UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the quarterly period ended October 31, 2009
Commission File Number
0-33473
VIRIDAX CORPORATION.
(Name of Small Business Issuer in its charter)
| FLORIDA | 65-1138291 |
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) |
| Incorporation or organization) | |
| | |
270 NW 3rd Court | 33432-3720 |
| Boca Raton, Florida | (Zip Code) |
| (Address of principal executive offices) | |
Issuer’s Telephone: (561) 368-1427
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 ¨ No x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨Yes ¨ No
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Smaller reporting company x
Indicate by checkmark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
APPLICABLE ONLY TO CORPORATE ISSUERS
As of the date of this filing there are 24,349,090 shares
of common stock outstanding.
PART I FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
Unaudited financial statements for Viridax Corporation as of the fiscal quarter ended October 31, 2009 are submitted in compliance with Article 8-03 of Regulation S-X.
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Viridax Corporation (Viridax) is a biopharmaceutical discovery and development company formed to expedite the commercialization of new technologies and products for the treatment of bacterial infectious diseases, especially antibiotic-resistant infections. The bacteriophage-based technologies under development by Viridax specifically target bacterial pathogens that incite resistant infections in substantial human populations.
In particular, the Company is developing specific bacteriophage products for the treatment of bacterial infections incited by Staphylococcus aureus and other Staphylococcal species encountered in the community setting and as nosocomial (hospital-acquired) agents. Many strains of Staphylococcus aureus and other Staphylococcal species are now resistant to most commercially-available antibiotics. The health threat and economic consequences of common Staph infections are now catastrophic areas of both the developing and the developed world.
Because Viridax is a developmental company, it has no products or services currently available to the public for commercial purposes.
The Company has no operating revenue. It is wholly dependent at this time upon the receipt of capital investment to fund its continuing activities. At this time, the only sources of this capital investment comes from the sale of its Class A Preferred Stock.
Viridax currently has two employees, Richard C. Honour, President and Richard E. Herman, Vice President, Research and Development. No compensation has been paid during the period ended October 31, 2009. As of October 31, 2009, accrued compensation to Richard C. Honour was $131,356 and will be paid as cash flow requirements permit.
The Company is wholly dependent upon the sales of an offering of 3,000,000 shares of Class A Preferred Stock at a net price to Viridax of $3.50 per share, which such offering is being conducted primarily in Germany, Austria, Switzerland, and other European countries. In view of the current global financial crisis there is no reasonable expectation that sales of preferred shares in the near future will be sufficient to sustain the corporation as a going concern. Although the Company has sales representatives in Europe conducting sales activities, it has no means to measure or project the results of these sales efforts.
The Company has a Cooperative Research and Development Agreement with the Agricultural Research Service (ARS) of the United States Department of Agriculture, which has a period of March 1, 2009 through January 10, 2011.
The overall objective of this Agreement is to join the resources and expertise of ARS and Viridax Corporation to evaluate and commercialize previously ARS-developed novel, multi-domain, antimicrobials that will target Staphylococus aureaus. The objective is to target S.aureus for treating bovine mastitis and human respiratory infections.
This Agreement calls for a payment amount of $150,000, payable in three installments of $50,000 each. The Company is now delinquent in meeting these payment obligations and presently does not have sufficient cash on hand to continue this Agreement on operative terms. It plans on continuing the relationship with ARS as additional funds become available.
The Company has no immediate plans for further development of its products until additional funding requirements are obtained. In addition to continuing its sales of preferred shares, the Company is making various applications to obtain grants and similar sources of funding.
Not applicable.
| | (4) | Off-balance sheet arrangements |
Not applicable.
| | (5) | Tabular disclosure of contractual obligations |
Not required.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:
| | | Our ability to obtain capital; |
| | | Our ability to fully implement our business plan; |
| | | General economic and business conditions, both nationally and in our markets; |
| | | Our expectations and estimates concerning future financial performance, financing plans and the impact of competition; |
| | | Anticipated trends in our business; |
| | | Other risk factors set forth under “Other Risk Factors” in this report. |
In addition, in this report, we use words or phrases such as “high value”, “plans,” “expects,” “future,” “intends,” and similar expressions to identify forward-looking statements.
We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
| ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company receives U.S. dollars in exchange for the sale of its Class A Preferred Stock in Europe. This price ($3.50 net proceeds to the Company) is constant.
