U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q/A

(Amendment No. 2)

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

 

OR

 

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________

 

COMMISSION FILE NUMBER: 0-51216

 

ANDAIN, INC.

(Exact Name of Company as Specified in its Charter)

 

Nevada		20-2066406
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
400 South Beverly Drive, Suite 312
Beverly Hills, California		90212
(Address of Principal Executive Offices)		(Zip Code)

 

Company’s telephone number: (310) 286-1777

 

_____________________________________________________

(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)

 

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No .

 

Indicate by check mark whether the Company has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No _ .

 

 

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

 

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

 

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

 

As of September 30, 2012, the Company had 56,704,928 shares of common stock issued and outstanding.

 

 

This Amendment to the Quarterly Report on Form 10-Q for the periods ended September 30, 2012 (“Form 10-Q”), originally filed with the Securities and Exchange Commission (“SEC”) on November 19, 2012 and amended on November 21, 2012, is being hereby amended for the following purpose: The SEC has determined that the originally filed Form 10-Q is deficient since it was reviewed by a public accountant that is not registered by the Public Company Accounting Oversight Board (“PCAOB”). The current PCAOB accounting firm for the Company, Yarel + Partners, has re-reviewed the Form 10-Q. The Company has also made various other changes to the Form 10-Q throughout the document and therefore it is being filed as a complete amendment. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

PAGE

 

Item 1. FINANCIAL STATEMENTS

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

5

 

CONSOLIDATED BALANCE SHEETS AS OF September 30, 2012 (UNAUDITED) AND DECEMBER 31, 2011

6

  

CONSOLIDATED StatementS of operations (UNAUDITED) FOR THE THREE AND nine months ENDED September 30, 2012 and September 30, 2011 AND PERIOD OF INCEPTION THROUGH September 30, 2012

7

 

	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE nine MONTHS ENDED September 30, 2012 AND September 30, 2011 AND PERIOD OF INCEPTION THROUGH September 30, 2012	9

 

NOTES TO UNAUDITED CONSOLIDATED fINANCIAL STATEMENTS

11

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS of FINANCIAL CONDITION AND RESULTS OF OPERATIONS

25

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

33

  

ITEM 4.

CONTROLS AND PROCEDURES

33

 

PART II – other information

 

ITEM 1.

LEGAL PROCEEDINGS

34

 

ITEM 1A.

RISK FACTORS

34

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

34

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

35

 

item 4.

MINE SAFETY DISCLOSURES

35

 

item 5.

OTHER INFORMATION

35

 

item 6.

EXHIBITS

36

 

SIGNATURE

36

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have reviewed the accompanying unaudited consolidated balance sheet of Andain Inc. (a development stage company) (“Company) and its subsidiaries as of September 30, 2012, and the related unaudited statements of operations and cash flows for the three-month and nine-month periods then ended, and for the period of inception (July 23, 2004) through September 30, 2012. These interim financial statements are the responsibility of the company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the unaudited consolidated financial statements, the Company has suffered recurring losses, has had significant recurring negative cash flows from operations, and has an accumulated deficit that raises substantial doubt over its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The unaudited consolidated financial statements do not include any adjustments that might result from this uncertainty.

 

As described in Note 13 to the financial statements, the Company amended its financial statements for September 30, 2012, to reflect corrections of accounting errors.

 

/s/ Yarel + Partners, CPA

Tel Aviv, Israel

June 10, 2013

ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

(U.S. Dollars)

 

		September 30,				December 31,
		2012				2011
		(Unaudited)
		Restated
ASSETS
Current assets:
Cash and cash equivalents		$	—			$	872
Related party receivable			28,179				289,178
Accounts receivable			460,437				511,882
Total current assets			488,616				801,932
Long-term assets:
Property, plant and equipment, net			23,673				35,098
Intangible assets			—				20,649
Total long term assets			23,673				55,747
Total assets		$	512,289			$	857,679
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Credit from banks		$	154			$	1
Related  party payable			15,907				50,811
Accounts payable and accrued expenses			687,796				1,161,706
Total current liabilities			703,857				1,212,518
Long-term liabilities:
Long-term shareholder loans			158,248				447,673
Total long-term liabilities			158,248				447,673
Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000,000 authorized shares; no shares issued and outstanding			—				—
Common stock, $0.001 par value, 500,000,000 shares authorized; 56,704,928 shares issued and outstanding at September 30, 2012 and 22,034,243 at December 31, 2011			56,704				16,404
Additional paid-in capital			6,426,719				3,483,855
Accumulated deficit during development stage			(6,351,424	)			(4,042,677	)
Accumulated other comprehensive income (loss)			(212,472	)			923
Total Andain, Inc.’s stockholders’ deficit			(80,473	)			(541,495	)
Non-controlling interest			(269,343	)			(261,017	)
Total stockholders’ deficit			(349,816	)			(802,512	)
Total liabilities and stockholders’ deficit		$	512,289			$	857,679

 

The accompanying notes are an integral part of the unaudited consolidated financial statements

ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollars)

(Unaudited)

																		Period of July 23, 2004
		For the Three Months Ended								For the Nine Months Ended								(Date of Inception) Through
		September 30,								September 30,								September 30,
		2012				2011				2012				2011				2012
		Restated								Restated								Restated
Revenues:
Government grants		$	—			$	279,298			$	—			$	421,291			$	682,690
Consulting income			74,508				(7,439	)			150,754								535,088
Total revenue			74,508				271,859				150,754				421,291				1,217,778
Operating expenses:
General and administrative			(2,081,629	)			(311,047	)			(2,532,546	)			(765,468	)			(6,762,646	)
Research and development			(34,710	)			(220,388	)			(55,359	)			(223,878	)			(391,287	)
Loss on disposal of associate			—				—				—				—				(135,424	)
Impairment of goodwill			—				—				—				—				(412,699	)
Impairment loss			—				—				—				—				(177,729	)
Total operating expenses			(2,116,339	)			(531,435	)			(2,587,905	)			(989,346	)			(7,879,785	)
Operating (loss)			(2,041,831	)			(259,576	)			(2,437,151	)			(568,055	)			(6,662,007	)
Other income, net			157,142				—				157,142				—				172,142
Financial income (expenses), net			(9,886	)			1,277				(35,771	)			(2,597	)			5,229
Share of loss of equity accounted Investee			—				(106,836	)			—				(115,996	)			—

 

 

ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS (continued)

(U.S. Dollars)

(Unaudited)

 

																		Period of July 23, 2004
		For the Three Months Ended								For the Nine Months Ended								(Date of Inception) Through
		September 30,								September 30,								September 30,
		2012				2011				2012				2011				2012
		Restated								Restated								Restated
Net  loss , including non-controlling interests			(1,894,575	)			(365,135	)			(2,315,780	)			(686,648	)			(6,484,636	)
Less: Net attributable to non-controlling interest			9,672				51,876				(7,033	)			36,233				(133,212	)
Net loss attributable to Andain, Inc.		$	(1,904,247	)		$	(417,011	)		$	(2,308,747	)		$	(722,881	)		$	(6,351,424	)
Loss per share (basic &diluted)		$	(0.07	)		$	(0.02	)		$	(0.10	)		$	(0.04	)
Weighted average number of shares outstanding			28,122,286				19,012,899				24,085,891				18,358,535

 

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements

ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars)

(Unaudited)

 

