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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2012

 

OR

 

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    No

 

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     No

 

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

 

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

(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 No

 

As of November 13, 2012 the issuer had 13,000,573 outstanding shares of Common Stock.

 

 

1

 

 
 

 

 

TABLE OF CONTENTS

 

    Page
  PART I  
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation 16
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 20
Item 4. Controls and Procedures 21
     
  PART II  
Item 1. Legal Proceedings 22
     
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
     
Item 3. Defaults Upon Senior Securities 22
Item 4. Mine Safety Disclosures 22
Item 5. Other Information 22
Item 6. Exhibits 23
  Signatures 24

 

 

 

 

2

 

 
 

PART I

 

ITEM 1. FINANCIAL STATEMENTS.

 

INDEX TO FINANCIAL STATEMENTS

 

  Page
Condensed Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011 4
Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2012 and 2011 and for the period February 16, 1999 (date of inception) to September 30, 2012 5
Unaudited Condensed Statement of Stockholders’ Deficit for the nine months ended September 30, 2012 6
Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 and for the period February 16, 1999 (date of inception) to September 30, 2012 7
Notes to the Unaudited Condensed Financial Statements 8

 

 

3

 
 

 

IRIS BIOTECHNOLOGIES, INC
(a development stage company)
CONDENSED BALANCE SHEETS
 
  September 30, December 31,
  2012 2011
  (unaudited)  
ASSETS    
Current assets:    
Cash $               6,040  $              43,729 
  Total current assets 6,040  43,729 
     
Property, plant and equipment, net of accumulated depreciation of $227,589 and $215,844 as of September 30, 2012 and December 31, 2011, respectively 11,211  22,956 
     
Total assets $            17,251  $              66,685 
     
LIABILITIES AND STOCKHOLDERS' DEFICIT (EQUITY)    
Current liabilities:    
Accounts payable $            44,363  $              34,802 
  Total current liabilities 44,363  34,802 
     
Long term debt:    
Convertible notes payable 45,000                            -  
  Total liabilities 89,363  34,802 
     
STOCKHOLDERS' EQUITY (DEFICIT)    
Preferred stock, no par; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2012 and December 31, 2011                         -                             -  
Common stock, no par; 20,000,000 shares authorized; 12,872,073 and 12,605,573 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively 6,672,704  6,477,603 
Additional paid in capital 2,389,780  2,288,376 
Common stock subscription 30,000                            -  
Common stock subscription receivable (128,375) (128,375)
Deficit accumulated during development stage (9,036,221) (8,605,721)
  Total stockholders' (deficit) equity (72,112) 31,883 
     
Total liabilities and stockholders' (deficit) equity $            17,251  $              66,685 
     
 The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

4

 

 

 
 
IRIS BIOTECHNOLOGIES, INC
(a development stage company)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
           
  Three months ended September 30, Nine months ended September 30, For the period from
  2012 2011 2012 2011 February 16, 1999 (date of inception) through September 30, 2012
Operating expenses:          
Selling, general and administrative $     102,393  $                 106,863  $          333,934  $               336,200  $                   5,026,176 
Research and development (Note 1) 53,107  46,144  84,122  125,143  2,155,449 
Impairment of intellectual property                    -                                  -                           -                                -   1,838,250 
Depreciation 3,438  3,970  11,745  11,787  227,589 
  Total operating expenses 158,938  156,977  429,801  473,130  9,247,464 
           
 Loss from operations (158,938) (156,977) (429,801) (473,130) (9,247,464)
           
Other income (expense):          
Grant income                    -                                  -                           -   209,671  244,480 
Loss on settlement of debt                    -                                  -                           -                                -   (12,835)
Interest income (expense) (637) (2,844) (699) (8,349) (20,402)
           
Net loss before provision for income taxes (159,575) (159,821) (430,500) (271,808) (9,036,221)
           
Income taxes                    -                                  -                           -                                -                                       -  
           
Net loss $   (159,575) $               (159,821) $        (430,500) $             (271,808) $                 (9,036,221)
           
Loss per common share-basic and diluted $          (0.01) $                     (0.01) $               (0.03) $                    (0.02)  
           
Weighted average number of common shares outstanding-basic and diluted 12,840,138  12,161,608  12,738,040  12,101,863   
           
 The accompanying notes are an integral part of these unaudited condensed financial statements

 

 

 

5

 
 

 

