gthr10ka20071231.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K/A
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the Fiscal Year Ended December 31, 2007
Commission
File Number:
000-27237
GeneThera,
Inc.
(Exact
name of registrant as Specified in its Charter)
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Nevada
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65-0622463
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|
(State
or Other Jurisdiction of
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(Internal
Revenue Service
|
|
Incorporation
or Organization)
|
Employer
Identification Number)
|
|
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3930
Youngfield Street
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Wheat
Ridge, Colorado
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80033
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (303) 463-6371
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, $0.001 per share
Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days:
Yes
[X] No [ ]
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one): Large
accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act): Yes [ ] No [X]
Indicate by check mark if the
registrant is a well-known seasoned user, as defined in Rule 405 of the
Securities Act. Yes
[ ] No [X]
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) if the Act. Yes
[X] No [ ]
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act): Yes
[ ] No [X]
As of December 31, 2007, the registrant
had 51,525,849 shares of its common stock ($.001 par value)
outstanding. The number of warrants outstanding as of December 31,
2007 was 597,826.
The
issuer’s revenue for its most recent fiscal year was $97,900.
The
aggregate market value of the issuer’s voting stock held by non-affiliates of
the issuer as of December 31, 2007 was $2,250,000.
PART
I.
ITEM
1. DESCRIPTION OF BUSINESS
GeneThera,
Inc. (“we” or “the Company”), formerly known as Hand Brand Distribution, Inc.,
was incorporated in November 1998, under the laws of the State or
Florida. We transferred our state of incorporation under the laws of
the State of Nevada in November 2007. This corporate action was finalized in
January 2008. No shareholder approval was obtained for the transfer of our state
of incorporation. The abovementioned corporate action protected the best
interest of our long-term shareholders’ investments when our Charter in Florida
was in jeopardy. Our main focus was to guard their investment in GeneThera. Our
Common Stock currently trades on the Over-the-Counter Bulletin Board (“OTC”)
under the symbol GTHA. Our executive offices are located at 3930
Youngfield Street, Wheat Ridge, Colorado 80033 and our telephone number is
303-463-6371.
For the
fiscal year 2006 the Company had one subsidiary, GeneThera, Inc., a Colorado
corporation, (“GeneThera”).
BUSINESS
OVERVIEW
GeneThera,
Inc., a Nevada corporation, was formerly known as Hand Brand Distribution, Inc.,
and was incorporated in November 1998 under the laws of the State of
Florida. In November 2007, the Company commenced the transfer of
their State of Incorporation under the laws of the State of Nevada. It was
finalized in January 2008. The Company, without the approval from
their shareholders, proceeded to change the state of incorporation in order to
protect the investments of their long-term shareholders and its investors. The
Company failed to file an Information Statement on the Schedule 14C and a
Current Report on Form 8-K to notify the shareholders about the changes. The
Company was rushed to incorporate elsewhere due to its Charter being taken by
another entity which had nothing to do with GeneThera, Inc. It was a corporate
action done under pressure. We thank all the shareholders who noticed the
purchase of our Charter and notified us about it. We are not currently in any
regulatory or clinical trials for any of the tests we have developed to date.
The molecular tests developed by GeneThera are in a validation phase. We
currently have no sales, marketing or
distribution capability. GeneThera has no plans, in the immediate future, to
offer any veterinary services in the United States.
Our
independent auditors have expressed some doubt about our ability to continue as
a going concern in their report on our consolidated financial statements for the
fiscal year ended December 31, 2007. For the years ended December 31,
2007 and 2006, our operating losses were $776,374 and $1,482,570,
respectively. Our current liabilities exceeded current assets by
$1,501,613 and $1,392,097 for the years ended December 31, 2007 and 2006,
respectively.
Up until
2002, GeneThera, Inc. was a privately held Colorado corporation (“GeneThera
Colorado”). The Board of Directors at that time determined it would
be in the best interests of the Company to become a publicly traded company in
order to facilitate the business goals and objectives of the
Company. That led to negotiations with the Board of Hand Brand
Distribution to effect a reverse acquisition. The negotiations were
on an “arms-length” basis at the time and results in the reverse acquisition
being completed in October 2003 with the distribution of shares to Dr. Milici
for the acquisition from him of GeneThera, Inc. A total of 9,270,000
(after 2:1) shares were issued as consideration for the sale of the private
corporation. GeneThera received all the assets of GeneThera Colorado
including all laboratory equipment, laboratory supplies, research and
development, processes, and intellectual property.
We are a
biotechnology company that develops molecular assays and is currently in the
process of developing therapeutic vaccines for the detection and prevention of
food contaminating pathogens, veterinary diseases, and diseases affecting human
health. We are in the development stage and have not generated
significant revenues since our organization. Since June 2005, we had
research contracts with Xpention Genetics, LLC for the development of a
molecular test for early detection of cancer in dogs and the development of a
molecular test for early detection of cancers in humans Stage
1. GeneThera’s business is based on its Integrated Technology
Platform (ITP) that combines a proprietary diagnostic solution called Gene
Expression System (GES) with PURIVAX™, a highly efficient purification
technology. The first part of this platform is the ongoing development of
molecular diagnostic assays solutions using Real Time Fluorogenic Polymerase
Chain Reaction (F-PCR) technology to detect the presence of infectious disease
from the blood of live animals. The second part of the ITP is the
development of therapeutic vaccines using RNA interference
technology. It also allows for the efficient, effectives, and
continuous testing, management and treatment of animal
populations. These facts distinguish the technology from any
alternative testing and management methodology available to agriculture today –
all of which require the destruction of individual animals and even entire
herds. Our testing and data analysis processes also allow us not only
to separate infected from clean animals, but also to gain knowledge vital to
development of preventative vaccines.
To date,
GeneThera has successfully developed the ability to detect Chronic Wasting
Disease, a disease affecting elk and deer in North America. GeneThera
has also successfully developed an assay for the detection of Mad Cow Disease, a
disease recently found in the United States, but which has been in Europe for
many years. Chronic Wasting Disease and Mad Cow Disease are both in
the family of diseases called Transmissible spongiform Encephalopathy
(TSE).
BUSINESS
MODEL
DESCRIPTION
OF TECHNOLOGIES
Summary. GeneThera’s
animal disease assay development business is based on its Integrated Technology
Platform (ITP) that combines a proprietary diagnostic solution called Gene
Expression System (GES) with PURIVAX™, a highly sophisticated purification
system that removes contaminating particles from biological fluids. The first
part of this platform is the ongoing development of molecular diagnostic assay
solutions using real time Fluorogenic Polymerase Chain Reaction (F-PCR)
technology to detect the presence of infectious disease from the blood of live
animals. The second part of the ITP is the development of therapeutic
vaccines using RNA interference technology. Interference RNA
technology is a new technique that is based on the use of short RNA sequences
complementary to a specific target gene. Once the RNA sequence binds to the
gene, the gene is deactivated or “silenced” and no longer able to produce the
specific protein. It also allows for the efficient, effective, and continuous
testing, management and treatment of animal populations. These facts
distinguish the technology from any alternative testing and management
methodology available to agriculture today – all of which require the
destruction of individual animals and even entire herds. Our testing
and data analysis processes also allow us not only to separate infected from
clean animals, but also to gain knowledge vital to development of preventative
vaccines.
Each
individual assay utilizes the propriety Field collection System (FCS) for the
collection and transportation of blood samples to GeneThera’s laboratory. This
system consists of two (2) tubes. A 5ml red cap tube containing 1ml
anticoagulant solution and a 10ml white cap tube containing 2ml of a cell lysing
and RNA extraction solution. One (1) ml of blood is collected from the animal
and added to the red cap tube and then the entire content of the red cap tube is
immediately transfer to the white cap tube. The FCS allows GeneThera
to maintain the integrity of each sample by the addition of specific reagents to
test tubes contained in the system. GeneThera’s FCS is designed to be
an easy-to-use method of gathering blood samples from harvested or domesticated
animals. It ensures consistency of samples as well as increased
assurance of each sample’s integrity.
We are
also continuing our research to develop vaccines for Chronic Wasting Disease and
Johne’s disease. The Company will need the approval of the USDA
before the vaccines can be manufactured or sold. The approval process
for animal vaccines is time-consuming and expensive. We anticipate
that such approval, if it is obtained, may require more than $5 million and may
require more than one year for each vaccine for which approval is
sought. Currently, we do not have the capital necessary to seek
approval of any of our candidate vaccines, and we cannot provide any assurance
that we will be able to raise the capital necessary for such approval on terms
that are acceptable to us, if at all. In addition, even if we are
successful in raising the capital necessary to seek approval of any vaccine,
there are no assurances that such an approval will be granted, or if granted,
whether we will be able to produce and sell such vaccines following such an
approval in commercial quantities or to make a profit from such production and
sales.
INTEGRATED
TECHNOLOGY PLATFORM (ITP)
GeneThera’s
integrated technology platform is the foundation for “fast-track” rDNA vaccine
development. At the present stage we are working on the development
of a recombinant DNA vaccine for transmissible spongiform encephalopathy (TSE)
and Johnne’s disease. Transmissible Spongiform Encephalopathy (TSE)
is a group of invariably fatal neurodegenerative diseases that include Scrapie
in sheep, Bovine Spongiform Encephalopathy (BSE) in cattle, Chronic Wasting
Disease (CWD) in elk and deer, and Kuru Disease and variant Creutzfeld-Jacob
Disease (vGCD) in humans. The pathological effects of the disease
occur predominantly in the CNS (central nervous system) where the predominant
hallmark is accumulation of an abnormally folded isoform of the prion protein
(PrPsc). Johnne’s Disease is a chronic debilitating infectious
disease of ruminants, characterized by weight loss and, particularly in cattle,
by profuse diarrhea. The casual agent is a bacterium, Mycobacterium
avium subspecies paratuberculosis. Infected animals may show no sign
of the disease until years after the initial infection. Johne’s is a
slow, progressive disease with worldwide distribution.
Both
vaccine developments are in the “in vitro” or pre-clinical stage. We
expect to initiate experimental animal studies for Johnne’s disease in the next
12 months. A longer time frame (24 months) will be needed to initiate
experimental animal studies for TSE. ITP combines the following
technologies: 1) gene expression technology or GES; 2) viral DNA purification
technology or PURIVAX™ technology; 3) genetically engineered Adenovirus(rAD) and
recombinant Adeno Associate Virus (rAAV) systems (vectors). This
integrated technology platform yields fast-track vaccine
development. Leveraging its ITP, GeneThera believes that it can
develop a prototype vaccine within four to six months versus the current
standard of 18 to 24. We estimate that the cost to bring these
vaccines to market is $2-5 million. There is no assurance that we
will be able to raise the capital necessary to bring a vaccine to market and if
the capital is raised, that we will be able to over the government regulations
involved in bringing such a product to market. The GES applied
modular unit system utilizes robotics and is based on nucleic acid extraction in
conjunction with F-PCR technology to develop gene expression
assays. Using GES assays, vaccine efficacy can be measured quickly
because it will be unnecessary to wait for the antibody response to measure how
well the vaccine is working. F-PCR will allow effective
quantification of the precise number of viral or bacterial genetic particles
before, during and after vaccine injection(s). We anticipate that the
more effective the vaccine is, the stronger the decrease of the infectious
disease particles will be.
GES
SYSTEM
GES is a
proprietary assay development system. GES was developed in 2001. To
date, the system has been used to develop our TSE molecular
assay. GES is a gene expression system to be used solely in our
laboratory and will not be marketed for commercial sale. The core of
GES is Fluorogenic Polymerase Chain Reaction technology
(F-PCR). GeneThera approaches the technical problems related to the
use of conventional PCR in molecular diagnostics via our modular unit concept.
Specifically, the modular unit consists of an Automated Nucleic Acid Workstation
(ANAW) and a Sequence Detection System (SDS) that are integrated, allowing an
operator to perform the entire procedure of DNA extraction and F-PCR analysis
within a closed computerized system. This system results in minimal
intervention and non post-PCR manipulation. GES is a molecular
genetic base system that utilizes fluorogenic Polymerase chain reaction
(F-PCR). Fluorogenic PCR (F-PCR) is a technology based on sequence
specific hybridization between a nucleic acid target and a fluorogenic probe, a
short sequence of DNA chemically treated to generate light at a specific
wavelength, complementary to the target sequence. The probe consists of an
oligonucleotide, a short synthetic DNA molecule, with two fluorescent molecules
(a reporter and quencher dye) attached to both ends of the
oligonucleotide. Due to the unique design of the Fluorogenic probe,
the activity of the Taq Polymerase enzyme allows direct detection of PCR
products by the release of the fluorogenic reporter during PCR. The
reporter and the quencher dye are linked at the end of the probe. When the probe
is intact, the proximity of the reporter dye to the quencher dye results in a
suppression of the reporter fluorescence. During PCR, if the target
of interest is present, the probe specifically
anneals between the forward and the reverse primer site. The nuclease
activity of the Taq DNA Polymerase cleaves the probe between the reporter and
the quencher only if the region binds to the target. If the probe is
not bound then no cleavage occurs. After cleavage, the shortened probe
dissociates from the target and the polymerization of the DNA strand
continues. This process occurs in every cycle and does not interfere
with the exponential accumulation of the product. The cleavage of the
oligonucleotide between the reporter and the quencher dye results in an increase
of fluorescence of the reporter that is directly proportional to the amount of
the product accumulated. The specificity of this 5’ nuclease assay
results from the requirement of sequence complementary between probe and
template in order for cleavage to occur. Thus, the fluorogenic signal
is generated only if the target sequence of the probe is generated by
PCR. No signal is generated by non-specific
amplification.
To
perform GES, specific laboratory equipment is needed. This involves
some substantial initial costs to set up the laboratory
operations. We have performed this substantial set up and are fully
operational to perform GES. We currently have all the specific
equipment necessary to further development. However, the use of F-PCR
represents a great advantage over other available systems because of its greater
sensitivity, speed, and accuracy.
The
Automated Nucleic Acid Workstation is a highly flexible robotic system that
extracts and purifies acids from a variety of complex samples, preparing them
for F-PCR analysis. Data management system software includes a
database to manage all run phases and record sample processing.
The
Sequence Detection System detects the fluorescent signal generated by the
cleavage of the reporter dye during each PCR cycle. This process
confers specificity without the need of post-PCR hybridization. Most
importantly, the SDS offers the advantage of monitoring real-time increases in
fluorescence during PCR processing. Specifically, monitoring
real-time progress of the PCR completely changes the approach to PR-based
quantitation of DNA and RNA, most particularly in improving the precision in
both detection and quantitation of DNA and RNA targets.
GeneThera
currently faces limited competition in the use of F-PCR technology and the
modular unit concept for commercial testing of either infectious disease is
animals or food pathogen contamination. Currently, most labs utilize
conventional microbiology, immunological or conventional PCR methods for either
veterinary diseases or food pathogen contamination
detection. Specific to microbiology and immunological techniques, the
drawbacks of these approaches are:
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1.
the antibodies-based culture media used to detect the presence of
infectious diseases has a low level of
sensitivity;
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2.
high background due to non-specific binding of antibodies and/or culture
contamination; sample preparation and storage creates artifacts; and long,
cumbersome protocols necessary to perform these
tests.
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A major
technical limitation of conventional PCR is the risk of contaminating a specimen
with the products of previously amplified sequences. Known as
cross-contamination, this phenomenon represents a constant challenge to any lab
using conventional PCR. Managing these challenges is cumbersome and
difficult to streamline. Fluorogenic PCR (F-PCR) attempts to overcome
these drawbacks by making it possible for PCR to efficiently test large numbers
of samples even when major laboratory facilities are not readily
available. A novel methodology, F-PCR allows quantitative and
qualitative detection of specific nucleic acid sequences in a sensitive,
accurate, and rapid fashion.
PURIVAX™
TECHNOLOGY
GeneThera
has developed a large-scale process for highly purified and high viral titer
(viral concentration) Adenovirus and AAV genetically engineered
viruses. This technology enables GeneThera to develop Adenovirus and
AAV-based recombinant DNA vaccines for veterinary diseases and food
pathogens.
GeneThera’s
PURIVAX™ is a purification system that dramatically improves biological purity
and viral titer of recombinant Adenovirus and AAV vectors. PURIVAX™
is intended to completely eliminate toxic side effects associated with
Adenoviruses and AAV vectors, thereby making it possible to develop highly
immunogenic and safe recombinant DNA vaccines. Importantly,
recombinant DNA (rDNA) vaccine technology represents a powerful fool for an
innovative vaccine design process known as “genetic immunization.”
Recombinant
Adenovirus (rAD) and AAV (rAAV) vectors are the ideal candidates for a gene
delivery system. These viruses can efficiently deliver genetic
material to both dividing and non-dividing cells, thereby overcoming some of the
obstacles encountered with first generation retroviral vectors.
