Attached files
| file | filename |
|---|---|
| EX-32 - EXHIBIT 32 - ANDAIN, INC. | exhibit_32.htm |
| EX-31.1 - EXHIBIT 31.1 - ANDAIN, INC. | exhibit_31-1.htm |
| EX-31.2 - EXHIBIT 31.2 - ANDAIN, INC. | exhibit_31-2.htm |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 0-51216
ANDAIN, INC.
(Exact Name of Company as Specified in its Charter)
|
Nevada
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20-2066406
|
|
(State or Other Jurisdiction of Incorporation
|
(I.R.S. Employer
|
|
or Organization)
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Identification No.)
|
|
|
|
|
400 South Beverly Drive, Suite 312, Beverly Hills, California
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90212
|
|
(Address of Principal Executive Offices)
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(Zip Code)
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Company’s telephone number: (310) 286-1777
_________________________________________________________________
(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the Company 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No x
Indicate by check mark 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:
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Large accelerated filer o
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Accelerated filer o
|
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Non-accelerated filer o
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Smaller reporting company x
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Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes o No x
As of March 31, 2011, the Company had 18,246,667 shares of common stock issued and outstanding.
TABLE OF CONTENTS
2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
|
March 31, 2011
(Unaudited)
|
December 31,
2010
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 48,046 | $ | 23,672 | ||||
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Accounts receivable
|
357,750 | 236,382 | ||||||
|
Total current assets
|
405,796 | 260,054 | ||||||
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Property, plant and equipment
|
45,949 | 47,477 | ||||||
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Investment in equity-accounted investee
|
646,366 | -- | ||||||
|
Other assets
|
767,067 | 93,841 | ||||||
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Total assets
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$ | 1,865,178 | $ | 401,372 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 980,541 | $ | 1,205,129 | ||||
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Total current liabilities
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980,541 | 1,205,129 | ||||||
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Long-term liabilities:
|
||||||||
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Long-term debt
|
951,555 | 1,867,201 | ||||||
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Bank overdrafts
|
39,138 | 38,387 | ||||||
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Total liabilities
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1,971,234 | 3,110,717 | ||||||
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Non-controlling interest
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(202,826 | ) | (186,441 | ) | ||||
3
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(continued)
|
March 31, 2011
(Unaudited)
|
December 31,
2010
|
|||||||
|
Stockholders’ deficit:
|
||||||||
|
Preferred stock, $0.001 par value, 10,000,000 authorized
shares; no shares issued and outstanding
|
-- | -- | ||||||
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Common stock, $0.001 par value, 500,000,000 shares
authorized; 18,246,667 shares issued and outstanding at
March 31, 2011 and 9,980,000 at December 31, 2010
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18,247 | 9,980 | ||||||
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Additional paid-in capital
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2,911,356 | 156,730 | ||||||
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Share-based reserves
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6,300 | 6,300 | ||||||
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Accumulated deficit during development stage
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(2,812,106 | ) | (2,682,781 | ) | ||||
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Accumulated other comprehensive loss
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(27,027 | ) | (13,133 | ) | ||||
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Total Andain stockholders’ deficit
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96,770 | (2,522,904 | ) | |||||
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Total stockholders’ deficit
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(106,056 | ) | (2,709,345 | ) | ||||
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Total liabilities and stockholders’ deficit
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$ | 1,865,178 | $ | 401,372 | ||||
See accompanying notes to consolidated financial statements
4
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
March 31,
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Period of Inception
(July 23, 2004) through
|
|||||||||||
| 2011 | 2010 | March 31, 2011 | ||||||||||
|
Revenue:
|
||||||||||||
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Government grants
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$ | 104,132 | $ | 44,189 | $ | 473,832 | ||||||
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Consulting income
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7,439 | -- | 379,757 | |||||||||
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Total revenue
|
111,571 | 44,189 | 853,589 | |||||||||
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Operating expenses:
|
||||||||||||
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Depreciation
|
(2,745 | ) | (2,165 | ) | (30,991 | ) | ||||||
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General and administrative
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(266,810 | ) | (126,678 | ) | (3,198,217 | ) | ||||||
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Impairment of goodwill
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-- | -- | (397,991 | ) | ||||||||
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Research and development
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-- | (23,679 | ) | (146,760 | ) | |||||||
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Total operating expenses
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(269,555 | ) | (152,522 | ) | (3,773,959 | ) | ||||||
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Loss from operations
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(157,984 | ) | (108,333 | ) | (2,920,370 | ) | ||||||
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Interest received
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-- | -- | 32,735 | |||||||||
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Interest expense
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-- | -- | (4,734 | ) | ||||||||
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Net loss
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(157,984 | ) | (108,333 | ) | (2,892,369 | ) | ||||||
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Less: Net income/(loss)
attributable to non-controlling
interests
|
28,659 | (6,358 | ) | 80,263 | ||||||||
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Net loss and deficit accumulated
during development state
attributable to Andain
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$ | (129,325 | ) | $ |
(114,691
|
) | $ |
(2,812,106
|
) | |||
| Loss per share – basic: | ||||||||||||
|
Net loss attributable to Andain
|
$ |
(0.01
|
) | $ |
(0.01
|
) | ||||||
| Weighted average shares
outstanding
|
18,246,667
|
9,980,000
|
||||||||||
| Loss per share – diluted: | ||||||||||||
| Net loss attributable to Andain | $ |
(0.01
|
) | $ |
(0.01
|
) | ||||||
| Weighted average shares
outstanding
|
24,246,667
|
15,980,000
|
||||||||||
See accompanying notes to consolidated financial statements
5
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Three Months Ended
March 31,
|
Period of Inception
(July 23, 2004) through
|
|||||||||||
| 2011 | 2010 | March 31, 2011 | ||||||||||
| Operating activities: | ||||||||||||
|
Net loss attributable to Andain, Inc.
