UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2005
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from _________ to _________
Commission file number: 0-32835
GAMMACAN INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0956433
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or organization)
11 Ben Gurion Street
54100 Givat Shmuel, Israel
(Address of principal executive offices)
972 3 5774475
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 after the distribution of securities under a plan confirmed by a court.
Yes |_| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the registrant's classes of
common equity, as of the latest practicable date: 26,231,510 shares issued and
outstanding as of August 10, 2005.
ITEM 1. - FINANCIAL STATEMENTS
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
TABLE OF CONTENTS
Page
Balance sheet 2
Statements of operations 3
Statement of stockholders' equity 4
Statements of cash flows 5
Notes to the financial statements 6-11
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
2005 2004
----------- -----------
(Unaudited) (Audited)
----------- -----------
A s s e t s
CURRENT ASSETS:
Cash and cash equivalent $ 1,001,049 $ 705,868
Prepaid expenses 20,707 11,029
Other 29,124 5,971
----------- -----------
T o t a l current assets 1,050,880 722,868
----------- -----------
PROPERTY AND EQUIPMENT, NET 9,720 3,899
----------- -----------
T o t a l assets $ 1,060,600 $ 726,767
=========== ===========
Liabilities and stockholders' equity
CURRENT LIABILITIES:
Accounts payable $ 59,872 $ 140,901
Payroll and related expenses 38,070 16,317
----------- -----------
T o t a l current liabilities 97,942 157,218
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, ($ 0.0001 par value, 20,000,000 shares authorized:
none issued and outstanding) -- --
Common stock ($ 0.0001 par value, 100,000,000 authorized,
26,231,510 and 25,221,510 shares issued and
outstanding as of June 30, 2005 and September 30, 2004,
respectively) 2,622 2,522
Additional paid-in capital 1,856,238 941,619
Warrants 414,847 139,494
Deficit accumulated during development stage (1,311,049) (514,086)
----------- -----------
T o t a l stockholders' equity 962,658 569,549
----------- -----------
T o t a l liabilities and stockholders' equity $ 1,060,600 $ 726,767
=========== ===========
The accompanying notes are an integral part of the
condensed financial statements.
2
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Period from
Nine months ended Three months ended October 6, 1998*
June 30 June 30 Through
------------------------------- ------------------------------- June 30,
2005 2004 2005 2004 2005
------------ ------------ ------------ ------------ ------------
RESEARCH AND
DEVELOPMENT COSTS $ 299,985 $ -- $ 184,987 $ -- $ 466,977
GENERAL AND
ADMINISTRATIVE
EXPENSES 508,075 **154,130 160,194 **153,024 867,544
FINANCIAL INCOME, NET (11,097) (5,823) (11,097)
MINORITY INTERESTS IN
LOSSES OF SUBSIDIARY (12,375)
------------ ------------ ------------ ------------ ------------
$ (796,963) $ (154,130) $ (339,358) $ (153,024) $ (1,311,049)
============ ============ ============ ============ ============
BASIC AND DILUTED LOSS
PER 1000 COMMON SHARES $ (30.59) $ (2.87) $ (12.94) $ (3.16)
============ ============ ============ ============
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES USED IN
COMPUTING BASIC AND
DILUTED LOSS PER 000
COMMON SHARES 26,055,177 53,650,871 26,231,510 48,389,614
============ ============ ============ ============
* Incorporation date, see note 1.
**Restated, see note 2.
The accompanying notes are an integral part of the
condensed financial statements.
