Kedem Pharmaceuticals Inc. - FORM 10-Q

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EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B) OR RULE 15D-14(B) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - Kedem Pharmaceuticals Inc.	ex32-2.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - Kedem Pharmaceuticals Inc.	ex31-1.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(B) OR RULE 15D-14(B) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - Kedem Pharmaceuticals Inc.	ex32-1.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A) PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - Kedem Pharmaceuticals Inc.	ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2011

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: 333-137888

GLOBAL HEALTH VENTURES INC.

(Exact name of registrant as specified in its charter)

Nevada		98-0633727
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

409 Granville Street, Suite 1023

Vancouver, BC, Canada V6C 1T2

(Address of principal executive offices)

(604) 324-4844

(Registrant’s telephone number, including area code)

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 require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (of for such shorter period that the registrant was required to submit and post such files). Yes þ No 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 þ

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

As of April 15, 2011, there were 143,483,192 shares of common stock of the registrant outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	2

Item 1. Unaudited Interim Consolidated Financial Statements	2
Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	3
Item 3. Quantitative and Qualitative Disclosures About Market Risk	9
Item 4. Controls and Procedures	9

PART II - OTHER INFORMATION	11

Item 1. Legal Proceedings	11
Item 1A. Risk Factors	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3. Defaults Upon Senior Securities	11
Item 4. (Removed and Reserved)	11
Item 5. Other Information	11
Item 6. Exhibits	11

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Interim Consolidated Financial Statements

GLOBAL HEALTH VENTURES INC.

(A Development Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED FEBRUARY 28, 2011

(Expressed in U.S. Dollars)

(Unaudited)

Consolidated Balance Sheets	F-1
Consolidated Statements of Operations	F-2
Consolidated Statements of Cash Flows	F-3
Consolidated Statement of Stockholders’ Deficit	F-4
Notes to the Unaudited Financial Statements	F-5

Global Health Ventures Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(Expressed in US Dollars)

	February 28,			May 31,
	2011			2010
	(unaudited)			(restated)
				(Note 12)
	$			$
ASSETS

Current Assets
Cash and cash equivalents		1,142,104			1,045,958
Accounts receivable		40,530			40,458
Prepaid expenses		3,140			5,127
Due from shareholders		–			13,525
Due from related party		–			4,080
		1,185,774			1,109,148

Property, Plant and Equipment
Laboratory equipment		179,080			141,748
Accumulated depreciation		(38,565	)		(16,816	)
Computer hardware		13,412			12,394
Accumulated depreciation		(6,954	)		(3,714	)
Office furniture and fixtures		5,792			4,692
Accumulated depreciation		(3,227	)		(2,647	)
Office machines and equipment		593			550
Accumulated depreciation		(366	)		(302	)
		149,765			135,905

Intangible Assets
Website development costs		2,509			2,509
Accumulated amortization		(2,509	)		(2,509	)
Patents		55,451			53,093
Deferred finance charges (Note 6)		777,422			1,214,654
		832,873			1,267,747

Total Assets		2,168,412			2,512,800


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable		299,488			350,150
Accrued liabilities (Note 3)		558,575			623,340
Convertible debenture (Note 4)		883,301			467,708
Due to shareholders		586			–

		1,741,950			1,441,198

Stockholders’ Equity
Preferred Stock: 80,000,000 shares authorized, $0.0001 par value No shares issued and outstanding		–			–
Common Stock: 196,000,000 shares authorized, $0.0001 par value 109,585,591 shares issued and outstanding (May 31, 2010 – 68,871,946 shares)		10,923			6,868

Additional Paid-In Capital		5,399,283			3,456,777

Donated Capital		2,474,000			2,474,000

Accumulated other comprehensive income		13,306			25,601

Deficit accumulated during the development stage		(7,471,050	)		(4,891,644	)

		426,462			1,071,602

Total Liabilities and Stockholders’ Equity		2,168,412			2,512,800

(The accompanying notes are an integral part of these consolidated financial statements)

F-1

Global Health Ventures Inc.

(A Development Stage Company)

Consolidated Statements of Operations (Unaudited)

(Expressed in US Dollars)

	Three Months Ended February 28, 2011 $			Three Months Ended February 28, 2010 $			Nine Months Ended February 28, 2011 $			Nine Months Ended February 28, 2010 $			Accumulated from April 25, 2006 (Date of inception) to February 28, 2011 $
Revenue		–			–			–			–			–


Expenses

Amortization		–			627			–			1,882			2,508
Depreciation		9,705			6,281			25,027			6,936			43,636
General and administrative		99,198			122,547			221,107			271,335			521,112
Professional fees:
Stock-based compensation		6,556			8,273			100,262			19,014			237,871
Incurred		24,507			21,058			143,760			52,624			525,424
Research and development		192,244			149,477			492,269			329,061			1,008,104
Salaries and wages:
Stock-based compensation		36,055			113,820			318,105			259,478			701,873
Incurred		96,282			112,802			281,047			275,355			659,495
Write-off of licensing costs		–			–			9,769			–			9,769

Total Expenses		464,547			534,885			1,591,346			1,215,685			3,709,792

Net Loss Before Other Income or Expense		(464,547	)		(534,885	)		(1,591,346	)		(1,215,685	)		(3,709,792	)

Other Income or Expense
Gain on settlement of payable (Note 8)		–			–			60,000			–			60,000
Interest expense		(529,274	)		–			(1,048,059	)		–			(1,217,137	)

Total Other Income or Expense		(529,274	)		–			(988,059	)		–			(1,157,137	)

Net Loss		(993,821	)		(534,885	)		(2,579,405	)		(1,215,685	)		(4,866,929	)

Other Comprehensive Income
Foreign currency translation adjustment		(9,464	)		(7,674	)		(12,295	)		(11,954	)		13,306

Comprehensive Loss		(1,003,285	)		(542,559	)		(2,591,700	)		(1,227,639	)		(4,853,623	)