|
$ | (157,984 | ) | $ | (108,333 | ) | $ | (2,892,369 | ) | |||
|
Adjustments to reconcile net loss to net
cash provided by operating activities:
|
||||||||||||
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Depreciation
|
2,745 | 2,165 | 30,991 | |||||||||
|
Amortized goodwill
|
-- | -- | 322,977 | |||||||||
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Minority interest
|
12,274 | 100 | 14,569 | |||||||||
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Shares issued for professional services
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1,920,000 | -- | 1,921,910 | |||||||||
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Shares issued in subsidiary
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642,170 | -- | 642,170 | |||||||||
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Non-cash compensation expense
|
-- | -- | 6,000 | |||||||||
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Equity-settled share-based payment
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-- | -- | 300 | |||||||||
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Effect of movements in foreign
exchange rates on non-cash items
|
(927 | ) | (437 | ) | (7,283 | ) | ||||||
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Changes in operating assets and liabilities:
|
||||||||||||
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Accounts payable
|
(224,588 | ) | 71,359 | 975,564 | ||||||||
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Accounts receivable
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(121,368 | ) | (33,922 | ) | (357,404 | ) | ||||||
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Accrued compensation
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90,000 | 120,000 | 2,010,000 | |||||||||
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Accrued consulting fees
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-- | -- | 60,000 | |||||||||
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Accrued expenses – stockholder
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-- | -- | 37,508 | |||||||||
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Net cash provided by operating activities
|
2,162,322 | 50,932 | 2,764,933 | |||||||||
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Investing activities:
|
||||||||||||
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Purchase of equipment
|
(290 | ) | (1,586 | ) | (70,838 | ) | ||||||
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Acquisition of subsidiary
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(200,723 | ) | -- | (662,475 | ) | |||||||
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Acquisition of interest in equity-accounted
investee
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(646,366 | ) | (162 | ) | (646,366 | ) | ||||||
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Net cash used in investing activities
|
(847,379 | ) | (1,748 | ) | (1,379,679 | ) | ||||||
6
ANDAIN, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
|
Three Months Ended
March 31,
|
Period of Inception
(July 23, 2004) through
|
|||||||||||
| 2011 | 2010 | March 31, 2011 | ||||||||||
| Financing activities: | ||||||||||||
|
Proceeds from increase in bank overdrafts
|
751 | 602 | 39,138 | |||||||||
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Proceeds from stock issued for cash
|
200,723 | -- | 365,523 | |||||||||
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Proceeds from other loans
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(182,085 | ) | (694 | ) | (183,394 | ) | ||||||
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Loan from majority stockholder
|
(354 | ) | (269 | ) | (16,971 | ) | ||||||
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Loan from equity-accounted investee
|
646,366 | (28,686 | ) | 646,366 | ||||||||
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Loans from key management personnel
|
(1,942,076 | ) | (15,655 | ) | (2,160,843 | ) | ||||||
|
Net cash used in financing activities
|
(1,276,675 | ) | (44,702 | ) | (1,310,181 | ) | ||||||
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Increase in cash and cash equivalents
|
38,268 | 4,482 | 75,073 | |||||||||
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Effects of exchange rate changes on the balance of cash held in foreign currencies
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(13,894 | ) | 252 | (27,027 | ) | |||||||
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Cash and cash equivalents,
beginning of period
|
23,672 | 28,604 | -- | |||||||||
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Cash and cash equivalents,
end of period
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$ | 48,046 | $ | 33,338 | $ | 48,046 |
|
Supplementary schedule of
cash flow activities:
|
||||||||||||
|
Non-cash investing and financing
activities:
|
||||||||||||
|
Issuance of common stock for payment
of management and consulting fees
|
$ | 1,920,000 | $ | -- | $ | 1,921,900 | ||||||
|
Issuance of common stock for
purchase of intellectual property
|
$ | -- | $ | -- | $ | 4,500 | ||||||
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Issuance of common stock for
purchase of subsidiary
|
$ | -- | $ | -- | $ | 2,500 | ||||||
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Issuance of common stock for payment
of management and consulting fees
|
$ | -- | $ | -- | $ | 300 | ||||||
|
Non-cash compensation expense
|
$ | -- | $ | -- | $ | 6,000 |
See accompanying notes to consolidated financial statements
7
ANDAIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – GENERAL INFORMATION
Andain Inc. (“Company”) was established in 2004 in the State of Nevada, U.S.A. Since commencing operations in 2006, the Company has been engaged, both independently and through its consolidated entities (collectively, the “Group”), in the development of medical technology, from early stage development to advanced clinical trials, for a wide range of medical needs.
NOTE 2 – BASIS OF PRESENTATION
The financial information included herein for the three-month periods ended March 31, 2011 and 2010 is unaudited; however, such information reflects all adjustments consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 2010 is derived from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s 2010 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.
The financial statements have been prepared under the historical cost basis.
The principal accounting policies are set out below, these policies have been consistently applied to all the years presented, unless otherwise stated.
In June 2009, the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) became the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The ASC did not create any new GAAP standards but incorporated existing accounting and reporting standards into a topical structure with a new referencing system to identify authoritative accounting standards, replaced the prior references.
Going Concern.