IRIS BIOTECHNOLOGIES, INC
(a development stage company)
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
(unaudited)
                   
                Deficit accumulated  
  Preferred shares Common shares Additional Common stock Subscription during  
  Stock Amount Stock Amount Paid in Capital Subscription Receivable Development stage Total
Balance, December 31, 2011        -   $         -   12,605,573 $ 6,477,603 $    2,288,376  $                  -   $   (128,375) $                   (8,605,721) $         31,883 
Common stock issued in January 2012 at $0.80 per share for services rendered        -                -   8,000 6,400                          -                            -                         -                                       -   6,400 
Common stock issued in January 2012 at $0.60 per share for accruals        -                -   37,500 22,500                          -                            -                         -                                       -   22,500 
Common stock issued in February 2012 at $0.80 per share for services rendered        -                -   8,000 6,400                          -                            -                         -                                       -   6,400 
Common stock issued in March 2012 at $0.80 per share for services rendered        -                -   8,000 6,400                          -                            -                         -                                       -   6,400 
Common stock issued in April 2012 at $0.57 per share for services rendered        -                -   8,000 4,560                          -                            -                         -                                       -   4,560 
Common stock issued in April 2012 at $0.80 per share for services rendered        -                -   37,500 30,000                          -                            -                         -                                       -   30,000 
Common stock issued in May 2012 at $0.35 per share for services rendered        -                -   8,000 2,800                          -                            -                         -                                       -   2,800 
Common stock issued in June 2012 at $0.41 per share for services rendered        -                -   8,000 3,280                          -                            -                         -                                       -   3,280 
Sale of common stock in June 2012 at $1.00 per share        -              -   40,000 40,000                       -                        -                       -                                       -   40,000 
Common stock issued in July 2012 at $0.40 per share for services rendered        -                -   8,000 3,200                          -                            -                         -                                       -   3,200 
Common stock issued in July 2012 at $0.44 per share for services rendered        -                -   37,500 16,500                          -                            -                         -                                       -   16,500 
Sale of common stock in July 2012 at $1.00 per share        -              -   10,000 10,000                       -                        -                       -                                       -   10,000 
Common stock issued in August 2012 at $0.38 per share for services rendered        -                -   8,000 3,061                          -                            -                         -                                       -   3,061 
Sale of common stock in August 2012 at $1.00 per share        -              -   40,000 40,000                      -                        -                       -                                       -   40,000 
Proceeds received from common stock subscriptions        -              -                     -                     -                         -   30,000                     -                                       -   30,000 
Fair value of vesting options for services        -             -                     -                     -   101,404                      -                       -                                       -   101,404 
Net loss        -              -                     -                     -                         -                        -                       -   (430,500) (430,500)
  Balance, September 30, 2012        -    $       -   12,872,073 $ 6,672,704 $    2,389,780 $         30,000 $   (128,375) $                   (9,036,221) $        (72,112)
                   
 The accompanying notes are an integral part of these unaudited condensed financial statements
                   
                     

 

6

 

 
 
IRIS BIOTECHNOLOGIES, INC
(a development stage company)
 CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
       
  Nine months ended September 30, For the period from
  2012 2011 February 16, 1999 (date of inception) through September 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $         (430,500) $         (271,808) $                 (9,036,221)
Adjustments to reconcile net loss to cash used in operating activities:      
Depreciation 11,745  11,787  227,261 
Amortization of deferred compensation                           -                            -   46,926 
Amortization of beneficial conversion feature relating to convertible debt                           -   2,768  15,176 
Loss on settlement of debt                           -                            -   12,835 
Common stock issued in exchange for services rendered 82,601  110,798  768,318 
Impairment of intellectual property                           -                            -   1,800,000 
Options and warrants issued in exchange for services rendered 101,404  138,202  2,327,678 
Changes in operating liabilities:      
Accounts payable and accrued liabilities 32,061  (17,126) 561,639 
Net cash used in operating activities: (202,689) (25,379) (3,276,388)
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
Acquisition of property, plant and equipment                           -   (3,664) (228,371)
Net cash used in investing activities:                           -   (3,664) (228,371)
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
Proceeds from issuance of note payable 45,000  65,000  191,454 
Proceeds from sale of common stock 120,000  84,000  3,214,845 
Exercise of common stock options                           -                            -   42,500 
Net (payments) proceeds, related party                           -   (44,400) 62,000 
Net cash provided by financing activities 165,000  104,600  3,510,799 
       