3
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
accumulated
Common Additional during
Common Stock paid-in development
Stock Amount Warrants capital stage Total
---------- ------ -------- ---------- ------------ ---------
Beginning balance -- $ -- $ -- $ -- $ -- $ --
Stock issued for cash on
October 6, 1998 1,650,000 165 (155) 10
Stock issued for cash on
October 9, 1998 2,722,500 272 (107) 165
Stock issued for cash on
October 10, 1998 198,000 20 100 120
Stock issued for services on
December 1, 1998 9,900,000 990 2,010 3,000
Stock issued for cash on
April 7, 1999 561,000 56 284 340
Net loss (3,444) (3,444)
---------- ------ -------- ---------- ------------ ---------
Balance at September 30,
1999 (audited) 15,031,500 1,503 2,132 (3,444) 191
Stock issued for cash on
September 30, 2000 41,250,000 4,125 875 5,000
---------- ------ -------- ---------- ------------ ---------
Balance at September 30,
2000 (audited) 56,281,500 5,628 3,007 (3,444) 5,191
Net loss (3,108) (3,108)
---------- ------ -------- ---------- ------------ ---------
Balance at September 30,
2001 (audited) 56,281,500 5,628 3,007 (6,552) 2,083
Net loss (4,231) (4,231)
---------- ------ -------- ---------- ------------ ---------
Balance at September 30,
2002 (audited) 56,281,500 5,628 3,007 (10,783) (2,148)
Contributed capital 7,025 7,025
Net loss (4,857) (4,857)
---------- ------ -------- ---------- ------------ ---------
Balance at September 30,
2003 (audited) 56,281,500 5,628 10,032 (15,640) 20
Cancellation of shares at
June 8, 2004 (32,284,988) (3,228) 3,228
Economic value of exercised
option 62,600 62,600
Common stock and warrants
issued on August 13,2004 1,224,998 122 139,494 779,134 918,750
Gain on issuance of subsidiary
Stock on August 17, 2004 86,625 86,625
Net loss (498,446) (498,446)
---------- ------ -------- ---------- ------------ ---------
Balance at September 30,
2004 (audited) 25,221,510 2,522 139,494 941,619 (514,086) 569,549
Common stock and warrants
issued on November 11,
2004 978,000 97 266,629 867,893 1,134,619
Common stock and warrants
issued on January 25, 2005 32,000 3 8,724 28,073 36,800
Stock based Consultants'
compensation expense 18,653 18,653
Net loss (796,963) (796,963)
---------- ------ -------- ---------- ------------ ---------
Balance at June 30, 2005
(unaudited) 26,231,510 $2,622 $414,847 $1,856,238 $ (1,311,049) $962,658
========== ====== ======== ========== ============ ========
The accompanying notes are an integral part of the
condensed financial statements.
4
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Period from
Nine months ended October 6, 1998*
June 30 through
-------------------------------- June 30,
2005 2004 2005
----------- ----------- -----------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (796,963) **$ (154,130) $(1,311,049)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation 1,691 1,750
Common stock issued for services 3,000
Minority interests in losses of subsidiary (12,375)
Acquisition of research and development in process 100,000
Option exercise & compensation costs 18,653 81,253
Changes in assets and liabilities:
Increase in prepaid expenses (9,678) (20,707)
Increase in other current assets (23,153) (29,124)
Increase (decrease) in current liabilities (59,276) 154,110 96,942
----------- ----------- -----------
Net cash used in operating activities (868,726) (20) (1,090,310)
----------- ----------- -----------
CASH FLOWS FROM
INVESTING ACTIVITIES -
Purchase of property and equipment (7,512) (11,470)
----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Issuance of common stock and warrants 1,171,419 (3,228) 2,090,510
Contribution to additional
paid in capital 3,228 12,319
----------- ----------- -----------
Net cash provided by financing activities 1,171,419 -- 2,102,829
----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENT 295,181 (20) --
CASH AND CASH EQUIVALENT
AT BEGINNING OF PERIOD 705,868 20 --
CASH AND CASH EQUIVALENT ----------- ----------- -----------
AT END OF PERIOD $ 1,001,049 -- $ 1,001,049
=========== =========== ===========
* Incorporation date, see note 1.
**Restated, see note 2
The accompanying notes are an integral part of the
condensed financial statements.
5
GAMMACAN INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2005
(Unaudited)
NOTE 1. - ORGANIZATION AND DESCRIPTION OF BUSINESS
GammaCan International Inc. (A Development Stage Company; "the Company")
was incorporated on October 6, 1998, under the laws of the State of
Delaware, as San Jose International, Inc. The Company has no significant
revenues and no material operations and in accordance with Statement of
financial Accounting Standard ("SFAS") No. 7 "Accounting and Reporting by
Development Stage enterprises", the Company is considered a development
stage company.
Through June 30, 2005, the Company has incurred losses in an aggregate
amount of $1,311,049. Such losses have resulted from the Company's
activities as a development stage company. The Company's management
estimates that it would be able to finance its operations until September
30, 2005 using the cash raised during August 2004 till January 2005.
