UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-Q





x
QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended March 31, 2011





o
TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934





For the transition period from __________________   to





Commission File Number: 000-50639





REGENOCELL THERAPEUTICS, INC.


(Exact name of registrant as specified in its charter)




Florida

22-3880440(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)





2 Briar Lane


Natick, Massachusetts 01760


(Address of Principal Executive Offices)





(508) 647-4065


(Registrant's telephone number, including area code)





Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the  Securities Exchange  Act during the past 12 months (or for such shorter period that the registrant was required to file such reports),  and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Yes x No o




Large Accelerated filer o

Accelerated filer oNon-accelerated filer (Do not check

Smaller reporting company xif a smaller reporting company) o




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes o No x





Indicate the number of shares outstanding of the registrant's common stock, par value $0.0001 per share, outstanding as of the latest practical date. 81,687,500 shares of common stock outstanding as of May 23, 2011.









REGENOCELL THERAPEUTICS, INC.





Quarterly Report on Form 10-Q


For the Quarterly Period Ended March 31, 2011





FORWARD-LOOKING STATEMENTS




This Form 10-Q for the quarterly period ended March 31, 2011 contains forward-looking statements that involve risks and uncertainties.  Forward-looking statements in this document or incorporated herein by reference that are not related to historical results are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.





Statements that are predictive, that depend upon or refer to future events or conditions, and/or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “hopes,” and similar expressions constitute forward-looking statements. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), business strategies or prospects, or possible future actions by us are also forward-looking statements.





These forward-looking statements are based on beliefs of our management as well as current expectations, projections, assumptions and information currently available to the Company and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated or implied by such forward-looking statements.  In evaluating these statements, you should consider various factors including the assumptions, risks and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, 2010 and other reports and documents we have filed with or furnished to the Securities and Exchange Commission.  Should one or more of those risks or uncertainties materialize or should underlying expectations, projections and assumptions prove incorrect, actual results may vary materially from those described.  Those events and uncertainties are difficult to predict accurately and many are beyond our control. The Company assumes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of these statements except as specifically required by law.  Accordingly, past results and trends should not be used to anticipate future results or trends.









INDEX




Part I— FINANCIAL INFORMATION

2Item 1. Interim Financial Statements and Notes – Quarter Ended March 31, 2011

2Item 2. Management’s Discussion and Analysis or Plan of Operations

10Item 3. Controls and Procedures

14Part II— OTHER INFORMATION

15Item 1. Legal Proceedings

15Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

15Item 3. Defaults upon Senior Securities

15Item 4. Submission of Matters to a Vote of Security Holders

16Item 5. Other Information

16Item 6. Exhibits and Reports on Form 8-K

16Signatures

17




1




PART I - FINANCIAL INFORMATION





Item 1 – Interim Financial Statements and Notes – Quarter Ended March 31, 2011





Contents






Page No.Consolidated Balance Sheets – March 31, 2011 (Unaudited) and December 31, 2010


3Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010 (Unaudited)


4Consolidated Statement of Stockholders’ Equity from December 31, 2008 through March 31, 2011 (Unaudited)


5Consolidated Statements of Cash Flows for the Three Months ended March 31, 2011 and 2010 (Unaudited)


6Notes to Condensed Consolidated Financial Statements


7




2




RegenoCELL Therapeutics, Inc. Consolidated Balance Sheets


March 31,


December 31,2011


2010(Unaudited)ASSETSCURRENT ASSETSCash

$
38,523


$
3,436Accounts receivable


33,000



33,000Deposits


143,754



143,635Other current assets


28,183



11,381Total Current Assets


243,460



191,452PROPERTY AND EQUIPMENT, net


135,021



150,980TOTAL ASSETS

$
378,481


$
342,432LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable and accrued expenses

