Asfiled with the Securities and Exchange Commission on January 21, 2022

 

RegistrationStatement No. 333-

 

 

UNITEDSTATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

FORMS-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

 

RETINALGENIXTECHNOLOGIES INC.

(Exactname of registrant as specified in its charter)

 

 

Delaware		3841		82-3936890
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

1450North McDowell Boulevard, Suite 150

Petaluma,CA 94954

(415)578-9583
(Address and telephone number of registrant’s principal executive offices)

 

 

JerryKatzman

ChiefExecutive Officer
RetinalGenix Technologies Inc.

1450North McDowell Boulevard, Suite 150

Petaluma,CA 94954

(415)578-9583
(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copiesto:

RichardFriedman, Esq.
Nazia J. Khan, Esq.
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112-0015
Tel.: (212) 653-8700

 

 

Approximatedate of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement becomes effective.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 underthe Securities Act of 1933 check the following box: [X]

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, pleasecheck the following box and list the Securities Act registration statement number of the earlier effective registration statementfor the same offering. [  ]

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and listthe Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and listthe Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reportingcompany 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 [X]		Smaller reporting company [X]
						Emerging growth company [X]

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [X]

 

CALCULATIONOF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Shares to be Registered (1)				Proposed Maximum Aggregate Offering Price per Security				Proposed Maximum Aggregate Offering Price				Amount of Registration Fee
Common Stock, par value $0.0001			1,259,368			$	1.00	(2)		$	1,259,368			$	116.74
TOTAL			1,259,368							$	1,259,368			$	116.74

 

(1) The shares of our common stock being registeredhereunder are being registered for sale by the selling stockholders named in the prospectus. Under Rule 416 of the Securities Actof 1933, as amended (the “Act”), the shares being registered include such indeterminate number of shares of commonstock as may be issuable with respect to the shares being registered in this registration statement as a result of any stocksplits, stock dividends or other similar event.

 

(2) This offering price is solely for the purposeof calculating the registration fee in accordance with Rule 457 under the Act and is based, in part, upon the last private saleof the Company’s common stock.

 

TheRegistrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date untilthe Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter becomeeffective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effectiveon such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

Theinformation in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securitiesuntil the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus isnot an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction wherethe offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED JANUARY 21, 2022

 

1,259,368 Sharesof Common Stock

 

 

This prospectus relates to the sale by the selling stockholders named in this prospectus (the “Selling Stockholders”) of RetinalGenix Technologies Inc. (the “Company”) of 1,259,368 shares of common stock, par value $0.0001 per share (the “Resale Shares”). We will not receive any of the proceeds from the sale by Selling Stockholders of the Resale Shares.

 

Our common stock is quoted on the OTC Pink tier of the OTC Markets Group, Inc. under the symbol “RTGN.” The Selling Stockholders may sell their Resale Shares at prevailing market prices or in privately negotiated transactions. We provide more information about how a Selling Stockholder may sell its Resale Shares in the section titled “Plan of Distribution” on page 30 .

 

TheSelling Stockholders and any broker-dealers that participate in the distribution of the securities may be deemed to be “underwriters”as that term is defined in Section 2(a)(11) of the Securities Act of 1933, as amended.

 

Weare an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and may elect to complywith certain reduced public company reporting requirements. See the section titled “Implications of Being an Emerging GrowthCompany.”

 

Investingin our securities is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertaintiesdescribed under the heading “Risk Factors” beginning on page 9 of this prospectus before making a decision to purchaseour securities.

 

NEITHERTHE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIESOR PASSED UPON THE ACCURACY OR ADEQUACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINALOFFENSE.

 

Thedate of this prospectus is            , 2022.

 

 

ABOUTTHIS PROSPECTUS

 

Inthis prospectus, unless the context suggests otherwise, unless otherwise noted, references to “the Company,” “we,”“us,” and “our” refer to RetinalGenix Technologies Inc., a Delaware corporation.

 

Thisprospectus describes the specific details regarding this offering and the terms and conditions of the securities being offeredhereby and the risks of investing in our securities. You should read this prospectus, any free writing prospectus and the additionalinformation about us described in the section entitled ‘‘Where You Can Find More Information’’ beforemaking your investment decision.

 

Neitherwe, nor any of our officers, directors, agents, representatives or underwriters, make any representation to you about the legalityof an investment in our securities. You should not interpret the contents of this prospectus or any free writing prospectus tobe legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult withthem about the legal, tax, business, financial and other issues that you should consider before investing in our securities.

 

ADDITIONALINFORMATION

 

Youshould rely only on the information contained in this prospectus and in any accompanying prospectus supplement. No one has beenauthorized to provide you with different or additional information. The securities are not being offered in any jurisdiction wherethe offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurateas of any date other than the date on the front of such documents.

 

TRADEMARKSAND TRADE NAMES

 

Thisprospectus includes trademarks which are protected under applicable intellectual property laws and are our property. This prospectusalso contains trademarks, service marks, trade names and/ or copyrights of other companies, which are the property of their respectiveowners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or TM symbols,but such references are not intended to indicate, in any way, that the respective owners of the trademarks and trade names willnot assert, to the fullest extent under applicable law, their rights thereto.

 

INDUSTRYAND MARKET DATA

 

Unlessotherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, includingmarket position and market opportunity, is based on information from our management’s estimates, as well as from industrypublications and research, surveys and studies conducted by third parties. The third-party sources from which we have obtainedinformation generally state that the information contained therein has been obtained from sources believed to be reliable, butwe cannot assure you that this information is accurate or complete. We have not independently verified any of the data from third-partysources nor have we verified the underlying economic assumptions relied upon by those third parties. Similarly, internal companysurveys, industry forecasts and market research, which we believe to be reliable, based upon management’s knowledge of theindustry, have not been verified by any independent sources. Our internal company surveys are based on data we have collectedover the past several years, which we believe to be reliable. Management estimates are derived from publicly available information,our knowledge of our industry, and assumptions based on such information and knowledge, which we believe to be reasonable andappropriate. However, assumptions and estimates of our future performance, and the future performance of our industry, are subjectto numerous known and unknown risks and uncertainties, including those described under the heading “Risk Factors”in this prospectus and those described elsewhere in this prospectus. These and other important factors could result in our estimatesand assumptions being materially different from future results. You should read the information contained in this prospectus completelyand with the understanding that future results may be materially different and worse from what we expect. See the informationincluded under the heading “Cautionary Note Regarding Forward-Looking Statements.”

 

 

TABLEOF CONTENTS

 

	Page
Prospectus Summary	5
Risk Factors	9
Cautionary Note Regarding Forward-Looking Statements	24
Use of Proceeds	24
Selling Stockholders	24
Plan of Distribution	30
Description of Securities	31
Description of Business	33
Market for Common Equity and Related Stockholder Matters	38
Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Management	45
Executive Compensation	46
Security Ownership Of Certain Beneficial Owners And Management	50
Certain Relationships And Related Party Transactions And Director Independence	51
Legal Matters	51
Experts	51
Where You Can Find More Information	51
Financial Statements	F-1

 

 

PROSPECTUSSUMMARY

 

Thefollowing summary is qualified in its entirety by, and should be read together with, the more detailed information and financialstatements and related notes thereto appearing elsewhere in this prospectus. Before you decide to invest in our securities, youshould read the entire prospectus carefully, including the risk factors and the financial statements and related notes includedin this prospectus.

 

BusinessOverview

 

Weare an ophthalmic research and development company focused on developing technologies to screen, monitor, diagnose and treat ocular,optical, and sight-threatening disorders. Our mission is to prevent vision loss and blindness due to diabetic retinopathy andmaculopathy through two devices: (1) Retinal Imaging Screening Device, a portable, retinal imaging system providinga 200-degree field of view without requiring pupil dilation; and (2) RetinalCam^TM, a home monitoring and imagingdevice offering real-time communication with physicians available 24/7.

 

One of the effects of diabetes is retinopathy, andsubsequent diabetic maculopathy, characterized by loss of visual function through occlusion of image transmission externally, internallyor by destruction of the image sensors in the macula themselves. The macula contains the majority and highest density of color and visionlight sensors with providing maximum visual image resolution. Signals are passed through the retinal nerve fiber layer to the optic nerve,an extension of the brain, accumulating retinal nerve bundles forming trunks of connections to pass signals to the brain. The final imagesare processed at the occipital lobe. When the retina degenerates, patients experience loss of vision due to bleeding, retinaldetachment, and other factors. Retinopathy in diabetes can also lead to a degenerative maculopathy, a progressive disease that can leadto vision loss and permanent blindness. Early detection for all causes of visual loss leading to macula disruption, destruction and occlusionare critical in preventing blindness in any form, and most importantly where progression is possible. We believe if detected early andproperly treated, the progression of retinopathy can be slowed or even stopped, so that vision can be maintained.

 

Currently, the standard of care requires patientsphysically go into an office to have their pupil dilated, which, among other things, is costly, time consuming and may cause the patientdiscomfort. Instead of dilating pupils, some physicians opt to instead use a microscope-like device to detect early signs of diabeticretinopathy, but most such devices have a fixed field of view, typically between 20 to 50 degrees, and therefore, because thelimited field of view, do not allow view of the periphery, where retinopathy typically begins, and may not detect signs of retinopathy.By the time the retinopathy reaches the center of the eye and can be seen by such instruments with a limited field of view, it can betoo late to treat and may result in blindness. Currently, the only way for a physician to see changes in the periphery of the eye isby an exam after dilation through use of an instrument that has a 200 degree field of view. A patient, when seen without a dilated eyeexam, may be misled to believe there is no evidence of retinopathy during the early stages because, without dilation, such diagnosiscan be easily missed.

 

We are in the process of developing two productsaimed at preventing loss of vision. Specifically, we are developing: (1) the RetinalGeniX^TM Imaging System, a diabeticnon-mydriatic mass retinal imaging and screening device; and (2) the RetinalCam^TM, a real-time in-home retinalmonitoring, imaging, and physician alert system.

 

RetinalGeniX^TMImaging System – Diabetic Non-Mydriatic Mass Retinal Imaging and Screening Device

 

RetinalGeniX^TM  Imaging System (“RetinalGeniX^TM)is a portable diabetic non-mydriatic mass retinal imaging screening device with a high resolution 200-degree field of view. Itis intended to be a cost-effective, ultra-wide imaging technology used to examine the periphery of the retina, without the need for dilation.It can also be used to screen patients for neurological diseases and detect early signs of diabetic retinopathy. We believe RetinalGeniX^TMmay detect a variety of health issues including diabetes, retinopathy, ocular tumors, Alzheimer’s and autoimmune diseases,without the discomfort associated with pupil dilation. We believe RetinalGeniX^TM will enable ophthalmologists, retinal specialistsand optometrists to perform a more accurate screening with an improved field of view.

 

 

RetinalCam^TM– Real-Time Patient In-Home Retinal Monitoring, Imaging, and Physician Alert System

 

RetinalCam^TM is a patient in-homeocular and retinal monitoring device which allows individuals at high risk of vision loss or blindness to alert their physicianof any vision changes on a real-time basis from their home. The images generated by the RetinalCam^TM may providecritical information in detecting abnormalities upon onset, potentially preventing degradation of a patient’s ocular health thatmight result in vision loss or blindness, if left untreated. RetinalCam^TM connects directly to the internet or usesWi-Fi to capture and transmit high resolution digital images directly to doctors from a patient’s home. Patients at riskinclude those with obesity, diabetes, cardiovascular disorders, macular degeneration, neurological disorders, ocular tumors, physicaldisabilities and individuals that lack regular access to eyecare. The images captured by RetinalCam^TM may allowpatients to detect any changes that may have occurred since their prior screenings.

 

Webelieve RetinalCam^TM may offer an opportunity to prevent blindness by early detection or progression in high-risk individuals.In addition, we believe, future treatments targeted at COVID-19 may have toxic effects on the macula, which would result in anincreased need for close monitoring of patients ocular health. In July 2020, a study published in the European Association for the Studyof Diabetes Journal, reported 46% of COVID-19 patients with diabetic maculopathy experienced vascular changes in the retina periphery.We anticipate the high incidence of microvascular changes may demonstrate a potential sign of the severity and a risk factor for deathin COVID-19 patients with diabetic maculopathy.

 

As of the date of this prospectus, we do not haveany products approved for sale and have not generated any revenue from product sales. We believe RetinalGenix^TM is a ClassII medical device that will require 510(k) clearance from the U.S. Food and Drug Administration (“FDA”). In addition, webelieve RetinalCam^TM will be considered a Class II exempt medical device because it is non-diagnostic in nature, and therefore,we do not anticipate needing 510(k) clearance from the FDA to market such product. We intend to launch RetinalCam^TM in thefall of 2022 and we intend to apply for 510(k) clearance for RetinalGenix^TM in 2022. We anticipate that we will need an additional$5,000,000 to complete product design and testing for RetinalGenix^TM and RetinalCam^TM and submit RetinalGenix^TMfor FDA clearance. We intend to obtain such funding through the sales of our equity and debt securities and/or through potentialstrategic partnerships; however, no assurance can be provided that funds will be available to us on acceptable terms, if at all.

 

Recent Developments

 

On December27, 2021, we entered into an exchange agreement with Sanovas Ophthalmology, LLC pursuant to which we exchanged 28,014,540 shares of ourcommon stock held by Sanovas Ophthalmology, LLC for a pre-funded warrant to purchase up to an aggregate of 28,014,540 shares of our commonstock. The pre-funded warrant is immediately exercisable at an exercise price of $0.0001 per share and terminates when exercisedin full. 

 

On November21, 2021, our board of directors rescinded the 3,000,000 shares of Series F preferred stock issued to Halo Management GroupLLC for lack of contract consideration.

 

RisksAssociated with Our Business

 

Our ability to execute on our business strategyis subject to a number of risks, which are discussed more fully in the section titled “Risk Factors.” Investors should carefullyconsider these risks before making an investment in our common stock. These risks include, among others, the following:

 

	●	We have generated no revenue from commercial sales to date and our future profitability is uncertain. If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development.
	●	There is substantial doubt about our ability to continue as a going concern.
	●	Our revenues from sales of our products will be dependent upon market acceptance and pricing and reimbursement guidelines, and if we do not achieve market acceptance of our products or pricing and reimbursement levels are inadequate to achieve profitability, our operations will suffer.
	●	If our suppliers cannot provide the components we require, our ability to develop and manufacture our products could be harmed.
	●	We may face substantial competition in the future and may not be able to keep pace with the rapid technological changes which may result from others discovering, developing or commercializing products before or more successfully than we do.
	●	Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
	●	If we fail to accurately forecast demand for our products, we could incur additional costs or experience lost sales.
	●	We will be dependent upon third parties for the distribution of our products, and if such third parties are unable to establish and maintain effective sales, marketing and distribution capabilities, we will be unable to successfully commercialize our products.
	●	Our intellectual property may not be sufficient to protect our products from competition, which may negatively affect our business.
	●	Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
	●	We are subject to stringent domestic and foreign medical device regulations. Our failure to obtain and maintain clearances or approvals or any regulatory action against us may materially and adversely affect our financial condition and business operations.
	●	If we fail to develop and successfully introduce new products and applications or fail to improve our existing products, our business prospects and operating results may suffer.
	●	Our shares of common stock are not publicly traded and there can be no assurance that there will be an active market for our shares of common stock in the future.
	●	As of January 19, 2022, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 81.00% of our outstanding shares of common stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval.
	●	Our First Amended and Restated Certificate of Incorporation and Bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

 

 

CorporateInformation

 

Wewere incorporated in Delaware on November 17, 2017. Our principal executive offices are located at 1450 North McDowell Boulevard, Suite150, Petaluma, CA 94954 and our telephone number is (415) 578-9583. Our website address is www.retinalgenix.com. The informationcontained on our website is not incorporated by reference into this prospectus, and you should not consider any information containedon, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our securities.

 

Implicationsof Being an Emerging Growth Company

 

Wequalify as an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012 (“JOBS Act”).As an emerging growth company, we expect to take advantage of reduced reporting requirements that are otherwise applicable topublic companies. These provisions include, but are not limited to:

 

	●	being permitted to present only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this prospectus;
	●	not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”);
	●	reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
	●	exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

Wemay use these provisions until the last day of our fiscal year following the fifth anniversary of the completion of our initialpublic offering. However, if certain events occur prior to the end of such five-year period, including if we become a “largeaccelerated filer,” our annual gross revenues exceed $1.07 billion or we issue more than $1.0 billion of non-convertibledebt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

 

As an emerging growth company, we intend to takeadvantage of an extended transition period for complying with new or revised accounting standards as permitted by the JOBS Act. To theextent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”), after we cease to qualify as an emerging growth company, certainof the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including:(i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (ii) scaled executivecompensation disclosures; and (iii) the requirement to provide only two years of audited financial statements, instead of three years.

 

 

THEOFFERING

 

Common stock offered by Selling Stockholders:		1,259,368 shares of common stock, par value $0.0001 per share (the “Resale Shares”).
Offering price:		The selling stockholders (the “Selling Stockholders”) may sell their Resale Shares at prevailing market prices or in privately negotiated transactions. See “Plan of Distribution.”
Common stock outstanding:		14,282,314 shares.
Use of proceeds:		We will not receive any of the proceeds from the sale of the Resale Shares by the Selling Stockholders. See “Use of Proceeds.”
Risk factors:		An investment in our securities involves a high degree of risk and could result in a loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 9.
OTC Pink Symbol:		RTGN

 

The number of shares of common stock outstanding is based on 14,282,314 shares of common stock issued and outstanding as of January 19, 2022 and excludes as of that date:

 

	●	199,000 shares of common stock issuable upon exercise of warrants with a weighted average exercise price of $1.07 per share;
	●	1,820,000 shares of common stock issuable upon exercise of options with an exercise price of $1.00 per share;
	●	28,014,540 shares of common stock issuable upon exercise of pre-funded warrants with an exercise price of $0.0001 per share; and
	●	5,680,000 shares of common stock reserved for future issuance under our 2017 Equity Incentive Plan.

  

 

RISKFACTORS

 

Aninvestment in our securities involves a high degree of risk. This prospectus contains the risks applicable to an investment inour securities. Prior to making a decision about investing in our securities, you should carefully consider the specific factorsdiscussed under the heading “Risk Factors” in this prospectus. The risks and uncertainties we have described are notthe only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may alsoaffect our operations. The occurrence of any of these known or unknown risks might cause you to lose all or part of your investmentin the offered securities.

 

RisksRelating to Our Business

 

Wehave generated no revenue from commercial sales to date and our future profitability is uncertain.

 

We were incorporated in November 2017 and have a limited operating history, and our business is subject to all of the risks inherent in the establishment of a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with development and expansion of a new business enterprise. Since inception, we have incurred losses and expect to continue to operate at a net loss for at least the next several years. Our net losses for the year ended December 31, 2020 and nine months ended September 30, 2021, were $2,077,993 and $1,769,556, respectively, and our accumulated deficit as of December 31, 2020 and September 30, 2021 was $2,925,022 and $4,694,578, respectively. There can be no assurance that the products under development by us will be cleared for sale in the U.S. or elsewhere. Furthermore, there can be no assurance that if such products are cleared they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.

 

Ifwe fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product developmentand you will likely lose your entire investment.

 

Wewill need to continue to seek capital from time to time to continue development of our products and we cannot provide any assurancesthat any revenues they may generate in the future will be sufficient to fund our ongoing operations. We believe that we will needto raise substantial additional capital to fund our continuing operations and the development and commercialization of our products.

 

Ourbusiness or operations may change in a manner that would consume available funds more rapidly than anticipated and substantialadditional funding may be required to maintain operations, fund expansion, develop new or enhanced products, acquire complementaryproducts, business or technologies or otherwise respond to competitive pressures and opportunities, such as a change in the regulatoryenvironment. In addition, we may need to accelerate the growth of our sales capabilities and distribution beyond what is currentlyenvisioned, and this would require additional capital. However, we may not be able to secure funding when we need it or on favorableterms. We may not be able to raise sufficient funds to commercialize the products we intend to develop.

 

Ifwe cannot raise adequate funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our researchand development activities or future operations. We may also be required to obtain funds through arrangements with collaborators,which arrangements may require us to relinquish rights to certain technologies or products that we otherwise would not considerrelinquishing, including rights to certain major geographic markets. This could result in sharing revenues which we might otherwiseretain for ourselves. Any of these actions may harm our business, financial condition and results of operations.

 

Theamount of capital we may need depends on many factors, including the progress, timing and scope of our product development programs;the time and cost necessary to obtain regulatory clearance; our ability to enter into and maintain collaborative, licensing andother commercial relationships; and our partners’ commitment of time and resources to the development and commercialization ofour products.

 

 

Raisingadditional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rightsto our products on unfavorable terms to us.

 

Wemay seek additional capital through a variety of means, including through private and public equity offerings and debt financings,collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additionalcapital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted,and the terms of such financings may include liquidation or other preferences, anti-dilution rights, conversion and exercise priceadjustments and other provisions that adversely affect the rights of our stockholders, including rights, preferences and privilegesthat are senior to those of our holders of common stock in the event of a liquidation. In addition, debt financing, if available,could include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, makingcapital expenditures, or declaring dividends and may require us to grant security interests in our assets. If we raise additionalfunds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, wemay have to relinquish valuable rights to our technologies, future revenue streams, or products or grant licenses on terms thatmay not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may needto curtail or cease our operations.

 

Thereis substantial doubt about our ability to continue asa going concern.

 

As of December 31, 2020 and September 30, 2021, we had cash of $2,219 and $36,578, respectively. In addition, as of December 31, 2020 and September 30, 2021, we had current liabilities of $141,463 and $449,286, respectively. In the event that we are unable to obtain additional financing, we may be unable to continue as a going concern. There is no guarantee that we will be able to secure additional financing. Changes in our operating plans, our existing and anticipated working capital needs, costs related to legal proceedings we might become subject to in the future, the acceleration or modification of our development activities, any near-term or future expansion plans, increased expenses, potential acquisitions or other events may further affect our ability to continue as a going concern. Similarly, the report of our independent registered public accounting firm on our financial statements as of and for the year ended December 31, 2020 includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.

 

Ourrevenues from sales of our products will be dependent upon pricing and reimbursement guidelines, and if pricing and reimbursementlevels are inadequate to achieve profitability, our operations will suffer.

 

Ourfinancial success will be dependent on our ability to price our products in a manner acceptable to government and private payorswhile still maintaining our profit margins. Numerous factors that may be beyond our control may ultimately impact the pricingof our products and determine whether we are able to obtain reimbursement or reimbursement at adequate levels from governmentalprograms and private insurance. If we are unable to obtain reimbursement or our products are not adequately reimbursed, we willexperience reduced sales, our revenues likely will be adversely affected, and we may not become profitable. Obtaining reimbursementapprovals is time consuming, requires substantial management attention and is expensive. Our business will be materially adverselyaffected if we do not receive approval for reimbursement of our products under government programs and from private insurers ona timely or satisfactory basis. If reimbursement for our products is unavailable, limited in scope or amount, or if pricing isset at unsatisfactory levels, our business may be materially harmed.

 

If our suppliers cannot provide the componentswe require, our ability to develop and manufacture our products could be harmed.

 

We rely on third-partysuppliers to provide us with components that will be used in the products we are developing. For example, we rely on third-party suppliersto provide us with sensors which will be used in both RetinalGeniX^TM and RetinalCam^TM. Relying on third-party suppliersmakes us vulnerable to component part failures or obsolescence and interruptions in supply including, but not limited to, as a resultof COVID-19, either of which could impair our ability to develop our products in a timely manner. Vendor lead times to supply us withordered components vary significantly and as a result of COVID-19 can exceed three months or more. We cannot be sure that our supplierswill furnish us required components when we need them or be able to provide us with sufficient components to support the developmentand manufacture of our products.

 

Some of our suppliersmay be the only source for a particular component, which makes us vulnerable to significant cost increases or shortage of supply. Wehave foreign suppliers for some of our parts in which we are subject to currency exchange rate volatility. Some of our vendors are smallin size and may have difficulty supplying the quantity and quality of materials required for our products as our business potentiallygrows. Vendors that are the sole source of certain products may decide to limit or eliminate sales of certain components due to productliability or other concerns and we might not be able to find a suitable replacement for those products. Our inventory may run out beforewe find alternative suppliers and we might be forced to purchase excess inventory, if available, to last until we are able to qualifyan alternate supplier. Any of these events could adversely impact our results of operations.

 

Ourcommercial and financial success depends on our products being accepted in the market, and if not achieved will result in ournot being able to generate revenues to support our operations.

 

Evenif we are able to obtain favorable reimbursement within the markets that we serve, commercial success of our products will depend,among other things, on their acceptance by retinal specialists, ophthalmologists, general practitioners, low vision therapistsand mobility experts, hospital purchasing and controlling departments, patients, and other members of the medical community. Thedegree of market acceptance of any of our potential products will depend on factors that include:

 

	●	cost of treatment;
	●	pricing and availability of alternative products;
	●	the extent of available third-party coverage or reimbursement;

 

 

	●	perceived efficacy of our products relative to other products and medical solutions; and
	●	prevalence and severity of adverse side effects associated with treatment.

 

Wemay face substantial competition in the future and may not be able to keep pace with the rapid technological changes which mayresult from others discovering, developing or commercializing products before or more successfully than we do.

 

Ingeneral, the development and commercialization of new medical devices is highly competitive and is characterized by extensive researchand development and rapid technological change. Our customers consider many factors including product reliability, product availability,inventory consignment, price and product services provided by the manufacturer. Market share can shift as a result of technological innovationand other business factors. Major shifts in industry market share have occurred in connection with product related problems, physicianadvisories and safety alerts and quality problems with processes, goods and services, any of which could harm our reputation and havea material adverse effect on our operations. In addition, our competitors may develop products or other novel technologies thatare more effective, safer or less costly than our products. If we fail to develop new products or enhance our existing products, ourbusiness, financial condition and results of operations may be adversely affected.

 

Productliability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products thatwe may develop.

 

Weface an inherent risk of product liability exposure related to our products. Product liability claims may be brought against usby patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselvesagainst claims that our products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome,liability claims may result in:

 

	●	decreased demand for our products;
	●	injury to our reputation and significant negative media attention;
	●	significant costs to defend the related litigation;
	●	substantial monetary awards;
	●	loss of revenue;
	●	diversion of management and scientific resources from our business operations; and
	●	the inability to commercialize any products that we may develop.

 

Priorto commercializing our products, we intend to obtain product liability insurance coverage at a level that we believe is customaryfor similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks; however, we may beunable to obtain such coverage at a reasonable cost, if at all. If we are able to obtain product liability insurance, we may notbe able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise andsuch insurance may not be adequate to cover all liabilities that we may incur. A successful product liability claim or seriesof claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affectour business.

 

 

Weare dependent on information technology systems, including systems from third parties, and if we fail to properly maintain theintegrity of our data or if our products do not operate as intended, our business could be materially and adversely affected.

 

Weare dependent on information technology systems for our products and infrastructure, and we rely on these information technologysystems, including technology from third-party vendors, to process, transmit and store electronic information in our day-to-dayoperations. We continuously monitor, upgrade and expand the systems we operate to improve information systems capabilities. Ourinformation systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systemsand develop or contract new systems to keep pace with continuing changes in information processing technology, evolving systemsand regulatory standards, and the increasing need to protect patient and customer information. In addition, third parties mayattempt to hack into our products or systems and may obtain data relating to patients or proprietary information. If we fail toprotect our information systems and data integrity, we could lose existing customers; have difficulty attracting new customers;have difficulty preventing, detecting, and controlling fraud; be subject to regulatory sanctions, fines or penalties; be subjectto increases in operating expenses; incur expenses or lose revenue; or suffer other adverse consequences.

 

Ifthe quality or delivery of our products does not meet our customers’ expectations, our reputation could suffer and ultimatelyour sales and operating earnings could be negatively impacted.

 

Inthe course of conducting our business, we will need to adequately address quality issues associated with our products, includingin our engineering, design, manufacturing and delivery processes, as well as issues in third-party components included in ourproducts. Because our products are highly complex, the occurrence of performance issues may increase as we continue to introducenew products and as we rapidly scale up manufacturing to meet increased demand for our products. There can be no assurance thatwe will be able to eliminate or mitigate occurrences of these issues and associated liabilities. In addition, identifying theroot cause of performance or quality issues, particularly those affecting third-party components, may be difficult, which increasesthe time needed to address quality issues as they arise and increases the risk that similar problems could recur. Finding solutionsto quality issues can be expensive, and we may incur significant costs or lost revenue in connection with, for example, shipmentholds, product recalls and warranty or other service obligations. In addition, quality issues can impair our relationships withnew or existing customers and our reputation as a producer of high quality products could suffer, which could adversely affectour business, financial condition or results of operations.

