UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
FOR THE QUARTERLY PERIOD ENDED September 30, 2004
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ____________ TO _____________
Commission File Number 333-61610
GOLDEN HAND RESOURCES INC.
(Exact name of small business issuer as specified in its charter)
Washington 912061053
---------- ---------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
36 Derech Bait Lechem
Jerusalem, Israel
----------------------------------------
(Address of principal executive offices)
011-972-2-6737445
(Issuer's telephone number)
Check whether the issuer (1) 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 |_|
The number of shares outstanding of the Issuer's Common Stock, $0.00005 Par
Value, as of September 30, 2004 was 20,773,000.
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
SEPTEMBER 30, MARCH 31,
2004 2004
----------------- ----------------
UNAUDITED AUDITED
----------------- ----------------
ASSETS
CURRENT ASSETS:
Cash 54,598 --
---------- --------
Total current assets 54,598 --
---------- --------
ASSETS ATTRIBUTED TO DISCONTINUED OPERATIONS -- 16,230
---------- --------
Total assets 54,598 16,230
----- ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable 5,000 --
Accrued liabilities 11,870 --
---------- --------
16,870 --
---------- --------
LIABILITIES ATTRIBUTED TO DISCONTINUED OPERATIONS -- 47,667
---------- --------
Total current liabilities 16,870 47,667
----- ---------- --------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock of $ 0.00005 par value - Authorized: 200,000,000 shares at
September 30, 2004 and March 31, 2004; Issued and outstanding:
20,773,000 and 10,238,000 at September 30, 2004 and March 31, 2004,
respectively (Note 5) 1,039 512
Preferred stock of $ 0.00005 par value - Authorized: 40,000,000 shares at
September 30, 2004 and March 31, 2004; none issued -- --
Additional paid-in capital 1,719,386 81,988
Donated capital (Note 5) 56,250 48,750
Deficit accumulated during the development stage (1,738,947) (162,687)
---------- --------
Total stockholders' equity (deficiency) 37,728 (31,437)
----- ---------- --------
Total liabilities and stockholders' equity (deficiency) 54,598 16,230
========== ========
The accompanying notes are an integral part of the financial statements.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
IN U.S. DOLLARS (EXCEPT PER SHARE DATA)
PERIOD FROM
SEPTEMBER 22,
2000 (INCEPTION
THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER DATE) THROUGH
SEPTEMBER 30, 30, SEPTEMBER 30,
---------------------------- ----------------------------
2004 2003 2004 2003 2004
----------- ----------- ----------- ----------- ----------
UNAUDITED
---------------------------------------------------------------------------------
Operating expenses:
Communication 1,709 -- 1,709 -- 1,709
Donated services (Note 5) 3,000 -- 3,000 -- 3,000
Professional fees 15,625 -- 15,625 -- 15,625
Expenses related to shares granted to
service providers for consulting,
legal and accounting services 1,553,550 -- 1,553,550 -- 1,553,550
Donated rent (Note 5) 750 -- 750 -- 750
----------- ----------- ----------- ----------- ----------
1,574,634 -- 1,574,634 -- 1,574,634
Financial expenses, net 342 -- 342 -- 342
----------- ----------- ----------- ----------- ----------
Net loss from continuing operations (1,574,976) -- (1,574,976) -- (1,574,976)
Net loss from discontinued operations of
a segment of a business -- (11,037) (1,284) (22,912) (163,971)
----------- ----------- ----------- ----------- ----------
Net loss for the period (1,574,976) (11,037) (1,576,260) (22,912) (1,738,947)
=========== =========== =========== =========== ==========
Basic net loss per share from continuing
operations (0.1) -- (0.1) --
=========== =========== =========== ==========
Basic net loss per share from
discontinued operations -- -- -- --
=========== =========== =========== ==========
Weighted average number of shares
outstanding 15,509,250 10,100,000 15,509,250 10,100,000
=========== =========== =========== ==========
The accompanying notes are an integral part of the financial statements.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
--------------------------------------------------------------------------------
IN U.S. DOLLARS
DEFICIT
ACCUMULATED TOTAL
COMMON STOCK ADDITIONAL DURING THE DURING THE
--------------------------
NUMBER PAID-IN DONATED DEVELOPMENT EQUITY
OF SHARES AMOUNT CAPITAL CAPITAL STAGE (DEFICIENCY)
----------- ----------- ----------- ----------- ----------- -----------
Balance as of September 22, 2000
(date of inception) -- -- -- -- -- --
Stock issued on September 22,
2000 for cash at $ 0.00188 per share 8,500,000 850 15,150 -- -- 16,000
Stock issued on March 31, 2001 for
cash at $ 0.0375 per share 1,600,000 160 59,840 -- -- 60,000
Value of rent donated by a related
party -- -- -- 1,500 -- 1,500
Value of services donated by a
related party -- -- -- 6,000 -- 6,000
Net loss -- -- -- -- (17,026) (17,026)
----------- ----------- ----------- ----------- ----------- -----------
Balance as of March 31, 2001 10,100,000 1,010 74,990 7,500 (17,026) 66,474
Value of rent donated by related party -- -- -- 2,250 -- 2,250
Value of services donated by related
party -- -- -- 9,000 -- 9,000
Net loss -- -- -- -- (25,560) (25,560)
----------- ----------- ----------- ----------- ----------- -----------
Balance as of March 31, 2002 10,100,000 1,010 74,990 18,750 (42,586) 52,164
Value of rent donated by related party -- -- -- 3,000 -- 3,000
Value of services donated by related
party -- -- -- 12,000 -- 12,000
Net loss -- -- -- -- (46,806) (46,806)
----------- ----------- ----------- ----------- ----------- -----------
Balance as of March 31, 2003 10,100,000 1,010 74,990 33,750 (89,392) 20,358
2 for 1 stock split 10,100,000 -- -- -- -- --
Stock issued on August 31, 2003 to
purchase mineral option at $ 0.065
per share 100,000 5 6,495 -- -- 6,500
Cancellation of shares granted to
Company's President (10,062,000) (503) 503 -- -- --
Value of rent donated by related party -- -- -- 3,000 -- 3,000
Value of services donated by related
party -- -- -- 12,000 -- 12,000
Net loss -- -- -- -- (73,295) (73,295)
----------- ----------- ----------- ----------- ----------- -----------
Balance as of March 31, 2004 10,238,000 512 81,988 48,750 (162,687) (31,437)
Stock issued on June 24, 2004 for
private placement at $ 0.01 per
share, net of $ 25,000 issuance
expenses 8,510,000 426 59,749 -- -- 60,175
Stock based compensation related to
shares granted to service
providers (note 6 a, c and d) 2,025,000 101 1,577,649 -- -- 1,577,750
Value of rent donated by related party -- -- -- 1,500 -- 1,500
