SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2016
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number:
(Exact name of registrant as Specified in its Charter)
(State or Other Jurisdiction of
(Internal Revenue Service
Incorporation or Organization)
Employer Identification Number)
6860 Broadway, Denver, CO
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Exchange Act:
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨No x
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¨ 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).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes x No
Indicate by check mark whether the registrant is a large accelerated filer, and 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 x
Emerging growth company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes¨ Nox
The issuer's revenues for the most recent fiscal year ended December 31, 2016 were $0.
State the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 40,064,983 shares of common stock issued and outstanding as of Sept 5, 2018.
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: less than $2,000,000.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016
TABLE OF CONTENTS
Item 1. Business
Item 1A. Risk Factors
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis or Plan of Operation
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits, Financial Statement Schedules
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Sections of this Form 10-K, including Business and Management's Discussion and Analysis or Plan of Operation, contain "forward-looking statements". These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as may, will, should, would, could, plan, goal, potential, expect, anticipate, estimate, believe, intend, project, and similar words and variations thereof. This report contains forward-looking statements that address, among other things,
* Our financing plans,
* Regulatory environments in which we operate or plan to operate, and
*Trends affecting our financial condition or results of operations, the impact of competition, the start-up of certain operations and acquisition opportunities.
Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements ("Cautionary Statements") include, among others,
* Our ability to raise capital,
* Our ability to execute our business strategy in a very competitive environment,
* Our degree of financial leverage, risks associated with our acquiring and integrating companies into our own,
* Risks relating to rapidly developing technology, and regulatory considerations;
* Risks related to international economies,
* Risks related to market acceptance and demand for our products and services,
* The impact of competitive services and pricing, and
* Other risks referenced from time to time in our SEC filings.
All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.
ITEM 1. BUSINESS
In November 2007, GeneThera, Inc. (“we”, “us”, the “Company” or “GeneThera”) reincorporated in the State of Nevada due to the fact that a third party had acquired the Company’s prior Florida Corporate Charter and the fact that the Company was unable to regain the control of such Corporate Charter. We had a special meeting of shareholders
where it was unanimously resolved for GeneThera to transfer its Charter to the State of Nevada as soon as possible in order to recognize our new incorporation on our next SEC filing.
Our common stock currently trades on the OTC “Over-The-Counter” pink market under the symbol GTHR. Our office is located at 6860 Broadway in Denver, CO 80221 and our telephone number is 303-955-0190. This is our new laboratory space and renovations have been completed.
For the fiscal year 2016, the Company had one subsidiary, GeneThera, Inc., a Colorado corporation. GeneThera no longer has holds on a commercial diagnostics laboratory in Mexico.
GeneThera is a biotechnology company, dedicated to improving food safety by applying the latest molecular technologies to eradicate "cross-over"(zoonotic) diseases such as Johne's disease, Mad Cow Disease, Chronic Wasting Disease, and E.coli. Diseases of terrestrial, avian and aquatic life animals influence a number of economic and global security issues; food for an increasing world population, access to international trade, species conservation and protection of those endangered, and economic growth in developing and re-organizing nations. Because many animal disease agents are zoonotic (transmissible between humans and animals, causing infection in both species), their management and prevention are crucial to improving public health on a global scale. The Company focuses on developing molecular diagnostic tests, therapeutics, and vaccines through robotic technology in the belief that better technologies and methodology need to be implemented to help control emerging diseases in animals and in humans, and believes that, if not, these diseases in animals will likely continue to cause serious and growing problems in terms of economics, human health and biodiversity.
GeneThera has developed proprietary diagnostic assays for use in the agricultural and veterinary markets. Specific assays for Chronic Wasting Disease (among elk and deer) and Mad Cow Disease (among cattle) have been developed and are available currently on a limited basis. A Johne's disease (predominantly dairy cattle) diagnostics is in development. GeneThera intends to shift from a research and development organization into a product marketing and revenue generating entity. The Company’s previous strategy that we had maintained from inception to July 2016 had been of research only. We focused all our energies, talent, and resources to the incubation and growth of new ideas in the realm of genetically engineered disease detection and vaccination. We feel that with recent announcements the Company is positioned to move from a developmental stage to a product oriented stage company, depending on reliable funding.
GeneThera provides genetics-based diagnostic through robotic technology and is currently working on vaccine solutions to meet the growing demands of today's veterinary industry and tomorrow's healthcare industries. The Company is organized and operated both to continually apply its scientific research to more effective management of diseases and, in so doing, realize the commercial potential of molecular biotechnology.
The Company believes it will require significant additional funding in order to achieve its business plan. Over the next 12 months, in order to have the capability of achieving its business plan, the Company will require at least $45,000,000 in additional funding. There are no guarantees that the Company will be able to secure such financing, and if the financing is secured, there are no guarantees whether the Company can fully achieve the goals laid out in its business plan.
Johne’s Disease (Paratuberculosis)
GeneThera’s focus includes the diagnosis and treatment of Johne’s disease.
Johne’s disease is a worldwide problem of domestic animals primarily including dairy cattle, sheep and goats. A significant public health concern is associated with Johne's disease (JD), which results from an infection with bacteria called Mycobacterium paratuberculosis. This organism grows very slowly, causes a gradually worsening disease condition, and is highly resistant to the infected animal's immune defenses. Therefore, infected animals harbor the organism for years before they test positive or develop disease signs.
Major Factors related to Johne's disease:
Reduction in milk production to 25%+.
High culling rate which increases costs.
JD affects trade and hinders exports.
Link between JD and Crohn’s disease.
Reduction in quality wool production in sheep.
Highest at risk animals are young calves or pre-born.
Bacterium can survive in contaminated soil for over 1 year.
Spread in herds can occur by fecal contamination, colostrum, milk, and trans placental.
Calves can become infected by suckling on “dirty” teats.
For every one “clinical stage” in a herd there are 15-20 silently infected plus additional 6-8 carriers.
Stage I: Silent, subclinical, non-detectable infection. Typically this stage occurs in all calves, heifers, and young stock less than two years of age and many adult animals exposed to small doses of disease-causing organisms. Infected animals at this early stage are rarely detected with currently available diagnostic tests, including fecal culture or serologic tests (ELISA). This stage progresses slowly over many months or years to stage II.
Stage II: Subclinical infection. Typically this stage occurs in older heifers or adults. Animals at this stage appear healthy but are shedding adequate numbers of MAP organisms in their manure to be detected on fecal culture. Blood tests will detect some, but not all animals at this stage. Blood test (ELISA) positive animals should be confirmed positive by fecal culture.
Stage III: Clinical JD. It is categorized as any animal with advanced infection the onset which is often associated with a period of stress such as recent calving. Cattle at this stage have intermittent, watery pea-soup manure. Animals lose weight and gradually drop in milk production, but continue to have a good appetite. Some animals appear to recover but often relapse in the next stress period. Most of these animals are shedding billions of organisms and are positive on culture. Most are positive on serologic tests (ELISA & AGID). Clinical signs often last several weeks to months before the animals are sent to slaughter in a thin, emaciated condition. In the final and terminal aspects of stage III of the fatal disease, animals become emaciated with fluid diarrhea and develop “bottle jaw.” The carcass may not pass meat inspection for human consumption in the later phases of stage III.
Crohn's disease (also known as Crohn-Leśniowski Disease, or "Charlotte Forditis" morbus Leśniowski-Crohn, granulomatous and regional enteritis) is an inflammatory disease of the intestines that may affect any part of the gastrointestinal tract from anus to mouth, causing a wide variety of symptoms. It primarily causes abdominal pain, diarrhea (which may be bloody), vomiting, or weight loss, but may also cause complications outside of the gastrointestinal tract such as skin rashes, arthritis, and inflammation of the eye.
Crohn's disease is an autoimmune disease, in which the body's immune system attacks the gastrointestinal tract, causing inflammation; it is classified as a type of inflammatory bowel disease. There has been evidence of a genetic link to Crohn's disease, putting individuals with siblings afflicted with the disease at higher risk. It is understood to have a large environmental component as evidenced by the higher number of cases in western industrialized nations. Males and females are equally affected. Smokers are three times more likely to develop Crohn's disease than non-smokers. Crohn's disease affects between 400,000 and 600,000 people in North America. Prevalence estimates for Northern Europe have ranged from 27–48 per 100,000. Crohn's disease tends to present initially in the teens and twenties, with another peak incidence in the fifties to seventies; although, the disease can occur at any age.
Similar to Johne’s disease in cattle, no known pharmaceutical or surgical cure for Crohn's disease currently exists for humans. Furthermore, new discoveries of MAP have been found in human patients and we believe that individuals that are genetically predisposed could possibly be contracting the disease through digestion of Johne’s disease - infected milk.
GeneThera has developed proprietary diagnostic assays through robotic technology for use in the agricultural and veterinary markets. Specific assays for Chronic Wasting Disease (among elk and deer) and Mad Cow Disease (among cattle) have been developed and are
available currently on a limited basis. A paratuberculosis molecular robotic assay diagnostics is currently in development. GeneThera intends to shift from a research and development organization into a product marketing and revenue generating entity, depending on obtaining funding. The Company’s historic operating strategy has been one of research only. We focused all our energies, talent, and resources to the incubation and growth of new ideas in the realm of genetically engineered disease detection and vaccination. We feel that the Company is positioned to move from a developmental stage to a product oriented Stage Company once funding is secured.
GeneThera provides genetics-based diagnostic and is currently working on vaccine solutions to meet the growing demands of today's veterinary industry and tomorrow's agriculture and healthcare industries. The Company is organized and operated both to continually apply its scientific research to more effective management of diseases and, in so doing, realize the commercial potential of molecular biotechnology.
GeneThera animal disease assay development business is based on its Integrated Technology Platform (ITP) that combines a proprietary diagnostic solution called Gene Expression System (GES) with PURIVAX, its system for analyzing large-scale recombinant DNA vaccine. The first part of this platform is the ongoing development of molecular diagnostic assays solutions via robotic technology while using real time Fluorogenic Polymerase Chain Reaction (F-PCR) technology to detect the presence of infectious disease from the blood of live animals. The second part of the ITP is the development of therapeutic vaccines using RNA interference technology. Interference RNA technology is a new technique that is based on the use of short RNA sequences complementary to a specific target gene. Once the RNA sequence binds to the gene, the gene is deactivated or “silenced” and no longer able to produce the specific protein. It also allows for the efficient, effective, and continuous testing, management and treatment of animal populations. These facts distinguish the technology from any alternative testing and management methodology available to agriculture today -- all of which require the destruction of individual animals and even entire herds. Our testing and data analysis processes also allow us not only to separate infected from clean animals, but also to gain knowledge vital to development of preventative vaccines.