Continuation of the Company's current operations after utilizing the
mentioned reserves until September 30, 2005, is dependent upon obtaining
financial support from investors until profitable results are achieved.
On August 19, 2004, the name of the company was changed from "San Jose
International, Inc." into "GammaCan International, Inc.".
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of accounting
The accompanying unaudited condensed consolidated financial
statements of the Company and the subsidiary GammaCan Ltd. ("the
Subsidiary") have been prepared in accordance with accounting
principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-QSB and
Item 310 of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by accounting principles
generally accepted in the United States 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. Operating results for the nine-month period
ended June 30, 2005, are not necessarily indicative of the results
that may be expected for the year ended September 30, 2005. For
further information, refer to the financial statements and footnotes
thereto included in the consolidated annual report on Form 10-KSB
for the year ended September 30, 2004.
The financial statements as of June 30, 2004 have been restated in
order to reflect, with retroactive effect, certain expenses which
were incurred during that period and were not accounted for in the
previous interim financial statements, as of the above date, that
were published by the company on Form 10Q-SB on July 26, 2004. These
expenses include the compensation attributed to the fair value of
options granted to the Company's Officer, and expenses accrued
through June 30, 2004.
6
GAMMACAN INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
In addition, the previous financial statements were headed
"consolidated" financial statements, taking into account the
consolidation of GammaCan, Ltd ("the subsidiary"). Since the
acquisition of this subsidiary was not completed as of June 30,
2004, it should not have been consolidated as of that date. The
deconsolidation of the subsidiary have no effect, however, on the
company's financial statements, as it had no content as of that
date.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
c. Cash equivalents
The Company and its subsidiary consider all highly liquid
investments, which include short-term bank deposits (up to three
months from date of deposit) that are not restricted as to
withdrawal or use, to be cash equivalents.
d. Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its Subsidiary. All material inter-company balances and
transactions have been eliminated in consolidation.
e. Loss per share
Basic and diluted net losses per common share are presented in
accordance with FAS No. 128 "Earning per share" ("FAS 128"), for all
periods presented. Outstanding share options, and warrants have been
excluded from the calculation of the diluted loss per share because
all such securities are antidilutive for all periods presented. The
total number of common stocks related outstanding options and
warrants excluded from the calculations of diluted net loss was
2,484,998 for the period ended June 30, 2005.
7
GAMMACAN INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
f. Stock based compensation
The Company accounts for employee stock based compensation in
accordance with Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations. In accordance with FAS 123 - "Accounting for
Stock-Based Compensation" ("FAS 123"), the Company discloses pro
forma data assuming the Company had accounted for employee stock
option grants using the fair value-based method defined in FAS 123.
The following table illustrates the pro - forma effect on net loss
and loss per common share assuming the Company had applied the fair
value recognition provisions of FAS 123 to its stock-based employee
compensation for the nine months ended June 30, 2005:
nine months three months
ended June 30, ended June 30,
2005 2005
--------- ---------
Net loss as reported $(796,963) $(339,358)
Deduct: stock based employee compensation expense
determined under fair value method for all awards,
net of related tax effects (89,638) (43,814)
Reversal of stock based employee compensation expense
determined under fair value method due to forfeiture
of awards granted to the company's CEO (see note 4) 118,190 565,231
--------- ---------
Pro forma profit (loss) $(768,411) $ 182,059
========= =========
Net profit (loss) per 1000 common shares:
Basic and diluted - as reported $ (30.59) $ (12.94)
========= =========
Basic and diluted - pro forma $ (29.49) $ 6.94
========= =========
g. Recently issued accounting pronouncements
In December 2004, the Financial Accounting Standards Board ("FASB")
issued the revised Statement of Financial Accounting Standards
("FAS") No. 123, Share-Based Payment (FAS 123R), which addresses the
accounting for share-based payment transactions in which the Company
obtains employee services in exchange for (a) equity instruments of
the Company or (b) liabilities that are based on the fair value of
the Company's equity instruments or that may be settled by the
issuance of such equity instruments. This Statement eliminates the
ability to account for employee share-based payment transactions
using APB Opinion No. 25, Accounting for Stock Issued to Employees,
and requires instead that such transactions be accounted for using
the grant-date fair value based method. This Statement will be
effective as of the beginning of the first interim or annual
reporting period that begins after December 15, 2005, for small
business issuers (January 1, 2006 for the Company). Early adoption
of FAS 123R
8
GAMMACAN INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
is encouraged. This Statement applies to all awards granted or
modified after the Statement's effective date. In addition,
compensation cost for the unvested portion of previously granted
awards that remain outstanding on the Statement's effective date
shall be recognized on or after the effective date, as the related
services are rendered, based on the awards' grant-date fair value as
previously calculated for the pro-forma disclosure under FAS 123.