Value of services donated by related
party -- -- -- 6,000 -- 6,000
Net loss -- -- -- -- (1,576,260) (1,576,260)
----------- ----------- ----------- ----------- ----------- -----------
Balance as of September 30, 2004
(unaudited) 20,773,000 1,039 1,719,386 56,250 (1,738,947) 37,728
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
PERIOD FROM
SEPTEMBER 22,
2000 (INCEPTION
SIX MONTHS ENDED DATE) THROUGH
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------
2004 2003 2004
---------- ---------- ----------
UNAUDITED
----------------------------------------------
Cash flows form operating activities:
Net loss (1,574,976) -- (1,574,976)
Adjustments to reconcile net loss to net cash used in
operating activities:
Donated consulting services 3,000 -- 3,000
Expenses related to shares granted to service providers 1,553,550 -- 1,553,550
Donated rent 750 -- 750
Decrease in prepaid expenses 155 -- 155
Increase in accounts payable 4,800 -- 4,800
Increase in accrued liabilities 6,920 -- 6,920
---------- ---------- ----------
Net cash used in continuing operating activities (5,801) -- (5,801)
Net cash provided by (used in) discontinued operating
activities 9,897 (3,527) (26,517)
---------- ---------- ----------
Total net cash provided by (used in) operating activities 4,096 (3,527) (32,318)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of Common stock, net 60,175 -- 60,175
---------- ---------- ----------
Net cash flows provided by continuing financing activities 60,175 -- 60,175
Net cash flows provided by (used in) discontinued financing
activities (14,277) -- 42,741
---------- ---------- ----------
Total net cash flows provided by financing activities 45,898 -- 102,916
---------- ---------- ----------
Cash flows from investing activities:
Net cash flows used in discontinued investing activities -- -- (16,000)
---------- ---------- ----------
Total net cash flows used in investing activities -- -- (16,000)
---------- ---------- ----------
Increase (decrease) in cash 49,994 (3,527) 54,598
Cash at beginning of the period 4,604 9,996 --
---------- ---------- ----------
Cash at end of the period 54,598 6,469 54,598
========== ========== ==========
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
FROM
SEPTEMBER 22,
2000 (INCEPTION
SIX MONTHS ENDED DATE) THROUGH
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------
2004 2003 2004
------------ ------------- --------------------
UNAUDITED
----------------------------------------------------
Non-cash financing activities:
Non-cash financing activities from discontinued operations 30,700 10,000 90,700
============ ============= ====================
The accompanying notes are an integral part of the financial statements.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
NOTE1:- GENERAL
a. Golden Hand Resources Inc. (formerly: Wizbang Technologies
Inc.) ("the Company") was incorporated in the State of
Washington on September 22, 2000.
b. The Company acquired the right to market and sell a digital
data recorder product line ("the license") in certain states
in the U.S. The license was acquired on September 22, 2000 and
has a four-year term. The license was purchased by the Company
for $ 16,000 in cash from Reach Technologies Inc. ("Reach"),
which is 33% owned by the President of the Company. Reach
manufactured all of the products that the Company sold. Under
the terms of the license agreement, the Company purchased
products from Reach and resold them.
On October 31, 2001, the Company agreed to pay $ 20,000 in the
form of a note payable, due October 31, 2003, to amend the
license agreement to a worldwide exclusive license, except in
certain territories where the license will be non-exclusive.
The Company has repaid the note payable in full.
On June 10, 2002, the Company agreed to pay $ 30,000 in the
form of a note payable, due June 30, 2004, to amend the
license agreement to include a worldwide exclusive license for
data recorders in the 41 to 160 mega bit per second range.
Interest is accrued on the unpaid principal amount of $ 20,974
at a rate of 7% per annum, matures June 30, 2004 and is due on
demand in the event of certain termination terms. The product
license was amortized on a straight-line basis over four
years.
On May 4, 2004, the Company amended the license agreement with
Reach to a worldwide non-exclusive license, in exchange for a
cash payment of $ 4,233 and the forgiveness of the remaining
balance on the promissory note of $ 16,741 and accrued
interest of $ 3,653.
Due to the non-exclusivity of the license, the Company cannot
determine whether the license will generate any future sales.
As a result, in the first quarter of 2004, the Company has
recognized impairment in the value of product license equal to
its net book value of $ 11,471, which has been charged to the
statement of operations.
c. On July 31, 2003, the Company acquired an option to purchase
the Dalhousie Mineral Claim, situated in the Stewart Area,
Skeena Mining Division in the Province of British Columbia,
Canada. The purchase price was $ 10,000 payable to the vendor
within 90 days of the date of the sale agreement ("the
agreement"). The Company, pursuant to the agreement, was
required to split the shares of Common stock on a two for one
basis and cancel an appropriate number of shares held by the
Company's president to leave 10,100,000 post-split shares
issued and outstanding prior to any share issuances to the
vendor. The cancellation of shares held by the Company's
president was completed as of December 31, 2003. Pursuant to
the sale agreement, the Company was required to issue 100,000
post-split shares within 90 days of the date of the agreement
and 100,000 post-split shares on the beginning of any
exploration program which the Company carries out on the
Dalhousie Claim. Also, pursuant to the agreement, the Company
was to issue 100,000 shares of post-split Common stock to the
vendor, upon the Dalhousie Claim being put into commercial
production.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
NOTE 1:- GENERAL (Cont.)
On September 1, 2003, the Company amended the agreement such
that the cash purchase price of the Dalhousie Mineral Claim
was made by way of promissory note and that upon issuance of
the first tranche of 100,000 shares, the option portion of the
agreement would complete, and transfer of claims and title
would pass to the Company as described in the agreement.
On October 6, 2003, the Company completed its option on the
Dalhousie Mineral Claim by issuing 100,000 shares to the
vendor pursuant to the agreement. Also pursuant to the
agreement, the Company cancelled 10,062,000 shares owned by
the president.