		Nine Months Ended September 30,								Period of July 23, 2004 (Date of Inception) Through September 30,
		2012				2011				2012
		Restated								Restated
Cash flows from operating activities:
Net loss attributable to Andain Inc.		$	(2,308,747	)		$	(722,881	)		$	(6,351,424	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation			11,425				5,828				52,050
Loss from acquisition of subsidiary			—				—				135,424
Impairment of goodwill			—				—				337,685
Impairment of loan			—				—				177,729
Minority interest			(8,326	)			36,233				(132,211	)
Loss from equity-accounted investee			—				115,996				—
Shares issued for professional services			579,164				447,500				957,374
Stock based compensation to key management			1,862,000				—				1,862,000
Contribution of services from shareholders			504,000				—				504,000
Impairment of intangible assets			20,649				—				20,649
Changes in operating assets and liabilities:
Accounts payable			(508,814	)			(426,882	)			667,088
Accounts receivable			23,269				(174,564	)			(396,025	)
Related parties			(251,428	)			270,000				1,615,543
Net cash (used in) operating activities			(76,808	)			(448,770	)			(550,118	)
Cash flows from investing activities:
Purchase of equipment			—				(952	)			(70,547	)
Acquisition of patent			—				—				(20,649	)
Acquisition of subsidiary			—				—				(578,503	)
Net cash (used in) investing activities			—				(952	)			(669,699	)
Cash flows from financing activities:
Proceeds from increase in bank overdrafts			153				(38,376	)			153
Proceeds from stock issued for cash			289,178				355,000				808,978
Proceeds from other loans			—				104,494				(59,520	)
Loan from majority stockholder			—				797				(15,754	)
Loans from key management personnel			—				23,419				704,217
Net cash provided by financing activities			289,331				445,334				1,438,074
Increase/decrease in cash and cash equivalents			212,523				(4,388	)			218,257

 

ANDAIN, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars)

(Unaudited)

(continued)

 

		Nine Months Ended September 30,								Period of July 23, 2004 (Date of Inception) Through September 30,
		2012				2011				2012
		Restated								Restated
Cash and cash equivalents, beginning of period			872				23,672				—
Effects of exchange rate changes on balance of cash held in foreign currencies			(213,395	)			(9,444	)			(218,257	)
Cash and cash equivalents, end of period		$	—			$	9,840			$	—
Non-cash investing and financing activities:
Issuance of common stock for purchase of intellectual property		$	—			$	—			$	4,500
Issuance of common stock for purchase of subsidiary		$	—			$	—			$	2,500
Issuance of common stock to directors in exchange for a loan		$	—			$	1,920,000			$	1,920,000
		$	—			$	—			$	—
Additional information:
Cash paid for income taxes		$	—			$	—			$	—
Cash paid for interest expense		$	—			$	—			$	—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements

ANDAIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED\

SEPTEMBER 30, 2012

(Unaudited)

 

NOTE 1 – GENERAL

 

Andain Inc. (“Company”) was established in 2004 in the State of Nevada, U.S.A. Since commencing operations in 2006, the Company has been engaged, both independently and through its consolidated entities (collectively, the “Group”), in the development of medical technology, from early stage development to advanced clinical trials, for a wide range of medical needs.

 

The Group incurred losses from operations in the amount of $2,308,747 during the nine months ended September 30, 2012 and $6,351,424 during the period from July 23, 2004 (date of inception) through September 30, 2012.

 

The above raise substantial doubt about the ability of the Company to continue as a going concern.

 

The future success of the Company is dependent upon its ability to invest the required resources in research and development, the quality of its technologies, future market and the continued financial support of its shareholders in order to secure the continuity of its research and development operations.

 

The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

NOTE 2 – GOING CONCERN

 

The Company’s consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established any source of revenue to cover its operating costs. The Company has sustained operating losses and expects such losses to continue for the foreseeable future. The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured. The Company will offer non-cash consideration as a mean of financing its operations. If the Company is unable to obtain revenue-producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations.

 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While management believes that such estimates are fair when considered in conjunction with the consolidated financial position and results of operations taken as a whole, actual results could differ from those estimates and such differences may be material to the financial statements.

 

Basis of presentation

 
The accompanying unaudited financial statements of the Company are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such U.S. Securities and Exchange Commission (“SEC”) rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2011 and the notes thereto included in the Company’s Report on Form 10-K filed with the SEC on April 16, 2012.

 

Functional and Reporting Currency.

 

The consolidated financial statements are presented in U.S. Dollars, which is the Company’s functional currency and presentation currency. The financial statements of entities that use a functional currency other than the U.S. Dollar are translated into U.S. Dollars. Assets and liabilities are translated using the exchange rate on the respective balance sheet dates. Items in the income statement and cash flow statement are translated into U.S. Dollars using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded as a separate component of other comprehensive income/(loss) within stockholders’ equity.

 

The functional currency of foreign entities is generally the local currency unless the primary economic environment requires the use of another currency. Gains or losses arising from the translation or settlement of foreign-currency-denominated monetary assets and liabilities into the functional currency are recognized in the income in the period in which they arise. However, currency differences on intercompany loans that have the nature of a permanent investment are accounted for as translation differences as a separate component of other comprehensive income/(loss) within stockholders’ equity.

 

New Israeli Shekel (“NIS”) amounts as of September 30, 2012 have been translated into U.S. Dollars at the representative rate of exchange on September 30, 2012 (USD 1 = NIS 3.912).

 

Consolidation Principles.

 

The consolidated financial statements of the Company include the accounts of the Company, and all entities in which a direct or indirect controlling interest exists through voting rights or qualifying variable interests. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

 

Fair Value Measurements.

 

As defined in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 820-10, “Fair Value Measurements and Disclosures,” fair value is based on the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, Topic 820-10 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

 

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

Level 2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market-corroborated inputs.  

 

Level 3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

In determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The following table presents the Company’s financial assets and liabilities that are carried at fair value, classified according to the three categories described above:

 

		Fair Value Measurements at September 30, 2012
		Total				(Level 1)				(Level 2)				(Level 3)
Credit from banks		$	(154	)		$	(154	)		$	—			$	—
Total liabilities at fair value		$	(154	)		$	(154	)		$	—			$	—

 

		Fair Value Measurements at December 31, 2011
		Total				(Level 1)				(Level 2)				(Level 3)
Cash and cash equivalents		$	871			$	871			$	—			$	—
Total assets at fair value		$	871			$	871			$	—			$	—

 

Impact of Recently Issued Accounting Standards.

 

In December 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-11, “Disclosures about Offsetting Assets and Liabilities.” The objective of ASU 2011-11 is to enhance disclosures by requiring improved information about financial instruments and derivative instruments in relation to netting arrangements. ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. The adoption of ASU 2011-11 did not have a material impact on its consolidated results of operation and financial condition.

 

On February 5, 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which adds additional disclosure requirements relating to the reclassification of items out of accumulated other comprehensive income.  This ASU is effective for the first quarter of 2013 and affects only disclosures. The adoption of ASU 2013-02 did not have a material impact on its consolidated results of operation and financial condition.

 

There were various other updates recently issued, none of which are expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

 

NOTE 4 – ACCOUNTS RECEIVABLE

 

		September 30				December 31,
		2012				2011
Prepaid expenses		$	38,073			$	—
Governmental Institutions			13,049				17,731
Grants received from the Office of the Chief Scientist (“OCS”) (Israel)			398,166				494,151
Other receivables			11,149				—
		$	460,437			$	511,882

 

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT, NET

 

				Computers				Furniture				Vehicles				Total
	Balance as of December 31, 2011			$	9,105			$	20,288			$	5,705			$	35,098
	Depreciation				(2,642	)			(3,078	)			(5,705	)			(11,425	)
	Balance as of September 30, 2012			$	6,463			$	17,210			$	—			$	23,673

 

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

		September 30,				December 31,
		2012				2011
Trade payables		$	11,345			$	135,608
Accrued liabilities			650,708				932,150
Employees and related			25,743				69,490
Other			—				24,458
		$	687,796			$	1,161,706

 

NOTE 7 – LONG-TERM DEBT

 

		September 30,				December 31,
		2012				2011
Stockholders loan (1)		$	158,248			$	447,673

 

(1) The loan bears interest at an annual rate of approximately 3%.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Common Stock.