$
834,156


$
773,638Payroll liabilities


381,108



391,124Related-party payables


453,435



378,575Notes payable


174,500



174,500Total Current Liabilities


1,843,199



1,717,837LONG-TERM LIABILITIESNotes payable, related party, net of discount


3,076,535



2,987,271TOTAL LIABILITIES


4,919,734



4,705,108STOCKHOLDERS' EQUITY (DEFICIT)Preferred stock $0.0001 par value, 80,000,000 shares authorized,no shares issued and outstanding


-



-CommonsStock, $0.0001 par value, 520,000,000 shares authorized,81,687,500 shares issued and outstanding


8,169



8,169Additional paid-in capital


129,888



129,888Accumulated other comprehensive loss


(119,800
)


(80,771
)Accumulated deficit


(4,559,510
)


(4,419,962
)Total Stockholders' Equity (Deficit)


(4,541,253
)


(4,362,676
)TOTAL LIABILITIES STOCKHOLDERS' EQUITY (DEFICIT)

$
378,481


$
342,432


The accompanying notes are an integral part of these consolidated financial statements
  3





RegenoCELL Therapeutics, Inc.
 Consolidated Statements of Operations


(Unaudited)


For the Three Months EndedMarch 31,2011


2010REVENUES

$
262,225


$
291,865OPERATING EXPENSESGeneral and administrative


68,676



151,287Salaries and wages


214,660



135,504Research and development


-



-Professional fees


13,023



291,131Impairment of licensing rights


-



-Depreciation


14,754



25,817Total Operating Expenses


311,113



603,739OPERATING INCOME (LOSS)


(48,888
)


(311,874
)OTHER INCOME (EXPENSE)Interest expense


(90,660
)


(50,825
)Other income


-



-Total Other Income (Expenses)


(90,660
)


(50,825
)NET LOSS BEFORE INCOME TAXES


(139,548
)


(362,699
)Income taxes


-



-NET LOSS

$
(139,548
)

$
(362,699
)OTHER COMPREHENSIVE INCOME (LOSS)Foreign currency translation adjustment


(39,029
)


4,758TOTAL COMPREHENSIVE LOSS

$
(178,577
)

$
(357,941
)BASIC AND DILUTED LOSS PERCOMMON SHARE

$
(0.00
)

$
(0.01
)WEIGHTED AVERAGE NUMBER OFCOMMON SHARES OUTSTANDING


81,071,016



61,078,125


The accompanying notes are an integral part of these consolidated financial statements
  4


RegenoCELL Therapeutics, Inc.
 Consolidated Statements of Stockholders Equity (Deficit)


AccumulatedAdditional


OtherCommon Stock


Paid-in


Comprehensive


AccumulatedShares


Amount


Capital


Deficit


Deficit


TotalDecember 31, 2008 - Balance


131,437,500


$
13,144


$
4,913


$
-


$
(134,168
)

$
(116,111
)December 30, 2009 - Cancellation of restrictedcommon stock issued on July 22, 2009


(90,000,000
)


(9,000
)


-



-



-



(9,000
)Net loss for the year ended December 31, 2009


-



-



-



-



(228,663
)


(228,663
)December 31, 2009 - Balance


41,437,500



4,144



4,913



-



(362,831
)


(353,774
)January 7, 2010- Issuance of  restricted common stock in acquisition of licensing rights


40,000,000



4,000



-



-



-



4,000July 6, 2010 - Issuance of commonstock for services


200,000



20



99,980



-



-



100,000August 11, 2010 - Issuance of restricted commonstock for cash


50,000



5



24,995



-



-



25,000Foreign currency translation adjustment


-



-



-



(80,771
)


-



(80,771
)Net loss for the year ended December 31, 2010


-



-



-



-



(4,057,131
)


(4,057,131
)December 31, 2010 - Balance


81,687,500



8,169



129,888



(80,771
)


(4,419,962
)


(4,362,676
)Foreign currency translation adjustment


-



-



-



(39,029
)