On May 4, 2004, the Dalhousie Mineral Claim was returned to
the vendor in exchange for the forgiveness of $ 10,305
including accrued interest of $ 305 owed to the vendor. As a
result, in the first quarter of 2004, the Company has recorded
a gain from forgiveness of debt, which has been charged to the
statement of operations.
d. On July 8, 2004, the Company entered into a licensing
agreement with Ramot Tel Aviv University Ltd. (hereafter
"Ramot"), an Israeli corporation, to acquire certain stem cell
technology (see Note 3(a)). The Company's business will now
focus on the treatment for Parkinson's disease based on the
results of the acquired technology and research to be
conducted and funded by the Company.
Following the licensing agreement dated July 8, 2004, the
management of the Company has decided to discontinue all
activities related to the sales of Digital Data Recorder
product. The discontinuation of their activity was accounted
for under the provision of SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets".
The results of discontinued operations are summarized as
follows:
Six months ended
September 30,
----------------------
2004 2003
-------- --------
Unaudited
----------------------
Amortization $ -- $ 11,471
Communication 1,972 370
Donated services 3,000 6,000
Professional fees 926 2,773
Expenses related to shares granted to service providers 24,200 --
Donated rent 750 1,500
-------- --------
30,848 22,114
Other income:
Consulting revenue 10,350 --
Gain on forgiveness of debt 30,700 --
Loss on impairment of intangible asset 11,471 --
-------- --------
20,681 22,114
Financial expenses, net 15 798
-------- --------
Net loss $ (1,284) $(22,912)
======== ========
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
NOTE 1:- GENERAL (Cont.)
e. The Company has an accumulated deficit of $ 1,738,947 at
September 30, 2004. The company's ability to continue to
operate is dependant upon additional financing support.
These financial statements do not include any adjustments
relating to the recoverability and classification of assets
carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to
continue as a going concern.
The Company is in advanced stages of negotiating and signing a
private placement agreements with investors for the sale of up
to 2,000,000 units, at a price per unit of $ 0.75. Each unit
consists of one share of Common stock, one year warrant to
purchase one share of Common stock at $ 1.50 per share and a
three year warrant to purchase one share of Common stock at $
2.50 per share. As of November 3, 2004, the Company issued
941,412 units in consideration for $ 706,059.
In the event the Company is unable to successfully raise
capital and generate revenues, it is unlikely that the Company
will have sufficient cash flows and liquidity to finance its
business operations as currently contemplated. There can be no
assurance that additional funds will be available on terms
acceptable to the Company, or at all.
The company's management is in the opinion that it currently
has the necessary financial resources to carry out its
operations for the next 6 months.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. Basis of presentation:
The financial statements of the Company have been prepared in
accordance with United States generally accepted accounting
principles.
The significant accounting policies applied in the annual
consolidated financial statements of the Company as of March
31, 2004 are applied consistently in these consolidated
financial statements.
These financial statements should be read in conjunction with
the audited annual financial statements of the Company as of
March 31, 2004 and their accompanying notes.
b. Year end:
The Company's fiscal year end is March 31.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
c. Discontinued operations:
In July 2004, the Company has decided to discontinue all
activities related to the sales of Digital Data Recorder
product. The Company ceased the operations and disposed of all
assets related to this operation. The operations and cash
flows of the Digital Data Recorder business have been
eliminated from the operations of the entity as a result of
the disposal transaction. The Company has no intent to
continue its activity in the Digital Data Recorder business.
d. Accounting for stock-based compensation:
The Company applies SFAS No. 123 and Emerging Issues Task
Force No. 96-18 "Accounting for Equity Instruments that are
Issued to other than Employees for Acquiring, or in
conjunction with selling, goods or Services" ("EITF 96-18"),
with respect to options and warrants issued to non-employees.
e. Long-lived assets:
The company's long-lived assets are certain identifiable
intangibles are reviewed for impairment in accordance with
Statement of Financial standard No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assents" ("SFAS No.
144"), whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assents to be held and used in measured by a
comparison of the carrying amount of an assent to the future
undiscounted cash flows expected to be generated by the
assets. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which
the carrying out amount of the assets exceeds the fair value
of the assets.
The company's Long-lived assets consisted of a product
license, which was amortized on a straight-line basis over
four years. The carrying value of the license was evaluated in
each reporting period to determine if there were events or
circumstances, which would indicate a possible inability to
recover the carrying amount. Such evaluation was based on
various analyses including assessing the Company's ability to
bring the commercial applications to market, related
profitability projections and undiscounted cash flows relating
to each application. Where an impairment loss has been
determined, the carrying amount is written-down to fair market
value. During the six months ended September 30, 2004, the
product license was impaired and an impairment charge of $
11,471 was charged to operations.
f. Interim financial statements:
The accompanying unaudited interim financial statements have
been prepared in a condensed format as of September 30, 2004
and for the three and six months then ended, in accordance
with accounting principles generally accepted in the United
States relating to the preparation of financial statements for
interim periods. Accordingly, they do not include all 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. Operating results for the
six-month period ended September 30, 2004 are not necessarily
indicative of the results that may be expected for the year
ended March 31, 2005.
GOLDEN HAND RESOURCES INC.
(FORMERLY: WIZBANG TECHNOLOGIES INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
IN U.S. DOLLARS
NOTE 3:- RESEARCH AND LICENSE AGREEMENT
On July 8, 2004, the Company entered into a research and
license agreement ("the agreement") with Ramot, a technology
licensing company of Tel Aviv University Ltd. ("Ramot"). The
license agreement grants the Company an exclusive, worldwide,
royalty-bearing license to develop, use and sell its
technology. In consideration of the license, the Company is
required to remit an upfront license fee payment of $ 100,000
within 45 days (which was extended until completion of a
future financing); royalties at a rate of 5% of all net sales
of products and 30% of all sublicense receipts. In addition
the company shall grant Ramot, upon the completion of an
investment of $ 750,000 in the company, a warrant to purchase
29% of the issued and outstanding shares of the company on a
fully diluted basis, at an exercise price of $ 0.01 per share.
The Company will also fund, through Ramot, further research of
$ 570,000 per year for an initial two-year period and for a
further two-year period if certain research milestones are
met. Ramot may terminate the agreement if the Company fails to
reach certain development milestones; fails to raise a minimum
of $ 750,000 of investment capital within the next six months,
or materially breaches the agreement. As of today, the company
raised the minimum investment as described above.
NOTE 4:- CONSULTING AGREEMENTS
On July 2004, the company entered into two consulting
agreements, upon which the consultants shall provide the
company consulting services in consideration for a monthly
payment of $ 6,000 each. In addition, the Company shall grant
each consultant, upon the completion of an investment of $
750,000 in the company, a warrant to purchase 3% of the issued
and outstanding shares of the company, on a fully diluted
basis, at an exercise price of $ 0.01 per share. The
investment of $ 750,000 was completed in the third quarter of
2004 (see Note 1e).