 

Changes during the nine months ended September 30, 2012 are as follows:

 

(a) On January 5, 2011, the Company entered into a Regulation S Stock Purchase Agreements with Sam Elimelech, the Company’s president and CEO, and with Gai Mar-Chaim, the Company’s secretary/treasurer. Under these agreements, they each purchased from the Company 1,280,000 restricted shares of common stock for a total consideration of $1,920,000. The Company issued 4,000,000 shares each instead of 1,280,000 to each of the directors (which later amount correctly reflects the value of the services provided); the excess shares were returned to the Company and cancelled effective on January 1, 2012.

 

(b) On August 1, 2011, the Company issued 707,352 free trading shares of common stock registered under a Form S-8 registration statement for various professional services to the Company valued at $530,514 for services rendered during 2011. The Company issued 830,000 shares instead of 707,352 shares for the services, the excess shares were returned to the Company on January 1, 2012.

 

(c) On January 1, 2011, the Company began using offices provided by 1568934 Ontario Limited located in Beverly Hills, California. This office space is approximately 1,000 square feet. The Company pays restricted shares of common stock to cover the value of $5,000 each

month for rent, electricity, telephones, and other expenses of the office. The Company is under a month-to-month lease of these offices. On August 8, 2011, the Company issued 60,000 restricted shares of common stock to 1568934 Ontario Limited under this arrangement as rent for the 2011 calendar year, valued at $45,000 ($0.75 per share). The Company issued an additional 20,000 restricted shares of common stock effective on January 1, 2012, valued at $15,000.

 

(d) On August 8, 2011, the Company issued 100,000 restricted shares of common stock to the Company’s transfer agent, Globex Transfer, LLC, for professional services. Valued at $10,000. The Company issued 100,000 shares instead of 13,333 shares for the services, the excess shares were returned to the Company on January 1, 2012.

 

(e) On January 5, 2012, the Company granted to 1568934 Ontario Limited, in connection with the purchase agreement dated December 26, 2011, an option to purchase two shares of Company common stock for each share purchased under this agreement, for a total of up to 5,181,818 restricted shares of common stock. The exercise price of this option is 67% of the lowest share price of the first one million shares sold by the Company’s underwriter to the public as of the Company public offering as set for in a Form S-1 registration statement to be filed with the Securities and Exchange Commission at a later time. This option will be exercisable commencing the following day the Company’s underwriter completes the sale of the first 1,000,000 shares of the common stock and continuing up to 5:00 p.m. Pacific Standard Time on a date which is 24 months from such date.

 

(f) On March 12, 2012, the Company issued a total of 300,000 restricted shares of common stock (150,000 each) to Otzarot Tarshsih Nechasim Vehashkaott Ltd., for consulting work, and Uziel Economic Consultant Ltd., for marketing services, both for a period of four months commencing February 5, 2012, valued at $9,000 each.

 

(g) On June 14, 2012, the Company issued 200,000 restricted shares of common stock to the Company’s transfer agent, Globex Transfer, LLC, for professional services rendered valued at $10,000 ($0.05 per share).

 

(h) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Sam Elimelech, the Company’s President & CEO. Under this agreement, Sam Eliemelech purchased from the Company 18,000,000 restricted shares of common stock at its par value for a total consideration of $18,000 ($0.001 par value per share). The company recorded stock based compensation valued at $882,000, the difference between the shares market price on July 29, 2012 and the consideration of $18,000.

 

(i) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Gai Mar-Chaim, the Company’s secretary/treasurer. Under this agreement, Mr. Mar-Chaim purchased from the Company 18,000,000 restricted shares of common stock at its par value for a total consideration of $18,000 ($0.001 par value per share). The company recorded stock based compensation valued at $882,000, the difference between the shares market price on July 29, 2012 and the consideration of $18,000.

 

(j) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Eran Elimelech, son of Sam Elimelech (the Company’s president) but not living in the same household. Under this agreement, Eran Elimelech purchased from the Company 2,000,000 restricted shares of common stock at its par value for a total consideration of $2,000 ($0.001 par value per share). Sam Elimelech disclaims any beneficial ownership of these shares. The company recorded stock based compensation valued at $98,000, the difference between the shares market price on July 29, 2012 and the consideration of $2,000.

 

(k) On September 20, 2012, the Company issued 720,000 restricted shares of common stock to American Capital Ventures, and 480,000 restricted shares of common stock to Maplehurst Investment Group, both for investor relations services to be rendered for a period of one year commencing September 20, 2012, valued at $60,000. Accordingly, the Company charged to general and administrative expenses during 2012 a total compensation of $16,750.

 

(l) On September 20, 2012, the Company issued a total of 3,000,000 restricted shares of common stock (1,500,000 each) to Otzarot Tarshsih Nechasim Vehashkaott Ltd., for consulting work, and Uziel Economic Consultant Ltd., for marketing services. The Company has determined that services were not performed the services as agreed so the Company did not deliver the stock certificates; the Company now intends to cancel these certificates.

 

(m) On September 21, 2012, the Company issued 600,000 restricted shares of common stock to 1568934 Ontario Limited as rent for the year ended December 31, 2012 under a Corporate Office Services Agreement, dated January 5, 2012.

 

NOTE 9 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

 

Foreign Exchange Risk.

 

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. Dollar and the New Israeli Shekel. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

 

Interest Rate Risk.

 

The Company is subject to cash flow interest rate risk due to fluctuations in the prevailing levels of market interest rates. The investment manager monitors the Company’s overall interest sensitivity on a monthly basis and the general director on a quarterly basis.

 

Credit Risk.

 

Credit risk refers to the risk that counter-party will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counter-parties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

 

Liquidity and Capital Risk Management.

 

The Company’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to stockholders, return capital to stockholders, issue new shares or sell assets to reduce debt.

 

NOTE 10 – RELATED PARTY TRANSATIONS

 

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

 

The following entities have been identified as related parties of the Company as of September 30, 2012:

 

Pangea Investments GmbH	Greater than 10% stockholder
1568934 Ontario Limited	Greater than 10% stockholder
Sam Elimelech	Director and greater than 10% stockholder
Eran Elimelech	Son of Sam Elimelech
Gai Mar-Chaim	Director and greater than 10% stockholder
Impact Active Team Ltd.	Israeli, wholly-owned subsidiary
TPDS Ltd.	Israeli, majority-owned subsidiary
Meizam - Advanced Enterprise Center Arad Ltd.	Israeli, majority-owned subsidiary
Meizam Arad Investments Ltd.	Israeli, majority owned subsidiary
Gai Med Ltd.	Israeli, majority owned subsidiary
P.O.C. Hi Tech Ltd.	Israeli company with common director

 

The following transactions were carried out with related parties:

 

		For the Nine Months Ended September 30,
		2012				2011
Income statements:
Directors’ remuneration		$	270,000			$	270,000
Stock based compensation		$	1,907,000			$	36,000
Balance sheets:
Related party receivable.		$	11,712			$	202,793
Long term loans – key management personnel		$	398,615			$	(74,652	)

 

(1) The annual compensation to key management personnel is $360,000 per year. During 2012 the Company recorded forgiveness of loans from key management personnel in the amount of $504,000. The amount was accounted for as an equity transaction.