Each individual assay utilizes the proprietary Field Collection System (FCS) for the collection and transportation of blood samples to GeneThera laboratory. This system consists of two (2) tubes. A 5 milliliter (ml) red cap tube containing 1ml anticoagulant solution and a 10 ml white cap tube. One (1) ml of blood is collected from the animal and added to the red cap tube. Ten (10ml) of milk is collected into the white cap tube. The FCS allows GeneThera to maintain the integrity of each sample by the addition of specific reagents to test tubes contained in the system. GeneThera FCS is designed to be an easy-to-use method of gathering blood samples from harvested or domesticated animals. It ensures consistency of samples as well as increased assurance of each sample's integrity.
To date, GeneThera has successfully developed the ability to detect Chronic Wasting Disease, a disease affecting elk and deer in North America. The release of commercialized Field Collection Systems and laboratory diagnostic testing occurred in October of 2003 as
a marketing trial. GeneThera has also successfully developed an assay for the detection of Mad Cow Disease, a disease recently found in the United States, but which has been in Europe for many years. The Field Collection Systems are available for purchase from the Company. Chronic Wasting Disease and Mad Cow Disease are both in the family of diseases called Transmissible Spongiform Encephalopathy (TSE). Johne's disease is in the final stages of development.
The Company will need the approval of the USDA before the vaccines can be manufactured or sold. The approval process for animal vaccines is time-consuming and expensive. We anticipate that such approval, if it is obtained, may require more than $75 million and may require more than two years for each vaccine for which approval is sought. Currently, we do not have the capital necessary to seek approval of any of our candidate vaccines, and we cannot provide any assurance that we will be able to raise the capital necessary for such approval on terms that are acceptable to us, if at all. Failure to raise the necessary capital will likely cause us to curtail or cease operations. In addition, even if we are successful in raising the capital necessary to seek approval of any vaccine, there are no assurances that such an approval will be granted, or if granted, whether we will be able to produce and sell such vaccines following such an approval in commercial quantities or to make a profit from such production and sales.
INTEGRATED TECHNOLOGY PLATFORM (ITP)
GeneThera’s Integrated Technology Platform (ITP) is the foundation for “fast-track” rDNA vaccine development. We are currently working on the development of a recombinant DNA vaccine for Johne’s disease. Johne’s disease is a chronic debilitating infectious disease of ruminants, characterized by weight loss and, particularly in cattle, by profuse diarrhea. The causal agent is a bacterium, Mycobacterium avium subspecies paratuberculosis. Infected animals may show no sign of the disease until years after the initial infection. Johne’s is a slow, progressive disease with worldwide distribution.
The vaccine development is in the “in vitro” or pre-clinical stage. ITP combines the following technologies: 1) gene expression system technology or “GES”; 2) viral DNA purification technology or PURIVAX technology; 3) genetically engineered Adenovirus (rAD) and recombinant Adeno Associate Virus (rAAV) systems (vectors). This integrated technology platform yields fast-track vaccine development. Leveraging its ITP, GeneThera believes that it can develop a prototype vaccine within 18 months versus the current standard of 24 to 36. We estimate that the cost to bring these vaccines to market is $7-10 million. There is no assurance that we will be able to raise the capital necessary to bring a vaccine to market and if the capital is raised, that we will be able to comply with the government regulations involved in bringing such a product to market. The GES applied modular unit system utilizes robotics and is based on nucleic acid extraction in conjunction with F-PCR technology to develop gene expression assays. Using GES assays, vaccine efficacy can be measured quickly because it will be unnecessary to wait for the antibody response to measure how well the vaccine is working. F-PCR will allow effective quantification of the precise number of viral or bacterial genetic particles before, during
and after vaccine injection(s). We anticipate that the more effective the vaccine is, the stronger the decrease of the infectious disease particles will be.
GES is a proprietary assay development system. To date, the system has been used to develop our TSE and Johne’s disease molecular assay. GES is a gene expression system to be used in our laboratory and will be marketed for commercial sale under the trade name HERDCHECK. The core of GES is Fluorogenic Polymerase Chain Reaction technology (F-PCR). GeneThera approaches the technical problems related to the use of conventional PCR in molecular diagnostics via our modular unit concept. Specifically, the modular unit consists of an Automated Nucleic Acid Workstation (ANAW) and a Sequence Detection System (SDS) that are integrated, allowing an operator to perform the entire procedure of DNA extraction and F-PCR analysis within a closed computerized system. This system results in minimal intervention and non-post-PCR manipulation. GES is a molecular genetic base system that utilizes Fluorogenic Polymerase Chain Reaction (F-PCR). Fluorogenic PCR (F-PCR) is a technology based on sequence specific hybridization between a nucleic acid target and a fluorogenic probe, a short sequence of DNA chemically treated to generate light at a specific wavelength, complementary to the target sequence. The probe consists of an oligonucleotide, a short synthetic DNA molecule, with two fluorescent molecules (a reporter and quencher dye) attached to both ends of the oligonucleotide. Due to the unique design of the Fluorogenic probe, the activity of the Taq Polymerase enzyme allows direct detection of PCR products by the release of the fluorogenic reporter during PCR. The reporter and the quencher dye are linked at the end of the probe. When the probe is intact, the proximity of the reporter dye to the quencher dye results in a suppression of the reporter fluorescence. During PCR, if the target of interest is present, the probe specifically anneals between the forward and the reverse primer site. The nuclease activity of the Taq DNA Polymerase cleaves the probe between the reporter and the quencher only if the region binds to the target. If the probe is not bound then no cleavage occurs. After cleavage, the shortened probe dissociates from the target and the polymerization of the DNA strand continues. This process occurs in every cycle and does not interfere with the exponential accumulation of the product. The cleavage of the oligonucleotide between the reporter and the quencher dye results in an increase of fluorescence of the reporter that is directly proportional to the amount of the product accumulated. The specificity of this 5’ nuclease assay results from the requirement of sequence complementary between probe and template in order for cleavage to occur. Thus, the fluorogenic signal is generated only if the target sequence of the probe is generated by PCR. No signal is generated by non-specific amplification.
To perform GES, specific laboratory equipment is needed. This involves some substantial initial costs to set up the laboratory operations. The use of F-PCR represents a great advantage over other available systems because of its greater sensitivity, speed, and accuracy.
The Automated Nucleic Acid Workstation is a highly flexible robotic system that extracts and purifies acids from a variety of complex samples, preparing them for F-PCR analysis.
Data management system software includes a database to manage all run phases and record sample processing.
The Sequence Detection System detects the fluorescent signal generated by the cleavage of the reporter dye during each PCR cycle. This process confers specificity without the need of post-PCR hybridization. Most importantly, the SDS offers the advantage of monitoring real-time increases in fluorescence during PCR processing. Specifically, monitoring real-time progress of the PCR completely changes the approach to PCR-based quantitation of DNA and RNA, most particularly, in improving the precision in both detection and quantitation of DNA and RNA targets.
GeneThera currently faces limited competition in the use of F-PCR technology and the modular unit concept for commercial testing of either infectious disease in animals or food pathogen contamination. Currently, most labs utilize conventional microbiology, immunological or conventional PCR methods for either veterinary diseases or food pathogen contamination detection. Specific to microbiology and immunological techniques, the drawbacks of these approaches are:
The antibodies-based culture media used to detect the presence of infectious
diseases has a low level of sensitivity; and
2. High background due to non-specific binding of antibodies and/or culture
contamination; sample preparation and storage creates artifacts; and long, cumbersome protocols necessary to perform these tests.
A major technical limitation of conventional PCR is the risk of contaminating a specimen with the products of previously amplified sequences. Known as cross-contamination, this phenomenon represents a constant challenge to any lab using conventional PCR. Managing these challenges is cumbersome and difficult to streamline. Fluorogenic PCR (F-PCR) attempts to overcome these drawbacks by making it possible for PCR to efficiently test large numbers of samples even when major laboratory facilities are not readily available. A novel methodology, F-PCR allows quantitative and qualitative detection of specific nucleic acid sequences in a sensitive, accurate, and rapid fashion.
GeneThera has developed a large-scale process for highly purified and high viral titer (viral concentration) Adenovirus and AAV genetically engineered viruses. This technology enables GeneThera to develop Adenovirus and AAV-based recombinant DNA vaccines for zoonotic pathogens. GeneThera’s PURIVAX is a purification system that dramatically improves biological purity and viral titer of recombinant Adenovirus and AAV vectors. PURIVAX is intended to completely eliminate toxic side effects associated with Adenoviruses and AAV vectors, thereby making it possible to develop highly immunogenic and safe recombinant DNA vaccines. Importantly, recombinant DNA (rDNA) vaccine technology represents a powerful tool for an innovative vaccine design process known as “genetic immunization.”
Recombinant Adenovirus (rAD) and AAV (rAAV) vectors are the ideal candidates for a gene delivery system. These viruses can efficiently deliver genetic material to both dividing and non-dividing cells, thereby overcoming some of the obstacles encountered with first generation retroviral vectors.
Equally important, rAD and rAAV are engineered virus genomes that contain no viral gene. One of the key features for rAD and rAAV is their ability to infect a large variety of cells. However, two technical challenges had to be overcome to fully utilize rAD and rAAV in the development of rDNA vaccines:
Lack of large scale purification system; and
2. Low viral titer.
Traditional technologies and first generation chromatography processes are limited both in terms of purity and yield. Due to the limitation of these purification technologies, adequate viral titers may not be achieved. We believe that the result is that there is currently no efficient system to deliver immunogenic genetic sequences into cells.
This is the significance of GeneThera’s PURIVAX, rAD and rAAV system for rDNA vaccine development. Succinctly stated, it is designed to be able to achieve both high purity and high viral titer (up to 10e16 viral particles/eulate) based on its propriety multi-resin anion exchange chromatography system. GeneThera believes that biological contaminants such as endogenous retrovirus, bacterial, mycoplasma, non-specific nucleic acids, lipids, proteins, carbohydrates and endotoxins are eliminated during the purification process.