 (Decrease) increase in cash and cash equivalents (37,689) 75,557  6,040 
Cash and cash equivalents beginning of period 43,729  3,222                                      -  
Cash and cash equivalents end of period $                6,040  $             78,779  $                           6,040 
       
Supplemental disclosures of cash flow information:      
Cash paid during the period for interest  $                      -    $                      -   $                              277 
Cash paid during the period for income taxes  $                      -    $                      -    $                                 -  
       
Non cash investing and financing activities:      
Common stock issued in settlement of notes payable and accrued interest  $                      -    $                      -   $                      196,157 
Common stock issued in settlement of accounts payable and accrued expenses $             22,500   $                      -   $                      481,260 
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

 

 
 

 

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 and nine month periods ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ended December 31, 2012. The unaudited condensed financial statements should be read in conjunction with the December 31, 2011 financial statements and footnotes thereto included in the Company’s Form 10-K filed on February 28, 2012.

 

Business and Basis of Presentation

 

Iris Biotechnologies, Inc. (the “Company”, “we”, “us”, “our”) 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 September 30, 2012, the Company has accumulated losses of $9,036,221.

 

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.

 

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.

 

 

8

 

 

 

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.

 

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 relate primarily to stock based compensation basis differences.  As of September 30, 2012, the Company has provided a 100% valuation against the deferred tax benefits.

 

Net 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 period. For all periods presented, common stock equivalents derived from shares issuable on 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.

 

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 does not have accounts receivable at September 30, 2012 and December 31, 2011.

 

 

9

 

 

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 $53,107 and $84,122 for the three and nine months ended September 30, 2012, respectively; $46,144 and $125,143 for the three and nine months ended September 30, 2011, respectively; and $2,155,449 from the period from February 16, 1999 (date of inception) to September 30, 2012.

 

During the nine months ended September 30, 2011, the Company received $209,671 grant income under the 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 within the overall cap.

 

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 unaudited condensed financial statements, the Company incurred a loss of $430,500 during the nine months ended September 30, 2012. For the period from February 16, 1999 (date of inception) through September 30, 2012, the Company has accumulated losses of $9,036,221. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise.

 

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. As in the past, Mr. Chin has committed to provide all necessary funding needed to meet the Company’s financial obligations through the next twelve months and beyond.

  

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, 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 unaudited condensed 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 unaudited condensed financial statement as of September 30, 2012.

 

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.

 

  

10

 

 

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.

 

During the nine months ended September 30, 2012 and 2011, the Company granted 85,000 and 285,000 employee stock options, respectively. The fair values of issued vesting options were $19,714 and $101,404 for the three and nine months ended September 30, 2012, respectively; and $48,287 and $138,202 for the three and nine months ended September 30, 2011, respectively.

 

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 financial position, results of operations or cash flows.

 

NOTE 2 - PROPERTY, PLANT, AND EQUIPMENT

 

Property, plant and equipment at September 30, 2012 and December 31, 2011 are as follows:

 

   

September 30, 2012

(unaudited)

    December 31, 2011  
Computer equipment   $ 67,983     $ 67,983  
Office equipment     1,728       1,728  
Furniture and fixtures     3,586       3,586  
Manufacturing equipment     165,503       165,503  
      238,800       238,800  
Less: accumulated depreciation     (227,589 )     (215,844 )
    $ 11,211     $ 22,956  

 

11

 

Depreciation expense charged to operations was $3,438 and $11,745 for the three and nine months ended September 30, 2012, respectively; and $3,970 and $11,787 for the three and nine months ended September 30, 2011, respectively.

 

NOTE 3 - LONG TERM CONVERTIBLE NOTE PAYABLE

 

Long-term debt at September 30, 2012 and December 31, 2011 are as follows:

 

    September 30, 2012 (unaudited)    

December 31,

 2011

 
        Note payables   $ 45,000     $  
        Total     45,000        
        Less: current portion            
        Long term portion   $ 45,000     $  

 

On June 21, 2012, the Company issued a $20,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due two years from date of issuance. The note is convertible into the Company’s common stock at a conversion rate of $1.00 per share.

 

On June 22, 2012, the Company issued a $15,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due two years from date of issuance. The note is convertible into the Company’s common stock at a conversion rate of $1.00 per share.