-



(39,029
)Net loss for the three months ended March 31, 2011 (unaudited)


-



-



-



-



(139,548
)


(139,548
)Balance, March 31, 2011 (unaudited)


81,687,500


$
8,169


$
129,888


$
(119,800
)

$
(4,559,510
)

$
(4,541,253
)


The accompanying notes are an integral part of these consolidated financial statements
  5
 
 RegenoCell Therapeutics, Inc.
 Consolidated Statements of Cash Flows


For the Three Months EndedMarch 31,2011


2010OPERATING ACTIVITIESNet Loss

$
(139,548
)

$
(362,699
)Adjustments to reconcile net loss to net cashprovided by operating activities:Depreciation


14,754



25,718Accrual of interest expense


-



50,826Amortization of discount on note payable


89,264



-Expenses paid pursuant to note payable - related party


278,603



-Changes in operating assets and liabilities:Accounts receivable


-



(3,290
)Prepaid expenses and deposits


-



-Other current assets


(15,593
)


(218,031
)Accounts payable and accrued expenses


62,020



661,744Accrued payroll expenses


(9,276
)


-Customer deposits


-



15,000Net cash provided by operating activities


280,224



169,268INVESTING ACTIVITIESAcquisition of property and equipment


-



(221,842
)Goodwill associated with asset purchase


-



(49,338
)Investment in production activities


-



(4,904,000
)Net cash used in investing activities


-



(5,175,180
)FINANCING ACTIVITIESRepayment of notes payable


-



-Common stock issued for cash


-



4,000Proceeds from note payable


-



4,927,283Proceeds from notes payable - related parties


2,000



-Payments on notes payable - related parties


(205,750
)


-Net cash provided (used in) by financing activities


(203,750
)


4,931,283EFFECTS OF EXCHANGE RATE CHANGES


(41,387
)


(4,758
)NET INCREASE (DECREASE) IN CASH


35,087



(79,387
)CASH AT BEGINNING OF PERIOD


3,436



102,079CASH AT END OF PERIOD

$
38,523


$
22,692SUPPLEMENTAL CASH FLOW DISCLOSURESCash paid for interest

$
-


$
-Cash paid for income taxes

$
-


$
-NON-CASH INVESTING AND FINANCING ACTIVITIESAssets purchased for debt, common stock, andassumption of liabilities

$
-


$
5,238,266


The accompanying notes are an integral part of these consolidated financial statements
  6





RegenoCELL Therapeutics, Inc.


Notes to Condensed Consolidated Financial Statements


March 31, 2011 and December 31, 2010




NOTE 1 – CONDENSED FINANCIAL STATEMENTS





The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2011, and for all periods presented herein, have been made.





Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2010 audited financial statements.  The results of operations for the periods ended March 31, 2011 is not necessarily indicative of the operating results for the full year.





NOTE 2 - GOING CONCERN





The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.





In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.





The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.





Recent Accounting Pronouncements


The Company has evaluated recent pronouncements and does not expect their adoption to have a material impact on the Company’s financial position, or statements.





NOTE 4 – NOTES PAYABLE





As of March 31, 2011, the Company holds $174,500 in notes payable to unrelated third party entities. One of these notes, with a principal balance of $102,000, is non-interest bearing and due on demand.  The remaining notes, with an aggregate principal balance of $72,500, bear interest at a rate of 5.0 percent per annum, and are also due on demand.  During the three months ended March 31, 2011, the Company made no new borrowings or principal payments on these notes.  Total accrued interest payable on the notes at March 31, 2011 was $113,827




7




RegenoCELL Therapeutics, Inc.


Notes to Condensed Consolidated Financial Statements


March 31, 2011 and December 31, 2010




NOTE 5 – RELATED PARTY NOTES PAYABLE





During the three months ended March 31, 2011, the Company borrowed $280,603 from a related party to fund continuing operations.  Of this amount, $278,603 represented expenses paid on behalf of the Company by the related party.  The Company made payments on the note totaling $205,750 during the period, leaving an outstanding balance of $414,271 at March 31, 2011.  The note bears no interest, is due on demand and is uncollateralized.





