10QSB 1 ihbt10q103107.htm QUARTERLY REPORT ON FORM 10-QSB ihbt10q103107.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarter ended October 31, 2007
   
¨
TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______to_______


Commission File No. 333-57946

INHIBITON THERAPEUTICS, INC.
 (Exact Name of Registrant as Specified in its Charter)


Nevada
88-0448626
(State or other jurisdiction of
(IRS Employer
incorporation or organization)
Identification No.)

7315 East Peakview Avenue
Englewood, Colorado 80111
(Address of principal executive offices) (Zip code)

(303) 796-8940
(Registrant's telephone number including area code)

 (Former name, address and fiscal year)


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, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No x

Number of shares of common stock outstanding at December 10, 2007: 16,245,219




INHIBITON THERAPEUTICS, INC.
 (A Development Stage Company)

Index to Financial Statements
(Unaudited)


   
Page
     
Condensed Balance Sheet at October 31, 2007
F-2
     
Condensed Statement of Operations for the three and nine months ended
 
 
October 31, 2007, three and nine months ended October 31, 2006,
 
 
and from May 11, 2004 (Inception) through October 31, 2007
F-3
     
Condensed Statement of Changes in Shareholders' Deficit for the period from
 
 
May 11, 2004 (Inception) through October 31, 2007
F-4
     
Condensed Statement of Cash Flows for the nine months ended October 31, 2007,
 
 
nine months ended October 31, 2006, and from May 11, 2004 (Inception)
 
 
through October 31, 2007
F-5
     
Notes to Financial Statements
F-6
   
Item 2. Plan of Operation
13
   
Part II – Other Information
14
   
Signatures
16
   



F-1


INHIBITON THERAPEUTICS, INC.
 (A Development Stage Company)
Condensed Balance Sheet
October 31, 2007
(Unaudited)
 
Assets
     
Cash
  $
22,437
 
         
Total assets
  $
22,437
 
         
Liabilities and Shareholders’ Deficit
       
Current liabilities:
       
Accounts and notes payable:
       
Accounts payable, related party (Note 2)
  $
323,725
 
Accounts payable, other
   
254,777
 
Notes payable, related party (Note 2)
   
400,639
 
Notes payable, other (Note 4)
   
30,000
 
Accrued interest payable:
       
Notes payable, related party (Note 2)
   
39,842
 
Notes payable, other (Note 4)
   
6,312
 
         
Total current liabilities
   
1,055,295
 
         
Commitments and contingencies
   
 
         
Shareholders’ deficit:
       
Preferred stock, $.01 par value; 100,000 shares authorized,
       
-0- shares issued and outstanding
   
 
Common stock, $.001 par value; 50,000,000 shares authorized,
       
16,035,219 shares issued and outstanding
   
16,035
 
Additional paid-in capital
   
1,447,047
 
Deficit accumulated during the development stage
    (2,495,940 )
         
Total shareholders' deficit
    (1,032,858 )
         
Total liabilities and shareholders' deficit
  $
22,437
 

See accompanying notes to condensed financial statements.   
 
F-2


INHIBITON THERAPEUTICS, INC.
 (A Development Stage Company)
Condensed Statements of Operations
(Unaudited)

                           
May 11, 2004
 
   
Three months
   
Three months
   
Nine months
   
Nine months
   
(Inception)
 
   
ended
   
ended
   
ended
   
ended
   
Through
 
   
October 31,
   
October 31,
   
October 31,
   
October 31,
   
October 31,
 
   
2007
   
2006
   
2007
   
2006
   
2007
 
                               
Operating costs and expenses:
                             
Research and development
  $
-
    $
75,000
    $
150,000
    $
225,000
    $
900,000
 
Selling, general and administrative expenses
                                       
Related party (Note 2)
   
32,250
     
32,250
     
96,750
     
96,750
     
750,425
 
Other (Note 5)
   
25,654
     
5,672
     
167,629
     
29,487
     
391,123
 
                                         
Total operating costs and expenses
    (57,904 )     (112,922 )     (414,379 )     (351,237 )     (2,041,548 )
                                         
Interest income (Note 3)
   
-
     
-
     
-
     
-
     
80,183
 
Interest expense (Notes 2, 3 & 4)
    (8,905 )     (14,080 )     (355,723 )     (41,356 )     (534,575 )
                                         