The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established any source of revenue to cover its operating costs. The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured. The Company will offer non-cash consideration as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities, through business alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.
8
Consolidation Principles.
The consolidated financial statements of the Company include the accounts of the Company, a Nevada corporation, and all entities in which a direct or indirect controlling interest exists through voting rights or qualifying variable interests. All intercompany balances and transactions have been eliminated in the consolidated financial statements.
The Company commenced operations in 2004 for the purpose of developing, manufacturing and distributing drug delivery systems. Since its formation, the Company has been engaged principally in organizational, financing, research and development and marketing activities. The Company has not made a public issue of its stock.
Foreign Currencies.
The consolidated financial statements are presented in U.S. Dollars, which is the Company’s functional currency and presentation currency. The financial statements of entities that use a functional currency other than the U.S. Dollar, are translated into U.S. Dollars. Assets and liabilities are translated using the exchange rate on the respective balance sheet dates. Items in the income statement and cash flow statement are translated into U.S. Dollars using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded as a separate component of other comprehensive income/(loss) within stockholders’ equity.
The functional currency of foreign entities is generally the local currency unless the primary economic environment requires the use of another currency. Gains or losses arising from the translation or settlement of foreign-currency-denominated monetary assets and liabilities into the functional currency are recognized in the income in the period in which they arise. However, currency differences on intercompany loans that have the nature of a permanent investment are accounted for as translation differences as a separate component of other comprehensive income/(loss) within stockholders’ equity.
Use of Estimates.
The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that is believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
9
Share-Based Payments.
On January 1, 2006, the Company adopted ASC 718, “Stock Compensation,” using the modified prospective method. ASC 718 requires the measurement and recognition of compensation expense for all share-based payment awards granted to its employees and directors, including employee stock options, restricted stock and stock purchases based on the estimated fair value of the award on the grant date. Upon the adoption of ASC 718, the Company maintained its method of valuation for stock option awards using the Black-Scholes valuation model, which has historically been used for the purpose of providing pro-forma financial disclosures in accordance with ASC 718.
The use of the Black-Scholes valuation model to estimate the fair value of stock option awards requires the Company to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.
Compensation expense is only recognized on awards that ultimately vest.
Cash Equivalents and Cash Equivalents.
Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturity of three months or less that are readily convertible to cash. They are stated at face value, which approximates their fair value.
Accounts Receivable.
Accounts receivables are stated at the amount that management of the Company expects to collect from outstanding balances. Management provides for probable uncollectible amounts through an allowance for doubtful accounts. Additions to the allowance for doubtful accounts are based on management’s judgment, considering historical write-offs, collections and current credit conditions. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable. Payments received subsequent to the time that an account is written off are considered bad debt recoveries. As of March 31, 2011, the Company has experienced no bad debt write offs from operations.
Property, Plant and Equipment.
Property and equipment are stated at cost. Expenditures for repairs and maintenance are expensed as incurred. Expenditures that increase the useful life or value are capitalized. For financial statement purposes, depreciation expense on property and equipment is computed on the straight-line method using the following lives:
|
Motor vehicles
|
5 years
|
|
Furniture
|
15 years
|
|
Computer equipment
|
3 years
|
10
Impairment of Long-Lived Assets.
The Company evaluates its long-lived assets and certain identified intangible assets for impairment in accordance with ASC 360, “Property, Plant and Equipment.” Long-lived assets, such as property, plant and equipment and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset, generally determined by reference to the discounted future cash flows. Assets held for sale that meet certain criteria are measured at the lower of their carrying amount or fair value less cost to sell.
Investments in Equity-Accounted Investees.
Investment in companies in which the Company does not have the ability to directly or indirectly control the financial and operating decisions, but does possess the ability to exercise significant influence are accounted for using the equity method. In the absence of demonstrable proof of significant influence, it is presumed to exist if at least 20% of the voting stock is owned. The Company’s share of net income of these companies is included in the results relating to equity-accounted investees in the consolidated statements of income. When the Company’s share of losses exceed the carrying amount of an investment accounted for by the equity method, the Company’s carrying amount of that investment is reduced to zero and recognition of further losses is discontinued unless the Company has guaranteed obligations of the investee or is otherwise committed to provide further financial support to the investee.
Revenue Recognition.
The Company recognizes revenue when all four recognition criteria have been met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, seller’s price to buyer is fixed or determinable and collectability is reasonably assured.
Government Grants.
Government grants are recognized in profit and loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future costs are recognized in profit and loss in the period in which they become receivable.
11
Income Taxes.
Income taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Earnings Per Share.
The Company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all potential dilutive common shares, which comprise options granted to employees.
Cash Flow Statement.
Cash flow statements have been prepared using the indirect method. Cash flows in foreign currencies have been translated into U.S. dollars using the average exchange rate for the periods.
