Attached files

file filename
EX-31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF GAI MAR-CHAIM - ANDAIN, INC.exhibit_31-2.htm
EX-31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF SAM SHLOMO ELIMELECH - ANDAIN, INC.exhibit_31-1.htm
EX-10.11 - REGULATION S STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND 1568934 ONTARIO LIMITED, DATED JULY 19, 2006 - ANDAIN, INC.exhibit_10-11.htm
EX-32 - SECTION 1350 CERTIFICATION OF SAM SHLOMO ELIMELECH AND GAI MAR-CHAIM - ANDAIN, INC.exhibit_32.htm


U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
 
(Mark One)
x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NUMBER: 0-29113

ANDAIN, INC.
(Exact Name of Company as Specified in its Charter)
 
Nevada
20-2066406 
(State or Other Jurisdiction of Incorporation
(I.R.S. Employer
or Organization)
Identification No.)
 
 
5190 Neil Road, Suite 430, Reno, Nevada
89502
(Address of Principal Executive Offices)
(Zip Code)

Company’s telephone number:  (775) 333-5997

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: common stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes o    No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:

Yes o    No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) been subject to such filing requirements for the past 90 days:  
 
Yes o    No x
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  
 
Yes o    No x
 
 
 

 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer  o
Accelerated filer  o
   
Non-accelerated filer  o
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act:  
 
Yes o    No x
 
The aggregate market value of the voting stock held by non-affiliates of the Company as of December 31, 2006: $0.  As of December 31, 2006, the Company had 9,980,000 shares of common stock issued and outstanding.
 
 
2

 
 
The Registrant, by this Form 10-K/A, amends the following: (a) Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, to reflect a changes in the general format of this section and to reflect certain changes in the numbers in the Statements of Cash Flows for the year ended December 31 2006 and for the period of inception (July 23, 2004) through December 31, 2006); (b) Part II, Item 8, Financial Statements and Supplementary Data, to reflect certain changes in the numbers in the Statements of Cash Flows for the year ended December 31 2006 and for the period of inception (July 23, 2004) through December 31, 2006); and (c) Part III, Item 15, Exhibits, Financial Statement Schedules, to add new Exhibit 10.11 and to provide new certifications at Exhibits 31 and 32.  Besides these changes, no other changes have been made to the Form 10-K for the fiscal year ended December 31, 2006.  In addition, the remaining information in this amended Form 10-K has not been changed or updated to reflect any changes in information that may have occurred subsequent to the date of the reporting period that this Form 10-K relates.
 
 
3

 
 
PART II.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with, the Company’s audited financial statements and related notes presented in a separate section of this report following Item 15, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
 
Overview.

(a)           General Discussion.

The Company intends to develop cutting edge pulmonary drug delivery systems capable of controlled drug delivery and drug release systems that improve the way patients receive medications and vaccines.  The Company’s long-term goal is to become a leading supplier of particle delivery systems to the pharmaceutical and biotechnology industries.

The Company will continue to focus its business development efforts on new and existing licensing and supply agreements with leading pharmaceutical and biotechnology companies and after clinical trials, if successful, will continue to push for human testing so the Company can bring its product into the market.

The Company’s clinical research efforts will continue to be aimed primarily at collaborations in the areas of vaccines and drug delivery.  The research and development efforts will focus on the Company’s two main product lines, VAP and COPD.  In addition, the Company will continue to work on product improvements to existing devices and development of products.

The Company is still in its development phase, and it expects to remain in the this phase for at least another five years until its products receive FDA approval and investors and buyers for its products can be secured.

(b)           Operations.

The Company intends to focus initially on delivery of hydrophobic antibiotics carried by our nano-particle delivery system via inhalation. In order to expedite time to market, the Company also intends to focus initially on VAP patients in hospitals, where the mortality rate is high and TPDS Ltd. technology may be considered as a life saving solution.  TPDS concluded its initial development of the nano-particle delivery system with the target antibiotics tested in hospital mobilization systems.  The Company’s next phase is bacterial and completion of clinical trials needed to receive Helsinki approval to administer the Company’s medical solution for dying VAP patents. All clinical data accumulated will be used as the FDA clinical data and provide substantiation of technology efficiency.  The Company estimates the needed funds for this phase as $500,000 including establishing initial production at a GMP facility.
 
 
4

 
 
The Company is looking for expediting the regulatory process to obtain an FDA approval. Although the Company will be required to conduct full clinical trials in order to obtain an FDA approval that will allow the Company to sell its products in the U.S., it can start commercializing the product outside the US before obtaining the FDA approval.  In Europe, the Company is required to obtain only a CE-Mark certification plus local registration certificates to start sales.

In order to obtain CE-Mark certification, the Company needs to submit to the local health department the Company’s compiled file containing all medical, biological, chemical, clinical information, along with all results accumulated from our pre-clinical and clinical trials.  In some cases, the Company will be asked to add or repeat a test in order to obtain the approval.

The Company estimates the needed funds for this phase as $300,000.  In addition, due to the potential life saving nature of these products, the Company may apply to the FDA for a “Compassionate Use” certificate that will allow the Company to begin selling its products to hospitals in the U.S. before the clinical trials are concluded.  The Company estimates that this phase funds needs are $100,000 for the regulation process.  Assuming the Company can collect and use the clinical data accumulated for the Companionate Use, the Company estimates that an additional $750,000 will be required in order to complete all phase 2 and 3 clinical trials in animals and humans.

The Company intends to retain regulatory consultants in order to expedite obtaining certifications in Israel, Europe, U.S. and the rest of the world.  The Company estimates that the cost of such an expert will be about $150,000.

In order to simplify the regulatory process, the Company intends to focus initially on generic FDA-approved drugs and on a drug delivery formulation based on GRAS (Generally Recognized As Safe) components.  The Company intends to conduct pre-clinical trials in animals, mainly to prove safety issues that will allow it to apply for clinical trials in hospitals.  Due to the potential life saving nature of its products, the Company expects that upon the completion of the safety pre-clinical trial some hospitals will start conducting clinical trials in their respiratory intensive care unit focusing initially on life threatened patients.  The Company estimates that safety bacterial and toxicity tests will require budget of approximately $40,000.  Should the clinical trials show successful results, the Company expects that hospitals will expand the usage to patients that are not in a life-threatening situation.