 

Failureto comply with data privacy and security laws could have a material adverse effect on our business.

 

Weare subject to state, federal and foreign laws relating to data privacy and security in the conduct of our business, includingstate breach notification laws, the Health Insurance Portability and Accountability Act, as amended by the Health InformationTechnology for Economic and Clinical Health Act of 2009 and the California Consumer Privacy Act. These laws affect how we collectand use data of our employees, consultants, customers and other parties. Furthermore, these laws impose substantial requirementsthat require the expenditure of significant funds and employee time to comply, and additional states are enacting new data privacyand security laws, which will require future expansion of our compliance efforts. We also rely on third parties to host or otherwiseprocess some of this data. Any failure by a third party to prevent security breaches could have adverse consequences for us. Wewill need to expend additional resources and make significant investments to comply with data privacy and security laws. Our failureto comply with these laws or prevent security breaches of such data could result in significant liability under applicable laws,cause disruption to our business, harm our reputation and have a material adverse effect on our business.

 

Wemay not be successful in hiring and retaining key employees, including executive officers.

 

Ourfuture operations and successes depend in large part upon the strength of our management team. We rely heavily on the continued serviceof Jerry Katzman, our President and Chief Executive Officer. Accordingly, if Dr. Katzman terminates his employment with us, sucha departure may have a material adverse effect on our business. Our future success also depends on our ability to identify, attract,hire or engage, retain and motivate other well-qualified financial, managerial, technical and regulatory personnel. There can be no assurancethat these professionals will be available in the market, or that we will be able to retain existing professionals or to meet or to continueto meet their compensation requirements. Furthermore, the cost base in relation to such compensation, which may include equity compensation,may increase significantly, which could have a material adverse effect on us. Failure to establish and maintain an effective managementteam and work force could adversely affect our ability to operate, grow and manage our business.

 

 

Wemay acquire other businesses, form joint ventures or make investments in other companies or technologies that could negativelyaffect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

 

Wemay pursue acquisitions of businesses and assets. We also may pursue strategic alliances and joint ventures that leverage ourproprietary technology and industry experience to expand our offerings or distribution. We have no experience with acquiring othercompanies and limited experience with forming strategic partnerships. We may not be able to find suitable partners or acquisitioncandidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, wemay not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingentliabilities. Any future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offsof intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and resultsof operations. Integration of an acquired company also may disrupt ongoing operations and require management resources that wewould otherwise focus on developing our existing business. We may experience losses related to investments in other companies,which could harm our financial condition and results of operations. We may not realize the anticipated benefits of any acquisition,strategic alliance or joint venture.

 

Tofinance any acquisitions or joint ventures, we may choose to issue shares of common stock as consideration, which could dilutethe ownership of our stockholders. Additional funds may not be available on terms that are favorable to us, or at all. If theprice of our common stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project usingour stock as consideration.

 

Ifwe fail to accurately forecast demand for our products, we could incur additional costs or experience lost sales.

 

Itwill be very important that we accurately predict the demand for our products. If we overestimate the demand for our products,we may have excess inventory, which would increase our costs. If we underestimate demand for our products, we may have inadequateinventory, which could delay delivery of our products to our customers and result in the loss of customer sales. Any of these occurrenceswould negatively impact our business and operating results.

 

Ifour facilities were to experience catastrophic loss, our operations would be seriously harmed.

 

Ourfacilities could be subject to catastrophic loss such as fire, flood, unpredictable power outages or earthquakes. All of our researchand development activities, our corporate headquarters and other critical business operations are located in California. Californiacan experience catastrophic wildfires, as well as intermittent power outages. Any such loss at any of our facilities caused byfires, flooding, power outages or earthquakes could disrupt our operations and may have a material adverse effect on our business.

 

Apandemic, epidemic or outbreak of an infectious disease, such as COVID-19, a novel strain of coronavirus, may materially and adverselyaffect our business and our financial results.

 

Publichealth epidemics or widespread outbreaks of contagious diseases could adversely impact our business. Any outbreak of contagious diseases,and other adverse public health developments, such as the novel strain of coronavirus (COVID-19), initially limited to a region in Chinaand now affecting the global community, could impact our operations depending on future developments, which are highly uncertain, largelybeyond our control and cannot be predicted with certainty. These uncertain factors include the duration of the outbreak, potential impactto our employees who may contract the disease or be subject to quarantine, new information which may emerge concerning the severity ofthe disease and the actions to contain or treat its impact, such as the temporary closure of facilities. These factors may cause disruptionsin our supply chain or disruptions or restrictions on our employees’ ability to work which may disrupt our research and developmentefforts. These or other currently unforeseen consequences of a health epidemic, pandemic or other outbreak, including the current COVID-19outbreak, may have a material adverse effect on our business, financial condition and results of operations.

 

Marketand economic conditions may negatively impact our business, financial condition and share price.

 

Concernsover medical epidemics, energy costs, geopolitical issues, the mortgage market and a deteriorating real estate market, unstableglobal credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability,diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectationsfor the global economy and expectations of slower global economic growth, increased unemployment rates, and increased credit defaultsin recent years. Our general business strategy may be adversely affected by any such economic downturns (including the currentdownturn related to the current COVID-19 pandemic), volatile business environments and continued unstable or unpredictable economicand market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equityfinancing more difficult to complete, more costly and more dilutive. Failure to secure any necessary financing in a timely mannerand on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price andcould require us to delay or abandon development or commercialization plans.

 

 

Wewill be dependent upon third parties for the distribution of our products, and if such third parties are unable to establish and maintaineffective sales, marketing and distribution capabilities, we will be unable to successfully commercialize our products.

 

Weintend to use third parties to market and sellour products. We cannot guarantee that we will be able to enter into and maintain any distributionagreements with third parties on acceptable terms, if at all. If we enter into distribution agreements with third parties, and suchthird parties are unable to establish and maintain effective sales, marketing and distribution capabilities, we will be unable to successfullycommercialize our products.

 

Our board of directors rescinded the 3,000,000shares of Series F Preferred Stock issued to Halo Management Group LLC (“Halo”)and Halo may dispute such decision.

 

Halo waspreviously issued 3,000,000 shares of our Series F Preferred Stock. See “Description of Business - Legal Proceedings.”On November 21,2021, our board of directors rescinded the 3,000,000 shares of SeriesF Preferred Stock issued to Halo for lack of contract consideration. Halo may dispute this decision; however, we believe Halo has nobasis to dispute such decision, and we are prepared to vigorously defend our decision. Notwithstanding the foregoing, litigationcan be expensive and time consuming and an adverse result in any litigation proceeding may have a material adverse effect on our business.The cost to us of any litigation or other proceeding, regardless of its merit, even if resolved in our favor, could be substantial andmay result in a diversion of our management’s attention.

 

RisksRelating to Intellectual Property

 

Ourintellectual property may not be sufficient to protect our products from competition, which may negatively affect our business.

 

Wemay be subject to competition despite the existence of intellectual property we license or may, in the future, own.We can give no assurances that our intellectual property claims will be sufficient to prevent third parties from designing aroundpatents we license, or may in the future own or developing and commercializing competitive products. The existence of competitiveproducts that avoid our intellectual property rights could materially adversely affect our operating results and financial condition.Furthermore, limitations, or perceived limitations, in our intellectual property rights may limit the interest of third partiesto partner, collaborate or otherwise transact with us, if third parties perceive a higher than acceptable risk to commercializationof our products.

 

Wemay elect to sue a third party, or otherwise make a claim, alleging infringement or other violation of patents, trademarks, tradedress, copyrights, trade secrets, domain names or other intellectual property rights that we license from a third party or may,in the future own. If we do not prevail in enforcing our intellectual property rights in this type of litigation, we may be subjectto:

 

	●	paying monetary damages related to the legal expenses of the third party;
	●	facing additional competition that may have a significant adverse effect on our product pricing, market share, business operations, financial condition and the commercial viability of our product; and
	●	restructuring our company or delaying or terminating select business opportunities, including, but not limited to, research and development and commercialization activities, due to a potential deterioration of our financial condition or market competitiveness.

 

Athird party may also challenge the validity, enforceability or scope of the intellectual property rights that we license or may, in thefuture, own, and the result of these challenges may narrow the scope or claims of or invalidate patents that are integral toour products in the future. There can be no assurance that we will be able to successfully defend our intellectual property rights inan action against third parties due to the unpredictability of litigation and the high costs associated with intellectual property litigation,among other factors.

 

Intellectualproperty rights and enforcement may be less extensive in jurisdictions outside of the U.S. Thus, we may not be able toprotect our intellectual property rights and third parties may be able to market competitive products that may use some or allof our intellectual property rights.

 

Changesto patent law, including the Leahy-Smith America Invests Act, AIA or Leahy-Smith Act, of 2011 and the Patent Reform Act of 2009and other future article of legislation, may substantially change the regulations and procedures surrounding patent applications,issuance of patents, and prosecution of patents. We can give no assurances that the patents of our licensor can be defended orwill protect us against future intellectual property challenges, particularly as they pertain to changes in patent law and futurepatent law interpretations.

 

Inaddition, enforcing and maintaining our intellectual property protection depends on compliance with various procedural, document submission,fee payment and other requirements imposed by the United States Patent and Trademark Office (“USPTO”), courts andforeign government patent agencies, and patent protection could be reduced or eliminated for non-compliance with these requirements whichmay have a material adverse effect on our business.

 

We may become involved in future lawsuitsto protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming and unsuccessful.

 

Competitors may infringe our future patents orthe patents of our licensors. To counter infringement or unauthorized use, we may file infringement claims, which can be expensive andtime consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or of our licensors is not validor is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not coverthe technology in question. An adverse result in any litigation or defense proceedings could put one or more of our or our licensors’patents at risk of being invalidated or interpreted narrowly and could put our or our licensors’ potential patent applicationsat risk of not issuing.

 

 

The USPTO may initiate interference proceedingsto determine the priority of inventions described in or otherwise affecting our future patents and patent applications or those of ourlicensors. An unfavorable outcome could require us to cease using the technology or to attempt to license rights to it from the prevailingparty. Our business could be harmed if a prevailing party does not offer us a license on terms that are acceptable to us. Litigationor interference proceedings may fail and, even if successful, may result in substantial costs and distraction of our management and otheremployees. We may not be able to prevent, alone or with our licensors, misappropriation of our proprietary rights, particularly in countrieswhere the laws may not protect those rights as fully as in the U.S.

 

Furthermore, if we are the target of claimsby third parties asserting that our products or intellectual property infringe upon the rights of others, we may be forced to incur substantialexpenses or divert substantial employee resources from our business and, if successful, those claims could result in our having to paysubstantial damages or prevent us from developing one or more of our products. Further, if a patent infringement suit were brought againstus or our licensors, we or they could be forced to stop or delay research, development, manufacturing or sales of the product that isthe subject of the lawsuit.

 

Ifwe experience patent infringement claims, or if we elect to avoid potential claims others may assert, we or our licensors maychoose to seek, or be required to seek, a license from the third-party and would most likely be required to pay license fees orroyalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our licensors were able toobtain a license, the rights may be non-exclusive, which would give our competitors access to the same intellectual property.Ultimately, we may be prevented from commercializing a product, or be forced to cease some aspect of our business operations if,as a result of actual or threatened patent infringement claims, we or our licensors are unable to enter into licenses on acceptableterms. This could harm our business significantly. The cost to us of any litigation or other proceeding, regardless of its merit,even if resolved in our favor, could be substantial and may result in a diversion of our management’s attention. Some ofour competitors may be able to bear the costs of such litigation or proceedings more effectively than we can because they mayhave greater financial resources than us. Uncertainties resulting from the initiation and continuation of patent litigation orother proceedings could have a material adverse effect on our business.

 

Wemay not be able to enforce our intellectual property rights throughout the world.

 

The laws of some foreign countries do not protectintellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problemsin protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stopthe infringement of our future patents or those that we license from our licensors, or the misappropriation of our otherintellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grantlicenses to third parties. In addition, many countries limit the enforceability of patents against certain third parties, including governmentagencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimatelybe sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we maychoose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

 

Proceedingsto enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention fromother aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our abilityto obtain adequate protection for our products and the enforcement of intellectual property.

 

 

Thirdparties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriatedtrade secrets.

 

Wemay employ individuals who were previously employed at universities or other medical device companies, including our competitorsor potential competitors. Although we intend to ensure that our employees and consultants do not use the proprietary informationor know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractorshave inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information,of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defendingany such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Evenif we are successful in defending against such claims, litigation could result in substantial costs and result in a diversionof management’s attention.

 

Wemay be unable to adequately prevent disclosure of trade secrets and other proprietary information.

 

Werely on trade secrets to protect our proprietary know-how and technological advances, especially where we do not believe patentprotection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality agreementswith our employees, consultants, outside scientific collaborators and other advisors to protect our trade secrets and other proprietaryinformation. However, any party with whom we have executed such an agreement may breach that agreement and disclose our proprietaryinformation, including our trade secrets. Accordingly, these agreements may not effectively prevent disclosure of confidentialinformation and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Costlyand time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. Failure to obtainor maintain trade secret protection could enable competitors to use our proprietary information to develop products that competewith our products or cause additional, material adverse effects upon our competitive business position and financial results.

 

RisksRelating to Government Regulations

 

Ourfailure to obtain and maintain FDA clearances or approvals on a timely basis, or at all, would prevent us from commercializingour products in the U.S., which could severely harm our business.

 

Unlessan exemption applies, each medical device that we market in the U.S. must first undergo premarket review pursuant to the Federal Food,Drug, and Cosmetic Act (“FDCA”) by receiving clearance of a 510(k) premarket notification, receiving clearance through thede novo review process, or obtaining approval of a premarket approval (“PMA”) application. Even if regulatory clearanceor approval of a product is granted, the FDA may clear or approve our products only for limited indications for use. Additionally, theFDA may not grant 510(k) clearance on a timely basis, if at all, for new products or uses that we propose. The traditional FDA 510(k)clearance process for our products may take between four to nine months. However, in some cases, the FDA is requiring applicants to provideadditional or different information and data for 510(k) clearance than it had previously required, and that the FDA may not rely on approachesthat it had previously accepted to support 510(k) clearance. As a result, FDA 510(k) clearance may be delayed for our productsin some cases.

 

Tosupport our product applications to the FDA, we may be required to conduct clinical testing of our products. Such clinical testingmust be conducted in compliance with FDA requirements pertaining to human research. Among other requirements, we must obtain informedconsent from study subjects and approval by institutional review boards before such studies may begin. We must also comply with otherFDA requirements such as monitoring, record-keeping, reporting and the submission of information regarding certain clinical trials toa public database maintained by the National Institutes of Health. In addition, if the study involves a significant risk device, we arerequired to obtain the FDA’s approval of the study under an Investigational Device Exemption. Compliance with these requirementscan require significant time and resources. If the FDA determines that we have not complied with such requirements, the FDA may refuseto consider the data to support our applications or may initiate enforcement actions. Even if we obtain 510(k) clearance, if safety oreffectiveness problems are identified with our products, we may need to initiate a recall of such devices. Furthermore, our productsmay be denied 510(k) clearance and be required to undergo the more burdensome PMA or de novo review processes. The process ofobtaining a de novo classification or PMA approval is much more costly, lengthy and uncertain than the process for obtaining 510(k)clearance. De novo classification generally takes six months to one year from the time of submission of the de novo request,although it can take longer. Approval of a PMA generally takes one year from the time of submission of the PMA, but may be longer.

 

 

Some of our products orproduct features may also be exempted from the 510(k) process and/or other regulatory requirements in accordance with specific FDA regulations,guidance or policies. If the FDA changes its policy or concludes that our marketing of these products is not in accordancewith its current policy, we may be required to seek clearance or approval of these devices through the 510(k), de novo or PMAprocesses.

 

Ourpromotional practices will be subject to extensive government scrutiny. We may be subject to governmental, regulatory and otherlegal proceedings relative to advertising, promotion, and marketing that could have a significant negative effect on our business.

 

Wewill be subject to governmental oversight and associated civil and criminal enforcement relating to medical device advertising, promotion,and marketing, and such enforcement is evolving and intensifying. In the United States, we are subject to potential enforcement fromthe FDA, the U.S. Federal Trade Commission, the Department of Justice, the Centers for Medicare & Medicaid Services, otherdivisions of the Department of Health and Human Services and state and local governments. Other parties, including private plaintiffs,also are commonly bringing suit against medical device companies, alleging off-label marketing and other violations. We may be subjectto liability based on the actions of individual employees and contractors carrying out activities on our behalf, including sales representativeswho may interact with healthcare professionals.

 

Legislativeor regulatory reform of the health care system in the U.S. may adversely impact our business, operations or financial results.

 

Ourindustry is highly regulated and changes in law may adversely impact our business, operations or financial results. In March 2010,the Patient Protection and Affordable Care Act, and a related reconciliation bill were signed into law. This legislation changesthe current system of healthcare insurance and benefits intended to broaden coverage and control costs. The law also containsprovisions that will affect companies in the medical device industry and other healthcare related industries by imposing additionalcosts and changes to business practices. We cannot predict what healthcare reform initiatives may be adopted in the future. Thesereforms could have an adverse effect on our ability to obtain timely regulatory approval for new products and on anticipated revenuesfrom our products, both of which may affect our overall financial condition.

 

Weare subject to stringent domestic and foreign medical device regulations and any unfavorable regulatory action may materiallyand adversely affect our financial condition and business operations.

 

Ourproducts, development activities and manufacturing processes are subject to extensive and rigorous regulation by numerous governmentagencies, including the FDA and comparable foreign agencies. To varying degrees, each of these agencies monitors and enforcesour compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing, distribution,and the safety and effectiveness of our medical devices. The process of obtaining marketing approval or clearance from the FDAand comparable foreign bodies for new products, or for enhancements, expansion of the indications or modifications to existingproducts, could:

 

	●	take a significant, indeterminate amount of time;
	●	result in product shortages due to regulatory delays;
	●	require the expenditure of substantial resources;
	●	involve modifications, repairs or replacements of our products;
	●	require design changes of our products;

 

 

	●	result in limitations on the indicated uses of our products; and
	●	result in our never being granted the regulatory approval we seek.

 

Anyof these occurrences that we might experience will cause our operations to suffer, harm our competitive standing and result infurther losses that adversely affect our financial condition.

 

Wewill be subject to ongoing responsibilities under FDA and international regulations, both before and after a product is commerciallyreleased. For example, we are required to comply with the FDA’s Quality System Regulation which mandates that manufacturersof medical devices adhere to certain quality assurance requirements pertaining, among other things, to validation of manufacturingprocesses, controls for purchasing product components and documentation practices. As another example, the Medical Device Reportingregulation requires us to provide information to the FDA whenever there is evidence that reasonably suggests that a device mayhave caused or contributed to a death or serious injury, or that a malfunction occurred which would be likely to cause or contributeto a death or serious injury upon recurrence. Compliance with applicable regulatory requirements is subject to continual reviewand is monitored rigorously through periodic inspections by the FDA. If the FDA were to conclude that we are not in compliancewith applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, theFDA could ban such medical devices, detain or seize such medical devices, order a recall, repair, replacement, or refund of suchdevices, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harmto the public health. Additionally,the FDA may restrict manufacturing and impose other operating restrictions, enjoin and restrain certain violations of applicablelaw pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us. Any adverse regulatoryaction, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products. In addition,negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effecton our financial condition and results of operations.

 

Wewill also be subject to stringent government regulation in foreign countries, which could delay or prevent our ability to sellour products in those jurisdictions.

 

Weintend to pursue market authorizations for our products in foreign countries. For us to market our products in international jurisdictions,we and our distributors and agents must obtain required regulatory registrations or approvals. The approval procedure varies amongcountries and jurisdictions and can involve additional testing, and the time and costs required to obtain approval may differfrom that required to obtain an approval by the FDA. Approval by the FDA does not ensure approval by regulatory authorities inother countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authoritiesin other foreign countries or jurisdictions or by the FDA. Violations of foreign laws governing use of medical devices may leadto actions against us by the FDA as well as by foreign authorities. We must also comply with extensive regulations regarding safety,efficacy and quality in those jurisdictions. We may not be able to obtain all the required regulatory registrations or approvals,or we may be required to incur significant costs in obtaining or maintaining any regulatory registrations or approvals we receive.Delays in obtaining any registrations or approvals required for marketing our products, failure to receive these registrationsor approvals, or future loss of previously obtained registrations or approvals would limit our ability to sell our products internationallyand may have a material adverse effect on our business.

 

Failureby us or our distributors to comply with foreign regulations applicable to the products we design, manufacture, install or distributecould expose us to enforcement actions or other adverse consequences.

 

Wemay be subject to the European Medical Device Regulation, which was adopted by the European Union (“EU”) as a common legalframework for all EU member states. These regulations require companies that wish to manufacture and distribute medical devices in EUmember states to meet certain quality system and safety requirements and ongoing product monitoring responsibilities, and obtain a “CE”marking (i.e., a mandatory conformity marking for certain products sold within the European Economic Area) for their products. Variouspenalties exist for non-compliance with the laws implementing the European Medical Device Regulations which, if incurred, couldhave a material adverse impact on our business, results of operations and cash flows.

 

 

Evenif we obtain clearance or approval to sell our products, we are subject to ongoing requirements and inspections that could leadto the restriction, suspension or revocation of our clearance.

 

We, as well as any potential collaborative partnerssuch as distributors, will be required to adhere to applicable FDA regulations regarding good manufacturing practice, which include testing,control, and documentation requirements. We are subject to similar regulations in foreign countries. Even if regulatory clearanceof a product is granted, the clearance may be subject to limitations on the indicated uses for which the product may be marketedor to the conditions of approval or contain requirements for costly post-marketing testing and surveillance to monitor the safety orefficacy of the product. Ongoing compliance with good manufacturing practice and other applicable regulatory requirements is strictlyenforced in the United States through periodic inspections by state and federal agencies, including the FDA, and in international jurisdictionsby comparable agencies. Failure to comply with these regulatory requirements could result in, among other things, warning letters, fines,injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure to obtain pre-marketclearance or pre-market approval for devices, withdrawal of approvals previously obtained and criminal prosecution. The restriction,suspension or revocation of regulatory approvals or any other failure to comply with regulatory requirements would limit our abilityto operate and could increase our costs which may have a material adverse effect on our business.

 

Wecould be subject to substantial fines or damages and possible exclusion from participation in federal or state health care programsif we fail to comply with the laws and regulations applicable to our business.

 

Weare subject to stringent laws and regulations at both the federal and state levels governing the participation of durable medicalequipment suppliers in federal and state health care programs. From time to time, the government may seek additional informationrelated to our claims submissions, and in some instances government contractors may perform audits of payments made to us underMedicare, Medicaid, and other federal health care programs. These reviews may identify overpayments for which we submit refunds.We believe the frequency and intensity of government audits and review processes has intensified, and we expect this will continuein the future, due to increased resources allocated to these activities at both the federal and state Medicaid level, and greatersophistication in data review techniques.

 

Ifwe are considered to have violated these laws and regulations, we could be subject to substantial fines, damages, possible exclusionfrom participation in federal health care programs such as Medicare and Medicaid and possible recoupment of any overpayments relatedto such violations. Failure to comply with applicable laws and regulations, even if inadvertent, could have a material adverseimpact on our business.

 

Ifwe fail to develop and successfully introduce new products and applications or fail to improve our existing products, our businessprospects and operating results may suffer.

 

Ourability to generate incremental revenue growth will depend, in part, on the successful outcome of research and development activities,which may include clinical trials that lead to the development of new products and new applications using our products. Our researchand development process is expensive, prolonged, and entails considerable uncertainty. Due to the complexities and uncertaintiesassociated with ophthalmic research and development, products we are currently developing may not complete the development processor obtain the regulatory approvals required to market such products successfully. In addition, our research and development processhas been slowed by the impact of COVID-19, and should the COVID-19 economic restrictions worsen, it could delay and disrupt ourresearch and development processes even further.

 

Successfulcommercialization of new products and new applications will require that we effectively transfer production processes from researchand development to manufacturing and effectively coordinate with our suppliers. In addition, we must successfully sell and achievemarket acceptance of new products and applications and enhanced versions of existing products. The extent of, and rate at which,market acceptance and penetration are achieved by future products is a function of many variables, which include, among otherthings, price, safety, efficacy, reliability, marketing and sales efforts, the development of new applications for these products,the availability of third-party reimbursement of procedures using our new products, the existence of competing products and generaleconomic conditions affecting purchasing patterns.

 

 

Ourability to market and sell new products is subject to government regulation, including approval or clearance by the FDA and foreigngovernment agencies. Any failure in our ability to successfully develop and introduce new products or enhanced versions of existingproducts and achieve market acceptance of new products and new applications could have a material adverse effect on our operatingresults and would cause our net revenues to decline.

 

RisksRelated to Owning our Securities and this Offering

 

Ourshares of common stock are not publicly traded and there can be no assurance that there will be an active market for our sharesof common stock in the future.

 

Ourshares of common stock are not currently publicly traded and timing for the commencement of trading is uncertain. An active tradingmarket for shares of our common stock may never develop or be sustained if developed. If an active trading market does not develop,you may have difficulty selling your shares of common stock at an attractive price, or at all. An inactive market may also impairour ability to raise capital by selling our common stock, and it may impair our ability to attract and motivate our employeesthrough equity incentive awards and our ability to acquire other companies, products or technologies by using our common stockas consideration.

 

Ourstock price may be volatile and you may not be able to resell your shares at or above the purchase price.

 

Themarket price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors,many of which are beyond our control, including the following:

 

	●	our ability to execute our business plan;
	●	changes in our industry;
	●	competitive pricing pressures;
	●	our ability to obtain working capital financing;
	●	additions or departures of key personnel;
	●	sales of our common stock;
	●	operating results that fall below expectations;
	●	regulatory developments;
	●	economic and other external factors;
	●	period-to-period fluctuations in our financial results;
	●	the public’s response to press releases or other public announcements by us or third parties, including filings with the SEC;
	●	changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;
	●	thedevelopment and sustainability of an active trading market for our common stock;
	●	any future sales of our common stock by our officers, directors and significant stockholders; and
	●	other events or factors, many of which may be out of our control, including, but not limited to, pandemics such as COVID-19, war, or other acts of God.

 

Inaddition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelatedto the operating performance of particular companies. These market fluctuations may also materially and adversely affect the marketprice of our common stock.

 

 

Futuresales and issuances of our common stock could result in additional dilution of the percentage ownership of our stockholders.

 

Weexpect that significant additional capital will be needed in the future to continue our planned operations. We may sell commonstock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine fromtime to time. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantialdilution.

 

Wehave never paid cash dividends and have no plans to pay cash dividends in the future.

 

Holdersof shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, wehave paid no cash dividends on our capital stock and we do not expect to pay cash dividends in the foreseeable future. We intendto retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our capitalstock may have will be in the form of appreciation, if any, in the market value of their shares of common stock.

 

Ourcommon stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited,which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

 

Rule 15g-9 under the Exchange Act, establishesthe definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of lessthan $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involvinga penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in pennystocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity andquantity of the penny stock to be purchased.

 

Inorder to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial informationand investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocksare suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluatingthe risks of transactions in penny stocks.

 

Thebroker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relatingto the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitabilitydetermination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to thetransaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock”rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value ofour common stock.

 

Disclosurealso has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about thecommissions payable to both the broker or dealer and the registered representative, current quotations for the securities andthe rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements haveto be sent disclosing recent price information for the penny stock held in the account and information on the limited market inpenny stocks.

 

Becausecertain of our stockholders control a significant number of shares of our common stock, they may have effective control over actionsrequiring stockholder approval.

 

As of January 19, 2022, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 81.00% of our outstanding shares of common stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:

 

●

delaying, deferring or preventing a change in corporate control;

 

 

	●	impeding a merger, consolidation, takeover or other business combination involving us; or
	●	discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

 

Weare an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicableto emerging growth companies, which could make our common stock less attractive to investors.