Equally
important, rAD and rAAV are engineered virus genomes that contain no viral
gene. One of the key features for rAD and rAAV is their ability to
infect a large variety of cells. However, two technical challenges
had to be overcome to fully utilize rAD and rAAV in the development of rDNA
vaccines:
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1.
lack of large scale purification system;
and
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Traditional
technologies and first generation chromatography processes are limited both in
terms of purity and yield. And, due to the limitation of these
purification technologies, adequate viral titers cannot be
achieved. We believe that the result is that there is currently no
efficient system to deliver immunogenic genetic sequences into
cells.
This is
the significant of GeneThera’s PURIVAX™, rAD and rAAV system for rDNA vaccine
development. Succinctly stated, it is designed to be able to achieve
both high purity and high viral titer (up to 10e16 viral particles/eulate) based
on its propriety multi-resin anion exchange chromatography
system. GeneThera believes that biological contaminants such as
endogenous retrovirus, bacterial, mycoplasma, non-specific nucleic acids,
lipids, proteins, carbohydrates and endotoxins are eliminated during the
purification process.
DEVELOPMENTS
TO DATE:
GeneThera
is a biotechnology company that develops molecular tests and DNA vaccines for
animal diseases. Listed below is a description of the different stages of
development achieved for the different projects the company is currently working
on.
CWD/BSE
TEST
GeneThera
has developed a molecular test for the detection of Chronic Wasting Disease
(CWD). This test measures the level of RNA of a genetic marker, EDRF that is
found to be at low levels in animals affected by the disease. The same marker is
also found at low levels in animals infected with BSE. Chronic Wasting Disease
and Mad Cow Disease are both in the family of diseases called Transmissible
Spongiform Encephalopathy (TSE). We have analyzed a total of 300 samples of elk
and deer blood obtained from CWD free animals, suspected CWD positive
depopulated herds, and experimentally infected animals. Samples were collected
using the FCS and processed according to our protocol for extraction of total
RNA from blood.
Our
results have shown that both the clinical stage experimentally infected sample
(CWD+) and one of the samples (#54) from the suspected CWD+ herd have a dramatic
reduction in the level of expression of EDRF in blood. The remaining samples
obtained from the same depopulated herds’ shows a profile of the level of
expression of the EDRF gene identical to our negative control
(CWD-).
These
results suggest 1) a correlation between the presence of clinic signs of CWD and
a significant reduction of the level of expression of EDFR in blood; 2) the
indication that the down regulation of EDRF in blood may represent an early sign
of CWD infection at a preclinical stage.
We
believe that EDRF is a very useful genetic marker to detect the presence of TSE
in the blood of infected live animals. We also believe that EDRF is an
‘indicator’ of the presence of Transmissible Spongiform Encephalopathy (TSE) at
an early stage of infection prior to the detection of the disease in the brain.
However, additional studies are required to determine the time course
correlation between the reduction in the level of expression of the EDRF gene
and pre-clinical and clinical signs of TSE.
JOHNES’S
TEST
GeneThera
has developed a molecular test for the detection of Johne’s disease, in blood.
Johne’s disease is a bacterial disease caused by Mycobacterium Paratuberculosis
(MAP) in blood; which affects primarily dairy cows. Blood from uninfected cows
was ‘spiked’ with different concentrations of MAP. The Bacterial DNA was
isolated using standard DNA extraction procedures and analyzed using the Real
Time PCR technology. Using this methodology, we can detect the presence of
twenty (20) bacterial particles from 1ml of blood. We believe our test will be
very useful for early diagnosis of MAP infected cows. However, we have not yet
tested blood from naturally infected Johne’s animals. Additional studies are
therefore necessary to determine the efficacy of our test in naturally infected
animals.
PRODUCTS
UNDER DEVELOPMENT:
DNA
VACCINES
We are
currently developing two (2) DNA vaccines. One vaccine targets Johne’s disease;
the other is related to TSE. GeneThera approaches to develop these vaccines are
based on the use of PURIVAX™ technology, genetically engineered Adenoviral and
AAV, and silencing RNA technology (iRNA).
JOHNE’S
DISEASE DNA VACCINE
GeneThera
is developing a vaccine for Johne’s disease using Adenoviral genetically
engineered virus and PURIVAX™ technology. To date, we have modified the
Adenovirus by inserting a gene of the MAP bacterium responsible for triggering
the infection in blood cells. Using PURIVAX™ the genetic construct has been
purified and characterized.
TSE
DNA VACCINE
The
company strategy to develop a TSE vaccine is based on the use of iRNA
technology. To date, we have isolated a specific sequence of the prion protein
gene. Our initial experiments indicate that our system is capable to generate a
reduction in the expression of the prion protein gene of about seventy percent.
Our next step will be to genetically alter the Adenovirus by inserting this
specific sequenced and characterize the construct using PURIVAX. ™ The vaccine
is still in an “in vitro” or preclinical stage.
So far,
none of our molecular tests of vaccine have been validated or approved by any
regulatory agency in the United States or abroad. These tests and vaccines still
require extensive validation and lengthy approval process. These procedures are
extremely time consuming and expensive. There is no guarantee that none of the
tests or vaccines that GeneThera is developing will be successfully validated or
approved by any regulatory agency. GeneThera have limited financial
resources. Therefore, the company may not be able to undertake any of the
necessary steps to secure a successful validation or approval of any of the
molecular tests or vaccines.
FUTURE
DEVELOPMENT PLANS
It is
GeneThera’s intention to continue with the research and development and
validation of the molecular tests and DNA vaccines. Future plans
comprises in initiating validation procedures for both TSE and Johne’s disease
molecular test. These validation protocols will be performed in Italy and
Mexico. At the present time, we do not plan to initiate any validation protocol
in the United States.
In
parallel, we will continue R&D phases for both the Johne’s disease and TSE
DNA vaccine. We plan initiating an experimental animal protocol to determine the
safety of our vaccines. We estimate that the experimental animal protocol may
take up to a year. We project to initiate the experimental animal’s studies
within 12-24 months.
MARKET
STRATEGY
GeneThera’s
goal is to focus on the international market for the commercialization of its
animal testing platform. We are in the process of setting up an animal testing
laboratory in Monterrey Mexico. The company has no plans, in the immediate
future, to offer any Veterinary Services in the United States.
However,
if GeneThera decides to initiate animal testing in the United States,
commercialization of its diagnostic tests will not require approval process from
the USDA. All tests will be done utilizing the blood of animals that
can be collected in the field using the Company’s proprietary Field Collection
System (FCS). The collected blood is then sent to GeneThera’s
laboratory for testing. Since all of the testing is done “in house,”
meaning tested at laboratories operated by GeneThera and using GeneThera
developed testing methods, the USDA deems GeneThera’s test to be under the
category of Veterinary Services. The regulations on Veterinary
Services are much different that that of third party
testing. “Veterinary Services” specifically mentioned by GeneThera
are tests developed and performed “in house’’. The USDA through APHIS regulates
Veterinary Biologicals (vaccines bacterins, antisera, diagnostic kits and other
product of biological origin) APHIS regulates veterinary biologics available for
the diagnosis prevention and treatment of animal disease to ensure the products
are pure, safe, potent and effective. GeneThera’ molecular tests are not
diagnostics kits and therefore do not fall under the Veterinary Biologics
category.
SALES
AND MARKETING
We
currently have no sales, marketing, or distribution capabilities and we do not
anticipate having the resources in the foreseeable future to allocate to the
sales and marketing of any products that we may develop. Our success
will depend, in part, on our ability to either (i) enter into or maintain
collaborative relationships with third parties for the marketing, sales, and
distribution of products that we develop, if any, or (ii) hire and retain our
own sales and marketing capabilities. Initially, we plan to market
products that we develop and for which we obtain regulatory approval through
marketing, licensing, distribution, or other arrangements with collaborative
partners. We believe that this approach will both increase market
acceptance of any products that we develop and enable us to avoid expending
significant funds to develop a sales and marketing organization.
COMMERCIAL
PRODUCTS
RESEARCH
AND DEVELOPMENT SERVICES
Molecular, Cellular, Viral
Biology Research, and Consulting Services. We provide
independent research services to scientists in academia, the pharmaceutical
industry, and the biotechnology industry. Primarily, we focus on
technology relevant to animal and human immunotherapy. Our services
are supported by more than 50 years of cumulative experience in research and
development for both government and industry by GeneThera’s senior
scientists. We intend to develop a commercial-scale implementation of
Adenovector Purification Process to support R&D material
production. Furthermore, we intend to evaluate and test commercially
available expression vectors and incorporate them into our vector repertoire.
These technologies are well established within the repertoire of GeneThera’s
scientific staff. We cannot provide any assurance, however, that we
will be able to successfully offer these services or that, if offered, we can
provide them profitably.
We intend
to offer the following research and development services.
Molecular Biology services
consisting of:
Synthetic
eDNA Construction
Prokaryotic
Expression Vector Construction & Development
e.coli
Expression Strain Evaluation
Pilot
Scale Fermentation
Mammalian
Expression Vector Construction & Development
Baculovirus
Expression
Protein
Isolation
Protein
Engineering: Complement Determining Region Conjugated Proteins
Monoclonal
Antibody Production Chimerization & Humanization
Vector
design for Prokaryotic Expression of Antibody Fragments (Fab) and Single
Chain
Antibody
(ScFv)
Pilot
Scale-up Development
Process
Purification & Characterization
Assay
Development & Quality Control Pharmaceutical Dosage and
Formulation
Molecular Biology Potential
Agreement Structure, which refers to the following stages or options
available to a potential customer interested in developing a gene/protein
expression system for research purposes.
Stage 1 –
cDNA Construction & Expression Vector Development Stage in which a specific
gene sequence is cloned in an expression vector and screened by restriction
enzyme analysis.
Stage II
in which the expression vector is grown into bacteria and the protein produced
is purified by chromatography techniques.
Stage
III, Assay for the protein stability and activity in which protein activity is
determined by testing the recombinant protein using a specific stabilizing
buffer. The recombinant protein is tested against a
substrate. The substrate is the target protein that is deactivated by
the recombinant protein.
Stage IV
– Quantification of protein yield per each cell line used for protein
expression. Each type of cell line responds differently to each
recombinant protein. Therefore, various cell lines that express the
highest quantity of a specific recombinant protein are then used for large-scale
recombinant protein production.
Stage V –
Experimental animal model development for determination of proper biological
active concentration and stability and determination of proper
storage. A typical animal model is a mouse model. Mice are
divided into two groups: 1) normal control and 2) mice injected with different
concentrations of recombinant protein. The biological activity is
determined by immunological assays such as an ELISA test or Western blot
analysis.
Gene Therapy Testing
Services. GeneThera offers GLP testing programs for somatic
cell, viral and naked DNA-based gene therapies. Our scientists have
over eight years experience in providing fully integrated bio-safety testing
programs for the cell and gene therapy fields and have supported a number of
successful BLA and IND applications. To date, the Company has not
generated any revenues with regard to these services, and there is no assurance
that we will generate any revenues from such services.
Replication-Competent Viral
Vector Testing. Sensitive in vitro cell culture assays are
used to detect replication-competent retroviruses or adenoviruses. GeneThera
intends to work with clients to provide custom replication-competent virus
detection assays for the particular vector construct.
Complete Somatic Cell and
Viral Vector Packaging and Producer Cell Line
Characterization. GeneThera offers all of the assays mandated
by regulatory authorities worldwide for the bio-safety analysis and
characterization of cells and cell lines used in gene therapy
products.
Vector Stock
Characterization. Custom purity and potency testing is
available for gene therapy viral vector stocks.
Vector Purification Process
Validation for Viral Clearance. Most biopharmaceuticals
require viral clearance studies to validate the removal of potential
contaminants, such as those from bovine components or from helper viruses
(adenovirus in AAV production). GeneThera can provide custom design
and performance of viral studies for various vector purification
processes.
Custom Bio-safety Testing
Programs for Somatic Cell, Ex Vivo Cell, and Tissue
Therapies. GeneThera can guide our clients through the unique
process of designing and implementing a bio-safety testing program that meets
the needs of each specific project.
To date,
we have not entered into any agreement for the provision of any of the services
described above with any customer. We are currently pursuing
agreements to provide some of these services to potential
customers. There is no assurance that any agreement will be entered
into for the provision of the Company’s services or that the Company will
generate significant revenues or profits from any such agreement.
INTELLECTUAL
PROPERTY
We do not
own any patents on any of our technology and have not filed any applications for
patents in any country. We cannot give any assurance that we will be
able to file any patent applications or that, if we file one or more
applications for patents, any patents will issue or that, if issued, the claims
granted in any such patents will afford us adequate protection against
competitors with similar technology.
We also
depend upon the skills, knowledge, and experience of our scientific and
technical personnel, none of which is patentable. To help protect our
proprietary know-how which is not patentable, and for inventions for which
patents may be difficult to endorse, we rely on trade secret protection to
protect our interests.
COMPETITION
We face
competition from many companies, universities, and research institutions in the
United States and abroad. Virtually all of our competitors have
substantially greater resources, experience in product commercialization, and
obtaining regulatory approvals for their products, operating experience,
research and development, marketing capabilities, and manufacturing capabilities
that we do. We will face competition from companies marketing
existing products or developing new products for diseases targeted by our
technologies. The development of new products for those diseases for
which we are attempting to develop products could render our product candidates
noncompetitive and obsolete. Our current competitors include Prionics AG, IDEXX
Laboratories, Inc., and Bio-Rad Laboratories, Inc.
Academic
and government institutions are also carrying out a significant amount of
research in the field of veterinary health, particularly in the fields of
Chronic Wasting Disease and Mad Cow Disease. We anticipate that these
institutions will become more aggressive in pursuing patent protection and
negotiating licensing arrangements to collect royalties for use of technology
that they have developed and to market commercial products similar to those that
we seek to develop, either on their own or in collaboration with
competitors. Any resulting increase in the cost or decrease in the
availability of technology or product candidates from these institutions may
affect our business.
Competition
with respect to our veterinary technologies and potential products is and will
be based, among other things, on effectiveness, safety, reliability,
availability, price, and patent protection. Another important factor
will be the timing of market introduction of products that we may develop and
for which we may receive regulatory approval. Accordingly, the speed
with which we can develop products, complete the required animal studies or
trials and approval processes and ultimately supply commercial quantities of the
products to the market is expected to be an important competitive
factor. Our competitive position will also depend upon our ability to
attract and retain qualified personnel, to obtain patent protection or otherwise
develop propriety products or processes, and to secure sufficient capital
resources for the often substantial period between technological conception and
commercial sales.
Several
attempts have been made to develop technologies that compete with
F-PCR. To our knowledge none of these technologies have resulted to
date in any product available on the market. The field of
biotechnology is very dynamic. The possibility that more advanced
technologies could be developed into products that may compete with ours is very
strong. However, it is very difficult to predict the length of time
necessary for this scenario to take place.
MANUFACTURING
We do not
currently manufacture any products and do not have any facilities capable of
manufacturing any products. If we are successful in developing a
vaccine for veterinary purposes, we intend to contract with third parties or a
collaborative partner to assist with production. We currently do not
intend to establish a manufacturing facility to manufacture any products that we
may develop. In the event we do decide to establish a commercial
manufacturing facility, we will require substantial additional funds and will be
required to hire and train significant numbers of employees and comply with the
extensive federal and state regulations applicable to such a
facility. In additional, we would be required to apply for a license
from the United States Department of Agriculture’s Animal and Plant Health
Inspection Service to manufacture any such vaccines at such
facilities.
PRODUCT
LIABILITY
The
testing, manufacturing, and marketing of the Company’s proposed products
involves an inherent risk of product liability attributable to unwanted and
potentially serious health effects in animals that may receive any vaccines that
we may develop and market. To the extent we elect to test,
manufacture, or market veterinary vaccines and other products, we will bear the
risk of product liability directly. We do not currently have product
liability insurance. There is no guarantee that we can obtain product
liability insurance at a reasonable cost, or at all, or that the amount of such
insurance will be adequate to cover any liability that we may be exposed
to. In the absence of such insurance, one or more product liability
lawsuits against us can be expected to have a material adverse effect on our
business and could result in our ceasing operations.
GOVERNMENT
REGULATION
Our
unique approach to the testing for various animal diseases allows us to begin
commercialization of its diagnostic tests without the need for a long and
enduring approval process from the USDA. All tests are done utilizing
the blood of animals that can be collected in the field using the Company’s
proprietary Field Collection System (FCS). The collected blood is
then sent to our laboratory for testing. Since all of the testing for
the diseases is done “in house,” meaning tested at laboratories operated by us
and using our developed testing methods, the USDA deems our test to be under the
category of Veterinary Services. The regulations on Veterinary
Services are much different than that of third party
testing. The USDA through APHIS regulates Veterinary
Biologicals (vaccines bacterins, antisera, diagnostic kits and other product of
biological origin) APHIS regulates veterinary biologics available for the
diagnosis prevention and treatment of animal disease to ensure the products are
pure, safe, potent and effective. GeneThera’ molecular tests are not diagnostics
kits and therefore do not fall under the Veterinary Biologics category. The
USDA, to our best of our knowledge, does not regulate laboratory tests that are
performed “in-house” under the category of Veterinary Services.