GeneThera provides a comprehensive Johne’s solution that allows diagnosing, treating and managing herds at risk or already infected with Johne’s disease.
Our proprietary Integrated Product Development Platform (IPDP) is design to prevent the spread of Johne’s disease to healthy animals and at the same time allow to better control the disease in those herds where the disease is already present.
More importantly we believe that the GeneThera platform can prevent the spread of the Mycobacterium into the food chain. An important part of this strategy is GeneThera’s ability to detect the presence of a low number of infected particles in milk tested for the presence of the Mycobacterium Paratuberculosis. Therefore, our IPDP not only is able to detect Johne’s infected animals, but can also prevent potential human infections.
Herd Guard is our comprehensive Johne’s management solution that includes a diagnostic (HerdCheck), a therapeutic (HerdSafe), and a management system (HerdSoft) to eradicate or mitigate Johne’s disease.
HERDCHECK (Molecular Test)
HerdCheck is our diagnostic product. Samples are collected using a Field Collection System with includes specific collection tubes and ship to a GeneThera laboratory for processing.
The major features of the testing system are:
High throughput system.
Capable of more than 20,000 tests per month.
Highly defined and structured testing system.
Proprietary Real Time PCR technology.
HERDSAFE (Genetic Therapy)
HerdSafe is our therapeutic product. HerdSafe is the large-scale purification and recombinant based DNA vaccine using Adenovirus and AVV genetically engineered viruses. (PURIVAX)
HERDSOFT (Software Management)
HerdSoft is our comprehensive Johne’s disease management solution which is a web-based product connected to our data center. The management system will deliver results, collect data and incorporate environmental analysis to guide the client on therapy and management of their herd to control Johne’s disease in their facility.
DEVELOPMENTS TO DATE
GeneThera has developed a molecular system for the detection of Mycobacteriun Avium Paratuberculosis(MAP) in milk of MAP infected dairy cows. Samples from milk obtaining from supermarket shelves were either “spiked’ with different concentrations of MAP or ‘naturally processed. The bacterial DNA was isolated using both, manual and robotic- based DNA extraction procedures and analyzed using The Real Time PCR technology. Using this methodology we can detect between two (2) and twenty (20) bacterial particles from 10 ml of milk. We believe that our test will be very useful for early detection of MAP both in milk samples and infected cows.
We are currently evaluating several robotic systems for DNA extraction. We believe that we can further increase the sensitivity of the molecular assay by using robotic driven DNA extraction methods.
To date, we have developed a prototype computer program to track samples that will be received and processed in our commercial laboratory. This program will initially be used to track samples that will be sent out and received to our laboratory. We had to stop our
timeline waiting for secured funding. We will then work on improving the system in order to track samples during the different phases of DNA extraction procedures. In addition, we will continue to develop a data base system to store and analyze data collected during sample analysis.
We are currently developing a vaccine for Johne’s disease. GeneThera’s approach for developing this vaccine is based on the use of PURIVAX technology, genetically engineered Adenoviral and AVV, and silencing RNA technology (iRNA). To date, we have modified the Adenovirus by inserting a gene of the MAP bacterium responsible for triggering the infection in blood cell.
However, at the present time, we do not have sufficient financial resources to implement further development work; therefore, we will need to secure substantial funding to continue the development of the Johne’s vaccine.
FUTURE DEVELOPMENT PLANS
We anticipate that research and development (R&D) will be the source for both assay development and vaccine design/development. If we are able to develop assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by GeneThera. To date, we have introduced our diagnostic solution for Chronic Wasting Mad Cow Disease on a very limited basis. We anticipate that R&D will be ongoing during the life of the Company, as this is the source for new products to be introduced to the market. Our plan is to seek new innovations in the biotechnology field. We cannot assure you that we will be successful in developing or validating any new assays or, if we are successful in developing and validating any such assays, that we can successfully commercialize them or earn profits from sales of those assays. Furthermore, we cannot assure you that we will be able to design, develop, or successfully commercialize any vaccines as a result of our research and development efforts.
It is GeneThera’s intention to continue with the research and development and validation of the molecular tests and DNA vaccines. Future plans comprises in initiating validation procedures for Johne’s disease molecular test. These validation protocols will be performed in our laboratory in Colorado.
In parallel, we will continue R&D phases for the Johne’s disease vaccine. We plan initiating an experimental animal protocol to determine the safety of our vaccines. We estimate that the experimental animal protocol may take up to a year. We project to initiate the experimental animal’s studies within 18-36 months.
RESEARCH AND DEVELOPMENT
We anticipate that R&D will be the source for both assay development and vaccine design/development. If we are able to develop assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by us. To date, we have introduced our diagnostic solution for Chronic Wasting Disease and Mad Cow Disease on a very limited basis. We anticipate that R&D will be ongoing during the life of the Company, as this is the source for new products to be introduced to the market. Our plan is to seek new innovations in the biotechnology field. We cannot assure you that we will be successful in developing or validating any new assays or, if we are successful in developing and validating any such assays, that we can successfully commercialize them or earn profits from sales of those assays. Furthermore, we cannot assure you that we will be able to design, develop, or successfully commercialize any vaccines as a result of our research and development efforts.
GeneThera’s goal is to focus on the international markets, primarily Pacific Rim and Europe, for the commercialization of its animal testing platform. The company has no plans to offer any veterinary services in the United States.
Our marketing approach is to align ourselves with both, the private sector and government agencies.
SALES AND MARKETING
Our sales and marketing efforts will be primarily in Europe and Pacific Rim (New Zealand and Australia).
COMMERCIAL DIAGNOSTIC TESTING
In the event that we are able to develop assays for the detection of diseases in animals, we intend to establish a series of diagnostic testing laboratories geographically proximate to the primary sources of individual diseases and/or according to specific available operating efficiencies. The specific number of labs to be built and operated will be based on assay demand (demand facilitated by the number of specific disease assays GeneThera develops), our ability to obtain the capital to build the labs, and our ability to successfully manage them from our principal office. As of the date of this filing, we are in negotiations to establish one diagnostic testing laboratory outside of our Colorado facility.
Through our licensing division, we intend to manage the marketing and sale of the vaccines developed by our R&D. As GeneThera does not intend to be a vaccine manufacturer, we plan to use our licensing division to license the technology related to any vaccines that may be developed and to manage the revenue potential available from the successful
development and validation of specific vaccines. We cannot provide any assurance that we will develop any vaccines or that, if they are developed, we will be able to license them successfully or that any such license will produce significant revenues.
We do not own any patents on any of our technology and have not filed any applications for patents in any country. We cannot give any assurance that we will be able to file any patent applications or that, if we file one or more applications for patents, any patents will issue or that, if issued, the claims granted in any such patents will afford us adequate protection against competitors with similar technology.
The Company believes that it owns common law proprietary rights with respect to its technology and intends to use its best efforts to protect such rights through confidentiality agreements.
We also depend upon the skills, knowledge, and experience of our scientific and technical personnel, none of which is patentable. To help protect our proprietary know-how, which is not patentable, and for inventions for which patents may be difficult to endorse, we rely on trade secret protection to shield our interests.
We face competition from many companies, universities, and research institutions in the United States and abroad. Virtually, all of our competitors have substantially greater resources, experience in product commercialization, and obtaining regulatory approvals for their products, operating experience, research and development, marketing capabilities, and manufacturing capabilities that we do. We will face competition from companies marketing existing products or developing new products for diseases targeted by our technologies. The development of new products for those diseases for which we are attempting to develop products could render our product candidates noncompetitive and obsolete.
Our current competitors include primarily, IDEXX Laboratories, Inc., Academic and government institutions are also carrying out a significant amount of research in the field of veterinary health, particularly in the field of Johne’s disease. We anticipate that these institutions will become more aggressive in pursuing patent protection and negotiating licensing arrangements to collect royalties for use of technology that they have developed and to market commercial products similar to those that we seek to develop, either on their own or in collaboration with competitors. Any resulting increase in the cost or decrease in the availability of technology or product candidates from these institutions may affect our business.
Competition with respect to our veterinary technologies and potential products is and will be based, among other things, on effectiveness, safety, reliability, availability, price, and patent protection. Another important factor will be the timing of market introduction of
products that we may develop and for which we may receive regulatory approval. Accordingly, the speed with which we can develop products, complete the required animal studies or trials and approval processes and ultimately supply commercial quantities of the products to the market is expected to be an important competitive factor. Our competitive position will also depend upon our ability to attract and retain qualified personnel, to obtain patent protection or otherwise develop propriety products or processes, and to secure sufficient capital resources for the often-substantial period between technological conception and commercial sales.
Several attempts have been made to develop technologies that compete with F-PCR. To our knowledge none of these technologies have resulted to date in any product available on the market. The field of biotechnology is very dynamic. The possibility that more advanced technologies could be developed into products that may compete with ours is very strong. However, it is very difficult to predict the length of time necessary for this scenario to take place.
We do not manufacture any products. We do not intend to establish a manufacturing facility to manufacture any products that we may develop anywhere in the world. We do not intent to manufacture, sell, and distribute any diagnostic or therapeutic product in the United States in the foreseeable future.
The testing, manufacturing, and marketing of the Company’s proposed products involves an inherent risk of product liability attributable to unwanted and potentially serious health effects in animals that may receive any vaccines that we may develop and market. To the extent we elect to test, manufacture, or market veterinary vaccines and other products, we will bear the risk of product liability directly. We do not currently have product liability insurance. There is no guarantee that we can obtain product liability insurance at a reasonable cost, or at all, or that the amount of such insurance will be adequate to cover any liability that we may be exposed to. In the absence of such insurance, one or more product liability lawsuits against us can be expected to have a material adverse effect on our business and could result in our ceasing operations.
Our unique approach to the testing for various animal diseases allows us to begin commercialization of its diagnostic tests without the need for a long and enduring approval process from the USDA. However, it is our intention not to seek, in the foreseeable future, any approval either from the USDA or the FDA for any of the products we develop both, diagnostic or therapeutic. It is our intention to perform any validation or clinical trials of our product abroad and primarily in Europe and Pacific Rim where our commercial operation will also be located. Our commercial laboratories will require a validation study to be performed to demonstrate the effectiveness of the system. Validation studies will be
performed according to each country’s guidelines. We have submitted an application outlining a protocol for animal studies. It is expected that validation studies will be conducted in collaboration with each country’s government guidelines over the next 18-36 month period.