There is no market price for the Viridax stock. None of the Company stock is publicly traded. Consequently the Company has no interest rate risk, foreign currency exchange rate risk, equity price risk, or otherwise.
| ITEM 4 | CONTROLS AND PROCEDURES |
The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) that are designed to ensure that information required to be disclosed in the company's Exchange Act reports 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.
Under the supervision and with the participation of management, including the Chief Executive Officer, as the primary Executive Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(c) and 15d-15(e) ) under the Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act.
During the period covered by this Quarterly Report on Form 10-Q, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f)) under the Exchange Act that materially affected or is reasonably likely to materially affect, our internal control over financial reporting. Our principal executive and financial officers concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by our Company in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this quarterly report.
PART II
| ITEM 1. | LEGAL PROCEEDINGS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
On March 31, 2006, the Board of Directors of Viridax Corporation approved the efforts of the Company in filing with the German Federal Financial Supervisory Authority (BaFin) a sales prospectus providing for the sale of up to the authorized limit of 3,000,000 shares of its Class A Preferred Stock, par value $ 1.00 per share, pursuant to the rules and requirements of Regulation S as promulgated by the United States Securities and Exchange Commission. Pursuant to the terms of that prospectus, East Slope Funding Corp., a Colorado corporation, has been designated as the Escrow Agent to receive the gross proceeds as paid by a given subscriber wherein the net sum of US $3.50 per share is retained by the Company and deliver a copy of the purchaser's subscription agreement. As of the date of this filing, under this arrangement, and within exemptions from the requirements of the prospectus, 358,529 shares have been sold for net cash proceeds to the Company totaling $1,254,852, net of a conversion of 2500 preferred shares to common totaling $8750. Final approval of the prospectus by the BaFin was obtained September 4, 2006. This approval was renewed by the BaFin on March 4, 2009.
In December 2008, the Agency Agreement referred to above was transferred to East Slope Funding Corporation of Florida, a Florida corporation, the sole shareholder and president of which are minority stockholders of the Company. The president of this company is also a director of the Company.
The Company claimed an exemption from registration under Regulation S based upon the following facts: (1) the offer and sale of the shares to each individual purchaser was an offshore transaction because each purchaser was a resident of Germany at the time of the transaction and located within that country, (2) there were no directed selling efforts and no activities were undertaken to condition the market. The Company comes within the Category 2 safe harbor as set forth in Rule 903(c)(2) because the sale of the preferred stock complies with the general conditions of Rule 903(a) and (b) and the stock certificates bear restrictive legends that meet the Regulation S selling restrictions in terms of transactional restrictions and offering restrictions.
The Class A Preferred Stock is non-cumulative and non-voting. Each share of Preferred Stock is convertible to Common Stock as follows: (1) if the owner wishes to exchange the certificate within one year from the date of purchase, that owner shall receive four shares of Common Stock for each one share of Preferred Stock, (2) if the owner wishes to exchange the certificate after owning it for a period longer than one year but less than two years, the owner shall receive 4.4 shares of Common Stock for each one share of Preferred Stock, (3) if the owner wishes to exchange the certificate after owning it for a period longer than two years but less than three years, the owner shall receive 4.6 shares of Common Stock for each one share of Preferred Stock, and (4) if the owner wishes to exchange the certificate after owning it for three years, that owner shall receive five shares of Common Stock for each one share of Preferred Stock. Once an owner has owned the Preferred Stock for three years, the option to convert to Common Stock must be exercised within 30 days thereafter or the conversion option shall lapse.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
Not applicable
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
Not applicable
| ITEM 5. | OTHER INFORMATION |
Not applicable
| Exhibit Number | | Page Number | | Description |
| | | | | |
| 3(i)(a) | | | | *Articles of Incorporation of Media Advisory Group, Inc. |
| 3(i)(b) | | | | *Certification of Reinstatement |
| 3(i)(c) | | | | *Articles of Amendment changing name to I & E Tropicals, Inc. |
| 3(i)(d) | | | | **Articles of Amendment changing name to Viridax Corporation |
| 3(ii) | | | | *Bylaws of Viridax Corporation |
| 10 | | | | **Asset Purchase Agreement |
| 10 | | | | ***Research Agreement |
| 10 | | | | ****Research Agreement |
| 14 | | | | **Code of Ethics |
| 31.1 | | E-1 | | Certification by President |
| 31.2 | | E-3 | | Certification by Chief Financial Officer |
| 32.1 | | E-5 | | Certification, 18 U.S.C. |
| 32.2 | | E-6 | | Certification, 18 U.S.C. |
*Incorporated by reference to Form 10-SB/12G, filed 1/7/02.