 

On September 12, 2012, the Company issued a $10,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due two years from date of issuance. The note is convertible into the Company’s common stock at a conversion rate of $1.00 per share.

 

NOTE 4 - STOCKHOLDER EQUITY

 

Preferred stock

 

The Company is authorized to issue 5,000,000 shares of no par preferred stock. From date of inception through September 30, 2012, 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 September 30, 2012 and December 31, 2011 the Company has 12,872,073 and 12,605,573 shares of common stock issued and outstanding, respectively.

 

During the nine months ended September 30, 2012, the Company issued an aggregate of 176,500 shares of common stock for services and accruals in the amount of $105,101 and 90,000 shares of common stock for cash in the amount of $90,000.

 

 

12

 

NOTE 5 – 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 September 30, 2012:

 

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       1.72     $ 0.13       40,000     $ 0.13  
  2.25       23,629       0.31       2.25       23,629       2.25  
          63,629                       63,629          

 

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

 

   

Number of

Shares

   

Weighted

Average

Price Per Share

 
        Outstanding at December 31, 2010     95,029     $ 1.29  
        Issued            
        Exercised            
        Expired     (17,500 )     (2.00 )
        Outstanding at December 31, 2011     77,529     $ 1.11  
        Issued            
        Exercised            
        Expired     (13,900 )     (2.00 )
        Outstanding at September 30, 2012     63,629     $ 0.92  

 

 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 September 30, 2012:

 

      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       6.72     $ 0.13       80,000     $ 0.13  
  0.15       400,000       1.72       0.15       400,000       0.15  
  0.80       85,000       8.45       0.80       31,875       0.80  
  1.00       846,875       4.02       1.00       761,875       1.00  
  1.11       200,000       8.25       1.11       83,333       1.11  
  2.25       167,696       5.65       2.25       167,696       2.25  
          1,779,571              $ 0.89       1,524,779      $ 0.87  

 

 

13

 

Transactions involving employee stock options issued are summarized as follows:

 

    Number of Shares    

Weighted Average

Price Per Share

 
        Outstanding at December 31, 2010:     1,481,571     $ 0.86  
        Granted     285,000       1.02  
        Exercised            
        Canceled or expired     (72,000 )     (0.86 )
        Outstanding at December 31, 2011     1,694,571     $ 0.88  
        Granted     85,000       1.00  
        Exercised            
        Expired            
        Outstanding at September 30, 2012:     1,779,571     $ 0.89  

 

On July 11, 2012, the Company granted 85,000 employee stock options with an exercise price of $1.00 vesting over four years and expiring ten years from issuance. The fair value (as determined as described below) of $33,358 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     1.54 %
        Expected stock price volatility     157.05 %
        Expected dividend payout      
        Expected option life-years (a)     10  

__________________________

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

 

The fair values of issued vesting options were $19,714 and $94,732 for the three and nine months ended September 30, 2012, respectively; and $41,439 and $115,597 for the three and nine months ended September 30, 2011, 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 September 30, 2012:

    

      Options Outstanding     Options Exercisable  

Exercise

Prices

   

Number

Outstanding

   

Weighted Average

Remaining

Contractual Life

(Years)

   

Weighted

Average

Exercise

Price

   

Number

Exercisable

   

Weighted

Average

Exercise

Price

 
 $ 1.00       110,000       3.45      $ 1.00       110,000      $ 1.00  
  1.40       105,000       6.48       1.40       105,000       1.40  
          215,000              $ 1.20       215,000      $ 1.20  

 

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

 

 

 

14

 

    Number of Shares    

Weighted Average

Price Per Share

 
       Outstanding at December 31, 2010:     375,000     $ 0.90  
       Granted            
       Exercised            
       Expired     (120,000 )     (0.50 )
       Outstanding at December 31, 2011     255,000     $ 1.09  
       Granted            
       Exercised            
       Expired     (40,000     (0.50 )
       Outstanding at September 30, 2012:     215,000     $ 1.20  

 

The fair value of the vested portion of previously granted non-employee options of $Nil and $6,672 was charged during the three and nine months ended September 30, 2012, respectively; and $6,848 and $22,605 for the three and nine months ended September 30, 2011, respectively.