As of December 31, 2016, we had a total of two full-time employees who devoted substantial effort on our behalf. None of our employees are represented by a collective bargaining unit.
ITEM 1A: RISK FACTORS
We encounter various risks related to our business and our industry. While the Company is optimistic about its long term prospects, the following risk factors should be considered in evaluating its outlook.
There is a substantial doubt about GeneThera’s ability to continue as an on-going concern.
GeneThera has had negligible revenues since inception, had a negative working capital deficit and an accumulated deficit of $25,813,740 and $25,034,820, respectively as of December 31, 2016 and 2015, and had a net loss of $778,920 for the year ended December 31, 2016. Because of these circumstances, GeneThera will require additional working capital to develop business operations. There is no assurance that GeneThera will reach a level of revenues adequate to generate sufficient cash flow from operations in the foreseeable future. Additionally, there is no assurance that GeneThera will be able to obtain additional financing necessary to support GeneThera operating expense requirements. If financing is available, it may involve issuing securities senior to our common stock. In addition, in the event we do not raise additional capital from conventional sources, such as our existing investors or commercial banks, there is a likelihood that our growth will be restricted and we may be forced to curtail or cease the implementation of our business plan.
If a Loss of Key Personnel Will Occur This Event Could Adversely Affect the Company.
The Company depends to a large part on the efforts and continued employment of Antonio Milici, M.D., Ph.D., our President, Chairman and chief executive officer. The loss of Dr. Milici will have a material adverse effect on the business, results of operations (if any) and financial condition of the Company. In addition, the loss of Dr. Milici may force the Company to seek a replacement who may have less experience, fewer contacts, or less understanding of the business. Further, we may be unable to find a suitable replacement for Dr. Milici, which could force the Company to curtail its operations and/or cause any
investment in the Company to become worthless. The Company has an employment agreement with Dr. Milici, which ends on January 7, 2022.
If the Company fails to attract and retain additional highly skilled personnel, operations will suffer.
Finding qualified personnel in the biotechnology industry is very challenging. Smaller biotechnology companies are always at a disadvantage because of its limited financial resources. The Company is in the process of hiring additional qualified scientific and engineering personnel in order to start escalating our scientific strength in R&D and commercial operations.
If the Company fails to attract significant additional capital, the Company may be unable to continue developing its products.
From the beginning of its operation, GeneThera has obtained limited funding to implement its business strategy. The Company believes it will require significant additional funding in order to achieve its business plan. Over the next 12 months, in order to have the capability of achieving its business plan, the Company will require at least $45,000,000 in additional funding. There are no guarantees that the Company will be able to secure such financing, and if the financing is secured, there are no guarantees whether the Company can fully achieve the goals laid out in its business plan. In addition, in the event we do not raise additional capital from conventional sources, such as our existing investors or commercial banks, there is a likelihood that our growth will be restricted and we may be forced to curtail or cease the implementation of our business plan.
Rapid growth may place significant demands on our resources.
We expect noteworthy expansion of our operations, funding permitting, moving forward. Our anticipated future growth will place a substantial demand on our managerial, operational and financial resources due to:
* The need to manage relationships with various strategic partners and other third parties.
* Difficulties in hiring and retaining skilled personnel necessary to support our business.
* The need to train and manage a growing employee base.
* Pressures for the continued development of our financial and information management systems.
If we have not made adequate allowances for the costs and risks associated with this expansion or if our systems, procedures, or controls are not adequate to support our operations, our business could be harmed.
The Company may not be able to comply with Government regulations.
The Company is subject to or affected by laws and regulations that govern, for example: the vaccination of animals for certain diseases. The failure to comply with these laws and regulations, or to obtain applicable governmental approvals, could result in the imposition of penalties, cause delays in, or make impossible, the marketing of our products and services.
The Company may be unable to compete against other more establish biotech of pharmaceutical companies.
The Company operates in a very competitive and difficult area. Biotechnology business is notoriously challenging and risky. The Company competes with other more established and better funded companies in the United States and overseas that are involved in the development of similar products. Several of these companies have significantly greater financial resources as well as greater production and marketing capabilities. The field of biotechnology requires extensive research and development. Better funded competitors may be able to develop and market superior or less expensive products which will make the Company’s products less valuable or unmarketable.
The Company has limited Government Regulatory Experience.
The Company has never successfully undertaken a clinical trial for animal testing. Our experience in this area is limited. The Company has never obtained regulatory approvals for any of its products. As such, the Company may be unable to ever successfully undertake a clinical trial of its products, and may be forced to curtail or modify its current business plan.
The Company has a history of operating losses.
We have generated no revenues to date from our operations. Historically, we have had net operating losses each year since our inception. Additionally, even if we are able to commercialize our technology or any products, it is not certain that will result in revenues or profitability.
The Company will rely on third parties for sale, distribution and manufacturing.
We do not have any “in house” sale, distribution or manufacturing capabilities. The success of our operations will depend on the establishment and success of marketing relationships with sale, distribution and manufacturing entities.
The Company has a limited operating history on which investors may evaluate our operation and prospects for profitable operations.
If we continue to suffer losses, as we have in the past, investors may not receive any return on their investments. Our prospects must be consider speculative in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of
development. A substantial risk is involved in investing in the Company because we have fewer resources than established companies.
The Company depends on new and rapidly evolving technologies.
We are engaged in activities in the biotechnology field, which is characterized by extensive research effort and rapid technological progress. If we fail to anticipate or respond adequately to technological developments, our ability to operate profitably could suffer. We cannot assure that research and discoveries by other biotechnology, agriculture, pharmaceutical or other companies will not render our technologies or products uneconomical or result in products superior to those we develop, depend on new and evolving technologies. If these technologies do not produce satisfactory results, our business may be harmed.
Over the last year, we have narrowed our potential product development to focus on the molecular testing of Johne’s disease.
Due to the increase cost of R&D and the very challenging economic environment, we have decided to concentrate our efforts in the development of a commercial platform for the diagnostic of Johne’s disease. As a result, the success of the Company depends entirely on being able to commercialize our product. If we are unable to achieve this goal, the Company’s operations could greatly suffer and any investment in the Company could be lost.
The Company may not obtain foreign regulatory approval to market any of our products.
If we fail to obtain regulatory approval of any of our products, we will not be permitted to market our products and may be forced to cease operations.
Our technology is not protected by patents.
Our technology and know-how is not patented. We rely on trade secrets to protect our intellectual property. We cannot assure, however, that these trade secrets will provide meaningful protection for our intellectual property. Furthermore, in absence of patent protection, competitors who independently develop substantially equivalent technology may harm our business.
The Company may not be able to raise the required capital to conduct our operations and develop and commercialize our products.
We require substantial additional resources in order to conduct our operations and develop and commercialize our products and run our facilities. We will need significant additional funds or a collaborative partner, or both, finance research and development activities of our potential products. Accordingly, we are continuing to pursue additional sources of financing. Additional financing through strategic collaborations, public or private equity
financing sources may not be available on accepted terms. Additionally, equity financing could result in significant dilution to our shareholders. Further, if additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of our technologies, or products that we would otherwise seek to develop and commercialize on our own. If sufficient capital is not available, we may be required to cease operations or at a minimum delay, reduce the scope of or eliminate one or more of our programs or potential products – either of which could have a material adverse effect on our financial condition or business prospect.
We have incurred, and expect to continue to incur, increased costs and risks as a result of being a public company.
As a public company, we are required to comply with the Sarbanes-Oxley Act of 2002, or SOX, as well as rules and regulations implemented by the SEC. Changes in the laws and regulations affecting public companies, including the provisions of SOX and rules adopted by the SEC, have resulted in, and will continue to result in, increased costs to us as we respond to these requirements. Given the risks inherent in the design and operation of internal controls over financial reporting, the effectiveness of our internal controls over financial reporting is uncertain. If our internal controls are not designed or operating effectively, we may not be able to issue an evaluation of our internal control over financial reporting as required or we or our independent registered public accounting firm may determine that our internal control over financial reporting was not effective. In addition, our registered public accounting firm may either disclaim an opinion as it relates to management’s assessment of the effectiveness of our internal controls or may issue an adverse opinion on the effectiveness of our internal controls over financial reporting. Investors may lose confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline and which could affect our ability to run our business as we otherwise would like to. New rules could also make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the coverage that is the same or similar to our current coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, and as executive officers. We cannot predict or estimate the total amount of the costs we may incur or the timing of such costs to comply with these rules and regulations.
Compliance with Section 404 of the Sarbanes-Oxley Act will continue to strain our limited financial and management resources.
We incur significant legal, accounting and other expenses in connection with our status as a fully reporting public company. The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. As such, our management and other personnel need to devote a substantial amount of time to these new compliance
initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and made some activities more time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures. Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts. We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
Investors May Face Significant Restrictions on The Resale of Our Common Stock Due to Federal Regulations of Penny Stocks.
Our common stock will be subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.
In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.
Shareholders May Be Diluted Significantly Through Our Efforts to Obtain Financing and Satisfy Obligations Through The Issuance of Additional Shares of Our Common Stock.
We have a committed source of financing with FOGT, LLC, but an additional $40,000,000 is still needed. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors
has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders, May further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.
The Market Price of our Common Stock Historically has been Volatile.
The market price of our common stock historically has fluctuated significantly based on, but not limited to, such factors as general stock market trends, announcements of developments related to our business, actual or anticipated variations in our operating results, and our ability or inability to generate new revenues.
Our common stock is traded on the OTC pink market under the symbol “GTHR.” In recent years, the stock market in general has experienced extreme price fluctuations that have oftentimes been unrelated to the operating performance of the affected companies. Similarly, the market price of our common stock may fluctuate significantly based upon factors unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock.
We currently have a sporadic, illiquid, volatile market for our common stock, and the market for our common stock may or may not remain sporadic, illiquid, and volatile in the future.