In the
event that we develop a vaccine based on our research, the vaccine product and
the facility at which commercial quantities of the vaccine will be produced will
be subject to comprehensive regulation by the United States Department of
Agriculture’s Animal and Plant Health Inspection Service. Before any
“biological product” (which includes vaccines) can be prepared for commercial
sale, APHIS must approve and license the product and the facility at which it is
proposed to be manufactured. The approval process is lengthy and
expensive. We will be required to submit an application containing,
among other things, an outline of production for the proposed product,
characterization data, and protocols for animal studies and trials of host
animal immunogenicity, safety, efficacy, back passage, shed/spread,
interference, and other studies.
We do not
have the capability to conduct our own studies and trials of any candidate
vaccine that we may develop and will rely on collaborative partners to conduct
all such studies. Currently, we do not have any such agreements with
any partner, and we cannot give any assurance that we will be able to enter into
such an agreement on terms that are favorable to the Company, if at
all. If we do enter into one or more such agreements, we will not be
able to control the timetable for completing such
studies. Furthermore, we cannot give any assurance that any
applications that we submit for any vaccine products will be approved by
APHIS. The failure to receive such approval, or the receipt of
approval following the approval of a competing product, would have an adverse
material effect on the Company.
LICENSING
Through
our third division, Licensing, we intend to manage the marketing and sale of the
vaccines developed by GeneThera’s Research & Development
division. As GeneThera does not intend to be a vaccine manufacturer,
we plan to use our Licensing division to license the technology related to any
vaccines that may be developed and to manage the revenue potential available
from the successful development and validation of specific
vaccines. We cannot provide any assurance that we will develop any
vaccines or that, if they are developed, we will be able to license them
successfully or that any such license will provide significant
revenues.
ITEM
1A RISK FACTORS
We
encounter various risks related to our business and our
industry. While the Company is optimistic about its long term
prospects, the following risk factors should be considered in evaluating its
outlook
There
is a substantial doubt about GeneThera ability to continue as an on going
concern
GeneThera
has had negligible revenues since inception. Because of these circumstances,
GeneThera will require additional working capital to develop business operation.
There is no assurance that GeneThera will reach a level of revenues adequate to
generate sufficient cash flow from operation or obtain additional financing
necessary to support GeneThera operating expenses requirements
If
a Loss of Key Personnel Will Occur This Event Could Adversely Affect the
Company
The
Company depends to a large part on the efforts and continued employment of
Antonio Milici, M.D., Ph.D., our President, Chairman of The Board, and Chief
Executive Officer. The loss of the services of Dr. Milici could
adversely affect our business.
If the Company fails to attract and retain
additional, high skilled personnel operations will suffer.
Finding
qualified personnel in the biotechnology industry is very challenging. Smaller
biotechnology companies there are always at a disadvantage because of its
limited financial resources. The Company has been unable at this time to hire
any additional qualified personnel. If the Company is unable to hire additional
personnel this may result in a substantial delay of its R&D and commercial
operations.
If
the Company fails to attract significant additional capital, the Company may be
unable to continue developing its products.
From the
starting of its operation, GeneThera has obtained limited funding to implement
its business strategy. The Company does not have sufficient funding to meet its
operating needs throughout 2008. Potential sources of additional funding could
include strategic relationships, public or private sales of shares of common
stocks, or other arrangements.
Rapid
Growth May Place Significant Demands on our Resources
We expect
significant expansion of our operations. Our anticipated future
growth will place a significant demand on our managerial, operational and
financial resources due to:
* The
need to manage relationships with various strategic partners and other third
parties;
*
Difficulties in hiring and retaining skilled personnel necessary to support our
business;
* The
need to train and manage a growing employee base; and
*
Pressures for the continued development of our financial and information
management systems.
If we
have not made adequate allowances for the costs and risks associated with this
expansion or if our systems, procedures, or controls are not adequate to support
our operations, our business could be harmed.
The
Company may not be able to comply with Government regulations
The
Company is subject to or affected by laws and regulations that govern, for
example: (i) the vaccination of animals for certain diseases. The
failure to comply with these laws and regulations, or to obtain applicable of
these governmental approvals, could result in the imposition of penalties, cause
delays in, or make impossible, the marketing of our products and
services.
The
Company may be unable to compete against other more establish biotech of
pharmaceutical companies
The
Company operates in a very competitive and
difficult area. Biotechnology is notoriously very difficult and risky business.
The Company competes with other more established and better funded companies in
the United States and overseas that are involved in the development of similar
products. Several of these companies have significant greater financial
resources as well greater production and market capabilities. The field of
Biotechnology requires extensive research and development. Better
funded competitors may be able to develop and market superior or less expensive
product which will make the Company products less valuable or
unmarketable.
The
Company has no manufacturing capabilities
The
Company does not have manufacturing capabilities for its DNA vaccine technology.
The Company solely relies on other companies to manufactures vaccines that can
meet Government Regulations. Manufacturing of these products are very expensive
and The Company may not be able to secure the necessary funding to hire any of
such companies. If The Company is unable to produce these vaccines, then the
Company may never be able to initiate clinical trials. This will seriously
hamper the Company’s ability to commercialize any of its DNA vaccine
products.
The
Company has limited Government Regulatory Experience
The
company has never successfully undertaken a clinical trial for animal DNA
vaccine. Our experience in this area is limited. The Company has never obtained
regulatory approvals for any of its products.
Being
Delisted from Over the Counter Bulletin Board (OTCBB)
Although
by the time of our original Form 10-K filing, our company was participant of the
exchange list of OTCBB (Over the Counter Bulletin Board), FINRA delisted our
Company on June 19, 2008 by putting a penalty symbol after our ticker symbol
GTHA due to failing to file our quarterly and annual reports according to the
regulations. The Company paid FINRA $4,000 for an appeal hearing. FINRA already
pre-determined our culpability before the appeal was addressed on June 20th, 2008.
The Company had IT difficulties with their server. The Company does not change
their date/time of filing. The Company requested for the SEC to change the
headline of the 10K filing. It could have been done but the Office of Technology
from the SEC opted to ignore the Company’s request for such modification based
on our 16:20 date and time status on our computer screen. The filing of the 10K
was done by 16:20; FINRA concluded the filing was done by 20:20. The Company
learned the server was down for more than 4 hours when finally the server
recovered its data; the date and time of the filing was changed without the
Company’s knowledge. The FINRA staff only spoke with the Company’s investor
relations entity, Mr. Richard Dopkin. No one spoke with our IT specialist who
knew about our technical difficulties and how to retrieve the correct filing
done by 16:20. Moreover, FINRA opted not speaking with the officers of GeneThera
who witnessed the IT difficulties.
ITEM
2 DESCRIPTION OF PROPERTY
We lease
a 5,730 square foot biotechnology laboratory located at 3930 Youngfield Street,
Wheat Ridge, Colorado 80033. The lease is on a month-to-month basis
and the rent is $5,235.26 per month. Our rent payment is $4,000 per
month effective January 1st, 2008.
We believe that our existing facilities are adequate to meet our current
requirements. We sub-lease 700 square foot of office space to GTI
Corporate Transfer Agents, LLC, a related party, located on the 3924 unit of our
lease space reflected as 3930 Youngfield Street, Suite #2, Wheat Ridge, Colorado
80033. The lease is on a month-to-month basis and the rent is $500.00
per month effective January 1st,
2008. We do not own any real property. If we are able to
develop assays for different diseases, we intend to formalize the procedure into
a commercial application through a series of laboratories to be owned and
operated by GeneThera. Currently we do not have the funds to purchase
or construct any such laboratories and do not have commitment from any party to
provide the funds for a laboratory.
ITEM
3 LEGAL PROCEEDINGS
On or
about July 23, 2004, Sisu Media sued the Company in Jefferson County District
court for breach of an alleged contract for website services for which the
plaintiff seeks compensatory damages, plus costs, interest, and attorney’s fees
in amounts to be determined at trial. Trial was held on August 4,
2005, wherein the court determined that Sisu Media was entitled to compensation
based only upon the breach of contract claim. Plaintiff’s claims in
quantum meruit and for
unjust enrichment were dismissed. The court also dismissed defendant
GeneThera, Inc.’s claim of aiding and abetting a breach of fiduciary duty by
third party. Entry of judgment was entered in favor of the plaintiff
for approximately $49,000.00. On February 9, 2006, the Company
appealed this judgment. The Appeals Committee’s decision was in favor of the
plaintiff due to the GeneThera’s legal counsel’s lack of preparedness. On July
19, 2007, the Appeals Committee approved plaintiff’s attorney, specifying the
attorney fees and costs in the amount of $6,237.31 incurred in said appeal
against GeneThera. No judgment has been paid to the plaintiff by the
Company.
On or
about September 21, 2006, MAG Capital, a California Limited Liability Company
(Mercator Momentum III, LP; Mercator Momentum Fund LP; Monarch Pointe Fund, ltd;
a British Virgin Islands Corporation), served GeneThera, Inc., a Florida
corporation, GTI Corporate Transfer Agents, LLC, a Colorado limited liability
company, Antonio Milici, an individual, Tannya L. Irizarry, and Laura Bryan,
individuals with a summons with the Federal Court, which was
quashed. On October 11, 2006, the above entities filed a Superior
Court State Complaint against GeneThera et al. for breach of written
contract. The plaintiffs dropped the charges against GeneThera, Inc.,
GTI Corporate Transfer Agents, LLC, Antonio Milici, Tannya L. Irizarry and Laura
Bryan. The plaintiffs charged the Company with breach of written contract for
which the Company’s litigation counsel filed an appeal on February 19, 2008. The
Company’s litigation counsel also filed a $5 million suit against the plaintiffs
and a $50,000 law suit against the plaintiff’s legal law firm for unethical
procedure in approaching one of the defendants.
ITEM
4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART
II.
ITEM
5 MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Our
common stock currently trades on the Over the Counter Bulletin Board under the
symbol GTHA. The following sets forth the rant of high and low bid
quotations for the periods indicated as reported by Yahoo
Finance. Such quotations reflect prices between dealers, without
retail markup, markdown or commission, and may not represent actual
transactions.
|
Year
|
Quarter
|
High
|
Low
|
|
2007
|
Fourth
|
.03
|
.01
|
|
|
Third
|
.03
|
.02
|
|
|
Second
|
.05
|
.02
|
|
|
First
|
0.05
|
.03
|
|
2006
|
Fourth
|
$0.08
|
$0.02
|
|
|
Third
|
0.10
|
0.05
|
|
|
Second
|
0.33
|
0.08
|
|
|
First
|
0.28
|
0.06
|
|
2005
|
Fourth
|
$0.49
|
$0.10
|
|
|
Third
|
1.00
|
0.40
|
|
|
Second
|
1.05
|
0.54
|
|
|
First
|
1.25
|
0.92
|
|
2004
|
Fourth
|
1.94
|
0.88
|
|
|
Third
|
1.60
|
0.70
|
|
|
Second
|
2.85
|
0.90
|
|
|
First
|
4.39
|
2.05
|
* Source
Yahoo Finance
There are
no restrictions on the payment of dividends. There are approximately 1,149
record holders of common stock as of December 31, 2007.
DIVIDENDS
On
May 21st, 2007,
the Company issued a one-time dividend payment in the amount of .0004 per
share.
ITEM
6 SELECTED FINANCIAL DATA
The
following selected financial data should be read in conjunction with Item 7.
“Management’s Discussion and Analysis or Plan of Operation” and Item 8.
“Financial Statements.”
|
|
|
As
of December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
97,900 |
|
|
|
150,000 |
|
|
|
190,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and Administrative
|
|
|
(313,381 |
) |
|
|
(739,
529 |
) |
|
|
(896,696 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
expense
|
|
|
(236,757 |
) |
|
|
(444,420 |
) |
|
|
(1,952,040 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(72,451 |
) |
|
|
(77,014 |
) |
|
|
(11,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
(100 |
) |
|
|
(0 |
) |
|
|
(1,301,373 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(524,789 |
) |
|
|
(1,482,571 |
) |
|
|
(3,794,079 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share
|
|
|
(.02 |
) |
|
|
(.07 |
) |
|
|
(.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
|
68,468 |
|
|
|
26,314 |
|
|
|
18,031 |
|
|
Total
assets
|
|
|
364,310 |
|
|
|
394,607 |
|
|
|
473,396 |
|
|
Total
liabilities
|
|
|
1,570,081 |
|
|
|
1,418,411 |
|
|
|
850,277 |
|
|
Stockholders
Equity (Deficit)
|
|
|
(1,205,771 |
) |
|
|
(1,023,804 |
) |
|
|
(376,881 |
) |
ITEM
7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
FORWARD-LOOKING
AND CAUTIONARY STATEMENTS
Sections
of this Form 10-K, including the Management’s Discussion and Analysis or Plan of
Operation, contain “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933 (the “Securities Act”), Section 21E of the
Securities and Exchange Act of 1934 (the “Exchange Act”), and the Private
Securities Litigation Reform Act of 1995. 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, 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,
*
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 oft his 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-K. Statements in this
Management’s Discussion and Analysis or Plan of Operation that are not
statements of historical or current objective fact are “forward-looking
statements.”
OVERVIEW
We have
developed proprietary diagnostic assays for use in the agricultural and
veterinary markets. Specific assays for Chronic Wasting Disease (CWD)
(among elk and deer) and Mad Cow Disease (among cattle) have been developed and
are available currently on a limited basis. E. coli (predominantly
cattle) and Johne’s disease (predominantly cattle and bison) diagnostics are in
development. We are also working on vaccine solutions to meet the
growing demands of today’s veterinary industry and tomorrow’s agriculture and
healthcare industries. The Company is organized and operated both to
continually apply its scientific research to more effective management of
diseases and, in so doing, realize the commercial potential of molecular
biotechnology.
We have
not generated significant operating revenues and, as of December 31, 2007 we had
incurred a cumulative net loss from inception of $16,278,007. Our
ability to generate substantial operating revenue will depend on our ability to
develop and obtain approval for molecular assays and developing therapeutic
vaccines for the detection and prevention of food contaminating pathogens,
veterinary diseases, and diseases affecting human health.
Our
independent auditors have expressed some doubt about our ability to continue as
a going concern in their report on our consolidated financial statements for the
fiscal year ended December 31, 2007. For the years ended December 31,
2007 and 2006, our operating losses were $776,374 and $1,482,570,
respectively. Our current liabilities exceeded current assets by
$1,501,613 and $1,392,097 for the years ended December 31, 2007 and 2006,
respectively.
Although
we completed an equity financing with gross proceeds of approximately $1.1
million in 2005, we will require significant additional funding in order to
achieve our business plan. Over the next 12 months, in order to have
the capability of achieving our business plan, we believe that we will require
at least $5,000,000 in additional funding. We will attempt to raise
these funds by both means of one or more private offerings of debt or equity
securities and revenues generated by our Project in Mexico. At this
time, we have commitments for additional capital funds. This amount
may exceed an additional $1,000,000 depending on cost involved in the further
development and commercialization of our products. In such event, we
may need immediate additional funding. Our capital requirements will
depend on many factors including, but not limited to, the timing of further
development of assays to detect the presence of infectious disease from the
blood of live animals, our hiring of additional personnel, the applications for,
and receipt of, regulatory approvals for any veterinary vaccines that we may
develop, and other factors. Our ability to raise capital will
increase our ability to implement our business plan.
Over the
next 12 months, we expect significant purchases and/or sales of plant or
equipment and significant changes in the number of our employees for any
off-balance sheet arrangements that will have current and future effect on our
financial condition.
We also
expect to spend a significant amount of our capital on research and development
activities for commercialization relating to development and vaccine
design/development. When we are able to develop assays for different
diseases, we intend to formalize the procedure into a commercial application
through a series of laboratories to be owned and operated by
GeneThera. To date, we have introduced our diagnostic solution for
Chronic Wasting Disease (CWD) and Mad Cow Disease on a very limited
basis. We anticipate that significant funds will be spent on research
and development throughout the life of the Company, as this is the source for
new products to be introduced to the market. Our plan is to seek new
innovations in the biotechnology field. We may be successful in
developing or validating any new assays and, when we are successful in
developing and validating any such assays, we may be able to successfully
commercialize them or earn profits from sales of those
assays. Furthermore, we may be able to design, develop, or
successfully commercialize vaccines as a result of our research and development
efforts.