 

Weare an “emerging growth company,” as defined in the JOBS Act and we intend to take advantage of certain exemptionsfrom various reporting requirements that are applicable to other public companies that are not “emerging growth companies”including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act,reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions fromthe requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachutepayments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company”we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, asamended (“Securities Act”), for complying with new or revised accounting standards. In other words, an “emerginggrowth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to privatecompanies. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.If some investors find our common stock less attractive as a result, there may be a less active trading market for our commonstock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an“emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the lastday of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscalyear following the fifth anniversary of our initial public offering; (iii) the date on which we have issued more than $1 billionin nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filerunder the rules of the SEC.

 

OurFirst Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) and our Bylaws (the “Bylaws”)and Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stockprice to decline.

 

Our Certificate of Incorporation and our Bylaws andDelaware law could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial toour stockholders. We are authorized to issue up to 40,000,000 shares of preferred stock. This preferred stock may be issued in one ormore series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders.The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters),preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reducethe value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrictour ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

 

Provisions of our Certificate of Incorporation andour Bylaws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delayingor preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrateattempts by our stockholders to replace or remove our management. In particular, our Certificate of Incorporation and our Bylaws andDelaware law, as applicable, among other things provide the board of directors with the ability to alter the bylaws without stockholderapproval.

 

 

Financial reporting obligations of being a publiccompany in the U.S. are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters.

 

As a publicly traded company we will incur significantadditional legal, accounting and other expenses that we did not incur as a private company. The obligations of being a public companyin the U.S. require significant expenditures and will place significant demands on our management and other personnel, including costsresulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governancepractices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act. These rules requirethe establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reportingand changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintaincompliance with. Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations willmake some activities more time-consuming and costly, particularly after we are no longer an “emerging growth company.” Inaddition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liabilityinsurance. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of theserequirements and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation, amongother potential problems.

 

Failure to maintain effective internal controlover our financial reporting in accordance with Section 404 of Sarbanes-Oxley could cause our financial reports to be inaccurate.

 

We are required pursuant to Section 404 of theSarbanes-Oxley Act, or Section 404, to maintain internal control over financial reporting and to assess and report on the effectivenessof those controls. This assessment includes disclosure of any material weaknesses identified by our management in our internal controlover financial reporting. Although we prepare our financial statements in accordance with accounting principles generally accepted inthe United States, our internal accounting controls may not meet all standards applicable to companies with publicly traded securities.If we fail to implement any required improvements to our disclosure controls and procedures, we may be obligated to report control deficiencies,in which case we could become subject to regulatory sanction or investigation. Further, such an outcome could damage investor confidencein the accuracy and reliability of our financial statements.

 

Our management has concluded that our internalcontrols over financial reporting were, and continue to be, ineffective, and as of September 30, 2021 as a result of a material weaknessin our internal controls due to the lack of segregation of duties. While management is working to remediate the material weakness, thereis no assurance that such changes, when economically feasible and sustainable, will remediate the identified material weaknesses or thatthe controls will prevent or detect future material weaknesses. If we are not able to maintain effective internal control over financialreporting, our financial statements, including related disclosures, may be inaccurate, which could have a material adverse effect onour business.

 

Our Certificate of Incorporation and Bylawsprovide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes betweenus and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or ourdirectors, officers or employees.

 

Our Certificate of Incorporation and Bylaws providethat unless we consent in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware is the soleand exclusive forum for: (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breachof a fiduciary duty owed by any director, officer or other employee of our Company to us or our stockholders, (iii) any action assertinga claim against us, our directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”)or our Certificate of Incorporation or Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine. This exclusiveforum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act orany other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federallaw claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liabilitycreated by the Exchange Act or the rules and regulations thereunder.

 

These choice of forum provisions may limit a stockholder’sability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employeesand may result in increased costs to our stockholders, which may discourage such lawsuits against us and our directors, officers and otheremployees. Alternatively, if a court were to find our choice of forum provisions contained in our Certificate of Incorporation or Bylawsto be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,which could harm our business, results of operations, and financial condition.

 

 

CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Thisprospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of theExchange Act. Any statements in this prospectus about our expectations, beliefs, plans, objectives, assumptions or future eventsor performance are not historical facts and are forward-looking statements. These statements are often, but not always, made throughthe use of words or phrases such as “believe,” “will,” “expect,” “anticipate,”“estimate,” “intend,” “plan” and “would.” For example, statements concerning financialcondition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of managementand market for our common stock are all forward-looking statements. Forward-looking statements are not guarantees of performance.They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performanceor achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied byany forward-looking statement.

 

Anyforward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this prospectus. Youshould read this prospectus and the documents that we reference herein and have filed as exhibits to the registration statement, of whichthis prospectus is part, completely and with the understanding that our actual future results may be materially different from what weexpect. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectusonly. Because the risk factors referred to on page 9 of this prospectus could cause actual results or outcomes to differ materiallyfrom those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-lookingstatements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation toupdate any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect theoccurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors willarise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors,may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the informationpresented in this prospectus, and particularly our forward-looking statements, by these cautionary statements.

 

USEOF PROCEEDS

 

TheSelling Stockholders will receive all of the proceeds from the sale of the Resale Shares offered by them pursuant to this prospectus.We will not receive any proceeds from the sale of the Resale Shares by the Selling Stockholders covered by this prospectus. However,we will receive proceeds from the exercise of the options and warrants if they are exercised for cash by the Selling Stockholders,and will use such proceeds for working capital purposes.

 

SELLINGSTOCKHOLDERS

 

This prospectus relates to the resale from time to time by the Selling Stockholders identified herein of up to an aggregate of 1,259,368 shares of common stock.

 

Thetransactions by which the Selling Stockholders acquired their securities from us were exempt under the registration provisionsof the Securities Act.

 

TheResale Shares are being registered to permit public sales of such securities, and the Selling Stockholders may offer the ResaleShares for resale from time to time pursuant to this prospectus. The Selling Stockholders may also sell, transfer or otherwisedispose of all or a portion of their Resale Shares in transactions exempt from the registration requirements of the SecuritiesAct or pursuant to another effective registration statement covering the sale of such securities.

 

Thefollowing table sets forth, based on information provided to us by the Selling Stockholders or known to us, the names of the SellingStockholders, the nature of any position, office or other material relationship, if any, which the Selling Stockholders have had,within the past three years, with us or with any of our predecessors or affiliates, and the number of shares of our common stockbeneficially owned by the Selling Stockholders before and after this offering. The number of shares owned are those beneficiallyowned, as determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership forany other purpose. Under these rules, beneficial ownership includes any shares of common stock as to which a person has sole orshared voting power or investment power and any shares of common stock that the person has the right to acquire within 60 daysthrough the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic terminationof a power of attorney or revocation of a trust, discretionary account or similar arrangement. Except as otherwise set forth herein,none of the Selling Stockholders are a broker-dealer or an affiliate of a broker-dealer.

 

 

Exceptas otherwise noted below, the address for each person or entity listed in the table is c/o RetinalGenix Technologies Inc., 1450North McDowell Boulevard, Suite 150, Petaluma, CA 94954.

 

		Beneficial Ownership of								Common Stock				Beneficial Ownership
		Common Stock Prior								Saleable				of Common Stock
		to the Offering								Pursuant				After the Offering (1)
		Number of				Percent of				to This				Number of				Percent of
Name of Selling Shareholder		Shares				Class (2)				Prospectus				Shares				Class (2)
Morland G. McManigal Trust (3)			50,000				*				22,500				27,500				*
Christopher Elbers			34,000				*				15,300				18,700				*
David Nissen			107,500				*				48,375				59,125				*
Karl Moll			45,000				*				20,250				24,750				*
Michael Sordelli			50,000				*				22,500				27,500				*
Forge Trust Co CFBO Philip Petruzzelli (4)			16,500				*				7,425				9,075				*
Forge Trust Co CFBO (Jeffrey N. Allen) (SEP IRA Acct #561009) (5)			150,001				1.05	%			67,500				82,501				*
Gary LeBlanc			50,000				*				22,500				27,500				*
James Banister and Michele Banister JT			25,000				*				11,250				13,750				*
Suess & Rapkin Family Trust (46)			8,371				*				3,766				4,605				*
William Wilson and Carolyn Wilson JT			9,000				*				4,050				4,950				*
Steven Hawthorne and Jeanne Hawthorne JT			15,000				*				6,750				8,250				*
Steven M. Nass and Suzanne M. Nass JT			25,000				*				11,250				13,750				*
The Rostad Family Trust (6)			30,000				*				13,500				16,500				*
Richard Waltz and Martha Waltz JT			5,000				*				2,250				2,750				*
Jeffrey Banister and Milissa Banister JT			12,500	(7)			*				450				12,050				*
Basem Kandah			5,000				*				2,250				2,750				*
Bill Pelzl and Tracie Pelzl JT			10,000				*				4,500				5,500				*
Theresa D. Gifford Revocable Trust (8)			50,000				*				22,500				27,500				*
David Rodin as Trustee under trust instrument dated March 2, 2010 and Heather Yeckes Rodin as Trustee under trust instrument dated March 1, 2010 (9)			10,000				*				4,500				5,500				*
Lawrence Pabst			100,000				*				45,000				55,000				*
Barbara T. Maddox Revocable Living Trust dated March 13, 2000 (10)			6,667				*				3,000				3,667				*
Dianne C. DeBoest Revocable Trust, dated January 28, 2013, as amended, Dianne C. DeBoest Grantor (11)			30,069				*				13,531				16,538				*
Survivors Trust of the Hans and Elsie Van Boldrik Trust of 1982 (12)			10,000				*				4,500				5,500				*
Provident Trust Group FBO, Douglas Bertsch ROTH IRA3201389 (13)			23,333				*				10,499				12,834				*
Hayden Hosford			160,000				1.12	%			67,500				92,500				*
Mark Manning and Carrie Manning JT			45,000				*				20,250				24,750				*
Nestor Sala II			20,000				*				9,000				11,000				*
The Liza and Steve Trust of 2013 (14)			10,000				*				4,500				5,500				*
Greg Schultz and Diane Schultz JT			15,000				*				6,750				8,250				*
The Boston Strong Trust (15)			165,000				1.16	%			74,250				90,750				*
Patricia Skovron			11,670				*				5,251				6,419				*
Gary A. Banister and Janice D. Banister Trust dated February 2000 (16)			50,000				*				22,500				27,500				*
Forge Trust Co CFBO (Monique Slone) (IRA Acct # 747130) (17)			25,000				*				11,250				13,750				*
Dana Seymour			12,850				*				5,782				7,068				*
Joseph Caprioni			20,000				*				9,000				11,000				*
Deborah Gisonni and Joseph Prestipino TTEES (18)			10,000				*				4,500				5,500				*
The Raymond William Kaliski and Carla Daro Kaliski Family Trust (19)			16,667				*				7,500				9,167				*
The Donald and Joan Hansen Trust dated 6-1-1993 (20)			20,000				*				9,000				11,000				*
Nick Moudakis and Andrea Moudakis JT			25,000				*				11,250				13,750				*
The Kinnear Trust dated July 13, 2000 (21)			15,000				*				6,750				8,250				*
Clark W. Nicholls			5,000				*				2,250				2,750				*
Jillian Eddy			5,000				*				2,250				2,750				*
Emad Nimri and Ruba Nimri JT			10,000				*				4,500				5,500				*
Isaac Triscell			5,000				*				2,250				2,750				*
Kristine Cesena			13,333				*				5,999				7,334				*
Fred Chasalow and Sandra Chasalow JT			25,000				*				11,250				13,750				*

 

 

Marcia M. Fenning Trust UA DTD 11/19/73 (22)			7,500				*				3,375				4,125				*
Barbara Lewicki			78,580				*				35,361				43,219				*
Forge Trust Co CFBO (Peter J Migale) (IRA Acct# 705597) (23)			194,334				1.37	%			87,450				106,884				*
Jan and Judith Ann Hervert Trust Dated February 10, 2021 (24)			15,000				*				6,750				8,250				*
Provident Trust Group FBO, Leslie D. Hellewell ROTH IRA110800021 (25)			15,000				*				6,750				8,250				*
Eric P. Werner and Michele A. Werner Revocable Living Trust (26)			16,762				*				7,542				9,220				*
Rick Slyter and Kathy Slyter JT			6,000				*				2,700				3,300				*
Dennett Kouri, Jr.			7,500				*				3,375				4,125				*
Karolyn Sowle			5,000				*				2,250				2,750				*
Frank Anthony Filangeri			8,000				*				3,600				4,400				*
Lori Rheaume			15,200				*				6,840				8,360				*
Gallagher Family Trust dated May 24, 2004 (27)			10,000				*				4,500				5,500				*
Gloria Morabito			7,500				*				3,375				4,125				*
Forge Trust Co CFBO (Regina Martinelli) (IRA Acct# 722765) (28)			5,000				*				2,250				2,750				*
Daniel McCauley			7,676				*				3,454				4,222				*
Forge Trust Co CFBO (Byron Scott Plumley) (IRA Acct# 842515) (29)			5,000				*				2,250				2,750				*
Forge Trust Co CFBO (Brad Nelson Whalen) (IRA759570) (30)			10,000				*				4,500				5,500				*
Lanier W. Moore II Trustee as His Sole Separate Property			175,000				1.23	%			78,750				96,250				*
PDS Trust, dtd 10/18/2000 (31)			102,500				*				46,125				56,375				*
Patricia Sheehan CFBO, Ashley Godshall (32)			3,333				*				1,499				1,834				*
Patricia Sheehan CFBO, James Sanborn (33)			3,333				*				1,499				1,834				*
Patricia Sheehan CFBO, Lindsay Doyle (34)			3,334				*				1,500				1,834				*
Patricia Sheehan CFBO The Sanborn Revocable Living Trust (35)			10,000				*				4,500				5,500				*
Patricia Sheehan CFBO William C. Frankmore and Shelby S. Frankmore (36)			15,000				*				6,750				8,250				*
Patricia Sheehan CFBO Sheehan Family Trust, December 6, 2008 (37)			20,000				*				9,000				11,000				*
Bruce Blakely			115,000	(38)			*				51,750				63,250				*
Forge Trust Co CFBO (Bruce W. Blakely) (ROTH IRA ACCT#613009) (39)			50,000				*				22,500				27,500				*
Charles Dorn			27,601	(40)			*				12,420				15,181				*
Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358 (41)			7,000				*				3,150				3,850				*
Scott Fenning			70,000				*				31,500				38,500				*
Philip Petruzzelli			26,500	(42)			*				11,925				14,575				*
Hans Van Boldrik			15,000	(43)			*				6,750				8,250				*
Renson Revocable Trust (44)			10,000				*				4,500				5,500				*
Fred Chasalow			65,000	(45)			*				29,250				35,750				*
Lisa Arbisser			25,000				*				11,250				13,750				*
Cynthia Matossian			10,000				*				4,500				5,500				*
Christopher Lanoue			10,000				*				4,500				5,500				*
George Coyne			5,000				*				2,250				2,750				*
Robert Epstein			25,000				*				11,250				13,750				*
Eugene Harrison			50,000				*				22,500				27,500				*
TOTAL											1,259,368

 

*Less than 1%.

 

 

(1) Assumes that all of the Resale Shares held bythe Selling Stockholders covered by this prospectus are sold and that the Selling Stockholders acquire no additional shares of commonstock before the completion of this offering. However, as the Selling Stockholders can offer all, some, or none of their Resale Shares,no definitive estimate can be given as to the number of Resale Shares that the Selling Stockholders will ultimately offer or sell underthis prospectus.

(2) Calculated based on 14,282,314 sharesof common stock issued and outstanding as of January 19, 2022.

(3) Joy McManigal is the Trustee of MorlandG. McManigal Trust and in such capacity has the right to vote and dispose of the securities held by such trust.

(4) Philip Petruzzelli is the Beneficiary of ForgeTrust Co CFBO Philip Petruzzelli and in such capacity has the right to vote and dispose of the securities held in such IRA.

(5) Jeffrey Allen is the Beneficiary of ForgeTrust Co CFBO (Jeffrey N. Allen) (SEP IRA Acct #561009) and in such capacity has the right to vote and dispose of the securitiesheld in such IRA.

(6) Michael Rostad and Sandra Rostad are Co-Trusteesof The Rostad Family Trust and in such capacity have the right to vote and dispose of the securities held by such trust.

(7) Represents (i) 1,000 shares of commonstock and (ii) 11,150 shares of common stock issuable upon exercise of warrants.

(8) Marshall Gifford is the Trustee of the TheresaD. Gifford Revocable Trust and in such capacity has the right to vote and dispose of the securities held by such trust.

(9) David Rodin is the Trustee under trust instrumentdated March 2, 2010 and Heather Yeckes Rodin is Trustee under trust instrument dated March 1, 2010 and in such capacity have the rightto vote and dispose of the securities held by such trust.

(10) Barbara Maddox is the Trustee of the BarbaraT. Maddox Revocable Living Trust dated March 13, 2000 and in such capacity has the right to vote and dispose of the securities held bysuch trust.

(11) Dianne C. DeBoest is the Trustee of the DianneC. DeBoest Revocable Trust, dated January 28, 2013, as amended, Dianne C. DeBoest Grantor and in such capacity that has the right to voteand dispose of the securities held by such trust.

(12) Hans Van Boldrik is the Trustee of the SurvivorsTrust of the Hans and Elsie Van Boldrik Trust of 1982 and in such capacity has the right to vote and dispose of the securitiesheld by such trust.

 

 

(13) Douglas Bertsch is the Beneficiary of the ProvidentTrust Group FBO, Douglas Bertsch ROTH IRA3201389 and in such capacity has the right to vote and dispose of the securities held in theRoth IRA.

(14) Steven H. Wilhelm is the Trustee of the Lizaand Steve Trust of 2013 and in such capacity has the right to vote and dispose of the securities held by such trust.

(15) Dessislava Boneva is the Trustee of The BostonStrong Trust and in such capacity has the right to vote and dispose of the securities held by such trust.

(16) Gary Banister is the Trustee of the Gary A. Banisterand Janice D. Banister Trust dated February 2000 and in such capacity has the right to vote and dispose of the securities held by suchtrust.

(17) Monique Slone is the Beneficiary of ForgeTrust Co CFBO (Monique Slone) (IRA Acct # 747130) and in such capacity has the right to vote and dispose of the securitiesheld in such IRA.

(18) Deborah Gisonni and Joseph Prestipino arethe trustees of the Deborah Gisonni and Joseph Prestipino TTEES and in such capacity has the right to vote and disposeof the securities held by such trust.

(19) Raymond Kaliski is the Trustee of The RaymondWilliam Kaliski and Carla Daro Kaliski Family Trust and in such capacity has the right to vote and dispose of the securities held by suchtrust.

(20) Donald C. Hansen and Joan C. Hansen are the Co-Trusteesof The Donald and Joan Hansen Trust dated 6-1-1993 and in such capacity have the right to vote and dispose of the securities held by suchtrust.

(21) John C. Kinnear III and Barbara E. Kinnear arethe Co-Trustees of the Kinnear Trust dated July 13, 2000 and in such capacity have the right to vote and dispose of the securities heldby such trust.

(22) Marcia Fenning is the Trustee of theMarcia M. Fenning Trustee Marcia M. Fenning Trust UA DTD 11/19/73 and in such capacity has the right to vote and dispose of the securitiesheld by such trust.

(23) Peter Migale is the Beneficiary of ForgeTrust Co CFBO (Peter J Migale) (IRA Acct# 705597) and in such capacity has the right to vote and dispose of the securities heldin such IRA.

 

 

(24) Jan Hervert is the Trustee of the Janand Judith Ann Hervert Trust Dated February 10, 2021 and in such capacity has the right to vote and dispose of the securities held bysuch trust.

(25) Leslie Hellewell is the Beneficiary ofthe Provident Trust Group FBO, Leslie D. Hellewell ROTH IRA110800021 and in such capacity has the right to vote and dispose of the securitiesheld in such Roth IRA.

(26) Michele Werner is the Trustee of theEric P. Werner and Michele A. Werner Revocable Living Trust and in such capacity has the right to vote and dispose of the securitiesheld by such trust.

(27) Cathy Gallagher is the Trustee of theGallagher Family Trust dated May 24, 2004 and in such capacity has the right to vote and dispose of the securities held by such trust.

(28) Regina Martinelli is the Beneficiaryof Forge Trust Co CFBO (Regina Martinelli) (IRA Acct# 722765) and in such capacity has the right to vote and dispose of the securitiesheld in such IRA.

(29) Scott Plumley is the Beneficiary of theForge Trust Co CFBO (Byron Scott Plumley) (IRA Acct# 842515) and in such capacity has the right to vote and dispose of the securitiesheld in such IRA.

(30) Brad Whalen is the Beneficiary of theForge Trust Co CFBO (Brad Nelson Whalen) (IRA759570) and in such capacity has the right to vote and dispose of the securities held insuch IRA.

(31) Patricia Sheehan is the Trustee of PDS Trust, dtd 10/18/2000and in such capacity has the right to vote and dispose of the securities held by such trust.

(32) Patricia Sheehan is the Custodian ofPatricia Sheehan CFBO, Ashley Godshall and in such capacity has the right to vote and dispose of the securities held by such trust.

(33) Patricia Sheehan is the Custodian ofPatricia Sheehan CFBO, James Sanborn and in such capacity has the right to vote and dispose of the securities held by such trust.

(34) Patricia Sheehan is the Custodian ofPatricia Sheehan CFBO, Lindsay Doyle and in such capacity has the right to vote and dispose of the securities held by such trust.

(35) Patricia Sheehan is the Custodian ofPatricia Sheehan CFBO The Sanborn Revocable Living Trust and in such capacity has the right to vote and dispose of the securities heldby such trust.

(36) Patricia Sheehan is the Custodian ofPatricia Sheehan CFBO William C. Frankmore and Shelby S. Frankmore and in such capacity has the right to vote and dispose of the securitiesheld by such trust.

(37) Patricia Sheehan is the Custodian ofCFBO Sheehan Family Trust, December 6, 2008 and in such capacity has the right to vote and dispose of the securities held by such trust.

(38) Represents (i) 65,000 shares of common stockheld by Bruce Blakely and (ii) 50,000 shares of common stock held by Forge Trust Co CFBO (Bruce W. Blakely) (ROTH IRA ACCT#613009). BruceBlakely is the Beneficiary of Forge Trust Co CFBO (Bruce W. Blakely) (ROTH IRA ACCT#613009) and in such capacity has the right to voteand dispose of the securities held in such IRA.

(39) Bruce Blakely is the Beneficiary of ForgeTrust Co CFBO (Bruce W. Blakely) (ROTH IRA ACCT#613009) and in such capacity has the right to vote and dispose of the securities heldin such IRA.

(40) Represents (i) 20,601 shares of commonstock held by Charles Dorn and (ii) 7,000 shares of common stock held by Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358. CharlesDorn is the Beneficiary of Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358 and in such capacity has the right to vote and disposeof the securities held in such Roth IRA.

(41) Charles Dorn is the Beneficiary of ProvidentTrust Group FBO, Chuck Dorn ROTH IRA3201358 and in such capacity has the right to vote and dispose of the securities held in such RothIRA.

 

 

(42) Represents (i) 10,000 shares of commonstock held by Philip Petruzzelli and (ii) 16,500 shares of common stock held by Forge Trust Co CFBO Philip Petruzzelli. Philip Petruzzelliis the Beneficiary of Forge Trust Co CFBO Philip Petruzzelli and in such capacity has the right to vote and dispose of the securitiesheld in such IRA.

(43) Represents (i) 5,000 shares of commonstock held by Hans Van Boldrik and (ii) 10,000 shares of common stock held by Survivors Trust of the Hans and Elsie Van Boldrik Trustof 1982. Hans Van Boldrik is the Trustee of the Survivors Trust of the Hans and Elsie Van Boldrik Trust of 1982 and in such capacityhas the right to vote and dispose of the securities held by such trust.

(44) Sheila Quan is the Trustee ofRenson Revocable Trust and in such capacity has the right to vote and dispose of the securities held by such trust.

(45) Represents (i) 40,000 shares of common stock held by FredChasalow and (ii) 25,000 shares of common stock held by Fred Chasalow and Sandra Chasalow JT.

(46) Amido Rapkin and James Suess are theTrustees of Suess & Rapkin Family Trust and in such capacity have the right to vote and dispose of the securities held by such trust.

 

PLANOF DISTRIBUTION

 

Up to 1,259,368 shares of common stock arebeing offered by this prospectus, all of which are being registered for sale for the accounts of the Selling Stockholders. We will notreceive any of the proceeds from the sale by the Selling Stockholders of the Resale Shares. We will bear all fees and expenses incidentto this registration.

 

The Selling Stockholders may sell all or a portionof the Resale Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealersor agents. If the Resale Shares are sold through underwriters or broker-dealers, the Selling Stockholders will be responsible for underwritingdiscounts or commissions or agent’s commissions. The Selling Stockholders may sell their Resale Shares in one or more transactionsat fixed prices, at prevailing market prices at the time of the sale (if a public market exists), at varying prices determined at thetime of sale, or at negotiated prices. All sales may be effected in transactions, which may involve crosses or block transactions:

 

	●	on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
	●	in the over-the-counter market;
	●	in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
	●	through the writing of options, whether such options are listed on an options exchange or otherwise;
	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	an exchange distribution in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
	●	sales pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, if available, rather than under this prospectus;
	●	broker-dealers may agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per share;

 

 

	●	a combination of any such methods of sale; and
	●	any other method permitted pursuant to applicable law.

 

Ifthe Selling Stockholders effect such transactions by selling Resale Shares to or through underwriters, broker-dealers or agents,such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions fromthe Selling Stockholders or commissions from purchasers of the Resale Shares for whom they may act as agent or to whom they maysell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may bein excess of those customary in the types of transactions involved). In connection with sales of the Resale Shares or otherwise,the Selling Stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of sharesof common stock in the course of hedging in positions they assume. The Selling Stockholders may also sell shares of common stockshort and deliver Resale Shares covered by this prospectus to close out short positions and to return borrowed common stock inconnection with such short sales. The Selling Stockholders may also loan or pledge common stock to broker-dealers that in turnmay sell such shares of common stock.

 

TheSelling Stockholders may pledge or grant a security interest in some or all of the Resale Shares owned by them and, if they defaultin the performance of their secured obligations, the pledgees or secured parties may offer and sell the Resale Shares from timeto time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision ofthe Securities Act, amending, if necessary, the list of Selling Stockholders to include the pledgee, transferee or other successorsin interest as Selling Stockholders under this prospectus. The Selling Stockholders also may transfer and donate the Resale Sharesin other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficialowners for purposes of this prospectus.

 

TheSelling Stockholders and any broker-dealer participating in the distribution of the Resale Shares may be deemed to be “underwriters”within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealermay be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the ResaleShares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of ResaleShares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts,commissions and other terms constituting compensation from the Selling Stockholders and any discounts, commissions or concessionsallowed or reallowed or paid to broker-dealers.

 

Underthe securities laws of some states, the Resale Shares may be sold in such states only through registered or licensed brokers ordealers. In addition, in some states the Resale Shares may not be sold unless such securities have been registered or qualifiedfor sale in such state or an exemption from registration or qualification is available and is complied with.

 

Therecan be no assurance that any Selling Stockholders will sell any or all of the Resale Shares registered pursuant to the registrationstatement, of which this prospectus forms a part.

 

TheSelling Stockholders and any other person participating in such distribution will be subject to applicable provisions of the ExchangeAct and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limitthe timing of purchases and sales of any of the Resale Shares stock by the Selling Stockholders and any other participating person.Regulation M may also restrict the ability of any person engaged in the distribution of the Resale Shares to engage in market-makingactivities with respect to the Resale Shares. All of the foregoing may affect the marketability of the Resale Shares and the abilityof any person or entity to engage in market-making activities with respect to the Resale Shares.

 

DESCRIPTIONOF SECURITIES

 

General

 

Ourauthorized capital stock consists of 80,000,000 shares of common stock, par value $0.0001 per share, and 40,000,000 shares ofpreferred stock, par value $0.0001 per share.

 

 

As of January 19, 2022, there were 104 record holders of our common stock. As of January 19, 2022 there were 14,282,314 shares of common stock and no shares of preferred stock issued and outstanding.