NOTE 3 – LIST OF SIGNIFICANT SUBSIDIARIES
| Name of Company | Principal Activity | Location |
Proportion of Ownership
Interest and Voting Power
Held at March 31, 2011
|
|
Impact Active Team Ltd.
|
Consulting
|
Israel
|
100%
|
|
TPDS Ltd.
|
Medical
|
Israel
|
94%
|
|
Meizam Arad Investments Ltd.
|
Financing |
Israel
|
92%
|
|
Meizam – Advanced Enterprise
|
|||
|
Center Arad Ltd.
|
Industrial Incubator
|
Israel
|
72% |
NOTE 4 – ACCOUNTS RECEIVABLE
|
March 31, 2011
|
December 31, 2010
|
|||||||
|
(Unaudited)
|
||||||||
|
Trade accounts receivable
|
$ | 368 | $ | 7,888 | ||||
|
Advances to suppliers
|
91,196 | 100,821 | ||||||
|
Institutions
|
35,461 | 29,545 | ||||||
|
Other accounts receivable from the
|
||||||||
|
Office of the Chief Scientist (“OCS”)
|
230,725 | 98,128 | ||||||
| $ | 357,750 | $ | 236,382 |
12
NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
| Computers | Furniture | Vehicles | Total | |||||||||||||
|
Balance as of December 31, 2010
|
$ | 14,066 | $ | 20,435 | $ | 12,976 | $ | 47,477 | ||||||||
|
Capital expenditure
|
-- | 290 | -- | 290 | ||||||||||||
|
Depreciation
|
(803 | ) | (510 | ) | (1,432 | ) | (2,745 | ) | ||||||||
|
Effect of foreign currency
|
||||||||||||||||
|
exchange differences
|
275 | 399 | 253 | 927 | ||||||||||||
|
Balance as of March 31, 2011 (unaudited)
|
$ | 13,538 | $ | 20,614 | $ | 11,797 | $ | 45,949 |
NOTE 6 – INVESTMENT IN EQUITY-ACCOUNTED INVESTEE
Investments in Gaia Med Ltd. (“Equity-Accounted Investee”) consists of the following:
|
Investment in Equity-Accounted Investee at December 31, 2010
|
$ | -- | ||
|
Acquisitions
|
646,366 | |||
|
Investment in Equity-Accounted Investee at March 31, 2011 (unaudited)
|
$ | 646,366 |
Total carrying amount of investments in and loans to the Equity-Accounted Investee is summarized as follows:
|
March 31, 2011
|
December 31, 2010
|
|||||||
|
Ownership
|
Ownership
|
|||||||
|
Equity-Accounted Investee
|
38 | % | 0 | |||||
NOTE 7 – OTHER ASSETS
Other assets consist of the following:
|
March 31, 2011
|
December 31, 2010
|
|||||||
| (Unaudited) | ||||||||
|
Other loans
|
$ | 44,630 | $ | 43,775 | ||||
|
Loans with related parties:
|
||||||||
|
Key management personnel
|
194,371 | -- | ||||||
|
Related companies
|
528,066 | 50,066 | ||||||
| $ | 797,067 | $ | 93,841 | |||||
The above loans are unsecured, bear interest at 4% per annum, and have no set terms of repayment.
13
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
March 31, 2011
|
December 31, 2010 | |||||||
| (Unaudited) | ||||||||
|
Trade payables
|
$ | 571,361 | $ | 606,133 | ||||
|
Institutions
|
52,260 | 44,942 | ||||||
|
Accrued liabilities
|
96,003 | 13,246 | ||||||
|
Deferred revenue:
|
||||||||
|
Arising from government grants (1)
|
34,447 | 33,787 | ||||||
|
Arising from unearned revenues
|
226,470 | 222,132 | ||||||
|
Refundable deposits
|
-- | 284,889 | ||||||
| $ | 980,541 | $ | 1,205,129 | |||||
(1) Deferred revenue arose as a result of the Group's receipt of an advanced payment from the OCS. The revenue will be offset against operating expenses of the Group's incubator Meizam Arad in 2011.
NOTE 9 – LONG-TERM DEBT
|
March 31, 2011
|
December 31, 2010
|
|||||||
|
(Unaudited)
|
||||||||
|
Key management personnel
|
$ | 43,528 | $ | 1,701,233 | ||||
|
Pangea Investments GmbH
|
80,537 | 80,891 | ||||||
|
Related companies
|
714,680 | 47,275 | ||||||
|
Other loans
|
112,810 | 37,802 | ||||||
| $ | 951,555 | $ | 1,867,201 | |||||
The above debt is unsecured, interest free and has no set terms of repayment.
NOTE 10 – STOCKHOLDERS’ EQUITY
Common Stock.
(a) On June 11, 2006, the Company entered into a share-based technology purchase agreement by issuing 4,500,000 restricted shares of common stock at $0.001 per share for the purchase of intellectual property, patent rights and related technical information for a pulmonary drug delivery system owned by Pangea Investments GmbH, the majority stockholder of the Company.
14
(b) On June 11, 2006, the Company entered into a share-based purchase agreement by issuing 2,500,000 restricted shares of common stock at $0.001 per share for the purchase of all the common stock of Impact Active Team Ltd, a Company owned by Pangea Investments GmbH.
(c) On July 19, 2006, the Company issued 200,000 restricted shares of common stock at $0.75 per share to 1568934 Ontario Limited for consideration of $150,000. Each share was accompanied by a 12 month warrant to acquire five shares of common stock at the price of the Company’s initial public offering as determined on the first day trading; however, no warrants were realized.
(d) On July 29, 2006, the Company issued 770,000 restricted shares of common stock at $0.01 per share to a total of 56 investors for consideration of $7,700.
(e) On January 5, 2011, the Company entered into a Regulation S Stock Purchase Agreements with the two directors of the Company. Under these agreements, the directors purchased from the Company a total of 8,000,000 restricted shares of common stock at $0.001) per share for a total consideration of $8,000. These shares were actually issued on or about March 1, 2011.
(f) On January 14, 2011, the Company entered into a Regulation S Stock Purchase Agreement with 1568934 Ontario Limited, an affiliate of the Company (“Purchaser”). Under this agreement, the purchaser purchased from the Company 266,667 restricted shares of common stock at $0.75 per share for a total consideration of $200,000. These shares were issued on or about January 14, 2011.