Net Loss Per Share – Basic and Diluted		–			–			–			–


Weighted Average Shares Outstanding		76,703,160			64,403,074			76,703,160			64,403,074			76,703,160

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

Global Health Ventures Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows (Unaudited)

(Expressed in US Dollars)

	Three Months Ended February 28, 2011 $			Three Months Ended February 28, 2010 $			Nine Months Ended February 28, 2011 $			Nine Months Ended February 28, 2010 $			Accumulated from April 25, 2006 (Date of inception) to February 28, 2011 $
Operating Activities

Comprehensive loss		(1,003,285	)		(533,263	)		(2,591,700	)		(1,218,343	)		(4,853,623	)

Adjustment to reconcile net loss to net cash used in operating activities:
Donated services		–			–			–			–			24,000
Amortization		–			627			–			1,882			2,508
Depreciation		9,705			6,119			25,028			6,774			43,636
Write-off of licensing costs		–						9,769						9,769
Gain on settlement of payable		–			–			(60,000	)		–			(60,000	)
Amortization of deferred finance charges and debt discount		454,673			–			775,131			–			899,015
Stock based compensation and share payments		42,611			155,187			418,367			354,551			939,744

Change in operating assets and liabilities:
Accounts receivable		(9,406	)		(5,202	)		(72	)		(8,587	)		(7,878	)
Prepaid expenses		3,199			(2,905	)		1,987			1,757			3,937
Accounts payable and accrued liabilities		107,683			40,550			357,932			188,690			764,846

Net Cash Used In Operating Activities		(394,820	)		(338,887	)		(1,063,558	)		(673,276	)		(2,234,046	)

Investing Activities

Cash acquired on investment in Posh		–			42,849			–			42,849			61,649
Credit on purchased capital assets					–			15,000			–			15,000
Capital assets purchased		(32,708	)		(51,697	)		(53,887	)		(60,429	)		(198,485	)
Website development costs		–			–			–			–			(2,509	)
Licenses and patents		(1,337	)		(239	)		(12,127	)		(514	)		(42,662	)

Net Cash Used in Investing Activities		(34,045	)		(9,087	)		(51,014	)		(18,094	)		(167,007	)

Financing Activities

Payment of share offering costs		–			–			–			–			(28,400	)
Advances from (repayments to) shareholders		586			66,505			14,110			43,385			585
Advances from (repayments to) a related party		–			(32,686	)		4,080			(1,499	)		125,428
Proceeds from issuance of common stock		–			400,000			–			1,000,000			1,910,018
Proceeds from debenture payable		750,000			–			1,250,000			–			1,650,000
Finance fees on debenture payable		(31,585	)		–			(57,473	)		–			(114,474	)

Net Cash Provided by (Used In) Financing Activities		719,001			433,819			1,210,717			1,041,886			3,543,157

Increase (decrease) in Cash		290,137			85,845			96,146			350,516			1,142,104

Cash – Beginning of Period		851,967			597,387			1,045,958			332,716			–

Cash - End of Period		1,142,104			683,232			1,142,104			683,232			1,142,104

Supplemental Disclosures
Interest paid		–			–			–			–			902
Income taxes paid		–			–			–			–			–

Non-cash Financing Transactions

Payable settled with common shares

12,500

–

343,600

–

343,600

Common stock issued for shares of Posh

–

400

–

400

Shares issued in settlement of advances from related party

–

116,000

Shares issued in partial settlement of debenture payable

359,519

–

1,001,494

–

1,001,494

Shares issued for deferred finance costs

–

252,000

–

1,147,250

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

Global Health Ventures Inc.

(A Development Stage Company)

Consolidated Statement of Stockholders’ Deficit (Unaudited)

(Expressed in US Dollars)

	Common Stock				Additional Paid-In					Accumulated Other			Deficit Accumulated During the Development
					Capital			Donated		Comprehensive			Stage			Total
	Shares		Amount		(restated)			Capital		Income			(restated)			(restated)
	#		$		$			$		$			$			$
Balance – May 31, 2009		62,722,000		6,272		567,478			2,474,000		41,632			(2,807,641	)		281,741
Oct 28, 2009 - common shares issued for cash at $0.75 per share (Note 6)		133,333		13		99,987			–		–			–			100,000
Oct 28, 2009 - common shares issued for cash at $0.75 per share (Note 6)		666,667		67		499,933			–		–			–			500,000
Dec 8, 2009 - common shares issued for cash at $0.75 per share (Note 6)		533,333		53		392,815			–		–			–			392,868
Dec 11, 2009 – share exchange with Posh		4,000,000		400		–			–		–			(105,121	)		(104,721	)
Apr 7, 2010 – common shares issued for cash at $0.80 per share (Note 6)		625,000		63		479,937			–		–			–			480,000
Cashless exercise of warrants		191,613		–		–			–		–			–			–
Convertible debenture financing		–		–		1,231,983			–		–			–			1,231,983
Beneficial conversion feature related to convertible debenture		–		–		63,267			–		–			–			63,267
Foreign currency translation adjustment		–		–		–			–		(16,031	)		–			(16,031	)
Stock-based compensation		–		–		521,377			–		–			–			521,377
Net loss for the period		–		–		–			–		–			(2,177,023	)		(2,177,023	)
Balance – May 31, 2010 (previously reported)		68,871,946		6,868		3,856,777			2,474,000		25,601			(5,089,785	)		1,273,461
Correction of convertible debenture (Note 13)		–		–		(400,000	)		–		–			–			(400,000	)
Adjustment to discount amortization (Note 13)		–		–		–			–		–			154,514			154,514
Adjustment to salary expense (Note 13)		–		–		–			–		–			85,429			85,429
Adjustment to accrued interest expense (Note 13)														(41,802	)		(41,802	)
Balance – May 31, 2010 (as restated)		68,871,946		6,868		3,456,777			2,474,000		25,601			(4,891,644	)		1,071,602
Commitment shares issued		600,000		60		251,940											252,000
Share issuance costs		–		–		(312,000	)										(312,000	)
Oct 4, 2010 - common shares issued for services		230,000		23		19,077			–		–			–			19,100
Jan 1, 2011 - common shares issued for services		250,000		25		12,475			–		–			–			12,500
Cashless exercise of warrants		163,226		–		–			–		–			–			–
Common shares for note conversion		20,970,387		2,097		944,709			–		–			–			946,806
Beneficial conversion feature related to convertible debenture		–		–		609,788			–		–			–			609,788
Cashless exercise of warrants related to convertible debenture		18,500,032		1,850		(1,850	)		–		–			–			–
Foreign currency translation adjustment		–		–		–			–		(12,295	)		–			(12,295	)
Stock-based compensation		–		–		418,367			–		–			–			418,367
Net loss for the period		–		–		–			–		–			(2,579,406	)		(2,579,406	)
Balance – February 28, 2011		109,585,591		10,923		5,399,283			2,474,000		13,306			(7,471,050	)		426,462