All needed budget for the medication production are covered in the initial development budget.  The current production facility can produce TPDS medication for 10 patients per day.  The available facility does not stand in GMP standards and therefore the Company’s production is dedicated for in-vitro and animal trials.
 
 
5

 
 
The Company intends to develop in parallel a product for home use aimed at the mass market of COPD patients.  The Company estimates the budget needed to adapt its technology to the COPD patients as $100,000.  The Company also intends to utilize the synergy in the regulatory procedures and expedite the COPD product development in parallel to the VAP product.  The Company estimates an additional budget of about 1 million dollars for completion of the additional clinical trials needed for COPD medication phase 1 and 2.  Since the mass COPD market is not in a life-threatening situation, the Company believes that it requires full FDA approval to commercialize the product in the U.S.  The Company estimates that it will require an additional $2,000,000 complete the full FDA approval process.

Therefore, the Company intends to focus on the hospital VAP product in order to promote the market education, if and when the FDA approval is obtained, and leverage it for the COPD product launching.

The Company has already started looking for a GMP manufacturing infrastructure that may produce its products.  The Company intends to rely initially on existing drug producers infrastructures, but in the long run it may establish our own manufacturing line in the City of Arad.

When clinical trials start, the Company intends to approach pharmaceutical companies in Europe and Israel that specialize in distributing hospital supply.  Such companies may take the responsibility for the local regulatory procedures as well as the local sales to hospitals.

There is no plan to purchase significant equipment or plant.  The Company may acquire additional business synergies to its current business line.  For the present time, there is no plan for such a transaction.  The Company plans to recruit additional two employees: pre-clinical trials manager, and regulatory manager.

Results of Operations.

(a)           Net Revenue.

The Company had net revenue of $112,583 for the year ended December 31, 2006 compared to $0 for the year ended December 31, 2005.  Net revenue increased exclusively from consulting services performed for an associated company Meizam – Advanced Enterprise Center Arad Ltd.

(b)           General and Administrative Expenses.

The Company had general and administrative expenses of $333,381 for the year ended December 31, 2006 compared to $12,118 for the year ended December 31, 2005, an increase of $321,263.  The increase in general and administrative expenses was due to the employment of the Company’s two directors, Gai Mar-Chaim and Sam Elimelech, during the current year, and fees paid for consulting work performed in the Company’s subsidiary Impact Active Team Ltd.

(c)           Net Loss.

The Company had a net loss of $299,095 for the year ended December 31, 2006 compared to $12,118 for the year ended December 31, 2005, an increase of $286,977.  The increase in net loss is the result of the factors mentioned above.
 
 
6

 
 
Operating Activities.

The net cash used in operating activities was $62,879 for the year ended December 31, 2006 compared to $100 for the year ended December 31, 2005, an increase of $62,779.  This decrease is attributed to many changes from period to period, including an increase in consulting fees.

Investing Activities.

Net cash used in investing activities was $32,907 for the year ended December 31, 2006 compared to $0 for the year ended December 31, 2005.  This increase was due mainly to the purchase of equipment.

Liquidity and Capital Resources.

As of December 31, 2006, the Company had total current assets of $46,201 and total current liabilities of $31,028, resulting in a working capital surplus of $15,173.  The cash balance as of December 31, 2006 totalled $45,563.

The net cash provided by financing activities was $142,767 for the year ended December 31, 2006, primarily from the proceeds of stock issued for cash in the amount of $164,700.  The net cash provided by financing activities was $100 for the year ended December 31, 2005, resulting in an increase of net cash provided by financing activities of $142,667.  Overall, cash and cash equivalents for the year ended December 31, 2006 increased by $45,563.

The Company’s current cash and cash equivalents balance will be not be sufficient to fund its operations for the next 12 months.  The Company’s ability to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, and to obtain additional financing, and ultimately attain profitability.  The Company’s continued operations, as well as the implementation of the Company’s business plan will depend upon its ability to raise additional funds through bank borrowings and equity or debt financing.

The Company raised $7,700 from the issuance of 770,000 common shares pursuant to a Regulation S offering during July 2006.  On July 19, 2006, the Company entered into a Regulation S Stock Purchase Agreement with 1568934 Ontario Limited for the sale of 200,000 restricted shares of the Company’s common stock for consideration of $150,000 ($0.75 per share).  These shares were issued on August 6, 2006, the value of which was recorded as offering costs against paid-in capital.  Each share was accompanied by a 12-month warrant to acquire five shares at the price of the Company’s initial public offering as determined on the first trading day.
 
 
7

 
 
Whereas the Company has been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to it and/or that demand for the Company’s common stock will be sufficient to meet its capital needs, or that financing will be available on terms favorable to the Company.  If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of the Company’s planned product development and marketing efforts, any of which could have a negative impact on its business and operating results.  In addition, insufficient funding may have a material adverse effect on the Company’s financial condition, which could require it to:
 
·
curtail operations significantly;
 
·
sell significant assets;

·
seek arrangements with strategic partners or other parties that may require the Company to relinquish significant rights to products, technologies or markets; or

·
explore other strategic alternatives including a merger or sale of the Company.

To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to the Company’s existing stockholders.  If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations.  Regardless of whether the Company’s cash assets prove to be inadequate to meet its operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to the Company’s existing stockholders.

Inflation.

The impact of inflation on the Company’s costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions.  The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and the Company does not anticipate that inflationary factors will have a significant impact on future operations.

Off-Balance Sheet Arrangements.

The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.
 
 
8

 
 
Critical Accounting Policies.

The Securities and Exchange Commission (“SEC”) has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies.  In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.  Based on this definition, the Company’s most critical accounting policies include: (a) use of estimates; (b) impairment of long-lived assets; and (c) share-based compensation.  The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.

(a)           Use of Estimates.