 

 NOTE 6 - COMMITMENTS AND CONTINGENCIES

 

Litigation

 

On May 16, 2012, a complaint was filed against the Company in Superior Court of California, County of Humboldt by Kenneth Stiver.  The complaint alleges that the Company has not paid Mr. Stiver for services rendered and is seeking a total sum of $86,000 plus reimbursement of expenses for $9,898.  The Company denies all allegations against it and is vigorously defending itself against this complaint, and accordingly no liability has been recognized as of September 30, 2012.

 

On August 20, 2012, the Company filed a motion to allow late filing of a malpractice claim against Heller Ehrman LLP, discovered after claims bar date, in the United States Bankruptcy Court, Northern District of California, San Francisco Division. The first hearing was held on November 1, 2012 before the Honorable Dennis Montali, United States Bankruptcy Judge at San Francisco, California.

 

We are not a party to any additional pending legal proceedings, 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.

 

 

NOTE 7 - SUBSEQUENT EVENTS

 

In the month of October 2012, the Company issued 16,000 shares of its common stock for services rendered for the months of September and October 2012, 37,500 shares of its common stock for services rendered for the previous three months and 35,000 shares for the sale of its common stock, of which 30,000 shares were for the common stock subscription received during the third quarter ended September 30, 2012.

 

In the month of November 2012, the Company issued 40,000 shares for the sale of its common stock.

 

 

15

 

 
 

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 unaudited condensed 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 September 30, 2012, we have sustained cumulative net losses of $9,036,221. Our losses have resulted primarily from research and development expenses, patent costs and legal and accounting expenses. From inception through September 30, 2012, 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 two years, we have spent less than $10,000 for public relations. Due to the severe recession we felt that it 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. In 2011, we were awarded the bulk of $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.

 

 

16

 

   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.

 

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.

 

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 Nano-BiochipsTM 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. The Nano-BiochipsTM have the ability to quickly and very accurately analyze the activity of multiple genes involved in a specific disease. Our manufacturing system has the capability to produce a variety of chips with a choice of mRNA, microRNA, protein, or other biomarker probes for the diagnosis and prognosis of many diseases. 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, more than $2 million 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.

 

 

 

17

 

 

 Number of Employees

 

From our inception through the period ended September 30, 2012, we have relied on the services of full time and part-time employees as well as outside consultants. As of November 12, 2012, we have 5 full time and 9 part-time employees and consultants. 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 (consultants) 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.

 

Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011

 

Revenues

 

We have generated no operating revenues from operations since our inception.

 

Costs and Expenses

 

Since our inception through September 30, 2012, we have incurred cumulative losses of $9,036,221. 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.

 

 

18

 

 

Selling, general and administrative (“SG&A”) expenses decreased by $4,470 from $106,863 for the three months ended September 30, 2011 to $102,393 for the three months ended September 30, 2012. 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 $42,474 for the three months ended September 30, 2012 and $90,669 for the three months ended September 30, 2011, a period to period decrease of $48,195. The remaining SG&A expenses, which required cash amounted to $59,919 and $16,194 for the three months ended September 30, 2012 and 2011, respectively. We used stock in lieu of cash to conserve our cash resources.

 

Research and development costs increased from $46,144 for the three months ended September 30, 2011 to $53,107 for the three months ended September 30, 2012.

 

As a result of the above-mentioned expenses, net losses decreased slightly from $159,821 for the three months ended September 30, 2011 to a net loss of $159,575 for the three months ended September 30, 2012.

 

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011

 

Revenues

 

We have generated no operating revenues from operations since our inception.

 

Costs and Expenses

 

Since our inception through September 30, 2012, we have incurred cumulative losses of $9,036,221. 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 $2,266 from $336,200 for the nine months ended September 30, 2011 to $333,934 for the nine months ended September 30, 2012. 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 $184,005 for the nine months ended September 30, 2012 and $249,000 for the nine months ended September 30, 2011, a period to period decrease of $64,995. The remaining SG&A expenses, which required cash amounted to $149,929 and $87,200 for the nine months ended September 30, 2012 and 2011, respectively. We used stock in lieu of cash to conserve our cash resources.

 

Research and development costs decreased from $125,143 for the nine months ended September 30, 2011 to $84,122 for the nine months ended September 30, 2012.

 

During the nine months ended September 30, 2011, we received $209,671 grant income from the U. S. Government for research previously done as compared to Nil for 2012.

 

As a result of the above-mentioned expenses, net losses increased from $271,808 for the nine months ended September 30, 2011 to a net loss of $430,500 for the nine months ended September 30, 2012.