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

1. Development Stage Company

Global Health Ventures Inc. (the “Company”) was incorporated in the State of Nevada on April 25, 2006 under the name Acting Scout Inc. The Company changed its name to Goldtown Investments Corp. on September 20, 2007 and on October 6, 2008 changed its name to Global Health Ventures Inc. The Company is located in British Columbia, Canada. The Company is a healthcare technology financial institution that is in the business of acquiring and licensing current outstanding and promising healthcare related technologies for further development and re-licensing to major pharmaceutical companies. The Company is a Development Stage Company, as defined under ASC 915 “Development stage entities”.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. As at February 28, 2011, the Company has never generated any significant revenue and has accumulated losses of $7,471,050 since inception. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s common shares trade on the Over the Counter Bulletin Board (“OTCBB”) under the symbol “GHLV”.

2. Summary of Significant Accounting Policies

a) Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Posh Cosmeceuticals Ltd., and its inactive wholly-owned subsidiary, Global Health (BC) Ventures Inc.

b) Interim Financial Statements

The interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. These financial statements should be used in conjunction with our annual audited financial statements.

c) Use of Estimates

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowance. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

F-5

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

2. Summary of Significant Accounting Policies (continued)

d) Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

e) Revenue Recognition

The Company recognizes revenue in accordance with ASC 605 “Revenue Recognition”. The Company has never generated any revenue since inception.

f) Comprehensive Loss

ASC 220, “Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.

g) Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

h) Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is provided annually at rates calculated to write off the assets over their estimated useful lives as follows:

Laboratory equipment	20% diminishing balance
Computer hardware	45% diminishing balance
Office furniture and fixtures	20% diminishing balance
Office machines and equipment	20% diminishing balance

In the year of acquisition, these rates are reduced by one-half.

i) Long-Lived Assets

In accordance with ASC 360 “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

F-6

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

2. Summary of Significant Accounting Policies (continued)

j) Website Development Costs

The Company capitalizes website development costs in accordance with ASC 350 “Intangibles – Goodwill and Other”, whereby costs related to the preliminary project stage of development are expensed and costs related to the application development stage are capitalized. Any additional costs for upgrades and enhancements which result in additional functionality will be capitalized. Capitalized costs will be amortized based on their estimated useful life over three years. Internal costs related to the development of website content are charged to operations as incurred.

k) Financial Instruments

The fair value of financial instruments, which include cash, accounts payable and amounts due to a related party, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company’s operations will be in Canada and the United States, resulting in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

l) Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, current taxes are recognized for the estimated income taxes payable for the current period.

Deferred income taxes are provided based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases as well as the benefit of losses available to be carried forward to future years for tax purposes.

Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be covered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.

m) Foreign Currency Translation

The functional currency of the Company is the Canadian dollar with the reported amounts being stated in the United States dollar. In accordance with ASC 830 “Foreign Currency Matters”, assets and liabilities are translated at the rates of exchange at the balance sheet dates. Income and expense items are translated at average annual rates of exchange. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

n) Research and development costs

Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless the Company believes a development project meets generally accepted accounting criteria for deferral and amortization. No such costs have been deferred as at February 28, 2011 and 2010.

o) Stock-based Compensation

In accordance with ASC 718 “Stock Compensation”, the Company accounts for share-based payments using the fair value method. Common shares issued to third parties for non-cash consideration are valued based on the fair market value of the services provided or the fair market value of the common stock on the measurement date, whichever is more readily determinable.

F-7

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

3. Accrued Liabilities

	February 28, 2011 $		May 31, 2010 (restated) $
Accrued interest		188,967		48,381
Professional fees		5,000		25,000
Research and development		86,095		30,833
Salaries		259,419		207,126
Accrued finance costs		–		312,000
Other		19,094		–
		558,575		623,340

4. Convertible Debenture

On March 19, 2010, the Company sold to one investor a $4,200,000 convertible debenture (“Debenture”) due March 18, 2014.

The debenture bears interest at a rate of 12% per annum payable on maturity. The debenture matures on March 2014, unless converted in accordance with the repayment terms prior to such date.

The debenture is unsecured and ranks equally to any of the Company’s existing and future unsecured debts.

The debenture was sold with a 25% discount from face value for a net book value of $3,150,000. The $3,150,000 consists of cash of $400,000 paid at closing and eleven “Investor Notes” in the amount of $250,000 each. The investor notes are mandatorily pre-payable in sequence, at the rate of one note per month commencing on the seven month anniversary of the closing date.

Beginning six months from the closing date, the lender may require the Company to repay the principal amount and accrued interest, in full or in part, in fully-paid and non-assessable shares of the Company’s common stock at a rate per share equal to the market price as calculated under the debenture agreement. The lender is not permitted to deliver a request for repayment where the dollar amount of the request for repayment would exceed 125% of the amounts outstanding under the debenture. In September 2010, the conversion price was amended, providing for an additional 10% discount to the market price as defined under the debenture agreement.