Loss before income taxes
    (66,809 )     (127,002 )     (770,102 )     (392,593 )     (2,495,940 )
                                         
Income tax provision (Note 6)
   
-
     
-
     
-
     
-
     
-
 
                                         
Net loss
  $ (66,809 )   $ (127,002 )   $ (770,102 )   $ (392,593 )   $ (2,495,940 )
                                         
Basic and diluted loss per common share
  $ (0.00 )   $ (0.01 )   $ (0.05 )   $ (0.03 )        
                                         
Weighted average common shares outstanding
   
15,901,886
     
13,651,597
     
15,163,700
     
13,548,938
         


See accompanying notes to condensed financial statements.   
 
F-3


INHIBITON THERAPEUTICS, INC.
 (A Development Stage Company)
Condensed Statement of Changes in Shareholders’ Deficit
(Unaudited)
 
                     
Deficit
       
               
Additional
   
accumulated
       
   
Common Stock
   
paid-in
   
during the
       
   
Shares
   
Par value
   
capital
   
development stage
   
Total
 
Balance at May 11, 2004
                             
Inception date
   
    $
    $
    $
    $
 
                                         
October 2004 and January 2005,
                                       
sale of common stock
   
9,555,100
     
9,555
     
269,945
     
     
279,500
 
October 2004, issuance of common stock
                                       
for debt issue costs
   
963,000
     
963
      (63 )    
     
900
 
December 2004, issuance of common stock
                                       
for services
   
107,000
     
107
     
893
     
     
1,000
 
January 2005, conversion of notes payable to
                                       
common stock
   
74,900
     
75
     
625
     
     
700
 
Net loss
   
     
     
      (534,619 )     (534,619 )
Balance at January 31, 2005
   
10,700,000
     
10,700
     
271,400
      (534,619 )     (252,519 )
                                         
February 2005 and March 2005,
                                       
sale of common stock
   
428,000
     
428
     
99,572
     
     
100,000
 
May  2005 Reverse acquisition of Organic
                                       
Soils.com, Inc.
   
2,323,000
     
2,323
      (47,179 )             (44,856 )
Net loss
   
     
     
      (664,190 )     (664,190 )
                                         
Balance at January 31, 2006
   
13,451,000
     
13,451
     
323,793
      (1,198,809 )     (861,565 )
                                         
July 2006 and August 2006,
                                       
sale of common stock, less
                                       
$7,500 of offering costs
   
250,000
     
250
     
67,250
     
     
67,500
 
Net loss
                            (527,029 )     (527,029 )
                                         
Balance at January 31, 2007
   
13,701,000
     
13,701
     
391,043
      (1,725,838 )     (1,321,094 )
                                         
March 2007, conversion of
                                       
convertible promissory notes to
                                       
common stock (Note 3)
   
594,356
     
594
     
213,374
     
     
213,968
 
Issuance of warrants upon conversion
                                       
of convertible promissory notes (Note 3)
   
     
     
172,363
     
     
172,363
 
March 2007, sale of common stock
                                       
(Note 7)
   
500,000
     
500
     
124,500
     
     
125,000
 
April 2007, sale of common stock,
                                       
less $3,000 of offering costs (Note 7)
   
100,000
     
100
     
26,900
     
     
27,000
 
July 2007, conversion of
                                       
convertible promissory notes to
                                       
common stock (Note 3)
   
489,863
     
490
     
183,209
     
     
183,699
 
Issuance of warrants upon conversion
                                       
of convertible promissory notes (Note 3)
   
     
     
151,368
     
     
151,368
 
July 2007, sale of common stock (Note 7)
   
200,000
     
200
     
49,800
     
     
50,000
 
August 2007, sale of common stock (Note 7)
   
250,000
     
250
     
74,720
             
74,970
 
October 2007, sale of common
                                       
stock (Note 7)
   
200,000
     
200
     
59,770
             
59,970
 
Net loss
   
     
     
      (770,102 )     (770,102 )
                                         
Balance at October 31, 2007
   
16,035,219
    $
16,035
    $
1,447,047
    $ (2,495,940 )   $ (1,032,858 )
 
See accompanying notes to condensed financial statements.   