 

 

(2) On January 5, 2011, the Company entered into a Regulation S Stock Purchase Agreements with Mr. Elimelech, and with Mr. Mar-Chaim. Under these agreements, they each purchased from the Company 1,280,000 restricted shares of common stock for a total consideration of $1,920,000. The Company issued 4,000,000 shares each instead of 1,280,000 to each of the directors (which later amount correctly reflects the value of the services provided); the excess shares were returned to the Company and cancelled effective on January 1, 2012.

 

(3) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Mr. Elimelech, Mr. Mar-Chaim, and Eran Elimelech. Under this agreement, they purchased from the Company 38,000,000 restricted shares of common stock at its par value for a total consideration of $38,000 ($0.001 par value per share). The Company recorded stock based compensation valued at $1,862,000, the difference between the shares market price on July 29, 2012 and the consideration of $38,000.

 

NOTE 12 – SUBSEQUENT EVENTS

 

(a) During October and November 2012, the Company received $50,000 from an investor on account of a future allocation of shares. As of the date of these financial statements, the investment agreement had not been signed.

 

(b) On January 28, 2013, the Company issued a total of 400,000 free trading shares of common stock under the 2011 Stock and Option Plan in connection with the conversion of accounts payables for services provided in exchange of short-term liabilities accrued in prior years in the amount of $47,164.

 

(c) On February 13, 2013 the Company engaged in a financial public relations services agreement with Investor Communications Services (a division of A.I.D. Capital, LLC.). According to the agreement 375,000 restricted shares of common stock were issued for services to be provided in the six months period ending June 30, 2013 valued at $15,000. The Company recorded stock based compensation in the amount of $7,500 for the three months ended March 31, 2013.

 

(d) On May 14, 2013, the Company’s board of directors (with Mr. Elimelech recusing himself) decided to simplify the Company’s corporate structure by transferring all assets and technologies from its subsidiaries to the Company, and sell its subsidiaries with their accumulated losses to Mr. Elimelech; the effective date of the transactions was January 1, 2013. Simultaneously with the sale of subsidiaries, the Company acquired an additional 7.5% interest in Meizam Investments, which then became a wholly owned and the only subsidiary of the Company (the effective date of this transaction is also January 1, 2013).

 

 

 

NOTE 13 – RESTATEMENT

 

The Company restated its financial statements for the three months and nine months ended September 30, 2012, to give retrospective effect to the amendments described below:

 

						For the Three Months Ended												For the Nine Months Ended
						September 30, 2012												September 30, 2012
		Note				As Previously Reported				Adjustments				As Restated				As Previously Reported				Adjustments				As Restated
						2012				2012				2012				2012				2012				2012
Revenues:
Government grants						$	—			$	—			$	—			$	—			$	—			$	—
Consulting income			(a	)			12,158				62,350				74,508				88,404				62,350				150,754
Total revenue							12,158				62,350				74,508				88,404				62,350				150,754
Operating expenses:
General and administrative			(b	)			(33,907	)			(2,047,722	)			(2,081,629	)			(155,660	)			(2,376,886	)			(2,532,546	)
Research and development			(b	)			(107,270	)			72,560				(34,710	)			(452,043	)			396,684				(55,359	)
Loss on disposal of associate							—				—				—				—				—				—
Impairment of goodwill							—				—				—				—				—				—
Impairment loss							—				—				—				—				—				—
Other income, net			(c	)			610,396				(453,254	)			157,142				610,396				(453,254	)			157,142
Total operating income (expenses)							469,219				(2,428,416	)			(1,959,197	)			2,693				(2,433,456	)			(2,430,763	)
Operating (loss)							481,377				(2,366,066	)			(1,884,689	)			91,097				(2,371,106	)			(2,280,009	)
Financial income (expenses),net			(d	)			22,379				32,265				(9,886	)			(3,506	)			(32,265	)			(35,771	)
Net profit (loss), including non-controlling interests							503,756				(2,398,331	)			(1,894,575	)			87,591				(2,403,371	)			(2,315,780	)
Attributable to non-controlling interest			(e	)			66,842				(57,170	)			9,672				2,809				(9,842	)			(7,033	)

 

 

						For the Three Months Ended												For the Nine Months Ended
						September 30, 2012												September 30, 2012
		Note				As Previously Reported				Adjustments				As Restated				As Previously Reported				Adjustments				As Restated
						2012				2012				2012				2012				2012				2012
Net profit (loss) attributable to Andain, Inc						$	436,914			$	(2,341,161	)		$	(1,904,247	)		$	84,782			$	(2,393,529	)		$	(2,308,747	)
Loss per share (basic and diluted): Net loss attributable to Andain, Inc						$	0.015							$	(0.07	)		$	(0.003	)						$	(0.10	)
Weighted average number of shares outstanding							27,438,650								28,122,286				23,905,304								24,085,891

 

 

(a) Consulting income: The Company had total consulting revenue of $74,508 and $150,754 for the three and nine months periods ended September 30, 2012. The Company previously recorded consulting income in the amount of $12,158 and $88,404 for the three and nine months periods ended September 30, 2012, due to an error in accounting.

 

(b) General and administrative expenses, and research and development expenses: The Company reclassified research and development expenses to general and administrative expenses due to an error in accounting. The OCS agreement has expired and not renewed and the company stopped employing sub-contractors funded by government grants, therefore most of the expenses of the company are related to general and administrative expenses. The Company had total research and development expenses of $34,710 and $55,359 for the three and nine months ended September 30, 2012. On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Sam Elimelech, Gai Mar-Chaim and Eran Elimelech, under which they purchased from the Company 38,000,000 restricted shares of common stock at its par value for a total consideration of $38,000 ($0.001 par value per share). The company recorded stock based compensation valued at $1,862,000, the difference between the shares market price on July 29, 2012 and the consideration of $38,000.

 

(c) Other income, net: The Company recorded a sum of $610,396 that consisted of $504,000 forgiveness of debt to stockholders and $106,396 of forgiveness of debt trade payables. The amount of $504,000 was restated and classified as additional paid-in capital and the amount of the forgiveness of payables was updated to $157,142 for the three and nine months ended September 30, 2012.

 

(d) Financial income (expenses), net: The Company restated its financial income (expenses) for the three and nine months ended September 30, 2012 due to an error in accounting.

 

(e) Non-controlling interest: The Company restated its non-controlling interest balance and accumulated deficit for the three and nine months ended September 30, 2012 due to an error in accounting.

 

 

						September 30, 2012
		Note				As Previously Reported				Prior Period Adjustments				As Restated
Cash and cash equivalents			1			$	2,207			$	(2,207	)		$	—
Accounts receivable			1				973,912				(485,296	)			488,616
Property ,plant and equipment			1				24,007				(334	)			23,673
Intangible assets			2				20,168				(20,168	)			—
Short term bank credits			1				(788	)			634				(154	)
Accounts payable and accrued expenses			1				(994,136	)			290,433				(703,703	)
Long term liabilities			3,1				(247,147	)			88,899				(158,248	)
Non-controlling interest			4				115,502				153,841				269,343
Common stock			5				(65,334	)			8,630				(56,704	)
Additional paid in capital			1,5,6,8				(4,036,155	)			(2,390,564	)			(6,426,719	)
Accumulated other comprehensive loss			1				78,145				134,327				212,472
Accumulated deficit during development stage			2,6,7,8			$	4,129,619			$	2,221,805			$	6,351,424

 