As long as any amounts due under the debenture are outstanding, the Company is prohibited, unless consented to by the lender, from selling, leasing or otherwise disposing of any of its assets other than in its ordinary course of business, from merging or consolidating with any other person unless the debenture is assumed by the surviving entity and from adopting any plan or arrangement for the dissolution or liquidation of the Company. Debenture covenants also prohibit the Company from redeeming or repurchasing any of its capital stock or making any advance or loan to any person, firm or corporation except for reasonable business expenses advanced to Company employees or independent contractors in the ordinary course of business. Under the terms of the agreement, the Company also has to reserve for issuance 50,000,000 shares of Common Stock as may be issuable from time to time upon a request for repayment of the debenture in common stock.

Events of default under the terms of the agreement include the following:

a)	Default of payment of interest or principal or any amount due under the agreement

b)	Material default, misrepresentation, or material breach of the covenants described in the paragraph above.

c)	Any transfer, conveyance, or assignment of substantial Company or subsidiary assets

F-8

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

4. Convertible Debenture (continued)

d)	Any money judgment, writ of warrant or attachment, or similar process against the company in excess of $100,000

e)	Failure to issue common stock within 5 business days of receipt of a written request for repayment of outstanding amounts in common shares

f)	The average dollar volume of common stock for any consecutive 10 day trading period falls below $40,000 per day

g)	Control of the whole or substantial portion of the Company by any governmental agencies

h)	Order by a court adjudging the Company bankrupt or insolvent, or seeking reorganization

i)	Failure of the Company to maintain its status as a reporting company under the federal securities laws

j)	Failure to timely file reports required to be filed by the SEC

Upon occurrence of one of the above events, the amount due under the debenture will be immediately due and payable at the rate of 110% of the sum of the principal outstanding immediately prior to the event of default and all interest, fees, costs and penalties. These amounts will accrue interest at the rate of 12% per annum until payment.

On July 16, 2010, the Company had an event of default under the terms of the debenture. The holder of the debenture waived the default, and in exchange, raised the interest rate on the debenture from 6% per annum to 9% per annum.

On September 2, 2010, the Company had an event of default under the terms of the debenture. The holder of the debenture waived the default, and in exchange, raised the interest rate on the debenture from 9% per annum to 12% per annum and negotiated a 10% discount on the market price as defined under the agreement for all conversions of the debenture into common stock.

In connection with the issuance of the debenture, the Company incurred $952,250 of issuance costs which consisted of $895,250 of non-cash costs for warrants issued to the lender and for warrants issued as a finder’s fee and $57,000 of cash costs for commissions and related professional fees. Additional cash costs for commissions of $57,473 were incurred in the nine month period ending February 28, 2011. These costs are being amortized and are recorded as interest expense through March 18, 2014, the maturity date of the debenture.

The Company has separately accounted for the liability and equity components of the convertible debenture by allocating the proceeds from the issuance of the debenture between the liability component and the beneficial conversion option, or equity component. Based on this calculation, $609,788 has been allocated to the equity component to date. During the nine month period ended February 28, 2011, the Company recorded amortization of the debt discount in the amount of $402,179 which was charged to interest expense.

	February 28, 2011			May 31, 2010
Principal amount of liability component	$	2,199,998		$	533,333
Amount converted to common shares		(866,666	)		-
Unamortized discount		(450,031	)		(65,625	)
Net carrying amount	$	883,301		$	467,708

For the nine month period ending February 28, 2011, the lender converted $1,001,494 of the debenture, including principal and interest, into 20,970,387 shares of the Company’s stock. For the nine month period ending February 28, 2011, the lender elected to exercise 402,321 share purchase warrants attached to the debenture to purchase 18,500,032 shares of the Company’s stock using a cashless provision.

F-9

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

5. Related Party Transactions

a)	During the nine month period ended February 28, 2011, the President of the Company advanced $nil (2010 - $nil) to the Company, was repaid $nil (2010 - nil) by the Company and incurred $2,330 (2010 - $12,424) of expenses on behalf of the Company.

b)	During the nine month period ended February 28, 2011, the Company paid $17,661 (2010 - $17,005) to a Company related to the President for rent of laboratory space.

On March 15, 2009, the Company entered into a research contract with Globe Laboratories Inc. (“Globe”), a company controlled by 2 individuals related to the President of the Company, to engage Globe for research on the sublingual technologies developed by Globe. The Company agreed to pay $50,000 per quarter to Globe from April 1, 2009 until the technology is put into commercial production, or the technologies are sold or sublicensed. To date, $383,333 in research costs have been accrued under this agreement, of which $350,000 has been paid to Globe.

Effective December 11, 2009, the Company issued an aggregate of 4,000,000 shares of its common stock to the shareholders of Posh Cosmeceuticals Inc., a company controlled by the President of the Company, pursuant to share exchange agreements dated June 12, 2009. The Company issued the securities to twenty-seven non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. Due to the fact that the two companies were not dealing at arm’s length, and due to the transaction not being in the normal course of business, the transaction was recorded at the carrying value of the Company acquired.

The following table sets forth the allocation of the purchase price for the investment in Posh Cosmeceuticals:

Working capital acquired	$	(205,685	)
Property, Plant and Equipment		9,916
Patents and rights		22,557
Other long-term assets		68,492
	$	(104,720	)

Consideration:
Common shares of the Company	$	(400	)
Related party adjustment on purchase charged to deficit		105,120
	$	104,720

6. Deferred Financing Costs

On March 19, 2010, the Company sold to one investor a $4,200,000 convertible debenture (“Debenture”) due March 18, 2014. As part of the debenture financing the Company issued share purchase warrants to purchase up to $800,000 worth of company stock and also issued warrants to purchase 100,000 common shares as a finders fee. These warrants were valued using the Black-Scholes model using the following assumptions:

Risk-free interest rate	2.85%
Expected term to exercise	4 years
Expected volatility of	253%
Expected dividend yield	0%

Based on this calculation $895,250 was recorded as a deferred financing cost.

To date, the company has also incurred direct cash costs relating to this financing of a total of $114,473 which have also been recorded as deferred financing costs.

F-10

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

6. Deferred Financing Costs (continued)

The deferred financing costs are being amortized over the term of the debt.

