GENETHERA INC - Quarter Report: 2015 June (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2015
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO _________
Commission File Number:
000-27237
GeneThera, Inc.
(Exact name of registrant as Specified in its Charter)
Nevada
65-0622463
(State or Other Jurisdiction of
(Internal Revenue Service
Incorporation or Organization)
Employer Identification Number)
9101 Harlan Street Suite 130, Westminster, CO
80031
(Address of Principal Executive Offices)
(Zip Code)
Registrants telephone number, including area code:
(303) 439-2085
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-Q or any amendment to this Form 10-Q. Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, and 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.
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer ¨ | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No x
State the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 37,410,636 shares of common stock issued and outstanding as of
August 15, 2015.
PART I FINANCIAL INFORMATION
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Sections of this Form 10-Q, including Business and Management's Discussion and Analysis or Plan of Operation, contain "forward-looking statements". These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as may, will, should, would, could, plan, goal, potential, expect, anticipate, estimate, believe, intend, project, and similar words and variations thereof. This report contains forward-looking statements that address, among other things:
* Our financing plans,
* Regulatory environments in which we operate or plan to operate, and
*Trends affecting our financial condition or results of operations, the impact of competition, the start-up of certain operations and acquisition opportunities.
Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements ("Cautionary Statements") include, among others:
* Our ability to raise capital,
* Our ability to execute our business strategy in a very competitive environment,
* Our degree of financial leverage, risks associated with our acquiring and integrating companies into our own,
* Risks relating to rapidly developing technology, and regulatory considerations;
* Risks related to international economies,
* Risks related to market acceptance and demand for our products and services,
* The impact of competitive services and pricing, and
* Other risks referenced from time to time in our SEC filings.
All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.
TABLE OF CONTENTS
Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014
Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2015 and 2014
Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2015 and 2014
Condensed Notes to Consolidated Financial Statements (Unaudited)
GeneThera, Inc. - Consolidated Balance Sheets
ASSETS |
| June 30, 2015 (Unaudited) | December 31, 2014 | ||
Current assets: |
|
|
| ||
Cash |
| $ | 1,031 | $ | 94 |
Receivable-related party |
|
| 161,971 |
| 15,330 |
Total current assets |
|
| 163,002 |
| 15,424 |
|
|
|
|
|
|
Investments |
|
| 110,620 |
| - |
|
|
|
|
|
|
Property and equipment: |
|
|
|
| - |
Office and laboratory equipment and leasehold improvements |
|
| 787,568 |
| 784,330 |
Construction in process |
|
| 28,500 |
|
|
Less: accumulated depreciation |
|
| (784,490) |
| (784,330) |
Total property and equipment, net |
|
| 31,578 |
| - |
TOTAL ASSETS |
| $ | 305,200 | $ | 15,424 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' DEFICIT |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
| $ | 1,181,630 | $ | 1,245,105 |
Accounts payable-related party |
|
| 547,553 |
| 271,858 |
Accrued expenses |
|
| 2,876,635 |
| 2,630,069 |
Notes payable |
|
| 10,800 |
| 10,800 |
Convertible notes payable |
|
| 1,138,661 |
| 951,161 |
Loan from shareholder |
|
| 653,047 |
| 645,271 |
Total current liabilities |
|
| 6,408,326 |
| 5,754,264 |
|
|
|
|
|
|
Commitments & Contingencies |
|
| - |
| - |
|
|
|
|
|
|
Series A preferred stock, par value $0.001 per share, 20,000,000 shares authorized, 4,600 shares and 4,600 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively |
|
| 5 |
| 5 |
Series B preferred stock, par value $0.001 per share, 30,000,000 shares authorized, 15,410,000 and 15,410,000 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively |
|
| 15,410 |
| 15,410 |
Common stock, par value $0.001 per share, 300,000,000 shares authorized, 37,410,636 and 34,473,056 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively |
|
| 37,412 |
| 34,473 |
Stock to be issued |
|
| 53,572 |
| - |
Additional paid-in capital |
|
| 18,254,139 |
| 18,160,622 |
Deficit accumulated during the development stage |
|
| (24,463,664) |
| (23,949,350) |
Total stockholders deficit |
|
| (6,103,126) |
| (5,738,840) |
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT |
| $ | 305,200 | $ | 15,424 |
The accompanying condensed notes are an integral part of these consolidated financial statements.
