AV Therapeutics, Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - AV Therapeutics, Inc.	Financial_Report.xls
EX-32 - EX-32 - AV Therapeutics, Inc.	ex32.htm
EX-10.1 - EX-10.1 - AV Therapeutics, Inc.	ex10-1.htm
EX-31.2 - EX-31.2 - AV Therapeutics, Inc.	ex31-2.htm
EX-31.1 - EX-31.1 - AV Therapeutics, Inc.	ex31-1.htm
EX-10.2 - EX-10.2 - AV Therapeutics, Inc.	ex10-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington DC 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission file number: 333-178789

MERICA CORP.

(Exact name of Registrant as specified in its charter)

Delaware		33-1222799
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

600 California, 9th Floor, San Francisco, California 94108

(Address of principal executive offices) (zip code)

Telephone: (925) 989-9900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of November 15, 2013 there were 84,000,000 shares of the Registrant's common stock issued and outstanding.

Table of Contents

TABLE OF CONTENTS

Part I Financial Information

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6

Item 4.	Controls and Procedures	6

Part II Other Information

Item 1.	Legal Proceedings	7

Item 1A.	Risk Factors

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7

Item 3.	Defaults Upon Senior Securities	7

Item 4.	Mine Safety Disclosures	7

Item 5.	Other Information	7

Item 6.	Exhibits	7

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Item 1. Financial Statements

MERICA CORP.

(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2013


Financial Statements

Balance Sheets as of September 30, 2013 and December 31, 2012	F-2

Statements of Operations for the Three and Nine months Ended September 30, 2013 and 2012, and Cumulative from Inception	F-3

Statement of Stockholders’ Equity for the Period from Inception through September 30, 2013	F-4

Statements of Cash Flows for the Nine months Ended September 30, 2013 and 2012, and Cumulative from Inception	F-5

Notes to Financial Statements	F-6

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MERICA CORP.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

AS OF SEPTEMBER 30, 2013 AND DECEMBER 31, 2012

ASSETS
	As of			As of
	September 30,			December 31,
	2013			2012
	(Unaudited)			(Audited)
Current Assets:
Cash or cash equivalents	$	74		$	4,204
Total current assets		74			4,204

Fixed Assets:
Fixed assets		-			5,000
Total fixed assets		-			5,000

Total Assets	$	74		$	9,204

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	3,050		$	8,485
Accrued interest payable		41			-
Notes payable		7,200			-
Due to shareholder		-			188
Total Current Liabilities		10,291			8,673

Commitments and Contingencies		-			-

Stockholders' Equity (Deficit):
Preferred stock, par value $0.0001 per share, 50,000,000 shares authorized;
Common stock, par value $0.0001 per share, 250,000,000 shares authorized; 84,000,000 shares issued and outstanding		8,400			8,400
Additional paid-in capital		48,002			37,600
Earnings (Deficit) accumulated during development stage		(66,619	)		(45,469	)

Total stockholders' equity (deficit)		(10,217	)		531

Total Liabilities and Stockholders' Equity	$	74		$	9,204

The accompanying notes to financial statements are an integral part of these statements.

F-2

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MERICA CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012,

AND CUMULATIVE FROM INCEPTION (NOVEMBER14, 2011)

(Unaudited)

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended			Cumulative
	September 30,			September 30,			September 30,			September 30,			From
	2013			2012			2013			2012			Inception

Revenues	$	-		$	-		$	-		$	-		$	7,980

Expenses:
General and administrative -
Filing fees		-			495			1,902			5,495			8,833
Professional fees		12,550			2,200			19,239			26,835			51,162
Franchise tax expense		-			-			-			400			400
Other costs		45			137			156			848			1,351

Total general and administrative expenses		12,595			2,832			21,297			33,578			61,746
		-			-			-			-			-
(Loss) from Operations		(12,595	)		(2,832	)		(21,297	)		(33,578	)		(53,766	)

Other income (expense):
Forgiven debt		-						188						188
Interest expense		(41	)					(41	)					(41	)

(Loss) before income taxes		(12,636	)		(2,832	)		(21,150	)		(33,578	)		(53,619	)

Provision for income taxes		-			-			-			-			-

(Loss) from Operations		(12,636	)		(2,832	)		(21,150	)		(33,578	)		(53,619	)

Extraordinary item - loss from flood		-			(13,000	)		-			(13,000	)		(13,000	)

Net (Loss)	$	(12,636	)	$	(15,832	)	$	(21,150	)	$	(46,578	)	$	(66,619	)

(Loss) Per Common Share:
(Loss) per common share - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		84,000,000			84,000,000			84,000,000			77,357,664

The accompanying notes to financial statements are an integral part of these statements.

