x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the quarter ended October
31, 2008
|
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15 (d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from
_______to_______
|
Nevada
|
88-0448626
|
(State
or other jurisdiction of
|
(IRS
Employer
|
incorporation
or organization)
|
Identification
No.)
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting companyx
|
Page
|
||
Condensed
Balance Sheets at October 31, 2008 (unaudited) and January 31,
2008
|
F-2
|
|
Condensed
Statement of Operations for the three and nine months ended
|
||
October
31, 2008, three and nine months ended October 31, 2007, and from
|
||
May
11, 2004 (Inception) through October 31, 2008 (unaudited)
|
F-3
|
|
Condensed
Statement of Changes in Shareholders' Deficit for the period
from
|
||
May
11, 2004 (Inception) through October 31, 2008 (unaudited)
|
F-4
|
|
Condensed
Statement of Cash Flows for nine months ended October 31,
2008,
|
||
nine
months ended October 31, 2007, and from May 11, 2004
(Inception)
|
||
through
October 31, 2008 (unaudited)
|
F-5
|
|
Notes
to Condensed Financial Statements
|
F-6
|
|
Item
2. Plan of Operation
|
13
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
14
|
|
Item
4T. Controls and Procedures
|
14
|
|
Part
II – Other Information
|
15
|
|
Signatures
|
17
|
|
October 31,
|
January 31,
|
|||||||
2008
|
2008
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Assets
|
||||||||
Cash
|
$241 | $21,023 | ||||||
Total
assets
|
$241 | $21,023 | ||||||
Liabilities and Shareholders’
Deficit
|
||||||||
Current
liabilities:
|
||||||||
Accounts and notes
payable:
|
||||||||
Accounts payable, related party
(Note 2)
|
$230,300 | $305,200 | ||||||
Accounts payable,
other
|
290,432 | 258,835 | ||||||
Derivative liability, convertible
notes payable (Note 3)
|
27,500 | — | ||||||
Notes payable, related party (Note
2)
|
299,004 | 380,542 | ||||||
Notes payable, other (Note
3)
|
35,200 | 35,200 | ||||||
Convertible notes payable, net of
discount of 21,252 (Note 3)
|
33,748 | |||||||
Accrued interest
payable:
|
||||||||
Interest payable, convertible
notes (Note 3)
|
2,102 | — | ||||||
Interest payable, related party
notes (Note 2)
|
51,412 | 44,358 | ||||||
Interest payable, notes payable
other (Note 3)
|
9,052 | 6,938 | ||||||
Total current
liabilities
|
978,750 | 1,031,073 | ||||||
Commitments and
contingencies
|
— | |||||||
Shareholders’
deficit:
|
||||||||
Preferred stock, $.001 par value;
10,000,000 shares authorized,
|
||||||||
-0- shares issued and
outstanding
|
— | — | ||||||
Common stock, $.001 par value;
200,000,000 shares authorized,
|
||||||||
20,359,326 (October 31) and
16,895,219 (January 31) shares
|
||||||||
issued and
outstanding
|
20,359 | 16,895 | ||||||
Additional paid-in
capital
|
2,156,739 | 1,861,437 | ||||||
Common stock issued for prepaid
services (Note 6)
|
(29,167 | ) | (160,417 | ) | ||||
Deficit accumulated during the
development stage
|
(3,126,440 | ) | (2,727,965 | ) | ||||
Total shareholders'
deficit
|
(978,509 | ) | (1,010,050 | ) | ||||
Total liabilities and
shareholders' deficit
|
$241 | $21,023 |
Common
stock
|
Deficit
|
|||||||||||||||||||||||
Additional
|
issued for
|
accumulated
|
||||||||||||||||||||||
Common
Stock
|
paid-in
|
prepaid
|
during the
|
|||||||||||||||||||||
Shares
|
Par value
|
capital
|
services
|
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
|
594,356 | 594 | 213,374 | — | — | 213,968 | ||||||||||||||||||
Issuance of warrants upon
conversion
|
||||||||||||||||||||||||
of convertible promissory
notes
|
— | — | 172,363 | — | — | 172,363 | ||||||||||||||||||
March 2007, sale of common
stock
|
500,000 | 500 | 124,500 | — | — | 125,000 | ||||||||||||||||||
April 2007, sale of common
stock,
|
||||||||||||||||||||||||
less $3,000 of offering
costs
|
100,000 | 100 | 26,900 | — | — | 27,000 | ||||||||||||||||||
July 2007, conversion of
convertible
|
||||||||||||||||||||||||
promissory notes to common
stock
|
489,863 | 490 | 183,209 | — | — | 183,699 | ||||||||||||||||||
