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Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2011

 

OR

 

o

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to            

 

COMMISSION FILE NUMBER 333-142076

 

IRIS BIOTECHNOLOGIES INC.

(Exact Name of small business issuer as specified in its charter)

 

California

 

77-0506396

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

5201 Great America Parkway, Suite 320, Santa Clara, California 95054

(Address of principal executive offices) (Zip Code)

 

Issuer’s telephone Number: (408) 867-2885

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No 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 (or for such shorter period that the registrant was required to submit and post such files). Yes o   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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o

 

Accelerated filer  o

 

 

 

Non-accelerated filer o

 

Smaller reporting company  x

(Do not check if a smaller
reporting company)

 

 

 

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

 

As of May 13, 2011 the issuer had 12,115,501 outstanding shares of Common Stock.

 

 

 





Table of Contents

 

IRIS BIOTECHNOLOGIES, INC

(a development stage company)

CONDENSED BALANCE SHEETS

 

 

 

March 31,

 

December 31,

 

 

 

2011

 

2010

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

67,196

 

$

3,222

 

Total current assets

 

67,196

 

3,222

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation of $203,254 and $199,861 as of March 31, 2011 and December 31, 2010, respectively

 

28,764

 

32,158

 

 

 

 

 

 

 

Total assets

 

$

95,960

 

$

35,380

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

108,815

 

$

102,483

 

Accrued liabilities

 

 

432,000

 

Notes payable, related party

 

 

53,400

 

Total current liabilities

 

108,815

 

587,883

 

 

 

 

 

 

 

Long term debt:

 

 

 

 

 

Convertible notes payable

 

25,000

 

25,000

 

Convertible note payable, related party net of debt discount of $11,930 and $13,247 as of March 31, 2011 and December 31, 2010, respectively

 

56,274

 

89,332

 

Total liabilities

 

190,089

 

702,215

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Preferred stock, no par or stated value; 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2011 and December 31, 2010

 

 

 

Common stock, no par or stated value; 20,000,000 shares authorized; 12,069,751 and 11,641,913 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively

 

5,994,268

 

5,527,508

 

Additional paid in capital

 

2,143,924

 

2,101,945

 

Common stock subscription receivable

 

(129,375

)

(163,750

)

Deficit accumulated during development stage

 

(8,102,946

)

(8,132,538

)

Total stockholders’ deficit

 

(94,129

)

(666,835

)

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$

95,960

 

$

35,380

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

4



Table of Contents

 

IRIS BIOTECHNOLOGIES, INC

(a development stage company)

CONDENSED STATEMENTS OF INCOME (LOSSES)

(unaudited)

 

 

 

Three months ended March 31,

 

For the period from
February 16, 1999 (date
of inception) through

 

 

 

2011

 

2010

 

March 31, 2011

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

$

127,596

 

$

128,747

 

$

4,403,379

 

Research and development (Note 1)

 

46,049

 

 

1,900,270

 

Impairment of intellectual property

 

 

 

1,838,250

 

Depreciation

 

3,394

 

4,457

 

203,255

 

Total operating expenses

 

177,039

 

133,204

 

8,345,154

 

 

 

 

 

 

 

 

 

Net loss from operations

 

(177,039

)

(133,204

)

(8,345,154

)

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Grant income

 

209,671

 

 

244,480

 

Interest income (expense)

 

(3,040

)

(1,142

)

(2,272

)

 

 

 

 

 

 

 

 

Net income (loss) before provision for income taxes

 

29,592

 

(134,346

)

(8,102,946

)

 

 

 

 

 

 

 

 

Income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

29,592

 

$

(134,346

)

$

(8,102,946

)

 

 

 

 

 

 

 

 

Income (loss) per common share-basic

 

$

0.00

 

$

(0.01

)

$

(0.83

)

 

 

 

 

 

 

 

 

Income (loss) per common share-fully diluted

 

$

0.00

 

$

(0.01

)

$

(0.83

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding-basic

 

12,045,843

 

11,268,415

 

9,801,462

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding-fully diluted

 

13,601,187

 

11,268,415

 

9,801,462

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

5



Table of Contents

 

IRIS BIOTECHNOLOGIES, INC

(a development stage company)

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FROM JANUARY 1, 2011 THROUGH MARCH 31 2011

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

 

 

 

Deficit accumulated

 

 

 

 

 

Preferred shares

 

