A sobering read as of December 2022 reported in the U.S. Securities and Exchange Commission.
Here is the link:
https://fintel.io/doc/sec-replicel-life-sciences-inc-1205059-20f-2023-may-02-19479-9649 Here is part of the report that is cause for concern:
The Company is exposed to certain risks if it loses the arbitration that it has commenced against Shiseido Company Limited
The Company entered into a Collaboration and Technology Transfer Agreement with Shiseido, one of the world’s largest cosmetic companies. Both companies agreed to work towards establishing a clinical research program in Asia, with the goal of increasing the available human clinical data on RCH-01. The Parties agreed to collaborate as any new improvements to the RCH-01 technology were developed by either party. This agreement gave Shiseido an exclusive geographic license to use the Company’s RCH-01 hair regeneration technology in Japan, China, South Korea, Taiwan and the ASEAN countries representing a population of approximately 2.1 billion people. In mid-2016, Shiseido alleged RepliCel had breached its obligations in the agreement which Shiseido alleged were potentially terminal to future obligations pursuant to the agreement. RepliCel has vigorously denied the existence of such breach and insists on the ongoing validity of the respective obligations on both parties pursuant to the agreement. In 2021 the Company attempted to engage Shiseido in settlement discussions by written letters, without success. The Company and Aceris Law filed a Notice of Arbitration with the International Center for Dispute Resolution (ICDR), which is the arbitral tribunal that has jurisdiction over the agreement. The Company issued a Press Release advising shareholders of this milestone. Shiseido served the Company with its Response to the Notice of Arbitration and the Company’s legal counsel reviewed Shiseido’s Response with the Company. Based on Shiseido’s Response to the Notice of Arbitration, the Company made a strategic and legally necessary step of terminating the Agreement with Shiseido. The Company has material risks with the arbitration including losing its claim and potentially losing rights to its RCH-01 hair regeneration technology in Japan, China, South Korea, Taiwan and the ASEAN countries.
We have not reached profitability and currently have negative operating cash flows and a working capital deficit and will have to conduct additional financings to fund our operations.
As of December 31, 2022, we had accumulated $42,974,870 in net losses since inception. Our business is focused on developing autologous cell therapies that treat functional cellular deficits including chronic tendon injuries, androgenetic alopecia and skin aging. In order to generate revenues, we will incur substantial expenses in the development of our business. We therefore expect to incur significant losses in the foreseeable future. Our company recognizes that if we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon which to base any assumption as to the likelihood that we will be successful in our plan of operation, and we can provide no assurance to investors that we will generate operating revenues or achieve profitable operations in the future.
We had cash and cash equivalents in the amount of $413,025 and current liabilities in excess of current assets of ($1,437,074) as of December 31, 2022. The Company anticipates that it will require approximately $2,000,000 to proceed with its plan of operations focused on completing the RCI-02 device (the dermal injector), meeting its obligations to support YOFOTO's activities in Greater China, and preparing for next-phase clinical development and commercialization in Japan over the twelve-month period ended December 31, 2023.
In order to fund our plan of operations for the next twelve months, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.
Our auditor's opinion on our December 31, 2022 financial statements includes an explanatory paragraph in respect of there being substantial doubt about our ability to continue as a going concern.
We have incurred an accumulated deficit of $42,974,870 for the cumulative period from September 7, 2006 (inception) to December 31, 2022. We anticipate generating losses for at least the next 12 months. As at December 31, 2022 we had current liabilities in excess of current assets of ($1,437,074) (2021: working capital deficit of $1,280,642) and we will require additional funding to continue our research and development activities, which casts substantial doubt about our company's ability to continue as a going concern. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event that we cannot continue in existence. Our business operations may fail if our actual cash requirements exceed our estimates and we are not able to obtain further financing. If we cannot continue as a viable entity, our shareholders may lose some or all of their investment in our company.