We currently have a highly sporadic, illiquid and volatile market for our common stock, which market is anticipated to remain sporadic, illiquid and volatile in the future and will likely be subject to wide fluctuations in response to several factors, including, but not limited to:
actual or anticipated variations in our results of operations;
our ability or inability to generate revenues;
the number of shares in our public float;
increased competition; and
conditions and trends in the market for our services.
Furthermore, because our common stock is traded on the OTC pink market, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. Shareholders and potential investors in our common stock should exercise caution before making an investment in our
Company, and should not rely on the publicly quoted or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based on the information contained in our public reports, industry information, and those business valuation methods commonly used to value private companies.
DESCRIPTION OF PROPERTY
During 2016 and 2017, we leased office space on a month-to-month basis. Commencing in January 2018, GTI Research, Inc. (GTIR), our scientific robotic technology collaborator, leased for 78 months a 7,990 sf lab space on 6860 Broadway in Denver, Colorado 80221 and we leased space from GTIR on a month-to-month basis. There is no rent payment during January, February and March 2018; April through March 31, 2019, the monthly rent cost is $9.00 sf NNN; April 1, 2019 through March 31, 2020, the rent cost is $10.00 per sf NNN; April 1, 2021 through March 31, 2022, the rent cost is $11.00 sf NNN; April 1, 2022 through March 31, 2023, the rent cost is $13.00 sf NNN; April 1, 2023 through March 31, 2024, the rent cost is $14.00 sf NNN. GTIR and GTHR sub-lease 750 square feet of office space for GTI Corporate Transfer Agents, LLC, a related party of GTHR, on a month-to-month basis in exchange for transfer agent services rendered to the Company.
On February 10, 2009, Centennial Credit Corporation filed a Civil Judgment at the Jefferson County Court in the amount of $967. The Company has not satisfied the judgment.
In June 2009, James Tufts filed a complaint at the Small Claims Court in Jefferson County CO in the amount of $4,000 plus expenses from a London trip. The Company has not satisfied the judgment.
On June 26, 2009, Enterprise Leasing Company of Denver filed a Civil Judgment at the Jefferson County District Court in the State of Colorado in the amount of $78,178. The Company has not satisfied the judgment.
On August 17, 2010, Banc of America Leasing filed a Civil Judgment at the Oakland County District in Troy, Michigan in the amount of $24,183. The Company has not satisfied the judgment.
On September 23, 2010, Liberty Acquisitions filed a Civil Judgment at the Jefferson County Court in the State of Colorado in the amount of $3,300. The Company has not satisfied the judgment.
On August 29, 2011, GeneThera had a court hearing concerning a litigation filed by The Park III related to unpaid rent according to the lease agreement. The District Court of Boulder entered a judgment against the Company in the amount of $77,000. The Company has not satisfied the judgment.
On November 26, 2012, the Internal Revenue Service filed a Federal Tax Lien in the amount of $1,275. The Company has not satisfied the lien.
MINE SAFETY DISCLOSURES
MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock currently trades on the OTC Pink Market under the symbol “GTHR.” The following sets forth the rank of high and low bid quotations for the periods indicated. Such quotations reflect prices between dealers, without retail markup, markdown or commission, and may not represent actual transactions.
The number of record holders of the Company’s common stock, as of September 5, 2018, is approximately 253.
The Company has not declared any dividends with respect to its common stock and does not intend to declare any dividends in the foreseeable future. The future dividend policy of the Company cannot be ascertained with any certainty. There are no material restrictions limiting the Company’s ability to pay cash dividends on its common stock.
Securities Authorized for Issuance under Equity Compensation Plans
RECENT SALES OF UNREGISTERED SECURITIES
In November 2017, the Company authorized, but has not issued, 2500 shares of Series A Preferred Stock (convertible into 1 million shares of common stock) for $250,000.
In April 2018, the Company authorized, but has not issued, 3000 shares of Series A Preferred Stock (convertible into 1.5 million shares of common stock) for $300,000.
The sales and issuances of the securities described above were made pursuant to the exemptions from registration contained in to Section 4(a)(2) of the Securities Act, Regulation D under the Securities Act and Regulation S under the Securities Act. Each purchaser represented that such purchaser’s intention to acquire the shares for investment only and not with a view toward distribution. We requested our stock transfer agent, that once dispensed the abovementioned stock, to affix appropriate legends to the stock certificate issued to each purchaser and the transfer agent will affix the appropriate legends. Each purchaser will continue to be given adequate access to sufficient information about us to make an informed investment decision. Except as described in this prospectus, none of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.
SELECTED FINANCIAL DATA
Not applicable for smaller reporting companies.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Management’s discussion and analysis of financial condition and results of operations, contain “forward-looking statements”. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as “may,” “will,” “should,” “would,” “could,” “plans,” “goal,” “potential,” “expect,” “anticipate,” “estimate,” “believe,” “intent,” “project,” and similar words and variations thereof. This report contains forward-looking statements that address, among other things,
* Our financing plans
* Regulatory environments in which we operate or plan to operate
* Trends affecting our financial condition or results of operations
* The impact of competition, the start-up of certain operations and acquisition opportunities.
Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements (“Cautionary Statements”) include, among others,
* Our ability to raise capital
* Our ability to execute our business strategy in a very competitive environment
* Our degree of financial leverage
* Risks associated with our acquiring and integrating companies into our own
* Risks relating to rapidly developing technology
* Regulatory considerations
* Risks related to international economies
* Risks related to market acceptance and demand for our products and services
* The impact of competitive services and pricing
* Other risks referenced from time to time in our SEC filings
All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.
You should read the following discussion of our results and plan of operation in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this Form 10-K. Statements that are not statements of historical or current objective fact are “forward-looking statements.”
We developed proprietary diagnostic assays for use in the agricultural and veterinary markets for the past 6 years. Specific assays for Chronic Wasting Disease (CWD) (among elk and deer) and Mad Cow Disease (among cattle) have been developed and are available currently on a limited basis. E. coli (predominantly cattle) and Johne’s disease (predominantly cattle and bison) diagnostics are in preliminary development. We are also working on vaccine solutions to meet the growing demands of today’s veterinary industry and tomorrow’s agriculture and healthcare industries. The Company is organized and operated both to continually apply its scientific research to more effective management of diseases and, in so doing, realize the commercial potential of molecular biotechnology.
We have not generated significant operating revenue as of December 31, 2016. Our ability to generate substantial operating revenue will depend on our ability to develop and obtain approval for molecular assays and developing therapeutic vaccines for the detection and prevention of food contaminating pathogens, veterinary diseases, and diseases affecting human health.
Our auditors have expressed substantial doubt about our ability to continue as a going concern in their report on our consolidated financial statements for 2016. For 2016 and 2015, our operating losses were $778,920 and $1,085,471, respectively. Our current
liabilities exceeded current assets by $7,121,447 and $6,647,595 as of December 31, 2016 and 2015, respectively.
Although, we completed an equity financing with gross proceeds of approximately $1.1 million in 2005, we will require significant additional funding in order to achieve our business plan. Over the next 12 months, in order to have the capability of achieving our business plan, we believe that we will require at least $45,000,000 in additional funding. We will attempt to raise these funds by both means of one or more private offerings of debt or equity securities and prospective revenues generated by our commercial labs, once the renovations are completed. At this time, we have commitments for additional capital funds. This amount may exceed an additional $4,000,000 depending on cost involved in the further development and commercialization of our products. In such event, we may need immediate additional funding. Our capital requirements will depend on many factors including, but not limited to, the timing of further development of assays to detect the presence of infectious disease from the blood of live animals, our hiring of additional personnel, the applications for, and receipt of, regulatory approvals for any veterinary vaccines that we may develop, and other factors. Our ability to raise capital will increase our ability to implement our business plan.
Over the next 12 months, we expect significant purchases and/or sales of plant or equipment and significant changes in the number of our employees for any off-balance sheet arrangements that will have current and future effect on our financial condition.
We also expect to spend a significant amount of our capital on research and development activities for commercialization relating to development and vaccine design/development. When we are able to develop assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by GeneThera. To date, we have introduced our diagnostic solution for Chronic Wasting Disease (CWD) and Mad Cow Disease on a very limited basis. We anticipate that significant funds will be spent on research and development throughout the life of the Company, as this is the source for new products to be introduced to the market. Our plan is to seek new innovations in the biotechnology field. We may be successful in developing or validating any new assays and, when we are successful in developing and validating any such assays, we may be able to successfully commercialize them or earn profits from sales of those assays. Furthermore, we may be able to design, develop, or successfully commercialize vaccines as a result of our research and development efforts.
RESULTS OF OPERATIONS
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
For 2016, the Company has a net loss of $778,920 or net loss per share of $0.02, and $0 of revenue as compared with a net loss of $1,085, 471, or $0.03 per share, and revenue of $0 for 2015. Our Company, at this time, was only a Research and Development (R&D) Company in pursue of improving our technology for commercialization.
General and Administrative Expenses: General and administrative expenses decreased to $206,067 for 2016 compared to $426,898 for 2015. Due to less rent, less professional fees and insurance fees.
Consulting Expenses: Consulting expenses decreased to $0 for 2016 compared to $0 for 2015 due to lack of reliable funding not provided on a timely matter.
Depreciation and Amortization Expense: Depreciation and amortization expenses decreased to $0 for 2016 compared to $0 for 2015. Our administrative and laboratory equipment stopped depreciation due to time of life.
LIQUIDITY AND CAPITAL RESOURCES
We had a cash balance of $175,153 as of December 31, 2017, a cash balance of $0 as of December 31, 2016, and a cash balance of $0 as of December 31, 2015. Our current cash balance is not sufficient to fund our business objectives and we will need significant additional capital over the next 12-18 months in order to fund our planned operations. In November 2017, we entered into a letter of intent with FOGT LLC and memorialized this agreement in a Milestones Investment Agreement in March 2018, pursuant to which FOGT has agreed to invest and purchase up to $5 million of Series A Preferred Stock pending completion of certain milestones. To date, FOGT has invested $550,000, will be issued 5,500 shares of Series A Preferred Stock, and has agreed to invest additional amounts as follows: (i) $1,200,000 upon the Company effecting all filings with the SEC as required pursuant to the Exchange Act; (ii) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (iii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. We may be unable to satisfy these conditions negating any additional financing pursuant to this Milestones Agreement or any other financing on terms that are acceptable to us, if at all.