The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk.  The Company bases its estimates on historical experience and on various other assumptions that is believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

(b)           Impairment Long-Lived Assets.

The Company evaluates its long-lived assets and certain identified intangible assets for impairment in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable utilizing an undiscounted cash flow analysis. We did not recognize any other impairment on our long-lived assets during the periods presented.
 
(c)           Share-Based Compensation.

On January 1, 2006, the Company adopted SFAS No.123R, which requires the measurement and recognition of compensation expense for all share-based payments to its employees and directors, including employee stock options, restricted stock and stock purchases based on the estimated fair value of the award on the grant date.  Upon the adoption of SFAS No. 123R, the Company maintained its method of valuation for stock option awards using the Black-Scholes valuation model, which has historically been used for the purpose of providing pro-forma financial disclosures in accordance with SFAS No. 123.
 
 
9

 
 
The use of the Black-Scholes valuation model to estimate the fair value of stock option awards requires the Company to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.

Compensation expense is only recognized on awards that ultimately vest. 

Forward Looking Statements.

Information in this Form 10-K contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended.  When used in this Form 10-K, the words “expects,” “anticipates,” “believes,” “plans,” “will” and similar expressions are intended to identify forward-looking statements.  These are statements that relate to future periods and include, but are not limited to, statements regarding the adequacy of cash, expectations regarding net losses and cash flow, statements regarding growth, the need for future financing, dependence on personnel, and operating expenses.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.  These forward-looking statements speak only as of the date hereof.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Audited financial statements as of and for the year ended December 31, 2005, the period of inception (July 23, 2004) through December 31, 2004, the period of inception (July 23, 2004) through December 31, 2005, as of and for the year ended December 31, 2006, and the period of inception (July 23, 2004) through December 31, 2006 are presented in a separate section of this report following Item 15.

PART III.

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents are being filed as a part of this report on Form 10-K:  Those exhibits required by Item 601 of Regulation S-K (included or incorporated by reference in this document are set forth in the Exhibit Index).
 
 
10

 
 
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Andain, Inc.
     
     
Dated: February 6, 2011
By:
/s/ Sam Shlomo Elimelech
   
Sam Shlomo Elimelech, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:

Signature
 
Title
 
Date
 
/s/  Sam Shlomo Elimelech
Sam Shlomo Elimelech
 
 
 
President/Director
 
 
February 6, 2011
/s/  Gai Mar-Chaim
Gai Mar-Chaim
 
Secretary/Treasurer/Director
 
 
February 6, 2011
 
 
11

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors
Andain, Inc.

We have audited the balance sheets of Andain, Inc. (a development stage company) (“Company”) as of December 31, 2005 and 2004, and the related statements of operations, changes in stockholders’ deficit and cash flows for the year ended December 31, 2005, the period of inception (July 23, 2004) through December 31, 2004, and the period of inception (July 23, 2004) through December 31, 2005.  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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, 2005 and 2004, and the results of its operations and its cash flows for the year ended December 31, 2005, the period of inception (July 23, 2004) through December 31, 2004, and the period of inception (July 23, 2004) through December 31, 2005, 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 3 to the financial statements, the Company has suffered net losses since inception and is still considered a development stage company, as it has not yet obtained revenues from its planned principle operations.  These factors raise substantial doubt about the Company’s ability to meet its obligations and to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ Child, Van Wagoner & Bradshaw, PLLC
Kaysville, Utah
March 31, 2006
 
 
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ANDAIN, INC.
(A Development Stage Company)
BALANCE SHEETS

   
December 31,
 
   
2005
   
2004
 
ASSETS
             
Total assets
  $ -     $ -  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
                 
Current liabilities:
               
Accounts payable
    3,186       -  
Note payable - stockholder (Note 5)
    14,192       7,270  
                 
     Total current liabilities
    17,378       7,270  
                 
 Total liabilities
    17,378       7,270  
                 
Stockholders’ deficit (Note 4):
               
   Preferred stock at $0.001 par value;
               
authorized 10,000,000 shares;
               
no shares issued and outstanding
    -       -  
                 
   Common stock at $0.001 par value;
               
authorized 500,000,000 shares;
               
2,010,000 shares issued and outstanding
    2,010       -  
                 
Deficit accumulated during development stage
    (19,388 )     (7,270 )
                 
   Total stockholders’ deficit
    (17,378 )     (7,270 )
                 
Total liabilities and stockholders’ deficit
  $ -     $ -  
 
See accompanying notes to the financial statements
 
 
13

 
 
ANDAIN, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS

         
Period of Inception
 
   
Year Ended
   
(July 23, 2004)
 
   
December 31,
   
through December 31,
 
   
2005
   
2004
   
2005
 
                   
Revenue
  $ -     $ -     $ -  
                         
Expenses:
                       
                         
General, administrative,
                       
  organization, & related expenses
    12,118       7,270       19,388  
                         
Net loss and deficit accumulated
                       
  during development stage
  $ (12,118 )   $ (7,270 )   $ (19,388 )
                         
Basic and diluted loss per share
  $ (0.015 )   $ (0.00 )        
                         
Weighted average number of common
                       
   shares outstanding
    814,932       0          
 
See accompanying notes to the financial statements
 
 
14

 
 
ANDAIN, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2005

 
       
 
         
Additional
         
Total
 
 
 
Common Stock
   
Subscriptions
   
Paid-in
   
Accumulated
   
Stockholders’
 
 
 
Shares
   
Amount
   
Receivable
   
Capital
   
Deficit
   
Deficit
 
                                     
Inception (July 23, 2004)
    -     $ -     $ -     $ -     $ -     $ -  
                                                 
Net loss
     -        -    
-
   
 -
      -       -  
                                                 
Balance, September 30, 2004
    -       -       -       -       -       -  
                                                 
Net loss
                                 (7,270 )      (7,270 )
                                                 
Balance, December 31, 2004
    -       -       -       -       (7,270 )     (7,270 )
                                                 
Common stock subscribed
    -       -       (100 )     -       -       (100 )
                                                 
Common stock issued
                                               
  at $0.001 for cash
    100,000       100       -       -       -       100  
                                                 
Common stock subscriptions received
    -       -       100       -       -       100  
                                                 
