UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2005
_ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to _____
INTERACTIVE THERAPEUTICS, INC.
(FORMERLY TABATHA I, INC.)
(Name of small business in its charter)
| Colorado | 0-31743 | 84-1536517 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
| | |
| 1117 Herkimer Street, Houston, Texas | 77008 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713) 802-2944
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____
Applicable only to issuers involved in bankruptcy proceedings during the past five years:
Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ____ No ____
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 81,302,500 as of August 12, 2005.
Transitional Small Business Disclosure Format (Check one): Yes __ No X
INTERACTIVE THERAPEUTICS, INC.
(FORMERLY TABATHA I, INC.)
INDEX TO FORM 10-QSB
June 30, 2005
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(A Company in the Developmental Stage)
(Formerly Tabatha I, Inc.)
| | | | | | |
| | | June 30, | | March 31, | |
| | | 2005 | | 2005 | |
| | | (Unaudited) | | | |
ASSETS | | | | | |
| | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 1,000 | | $ | -- | |
| Total assets | | $ | 1,000 | | $ | -- | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | | | | |
| | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 8,119 | | $ | 1,792 | |
| Total current liabilities | | | 8,119 | | | 1,792 | |
| Shareholders' deficit: | | | | | | | |
Preferred stock, no par value, 10,000,000 shares authorized, no shares issued or outstanding | | | | | | | |
| Common stock, no par value, 500,000,000 shares authorized, 81,302,500 issued and outstanding | | | | | | | |
| at June 30 and March 31, 2005, respectively | | | 1,000 | | | 1,000 | |
| Stock subscription receivable | | | -- | | | (1,000 | ) |
| Deficit accumulated in the developmental stage | | | (8,119 | ) | | (1,792 | ) |
| Total shareholders’ deficit | | | (7,119 | ) | | (1,792 | ) |
| Total liabilities and shareholders' deficit | | $ | 1,000 | | $ | -- | |
See accompanying notes to unaudited consolidated financial statements.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2005 AND
INCEPTION (FEBRUARY 15, 2005) TO JUNE 30, 2005
(A Company in the Developmental Stage)
(Formerly Tabatha I, Inc.)
(Unaudited)
| | | Three Months | | Inception | |
| | | Ended | | (February 15, 2005) to | |
| | | June 30, 2005 | | June 30, 2005 | |
| | | | | | |
| General and administrative expenses | | $ | 6,327 | | $ | 8,119 | |
| Net loss | | $ | (6,327 | ) | $ | (8,119 | ) |
| | | | | | | | |
| Net loss per share: | | | | | | | |
| Basic and diluted | | $ | -- | | $ | -- | |
| | | | | | | | |
| Weighted average number of common shares outstanding+ | | | | | | | |
| Basic and diluted | | | 81,302,500 | | | 74,726,643 | |
See accompanying notes to unaudited consolidated financial statements.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2005 AND
INCEPTION (FEBRUARY 15, 2005) TO JUNE 30, 2005
(A Company in the Developmental Stage)
(Formerly Tabatha I, Inc.)
(Unaudited)
| | | Three Months | | Inception | |
| | | Ended | | (February 15, 2005) | |
| | | June 30, 2005 | | to June 30, 2005 | |
| Cash flows from operating activities: | | | | | |
| Net loss | | $ | (6,327 | ) | $ | (8,119 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: | | | |
| Changes in assets and liabilities: | | | | | | | |
| Accounts payable | | | 6,327 | | | 8,119 | |
| Net cash used in operating activities | | | -- | | | -- | |
| Cash flows from investing activities: | | | -- | | | -- | |
| Cash flows from financing activities: | | | | | | | |
| Collection of stock subscription receivable | | | 1,000 | | | 1,000 | |
| Net cash provided by financing activities | | | 1,000 | | | 1,000 | |
| Net increase in cash | | | 1,000 | | | 1,000 | |
| Cash and cash equivalents, beginning of period | | | -- | | | -- | |
| Cash and cash equivalents, end of period | | $ | 1,000 | | $ | 1,000 | |
See accompanying notes to unaudited consolidated financial statements.
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
(Formerly Tabatha I, Inc.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2005
Note 1. Organization and Nature of Business
Interactive Therapeutics, Inc., (formerly Tabatha I, Inc.) a company in the developmental stage (the “Company” or “Interactive”), was originally incorporated on March 17, 2000, in the State of Colorado. The Company is a small business issuer that has not conducted business operations nor had revenues from operations in each of its last two fiscal years. The Company was a "blank check" or "shell" company whose business plan was to seek, investigate, and, if warranted, acquire one or more properties or businesses, and to pursue other related activities intended to enhance shareholder value. The acquisition of a business opportunity may be made by purchase, merger, exchange of stock, or otherwise, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership. The Company has no capital, and it is unlikely that it will be able to take advantage of more than one such business opportunity.