NOTE 5:- TRANSACTIONS AND BALANCES WITH RELATED PARTIES
a. The president of the Company donated services valued at $
6,000 (2003 - $ 6,000) and rent valued at $ 1,500 for the six
months ended September 30, 2004 (2003 - $ 1,500). These
amounts were charged to the statement of operations and
classified as "donated capital" in stockholders' equity.
b. A director in the company holds 50% in Reach Technologies,
Inc. ("Reach"). Under the terms of the license agreement with
Reach, the Company acquired products from Reach for sale to
unrelated third parties. The license expired on September
2004. The Company made no purchases from Reach during the
six-month period ended September 30, 2004.
c. The former president of the Company advanced $ 10,044 for
working capital purposes, which was repaid to him during the
six months ended September 30, 2004. This amount was
unsecured, non-interest bearing and payable on demand.
NOTE 6:- SHAREHOLDERS' EQUITY
a. On June 1 and June 4, the Company issued 40,000 and 150,000
Common shares for 12 months filing services, legal and
due-diligence services with respect to private placement,
respectively. Compensation expenses related to filing
expenses, totaling $ 26,400, are amortized over a period of 12
months and were charged to the statement of operations.
Compensation expenses related to legal and due-diligence
services, totaling $ 105,000, were recorded and deducted from
additional paid in capital.
b. On June 24, 2004, the Company issued 8,510,000 Common shares
for total proceeds of $ 60,175 (net of $ 25,000 issuance
expenses) .
c. On August 10, 2004, the Company issued 1,800,000 shares to two
consultants for past and future consulting services. The
compensation is deemed earned upon the issuance of the shares.
As a result, compensation expenses, totaling $ 1,530,000, were
charged to the statement of operations in the second quarter
of 2004.
d. On July 1 and September 22, 2004, the Company issued 20,000
and 15,000 shares to a director for financial services for the
first and second quarters of 2004, respectively. Compensation
expenses, totaling $ 22,000 and $ 16,950, were charged to the
statement of operations in the first and second quarters of
2004, respectively.
e. As for warrants, see Notes 3 and 4.
NOTE 7:- SUBSEQUENT EVENTS
On November 8, 2004, the Company appointed a new officer (the
"Officer") that will perform as a President and Chief
Executive. Pursuant to the agreement that was signed with the
officer (the "Agreement"), the Company will grant the officer
options to purchase 1,828,692 shares of the Company's common
stock at a price per share of $ 0.15 each, which options will
vest and become exercisable in thirty-six equal monthly
installments from November 8, 2004 (the "Effective Date"). Two
years from the Effective Date, the officer will be entitled to
receive an additional stock option to purchase the number of
shares of the Company's common stock that represents two
percent (2%) of the Company's issued and outstanding share
capital as of that date at a price per share of $ 0.15. The
additional option shall vest and become exercisable in thirty
six equal monthly installments commencing as of such date.
Each of these options shall be exercisable for a ten 10 year
period following the Effective Date, but in any case not later
than four 4 years after termination of the Agreement.
The Officer will be entitled to an annual bonus in connection
with the achievement of milestones and/or objectives, in each
case as determined by the board of directors. In addition,
within a 10 days period following the 12 months anniversary of
the effective date of the Officer's employment agreement, the
Officer will receive an additional bonus as determined by the
board of directors of at least $ 50,000.
ITEM 2. PLAN OF OPERATION
This report contains forward-looking statements relating to future events and
our future performance within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, without limitation, statements regarding our expectations,
beliefs, intentions or future strategies that are signified by the words
"expects", "anticipates", "intends", "believes" or similar language. Actual
results could differ materially from those anticipated in such forward-looking
statements. All forward-looking statements included in this document are based
on information available to us on the date hereof. It is routine for our
internal projections and expectations to change as the year or each quarter in
the year progresses, and therefore it should be clearly understood that the
internal projections and beliefs upon which we base our expectations may change
prior to the end of each quarter or the year. Although these expectations may
change, we may not inform you immediately if they do. We caution investors that
our business and financial performance are subject to substantial risks and
uncertainties. In evaluating our business, prospective investors should
carefully consider the information set forth under the caption "Risk Factors" in
addition to the other information set forth herein and elsewhere in our other
public filings with the Securities and Exchange Commission.
Overview; Ramot Agreement
On July 8, 2004, we entered into a Research and License Agreement with Ramot at
Tel Aviv University Ltd. ("Ramot"), the technology licensing company of Tel Aviv
University. Under the terms of this Agreement, Ramot granted to us an exclusive
license to (a) certain stem cell technology developed at the Felsenstein Medical
Research Center of Tel Aviv University and related patent applications, and (b)
the results of further research to be performed at Tel Aviv University relating
to this technology under the supervision of Professor Eldad Melamed and Dr.
Daniel Offen, the lead inventors. Simultaneously with the execution of the
Research and License Agreement with Ramot, we entered into individual consulting
agreements with Prof. Melamed and Dr. Offen pursuant to which, all intellectual
property developed by Prof. Melamed or Dr. Offen in the performance of services
thereunder will be owned by Ramot and licensed to us under the Research and
License Agreement. Prof. Melamed's and Dr. Offen's team will continue the
research of applications of adult stem cell transplantation for
neurodegenerative diseases with an initial focus on treatment for Parkinson's
Disease.
Stem Cell Therapy
Our activities are within the overall stem cell therapy market. Stem cells are
non-specialized cells with a potential for both self-renewal and differentiation
into cell types with a specialized function, such as muscle, blood or brain
cells. Stem cell therapy aims to "cure" diseased tissue by the replacement
and/or addition of healthy cells by stem cell transplants.
Currently, two principal platforms for cell therapy products are being explored:
embryonic stem cells (ESC), isolated from the inner mass of a few day old
embryo, and adult stem cells, sourced from bone arrow, cord blood and various
organs. Although embryonic stem cells are the easiest to grow and differentiate,
their use in human therapy has generated much legal and ethical debate due to
their origin in early human embryos. Cell therapy using adult stem cells does
not suffer from the same controversy. Bone marrow harbors stem cells capable of
differentiation into both hemopoeitic (blood and lymph) and mesenchymal (muscle,
bone, fat and other) tissues. Bone marrow stem cells have even been shown
capable of differentiating into nerve and skin cells.