We will require significant additional funding in order to achieve our business plan. Specifically, we intend to spend significant funds on validating and testing our products, seeking necessary regulatory approvals and focusing on international expansion. Over the next 12 month, in order to have the capability of achieving our business plan, we believe that we will require at least $40,000,000. We will attempt to raise these funds by means of one or more private offerings of debt or equity securities or both. We may not be able to secure the financing that we believe is necessary to implement our strategic objectives and, even if additional financing is secured, we may not achieve our strategic objectives. As of the date of this Report, we do not have any firm commitments from any investors for any additional funding.
Our longer-term working capital and capital requirements will depend upon numerous factors, including revenue and profit generation, pre-clinical studies and clinical trials, the timing and cost of obtaining regulatory approvals, the cost of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights, competing technological and market developments, collaborative arrangements. Additional capital will be required in order to attain such goals. Such additional funds may not become
available on acceptable terms and we cannot give any assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term.
Failure to obtain capital to fund short-term and long-term needs will likely result in the curtailment of our operations or cessation of certain aspects of our business strategy.
CRITICAL ACCOUNTING POLICIES
In December 2001, the SEC requested that all registrants discuss their most “critical accounting policies” in Management’s Discussion and Analysis of Financial Condition or Plan of Operation. The SEC indicated that a “critical account policy” is one which is both important to the portrayal of the Company’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our significant accounting policies are described in Note 1 to our consolidated financial statements included in this Report.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant effect on its consolidated financial position or results of operations. On the footnotes, we have discussed the new ASU assertions.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016 and 2015
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2016 and 2015
Consolidated Statements of Operations for the years ended December 31, 2016 and 2015
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2016 and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of GeneThera, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of GeneThera, Inc. (“the Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, changes in shareholders deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has significant accumulated deficits and intends to fund operations through new financing which may be insufficient to fund its capital expenditures. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Fruci & Associates II, PLLC
We have served as the Company’s auditor since 2015.
September 11, 2018
GeneThera, Inc. - Consolidated Balance Sheets
See accompanying notes to consolidated financial statements.
GeneThera, Inc. - Consolidated Statements of Cash Flows
For the Years Ended
Cash flows from operating activities
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on debt
Depreciation and amortization
Shares issued for services
Loss on abandonment
Loss on Investment
Changes in operating assets and liabilities:
Accounts receivable - related parties
Accounts payable and accrued expenses - related parties
Accounts payable and accrued expenses
Net cash used in operating activities
Cash flows from investing activities
Purchase of construction in process
Investment in Galtheron Molecular Solutions
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of stock
Proceeds from convertible debt financing
Net advance from related parties
Proceeds from convertible notes
Net cash provided by financing activities
Net effect of exchange rates change
Net decrease in cash
Cash at the beginning of the year
Cash at the end of the year
Supplemental disclosures of cash flow information:
Cash paid for interest
Cash paid for income taxes
Non-cash investing and financing transactions:
Equipment purchased by third party
Property acquired in exchange for common stock
Conversion of convertible notes payable to common stock
Convertible note proceeds received by related party
See accompanying notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2016
Note 1 – Organization, nature of operations and summary of significant accounting policies
Organization and nature of operations
The consolidated financial statements include GeneThera, Inc. and its wholly owned subsidiary GeneThera, Inc. (Colorado) (collectively “GeneThera” or the “Company”). GeneThera has a long standing research collaboration with GTI Research. GTI Research is assisting GeneThera in managing the robotic technology project. Our CEO is also collaborating with this project in order for our research and development to finally become commercial in order to generate revenues.
GeneThera is a biotechnology company that develops molecular assays for the detection of food contaminating pathogens, veterinary diseases and genetically modified organisms.
Use of estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
Cash equivalents are highly liquid investments with an original maturity of three months or less.
Principles of consolidation
The consolidated financial statements include the accounts of the Company, it is a controlled subsidiary. Intercompany accounts are eliminated upon consolidation.
Property and Equipment, Net
Property and equipment consists primarily of office and laboratory equipment and leasehold improvements and is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives ranging from five to seven years. Leasehold improvements are amortized over the shorter of their economic lives or lease terms.
Impairment of Long-Lived Assets
The Company reviews the recoverability of its long-lived assets to determine whether events or changes in circumstances occurred that indicate the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future cash flows of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between the estimated fair value and carrying value. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.
Research and development contracts are on a pre-paid basis in order to reflect milestones during research investigation. Revenues are recognized when services are completed. There were no revenues during the years ended December 31, 2016 and 2015.
Stock-based compensation is accounted for under FASB ASC Topic No. 718 – Compensation – Stock Compensation. The guidance requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). The guidance also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair value of the award. The Company accounts for non-employee share-based awards in accordance with guidance related to equity instruments that are issued to other than employees for acquisition, or in conjunction with selling, goods or services.
Income taxes are accounted for in accordance with the provisions of FASB ASC Topic No. 740 - Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.
Basic and Diluted Net Loss per Common Share
Basic and diluted net loss per share calculations are presented in accordance with FASB ASC Topic No. 260 – Earnings per Share, and are calculated on the basis of the weighted average number of common shares outstanding during the period. Diluted net loss per share calculations includes the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same due to the absence of common stock equivalents.
Fair Value of Financial Instruments
The carrying value of cash, accounts payable and accrued expenses approximates fair value due to the short term nature of these accounts.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant effect on its consolidated financial position or results of operations. The following are being evaluated for any potential impact:
2017-09 Stock Compensation
2016-12 Revenue from contracts with customers
Note 2- Going Concern
As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $25,813,740 and negative working capital of $7,121,447 as of December 31, 2016. This raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. The
consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
Note 3 – Accrued Expenses
The following is the breakdown of the Company’s accrued expenses as of December 31, 2016 and 2015:
Accrued officer salaries
Accrued expenses- other
Total accrued expenses
Note 4 – Related party transactions
The Company has an outstanding loan payable to Antonio Milici, its CEO and shareholder amounting to $676,796 as of December 31, 2016 and 2015, respectively. This outstanding loan to the Company is unsecured with a 2.41% interest bearing. The Company has an outstanding loan payable to Tannya Irizarry its COO and shareholder amounting to $90,356 as December 31,2016. This outstanding loan to the Company is unsecured.
The Company had a receivable from GTI in the amount of $27,094.82 in 2015 and $0 in 2016. The Company had a loss of $27,094.82 forgiving the receivable for GTI. The Company had a receivable from Kalos Holding in the amount of $14,026 in 2015 and $0 in 2016. The Company had a loss of $14,026 forgiving the receivable for Kalos Holdings.
The Company had payable for Elia Holdings in the amount of $625 in 2015 and was forgiving the payable in 2016. The Company had a gain of $625 in 2016.
The Company had payable for Setna Holdings in amount of $989,003 in 2015 and $262,085 in 2016. The Company was forgiving the part of the payable in 2016 and had a gain of $76,378.
Note 5 – Extinguishment of Debt
The Company has written off (“Write-Off Accounts”) $314,596 from Accounts Payable for a gain on extinguishment of Debt.
Note 6 – Convertible notes payable
During fiscal 2016, the Company borrowed money from investors and issued convertible notes in the aggregate principal amount of $108,500 due on demand, bearing interest at an annual rate of 8%. The notes are convertible into shares of Company common stock at a conversion price between $0.01 to $0.05 per share.
During fiscal 2015, the Company borrowed money from investors and issued convertible notes in the aggregate principal amount of $417,960 due on demand, bearing interest at an annual rate of 8%. The notes are convertible into shares of Company common stock at a conversion price between $0.015 through $0.04 per share.
Note 7- Shareholders’ Equity
Convertible preferred stock rights
Preferred Stock (“Series A”) shall be convertible into common stock any time at the holder’s sole discretion at a fixed conversion stipulated by the parties.
NO Reissuance of Preferred Stock. Any shares of Series A Preferred Stock acquired by the Corporation by reason of purchase, conversion or otherwise shall be cancelled, retired and eliminated from the shares of Series A Preferred Stock that the Corporation shall be authorized to issue. All such shares shall, upon their cancellation, become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock, subject to the conditions and restrictions on issuance set forth in the Articles of Incorporation or in any certificate of Determination creating a series of Preferred Stock or any similar stock or as otherwise required by law.
Preferred Stock (Series A) shall be convertible into common stock any time at the holder’s sole discretion at a ratio of 1:1 of common shares. Preferred A Stock are entitled to 5 common share votes per such preferred share. There are three (3) criteria for mandatory conversion: 1) IPO of a minimum of twenty million ($20,000,000); 2) Closing at more than $6.00 per share for twenty (20) days; and 3) as of March 31, 2014, all with the caveat that an effective registration be on file.
Preferred Stock (“Series B”) shall be convertible into ten common shares at any time and holders are entitled to 20 common share votes per such preferred share.
As of December 31, 2016, there were shares of Series A issued and 4,600 outstanding, convertible into shares of common stock. An additional 5,500 shares will be issued and 15,410,000 shares of Series B issued and outstanding, convertible into shares of common stock.
The Company has authorized 300,000,000 shares of of common stock, $.001 par value.
The Company had issued and outstanding 40,064,983 and 36,610,636 shares as of December 31, 2016 and 2015, respectively.
During the twelve months ended December 31, 2016, the Company issued 3,454,347 shares of common stock valued at $117,050 in exchange for services and property:
918,368 shares valued at $45,000 to an officer for services
654,082 shares valued at $32,050 to two vendors for consulting services
1,881,897 shares of common stock were issued for converted notes valued at $40,000
As of December 31, 2016 an additional 1,783,332 shares valued at $53,572 were yet to be issued pursuant to convertible notes payable that were converted.
Note 8 – Commitments and contingencies
No operating leases. The only entity with operating leases is GTI Research, Inc., our scientific robotic technology collaborator.
On January 8, 2012, the Company entered into an employment agreement with its chief executive officer and scientific officer for a five year term and providing for a compensation of $18,000 per month, which the salary was deferred due to lack of reliable funding. The Company also entered into an employment agreement with its chief administrative and financial officer for a five year term and providing for a compensation of $14,000 per month, which was also deferred. On January 8, 2017, the Company entered into an employment agreement with its chief executive officer and scientific officer for a five year term and providing for a compensation of $18,750 per month. On the same date, the Company also entered into an employment agreement with its chief administrative and financial officer for a five year term and providing for a compensation of $17,333 per month. Both compensations continue to be on deferred salaries status and employment contracts expire on January 31, 2022.