Common shares

 

Additional

 

Stock

 

Subscription

 

Deferred

 

during

 

 

 

 

 

Stock

 

Amount

 

Stock

 

Amount

 

Paid in Capital

 

To be Issued

 

Receivable

 

Compensation

 

Development stage

 

Total

 

Balance, January 1, 2011

 

 

$

 

11,641,913

 

$

5,527,508

 

$

2,101,945

 

$

 

$

(163,750

)

$

 

$

(8,132,538

)

$

(666,835

)

Common stock issued in January 2011 in exchange for accounts payable and accruals at $1.00 per share

 

 

 

66,000

 

66,000

 

 

 

 

 

 

66,000

 

Common stock issued in January 2011 in exchange for accounts payable and accruals at $1.11 per share

 

 

 

353,838

 

392,760

 

 

 

 

 

 

392,760

 

Common stock issued in March 2011 at $1.00 per share in exchange for services rendered

 

 

 

8,000

 

8,000

 

 

 

 

 

 

8,000

 

Common stock subscription offset by note payable

 

 

 

 

 

 

 

34,375

 

 

 

34,375

 

Fair value of vested options issued for services

 

 

 

 

 

41,979

 

 

 

 

 

41,979

 

Net income

 

 

 

 

 

 

 

 

 

29,592

 

29,592

 

 

 

 

$

 

12,069,751

 

$

5,994,268

 

$

2,143,924

 

$

 

$

(129,375

)

$

 

$

(8,102,946

)

$

(94,129

)

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

6



Table of Contents

 

IRIS BIOTECHNOLOGIES, INC

(a development stage company)

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

Three months ended March 31,

 

For the period from
February 16, 1999 (date of
inception) through

 

 

 

2011

 

2010

 

March 31, 2011

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income(loss)

 

$

29,592

 

$

(134,346

)

$

(8,102,946

)

Adjustments to reconcile net loss to cash (used in) operating activities:

 

 

 

 

 

 

 

Depreciation

 

3,394

 

4,456

 

202,928

 

Amortization of deferred compensation

 

 

 

46,926

 

Amortization of beneficial conversion feature relating to convertible debt

 

1,317

 

 

3,246

 

Common stock issued in exchange for services rendered

 

8,000

 

16,000

 

551,539

 

Impairment of intellectual property

 

 

 

1,800,000

 

Options and warrants issued in exchange for services rendered

 

41,979

 

31,017

 

2,081,822

 

Increase (decrease) in:

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

33,092

 

59,665

 

587,473

 

Net cash provided by (used in) operating activities:

 

117,374

 

(23,208

)

(2,829,012

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

 

(221,591

)

Net cash (used in) investing activities:

 

 

 

(221,591

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of note payable

 

 

 

81,454

 

Proceeds from sale of common stock

 

 

25,000

 

2,940,845

 

Exercise of common stock options

 

 

 

42,500

 

Net (payments) proceeds, related party

 

(53,400

)

(950

)

53,000

 

Net cash (used in) provided by financing activities

 

(53,400

)

24,050

 

3,117,799

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

63,974

 

842

 

67,196

 

Cash and cash equivalents beginning of period

 

3,222

 

442

 

 

Cash and cash equivalents end of period

 

$

67,196

 

$

1,284

 

$

67,196

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

 

$

 

$

277

 

Cash paid during the period for taxes

 

$

 

$

 

$

 

Convertible debt adjusted with subscription receivable

 

$

34,375

 

$

 

$

41,250

 

Beneficial conversion feature of convertible notes payable

 

$

 

$

 

$

15,176

 

Common stock issued in exchange for intellectual property

 

$

 

$

 

$

1,800,000

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements

 

7



Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A summary of the significant accounting policies applied in the preparation of the accompanying unaudited condensed financial statements follows.

 

General

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Accordingly, the results from operations for the three month period ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. The unaudited condensed financial statements should be read in conjunction with the December 31, 2010 financial statements and footnotes thereto included in the Company’s Form 10-K filed on April 6, 2011.

 

Business and Basis of Presentation

 

Iris BioTechnologies Inc. (the “Company”) was incorporated on February 16, 1999 under the laws of the State of California. The Company is in the development stage as defined under Accounting Standards Codification subtopic 915-10 Development Stage Entities and its efforts are principally devoted to developing solutions for the detection and monitoring of monogenic and complex genomic diseases. The Company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. For the period from inception through March 31, 2011, the Company has accumulated losses of $8,102,946.