On June 30, 2008, the Company executed a note in the amount of $39,164 with a related party.  The note bears interest at a rate of 5.0 percent per annum, is unsecured, and due on demand.  Total accrued interest payable on this note as of March 31, 2011 was $5,654.





On January 7, 2010 the Company consummated an agreement to purchase the intangible assets of Yieldex, Inc., a company incorporated in Hong Kong.  Pursuant to the terms of the agreement, the Company purchased the rights to certain patents and patent applications in connection with its activities of stem cell research, therapy development, and clinical trials, under the trade name "TheraVitae."  The agreement also assigned rights to testing procedures, testing results, and full copy data from clinical trials conducted by the seller over its operating and research history.  This also includes all other related procedures, software files, etc.  The assets were acquired in exchange for 40,000,000 shares of the Company’s common stock, $100,000 cash, and a non-interest bearing note, payable January 25, 2015, in the amount of $4,900,000. Per the terms of the agreement, repayment of the note will be made out of proceeds of revenues relating to the assigned intangible assets and out of capital raised by management.  Pursuant to this transaction, Yieldex became a related-party entity.





The Company’s related-party note payable to Yieldex, with a face value of $4,900,000, has been discounted to present value assuming a 12 percent interest rate. The amount of the discount was calculated to be $2,227,302, and is being amortized using the effective interest method over the term of the note and charged to interest expense on the income statement. As of March 31, 2011 the unamortized discount was $1,823,465.





NOTE 6 – ASSET ACQUISITION





In January, 2010 the Company created a wholly-owned foreign subsidiary in Israel for the purpose of developing and operating the laboratory facilities associated with its products. The name of the subsidiary is Regenocell Laboratories Ltd.  On January 7th 2010, Regenocell Laboratories Ltd. consummated an Asset Purchase Agreement with TheraVitae Limited. Under the terms of the agreement the Company acquired certain assets of TheraVitae Limited at a book value of approximately $370,000, in exchange for assuming certain liabilities of approximately $334,000 and $100,000 in cash (all currency is in US dollars).





Consideration Paid:Cash paid

$
100,000Liabilities assumed


334,266Common stock issued


4,000Note payable


4,900,000Discount on note payable


(2,227,302
)Total Purchase Price





$
3,110,964Consideration Received:Assets


370,350Licenses and intellectual property


2,740,614Net Value of Assets Purchased





$
3,110,964





NOTE 7 – EQUITY TRANSACTIONS





On January 7, 2010 the Company issued 40,000,000 shares of common stock pursuant to an Asset Purchase Agreement (see Note 4).  The shares were valued at par value ($0.0001), resulting in a total share value of $4,000.





On July 6, 2010 the Company issued 200,000 shares of common stock as payment for legal services rendered.  The shares were valued at $0.50 per share, resulting in a total share value of $100,000.





On August 11, 2010 the Company issued 50,000 shares of common stock for cash at $0.50 per share, for an aggregate share value of $25,000.  Pursuant to this transaction the investor also received warrants to purchase an additional 50,000 shares of common stock at $0.75 per share.




8





RegenoCELL Therapeutics, Inc.


Notes to Condensed Consolidated Financial Statements


March 31, 2011 and December 31, 2010





NOTE 8 – SUBSEQUENT EVENTS





In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no material subsequent events to report.




9




ITEM 2. Management’s Discussion and Analysis or Plan of Operations




Overview





The Company was incorporated in Florida on February 1, 2002 and planned to develop cafes in South Carolina expanding to other states in the South East, featuring gourmet coffee, pastries and related items. The Company’s objective was to develop cafes that provided a forum for rapid service and a strong community identity with the widespread popularity of coffee and related products. Due to intense competition, in early 2008 the Company changed its focus.