 

The following description of our capital stock isintended as a summary only and is qualified in its entirety by reference to our Certificate of Incorporation and Bylaws whichare filed as exhibits to the registration statement of which this prospectus is a part.

 

CommonStock

 

Weare authorized to issue up to a total of 80,000,000 shares of common stock, par value $0.0001 per share. Holders of our common stockare entitled to one vote for each share held on all matters submitted to a vote of our stockholders. Holders of our common stock haveno cumulative voting rights, preemptive or conversion rights or other subscription rights. Upon our liquidation, dissolution orwinding-up, holders of our common stock are entitled to share in all assets remaining after payment of all liabilities and the liquidationpreferences of any of our outstanding shares of preferred stock. Subject to preferences that may be applicable to any outstanding sharesof preferred stock, holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by ourboard of directors out of our assets which are legally available.

 

Theholders of a majority of the shares of our capital stock, represented in person or by proxy, are necessary to constitute a quorumfor the transaction of business at any meeting. If a quorum is present, an action by stockholders entitled to vote on a matteris approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, withthe exception of the election of directors, which requires a plurality of the votes cast.

 

PreferredStock

 

Ourboard of directors will have the authority, without further action by the stockholders, to issue up to 40,000,000 shares of preferredstock in one or more series and to fix the designations, powers, preferences, privileges, and relative participating, optional,or special rights as well as the qualifications, limitations, or restrictions of the preferred stock, including dividend rights,conversion rights, voting rights, terms of redemption, and liquidation preferences, any or all of which may be greater than therights of the common stock. Our board of directors, without stockholder approval, will be able to issue preferred stock with voting,conversion, or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferredstock could be issued quickly with terms calculated to delay or prevent a change of control or make removal of management moredifficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock,and may adversely affect the voting and other rights of the holders of common stock.

 

Options

 

Our 2017 Equity Incentive Plan provides for us to issue up to 10,000,000 shares of common stock as restricted shares, incentive stock options, nonqualified stock options, stock appreciation rights or restricted stock unit awards to our and our subsidiaries’ employees, members of the board of directors and consultants. As of January 19, 2022, 1,820,000 options to purchase common stock pursuant to our 2017 Equity Incentive Plan were outstanding. For additional information regarding the terms of the 2017 Equity Incentive Plan, see “Executive and Director Compensation — 2017 Equity Incentive Plan.”

 

Warrants

 

As of January 19, 2022, warrants to purchase upto 199,000 shares of our common stock were outstanding and pre-funded warrants to purchase up to 28,014,540 shares of our common stock wereoutstanding.

 

ExclusiveForum

 

OurCertificate of Incorporation and Bylaws provide that unless we consent in writing to the selection of an alternative forum, theState of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us, (ii) any actionasserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of our Company to us or our stockholders,(iii) any action asserting a claim arising pursuant to any provision of the DGCL of our Certificate of Incorporation or Bylaws or (iv)any action asserting a claim governed by the internal affairs doctrine.

 

Anti-TakeoverProvisions of Delaware Law, our Certificate of Incorporation and our Bylaws

 

DelawareLaw

 

Weare governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publiclytraded Delaware corporation from engaging in a business combination with an interested stockholder for a period of three yearsafter the date of the transaction in which the person became an interested stockholder, unless the business combination is approvedin a prescribed manner. A business combination includes mergers, asset sales or other transactions resulting in a financial benefitto the stockholder. An interested stockholder is a person who, together with affiliates and associates, owns (or within threeyears, did own) 15% or more of the corporation’s voting stock, subject to certain exceptions. The statute could have theeffect of delaying, deferring or preventing a change in control of our Company.

 

 

Advance NoticeRequirements for Stockholder Proposals and Director Nominations

 

Our Bylaws provide that stockholders seeking tobring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting ofstockholders, must provide timely notice of their intent in writing. To be timely, a stockholder’s notice must be delivered toour secretary at our Company’s principal executive offices not later than the close of business on the 90th day nor earlierthan the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided,however, that in the event the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date,or if no annual meeting was held in the preceding year, notice by the stockholder must be delivered not earlier than the close of businesson the 120^th day prior to such annual meeting and not later than the 90^th day prior to such annual meeting or the10^th day following the day on which a public announcement of the date of such meeting is first made by the Company. Theseprovisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations fordirectors at our annual meeting of stockholders.

 

Authorizedbut Unissued Shares

 

Ourauthorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval andmay be utilized for a variety of corporate purposes, including future private or public offerings to raise capital, corporateacquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock couldrender more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

 

TransferAgent and Registrar

 

Thetransfer agent and registrar for our common stock is Continental Stock Transfer and Trust at 1 State Street, Floor 30, New York,NY 10004.

 

DESCRIPTIONOF BUSINESS

 

BusinessOverview

 

Weare an ophthalmic research and development company focused on developing technologies to screen, monitor, diagnose and treat ocular,optical, and sight-threatening disorders. Our mission is to prevent vision loss and blindness due to diabetic retinopathy andmaculopathy through two devices: (1) Retinal Imaging Screening Device, a portable, retinal imaging system providinga 200-degree field of view without requiring pupil dilation; and (2) RetinalCam^TM, a home monitoring and imagingdevice offering real-time communication with physicians available 24/7.

 

One of the effects of diabetes is retinopathy, andsubsequent diabetic maculopathy, characterized by loss of visual function through occlusion of image transmission externally, internallyor by destruction of the image sensors in the macula themselves. The macula contains the majority and highest density of color and visionlight sensors with providing maximum visual image resolution. Signals are passed through the retinal nerve fiber layer to the optic nerve,an extension of the brain, accumulating retinal nerve bundles forming trunks of connections to pass signals to the brain. The final imagesare processed at the occipital lobe. When the retina degenerates, patients experience loss of vision due to bleeding, retinaldetachment, and other factors. Retinopathy in diabetes can also lead to a degenerative maculopathy, a progressive disease that can leadto vision loss and permanent blindness. Early detection for all causes of visual loss leading to macula disruption, destruction and occlusionare critical in preventing blindness in any form, and most importantly where progression is possible. We believe if detected early andproperly treated, the progression of retinopathy can be slowed or even stopped, so that vision can be maintained.

 

Currently, the standard of care requires patientsphysically go into an office to have their pupil dilated, which, among other things, is costly, time consuming and may cause the patientdiscomfort. Instead of dilating pupils, some physicians opt to instead use a microscope-like device to detect early signs of diabeticretinopathy, but most such devices have a fixed field of view, typically between 20 to 50 degrees, and therefore, because thelimited field of view, do not allow view of the periphery, where retinopathy typically begins, and may not detect signsof retinopathy. By the time the retinopathy reaches the center of the eye and can be seen by such instruments with a limited field ofview, it can be too late to treat and may result in blindness. Currently, the only way for a physician to see changes in the peripheryof the eye is by an exam after dilation through use of an instrument that has a 200 degree field of view. A patient, when seen withouta dilated eye exam, may be misled to believe there is no evidence of retinopathy during the early stages, because, without dilation,such diagnosis can be easily missed.

 

 

We are in the process of developing two productsaimed at preventing loss of vision. Specifically, we are developing (1) the RetinalGeniX^TM Imaging System, a diabeticnon-mydriatic mass retinal imaging and screening device and (2) the RetinalCam^TM, a real-time in-home retinal monitoring,imaging, and physician alert system.

 

RetinalGeniX^TM Imaging System –Diabetic Non-Mydriatic Mass Retinal Imaging and Screening Device

 

RetinalGeniX^TM is a portable diabeticnon-mydriatic mass retinal imaging screening device with a high resolution 200-degree field of view. It is intended to be a cost-effective,ultra-wide imaging technology used to examine the periphery of the retina, without the need for dilation. It can also be used to screenpatients for neurological diseases and detect early signs of diabetic retinopathy. We believe RetinalGeniX^TM may detect avariety of health issues including diabetes, retinopathy, ocular tumors, Alzheimer’s and autoimmune diseases, without the discomfortassociated with pupil dilation. We believe RetinalGeniX^TM will enable ophthalmologists, retinal specialists and optometriststo perform a more accurate screening with an improved field of view in less than one minute at a low-cost.

 

RetinalCam^TM – Real-TimePatient In-Home Retinal Monitoring, Imaging, and Physician Alert System

 

RetinalCam^TM is an in-home ocularand retinal monitoring device which allows individuals at high risk of vision loss or blindness to alert their physicianof any vision changes on a real-time basis from their home. The images generated by RetinalCam^TM may providecritical information in detecting abnormalities upon onset, potentially preventing degradation of a patient’s ocular health thatmight result in vision loss of blindness, if left untreated. RetinalCam^TM connects directly to the internet or usesWi-Fi to capture and transmit high resolution digital images directly to doctors from a patient’s home. Patients at riskinclude those with obesity, diabetes, cardiovascular disorders, macular degeneration, neurological disorders, ocular tumors, physicaldisabilities and individuals that lack regular access to eyecare. The images captured by RetinalCam^TM may allow patientsto detect any changes that may have occurred since their prior screenings.

 

Webelieve RetinalCam^TM may offer an opportunity to prevent blindness by early detection of progression by high-risk individuals.In addition, we believe, future treatments targeted at COVID-19 may have toxic effects on the macula, which would result in apatient requiring close monitoring of their eyes. In July 2020, a study published in the European Association for the Study of DiabetesJournal, reported 46% of COVID-19 patients with diabetic maculopathy experienced vascular changes in the retina periphery. We anticipatethe high incidence of microvascular changes may demonstrate a potential sign of the severity and a risk factor for death in COVID-19patients with diabetic maculopathy.

 

As of the date of this prospectus, we do not haveany products approved for sale and have not generated any revenue from product sales. We anticipate that we will need an additional $5,000,000to complete product design and testing for RetinalGenix^TM and RetinalCam^TM and submit RetinalGenix^TMfor FDA clearance as we believe RetinalCam^TM will be considered a Class II exempt medical device because it is non-diagnosticin nature, and therefore, we do not anticipate needing 510(k) clearance from the FDA to market such product. We intend to obtain suchfunding through the sales of our equity and debt securities and/or through potential strategic partnerships; however, no assurance canbe provided that funds will be available to us on acceptable terms, if at all.

 

Recent Developments

 

On December27, 2021, we entered into an exchange agreement with Sanovas Ophthalmology, LLC pursuant to which we exchanged 28,014,540 shares of ourcommon stock held by Sanovas Ophthalmology, LLC for a pre-funded warrant to purchase up to an aggregate of 28,014,540 shares of our commonstock. The pre-funded warrant is immediately exercisable at an exercise price of $0.0001 per share and terminates when exercisedin full. 

 

On November21, 2021, our board of directors rescinded the 3,000,000 shares of Series F preferred stock issued to Halo Management GroupLLC for lack of contract consideration.

 

MarketOpportunity

 

According to Reuters, 2.1 billion people, or nearly30% of the world’s population is obese or overweight, and according to the World Health Organization, obesity has reached epidemicproportions with at least 2.8 million people dying each year as a result of being overweight or obese. Obesity is a major risk factorin diseases including, but not limited to, diabetes. Globally, 39% of adults and 18% of children and adolescents are overweight or obese.In most high income countries, about two-thirds of adults are overweight or obese, and in the U.S. 70% are overweight or obese. Accordingto The International Federation of Diabetes, there were 463 million adults worldwide with diabetes in 2019, and it is estimated thatby 2045, there will be 700 million adults worldwide with diabetes. Furthermore, a 2017 study published by the National Institutes ofHealth indicated that diabetic retinopathy affects approximately 35% of diabetics and is a leading cause of blindness worldwide. Accordingto the Centers for Disease Control and Prevention, 34.2 million patients in the U.S. have diabetic maculopathy with 26.9 million diagnosedand 7.3 million undiagnosed. In addition, 88 million adult Americans are pre-diabetics of which 84%, or 74 million, are undiagnosed.Diabetic maculopathy effects 500 million patients globally.

 

 

Competition

 

Theophthalmic medical technology industries utilize rapidly advancing technologies and are characterized by intense competition. There isa strong emphasis on intellectual property and proprietary products. We face competition from different sources including ophthalmicmedical technology companies, academic institutions, government agencies, and public and private research institutions. For example,we face competition from Optomed plc. (“Optomed”), Optos plc (“Optos”) and Zeiss with respect to our RetinalGeniX^TMImaging System. Optos has developed and is currently globally marketing a wide screen imaging system that has a 200 degree fieldof view that screens for diabetic retinopathy, and Optomed has developed and is currently globally marketing a wide screen imaging systemthat has a 150 degree field of view that screens for diabetic retinopathy. Zeiss has developed and is currently globally marketing awide screen imaging system that has a 200 degree field of view that screens for diabetic retinopathy. Although we face competition withrespect to our RetinalGeniX^TM Imaging System, we do not believe we face competition with respect to our RetinalCam^TM.

 

Many of our competitors have significantly greater financialresources and expertise in research and development, medical device development and obtaining regulatory approvals than us aswell as more established distribution networks and relationships with healthcare providers. Mergers and acquisitions in the ophthalmicmedical technology industries may result in even more resources being concentrated among a smaller number of our competitors.These competitors also compete with us in recruiting and retaining qualified personnel, as well as in acquiring technologies complementaryto our products.

 

Manufacturingand Distribution

 

On June 24, 2021, we entered intoan Amended and Restated Master Services Agreement (“Master Services Agreement”) with ADM Tronics Unlimited, Inc.(“ADM Tronics”), pursuant to which ADM Tronics will provide us with design, engineer and provide regulatory servicesrelated to RetinalGenix^TM and RetinalCam^TM.

 

On October 8, 2019, we entered into an optionexchange agreement (the “Option Exchange Agreement”) with Diopsys, Inc. (“Diopsys”) pursuant towhich we shall issue Diopsys an option to purchase up to 10% of our issued and outstanding shares of common stock and Diopsysshall issue us an option to purchase up to 10% of the issued and outstanding shares of common stock of Diopsys on the Closing Date(the “Option Exchange”). “Closing Date” means a date that is within 30 days of the date that all of the contingenciesset forth in the Option Exchange Agreement are satisfied including, but not limited to, approval of a product by the FDA. In addition,pursuant to the Option Exchange Agreement, upon the closing of the Option Exchange, we shall enter into an exclusive distribution agreementwith Diopsys pursuant to which Diopsys shall act as our exclusive distributor of such product.

 

IntellectualProperty Portfolio

 

Oursuccess depends in large part on our ability to protect our proprietary technologies and information, and to operate without infringingthe proprietary rights of third parties. We rely on a combination of patent, trade secret, trademark, and copyright laws, as wellas confidentiality and other agreements, to establish and protect our proprietary rights. In addition to patent protection, werely on trade secrets, proprietary know-how, and continuing technological advances to develop and maintain our competitive position.Our goal is to obtain, maintain and enforce patent protection for our products, preserve our trade secrets, and operate withoutinfringing on the proprietary rights of other parties.

 

Sublicense Agreement with Sanovas OphthalmologyLLC

 

On June 24, 2021, we entered into a sublicense agreement(“Sublicense Agreement”) with Sanovas Ophthalmology LLC (“Sanovas Ophthalmology”) pursuant to which Sanovas Ophthalmologygranted us an exclusive worldwide (“Territory”) license to certain intellectual property, including four patents,two patent applications, and two trademark applications, licensed to Sanovas Ophthalmology by Sanovas Intellectual PropertyLLC relating to certain technologies for eye and ocular visualization and monitoring (“Licensed IP”) for uses related tothe screening, examination, diagnosis, prevention and/or treatment of any eye disease, medical condition or disorder, or any disease,medical condition or disorder affecting the eye. The Licensed IP which has been issued by the USPTO and relates to methods of use andsystems expires on dates ranging from September 2034 to December 2034, and the Licensed IP which is still pending before the USPTO alsorelates to methods of use and systems. Pursuant to the Sublicense Agreement, commencing on the date of the first commercial sale of aLicensed Product (as defined in the Sublicense Agreement), in each country in the Territory and continuing on a country by country basisuntil the expiration or termination of the last Valid Claim (as defined herein) of a licensed patent in such country (the “RoyaltyEnd Date”), we shall pay Sanovas Ophthalmology a royalty equal to a mid single digit percentage of any Net Sales (as defined inthe Sublicense Agreement) of any Licensed Product. “Valid Claim” means an issued, unexpired patent claim contained ina licensed patent as long as the claim has not been admitted by Sanovas Intellectual Property, LLC, the owner of the Licensed IP, orotherwise caused to be invalid or unenforceable through reissue, disclaimer or otherwise, or held invalid or unenforceable by a tribunalor governmental agency of competent jurisdiction from whose judgment no appeal is allowed or timely taken. The Sublicense Agreementshall continue until the Royalty End Date, unless earlier terminated pursuant to its terms. The Sublicense Agreement may be terminatedby either party if the other party materially breaches the Sublicense Agreement in a manner that cannot be cured, or materially breachesthe Sublicense Agreement in a manner that can be cured, and such breach remains uncured for more than 30 days after the receipt by thebreaching party of notice specifying the breach. Furthermore, we may terminate the Sublicense Agreement at any time upon 90 days writtennotice to Sanovas Ophthalmology.

 

GovernmentRegulations

 

Ourbusiness is subject to extensive, complex, and rapidly changing federal and state laws and regulations. Various federal and stateagencies have discretion to issue regulations any interpret and enforce healthcare laws. While we believe we comply in all materialrespects with applicable healthcare laws and regulations, these regulations can vary significantly from jurisdiction, and interpretationof existing laws and regulations may change periodically. Federal and state legislatures also may enact various legislative proposalsthat could materially impact certain aspects of our business.

 

United States Regulations

 

In the United States, medical devices are classifiedinto one of three classes (e.g., Class I, II or III). The class to which the device is assigned determines, among other things, the typeof pre-marketing submission and application required for FDA clearance or approval to market. If a device is classifiedas Class I or II, unless otherwise exempt, it requires a 510(k) pre-market notification and clearance, or grant a de novo request,prior to marketing. Under FDA regulations, all devices, including Class I devices, are subject to general controls, whichare the basic authorities of the Medical Device Amendments that provide the FDA with the means of regulating devices to ensure theirsafety and effectiveness (e.g., labeling, facility registration and device listing and adherence to Quality System Regulation(“QSR”) requirements). For Class III devices, a PMA application will be required unless the device is a pre-amendmentdevice (on the market prior to the passage of the medical device amendments in 1976, or substantially equivalent to such a device)or is exempted from submission of a PMA. In that case, a 510(k) will be the route to market. A 510(k) clearance will be grantedif the submitted information establishes that the proposed device is substantially equivalent to a legally marketed Class I or II medicaldevice, or to a Class III medical device for which the FDA has not required a PMA. The FDA may determine that a proposed deviceis not substantially equivalent to a legally marketed device or that additional information or data are needed before a substantial equivalencedetermination can be made. A request for additional data may require that clinical studies of the device’s safety and efficacybe performed.

 

Commercialdistribution of a device for which a 510(k) notification is required may begin only after the FDA issues an order finding thedevice to be substantially equivalent to a previously cleared device. Even in cases where the FDA grants a 510(k) clearance, it may takethe FDA between four and nine months from the date of submission to grant a 510(k) clearance, but may take longer.

 

 

A“not substantially equivalent” determination, or a request for additional information, could delay the market introductionof new products that fall into this category and could have a material adverse effect on our business, financial condition andresults of operations. For any of our products that are cleared through the 510(k) process, modifications or enhancements thatcould significantly affect the safety or efficacy of the device or that constitute a major change to the intended use of the devicewill require new 510(k) submissions.

 

Any products manufactured or distributed by us aresubject to pervasive and continuing regulation by the FDA, including record keeping requirements and reporting of adverse experienceswith the use of the device. Device manufacturers are required to register their establishments and list their devices with the FDA andcertain state agencies, and are subject to periodic inspections by the FDA and certain state agencies. The FDCA requires devicesto be manufactured to comply with applicable QSR regulations which impose certain procedural and documentation requirements upon us withrespect to design, development, manufacturing and quality assurance activities. We are subject to unannounced inspections by the FDAand the Food and Drug Branch of the California Department of Public Health to determine our compliance with the QSR and other regulations,and these inspections may include the manufacturing facilities of our subcontractors.

 

Labeling and promotion activities are subject to scrutinyby the FDA and by the Federal Trade Commission. The FDA actively enforces regulations prohibiting marketing of products for unapproveduses. We and our products are also subject to a variety of state laws and regulations in those states or localities where our productswill be marketed. Any applicable state or local regulations may hinder our ability to market our products in those states or localities.Manufacturers are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturingpractices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. We may be requiredto incur significant costs to comply with such laws and regulations now or in the future. Such laws or regulations may have a materialadverse effect upon our ability to do business.

 

Export of our products is regulated by the FDA andsubject to the FDCA, 21 U.S.C. §§381-384f, and other statutes FDA administers, which greatly expanded the exportof approved and unapproved United States medical devices. Some foreign countries require manufacturers to provide a specific typeof FDA export certificate (such as a Certificate to Foreign Government or Certificate of Exportability), which may requirethe device manufacturer to certify the device is lawfully marketed in the United States, including in conformancewith QSR requirements, labeling regulations, premarket notification, and other requirements. The FDA will refuse to issueany export certificate if significant outstanding QSR violations exist.

 

We believe RetinalGenix^TM is a ClassII medical device that will require 510(k) clearance from the FDA. In addition, we believe RetinalCam^TM will beconsidered a Class II exempt medical device because it is non-diagnostic in nature, and therefore, we do not anticipateneeding 510(k) clearance from the FDA to market such product. Pursuant to FDA product classification codes for ophthalmic camerasunder 21 C.F.R. § 886.1120, “PJZ” cameras are prescription devices indicated only for the capture and storageof images of the eye and surrounding area in the general population. PJZ cameras cannot be indicated for any specific population (e.g.,pediatrics, AMD patients, etc.), cannot contain any type of “diagnostic” or “aid in diagnosis” claims in theindication for use, and cannot reference any specific disease. PJZ cameras do not exceed group 1 radiant exposure limits for ultraviolet,visible, and infrared radiation under all light energy conditions, as defined in the ANSI Z80.36-2016 standard Light Hazard Protectionfor Ophthalmic Instruments. PJZ cameras also have other design and performance characteristics that are described by FDA in the productcode description.

 

If the RetinalGeniX^TMwere to be classified as a Class II medical device, such classification wouldrequire us to submit a premarket notification submission to FDA. We anticipate the submission will requireclinical evidence of safety and efficacy, generated through a regulated, randomized clinical trial or field evaluation. FDA clearancefor ophthalmological devices usually require about 170 days.

 

Weintend to launch RetinalCam^TM in the fall of 2022 and we intend to apply for 510(k) clearance forRetinalGenix^TM in 2022.

 

European Union Regulations

 

In the European Union (“EU”), there arefour main medical device classes: I, IIa, IIb and III.  Similar to the US classification system, the EU classification systemis a risk-based system, depending on the potential risk associated with the device. In the EU, we believe the RetinalCam^TMwould be considered a Class IIa medical device, which would require the grant of a CE marking prior to launching in the EU. To obtaina CE marking, the device manufacturer must be certified to ISO 13485, and the product must meet certain harmonized standards for itsdesign, development and testing. If the manufacturer is not self-certifying, outside agencies (known as Notified Bodies) will be requiredto test and certify that the device meets the applicable requirements, including clinical evidence of safe and effective use prior tothe product being released for general market introduction.

 

 

Employees

 

As of January 19, 2022, we had no full-timeemployees and 1 part-time employee. We are not a party to any collective bargaining agreements. We believe that we maintain good relationswith our employee.

  

Legal Proceedings

 

From time to time, we may become involved in variouslawsuits and legal proceedings. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arisefrom time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individuallyor in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

Notwithstanding the foregoing, Sanovas, Inc. (“Sanovas”)commenced the Delaware Action (as defined herein) against Halo and Mr. Gerrans seeking an order declaring that any rights that Halo and/orMr. Gerrans may have with respect to any equity securities in Sanovas and each of its affiliated subsidiaries (including, but not limitedto, our Company) are void or voidable and may be cancelled. Specifically, pursuant to the terms of an employment agreement dated January1, 2012 (the “Effective Date”) by and between Sanovas, the majority stockholder of Sanovas Ophthalmology, which is a majoritystockholder of the Company, and Lawrence Gerrans, the then President and Chief Executive Officer of Sanovas (the “Original EmploymentAgreement”), in consideration for Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the followingequity securities: (i) 441,177 shares of restricted common stock of each of the wholly-owned subsidiaries of Sanovas, as of the EffectiveDate (the “Affiliate Subsidiaries”), representing 7.5% of the total equity capital of each such subsidiary issued and outstandingas of the date of grant; and (ii) 5,000 shares of Series F Preferred Stock of Sanovas and each of the Affiliate Subsidiaries. We wereincorporated in Delaware on November 17, 2017, subsequent to the Effective Date, and as such these shares were never issued by us becausewe were not an Affiliate Subsidiary of Sanovas. Thereafter, in May 2015, Mr. Gerrans’ Original Employment Agreement was amendedand restated with an effective date of January 1, 2012 (the “Amended and Restated Employment Agreement”), the same as theEffective Date of the Original Employment Agreement. Pursuant to the Amended and Restated Employment Agreement, in consideration forMr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) 7.5% of thetotal equity capital of each of Sanovas’ Affiliate Subsidiaries as of the Effective Date or thereafter formed (collectively, the“New Subsidiaries”); and (ii) 5,000 shares of Series F Preferred Stock of Sanovas, each of the Affiliate Subsidiaries andeach of the New Subsidiaries, including our Company. Subsequently, pursuant to a board resolution dated December 1, 2017 approved byLawrence Gerrans, our then Chief Executive Officer, President and sole director, in 2018 we issued 27,000,000 shares of our common stockto Sanovas Ophthalmology LLC, and issued 3,000,000 shares of our Series F Preferred Stock to Halo, an entity owned by Mr. Gerrans, forcertain enumerated consideration that was purported to have been provided. Thereafter, and in part based upon the evidence and testimonypresented, and verdict and conviction rendered, in the Criminal Action (discussed below), including, but not limited to, the fact thatMr. Gerrans misled and coerced the board of Sanovas regarding the terms and need for approval of the Amended and Restated EmploymentAgreement, our board of directors, acting in concert with the board of directors of Sanovas, carried out an investigation with respectto actions taken by Mr. Gerrans and have determined that Halo did not provide us with valid consideration for the Series F PreferredStock, and we dispute whether any of the shares of the Company issued to Halo were validly issued.

 

In January 2020, a jury in the United States DistrictCourt for the Northern District of California found Mr. Gerrans guilty, in a criminal proceeding (the “Criminal Action”),on 12 felony counts of wire fraud, money laundering, perjury, contempt of court, witness tampering, and obstruction of justice in connectionwith his activities as an officer and director of Sanovas. Thereafter, in November 2020, Sanovas commenced an action in the Court ofChancery of the State of Delaware (the “Delaware Action”) against Halo and Mr. Gerrans seeking an order declaring that anyrights that Halo and/or Mr. Gerrans may have with respect to any equity securities in Sanovas and each of its affiliated subsidiaries(including, but not limited to, our Company) are void or voidable and may be cancelled. The Delaware Action is currently still pending.Although, on November 21, 2021, our board of directors resolved to rescind the 3,000,000 sharesof Series F Preferred Stock issued to Halo for lack of contract consideration, we intend to take any and all actions requiredto assist Sanovas in obtaining a judgement against Halo and Mr. Gerrans in the Delaware Action declaring any shares issued to them voidor voidable.

 

CorporateInformation

 

Wewere incorporated in Delaware on November 17, 2017. Our principal executive offices are located at 1450 North McDowell Boulevard, Suite150, Petaluma, CA 94954 and our telephone number is (415) 578-9583. Our website address is www.retinalgenix.com. The informationcontained on our website is not incorporated by reference into this prospectus, and you should not consider any information containedon, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our securities.

 

 

MARKETFOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Market Information

 

There is currently no public market for our sharesof common stock. We intend to seek a listing of our common stock on the OTC Pink tier of the OTC Markets Group, Inc. under thesymbol “RTGN,” if available; however, we cannot assure you that our listing will be approved or that a public tradingmarket for our common stock will ever develop.