	February 28, 2011			May 31, 2010
Deferred financing costs	$	1,009,723		$	952,250
Accumulated amortization		(232,301	)		(49,596	)
Net carrying amount		777,422			902,654

Share purchase agreement commitment fee (Note 8)		312,000			312,000
Write-off of commitment fee (Note 8)		(312,000	)		-
		-			312,000
	$	777,422		$	1,214,654

7. Income Taxes

The Company accounts for income taxes using the liability method of tax allocation. Deferred income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Deferred income tax assets are evaluated periodically and if realization is not considered likely, a valuation allowance is provided.

a) Deferred tax assets and liabilities

	February 28, 2011 $			May 31, 2010 $
Property and equipment		8,218			8,218
Intangible assets		878			878
Operating loss carry forwards		1,109,100			630,350
Valuation allowance		(1,118,196	)		(639,446	)
Net future tax asset		-			-

Management believes that it is not more likely than not that it will create sufficient taxable income sufficient to realize its deferred tax assets.

b) Loss carryforwards

The Company has estimated accumulated non-capital losses of approximately $3,697,000 which will expire as follows:

2026	$	9,000
2027		52,000
2028		56,000
2029		168,000
2030		1,316,000
2031		2,096,000
	$	3,697,000

F-11

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

8. Share Purchase Agreement

Pursuant to a Purchase Agreement dated May 28, 2010 and a Registration Rights Agreement dated May 28, 2010 with Lincoln Park Capital Fund, LLC (“LPC”), the Company could have sold to LPC up to $20,000,000 of its common stock over a thirty month period. As part of this agreement, the Company was required to issue 600,000 shares of its stock to LPC as a commitment fee for entering into the Purchase Agreement. The fee was recorded as a payable at May 31, 2010 of $312,000 based on the fair market price of the stock of $0.52.

On June 15, 2010, the shares were issued. The fair market value of the stock on the date of issuance was $0.42, resulting in a gain on the settlement of the payable of $60,000.

On August 14, 2010, the agreement was cancelled and the commitment fee of $312,000 was written off to share issue costs.

9. Warrants

A summary of share purchase warrants outstanding is presented below:

	Number of Warrants			Weighted Average Exercise Price $
Warrants outstanding at June 1, 2010		4,918,333		$	0.68
Expired		(1,000,000	)		-
Exercised		(862,321	)		-
Warrants outstanding at February 28, 2011		3,056,012		$	0.94

10. Stock Options

On June 29, 2009, the Company granted 2,000,000 options to directors and officers of the Company. On November 12, 2010, the Company cancelled these options and reissued 5,200,000 options to directors and officers of the Company. Pursuant to ASC 718-20-35-8, cancellations with concurrent grants of replacement awards are to be treated as a modification of the terms of the cancelled award. As a result, compensation costs recorded in the quarter include the compensation cost of the original award and the incremental cost resulting from the modification.

For the nine months ending February 28, 2011, the fair value of the options of $418,367 has been expensed and 728,000 of the options are exercisable.

A summary of stock options outstanding is presented below:

	Number of Options			Weighted Average Exercise Price $
Options outstanding at June 1, 2010		2,000,000		$	0.70
Granted		5,200,000		$	0.07
Expired		(2,000,000	)		(0.70	)
Options outstanding at February 28, 2011		5,200,000		$	0.07

The Company has estimated the fair value of each option on the date of grant using the Black-Scholes Options Pricing Model with the following weighted average assumptions:

Risk-free interest rate	2.36%
Expected life of options	5-10 years
Expected volatility in the market price of the shares	205%
Expected dividend yield	0.0%

F-12

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

11. Fair Value Measures

ASC 820 “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Our financial instruments consist principally of cash and accounts payable. Pursuant to ASC 820, “Fair Value Measurements and Disclosures”, or the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

12. Restatement of prior year

During the quarter ending November 30, 2010, the Company identified that the compensation expense for the President of the Company for the year ended May 31, 2010 was overstated. In addition, during the review of the financial statements, the Company discovered that the accounting for the convertible debenture considered a beneficial conversion feature in error.

The impact of these restatements on the 2010 financial statements was as follows:

	May 31, 2010
	As previously reported			Adjustment			As restated
Deficit		5,089,785			(198,141	)		4,891,644
Convertible debenture		(222,223	)		(245,485	)		(467,708	)
Accrued expenses		(666,966	)		43,626			(623,340	)
Additional paid up capital		(3,856,777	)		400,000			(3,456,777	)

F-13

Global Health Ventures Inc.

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

February 28, 2011

13. Subsequent Events

In accordance with the terms of the Debenture detailed in Note 4, the Company has received two ‘investor notes’ with a contributed value of $250,000 and face value of $333,333 subsequent to the quarter end.

On March 2, 2011, 164,103 share purchase warrants were exercised using a cashless provision, for 8,000,021 common shares.

On March 16, 2011, 133,334 share purchase warrants were exercised using a cashless provision, for 6,500,033 common shares.

On March 23, 2011, 147,989 share purchase warrants were exercised using a cashless provision, for 7,000,023 common shares.

On March 28, 2011, 124,334 share purchase warrants were exercised using a cashless provision, for 6,000,039 common shares.

On March 31, 2011, 133,910 share purchase warrants were exercised using a cashless provision, for 6,397,485 common shares.

F-14

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

As used in this report, the terms "we", "us", "our", and the “Company" mean Global Health Ventures Inc. and its subsidiaries, unless the context requires otherwise; and all dollar amounts in this report refer to U.S. dollars unless otherwise indicated.

Cautionary Statement Regarding Forward-Looking Information

The statements in this report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding the development of our products, our proposed markets and our business plans.

You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.