On February 25, 2005, the Company closed on a transaction acquiring all of the common stock of Zigen, Inc., a Texas corporation (“Zigen”), pursuant to an exchange agreement by and among the Company, Zigen and the stockholders of Zigen (the “Exchange Agreement”). As a result of the Exchange Agreement, Zigen became a wholly-owned subsidiary of the Company. Zigen was incorporated in the State of Texas on February 15, 2005. References herein to the Company include Zigen.
As a result of the closing of the Exchange Agreement, the Company issued an aggregate of 73,000,000 shares of its common stock to the former shareholders of Zigen (in exchange for all the outstanding capital stock of Zigen), resulting in the former shareholders of Zigen owning approximately 89.8% of the issued and outstanding Company common stock. The Company issued 66,430,000 shares of its common stock to Silver Star Holdings Trust of which Kevan Casey is Trustee and 6,570,000 shares of its common stock to Carl A. Chase, the former shareholders of Zigen. Additionally, Kevan Casey was appointed as chairman and a director and J. Leonard Ivins was appointed to serve as chief executive officer, principal accounting officer and a director.
Effective July 25, 2005, the Company changed its name to Interactive Therapeutics, Inc. to more accurately reflect the business it intends to enter subsequent to the merger with Zigen and will focus its efforts for growth in the area of biotechnology.
Note 2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany transactions and account balances have been eliminated.
Stock Options
On May 25, 2005, the Board of Directors adopted the 2005 Stock Option Plan (the “2005 Plan”), which allows for the issuance of up to 6,000,000 stock options to directors, executive officers, employees and consultants of the Company who are contributing to the Company’s success. On June 23, 2005, the Board of Directors increased the number of stock options for issuance under the 2005 Plan to 8,000,000. The 2005 Plan was approved by the shareholders of the Company on July 22, 2005. As of June 30, 2005, there were no stock options outstanding pursuant to the 2005 Plan.
During December 2002, the FASB issued SFAS No. 148. Statement 148 establishes standards for two alternative methods of transition to the fair value method of accounting for stock-based employee compensation of FASB SFAS No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”). SFAS 148 also amends and augments the disclosure provisions of SFAS 123 and Accounting Principles Board Opinion 28 "Interim Financial Reporting" to require disclosure in the summary of significant accounting policies for all companies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. The transition standards and disclosure requirements of SFAS 148 are effective for fiscal years and interim periods ending after December 15, 2002. The Company has adopted only the disclosure provisions of this statement. The Company accounts for non-employee stock option expense in accordance with SFAS 123 and EITF 96-18.
Recently Issued Accounting Standards
In December 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (SFAS 123R). This statement revises SFAS No. 123, supersedes APB No. 25, and requires companies to recognize the cost of employee stock options and other awards of stock-based compensation based on the fair value of the award as of the grant date. The effective date of this pronouncement is as of the beginning of the first interim or annual period that begins after December 15, 2005. The Company is evaluating whether the adoption of FASB No. 123R will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
Note 3. Common Stock
Zigen issued 1,000 shares of common stock to its founding stockholders in exchange for $1,000 in cash. On February 25, 2005, the founding stockholders exchanged 100% of their common stock for approximately 89.8% of the Company as discussed in Note 1.
The following discussion and analysis of the Company’s financial condition as of June 30, 2005, and its results of operations for the three month period ended June 30, 2005, should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Form 10-KSB for the year ended March 31, 2005, filed with the Securities and Exchange Commission.
Forward-Looking Statements
Some of the statements contained in this report discuss future expectations, contain projections of results of operations or financial condition, or state other "forward-looking" information. The words "believe," "intend," "plan," "expect," "anticipate," "estimate," "project," "goal" and similar expressions identify such statement was made. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. Factors that might cause or contribute to such a discrepancy include, but are not limited to the risks discussed in the Company’s other SEC filings. The Company does not promise to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements. Future events and actual results could differ materially from those expressed in, contemplated by, or underlying such forward-looking statements.
Overview
Interactive is a development stage biopharmaceutical company with a primary focus on developing products to treat cancer, infectious diseases and other medical conditions associated with compromised immune systems. As a development stage company, substantially all efforts of the Company will be devoted to performing research and experimentation, conducting clinical trials, developing and acquiring intellectual properties, raising capital and recruiting and training personnel.
Overview of Cancer and Treatment Methods
Cancer is the second leading cause of death in the United States, exceeded only by heart disease. It is a devastating disease with tremendous unmet medical needs. The American Cancer Society estimated that 1.4 million new cases of cancer will be diagnosed in 2004 in the United States and 563,700 Americans are expected to die from cancer in 2004.