 

DividendPolicy

 

Wehave not paid any cash dividends on our capital stock and we do not expect to pay cash dividends in the foreseeable future. Weintend to retain future earnings, if any, to provide funds for operations of our business. The decision whether to pay cash dividendson our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, resultsof operations, capital requirements and other factors that our board of directors considers significant.

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Youshould read the following discussion of our financial condition and results of operations in conjunction with our financial statementsand notes thereto, as well as the “Risk Factors” and “Description of Business” sections included elsewherein this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause orcontribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors.”

 

Overview

 

We are an ophthalmic research and developmentcompany focused on developing technologies to screen, monitor, diagnose and treat ocular, optical, and sight-threatening disorders. Ourmission is to prevent vision loss and blindness due to diabetic retinopathy and maculopathy through two devices: (1) Retinal ImagingScreening Device, a portable, retinal imaging system providing a 200-degree field of view without requiring pupil dilation; and (2)RetinalCam^TM, a home monitoring and imaging device offering real-time communication with physicians available 24/7.

 

To date, we have devoted substantially all of ourresources to organizing, business planning, raising capital, designing and developing product candidates, and securing manufacturing andsales/distribution partners. We do not have any products approved for sale and have not generated any revenue from product sales. We havefunded our operations primarily through the private placement of common stock.

 

We anticipate that we will need an additional $5,000,000 to complete product design and testing for RetinalGenix^TM and RetinalCam^TM and submit RetinalGenix^TM for FDA clearance as we anticipate that the RetinalCam^TM will not require FDA clearance. We intend to obtain such funds through the sales of our equity and debt securities and/or through potential strategic partnerships; however, no assurance can be provided that funds will be available to us on acceptable terms, if at all.

 

We do not expect to generate any revenues from product sales unless and until we successfully complete development of RetinalCam^TM, and we do not expect to generate any revenues from product sales unless and until we successfully obtain regulatory clearance for RetinalGenix^TM. In addition, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, compliance and other expenses.

 

As a result, we will need substantial additionalfunding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue fromsales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings,strategic partnerships, collaborations and licensing arrangements or other capital sources. However, we may be unable to raiseadditional funds or enter into such other arrangements when needed, on favorable terms or at all.

 

 

Our failure to raise capital or enter into such otherarrangements as and when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce orterminate our product development or future commercialization efforts or grant rights to develop and market our product candidates.

 

We have been issuingshares of our common stock pursuant to a private placement raising approximately $2.4 million from the sale of 2,441,000 shares of commonstock from 2019 through September 30, 2021. In October 2021, the registration statement on Form S-1 (the “Registration Statement”)that we filed with the SEC pursuant to which we registered for resale shares of common stock, including shares of common stock issuableupon exercise of outstanding options and warrants was declared effective. No funds were raised pursuant to the Registration Statement.

 

Becauseof the numerous risks and uncertainties we are unable to accurately predict the timing or amount of increased expenses or whenor if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable.If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue ouroperations at planned levels and be forced to reduce or terminate our operations.

 

Trendsand Uncertainties—COVID-19

 

The global COVID-19 pandemic continues toevolve, and we continue to monitor the COVID-19 situation closely. The extent of the impact of COVID-19 on our business, operations,research and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spreadof the outbreak and its future impact on our operations, including our ability to obtain components such as sensors and other materialsin a timely manner required to complete the development of RetinalGenix^TM and RetinalCam^TM and seek 510(k)regulatory clearance from the FDA for RetinalGenix^TM . The ultimate impact of the COVID-19 pandemic or a similar health epidemicis highly uncertain and subject to change. To the extent possible, we are conducting business as usual, with necessary or advisable modificationsto employee travel and with many of our employees and consultants working remotely. We will continue to actively monitor the evolvingsituation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal,state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.At this point, the extent to which the COVID-19 pandemic may affect our business, operations and clinical development timelines and plans,including the resulting impact on our expenditures and capital needs, remains uncertain.

 

Basisof presentation:

 

These accompanying financial statements have beenprepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) including allpronouncements of the SEC applicable to annual financial statements.

 

Componentsof Results of Operations

 

Revenue

 

Wehave not generated any revenue since our inception.

 

Researchand Development Expenses

 

Researchand development expenses include personnel costs associated with research and development activities, including third-party contractorsto perform research, product and prototype development, and testing of materials. Research and development expenses are charged to operationsas incurred.

 

Weaccrue for costs incurred by external service providers based on our estimates of services performed and costs incurred. These estimatesinclude the level of services performed by third parties and other indicators of the services completed.

 

Wecannot determine with certainty the duration and costs of future clinical trials and product development or if, when or to what extentwe will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing clearance. We maynever succeed in obtaining marketing approval for any product candidate. The duration, costs and timing of product development will dependon a variety of factors, including:

 

	●	the scope, rate of progress, expense and results of product development, as well as of any future clinical trials of other product candidates and other research and development activities that we may conduct;
	●	the actual probability of success for our product candidates, including their safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability;
	●	significant and changing government regulation and regulatory guidance;
	●	the timing and receipt of any marketing approvals; and
	●	the expense of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights.

 

Achange in the outcome of any of these variables with respect to the development of a product candidate could mean a significant changein the costs and timing associated with the development of that product candidate.

 

 

AdministrativeExpenses

 

Administrativeexpenses consist primarily of compensation and consulting related expenses. Administrative expenses also include professional fees andother corporate expenses, including legal fees relating to corporate matters; professional fees for accounting, auditing, tax and consultingservices; insurance costs; travel expenses, marketing activities and other operating costs that are not specifically attributable toresearch activities.

 

We expect that our administrative expenses will increasein the future as we increase our personnel headcount to support our continued research activities and development of our product candidates.We also expect increased expenses associated with being a public company, including costs related to accounting, audit, legal,regulatory and tax-related services associated with compliance with SEC requirements; director and officer insurance costs; and investorand public relations costs.

 

Interest Expense

 

Interest expense is the coupon interest rate chargedon loans from stockholders.

 

Resultsof Operations

 

Comparisonof the Years Ended December 31, 2020 and 2019

 

Thefollowing table sets forth key components of our results of operations for the years ended December 31, 2020 and 2019.

 

		Year Ended December 31
		2020				2019				Change
Operating Expenses:
Research and development		$	431,557			$	250,780			$	180,777
Stock based compensation			220,206				27,776				192,430
Administrative			1,426,230				527,259				898,971
Total costs and expenses			2,077,993				805,815				1,272,178
Loss from Operations			(2,077,993	)			(805,815	)			(1,272,178	)
Net Loss		$	(2,077,993	)		$	(805,815	)		$	(1,272,178	)

 

Revenues

 

Wehave not generated any revenues since our inception.

 

Researchand Development Expenses

 

		Year ended December 31, 2020				Year ended December 31, 2019
Direct costs		$	318,671			$	79,100
Allocated costs from Sanovas			112,886				171,680
Total Research and Development expenses		$	431,557			$	250,780

 

Researchand development expenses increased by $180,777, or 72%, to $431,557 for the year ended December 31, 2020 from $250,780 for the year endedDecember 31, 2019. The increase was primarily the result of an increase in prototype related expense, engineering and technology consultants,and pilot manufacturing. Because we are developing both the RetinalGeniXImaging System and the RetinalCam simultaneously, we do no track costs for the development of each product separately.

 

StockBased Compensation Expenses

 

Stockbased compensation expenses increased by $192,430, or 693%, to $220,206 for the year ended December 31, 2020 from $27,776 for the yearended December 31, 2019. The increase was primarily due to the recognition of expense related to stock options issued in late 2019.

 

AdministrativeExpenses

 

		Year ended December 31, 2020				Year ended December 31, 2019
Direct costs		$	222,801			$	6,519
Allocated costs from Sanovas			1,203,429				520,740
Total General and Administrative expenses		$	1,426,230			$	527,259

 

Administrativeexpenses increased by $898,971, or 171%, to $1,426,230 for the year ended December 31, 2020 from $527,259 for the year endedDecember 31, 2019. The increase in administrative expenses was primarily due to increases of executive payroll of approximately$375,000, other salaries of approximately $180,000, marketing of approximately $20,000, rent of approximately $50,000,insurance of approximately $46,000 and corporate legal, accounting and auditing expenses of approximately $150,000.Administrative costs consisting of costs related to executives and employees from Sanovas were allocated based upon the amount ofeffort spent by such personnel on our business.

 

 

Comparisonof the Three Months Ended September 30, 2021 and 2020

 

Thefollowing table sets forth key components of our results of operations for the three months ended September 30, 2021 and 2020. Our activitiesto date have been limited based upon the availability of cash flow and availability of personnel/resources from Sanovas.

 

		Three Months Ended
		September 30,
		2021				2020				Change
Revenue		$	-			$	-
Expenses
Administrative			293,893				413,151				(119,258	)
Research and Development			200,899				98,896				102,003
Stock-based compensation			55,051				55,051				-
Total Operating Expenses			549,843				567,098				17,255
Loss from operations			(549,843	)			(567,098	)			17,255
Interest expense			1,180				-				1,180
Net Loss		$	(551,023	)		$	(567,098	)		$	16,075

 

Revenues

 

Wedid not recognize revenues for the three months ended September 30, 2021 and September 30, 2020.

 

Researchand Development Expenses

 

		Three Months Ended September 30,
		2021				2020
Direct costs		$	200,899			$	71,986
Allocated costs from Sanovas			-				26,910
Total Research and Development expenses		$	200,899			$	98,896

 

Researchand development expenses increased by $102,003, or 103%, to $200,899 for the three months ended September 30, 2021 from $98,896 for thethree months ended September 30, 2020. The increase was primarily the result of an increase in prototype related expense, engineeringand technology consultants, and pilot manufacturing.

 

StockBased Compensation Expenses

 

Stockbased compensation expenses remained constant in the three months ended September 30, 2021 and September 30, 2020. There were no stockoptions or warrants issued in the three months ended September 30, 2021 or September 30, 2020.

 

AdministrativeExpenses

 

		Three Months Ended September 30,
		2021				2020
Direct costs		$	64,902			$	240,651
Allocated costs from Sanovas			228,991				172,500
Total Administrative expenses		$	293,893			$	413,151

 

Administrativeexpenses decreased by $119,258, or 29%, to $293,893 for the three months ended September 30, 2021 from $413,151 for the three monthsended September 30, 2020. Executive salaries were $120,000 during the three months ended September 30, 2021 and 2020. Professional feeswere approximately $47,000 during the three months ended September 30, 2021 as compared to $70,000 during the three months ended September30, 2020, the decrease resulting from accounting and auditing services and legal services. The decrease in administrative expenses wasprimarily due to decrease in other salaries and operating costs allocated from Sanovas and reduced marketing costs. Administrative costsconsisting of costs related to executives and employees from Sanovas were allocated based upon the amount of effort spent by such personnelon our business.

 

 

Comparisonof the Nine Months Ended September 30, 2021 and 2020

 

Thefollowing table sets forth key components of our results of operations for the nine months ended September 30, 2021 and 2020. Our activitiesto date have been limited based upon the availability of cash flow and availability of personnel/resources from Sanovas.

 

		Nine Months Ended
		September 30,
		2021				2020				Change
Revenue		$	-			$	-
Expenses
Administrative			949,945				1,077,450				(127,505	)
Research and Development			565,564				222,193				343,371
Stock-based compensation			252,867				165,153				87,714
Total Operating Expenses			1,768,376				1,464,796				303,580
Loss from operations			(1,768,376	)			(1,464,796	)			(303,580	)
Interest expense			1,180				-				1,180
Net Loss		$	(1,769,556	)		$	(1,464,796	)		$	(304,760	)

 

Revenues

 

Wedid not recognize revenues for the nine months ended September 30, 2021 and September 30, 2020.

 

Researchand Development Expenses

 

		Nine Months Ended September 30,
		2021				2020
Direct costs		$	547,734			$	136,051
Allocated costs from Sanovas			17,830				86,142
Total Research and Development expenses		$	565,564			$	222,193

 

Researchand development expenses increased by $343,371, or 155%, to $565,564 for the nine months ended September 30, 2021 from $222,193 for thenine months ended September 30, 2020. The increase was primarily the result of an increase in prototype related expense, engineeringand technology consultants, and pilot manufacturing.

 

StockBased Compensation Expenses

 

Stockbased compensation expenses increased by $87,714, or 53%, to $252,867 for the nine months ended September 30, 2021 from $165,153 forthe nine month ended September 30, 2020. The increase was primarily due to the recognition of expense related to stock options issuedin late 2020.

 

AdministrativeExpenses

 

		For The Nine Months Ended September 30,
		2021				2020
Direct costs		$	217,135			$	528,038
Allocated costs from Sanovas			732,810				549,412
Total Administrative expenses		$	949,945			$	1,077,450

 

Administrativeexpenses decreased by $127,505, or 12%, to $949,945 for the nine months ended September 30, 2021 from $1,077,450 for the nine monthsended September 30, 2020. The decrease in administrative expenses was primarily due to decreases of marketing and corporate legal, accountingand auditing expenses. Executive salaries were $360,000 during the nine months ended September 30, 2021 and 2020. Professional fees wereapproximately $127,000 during the nine months ended September 31, 2021 as compared to $80,000 during the nine months ended September30, 2002, the increase resulting from additional accounting and auditing services and legal services. The decrease in administrativeexpenses was primarily due to decrease in other salaries and operating costs allocated from Sanovas and reduced marketing costs. Administrativecosts consisting of costs related to executives and employees from Sanovas were allocated based upon the amount of effort spent by suchpersonnel on our business.

 

Liquidityand Capital Resources

 

Todate, we have devoted substantially all of our resources to organizing, business planning, raising capital, designing and developingproduct candidates, and securing manufacturing and sales/distribution partners. We do not have any products approved for sale and havenot generated any revenue from product sales. We have funded our operations primarily from the sale of common stock.

 

 

CashFlow Activities for the Year Ended December 31, 2020 and 2019

 

Thefollowing table sets forth a summary of our cash flows for the periods presented:

 

		Years Ended December 31,
		2020				2019
Net cash used in operating activities		($	1,422,303	)		($	156,765	)
Net cash used in/provided by investing activities			-				-
Net cash provided by financing activities			1,370,141				211,146
Net (decrease) increase in cash			(52,162	)			54,381
Cash at beginning of the year			54,381				-
Cash at end of the year		$	2,219			$	54,381

 

OperatingActivities

 

Netcash used in operating activities was $1,422,303 for the year ended December 31, 2020 and $156,765 for the year ended December 31, 2019.The increase in net cash used in operating activities was primarily due to an increase in executive salaries, marketing activities, professionalfees and product development.

 

InvestingActivities

 

Therewas no cash used in or provided by investing activities for the years ended December 31, 2020 and 2019.

 

FinancingActivities

 

Netcash provided by financing activities was $1,370,141 and $211,146 during the years ended December 31, 2020 and 2019, respectively, attributableprimarily to the issuance of common stock.

 

CashFlow Activities for the Nine Months Ended September 30, 2021 and 2020

 

Thefollowing table sets forth a summary of our cash flows for the periods presented:

 

		Nine Months Ended
		September 30,
		2021				2020
Net cash used in operating activities		$	(876,406	)		$	(1,050,622	)
Net cash used in/provided by investing activities			-				-
Net cash provided by financing activities			910,765				1,026,331
Net increase (decrease) in cash			34,359				(24,291	)
Cash at beginning of period			2,219				54,381
Cash at end of period		$	36,578			$	30,090

 

OperatingActivities

 

Net cash used in operating activities was $876,406 for the nine months ended September 30, 2021 and $1,050,622 for the nine months ended September 30, 2020. The cash flow used in operating activities was driven by the net loss of $1,769,556 offset in part by non-cash stock based compensation expense of $252,867 for the nine months ended September 30, 2021. The cash flow used in operating activities was driven by the net loss of $1,464,796 offset in part by non-cash stock based compensation expense of $165,153 for the nine months ended September 30, 2020. The net cash used in operating activities also driven by an increase in accounts payable and amounts due to Sanovas to fund the losses from operations in both periods.

 

  

InvestingActivities

  

There was no cash used inor provided by investing activities for the nine months ended September 30, 2021 and 2020.

 

FinancingActivities

 

Net cash provided by financing activities was $910,765 and $1,026,331 during the nine months ended September 30, 2021 and 2020, respectively, attributable primarily to the sale of common stock in both the 2021 and 2020 periods; and proceeds from the exercise of warrants and shareholder loans during the nine months ended September 30, 2021.

 

We anticipate that we willneed $5,000,000 in operating capital to complete product design and testing for RetinalGenix^TM and RetinalCam^TM andsubmit RetinalGenix^TM for FDA approval as we anticipate that the RetinalCam^TM will not require FDA approval.We do not expect to generate any revenues from product sales unless and until we successfully complete development of RetinalGenix^TM andRetinalCam^TM and obtain regulatory approval for RetinalGenix^TM. We will also require additional operating capitalas a result of us operating as a public company, including for legal, accounting, investor relations, compliance and other expenses.

 

Asa result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until suchtime as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs throughpublic or private equity offerings, debt financings, strategic partnerships, collaborations and licensing arrangements or other capitalsources. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms orat all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financialcondition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grantrights to develop and market our product candidates.

 

Becauseof the numerous risks and uncertainties, we are unable to accurately predict the timing or amount of increased expenses or when or ifwe will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. Ifwe fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operationsat planned levels and be forced to reduce or terminate our operations.

 

Off-BalanceSheet Arrangements; Commitments and Contractual Obligations

 

During the periods presented, wedid not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financialcondition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources nor did we have any commitmentsor contractual obligations. 

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformitywith GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and relateddisclosures in the financial statements and accompanying notes. Management bases it estimates on historical experience and on assumptionsbelieved to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimatesof the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Estimatesare used in areas including, but not limited to: research and development expense recognition, valuation of stock options, allowancesof deferred tax assets, accrued expenses and liabilities, and cash flow assumptions regarding going concern considerations.

 

Stock Based Compensation

 

Stock based compensation represents the cost relatedto stock based awards granted to employees. We measure stock based compensation costs at the grant date, based on the estimated fairvalue of the award and recognize the cost (net of estimated forfeitures) over the vesting period. Forfeitures are estimated on the dateof grant and revised if actual or expected forfeiture activity differs materially from the original estimates. We estimate the fair valueof stock options using a Black-Scholes valuation model. The cost is recorded in the consolidated statements of operations based on theemployees’ respective function. The fair value of common stock was determined based upon the sale of common stock to third partiespursuant to the offering which commenced in 2019, which offering continues through September 2021.

 

Income taxes

 

We account for income taxes using the asset-and-liabilitymethod in accordance with Accounting Standards Codification 740, Income Taxes. Deferred tax assets and liabilities are recognizedfor the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilitiesand their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured usingenacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoveredor settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes theenactment date. A valuation allowance has been recorded for all of the deferred tax assets.

 

Recently Issued and Adopted Accounting Standards

 

In August 2016, the Financial Accounting StandardsBoard issued Accounting Standards Update (“ASU”) 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU2016-15”). ASU 2016-15 is intended to reduce diversity in practice on how certain cash receipts and payments are presented andclassified in the statement of cash flows. The standard provides guidance in a number of situations including, among others, settlementof zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insuranceclaims, and distributions received from equity method investees. ASU 2016-15 also provides guidance for classifying cash receipts andpayments that have aspects of more than one class of cash flows. ASU 2016-15 is effective for the Company’s fiscal year beginningJanuary 1, 2019. Early adoption is permitted. The standard requires application using a retrospective transition method. The impact ofadoption on our financial statements was not significant.

 

See Note 2 and B of the notes to the financial statements included in this Form S-1 for details about other pronouncements not yet implemented.

 

 

Changes in and Disagreements with Accountantson Accounting and Financial Disclosure

 

None.

 

JOBS Act

 

We are an “emerging growth company,”as defined in Section 2(a) the Securities Act, as modified by the JOBS Act. Emerging growth companies can delay adopting new or revisedaccounting standards until such time as those standards apply to private companies. Therefore, we may not be subject to the same newor revised accounting standards as other public companies that are not “emerging growth companies.” For as long as we continueto be an emerging growth company, we also intend to take advantage of certain other exemptions from various reporting requirements thatare applicable to other public companies including, but not limited to, reduced disclosure obligations regarding executive compensationin our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory stockholder vote on executivecompensation and any golden parachute payments not previously approved, exemption from the requirement of auditor attestation in theassessment of our internal control over financial reporting and exemption from any requirement that may be adopted by the Public CompanyAccounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additionalinformation about the audit and the financial statements (auditor discussion and analysis). After we become a reporting company underthe Exchange Act, we will remain an emerging growth company until the earliest of (i) the end of the fiscal year in which the marketvalue of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second fiscal quarter, (ii) the endof the fiscal year in which we have total annual gross revenues of $1.07 billion or more during such fiscal year, (iii) the date on whichwe issue more than $1 billion in non-convertible debt in a three-year period or (iv) the end of the fiscal year following the fifth anniversaryof the date of the first sale of our common stock pursuant to an effective registration statement filed under the Securities Act.

 

MANAGEMENT

 

Setforth below is certain information regarding our executive officers and directors. Each of the directors listed below was elected toour board of directors to serve until our next annual meeting of stockholders or until his or her successor is elected and qualified.The following table sets forth information regarding the members of our board of directors and our executive officers as of January19, 2022:

 

Name		Age		Position
Jerry Katzman		68		Chief Executive Officer, President and Director
Herbert Gould		93		Director

 

Biographiesfor the members of our board of directors and our management team are set forth below.

 

Jerry Katzman. Jerry Katzman has served asthe Company’s Chief Executive Officer and President since December 2018 and a member of the Company’s board of directorssince August 2018. In addition, since December 2018, he has served as the Chief Executive Officer, President and Chairman of the boardof directors of Sanovas Inc. In 2013, he founded Disruptor Technologies, a marketing and consulting company and served as founder,Chief Executive Officer and President. Dr. Katzman previously served in various capacities including ophthalmologist and founder of theOphthalmology department at Brandon Surgical Group in Brandon, Florida; Founder, President, Chief Medical Officer and a director of EyeCare International, the national’s largest non-insurance based discount vision network consisting of ophthalmologists, optometrists,opticians and optical outlets; Chief Medical Officer and director of Amacore Group, Inc., the successor of Eye Care International, Inc.;Chief Executive Officer and President of Clinical Control Systems, Inc., an electronic medical record development and marketing firm;and Executive Vice President of Strategic Development of Comprehensive Behavioral Care. Since August 2019, Dr. Katzman has servedas a member of the board of directors of Paradigm Medical Industries, Inc. Dr. Katzman received his bachelor of science in biomedicalengineering from Boston University and his M.D. from Universidad de Guadalajara in Jalisco, Mexico. We believe Dr. Katzman is qualifiedto serve as a member of our board of directors because of his proven track record as a leader within the ophthalmology field.

 

 

Herbert Gould. Herbert Gould has served asa member of the Company’s board of directors since April 2019. Since 2007, he has served as a Medical Director of NutraceuticalDelivery Corporation, a drug delivery system company. He previously served in various capacities including Medical Director of DiamondVison Laser Center; Teaching Fellow and Assistant Clinical Professor in Ophthalmology at State University of New York; Associate ClinicalProfessor at New York Medical College; Instructor at American Academy of Ophthalmology; and Attending Surgeon at Westchester County MedicalCenter and New York Eye & Ear Infirmary. Dr. Gould also served as a Flight Surgeon for the U.S. Air Force. Since January 2019, Dr.Gould has served as a director of Sanovas, Inc., and since August 2019, he has served as a member of the board of directors of ParadigmMedical Industries, Inc. Dr. Gould received his bachelor of arts from Bowdoin College and his M.D. from Columbia University. Dr. Gouldis a board certified ophthalmologist. We believe Dr. Gould is qualified to serve as a member of our board of directors because of hisexpertise and professional contacts in the ophthalmology field.

 

FamilyRelationships

 

Thereare no family relationships among our executive officers and directors.

 

Involvementin Certain Legal Proceedings

 

Weare not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to anymatters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses), or being subject to anyof the items set forth under Item 401(f) of Regulation S-K.

 

CorporateGovernance

 

BoardCommittees

 

Wepresently do not have an audit committee, compensation committee or nominating and corporate governance committee or committeeperforming similar functions, as management believes that we are in an early stage of development to form an audit, compensation,or nominating committee. We currently do not have an audit committee financial expert for the same reason that we do not haveboard committees. Currently, our board of directors acts as our audit, nominating, corporate governance and compensation committees.We intend to appoint persons to the board of directors and committees of the board of directors as required to meet the corporategovernance requirements of a national securities exchange, although we are not required to comply with these requirements untilwe are listed on a national securities exchange. We intend to appoint directors in the future so that we have a majority of ourdirectors who will be independent directors, and of which at least one director will qualify as an “audit committee financialexpert,” prior to a listing on a national securities exchange.

 

MedicalAdvisory Board

 

In2019, the board of directors formed a Medical Advisory Board. The members of such board are Jack M. Dodick, M.D., MargueriteB. McDonald, M.D., Lawrence A. Yannuzzi, M.D. and Ahmed Mohiuddin, M.D.

 

EXECUTIVECOMPENSATION

 

During the year ended December 31, 2021, ourexecutive officers did not receive any compensation.

 

Outstanding Equity Awards at December 31, 2021

 

As of December 31, 2021, there were no outstandingequity awards held by any of our executive officers.

 

 

 

Non-EmployeeDirector Compensation

 

During the year ended December 31, 2021, ournon-employee directors did not receive any compensation.

 

EmploymentAgreements

 

During the year ended December 31, 2021,we were not a party to any employment agreement.

 

2017Equity Incentive Plan

 

Summary

 

Our2017 Equity Incentive Plan (the “2017 Plan”) was adopted by our board of directors on December 1, 2017 and by ourstockholders on December 1, 2017. Having an adequate number of shares available for future equity compensation grants is necessaryto promote our long-term success and the creation of stockholders value by:

 

	●	Enabling us to continue to attract and retain the services of key service providers who would be eligible to receive grants;
	●	Aligning participants’ interests with stockholders’ interests through incentives that are based upon the performance of our common stock;
	●	Motivating participants, through equity incentive awards, to achieve long-term growth in our business, in addition to short-term financial performance; and
	●	Providing a long-term equity incentive program that is competitive as compared to other companies with whom we compete for talent.

 

The2017 Plan permits the discretionary award of options, including non-qualified stock options (“NSOs”) and incentivestock options (“ISOs”), restricted shares, deferred stock, restricted stock units (“RSUs”), or stock appreciationrights (“SARs”). The 2017 Plan will remain in effect until the earlier of (i) December 1, 2027 and (ii) the date uponwhich the 2017 Plan is terminated pursuant to its terms, and in any event subject to the maximum share limit of the 2017 Plan.The 2017 Plan provides for the reservation of 10,000,000 shares of common stock for issuance thereunder.

 

 

KeyFeatures of the 2017 Plan

 

Certainkey features of the 2017 Plan are summarized as follows:

 

	●	If not terminated earlier by our board of directors, the 2017 Plan will terminate on December 1, 2027.
	●	Up to a maximum aggregate of 10,000,000 shares of common stock may be issued under the 2017 Plan. The maximum aggregate fair market value with respect to ISOs are exercisable for the first time by such grantee during any calendar year may not exceed $100,000.
	●	The 2017 Plan will generally be administered by a committee (the “Committee”), comprised of two or more directors who may be appointed by the board from time to time.
	●	Employees, consultants and board members are eligible to receive awards, provided that the Committee has the discretion to determine (i) who shall receive any awards, and (ii) the terms and conditions of such awards.
	●	Awards may consist of ISOs, NQSOs, restricted shares, deferred stock, RSUs and SARs.
	●	Stock options and SARs may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant. If stock options or SARs are granted to a ten percent owner, they may not be granted at a per share exercise price below 110% of the fair market value of a share of our common stock on the date of grant.
	●	The maximum exercisable term of stock options and SARs may not exceed ten years (five years if the grantee is a ten percent owner).

 

Eligibilityto Receive Awards. Employees, consultants and board members of the Company and its subsidiaries are eligible to receiveawards under the 2017 Plan. The Committee determines, in its discretion, the selected participants who will be granted awardsunder the 2017 Plan.

 

SharesSubject to the 2017 Plan. The maximum number of shares of common stock that can be issued under the 2017 Plan is 10,000,000shares. The shares underlying forfeited or terminated awards (without payment of consideration), or unexercised awards becomeavailable again for issuance under the 2017 Plan.