Issuance of warrants upon
conversion
|
||||||||||||||||||||||||
of convertible promissory
notes
|
— | — | 151,368 | — | — | 151,368 | ||||||||||||||||||
July 2007, sale of common
stock
|
200,000 | 200 | 49,800 | — | — | 50,000 | ||||||||||||||||||
August 2007, sale of common
stock
|
250,000 | 250 | 74,720 | — | — | 74,970 | ||||||||||||||||||
October 2007, sale of common
stock
|
200,000 | 200 | 59,770 | — | — | 59,970 | ||||||||||||||||||
November 2007, sale of common
stock
|
210,000 | 210 | 59,790 | — | — | 60,000 | ||||||||||||||||||
December 2007, stock issued
for
|
||||||||||||||||||||||||
consulting
services
|
500,000 | 500 | 174,500 | (160,417 | ) | — | 14,583 | |||||||||||||||||
December 2007, issuance of stock
options
|
— | — | 140,250 | — | — | 140,250 | ||||||||||||||||||
January 2008, sale of common
stock
|
150,000 | 150 | 39,850 | — | — | 40,000 | ||||||||||||||||||
Net loss
|
- | — | — | — | (1,002,127 | ) | (1,002,127 | ) | ||||||||||||||||
Balance at January 31,
2008
|
16,895,219 | 16,895 | 1,861,437 | (160,417 | ) | (2,727,965 | ) | (1,010,050 | ) | |||||||||||||||
February 2008, sale of common
stock
|
||||||||||||||||||||||||
(Note
6)
|
242,000 | 242 | 67,758 | — | — | 68,000 | ||||||||||||||||||
July 2008, expense stock issued
for
|
||||||||||||||||||||||||
prepaid services in Dec 2007 (Note
6)
|
— | — | — | 131,250 | — | 131,250 | ||||||||||||||||||
July 2008, conversion of
promissory note
|
||||||||||||||||||||||||
to common stock (Note
6)
|
247,107 | 247 | 14,579 | — | — | 14,826 | ||||||||||||||||||
July 2008, issuance of warrants
to
|
||||||||||||||||||||||||
convertible noteholders (Note
3)
|
— | — | 2,440 | — | — | 2,440 | ||||||||||||||||||
August 2008, stock issued
for
|
||||||||||||||||||||||||
consulting services (Note
6)
|
500,000 | 500 | 24,500 | — | — | 25,000 | ||||||||||||||||||
August, september and October
2008, sale of
|
||||||||||||||||||||||||
common stock (Note
6)
|
1,450,000 | 1,450 | 85,550 | — | — | 87,000 | ||||||||||||||||||
August 2008, stock issued for
liabilities (Note 6)
|
1,000,000 | 1,000 | 99,000 | — | — | 100,000 | ||||||||||||||||||
October 2008, stock issued for
services (Note 6)
|
25,000 | 25 | 1,475 | — | — | 1,500 | ||||||||||||||||||
Net loss
|
— | — | — | — | (398,475 | ) | (398,475 | ) | ||||||||||||||||
Balance at October 31,
2008
|
20,359,326 | $ | 20,359 | $ | 2,156,739 | $ | (29,167 | ) | $ | (3,126,440 | ) | $ | (978,509 | ) |
May 11,
2004
|
||||||||||||
Nine months
|
Nine months
|
(Inception)
|
||||||||||
ended
|
ended
|
Through
|
||||||||||
October 31,
|
October 31,
|
October 31,
|
||||||||||
2008
|
2007
|
2008
|
||||||||||
Cash flows from operating
activities:
|
||||||||||||
Net loss
|
$ | (398,475 | ) | $ | (702,969 | ) | $ | (3,126,440 | ) | |||
Adjustments to reconcile net loss
to net cash
|
||||||||||||
used by operating
activities:
|
||||||||||||
Stock based compensation (Note
6)
|
26,500 | — | 342,750 | |||||||||
Common stock issued for prepaid
services (Note 6)
|
131,250 | — | (29,167 | ) | ||||||||
Loss on debt
extinguishment
|
— | 126,612 | 126,612 | |||||||||
Expense incurred upon issuance or
modification
|
||||||||||||
of stock and warrants (Note
3)
|
2,440 | 323,731 | 326,171 | |||||||||
Increase in derivative liability
(Note 3)
|
27,500 | — | 27,500 | |||||||||
Amortization of discount on
debentures payable (Note 3)
|
(21,252 | ) | — | (21,252 | ) | |||||||
Changes in operating assets and
liabilities:
|
||||||||||||
Accounts
payable
|
31,597 | 51,867 | 290,432 | |||||||||
Related party payables (Note
2)
|
25,100 | 54,500 | 330,300 | |||||||||
Accrued
expenses
|
13,097 | 7,810 | 110,448 | |||||||||
Net cash used
in
|
||||||||||||
operating
activities
|
(162,243 | ) | (138,449 | ) | (1,622,646 | ) | ||||||
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)
|
(68,539 | ) | (58,785 | ) | 300,603 | |||||||
Proceeds from notes payable, other
(Note 3)
|
— | — | 48,200 | |||||||||
Proceeds from convertible
promissory note (Note 3)
|