On July 16, 2008 the Company began focusing on a new stem cell therapy business opportunity as set forth in a Letter of Intent dated March 31, 2008 with TheraVitae, Inc. by completing several actions. These actions included the filing of Amended Articles of Incorporation which among other matters changed the name of the corporation to RegenoCELL Therapeutics, Inc. and increased the authorized capitalization to 520,000,000 shares of Common Stock and 80,000,000 shares of Preferred Stock, approved Amended Bylaws, issued restricted common shares to Douglas T. Rice (250,000) for introducing this new business opportunity, Dominick Mazza (5,000,000) for consulting services for this new business opportunity and James F. Mongiardo (15,000,000) for negotiating the Letter of Intent which will become the new business of the corporation and for directing and building it as its President and Chief Executive Officer, ratified the March 31 Letter of Intent with TheraVitae, and approved the Employment Agreement with James F. Mongiardo as President and Chief Executive Officer.





The Letter of Intent with TheraVitae provides for a non exclusive license in Mexico and later the Islands of the Caribbean to commercialize TheraVitae’s stem cell therapy for cardiovascular indications.  The Company may establish clinics to treat congestive heart failure patients with VesCell, TheraVitae’s stem cell therapy.  It also provides for an exclusive license in the United States, Canada and Mexico to obtain regulatory approvals and then market VesCell stem cell therapy for the treatment of peripheral artery disease.





Further in connection with this change in business focus, the Board of Directors accepted the resignations of Scott Massey and Phillips N. Dee as directors and officers of the Company and elected James F. Mongiardo to fill the vacancies on the Board.  Mr. Mongiardo was elected as Chief Executive Officer, President, Treasurer, Secretary and sole director of the Company.





In 2009 the parties to the Letter of Intent reached an impasse and the license was not acquired.





In early January 2010 the Company created a wholly-owned foreign subsidiary in Israel for the purpose of developing and operating the laboratory facilities associated with its products. The name of the subsidiary is Regenocell Laboratories Ltd.





On January 7th 2010, the Company’s foreign subsidiary Regenocell Laboratories Ltd. consummated an asset purchase agreement with TheraVitae Limited. Under the terms of the agreement the Company acquired certain assets of TheraVitae Limited, with an approximate net book value of $370,000, in exchange for assuming certain liabilities of approximately $334,000 and $75,000 in cash (all currency is in US dollars).





In early January 2010 the Company signed an Assignment of Rights agreement with Yieldex LTD a Hong Kong corporation.  Under the agreement the Company purchased the right to use outside of Asia the patents and patent applications related to Yieldex LTD’s stem cell research, therapy development and clinical trials. In addition the Company obtained the rights to all the clinical trial results, endorsements, files and other pertinent information.  Under the terms of the agreement the Company will pay Yieldex LTD $5,000,000 (US) in cash over a period of five years. In addition the Company also irrevocably issued 40,000,000 shares of Common stock to Yieldex LTD.




10





Critical Accounting Policies





Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation.  A complete summary of these policies is included in Note 3 of the notes to our consolidated financial statements.  We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.





Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.





Provision for Taxes





The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes.  This method requires that the current or deferred tax consequences of all events recognized in the financial statements be measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years.  Deferred tax assets are reviewed for recoverability and the Company records a valuation to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.





Foreign Currency Translation





Assets and liabilities of consolidated subsidiaries whose functional currency is not the U.S. dollar are translated into U.S. dollars, the functional currency of the Company, using the exchange rate in effect at each period end.  Revenues and expenses are translated at the weighted average exchange rate during the period.  The effects of the foreign currency translation adjustment arising from differences in exchange rate from period to period are deferred and accumulated in other comprehensive loss for subsidiaries whose functional currency is their local currency.  Currency transaction gain or losses, derived on monetary assets and liabilities stated in a currency other than the functional currency, are recognized in current operations and have not been significant to the Company’s operating results in any period.