 

Cash and Cash Equivalents

 

For purposes of the Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.

 

Property and Equipment

 

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years.

 

Long-Lived Assets

 

The Company follows Accounting Standards Codification subtopic 360-10, Property, plant and equipment (“ASC 360-10”). The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

 

8



Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates

 

Income Taxes

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial.

 

Net Income (loss) Per Common Share

 

The Company computes earnings per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year.  For the three months ended March 31, 2010 common stock equivalents derived from shares issuable conversion of convertible notes and   the exercise of options and warrants are not considered in the calculation of the weighted average number of common shares outstanding because they would be anti-dilutive, thereby decreasing the net loss per share.

 

Research and Development

 

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenditures of $46,049 and $Nil for the three months ended March 31, 2011 and 2010, respectively; and $1,900,270 from the period from February 16, 1999 (date of inception) to March 31, 2011.

 

During the three months ended March 31, 2011, the Company received $209,671 grant income under the a federal program entitled the Qualifying Therapeutic Discovery Project.  The grant was only available to taxpayers with no more than 250 employees and covers up to 50 percent of qualified investment made in 2009 and 2010.

 

Liquidity and Dependency of Key Management

 

To date the Company has generated no revenues, has incurred expenses, and has sustained losses. As shown in the accompanying financial statements, the Company incurred an operating loss of $177,039 during the three months ended March 31, 2011 and $133,204 during the three months ended March 31, 2010. For the period from February 16, 1999 (date of inception) through March 31, 2011, the Company has accumulated losses of $8,102,946. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise.

 

9



Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)

 

The future success or failure of the Company is dependent primarily upon the continued efforts and financial support of Simon Chin, the Company’s Chief Executive Officer, Chief Financial Officer and the majority shareholder (see Note 3).  As in the past, Mr. Chin has committed to provide all necessary funding needed to the meet the Company’s financial obligations through 2011.

 

Concentrations of Credit Risk

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and related party receivables. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. The Company periodically reviews its trade receivables in determining its allowance for doubtful accounts. The Company does not have accounts receivable and allowance for doubtful accounts at March 31, 2011 and December 31, 2010.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.  All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed. There were no items required to be measured at fair value on a recurring basis in the financial statement as of March 31, 2011.

 

The company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value. Neither of these statements had an impact on the Company’s financial position, results of operations nor cash flows.

 

Stock Based Compensation

 

The Company follows the fair value recognition provisions of Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) using the modified-prospective transition method. Under this transition method, stock-based compensation expense was recognized in the financial statements for granted, modified, or settled stock options. Compensation expense recognized included the estimated expense for stock options granted on and subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of ASC 718-10, and the estimated expense for the portion vesting in the period for options granted prior to, but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of ASC 718-10. Results for prior periods have not been restated, as provided for under the modified-prospective method.

 

ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma information required under ASC 718-10 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

 

Upon adoption of ASC 718-10, the Company is using the Black-Scholes option-pricing model as its method of valuation for share-based awards granted beginning in fiscal 2006, which was also previously used for the Company’s pro forma information required under ASC 718-10 The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and certain other market variables such as the risk free interest rate.

 

For the three months ended March 31, 2011 and 2010, the Company granted 285,000 and Nil employee stock options, respectively.  The fair value of issued vesting options is $41,979 and $31,017 for the three months ended March 31, 2011 and 2010, respectively.

 

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Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)

 

Recent Accounting Pronouncements

 

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

NOTE 2 - PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant and equipment at March 31, 2011 and December 31, 2010 are as follows:

 

 

 

March 31, 2011

 

December 31, 2010

 

Computer equipment

 

$

61,201

 

$

61,201

 

Office equipment

 

1,728

 

1,728

 

Furniture and fixtures

 

3,586

 

3,586

 

Manufacturing equipment

 

165,503

 

165,503

 

 

 

232,018

 

232,018

 

Less: accumulated depreciation

 

(203,254

)

(199,860

)

 

 

$

28,764

 

$

32,158

 

 

During the three months ended March 31, 2011 and 2010, depreciation expense charged to operations was $3,394 and $4,457, respectively.