Parkinson's Disease (PD)
Parkinson's disease (PD) is a chronic, progressive neurodegenerative disorder,
affecting certain nerve cells in the brain that produce dopamine. Dopamine is a
chemical messenger (neurotransmitter) in a part of the brain that directs and
controls movement. In PD, these dopamine-producing nerve cells break down,
causing dopamine levels to drop and brain signals that direct movement to become
abnormal. The cause of the disease is unknown. The classic symptoms of
Parkinson's disease are shaking (tremor), stiff muscles (rigidity) and slow
movement. A person with fully developed PD may also have a stooped posture, a
blank stare or fixed facial expression, speech problems and difficulties with
balance or walking.
Our approach
We intend to focus our efforts to develop cell therapeutic treatments for PD
based on the processing of human mesenchymal stem cells, present in adult bone
marrow, which are capable of self-renewal as well as differentiation into many
mesenchymal-derived tissues. Our aim is to "replace" damaged nerve cells and
diseased tissue by augmentation with healthy cells provided by stem cell
transplants.
The scientific team of Prof. Melamed and Dr. Offen is among the first to have
successfully demonstrated the physiological release of dopamine in vitro in
differentiated bone marrow cells. Moreover, in research conducted by this team,
implantation of these cells into the brains of mice and rats induced to
Parkinsonian behavior markedly improved their symptoms. We intend to optimize
this proprietary process for generation of neuron-like human bone marrow derived
cells that produce dopamine in a controlled manner for implantation to PD
patients. The optimization and process development will be conducted in an
effort to adhere strictly to FDA guidelines for Good Tissue Practice. In an
attempt to increase patient safety and minimize any chance of rejection or
immune reaction, we intend to develop NurOwnTM , as an autologous cell
therapeutic modality, comprising extracted bone marrow, processed into the
appropriate neuronal cells and re-implanted into the patient's brain.
Business strategy
Our efforts are currently focused on the development of the technology from the
lab to the clinic with the main objectives:
o Developing the cell differentiation process according to FDA
guidelines
o Demonstrating safety and efficacy, first in animals and then in
patients
o Setting up centralized facilities to provide NurOwnTM therapeutic
products and services for transplantation in patients.
We intend to enter into strategic partnerships as we progress towards advanced
clinical development and commercialization with companies responsible for
advanced clinical development and commercialization. We intend to provide
strategic partners with services required to process the NurOwnTM products for
the clinical trials. This approach is intended to generate an early inflow of
up-front and milestone payments and to enhance our capacities in regulatory and
clinical infrastructure while minimizing expenditure and risk.
Employees
As of November 11, 2004, we currently only have one executive officer, Dr. Beck
and no day-to-day employees. We have used consultants, attorneys and accountants
as necessary. We are in the process of recruiting additional officers and
employees and expect to increase our staff significantly in the near future.
Facilities; Equipment
Our address is 36 Derech Bait Lechem, Jerusalem, Israel. We are provided with
such space at no charge from one of our current shareholders. We intend to lease
new office space in Israel in the near future and to purchase certain laboratory
equipment necessary for us to undertake our development efforts.
Cash requirements
We have begun to increase our spending to execute our development programs. In
October 2004, we made a $402,000 payment to Ramot to cover the up-front license
fee, reimbursement of certain patent expenses and initial research funding
obligations under our agreement. Beginning January 1,we will be obligated to pay
Ramot $142,500 on a quarterly basis through April 2006, and, if certain research
milestones are met, for an additional two-year period. Our other material cash
needs for the next 12 months will include employee salaries and benefits and
facility lease and capital equipment expenses.
We will need to raise additional funds through public or private debt or equity
financings within the next 6 months to meet these expenses so that we can
execute against our business plan. At September 30, 2004, we had $54,598 in
total current assets and $16,870 in total current liabilities. In October and
November 2004, we raised approximately $706,000 in connection with several
closings on a private placement pursuant, of which $402,000 was used to pay
Ramot. We may raise up to an additional $794,000 pursuant to additional closings
under this private placement, but we cannot assure you that any additional
closings will occur. We may not be able to raise additional funds on favorable
terms, or at all. If we are unable to obtain additional funds, we will be unable
to execute our business plan and we may be forced to cease our operations.
Risk Factors
Any investment in our common stock involves a high degree of risk. You
should consider carefully the risks described below, together with the other
information contained in this report. If any of the following events actually
occurs, our business, financial condition and results of operations may suffer
materially. As a result, the market price of our common stock could decline, and
you could lose all or part of your investment in our common stock.
WE HAVE A LIMITED OPERATING HISTORY WHICH WILL LIMIT YOUR ABILITY TO EVALUATE
OUR OPERATIONS AND PROSPECTS.
We were incorporated under the laws of the State of Washington on September 22,
2000, but only changed our business model to focus on stem cell research in
connection with the signing of the Research and License Agreement with Ramot in
July 2004. We have a limited operating history upon which you may evaluate our
operations and prospects. Our limited operating history makes it difficult to
evaluate our commercial viability. Our potential success should be evaluated in
light of the problems, expenses and difficulties frequently encountered by new
businesses in general and biotechnology businesses specifically.
OUR COMPANY HAS A HISTORY OF LOSSES AND WE EXPECT TO INCUR LOSSES FOR THE
FORESEEABLE FUTURE.
We had no revenues for the fiscal year ended March 31, 2004 or for any interim
period since then. As a development stage company, we are at the earliest stages
of executing against our business plan, our ability to operate successfully is
materially uncertain and our operations are subject to significant risks
inherent in a developing business enterprise. Most notably, we do not expect
that any drugs resulting from our or our and our collaborators' research and
development efforts will be commercially available for a significant number of
years, if at all. We do also not expect to generate revenues from strategic
partnerships or otherwise for at least the next 12 months, and likely longer.
Furthermore, we expect to incur substantial and increasing operating losses for
the next several years as we increase our spending to execute our development
programs. These losses are expected to have, an adverse impact on our working
capital, total assets and stockholders' equity, and we may never achieve
profitability.
IN ORDER TO EXECUTE OUR BUSINESS PLAN, WE WILL NEED TO RAISE ADDITIONAL CAPITAL
IN THE NEXT 6 MONTHS. IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL, WE WILL NOT
BE ABLE TO ACHIEVE OUR BUSINESS PLAN, WE MAY BE FORCED TO CEASE OUR OPERATIONS
AND YOU COULD LOSE YOUR INVESTMENT.