Common stock issued
                                               
  at $0.001 for legal services
    10,000       10       -       -       -       10  
                                                 
Net loss
                                 (8,655 )      (8,655 )
                                                 
Balance, March 31, 2005
    110,000       110       -       -       (15,925 )     (15,815 )
                                                 
Net loss
                                 (834 )      (834 )
                                                 
Balance, June 30, 2005
    110,000       110       -       -       (16,759 )     (16,649 )
                                                 
Common stock issued to reduce
                                               
  stockholder loan
    1,900,000       1,900       -       -       -       1,900  
 
 
15

 
 
ANDAIN, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2005
(continued)

 
                   
Additional
         
Total
 
 
 
Common Stock
   
Subscriptions
   
Paid-in
   
Accumulated
   
Stockholders’
 
 
 
Shares
   
Amount
   
Receivable
   
Capital
   
Deficit
   
Deficit
 
                                     
Net loss
 
 
         
 
   
 
       (2,005 )      (2,005 )
                                         
Balance, September 30, 2005
    2,010,000       2,010       -       -       (18,764 )     (16,754 )
                                                 
Net loss
                 
 
   
 
       (624 )      (624 )
                                                 
Balance, December 31, 2005
    2,010,000     $ 2,010     $ -     $ -     $ (19,388 )   $ (17,378 )
 
See accompanying notes to the financial statements
 
 
16

 
 
ANDAIN, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS

         
Period of Inception
 
   
Year Ended
   
(July 23, 2004)
 
    December 31,    
through December 31,
 
   
 2005
   
2004
   
2005
 
Operating Activities:
                 
  Net loss
  $ (12,118 )   $ (7,270 )   $ (19,388 )
  Adjustments to reconcile net loss to
                       
 net cash used in operations:
                       
Shares issued for legal services
    10       -       10  
Note payable issued to stockholder
                       
for payment of operating expenses
    8,822       7,270       16,092  
  Changes in operating assets
                       
     and liabilities:
                       
  Accounts payable
    3,186       -       3,186  
Net cash used in operating activities
    (100 )     -       (100 )
                         
Investing Activities:
    -       -       -  
                         
Financing Activities:
                       
  Shares issued for cash
    100       -       100  
Net cash provided by financing activities
    100       -       100  
                         
Increase in cash and cash equivalents
    -       -       -  
                         
Cash and cash equivalents,
                       
   beginning of period
    -       -       -  
                         
Cash and cash equivalents, end of period
  $ -     $ -     $ -  
                         
Supplemental schedule of cash flow activities:
                       
   Cash paid for:
                       
      Interest
  $ -     $ -     $ -  
      Income taxes
  $ -     $ -     $ -  
                         
Noncash investing and financing activities:
                       
Stock issued to reduce stockholder loan
  $ 1,900     $ -     $ 1,900  
 
See accompanying notes to the financial statements
 
 
17

 
 
ANDAIN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2005,
PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2004,
AND PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2005

NOTE 1 – PRESENTATION AND ORGANIZATION

The Company was incorporated under the laws of the State of Nevada on July 23, 2004 and has been inactive since inception.  The Company intends to serve as a vehicle to effect an asset acquisition, merger, exchange of capital stock or other business combination with a domestic or foreign business.

The Company has not earned any revenue from operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Enterprise” as set forth in the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 7.  Among the disclosures required by SFAS No. 7, are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations and cash flows disclose activity since the date of the Company’s inception.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Provision for Taxes.

At December 31, 2005, the Company had net operating loss carryforwards of $19,388 that may be offset against future federal taxable income through 2025.  No tax benefit has been reported with respect to these net operating loss carryforwards in the accompanying financial statements because the Company believes that realization is not likely. Accordingly, the potential tax benefits of the net loss carryforwards are fully offset by a valuation allowance.

The income tax benefit for the year ended December 31, 2005 differs from the amount computed at the federal statutory rates of approximately 35% as follows:

Income tax benefit at statutory rate
  $ (4,241 )
Valuation allowance
    4,241  
         
Total
  $ -  
 
If substantial changes in the Company’s ownership should occur, there would be an annual limitation of the amount of net operating loss carryforwards that may be utilized by the Company.
 
 
18

 
 
Cash Equivalents.

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.  The Company had no cash or equivalents at December 31, 2005.

Estimates.

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.  Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates.

Basic Loss Per Common Share.

Basic loss per common share has been calculated based on the weighted average number of shares outstanding during the period. There are no dilutive securities at December 31, 2005 for purposes of computing fully diluted earnings per share.

NOTE 3 GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not established any source of revenue to cover its operating costs.  The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured.  The Company will offer non-cash consideration and seek equity lines as a means of financing its operations.  If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

NOTE 4 STOCKHOLDERS’ DEFICIT

Common Stock.

On December 10, 2004, the Board of Directors resolved to issue 110,000 shares of common stock at $0.001 per share to one company and one individual.   The shares were issued on January 10, 2005 in exchange for $100 in cash and $10 of legal services.
 
 
19

 
 
On August 17, 2005, the Company issued 1,900,000 shares of common stock at $0.001 per share to its majority stockholder for total value of $1,900 to reduce reimbursements payable to the majority stockholder (see Note 5).

The holders of the Company’s common stock:

·
have equal ratable rights to dividends from funds legally available for payment of dividends when, and if declared by the board of directors;

·
are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;

·
do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and

·
are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders.

Preferred Stock.

The Company has authorized, but not issued, 10,000,000 shares of preferred stock, par value $0.001 per share.  The board of directors has the authority to establish and fix the designation, powers, or preferences of preferred shares without further vote by the stockholders.

NOTE 5 RELATED PARTY TRANSACTIONS

The Company relies on its majority stockholder for payment of its expenses during its development stage.  Since inception, this stockholder had accumulated reimbursements totaling $16,092.  On August 17, 2005, the Company issued common stock valued at $1,900 to this Stockholder (see Note 4), reducing the amount owed at December 31, 2005 to $14,192.    Of the expenses, $10,020 was for legal fees incurred with the Company’s attorney, who is a minority stockholder of the Company.
 