F-4


INHIBITON THERAPEUTICS, INC.
 (A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
 
               
May 11, 2004
 
   
Nine months
   
Nine months
   
(Inception)
 
   
ended
   
ended
   
Through
 
   
October 31,
   
October 31,
   
October 31,
 
   
2007
   
2006
   
2007
 
                   
Cash flows from operating activities:
                 
  Net loss
  $ (770,102 )   $ (392,593 )   $ (2,495,940 )
Adjustments to reconcile net loss to net cash
                       
used by operating activities:
                       
Stock based compensation
   
     
     
1,000
 
Loss on debt extinguishment (Note 3)
   
126,612
     
     
126,612
 
Expense incurred upon issuance or modification
                       
of stock and warrants (Note 3)
   
323,731
     
     
323,731
 
Changes in operating assets and liabilities:
                       
Prepaid expense
   
     
     
 
Accounts payable
   
22,836
     
111,794
     
254,777
 
Related party payables (Note 2)
   
64,850
     
96,750
     
323,725
 
Accrued expenses
   
13,269
     
26,687
     
92,210
 
Net cash used in
                       
operating activities
    (218,804 )     (157,362 )     (1,373,885 )
                         
Cash flows from investing activities:
                       
Investment in Inhibitex Therapeutics, Inc.
   
     
      (44,856 )
Net cash used in
                       
investing activities
   
     
      (44,856 )
                         
Cash flows from financing activities:
                       
(Payments on) proceeds from related party notes
                       
payable, net (Note 2)
    (95,840 )    
76,419
     
389,238
 
Proceeds from notes payable, other
   
     
13,000
     
43,000
 
Proceeds from convertible promissory note (Note 3)
   
     
     
225,000
 
Proceeds from issuance of common stock,
                       
net of offering costs (Note 7)
   
336,940
     
67,500
     
783,940
 
Net cash provided by
                       
financing activities
   
241,100
     
156,919
     
1,441,178
 
                         
Net change in cash and
                       
cash equivalents
   
22,296
      (443 )    
22,437
 
                         
Cash and cash equivalents:
                       
Beginning of period
   
141
     
747
     
 
                         
End of period
  $
22,437
    $
304
    $
22,437
 
                         
Supplemental disclosure of cash flow information:
                       
Cash paid during the period for:
                       
Income taxes
  $
    $
    $
 
    Interest
  $
18,323
    $
14,669
    $
38,430
 
                         
Noncash financing transactions:
                       
Notes and interest payable converted to stock
  $
271,055
    $
    $
271,755
 
Stock issued in exchange for debt issue costs
  $
    $
    $
900
 
                         
 
See accompanying notes to condensed financial statements.   
 
F-5

      
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
    


Note 1:  Basis of presentation

The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the Company’s annual financial statements for the year ended January 31, 2007, notes and accounting policies thereto included in the Company’s Annual Report on Form 10-KSB as filed with the SEC.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented have been made.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year.

Interim financial data presented herein are unaudited.

Reorganization

Effective May 19, 2005, Organic Soils.com, Inc. (“Organic Soils.com”) entered into an Agreement and Plan of Reorganization with Inhibetex Therapeutics, Inc.  The Agreement provided for the reorganization of Inhibetex with Organic Soils.com, with the surviving entity adopting the name Inhibiton Therapeutics, Inc. (the “Company”).  In connection with the Agreement, Organic Soils.com acquired all of the issued and outstanding common shares of Inhibetex, on a fully-diluted basis, in exchange for 11,128,000 shares of Organic Soils.com common stock.  At the closing of the Agreement, the shareholders of Inhibetex held  82.7% of the outstanding common stock of Organic Soils.com, resulting in a change in control.

This acquisition was treated as a recapitalization of Inhibetex, with Organic Soils.com as the legal surviving entity.  Since Organic Soils.com had, prior to the recapitalization, minimal assets and no operations, the recapitalization has been accounted for as the sale of 2,323,000 shares of Organic Soils.com common stock for net assets of Inhibetex.  Costs of the transaction were charged to the period in which they were incurred.