RECENT
DEVELOPMENTS
The
Company is in continued negotiations with the Italian government to open a
laboratory facility in Northern Italy for the validation and testing of its live
animal test for TSE. The parties are currently discussing space
requirements and personnel needs. The Italian Project is also impatiently
awaiting the completion of the funding for this venture.
The
Company has begun to form an entity with a Mexican company to jointly own and
operate a laboratory facility in Monterrey, Mexico for express purposes of
testing cattle for TSE. The entity is currently being legally formed.
The Mexico Project is also enthusiastically waiting for the completion of the
funding for this enterprise.
The
Company signed an Investor Relations agreement with The Mezey Howarth Group,
Inc., in March 2007. The Company terminated its Investor Relations arrangement
with The Mezey Howarth Group, Inc. due to false press releases generated by J.
Wade Mezey on June 18, 2007. This entity owes the Company $120,000 for which
GeneThera will pursue through litigation due to their failure in reimbursing the
Company for line of credit pre-paid fees, which was never approved and/or
materialized.
In March
2006, the Company opened a line of credit with Imperial Capital Holdings, LLC on
the advice of the Company’s consulting financial advisor, Mr. Gary Rasmussen,
who is also the primary beneficiary of Imperial. The Company was not
aware of the relationship but, more importantly, after the CEO of the Company
learned that Red Sea Management was the managing company of Imperial Capital,
the CEO opted not to use the line of credit, requesting from the SEC to grant a
withdrawal. The withdrawal was approved on April 13,
2007.
RELATED
PARTY TRANSACTIONS
Setna
Holdings, LLC is a related party to the Company with a promissory note of
$150,801. Setna is in the business of providing financial services
and general business consulting services to privately-held and publicly-held
corporations. Setna consults and assists GeneThera in implementing and also
providing financial assistance while researching for appropriate plans for
securing funds to meet the Company requirements for which Setna also introduces
financial sources. Mr. Anthony J. Milici is the Managing Director of
Setna Holdings. Upon the Company’s direction and approval, Setna
disseminates information regarding GeneThera to shareholders, brokers, dealers,
other investment community professionals, and the general investing
public.
GTI
Corporate Transfer Agents, LLC is the Company’s transfer agent. After
the death of the original Managing Director, Ms. Juanita Pagan in March 2006,
Ms. Tannya L. Irizarry became the Managing Director of GTI Corporate Transfer
Agents, LLC with a one-third ownership and/or interest.
RESULTS
OF OPERATIONS
Year
Ended December 31, 2007 Compared to Year Ended December 31, 2006
For the
year ended December 31, 2007, the Company reported a net loss of $776,374, or
less than $0.02 per share, and $97,900 of revenue as compared with a net loss of
$1,482,570, or $0.07 per share, and $150,000 of revenue for the twelve months
ended December 31, 2006.
General and Administrative
Expenses: General and administrative expenses decreased to $313,381
for the twelve months ended December 31, 2007 compared to $739,529 for the same
period in 2006. This decline was due to a decrease in
personnel.
Consulting Expenses:
Consulting expenses decreased to $236,757 for the twelve months ended
December 31, 2007 compared to $444,420 for the same period in 2006. The
decrease is attributable to the discontinuation of use of marketing consultants
traditionally paid in stock of the Company.
Depreciation and Amortization
Expense: Depreciation and amortization expenses decreased to
$72,451 for the twelve months ended December 31, 2007 compared to $77,014 for
the same period in 2006 primarily due to no new equipment being purchased.
Year
Ended December 31, 2006 Compared to Year Ended December 31, 2005
For the
year ended December 31, 2006, the Company reported a net loss of $1,482,571, or
$0.07 per share, and $150,000 of revenue as compared with a net loss of
$3,794,079, or $0.017 per share, and $190,982 of revenue for the twelve months
ended December 31, 2005.
General and Administrative
Expenses: General and administrative expenses decreased to $739,529
for the twelve months ended December 31, 2006 compared to $896,696 for the same
period in 2005. The decrease was attributable to the decrease in employees
in 2006 due to budget constraints.
Consulting Expenses:
Consulting expenses decreased to $444,420 for the twelve months ended
December 31, 2006 compared to $1,952,040 for the same period in 2005. This
decrease is primarily attributed to the elimination of marketing consultants
traditionally paid in stock of the Company.
Depreciation and Amortization
Expense: Depreciation and amortization expenses increased to
$77,014 for the twelve months ended December 31, 2006 compared to $11,751 for
the same period in 2005 primarily due to equipment purchased to expand the
lab.
LIQUIDITY
AND CAPITAL RESOURCES
We had a
cash balance of $201 as of December 31, 2007 and a cash balance of $234 as of
December 31, 2006. Our current cash balance is not sufficient to fund
our business objectives and we will need significant additional capital over the
next 12-18 months in order to fund our planned operations. We may be
unable to secure any additional financing on terms that are acceptable to us, if
at all.
Since we
completed the reverse merger with Hand Brand Distribution, Inc., we have
financed our operations, in large part, by private placements of our common and
preferred stock and promissory notes convertible into our common
stock. We have raised an aggregate of $2,613,900 through such sales,
including the sale of approximately $1.1 million of our preferred stock in
January 2005.
We will
require significant additional funding in order to achieve our business
plan. Specifically, we intend to spend significant funds on
validating and testing our products, seeking necessary regulatory approvals and
focusing on international expansion. Over the next 12 month, in order
to have the capability of achieving our business plan, we believe that we will
require at least $5,000,000. We will attempt to raise these funds by
means of one or more private offerings of debt or equity securities or
both. We may not be able to secure the financing that we believe is
necessary to implement our strategic objectives and, even if additional
financing is secured, we may not achieve our strategic objectives. As
of the date of this Report, we do not have any firm commitments from any
investors for any additional funding.
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,
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.
CRITICAL
ACCOUNTING POLICIES
In
December 2001, the SEC requested that all registrants discuss their most
“critical accounting policies” in Management’s Discussion and Analysis of
Financial Condition or Plan of Operation. The SEC indicated that a
“critical account policy” is one which is both important to the portrayal of the
Company’s financial condition and results and requires management’s most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently
uncertain. Our significant accounting policies are described in Note
1 to our consolidated financial statements included in this Report.
RECENTLY
ISSUED ACCOUNTING STANDARDS
On
December 16, 2004, the Financial Accounting Standard Board issued SFAS No. 123
(revised 2004), “Share-Based Payment,” which is a revision of SFAS No.
123. SFAS No. 123 GeneThera supersedes APB No. 25, and amends SFAS
No. 95, “Statement of Cash Flows.” Generally, the approach in SFAS
No. 123 GeneThera is similar to the approach described in SFAS No.
123. However, SFAS No. 123 GeneThera requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro
forma disclosure is no longer an alternative. SFAS No. 123 GeneThera
must be adopted no later than July 1, 2005. The Company has adopted
SFAS No. 123 GeneThera using a “modified retrospective” method which includes
the requirements of the modified prospective method described above, but also
permits entities to restate based on the amounts previously recognized under
SFAS No. 123 for purposes of pro forma disclosures either (a) all prior periods
presented or (b) prior interim periods of the year of adoption. In
March 2005, the FASB issued FASB interpretation No. 47, “Accounting for
Conditional Asset Retirement Obligations” (“FIN 47”). FIN 47 provides
guidance relating to the identification of and financial reporting for legal
obligations to perform an asset retirement activity. The
Interpretation requires recognition of a liability for the fair value of a
conditional asset retirement obligation when incurred if the liability’s fair
value can be reasonable estimated. FIN 47 also defines when an entity
would have sufficient information to reasonably estimate the fair value of an
asset retirement obligation. The provision is effective no later than
the end of fiscal years ending after December 15, 2005. The Company
will adopt FIN 47 beginning the first quarter of fiscal year 2006 and does not
believe the adoption will have a material impact on its consolidated financial
position or results of operations or cash flows.
In May
2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
(“SFAS 154”) which replaces Accounting Principles Board Opinions No. 20
“Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
Financial Statements – An Amendment of APB Opinion No. 28.” SFAS 154
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes retrospective applications, or the
latest practicable date, as the required method for reporting a change in
accounting changes and a correction of errors made in fiscal years beginning
after December 15, 2005 and is required to be adopted by the Company in the
first quarter of 2006. The Company is currently evaluating the effect
that the adoption of SFAS 154 will have on its results of operations and
financial condition but does not expect it to have material impact.
In June
2005, the Emerging Issues Task Force, or EITF, reached a consensus on Issue
05-6, Determining the Amortization Period for Leasehold Improvements, which
requires that leasehold improvements acquired in a business combination or
purchased subsequent to the inception of a lease be amortized over the lesser of
the useful life of the assets or a term that includes renewals that are
reasonable assured at the date of the business combination or
purchase. EITF 05-6 is effective for periods beginning after July 1,
2005. We do not expect the provisions of this consensus to have a
material impact on the financial position, results or cash flows.
In
February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial
Instruments, which amends SFAS 133, Accounting for Derivative Instruments and
Hedging Activities, and SFAS 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities – a replacement of FASB
Statement No. 125. SFAS 155 will be effective for the Company for all
financial instruments issued or acquired after the beginning of its fiscal year
ending December 31, 2006. The Company has not yet evaluated and
determined the likely effect of SFAS 155 on future financial
statements.
In June
2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes – An Interpretation of FASB Statement No. 109, (FIN
48). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. FIN 48 also
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return that results in a tax benefit. Additionally,
FIN 48 provides guidance on de-recognition, income statement classification of
interest and penalties, accounting interim periods, disclosure, and
transition. This interpretation is effective for the Company for its
fiscal year ending December 31, 2007. The Company has not yet
evaluated the effect that the application of FIN 48 may have, if any, on its
future results of operations and financial condition.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements.” This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. This statement
applies under other accounting pronouncements that require or permit fair value
measurements. SFAS No. 157 is effective for the Company for its
fiscal year beginning on July 1, 2008. The Company is currently
assessing the impact the adoption of SFAS No. 157 will have on its financial
statements.
In
September 2006, the Sec issued Staff Accounting Bulletin (SAB) No. 108 in order
to eliminate the diversity of practice surrounding how public companies quantify
financial statement misstatements. In SAB 108, the SEC staff
established an approach that requires quantification of financial statement
misstatements based on the effects of the misstatements on each of the Company’s
financial statements and the related financial statement
disclosures. SAB No. 108 is effective for the Company for its current
fiscal year. The adoption of SAB No. 108 did not have an impact on
the Company’s financial statements.
On
February 15, 2007, the FASB issues SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115.” This standard permits an entity to measure many
financial instruments and certain other items at estimated fair
value. Most of the provisions of SFAS No. 115 (“Accounting for
Certain Investment in Debt and Equity Securities) apply to all entities that own
trading and available-for-sale securities. The fair value option
created by SFAS No. 159 permits an entity to measure eligible items at fair
value as of specified election dates. Among others eligible items
exclude (1) financial instruments classified (partially or in total) as
permanent or temporary stockholders’ equity (such as a convertible debt security
with a non-contingent beneficial conversion feature) and (2) investments in
subsidiaries and interests in variable interests that must be
consolidated. A for-profit business entity will be required to report
unrealized gains and losses on items for which the fair value option has been
elected in its statements of operations at each subsequent reposting
date. The fair value option (a) may generally be applied instrument
by instrument, (b) is irrevocable unless a new elections date occurs, and (c)
must be applied to the entire instrument and not to only a portion of the
instrument. SFAS No. 159 is effective as of the beginning of the
first fiscal year that begins after November 15, 2007. The Company
has not yet evaluated the effect that the application of SFAS No. 159 may have,
if any, on its future results of operations and financial
condition.
EMPLOYEES
As of
December 31, 2007, we had a total of two (2) full-time employees who devote
substantial effort on our behalf. None of our employees are
represented by a collective bargaining unit. We entered into an
employment agreement with Antonio Milici, M.D., Ph.D., to serve as our Chief
Executive Officer and Chief Scientific Officer through January 7,
2012. In consideration for his services, Dr. Milici will receive a
base salary of $144,000 per annual plus bonuses as may be determined by the
Board of Directors in its sole discretion. As part of his employment
agreement, Dr. Milici is subject to non-disclosure and non-competition
obligations and has transferred to the Company all of his interests in any idea,
concept, technique, invention or written work. We also entered into
an employment agreement with Tannya L. Irizarry to serve as our Chief
Administrative Officer through January 7, 2012. Ms. Irizarry’s base
salary is $90,000 per annum. The above salaries have been accrued to
be paid in common stock shares from the Company. There are no
employee issues at this time.
RESEARCH
AND DEVELOPMENT
We
anticipate that R&D will be the source for both assay development and
vaccine design/development. If we are able to develop assays for
different diseases, we intend to formalize the procedure into a commercial
application through a series of laboratories to be owned and operated by
GeneThera. To date, we have introduced our diagnostic solution for
Chronic Wasting Disease and Mad Cow Disease on a very limited
basis. We anticipate that R&D will be ongoing during the life of
the Company, as this is the source for new products to be introduced to the
market. Our plan is to seek new innovations in the biotechnology
field. We cannot assure you that we will be successful in developing
or validating any new assays or, if we are successful in developing and
validating any such assays, that we can successfully commercialize them or earn
profits from sales of those assays. Furthermore, we cannot assure you that we
will be able to design, develop, or successfully commercialize any vaccines as a
result of our research and development efforts.
COMMERCIAL
DIAGNOSTIC TESTING
In the
event that we are able to develop assays for the detection of diseases in
animals, we intend to establish a series of diagnostic testing laboratories
geographically proximate to the primary sources of individual diseases and/or
according to specific available operating efficiencies. The specific
number of labs to be built and operated will be based on assay demand (demand
facilitated by the number of specific disease assays GeneThera develops), our
ability to obtain the capital to build the labs, and our ability to successfully
manage them from our principal office.
PROPERTIES
We lease
a 5,730 square foot biotechnology laboratory located at 3930 Youngfield Street,
Wheat Ridge, Colorado 80033. The lease expired in January 2007, and
the rent is $5,235.00 per month. Currently, the Company is on a
month-to-month basis. Effective January 2008, the rent is $4,000 per month. We
sub-lease 700 square feet to GTI Corporate Transfer Agents, LLC. The
monthly rent is $500. We believe that our existing facilities are
adequate to meet our current requirements. We do not own any real
property. If we are able to develop assays for different diseases, we
intend to formalize the procedure into a commercial application through a series
of laboratories to be owned and operated by GeneThera. Currently, we
do not have the funds to purchase or construct any such laboratories and do not
have a commitment from any party to provide the funds for a
laboratory.
ITEM
8 FINANCIAL STATEMENTS
GENETHERA,
INC.
AND
SUBSIDIARY
(A
Development Stage Company)
FINANCIAL
STATEMENTS
FOR THE
PERIODS
OCTOBER
5, 1998 (INCEPTION) TO DECEMBER 31, 2006 (UNAUDITED)
AND DECEMBER
31, 2007
TABLE
OF CONTENTS
|
|
Page
No.
|
|
|
|
|
|
|
|
Independent
Registered Public Accounting Firm’s Report
|
2
|
|
|
|
|
Consolidated
Balance Sheets – December 31, 2007 and 2006
|
4
|
|
|
|
|
Consolidated
Statements of Operations for the Period
from October 5, 1998 (Inception) to December 31,
2007
|
6
|
|
|
|
|
Consolidated
Statements of Changes in Stockholders’ Equity (Deficit) for the Period
from October 5, 1998 (Inception) to December 31, 2007
|
7
|
|
|
|
|
Consolidated
Statements of Cash Flows for the Period from October 5, 1998 (Inception)
to December 31, 2007
|
10
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
11
|
Board of
Directors
GeneThera,
Inc.
Wheat
Ridge, Co.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have
audited the accompanying balance sheets of GeneThera, Inc. and subsidiary (the
“Company”) as of December 31, 2008 and 2007 and the related statements of
operations, stockholders’ deficit, and cash flows for the years ended December
31, 2008 and 2007. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 2008
and 2007, and the results of its operations and changes in stockholders’ deficit
and its cash flows for the years ended December 31, 2008 and 2007, in conformity
with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 9 of the financial
statement, the Company’s accumulated deficit from operations and its
difficulties in maintaining sufficient working capital raise substantial doubt
about its ability to continue as a going concern. Management’s plans
concerning these matters are also described in Note 9. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
W.T.
Uniack & Co. CPA’s P.C.