 

NOTE 3 — RELATED PARTY ADVANCES AND NOTES PAYABLES

 

On September 24, 2009, the Company issued a note totaling $38,000 to a shareholder/director, unsecured and bearing an interest rate of 7.5% per annum, due five years from date of issuance.  The notes are convertible into the Company’s common stock at a conversion rate of $2.25 per share. On November 3, 2010 and January 2, 2011, $6,875 and $31,125 of the outstanding note was offset by a common stock subscription receivable due to the Company. During the three months ended March 31, 2011 and 2010, the Company has charged $0 and $702.74, respectively to interest expense.

 

One of our board members owns 40% of an entity that entered into a 5-year, 7.5% interest, and convertible note agreement with the Company for the amount of $71,454 in May 2010. The note is convertible at any time prior to maturity, at the holder’s option, into shares of our common stock at $1.13 per share. On January 2, 2011, $3,250 of the outstanding note payable was offset by a common stock subscription receivable due the Company.  During the three months ended March 31, 2011, the Company has charged $2,578 to interest expense inclusive of debt discount amortization.

 

In accordance with ASC 470-20, the Company recognized an embedded beneficial conversion feature present in the note. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The Company recognized and measured an aggregate of $15,176 of the proceeds, which is equal to the intrinsic value of the embedded beneficial conversion feature, to additional paid-in capital and a discount against the note. The debt discount attributed to the beneficial conversion feature is charged to current period operations as interest expense using the effective interest method over the term of the note.

 

During the three months ended March 31, 2011, the recorded an amortization of the discount of $1,316 as a charge against current period interest expense.

 

11



Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 3 — RELATED PARTY ADVANCES AND NOTES PAYABLES (continued)

 

Convertible related party notes at March 31, 2011 and December 31, 2010 are as follows:

 

 

 

March 31, 2011

 

December 31, 2010

 

Convertible notes payable, related party

 

$

 

$

31,125

 

Convertible note payable, unrelated party net of debt discount of $11,930 and $13,247, respectively

 

56,274

 

58,207

 

Total

 

56,274

 

89,332

 

Less: current portion

 

 

 

Long term portion

 

$

56,274

 

$

89,332

 

 

Aggregate maturities of long-term debt as of December 31, 2010 are as follows:

 

Year ended

 

Amount

 

December 31, 2011

 

$

 

December 31, 2012

 

 

December 31, 2013

 

 

December 31, 2014

 

 

December 31, 2015 and above

 

68,204

 

Total

 

68,204

 

Less: Debt Discount

 

11,930

 

Total

 

$

56,274

 

 

The Company’s President and shareholders have advanced funds on a non-interest-bearing basis to the Company for working capital purposes since the Company’s inception in February 1999.  No formal repayment terms or arrangements exist. The net amount outstanding at March 31, 2011 and December 31, 2010 was $Nil and $53,400, respectively.

 

NOTE 4 - LONG TERM DEBT

 

Long-term debt at March 31, 2011 and December 31, 2010 are as follows:

 

 

 

March 31, 2011

 

December 31, 2010

 

Note payables

 

$

25,000

 

$

25,000

 

Total

 

25,000

 

25,000

 

Less: current portion

 

 

 

Long term portion

 

$

25,000

 

$

25,000

 

 

On October 9, 2009, the Company issued a $5,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due five years from date of issuance.  The note is convertible into the Company’s common stock at a conversion rate of $2.25 per share.

 

On December 23, 2009, the Company issued a $10,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due five years from date of issuance.  The note is convertible into the Company’s common stock at a conversion rate of $2.25 per share.

 

On January 10, 2010, the Company issued a $10,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due five years from date of issuance.  The note is convertible into the Company’s common stock at a conversion rate of $2.25 per share.

 

12



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IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 5 - STOCKHOLDER EQUITY

 

Preferred stock

 

The Company is authorized to issue 5,000,000 shares of no par preferred stock. From date of inception through March 31, 2011, the Company has not issued any preferred shares.

 

Common stock

 

The Company is authorized to issue 20,000,000 shares of no par value common stock. As of March 31, 2011 and December 31, 2010 the Company has 12,069,751 and 11,641,913 shares of common stock issued and outstanding, respectively.

 

During the three months ended March 31, 2011, the Company issued an aggregate of 427,838 shares of common stock for services in the amount of $466,760 out of which 419,838 shares of common stock were issued for a value of $458,760 related to prior accruals.