We expect to incur substantial and increasing net losses for the foreseeable
future as we increase our spending to execute our development programs. Our
auditors have expressed that there is substantial doubt regarding our ability to
continue as a going concern. We will need to raise additional funds through
public or private debt or equity financings within the next 6 months to execute
against our business plan. At September 30, 2004, we had $54,598 in total
current assets and $16,870 in total current liabilities. In October and November
2004, we raised approximately $706,000 in connection with several closings on a
private placement pursuant, of which $402,000 was used to pay Ramot. We may
raise up to an additional $793,941 pursuant to additional closings under this
private placement, but we cannot assure you that any additional closings will
occur. No definitive commitments to provide additional funds have been made by
management or other shareholders. When additional capital is needed, we may not
be able to raise additional funds on favorable terms, or at all. If we are
unable to obtain additional funds in a timely fashion, we will be unable to
execute our business plan , we may be forced to cease our operations and you
could lose your investment. If we raise additional funds through the issuance of
equity, equity-related or convertible debt securities, these securities may have
rights, preferences or privileges senior to those of the rights of our common
stock and our stockholders may experience additional dilution. In the event of a
bankruptcy in either case, shareholders could loose their entire investments as
a result of the senior preferences or privileges.
OUR BUSINESS IN THE FORESEEABLE FUTURE WILL BE BASED ON TECHNOLOGY LICENSED FROM
RAMOT AND IF THIS LICENSE WERE TO BE TERMINATED FOR ANY REASON, INCLUDING
FAILURE TO PAY THE REQUIRED RESEARCH FUNDING OR ROYALTIES, WE WOULD NEED TO
CHANGE OUR BUSINESS STRATEGY AND WE MAY BE FORCED TO CEASE OUR OPERATIONS.
Our Research and License Agreement with Ramot imposes on us development and
commercialization obligations, milestone and royalty payment obligations and
other obligations. In October 2004, we made payments to Ramot to cover the
up-front license fee, reimbursement of certain patent expenses and initial
research funding. Beginning January 1,we will be obligated to pay Ramot $142,500
on a quarterly basis through April 2006, and, if certain research milestones are
met, for an additional two-year period. If we fail to comply with these
obligations to Ramot, Ramot may have the right to terminate the license. If
Ramot elects to terminate our license, we would need to change our business
strategy and we may be forced to cease operations.
STEM CELL THERAPY IS NEW AND OUR DEVELOPMENT EFFORTS MAY NOT YIELD AN EFFECTIVE
TREATMENT OF HUMAN DISEASES.
The field of stem cell therapy is new and, except for bone marrow transplants
for neoplastic disease, it remains largely untested in the clinical setting. Our
intended cell therapeutic treatment methods for PD involve a new approach that
has never proven to work in human testing. We are still conducting experimental
testing in animals for our treatment which, together with other stem cell
therapies, may ultimately prove ineffective in treatment of human diseases. If
we cannot successfully implement our stem cell therapy in human testing, we
would need to change our business strategy and we may be forced to cease
operations.
WE DEPEND UPON KEY PERSONNEL, NEED ADDITIONAL PERSONNEL AND IF WE ARE UNABLE TO
MAINTAIN OUR CURRENT PERSONNEL OR OBTAIN NEW PERSONNEL OUR RESULTS OF OPERATIONS
WILL BE NEGATIVELY IMPACTED.
Our success depends on services of our President and Chief Executive Officer,
Dr. Yaffa Beck and our consultants, Prof. Melamed and Dr. Offen. The loss of any
of these individuals could have a material and adverse effect on our business
operations. Additionally, the success of our company will largely depend upon
our ability to successfully attract and maintain competent and qualified key
management and scientific personnel. As with any startup company, there can be
no guarantee that we will be able to attract such individuals or that the
presence of such individuals will necessarily translate into profitability for
our company. Our inability to attract and retain key personnel may materially
and adversely affect our business operations.
OUR ABILITY TO COMMERCIALIZE THE PRODUCTS WE INTEND TO DEVELOP WILL DEPEND UPON
OUR ABILITY TO PROVE THE EFFICACY AND SAFETY OF THESE PRODUCTS ACCORDING TO
GOVERNMENT REGULATIONS
Our present and proposed activities are subject to extensive and rigorous
regulation by governmental authorities in the United States and other countries.
To clinically test, produce and market our proposed future products for human
use, we must satisfy mandatory procedural and safety and efficacy requirements
established by the FDA and comparable state and foreign regulatory agencies.
Typically, such rules require that products be approved by the government agency
as safe and effective for their intended use prior to being marketed. The
approval process is expensive, time consuming and subject to unanticipated
delays. It takes years to complete the testing of a product, and failure can
occur at any stage of testing. Our product candidates may not be approved. In
addition, our product approvals could be withdrawn for failure to comply with
regulatory standards or due to unforeseen problems after the product's marketing
approval.
Testing is necessary to determine safety and efficacy before a submission may be
filed with the FDA to obtain authorization to market regulated products. In
addition, the FDA imposes various requirements on manufacturers and sellers of
products under its jurisdiction, such as labeling, Good Manufacturing Practices,
record keeping and reporting requirements. The FDA also may require
post-marketing testing and surveillance programs to monitor a product's effects.
Furthermore, changes in existing regulations or the adoption of new regulations
could prevent us from obtaining, or affect the timing of, future regulatory
approvals or could negatively affect the marketing of our existing products.
We may not be able to obtain regulatory approval of potential products, or may
experience delays in obtaining such approvals, and we may consequently never
generate revenues from product sales because of any of the following risks
inherent in the regulation of our business:
o we may not be successful in obtaining the approval to perform
clinical studies, an investigational new drug application, or IND,
with respect to a proposed product;
o preclinical or clinical trials may not demonstrate the safety and
efficacy of proposed products satisfactory to the FDA or foreign
regulatory authorities; or
o completion of clinical trials may be delayed, or costs of clinical
trials may exceed anticipated amounts (for example, negative or
inconclusive results from a preclinical test or clinical trial or
adverse medical events during a clinical trial could cause a
preclinical study or clinical trial to be repeated, additional tests
to be conducted or a program to be terminated, even if other studies
or trials relating to the program are successful).
WE MAY NOT BE ABLE TO SUCCEED IN OUR BUSINESS MODEL OF SEEKING TO ENTER INTO
COLLABORATIONS AT APPROPRIATE STAGES OF DEVELOPMENT.