In connection with this agreement, the Company issued to the Purchaser an option, dated January 14, 2011, to purchase 1,000,000 restricted shares of the Company’s common stock. This option is exercisable for a period of 24 months from the date of filing by the Company of a Form 211 with the Financial Industry Regulatory Authority (“FINRA”) at an exercise price that is equal to the public offering price of the common stock in a future Form S-1 registration statement of the Company.
The holders of the Company’s common stock:
|
·
|
have equal ratable rights to dividends from funds legally available for payment of dividends when, and if declared by the board of directors;
|
|
·
|
are entitled to share ratably in all of the assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
|
|
·
|
do not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund and;
|
15
|
·
|
are entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders.
|
Preferred Stock.
The Company has authorized, but not issued, 10,000,000 shares of preferred stock, par value $0.001 per share. The board of directors has the authority to establish and fix the designation, powers, or preferences of preferred shares without further vote by the stockholders.
NOTE 11 – PROVISION FOR TAXES
At March 31, 2011, the Company had net operating loss carry forwards of $2,812,106 that may be offset against future federal taxable income through 2025. No tax benefit has been reported with respect to these net operating loss carry forwards in the accompanying financial statements because the Company believes that realization is not likely. Accordingly, the potential tax benefits of the net loss carry forwards are fully offset by a valuation allowance.
The income tax benefit for the nine months ended March 31, 2011 differs from the amount computed at the federal statutory rates of approximately 35% as follows:
|
Income tax benefit at statutory rate
|
$ | (55,294 | ) | |
|
Valuation allowance
|
55,294 | |||
|
Total
|
$ | -- |
If substantial changes in the Company’s ownership should occur, there would be an annual limitation of the amount of net operating loss carry forwards that may be utilized by the Company.
NOTE 12 – BUSINESS COMBINATIONS
Subsidiary Acquired.
Meizam Arad Investments Ltd. is an Israeli Company established on February 9, 2011 and situated in the State of Israel in the city of Arad. On February 9, 2011, the Company acquired 99.9% of the voting equity interests of Meizam Investments.
Meizam Arad Investments was established to meet the Israeli Ministry of Industry, Trade, and Labor’s (MOITL) requirement to operate the Group’s industrial incubator, Meizam Arad, as a management service provider only and arrange the financing through a separate entity; as it is structured in other technology incubators within Israel.
No goodwill arose from the acquisition of Meizam Arad Investments.
16
Consideration Transferred.
The Company acquired its majority ownership in Meizam Arad Investments on the purchase of 2,360,723 ordinary shares for approximately U.S. $203,604.
Goodwill on Acquisition.
|
Consideration transferred
|
$ | 203,604 | ||
|
Add: Non-controlling interest
|
546 | |||
|
Add: Previously held equity interest in Meizam Arad Investments
|
0 | |||
|
Less: Fair value of identifiable net assets acquired
|
(204,150 | ) | ||
|
Goodwill arising on acquisition
|
$ | 0 |
Asset Acquired and Liabilities Recognized at Date of Acquisition.
|
Meizam Arad Investments
|
||||
|
Non-current assets
|
$ | 204,150 | ||
|
Net assets acquired
|
$ | 204,150 | ||
NOTE 13 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Foreign Exchange Risk.
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. Dollar and the New Israeli Shekel. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
Interest Rate Risk.
The Company is subject to cash flow interest rate risk due to fluctuations in the prevailing levels of market interest rates. The investment manager monitors the Company’s overall interest sensitivity on a monthly basis and the general director on a quarterly basis.
Credit Risk.
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counter-parties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
17
Liquidity and Capital Risk Management.
The Company’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to stockholders, return capital to stockholders, issue new shares or sell assets to reduce debt.
NOTE 14 – RELATED PARTY TRANSATIONS
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the group and other related parties are disclosed below.
The following entities have been identified as related parties:
|
Pangea Investments GmbH
|
Affiliate stockholder of Andain, Inc.
|
|
1568934 Ontario Limited
|
Affiliate stockholder of Andain, Inc. |
|
Impact Active Team Ltd.
|
Israeli, wholly-owned subsidiary
|
|
TPDS Ltd.
|
Israeli, majority-owned subsidiary
|
|
Meizam - Advanced Enterprise Center Arad Ltd.
|
Israeli, majority-owned subsidiary
|
|
Meizam Arad Investments
|
Israeli, majority-owned subsidiary |
|
Sam Elimelech
|
Director of Andain, Inc.
|
|
Gai Mar-Chaim
|
Director of Andain, Inc.
|
|
P.O.C. Hi Tech Ltd.
|
Israeli company with common director
|
|
Gaia Med Ltd.
|
Israeli, Equity-Accounted Investee |
The following transactions were carried out with related parties:
|
March 31, 2011
|
December 31, 2010
|
|||||||
|
(Unaudited)
|
||||||||
|
$
|
$
|
|||||||
|
Income statements:
|
||||||||
|
Directors’ remuneration
|
60,000 | 480,000 | ||||||
|
Balance sheets:
|
||||||||
|
Loan – related companies
|
528,066 | 50,066 | ||||||
|
Loan – Pangea Investments GmbH
|
(80,537 | ) | (80,891 | ) | ||||
|
Loans – key management personnel
|
150,843 | (1,701,233 | ) | |||||
|
Loan – related company
|
(714,680 | ) | (47,275 | ) | ||||
NOTE 15 – SUBSEQUENT EVENTS
No material event occurred subsequent to year end which would have a material impact on the financial statements.