 

Administrationof the 2017 Plan. The 2017 Plan will be administered by the Committee, which shall consist of two or more directors whomay be appointed by the board from time to time Subject to the terms of the 2017 Plan, the Committee has the sole discretion,among other things, to:

 

	●	Select the individuals who will receive awards;
	●	Determine the terms and conditions of awards (including the number of shares to which an award will relate, any option price, grant price or purchase price, any limitation or restriction, any performance conditions, forfeiture restrictions, any performance goals and/or vesting schedules and the terms of the grants);
	●	Determine whether or not specific awards shall be granted in connection with other specific awards, and if so, whether they shall be exercisable cumulatively with, or alternatively to, such other specific awards and all other matters to be determined in connection with an award;
	●	Offer to exchange or buy out any previously granted award for a payment of cash, shares or other award; and
	●	Interpret the provisions of the 2017 Plan and outstanding awards.

 

Typesof Awards.

 

StockOptions. A stock option is the right to acquire shares at a fixed exercise price over a fixed period of time, not to exceedten years from its grant date. The Committee will determine, among other terms and conditions, the number of shares covered byeach stock option and the exercise price of the shares subject to each stock option, but such per share exercise price cannotbe less than the fair market value of a share of our common stock on the date of grant of the stock option. The exercise priceof each stock option granted under the 2017 Plan must be paid in full at the time of exercise, either with cash or through anothermethod approved by the Committee. Stock options granted under the 2017 Plan may be either ISOs or NQSOs.

 

 

SAR.A SAR is the right to receive, upon exercise, an amount equalto the difference between the fair market value of the shares on the date of the SAR’s exercise and the aggregate exerciseprice of the shares covered by the exercised portion of the SAR. The Committee determines the terms of SARs, including the exerciseprice (provided that such per share exercise price cannot be less than the fair market value of a share of our common stock onthe date of grant), the vesting and the term of the SAR. Settlement of a SAR may be in shares of common stock, in cash, or inother property or any combination thereof, as the Committee may determine.

 

RestrictedShares. A restricted share award is the grant of shares of our common stock to a selected participant and such sharesmay be subject to a substantial risk of forfeiture until specific conditions or goals are met. The restricted shares may be issuedwith or without cash consideration being paid by the selected participant as determined by the Committee. The Committee also willdetermine any other terms and conditions of an award of restricted shares.

 

DeferredStock. Deferred stock is a right to receive shares at the end of a specified deferral period.

 

RSUs.RSUs are the right to receive an amount equal to the fair market value of the shares covered by the RSU at some future date afterthe grant. The Committee will determine all of the terms and conditions of an award of RSUs. Payment for vested RSUs may be inshares of common stock or in cash, or any combination thereof, as the Committee may determine. RSUs represent an unfunded andunsecured obligation for us, and a holder of a stock unit has no rights other than those of a general creditor.

 

LimitedTransferability of Awards. Awards granted under the 2017 Plan generally are not transferrable other than by will or bythe laws of descent and distribution. In addition, in the event a holder desires at any time to sell or otherwise transfer allor part of his shares (the “Offered Shares”) under the 2017 Plan, then such holder shall first give us written noticeof such proposed sale or transfer including the terms of such sale or transfer, and we shall have the right at any time, within30 days after receipt of such notice, to elect to purchase all or any portion of the Offered Shares at the price and on the termsset forth in the notice. Furthermore, in the event the holders of a majority of our voting capital then outstanding determineto sell or otherwise dispose or all or substantially all of our assets or all or 50% or more of our capital stock to any person(other than to our affiliate(s) or to the Majority Shareholders (as defined in the 2017 Plan)), or to cause us to merge with orinto or consolidate with any person (other than to our affiliate(s) or to the Majority Shareholders) in a bona fide negotiatedtransaction, each holder of shares issued under the 2017 Plan shall be obligated to and shall upon written request of the MajorityShareholders sell, transfer and deliver to the buyer his shares under the 2017 Plan.

 

Changein Control. In the event that we are a party to a merger or consolidation or similar transaction (“Corporate Transaction”),unless an outstanding award under the 2017 Plan is assumed by the surviving company or replaced with an equivalent award grantedby the surviving company in substitution for such outstanding award, such award shall be vested and non-forfeitable and any conditionswith respect to such award shall lapse. If an award becomes exercisable or non-forfeitable, the Committee may (i) permit the granteeto exercise such award of options or SARs within a reasonable period prior to the consummation of the Corporate Transaction andcancel any outstanding awards that remain unexercised upon consummation of such transaction or (ii) cancel any or all outstandingawards of options and SARs in exchange for a payment (in cash, securities or other property) in an amount equal to the amountthat the grantee would have received (net of the option price and/or grant price) if such options and SARs were fully vested andexercised immediately prior to the consummation of the Corporate Transaction; provided, however, if the option price with respectto any outstanding option or grant price with respect to any outstanding SAR exceeds the fair market value of the shares immediatelyprior to the consummation of the Corporate Transaction, such awards shall be cancelled without any payment to the grantee.

 

Amendmentand Termination of the 2017 Plan. The board generally may amend or terminate the 2017 Plan at any time and for any reason,except that it must obtain stockholder approval if required pursuant to federal or state laws or the rules of any stock exchangeor quotation system on which our shares are then listed or quoted.

 

 

SECURITYOWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Thefollowing table sets forth certain information regarding the beneficial ownership of our capital stock outstanding as of January 19,2022 by:

 

	●	each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock;
	●	each of our directors;
	●	each of our named executive officers; and
	●	all of our directors and named executive officers as a group.

 

The percentage ownership information is based on 14,282,314 shares of common stock outstanding as of January 19, 2022. The number of shares owned are those beneficially owned, as determined under the rules of the SEC. Under these rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock that the person has the right to acquire within 60 days of January 19, 2022 through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement. These shares are deemed to be outstanding and beneficially owned by the person holding such option, warrants or other derivative securities for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

 

Exceptas otherwise noted below, the address for each person or entity listed in the table is c/o RetinalGenix Technologies Inc., 1450North McDowell Boulevard, Suite 150, Petaluma, CA 94954.

 

Name and Address of Beneficial Owner		Number of shares beneficially owned				Percentage of shares beneficially owned
Directors and Named Executive Officers:
Jerry Katzman			33,911,540	(1)			80.18	%
Herbert Gould			350,000				2.45	%
All Officers and Directors as a Group (2 persons)			34,261,540				81.00	%
5% or greater stockholders:
Sanovas Ophthalmology, LLC (2)			28,014,540	(3)			66.23	%
Bayern Capital, LLC (4)			5,067,000				35.48	%
Capital Funding Partners, LLC (5)			5,897,000				41.29	%

 

*less than 1%.

 

(1) Represents (i) 5,987,000 shares of common stockheld by Capital Funding Partners, LLC and (ii) pre-funded warrants to purchase up to 28,014,540 shares of common stock held bySanovas Ophthalmology. Jerry Katzman is the Sole Member of Capital Funding Partners, LLC and in such capacity has the right to vote anddispose of the securities held by such entity. Jerry Katzman is the Manager of Sanovas Ophthalmology and in such capacity has the rightto vote and dispose of the securities held by such entity.

 

(2) Jerry Katzman is the Manager of Sanovas Ophthalmologyand in such capacity has the right to vote and dispose of the securities held by such entity.

 

(3) Represents pre-funded warrants to purchaseup to 28,014,540 shares of the Company’s common stock.

 

(4) Steven Bayern is the Manager of Bayern Capital,LLC and in such capacity has the right to vote and dispose of the securities held by such entity. The address of Bayern Capital, LLCis 403 East Boardwalk, Suite 601, Long Beach, NY 11561.

 

(5) Jerry Katzman is the Sole Member of CapitalFunding Partners, LLC and in such capacity has the right to vote and dispose of the securities held by such entity. The address of CapitalFunding Partners, LLC is P.O. Box 24866, Tampa, FL 33623.

 

 

CERTAINRELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

During our fiscal years ended December 31,2020 and December 31, 2019, except as set forth herein, we were not a party to any transactions in whichthe amount involved in the transaction exceeded the lesser of $120,000 or 1% of the average of our total assets at year-end forthe last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners ofmore than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct orindirect material interest.

 

Transactions with Sanovas, Inc.

 

Commencing in 2019, Sanovas began paying invoices on behalf of the Company, and began allocating a portion of salaries and infrastructure costs to the Company. There were no specific terms of repayment. As of December 31, 2020, December 31, 2019 and September 30, 2021, the Company owed Sanovas $0, $15,069 and $0, respectively. For the years ended December 31, 2020 and December 31, 2019 and the nine months ended September 30, 2021, the Company paid Sanovas $1,086,156, $103,200 and $215,489, respectively, to discharge a portion of the payments due to Sanovas. The balance of the payments due to Sanovas were discharged pursuant to the issuance by the Company of shares of its common stock. Specifically, at December 31, 2019, Sanovas retired the debt due from the Company through the issuance of 266,056 shares of the Company’s common stock to Sanovas Ophthalmology LLC. In June 2021 and July 2020, the Company issued 390,358 and 358,126 shares of common stock to Sanovas Ophthalmology LLC to retire the then estimated debt due from the Company, respectively. The Company is related to Sanovas through common ownership and management.

 

DirectorIndependence

 

Althoughour common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independenceapplied by The Nasdaq Stock Market. Our board of directors has determined that Herbert Gould is “independent” in accordancewith such definition.

 

LEGALMATTERS

 

Unlessotherwise indicated, Sheppard, Mullin, Richter & Hampton LLP, New York, New York, will pass upon the validity of the sharesof the Resale Shares to be sold in this offering.

 

EXPERTS

 

The financial statements of RetinalGenix TechnologiesInc. for the years ended December 31, 2020 and December 31, 2019 have been included herein in reliance upon the reportsof Liebman Goldberg & Hymowitz LLP, independent registered public accounting firm, upon the authority of said firm as experts inaccounting and auditing.

 

WHEREYOU CAN FIND MORE INFORMATION

 

Wehave filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Resale Shares offeredhereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forthin the registration statement or the exhibits and schedules filed therewith. For further information about us and the Resale Sharesoffered hereby, we refer you to the registration statement and the exhibits and schedules filed thereto. Statements containedin this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registrationstatement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text ofsuch contract or other document filed as an exhibit to the registration statement.

 

You may read and copy the registration statementof which this prospectus is a part, as well as our reports, proxy statements and other information, at the SEC’s Public ReferenceRoom at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation ofthe Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other informationregarding issuers that file electronically with the SEC, including RetinalGenix Technologies Inc. The SEC’s Internet site can befound at http://www.sec.gov. You may also request a copy of these filings, at no cost, by writing us at RetinalGenix Technologies Inc.,1450 North McDowell Boulevard, Suite 150, Petaluma, CA 94954 or telephoning us at (415) 578-9583.

 

We are subject to the information and reportingrequirements of the Exchange Act, and, in accordance with this law, file periodic reports, proxy statements and other information withthe SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the SEC’s publicreference facilities and the website of the SEC referred to above. You may access these materials free of charge as soon as reasonablypracticable after they are electronically filed with, or furnished to, the SEC.

 

 

 

1,259,368 Sharesof Common Stock

 

PROSPECTUS

 

                         ,2022

 

 

INDEXTO FINANCIAL STATEMENTS

 

RetinalGenixTechnologies Inc.

FinancialStatements

 

TABLEOF CONTENTS

 

	Page
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as of December 31, 2020 and 2019	F-3
Statements of Operations for the Years Ended December 31, 2020 and 2019	F-4
Statements of Stockholders’ (Deficit) Equity for the Years Ended December 31, 2020 and 2019	F-5
Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	F-6
Notes to Financial Statements for the Years Ended December 31, 2020 and 2019	F-7
Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	F-18
Statements of Operations for the Three and Nine Months Ended September 30, 2021	F-19 - F-20
Statements of Stockholders’ Equity (Deficit) for the Nine Months Ended September 30, 2021 and 2020 (Unaudited)	F-21 - F-22
Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (Unaudited)	F-23
Notes to Financial Statements for September 30, 2021 and 2020 (Unaudited)	F-24

 

 

Reportof Independent Certified Public Accountants

 

Tothe Board of Directors and
Stockholders of RetinalGenix Technologies Inc.

 

Opinionon the Financial Statements

 

Wehave audited the accompanying balance sheets of RetinalGenix Technologies Inc. (the “Company”) as of December 31, 2020 and2019, and the related statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and therelated notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in allmaterial respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and itscash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally acceptedin the United States of America.

 

SubstantialDoubt about the Company’s Ability to Continue as a Going Concern

 

Theaccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in NoteA to the financial statements, based on its projections, the Company anticipates that during 2021, it will not have sufficient capital.Furthermore, the Company’s losses from operationsand working capital deficiency raises substantial doubt about its ability to continue as a going concern. Management’s plans inregard to these matters are also described in Note A. The financial statements do not include any adjustments that might result fromthe outcome of this uncertainty.

 

Basisfor Opinion

 

Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

Weconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Companyis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Ouraudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures that respond to those risks.

 

Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditsalso included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

CriticalAudit Matters

 

Criticalaudit matters are matters arising from the current period audit of the financial statements that were communicated or required to becommunicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and(2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

 

/s/Liebman Goldberg & Hymowitz, LLP

 

Wehave served as the Company’s auditor since 2019.

 

GardenCity, New York

June24, 2021

 

 

RETINALGENIXTECHNOLOGIES INC.

BALANCESHEETS

 

		2020				2019
		December 31,
		2020				2019
ASSETS
Current assets
Cash		$	2,219			$	54,381
Due from Sanovas			15,069				-
Deferred offering costs			43,787				-
Total Current Assets			61,075				54,381
Total Assets		$	61,075			$	54,381
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities
Stockholder refund payable		$	-			$	25,000
Accounts payable			141,431				5,217
Due to Sanovas
Accrued Interest
Total Liabilities			141,431				30,217
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value; 40,000,000 shares authorized; Series F preferred stock, 3,000,000 shares designated, issued and outstanding at December 31, 2020 and 2019			300				300
Common stock, $0.0001 par value; 80,000,000 shares authorized; 40,678,323 shares issued and outstanding at December 31, 2020 and 38,915,056 shares issued and outstanding at December 31, 2019			4,067				3,892
Additional paid-in capital			2,840,599				867,301
Preferred stock subscription receivable			(300	)			(300	)
Accumulated deficit			(2,925,022	)			(847,029	)
Total stockholders’ (deficit) equity			(80,356	)			24,164
Total Liabilities and Stockholders’ (Deficit) Equity		$	61,075			$	54,381

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF OPERATIONS

 

		2020				2019
		Year ended December 31,
		2020				2019
Revenues		$	-			$	-
Costs and expenses:
Administrative expenses			1,426,230				527,259
Research and development costs			431,557				250,780
Stock based compensation			220,206				27,776
Total costs and expenses			2,077,993				805,815
(Loss) from operations			(2,077,993	)			(805,815	)
Interest expense
Net (Loss)		$	(2,077,993	)		$	(805,815	)
Net (Loss) per share - basic and diluted		$	(0.05	)		$	(0.02	)
Weighted average number of common shares outstanding during the period- basic and diluted			39,696,697				35,471,382

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF STOCKHOLDERS’ EQUITY (DEFICIT)

DECEMBER31, 2020 and 2019

 

		Shares				Par Value				Shares				Par Value				Preferred Stock				Paid-in Capital				Accumulated Deficit				Total
		Common Stock								Series F  Preferred Stock								Subscription Receivable -				Additional
		Shares				Par Value				Shares				Par Value				Preferred Stock				Paid-in Capital				Accumulated Deficit				Total
Balance at December 31, 2018			27,000,000			$	2,700				3,000,000			$	300			$	(300	)		$	284			$	(2,984	)			-
Stock based compensation			-				-				-				-				-				27,776				-				27,776
Exercise of stock options			2,500,000				250				-				-				-				-				-				250
Exercise of warrants			8,964,000				896				-				-				-				-				-				896
Capital contribution by Sanovas (Note C)			-				-				-				-				-				350,000				-				350,000
Retirement of due to Sanovas through issuance of common stock to Sanovas Ophthalmology LLC (Note C)			266,056				27				-				-				-				266,030				-				266,057
Stock purchased by investors			185,000				19				-				-				-				184,981				-				185,000
Deemed dividend			-				-				-				-				-				38,230				(38,230	)			-
Costs of stock sales
Net loss			-								-				-				-				-				(805,815	)			(805,815	)
Balance at December 31, 2019			38,915,056			$	3,892				3,000,000			$	300			$	(300	)		$	867,301			$	(847,029	)		$	24,164
Stock based compensation			-				-				-				-				-				220,206				-				220,206
Stock purchased by investors, net of expenses			1,405,141				140				-				-				-				1,395,001				-				1,395,141
Retirement of due to Sanovas through issuance of common stock to Sanovas Ophthalmology LLC (Note C)			358,126				35				-				-				-				358,091				-				358,126
Net loss			-				-				-				-				-				-				(2,077,993	)			(2,077,993	)
Balance at December 31, 2020			40,678,323			$	4,067				3,000,000			$	300			$	(300	)		$	2,840,599			$	(2,925,022	)		$	(80,356	)

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF CASH FLOWS

 

		2020				2019
		Year ended December 31,
		2020				2019
Cash flows from operating activities:
Net loss		$	(2,077,993	)		$	(805,815	)
Stock based compensation expense			220,206				27,776
Costs and expenses paid on behalf of Company by Sanovas, net			358,126				616,057
Changes in operating assets and liabilities:
Increase in current assets			(58,856	)			-
Increase in accounts payable			136,214				5,217
Increase in accrued interest
Total Adjustments
Net cash used in operating activities			(1,422,303	)			(156,765	)
Cash flows from financing activities:
Change in stockholders refund payable, net			(25,000	)			25,000
Proceeds from the sale of common stock			1,395,141				185,000
Proceeds from shareholder loans
Proceeds from exercise of warrants			-				896
Proceeds from exercise of options			-				250
Net cash provided by financing activities			1,370,141				211,146
Net (decrease) increase in cash			(52,162	)			54,381
Cash:
Beginning of year			54,381				-
End of year		$	2,219			$	54,381
Supplemental information:
Retirement of due to Sanovas to capital through the issuance of common shares to Sanovas Ophthalmology LLC (Note C)		$	358,126			$	266,057
Capital contribution by Sanovas		$	-			$	350,000

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December 31,2020 and 2019

 

NOTEA – HISTORY, BUSINESS PURPOSE, LIQUIDITY AND GOING CONCERN

 

RetinalGenixTechnologies Inc. (the “Company”), a Delaware corporation, was formed in November 2017 by Sanovas Ophthalmology LLC,a majority owned subsidiary of Sanovas Inc. (“Sanovas”), a privately held research and development incubator. At December31, 2020 and 2019, Sanovas Ophthalmology LLC (“Sanovas Ophthalmology”) owns a majority of the outstanding stock ofthe Company. Through December 31, 2018, the Company was largely inactive. During the years ended December 31, 2020 and 2019, substantiallyall of the operations of the Company were conducted by Sanovas, who invoices the Company for reimbursement for services and costsperformed on behalf of the Company.

 

RetinalGenixTechnologies Inc. was formed to develop technologies to diagnose and treat optical disorders. The Company may license technologyinitially developed by Sanovas, depending on negotiation and execution of a technology license or it may develop/license technologiesfrom other parties. Since 2018, the Company has been developing its screening device and home monitoring and physician alert system.

 

OnOctober 8, 2019, the Company entered into an option exchange agreement (the “Option Exchange Agreement”) with Diopsys,Inc. (“Diopsys”) pursuant to which the Company shall issue Diopsys an option to purchase up to 10% of its issued andoutstanding shares of common stock and Diopsys shall grant the Company an option to purchase up to 10% of the issued and outstandingshares of common stock of Diopsys on the Closing Date (the “Option Exchange”). “Closing Date” means adate that is within 30 days of the date that all of the contingencies set forth in the Option Exchange Agreement are satisfiedincluding, but not limited to, clearance of a product by the U.S. Food and Drug Administration. In addition, pursuant to the OptionExchange Agreement, upon the closing of the Option Exchange, the Company shall enter into an exclusive distribution agreementwith Diopsys pursuant to which Diopsys shall act as the Company’s exclusive distributor of such product.

 

Liquidityand Going Concern

 

TheCompany expects that operating losses and negative cash flows from operations will occur for at least the next several years,and the Company will need to access additional funds to achieve its strategic goals with respect to the licensed technology. Sanovashas paid most of the Company’s operating expenses through December 2020.

 

TheCompany commenced a private offering of shares of its common stock in November 2019 raising approximately $185,000 in 2019 and$1,395,000 in 2020, which private offering continued into 2021 (See Notes D and H). The Company also received a capital contributionof approximately $350,000 from Sanovas in 2019, and also issued common stock to Sanovas Ophthalmology to offset amounts due toSanovas for payment of bills on behalf of the Company of approximately $358,000 and $266,000 during the years ended December 31,2020 and 2019, respectively (See Note C).

 

F-7

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December 31,2020 and 2019

 

NOTEA – HISTORY, BUSINESS PURPOSE, LIQUIDITY AND GOING CONCERN - continued

 

TheCompany will seek to raise substantial funds through the sale of common stock, through debt financing or through establishingstrategic collaboration agreements. In February 2020, the Company entered into an agreement with an investment banker to supportfundraising or strategic transactions. This agreement was terminated in March 2021. In February 2021, the Company entered intoa new agreement with an investment banker to raise funding for the Company. The Company does not know whether additional financingwill be available when needed, whether it will be available on favorable terms, or if it will be available at all. As of the dateof this report, the Company does not have adequate resources to fund its operations through May 2022 without considering any potentialfuture milestone payments that it may receive under any new collaborations that it may enter into in the future or any futurecapital raising transactions. These factors raise substantial doubt about the Company’s ability to continue as a going concern.The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

NOTEB - SIGNIFICANT ACCOUNTING POLICIES

 

Asummary of significant accounting policies consistently applied in the preparation of the accompanying financial statements isas follows:

 

1.	Basis of Presentation

 

TheCompany’s financial statements were prepared in accordance with accounting principles generally accepted in the United Statesof America (“US GAAP”).

 

2.	Cash Equivalents

 

Forpurpose of the statements of cash flows, the Company considers all short-term investments purchased with a maturity of three monthsor less to be cash equivalents.

 

3.	Deferred Offering Costs

 

Deferredoffering costs are expenses directly related to the expected financing. These costs consisted of legal fees that the Company capitalizedwhich will be offset against the proceeds upon completion of the financing.

 

4.	Use of Estimates

 

Inpreparing the Company’s financial statements in conformity with US GAAP, management is required to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date ofthe financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from those estimates.

 

F-8

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTEB - SIGNIFICANT ACCOUNTING POLICIES – continued

 

5.	Income Taxes

 

Incometaxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimatedfuture tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilitiesand their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measuredusing enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected tobe recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income inthe period that includes the enactment date.

 

TheCompany follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification(“ASC”) Topic 740-10 Income Taxes. ASC Topic 740-10 clarifies the accounting for income taxes, by prescribinga minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It alsoprovides guidance on the recognition, measurement, and classification of amounts relating to uncertain tax positions, accountingfor and disclosure of interest and penalties, accounting in interim periods and disclosures. The application of that guidancedid not result in the recognition of any unrecognized tax benefits at December 31, 2020 and 2019. The Company’s policy isto expense any penalties and interest associated with this topic. As of December 31, 2020 and 2019, there were no amounts accruedfor penalties and interest.

 

6.	Income (Loss) Per Common Share

 

TheCompany computes net income (loss) per share in accordance with ASC 260, Earnings Per Share (“EPS”). Underthe provisions of ASC 260, basic net income (loss) per share is computed by dividing the net income (loss) for the period by theweighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividingthe net income (loss) for the period by the weighted-average number of common and common equivalent shares outstanding duringthe period. However, common shares that are considered anti-dilutive are excluded from the computation of diluted EPS. Since theCompany had a loss during the years ended December 31, 2020 and 2019, the basic and diluted net loss per share are the same.

 

Potentiallydilutive securities not included in the computation of loss per share at December 31, 2020 and 2019 included 3,000,000 shares of SeriesF preferred stock, stock options to purchase 1,800,000 shares of common stock, and warrants to purchase 62,500 shares of common stock.The shares of common stock potentially issuable to Diopsys upon resolution of specified contingencies and exercise of options(which, as of December 31, 2020 would have been 4,067,832 shares) are also excluded from the loss per share calculation.

 

F-9

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTEB - SIGNIFICANT ACCOUNTING POLICIES - continued

 

7.	Stock-based Compensation

 

TheCompany recognizes expense for stock-based compensation in accordance with ASC Topic 718, Stock-Based Compensation. Forstock-based awards, the Company calculates the fair value of the award on the date of grant using the Black Scholes option-pricingmodel. The expense is recognized over the service period for awards expected to vest. The estimate of stock-based awards thatwill ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates,such amounts are recorded as a cumulative adjustment in the period the estimates are revised. Stock options granted to non-employeeconsultants are revalued at the end of each reporting period until vested and the changes in their fair value are recorded asadjustments to expense over the related vesting period.

 

8.	Research and Development Costs

 

Researchand development costs are expensed as incurred.

 

9.	Recent Accounting Pronouncements

 

Thefollowing pronouncements may have an impact on the accounting policies of the Company:

 

InAugust 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Classification of Certain Cash Receiptsand Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice on how certain cashreceipts and payments are presented and classified in the statement of cash flows. The standard provides guidance in a numberof situations including, among others, settlement of zero-coupon bonds, contingent consideration payments made after a businesscombination, proceeds from the settlement of insurance claims, and distributions received from equity method investees. ASU 2016-15also provides guidance for classifying cash receipts and payments that have aspects of more than one class of cash flows. ASU2016-15 is effective for the Company’s fiscal year beginning January 1, 2019. Early adoption is permitted. The standardrequires application using a retrospective transition method. The impact of adoption on the Company’s financial statementswas not significant.

 

Avariety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations. Dueto the tentative and preliminary nature of those proposed standards, management has not determined whether the implementationof such proposed standards would be material to the financial statements of the Company.

 

NOTEC - RELATED PARTY TRANSACTIONS

 

The Company is related to Sanovas through commonownership and management. Commencing in 2019, Sanovas began paying invoices on behalf of the Company, and began allocating a portionof salaries and infrastructure costs to the Company and other entities where Sanovas was performing shared services. Included in suchallocated costs is approximately $780,000 in costs related to an officer and consultant to the Company in both the years ended December31, 2020 and 2019. The Company and Sanovas did not have specific terms of repayment. At December 31, 2019, Sanovas retired the debtdue from the Company through the issuance of 266,056 shares of common stock to Sanovas Ophthalmology. In July 2020, the Company issued358,126 shares of common stock to Sanovas Ophthalmology to retire the then estimated debt due from the Company.

 

F-10

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

Thefollowing summarizes the transactions between the Company and Sanovas for the years ended December 31, 2020 and 2019:

 SCHEDULE OF RELATED PARTY TRANSACTIONS

		Year ended December 31,
		2020				2019
Balance due from Sanovas – beginning of period			-				-
Costs paid by Sanovas on the Company’s behalf		$	127,967			$	26,837
Costs of Sanovas allocated to the Company			1,301,246				692,420
Repayment of costs charged by Sanovas to the Company			(1,086,156	)			(103,200	)
Subtotal			343,057				616,057
Capital Contribution by Sanovas (see Note F)			-				(350,000	)
Retirement of due to Sanovas through issuance of 358,126 and 266,056 shares of common stock to Sanovas Ophthalmology in 2020 and 2019, respectively			(358,126	)			(266,057	)
Balance due from Sanovas		$	15,069			$	0

 

NOTED - COMMON AND PREFERRED STOCK

 

Pursuantto the Company’s Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),filed with the Delaware Secretary of State on January 8, 2018, the Company is authorized to issue 40,000,000 shares of preferredstock and 80,000,000 shares of common stock each with a par value of $0.0001 per share. The Company has designated 3,000,000 sharesof preferred stock as Series F preferred stock.