GeneThera, Inc. - Consolidated Statements of Operations
(Unaudited)
|
| Three Months End | Six Months End | ||||||||
|
| June 30, | June 30, | ||||||||
|
| 2015 |
| 2014 |
|
|
| 2015 |
|
| 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Revenue | $ | - | $ | - |
|
| $ | - |
| $ | - |
Total Revenue: |
| - |
| - |
|
|
| - |
|
| - |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
| 51,450 |
| 114,679 |
|
|
| 214,256 |
|
| 181,241 |
Payroll expenses |
| 96,000 |
| 96,000 |
|
|
| 282,000 |
|
| 192,000 |
Depreciation |
| 80 |
| 3,414 |
|
|
| 160 |
|
| 6,828 |
Total operating expenses |
| 147,530 |
| 214,093 |
|
|
| 496,416 |
|
| 380,069 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
| (147,530) |
| (214,093) |
|
|
| (496,416) |
|
| (380,069) |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
| (10,321) |
| - |
|
|
| (17,898) |
|
| - |
Total other expense |
| (10,321) |
| - |
|
|
| (17,898) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxes |
| (157,851) |
| (214,093) |
|
|
| (514,314) |
|
| (380,069) |
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
| - |
| - |
|
|
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss | $ | (157,851) | $ | (214,093) |
| $ |
| (514,314) |
| $ | (380,069) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share - Basic and diluted | $ | (0.00) |
| (0.01) |
|
| $ | (0.01) |
| $ | (0.01) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
| 37,410,636 |
| 32,123,479 |
|
|
| 37,396,811 |
|
| 31,804,034 |
The accompanying condensed notes are an integral part of these interim consolidated financial statements.
GeneThera, Inc. - Consolidated Statements of Cash Flows
(Unaudited)
|
| Six Months, Ended June 30, | ||
|
| 2015 |
| 2014 |
Cash flows from operating activities |
|
|
|
|
Net loss |
| (514,314) |
| (380,069) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
Stock-based compensation |
| 55,000 |
| - |
Depreciation and amortization |
| 160 |
| 6,828 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable - related parties |
| (146,641) |
| 80,000 |
Accounts payable - related parties |
| 263,776 |
| - |
Accounts payable and accrued expenses |
| 188,618 |
| 250,117 |
Net cash used in operating activities |
| (153,401) |
| (43,124) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Investment in Galtheron Molecular Solutions |
| (110,620) |
| - |
Net cash used in investing activities |
| (110,620) |
| - |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Net advance from related parties |
| 264,958 |
| 41,959 |
Net cash provided by financing activities |
| 264,958 |
| 41,959 |
|
|
|
|
|
Net increase (decrease in cash) |
| 937 |
| (1,165) |
Cash at the beginning of the year |
| 94 |
| 1,331 |
Cash at the end of the year |
| $ 1,031 |
| $ 166 |
|
|
|
|
|
Non-cash investing and financing transactions: |
|
|
|
|
Shares issued arising from note conversion |
| - |
| 25,000 |
Convertible note proceeds received by related part |
| 256,000 |
| 65,000 |
Conversion of convertibles notes payable to common stock |
| 69,026 |
| - |
Property acquired in exchange for common stock |
| 26,000 |
| - |
Equipment purchased by related party |
| 5,739 |
| - |
The accompanying condensed notes are an integral part of these interim consolidated financial statements.
GENETHERA, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Organization and nature of operations and summary of significant accounting policies
Organization and nature of operations
The consolidated financial statements include GeneThera, Inc. and its wholly owned subsidiary GeneThera, Inc. (Colorado) (collectively GeneThera or the Company. GeneThera is a biotechnology company that develops molecular assays for the detection of food contaminating pathogens, veterinary diseases and genetically modified organisms. The accompanying unaudited interim consolidated financial statements of GeneThera have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Companys latest Annual Report filed with the SEC on Form 10K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ending December 31, 2014, as reported in Form 10K, have been omitted, including summaries of the Companys significant accounting policies.
Use of estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
Cash equivalents are highly liquid investments with an original maturity of three months or less.
Principles of consolidation
The consolidated financial statements include the accounts of the Company, and its subsidiary.
Property and equipment, net
Property and equipment consists primarily of office and laboratory equipment and leasehold improvements and is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives ranging from five to seven years. Leasehold improvements are amortized over the shorter of their economic lives or lease terms.
Impairment of long-lived assets
The Company reviews the recoverability of its long-lived assets to determine whether events or changes in circumstances occurred that indicate the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future cash flows of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between the estimated fair value and carrying value. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.
Revenue recognition
Research and development contracts are on a pre-paid basis in order to reflect milestones during research investigation. Revenues are recognized when services are completed. There were no revenues during the six months ended June 30, 2015 and 2014.