Overview of Our Business

We are a specialty pharmaceutical company that develops advanced next generation drugs to displace current “blockbuster” drugs upon their loss of patent protection. The core strength of Global Health is its exclusive access to Sublingual Platform Technology. This technology provides the foundation to design unique pharmaceuticals with properties that result in a market advantage through faster onset of action, increased availability, lower dosage, improved safety, fewer or less severe side effects, reduced dosing regiments, safer systems, taste masking and others. We believe these advantages will enable our new products to establish themselves quickly in the market by displacing existing products in a relatively short period of time. Our lifestyle products are related to male sexual enhancement, anti-addiction and energy boosters. Our therapeutic products are related to weight loss and pulmonary disease management. We work with products that are already approved by the FDA, but require better or faster absorption. We also plan to reformulate existing products that currently have considerable side effects when manufactured with their current chemical formulation. We intend to develop these new products internally or license them from other pharmaceutical companies. We expect to have several products under development and we plan to bring them to the stages of partnership and co-marketing. Our most advanced product (X-Excite) has been contracted out to a manufacturing company in Romania to produce exclusively for the European market. The product has been manufactured and was sent to a hospital in Bulgaria for human clinical trials. The clinical trials are supervised by Clinical Investigation Limited, a contract research organization incorporated in the United Kingdom.

We are a multi-product company. Our current portfolio of products includes:

1.	X-Excite (male sexual enhancement drug)

2.	Relax-B (anti-stress drug)

3.	Nico-Z (nicotine replacement product)

4.	V-Energy (energy booster product)

5.	T-Slim (appetite suppressor drug)

6.	POS001 (growth of hair follicles product)

7.	POS002 (treatment of cellulite product)

X-Excite

X-Excite is a development stage sublingual formulation of sildenafil. Sildenafil is registered under the trade name of Viagra® and currently marketed by Pfizer under patent protection until 2012/2013 (depending on the jurisdiction). Viagra® (sildenafil citrate) is indicated for the treatment of erectile dysfunction, which is the inability to achieve or maintain a penile erection sufficient for satisfactory sexual performance.

Relax-B

This product utilizes Propranolol as its active ingredient. Propranolol is an FDA approved drug for hypertension and anxiety attack prescribed worldwide. When it is used at a low dose, the product has a relaxant property and can reduce stress and anxiety. We have formulated Propranolol to absorb sublingually and have used taste masking products to reduce the taste. Our plan is to develop this product once further financing is secured.

Nico-Z

Nico-Z is a sublingual formulation of nicotine designed for cigarette replacement. We are using a small dose of nicotine (about 5 times less than commercial nicotine) and will achieve a higher concentration of nicotine in the blood in a much shorter time span. The rapid absorption of nicotine will be beneficial for individuals craving cigarette or tobacco products. Nico-Z is not designed for smoking cessation.

V-Energy

This product is a sublingual formulation of vitamin B6/B12. Vitamin B6/B12 is a stimulus and anti-tiredness. This product is reported to be several times more stimulant than caffeine, yet does not have the side effects of caffeine such as increased heart rate, and sleeping disorder. Vitamin B6/B12 is often used in patients with cancer to help them to be less tired and more energetic. Currently vitamin B6/B12 is used by injection or taken orally. Injection is not a convenient way for drug delivery and also carries certain risks including infection. A sublingual formulation would be the most convenient and acceptable route of administration.

T-Slim

T-Slim is a novel formulation of catechin. Catechin is a flavonoid that is found in higher plants and green tea. Catechin is a major component in reducing appetite but has a poor oral absorption rate. A sublingual formulation should have an increased availability. Thus, it will be most beneficial if used whenever a person feels hungry and it should reduce the desire for food appreciably.

POS001

This product is a growth factor which is believed to help the growth of hair follicles. We shall develop the product for hair growth.

POS002

This is an analog of Vitamin K2 which is designed for treatment of cellulite. We shall develop this product once all of our other products are developed.

Our primary research has been focused on the development of our new formulation of drug delivery technology. We continue to improve the drug bioavailability and formulations to maximize absorption. During the next twelve months, we intend to work on the formulation of our drugs, including the study and investigation of the rate of blood absorption into the blood stream. Further, we intend to evaluate the dose ratio between active chemicals and other ingredients. We want to improve the drug availability and maximize absorption. We also intend to set out a formula for drug to body mass ratio. Research will also be conducted on other ingredients which can be used for enhancement of skin penetration.

The following sets forth information relating to the stage of development of our products:

Product	Stage of Development	Approximate Date for Marketing
X-Excite	Clinical Phase I	2013
Relax-B	Filing for Phase I	2014
Nico-Z	Research	2016
V-Energy	Research	2016
T-Slim	Research	2016
POS001	Research	2018
POS002	Research	2018

X-Excite is our most advanced product and has been contracted out to a manufacturing company in Romania to produce exclusively for the European market. The product was manufactured in accordance with European regulatory guidelines and was sent to a hospital in Bulgaria for Phase I human clinical trials. The clinical trials were supervised by Clinical Investigation Limited, a contract research organization incorporated in the United Kingdom. The data from the clinical trials met our expectations and we plan to proceed with Phase II trials in 2011. Phase III clinical trials of X-Excite are planned for 2012. We do not anticipate any hindrances to the progress of this product.

We have filed with regulatory bodies in Europe to conduct Phase I clinical trial for Relax-B and are awaiting the required approval in that regard. Our remaining products are in the early stages of development and we are conducting research for their development.

Plan of Operations

Our plan of operations over the next 12 months is to work on the formulation of our drugs. We anticipate we will require approximately $1.3 million to pursue our plans over the next 12 months. We had cash and cash equivalents of $1,142,104 and a working capital deficit of $556,176 as of February 28, 2011. We plan to obtain the necessary funds from equity or debt financings, as required. However, there can be no assurance that we will be able to obtain the additional financing required, or any at all. If we are not able to obtain additional financing, we may be required to scale back our plans or eliminate them altogether. There can be no assurance that we will achieve our plans, or any of them, and you could lose your entire investment. Our expenditures for the next twelve months include:

Description	Cost to Complete ($)
Equipment		250,000
Leasehold Improvement/rent		200,000
Research (1)		200,000
Packaging		100,000
Wages		300,000
Professional Fees		100,000
Travel		50,000
Overhead		50,000
Administration		50,000
Total		1,300,000

(1) Represents a quarterly payment of $50,000 to Globe Laboratories.