Alpharetta,
Georgia
June 23,
2009
Balance
Sheet – 4
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STATE COMPANY)
CONSOLIDATED
BALANCE SHEET
DECEMBER
31, 2007 AND 2006
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
Unaudited
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash
|
|
$ |
201 |
|
|
$ |
234 |
|
|
Accounts
receivable
|
|
|
68,267 |
|
|
|
6,800 |
|
|
Accounts
receivable Related Parties
|
|
|
- |
|
|
|
17,390 |
|
|
Prepaid
expenses
|
|
|
- |
|
|
|
1,890 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
68,468 |
|
|
|
26,314 |
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment
|
|
|
727,428 |
|
|
|
727,428 |
|
|
Accumulated
Depreciation
|
|
|
(436,864 |
) |
|
|
(364,413 |
) |
|
Property
and equipment, net
|
|
|
290,564 |
|
|
|
363,015 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
5,278 |
|
|
|
5,278 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Assets
|
|
|
5,278 |
|
|
|
5,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
364,310 |
|
|
$ |
394,607 |
|
Balance
Sheet – 5
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
BALANCE SHEET
DECEMBER
31, 2007 AND 2006
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
Unaudited
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
601,013 |
|
|
$ |
594,095 |
|
|
Accrued
expenses
|
|
|
818,267 |
|
|
|
704,724 |
|
|
Leases
payable, current portion
|
|
|
- |
|
|
|
12,040 |
|
|
Notes payable
|
|
|
150,801 |
|
|
|
107,552 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
1,570,081 |
|
|
|
1,418,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
1,570,081 |
|
|
|
1,418,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $.001 par value, 20,000,000 shares authorized;
|
|
|
|
|
|
|
Series
A 4,600 shares issued and outstanding $.001 par value
|
|
|
5 |
|
|
|
5 |
|
|
Series
B 3,000,000 shares issued and outstanding $.001 par value
|
|
|
3,000 |
|
|
|
2,250 |
|
|
Common
stock $.001 par value, 100,000,000 shares authorized; 51,525,849
shares issued and outstanding
|
|
|
51,527 |
|
|
|
35,476 |
|
|
Additional
paid in capital
|
|
|
15,017,704 |
|
|
|
14,506,428 |
|
|
Deficit
accumulated during development stage
|
|
|
(16,278,007 |
) |
|
|
(15,567,963 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
|
|
(1,205,771 |
) |
|
|
(1,023,804 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities & Stockholders' Equity
|
|
$ |
364,310 |
|
|
$ |
394,607 |
|
Stmt of
Operations – 6
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE PERIOD FROM OCTOBER 5, 1998 (INCEPTION) TO DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
For
the period from
|
|
|
|
|
Year
End December 31,
|
|
|
October
5, 1998
|
|
|
|
|
2007
|
|
|
2006
|
|
|
(inception)
to
|
|
|
|
|
|
|
|
Unaudited
|
|
|
December
31, 2007
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
97,900 |
|
|
$ |
150,000 |
|
|
$ |
516,649 |
|
|
Research
fees
|
|
|
- |
|
|
|
- |
|
|
|
188,382 |
|
|
Total
income
|
|
|
97,900 |
|
|
|
150,000 |
|
|
|
705,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
- |
|
|
|
- |
|
|
|
(30,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
97,900 |
|
|
|
150,000 |
|
|
|
674,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
compensation
|
|
|
- |
|
|
|
- |
|
|
|
3,283,009 |
|
|
Consulting
|
|
|
236,757 |
|
|
|
444,420 |
|
|
|
4,754,264 |
|
|
General
and administrative expenses
|
|
|
313,381 |
|
|
|
739,529 |
|
|
|
3,821,000 |
|
|
Payroll
expenses
|
|
|
235,350 |
|
|
|
306,890 |
|
|
|
2,104,619 |
|
|
Depreciation
|
|
|
72,451 |
|
|
|
77,014 |
|
|
|
475,567 |
|
|
Settlement
expense
|
|
|
|
|
|
|
25,132 |
|
|
|
82,625 |
|
|
Dividend
Payment
|
|
|
15,980 |
|
|
|
|
|
|
|
15,980 |
|
|
Lab
expenses
|
|
|
255 |
|
|
|
39,592 |
|
|
|
294,772 |
|
|
Total
expenses
|
|
|
874,174 |
|
|
|
1,632,578 |
|
|
|
14,887,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(776,274 |
) |
|
|
(1,482,577 |
) |
|
|
(14,212,871 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion expense
|
|
|
- |
|
|
|
- |
|
|
|
(1,987,991 |
) |
|
Interest
expense
|
|
|
- |
|
|
|
- |
|
|
|
(46,758 |
) |
|
Gain
on settlements
|
|
|
- |
|
|
|
- |
|
|
|
58,203 |
|
|
Other
income (expenses), net
|
|
|
(100 |
) |
|
|
6 |
|
|
|
33,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(776,374 |
) |
|
$ |
(1,482,570 |
) |
|
$ |
(16,278,007 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share Basic & Diluted
|
|
$ |
(0.015 |
) |
|
$ |
(0.065 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight
Average Shares
|
|
|
50,475,480 |
|
|
|
22,923,273 |
|
|
|
|
|
Stmt of
Changes in Stockholders – 7
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE PERIOD ENDED DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage
|
|
|
|
|
|
|
|
Preferred
Stock A
|
|
|
Preferred
Stock B
|
|
|
Common
Stock
|
|
|
|
|
|
Paid
in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Agreement
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2004
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
18,732,534 |
|
|
$ |
18,733 |
|
|
$ |
10,146,977 |
|
|
$ |
(100,040 |
) |
|
$ |
(10,413,571 |
) |
|
|
(347,901 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in exchange for convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000 |
|
|
|
19 |
|
|
|
18,981 |
|
|
|
|
|
|
|
|
|
|
|
19,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,050,000 |
|
|
|
2,050 |
|
|
|
1,965,952 |
|
|
|
|
|
|
|
|
|
|
|
1,968,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
|
90 |
|
|
|
73,260 |
|
|
|
|
|
|
|
|
|
|
|
73,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation
of Previously Issued Consulting Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,204 |
) |
|
|
(15 |
) |
|
|
(15,945 |
) |
|
|
|
|
|
|
|
|
|
|
(15,960 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
367,397 |
|
|
|
|
|
|
|
|
|
|
|
367,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock issued
|
|
|
11,000 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,099,989 |
|
|
|
|
|
|
|
|
|
|
|
1,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
dividends paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,338 |
) |
|
|
(46,338 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase
of Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,400 |
) |
|
|
(1 |
) |
|
|
(1,609 |
) |
|
|
|
|
|
|
|
|
|
|
(1,610 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued upon conversion of Preferred Shares
|
|
|
(1,400 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
318,182 |
|
|
|
318 |
|
|
|
(317 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Paid in capital- related party - note payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
15 |
|
|
|
12,285 |
|
|
|
|
|
|
|
|
|
|
|
12,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued upon conversion of Preferred Shares
|
|
|
(5,000 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
1,086,957 |
|
|
|
1,087 |
|
|
|
(1,082 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Satisfaction
of Subscription Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,040 |
|
|
|
|
|
|
|
100,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,625,483 |
) |
|
|
(3,625,483 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2005
|
|
|
4,600 |
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
22,295,069 |
|
|
$ |
22,296 |
|
|
$ |
13,685,888 |
|
|
$ |
- |
|
|
$ |
(14,085,392 |
) |
|
|
(377,203 |
) |
Stmt of
Changes in Stockholders – 8
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE PERIOD ENDED DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage
|
|
|
|
|
|
|
|
Preferred
Stock A
|
|
|
Preferred
Stock B
|
|
|
Common
Stock
|
|
|
|
|
|
Paid
in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Agreement
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2005
|
|
|
4,600 |
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
22,295,069 |
|
|
$ |
22,296 |
|
|
$ |
13,685,888 |
|
|
$ |
- |
|
|
$ |
(14,085,392 |
) |
|
|
(377,203 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to officers in
lieu of salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
$ |
90 |
|
|
$ |
12,510 |
|
|
|
|
|
|
|
|
|
|
|
12600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to replace cancelled
certificate-settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
$ |
40 |
|
|
$ |
7,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,000 |
|
|
|
700 |
|
|
|
87,300 |
|
|
|
|
|
|
|
|
|
|
|
88,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
issued to officer
|
|
|
|
|
|
|
|
|
|
|
1,500,000 |
|
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
58,500 |
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,796,667 |
|
|
|
5,797 |
|
|
|
326,003 |
|
|
|
|
|
|
|
|
|
|
|
331,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
issued to officer
|
|
|
|
|
|
|
|
|
|
|
750,000 |
|
|
|
750 |
|
|
|
|
|
|
|
|
|
|
|
29,250 |
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for Settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000 |
|
|
|
600 |
|
|
|
35,400 |
|
|
|
|
|
|
|
|
|
|
|
36,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued to officers in
lieu of accrued salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,600,000 |
|
|
|
1,600 |
|
|
|
114,400 |
|
|
|
|
|
|
|
|
|
|
|
116,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,353,000 |
|
|
|
4,353 |
|
|
|
150,017 |
|
|
|
|
|
|
|
|
|
|
|
154,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,482,571 |
) |
|
|
(1,482,571 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2006
|
|
|
4,600 |
|
|
$ |
5 |
|
|
|
2,250,000 |
|
|
$ |
2,250 |
|
|
|
35,474,736 |
|
|
$ |
35,476 |
|
|
$ |
14,506,428 |
|
|
$ |
- |
|
|
$ |
(15,567,963 |
) |
|
$ |
(1,023,804 |
) |
Stmt of
Changes in Stockholders – 9
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONSOIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE PERIOD ENDED DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage
|
|
|
|
|
|
|
|
Preferred
Stock A
|
|
|
Preferred
Stock B
|
|
|
Common
Stock
|
|
|
|
|
|
Paid
in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Agreement
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2006
|
|
|
4,600 |
|
|
$ |
5 |
|
|
|
2,250,000 |
|
|
$ |
2,250 |
|
|
|
35,474,736 |
|
|
$ |
35,476 |
|
|
$ |
14,506,428 |
|
|
$ |
- |
|
|
$ |
(15,567,963 |
) |
|
$ |
(1,023,804 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,336,500 |
|
|
|
2,337 |
|
|
|
87,623 |
|
|
|
|
|
|
|
|
|
|
|
89,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Shares
issued to officers in
lieu of salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,485,000 |
|
|
|
1,485 |
|
|
|
71,865 |
|
|
|
|
|
|
|
|
|
|
|
73,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,912,001 |
|
|
|
7,912 |
|
|
|
255,504 |
|
|
|
|
|
|
|
|
|
|
|
263,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Sold Officers
|
|
|
|
|
|
|
|
|
|
|
750,000 |
|
|
|
750 |
|
|
|
|
|
|
|
|
|
|
|
14,250 |
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,855,390 |
|
|
|
1,855 |
|
|
|
35,252 |
|
|
|
|
|
|
|
|
|
|
|
37,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,462,222 |
|
|
|
2,462 |
|
|
|
46,782 |
|
|
|
|
|
|
|
|
|
|
|
49,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(776,374 |
) |
|
|
(776,374 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2007
|
|
|
4,600 |
|
|
$ |
5 |
|
|
|
3,000,000 |
|
|
$ |
3,000 |
|
|
|
51,525,849 |
|
|
$ |
51,527 |
|
|
$ |
15,017,704 |
|
|
|
- |
|
|
$ |
(16,278,007 |
) |
|
|
(1,205,771 |
) |
Stmt of
Cash Flows – 10
GENETHERA,
INC. AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
For
the period from
|
|
|
|
|
Year
End December 31,
|
|
|
October
5, 1998
|
|
|
|
|
2007
|
|
|
2006
|
|
|
(inception)
to
|
|
|
|
|
|
|
|
|
|
|
December
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(776,374 |
) |
|
$ |
1,482,571 |
|
|
$ |
(16,278,007 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
72,451 |
|
|
|
77,014 |
|
|
$ |
238,031 |
|
|
Compensation
in exchange for common stock
|
|
|
506,057 |
|
|
|
629,970 |
|
|
$ |
9,026,641 |
|
|
Beneficial
conversion feature
|
|
|
|
|
|
|
|
|
|
$ |
1,987,990 |
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
Decrease in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(61,467 |
) |
|
|
(90,990 |
) |
|
$ |
(129,734 |
) |
|
Accounts
receivable Related Parties
|
|
|
17,390 |
|
|
|
(17,390 |
) |
|
$ |
17,390 |
|
|
Reserve
for Uncollectible
|
|
|
- |
|
|
|
90,000 |
|
|
$ |
90,000 |
|
|
Inventory
|
|
|
- |
|
|
|
- |
|
|
$ |
- |
|
|
Prepaid
expenses
|
|
|
1,890 |
|
|
|
8,661 |
|
|
$ |
(110 |
) |
|
Other
assets
|
|
|
- |
|
|
|
9,736 |
|
|
$ |
7,278 |
|
|
Increase
in accounts payable and
accrued liabilites
|
|
|
221,461 |
|
|
|
417,669 |
|
|
$ |
1,588,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
adjustments
|
|
|
757,782 |
|
|
|
1,124,670 |
|
|
|
12,826,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(18,592 |
) |
|
|
(357,901 |
) |
|
|
(3,451,856 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
payments for the purchase of property
|
|
|
- |
|
|
|
- |
|
|
|
(299,072 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
overdraft
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Capital
contributed as equipment
|
|
|
|
|
|
|
|
|
|
|
272,376 |
|
|
Principal
payments on notes & leases payable
|
|
|
|
|
|
|
|
|
|
|
(240,119 |
) |
|
Payment
of lease payable
|
|
|
(12,040 |
) |
|
|
(2,311 |
) |
|
|
120,343 |
|
|
Payment
for Accrued Salaries
|
|
|
73,350 |
|
|
|
116,000 |
|
|
|
189,350 |
|
|
Proceeds
from issuance of stock
|
|
|
15,000 |
|
|
|
90,000 |
|
|
|
1,908,882 |
|
|
Proceeds
from loans payable
|
|
|
(57,751 |
) |
|
|
152,777 |
|
|
|
1,633,301 |
|
|
Proceeds
from Subscription Recievable
|
|
|
- |
|
|
|
|
|
|
|
100,040 |
|
|
Repurchase
of Common Stock
|
|
|
- |
|
|
|
|
|
|
|
(1,610 |
) |
|
Receipt
of APIC
|
|
|
- |
|
|
|
|
|
|
|
20,000 |
|
|
Payment
of Preferred Dividend
|
|
|
- |
|
|
|
|
|
|
|
(46,338 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
18,559 |
|
|
|
356,466 |
|
|
|
3,956,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash
|
|
|
(33 |
) |
|
|
(1,435 |
) |
|
|
205,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of year
|
|
|
234 |
|
|
|
1,669 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of year
|
|
$ |
201 |
|
|
$ |
234 |
|
|
$ |
201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for interest expense
|
|
$ |
- |
|
|
|
|
|
|
$ |
46,758 |
|
|
Cash
paid during the period for Taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
1 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 the “Company”)
GeneThera,
Inc., formerly known as Hand Brand Distribution, Inc., was incorporated in
November 1995, under the laws of the State of Florida. On February
25, 2002, GeneThera, Inc. acquired 100% of the outstanding shares of GeneThera,
Inc. (Colorado). A total of 16,611,900 shares of common stock were
issued for the acquisition. For accounting purposes, the acquisition has been
treated as a reversed merger and as a recapitalization of GeneThera, Inc.
(Colorado).
GeneThera,
Inc. (Colorado) is a biotechnology company that develops molecular assays for
the detection of food contaminating pathogens, veterinary diseases and
genetically modified organisms.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of
GeneThera, Inc. (Florida) and GeneThera, Inc. (Colorado). All
significant inter-company balances and transactions have been eliminated in
consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration risks are cash
and accounts receivable. At various times during the year, the
Company had deposits in excess of the federally insured limits. The
Company maintains its cash with high quality financial institutions, which the
Company believes limits these risks.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
1 SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES – continued
Related
Party Transactions
Setna
Holdings, LLC is a related party to the Company with a promissory note of
$150,801. Mr. Anthony J. Milici is the Managing Director of Setna Holdings. GTI
Corporate Transfer Agents, LLC is the Company’s transfer agent. After the death
of the original Managing Director, Ms. Juanita Pagan sometime in March 2006, Ms.
Tannya L. Irizarry became the Managing Director (Interim) of GTI Corporate
Transfer Agents, LLC with a one third ownership and/or interest.
Ms.
Irizarry is also the Chief Administrative Officer and Chief Financial Officer
(Interim) of the Company, hence making the accounts receivable transaction of
$17,390 to be a related party. GTI Corporate Transfer Agents LLC does not share
employer identification number with GeneThera, Inc. Elia, Inc. was paid 500,000
common shares in exchange for services rendered on May 2nd 2006.