We intend to enter into strategic partnerships as we progress towards advanced
clinical development and commercialization with companies responsible for such
activities. We intend to provide strategic partners with services required to
process the NurOwnTM products for the clinical trials. It may be difficult for
us to find third parties that are willing to enter into collaborations for our
potential products at the appropriate stage of development, on economic terms
that are attractive to us or at all. If we are not able to continue to enter
into acceptable collaborations, we could fail in our strategy of generating an
early inflow of up-front and milestone payments and to enhance our capacities in
regulatory and clinical infrastructure while minimizing expenditure and risk and
we could be required to undertake and fund further development, clinical trials,
manufacturing and marketing activities solely at our own expense.
WE MAY BE DEPENDENT UPON ANY COMPANY WITH WHICH WE ENTER INTO COLLABORATIONS TO
CONDUCT CLINICAL TRIALS AND TO COMMERICALIZE OUR POTENTIAL PRODUCTS.
If we are ultimately successful in executing on our strategy of securing
collaborations with companies that would undertake advanced clinical development
and commercialization of our products, we may not have day-to-day control over
their activities. Any such collaborator may adhere to criteria for determining
whether to proceed with clinical development program under circumstances where
we might have continued such a program. Potential collaborators may have
significant discretion in determining the efforts and amount of resources that
they dedicate to our collaborations or may be unwilling or unable to fulfill its
obligations to us, including its development and commercialization. Potential
collaborators may underfund or not commit sufficient resources to the testing,
marketing, distribution or other development of our products. They may also not
properly maintain or defend our intellectual property rights or they may utilize
our proprietary information in such a way as to invite litigation that could
jeopardize or potentially invalidate our proprietary information or expose us to
potential liability. Potential collaboration partners may have the right to
terminate the collaboration on relatively short notice and if they do so or if
they fail to perform or satisfy their obligations to us, the development or
commercialization of products would be delayed and our ability to realize any
potential milestone payments and royalty revenue would be adversely affected.
WE FACE SIGNIFICANT COMPETITION IN OUR EFFORTS TO DEVELOP CELL THERAPIES FOR PD
AND OTHER NEURODEGENERATIVE DISEASES.
We face significant competition in our efforts to develop cell therapies and
other treatment or procedures to cure or slow the effects of PD and other
neurodegenerative diseases. Among our competitors are companies that are
involved in the fetal cell transplant or embryonic stem cell derived cell
therapy and companies developing adult stem cells. Other companies are
developing traditional chemical compounds, new biological drugs, cloned human
proteins and other treatments which are likely to impact the markets which we
intend to target. Many of our competitors possess longer operating histories and
greater financial, managerial, scientific and technical resources than we do and
some possess greater name recognition and established customer bases. Many also
have significantly more experience in preclinical testing, human clinical
trials, product manufacturing, the regulatory approval process and marketing and
distribution than we do. All of these factors put us at a competitive
disadvantage.
IF RAMOT IS UNABLE TO OBTAIN PATENTS ON THE PATENT APPLICATIONS AND TECHNOLOGY
EXCLUSIVELY LICENSED TO US OR IF PATENTS ARE OBTAINED BUT DO NOT PROVIDE
MEANINGFUL PROTECTION, WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET OUR PROPOSED
PRODUCTS.
We rely upon the patent application as filed by Ramot with the Israeli Patent
Office and the license granted to us by Ramot under the Research and License
Agreement. We have agreed with Ramot in the Research and License Agreement to
seek comprehensive patent protection for all inventions licensed to us under the
Research and License Agreement. However, we cannot be sure that any patents will
be issued to Ramot as a result of its domestic or future foreign patent
applications or that any issued patents will withstand challenges by others.
We also rely upon unpatented proprietary technology, know-how and trade secrets
and seek to protect them through confidentiality agreements with employees,
consultants and advisors. If these confidentiality agreements are breached, we
may not have adequate remedies for the breach. In addition, others may
independently develop or otherwise acquire substantially the same proprietary
technology as our technology and trade secrets.
AS A RESULT OF OUR RELIANCE ON CONSULTANTS, WE MAY NOT BE ABLE TO PROTECT THE
CONFIDENTIALITY OF OUR TECHNOLOGY, WHICH, IF DISSEMINATED, COULD NEGATIVELY
IMPACT OUR PLAN OF OPERATIONS
We currently have relationships with two academic consultants who are not
employed by us, and we may enter into additional such relationships in the
future. We have limited control over the activities of these consultants and can
expect only limited amounts of their time to be dedicated to our activities.
These persons may have consulting, employment or advisory arrangements with
other entities that may conflict with or compete with their obligations to us.
Our consultants typically sign agreements that provide for confidentiality of
our proprietary information and results of studies. However, in connection with
every relationship, we may not be able to maintain the confidentiality of our
technology, the dissemination of which could hurt our competitive position and
results of operations. To the extent that our scientific consultants develop
inventions or processes independently that may be applicable to our proposed
products, disputes may arise as to the ownership of the proprietary rights to
such information, we may expend significant resources in such disputes and we
may not win those disputes.
THE PRICE OF OUR STOCK IS EXPECTED TO BE HIGHLY VOLATILE
The market price of our common stock has fluctuated significantly in the short
time it has been traded, and is likely to continue to be highly volatile. To
date, the trading volume in our stock has been relatively low and significant
price fluctuations can occur as a result. An active public market for our common
stock may not continue to develop or be sustained. If the low trading volumes
experienced to date continue, such price fluctuations could occur in the future
and the sale price of our common stock could decline significantly. Investors
may therefore have difficulty selling their shares.
ACTUAL OR PERCEIVED SUBSTANTIAL SALES OF SHARES OF OUR COMMON STOCK COULD RESULT
IN A SIGNIFICANT DECLINE IN OUR STOCK PRICE.
In late October and early November 2004, we issued a total of 941,412 Units for
$.75 per Unit pursuant to a private placement, each unit of which consists of
(i) one share of our common stock, (ii) a warrant to purchase one share of our
common stock at an exercise price of $1.50 per share, which warrant is
exercisable for a one-year period from the date of issuance, and (iii) a warrant
to purchase one share of our common stock at an exercise price of $2.50 per
share, which warrant is exercisable for a three-year period from the date of
issuance. We may issue up to an additional 1,058,588 of these Units for $.75 per
Unit pursuant to additional closings under this offering in the near future,
although no assurance can be given that these additional closings will occur.
The shares of common stock and warrants that comprise the Units have "piggy
back" registration rights, subject to underwriter discretion, to be included by
the Company in a registration statement filed with the Securities and Exchange
Commission.