Stock-Based Compensation
Stock-based compensation is accounted for under FASB ASC Topic No. 718 Compensation Stock Compensation. The guidance requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). The guidance also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair value of the award. The Company accounts for non-employee share-based awards in accordance with guidance related to equity instruments that are issued to other than employees for acquisition, or in conjunction with selling, goods or services.
Income taxes
Income taxes are accounted for in accordance with the provisions of FASB ASC Topic No. 740 - Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax 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 enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
Basic and diluted net loss per common share
Basic and diluted net loss per share calculations are presented in accordance with FASB ASC Topic No. 260 Earnings per Share, and are calculated on the basis of the weighted average number of common shares outstanding during the period. Diluted net loss per share calculations includes the dilutive effect of common stock equivalents in years with
net income. Basic and diluted loss per share is the same due to the absence of common stock equivalents.
Fair value of financial instruments
The carrying value of cash, accounts payable and accrued expenses approximates fair value due to the short term nature of these accounts.
Recently issued accounting pronouncements
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant effect on its consolidated financial position or results of operations.
Note 2- Going Concern
As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $24,463,664 and negative working capital of $6,245,324 as of June 30, 2015. This raises substantial doubt about the Companys ability to continue as a going concern. The Companys ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Note 3 Related party transactions
The Company has an outstanding loan payable, including interest, to Antonio Milici, its CEO and shareholder amounting to $653,047 and $645,271 as of June 30, 2015 and December 31, 2014, respectively. This outstanding loan to the Company is unsecured and bears interest at 2.41% per year. During the six months ended June 30, 2015, the Company has recorded interest expense on this loan in the amount of 7,776.
In May 2015, the Company invested $110,620 in Galtheron Molecular Solutions AG, a Swiss entity under common control. See Note 4 below.
As of June 30, 2015, the Company has outstanding liabilities due to related parties, including Setna Holdings LLC, Tannya Irizarry, and Elia Holdings, LLC totaling $547,553.
The Company has amounts receivable from these related parties of $161,971 and $15,331 as of June 30, 2015 and December 31, 2014, respectively.
During six months ended June 30, 2015, the Company issued $256,000 of convertible promissory notes (see Note 5). The proceeds from these notes were managed by a subsidiary of Setna Holdings, a related party.
Note 4 Investments
During May 2015, the Company invested $110,620 in Galtheron Molecular Solutions (GMS), a Swiss entity. The Company is planning on entering into a licensing agreement with GMS as noted in Note 8 and, contingent upon GMS hiring of qualified personnel and development of an operating plan, will look to develop a long-term relationship. The Company plans to transfer control of the entity once an operating plan is developed and expected that this investment will be a non-controlling interest in Galtheron's equity structure as all aspects of the relationship are finalized. Currently, there are no direct activities and the investment is valued at its book value.
Note 5 Property and equipment
Property and equipment consists primarily of office and laboratory equipment and leasehold improvements and is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives ranging from five to seven years. Leasehold improvements are amortized over the shorter of their economic lives or lease terms.
The companys property and equipment at June 30, 2015 and December 31, 2014 consisted of furniture, lab equipment, and computer software. As of June 30, 2015, the Company had construction in progress in the amount of $28,500 related to renovation of its lab space.
Depreciation expense was $160 and $12,762 for the six months ended June 30, 2015 and the twelve months ended December 31, 2015. Expenditures for repairs and maintenance are expensed as incurred.
Note 6 Convertible notes payable
During January 2015, the Company issued Subordinated Convertible Promissory notes in the aggregate amount of $256,000, and convertible notes and related interest totaling $69,026 were converted to 2,298,465 shares of common stock. Of that, 515,133 shares of common stock valued at $15,454 had been issued as of March 31, 2015; the remaining 1,783,332 shares valued at $53,572 has not yet been issued as of June 30, 2015.
Note 7 - Shareholders equity
Convertible preferred stock rights
Preferred Stock (Series A) shall be convertible into Common Stock any time at the holders sole discretion in part or in whole by dividing the Purchase Price per Share by
110% of the Market Value on the Closing Date. Market Value on any given date shall be defined as the average of the lowest three intra-day trading prices of the Companys common stock during the 15 immediately preceding trading days.
Preferred Stock (Series B) shall be convertible into ten common shares at any time and holders are entitled to 20 common share votes per such preferred share.
Common stock
During the six months ended June 30, 2015, the Company issued 2,422,447 shares of common stock valued at $81,000 in exchange for services and property:
?
204,080 shares valued at $10,000 to directors for services;
?
918,367 shares valued at $45,000 to an officer for services; and
?
1,300,000 shares valued at $26,000 to a vendor for construction in process.