F-6

      
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
 

Derivative Instruments

In connection with the issuances of equity instruments or debt, the Company may issue options or warrants to purchase common stock. In certain circumstances, these options or warrants may be classified as liabilities, rather than as equity. In addition, the equity instrument or debt may contain embedded derivative instruments, such as conversion options or listing requirements, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative liability instrument. The Company accounts for derivative instruments under the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities".


Note 2:  Related Party

At October 31, 2007, the Company owed its officers a total of $305,400 for management services.  The Board of Directors has estimated the value of management services at the monthly rate of $8,000 and $2,000 for the president and treasurer, respectively.  The estimates were determined by comparing the level of effort to the cost of similar labor in the local market.

The Company rents office space from an affiliate at the rate of $750 per month, based on the amount of space occupied by the Company.  Rent expense totaled $6,750 for the nine months ended October 31, 2007.  At October 31, 2007, the Company owed the affiliate a total of $18,325 for rent of office space.

Accounts payable to related parties consisted of the following at October 31, 2007:

Management fees payable to officers
  $
305,400
 
         
Rent payable to company affiliated with officers
   
18,325
 
         
Total accounts payable, related party
  $
323,725
 


Prior to the nine months ended October 31, 2007, the Company issued various promissory notes payable to a trust created by the president of the Company for the benefit of his children, in exchange for cash used for working capital purposes.   The notes bear an interest rate of 8% and are due on demand.  During the nine months ended October 31, 2007, $21,546 of these notes were repaid leaving $274,612 in principal and $24,883 in accrued interest outstanding on all notes payable to the trust at October 31, 2007.


F-7

      
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
 

During the nine months ended October 31, 2007, the Company made payments of $37,357 on promissory notes payable to a company owned by the president.  The notes bear an interest rate of 8% per annum and are due on demand.  At October 31, 2007, $75,356 in principal and $11,204 in accrued interest remained outstanding on all notes payable to this affiliate.

During the nine months ended October 31, 2007, the Company made payments of $18,541 on  promissory notes payable to the president.  The notes bear an interest rate of 8% per annum and are due on demand.  At October 31, 2007, $671 in principal and $1 in accrued interest remained outstanding on all notes payable to the president.

During the fiscal year ended January 31, 2007, the Company issued a promissory note payable to its secretary totaling $2,000 that was used for working capital purposes.  The note carried an interest rate of 8% per annum and was due on demand.  This note was repaid during the quarter ended April 30, 2007.

During the year ended January 31, 2007, the Company executed two promissory notes with companies affiliated with the Company’s officers in exchange for $31,500.  These notes carry an interest rate of 8% per annum and are due on demand.  As of October 31, 2007, these loans remained outstanding with accrued interest payable of $2,493.

During the quarter ended July 31, 2007, the Company executed a promissory note with a partnership affiliated with the Company’s president in the amount of $5,500.  This note carries an interest rate of 8% and is due on demand.  As of October 31, 2007, the entire balance of this note remains outstanding with accrued interest payable of $127.

During the year ended January 31, 2007, the Company executed a promissory note with a significant stockholder in exchange for $13,000.  The note bears 8% interest and is due on demand.  The entire balance of this note remained unpaid at October 31, 2007 with accrued interest payable of $1,134.

Notes and interest payable to related parties consisted of the following at July 31, 2007:

Notes payable to officers; interest at 8% and due on demand
  $
671
 
         
Notes payable to affiliates of Company officers; interest at 8% and due on demand
   
386,968
 
         
Note payable to significant stockholder; interest at 8% and due on demand
   
13,000
 
         
Notes payable, related party
   
400,639
 
         

F-8

 
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
    


Interest payable related party
   
39,842
 
         
Total principal and interest payable, related party
  $
466,318
 


Note 3: Convertible Notes Payable

In September and October 2004, the Company entered into agreements to borrow an aggregate principal amount of $225,000 and to issue to the lenders convertible promissory notes (the “Notes”).

Each note carries an interest rate of 8% per annum.  Principal and accrued interest was due in October and November 2005.  At the option of the lenders, the principal and accrued interest is convertible, in whole or in part, into $0.001 par value common stock of the Company at 75% of the average closing price of the common stock for the first thirty days immediately following the date the Company began trading as a public company (May 19, 2005) or $3.38 per share.