Cancer is a group of diseases characterized by uncontrolled cell division resulting in the development of a mass of cells, commonly known as a tumor, as well as the invasion and spreading of these cells. Cancerous tumors can arise in any tissue or organ within the human body. Cancer is believed to occur as a result of a number of factors, such as genetic predisposition, chemical agents, viruses and irradiation. These factors result in genetic changes affecting the ability of cells to regulate their growth and differentiation normally. When a normal cell becomes cancerous, it can spread to various sites in the body.
The most common methods of treating patients with cancer are surgery, radiation and drug therapy. A cancer patient often receives treatment with a combination of methods. Surgery and radiation therapy are particularly effective in patients where the disease is localized and has not spread to other tissues or organs. The most common method of treating patients with cancer that has spread beyond the primary site is to administer anticancer drugs by mouth or intravenously. In general, drugs used to treat cancer are classified as chemotherapy. Chemotherapy seeks to damage and kill cancer cells or to interfere with the molecular and cellular processes that control the development, growth and survival of malignant tumor cells. In many cases, chemotherapy consists of the administration of several different drugs in combination. Chemotherapy can cause patient weakness, loss of appetite, nausea and vomiting, and damage to various organs that can result in loss of normal body functions. Current treatment for most kinds of cancer is inadequate. Therefore, a significant need exists for new therapies which are more effective and/or have reduced side effects.
Recent Developments
Interactive Therapeutics, Inc. (formerly Tabatha I, Inc.) (the “Company” or “Interactive”) is a small business issuer that has not conducted business operations nor had revenues from operations in each of its last two fiscal years. It remains in the development stage and its business plan is to seek, investigate, and, if warranted, acquire one or more properties or businesses, and to pursue other related activities intended to enhance shareholder value. The acquisition of a business opportunity may be made by purchase, merger, exchange of stock, or otherwise, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership. The Company has very limited capital, and it is unlikely that it will be able to take advantage of more than one such business opportunity. The Company cannot predict to what extent its liquidity and capital resources will be diminished prior to the consummation of a business combination or whether its capital will be further depleted by the operating losses (if any) of the business entity which it may eventually acquire.
On February 25, 2005, Interactive closed on a transaction acquiring all of the common stock of Zigen, Inc., a Texas corporation (“Zigen”), pursuant to an exchange agreement by and among the Company, Zigen and the stockholders of Zigen (the “Exchange Agreement”). As a result of the Exchange Agreement, Zigen became a wholly-owned subsidiary of the Company. Zigen was incorporated in the State of Texas on February 15, 2005. References herein to the Company include Zigen.
As a result of the closing of the Exchange Agreement, the Company issued an aggregate of 73,000,000 shares of its common stock to the former shareholders of Zigen (in exchange for all the outstanding capital stock of Zigen), resulting in the former shareholders of Zigen owning approximately 89.8% of the issued and outstanding Company common stock. The Company issued 66,430,000 shares of its common stock to Silver Star Holdings Trust of which Kevan Casey is Trustee and 6,570,000 shares of its common stock to Carl A. Chase, the former shareholders of Zigen. Additionally, Kevan Casey was appointed as chairman and a director and J. Leonard Ivins was appointed to serve as chief executive officer, principal accounting officer and director.
Effective July 25, 2005, the Company changed its name to Interactive Therapeutics, Inc. to more accurately reflect the business it intends to enter subsequent to the merger with Zigen and will focus its efforts for growth in the area of biotechnology.
Critical Accounting Policies
General
The Consolidated Financial Statements and Notes to Consolidated Financial Statements contain information that is pertinent to this management’s discussion and analysis. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities. Management believes these accounting policies involve judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related asset and liability amounts. Management believes it has exercised proper judgment in determining these estimates based on the facts and circumstances available to its management at the time the estimates were made. The significant accounting policies are described in the Company's financial statements (See Note 2 in Notes to Consolidated Financial Statements).
Results of Operations and Financial Condition
Prior to the acquisition of Zigen, Interactive was a development stage company whose business plan was to seek, investigate, and, if warranted, acquire one or more properties or businesses, and to pursue other related activities intended to enhance shareholder value. The acquisition of a business opportunity may be made by purchase, merger, exchange of stock, or otherwise, and may encompass assets or a business entity, such as a corporation, joint venture, or partnership. The Company has no capital, and it is unlikely that it will be able to take advantage of more than one such business opportunity. The Company intends to seek opportunities demonstrating the potential of long-term growth as opposed to short-term earnings. During the three months ended June 30, 2005, the Company incurred expenses of $6,327, which expenses are comprised of legal and accounting fees.