F-3

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MERICA CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION (NOVEMBER14, 2011)

THROUGH SEPTEMBER 30, 2013

(Unaudited)

							(Deficit)
							Accumulated
					Additional		During the
	Common stock				Paid-in		Development
Description	Shares		Amount		Capital		Stage			Totals

Balance - at inception		-	$	-	$	-	$	-		$	-

Common stock issued for cash ($0.00026/share)		70,000,000		7,000		11,000		-			18,000

Net (loss) for the period		-		-		-		(1,604	)		(1,604	)

Balance -December 31, 2011		70,000,000		7,000		11,000		(1,604	)		16,396

Common stock issued for cash ($0.002/share)		14,000,000		1,400		26,600		-			28,000

Net (loss) for the period		-		-		-		(43,865	)		(43,865	)

Balance - December 31, 2012		84,000,000		8,400		37,600		(45,469	)		531

Contributed capital		-		-		10,402		-			10,402

Net (loss) for the period		-		-		-		(21,150	)		(21,150	)

Balance - September 30, 2013		84,000,000		8,400		48,002		(66,619	)		(10,217	)

The accompanying notes to financial statements are an integral part of these statements.

F-4

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MERICA CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012,

AND CUMULATIVE FROM INCEPTION (NOVEMBER14, 2011)

(Unaudited)

	Nine Months			Nine Months			Cumulative
	Ended			Ended			From
	September 30, 2013			September 30, 2012			Inception

Operating Activities:
Net (loss)	$	(21,150	)	$	(46,578	)	$	(66,619	)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Extraordinary loss		-			13,000			13,000
Non-cash fees		5,000			-			5,000
Deferred offering costs		-			12,000			-
Accounts payable and accrued liabilities		(5,435	)		(9,656	)		3,050
Accrued interest payable		41			-			41
Forgiven debt		(188	)		-			-

Net Cash Used in Operating Activities		(21,732	)		(31,234	)		(45,528	)

Investing Activities:
Purchased fixed assets		-			(13,000	)		(18,000	)

Net Cash Used in Investing Activities		-			(13,000	)		(18,000	)

Financing Activities:
Proceeds from notes payable		7,200			-			7,200
Contributed capital		10,402			-			10,402
Proceeds from common stock		-			28,000			46,000

Net Cash Provided by Financing Activities		17,602			28,000			63,602

Net (Decrease) Increase in Cash		(4,130	)		(16,234	)		74

Cash - Beginning of Period		4,204			17,825			-

Cash - End of Period	$	74		$	1,591		$	74

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

The accompanying notes to financial statements are an integral part of these statements.

F-5

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MERICA CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation and Organization

Merica Corp. Inc., formerly Aquino Milling Inc. (the “Company”) is in the development stage, and has limited operations. The Company was incorporated under the laws of the State of Delaware on November 14, 2011. The business plan of the Company is to build and maintain a rice mill in the Philippines.

The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.

Unaudited Interim Financial Statements

The interim financial statements of the Company as of September 30, 2013, and for the periods then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of September 30, 2013, and the results of its operations and its cash flows for the periods ended September 30, 2013, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2013. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2012, filed with the SEC, for additional information, including significant accounting policies.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Revenue Recognition

The Company recognizes revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the period ended September 30, 2013.

Income Taxes

The Company accounts for income taxes pursuant to FASB ASC 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

F-6

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The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2013 and December 31, 2012, the carrying value of accounts payable and accrued liabilities, and loans from related parties approximated fair value due to the short-term nature and maturity of these instruments.

Deferred Offering Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

Common Stock Registration Expenses

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.

Lease Obligations

All non cancellable leases with an initial term greater than one year are categorized as either capital leases or operating leases. Assets recorded under capital leases are amortized according to the methods employed for property and equipment or over the term of the related lease, if shorter.

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Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. Actual results could differ from those estimates made by management.

2. Development Stage Activities and Going Concern

The Company is currently in the development stage, and has limited operations. The business plan of the Company is to build and maintain a rice mill in the Philippines.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception. Further, as of September 30, 2013 the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

3. Fixed Assets

As of December 31, 2012 fixed assets were comprised of a rice mill located in the Philippines. The rice mill was not placed in service and was transferred to the former director as payment of fees.

4. Notes Payable

On August 20, 2013 the Company issued 2 promissory notes: one to Sable Ridge Capital Opportunity Fund LP in the principal amount of $3,600 and one to Stetson Capital Investments, Inc. in the principal amount of $3,600. Both notes are interest bearing at the rate of 5% per year. The principle and interest of the notes are payable upon the date of closing of a Reverse Merger Financing (the term is defined in the promissory notes).