 

Pursuant to the terms of an employment agreementdated January 1, 2012 (the “Effective Date”) by and between Sanovas and Lawrence Gerrans, the then President and Chief ExecutiveOfficer of Sanovas (the “Original Employment Agreement”), in consideration for Mr. Gerrans’ services, Mr. Gerrans wasto receive, among other consideration, the following equity securities: (i) 441,177 shares of restricted common stock of each of thewholly-owned subsidiaries of Sanovas, as of the Effective Date (the “Affiliate Subsidiaries”), representing 7.5% of the totalequity capital of each such subsidiary issued and outstanding as of the date of grant; and (ii) 5,000 shares of Series F preferred stockof Sanovas and each of the Affiliate Subsidiaries. The Company was incorporated in Delaware on November 17, 2017, subsequent to the EffectiveDate, and as such these shares were never issued by the Company because the Company was not an Affiliate Subsidiary of Sanovas. Thereafter,in May 2015, Mr. Gerrans’ Original Employment Agreement was amended and restated with an effective date of January 1, 2012 (the“Amended and Restated Employment Agreement”), the same as the Effective Date of the Original Employment Agreement. Pursuantto the Amended and Restated Employment Agreement, in consideration for Mr. Gerrans’ services, Mr. Gerrans was to receive, amongother consideration, the following equity securities: (i) 7.5% of the total equity capital of each of Sanovas’ Affiliate Subsidiariesas of the Effective Date or thereafter formed (collectively, the “New Subsidiaries”); and (ii) 5,000 shares of Series F preferredstock of Sanovas, each of the Affiliate Subsidiaries and each of the New Subsidiaries, including the Company. Subsequently, pursuantto a board resolution dated December 1, 2017 approved by Lawrence Gerrans, the Company’s then Chief Executive Officer, Presidentand sole director, in 2018 the Company issued 27,000,000 shares of its common stock to Sanovas Ophthalmology LLC, and issued 3,000,000shares of its Series F preferred stock to Halo Management LLC (“Halo”), an entity owned by Mr. Gerrans, for certain enumeratedconsideration that was purported to have been provided. Thereafter, and in part based upon the evidence and testimony presented, andverdict and conviction rendered, in the Criminal Action (discussed below), including, but not limited to, the fact that Mr. Gerrans misledand coerced the board of Sanovas regarding the terms and need for approval of the Amended and Restated Employment Agreement, the Company’sboard of directors, acting in concert with the board of directors of Sanovas, carried out an investigation with respect to actions takenby Mr. Gerrans and have determined that Halo did not provide us with valid consideration for the Series F preferred stock, and the Companydisputes whether any of the shares of the Company issued to Halo were validly issued.

 

In January 2020, a jury in the United States DistrictCourt for the Northern District of California found Mr. Gerrans guilty, in a criminal proceeding (the “Criminal Action”),on 12 felony counts of wire fraud, money laundering, perjury, contempt of court, witness tampering, and obstruction of justice in connectionwith his activities as an officer and director of Sanovas. Thereafter, in November 2020, Sanovas commenced an action in the Court ofChancery of the State of Delaware (the “Delaware Action”) against Halo and Mr. Gerrans seeking an order declaring that anyrights that Halo and/or Mr. Gerrans may have with respect to any equity securities in Sanovas and each of its affiliated subsidiaries(including, but not limited to, the Company) are void or voidable and may be cancelled. The Delaware Action is currently still pending.The Company intends to take any and all actions required to assist Sanovas in obtaining a judgement against Halo and Mr. Gerrans in theDelaware Action declaring any shares issued to them void or voidable. In the event that Sanovas is successful in obtaining a judgementagainst Halo and Mr. Gerrans in the Delaware Action declaring any shares issued to them void or voidable, the Company’s board ofdirectors intends to take action to cancel any such shares. Alternatively, the Company’s board of directors continues to considerand explore any and all other actions or remedies which may be available to the Company to cancel such shares and/or declare such sharesvoid or voidable. While no definitive action has been taken by the Company’s board of directors to date, the Company currentlyexpects its board of directors to determine an appropriate course of action based upon the outcome of the Delaware Action.

 

F-11

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTED - COMMON AND PREFERRED STOCK (CONTINUED)

 

CommonStock

 

During2019, the Company commenced a private offering of its shares of common stock at a purchase price of $1.00 per share, pursuantto which the Company sold an aggregate of 1,405,141 and 185,000 shares of its common stock during the years ended December 31,2020 and 2019, respectively. The Company incurred approximately $10,000 of costs attributable to this offering which has beenrecorded as a reduction of additional paid-in capital in the accompanying financial statements. At December 31, 2019 there wasa $25,000 stockholder refund payable due to a cancelled stock purchase agreement, which was repaid in 2020.

 

Thecommon shareholders, voting as a separate class, are entitled to elect one member of the Board of Directors.

 

F-12

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTED - COMMON AND PREFERRED STOCK (CONTINUED)

 

PreferredStock

 

Therights and privileges of the Series F preferred stock are summarized as follows:

 

VotingPrivileges and Protective Features:

Eachholder of outstanding shares of Series F preferred stock is entitled to cast the number of votes equal to the number of wholeshares of common stock into which the Series F preferred stock held by such holder are convertible as of the record date for determiningstockholders entitled to vote on such matter. The holders of record of a majority of outstanding Series F preferred stock shallbe entitled to elect two of the members of the Board of Directors of the Company. The right to elect two directors shall terminateon the date upon which there are less than 25,000 shares of Series F preferred stock issued and outstanding.

 

Forso long as at least 25,000 shares of Series F preferred stock remain outstanding, the vote or written consent of the holders ofthe majority of the outstanding shares of Series F preferred stock is necessary for the Company to conduct certain corporate actions,including but not limited to merger, consolidation or dissolution of the Company; certain amendments to the Certificate of Incorporationor bylaws of the Company; authorization or issuance of shares of any additional class or series of capital stock unless the sameranks on parity or junior to the Series F preferred stock with respect to voting rights.

 

Redemption:

TheSeries F preferred stock does not have redemption features.

 

Dividends:

Thereis no stated dividends on the Series F preferred stock.

 

Conversion:

Eachshare of Series F preferred stock is convertible, at the option of the holder, at any time and from time to time into shares ofcommon stock at a conversion rate as is determined by dividing the Series F Original Issue Price by the Series F Conversion Price.“Series F Original Issue Price” initially means $0.01 and “Series F Conversion Price” initially means$0.01 as adjusted for any dilutive transaction such as stock splits, certain dividends, mergers or acquisitions.

 

Allof the outstanding shares of Series F preferred stock will automatically convert into shares of the Company’s common stockupon the consummation of an underwritten public offering pursuant to an effective registration statement under the SecuritiesAct of 1933, as amended, resulting in gross proceeds of at least $15,000,000 to the Company or upon written consent of at least67% of the Series F preferred shareholders.

 

F-13

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTEE - STOCK PLAN

 

TheCompany has reserved 10,000,000 shares of common stock for issuance to employees or consultants from the RetinalGenix TechnologiesInc. 2017 Equity Incentive Plan (the “Plan”). The Company may grant stock options, restricted stock or other typesof equity incentive instruments under the Plan. There were no stock option awards issued through December 31, 2018.

 

InApril 2019, the Company issued stock options to purchase up to 2,500,000 shares of the Company’s common stock at an exerciseprice of $0.0001 per share to consultants pursuant to the Plan. These options were fully vested upon issuance and were exercisedin the second quarter of 2019. The estimated fair value of the stock options of $250 was recognized as an expense during the yearended December 31, 2019, since they were fully vested upon issuance.

 

InNovember 2019, the Company issued stock options to purchase up to 1,800,000 shares of common stock at an exercise price of $1.00per share to members of the Company’s medical advisory board and consultants pursuant to the Plan. The options vest overa five year period and were unexercised at December 31, 2020 and 2019. The estimated aggregate fair value of the stock optionswas determined to be $1,101,028 using a Black Scholes model.

 

TheCompany recognized $220,206 and $27,776 of compensation expense during the years ended December 31, 2020 and 2019, respectively,related to all stock options which is included in the accompanying statements of operations. As of December 31, 2020, there wasapproximately $1,074,000 of total unrecognized compensation expense related to non-vested share-based compensation arrangementsgranted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately 3.8 years.

 

AtDecember 31, 2020, there are 5,700,000 shares available to be issued under the Plan. The following table summarizes stock optionactivity of the Plan during 2020 and 2019:

 SCHEDULEOF STOCK OPTION ACTIVITY

		Options Issued				Weighted-Average Exercise Price
Options outstanding December 31, 2018			-				-
Granted			4,300,000			$	0.42
Canceled			-				-
Exercised			(2,500,000	)		$	0.0001
Options outstanding – December 31, 2019			1,800,000			$	1.00
Granted			-				-
Canceled			-				-
Exercised			-				-
Options outstanding – December 31, 2020			1,800,000			$	1.00

 

F-14

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTEE - STOCK PLAN (continued)

 

Additionalinformation regarding the exercisable options and average remaining contractual life of the options outstanding as of December31, 2020 is as follows:

 SCHEDULE OF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Exercise Price				Number Outstanding				Weighted Average Remaining Contractual Life				Number Exercisable at December 31, 2020				Number Exercisable at December 31, 2019
$	1.00				1,800,000				4 Years				405,000				45,000

 

Thefair value of each option grant was estimated on the date of grant to be $0.61 per share using the Black-Scholes option-pricingmodel with the following assumption weighted-averages in 2019:

 SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS

Risk-free interest rates			2.38	%
Expected life in years			5.0
Expected volatility			73.1	%
Expected dividend yield			0	%
Fair value common stock		$	1.00

 

Therisk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero-coupon issues witha remaining term commensurate with the expected term of the award. Management has estimated expected volatility based on similarcomparable industry sector averages. Expected life of the option represents the period of time options are expected to be outstanding.The estimate for dividend yield is 0% because the Company has not historically paid, and does not intend to pay a dividend onits common stock in the foreseeable future.

 

NOTEF - WARRANTS

SCHEDULEOF WARRANTS FAIR VALUE ASSUMPTIONS

Risk-free interest rates			2.42	%
Expected life in years			3.5
Expected volatility			73.1	%
Expected dividend yield			0	%
Fair value common stock		$	1.00

 

InMarch 2019, the warrant holders paid $929 to exercise warrants to purchase 9,288,000 shares of common stock granted in 2018 tothe Chief Executive Officer of the Company and a consultant at an exercise price of $0.0001 per share. In May 2019, the Companyadjusted the warrants issued (due to a previous mathematical error in the computation of the amount of the warrants issued) tosuch warrant holders, decreasing the awards by an aggregate of 324,000 shares of common stock. The Company refunded the excessexercise price of these 324,000 shares of common stock (or $32) in May 2019. Therefore, during 2019, the net amount of sharesissued were 8,964,000 shares of common stock for proceeds of $896.

 

F-15

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

SanovasOffering

 

During2019, Sanovas commenced a $5,000,000 offering of its common stock designed to raise funds for both Sanovas and the Company. Pursuantto a special offer issued by Sanovas, if an investor in Sanovas exercised their Series A, A-1, or A-2 warrants between December24, 2018 and September 1, 2019, then a portion of the proceeds would be used to fund the business of the Company through a capitalcontribution. A total of $350,000 was contributed to the capital of the Company pursuant to this investment option. The Companydid not receive the proceeds from this offering, but instead offset amounts due to Sanovas (see Note C). Further, certain investorsin this special offering during 2019 also received three-year warrants to purchase an aggregate of 62,500 shares of the Company’scommon stock at an exercise price of $1.00 per share. The fair value of such warrants (calculated under the Black Scholes model)of $38,230 is treated as a deemed dividend for financial reporting purposes.

 

Thefollowing table summarizes warrant activity during 2020 and 2019:

 SCHEDULE OF WARRANTS ACTIVITY

		Warrants Issued				Weighted-Average Exercise Price
Warrants outstanding - December 31, 2018			8,640,000			$	0.0001
Granted			62,500			$	1.00
Canceled			-				-
Exercised			(8,640,000	)		$	0.0001
Warrants outstanding – December 31, 2019			62,500			$	1.00
Granted			-				-
Canceled			-				-
Exercised			-				-
Warrants outstanding – December 31, 2020			62,500			$	1.00

 

Additionalinformation regarding the exercisable warrants and average remaining contractual life of the warrants outstanding as of December31, 2020 is as follows:

 SCHEDULE OF WARRANTS OUTSTANDING

Exercise Price				Number Outstanding				Weighted Average Remaining Contractual Life				Number Exercisable
$	1.00				62,500				2.5 Years				62,500

 

F-16

 

 

RETINALGENIX TECHNOLOGIES INC.

NOTES TO FINANCIAL STATEMENTS

 

December31, 2020 and 2019

 

NOTEG – INCOME TAXES

 

AtDecember 31, 2020, the Company had net operating loss carryforwards (“NOL”) of approximately $2,058,000 for federal incometax purposes of which $1,283,000 has no expiration date, $775,000 which begins to expire in 2034, and approximately $2,058,000 for stateincome tax purposes which begins to expire in 2030.

 

Theresultant net deferred tax assets of approximately $788,000 and $232,000 at December 31, 2020 and December 31, 2019, respectively,has been fully reserved due to the uncertainty of future realization. The valuation allowance increased by approximately $556,000and $232,000 at December 31, 2020 and December 31, 2019, respectively. In assessing the realizability of deferred tax assets,management considered whether it is more likely than not that some portion or all of the deferred taxes will not be realized.The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods inwhich those temporary differences become deductible.

 

Dueto the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s NOL carryforwardsmay be subject to annual limitations against taxable income in future periods, which could substantially limit the eventual utilizationof such carryforwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficialownership and therefore no determination has been made whether the NOL carryforward is subject to any Internal Revenue Code Section382 limitation. To the extent there is a limitation, there would be a reduction in the deferred tax asset with an offsetting reductionin the valuation allowance.

 

Theopen years for tax examination are 2017 and thereafter.

 

NOTEH - SUBSEQUENT EVENTS

 

Subsequentevents were reviewed through June 24, 2021, the date these financial statements were available for issuance.

 

FromJanuary 2021 through June 24, 2021, the Company sold 664,973 shares of its common stock at $1.00 per share pursuant to the offeringdescribed in Note D.

 

In2021, the Company finalized the issuance of warrants to purchase 150,000 shares of common stock at $1.10 per share vesting throughJune 2021, and exercisable over 7 years, to a consulting firm.

 

OnJune 24, 2021, the Company entered into a sublicense agreement (“Sublicense Agreement”) with Sanovas Ophthalmologypursuant to which Sanovas Ophthalmology granted the Company an exclusive worldwide (“Territory”) license to certainintellectual property licensed to Sanovas Ophthalmology by Sanovas Intellectual Property LLC relating to certain technologiesfor eye and ocular visualization and monitoring (“Licensed IP”) for uses related to the screening, examination, diagnosis,prevention and/or treatment of any eye disease, medical condition or disorder, or any disease, medical condition or disorder affectingthe eye. Pursuant to the Sublicense Agreement, commencing on the date of the first commercial sale of a Licensed Product (as definedin the Sublicense Agreement), in each country in the Territory and continuing on a country by country basis until the expirationor termination of the last Valid Claim (as defined in the Sublicense Agreement) of a licensed patent in such country (the “RoyaltyEnd Date”), the Company shall pay Sanovas Ophthalmology a royalty equal to a mid-single digit percentage of any Net Sales(as defined in the Sublicense Agreement) of any Licensed Product. The Sublicense Agreement shall continue until the Royalty EndDate, unless earlier terminated pursuant to its terms. The Sublicense Agreement may be terminated by either party if the otherparty materially breaches the Sublicense Agreement in a manner that cannot be cured, or materially breaches the Sublicense Agreementin a manner that can be cured, and such breach remains uncured for more than 30 days after the receipt by the breaching partyof notice specifying the breach. Furthermore, the Company may terminate the Sublicense Agreement at any time upon 90 days writtennotice to Sanovas Ophthalmology.

 

 

RETINALGENIXTECHNOLOGIES INC.

BALANCESHEETS

 

		September 30, 2021 (Unaudited)				December 31, 2020
ASSETS
Current Assets
Cash		$	36,578			$	2,219
Due from Sanovas			-				15,069
Deferred Offering Costs			-				43,787
Total Current Assets			36,578				61,075
TOTAL ASSETS		$	36,578			$	61,075
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts Payable			210,873				141,431
Due to Sanovas			164,233				-
Shareholder’s Loans			73,000				-
Accrued Interest			1,180				-
Total Liabilities			449,286				141,431
Stockholders’ Deficit:
Preferred stock, $0.0001 par value; 40,000,000 shares authorized; Series F preferred stock, 3,000,000 shares designated, issued and outstanding at September 30, 2021 and December 31, 2020			300				300
Preferred stock, Value			300				300
Common stock, $0.0001 par value; 80,000,000 shares authorized; 41,933,654 and 40,678,323 shares issued and outstanding at September 30, 2020 and December 31, 2020, respectively			4,194				4,067
Common stock, Value			4,194				4,067
Additional paid in capital			4,277,676				2,840,599
Preferred stock subscription receivable			(300	)			(300	)
Accumulated deficit			(4,694,578	)			(2,925,022	)
Total stockholders’ deficit			(412,708	)			(80,356	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	36,578			$	61,075

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF OPERATIONS (Unaudited)

 

		For The Nine Months Ended
		September 30,
		2021				2020
Revenue		$	-			$	-
Costs and expenses
Administrative			949,945				1,077,450
Research and Development			565,564				222,193
Stock-based compensation			252,867				165,153
Total Operating Expenses			1,768,376				1,464,796
(Loss) from operations
Interest expense			1,180				-
Net Loss		$	(1,769,556	)		$	(1,464,796	)
Net Loss per share - basic and diluted		$	(0.04	)		$	(0.04	)
Weighted average number of common shares outstanding during the period- basic and diluted			41,303,545				39,507,084

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF OPERATIONS (Unaudited)

 

		For The Three Months Ended
		September 30,
		2021				2020
Revenue		$	-			$	-
Costs and expenses
Administrative			293,893				413,151
Research and Development			200,899				98,896
Stock-based compensation			55,051				55,051
Total Operating Expenses			549,843				567,098
(Loss) from operations
Interest expense			1,180				-
Net Loss		$	(551,023	)		$	(567,098	)
Net Loss per share - basic and diluted		$	(0.01	)		$	(0.01	)
Weighted average number of common shares outstanding during the period- basic and diluted			41,825,154				39,996,806

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF STOCKHOLDERS’ EQUITY (DEFICIT)

NINEMONTHS ENDED SEPTEMBER 30, 2021 (Unaudited)

 

		Shares Outstanding				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total
Balance as at December 31, 2020			40,678,323			$	4,067			$	2,840,599			$	(2,925,022	)		$	(80,356	)
Stock purchased by investors			398,097				40				398,057								398,097
Stock based compensation											111,487								111,487
Exercise of warrants
Exercise of warrants, shares
Retirement of due to Sanovas through the issuance of shares of common stock to Sanovas Ophthalmology LLC
Retirement of due to Sanovas through the issuance of shares of common stock to Sanovas Ophthalmology LLC, shares
Costs of stock sales
Net loss															(683,681	)			(683,681	)
Balance as at March 31, 2021			41,076,420				4,107				3,350,143				(3,608,703	)			(254,453	)
Stock purchased by investors			263,376				27				263,349								263,376
Stock based compensation											86,329								86,329
Exercise of warrants			13,500				1				13,499								13,500
Retirement of due to Sanovas through the issuance of shares of common stock to Sanovas Ophthalmology LLC			390,358				39				390,319								390,358
Net loss															(534,852	)			(534,852	)
Balance as at June 30, 2021			41,743,654				4,174				4,103,639				(4,143,555	)			(35,742	)
Stock purchased by investors			190,000				20				189,980								190,000
Stock based compensation											55,051								55,051
Costs of stock sales											(70,994	)							(70,994	)
Net loss															(551,023	)			(551,023	)
Balance as at September 30, 2021			41,933,654			$	4,194			$	4,277,676			$	(4,694,578	)		$	(412,708	)

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTSOF STOCKHOLDERS’ EQUITY (DEFICIT)

NINEMONTHS ENDED SEPTEMBER 30, 2020 (Unaudited)

 

		Shares Outstanding				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total
Balance as at December 31, 2019			38,915,056			$	3,892			$	867,301			$	(847,029	)		$	24,164
Stock purchased by investors			377,000				38				376,962								377,000
Stock based compensation											55,051								55,051
Net loss															(466,837	)			(466,837	)
Balance as at March 31, 2020			39,292,056				3,930				1,299,314				(1,313,866	)			(10,622	)
Stock purchased by investors			257,670				26				257,644								257,670
Stock based compensation											55,051								55,051
Net loss															(430,861	)			(430,861	)
Balance as at June 30, 2020			39,549,726				3,956				1,612,009				(1,744,727	)			(128,762	)
Beginning balance, value			39,549,726				3,956				1,612,009				(1,744,727	)			(128,762	)
Stock purchased by investors			416,658				42				416,616								416,658
Stock based compensation											55,051								55,051
Retirement of due to Sanovas through the issuance of shares of common stock to Sanovas Ophthalmology LLC			358,126				36				358,090								358,126
Net loss															(567,098	)			(567,098	)
Balance as at September 30, 2020			40,324,510			$	4,034			$	2,441,766			$	(2,311,825	)		$	133,975
Ending balance, value			40,324,510			$	4,034			$	2,441,766			$	(2,311,825	)		$	133,975

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

STATEMENTS OF CASH FLOWS (Unaudited)

 

		For The Nine Months Ended
		September 30,
		2021				2020
Cash Flows From Operating Activities
Net Loss		$	(1,769,556	)		$	(1,464,796	)
Stock based compensation expense			252,867				165,153
Costs and expenses paid on behalf of Company by Sanovas, net			569,657				236,739
Changes in operating assets and liabilities:
Increase in accounts payable			69,446				12,282
Increase in accrued interest			1,180				-
Total Adjustments			893,150				414,174
Net cash used in operating activities			(876,406	)			(1,050,622	)
Cash Flows From Financing Activities
Proceeds from common stock sold, net of costs			824,265				1,051,331
Proceeds from exercise of warrants			13,500				-
Proceeds from shareholder loans			73,000				-
Proceeds from exercise of options			-				250
Change in stockholders refund payable, net			-				(25,000	)
Net cash provided by financing activities			910,765				1,026,331
Net increase (decrease) in cash			34,359				(24,291	)
Cash at beginning of period			2,219				54,381
Cash at end of period		$	36,578			$	30,090
Supplemental information:
Retirement of due to Sanovas to capital through the issuance of common stock to Sanovas Ophthalmology LLC (Note C)		$	390,358			$	358,126
Capital contribution by Sanovas		$	-			$	-

 

Theaccompanying notes are an integral part of these financial statements.

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEA – HISTORY, BUSINESS PURPOSE, LIQUIDITY AND GOING CONCERN

 

RetinalGenixTechnologies Inc. (the “Company”), a Delaware corporation, was formed in November 2017 by Sanovas Ophthalmology, LLC (“SanovasOphthalmology”), a majority owned subsidiary of Sanovas Inc. (“Sanovas”), a privately held research and developmentincubator. At September 30, 2021 and December 31, 2020, Sanovas Ophthalmology owns a majority of the outstanding stock of the Company.During the nine months ended September 30, 2021 and 2020, substantially all of the operations of the Company were conducted by Sanovas,who invoices the Company for reimbursement for services and costs performed on behalf of the Company.

 

TheCompany was formed to develop technologies to diagnose and treat optical disorders. The Company sublicensed certain technology initiallydeveloped by Sanovas from Sanovas Ophthalmology – See Note C. Since 2018, the Company has been developing its screening deviceand home monitoring and physician alert system.

 

InOctober 2021, the Company filed a registration on Form S-1 (the “Registration Statement”) with the Securities and ExchangeCommission pursuant to which it registered for resale shares of common stock, including shares of common stock issuable upon exerciseof outstanding options and warrants. The Company did not raise any cash from the resale of the securities offered by the RegistrationStatement, and accordingly, the previously deferred offering costs were applied against the proceeds of the shares of common stock soldfrom 2019 through September 30, 2021 pursuant to the Company’s previous private offering of securities.

 

OnOctober 8, 2019, the Company entered into an option exchange agreement (the “Option Exchange Agreement”) with Diopsys, Inc.(“Diopsys”) pursuant to which the Company shall issue Diopsys an option to purchase up to 10% of its issued and outstandingshares of common stock and Diopsys shall grant the Company an option to purchase up to 10% of the issued and outstanding shares of commonstock of Diopsys on the Closing Date (the “Option Exchange”). “Closing Date” means a date that is within 30 daysof the date that all of the contingencies set forth in the Option Exchange Agreement are satisfied including, but not limited to, approvalof a product by the U.S. Food and Drug Administration. In addition, pursuant to the Option Exchange Agreement, upon the closing of theOption Exchange, the Company shall enter into an exclusive distribution agreement with Diopsys pursuant to which Diopsys shall act asthe Company’s exclusive distributor of such product.

 

Liquidityand Going Concern

 

TheCompany expects that operating losses and negative cash flows from operations will occur for at least the next several years, and theCompany will need to access additional funds to achieve its strategic goals with respect to the sublicensed technology. Sanovas has paidmost of the Company’s operating expenses through September 2021.

 

TheCompany commenced private offerings of shares of its common stock raising gross proceeds of approximately $1,395,000in the year ended December 31, 2020, and$851,000for the nine months ended September 30, 2021- See Note D. The Company also issued shares of its common stock to offset amounts due to Sanovas for payment of bills on behalf of theCompany of $390,358in June 2021 and $358,126in July 2020, respectively.

 

F-24

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEA – HISTORY, BUSINESS PURPOSE, LIQUIDITY AND GOING CONCERN - continued

 

TheCompany will seek to raise substantial funds through the sale of common stock, through debt financing and/or through establishing strategiccollaboration agreements. In February 2020, the Company entered into an agreement with an investment banker to support fundraising orstrategic transactions. This agreement was terminated in March 2021. In February 2021, the Company entered into a new agreement withan investment banker to raise funds for the Company. The Company does not know whether additional financing will be available when needed,whether it will be available on favorable terms, or if it will be available at all. As of the date of this report, the Company does nothave adequate resources to fund its operations through September 2022 without considering any potential future milestone payments thatit may receive under any new collaborations that it may enter into in the future or any future capital raising transactions. These factorsraise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include anyadjustments that might result from the outcome of this uncertainty.

 

NOTEB - SIGNIFICANT ACCOUNTING POLICIES

 

Asummary of significant accounting policies consistently applied in the preparation of the accompanying financial statements is as follows:

 

1.Basis of Presentation

 

TheCompany’s financial statements were prepared in accordance with accounting principles generally accepted in the United States ofAmerica (“US GAAP”).

 

2.Cash Equivalents

 

Forpurpose of the statements of cash flows, the Company considers all short-term investments purchased with a maturity of three months orless to be cash equivalents.

 

3.Deferred Offering Costs

 

Deferredoffering costs are expenses directly related to an expected financing. These costs consisted of legal fees that the Company capitalizedwhich will be offset against the proceeds upon completion of such future financing. During the quarter ended September 30, 2021, allsuch costs were charged against additional paid in capital for the funds raised during 2021.

 

4.Use of Estimates

 

Inpreparing the Company’s financial statements in conformity with US GAAP, management is required to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financialstatements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates.

 

F-25

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEB - SIGNIFICANT ACCOUNTING POLICIES - continued

 

5.Income Taxes

 

Incometaxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated futuretax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities andtheir respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enactedtax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactmentdate.

 

TheCompany follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)Topic 740-10 Income Taxes. ASC Topic 740-10 clarifies the accounting for income taxes by prescribing a minimum recognition thresholda tax position is required to meet before being recognized in the financial statements. It also provides guidance on the recognition,measurement, and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties,accounting in interim periods and disclosures. The application of that guidance did not result in the recognition of any unrecognizedtax benefits at September 30, 2021 or December 31, 2020. The Company’s policy is to expense any penalties and interest associatedwith this topic. At September 30, 2021 and December 31, 2020, there were no amounts accrued for penalties and interest.

 

6.Income (Loss) Per Common Share

 

TheCompany computes net income (loss) per share in accordance with ASC 260, Earnings Per Share (“EPS”). Under the provisionsof ASC 260, basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average numberof common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) forthe period by the weighted-average number of common and common equivalent shares outstanding during the period. However, common sharesthat are considered anti-dilutive are excluded from the computation of diluted EPS. Since the Company had a loss during the nine monthsended September 30, 2021 and 2020, the basic and diluted net loss per share are the same.