 
20

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders
of Andain Inc. and subsidiaries

We have audited the accompanying balance sheet of Andain Inc. and subsidiaries (a development stage company) (the “Company) as of December 31, 2006, and the related statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2006, and for the period of inception (July 23, 2004) through December 31, 2006. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes 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, 2006, and the results of its operations and cash flows for the year ended December 31, 2006, and for the period of inception (July 23, 2004) through December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses, has had significant recurring negative cash flows from operations, and has an accumulated deficit that raises substantial doubt over its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from this uncertainty.

The financial statements of the Company for the year ended December 31, 2005 were audited by another auditor who expressed an unmodified opinion on those statements on March 31, 2006.

/s/ Dov Weinstein & Co. C.P.A. (Isr)
Jerusalem, Israel
December 10, 2010
 
 
21

 
 
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2006
 
ASSETS
Current assets:
       
   Cash and cash equivalents
  $
45,563
 
   Accounts receivable
   
       638
 
Total current assets
   
  46,201
 
         
Property, plant and equipment
   
  30,600
 
Investment in equity-accounted investee
 
 
568
 
Other loans
   
              43,855
 
         
Total assets
  $
121,224
 
         
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
       
   Accounts payable and accrued expenses
  $
 31,028
 
Total current liabilities
   
              31,028
 
         
Long-term liabilities:
       
   Long term debt
   
            206,033
 
   Bank overdrafts
   
              33,397
 
         
Total liabilities
   
         270,458
 
         
Minority interest
   
    1,657
 
         
Stockholders’ deficit:
       
   Preferred stock, $0.001 par value; 10,000,000 shares
       
      authorized; no shares issued and outstanding
   
                   --
 
   Common stock, $0.001 par value; 500,000,000 shares
       
      authorized; 9,980,000 shares issued and outstanding
   
             9,980
 
   Additional paid-in capital
   
         156,730
 
   Share-based  payments
   
             2,300
 
   Accumulated deficit during development stage
   
        (318,483
   Accumulated other comprehensive loss
   
            (1,418
Total Andain stockholders’ deficit
   
           (150,891
         
Total stockholders’ deficit
 
 
(149,234
         
Total liabilities and stockholders’ deficit
  $
121,224
 

See accompanying notes to consolidated financial statements
 
 
22

 
 
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS

         
Period of Inception
 
   
Year Ended
   
(July 23, 2004) through
 
   
December 31, 2006
   
December 31, 2006
 
             
Net revenue
  $ 112,583     $ 112,583  
                 
Operating expenses:
               
   Depreciation
    (1,739 )     (1,739 )
   General and administrative
    (333,381 )     (352,769 )
   Impairment of goodwill
     (75,014 )      (75,014 )
                 
Loss from operations
    (297,551 )     (316,939 )
                 
Interest expense
     (1,544 )      (1,544 )
                 
Net loss and deficit accumulated during
               
   development stage
  $ (299,095 )   $ (318,483 )
                 
Basic earnings per share:
               
   Net income attributable to Andain
  $ (0.047 )        
   Weighted average shares outstanding
    6,360,027          
                 
Diluted earnings per share:
               
   Net income attributable to Andain
  $ (0.034 )        
   Weighted average shares outstanding
    8,600,027          

See accompanying notes to consolidated financial statements
 
 
23

 
 
 ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2006
 
               Capital      Share-     Non-           Other     Total  
   Common Stock      In Excess      Based      Controlling      Accumulated     Comprehensive      Stockholders’  
  Shares    
Amount
   
 Of Par
   
 Reserves
   
Interest
   
Deficit
   
Loss
   
 Deficit
 
Inception (July 23, 2004)
    --     $ --     $ --     $ --     $ --     $ --     $ --     $ --  
                                                                 
Net loss
    --       --       --       --       --       (7,270 )     --       (7,270 )
                                                                 
Balance at December 31, 2004
    --       --       --       --       --       (7,270 )     --       (7,270 )
                                                                 
Common stock issued at $0.001
  for cash
    100,000       100       --       --       --       --       --       100  
                                                                 
Common stock issued at $0.001
  for legal services
    10,000       10       --       --       --       --       --       10  
                                                                 
Common stock issued to reduce
  stockholder loan at $0.001
    1,900,000       1,900       --       --       --       --       --       1,900  
                                                                 
Net loss
    --       --       --       --       --       (12,118 )     --       (12,118 )
                                                                 
Balance at December 31, 2005
    2,010,000       2,010       --       --       --       (19,388 )     --       (17,378 )
                                                                 
Common stock issued at $1.50 to
  purchase intellectual property
    4,500,000       4,500       --       --       --       --       --       4,500  
                                                                 
Common stock issued at $0.001 to
  purchase Impact Active
  Team Ltd. From Pangea
  Investments GmbH
    2,500,000       2,500       --       --       --       --       --       2,500  
                                                                 
Common stock issued at $0.01
  for cash
    770,000       770       6,930       --       --       --       --       7,700  

 
24

 

ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2006
(continued)
 
          Capital In     Share-     Non-           Other     Total  
   
Common Stock
    Excess     Based     Controlling     Accumulated     Comprehensive      Stockholders’  
       Shares    
Amount
   
 Of Par
   
 Reserves
   
Interest
   
 Deficit
   
  Loss
   
  Deficit
 
Common stock issued at $0.75
  for cash
    200,000       200       149,800       --       --       --       --       150,000  
                                                                 
Equity-settled share-based payment
    --       --       --       300       --       --       --       300  
                                                                 
Non-controlling interest
    --       --       --       --       1,657       --       --       1,657  
                                                                 
Non-cash compensation expense
    --       --       --       2,000       --       --       --       2,000  
                                                                 
Foreign currency translation
  adjustment
    --       --       --       --       --       --       (1,418 )     (1,418 )
                                                                 
Net loss
    --       --       --       --       --       (299,095 )     --       (299,095 )
                                                                 