The Company estimates that the cumulative effect of adopting FAS
123R as of its adoption date by the Company (January 1, 2006), based
on the awards outstanding as of June 30, 2005, will be approximately
$163,344. This estimate does not include the impact of additional
awards, which may be granted, or forfeitures, which may occur
subsequent to June 30, 2005 and prior to our adoption of FAS 123R.
The Company expects that upon the adoption of FAS 123R, the Company
will apply the modified prospective application transition method,
as permitted by the Statement. Under such transition method, upon
the adoption of FAS 123R, the Company's financial statements for
periods prior to the effective date of the Statement will not be
restated.
On June 7, 2005, the FASB issued Statement No. 154, "Accounting
Changes and Error Corrections, a replacement of APB Opinion No. 20,
Accounting Changes, and Statement No. 3, Reporting Accounting
Changes in Interim Financial Statements" (FAS 154). FAS 154 changes
the requirements for the accounting for, and reporting of, a change
in accounting principle. Previously, most voluntary changes in
accounting principles were required to be recognized by way of a
cumulative effect adjustment within net income during the period of
the change. FAS 154 requires retrospective application to prior
periods' financial statements, unless it is impracticable to
determine either the period-specific effects or the cumulative
effect of the change. FAS 154 is effective for accounting changes
made in fiscal years beginning after December 15, 2005; however, the
Statement does not change the transition provisions of any existing
accounting pronouncements. The implementation of FAS 154 is not
expected to have a material impact on the Company's consolidated
financial statements.
NOTE 3. - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has net losses for
the period from inception (October 6, 1998) through June 30, 2005 of
$1,311,049. The Company's continuation as a going concern is dependent on
its ability to meet its obligations, to obtain additional financing as may
be required and ultimately to attain profitability. These financial
statements do not include any adjustments that might result from the
outcome of this uncertainty. See also note 1.
9
GAMMACAN INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 4. - RELATED PARTY TRANSACTIONS
On November 4, 2004, the Subsidiary entered into a consulting
agreement with PBD Ltd., a company controlled by a related party
(the "Consultant"). Pursuant to the terms of the agreement, the
Subsidiary will pay the Consultant a total fee of $50,000 for the
services provided as detailed in the agreement. Mainly the services
include:
o Summary of pre-clinical data and collection of historical
research data.
o Preparation of clinical trial.
o Oncologists survey for cancer indication.
o Survey of complementary technologies
o Survey of potential IVIg collaborators
o Initiation of contacts with potential partners.
The work has been completed and the sum of $50,000 paid to the
Consultant is included in "General & administrative expenses ".
Additionally, it was also agreed that the Subsidiary shall reimburse
the Consultant for out of pocket expenses incurred in connection
with the performance of its duties under the agreement only if it
has been approved in writing by the Subsidiary. The expenses of
hiring a clinical expert to advise on the specifics of the protocol,
for a total cost that will not exceed $8,000, was approved by the
Subsidiary . On March 1, 2005 the Company and its Subsidiary,
entered into an agreement appointing a related party as Vice
President of Business Development, in consideration of a salary of
$4,000 per month, commencing February 2005. On June 2, 2005 the CEO
of the Company and its Subsidiary resigned effective as of July 2,
2005. Upon the CEO's resignation, his 1,400,000 granted options have
been forfeitured. Effective July 2, 2005 the related party will
serve as the CEO of the Subsidiary and as acting CEO of the Company,
devoting approximately 70% of her business time to the affairs of
the Company and its subsidiary for a monthly salary of $6,475.
NOTE 5. - STOCK TRANSACTIONS:
a. On November 11, 2004 the Company entered into subscription
agreements for the sale of 978,000 units at a purchase price
of $1.25 per unit for a total consideration of $1,222,500.