						Nine Months Ended September 30,
						2012				2012				2012
		Note				As Previously Reported				Prior Period Adjustments				As Restated
Cash flows from operating activities:
Net loss attributable to Andain Inc.			2,3,4,6,7			$	84,782			$	(2,393,529	)		$	(2,308,747	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation			1				9,532				1,893				11,425
Loss from acquisition of subsidiary			—				—				—
Impairment of goodwill			—				—				—
Impairment of loan			—				—				—
Minority interest			4				2,809				(11,135	)			(8,326	)
Loss from equity-accounted investee			—				—
Shares issued for professional services			8				143,236				435,928				579,164

 

 

 

						Nine Months Ended September 30,
						2012				2012				2012
		Note				As Previously Reported				Prior Period Adjustments				As Restated
Stock based compensation to key management			6				—				1,862,000				1,862,000
Contribution of services from shareholders			9				—				504,000				504,000
Impairment of intangible assets			2				—				20,649				20,649
Changes in operating assets and liabilities:
Accounts payable			1				(672,494	)			163,680				(508,814	)
Accounts receivable			1				163,181				(139,912	)			23,269
Related parties			1				270,000				(521,428	)			(251,428	)
Net cash (used in) operating activities							1,046				(77,854	)			(76,808	)
Cash flows from investing activities:
Purchase of equipment			11				(480	)			480				—
Acquisition of subsidiary							—				—
Net cash (used in) investing activities							(480	)			480				—
Cash flows from financing activities:
Proceeds from increase in bank overdrafts			1				—				153				153
Proceeds from stock issued for cash			1				—				289,178				289,178
Proceeds from other loans							—				—				—
Loan from majority stockholder							—				—				—
Loans from key management personnel							—				—				—
Net cash provided by financing activities							—				289,331				289,331
Increase (decrease) in cash and cash equivalents							566				211,957				212,523
Cash and cash equivalents, beginning of period							872				—				872
Effects of exchange rate changes on balance of cash held in foreign currencies			10				(19	)			(213,376	)			(213,395	)
Cash and cash equivalents, end of period						$	1,419			$	(1,419	)			—
Non-cash investing and financing activities:
Issuance of common stock for payment of legal fee and various other services			11			$	58,000			$	(58,000	)		$	—
Issuance of common stock for payment of services of transfer agent			11			$	24,638			$	(24,638	)		$	—

 

(1) Reclassified.

 

(2) Patents in the amount of $20,168 were written off.

 

(3) Restatement in the amount of $54,990. Expenses that were erroneously recorded.

 

 

(4) The Company determined that its non-controlling interest balance and accumulated deficit during the development stage were overstated by $153,841 due to an error in accounting.

 

(5) As of January 1, 2012, the Company restated various stock based compensation transactions recorded during 2011.

 

(6) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Sam Elimelech,Gai Mar-Chaim and Eran Elimelech. Under this agreement, they purchased from the Company 38,000,000 restricted shares of common stock at its par value for a total consideration of $38,000 ($0.001 par value per share). The company recorded stock based compensation valued at $1,862,000, the difference between the shares market price on July 29, 2012 and the consideration of $38,000.

 

(7) Revenues in the amount of $65,972 were erroneously cancelled due to an error in accounting.

 

(8) Stock based compensation was misstated due to an error in accounting.

 

(9) Contribution of services from shareholders was recorded as income due to an error in accounting.

 

(10) Effects of exchange rate changes on balance of cash held in foreign currencies were misstated due to an error in accounting.

 

(11) Error in accounting.

 

 

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

 

The following management’s discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with, the Company’s unaudited financial statements and related notes included elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

 

Overview.

 

(a) General Discussion.

 

The Company is involved in the biotech and medical fields, specializing in identifying technical innovations and providing a unique incubator/accelerator development and industrial platform. The company also offers technical know-how and business strategy expertise to commercialize new technologies into products. The Company’s main efforts are to optimize development, engineering for production, regulation, pre-clinical and clinical trials and market penetration, respectfully, to each of its products. The Company is constantly working to enhance its products by new synergetic novel technologies keeping each of its products advantageous in its market.

 

The Company recorded income from grants from the government’s Office of the Chief Scientist (“OCS”) during the years 2009 to 2011. In January 2012, the Company’s board of directors decided not to extend the agreement period with the OCS beyond the initial 3 years term. The Company will continue for the next 3 years to maintain all guidelines to the projects funded by the OCS. Therefore the company is not expected to receive additional government grants based on the previous OCS agreement.

 

The Company’s industrial incubator specializes in utilization of the industrial infrastructure of companies that it works with, optimizing each product’s research and development and engineering development to the “best-in-the-market” product.

 

The Company’s team of experts manages all technological, medical, regulatory and other aspects needed to insure timely development, and market presence within the planed program and budget.

 

The Company operates five product lines:

 

· Miniature insulin pump

 

· Targeted drug delivery nano-particles

 

· Stem cell therapy

 

· Ultasonic catheter for brain cancer therapy

 

· Peptide booster for anti-wrinkle cosmeceuticals

 

Miniature Disposable Insulin Pump.

 

The Company has developed a miniature insulin pump with ultra slim, small 'Band-Aid' patch size, fully disposable, water proof, fully programmable characteristics, designed to treat Type I and Type II diabetes for a full week. The pump's dimensions 49mm diameter, by less than 7 mm thick with 6CC (600 units) insulin, make it very comfortable and almost unnoticeable to wear. Its ultra-low cost makes it an affordable yet clinically superior replacement for pen injector products. Smart on-line monitoring provides a real-time alert for occlusions and leakages. The Company’s main challenge was to achieve production price capable to compete with the low price of the insulin pen syringe injection for diabetic type II. The Company’s detailed market survey showed a significant advantage of such a product in the market, providing the size and price comfort, yet accurate as the expensive top of the line insulin pumps and preventing any hyper or hypo life threatening situations to the patient (stable blood glucose level superior to the syringe use).

 

The Company’s team successfully developed the technology of the MinIn (miniature insulin) fully disposable pump, and lab tested all regulatory aspects of the MinIn pup, ready for the clinical trials initial production batch. During the first quarter of 2012, the Company’s team focused on the technology transfer for GMP/GLP production, and Helsinky approval for clinical trials. During the second quarter, the Company has produced parts and subassemblies for 2,000 units, adapting production and assembly lines.

 

The Company estimates that the MinIn development, regulatory, and manufacturing in order to complete all needed clinical trials, will require an additional $530,000.

 

Nano-particles Targeted Drug Delivery Technology.

 

The Company is also committed to develop its nano-particle technology with the capacity to accommodate hydrophobic (repelling water based molecules), as well hydrophilic (attracting water based molecules) properties. These developments will enable the Company’s product to carry ultra strong antibiotics to treat VAP (ventilated associated pneumonia) at respiratory intensive care units (ICU) with an average mortality rate over 50%. The Company is using the VAP application to clinically test the technology, and start market test with its application for compassionate use before full Food and Drug Administration (“FDA”) regulation will end. The Company is also developing its product to carry the GSK RELENZA (zanamivir) drug for swine flu (H1N1) therapy. The Company’s lab results show very stable nano-particle with over a six months shelf life capable to carry hydrophobic and hydrophilic molecules with a high drug load, providing exceptional drug delivery efficiency. During the first quarter of 2012, the Company’s team mapped all intellectual properties used to develop the multi-task nano-particles and to secure it in a separate its intellectual properties apart from those used by TPDS. During the second quarter of 2012, the Company’s team prepared the all pre-clinical studies ready for animal tests. This work dramatically reduced the need for extended pre-clinical trials, saving time and money.

The Company estimates that the additional development, regulatory, and manufacturing in order to complete all needed clinical trials will require an additional $850,000 in order to conclude successful human trial.