Balance at December 31, 2006
    9,980,000       9,980       156,730       2,300       1,657       (318,483 )     (1,418 )     (149,234 )
 
See accompanying notes to consolidated financial statements
 
 
25

 
 
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Year Ended
    Period of Inception
(July 23, 2004) through
 
   
December 31, 2006
   
December 31, 2006
 
Operating activities:
           
   Net loss
  $ (299,095 )   $ (318,483 )
   Adjustments to reconcile net loss to
     net cash used in operating activities:
               
        Depreciation
    1,739       1,739  
        Minority interest
    1,657       1,657  
        Accrued expenses – stockholder
    23,316       37,508  
        Accrued expenses – consulting fees
    60,000       60,000  
        Shares issued for professional services
    --       1,910  
        Accounts payable
    27,842       31,028  
        Accounts receivable
    (638 )     (638 )
        Non-cash compensation expense
    2,000       2,000  
        Equity-settled share-based payment
    300       300  
       Accrued compensation
    120,000       120,000  
                 
Net cash used in operating activities
    (62,879 )     (62,979 )
                 
Investing activities:
               
   Purchase of equipment
    (32,339 )     (32,339 )
   Purchase of interest in equity-
     accounted investee
    (568 )     (568 )
                 
Net cash used in investing activities
    (32,907 )     (32,907 )

 
26

 

ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
 
   
Year Ended
December 31, 2006
   
Period of Inception
(July 23, 2004) through
December 31, 2006
 
Financing activities:
           
   Proceeds from increase in bank
     overdrafts
    33,397       33,397  
   Proceeds from stock issued for cash
    164,700       164,800  
   Repayment of other loans
    (43,855 )     (43,855 )
   Loan from majority stockholder
    (11,447 )     (11,447 )
   Loan from equity-accounted investee
    568       568  
   Loans from key management
     personnel
    (596 )     (596 )
                 
Net cash provided by financing activities
    142,767       142,867  
                 
Increase in cash and cash equivalents
    46,981       46,981  
                 
Cash and cash equivalents,
  beginning of period
    --       --  
                 
Effects of exchange rate changes on
  balance of cash held in foreign
  currencies
    (1,418 )     (1,418 )
                 
Cash and cash equivalents,
  end of period
  $ 45,563     $ 45,563  
                 
Supplementary schedule of cash flow activities:
               
   Non-cash investing and financing
     activities:
               
      Issuance of common stock for
        payment of consulting fees
  $ --     $ 1,900  
 
27

 
 
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
 
   
Year Ended
December 31, 2006
   
Period of Inception
(July 23, 2004) through
December 31, 2006
 
Issuance of common stock for 
   purchase of intellectual property
  $ 4,500     $ 4,500  
Issuance of common stock for 
   purchase of subsidiary
  $ 2,500     $ 2,500  
Issuance of common stock for 
   payment of management and 
   consulting fees
  $ 300     $ 300  
Non-cash compensation 
   expense
  $ 2,000     $ 2,000  
 
See accompanying notes to consolidated financial statements
 
 
28

 
 
ANDAIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2006 AND
PERIOD OF INCEPTION (JULY 23, 2004) THROUGH DECEMBER 31, 2006

NOTE 1 – GENERAL INFORMATION

Andain Inc (“Company”) was established in 2004 in Nevada, U.S.A. It is a public company developing novel technologies and products in the biotechnology and medical fields. Through its recent technology purchases, the Company has acquired the rights to intellectual properties, in order to produce pulmonary inhalation drug delivery systems.

NOTE 2 – BASIS OF PRESENTATION

The following financial statements present the financial results of the Company and its subsidiaries on a consolidated basis. The consolidated financial statements are prepared in accordance with generally accepted accounting principles of the United States (U.S. GAAP).

The financial statements have been prepared under the historical cost basis.
 
The principal accounting policies are set out below, these policies have been consistently applied to all the years presented, unless otherwise stated.

Going Concern.

The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not established any source of revenue to cover its operating costs.  The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured.  The Company will offer non-cash consideration and seek equity lines as a means of financing its operations.  If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities, through business alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

Consolidation Principles.

The consolidated financial statements of the Company include the accounts of the Company, a Nevada corporation, and all entities in which a direct or indirect controlling interest exists through voting rights or qualifying variable interests.  All intercompany balances and transactions have been eliminated in the consolidated financial statements.
 
 
29

 
 
The Company commenced operations in 2004 for the purpose of developing, manufacturing and distributing drug delivery systems. Since its formation, the Company has been engaged principally in organizational, financing, research and development and marketing activities. The Company has not made a public issue of its stock.

Foreign Currencies.

The consolidated financial statements are presented in U.S. Dollars, which is the Company’s functional currency and presentation currency.  The financial statements of entities that use a functional currency other than the U.S. Dollar, are translated into U.S. Dollars. Assets and liabilities are translated using the exchange rate on the respective balance sheet dates. Items in the income statement and cash flow statement are translated into U.S. Dollars using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded as a separate component of other comprehensive income/(loss) within stockholders’ equity.

The functional currency of foreign entities is generally the local currency unless the primary economic environment requires the use of another currency.  Gains or losses arising from the translation or settlement of foreign-currency-denominated monetary assets and liabilities into the functional currency are recognized in the income in the period in which they arise. However, currency differences on intercompany loans that have the nature of a permanent investment are accounted for as translation differences as a separate component of other comprehensive income/(loss) within stockholders’ equity.

Use of Estimates.

The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk.  The Company bases its estimates on historical experience and on various other assumptions that is believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

Share-Based Payments.

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” using the modified prospective method.  SFAS No.123R requires the measurement and recognition of compensation expense for all share-based payment awards granted to its employees and directors, including employee stock options, restricted stock and stock purchases based on the estimated fair value of the award on the grant date.  Upon the adoption of SFAS No. 123R, the Company maintained its method of valuation for stock option awards using the Black-Scholes valuation model, which has historically been used for the purpose of providing pro-forma financial disclosures in accordance with SFAS No. 123.
 
 
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The use of the Black-Scholes valuation model to estimate the fair value of stock option awards requires the Company to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.