 

NOTE 6 - WARRANTS AND OPTIONS

 

Warrants

 

The following table summarizes the changes in warrants outstanding and related prices for the shares of the Company’s common stock issued to shareholders at March 31, 2011:

 

Exercise
Price

 

Number
Outstanding

 

Warrants Outstanding
Weighted Average
Remaining Contractual
Life (years)

 

Weighted
Average
Exercise price

 

Number
Exercisable

 

Warrants Exercisable
Weighted
Average
Exercise Price

 

$

 0.13

 

40,000

 

3.22

 

$

0.13

 

40,000

 

$

0.13

 

$

 2.00

 

31,400

 

0.45

 

$

2.00

 

31,400

 

$

2.00

 

$

 2.25

 

23,629

 

1.89

 

$

2.25

 

23,629

 

$

2.25

 

 

 

95,029

 

 

 

 

 

95,029

 

 

 

 

Transactions involving the Company’s warrant issuance are summarized as follows:

 

 

 

Number of
Shares

 

Weighted
Average
Price Per Share

 

Outstanding at December 31, 2009

 

95,029

 

$

1.29

 

Issued

 

 

 

Exercised

 

 

 

Canceled or expired

 

 

 

Outstanding at December 31, 2010

 

95,029

 

$

1.29

 

Issued

 

 

 

Exercised

 

 

 

Canceled or expired

 

 

 

Outstanding at March 31, 2011

 

95,029

 

$

1.29

 

 

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Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 6 - WARRANTS AND OPTIONS (continued)

 

Options

 

Employee Options

 

The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to employees under a stock option plan at March 31, 2011:

 

 

 

Options Outstanding

 

Options Exercisable

 

Exercise
Prices (S)

 

Number
Outstanding

 

Weighted Average
Remaining
Contractual Life
(Years)

 

Weighted
Average
Exercise
Price (S)

 

Number
Exercisable

 

Weighted
Average
Exercise
Price

 

$

 0.13

 

80,000

 

8.22

 

$

0.13

 

80,000

 

$

0.13

 

0.15

 

400,000

 

3.22

 

0.15

 

400,000

 

0.15

 

0.80

 

85,000

 

9.96

 

0.80

 

 

0.80

 

1.00

 

813,875

 

4.58

 

1.00

 

813,875

 

1.00

 

1.11

 

200,000

 

9.76

 

1.11

 

8,333

 

1.11

 

2.25

 

167,696

 

7.16

 

2.25

 

118,785

 

2.25

 

 

 

1,746,571

 

 

 

0.89

 

1,420,993

 

0.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions involving employee stock options issued are summarized as follows:

 

 

 

Number of Shares

 

Weighted Average
Price Per Share

 

Outstanding at December 31, 2009:

 

1,689,446

 

$

0.85

 

Granted

 

 

 

Exercised

 

(86,875

)

(0.71

 

Canceled or expired

 

(121,000

)

(0.92

 

Outstanding at December 31, 2010

 

1,481,571

 

$

0.86

 

Granted

 

285,000

 

1.02

 

Exercised

 

 

 

Expired

 

(20,000

)

(0.50

)

Outstanding at March 31, 2011:

 

1,746,571

 

$

0.89

 

 

On January 2, 2011, the Company granted 200,000 employee stock options with an exercise price of $1.11 vesting over four years and expiring ten years from issuance.  The fair value of the  (as determined as described below) of $219,376 is charged ratably over the vesting term of the options.

 

The fair value of these stock options granted and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

 

Significant assumptions:

 

 

 

Risk-free interest rate at grant date

 

3.30

%

Expected stock price volatility

 

155.50

%

Expected dividend payout

 

 

Expected option life-years (a)

 

10

 

 


(a)           The expected option life is based on contractual expiration dates

 

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Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 6 - WARRANTS AND OPTIONS (continued)

 

Options (continued)

 

Employee Options (continued)

 

On March 16, 2011, the Company granted 85,000 employee stock options with an exercise price of $0.80 vesting over four years and expiring ten years from issuance.  The fair value of the  (as determined as described below) of $66,389 is charged ratably over the vesting term of the options.

 

The fair value of these stock options granted and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

 

Significant assumptions:

 

 

 

Risk-free interest rate at grant date

 

3.22

%

Expected stock price volatility

 

139.10

%

Expected dividend payout

 

 

Expected option life-years (a)

 

10

 

 


(a)           The expected option life is based on contractual expiration dates

 

The fair value of the vested portion previously granted employee options of $32,719 and $23,579 was charged during the three months ended March 31, 2011 and 2010, respectively.