 

Stem Cell Therapy for Muscular Injuries.

 

The Company has completed successful animal studies with positive results on limb therapy. The initial animal studies showed very promising rehabilitating results. Because of those results, the Company has modified and accelerated its development program with two pillar technologies with strong intellectual properties: (i) Direct a stem cell to a myogenic (muscle) cell without any spontaneous direction into unhealthy cells such as cancer; and (ii) mass produce the directed myogenic cells for patient treatment. As part of the of the development phase, the Company has developed a “harvesting” procedure of human fat tissue from the patient as a row material for extracting the stem cells, diverting and directing the stem cells to muscle cells and reproducing these cells for an effective treatment. Currently, the Company is developing the upscale production process for commercial use.

 

The Company estimates that the additional development, regulatory, and manufacturing in order to complete all needed pre-clinical trials, will require an additional $620,000.

 

(b) Operations.

 

Insulin Pumps.

 

The Company has postponed the registration and filing of the patent application from second quarter of 2012 to the end of 2012 due to the multiple miniaturizing, and sensory innovations emanated from the accelerated development program, which added to the Company’s IP.

 

The Company’s new pump is not based or relates in any aspect on Gaia-Med’s technology that precludes the Company and the incubator from any royalty payments on this product line. Currently, the Company and the incubator discontinued the development of the semi-disposable Gaia-Med pump within its original program. The Company will revisit the Gaia-Med development program in the third quarter of 2012, according to a MOITL request.

 

Nano-Particles.

 

The Company separates the additional development in any aspect from the development done in TPDS.

 

The Company has successfully managed to develop new technology and intellectual properties to be secured by new patents, for the multi-tasking nano-particles. The Company the registration and filing of the patent application from second quarter of 2012 to the end of 2012 due to additional technological patentable developments emanated from the accelerated program. The Company’s development success of new and separate technology that is not based or relates

in any aspect on TPDS’s technology that precludes the Company and the incubator from any royalty payments on this product line. Currently, the Company and the incubator-halted development of TPDS based technology, and now develop only its new technology. The Company will revisit the original TPDS development program in the third quarter of 2012, according to a MOITL request.

 

The Company plans to initiate the planed pre-clinical animal trials to enable it to begin human clinical trials in Rambam Medical Centre, ICU, for VAP patients.

 

Stem Cell Therapy.

 

The Company has developed the stem-cell technology and product line, conducted animal tests and successfully built massive intellectual properties without the need to separate and transfer the activity into owned subsidiary. Therefore the Company decided to postpone its intention as planed to establish in the second quarter of 2012 a new company to accommodate all assets and operations of the new technology and development of the project. The Company will revisit the need to transfer this activity to a separate subsidiary during the next two quarters.

 

Results of Operations.

 

(a) Total Revenue.

 

The Company had total revenue of $74,058 for the three months ended September 30, 2012 compared to $271,859 for the three months ended September 30, 2011, a decrease of $197,801 or approximately 72%. The Company had total revenue of $150,754 for the nine months ended September 30, 2012 compared to $421,291 for the Nine months ended September 30, 2011, a decrease of $270,537 or approximately 64%. The decrease in revenues is attributed mainly to decrease in government grants. In January 2012, the Company’s board of directors decided not to extend the agreement period with the OCS beyond the initial 3 years term, therefore the company is not expected to receive additional government grants based on the previous OCS agreement.

 

The Company had total revenue of $1,217,778 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

(b) General and Administrative Expenses.

 

The Company had general and administrative expenses of $2,081,629 for the three months ended September 30, 2012 compared to $311,047 for the three months ended September 30, 2011, an increase of $1,770,882 or approximately 569%. The Company had general and administrative expenses of $2,532,546 for the nine months ended September 30, 2012 compared to $765,468 for the nine months ended September 30, 2011, a increase of $1,767,078 or approximately 231%. The increase in general and administrative costs was mainly due to stock based compensation of $1,862,000 to key management in 2012 as compared to no stock based compensation to key management in 2011.

 

 

The Company had general and administrative expenses of $6,762,646 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

(c) Research and Development Expenses.

 

The Company had research and development expenses of $34,710 for the three months ended September 30, 2012 compared to $220,388 for the three months ended September 30, 2011, a decrease of $185,678 or approximately 84%. The Company had research and development expenses of $55,359 for the nine months ended September 30, 2012 compared to $223,878 for the nine months ended September 30, 2011, a decrease of $168,519 or approximately 75%. The decrease in research and development was because the Company stopped employing sub-contractors funded by government grants.

 

The Company had research and development expenses of $391,287 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

(d) Net Profit (Loss).

 

The Company had a net loss of $1,904,247 for the three months ended September 30, 2012 compared to a net loss of $417,011 for the three months ended September 30, 2011, an increase of $1,487,236 or approximately 357%. The Company had a net loss of $2,308,747 for the nine months ended September 30, 2012 compared to a net loss of $722,881 for the nine months ended September 30, 2011, an increase of $1,585,866 or approximately 219%. These changes from period to period are the result of the Company’s accelerated development and engineering for production of our disposable insulin pump.

 

The Company had a net loss of $6,351,424 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

Operating Activities.

 

Net cash used in operating activities was $76,808 for the nine months ended September 30, 2012 compared to net cash used in operating activities of $448,770 for the nine months ended September 30, 2011, a decrease of $371,962 or approximately 83%. This change is attributed mainly to decrease of payment for professional services of technological and management consultants.

 

The net cash used in operating activities was $550,118 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

Investing Activities.

 

Net cash used in investing activities was $0 for the nine months ended September 30, 2012 compared to $952 for the nine months ended September 30, 2011.

 

 

Net cash used in investing activities was $669,699 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

Financing Activities.

 

The net cash provided by financing activities was $289,331 for the nine months ended September 30, 2012 compared to $445,334 for the nine months ended September 30, 2011, a decrease of $156,003 or approximately 35%. This decrease is attributed to decrease in share issuance for cash payments. The net cash provided by financing activities was $1,438,074 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

Liquidity and Capital Resources.

 

As of September 30, 2012, the Company had total current assets of $488,616 and total current liabilities of $703,857 resulting in a working capital deficit of $215,241. The cash and cash equivalents was $0 as of September 30, 2012 compared to $872 as of December 31, 2011, a decrease of $872. 

 

The net cash provided by financing activities was $289,331 for the nine months ended September 30, 2012 compared to $445,334 for the nine months ended September 30, 2011, a decrease of $156,003 or approximately 35%. This decrease is attributed to decrease in share issuance for cash and for share-based payments. Overall, cash and cash equivalents for the nine months ended September 30, 2012 increased by $153. The net cash provided by financing activities was $1,438,074 for the period of June 23, 2004 (date of inception) through September 30, 2012.

 

The Company’s current cash and cash equivalents balance will be not be sufficient to fund its operations for the next 12 months. The Company’s ability to continue as a going concern on a longer-term basis will be dependent upon its ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, and to obtain additional financing, and ultimately attain profitability. The Company’s continued operations, as well as the implementation of the Company’s business plan will depend upon its ability to raise additional funds through bank borrowings and equity or debt financing.

 

Whereas the Company has been successful in the past in raising capital, no assurance can be given that these sources of financing will continue to be available to it and/or that demand for the Company’s common stock will be sufficient to meet its capital needs, or that financing will be available on terms favorable to the Company. If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of the Company’s planned product development and marketing efforts, any of which could have a negative impact on its business and operating results. In addition, insufficient funding may have a material adverse effect on the Company’s financial condition, which could require it to:

 

·	curtail operations significantly;

 

·

sell significant assets;

 

·

seek arrangements with strategic partners or other parties that may require the Company to relinquish significant rights to products, technologies or markets; or

 

·

explore other strategic alternatives including a merger or sale of the Company.