The Company evaluated the Notes’ conversion terms to determine if they gave rise to an embedded derivative that would need to be accounted for separately under SFAS No. 133 and Emerging Issues Task Force (EITF) 00-19 "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock." The Company determined that because the number of shares that could have been required to be delivered upon net share settlement was essentially indeterminate, it was not possible to conclude that the Company had available authorized and unissued shares.  Accordingly net share settlement was not within the control of the Company and, as a result, the conversion feature is an embedded derivative that must be bifurcated from the Notes and recorded as a derivative liability. On June 20, 2005, the number of shares that could have been required to be delivered was determinable. This resulted in the elimination of the need to bifurcate the embedded derivative associated with the Notes’ conversion feature.

Accordingly, the Company recorded an initial liability of $80,183 for the fair value of the Notes’ embedded liability. The initial value of the embedded liability has been amortized over the term of the Notes ending in the quarter ended October 31, 2005, and recognized as amortization expense of $80,183 which was included in interest expense in the nine month period ended October 31, 2005.

From the date of note issuance through June 20, 2005, the changes in the fair value of the derivative liability were calculated. The amortization of the debt discount was calculated for each period. On June 20, 2005, the number of shares into which the notes were convertible was fixed and determinable, and the notes were therefore determined to be conventional as of that date. Therefore, on June 20, 2005, the derivative liability was adjusted to $0, and the change in fair value was recorded as a credit to interest income.


F-9

      
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
 

In March 2007, $125,000 in principal of the convertible promissory notes along with $23,589 in accrued interest were converted to common stock at $0.25 per share with the noteholders receiving 594,356 restricted shares of common stock.  In addition, the noteholders were issued warrants to purchase a total of 594,356 shares of the Company’s common stock at an exercise price of $0.50 per share that are exercisable for three years from their issuance date.  The shares were valued at $0.36 per share, which represents the market value on the issuance date.  The Company recorded a loss on the extinguishment of debt of $65,379 in the three months ended April 30, 2007, as a result of this transaction.  The Company determined the fair value of the warrants were estimated to be $172,363 on the grant date using the Black-Scholes option pricing model, which was recorded as interest expense in the three months ended April 30, 2007.

In July 2007, the final $100,000 in principal of the convertible promissory notes along with $22,466 in accrued interest were converted to common stock at $0.25 per share with the noteholder receiving 489,863 restricted shares of common stock.  In addition, the noteholder was issued warrants to purchase a total of 489,863 shares of the Company’s common stock at an exercise price of $0.50 per share that are exercisable for three years from their issuance date.  The shares were valued at $0.375 per share, which represents the market value on the issuance date.  The Company recorded a loss on the extinguishment of debt of $61,233 in the three month period ended July 31, 2007, as a result of this transaction.  The Company determined the fair value of the warrants were estimated to be $151,368 on the grant date using the Black-Scholes option pricing model, which was recorded as interest expense in the three month period ended July 31, 2007.

The fair value of the warrants issued in connection with the conversion of the convertible debt to common stock was calculated utilizing the following assumptions:

Issuance Date
Fair Value
Term
Exercise Price
Market Price on Grant Date
Volatility Percentage
Interest Rate
April 2007
$172,363
3 years
$0.50
$0.36
156%
4.5%
July 2007
$151,368
3 years
$0.50
$0.375
161%
4.5%


Note 4: Notes Payable

During the year ended January 31, 2006, the Company received proceeds of $30,000, in exchange for a promissory note issued to an unaffiliated third party.  This promissory note bears an interest rate of  8% per annum and is due on demand. The entire principal balance of $30,000 and accrued interest of $6,312 on this note remains unpaid as of October 31, 2007.