During the six months ended June 30, 2015, convertible notes payable were converted to common stock:
?
515,133 shares of common stock were issued for converted notes totaling $69,026
?
An additional 1,783,332 shares valued at $53,572 were yet to be issued as of June 30, 2015 pursuant to convertible notes payable that were converted.
Note 8 Subsequent events
On August 12, 2015, the Company entered into a settlement agreement with Litchfield Church Ranch, LLC (LCR), its former landlord, related to back rent in the amount of $325,000. The Company is required to pay $15,000 on or before September 12, 2015 as a good-faith down payment. The Company, at its option, can satisfy the judgment in the following ways:
·
If paid on or before February 12, 2016, the judgment shall be deemed paid-in-full if the Company delivers $100,000 to LCR
·
If not paid off prior to February 12, 2016, the Company judgment shall be deemed satisfied if the Company delivers $150,000 to LCR on or before August 12, 2016.
·
If not paid off prior to August 12, 2016, there will be no discount and the Company shall owe the judgment balance in the amount of $325,885
In late August 2015, the Company expects to finalize and enter into an exclusive License Agreement with Galtheron Molecular Solutions. GeneThera will license Galtheron to commercialize diagnostic and vaccine technologies in Europe and the Middle East. Further details will be forthcoming.
ITEM 2:
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sections of this Form 10-Q, including the Managements Discussion and Analysis or Plan of Operation, contain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as may, will, should, would, could, plans, goal, potential, expect, anticipate, estimate, believe, intent, project, and similar words and variations thereof. This report contains forward-looking statements that address, among other things,
* Our financing plans
* Regulatory environments in which we operate or plan to operate
* Trends affecting our financial condition or results of operations
* The impact of competition, the start-up of certain operations and acquisition opportunities.
Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements (Cautionary Statements) include, among others,
* Our ability to raise capital
* Our ability to execute our business strategy in a very competitive environment
* Our degree of financial leverage
* Risks associated with our acquiring and integrating companies into our own
* Risks relating to rapidly developing technology
* Regulatory considerations
* Risks related to international economies
* Risks related to market acceptance and demand for our products and services
* The impact of competitive services and pricing
* Other risks referenced from time to time in our SEC filings
All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We do not undertake any obligations to publicly release any revisions to any forward-
looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.
You should read the following discussion of our results and plan of operation in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this Form 10-Q and in conjunction with our Annual Report on Form 10-K, file on April 14, 2015. Statements in this Managements Discussion and Analysis or Plan of Operation that are not statements of historical or current objective fact are forward-looking statements.
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015, COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2014
We did not generate any revenue for the three or six months ended June 30, 2015 and 2014.
We had total operating expenses of $147,530 for the three months ended June 30, 2015, compared to total operating expenses of $214,093 for the three months ended June 30, 2014, a decrease of $66,563 from the prior period. The decrease was largely due to lower general and administrative expenses.
We had total operating expenses of $496,416 for the six months ended June 30, 2015, compared to total operating expenses of $380,069 for the six months ended June 30, 2014, an increase of $116,347 from the prior period. The increase was largely due to higher general and administrative expenses, including interest on convertible notes and professional fees.
|
LIQUIDITY AND CAPITAL RESOURCES
We had total assets as of June, 2015 of $305,200, which included cash of $1,031, receivables from related parties of $161,971, and net property and equipment of $31,578.
We had total liabilities of $6,408,326 as of June 30, 2015, which included $1,729,183 of accounts payable, $2,876,635 of accrued liabilities, and $1,802,508 of notes and loans payable.
We had negative working capital of $6,245,324 and an accumulated deficit of $24,463,664 as of June 30, 2015.
It is estimated that we will require outside capital for the remainder of 2015 for the commercialization of GeneThera molecular assays as well as the development of our therapeutic vaccines. The Company intends to raise these funds by means of one or more private offerings of debt or equity securities or both. The Company is still in discussions with one or two groups to obtain financing through equity. No definitive agreements have
been signed. There are no guarantees whether the Company will be able to secure such financing, and if the financing is secured, there are no guarantees whether the Company can achieve the goals laid out in its business plan fully. We will require significant additional funding in order to achieve our business plan.
Our longer-term working capital and capital requirements will depend upon numerous factors, including revenue and profit generation, pre-clinical studies and clinical trials, the timing and cost of obtaining regulatory approvals, the cost of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights, competing technological and market developments, and collaborative arrangements. Additional capital will be required in order to attain such goals. Such additional funds may not become available on acceptable terms and we cannot give any assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term.
In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders.
The Company has no off balance sheet commitments or arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a smaller reporting company, as defined by Rule 229.10(f)(1).