 

Potentiallydilutive securities not included in the computation of loss per share for the nine months ended September 30, 2021 included 3,000,000shares of Series F preferred stock, stock options to purchase 1,820,000 shares of common stock, and warrants to purchase 199,000 sharesof common stock. Potentially dilutive securities not included in the computation of loss per share for the nine months ended September30, 2020 included 3,000,000 shares of Series F preferred stock, stock options to purchase 1,800,000 shares of common stock, and warrantsto purchase 62,500 shares of common stock. The shares of common stock potentially issuable to Diopsys upon the resolution of specifiedcontingencies and exercise of stock options (which as of September 30, 2021 would have been approximately 4,193,000 shares) are alsoexcluded from the loss per share calculation.

 

F-26

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEB - SIGNIFICANT ACCOUNTING POLICIES - continued

 

7.Stock-based compensation:

 

TheCompany recognizes expense for stock-based compensation in accordance with ASC Topic 718, Stock-Based Compensation. For stock-basedawards, the Company calculates the fair value of the award on the date of grant using the Black Scholes option-pricing model. The expenseis recognized over the service period for awards expected to vest. The estimate of stock-based awards that will ultimately vest requiresjudgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulativeadjustment in the period the estimates are revised. Stock options granted to non-employee consultants are revalued at the end of eachreporting period until vested and the changes in their fair value are recorded as adjustments to expense over the related vesting period.

 

8.Research and Development costs:

 

Researchand development costs are expensed as incurred.

 

9.Recent Accounting Pronouncements:

 

Thefollowing pronouncement may have an impact on the accounting policies of the Company:

 

InAugust 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Classification of Certain Cash Receipts andCash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice on how certain cash receipts andpayments are presented and classified in the statement of cash flows. The standard provides guidance in a number of situations including,among others, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from thesettlement of insurance claims, and distributions received from equity method investees. ASU 2016-15 also provides guidance for classifyingcash receipts and payments that have aspects of more than one class of cash flows. ASU 2016-15 is effective for the Company’s fiscalyear beginning January 1, 2019. The standard requires application using a retrospective transition method. The impact of adoption onthe Company’s financial statements was not significant.

 

Avariety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations. Due to thetentative and preliminary nature of those proposed standards, management has not determined whether the implementation of such proposedstandards would be material to the financial statements of the Company.

 

NOTEC - RELATED PARTY TRANSACTIONS

 

TheCompany is related to Sanovas through common ownership and management. Commencing in 2019, Sanovas began paying invoices on behalf ofthe Company, and began allocating a portion of salaries and infrastructure costs to the Company and other entities where Sanovas wasperforming shared services. Included in such allocated costs is approximately $360,000 in costs related to an officer and consultantto the Company in both the nine months ended September 30, 2021 and 2020. The Company and Sanovas did not have specific terms of repayment.In June 2021 and July 2020, the Company issued 390,358 and 358,126 shares of common stock, respectively, to Sanovas Ophthalmology toretire the then estimated debt due from the Company.

 

F-27

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEC - RELATED PARTY TRANSACTIONS, continued

 

Thefollowing summarizes the transactions between the Company and Sanovas for the nine months ended September 30, 2021 and 2020:

 SCHEDULEOF RELATED PARTY TRANSACTIONS

		Nine Months Ended September 30,
		2021				2020
Balance due from Sanovas – beginning of period		$	(15,069	)		$	-
Costs paid by Sanovas on the Company’s behalf			34,510				87,785
Costs of Sanovas allocated to the Company			750,639				1,248,154
Repayment of costs charged by Sanovas to the Company			(215,489	)			(1,099,200	)
Subtotal			554,591				236,739
Retirement of due to Sanovas through the issuance of 390,358 and 358,126 shares of common stock to Sanovas Ophthalmology, respectively			(390,358	)			(358,126	)
Balance due to Sanovas at September 30,		$	164,233			$	(121,387	)

 

Sublicense

 

OnJune 24, 2021, the Company entered into a sublicense agreement (“Sublicense Agreement”) with Sanovas Ophthalmology pursuantto which Sanovas Ophthalmology granted the Company an exclusive worldwide (“Territory”) license to certain intellectual propertylicensed to Sanovas Ophthalmology by Sanovas Intellectual Property LLC relating to certain technologies for eye and ocular visualizationand monitoring (“Licensed IP”) for uses related to the screening, examination, diagnosis, prevention and/or treatment ofany eye disease, medical condition or disorder, or any disease, medical condition or disorder affecting the eye. Pursuant to the SublicenseAgreement, commencing on the date of the first commercial sale of a Licensed Product (as defined in the Sublicense Agreement), in eachcountry in the Territory and continuing on a country by country basis until the expiration or termination of the last Valid Claim (asdefined in the Sublicense Agreement) of a licensed patent in such country (the “Royalty End Date”), the Company shall paySanovas Ophthalmology a royalty equal to a mid-single digit percentage of any Net Sales (as defined in the Sublicense Agreement) of anyLicensed Product. The Sublicense Agreement shall continue until the Royalty End Date, unless earlier terminated pursuant to its terms.The Sublicense Agreement may be terminated by either party if the other party materially breaches the Sublicense Agreement in a mannerthat cannot be cured, or materially breaches the Sublicense Agreement in a manner that can be cured and such breach remains uncured formore than 30 days after the receipt by the breaching party of notice specifying the breach. Furthermore, the Company may terminate theSublicense Agreement at any time upon 90 days written notice to Sanovas Ophthalmology.

 

F-28

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTED - COMMON AND PREFERRED STOCK

 

Pursuantto the Company’s Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),filed with the Delaware Secretary of State on January 8, 2018, the Company is authorized to issue 40,000,000 shares of preferred stockand 80,000,000 shares of common stock each with a par value of $0.0001 per share. The Company has designated 3,000,000 shares of preferredstock as Series F preferred stock.

 

Pursuantto the terms of an employment agreement dated January 1, 2012 (the “Effective Date”) by and between Sanovas and LawrenceGerrans, the then President and Chief Executive Officer of Sanovas (the “Original Employment Agreement”), in considerationfor Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) 441,177shares of restricted common stock of each of the wholly-owned subsidiaries of Sanovas, as of the Effective Date (the “AffiliateSubsidiaries”), representing 7.5% of the total equity capital of each such subsidiary issued and outstanding as of the date ofgrant; and (ii) 5,000 shares of Series F preferred stock of Sanovas and each of the Affiliate Subsidiaries. The Company was incorporatedin Delaware on November 17, 2017, subsequent to the Effective Date, and as such these shares were never issued by the Company becausethe Company was not an Affiliate Subsidiary of Sanovas. Thereafter, in May 2015, Mr. Gerrans’ Original Employment Agreement wasamended and restated with an effective date of January 1, 2012 (the “Amended and Restated Employment Agreement”), the sameas the Effective Date of the Original Employment Agreement. Pursuant to the Amended and Restated Employment Agreement, in considerationfor Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) 7.5% ofthe total equity capital of each of Sanovas’ Affiliate Subsidiaries as of the Effective Date or thereafter formed (collectively,the “New Subsidiaries”); and (ii) 5,000 shares of Series F preferred stock of Sanovas, each of the Affiliate Subsidiariesand each of the New Subsidiaries, including the Company. Subsequently, pursuant to a board resolution dated December 1, 2017 approvedby Lawrence Gerrans, the Company’s then Chief Executive Officer, President and sole director, in 2018 the Company issued 27,000,000shares of its common stock to Sanovas Ophthalmology LLC, and issued 3,000,000 shares of its Series F preferred stock to Halo ManagementLLC (“Halo”), an entity owned by Mr. Gerrans, for certain enumerated consideration that was purported to have been provided.Thereafter, and in part based upon the evidence and testimony presented, and verdict and conviction rendered, in the Criminal Action(discussed below), including, but not limited to, the fact that Mr. Gerrans misled and coerced the board of Sanovas regarding the termsand need for approval of the Amended and Restated Employment Agreement, the Company’s board of directors, acting in concert withthe board of directors of Sanovas, carried out an investigation with respect to actions taken by Mr. Gerrans and have determined thatHalo did not provide us with valid consideration for the Series F preferred stock, and the Company disputes whether any of the sharesof the Company issued to Halo were validly issued.

 

InJanuary 2020, a jury in the United States District Court for the Northern District of California found Mr. Gerrans guilty, in a criminalproceeding (the “Criminal Action”), on 12 felony counts of wire fraud, money laundering, perjury, contempt of court, witnesstampering, and obstruction of justice in connection with his activities as an officer and director of Sanovas. Thereafter, in November2020, Sanovas commenced an action in the Court of Chancery of the State of Delaware (the “Delaware Action”) against Haloand Mr. Gerrans seeking an order declaring that any rights that Halo and/or Mr. Gerrans may have with respect to any equity securitiesin Sanovas and each of its affiliated subsidiaries (including, but not limited to, the Company) are void or voidable and may be cancelled.The Delaware Action is currently still pending. The Company intends to take any and all actions required to assist Sanovas in obtaininga judgement against Halo and Mr. Gerrans in the Delaware Action declaring any shares issued to them void or voidable. See Note H.

 

F-29

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

CommonStock

 

During2019, the Company commenced a private offering of its shares of common stock at a purchase price of $1.00 per share, pursuant to whichthe Company sold an aggregate of 1,405,141 shares of its common stock during the year ended December 31, 2020. For the nine months endedSeptember 30, 2021 and 2020, the Company sold and aggregate of approximately 851,000 and 1,051,000 shares of its common stock, respectively.

 

Thecommon shareholders, voting as a separate class, are entitled to elect one member of the Board of Directors.

 

PreferredStock

 

Therights and privileges of the Series F preferred stock are summarized as follows:

 

VotingPrivileges and Protective Features:

 

Eachholder of outstanding shares of Series F preferred stock is entitled to cast the number of votes equal to the number of whole sharesof common stock into which the Series F preferred stock held by such holder are convertible as of the record date for determining stockholdersentitled to vote on such matter. The holders of record of a majority of outstanding Series F preferred stock shall be entitled to electtwo of the members of the Board of Directors of the Company. The right to elect two directors shall terminate on the date upon whichthere are less than 25,000 shares of Series F preferred stock issued and outstanding.

 

Forso long as at least 25,000 shares of Series F preferred stock remain outstanding, the vote or written consent of the holders of the majorityof the outstanding shares of Series F preferred stock is necessary for the Company to conduct certain corporate actions, including, butnot limited to, merger, consolidation or dissolution of the Company; certain amendments to the Certificate of Incorporation or bylawsof the Company; authorization or issuance of shares of any additional class or series of capital stock unless the same ranks on parityor junior to the Series F preferred stock with respect to voting rights.

 

Redemption:

 

TheSeries F preferred stock does not have redemption features.

 

Dividends:

 

Thereis no stated dividends on the Series F preferred stock.

 

Conversion:

 

Eachshare of Series F preferred stock is convertible, at the option of the holder, at any time and from time to time into shares of commonstock at a conversion rate as is determined by dividing the Series F Original Issue Price by the Series F Conversion Price. “SeriesF Original Issue Price” initially means $0.01 and “Series F Conversion Price” initially means $0.01, as adjusted forany dilutive transaction such as stock splits, certain dividends, mergers or acquisitions.

 

Allof the outstanding shares of Series F preferred stock will automatically convert into shares of the Company’s common stock uponthe consummation of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933,as amended, resulting in gross proceeds of at least $15,000,000 to the Company or upon written consent of at least 67% of the SeriesF preferred shareholders.

 

F-30

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEE - STOCK PLAN

 

TheCompany has reserved 10,000,000 shares of common stock for issuance to employees or consultants from the RetinalGenix Technologies Inc.2017 Equity Incentive Plan (the “Plan”). The Company may grant stock options, restricted stock or other types of equity incentiveinstruments under the Plan.

 

InNovember 2019, the Company issued stock options to purchase up to 1,800,000shares of common stock at an exercise price of$1.00per share to members of the Company’s medicaladvisory board and consultants pursuant to the Plan. The options vest over a fiveyear period and were unexercised at December 31,2020 and September 30, 2021. The estimated aggregate fair value of the stock options was determined to be $1,101,028using a Black Scholes model.

 

Inthe nine months ended September 30, 2021, the Company issued stock options to purchase up to 20,000shares of common stock at an exercise price of$1.00per share to members of the Company’s medicaladvisory board and consultants pursuant to the Plan. The options vest immediately and were unexercised at September 30, 2021.The estimated aggregate fair value of the stock options was determined to be approximately $12,200using a Black Scholes model.

 

TheCompany recognized $252,867and $165,153of stock based compensation expense duringthe nine months ended September 30, 2021 and 2020, respectively, related to all stock options and warrants (see Note F) which is includedin the accompanying statements of operations. As of September 30, 2021, there was approximately $688,000of total unrecognized compensation expense relatedto non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-averageperiod of approximately 2.9years.

 

AtSeptember 30, 2021, there were 5,680,000 shares available to be issued under the Plan. The following table summarizes stock option activityof the Plan during 2021 and 2020:

SCHEDULEOF STOCK OPTION ACTIVITY 

		Options Issued				Weighted- Average Exercise Price
Options outstanding – December 31, 2019			1,800,000			$	1.00
Granted			-				-
Canceled			-				-
Exercised			-				-
Options outstanding – December 31, 2020			1,800,000				1.00
Granted			20,000				1.00
Canceled			-				-
Exercised			-				-
Options outstanding – September 30, 2021			1,820,000			$	1.00

 

F-31

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEE - STOCK PLAN (continued)

 

Additionalinformation regarding the exercisable options and average remaining contractual life of the options outstanding as of September 30, 2021is as follows:

SCHEDULEOF STOCK OPTIONS OUTSTANDING AND EXERCISABLE

Exercise Price				Number Outstanding				Weighted Average Remaining Contractual Life				Number Exercisable at December 31, 2020				Number Exercisable at September 30, 2021
$	1.00				1,820,000				3.5 Years				405,000				605,000

 

Thefair value of each option grant was estimated on the date of grant to be $0.61 per share using the Black-Scholes option-pricing modelwith the following assumption weighted-averages in 2020:

 

SCHEDULEOF STOCK OPTIONS FAIR VALUE ASSUMPTIONS

Risk-free interest rates			2.42	%
Expected life in years			5.0
Expected volatility			73.1	%
Expected dividend yield			0	%
Fair value common stock		$	1.00

 

Therisk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero-coupon issues with a remainingterm commensurate with the expected term of the award. Management has estimated expected volatility based on similar comparable industrysector averages. Expected life of the option represents the period of time options are expected to be outstanding. The estimate for dividendyield is 0% because the Company has not historically paid, and does not intend to pay a dividend on its common stock in the foreseeablefuture.

 

NOTEF - WARRANTS

 

In2021, the Company finalized the issuance of warrants to purchase 150,000 shares of common stock at $1.10 per share vesting through June2021, and exercisable over 7 years, to a consulting firm. The fair value of such warrants was estimated on the date of grant to be $0.61per share using the Black-Scholes option-pricing model with the following assumption weighted-averages in 2021:

 

SCHEDULEOF WARRANTS FAIR VALUE ASSUMPTIONS

Risk-free interest rates			2.42	%
Expected life in years			3.5
Expected volatility			73.1	%
Expected dividend yield			0	%
Fair value common stock		$	1.00

 

F-32

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

Therisk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero-coupon issues with a remainingterm commensurate with the expected term of the award. Management has estimated expected volatility based on similar comparable industrysector averages. Expected life of the option represents the period of time options are expected to be outstanding. The estimate for dividendyield is 0%because the Company has not historically paid,and does not intend to pay a dividend on its common stock in the foreseeable future. The Company recognized stock-based compensationexpense related to these warrants of approximately $75,500in the nine months ended September 30, 2021.At September 30, 2021, there is noremaining compensation expense to be recognized.

 

Thefollowing table summarizes warrant activity during 2021 and 2020:

 

SCHEDULEOF WARRANTS ACTIVITY

		Warrants Issued				Weighted- Average Exercise Price
Warrants outstanding – December 31, 2019			62,500			$	1.00
Granted			-				-
Canceled			-				-
Exercised			-				-
Warrants outstanding – December 31, 2020			62,500			$	1.00
Granted			150,000			$	1.10
Canceled			-				-
Exercised			(13,500	)		$	1.00
Warrants outstanding – September 30, 2021			199,000			$	1.07

 

Additionalinformation regarding the warrants outstanding as of September 30, 2021 is as follows:

 

SCHEDULEOF WARRANTS OUTSTANDING

Exercise Price				Number Outstanding				Weighted Average Remaining Contractual Life				Number Exercisable
$	1.00				49,000				1.7 Years				49,000
$	1.10				150,000				6.2 Years				150,000

 

F-33

 

 

RETINALGENIXTECHNOLOGIES INC.

NOTESTO FINANCIAL STATEMENTS

 

September30, 2021 and 2020

 

NOTEG – INCOME TAXES

 

AtDecember 31, 2020, the Company had net operating loss carryforwards (“NOL”) of approximately $2,058,000 for federal incometax purposes of which $1,283,000 has no expiration date, $775,000 which begins to expire in 2034, and approximately $2,058,000 for stateincome tax purposes which begins to expire in 2030.

 

Theresulting net deferred tax assets of approximately $788,000 and $232,000 at December 31, 2020 and December 31, 2019, respectively, hasbeen fully reserved due to the uncertainty of future realization. The valuation allowance increased by approximately $556,000 and $232,000at December 31, 2020 and 2019, respectively. In assessing the realizability of deferred tax assets, management considered whether itis more likely than not that some portion or all of the deferred taxes will not be realized. The ultimate realization of deferred taxassets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

 

Dueto the change in ownership provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), theavailability of the Company’s NOL carryforwards may be subject to annual limitations against taxable income in future periods,which could substantially limit the eventual utilization of such carryforwards. The Company has not analyzed the historical or potentialimpact of its equity financings on beneficial ownership and therefore no determination has been made whether the NOL carryforward issubject to any Internal Revenue Code Section 382 limitation. To the extent there is a limitation, there would be a reduction in the deferredtax asset with an offsetting reduction in the valuation allowance.

 

Theopen years for tax examination are 2017 and thereafter.

 

NOTEH - SUBSEQUENT EVENTS

 

Subsequentevents were reviewed through November 22, 2021, the date these financial statements were available for issuance.

 

FromOctober 2021 through November 19, 2021, the Company sold 170,000 shares of its common stock at $1.00 per share pursuant to the offeringdescribed in Note D.

 

OnNovember 21,2021, the Company’s Board of Directors resolved to rescind the 3,000,000 shares of Series F preferred stock purportedissued to Halo Management Group LLC for lack of contract consideration. The Company expects to record this action into the accounts ofthe Company in the fourth quarter of 2021.The Company is aware that the management/ownership of Halo Management Group LLC may disputethis decision however, the Company is prepared to defend its decision in this case. In addition, the Company reserves the right to voidthe shares ab initio and adjust its filings accordingly if necessary.

 

 

PARTII- INFORMATION NOT REQUIRED IN PROSPECTUS

 

ITEM13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

 

Thefollowing table sets forth the costs and expenses payable by the Company in connection with the issuance and distribution of thesecurities being registered hereunder. All amounts are estimates except the SEC registration fee.

 

SEC registration fees		$	117
Printing expenses		$	1,000
Accounting fees and expenses		$	1,500
Legal fees and expenses		$	25,000
Blue sky fees		$	5,000
Miscellaneous		$	2,383
Total		$	35,000

 

ITEM14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

 

Section 102 of the DGCL permits a corporation toeliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breachof fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentionalmisconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delawarecorporate law or obtained an improper personal benefit. Our Certificate of Incorporation provides that our directors shall notbe personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director,notwithstanding any provision of law imposing such liability, except to the extent that the DGCL prohibits the elimination or limitationof liability of directors for breaches of fiduciary duty.

 

Section145 of the DGCL provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation,or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprisein related capacities against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actuallyand reasonably incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatenedto be made a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such personacted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and,in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case ofactions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matteras to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Courtof Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstancesof the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or suchother court shall deem proper.

 

OurCertificate of Incorporation and Bylaws provide indemnification for our directors and officers to the fullest extent permittedby the DGCL. We will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending orcompleted action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is orwas, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director,officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trustor other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged tohave been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amountspaid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom,if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests,and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful.Our Certificate of Incorporation and Bylaws provides that we will indemnify any Indemnitee who was or is a party to an actionor suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or hasagreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer,partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or otherenterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (includingattorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connectionwith such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or shereasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respectto any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that,despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses.Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she willbe indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith.Expenses must be advanced to an Indemnitee under certain circumstances.

 

 

In addition, we, through Sanovas have a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising outof claims based on acts or omissions in their capacities as directors or officers.

 

ITEM15. RECENT SALES OF UNREGISTERED SECURITIES.

 

2022

 

In January 2022, the Company issued an aggregateof 116,200 shares of its common stock at a purchase price of $1.00 per share.

 

2021

 

From January 2021 to May 2021, the Company issuedan aggregate of 617,473 shares of its common stock at a purchase price of $1.00 per share.

 

In March 2021 and June 2021, the Company issued options topurchase up to an aggregate of 20,000 shares of the Company’s common stock at an exercise price of $1.00 per share to consultants forservices.

 

In May 2021, the Company issued 12,500 sharesof its common stock upon the exercise of warrants to purchase shares of the Company’s common stock at an exercise price of $1.00per share.

 

From June to September 2021, theCompany issued an aggregate of 215,000 shares of its common stock at a purchase price of $1.00 per share.

 

In June 2021, the Company issued 390,358 sharesof its common stock to a related party to retire the debt due from the Company.

 

In October and November 2021, the Company issuedan aggregate of 247,000 shares of its common stock at a purchase price of $1.00 per share.

 

On December 27, 2021, the Company exchanged 28,014,540shares of its outstanding common stock for a  pre-funded warrant to purchase up to an aggregate of 28,014,540 shares of the Company’scommon stock at an exercise price of $0.0001 per share.

 

2020

 

From January 2020 to December 2020, the Companyissued an aggregate of 1,405,141 shares of its common stock at a purchase price of $1.00 per share.

 

In March 2020, the Company issued 500 shares ofits common stock upon the exercise of warrants to purchase shares of the Company’s common stock at an exercise price of $1.00 pershare.

 

In September 2020, the Company issued 500 sharesof its common stock upon the exercise of warrants to purchase shares of the Company’s common stock at an exercise price of $1.00per share.

 

In July 2020, the Company issued 358,126 sharesof its common stock to a related party to retire the debt due from the Company.

 

In December 2020, the Company issued warrantsto purchase up to 150,000 shares of its common stock to a consultant for services.

 

2019

  

In April 2019, the Company issued options to purchaseup to an aggregate of 2,000,000 shares of its common stock at an exercise price of $0.0001 per share.

 

InMarch and April 2019, the Company issued an aggregate of 10,964,000 shares of its common stock upon the exercise of warrants and optionsat an exercise price of $0.0001 per share.

  

In April 2019, the Company issued options to purchaseup to 500,000 shares of the Company’s common stock at an exercise price of $0.0001 per share to a director for services.

 

InApril 2019, the Company issued 500,000 shares of its common stock upon the exercise of options at an exercise price of $0.0001 per share.

  

In May 2019, the Company issued warrants to purchaseup to an aggregate of 8,640,000 shares of the Company’s common stock at an exercise price of $0.0001 per share.

 

From September 2019 to November 2019, the Companyissued warrants to purchase up to an aggregate of 62,500 shares of the Company’s common stock at an exercise price of $1.00 pershare.

 

In November 2019, the Company issued options topurchase up to an aggregate of 1,800,000 shares of the Company’s common stock at an exercise price of $1.00 per share to membersof the Company’s Medical Advisory Board and consultants for services.

 

From November 2019 to December 2019, the Companyissued an aggregate of 185,000 shares of its common stock at a purchase price of $1.00 per share.

 

At December 31, 2019, the Company retired debtdue to a related party through the issuance of 266,056 shares of its common stock to a related party.

 

The offers, sales and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance upon (i) Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering or (ii) Section 3(a)(9) of the Securities Act.

 

  

ITEM16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

(a)Exhibits

 

Theexhibit index attached hereto is incorporated herein by reference.

 

(b)Financial Statement Schedule

 

Allschedules have been omitted because the information required to be set forth in the schedules is either not applicable or is shownin the financial statements or notes thereto.

 

EXHIBIT INDEX
Exhibit No.		Description
3.1		First Amended and Restated Certificate of Incorporation of RetinalGenix Technologies Inc. (Incorporated by reference to Exhibit 3.1 the Company’s Registration Statement on Form S-1 filed with the SEC on August 5, 2021)
3.2		Bylaws of RetinalGenix Technologies Inc. (Incorporated by reference to Exhibit 3.2 the Company’s Registration Statement on Form S-1 filed with the SEC on August 5, 2021)
5.1*		Opinion of Sheppard, Mullin, Richter & Hampton LLP
10.1		Option Exchange Agreement by and between the Company and Diopsys, Inc. dated October 8, 2019 (Incorporated by reference to Exhibit 10.1 the Company’s Registration Statement on Form S-1 filed with the SEC on August 5, 2021)
10.2+		RetinalGenix Technologies Inc. 2017 Equity Incentive Plan (Incorporated by reference to Exhibit 10.2 the Company’s Registration Statement on Form S-1 filed with the SEC on August 5, 2021)
10.3		Amended and Restated Master Services Agreement by and between the Company and ADM Tronics Unlimited, Inc. dated June 24, 2021 (Incorporated by reference to Exhibit 10.3 the Company’s Registration Statement on Form S-1 filed with the SEC on August 5, 2021)
10.4#		Sublicense Agreement by and between the Company and Sanovas Ophthalmology LLC dated June 24, 2021 (Incorporated by reference to Exhibit 10.4 the Company’s Registration Statement on Form S-1 filed with the SEC on August 5, 2021)
23.1*		Consent of Liebman Goldberg & Hymowitz LLP, independent registered public accounting firm
23.2*		Consent of Sheppard, Mullin, Richter & Hampton, LLP (included in Exhibit 5.1)
24.1		Power of Attorney (included on the signature page to this registration statement)

 

* Filed herewith.

+ Indicates amanagement contract or any compensatory plan, contract or arrangement.

# Pursuant to Item 601(b)(10) of Regulation S-K,certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because the identifiedconfidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

 

FinancialStatement Schedules

 

Scheduleshave been omitted because the information required to be set forth therein is not applicable or is shown in the financial statementsor notes thereto.

 

ITEM17. UNDERTAKINGS.

 

Insofaras indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controllingpersons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinionof the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrantof expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a courtof appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act andwill be governed by the final adjudication of such issue.

 

Theundersigned registrant hereby undertakes that:

 

(1)For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectusfiled as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrantpursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statementas of the time it was declared effective.

 

(2)For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a formof prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offeringof such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Actof 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned,thereunto duly authorized in the City of Petaluma, State of California, on the 21st day of January, 2022.

 

	RETINALGENIX TECHNOLOGIES INC.
	By:	/s/ Jerry Katzman
		Jerry Katzman
		Chief Executive Officer

 

POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that each personwhose signature appears below constitutes and appoints Jerry Katzman, his true and lawful attorney-in-fact and agent with full powerof substitution and re-substitution, for him and in his name, place and stead, in any and all capacities to sign any or all amendments(including, without limitation, post-effective amendments) to this Registration Statement, any related Registration Statement filed pursuantto Rule 462(b) under the Securities Act of 1933, as amended, and any or all pre- or post-effective amendments thereto, and to file thesame, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, grantingunto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessaryto be done in and about the premises, as fully for all intents and purposes as he or she might or could do in person, hereby ratifyingand confirming that said attorney-in-fact and agent, or any substitute or substitutes for him, may lawfully do or cause to be done byvirtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, the following persons in the capacities and onthe dates indicated have signed this Registration Statement below.

 

Pursuantto the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by thefollowing persons in the capacities and on the dates indicated below.

 

Signature		Title		Date
/s/ Jerry Katzman		Chief Executive Officer, President and Director		January 21, 2022
Jerry Katzman		(Principal Executive Officer and Principal Financial and Accounting Officer)
/s/ Herbert Gould		Director		January 21, 2022
Herbert Gould