Each unit consisted of one common share and one share purchase
warrant. Each share purchase warrant entitles the holder to
purchase one additional common share for a period of two years
after the date of the subscription agreement at an exercise
price of $1.50 in the first 15 months and $2.00 for the next
nine months. The fair value of the warrants estimated by using
the Black & Scholes option-pricing model is $266,629.
10
GAMMACAN INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 5. - STOCK TRANSACTIONS (continued):
b. On January 25, 2005 the Company entered into a subscription
agreement for the sale of 32,000 units at a purchase price of $1.25
per unit for a total consideration of $40,000. Each unit consisted
of one common share and one share purchase warrant. Each share
purchase warrant entitles the holder to purchase one additional
common share for a period of two years after the date of the
subscription agreement at an exercise price of $1.50 in the first 15
months and $2.00 for the next nine months. The fair value of the
warrants estimated by using the Black & Scholes option-pricing model
is $8,724.
c. According to a board of directors' resolution from January 11, 2005
the following are entitled to receive options under the 2004
Employees and Consultant Stock Option Plan:
o 50,000 options to each of the four board members.
o 50,000 options to each of three scientific advisors.
d. According to a board of directors' resolution from June 21, 2005, an
employee of the Subsidiary is entitled to receive 100,000 options
under the 2004 Employees and Consultant Stock Option Plan.
11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We currently have no revenue from operations, we are in a start-up phase with
our existing assets and we have no significant assets, tangible or intangible.
There can be no assurance that we will generate revenues in the future, or that
we will be able to operate profitably in the future, if at all. We have incurred
net losses in each fiscal year since inception of our operations.
Our initial focus over the next several years is to demonstrate efficacy of IVIG
cancer immunotherapy in human clinical trials. Efficacy is the ability of a drug
or other treatment to produce the desired result when taken by its intended
users. If ultimately proven to be successful, and there can be no assurance that
it will be, we could be well-positioned to enter a licensing agreement with a
major pharmaceutical partner for commercial market development and sales.
We received approval from the Institutional Review Boards of a number of medical
centers for the initiation of a clinical trial in Israel for a Phase II study
using IVIG immunotherapy for a range of metastatic cancers. We started enrolling
patients during July 2005. Since IVIG is an established, safe therapy, we will
not be required to conduct Phase I studies. Phase II clinical trials will be
conducted at no less than two medical centers in Israel. It is expected to take
at least six months to enroll patients. We are planning on including several
different cancers in the trial, and preliminary results should be available
during the first year of trial. We may decide to continue to monitor patients
for an extended period of time in order to observe positive and negative effects
arising at a later stage. If successful or promising, and at this preliminary
stage there is no assurance they will be, results of these clinical trials will
be used to enter into discussions with a major pharmaceutical partner to work
with us to potentially commercialize the products.
We expect that it will take a number of years to receive final approval and
registration of an IVIG preparation for use as an anti-cancer reagent. However,
the company's strategy is to collaborate with a suitable IVIG manufacturer and
license them the rights to use IVIG as an anti-cancer agent, wherefore the
company's expected revenue stream is not entirely dependent upon the
registration of the IVIG products.
We are also contemplating to conduct additional clinical trials to test new
formulations of IVIG and to test IVIG immunotherapies for different cancers at
different stages of disease progression with varying dosages and routes of
administration. Our goal is to partner with a pharmaceutical company to conduct
these further Phase II and Phase III trials, in order to attain broad-based
regulatory approval.
Long Term Business Strategy
As noted previously, if IVIG shows significant promise thorough clinical trials,
we plan to ultimately seek a strategic commercial partner, or partners, with
extensive experience in commercialization and marketing of cancer drugs and or
therapeutic proteins. It is envisaged that the partner, or partners, would be
responsible for ensuring regulatory approvals and registrations in a timely
manner and for the penetration of the IVIG immunotherapies to the market. This
planned strategic partnership, or partnerships, could provide a marketing and
sales infrastructure for our products as well as financial and operational
support for global trials and other FDA requirements concerning future clinical
development. Our future strategic partner, or partners, could also provide
capital and expertise that would enable the partnership to develop new
formulations of IVIG cancer immunotherapy suitable for patients at different
stages of disease progression as well as IVIG derivatives.