Results of Operations

The following discussion and analysis of our results of operations and financial condition for the three and nine months ended February 28, 2011 should be read in conjunction with our interim consolidated financial statements and related notes included in this report, as well as our most recent annual report on Form 10-K/A for the year ended May 31, 2010. The financial information for the year ended May 31, 2010 included in this report has been restated as the compensation expense of the President of the Company for the year ended May 31, 2010 was overstated and to correct the accounting for the beneficial conversion feature of the convertible debenture sold in May 2010 (see Note 12). See our Form 8-K filed with the SEC on January 4, 2011.

Three Months ended February 28, 2011 Compared to Three Months ended February 28, 2010

Revenues

We have not generated any revenues from inception on April 25, 2006 to February 28, 2011. We do not anticipate generating any revenues until we have developed our products to the point where they are suitable for commercial production. We anticipate we will incur substantial expenses in the development of our business and current products and the identification and acquisition of new healthcare technologies. Accordingly, we expect to incur significant losses into the foreseeable future. If we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon which to base any assumption as to the likelihood that we will be successful in our plan of operations, and we can provide no assurance to investors that we will generate any operating revenues or achieve profitable operations.

Expenses

During the three months ended February 28, 2011, our operating expenses totalled $464,547, including $31,063 in professional fees, $99,198 in general and administrative expenses, $132,337 in salaries, and $192,244 in research and development costs. During the three months ended February 28, 2010, our operating expenses totalled $534,885, including $29,331 in professional fees, $122,547 in general and administrative expenses, $149,477 in research and development costs and $226,622 in salaries. Operating expenses generally decreased due to a decrease in our operations for the period.

Our general and administrative expenses consist of rent, travel, advertising and promotion, office maintenance, communication expenses (cellular, internet, fax, and telephone), courier, postage costs, and office supplies. General and administrative expenses decreased to $99,198 for the three months ended February 28, 2011 from $122,547 for the three months ended February 28, 2010, primarily due to better management and reduction in overhead.

Professional fees increased to $31,603 for the three months ended February 28, 2011 from $29,331 for the same period in 2010, primarily due to an increase in legal fees.

Salaries decreased to $132,337 in the current period from $226,622 in the prior period, primarily due to a decrease in personnel and the accounting for share-based payments using the fair value method.

Research and development costs increased to $192,244 in the current period from $149,477 in the prior period, primarily due to the advancement in our product development and clinical and manufacturing work as well as the purchase of raw materials for conducting research on our various products.

We reported a loss from operations of $464,547 for the three months ended February 28, 2011, compared to a loss from operations of $534,885 for the three months ended February 28, 2010.

Interest expense increased to $529,274 in the current period from $0 in the prior period, primarily due to the sale of a convertible debenture in May 2010 in the amount of $4,200,000 (see Note 4).

Net Loss

We incurred a net loss of $993,821 for the three months ended February 28, 2011, compared to $534,885 for the three months ended February 28, 2010.

Nine Months ended February 28, 2011 Compared to Nine Months Ended February 28, 2010

Revenues

We have not generated any revenues from inception on April 25, 2006 to February 28, 2011. We do not anticipate generating any revenues until we have developed our products to the point where they are suitable for commercial production. We anticipate we will incur substantial expenses in the development of our business and current products and the identification and acquisition of new healthcare technologies. Accordingly, we expect to incur significant losses into the foreseeable future. If we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon which to base any assumption as to the likelihood that we will be successful in our plan of operation, and we can provide no assurance to investors that we will generate any operating revenues or achieve profitable operations.

Expenses

During the nine months ended February 28, 2011, our operating expenses totalled $1,591,346, including $244,022 in professional fees, $221,107 in general and administrative expenses, $599,152 in salaries, $492,269 in research and development costs and $9,769 relating to the write-off of licensing costs. During the nine months ended February 28, 2010, our operating expenses totalled $1,215,685, including $71,638 in professional fees, $271,335 in general and administrative expenses, $329,061 in research and development costs and $534,833 in salaries. Operating expenses generally increased due to an increase in our operations for the period.

Our general and administrative expenses consist of rent, travel, advertising and promotion, office maintenance, communication expenses (cellular, internet, fax, and telephone), courier, postage costs, and office supplies. General and administrative expenses decreased to $221,107 for the nine months ended February 28, 2011 from $271,335 for the nine months ended February 28, 2010, primarily due to better management and reduction in overhead.

Professional fees increased to $244,022 for the nine months ended February 28, 2011 from $71,638 for the same period in 2010, primarily due to consulting fees being included as professional fees and the accounting for share-based payments using the fair value method.

Salaries increased to $599,152 in the current period from $534,883 in the prior period, primarily due to the accounting for share-based payments using the fair value method.

Research and development costs increased to $492,269 in the current period from $329,061 in the prior period, primarily due to the advancement in our product development and clinical and manufacturing work as well as the purchase of raw materials for conducting research on our various products.

We reported a loss from operations of $1,591,346 for the nine months ended February 28, 2011, compared to a loss from operations of $1,215,685 for the nine months ended February 28, 2010.

In the current period, we recognized a gain on the settlement of a payable of $60,000 relating to shares issued under a purchase agreement entered in May 2010 (see Note 8).

Interest expense increased to $1,048,059 in the current period from $0 in the prior period, primarily due to the sale of a convertible debenture in May 2010 in the amount of $4,200,000 (see Note 4).

Net Loss

We incurred a net loss of $2,579,405 for the nine months ended February 28, 2011, compared to $1,215,685 for the nine months ended February 28, 2010.

Liquidity and Capital Resources

We had cash and cash equivalents of $1,142,104 and a working capital deficit of $556,176 as of February 28, 2011, compared to cash of $683,232 and working capital of $212,885 as of February 28, 2010.

To date, we have not generated any revenue and have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We expect this situation to continue for the foreseeable future.