**Incorporated by reference to Form 10-KSB, filed on 6/27/05.
***Incorporated by reference to Form 10-KSB, filed on 8/13/07.
****Incorporated by reference to Form 10-K, filed on 6/21/10.
SIGNATURES
In accordance with 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.
| Dated: July 13, 2010 | By: | /s/ Richard C. Honour |
| | | Name: Richard C. Honour |
| | | Title: President |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| /s/ Richard C. Honour | | President and Director |
| Richard C. Honour | | |
| | | |
| /s/ Ledyard H. DeWees | | Secretary |
| Ledyard H. DeWees | | |
| | | |
| /s/ Michael C. Maloney | | Director |
| Michael C. Maloney | | |
| | | |
| /s/ Kenneth E. Lehman | | Chief Financial Officer |
| Kenneth E. Lehman | | Director |
VIRIDAX CORPORATION
(A Development Stage Company)
BALANCE SHEETS
| | | October 31 | | | April 30, | |
| | | 2009 | | | 2009 | |
| | | (Unaudited) | | | | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| CURRENT ASSETS | | | | | | |
| Cash | | $ | 3,715 | | | $ | 859 | |
| Notes receivable and accrued interest - related parties, net of allowance for doubtful accounts of $15,826 | | | 3,797 | | | | 3,729 | |
| Prepaid expenses | | | - | | | | 25,342 | |
| | | | | | | | | |
| Total Current Assets | | | 7,512 | | | | 29,930 | |
| | | | | | | | | |
| COMPUTER AND LABORATORY EQUIPMENT - NET | | | 23,968 | | | | 27,985 | |
| | | | | | | | | |
| OTHER ASSET | | | | | | | | |
| Bacteriophage material | | | 1,795,000 | | | | 1,795,000 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 1,826,480 | | | $ | 1,852,915 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Note payable - bank | | $ | 31,000 | | | $ | 49,000 | |
| Accounts payable and accrued expenses | | | 202,922 | | | | 198,629 | |
| Note payable and accrued interest - related parties | | | 14,349 | | | | 8,033 | |
| | | | | | | | | |
| Total Current Liabilities | | | 248,271 | | | | 255,662 | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY | | | | | | | | |
| Class A non-cumulative, convertible preferred stock, $1 par value, 3,000,000 shares authorized, 347,429 and 334,929 shares issued and outstanding, respectively | | | 347,429 | | | | 334,929 | |
| Common stock, $.001 par value, 50,000,000 shares authorized, 24,349,090 shares issued and outstanding | | | 24,349 | | | | 24,349 | |
| Additional paid-in capital | | | 3,520,567 | | | | 3,489,317 | |
| Deficit accumulated during the development stage | | | (2,314,136 | ) | | | (2,251,342 | ) |
| | | | | | | | | |
| Total Stockholders' Equity | | | 1,578,209 | | | | 1,597,253 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 1,826,480 | | | $ | 1,852,915 | |
Read accompanying Notes to Financial Statements.
VIRIDAX CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | | | | | | | | Period From | |
| | | | | | | | | | | | | | | July 1, 1998 | |
| | | Three Months | | | Six Months | | | (Inception) | |
| | | Ended October 31, | | | Ended October 31, | | | To October 31, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | | | 2009 | |
| | | | | | | | | | | | | | | | |
| REVENUE | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 735 | |
| | | | | | | | | | | | | | | | | | | | | |
| EXPENSES | | | | | | | | | | | | | | | | | | | | |
| General and administrative | | | 38,621 | | | | 132,795 | | | | 62,794 | | | | 291,291 | | | | 2,109,871 | |
| Impairment of bacteriophage material | | | - | | | | - | | | | - | | | | - | | | | 205,000 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Expenses | | | 38,621 | | | | 132,795 | | | | 62,794 | | | | 291,291 | | | | 2,314,871 | |
| | | | | | | | | | | | | | | | | | | | | |
| NET (LOSS) | | $ | (38,621 | ) | | $ | (132,795 | ) | | $ | (62,794 | ) | | $ | (291,291 | ) | | $ | (2,314,136 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| (LOSS) PER SHARE | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | | | 24,349,090 | | | | 24,349,090 | | | | 24,349,090 | | | | 24,349,090 | | | | | |
Read accompanying Notes to Financial Statements.