The Company is involved in claims arising during the ordinary course of business resulting from disputes with vendors and shareholders over various contracts and agreements. Other than those outstanding judgments previously mentioned in this filing, and those disclosed, no other legal claims have been made or are known at this time.
Note 9 – Income Taxes
We are subject to taxation in the U.S. and the State of Colorado. The Company is not current on its tax filings and is subject to examination until those filings take place.
The Company has no current or deferred income tax liability due to its operating losses.
The Company has federal net operating loss carryforwards totaling $11,854,914 and 11,144,428 at December 31, 2016 and 2015, respectively. Subject to certain limitations (including limitations under Section 382 of the Internal Revenue Code), the carryforwards are available to offset future taxable income through 2035. The amount of change in the deferred tax asset and the related valuation allowance was approximately $191,486 during the year ending December 31, 2016, compared to approximately $313,326 in the year ending December 31,2015.
Estimated deferred tax assets totaled $4,092,036 and $3,900,550 at December 31, 2016 and 2015, respectively. A 100% valuation allowance has been recorded to offset the deferred tax assets, due to uncertainty of the Company’s ability to generate future taxable income, in the amount of $4,092,036, resulting in a net deferred tax asset of $0.
We have analyzed the filing positions in all jurisdictions where we are required to file income tax returns and found no positions that would require a liability for unrecognized income tax positions be recognized.
Note 10 – Subsequent Events
On February 13, 2017, the Company received a loan from Lance C. Elliott in the amount of $10,000. No Convertible Promissory Note was issued.
In November 2017, we entered into a letter of intent with FOGT LLC and memorialized this agreement in a Milestones Investment Agreement in March 2018, pursuant to which FOGT has agreed to invest and purchase $5 million of Series A Preferred Stock pending completion of certain milestones. To date, FOGT has invested $550,000, was authorized 5,500 shares of Series A, and has agreed to invest additional amounts as follows: (i) $1,200,000 upon the Company effecting all filings with the SEC as required pursuant to the Exchange Act; (ii) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (iii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. FOGT is an affiliate of Fred Oeschger, a director.
On December 19, 2017, GTI Research, Inc., the Company’s collaborator with Robotic Technology, signed a six year lease agreement commencing on January 1, 2018. The lab space is located in Denver, Colorado. The space is approximately 7,990 square feet. The security deposit was $12,000. The monthly rent during the first year is $12,000. The first three months of this six year lease is no rent. However, the landlord requested for the Company to pay the triple net in the amount of $2,337. The lease expires on March 31, 2024.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company is collected and communicated to management to allow timely decisions regarding required disclosures. The chief executive officer and the chief financial officer have concluded, based on their evaluation as of December 31, 2016 that, as a result of the material weaknesses described below, disclosure controls and procedures were ineffective in providing reasonable assurance that material information is made known to them by others within the Company.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). Management has assessed the effectiveness of internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework in May of 2013. A material weakness, as defined by SEC rules, is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses in internal control over financial reporting that were identified are:
Due to our small size, we do not have a proper segregation of duties in certain areas of our financial reporting process. The areas where we have a lack of segregation of duties include cash receipts and disbursements, approval of purchases and approval of accounts payable invoices for payment. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis.
As a result of the existence of these material weaknesses as of December 31, 2016, management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2016, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework in May of 2013.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.
Management’s Remediation Plans
We will look to increase our personnel resources as funds become available. Management believes that hiring additional knowledgeable personnel with technical accounting expertise will remedy the lack of segregation of duties weakness.
On April 2, 2018 GeneThera’s Board of Directors terminated Bruce Winslett and Jorgen Frandsen appointment as Members of the Board of Directors. On the same day GeneThera BOD appointed Fred Oeschger and Jeremiah Bartley MD. to the Company’s Board of Directors. Mr. Oeschger is the President of a plumbing and heating oil company located in Vermont. He is also the Owner of a truck company delivering heating oil and diesel fuel in the Northeast United States. Mr. Oeshhger is a very successful commercial real estate investor. He owns multiple commercial properties throughout the United States. Fred Oscheger has been a Member of the Board of a Financial Institution for the past twelve years.
Dr. Jeremiah Bartley is the Director of Women’s Health Care at Rocky Mountain Internal Medicine in Denver, Colorado. He is a past President of the Colorado Section of the American College of Obstetrics and Gynecology. Dr. Bartley was a Member of the Hospital Provider Fee Oversight and Advisory Board from 2009 to 2016. Dr. Bartley receive a BA from Yale University and MD degree from University of Miami. He completed his residency in Obstetrics and Gynecology at Case Western University.
In November 2017, we entered into a letter of intent with FOGT LLC and memorialized this agreement in a Milestones Investment Agreement in March 2018, pursuant to which FOGT has agreed to invest and purchase up to $5 million of Series A Preferred Stock pending completion of certain milestones. To date, FOGT has invested $550,000, is entitled to receive 5,500 shares of Series A Preferred Stock, and has agreed to invest additional amounts as follows: (i) $1,200,000 upon the Company effecting all filings with the SEC as required pursuant to the Exchange Act; (ii) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (iii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. FOGT is an affiliate of Fred Oeschger.
On January 8, 2017, the Company entered into employment agreements with Dr. Antonio Milici and Tannya L. Irizarry, as is more fully disclosed in Item 10 hereof.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are currently serving as the Company’s executive officers and directors.
Dr. Tony Milici
Chairman of the Board, Chief Executive
Officer and Chief Scientific Officer
Tannya L. Irizarry
Chief Administrative Officer and
Chief Financial Officer (Interim)
Dr. Antonio Milici founded GeneThera, Inc. in 1998 and has served as its Chairman and CEO since inception. Prior to founding GeneThera, Dr. Milici served as CEO and President of Genetrans, Inc., a genetic diagnostic company from 1993 to 1998. Dr. Milici was also an assistant professor in the department of Molecular Pathology at the University of Texas M.D. Anderson Cancer Center.
Tannya L. Irizarry served as Chief Administrative Officer from 1999 to Present. Since May 2006, she has served as chief financial officer (Interim) of the Company. Ms. Irizarry has over 22 years of experience in medical technology and biotechnology industries. Ms. Irizarry worked at the University of Texas M.D. Anderson Cancer Center in the department of Neuro-Oncology with Dr. William S. Fields and the Office of Education with Dr. James Bowen. She also worked at the Medical College of Georgia and subsequently, at the St. Joseph Hospital in the biotechnology division. Ms. Irizarry was the Vice President of Genetrans, Inc. from 1994 to 1998. Ms. Irizarry relocated to Colorado in order to manage GeneThera, Inc. at the request of Dr. Milici.
Fred Oeschger is the President of a plumbing and heating oil company located in Vermont. Mr. Oeschger is also the Owner of a truck company delivering heating oil and diesel fuel in the Northeast of the United States. Mr. Oeschger is a very successful commercial real estate investor. He owns multiple commercial properties throughout the United States. Mr. Oeschger has been a Member of the Board of a Financial Institution for the past twelve years.
Dr. Jerry Bartley is the Director of Women’s Health Care at Rocky Mountain Internal Medicine in Denver, Colorado. He is a past President of the Colorado Section of the American College of Obstetrics and Gynecology. Dr. Bartley was a Member of the Hospital Provider Fee Oversight and Advisory Board from 2009 to 2016. Dr. Bartley received a BA degree from Yale University and MD degree from University of Miami. He completed his residency in Obstetrics and Gynecology at Case Western University.
Each Director is elected at the Company’s annual meeting of shareholders and holds office until the next annual meeting of shareholders and/or until the successors are elected and qualified. There are no Board committees and we don’t have an audit committee financial expert. At present, the Company’s bylaws provide for not less than three or more than five Directors.
Dr. Antonio Milici and Tannya L. Irizarry are husband and wife.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and 10% shareholders to file reports regarding initial ownership and changes in ownership with the SEC. Our information regarding compliance with Section 16(a) is based solely on a review of the copies of such reports furnished to us by our executive officers, directors and 10% shareholders. These forms include (i) Form 3, which is the Initial Statement of Beneficial Ownership of Securities, (ii) Form 4, which is a Statement of Changes in Beneficial Ownership, and (iii) Form 5, which is an Annual Statement of Changes in Beneficial Ownership. To date, our executive officers, directors and 10% shareholders have not filed the required reports with the SEC.
The Company has adopted a Code of Ethics applicable to its principal executive officer, principal financial officer, and principal accounting officer. Our Code of Ethics can be obtained by calling the Company at 303-439-2085.
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information for the fiscal years ended December 31, 2017, 2016 and 2015, concerning the compensation awarded to, earned by, or paid to those persons serving as chief executive officer and chief financial officer of the Company during those years (the “Named Executive Officers”). No other executive officer of the Company had a total annual salary and bonus for the years presented that exceeded $100,000. Antonio Milici, M.D., Ph.D., and Tannya L. Irizarry were the only executive officers during the year ended December 31, 2016.
Name and Principal Position
Non-Equity Incentive Plan Compensation
Change in Pension Value and Non-Qualified Deferred Compensation Earnings
All Other Compensation
Dr. Tony Milici
Chief Executive Officer
Chief Financial Officer
(i) Does not include perquisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation. No executive officer of the Company received any non-equity incentive plan compensation or nonqualified deferred compensation earnings during the periods presented.
EMPLOYMENT AGREEMENTS AND COMPENSATION OF DIRECTORS
On January 8, 2017, the Company entered into an employment agreement with Antonio Milici, M.D., Ph.D., to serve as the chief executive officer and Chief Scientific Officer of the Company through January 31, 2022. Unless either party gives notice to terminate the agreement at least thirty days prior to expiration of the agreement, the agreement will automatically be extended for an additional two year period. In consideration for his services, Dr. Milici receives a base salary of $258,000 per annum throughout the term of the agreement plus $90,000 worth on Preferred Stock Class B every March of each year during the duration of his employment agreement with the Company and bonuses as may be determined by the Board of Directors in its discretion or if the Company achieves net income in excess of $2,000,000 per year. During fiscal 2017, 2016 and 2015, no Class B Preferred Stock was issued to Dr. Milici pursuant to his employment agreement. As part of his employment agreement, Dr. Milici has agreed not to compete with the Company, solicit any of its customers or solicit any of its employees for a period of two years after the term of the agreement. Dr. Milici is also subject to confidentiality obligations in favor of the Company and has agreed to transfer to the Company all of his interests in any idea, concept, technique, inventory or written work developed by him during the term of his employment agreement. The Company also provides a company vehicle and gas allowance for him and his scientific consultants.