 

 

To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to the Company’s existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations. Regardless of whether the Company’s cash assets prove to be inadequate to meet its operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to the Company’s existing stockholders.

 

Inflation.

 

The impact of inflation on the Company’s costs and the ability to pass on cost increases to its customers over time is dependent upon market conditions. The Company is not aware of any inflationary pressures that have had any significant impact on its operations over the past quarter and the Company does not anticipate that inflationary factors will have a significant impact on future operations.

 

Off-Balance Sheet Arrangements.

 

The Company does not maintain off-balance sheet arrangements nor does it participate in non-exchange traded contracts requiring fair value accounting treatment.

 

Critical Accounting Policies.

 

The SEC has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: (a) use of estimates; (b) impairment of long-lived assets; (c) revenue recognition; and (d) share-based compensation. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.

 

(a) Use of Estimates.

 

The preparation of financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that is believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

 

(b) Impairment of Long-Lived Assets.

 

For purposes of recognition and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company assesses the impairment of long-lived assets (including identifiable intangible assets) annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

 

When management determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we test for any impairment based on a projected undiscounted cash flow method. Projected future operating results and cash flows of the asset or asset group are used to establish the fair value used in evaluating the carrying value of long-lived and intangible assets. The Company estimates the future cash flows of the long-lived assets using current and long-term financial forecasts. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If this were the case, an impairment loss would be recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value.

 

(c) Revenue Recognition.

 

The Company recognizes revenue when all four recognition criteria have been met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, seller’s price to buyer is fixed or determinable, and collectability is reasonably assured.

 

(d) Share-Based Compensation.

 

The Company follows Accounting Standards Codification Topic 718-10, “Stock Compensation,” which addresses accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. Topic 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Upon the adoption of Topic 718-10, the Company maintained its method of valuation for stock option awards using the Black-Scholes valuation model, which has historically been used for the purpose of providing pro-forma financial disclosures in accordance with Topic 718-10.

 

The use of the Black-Scholes valuation model to estimate the fair value of stock option awards requires the Company to make judgments and assumptions regarding the risk-free interest rate, expected dividend yield, expected term and expected volatility over the expected term of the award. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the actual amount of expense could be materially different in the future.

 

Compensation expense is only recognized on awards that ultimately vest.

Forward Looking Statements.

 

Information in this Form 10-Q contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended (“Securities Act”). When used in this Form 10-Q, the words “expects,” “anticipates,” “believes,” “plans,” “will” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements regarding the adequacy of cash, expectations regarding net losses and cash flow, statements regarding growth, the need for future financing, dependence on personnel, and operating expenses.

 

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures.

 

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in its periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer/principal financial officer, to allow timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, the Company’s management carried out an evaluation, under the supervision and with the participation of the principal executive officer/principal financial officer, of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon the evaluation, the principal executive officer/principal financial officer concluded that, the Company's disclosure controls and procedures were not effective as of September 30, 2012. The material weaknesses relate to inadequate staffing within the Company’s accounting department, lack of consistent policies and procedures, and inadequate monitoring of controls, including the Company's lack of an audit committee.

 

 

Inherent Limitations of Control Systems.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur and not be detected.

 

Changes in Internal Control Over Financial Reporting.

 

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

From time to time, the Company may become party to litigation or other legal proceedings that the Company considers to be a part of the ordinary course of the business. There are no material legal proceedings to report, except as outlined in the last Form 10-K. There are no changes to those legal proceedings as reported in that Form 10-K.

 

ITEM 1A. RISK FACTORS.

 

There have been no material changes in the risk factors as previously disclosed in response to Item 1A.of Part I of the Company’s latest Form 10-K.

 

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

 

Other than as set forth below, there were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2012 that were not previously reported in a filing:

 

 

(a) On September 20, 2012, the Company issued a total of 3,000,000 restricted shares of common stock (1,500,000 each) to Otzarot Tarshsih Nechasim Vehashkaott Ltd., for additional consulting work, and Uziel Economic Consultant Ltd., for additional marketing services. The Company did not charge any additional compensation to the profit and loss account for the nine months ended September 30, 2012 since these additional services have not been provided yet.

 

(b) On September 20, 2012, the Company issued 720,000 restricted shares of common stock to American Capital Ventures, and 480,000 restricted shares of common stock to Maplehurst Investment Group, both for investor relations services. Accordingly, the Company charged to the profit and loss account total compensation of $10,000 for the nine months ended September 30, 2012.

 

The Company relied on the exemptive provisions of Regulation D under the Securities Act for the issuances in (a) and (b) above. At all times relevant the securities were offered subject to the terms and conditions of this Regulation. No commissions were paid in connection with any of these sales. All funds received from the sale of the common stock are to be used for working capital purposes.

 

There were no purchases of the Company’s common stock by the Company or its affiliates during the three months ended September 30, 2012 that were not previously reported in a filing.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

Corrections.

 

(a) It was reported in the Company’s last Form 10-Q that 600,000 restricted shares of common stock were issued to 1568934 Ontario Limited, a greater than 10% stockholder of the Company, located in Beverly Hills, California, on August 14, 2012 in connection with office space leased to the Company. These shares were actually issued on September 21, 2012.

 

(b) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Sam Elimelech, the Company’s President & CEO. Under this agreement, Sam Eliemelech purchased from the Company 18,000,000 restricted shares of common stock for a total consideration of $18,000 ($0.001 per share). These shares were actually issued on September 20, 2012.

 

 

(c) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Gai Mar-Chaim, the Company’s secretary/treasurer. Under this agreement, Mr. Mar-Chaim purchased from the Company 18,000,000 restricted shares of common stock for a total consideration of $18,000 ($0.001 per share). These shares were actually issued on September 20, 2012.

 

(d) On July 29, 2012, the Company entered into a Regulation S Stock Purchase Agreement with Eran Elimelech, son of Sam Elimelech (the Company’s president) but not living in the same household. Under this agreement, Eran Elimelech purchased from the Company 2,000,000 restricted shares of common stock for a total consideration of $2,000 ($0.001 per share). Sam Elimelech disclaims any beneficial ownership of these shares. These shares were actually issued on September 20, 2012.

 

The Company relied on the exemptive provisions of Regulation S under the Securities Act for the issuances in (a), (b), and (c) above. At all times relevant the securities were offered subject to the terms and conditions of this Regulation. No commissions were paid in connection with any of these sales. All funds received from the sale of the common stock are to be used for working capital purposes.

 

ITEM 6. EXHIBITS.

 

Exhibits included or incorporated by reference herein are set forth in the Exhibit Index.

 

 

SIGNATURE

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Andain, Inc.
Date: June 10, 2013	By:	/s/ Sam Shlomo Elimelech
		San Shlomo Elimelech, President principal executive officer

 

 

EXHIBIT INDEX

 

Number

Description

 

3.1

Articles of Incorporation, dated July 14, 2004 (incorporated by reference to Exhibit 3.1 of the Form 10-SB filed on March 24, 2005).

 

3.2

Bylaws, dated August 1, 2004 (incorporated by reference to Exhibit 3.2 of the Form 10-SB filed on March 24, 2005).

 

4.1

Option issued to 1568934 Ontario Limited by the Company, dated January 14, 2011 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed on March 29, 2011).

 

4.2

Employee Stock Option Plan, dated January 15, 2011 (incorporated by reference to Exhibit 4.2 of the Form 10-Q filed on November 21, 2011).