5. Common Stock

On November 21, 2011, the Company issued 70,000,000 (post stock split) shares of common stock to the directors of the Company at a price of $0.00026 per share, for $18,000 subscription receivable. Payments of the subscriptions were received by December 31, 2011.

The Company has commenced a capital formation activity by filing a Registration Statement on Form S-1 to the SEC to register and sell in a self-directed offering 35,000,000 (post stock split) shares of newly issued common stock at an offering price of $0.0029 per share for proceeds of up to $100,000. As of May 10, 2012, the Company had received $40,000 in proceeds and issued 14,000,000 (post stock split) shares. The Company offset the proceeds by $12,000 of legal and audit offering costs related to this capital formation activity.

On June 22, 2013, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to, among other things, effect a forward split in the form of a stock dividend whereby each stockholder of record on June 22, 2013 received a dividend of an additional 69 shares of the Company’s common stock on every one share owned. All share and per share values for all periods presented in the accompanying financial statements are retroactively restated for the effect of the forward split.

On July 31, 2013, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to, among other things, (1) change the name of the Company to Merica Corp., Inc. and (2) change the authorized stock to two hundred fifty million (250,000,000) shares of common stock and fifty million (50,000,000) shares of preferred stock.

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6. Income Taxes

The provision (benefit) for income taxes for the periods ended September 30, 2013 and 2012 were as follows (assuming a 15% effective tax rate):

	2013			2012

Current Tax Provision:
Federal-
Taxable income	$	-		$	-
Total current tax provision	$	-		$	-

Deferred Tax Provision:
Federal-
Loss carryforwards	$	3,172		$	6,987
Change in valuation allowance		(3,172	)		(6,987	)
Total deferred tax provision	$	-		$	-

The Company had deferred income tax assets as of September 30, 2013 and December 31, 2012 as follows:

	2013			2012

Loss carryforwards	$	9,993		$	6,820
Less - Valuation allowance		(9,993	)		(6,820	)
Total net deferred tax assets	$	-		$	-

The Company provided a valuation allowance equal to the deferred income tax assets for periods ended September 30, 2013 and December 31, 2012 because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

As of September 30, 2013, the Company had approximately $66,619 in tax loss carryforwards that can be utilized future periods to reduce taxable income, and expire by the year 2033.

The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.

The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.

7. Related Party Loans and Transactions

During the nine months ended September 30, 2013 the Company paid the former president $7,500 in fees.

The Company's director provides rent-free office space to the Company.

8. Recent Accounting Pronouncements

We do not expect that any recently issued accounting pronouncements will have a material effect on our financial statements.

9. Extraordinary Item

As a result of a flood on August 9, 2012 a rice mill in the Philippines was written off as a total loss. The loss per share attributable to the loss was less than $(0.01).

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

Certain statements that the Company may make from time to time, including all statements contained in this report that are not statements of historical fact, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the safe harbor provisions set forth in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,” “projects,” “will,” “should,” and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, market position and expenditures. The Company assumes no obligation to update any forward-looking statements. Additional information concerning factors which could cause differences between forward-looking statements and future actual results is discussed under the heading “Risk Factors” in the Company’s Post Effective Amendment to its Registration Statement on Form S-1, as effective from May 1, 2013.

Recent Events

On August 20, 2013 the Company issued two promissory notes in the aggregate principal amount of $7,200. Both notes are interest bearing at the rate of 5% per year. The principle and interest of the notes are payable upon the date of closing of the sale by the Company of its securities in a capital raising transaction through the sale of common stock, warrants, notes or other securities of the Company that occurs at or about the time that a privately held operating company, directly or indirectly (a) merges or consolidates with, or in one or a series of related transaction sells all or substantially all of its assets to the Company or a wholly owned subsidiary of the Company, that is required to be accounted for by the Company as a “reverse acquisition” under GAAP; or (b) is sold or otherwise acquired by the Company in a transaction or business combination other than a merger or consolidation.

General

We were incorporated on November 14, 2011. Our business activity through December 31, 2011 involved incorporation efforts, planning and research of (i) potential clients in the Gerona area and (ii) cost evaluation for acquiring rice milling machines, as well as preparation of this Offering, whose Registration Statement was declared effective on March 26, 2012.

In 2012, we incurred costs to research the market, acquire a milling machine and construct our warehouse facility. We completed the acquisition of the milling machine and the construction of our milling facility and warehouse facility in the 2nd quarter of 2012. Unfortunately, at the end of July/early August 2012 Typhoon Soala flooded most of the Philippines and especially Tarlac and destroyed our milling facility resulting in a total loss of our equipment .At the time we had not yet earned any revenue from rice milling activities as this was the beginning of the rice season. All rice crops were destroyed. Our mill was under two meters of water for an extended period of time, causing electrical and rust damage to our mill.