Impairment





The Company accounts for any impairment with FASB Accounting Standards Codification No. 350, Intangibles – Goodwill and Other.  Under FASB ASC No. 350, intangible assets are reviewed for evidence or changes in circumstances that indicate that their carrying value may not be recoverable.  The Company periodically reviews the carrying value to determine whether or not impairment to such value has occurred.




11




Off Balance Sheet Arrangements





The Company is not a party to any off-balance sheet arrangements.





Description of Property





The Company does not own any real property or any interest in real property and does not invest in real property or have any policies with respect thereto as a part of its operations or otherwise.





The principal business address of the Company is 2 Briar Lane, Natick, Massachusetts 01760, which is space owned by the President and Chief Executive Officer of the Company. Rent has not been charged for the office space and it is not expected that rent will be charged in the near-term.





Regenocell Laboratories, Ltd. has assumed a lease with Africa-Israel for its manufacturing operations in Israel.  Lease payments converted to dollars are $10,400 plus VAT totaling $12,050 per month.  The lease runs through August 31, 2011 with a two-year option to renew.  There is $135,000 in a restricted account used by Bank Hapoalim to guarantee payment of the lease.  These funds were transferred and accordingly the bank guarantee transferred from TheraVitae Limited to Regenocell Laboratories, Ltd.





Management’s Discussion and Analysis and Plan of Operations





The new mission of the Company is to bring stem cell therapy treatments to the market as quickly as possible.  The Company manufacturers a product utilizing adult stem cells for the treatment of congestive heart failure and other indications. These adult stem cells are grown into large numbers in vitro (outside the body) and then encouraged to differentiate into angiogenic precursor cells or blood vessel forming cells for the treatment of congestive heart failure.  These adult stem cells can also be used for the treatment of other conditions such as peripheral artery disease.  The manufacturing operations for this process are located in Israel.





Currently congestive heart failure patients cleared for treatment have one-half pint of blood drawn which is sent to the cell processing facility in Israel. After the adult stem cells in the patient’s blood have been extracted and grown into large numbers of angiogenic precursor cells, they are sent to several locations for infusion into the patient in a minimally invasive procedure.  The stem cell therapy is either delivered through a catheter or injected directly into the myocardium. All patients are private pay.





The results to date have been impressive.  Over three hundred (500) congestive heart failure patients with no other options have shown similar results to a clinical trial of 24 patients.  In that trial, statistically significant improvements between baseline and the three month and six month follow-up were achieved for:





·
Improvement in the six-minutes walking test.





·
Increase in metabolic equivalent units (METs) during the stress test.





·
Decrease in the perfusion defect region of the target artery.





·
Decrease in the Canadian Cardiovascular Society (CCS) Grading Scale.




12





On January 7, 2010 the Company entered into two agreements.  Closing occurred on February 4, 2010.





The first agreement was between TheraVitae Limited, the Israeli corporation manufacturing the stem cell therapy product, and a newly formed Israeli corporation which is a wholly owned subsidiary of the Company, Regenocell Laboratories, Ltd.  Pursuant to the terms of the agreement, certain assets were acquired and certain liabilities assumed.  These assets include all the manufacturing and office equipment and the transfer of the lease.  At signing the Company paid $75,000 toward the reduction of the assumed liabilities.  All the employees were terminated then offered and accepted employment with Regenocell Laboratories, Ltd.





The second agreement is between Yieldex, Ltd. and the Company for the acquisition of certain rights.  This includes clinical data, the non exclusive use of the CRM System which manages clinical data and input necessary to schedule a patient for stem cell production, and all rights in patent and patent applications, if any, in connection with activities of stem cell research, therapy development and clinical trials under the trade name ”TheraVitae” for the world except for Asia.  Israel is excluded by definition from being part of Asia.  The cash price is $5,000,000 (five million United States dollars), of which $75,000 was paid to TheraVitae Limited and $25,000 to Yieldex on January 7.  The balance is due in monthly installments on or before January 4, 2015.  Minimum installments are $5,000 per patient processed in Israel after the first eight patients during the preceding month.  In addition 25% of any equity raised by the Company will be applied to the outstanding balance.