3
Other Research and Development Plans
In addition to conducting early-stage clinical trials, we plan to conduct
research to develop alternative delivery systems, to determine the optimal
dosage for different patient groups and to investigate alternative sources of
immunoglobulin other than human plasma. We plan to conduct research to isolate
the fraction of IVIG, which is responsible for its anti-metastatic effects and
to develop a potential synthetic version of IVIG. These formulations will be
suitable for:
o Low-dose, preventative therapy for disease-free, high-risk
individuals,
o Strong dose for use in conjunction with surgery and other cancer
treatments, and
o Maintenance dose for use to prevent recurrence of cancer growth.
o Others
Our plan is to patent any successful inventions resulting from our further
research activities.
Other Strategic Plans
We are considering additional alternatives for expanding our pipeline of
putative drugs in order to create a well balanced portfolio of future products.
Planned Expenditures
The estimate expenses referenced herein are in accordance with the business
plan. As the technology is still in the development stage, it can be expected
that there will be changes in some budgetary items. Our planned expenditures for
the next 12 months include:
Category Amount
Research & Development $1,447,000
Marketing and Business Development $145,000
General & Administrative Expenses $662,000
Total $2,254,000
We are considering expanding and accelerating our planned clinical trials
program for IVIG. Ultimately, such a change may enable our company to
commercialize the product sooner if the trials prove to be successful. If we
decide to adjust our program, we anticipate that our related clinical trial
costs over the next 12 months would increase by approximately $1 million. The
decision to proceed according to the planned expenditures will be based on
several major factors, one of which is the ability of our company to attract
sufficient financing on acceptable terms.
4
Forward Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
management's current views with respect to future events and financial
performance. Those statements include statements regarding the intent, belief or
current expectations of Gammacan and members of its management team as well as
the assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made
in this report and in our other reports filed with the Securities and Exchange
Commission. Important factors currently known to Management could cause actual
results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. Gammacan believes that its
assumptions are based upon reasonable data derived from and known about its
business and operations and the business and operations of Gammacan. No
assurances are made that actual results of operations or the results of
GammaCan's future activities will not differ materially from its assumptions
5
ITEM 3. CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures. As of June 30, 2005, the
Company's management carried out an evaluation, under the supervision of
the Company's Chief Executive Officer and the Chief Financial Officer, of
the effectiveness of the design and operation of the Company's system of
disclosure controls and procedures pursuant to the Securities and Exchange
Act , Rule 13a-15(d) and 15d-15(d) under the Exchange Act. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were
effective, as of the date of their evaluation, for the purposes of
recording, processing, summarizing and timely reporting material
information required to be disclosed in reports filed by the Company under
the Securities Exchange Act of 1934.
b) Changes in internal controls. There were no changes in the Company's
internal controls over financial reporting, that occurred during the
period covered by this report that have materially affected, or are
reasonably likely to materially effect, the Company's internal control
over financial reporting.
6
PART II
ITEM 1 LEGAL PROCEEDINGS
From time to time the Company is subject to litigation incidental to its
business. Such claims, if successful, could exceed applicable insurance
coverage. The Company is not currently a party to any material legal
proceedings.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In June 2005, we issued an aggregate of 300,000 stock options to four members of
our Board of Directors and an employee of GammaCan Ltd., our Israeli subsidiary,
pursuant to our 2004 Stock Option Plan. The members of our Board of Directors
were each granted 50,000 stock options 25 % of which will vest on the first
anniversary of the date of grant (for 3 directors it's January 11, 2005 and for
one director it's February 13, 2005) and the remaining options will vest in 36
equal monthly installments and are exercisable at $1.15 per share. Adi Avidar,
an employee of GammaCan Ltd., was granted 100,000 stock options 25% of which
vest on November 14, 2005 and the remaining options will vest in 36 equal
monthly installments and are exercisable at $1.15 per share. These securities
were issued pursuant to an exemption from registration requirements under
Section 4(2) of the Securities Act of 1933, as amended.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5 OTHER INFORMATION
Not applicable.
ITEM 6 EXHIBITS
31.1 - Certification of Principal Executive Officer pursuant to Rule
13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange
Act of 1934, as amended
31.2 - Certification of Principal Financial Officer pursuant to Rule
13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange
Act of 1934, as amended
32.1 - Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer)
7
32.2 - Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer)
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GAMMACAN INTERNATIONAL, INC.
August 10, 2005 /s/ TOVI BEN ZEEV
-----------------
Tovi Ben Zeev,
Chief Financial Officer
8