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a15 under the Securities Exchange Act of 1934, as amended (the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on our evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 29, 2007, the Internal Revenue Service filed a Federal Tax Lien at the Jefferson County Recorder in the State of Colorado in the amount of $1,983. The Company has not satisfied the judgment.
On June 6, 2008, Mark A. Shoemaker filed a Civil Judgment at the LA County/Recorder of Deeds Court in the amount of $37,721. This lawyer has been disbarred and incarcerated. The Company will not satisfy the judgment.
On February 10, 2009, Centennial Credit Corporation filed a Civil Judgment at the Jefferson County Court in the State of Colorado in the amount of $967. The Company has not satisfied the judgment.
In June 2009, James Tufts filed a complaint at the Small Claims Court in Jefferson County, Colorado in the amount of $4,000 plus expenses from a London business trip. The Company will not satisfy the judgment. The Company discovered that during the time his spouse was working at the transfer agency, she issued more than one stock certificate in the amount of $15,000 each. In December 2009, James Tufts returned only one certificate in the amount of $15,000; the other stock certificate for the same amount is still active and in the database.
On June 26, 2009, Enterprise Leasing Company of Denver filed a Civil Judgment at the Jefferson County District Court in the State of Colorado in the amount of $78,178. The Company has not satisfied the judgment.
On August 17, 2010, Banc of America Leasing filed a Civil Judgment at the Oakland County District in Troy, Michigan in the amount of $24,002. The Company has not satisfied the judgment.
On September 23, 2010, Liberty Acquisitions filed a Civil Judgment at the Jefferson County Court in the State of Colorado in the amount of $3,300. The Company has not satisfied the judgment.
On August 29, 2011, GeneThera had a court hearing concerning a litigation filed by The Park III related to unpaid rent according to our lease agreement. The District Court of Boulder entered a judgment against the Company in the amount of $77,000. The Company has not satisfied the judgment.
On January 31, 2013, the Company had a judgment by default in the amount of $19,586. Laboratory equipment was arbitrarily and improperly seized from the Company premises. These equipment were not Companys property since were loaned to the Company as part of an ongoing research project. The Company strongly argues that the equipment was unlawfully removed from its facilities. The Company has retained a law firm to pursue litigations against all the parties that caused to illegally and arbitrarily seize the equipment without proper procedure or cause.
On April 24, 2014, the Company decided not to finalize the liability purchase agreement with Tarpon Bay Partners, LLC/Southridge due to hostile terms and their unwillingness to agree on more favorable terms for GeneThera.
On August 12, 2015, the Company entered into a settlement agreement related to a judgment of confession with its former landlord, Litchfield Church Ranch LLC, in the amount of $325,885, due by August 12, 2016. The Company receives discounts on the judgment if it is paid early.
Item 1A.
Risk Factors
There have been no material changes from the risk factors previously disclosed in the Companys Annual Report on Form 10-K, filed with the Commission on April 14, 2015 and investors are encouraged to review such risk factors prior to making an investment in the Company.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
On January 17, 2013, the Company issued 1,000,000 shares of its common stock for cash for total proceeds of $200, a nominal fee. This issuance has a restrictive legend until such consultants forthcoming report for services rendered. The stock issuance was cancelled.
Item 3.
Defaults upon Senior Securities
None.
Item 4:
Mine Safety Disclosures
Not applicable.
Item 5:
Other Information
On April 18, 2013, the Company, in error, issued restricted stock in lieu of cash invested
during a binding Escrow Agreement, which was defaulted by Gold X Change, Inc. The
issuance of restricted stock was cancelled as per the escrow agreement terms.
Item 6:
Exhibits
Exhibit
Description of Exhibit
Number
31.1*
Certificate of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2*
Certificate of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1* | Certificate of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2* | Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS** XBRL Instance Document
101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB** XBRL Taxonomy Extension Label Linkbase Document
101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF** XBRL Taxonomy Extension Definition Linkbase Document
_________________
* Filed herewith
** Furnished herewith
** Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 19, 2015.
GeneThera, Inc.
By: /s/ Antonio Milici
Antonio Milici, MD, PhD
President
(Principal Executive Officer)
By: /s/ Tannya L. Irizarry
Tannya L. Irizarry
Chief Financial Officer (Interim)
(Principal Financial/Accounting Officer)
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature |
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/s/ Antonio Milici |
| President, Director |
| 8/19/2015 |
Antonio Milici, M.D., PhD. |
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/s/ Tannya L. Irizarry |
| Chief Financial Officer (Interim) |
| 8/19/2015 |
Tannya L Irizarry |
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