Compensation expense is only recognized on awards that ultimately vest. 

Cash Equivalents and Cash Equivalents.

Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturity of three months or less that are readily convertible to cash. They are stated at face value, which approximates their fair value.

Accounts Receivable.
 
Accounts receivables are stated at the amount that management of the Company expects to collect from outstanding balances. Management provides for probable uncollectible amounts through an allowance for doubtful accounts. Additions to the allowance for doubtful accounts are based on management’s judgment, considering historical write-offs, collections and current credit conditions.  Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable.  Payments received subsequent to the time that an account is written off are considered bad debt recoveries.  As of December 31, 2006, the Company has experienced no bad debt write offs from operations.

Property, Plant and Equipment.

Property and equipment are stated at cost. Expenditures for repairs and maintenance are expensed as incurred. Expenditures that increase the useful life or value are capitalized. For financial statement purposes, depreciation expense on property and equipment is computed on the straight-line method using the following lives:

 
Motor vehicles
  5 years
 
Furniture
15 years
 
Computer equipment
      3 years

Impairment of Long-Lived Assets.

The Company evaluates its long-lived assets and certain identified intangible assets for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  Long-lived assets, such as property, plant and equipment and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset, generally determined by reference to the discounted future cash flows. Assets held for sale that meet certain criteria are measured at the lower of their carrying amount or fair value less cost to sell.
 
 
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Intangible Assets.
 
Intangible assets are stated at cost, less accumulated amortization.  Amortization of intangible assets is computed using the straight-line method over the estimated economic useful life of the assets.

Intangible assets resulted from the purchase from Pangea Investments GmbH, the majority stockholder of the Company, the rights to intellectual property related to the production of inhalation drug delivery system.

The Company has recorded the assets at historical cost in accordance with the Staff Accounting Bulletin 5(g), “Transfers of Non-Monetary Assets by Promoters or Shareholders.” Pangea Investments GmbH has expensed all costs relating to the intellectual properties and the carrying value is assumed to be $Nil.

Amortization was computed using the straight-line method over the following estimated useful lives:

Intellectual property 10 years

On October 19, 2006, the Company transferred its intellectual property to its operating subsidiary, TPDS Ltd.

Goodwill.

The Company accounts for goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” Accordingly, goodwill is no amortized, but is tested for impairment annually and whenever impairment indicators require so. An impairment loss is recognized to the extent that the carrying amount exceeds the assets fair value.

Investments in Equity-Accounted Investees.

Investment in companies in which the Company does not have the ability to directly or indirectly control the financial and operating decisions, but does possess the ability to exercise significant influence are accounted for using the equity method.  In the absence of demonstrable proof of significant influence, it is presumed to exist if at least 20% of the voting stock is owned.  The Company’s share of net income of these companies is included in the results relating to equity-accounted investees in the consolidated statements of income.  When the Company’s share of losses exceed the carrying amount of an investment accounted for by the equity method, the Company’s carrying amount of that investment is reduced to zero and recognition of further losses is discontinued unless the Company has guaranteed obligations of the investee or is otherwise committed to provide further financial support to the investee.
 
 
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Revenue Recognition.

The Company recognizes revenue when all four recognition criteria have been met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, seller’s price to buyer is fixed or determinable and collectability is reasonably assured.

Interest Income.

Interest income is recognized in the consolidated statement of income as it is earned.

Income Taxes.

Income taxes are accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes.”  Under the asset and liability method specified by SFAS No. 109, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences).  Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.  At December 31, 2006 and 2005, deferred tax assets had a 100% valuation allowance.

Earnings Per Share.

The Company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all potential dilutive common shares, which comprise options granted to employees.

Cash Flow Statement.

Cash flow statements have been prepared using the indirect method. Cash flows in foreign currencies have been translated into U.S. dollars using the average exchange rate for the periods.
 
 
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NOTE 3 – LIST OF SIGNIFICANT SUBSIDIARIES

Name of Company
 
Principal Activity
 
Location
 
Proportion of Ownership
Interest and Voting Power
Held at December 31, 2006
             
Impact Active Team Ltd.
 
Consulting
 
Israel
 
100%
TPDS Ltd
 
Medical
 
Israel
 
69%

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

 
 
Computers
   
Vehicles
   
Total
 
Balance as of December 31, 2005
  $ --     $ --     $ --  
                         
 Capital expenditure
    860       31,479       32,339  
 Depreciation
    (47 )     (1,692 )     (1,739 )
                         
Balance as of December 31, 2006
  $ 813     $ 29,787     $ 30,600  

NOTE 5 – INVESTMENT IN EQUITY-ACCOUNTED INVESTEE

Investments in Equity-Accounted Investee (as defined under Note 10) consists of the following:

Investment in Equity-Accounted Investee at January 1, 2006
  $ --  
         
Acquisitions
     568  
         
Investment in Equity-Accounted Investee at December 31, 2006:
  $ 568  

Total carrying amount of investments in and loans to the Equity-Accounted Investee is summarized as follows:
 
Stockholding
   
Meizam – Advanced Enterprise Center Arad Ltd.
45%

NOTE 6 – LONG-TERM DEBT

Long-term debt consists of the following:
 
 
2006
   
2005
 
             
Key management personnel
  $ 119,404     $ --  
Equity-Accounted Investee
    568       --  
Majority Stockholder (as defined under Note 10)
    86,061        14,192  
                 
 
  $ 206,033     $ 14,192  

The above loans are unsecured, interest free and have no set terms of repayment.
 
 
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NOTE 7 – STOCKHOLDERS’ EQUITY

Common Stock.

On June 11, 2006, the Company entered into a share-based technology purchase agreement by issuing 4,500,000 restricted shares of common stock at $0.001 per share for the purchase of intellectual property, patent rights and related technical information for a pulmonary drug delivery system owned by Pangea Investments GmbH, the majority stockholder of the Company.

On June 11, 2006, the Company entered into a share-based purchase agreement by issuing 2,500,000 restricted shares of common stock at $0.001 per share for the purchase of all the common stock of Impact Active Team Ltd, a Company owned by Pangea Investments GmbH.