 

Non-employee options

 

The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to non-employees under a stock option plan at December 31, 2010:

 

 

 

Options Outstanding

 

Options Exercisable

 

Exercise
Prices

 

Number
Outstanding

 

Weighted Average
Remaining
Contractual Life
(Years)

 

Weighted
Average
Exercise
Price

 

Number
Exercisable

 

Weighted
Average
Exercise
Price

 

$

 0.50

 

40,000

 

1.12

 

$

0.50

 

40,000

 

$

0.50

 

1.00

 

110,000

 

4.96

 

1.00

 

110,000

 

1.00

 

1.40

 

105,000

 

7.99

 

1.40

 

64,167

 

1.40

 

 

 

255,000

 

 

 

1.09

 

214,167

 

1.03

 

 

Transactions involving non-employee stock options issued are summarized as follows:

 

 

 

Number of Shares

 

Weighted Average
Price Per Share

 

Outstanding at December 31, 2009:

 

375,000

 

$

0.90

 

Granted

 

 

 

Exercised

 

 

 

Canceled or expired

 

 

 

Outstanding at December 31, 2010

 

375,000

 

$

0.90

 

Granted

 

 

 

Exercised

 

 

 

Canceled or expired

 

(120,000

)

(0.50

)

Outstanding at March 31, 2011:

 

255,000

 

$

1.09

 

 

15



Table of Contents

 

IRIS BIOTECHNOLOGIES INC.

(A development stage company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2011

(Unaudited)

 

NOTE 7 - INCOME TAXES

 

ASC 740-10 requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

 

NOTE 8 - SUBSEQUENT EVENTS

 

In the month of April 2011, the Company issued an aggregate of 8,000 shares of its common stock for services rendered in April 2011 and in May  2011 37,750 shares were issued as board of director fees for the quarter ended March 31, 2011.

 

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Table of Contents

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

 

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

 

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

 

Overview

 

Since inception on February 16, 1999 through March 31, 2011, we have sustained cumulative net losses of $8,102,946. Our losses have resulted primarily from research and development expenses, patent costs and legal and accounting expenses. From inception through March 31, 2011, we have not generated any revenue from operations. We expect to incur additional losses to perform further research and development activities. We have sufficient cash to operate for one year at the current burn rate with our CEO’s agreement to fund our operations. In order to accelerate our product introduction and to grow dynamically, we will need to raise additional funds. We do not currently have any commercial products. With additional funding, we expect to launch our nano-biochip products in less than a year.

 

During the past 21 months, we have spent less than $10,000 for public relations. Due to the severe recession we felt that is was prudent to spend investor dollars on designing and building an advanced Nano-Biochip making system, streamlining the automated patient sample processing protocols and product tracking system, and interacting with physicians and patients to demonstrate the usefulness of our BioWindows medical informatics system.  We have an extensive pipeline of disease chips including a BreastCancerChip™, ColonCancerChip™, NeuroChip™, CardioChip™, ComprehensiveCancerChip™, and MetabolicChip™.

 

We have been in discussions with various entities in regard to launching our products in the US and abroad. We have also had discussions with equipment financing sources with respect to building or buying additional equipment, which would allow us to expand our manufacturing capacity. Under the US Qualifying Therapeutic Discovery Project (QTDP) Program, the maximum amount of a grant application was $5 million, but the maximum amount that the government actually gave for any grant was $245,000. We were awarded $245,000 in recognition of our patented Nano-Biochip™ and BioWindows™ Medical Informatics System for optimizing personalized and targeted medical treatment.

 

The selection criteria includes a company’s ability to diagnose diseases or conditions; to determine molecular factors related to diseases or conditions by developing molecular diagnostic guided therapeutic decisions; or to develop a product, process, or technology to further the delivery or administration of therapeutics. The award was given to projects that show reasonable potential to result in new therapies to treat areas of unmet medical needs or to prevent, detect or treat chronic or acute diseases and conditions; to reduce long-term health care costs in the U.S.; or to significantly advance the goal of curing cancer within the next 30 years.

 

There are some risks with respect to clinical testing, regulatory approval and review cycles and uncertainty of the costs.. Net positive cash inflows from any products developed may take several years to achieve.  Management plans to continue financing operations with a combination of equity issuances and debt arrangements. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate our research or development programs, or cease operations.