F-10

      
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
    

Note 5:  Other Expense

Other expense for the three and nine month periods ended October 31, 2007 and 2006, and for the period from May 11, 2004 (Inception) through July 31, 2007 consisted of the following:

   
Three months ended October 31, 2007
   
Three months ended October 31, 2006
   
Nine months ended October 31, 2007
   
Nine months ended October 31, 2006
   
May 11, 2004 (Inception) through October 31, 2007
 
General and administrative
  $
871
    $
686
    $
3,381
    $
1,569
    $
19,213
 
Legal and accounting
   
1,683
     
4,386
     
8,236
     
26,118
     
75,189
 
Loss on debt extinguishment
   
-
     
-
     
126,612
     
-
     
126,612
 
Professional services
   
23,100
     
600
     
29,400
     
1,800
     
169,109
 
Stock based compensation
   
-
     
-
     
-
     
-
     
1,000
 
    $
25,654
    $
5,672
    $
167,629
    $
29,487
    $
391,123
 


Note 6:  Income Tax

The Company records its income taxes in accordance with Statement of Financial Accounting Standard No. 109, “Accounting for Income Taxes”.  The Company has incurred significant net operating losses since inception resulting in a deferred tax asset, which was fully allowed for; therefore, the net benefit and expense resulted in $-0- income taxes.


Note 7:  Capital Stock

In March 2007, concurrent with the convertible note conversion transaction discussed in Note 3 above, the noteholders who converted their notes also agreed to purchase 500,000 restricted shares of the Company’s common stock in a private placement transaction.  These shares were purchased at $0.25 per share for which the Company received proceeds of $125,000.  The Company also issued the noteholders warrants to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.50 per share that are exercisable for three years from the issuance date.


F-11

      
INHIBITON THERAPEUTICS, INC.
(A Development Stage Company)
Notes to Condensed Financial Statements
(Unaudited)
 

In April 2007, the Company commenced a private placement of its restricted common stock to accredited investors at a purchase price of $0.30 per unit, which includes one share of common stock and one common stock purchase warrant.  Each warrant entitles the holder to purchase one share of common stock at an exercise price of $0.50 per share for a period of three years from the issue date.  A total of 100,000 restricted shares of common stock and 100,000 warrants have been sold for total proceeds to the Company of $30,000, net of $3,000 in offering costs.

In July 2007, concurrent with the convertible note conversion transaction discussed in Note 3 above, the noteholder who converted their note also agreed to purchase 200,000 restricted shares of the Company’s common stock in a private placement transaction.  These shares were purchased at $0.25 per share for which the Company received proceeds of $50,000.  The Company also issued the noteholder warrants to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.50 per share that are exercisable for three years from the issuance date.

In August and October 2007, the Company sold shares in a private placement of its restricted common stock to accredited investors at a purchase price of $0.30 per unit, which includes one share of common stock and one common stock purchase warrant.  Each warrant entitles the holder to purchase one share of common stock at an exercise price of $0.50 per share for a period of three years from the issue date.  A total of 450,000 restricted shares of common stock and 450,000 warrants were sold for total proceeds to the Company of $135,000.


Note 8:  Subsequent Events

In November 2007, we issued 210,000 shares of common stock to four unaffiliated accredited investors pursuant to payable private placement for proceeds totaling $60,000, or $0.29 per share.  In connection with these transactions, we issued warrants to purchase 210,000 shares of our common stock at an exercise price of $0.50 per share which expire three years from the issuance date.



F-12


Item 2. Plan of Operation

Effective as of May 19, 2005, pursuant to an Agreement and Plan of Reorganization dated as of March 24, 2005 (the “Share Exchange Agreement”) by and between Organic Soils.com, Inc., a Nevada corporation (the “Company”) and Inhibetex Therapeutics, Inc., a Colorado corporation (“Inhibetex”), the Company and Inhibetex entered into a share exchange whereby all of the issued and outstanding capital stock of Inhibetex, on a fully-diluted basis, were exchanged for like securities of the Company, and whereby Inhibetex became a wholly owned subsidiary of the Registrant (the “Share Exchange”).  Contemporaneously, we changed our name to “Inhibiton Therapeutics, Inc.”

Upon completion of the Share Exchange, we ceased all operations relating to our historical business and adopted the business plan of Inhibetex, which is now our wholly owned subsidiary.  Inhibetex was incorporated on May 11, 2004 under the laws of the state of Colorado for the purpose of engaging in the discovery and development of novel cancer therapies.  Our focus is the research and development of new cancer therapeutic agents and cancer fighting drugs called targeted therapies.  We are conducting our research through a Cooperative Research and Development Agreement (“CRADA”) signed on September 30, 2004, with the Department of Veteran’s Affairs.  The research is conducted at the VA Medical Center in Tampa Florida under the direction of Dr. Mildred Acevedo-Duncan, who is affiliated with the University of South Florida and the Veteran’s Administration.