55,000 | — | 280,000 | |||||||||
Proceeds from issuance of common
stock,
|
||||||||||||
net of offering costs (Note
6)
|
155,000 | 202,000 | 1,038,940 | |||||||||
Net cash provided
by
|
||||||||||||
financing
activities
|
141,461 | 143,215 | 1,667,743 | |||||||||
Net change in cash
and
|
||||||||||||
cash
equivalents
|
(20,782 | ) | 4,766 | 241 | ||||||||
Cash and cash
equivalents:
|
||||||||||||
Beginning of
period
|
21,023 | 141 | — | |||||||||
End of
period
|
$ | 241 | $ | 4,907 | $ | 241 | ||||||
Supplemental disclosure of cash
flow information:
|
||||||||||||
Cash paid during the period
for:
|
||||||||||||
Income
taxes
|
$ | — | $ | — | $ | — | ||||||
Interest
|
$ | 10,961 | $ | 14,877 | $ | 53,332 | ||||||
Noncash financing
transactions:
|
||||||||||||
Notes and interest payable
converted to stock
|
$ | 14,826 | $ | 271,055 | $ | 286,581 | ||||||
Stock issued in exchange for debt
issue costs
|
$ | — |
$
|
— | $ | 900 | ||||||
Stock issued in exchange for
related party debt
|
$ | 100,000 | $ | — | $ | 100,000 |
Management
fees payable to officers
|
$229,300 | |||
Rent
payable to company affiliated with officers
|
1,000 | |||
Total
accounts payable, related party
|
$230,300 |
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
|
298,333 | |||
Notes
payable, related party
|
299,004 | |||
Interest
payable related party
|
51,412 | |||
Total
principal and interest payable, related party
|
$350,416 |
Issuance Date
|
Fair Value
|
Term
|
Exercise
Price
|
Market
Price on
Grant Date
|
Volatility
Percentage
|
Interest
Rate
|
May
2, 2008
|
$1,515
|
3
years
|
$0.25
|
$0.12
|
182%
|
2.5%
|
May
21, 2008
|
$925
|
3
years
|
$0.25
|
$0.09
|
182%
|
2.5%
|
Three
months ended October 31, 2008
|
Three
months ended October 31, 2007
|
Nine
months ended October 31, 2008
|
Nine
months ended October 31, 2007
|
May
11, 2004 (Inception) through October 31, 2008
|
||||||||||||||||
General
and administrative
|
$1,087 | $871 | $5,098 | $3,381 | $33,371 | |||||||||||||||
Technology
access fees
|
40,000 | - | 40,000 | - | 40,000 | |||||||||||||||
Legal
and accounting
|
3,189 | 1,683 | 11,232 | 8,236 | 89,208 | |||||||||||||||
Loss
on debt extinguishment
|
- | - | - | 126,612 | 126,612 | |||||||||||||||
Professional
services
|
92,600 | 23,100 | 210,150 | 29,400 | 402,359 | |||||||||||||||
Stock
based compensation
|
- | - | - | - | 155,833 | |||||||||||||||
$136,876 | $25,654 | $266,480 | $167,629 | $847,383 |
Warrants
|
Weighted-average
exercise price
|
Weighted-average
grant date fair value
|
||||
Outstanding
and exercisable at January 31, 2008
|
2,944,219
|
$ 0.50
|
$ 0.11
|
|||
Granted
|
269,500
|
0.47
|
0.01
|
|||
Exercised
|
-
|
-
|
-
|
|||
Outstanding
and exercisable at October 31, 2008
|
3,213,719
|
$ 0.50
|
$ 0.10
|
Exercise
price range
|
Number
of options outstanding
|
Weighted-average
exercise price
|
Weighted-average
remaining life
|
|||
$0.25
|
27,500
|
$ 0.25
|
2.6
years
|
|||
$0.50
|
3,186,219
|
$ 0.50
|
1.8
years
|
|||
3,213,719
|
$ 0.50
|
1.9
years
|
Options
|
Weighted-average
exercise price
|
Weighted-average
remaining contractual life (years)
|
Aggregate
intrinsic value
|
||||
Outstanding
at January 31, 2008
|
425,000
|
$0.35
|
4.92
|
$0
|
|||
Options
granted
|
-
|
-
|
-
|
-
|
|||
Outstanding
at October 31, 2008
|
425,000
|
$0.35
|
4.17
|
$0
|
•
|
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect our transactions and dispositions of our
assets;
|
•
|
|
Provide
reasonable assurance our transactions are recorded as necessary to permit
preparation of our financial statements in accordance with GAAP, and that
receipts and expenditures are being made only in accordance with
authorizations of our management and directors;
and
|
• |
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on the financial
statement.
|
Exhibits:
|
|
31.1
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
INHIBITON
THERAPEUTICS, INC.
|
|
(Registrant)
|
Date:
December 17, 2008
|
By:
/s/ Henry
Fong
|
Henry
Fong
|
|
Principal
Executive Officer and
Principal
Financial Officer
|
|