 

Management plans to continue financing operations with a combination of equity issuances and debt arrangements. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate our research or development programs, or cease operations.

 

History

 

We were incorporated in the State of California on February 16, 1999 and planned to sell theranostic (choosing therapy based upon personalized diagnostic results) products and services in the medical field. In an effort to develop that business, we set up operations in two locations in California - Headquarters in Santa Clara and Laboratory in San Leandro.

 

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Table of Contents

 

Beginning on March 11, 1999, Simon Chin, MBA, our founder, President and CEO, Secretary and principal shareholder, entered into Common Stock Purchase Agreements with various companies, investment groups and private individuals. On March 1, 2003, Daniel Farnum, M.D., an owner of Humboldt Orthopedics and a key shareholder, and Grace Osborne, MBA, President of GCO Recruiting, joined Mr. Chin on our board of directors. On April 9, 2003, the board approved a 2 for 1 stock split, changed the authorized shares of common stock from 10 million to 20 million, and the authorized preferred stock remained at 5 million shares.

 

Plan of Operation

 

We are a life science company focused on the development and commercialization of a nano-biochip gene expression kit and an artificial intelligence system to assist in establishing the foundation for personalized medicine, which will initially be utilized in the treatment of breast cancer. Although we may market our products as CLIA laboratory tests, we are designing them to be approved by the FDA, which can then be used in any certified laboratory. Starting at the point of a breast biopsy diagnosis of cancer, the nano-biochip and informatics program are designed to enable a treating physician to quickly prescribe a personalized treatment regimen that will have the greatest probability of success for each patient’s particular type of cancer. Our product platform is expected to lead to more effective diagnosis and treatment not only for patients with breast cancer, but also for those with neurological disorders, heart disease, diabetes and other gene-related metabolic problems.

 

Product Research and Development

 

We anticipate spending, in order to accelerate our growth, which is contingent upon raising additional funds, approximately $2,000,000 for product research and development activities related to our anticipated product launch during the next twelve months.

 

Acquisition of Plant and Equipment and Other Assets

 

We do not anticipate the sale of any material property, plant or equipment during the next 12 months. We do not anticipate the acquisition of any material property, plant or equipment during the next 12 months, unless we raise additional funds to accelerate our growth to fulfill the unmet needs of a large, growing market.

 

Number of Employees

 

From our inception through the period ended March 31, 2011, we have principally relied on the services of outside consultants and part-time employees for services. As of May 13, 2011, we have five full time employees and 8 part-time employees. In order for us to attract and retain quality personnel, we anticipate we will have to offer competitive salaries to future employees. We anticipate that it may become desirable to add additional full and or part time employees to discharge certain critical functions during the next 12 months. This projected increase in personnel is dependent upon our ability to generate revenues and obtain sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the projected increase in the number of employees. As we continue to expand, we will incur additional cost for personnel.

 

Results of Operations

 

We are in the development stage and to date have not generated revenues. The risks specifically discussed are not the only factors that could affect future performance and results. In addition to the discussion in this prospectus concerning us, our business and our operations contain forward-looking statements. Such forward-looking statements are necessarily speculative and there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. We do not have a policy of updating or revising forward-looking statements and thus it should not be assumed that silence by our Management over time means that actual events or results are occurring as estimated in the forward-looking statements herein.

 

As a development stage company, we have yet to earn revenues from operations. We may experience fluctuations in operating results in future periods due to a variety of factors, including our ability to obtain additional financing in a timely manner and on terms favorable to us, our ability to successfully develop our business model, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure and the implementation of marketing programs, key agreements, and strategic alliances, and general economic conditions specific to our industry.

 

As a result of limited capital resources and no revenues from operations since inception, we have relied on the issuance of equity securities to employees and non-employees in exchange for services. Our management enters into equity compensation agreements with non-employees if it is in our best interest under terms and conditions consistent with the requirements of Accounting Standards Codification Subtopic 718-10 Compensation (ASC 718-10). In order to conserve our limited operating capital resources, we anticipate continuing to compensate non-employees with equity for services during the next twelve months. This policy may have a material effect on our results of operations during the next twelve months.

 

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Table of Contents

 

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

 

Revenues

 

We have generated no operating revenues from operations from our inception. We believe we will begin earning revenues from operations in 2011 from actual operation as we transition from a development stage company to that of an active growth stage company.