In general terms, the VA provides facilities, government furnished equipment and scientific skills and we provide funding of $75,000 quarterly for a period of three years.  Funding of the CRADA commenced in September 2004 and we have expensed a total of $900,000 in research and development costs as of October 31, 2007, $237,000 of which remained unpaid and is included in accounts payable as of that date.

While our financial statements are presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time, our independent auditor has raised a substantial doubt about our ability to continue as a going concern.

To address the going concern situation addressed in our financial statements at October 31, 2007, we will require approximately $350,000 of additional capital to fund the balance due under the CRADA as well as for general corporate working capital to fund our minimal day-to-day operations and costs associated with being a publicly-traded company.  This amount does not include any amounts which may be necessary to pay off existing debt or accrued expenses.  We presently believe the source of funds will primarily consist of debt financing, which may include further loans from our officers or directors as detailed more fully in the accompanying financial statements, or the sale of our equity securities in private placements or other equity offerings or instruments.  During nine months ended October 31, 2007, we received net proceeds of $336,940 in additional funds through equity sales and received an additional $60,000 in November 2007.

We can make no assurance that we will be successful in raising the funds necessary for our working capital requirements as suitable financing may not be available and we may not have the ability to sell our equity securities under acceptable terms or in amounts sufficient to fund our

13


needs. Our inability to access various capital markets or acceptable financing could have a material effect on our results of operations, research and deployment of our business strategies and severely threaten our ability to operate as a going concern.

During the remainder of our fiscal year and for the foreseeable future, we will be concentrating on raising the necessary working capital through acceptable debt facilities and equity financing to insure our ability to continue our research and implement other business strategies.  To the extent that additional capital is raised through the sale of equity or equity related securities, the issuance of such securities could result in significant dilution of our current shareholders.

Off-Balance Sheet Arrangements.  During the nine months ended October 31, 2007, the Company did not engage in any off-balance sheet arrangements and defined in Item 303(c) of the SEC’s Regulation S-B.

Item 3. Controls and Procedures

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-159e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosures.  A review and evaluation of our disclosure controls and procedures was performed by the Company’s management, including the Company’s Chief Executive Officer (the “CEO”) who is also Chief Financial Officer (the “CFO”), as of October 31, 2007.  Based on that review and evaluation, the CEO/CFO has concluded that the Company’s disclosure controls and procedures were effective as of that date.

During the nine months ended October 31, 2007, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.


PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities

In August 2007, we issued 250,000 shares of common stock to three unaffiliated accredited investors pursuant to payable private placement for proceeds totaling $74,970, or $0.30 per share.  In connection with these transactions, we issued warrants to purchase 250,000 shares of our common stock at an exercise price of $0.50 per share which expire three years from the issuance date.

14


In October 2007, we issued 200,000 shares of common stock to three unaffiliated accredited investors pursuant to payable private placement for proceeds totaling $59,970, or $0.30 per share.  In connection with these transactions, we issued warrants to purchase 200,000 shares of our common stock at an exercise price of $0.50 per share which expire three years from the issuance date.

In November 2007, we issued 210,000 shares of common stock to four unaffiliated accredited investors pursuant to payable private placement for proceeds totaling $60,000, or $0.29 per share.  In connection with these transactions, we issued warrants to purchase 210,000 shares of our common stock at an exercise price of $0.50 per share which expire three years from the issuance date.

We offered and sold the securities in reliance on an exemption from federal registration under Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. We relied on this exemption and rule based on the fact that there were a limited number of investors, all of whom were accredited investors and (i) either alone or through a purchaser representative, had knowledge and experience in financial and business matters such that each was capable of evaluating the risks of the investment, and (ii) we had obtained subscription agreements from such investors indicating that they were purchasing for investment purposes only. The securities were not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The disclosure contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company, and is made only as permitted by Rule 135c under the Securities Act.

Item 3. Defaults upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits:
 
31.1
CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
32.1
CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 




15


SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
INHIBITON THERAPEUTICS, INC.
 
(Registrant)

Date: December 14, 2007
By: /s/ Henry Fong
 
Henry Fong
 
Principal Executive Officer and
Principal Financial Officer
   


16