On July 19, 2006, the Company issued 200,000 restricted shares of common stock at $0.75 per share to 1568934 Ontario Limited for consideration of $150,000.  Each share was accompanied by a 12 month warrant to acquire five shares of common stock at the price of the Company’s initial public offering as determined on the first day trading; however, no warrants were realized.

On July 29, 2006, the Company issued 770,000 restricted shares of common stock at $0.01 per share to a total of 56 investors for consideration of $7,700.

The holders of the Company’s common stock:

·
have equal ratable rights to dividends from funds legally available for payment of dividends when, and if declared by the board of directors;

·
are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;

·
do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund and;

·
are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders.

Preferred Stock.

The Company has authorized, but not issued, 10,000,000 shares of preferred stock, par value $0.001 per share. The board of directors has the authority to establish and fix the designation, powers, or preferences of preferred shares without further vote by the stockholders.
 
 
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NOTE 8 – PROVISION FOR TAXES

At December 31, 2006, the Company had net operating loss carry forwards of $318,483 that may be offset against future federal taxable income through 2025. No tax benefit has been reported with respect to these net operating loss carry forwards in the accompanying financial statements because the Company believes that realization is not likely.  Accordingly, the potential tax benefits of the net loss carry forwards are fully offset by a valuation allowance.

The income tax benefit for the year ended December 31, 2006 differs from the amount computed at the federal statutory rates of approximately 35% as follows:

Income tax benefit at statutory rate
  $ (104,683 )
Valuation allowance
    104,683  
         
Total
  $ --  

If substantial changes in the Company’s ownership should occur, there would be an annual limitation of the amount of net operating loss carry forwards that may be utilized by the Company.

NOTE 9 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Foreign Exchange Risk.

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. Dollar and the New Israeli Shekel.  Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

Interest Rate Risk.

The Company is subject to cash flow interest rate risk due to fluctuations in the prevailing levels of market interest rates.  The investment manager monitors the Company’s overall interest sensitivity on a monthly basis and the general director on a quarterly basis.

Credit Risk.

Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the Group.  The Group has adopted a policy of only dealing with creditworthy counter-parties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
 
 
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Liquidity and Capital Risk Management.

The Company’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to stockholders, return capital to stockholders, issue new shares or sell assets to reduce debt.
 
NOTE 10 – RELATED PARTY TRANSATIONS

The Company’s majority stockholder is Pangea Investments GmbH (incorporated in the Switzerland), which owns approximately 70% of the Company’s outstanding common stock.

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.  Details of transactions between the group and other related parties are disclosed below.

The following entities have been identified as related parties:

Pangea Investments GmbH
Majority Stockholder of Andain, Inc.
Impact Active Team Ltd.
Israeli, wholly-owned subsidiary
TPDS Ltd.
Israeli, majority-owned subsidiary
Meizam - Advanced Enterprise Center Arad Ltd.
Israeli, Equity-Accounted Investee
Sam Elimelech
Director of Andain, Inc.
Gai Mar-Chaim
Director of Andain, Inc.

The following transactions were carried out with related parties:

   
2006
   
2005
 
    $     $  
Income statements:
             
Compensation expenses
    2,000       --  
Directors’ remuneration
    120,000       --  
Management fees
    60,000       --  
Legal fees
    20,000       10,020  
                 
Balance sheet:
               
Loan from Equity-Accounted Investee
    (568 )     --  
Loan from Majority Stockholder
    (86,061 )     --  
Loans from key management personnel
    (119,404 )     --  

NOTE 11 – SUBSEQUENT EVENTS

No material event occurred subsequent to year end which would have a material impact on the financial statements.
 
 
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EXHIBIT INDEX

Number
Description
   
3.1
Articles of Incorporation, dated July 14, 2004 (incorporated by reference to Exhibit 3.1 of the Form 10-SB filed on March 24, 2005).
   
3.2
Bylaws, dated August 1, 2004 (incorporated by reference to Exhibit 3.2 of the Form 10-SB filed on March 24, 2005).
   
10.1
Affiliation Agreement between the Impact Active Team Ltd. and P.O.C. High-Tech (1992) Ltd. Corporation, dated June 23, 2004 (incorporated by reference to Exhibit 10.8 of the Form SB-2 filed on February 13, 2007).
   
10.2
Consulting Agreement between the Company and Dr. Leonid Lurya, dated May 16, 2006 (incorporated by reference to Exhibit 10.2 of the Form 10-K filed on December 30, 2010).
   
10.3
Share Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (not including Schedule 1, Disclosure Schedule) (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on July 5, 2006).
   
10.4
Technology Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on July 5, 2006).
   
10.5
Finder’s Fee Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.5 of the Form 8-K filed on July 5, 2006).
   
10.6
Consulting Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on July 5, 2006).
   
10.7
Business Development Services Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.4 of the Form 8-K filed on July 5, 2006).
   
10.8
Employment Agreement between the Company and Sam Elimelech, dated July 3, 2006 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed on July 5, 2006).
   
10.9
Employment Agreement between the Company and Gai Mar-Chaim, dated July 3, 2006 (incorporated by reference to Exhibit 10.7 of the Form 8-K filed on July 5, 2006).
 
 
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10.10
Consulting Agreement between the Company and Meizam - Advanced Enterprise Center Arad Ltd., dated October 25, 2006 (incorporated by reference to Exhibit 10.10 of the Form 10-K filed on December 30, 2010).
   
10.11
Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated July 19, 2006 (filed herewith).
   
16.1
Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on January 5, 2006).
   
16.2
Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on November 5, 2010).
   
21
Subsidiaries of the Company (incorporated by reference to Exhibit 21 of the Form 10-QSB filed on November 20, 2006).
   
31.1
Rule 13a-14(a)/15d-14(a) Certification of Sam Shlomo Elimelech (filed herewith).
   
31.2
Rule 13a-14(a)/15d-14(a) Certification of Gai Mar-Chaim (filed herewith).
   
32
Section 1350 Certification of Sam Shlomo Elimelech and Gai Mar-Chaim (filed herewith).
 

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