Our plan of operations over the next 12 months is to work on the formulation of our drugs. We anticipate we will require approximately $1.3 million to pursue our plans over the next 12 months. We plan to obtain the necessary funds from equity or debt financings, as required. However, there can be no assurance that we will be able to obtain the additional financing required, or any at all. If we are not able to obtain additional financing, we may be required to scale back our plans or eliminate them altogether. There can be no assurance that we will achieve our plans, or any of them, and you could lose your entire investment. Our expenditures for the next twelve months include:

Cash Flow Used in Operating Activities

Operating activities used cash of $394,820 for the three months ended February 28, 2011, compared to using cash of $338,887 for the three months ended February 28, 2010. The increase in cash used during the period ended February 28, 2011 was primarily attributable to increased legal and accounting activities, and research and development.

Operating activities used cash of $1,063,558 for the nine months ended February 28, 2011, compared to using cash of $673,276 for the nine months ended February 28, 2010. The increase in cash used during the period ended February 28, 2011 was primarily attributable to increased legal and accounting activities, consulting fees, research and development and salaries.

Cash Flow Used in Investing Activities

Investing activities used cash of $34,045 for the three months ended February 28, 2011, compared to using cash of $9,087 for the three months ended February 28, 2010, primarily due to capital assets purchased and licenses and patents.

Investing activities used cash of $51,014 for the nine months ended February 28, 2011 primarily due to capital assets purchased and licenses and patents, compared to using cash of $18,094 for the nine months ended February 28, 2010 primarily due to capital assets purchased offset by cash acquired on the acquisition of Posh Cosmeceuticals in December 2009.

Cash Flow Provided by Financing Activities

Financing activities provided cash of $719,001 for the three months ended February 28, 2011 primarily due to proceeds from a debenture, compared to providing cash of $433,819 for the three months ended February 28, 2010 primarily due to the issuance of common stock and advances from shareholders.

Financing activities provided cash of $1,210,717 for the nine months ended February 28, 2011 primarily due to proceeds from a debenture, compared to providing cash of $1,041,886 for the nine months ended February 28, 2010 primarily due to the issuance of common stock and advances from shareholders.

We anticipate we will require approximately $1,300,000 to pursue our plan of operations over the next 12 months. We had cash and cash equivalents of $1,142,104 and a working capital deficit of $556,176 as of February 28, 2011 and will require additional capital to pursue our business plans. We intend to raise additional funds through the sale of our equity securities or through debt financing. There are no assurances that we will be able to obtain the funds required for our continued operation, upon terms acceptable to us or at all. If we are not able to obtain additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or cease the operation of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

We do not anticipate generating positive internal operating cash flows until we can generate substantial revenues from the commercial production of our products. There is no assurance that we will achieve profitable operations in the future. We have historically financed our operations primarily by cash flows generated from the sale of our equity securities and through cash infusions from officers and affiliates in exchange for debt and/or common stock. No officer or affiliate has made any commitment or is obligated to continue to provide cash through loans or purchases of equity.

We are currently seeking additional financing, however, we currently do not have any financing arrangements in place and there is no assurance that we will be successful in completing any further private placement financings. If we are unsuccessful in raising sufficient funds through future capital raising efforts, we may review other financing options.

Going Concern

Our financial statements for the period ended February 28, 2011 have been prepared on a going concern basis and Note 1 to the financial statements identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our common stock and loans from related and other parties to fund our operations. We may not generate any material revenues, and if we are unable to raise equity or secure alternative financing, we may not be able to pursue our plans and our business may fail.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation and under the supervision of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

During the course of the preparation of our financial statements for the period ended November 30, 2010, our Chief Executive Officer and Chief Financial Officer identified a material weakness in our internal controls and disclosure controls and procedures. A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on the assessment of the effectiveness of disclosure controls and procedures as of February 28, 2011, the following deficiencies were identified:

Our annual audited financial statements for the year ended May 31, 2010 and unaudited interim financial statements for the three months ended August 31, 2010 required an audit adjustment to the accounting and disclosure of the compensation paid to our President in fiscal 2010. The amount of compensation paid to our President reported in our Annual Report on Form 10-K for the year ended May 31, 2010 was overstated due to our acquisition of Posh Cosmeceuticals Inc. effective December 2009 and an inadvertent error in the accrual of compensation to which our President is entitled. Similarly, the amount of compensation paid to our President reported in our Quarterly Report on Form 10-Q for the three months ended August 31, 2010 was overstated due to an inadvertent error in the accrual of compensation to which our President is entitled. Our annual audited financial statements for the year ended May 31, 2010 and unaudited interim financial statements for the three months ended August 31, 2010 have been restated to reflect this adjustment and disclosure of the actual compensation paid or accrued to our President was made.

In addition, based on the assessment of the effectiveness of disclosure controls and procedures as of February 28, 2011, the following additional deficiencies were identified:

1.	Lack of segregation of duties/management override – in common with businesses that have few employees, there exists a weakness as one person performs many different functions;

2.	Financial reporting deficiencies – certain accounting entries and related reporting of transactions were inadvertently not properly recorded in the past.

Accordingly, our management concluded that our disclosure controls and procedures as of February 28, 2011 were not effective.

Management plans to remediate many of these deficiencies by engaging an accountant (other than our independent auditors) to prepare our financial statements on our behalf going forward. In addition, management plans to work with such accountants in evaluating or proceeding with any potential acquisitions. Also, management is currently considering additional remediation plans with respect to the above.

Changes in Internal Control over Financial Reporting

There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material pending legal proceedings and are not aware of any legal proceedings that have been threatened against us. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or securityholder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There have been no sales of our equity securities during the period covered by this report that have not been previously reported.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Exhibit Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: April 18, 2011		GLOBAL HEALTH VENTURES INC.

	By:	/s/ Hassan Salari
		Hassan Salari
		Chief Executive Officer

Kedem Pharmaceuticals Inc. - FORM 10-Q - April 18, 2011

Attached files

Kedem Pharmaceuticals Inc. Reports