 

Costs and Expenses

 

From our inception through March 31, 2011, we have incurred cumulative losses of $8,102,946. In addition, a significant part of the overall remaining costs are associated principally with equity-based compensation to employees and consultants, research and development costs and professional services rendered.

 

Selling, general and administrative (“SG&A”) expenses decreased by $1,151 from $128,747 for the three months ended March 31, 2010 to $127,596  for the three months ended March 31, 2011. SG&A expenses consisted of accounting, legal, consulting, public relations, startup and organizational expenses. SG&A expenses also included non-cash charges from the issuance of stock, warrants and stock options in the amounts of $49,979 for the three months ended March 31, 2011 and $47,017 for the three months ended March 31, 2010, a period to period increase of $2,962. The remaining SG&A expenses which required cash amounted to approximately $77,617 and $81,730 for the three months ended March 31, 2011 and 2010, respectively. We used stock in lieu of cash to conserve our cash resources.

 

Research and development costs increased from $0 for the three months ended March 31, 2010 to $46,049 for the three months ended March 31, 2011.

 

During the three months ended March 31, 2011, we received $209,671 grant income from the U. S. Government for research previously done as compared to Nil for 2010.

 

As a result of the above-mentioned expenses and the grant income, net losses decreased from $134,346 for the three months ended March 31, 2010 to a net profit of $29,592 for the three months ended March 31, 2011.

 

Liquidity and Capital Resources

 

As of March 31, 2011, we had a working capital deficit of $41,618 as compared to a working capital deficit of $584,661 as of December 31, 2010. Our cash position was $67,196 as of March 31, 2011 compared to $3,222 as of December 31, 2010. From inception to March 31, 2011 we have incurred an operating cash flow deficit of $2,829,012, which has been principally financed through the private placement of our common stock, advances from related parties and issuance of notes payable. As of March 31, 2011, we have long term debt of $56,274.

 

We expect to continue to incur additional losses and negative cash flows from operating activities for the next two years.

 

Our available working capital and capital requirements will depend upon numerous factors, including progress of our research and development programs, our progress in and the cost of pre-clinical and clinical testing, the timing and cost of obtaining regulatory approvals, the cost of filing and prosecuting patent claims and other intellectual property rights, completing technological and market developments, current and future licensing relationships, the status of our competitors, and our ability to establish collaborative arrangements with other organizations .

 

Our continued operations will depend on whether we are able to raise additional funds through various potential sources, such as equity and debt financing, collaborative and licensing agreements, strategic alliances, and our ability to realize the full potential of our technology in development. Such additional funds may not become available on acceptable terms, if at all, and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. Through May 13 2011, virtually all of our financing has been through private placements of common stock and warrants. We intend to continue to fund operations from cash on-hand and through the similar sources of capital previously described for the foreseeable future. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs. We believe that we will continue to incur net losses and negative cash flows from operating activities for the next two years. Based on the resources available to us on May 13, 2011. We have sufficient cash to operate for one year at the current burn rate with our CEO’s agreement to fund our operations..  We may need additional financing thereafter.

 

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Table of Contents

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Inflation

 

It is our opinion that inflation has not had a material effect on our operations.

 

Critical Accounting Policies

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

The following accounting policies are critical in fully understanding and evaluating our reported financial results:

 

Accounting for Stock-Based Compensation

 

We account for our stock options and warrants using the fair value method promulgated by Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services. Therefore, our results include non-cash compensation expense as a result of the issuance of stock options and warrants and we expect to record additional non-cash compensation expense in the future.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures . Under the supervision and with the participation of our management, including our President, Chief Financial Officer and Secretary, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our President, Chief Financial Officer and Secretary concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended March 31, 2011, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II

 

ITEM 1. LEGAL PROCEEDINGS.

 

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

 

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Table of Contents

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

During the three months ended March 31, 2011,  we issued 427,838 shares of common stock to consultants for services rendered in the amount of $466,760 out of which 419,838 common stock were issued for value $458,760 relates to accruals. In connection with the issuance of such shares, we relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.

 

ITEM 6. EXHIBITS.

 

Exhibit
Number

 

Description of Exhibit

 

 

 

31.1

 

Certifications required by Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Chief Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

21



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.

 

 

IRIS BIOTECHNOLOGIES INC.

 

 

 

/s/ Simon Chin

 May 16, 2011

Simon Chin

 

President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer)

 

 

 

22