As a result, we have not earned any revenue from rice milling activities for the period ended September 30, 2013. All of our efforts to date had related to developing our business plan, building our mill and constructing the warehouse facility which was wiped out as a result of Typhoon Soala in the summer of 2012. Through September 30, 2013, we had substantially no operating revenues. We face a high risk of business failure.

We are a development stage company, have extremely limited financial resources and suffered a total loss of our previous investment as a result of Typhoon Saola. We have not established a source of equity or debt financing to help us rebuild our mill and warehouse facility Our independent registered public accounting firm has included an explanatory paragraph in its report emphasizing the uncertainty of our ability to remain a going concern. We had expected to engage in rice milling activities. Our principal sources of revenue was anticipated to be from the sale of our rice milling services to farmers in the Gerona.

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Our plan was to continue as a going concern is to reach the point where we begin generating sufficient revenue from our rice milling services to meet all of our obligations on a timely basis. In the early stages of our operations we intend to keep costs to a minimum. Now, we do not know if we will be able to continue operations.

Results of Operations

For the nine month period ended September 30, 2013, we had no revenues. For the fiscal year ended December 31, 2012, and for the year ended December, 31, 2011 which is measured from inception, November 14, 2011, we had no revenue.

Expenses for the nine month period ended September 30, 2013 were $21,297 resulting in a net loss of $21,150 for the period, as compared to expenses of $33,578 for the nine month period ended September 30, 2012 resulting in a net loss for that period of were $46,578. From inception (November 14, 2011) we have incurred a net loss of $66,619.

As of September 30, 2013, we have cash on hand of $74 as compared with cash on hand on September 30, 2012 of $1,591.

Liquidity and Capital Resources

In the event that we intend to continue in the milling business, we estimate that we will require $25,000 for the next 12 months of operations including acquiring new milling machines and rebuilding our milling facility and warehouse. As of September 30, 2013, we had $74 available in cash.

Use of Funds

Since incorporation, most of our resources and work have been devoted to planning our business, implementing systems and controls, completing our registration statement buying the mill and constructing our warehouse. We have begun introductory marketing to attract farmers to use our rice milling facilities. We expected to commence milling activity in September 2012 but were wiped out by Typhoon Saola.

• In the first quarter of 2012 we located suitable land on which to build our rice milling facility.

• In May 2012 we raised $28,000 pursuant to our offering.

• In June we finalized the acquisition of the rice milling machine and began installation in our newly constructed warehouse, we also plan on negotiating fixed prices for logistics/transportation with independent taxis in the town of Gerona.

• We began to market our services to rice farmers.

• In July-August, Typhoon Saola destroyed our milling machine and our facility.

• No new milling machine has yet been acquired.

We have become a public company and, by doing so, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. As a public entity, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year for the next few years and will be higher if our business volume and activity increases but lower during the first year of being public because our overall business volume will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until we exceed $75 million in market capitalization.

These obligations will reduce our ability and resources to expand our business. We hope to be able to use our status as a public company to increase our ability to use non-cash means of settling obligations and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of those efforts. We will reduce the compensation levels paid to management if there is insufficient cash generated from operations to satisfy these costs.

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Critical Accounting Policies

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2 to the financial statements, included elsewhere in this prospectus, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.

Seasonality

There is a seasonal trend in our business. There are generally two rice harvests per year. September - December and March-May. Initially, our income and activity will be heavily based on those two three month periods.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, as defined in Item 313(a)(4)(ii) of Regulation S-K, or obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods as rules and forms, and that such information is accumulated specified in the Securities and Exchange Commission’ and communicated to our management, including our president (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of September 30, 2013, the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our management, including our president and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

There have been no significant changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2013, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. However, from time to time, we may become a party to certain legal proceedings in the ordinary course of business.

Item 1A. Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not Applicable.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit No.

Description

10.1*		Form of Note Purchase Agreement

10.2*		Form of Note

31.1*		Section 302 Certification of the Sarbanes-Oxley Act of 2002

31.2*		Section 302 Certification of the Sarbanes-Oxley Act of 2002

32*		Section 906 Certification of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

_________

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Merica Corp.

Dated: November 18, 2013	By:	/s/ Doug Cole
		President, Chief Executive Officer, Chief Financial Officer and a member of the Board of Directors (who also performs as the Principal Executive and Principal Financial and Accounting Officer)

AV Therapeutics, Inc. - FORM 10-Q - November 18, 2013

Attached files

AV Therapeutics, Inc. Reports