Elia is partially owned by an independent contractor of GeneThera, Inc. Elia has
paid $78,202 of GeneThera, Inc. expenses in 2006.
Property
and Equipment
Property
and equipment are stated at cost. Equipment under capital leases is stated at
the present value of minimum lease payments. Depreciation is
calculated on a straight-line basis over the estimated useful lives of the
assets, which is 5 to 10 years. Betterments, which extend the life of
the asset, are capitalized, and maintenance and repairs are expensed as
incurred.
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
Our
Research and Development contracts are on a pre-paid basis in order to reflect
our milestones during the research investigation. Revenues from sales are
recognized when services are completed.
Loss
per Share
Basic
loss per share for each year is computed by dividing loss for the year by the
weighted average number of common shares outstanding during the
year. Diluted loss per share includes the effects of common stock
equivalents to the extent they are dilutive. At December 31, 2007 and 2006 all
common stock equivalents were anti-dilutive and therefore diluted loss per share
equaled basic loss per share. The total outstanding warrants of 597,826 and the
CEO exercisable option of 2,730,000 would be added into the weighted average
common shares if not anti-dilutive in calculating diluted loss per
share.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
1 SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES – continued
Fair
Value of Financial Instruments
The
respective carrying value of certain on-balance sheet financial instruments
approximated their fair value. These instruments include cash,
accounts receivable and accounts payable. Fair values were assumed to
approximated carrying values for these financial instruments since they are
short-term in nature and their carrying amounts approximate fair values or they
are receivable or payable on demand.
Net
Cash and Cash Equivalents
The
Company considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Recent
Accounting Pronouncements
In March
2005, the FASB issued FASB interpretation No. 47, “Accounting for Conditional
Asset Retirement Obligations” (“FIN 47”). FIN 47 provides guidance relating to
the identification of and financial reporting for legal obligations to perform
an asset retirement activity. The Interpretation requires recognition of a
liability for the fair value of a conditional asset retirement obligation when
incurred if the liability’s fair value can be reasonably estimated. FIN 47 also
defines when an entity would have sufficient information to reasonably estimate
the fair value of an asset retirement obligation. The provision is
effective no later than the end of fiscal years ending after December 15,
2005. The Company will adopt FIN 47 beginning the first quarter of
fiscal year 2006 and does not believe the adoption will have a material impact
on its consolidated financial position or results of operations or cash
flows.
In May
2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
(“SFAS 154”) which replaces Accounting Principles Board Opinions No. 20
‘Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim
Financial Statements –An Amendment of APB Opinion No. 28.” SFAS 154 provides
guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting
changes and a correction of errors made in fiscal years beginning after December
15, 2005 and is required to be adopted by the company in the first quarter of
2006. The Company is currently evaluating the effect that the
adoption of SFAS 154 will have on its results of operations and financial
condition but does not expect it to have a material impact.
In June
2005, the Emerging Issues Task Force, or EITF, reached a consensus on Issue
05-6, Determining the Amortization Period for Leasehold Improvements, which
requires that leasehold improvements acquired in a business combination or
purchased subsequent to the inception of a lease be amortized over the lesser of
the useful life of the assets or a term that includes renewals that are
reasonably assured at the date of the business combination or purchase. EITF
05-6 is effective for periods beginning after July 1, 2005. We do not
expect the provisions of this consensus to have a material impact on the
financial position, results of operations or cash flows.
In
February 2006, the FASB issued SFAS 155, Accounting for Certain
Hybrid Financial Instruments, which amends SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, and SFAS 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125.
SFAS 155
will be effective for the Company for all financial instruments issued or
acquired after the beginning its fiscal year ending December 31, 2006. The
Company not yet evaluated and determined the likely effect of SFAS 155 on future
financial statements.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
1 SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES – continued
In June
2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes - An Interpretation of FASB Statement No. 109, (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 also prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return that results in a tax benefit. Additionally, FIN 48 provides guidance
on de-recognition, income statement classification of interest and penalties,
accounting in interim periods, disclosure, and transition. This interpretation
is effective for the Company for its fiscal year ending December 31, 2007. The
Company has not yet evaluated the effect that the application of FIN 48 may
have, if any, on its future results of operations and financial
condition.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”. This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. This statement
applies under other accounting pronouncements that require or permit fair value
measurements. SFAS No. 157 is effective for the Company for its
fiscal year beginning on July 1, 2008. The Company is currently
assessing the impact the adoption of SFAS No. 157 will have on its financial
statements.
In
September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 in order
to eliminate the diversity of practice surrounding how public companies quantify
financial statement misstatements. In SAB 108, the SEC staff
established an approach that requires quantification of financial statement
misstatements based on the effects of the misstatements on each of the Company’s
financial statements and the related financial statement
disclosures. SAB No. 108 is effective for the Company for its current
fiscal year. The adoption of SAB No. 108 did not have an impact on
the Company’s financial statements.
On
February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115.” This standard permits an entity to measure many
financial instruments and certain other items at estimated fair
value. Most of the provisions of SFAS No. 115 (“Accounting for
Certain Investments in Debt and Equity Securities) apply to all entities that
own trading and available-for-sale securities. The fair value option
created by SFAS No. 159 permits an entity to measure eligible items at fair
value as of specified election dates. Among others, eligible
items exclude (1) financial instruments classified (partially or in total) as
permanent or temporary stockholders’ equity (such as a convertible debt security
with a non-contingent beneficial conversion feature) and (2) investments in
subsidiaries and interests in variable interests that must be
consolidated.
A
for-profit business entity will be required to report unrealized gains and
losses on items for which the fair value option has been elected in its
statements of operations at each subsequent reposting date. The
fair value option (a) may generally be applied instrument by instruments, (b) is
irrevocable unless a new elections date occurs, and (c) must be applied to the
entire instrument and not to only a portion of the instrument. SFAS
No. 159 is effective as of the beginning of the first fiscal year that begins
after November 15, 2007. The Company has not yet evaluated the effect
that the application of SFAS No. 159, may have, if any, on its future results of
operations and financial condition.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
2 ACCOUNTS
RECEIVABLE
The
Company has an outstanding Accounts Receivable to a related party as
follows:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Receivable
with no interest, due on demand, unsecured.
|
|
$ |
0 |
|
|
$ |
17,390 |
|
|
Less
current portion
|
|
|
(0 |
) |
|
|
(17,390 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
Accounts Receivable – related party
|
|
$ |
0 |
|
|
$ |
0 |
|
There was
no interest revenue related to this obligation for the years ended December 31,
2006 and 2005. This transaction is with a related party as an officer of
GeneThera, Inc. is a one-third owner of GTI Corporate Transfer Agents, LLC. GTI
paid GeneThera operations expenses in the beginning of 2006.
The
receivable of $90,000 for Xpention Genetics was written off to bad debt and
reserve for uncollectible debt.
NOTE
3 PROPERTIES AND
EQUIPMENT
Property
and equipment at December 31, 2007 and 2006 consisted of the
following:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Office
Equipment
|
|
$ |
84,344 |
|
|
$ |
84,344 |
|
|
Laboratory
Equipment
|
|
|
643,084 |
|
|
|
643,084 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
727,428 |
|
|
|
727,428 |
|
|
Less: Accumulated
Depreciation
|
|
|
(436,864 |
) |
|
|
(364,413 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
Property & Equipment
|
|
$ |
290,564 |
|
|
$ |
363,015 |
|
Depreciation
expense for the years ended December 31, 2007 and 2006 was $72,451 and $77,014,
respectively.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
4 LEASE
OBLIGATIONS
Operating
Leases
The
Company leases its office, warehouse, laboratory space and vehicle under
non-cancelable operating leases, which have initial terms in a month-to-month
basis. We sub-lease 700 square foot office space to GTI Corporate
Transfer Agents, LLC located on the 3924 unit of our lease space reflected as
3930 Youngfield Street, Suite #2, Wheat Ridge, CO 80033. The Lease is
on a month-to-month basis and the rent is $500.00 per month. The rent is paid
out in Common Stock.
Total
lease expense for the years ended December 31, 2007 and 2006 was $54,405, and
$62,823, respectively.
Capital
Leases
The
Company’s property under capital leases is included in property and equipment
(See Note 3) and is summarized as follows:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Laboratory
Equipment
|
|
$ |
31,574 |
|
|
$ |
31,574 |
|
|
Computer
|
|
|
2,672 |
|
|
|
2,672 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,246 |
|
|
|
34,264 |
|
|
Less: Accumulated
depreciation
|
|
|
(23,077 |
) |
|
|
(23,077 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
assets under capital leases
|
|
$ |
11,169 |
|
|
$ |
12,760 |
|
Future
annual minimum lease payments under these non-cancelable operating and capital
leases at December 31, 2007 were as follows:
|
|
|
Operating
|
|
|
Capital
|
|
|
|
|
Leases
|
|
|
Leases
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
0 |
|
|
|
0 |
|
|
2009
|
|
|
0 |
|
|
|
0 |
|
|
2010
and thereafter
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
|
0 |
|
|
Less
amount representing interest
|
|
|
|
|
|
|
0 |
|
|
Present
value of minimum lease payments
|
|
|
|
|
|
|
0 |
|
|
Less
current portion
|
|
|
|
|
|
|
(0 |
) |
|
|
|
|
|
|
|
|
|
|
|
Long-term
portion of capital lease payable
|
|
|
|
|
|
$ |
0 |
|
Total
interest expense, including late fees, under capital leases was $0 and $3,828
for the years ended December 31, 2007 and 2006, respectively.
NOTE
5 LOAN
PAYABLE
The
Company has an outstanding loan payable to a related party as
follows:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Loan
payable with no interest, due on demand, unsecured.
|
|
$ |
150,801 |
|
|
$ |
107,552 |
|
|
Less
current portion
|
|
|
(0 |
) |
|
|
(0 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
Current loan payable – related party
|
|
$ |
150,801 |
|
|
$ |
107,552 |
|
There was
no interest expense related to this obligation for the years ended December 31,
2007 and 2006. Setna Holdings is a shareholder and is managed by
Anthony J. Milici. Setna is advancing the company funds for their operational
expense until pending contracts are finalized.
NOTE
6 ACCRUED
EXPENSE
The
Company has an outstanding accrued expense to the party as
follows:
|
Antonio
Milici
|
|
$ |
517,187 |
|
|
Tannya
Irizarry
|
|
|
248,973 |
|
|
Steve
G
|
|
|
36,258 |
|
|
Sisu
Media
|
|
|
15,849 |
|
|
|
|
|
|
|
|
Total
Accrued Expense
|
|
$ |
818,267 |
|
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
7 STOCKHOLDERS’
EQUITY (DEFICIT)
Common
Stock Transactions
On
December 31, 2007, the Company authorized 100,000,000 shares of $.001 par value
common stock; 51,525,849 are outstanding at December 31, 2007.
In
January 2005, the Company issued 2,000 shares of common stock valued at $2,200
pursuant to conversion rights exercised by a holder.
In
January 2005, the Company cancelled 15,204 shares of common stock valued at
$15,960 from a consultant. Accordingly, $15,960 for consultant expense was
charged to operations.
In
January 2005, the Company cancelled 1,400 shares of common stock valued at
$1,610 from a consultant. Accordingly, $1,610 for consultant expense was charged
to operations.
In March
2005, the Company issued 1,475,000 shares valued at $1,489,999 to a marketing
consultant and resulted in an immediate charge to operations.
In March
2005, the Company issued 175,000 shares valued at $182,000 to two consultants
assisting the Company in the development of operations in Mexico and resulted in
immediate charges to operations.
In March
2005, the Company issued 45,000 shares valued at $46,350 to an officer in lieu
of salary and resulted in an immediate charge to operations.
In May
2005, the Company issued 45,000 shares valued at $27,000 to an officer in lieu
of salary and resulted in an immediate charge to operations.
In May
2005, the Company issued 17,000 shares of common stock valued at $12,580
pursuant to conversion rights exercised by a holder. In June 2005, the Company
issued 318,182 shares of common stock in exchange for 1,400 of its Series A
Preferred Stock.
In July
2005, the Company issued 15,000 shares of common stock valued at $12,300 to
employees and resulted in an immediate charge to operations.
In July
2005, the Company issued 400,000 shares valued at $296,000 to a marketing
consultant and resulted in an immediate charge to operations.
In March
2006, the Company issued 40,000 shares valued at $7,200 in settlement of a
lawsuit previously filed by OR Surgical and resulted in an immediate charge to
operations.
In March
2006, the Company issued 90,000 shares valued at $12,600 to two officers in lieu
of salary and resulted in an immediate charge to operations.
In May
2006, the Company issued 500,000 shares valued at $65,000 to a marketing
consulting group and resulted in an immediate charge to operations.
In May
2006, the Company issued 50,000 shares valued at $6,500 to consulting services
for lab work and resulted in an immediate charge to operations.
In June
2006, the Company issued 750,000 shares valued at $82,500 to consulting services
of operations and resulted in an immediate charge to operations.
In August
2006, the Company issued 2,130,000 shares valued at $131,800 to consulting
services of operations and resulted in an immediate charge to
operations.
In August
2006, the Company issued 625,000 shares valued at $37,500 to the line of credit
fees of operations and resulted in an immediate charge to
operations.
In
September 2006, the Company issued 3,041,667 shares valued at $162,500 to
consulting services of operations and resulted in an immediate charge to
operations.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
7 STOCKHOLDERS’ EQUITY
(DEFICIT) – continued
In
September 2006, the Company issued 600,000 shares valued at $36,000 to a
settlement and resulted in an immediate charge to operations.
In
September 2006, the Company issued 1,000,000 shares valued at $50,000 to lieu of
salary and resulted in an immediate charge to operations.
In
October 2006, the Company issued 2,400,000 shares valued at $96,750 to
consulting services of operations and resulted in an immediate charge to
operations.
In
November 2006, the Company issued 678,000 shares valued at $29,870 to consulting
services of operations and resulted in an immediate charge to
operations.
In
November 2006, the Company cancelled 200,000 shares valued at $10,000 to
consulting services.
In
December 2006, the Company issued 1,100,000 shares valued at $34,000 to
consulting services of operations and resulted in an immediate charge to
operations.
In
January 2007, the Company issued 1,100,000 shares valued at $33,000 to
consulting services of operations and resulted in an immediate charge to
operations.
In
February 2007, the Company issued 400,000 shares valued at $16,000 to consulting
services of operations and resulted in an immediate charge to
operations.
In March
2007, the Company issued 836,500 shares valued at $40,960 to consulting services
of operations and resulted in an immediate charge to operations.
In April
2007, the Company issued 1,399,706 shares valued at $59,835 to consulting
services of operations and resulted in an immediate charge to
operations.
In April
2007, the Company issued 1,440,000 shares valued at $.05/share, $72,000 for lieu
salary.
In May
2007, the Company issued 5,295,331 shares valued at $160,356 to consulting
services of operations and resulted in an immediate charge to
operations.
In May
2007, the company issued 45,000 shares valued at S.03/share, $1,350 for lieu of
salary.
In June
2007, the company issued 1,216,964 shares valued at $43,225 to consulting
services of operations and resulted in an immediate charge to
operations.
In July
2007, the company issued 534,928 shares valued at $10,699 to consulting services
of operations and resulted in an immediate charge to operations.
In August
2007, the company issued 738,438 shares valued at $14,769 to consulting services
of operations and resulted in an immediate charge to operations.
In
September 2007, the company issued 582,024 shares valued at $11,640 to
consulting services of operations and resulted in an immediate charge to
operations.
In
October 2007, the company issued 1,211,347 shares valued at 24,226 to consulting
services of operations and resulted in an immediate charge to
operations.
In
November 2007, the company issued 523,526 shares valued at 10,471 to consulting
services of operations and resulted in an immediate charge to
operations.
In
December 2007, the company issued 727,349 shares valued at 14,547 to consulting
services of operations and resulted in an immediate charge to
operations.
Preferred
Stock
On
December 31, 2007, the Company authorized 20,000,000 shares of $0.001 par value
preferred stock; 4,600 shares of Series A, Convertible Preferred Stock (“Series
A”) and 3,000,000 Shares of Series B, Convertible Preferred Stock (“Series B”)
were issued and outstanding at December 31, 2007.
Preferred
Stock (“Series A”) shall be convertible into Common Stock any time at the
holder’s sole discretion in part or in whole by dividing the Purchase Price per
Share by a price (the “Conversion Price”) equal to 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 Company’s
common stock during the 15 immediately preceding trading days.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
7 STOCKHOLDERS’ EQUITY
(DEFICIT) – continued
Common
Stock – continued
Pursuant
to the Registrant's Certificate of Designation establishing the Series B
Preferred Stock, each share of the currently issued and outstanding Series B
Preferred Stock may be converted into ten (10) fully paid and non-assessable
shares of the Registrant's common stock. On all matters submitted to a vote of
the holders of the common stock, including, without limitation, the election of
directors, a holder of shares of the Series B Preferred Stock is entitled to the
number of votes on such matters equal to the number of shares of the Series B
Preferred Stock held by such holder multiplied by twenty (20).