 

 Liquidity and Capital Resources

 

As of September 30, 2012, we had a working capital deficit of $38,323 as compared to working capital of $8,927 as of December 31, 2011. Our cash position was $6,040 as of September 30, 2012 compared to $43,729 as of December 31, 2011. From our inception to September 30, 2012 we have incurred an operating cash flow deficit of $3,276,388, which has been principally financed through the private placement of our common stock, advances from related parties, issuance of notes payable and financial support of the Company's Chief Executive Officer (CEO). As of September 30, 2012, we had $45,000 of long-term debt.

 

 

19

 

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

 

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 October 2012, virtually all of our financing has been through private placements of common stock, convertible notes 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, we have sufficient cash to operate for one year at the current burn rate with our CEO’s agreement to continue fund our operations. We may need additional financing thereafter.

 

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 unaudited condensed 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable 

 

 

20

 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures

 

We evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that we disclose required information in a timely manner and in accordance with the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated by the SEC.  The executive who serves as our President and Chief Financial Officer has participated in such evaluation.  Management concluded, based on such review, that our disclosure controls and procedures, as defined by Exchange Act Rules 13a-15(e) and 15d-15(e), were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q.  The ineffectiveness of these disclosure controls is due to the matters described below in "Internal Control over Financial Reporting."

 

Limitations on the Effectiveness of Controls

 

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control 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.  Our disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives and our President and Chief Financial Officer has concluded that such controls and procedures are not effective at the "reasonable assurance" level.  The ineffectiveness of these disclosure controls is due to the matters described below in "Internal Control over Financial Reporting."

 
Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Management assessed the effectiveness of the internal controls over financial reporting as of September 30, 2012, using the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our management concluded that, as of September 30, 2012, the internal controls over financial reporting were not effective. The reportable conditions and material weakness relate to a limited segregation of duties at the Company. Segregation of duties within our company is limited due to the small number of employees that are assigned to positions that involve the processing of financial information. Specifically, certain key financial accounting and reporting personnel had an expansive scope of duties that allowed for the creation, review, approval and processing of financial data without independent review and authorization for preparation of schedules and resulting financial statements and related disclosures. We did not maintain a sufficient depth of personnel with an appropriate level of accounting knowledge, experience and training in the selection and application of Generally Accepted Accounting Principles commensurate with financial reporting requirements. Accordingly, we place undue reliance on the finance team at corporate headquarters, specifically the executive who is our President and Chief Financial Officer along with outside accounting consulting. Accordingly, management has determined that this control deficiency constitutes a material weakness. This material weakness could result in material misstatements of significant accounts and disclosures that would result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. In addition, due to limited staffing, the Company is not always able to detect minor errors or omissions in reporting.

 

Going forward, management anticipates that additional staff will be necessary to mitigate these weaknesses, as well as to implement other planned improvements.  Additional staff will enable us to document and apply transactional and periodic controls procedures, permit a better review and approval process and improve quality of financial reporting.  However, the potential addition of new staff is contingent on obtaining additional financing, and there is no assurance that the Company will be able to do so.

 

 

21

 

Changes in Internal Control Over financial Reporting

 

During the three months ended September 30, 2012, there were no changes to our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

On August 20, 2012, we filed a motion to allow late filing of a malpractice claim against Heller Ehrman LLP, discovered after claims bar date, in the United States Bankruptcy Court, Northern District of California, San Francisco Division. The first hearing was held on November 1, 2012 before the Honorable Dennis Montali, United States Bankruptcy Judge at San Francisco, California.

 

On May 16, 2012, a complaint was filed against us in Superior Court of California, County of Humboldt by Kenneth Stiver.  The complaint alleges that we have not paid Mr. Stiver for services rendered and is seeking a total sum of $86,000 plus reimbursement of expenses for $9,898.  We deny all allegations against us and we are vigorously defending ourself against this complaint, and accordingly no liability has been recognized as of September 30, 2012.

 

We are not a party to any additional pending legal proceedings, 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.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

 

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

 

During the three months ended September 30, 2012, we issued 53,500 shares of common stock to consultants for services rendered and accruals in the amount of $22,761. 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 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None

 

ITEM 5. OTHER INFORMATION

 

None

 

 

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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.
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

  

 

 

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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.  
       
November 13, 2012 By: /s/ Simon Chin  
    Simon Chin  
    President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer)  
       

 

 

 

 

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