Liquidity and Capital Resources
The Company has significant liquidity problems and has no meaningful capital resources or stockholder's equity. It may not be able to satisfy its estimated cash requirements for the next twelve months. In the event additional cash is required, the Company may have to borrow funds from stockholders or other sources, or seek funds from a private placement among new investors, none of which can be assured. The Company has faced this situation since inception and has managed to carry on and there is no reason to believe that it can not do so in the future. The Company cannot predict to what extent its lack of liquidity and capital resources will impair the consummation of a business combination or whether it will incur further operating losses through any business entity which it may eventually acquire. The Company has had no material business operations since 2000 and has never had any revenue. During these periods it has engaged in no significant operations other than organizational activities, acquisition of capital, and meeting its reporting obligations under the Securities Exchange Act of 1934, as amended. No revenues were received during this period. The Company anticipates that until a business combination is completed with an acquisition candidate, it will not generate revenue and may operate at a loss after completing a business combination, depending upon the performance of the acquired business.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
New Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 123R “Share-Based Payment” (SFAS 123R). This statement revises SFAS No. 123, supersedes APB No. 25, and requires companies to recognize the cost of employee stock options and other awards of stock-based compensation based on the fair value of the award as of the grant date. The effective date of this pronouncement is as of the beginning of the first interim or annual period that begins after December 15, 2005. The Company is evaluating whether the adoption of FASB No. 123R will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports pursuant to the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Company’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The nature of the business and the size of the Company have prevented the Company from being able to employ sufficient resources to enable it to have adequate segregation of duties within its internal control system. This condition is considered a reportable condition and has been discussed with the Board of Directors. The Company will continue to monitor and assess the costs and benefits of additional staffing in the accounting area.
None.
Recent Sales of Unregistered Securities
There were no sales of unregistered securities made by the Company during the quarter ended June 30, 2005.
None.
On July 22, 2005, with a written consent to action without a meeting of the majority of the shareholders of Interactive Therapeutics, Inc., the following resolutions were deemed to be adopted to the same extent and to have the same force and effect as if adopted by a formal meeting of shareholders of the Company duly called and held for the purpose of adopting and acting upon such resolutions:
RESOLVED, that the Majority Shareholders hereby elect Kevan M. Casey, and J. Leonard Ivins as directors to serve until their successors are elected, appointed and duly qualified; and that the Majority Shareholders direct the officers to implement this resolution.
RESOLVED, that the Majority Shareholders hereby approve an amendment to the Company’s Articles of Incorporation to change the name of the Company to Interactive Therapeutics, Inc. and that the Majority Shareholders direct the officers to implement this resolution.
RESOLVED, that the Majority Shareholders hereby approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 500,000,000 and that the Majority Shareholders direct the officers to implement this resolution.
RESOLVED, that the Majority Shareholders hereby grants the Board of Directors the authority to perform a reverse split of the Company’s common stock at anytime in the future for a period from July 22, 2005 for a period of two years and that the Majority Shareholders direct the officers to implement this resolution.
RESOLVED, that the Majority Shareholders hereby adopt the 2005 Stock Option Plan and appoint and retain Lopez, Blevins, Bork & Associates LLP as the Company’s independent auditors for its current fiscal year; and that the Majority Shareholders direct the officers to implement this resolution.
None.
| Exhibit No. | Description |
| 3.1 | Articles of Incorporation (incorporated by reference to Exhibit 3.1 from Registration Statement on Form-SB filed with the Securities and Exchange Commission on October 11, 2000) |
| 3.2 | Bylaws of Interactive Therapeutics, Inc. (incorporated by reference to Exhibit 3.2 from Registration Statement on Form-SB filed with the Securities and Exchange Commission on October 11, 2000) |
| 4.1 | Specimen of Stock Certificate (incorporated by reference to Exhibit 4.1 from Registration Statement on Form-SB filed with the Securities and Exchange Commission on October 11, 2000) |
| 4.2 | Specimen Class A Convertible Preferred Stock Certificate (incorporated by reference to Exhibit 4.2 from Registration Statement on Form-SB filed with the Securities and Exchange Commission on October 11, 2000) |
| 31.1 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith) |
| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
INTERACTIVE THERAPEUTICS, INC.
By: /s/ J. Leonard Ivins___________
J. Leonard Ivins, Chief Executive Officer
Date: August 15, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Kevan Casey Chairman of the Board August 15, 2005
Kevan Casey
/s/ J. Leonard Ivins Chief Executive Officer, August15, 2005
J. Leonard Ivins Principal Accounting Officer
and Director