18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following management’s discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with, the Company’s unaudited financial statements and related notes included elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.
Overview.
(a) General Discussion.
The Company intends to develop cutting edge pulmonary drug delivery systems capable of controlled drug delivery and drug release systems that improve the way patients receive medications and vaccines. The Company’s long-term goal is to become a leading supplier of particle delivery systems to the pharmaceutical and biotechnology industries.
The Company will continue to focus its business development efforts on new and existing licensing and supply agreements with leading pharmaceutical and biotechnology companies and after clinical trials, if successful, will continue to push for human testing so the Company can bring its product into the market.
The Company’s clinical research efforts will continue to be aimed primarily at collaborations in the areas of vaccines and drug delivery. The research and development efforts will focus on the Company’s two main product lines, VAP and COPD. In addition, the Company will continue to work on product improvements to existing devices and development of products.
The Company is still in its development phase, and it expects to remain in the this phase for at least another five years until its products receive FDA approval and investors and buyers for its products can be secured.
(b) Operations.
The Company intends to focus initially on delivery of hydrophobic antibiotics carried by our nano-particle delivery system via inhalation. In order to expedite time to market, the Company also intends to focus initially on VAP patients in hospitals, where the mortality rate is high and TPDS Ltd. technology may be considered as a life saving solution. TPDS concluded its initial development of the nano-particle delivery system with the target antibiotics tested in hospital mobilization systems. The Company’s next phase is bacterial and completion of clinical trials needed to receive Helsinki approval to administer the Company’s medical solution for dying VAP patents. All clinical data accumulated will be used as the FDA clinical data and provide substantiation of technology efficiency. The Company estimates the needed funds for this phase as $500,000 including establishing initial production at a GMP facility.
19
The Company is looking for expediting the regulatory process to obtain an FDA approval. Although the Company will be required to conduct full clinical trials in order to obtain an FDA approval that will allow the Company to sell its products in the U.S., it can start commercializing the product outside the US before obtaining the FDA approval. In Europe, the Company is required to obtain only a CE-Mark certification plus local registration certificates to start sales.
In order to obtain CE-Mark certification, the Company needs to submit to the local health department the Company’s compiled file containing all medical, biological, chemical, clinical information, along with all results accumulated from our pre-clinical and clinical trials. In some cases, the Company will be asked to add or repeat a test in order to obtain the approval.
The Company estimates the needed funds for this phase as $300,000. In addition, due to the potential life saving nature of these products, the Company may apply to the FDA for a “Compassionate Use” certificate that will allow the Company to begin selling its products to hospitals in the U.S. before the clinical trials are concluded. The Company estimates that this phase funds needs are $100,000 for the regulation process. Assuming the Company can collect and use the clinical data accumulated for the Companionate Use, the Company estimates that an additional $750,000 will be required in order to complete all phase 2 and 3 clinical trials in animals and humans.
The Company intends to retain regulatory consultants in order to expedite obtaining certifications in Israel, Europe, U.S. and the rest of the world. The Company estimates that the cost of such an expert will be about $150,000.
In order to simplify the regulatory process, the Company intends to focus initially on generic FDA-approved drugs and on a drug delivery formulation based on GRAS (Generally Recognized As Safe) components. The Company intends to conduct pre-clinical trials in animals, mainly to prove safety issues that will allow it to apply for clinical trials in hospitals. Due to the potential life saving nature of its products, the Company expects that upon the completion of the safety pre-clinical trial some hospitals will start conducting clinical trials in their respiratory intensive care unit focusing initially on life threatened patients. The Company estimates that safety bacterial and toxicity tests will require budget of approximately $40,000. Should the clinical trials show successful results, the Company expects that hospitals will expand the usage to patients that are not in a life-threatening situation.
All needed budget for the medication production are covered in the initial development budget. The current production facility can produce TPDS medication for 10 patients per day. The available facility does not stand in GMP standards and therefore the Company’s production is dedicated for in-vitro and animal trials.
The Company intends to develop in parallel a product for home use aimed at the mass market of COPD patients. The Company estimates the budget needed to adapt its technology to the COPD patients as $100,000. The Company also intends to utilize the synergy in the regulatory procedures and expedite the COPD product development in parallel to the VAP product. The Company estimates an additional budget of about 1 million dollars for completion of the additional clinical trials needed for COPD medication phase 1 and 2. Since the mass COPD market is not in a life-threatening situation, the Company believes that it requires full FDA approval to commercialize the product in the U.S. The Company estimates that it will require an additional $2,000,000 complete the full FDA approval process.
20
Therefore, the Company intends to focus on the hospital VAP product in order to promote the market education, if and when the FDA approval is obtained, and leverage it for the COPD product launching.
The Company has already started looking for a GMP manufacturing infrastructure that may produce its products. The Company intends to rely initially on existing drug producers infrastructures, but in the long run it may establish our own manufacturing line in the City of Arad.
When clinical trials start, the Company intends to approach pharmaceutical companies in Europe and Israel that specialize in distributing hospital supply. Such companies may take the responsibility for the local regulatory procedures as well as the local sales to hospitals.
There is no plan to purchase significant equipment or plant. The Company may acquire additional business synergies to its current business line. For the present time, there is no plan for such a transaction. The Company plans to recruit additional two employees: pre-clinical trials manager, and regulatory manager.
Results of Operations.
(a) Total Revenue.