 

4.3

Stock Option Grant to Sam Elimelech, dated January 20, 2011 (incorporated by reference to Exhibit 4.3 of the Form 10-Q filed on November 21, 2011).

 

4.4

Stock Option Grant to Gai Mar-Chaim, dated January 20, 2011 (incorporated by reference to Exhibit 4.4 of the Form 10-Q filed on November 21, 2011).

 

4.5

2011 Stock and Option Plan, dated July 26, 2011 (incorporated by reference to Exhibit 4 of the Form S-8 filed on July 26, 2011).

 

10.1

Affiliation Agreement between the Impact Active Team Ltd. and P.O.C. High-Tech (1992) Ltd. Corporation, dated June 23, 2004 (incorporated by reference to Exhibit 10.8 of the Form SB-2 filed on February 13, 2007).

 

10.2

Consulting Agreement between the Company and Dr. Leonid Lurya, dated May 16, 2006 (incorporated by reference to Exhibit 10.2 of the Form 10-K filed on December 30, 2010).

 

10.3

Share Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (not including Schedule 1, Disclosure Schedule) (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on July 5, 2006).

 

10.4

Technology Purchase Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on July 5, 2006).

 

10.5

Finder’s Fee Agreement between the Company and Pangea Investments GmbH, dated June 11, 2006 (incorporated by reference to Exhibit 10.5 of the Form 8-K filed on July 5, 2006).

 

10.6

Consulting Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on July 5, 2006).

 

10.7

Business Development Services Agreement between the Company and Pangea Investments GmbH, dated July 3, 2006 (incorporated by reference to Exhibit 10.4 of the Form 8-K filed on July 5, 2006).

 

10.8

Employment Agreement between the Company and Sam Elimelech, dated July 3, 2006 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed on July 5, 2006).

 

10.9

Employment Agreement between the Company and Gai Mar-Chaim, dated July 3, 2006 (incorporated by reference to Exhibit 10.7 of the Form 8-K filed on July 5, 2006).

 

10.10

Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated July 19, 2006 (incorporated by reference to Exhibit 10.11 of the Form 10-K/A filed on February 7, 2011).

 

10.11

Consulting Agreement between the Company and Meizam - Advanced Enterprise Center Arad Ltd., dated October 25, 2006 (incorporated by reference to Exhibit 10.10 of the Form 10-K filed on December 30, 2010).

 

10.12

Employment Agreement between the Company and Sam Elimelech, dated January 1, 2011 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on March 29, 2011).

 

10.13

Employment Agreement between the Company and Gai Mar-Chaim, dated January 1, 2011 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on March 29, 2011).

 

10.14

Regulation S Stock Purchase Agreement between the Company and Sam Elimelech, dated January 5, 2011 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on March 29, 2011).

 

10.15

Regulation S Stock Purchase Agreement between the Company and Gai Mar-Chaim, dated January 5, 2011 (incorporated by reference to Exhibit 10.4 of the Form 8-K filed on March 29, 2011).

 

10.16

Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated January 14, 2011 (incorporated by reference to Exhibit 10.5 of the Form 8-K filed on March 29, 2011).

10.17

Stock Purchase Agreement between the Company and Meizam Arad Investments Ltd., dated January 31, 2011 (incorporated by reference to Exhibit 10.7 of the Form 8-K filed on March 29, 2011).

 

10.18

Stock Purchase Agreement between Meizam – Advanced Enterprise Center Arad Ltd and Meizam Arad Investments Ltd., dated January 31, 2011 (incorporated by reference to Exhibit 10.8 of the Form 8-K filed on March 29, 2011).

 

10.19

Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated May 24, 2011 (incorporated by reference to Exhibit 10 of the Form 8-K filed on July 19, 2011) (excluding Schedules 2.4, 2.7, and 2.10).

 

10.20

Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated July 29, 2011 (incorporated by reference to Exhibit 10 of the Form 8-K filed on August 16, 2011) (excluding Schedules 2.4, 2.7, and 2.10).

 

10.21

Regulation S Stock Purchase Agreement between the Company and 1568934 Ontario Limited, dated December 26, 2011 (incorporated by reference to Exhibit 10 of the Form 8-K filed on February 6, 2012) (including Schedule 1.4 (Option to Purchase Shares of Common Stock) and Schedule 2.4 (Litigation); excluding Schedule 2.7).

 

10.22

Corporate Office Services Agreement between the Company and 1568934 Ontario Limited, dated January 5, 2012 (incorporated by reference to Exhibit 10.22 of the Form 10-Q filed on August 29, 2012).

 

10.23

Regulation S Stock Purchase Agreement between the Company and Eran Elimelech, dated July 29, 2012 (incorporated by reference to Exhibit 10.23 of the Form 10-Q filed on August 29, 2012).

 

10.24

Regulation S Stock Purchase Agreement between the Company and Sam Elimelech, dated July 29, 2012 (incorporated by reference to Exhibit 10.24 of the Form 10-Q filed on November 19, 2012).

 

10.25

Regulation S Stock Purchase Agreement between the Company and Gai Mar-Chaim, dated July 29, 2012 (incorporated by reference to Exhibit 10.25 of the Form 10-Q filed on November 19, 2012).

 

10.26

Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and Meizam Arad Investments Ltd. (Gaia Med Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.26 of the Form 10-Q filed on May 20, 2013).

 

10.27

Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and Meizam Arad Investments Ltd. (TPDS Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.27 of the Form 10-Q filed on May 20, 2013).

 

10.28

Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and the Company (TPDS Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.28 of the Form 10-Q filed on May 20, 2013).

 

10.29

Acquisition Agreement between Meizam – Advanced Enterprise Center Arad Ltd. and the Company (Impact Active Team Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.29 of the Form 10-Q filed on May 20, 2013).

 

10.30

Acquisition Agreement between Sam Shlomo Elimelech and the Company (Meizam – Advanced Enterprise Center Arad Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.30 of the Form 10-Q filed on May 20, 2013).

 

10.31

Acquisition Agreement between the Company and Gai Mar-Chaim (Meizam Arad Investments Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.31 of the Form 10-Q filed on May 20, 2013).

 

10.32

Acquisition Agreement between the Company and Sam Shlomo Elimelech (Meizam Arad Investments Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.32 of the Form 10-Q filed on May 20, 2013).

 

10.33

Acquisition Agreement between Sam Shlomo Elimelech and Meizam Arad Investments Ltd. (Meizam – Advanced Enterprise Center Arad Ltd.), dated May 15, 2013 (incorporated by reference to Exhibit 10.33 of the Form 10-Q filed on May 20, 2013).

 

16.1

Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on January 5, 2006).

 

16.2

Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on November 5, 2010).

 

16.3

Letter on Change in Certifying Accountant (incorporated by reference to Exhibit 16 of the Form 8-K filed on July 24, 2012).

 

21

Subsidiaries of the Company (incorporated by reference to Exhibit 21 of the Form 10-K filed on April 16, 2012).

 

23.1

Consent of Dov Weinstein & Co. C.P.A. (Isr) (incorporated by reference to Exhibit 23.1 of the Form 10-K filed on May 13, 2013).

 

23.2

Consent of Yarel + Partners, CPA (incorporated by reference to Exhibit 23.2 of the Form 10-K filed on May 13, 2013).

 

31.1

Rule 13a-14(a)/15d-14(a) Certification of Sam Shlomo Elimelech (filed herewith).

 

31.2	Rule 13a-14(a)/15d-14(a) Certification of Gai Mar-Chaim (filed herewith).

 

32

Section 1350 Certification of Sam Shlomo Elimelech and Gai Mar-Chaim (filed herewith).

 

101

Interactive Data File (filed herewith).