On
January 18, 2005, the Company issued 11,000 shares of its Series A Preferred
Stock to Mercator Momentum Fund, LP, Mercator Momentum Fund III, LP and Monarch
Pointe Fund, Ltd. (the “Purchasers”), for $100 per share, or an aggregate of
$1,100,000. The Company also issued warrants to purchase an aggregate
of 597,826 shares of common stock at an exercise price of $0.92 per share, in
consideration for the aggregate proceeds of $1,100,000 to the Purchasers and
Mercator Advisory Group, LLC, an affiliate of the Purchasers. In
connection with the sale of the shares, the Company paid a due diligence fee of
$88,000 and legal expenses of $10,000 to Mercator Advisory Group,
LLC. All warrants expire on January 18, 2008.
In June
2005, 1,400 shares of Series A Preferred Stock were cancelled and converted into
318,182 common shares of the company.
In July
2005, 5,000 shares of Series A Preferred Stock were cancelled and converted into
1,086,957 common shares of the company. The
adjustment to shareholder equity was due to the reclassification in common stock
in the amount of 49,658.
On May 5,
2006, GeneThera, Inc. (the "Registrant") entered into a subscription agreement
and issued 1,500,000 shares of the Registrant's Series B convertible, preferred
stock, par value $0.001 per share (the "Series B Preferred Stock"), to Antonio
Milici, Registrant's Chief Executive Officer and Chairman of the Board of
Directors. The Series B Preferred Stock was issued to Dr. Milici for cash
consideration of $.04, per share, or an aggregate of Sixty Thousand ($60,000)
Dollars.
On
September 1, 2006, GeneThera, Inc. (the "Registrant") entered into a
subscription agreement and issued 750,000 shares of the Registrant's Series B
convertible, preferred stock, par value $0.001 per share (the "Series B
Preferred Stock"), to Tannya L. Irizarry, Registrant's Chief Administrative
Officer. The Series B Preferred Stock was issued to Ms. Irizarry for cash
consideration of $.04, per share, or an aggregate of Thirty Thousand ($30,000)
Dollars.
In April
2007, the company issued 750,000 preferred B shares valued at $.06/share to
adjust 9/1/06 issued Preferred Stock. To Tannya L. Irizarry, Registrant’s Chief
Administrative officer.
Warrants
The
Company has warrants to purchase an aggregate of 597,826 shares of common stock
at an exercise price of $0.92 per share outstanding at December 31, 2007.
Warrants expire on January 18th
2008.
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELPOMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
7 STOCKHOLDERS’ EQUITY
(DEFICIT) – continued
Summary
of Warrant activity
|
|
Warrants-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
Warrants
exercisable-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
Outstanding
December 31, 2004
|
0
|
|
|
|
|
|
|
|
Granted (1)
|
597,826
|
|
$0.92
|
|
597,826
|
|
$0.92
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2005
|
597,826
|
|
$0.92
|
|
597,826
|
|
$0.92
|
|
Granted
|
0
|
|
|
|
0
|
|
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2006
|
597,826
|
|
$0.92
|
|
597,826
|
|
$0.92
|
|
Granted
|
0
|
|
|
|
0
|
|
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2007
|
597,826
|
|
$0.92
|
|
597,826
|
|
$0.92
|
(1) In
January of 2005, we issued 597,826 warrants to MAG Capital and three affiliated
parties of MAG Capital as part of a $1.1 million convertible note. The warrants
carried a term of 3 years and subsequently expired in January of
2008.
|
|
|
Warrants
outstanding
|
|
|
|
Warrants
exercisable
|
|
Range
of Warrant
Exercise
Price
|
|
Warrants-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
as
of 12/31/2007
|
|
Warrants-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
$0.92
|
|
597,826
|
|
$0.92
|
|
.083
years
|
|
597,826
|
|
$0.92
|
Option grant
summary
|
|
Options-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
Options
exercisable-
Common
share equivalents
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding
December 31, 2003
|
0
|
|
|
|
|
|
|
|
Granted
(2)
|
1,450,000
|
|
$0.25
|
|
1,450,000
|
|
$0.25
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2004
|
1,450,000
|
|
$0.25
|
|
1,450,000
|
|
$0.25
|
|
Granted (3)
|
1,280,000
|
|
$0.44
|
|
1,280,000
|
|
$0.44
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2005
|
2,730,000
|
|
$0.34
|
|
2,730,000
|
|
$0.34
|
|
Granted
|
0
|
|
|
|
0
|
|
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2006
|
2,730,000
|
|
$0.34
|
|
2,730,000
|
|
$0.34
|
|
Granted
|
0
|
|
|
|
0
|
|
|
|
Exercised
|
0
|
|
|
|
0
|
|
|
|
Outstanding
December 31, 2007
|
2,730,000
|
|
$0.34
|
|
2,730,000
|
|
$0.34
|
|
|
|
Options outstanding
|
|
|
|
Options
exercisable
|
|
Range
of Option
Exercise
Price
|
|
Options-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
as
of 12/31/2007
|
|
Options-
Common
Share Equivalents
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.25
|
|
1,780,000
|
|
$0.25
|
|
3.33
|
|
1,780,000
|
|
$0.25
|
|
$0.50
|
|
950,000
|
|
$0.50
|
|
2.25
|
|
950,000
|
|
$0.50
|
|
Total
|
|
2,730,000
|
|
$0.34
|
|
|
|
2,730,000
|
|
$0.34
|
|
|
(1)Issued
pursuant to 2004 Senior Officer Option Plan. These options were
subsequently recalculated after the Company’s reverse stock split made
effective in July 2008. Outstanding options under this plan are now 290 at
an exercise price of $1250.
|
|
|
(2)Issued
pursuant to 2005 Employee, Director, and Consultant Option Plan. These
options were subsequently recalculated after the Company’s reverse stock
split in July 2008. Outstanding options under this plan after the split
were 66 at $1250 and all expired in September
2008.
|
|
|
(3)Issued
pursuant to 2005 Employee, Director, and Consultant Option Plan. These
options were subsequently recalculated after the Company’s reverse stock
split in July 2008. Outstanding options under this plan after the split
were 190 at $2500 and expire in September
2010.
|
GENETHERA,
INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
NOTE
8 INCOME
TAXES
The
Company has no current or deferred income tax due to its operating
losses.
The
Company has a federal net operating loss carry forward at December 31, 2007 and
2006 of approximately $16,278,007 and $15,567,963, respectively, subject to
annual limitations prescribed by the Internal Revenue Code, that are available
to offset future taxable income through 2025. A 100% valuation
allowance has been recorded to offset the net deferred taxes due to uncertainty
of the Company’s ability to generate future taxable income.
NOTE
9 CONTINGENCIES
The
Company is involved in claims arising during the ordinary course of business
resulting from disputes with vendors and shareholders over various contracts and
agreements. While the ultimate outcome of these matters has yet to be
determined, management has included a provision for these claims based on known
facts and circumstances as of December 31, 2007 in the amount of
$55,000.
NOTE
10 GOING-CONCERN
UNCERTAINTY
These
financial statements are presented assuming the Company will continue as a going
concern. For the years ended December 31, 2007 and 2006, the Company
showed operating losses of $776,374 and $1,482,570, respectively. The
accompanying financial statements indicate that current liabilities exceed
current assets by $1,501,613 and $1,392,097 at December 31 2007 and 2006,
respectively.
These
factors raise substantial doubt about its ability to continue as a going
concern. Management’s plan with regard to these matters includes
raising working capital and significant assets and resources to assure the
Company’s viability, through private or public equity offering, and/or debt
financing, and/or through the acquisition of new business or private ventures.
The Company will bring in contract work and start the operation in Mexico to
bring in revenue.
NOTE
11 RESEARCH AND
DEVELOPMENT COSTS
All
research and development costs are charged to expense when
incurred. The following table illustrates the types of expenses
imbedded in the financial statements as costs related to laboratory research,
formulation, and design and testing of products and processes as related to the
business plan.
|
|
|
2007
|
|
|
2006
|
|
|
Consulting
|
|
$ |
0 |
|
|
$ |
0 |
|
|
Salaries
|
|
|
144,000 |
|
|
|
144,000 |
|
|
Lease
expense
|
|
|
63,217 |
|
|
|
63,217 |
|
|
Depreciation
|
|
|
11,751 |
|
|
|
11,751 |
|
|
Lab
expenses
|
|
|
255 |
|
|
|
39,592 |
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$ |
219,223 |
|
|
$ |
258,560 |
|
ITEM
9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Since
March 15, 2006, our auditors are Jaspers + Hall, P.C. On November 9, 2008, after
the PCAOB Registration was revoked from Jaspers + Hall, PC, the auditor
re-auditing this annual report is W.T. Uniack & Co. CPA’s, P.C.
ITEM
9A CONTROLS AND PROCEDURES
As
required by Rule 13a-15 under the Securities Exchange Act of 1934 (The “Exchange
Act”), we carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures within the 90 days prior to
the filing date of this report. This evaluation was carried out under
the supervision and with the participation of our Chief Executive Officer,
Consulting Chief Financial Officer, and Controller. We concluded that our
internal controls are ineffective. We will be working on them to improve its
effectiveness.
There
will be significant changes in our internal controls and in other factors that
will definitely affect internal controls positively subsequent to the date we
carried out our evaluation.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted 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. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure.
PART
III.
ITEM
10 DIRECTORS, OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(a) OF THE EXCHANGE ACT
DIRECTORS
AND EXECUTIVE OFFICERS
The
following persons are currently serving as the Company’s executive officers and
directors.
|
Name
|
Age
|
Positions
|
|
|
|
|
|
Dr.
Antonio Milici
|
53
|
Chairman
of the Board, Chief Executive Officer and
|
|
|
|
Chief
Scientific Officer
|
|
|
|
|
|
Tannya
L. Irizarry
|
48
|
Chief
Financial Officer (Interim)
|
|
|
|
|
|
Dr.
Thomas G. Slaga
|
63
|
Director
|
Dr. Antonio Milici founded
GeneThera, Inc. in 1999 and has served as its Chairman and CEO since
inception. Prior to founding GeneThera, Dr. Milici served as CEO and
President of Genetrans, Inc., a genetic diagnostic company from 1993 to
1998. Dr. Milici was also an assistant professor in the department of
Molecular Pathology at the University of Texas M.D. Anderson Cancer
Center.
Tannya L. Irizarry has served
as Chief Administrative Officer since 1999. She is now serving as
Chief Financial Officer (Interim). Ms. Irizarry has over 20 years of
experience in medical technology and biotechnology industries. Ms.
Irizarry worked at the University of Texas M.D. Anderson Cancer Center in the
department of Neuro-Oncology with Dr. William S. Fields and the Office of
Education with Dr. James Bowen; St. Joseph Hospital in the biotechnology
division. Ms. Irizarry was the Vice President of Genetrans, Inc. from
1994 to 1998. Ms. Irizarry relocated to Colorado in order to manage
GeneThera, Inc. at the request of Dr. Milici.
Dr. Thomas Slaga has served on
GeneThera’s Board of Directors since 2003. Dr. Slaga has investigated
cancer causation and prevention for more than 35 years. He held a
position as Scientific Director of the AMC Cancer Research Center in Denver,
Colorado since 1999 until 2005. He chairs the Center for Cancer
Causation and Prevention at AMC and also serves as Deputy Director of the
University of Colorado Cancer Center. Previously, from 1983 to 1997,
he served as Director of the Science Park – Research Division of The University
of Texas M.D. Anderson Cancer Center. Dr. Slaga was co-founder of
Molecular Carcinogenesis in 1987 and served as editor-in-chief until early
2003. Since June 2005, Dr. Slaga was appointed Director of The Cancer
Institute at the University of Texas in San Antonio.
Each
Director is elected at the Company’s annual meeting of shareholders and holds
office until the next annual meeting of shareholders, or until the successors
are elected and qualified. At present, the Company’s bylaws provide
for not less than three or more than seven Directors. Currently, we
have two Director Positions. The bylaws permit the Board of Directors
to fill any vacancy and such Director may serve until the next Annual Meeting of
Shareholders or until his successor is elected and
qualified. Officers are elected by the Board of Directors and their
terms of office are, except to the extent governed by employment contracts, at
the discretion of the Board. The officers of the Company devote full
time to the business of the Company.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our Executive
Officers, Directors and 10% Shareholders to file reports regarding initial
ownership and changes in ownership with the SEC. Executive Officers,
Directors, and 10% Shareholders are required by SEC regulations to furnish us
with copies of all Section 16(a) forms they file. Our information
regarding compliance with Section 16(a) is based solely on a review of the
copies of such reports furnished to us by our Executive Officers, Directors and
10% Shareholders. These forms include (i) Form 3, which is the
Initial Statement of Beneficial Ownership of Securities, (ii) Form 4, which is a
Statement of Changes in Beneficial Ownership, and (iii) Form 5, which is an
Annual Statement of Changes in Beneficial Ownership.
The
Company has recently adopted a Code of Ethics applicable to its principal
executive officer, principal financial officer, and principal accounting
officer. Our Code of Ethics can be obtained by calling the Company at
303-463-6371.
ITEM
11 EXECUTIVE COMPENSATION
The
following table sets forth certain summary information for the fiscal year ended
December 31, 2007, concerning the compensation awarded to, earned by, or paid to
those persons serving as executive officers during fiscal year
2007.
SUMMARY
COMPENSATION TABLE
The
following table sets forth certain summary information for the fiscal year ended
December 31, 2007, concerning the compensation awarded to, earned by, or paid to
those persons serving as executive officers during fiscal year 2006, that served
as our Chief Executive Officer or earned compensation in excess of $100,000 (the
“Names Executive Officers”). No other executive officer of the
Company had a total annual salary and bonus for 2007 that exceeded
$100,000. Antonio Milici, M.D., Ph.D., and Tannya L. Irizarry were
the only executive officers during the fiscal year ended December 31,
2007.
The
following table summarizes compensation earned in each of the last three fiscal
years by the named officers.
Summary
Compensation Table
The
following table summarizes the annual and long-term compensation paid to Dr.
Tony Milici, our chief executive officer. Except for Dr. Milici, no
other executive officer received annual remuneration in excess of $100,000
during 2006 or 2007. This summary compensation table shows certain compensation
information for services rendered in all capacities during each of the last two
completed fiscal years.
|
Name and Principal Position
|
|
Year
|
|
Salary
$
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change
in
Pension
Value
and
Non-Qualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
Dr.
Tony Milici
|
|
2006
|
|
$ |
144,000 |
(1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
144,000 |
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2007
|
|
|
144,000 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tannya
Irizarry
|
|
2006
|
|
|
90,000 |
|
|
|
|
|
|
45,000
Restricted
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000 |
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
90,000 |
|
|
|
- |
|
|
45,000
Restricted
Shares
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
135,000 |
|
No other
officer or director received in excess of $100,000 for the years ending December
31, 2007 and December 31, 2006.
(1) and
(2) Dr. Milici’s salaries for years indicated have been accrued but not
paid.
The
Company provides Dr. Milici with a company car and reimburses him for fuel
costs.
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
On
January 23, 2002, the Company entered into an employment agreement with Antonio
Milici, M.D., Ph.D., to serve as the Chief Executive Officer and Chief
Scientific Officer of the Company through January 7, 2012. Unless either party
gives notice to terminate the agreement at least thirty days prior to expiration
of the agreement, the agreement will automatically be extended for an additional
two year period. In consideration for his services, Dr. Milici receives a base
salary of $144,000 per annum throughout the term of the agreement plus bonuses
as may be determined by the Compensation Committee of the Board of Directors in
its discretion or if the Company achieves net income in excess of $2,000,000 per
year. As part of his employment agreement, Dr. Milici has agreed not
to compete with the Company, solicit any of its customers or solicit any of its
employees for a period of two years after the term of the
agreement. Dr. Milici is also subject to confidentiality obligations
in favor of the Company and has agreed to transfer to the Company all of his
interests in any idea, concept, technique, inventory or written work developed
by him during the term of his employment agreement. The Company also provides a
company vehicle and gas allowance for him and his scientific
consultants.
No
director received compensation for his services to the
Company.