The Company had total revenue of $111,571 for the three months ended March 31, 2011 compared to $44,189 for the three months ended March 31, 2010, an increase of $67,382 or approximately 152%. This increase in net revenue was the result of an increase in government grants received by the Company’s majority owned subsidiaries, TPDS and Meizam Arad, during the three months ended March 31, 2011.
(b) General and Administrative Expenses.
The Company had general and administrative expenses of $266,810 for the three months ended March 31, 2011 compared to $126,678 for the three months ended March 31, 2010, an increase of $140,132 or approximately 111%. The increase in general and administrative costs was due to consulting fees incurred by Meizam Arad.
(c) Research and Development Expenses.
The Company had research and development expenses of $0 for the three months ended March 31, 2011 compared to $23,679 for the three months ended March 31, 2010. This decrease in research and development was due to no research and development being performed by the Company’s subsidiary TPDS during the three months ended March 31, 2011.
21
(d) Net Loss.
The Company had a net loss of $129,325 for the three months ended March 31, 2011 compared to $114,691 for the three months ended March 31, 2010, an increase of $14,634 or approximately 13%. The increase in net loss is the result of the factors mentioned above, but is mainly due to an increase in consulting fees incurred by the Company’s industrial incubator, Meizam Arad.
Operating Activities.
The net cash provided by operating activities was $2,162,322 for the three months ended March 31, 2011 compared to $50,932 for the three months ended March 31, 2010, an increase of $2,111,390. This increase is attributed to many changes from period to period, but mainly due to shares issued in the acquisition of Gaia Med Ltd., an equity-accounted investee, now part of the industrial incubator project, and due to the issuance of shares to settle accrued remuneration from 2006 owing to key management personnel.
Investing Activities.
Net cash used in investing activities was $847,379 for the three months ended March 31, 2011 compared to $1,748 for the three months ended March 31, 2010, an increase of $845,631. This increase resulted from acquisition of Gaia Med and also the acquisition of Meizam Arad Investments Ltd., an Israeli subsidiary to deal with financing the industrial incubator program.
Liquidity and Capital Resources.
As of March 31, 2011, the Company had total current assets of $405,796 and total current liabilities of $980,541 resulting in a working capital deficit of $574,745. The cash and cash equivalents balance as of March 31, 2011 totaled $48,046.
The net cash used in financing activities was $1,276,675 for the three months ended March 31, 2011, primarily as a result of repayment of accrued compensation to key management personnel. The net cash provided by financing activities was $44,702 for the three months ended March 31, 2010, resulting in an increase of net cash used in financing activities of $1,231,973. Overall, cash and cash equivalents for the three months ended March 31, 2011 increased by $24,374.
The Company’s current cash and cash equivalents balance will be not be sufficient to fund its operations for the next 12 months. The Company’s ability to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, and to obtain additional financing, and ultimately attain profitability. The Company’s continued operations, as well as the implementation of the Company’s business plan will depend upon its ability to raise additional funds through bank borrowings and equity or debt financing.
22
On January 14, 2011, the Company entered into a Regulation S Stock Purchase Agreement with 1568934 Ontario Limited, an Ontario limited partnership (“Purchaser”). Under this agreement, the Purchaser purchased from the Company 266,667 restricted shares of common stock at $0.75 per share for a total consideration of $200,000. The Purchaser is an affiliate of the Company. These shares were issued on or about January 14, 2011.
Whereas the Company has been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to it and/or that demand for the Company’s common stock will be sufficient to meet its capital needs, or that financing will be available on terms favorable to the Company. If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of the Company’s planned product development and marketing efforts, any of which could have a negative impact on its business and operating results. In addition, insufficient funding may have a material adverse effect on the Company’s financial condition, which could require it to:
|
·
|
curtail operations significantly;
|
|
·
|
sell significant assets;
|
|
·
|
seek arrangements with strategic partners or other parties that may require the Company to relinquish significant rights to products, technologies or markets; or
|
|
·
|
explore other strategic alternatives including a merger or sale of the Company.
|
To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to the Company’s existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations. Regardless of whether the Company’s cash assets prove to be inadequate to meet its operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to the Company’s existing stockholders.
Inflation.
The impact of inflation on the Company’s costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and the Company does not anticipate that inflationary factors will have a significant impact on future operations.
Off-Balance Sheet Arrangements.
The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.
23
Critical Accounting Policies.
The SEC has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: (a) use of estimates; (b) impairment of long-lived assets; (c) share-based compensation; and (d) government grants. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.
(a) Use of Estimates.
The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that is believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
(b) Impairment Long-Lived Assets.
The Company evaluates its long-lived assets and certain identified intangible assets for impairment in accordance with Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable utilizing an undiscounted cash flow analysis. The Company did not recognize any other impairment on its long-lived assets during the periods presented.
(c) Share-Based Compensation.
On January 1, 2006, the Company adopted ASC 718, “Stock Compensation,” which requires the measurement and recognition of compensation expense for all share-based payments to its employees and directors, including employee stock options, restricted stock and stock purchases based on the estimated fair value of the award on the grant date. Upon the adoption of ASC 718, the Company maintained its method of valuation for stock option awards using the Black-Scholes valuation model, which has historically been used for the purpose of providing pro-forma financial disclosures in accordance with ASC 718.
24
The use of the Black-Scholes valuation model to estimate the fair value of stock option awards requires the Company to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.
Compensation expense is only recognized on awards that ultimately vest.
(d) Government Grants.
Government grants are not recognized until there is reasonable assurance that the group will comply with the conditions attaching then and the grants will be received. Government grants are recognized in profit and loss on a systematic basis over the periods in which the group recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the group with no future costs are recognized in profit and loss in the period in which they become receivable.