In addition 40,000,000 (forty million) shares of the Company’s common stock, par value $.0001, were issued to Yieldex Ltd and its nominees.  The 40,000,000 shares are restricted and subject to a two-year lock-up period beginning January 4, 2010.  These shares are also subject to a voting agreement.  During the Lock-Up period and for any subsequent period until the shares are sold to the public in the open market, the Board of Directors will be expanded to five members and the shareholders whose shares are locked up will vote for a maximum of two directors.  The Company’s affiliated shareholders who are not parties to the Lock-Up agreement will vote their shares for the same two directors until the aggregate number of Yieldex shares are 15,000,000 (fifteen million) or less. The Yieldex shareholders agree to vote the Yieldex shares for a maximum of three directors designated by James F. Mongiardo.  While this voting rights agreement is in effect, unanimous approval of all the directors then in office or approval of holders of at least a majority of the shares will be required for: (i) any proposal to increase capital in a way that would result in dilution of existing shareholders’ percentages by ten percent (10%) or more; (ii) any proposal to merge, consolidate or amalgamate with any other corporate entity; (iii) any proposal to sell all or a material part of the assets; and, (iv) any proposal to amend the bylaws.





As a result of the actions described above, on February 4, 2010 the Company’s primary asset is Regenocell Laboratories Ltd. which is manufacturing and selling stem cell therapy product used to treat congestive heart failure and peripheral artery disease.  Purchases are or have been made to treat patients for these indications in Bangkok, Thailand, the Dominican Republic and other countries.





For the three months ended March 31, 2011, the Company had revenues of $262,225 compared to $291,865 revenues for the same three months in 2010.  The Company incurred operating expenses of $311,113 during the three months ended March 31, 2011, compared to $603,739 for the comparable period of 2010.  Total net loss for the three months ended March 31, 2011 was $139,548 compared to $362,699 for the same three month period in 2010.





Cash on hand was $38,523 as of March 31, 2011 which amount is inadequate to fund the company’s current projected capital requirements.  In order to implement the new strategy of the Company, the Company will need to raise capital during the next twelve months.  The Company has funded operations to date in part through the sale of equity securities and loans, although such efforts have been insufficient to effectively pursue its business strategy.




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With respect to Regenocell Laboratories, Ltd., processing eight patients during a month will result in revenues exceeding $130,000.  The combination of the existing business being serviced by the manufacturing operations and the addition of patients to be treated in other locations is expected to keep patient flow for the manufacturing facility at or above the breakeven of eight patients.  Capacity at the current configuration of the manufacturing facility is more than double the breakeven.  There can be no assurance of any patient flow for any given month.





Our capital requirements will depend on numerous factors, including but not limited to the commitments and progress of our research and development efforts, the progress of clinical trials, the cost of sales and marketing for the congestive heart failure stem cell therapy business and other products, medical and business consultants and advisors, the time and cost involved in maintaining regulatory compliance, and competing technological and market developments.  Future activities, including the establishment of stem cell therapy for the treatment of peripheral artery disease in the medical marketplace, will be subject to our ability to raise funds.