We are also obligated to issue the following convertible securities, each of
which we expect to issue in the near future: (i) to Ramot, a warrant to purchase
10,606,415 shares of our common stock at a purchase price of $.01 per share,
which represents 29% of the issued and outstanding shares of our capital stock
on a fully diluted and as converted basis as of November 4, 2004 (including the
Units issued as of such date); (ii) to each of our consultants, Dr. Daniel Offen
and Professor Eldad Melamed, warrants to purchase 1,097,215 shares of our common
stock at a purchase price of $.01 per share, which represents 3% of the issued
and outstanding shares of our capital stock on a fully diluted and as converted
basis as of November 4, 2004 (including the Units issued as of such date); and
(iii) to our President and CEO, Dr. Beck, options to purchase 1,828,692 shares
of our common stock at a price per share of $0.15 each, which options will vest
and become exercisable in thirty six equal monthly installments from November 8,
2004. In addition, in November 2006, Dr. Beck will be entitled to receive an
additional stock option grant to purchase the number of shares of our common
stock that represents two percent (2%) of our issued and outstanding share
capital as of that date at a price per share of $0.15 each, which additional
options shall vest and become exercisable in thirty six equal monthly
installments commencing as of such date. We are in the process of negotiating
the additional terms of the Ramot and consultant warrants, including
registration rights, and we have agreed to register the shares underlying Dr.
Beck's options on an S-8 registration statement; provided that this obligation
shall not take effect until the one year anniversary of the grant of the
options.
If we register the shares underlying these convertible securities, they can be
sold in the public market. They will also become eligible for sale into the
public market subject to and in accordance with applicable SEC rules and
regulations which provide exemptions from registration requirements. If any of
the holders of these shares or convertible securities, or any other of our
existing stockholders, sell a large number of shares of our common stock, or the
public market perceives that existing stockholders might sell shares of common
stock, the market price of our common stock could decline significantly.
YOUR PERCENTAGE OWNERSHIP WILL BE DILUTED BY OPTIONS WE INTEND TO GRANT TO
MANAGEMENT, EMPLOYEES, DIRECTORS AND CONSULTANTS.
In anticipation of hiring new management members and employees, recruiting new
directors and retaining additional advisors and consultants, we intend to adopt
a stock option plan, pursuant to which we expect issue options to such
individuals. Such issuances will, if and when made, dilute your percentage
ownership in the company.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR STOCK DUE TO
THE WAY IN WHICH STOCK TRADES ARE HANDLED BY BROKER-DEALERS
Brokers may be less willing to execute transactions in securities subject to
"penny stock" rules. This may make it more difficult for investors to dispose of
our common stock and cause a decline in the market value of our stock. Because
of large broker-dealer spreads, investors may be unable to sell the stock
immediately back to the broker-dealer at the same price the broker-dealer sold
the stock to the investor. In some cases, the stock may fall quickly in value.
Investors may be unable to reap any profit from any sale of the stock, if they
can sell it at all. The market among broker-dealers may not be active. Investors
in penny stocks often are unable to sell stock back to the dealer that sold them
the stock. The mark ups or commissions charged by the broker-dealers may be
greater than any profit a seller may make.
YOU MAY EXPERIENCE DIFFICULTIES IN ATTEMPTING TO ENFORCE LIABILITIES BASED UPON
U.S. FEDERAL SECURITIES LAWS AGAINST US AND OUR NON-U.S. RESIDENT DIRECTORS AND
OFFICERS.
Our principal operations are located through our subsidiary in Israel and our
principal assets are located outside the United States. Our President and
directors are foreign citizens and do not reside in the United States. It may be
difficult for courts in the United States to obtain jurisdiction over our
foreign assets or these persons and as a result, it may be difficult or
impossible for you to enforce judgments rendered against us or our directors or
executive officers in United States courts. Thus, should any situation arise in
the future in which you have a cause of action against these persons or
entities, you are at greater risk in investing in our company rather than a
domestic company because of greater potential difficulties in bring lawsuits or,
if successful, collecting judgments against these persons or entities as opposed
to domestic persons or entities.
POLITICAL, ECONOMIC AND MILITARY INSTABILITY IN ISRAEL MAY IMPEDE OUR ABILITY TO
EXECUTE OUR PLAN OF OPERATIONS.
Our subsidiary's offices and the research and development facilities of Ramot
are located in Israel. Accordingly, political, economic and military conditions
in Israel may affect directly our business. Since the establishment of the State
of Israel in 1948, a number of armed conflicts have occurred between Israel and
its Arab neighbors. Since October 2000, terrorist violence in Israel has
increased significantly and negotiations between Israel and Palestinian
representatives have effectively ceased. Ongoing and revived hostilities or
other factors related to Israel could harm our operations and research and
development process and could impede on our ability to execute our plan of
operations.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
Within the 90 days prior to the date of the Quarterly Report for the period
ended September 30, 2004, we carried out an evaluation, under the supervision
and with the participation of our management, including the company's Chief
Executive Officer and Principal Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to Rule
3a-14 of the Securities Exchange Act of 1934 (the "Exchange Act"), which
disclosure controls and procedures are designed to insure that information
required to be disclosed by a company in the report that it files under the
Exchange Act is recorded, processed summarized and reported within required time
periods specified by the SEC's rules and forms. Based upon that evaluation, the
Chief Executive Officer and Principal Financial Officer concluded that our
disclosure controls and procedures are effective in timely providing alerts to
material information relating to the company required to be included in the
company's period SEC filings.
(b) Changes in Internal Control.
Subsequent to the date of such evaluation as described in subparagraph (a)
above, there were no significant changes in our internal controls or other
factors that could significantly affect these controls, including any corrective
action with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. Litigation is
subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. We are currently
not aware of any such legal proceedings or claims that we believe will have,
individually or in the aggregate, a material adverse affect on our business,
financial condition or operating results.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
On August 10, 2004, we issued 1,800,000 shares to two consultants for consulting
services. On July 1 and September 22, 2004, we issued 20,000 and 15,000 shares
to a director for accounting and consulting services for the first and second
quarters of 2004, respectively. Based on facts known to us, we believe that each
of these issuances is exempt from the registration requirements of the
Securities Act based on Section 4(2).
ITEM 6. EXHIBITS.
31.1 Certification by the Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOLDEN HAND RESOURCES, INC.
Dated: November 15, 2004
By: /s/ Yaffa Beck
-----------------------------------
Name: Yaffa Beck
Title: President & CEO, Director
Principal Executive Officer and
Principal Financial Officer