Forward Looking Statements.
Information in this Form 10-Q contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended. When used in this Form 10-Q, the words “expects,” “anticipates,” “believes,” “plans,” “will” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements regarding the adequacy of cash, expectations regarding net losses and cash flow, statements regarding growth, the need for future financing, dependence on personnel, and operating expenses.
Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
25
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures.
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in its periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer/principal financial officer, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, the Company’s management carried out an evaluation, under the supervision and with the participation of the principal executive officer/principal financial officer, of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon the evaluation, the principal executive officer/principal financial officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by it in the reports that the Company 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. In addition, the principal executive officer/principal financial officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer/principal financial officer, to allow timely decisions regarding required disclosure.
Inherent Limitations of Control Systems.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control Over Financial Reporting.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
26
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company may become party to litigation or other legal proceedings that the Company considers to be a part of the ordinary course of the business. There are no material legal proceedings to report, except as outlined in the last Form 10-K. There are no changes to those legal proceedings as reported in that Form 10-K.
ITEM 1A. RISK FACTORS.
There have been no material changes in the risk factors as previously disclosed in response to Item 1A.of Part I of the Company’s latest Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2011 that were not reported in a previously filed Form 8-K.
There were no purchases of the Company’s common stock by the Company or its affiliates during the three months ended March 31, 2011.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. (REMOVED AND RESERVED).
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibits included or incorporated by reference herein are set forth in the Exhibit Index.
27
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Andain, Inc.
|
|||
|
Dated: May 23, 2011
|
By:
|
/s/ Sam Shlomo Elimelech | |
|
Sam Shlomo Elimelech, President
|
|||
28
EXHIBIT INDEX
| Number | Description |
|
3.1
|
Articles of Incorporation, dated July 14, 2004 (incorporated by reference to Exhibit 3.1 of the Form 10-SB filed on March 24, 2005).
|
|
3.2
|
Bylaws, dated August 1, 2004 (incorporated by reference to Exhibit 3.2 of the Form 10-SB filed on March 24, 2005).
|
|
10.1
|
Affiliation Agreement between the Impact Active Team Ltd. and P.O.C. High-Tech (1992) Ltd. Corporation, dated June 23, 2004 (incorporated by reference to Exhibit 10.8 of the Form SB-2 filed on February 13, 2007).
|
|
10.2
|
Consulting Agreement between the Company and Dr. Leonid Lurya, dated May 16, 2006 (incorporated by reference to Exhibit 10.2 of the Form 10-K filed on December 30, 2010).
|
|
10.3
|
Share Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (not including Schedule 1, Disclosure Schedule) (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on July 5, 2006).
|
|
10.4
|
Technology Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on July 5, 2006).
|
|
10.5
|
Finder’s Fee Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.5 of the Form 8-K filed on July 5, 2006).
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10.6
|
Consulting Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on July 5, 2006).
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10.7
|
Business Development Services Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.4 of the Form 8-K filed on July 5, 2006).
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10.8
|
Employment Agreement between the Company and Sam Elimelech, dated July 3, 2006 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed on July 5, 2006).
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10.9
|
Employment Agreement between the Company and Gai Mar-Chaim, dated July 3, 2006 (incorporated by reference to Exhibit 10.7 of the Form 8-K filed on July 5, 2006).
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29
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10.10
|
Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated July 19, 2006 (incorporated by reference to Exhibit 10.11 of the Form 10-K/A filed on February 7, 2011).
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10.11
|
Consulting Agreement between the Company and Meizam - Advanced Enterprise Center Arad Ltd., dated October 25, 2006 (incorporated by reference to Exhibit 10.10 of the Form 10-K filed on December 30, 2010).
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10.12
|
Employment Agreement between the Company and Sam Elimelech, dated January 1, 2011 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 29, 2011).
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10.13
|
Employment Agreement between the Company and Gai Mar-Chaim, dated January 1, 2011 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on March 29, 2011).
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10.14
|
Regulation S Stock Purchase Agreement between the Company and Sam Elimelech, dated January 5, 2011 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on March 29, 2011).
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10.15
|
Regulation S Stock Purchase Agreement between the Company and Gai Mar-Chaim, dated January 5, 2011 (incorporated by reference to Exhibit 10.4 of the Form 8-K filed on March 29, 2011).
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10.16
|
Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated January 14, 2011 (incorporated by reference to Exhibit 10.5 of the Form 8-K filed on March 29, 2011).
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10.17
|
Option issued to 1568934 Ontario Limited by the Company, dated January 14, 2011 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed on March 29, 2011).
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10.18
|
Stock Purchase Agreement between the Company and Meizam Arad Investments Ltd., dated January 31, 2011 (incorporated by reference to Exhibit 10.7 of the Form 8-K filed on March 29, 2011).
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10.19
|
Stock Purchase Agreement between Meizam – Advanced Enterprise Center Arad Ltd and Meizam Arad Investments Ltd., dated January 31, 2011 (incorporated by reference to Exhibit 10.8 of the Form 8-K filed on March 29, 2011).
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16.1
|
Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on January 5, 2006).
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16.2
|
Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on November 5, 2010).
|
30
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21
|
Subsidiaries of the Company (incorporated by reference to Exhibit 21 of the Form 10-K filed on April 15, 2011).
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31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Sam Shlomo Elimelech (filed herewith).
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31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Gai Mar-Chaim (filed herewith).
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32
|
Section 1350 Certification of Sam Shlomo Elimelech and Gai Mar-Chaim (filed herewith).
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31