ITEM
12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDERS MATTERS
The
following table sets forth certain information concerning the beneficial
ownership of our outstanding classes of stock as of December 31, 2007 by each
person known by us to be (i) the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each current director and nominee,
(iii) each of the executive officers who were serving as executive officers at
the end of the December 31, 2007 fiscal year and (iv) all of our directors and
current executive officers as a group. Unless otherwise indicated below, to our
knowledge, all persons listed below have sole voting and investment power with
respect to their shares of common stock except to the extent that authority is
shared by spouses under applicable law. The calculation of percentage
ownership for each listed beneficial owner is based upon the number of shares of
common stock issued and outstanding on December 31, 2007, plus shares of common
stock subject to options, warrants and conversion rights held by such person on
December 31, 2007, and exercisable or convertible within 60 days
thereafter.
The
following table shows, as of December 31, 2007, the common stock owned
beneficially by (i) each person known by us to be the beneficial owner of more
than five percent of our Common Stock, (ii) each of our directions, (iii) each
of our executive officers, and (iv) all of our directors and executive officers
as a group. Unless otherwise indicated, the address of each person or
entity named below is c/o GeneThera, Inc., 3930 Youngfield Street, Wheat Ridge,
Colorado 80033.
|
Name
of Beneficial Owner
|
|
|
Number
of Shares
Beneficially
Owned (1)
|
|
|
Percent
of Class
|
|
|
Five
Percent Shareholders:
|
|
|
|
|
|
|
|
Elmer
McNece, Jr.
|
|
|
6,670,000 |
|
|
|
12.94 |
% |
|
Knight
Equity Markets, LP
|
|
|
6,204,528 |
|
|
|
12.04 |
% |
|
Directors
and Executive Officers:
|
|
|
|
|
|
|
|
|
|
Dr.
Antonio Milici (2)
|
|
|
10,068,339 |
|
|
|
19.54 |
% |
|
Tannya
L. Irizarry
|
|
|
735,000 |
|
|
|
1.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
All
Directors and Executive Officers as a Group (two persons):
|
|
|
10,803,339 |
|
|
|
21.0 |
% |
|
(1)
|
This
table is based upon information supplied by officers, directors and
principal shareholders and Schedules 13D and 13G filed with the SEC.
Unless otherwise indicated in the footnotes to this Table and
subject to community property laws where applicable, the Company believes
that each of the shareholders named in this Table has sole voting and
investment power with respect to the shares indicated as beneficially
owned. Applicable percentages are based on 51,525,849 shares of common
stock outstanding on December 31, 2007, adjusted as required by rules
promulgated by the SEC.
|
|
(2)
|
Includes
300,000 shares subject to operations exercisable within 60 days of
December 31, 2007.
|
SERIES
B PREFERRED STOCK
|
|
|
Common
Stock
Beneficially
Owned (2)
|
|
|
Voting
Preferred Stock
Beneficially
Owned (2)
|
|
|
Name
of Beneficial Owner (1)
|
|
Number
|
|
|
Percent
|
|
|
Number
|
|
|
Percent
|
|
|
Antonio
Milici
|
|
|
10,068,339 |
|
|
|
19.54 |
% |
|
|
1,500,000 |
|
|
|
50 |
|
|
Tannya
L. Irizarry (3)
|
|
|
735,000 |
|
|
|
1.43 |
% |
|
|
1,500,000 |
|
|
|
50 |
|
|
All
Directors and Officers as a Group (2 persons)
|
|
|
10,803,339 |
|
|
|
21.00 |
% |
|
|
3,0000,000 |
|
|
|
100 |
|
|
(1)
|
This
table is based upon information supplied by officers, directors, and
principal shareholders and documents filed with the SEC. Unless
otherwise indicated and subject to community property laws, if applicable,
the Company believes that each of the shareholders named in this table has
sole voting and investment power with respect to the shares indicated as
beneficially owned.
|
|
(2)
|
Applicable
percentages are based on 51,525,849 shares of common stock outstanding and
on 3,000,000 shares of Series B Preferred Stock outstanding on December
31, 2007, adjusted as required by rules promulgated by the SEC.
Although the Series A Preferred Stock is convertible into
approximately 7.2 million shares of our common stock (assuming all shares
were converted as of the date of this prospectus), this Table does not
give effect to the Series A Preferred
Stock because these shares have no voting rights and their convertibility
by the holder is currently being contested by the
Company.
|
|
(3)
|
Ms.
Irizarry is married to Dr. Antonio Milici. Therefore, she has a
beneficial interest in his
shares.
|
ITEM
13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERIES
A PREFERRED STOCK FINANCING
On
January 18, 2005, we issued 11,000 shares of our Series A Preferred Stock to
Mercator Momentum Fund, LP, Mercator Momentum Fund III, LP, and Monarch Pointe
Fund, Ltd. (the “Purchasers”), for $100 per share, or an aggregate of
$1,100,000. We also issued warrants to purchase an aggregate of
597,826 shares of common stock at an exercise price of $0.92 per share, in
consideration for the aggregate proceeds of $1,100,000 to the Purchasers and
Mercator Advisory Group, LLC, an affiliate of the Purchasers. The
warrants became exercisable on January 18, 2005, and are exercisable for three
years from their date of issuance. The warrants were never exercised.
We paid a due diligence fee of $88,000 and legal expenses of $10,000 to Mercator
Advisory Group, LLC.
The
Series A Preferred Stock is convertible into the Company’s common stock at an
initial conversion price of $1.01, subject to adjustment. If, at any
time after March 14, 2005, the market price (i.e., the average of the lowest
three intra-day trading prices of the Company’s common stock during the 15
trading days immediately preceding the conversion date) is less than $1.11, then
the conversion price of the Series A Preferred Stock is 80% of the market price
on the date of such conversion. If an “Event of Default” as defined
in the subscription agreement under which the Purchasers bought the Series A
Preferred Stock occurs (e.g., bankruptcy, failure to timely file the
registration statement, failure of such registration statement to be timely
declared effective), the conversion price of the Series A Preferred Stock is
reduced by 10%. The Series A Preferred Stock pays a per share monthly
dividend equal to $100 multiplied by the prime rate (as reported in the Wall
Street Journal) plus 2.5% to the extent that funds are lawfully
available. The Series A Preferred Stock has sole preference of
priority at par in liquidation over our common stock and any subsequent series
of preferred stock.
In
connection with the issuance of the Series A Preferred Stock and warrants, we
agreed to file a registration statement with the U.S. Securities and Exchange
Commission (“SEC”) registering the shares of common stock issuable upon
conversion of the preferred stock and exercise of the warrants, and to use
diligent efforts to have the registration statement declared effective within
120 days after the initial filing of the registration
statement. Under the terms of the agreements with the Purchasers, the
ownership of our common stock by the Purchasers will not exceed 9.99% of the
total outstanding shares at any one time. In addition, the Purchasers
agreed not to sell, in any trading day, shares of our common stock in excess of
20% of the total shares traded on such trading day.
SERIES
B PREFERRED STOCK FINANCING
|
|
|
Common
Stock
Beneficially
Owned (2)
|
|
|
Voting
Preferred Stock
Beneficially
Owned (2)
|
|
|
Name
of Beneficial Owner (1)
|
|
Number
|
|
|
Percent
|
|
|
Number
|
|
|
%
|
|
|
Antonio
Milici (3)
|
|
|
10,068,339 |
|
|
|
19.54 |
|
|
|
1,500,000 |
|
|
|
50.0 |
|
|
Tannya
L. Irizarry (4)
|
|
|
735,000 |
|
|
|
1.43 |
|
|
|
1,500,000 |
|
|
|
50.0 |
|
|
All
Directors and Officers as a Group (2 persons)
|
|
|
10,803,339 |
|
|
|
21.0 |
|
|
|
3,000,000 |
|
|
|
100.0 |
|
|
(1)
|
This
table is based upon information supplied by officers, directors, and
principal shareholders and documents filed with the SEC. Unless
otherwise indicated and subject to community property laws, if applicable,
the Company believes that each of the shareholders named in this table has
sole voting and investment power with respect to the shares indicated as
beneficially owned.
|
|
(2)
|
Applicable
percentages are based on 24,325,069 shares of common stock outstanding and
on 1,500,000 shares of Series B Preferred Stock outstanding on June 30,
2006, adjusted as required by rules promulgated by the
SEC. Although the Series A Preferred Stock is convertible into
approximately 7.2 million shares of our common stock (assuming all shares
were converted as of the date of this prospectus), this Table does not
give effect to the Series A Preferred Stock because these shares have no
voting rights and their convertibility by the holder is currently being
contested by the Company.
|
|
(3)
|
On
June 15, 2006, Dr. Milici owns 1,500,000 shares of our Series B Preferred
Stock. Dr. Milici is our Chief Executive Officer and Chairman
of the Board. He owns 10,068,339 shares of our common
stock. Pursuant to our Certificate of Designation establishing
the Series B Preferred Stock, each share of our currently issued and
outstanding Series B Preferred Stock may be converted into ten fully paid
and non-assessable shares of our common stock. On all matters
submitted to a vote of the holders of the common stock, including, without
limitation, the election of directors, a holder of shares of the Series B
Preferred Stock shall be entitled to the number of votes on such matters
equal to the number of shares of the Series B Preferred Stock held by such
holder multiplied by twenty (20). Therefore, Dr. Milici will
have the power to vote 40,068,339 shares, effectively giving him absolute
voting control of the Company.
|
|
(4)
|
Ms.
Irizarry is married to Dr. Antonio Milici. Therefore, she has a
beneficial interest in his shares.
|
MARKETING
CONSULTANT
In March
2007 we entered into a consulting agreement with The Mezey Howarth Group (the
“Marketing Consultant”) pursuant to which the Marketing Consultant agreed to
provide us with Investor Relations. In June 2007, the marketing consultant was
terminated. Currently, the Company is in the process of signing a consulting
agreement as a marketing consultant with JR Dopkin & Associates from New
York. On February 29th, 2008,
the Company signed a consulting agreement as a marketing consultant with Jack
Craig from Florida. They will both work together as marketing/Investor Relations
consultants.
ITEM
14 PRINCIPAL ACCOUNTING FEESAND SERVICES
AUDIT
FEES
The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by our principal accountant for the audit of the Company’s
annual financial statements and review of financial statements included in the
registrant’s Form 10-Q was as follows:
AUDIT-RELATED
FEES
The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by our principal accountant that are reasonably related to the
performance of the audit and not reported in Audit Fees was $-0-.
TAX
FEES
The
aggregate fees billed in each of the last two fiscal years for services rendered
by our principal accountant for tax compliance, tax advice, and tax planning was
$-0-.
ALL
OTHER FEES
The
aggregate fees billed in each of the last two fiscal years for products and
services provided by our principal accountant other than those described above
was $-0-.
The
Company’s audit committee, which consists of all directors, approved the
services described above.
ITEM
15 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
EXHIBITS
The
following documents are filed herewith or have been included as exhibits to
previous filings with the SEC and are incorporated herein by this
reference:
|
EXHIBIT
|
DESCRIPTION OF
DOCUMENT
|
|
|
|
|
3.1
|
Articles
of Incorporation of GeneThera, Inc., as amended in the State of Nevada.
(6)
|
|
|
|
|
3.2
|
Bylaws,
as amended. (2)
|
|
|
|
|
3.3
|
State
of Incorporation in the State of Nevada
|
|
|
|
|
10.1
|
Form
of Common Stock Purchase Agreement among GeneThera, Inc. and various
original holders of the common stock of GeneThera, Inc.
(1)
|
|
|
|
|
10.2
|
Form
of Letter Agreement between GeneThera, Inc. and various original holders
of the Common Stock of GeneThera, Inc. (2)
|
|
|
|
|
10.3
|
Employment
Agreement dated as of January 23, 2002 between Antonio Milici, MD, PhD and
GeneThera, Inc. (2)
|
|
|
|
|
10.4
|
Letter
of Intent dated November 6, 2003 between Oncology Sciences Corporation and
GeneThera, Inc. (3)
|
|
|
|
|
10.5
|
Research
Consulting Agreement between Xpention Genetics, Inc. and GeneThera,
Inc.
|
|
|
|
|
10.6
|
Placement
Agent Agreement dated as of May 31, 2004 between Invest Line Securities,
LLC and GeneThera, Inc. (4)
|
|
|
|
|
10.7
|
Letter
Agreement dated November 22, 2003 between NVO Solutions, Inc. and
GeneThera, Inc. (4)
|
|
|
|
|
10.8
|
Resolution
Agreement dated August 2004 by and among John Taggart, Family Health News,
Inc., and GeneThera, Inc. 4)
|
|
|
|
|
10.9
|
GeneThera,
Inc. 2004 Employee, Director, and Consultant Stock Option Plan
(6)
|
|
|
|
|
10.10
|
GeneThera,
Inc. 2004 Senior Executive Officer Option Plan. (6)
|
|
|
|
|
10.11
|
Subscription
Agreement dated as of January 18, 2005 by and between GeneThera, Inc.,
Mercator Advisory Group, LLC, Mercator Momentum Fund, LP, Mercator
Momentum Fund III, LP, and Monarch Pointe Fund, Ltd.
(5)
|
|
|
|
|
10.12
|
Registration
Rights Agreement dated as of January 18, 2005 by and between GeneThera,
Inc., Mercator Advisory Group, LLC, Mercator Momentum Fund, LP, Mercator
Momentum Fund III, LP, and Monarch Pointe Fund, Ltd.
(5)
|
|
|
|
|
10.13
|
Warrant
to Purchase Common Stock issued to Mercator Advisory Group, LLC.
(5)
|
|
10.14
|
Warrant
to Purchase Common Stock issued to Mercator Momentum Fund, LP.
(5)
|
|
|
|
|
10.15
|
Warrant
to Purchase Common Stock issued to Mercator Momentum Fund III, LP.
(5)
|
|
|
|
|
10.16
|
Warrant
to Purchase Common Stock issued to Monarch Pointe Fund, Ltd.
(5)
|
|
|
|
|
10.17
|
Industrial
Multi-Tenant Lease dated December 4, 2001 between Youngfield Plaza LLC and
GeneThera, Inc. (4)
|
|
|
|
|
10.18
|
Amendment
to Industrial Multi-Tenant Lease dated December 12, 2004 between
Youngfield Plaza LLC and GeneThera, Inc. (6)
|
|
|
|
|
10.19
|
Strategic
Alliance Agreement dated November 1, 2004 between G. Gekko Enterprises and
GeneThera, Inc. (6)
|
|
|
|
|
10.20
|
Securities
Purchase Agreement dated November 8, 2004 between G. Gekko Enterprises and
GeneThera, Inc. (6)
|
|
|
|
|
10.21
|
Letter
Agreement dated March 1, 2005 between 0711005 B.C. Ltd and GeneThera, Inc.
(6)
|
|
|
|
|
10.22
|
Mutual
Release and Settlement Agreement dated March 1, 2005 between J.P. Turner
& Company, L.L.C. and GeneThera, Inc. (6)
|
|
|
|
|
21.1
|
List
of Subsidiaries. (6)
|
|
|
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant To Section 302 Of The Sarbanes-Oxley
Act Of 2002
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant To Section 302 Of The Sarbanes-Oxley
Act Of 2002
|
|
|
|
|
32.1
|
Certification
Of The President And The Chief Executive Officer Pursuant To 18 U.S.C.
Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act
Of 2002
|
|
|
|
|
32.2
|
Certification
Of The Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As
Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of
2002
|
|
|
|
|
99.1
|
Curriculum
Vitae. (4)
|
|
(1)
|
Incorporated
by reference to our Current Report on Form 8-K, as filed with the
Commission on March 5, 2002.
|
|
(2)
|
Incorporated
by reference to our Annual Report on Form 10-Q, as filed with the
Commission on June 4, 2002.
|
|
(3)
|
Incorporated
by reference to our Annual Report on Form 10-Q, as filed with the
Commission on April 14, 2004.
|
|
(4)
|
Incorporated
by reference to our Registration Statement on Form SB-2 (File No.
333-118937) and amendments thereto, declares effective December 1,
2004.
|
|
(5)
|
Incorporated
by reference to our Current Report on Form 8-K, as filed with the
Commission on January 19, 2005.
|
|
(6)
|
Incorporated
by reference to our Registration Statement on Form SB-2 (File No.
333-123138) filed on March 4, 2005.
|
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 the 23 day
of June, 2009.
GeneThera,
Inc.
Antonio
Milici, M.D., Ph.D.
President
By: /s/
Tannya L.
Irizarry
Tannya L.
Irizarry
Chief
Financial Officer (Interim)
In
accordance with the Exchange Act, 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
|
Title
|
Date
|
|
/s/
Antonio Milici
|
President
|
06/23/09
|
|
Antonio
Milici, M.D., Ph.D.
|
Director
|
|
|
|
|
|
|
/s/
Tannya L. Irizarry
|
Chief
Financial
|
06/23/09
|
|
Tannya
L. Irizarry
|
Officer
(Interim)
|
|
|
|
|
|
|
/s/
Dr. Thomas Slaga
|
Director
|
06/23/09
|
|
Dr.
Thomas Slaga
|
|
|