On January 8, 2017, the Company entered into an employment agreement with Tannya L Irizarry to serve as the Chief Administrative Officer and chief financial officer (Interim) of the Company until January 31, 2022. Unless either party gives notice to terminate the agreement at least thirty days prior to expiration of the agreement, the agreement will
automatically be extended for an additional two year period. In consideration for her services, Ms. Irizarry receives a base salary of $208,000 per annum throughout the term of the agreement plus $45,000 worth on common stock issuance every March of every year of her employment agreement. During fiscal 2017, 2016 and 2015, no common stock was issued to Tannya L Irizarry pursuant to her employment agreement. If the Company achieves net income in excess of $2,000,000 per year, Ms. Irizarry is entitled to a company vehicle, gas expenses, and auto repairs. No director received compensation for their services to the Company.
No director received compensation for his services to the Company since January 1, 2015.
SECURITY OWNERSHIP OF CERTAIN BENIFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
The following table sets forth certain information concerning the beneficial ownership of our outstanding classes of stock as of July 20, 2018 by each person known by us to be (i) the beneficial owner of more than 5% of the outstanding shares of common stock, (ii) each current director and nominee, (iii) each Named Executive Officer serving at the end of the July 23, 2018 and (iv) all of our directors and current executive officers as a group. Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of common stock except to the extent that authority is shared by spouses under applicable law. The calculation of percentage ownership for each listed beneficial owner is based upon the number of shares of common stock issued and outstanding on July 23, 2018, plus shares of common stock subject to options, warrants and conversion rights held by such person on July 23, 2018, and exercisable or convertible within 60 days thereafter. Unless otherwise indicated, the address of each person or entity named below is c/o GeneThera, Inc., 6860 Broadway, Denver, CO 80221.
Series A Preferred Stock(1)
Series B Preferred Stock(2)
% of Total Voting Power(3)
Name and Address of Beneficial Owner
Dr. Tony Millici
Tannya L. Irizarry
Kalos Holdings, LLC
Gold X Change, Inc.
Executive Officers and Directors as a group (4)
Less than one percent
These shares of Series A Preferred Stock convert into 2,500,000 shares of common stock.
These shares of Series B Preferred Stock convert into 15,410,000 shares of common stock and have voting power of 308,200,000 shares of common stock.
Based upon a voting power of 437,764,983 shares of common stock, comprised of 40,064,983 shares of common stock issued and outstanding, 4,600 shares of Series A Preferred Stock issued and outstanding, which are convertible into and have voting power of 2,500,000 shares of common stock, and 15,410,000 shares of Series B Preferred Stock issued and outstanding, which convert into 154,100,000 shares of common stock and have voting power of 308,200,000 shares of common stock.
Fred Oeschger is the sole member and manager of FOGT, LLC.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue 300,000,000 shares of common stock, par value $0.001, of which 40,064,983 shares are issued and outstanding as of July 23, 2018. We are also authorized to issue 20,000,000 shares of Series A Preferred Stock, of which 10,100 shares are issued and outstanding as of August 10, 2018, and we are authorized to issue 30,000,000 shares of Series B Preferred Stock, of which 15,410,000 shares are issued and outstanding as of August 10, 2018.
The holders of common stock are entitled to one vote per share with respect to all matters required by law to be submitted to stockholders. The holders of common stock have the sole right to vote, except as otherwise provided by law or by our articles of incorporation, including provisions governing any preferred stock. The common stock does not have any cumulative voting, preemptive, subscription or conversion rights. Election of directors requires the affirmative vote of a plurality of shares represented at a meeting, and other general stockholder action requires the affirmative vote of a majority of shares represented at a meeting in which a quorum is represented. The outstanding shares of common stock are validly issued, fully paid and non-assessable.
Subject to the rights of any outstanding shares of preferred stock, the holders of common stock are entitled to receive dividends, if declared by our board of directors, out of funds legally available. In the event of liquidation, dissolution or winding up of the affairs of the Company, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.
The authorized but unissued shares of our common stock are available for future issuance without stockholder approval. These additional shares may be used for a variety of corporate purposes, including future public offering to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock may enable our Board to issue shares of stock to persons friendly to existing management, which may deter or frustrate a takeover of the Company.
Series A Preferred Stock and Series B Preferred Stock
The purchase price of each share of the series A preferred stock shall be $100.00 per share. No dividends shall be declared or paid.
Each holder of shares of series A preferred stock may, at holder’s option and at any time, convert any or all such shares, on the terms and conditions set forth herein, into fully paid and non-assessable shares of the share of the Corporation’s common stock. The number of shares of common stock into which each share of series A preferred stock may be converted shall be determined according to the terms of the series A preferred stock purchase agreement between the Corporation and the holder. To exercise holder’s conversion privilege, the holder of any shares of series A preferred stock shall surrender to the Corporation during regular business hours at the principal executive offices of the Corporation or the offices of the transfer agent for the series A preferred stock or at such other place as may be designated by the Corporation, the certificate or certificates for the share to be converted, duly endorsed for transfer to the Corporation (if required by it), accompanied by written notice stating that the holder irrevocably elects to convert such shares. Please refer to Exhibit 3.1.
The purchase price of each share of the series B preferred stock shall be determined by the Corporation. No dividends shall be declared or paid.
Each holder of shares of series B preferred stock may, at holder’s option and at any time, convert any or all such shares, on the terms and conditions set forth herein, into fully paid and non-assessable shares of the Corporation’s common stock. The number of shares of common stock into which each share of series B preferred stock may be converted to ten common shares of the Corporation. Please refer to Exhibit 3.2.
Indemnification of Directors and Officers
Section 718.7502 of the Nevada Revised Statutes (“NRS”) provides, in general, that a corporation incorporated under the laws of the State of Nevada, as we are, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person (a) is not liable pursuant to Section 73.138 of the NRS, and (b) acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. In the case of a derivative action, a Nevada corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person (a) is not liable pursuant to Section 73.138 of the NRS, and (b) acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation.
Our Articles of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in the manner permitted by the provisions of the NRS, as amended from time to time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders’ or directors’ resolution or by contract. In addition, our director and officer indemnification agreements with each of our directors and officers provide, among other things, for the indemnification to the fullest extent permitted or required by Nevada law. Any repeal or modification of these provisions approved by our stockholders will be prospective only and will not adversely affect any limitation on the liability of any of our directors or officers existing as of the time of such repeal or modification. We are also permitted to maintain insurance on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the NRS would permit indemnification.
Anti-Takeover Effect of Nevada Law
The “business combination” provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada corporation with at least 200 stockholders from engaging in various “combination” transactions with any interested stockholder: for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the interested stockholder obtained such status; or after the expiration of the three-year period, unless:
the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders; or
the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.
A “combination” is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) 10% or more of the earning power or net income of the corporation.
In general, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation’s voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.
Control Share Acquisitions
The “control share” provisions of Sections 78.378 to 78.3793, inclusive, of the NRS, which apply only to Nevada corporations with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada, prohibit an acquirer, under certain circumstances, from voting its shares of a target corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation’s disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Once an acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof become “control shares” and such control shares are deprived of the right to vote until disinterested stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures established for dissenters’ rights.
Our Articles of Incorporation state that we have elected not to be governed by the “control share” provisions, therefore, they currently do not apply to us.
The transfer agent and registrar for our common stock is GTI Corporate Transfer Agents, LLC, Denver, Colorado.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The Company has an outstanding loan payable to Antonio Milici amounting to $645,419 as of December 31, 2016 and 2015, respectively. This outstanding loan to the Company is unsecured and bears interest at an annual rate of 2.41%. The Company has an outstanding loan payable to Tannya Irizarry amount of $90,355 as of December 31, 2016.
GTI Corporate Transfer Agents, LLC is the Company’s transfer agent and we lease space to GTI Corporate Transfer Agents, LLC, in exchange for transfer agent services to the Company. Ms. Michelle Torres is the Managing Director of GTI Corporate Transfer Agents, LLC with 34% ownership and/or interest. Ms. Janice Pinero is our new Assistant Managing Director of GTI Corporate Transfer Agents, LLC with a one-third ownership and/or interest. Ms. Tannya Irizarry has a one-third ownership and/or interest.
In November 2017, we entered into a letter of intent with FOGT LLC and memorialized this agreement in a Milestones Investment Agreement in March 2018, pursuant to which FOGT has agreed to invest and purchase $5 million of Series A Preferred Stock pending completion of certain milestones. To date, FOGT has invested $550,000, was issued 5,500 shares of Series A, and has agreed to invest additional amounts as follows: (i) $1,200,000 upon the Company effecting all filings with the SEC as required pursuant to the Exchange Act; (ii) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (iii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. FOGT is an affiliate of Fred Oeschger, a director.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The following is a summary of the fees billed to us by our principal accountants, Fruci & Associates, II, PLLC during the years ended December 31, 2016 and 2015.
All Other Fees
The Company’s Directors approved the services described above.
EXHIBITS, FINANCIAL STATEMENTS
Description of Exhibit
Articles of Incorporation of GeneThera, Inc., as amended(1)
Certificate of the Designation, Preferences, Rights and Limitations of Series A Convertible Preferred Stock
Bylaws, as amended(1)
Certificate of the Designation, Preferences, Rights and Limitations of Series A Convertible Preferred Stock
Milestones Investment Agreement with FOGT, LLC(_)
Employment Agreement, dated as of January 8, 2017, between Antonio Milici, M.D., Ph.D. and GeneThera, Inc.(2)
Employment Agreement, dated as of January 8, 2017, between Tannya L. Irizarry and GeneThera, Inc.(2)
List of Subsidiaries(2)
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. (2)
(1) Previously filed.
(2) Filed herewith.
(3) XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.