We intend to raise capital primarily through the public or private sale of securities (equity and/or debt), although there can be no assurance that we will be able to obtain capital or, if such capital is available, that the terms of any financing will be acceptable.  If the Company succeeds in raising capital, such funds will be used to facilitate the manufacturing operations of Regenocell Laboratories Ltd., to find new customers for Regenocell Laboratories Ltd. With respect to peripheral artery disease, capital will be used for completing the research and development to submit an IND (and its equivalent in Europe) for authorization to begin clinical trials in the United States and Europe. This may include payment for additional animal trials. Payment for clinical trials includes retaining the services of a clinical research organization, payment to the clinical research site(s) for patients enrolled in the clinical trials, payment for the stem cell therapy used in these clinical trials, payment for costs associated with Institution Review Board Approval, and preparation of reports to the Food and Drug Administration (“FDA”) and European Medicines Agency (“EMEA”), requests to continue later phase clinical trials and submission of a BLA to the FDA and its equivalent to the EMEA requesting marketing approval for the treatment of peripheral artery disease.





The Company also does not expect to purchase any plant or significant equipment over the next 12 months.  Regenocell Laboratories, Ltd. may purchase between $100,000-$300,000 in new equipment for its manufacturing operations.





If we are unsuccessful at raising sufficient capital to fund our operations, for whatever reason, we may be forced to seek opportunities outside of our new corporate focus or to seek a buyer for our business or another entity with which we could partner.  Ultimately, if all of these alternatives fail, we may be required to cease operations and seek protection from creditors under applicable bankruptcy laws.





ITEM 3. Controls and Procedures




Evaluation of disclosure controls and procedures





In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of March 31, 2011.  Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding the required disclosures.  Based on its evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective.




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There has been no change in our internal control over financial reporting (as defined in Rule 13 a-15(f) under the Exchange Act) during the quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





PART II – OTHER INFORMATION





Item 1.  Legal Proceedings





On February 10, 2010, Kwalata Trading Limited, a wholly owned subsidiary of TheraVitae, Inc., a Canadian corporation, obtained an ex parte order from the District Court for the Central Region of Israel to seize the intellectual property alleged owned by Kwalata which is in the possession of either Theravitae, Ltd. or Regenocell Laboratories Ltd., the wholly owned Israeli subsidiary corporation of the Company. The Court appointed trustee took files and computers including computers dedicated solely to equipment from  Regenocell Laboratories facilities at 7, Pinchas St., Ness Ziona in what the Company considered to be an unlawful attempt to close the facilities.





Prior to a scheduled hearing, a settlement agreement was reached which then became the resolution of the case by the District Court for the Central Region of Israel.  All equipment and files taken are to be returned subject to copying by the applicants at their expense.  Excluded from copying are attorney-client privileged documents, business documents and private documents.  Regenocell Laboratories and the Company agree not to disclose the alleged intellectual property to third parties except in the ordinary course of business, for government filings and when a non disclosure agreement is obtained. This order remains in effect until a subsequent order by the Court or the resolution of an arbitration begun in Canada by Kwalata against TheraVitae, Ltd.





On October 20, 2010, TheraVitae, Inc., the same Canadian corporation involved in the litigation in Israel, served the Company with a Statement of Claim filed with the Ontario, Canada Superior Court of Justice alleging breach of a Confidentiality and Non-Circumvention Agreement.  On December 29, 2010, the company filed its Statement of Defence.  On February 23, 2011, the Company moved for Summary Judgment.  TheraVitae at the same time cross moved to dismiss the Company’s defenses.  The hearing on the two motions is scheduled for October 1, 2011.  The Company believes that the Statement of Claim is totally without merit.





Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds





None.





Item 3.  Defaults Upon Senior Securities





Not applicable.




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Item 4.  Submission of Matters to a Vote of Security Holders





None





Item 5.  Other Information





None.





Item 6.  Exhibits and Reports on Form 8-K.





a)  Exhibits





The following are exhibits included with this Quarterly Report on Form 10-Q:





31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14    or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.





32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





b)  Reports on Form 8-K





None.




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SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.











REGENOCELL THERAPEUTICS, INC.Dated:  May 23, 2011
By:
/s/ James F. MongiardoJames F. MongiardoPrincipal Executive Officer,President, Principal Financial Officer,Principal Accounting Officer, andDirector




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