VIRIDAX CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | Period From | |
| | | Six | | | Six | | | July 1,1998 | |
| | | Months Ended | | | Months Ended | | | (Inception) | |
| | | October 31, | | | October 31, | | | to October 31, | |
| | | 2009 | | | 2008 | | | 2009 | |
| | | | | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | |
| Net (loss) | | $ | (62,794 | ) | | $ | (291,291 | ) | | $ | (2,314,136 | ) |
| Adjustments to reconcile net (loss) to net cash (used in) operating activities: | | | | | | | | | | | | |
| Depreciation | | | 4,017 | | | | 4,463 | | | | 19,489 | |
| Impairment of bacteriophage material | | | - | | | | - | | | | 205,000 | |
| Bad debt - note receivable | | | - | | | | - | | | | 15,826 | |
| Common shares issued for services rendered | | | - | | | | - | | | | 5,000 | |
| Conversion of accrued interest to additional paid-in capital | | | - | | | | - | | | | 576 | |
| (Increase) in accrued interest receivable | | | (68 | ) | | | (44 | ) | | | (2,036 | ) |
| Decrease in prepaid expenses | | | 25,342 | | | | 54,171 | | | | - | |
| Increase in accrued interest payable | | | 316 | | | | - | | | | 349 | |
| Increase in accounts payable and accrued expenses | | | 4,293 | | | | 55,728 | | | | 230,822 | |
| NET CASH (USED IN) OPERATING ACTIVITIES | | | (28,894 | ) | | | (176,973 | ) | | | (1,839,110 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | |
| Purchase of computer and laboratory equipment | | | - | | | | (6,213 | ) | | | (43,457 | ) |
| Increase in note receivable - related parties | | | - | | | | - | | | | (38,700 | ) |
| Repayment of notes receivable - related parties | | | - | | | | 10,000 | | | | 21,113 | |
| Increase in loans receivable - stockholder | | | - | | | | - | | | | (12,000 | ) |
| Repayment of loans receivable - stockholder | | | - | | | | - | | | | 4,000 | |
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | | | - | | | | 3,787 | | | | (69,044 | ) |
Read accompanying Notes to Financial Statements.
VIRIDAX CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
| | | | | | | | | Period From | |
| | | Six | | | Six | | | July 1,1998 | |
| | | Months Ended | | | Months Ended | | | (Inception) | |
| | | October 31, | | | October 31, | | | to October 31, | |
| | | 2009 | | | 2008 | | | 2009 | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | |
| Issuance of common stock | | | - | | | | | | | 507,425 | |
| Issuance of preferred stock, net | | | 43,750 | | | | 136,500 | | | | 1,224,748 | |
| Payments on stock subscription receivable | | | - | | | | - | | | | 113,476 | |
| Proceeds of notes payable - bank | | | - | | | | - | | | | 50,000 | |
| Repayment of notes payable - bank | | | (18,000 | ) | | | - | | | | (19,000 | ) |
| Proceeds of note payable - related party | | | 6,000 | | | | - | | | | 20,000 | |
| Repayment of note payable - related party | | | - | | | | - | | | | (6,000 | ) |
| Proceeds of note payable | | | - | | | | - | | | | 5,000 | |
| Increase in amount due to stockholder | | | - | | | | - | | | | 16,220 | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | | | 31,750 | | | | 136,500 | | | | 1,911,869 | |
| | | | | | | | | | | | | |
| NET INCREASE (DECREASE) IN CASH | | | 2,856 | | | | (36,686 | ) | | | 3,715 | |
| | | | | | | | | | | | | |
| CASH - BEGINNING | | | 859 | | | | 41,429 | | | | - | |
| | | | | | | | | | | | | |
| CASH - ENDING | | $ | 3,715 | | | $ | 4,743 | | | $ | 3,715 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | | | | | | | |
| Common shares issued for services rendered. | | $ | - | | | $ | - | | | $ | 5,000 | |
| | | | | | | | | | | | | |
| Common shares issued for purchase of bacteriophage material. | | $ | - | | | $ | - | | | $ | 2,000,000 | |
| | | | | | | | | | | | | |
| Conversion of notes payable and accrued interest and net stockholders loans to additional paid-in capital. | | $ | - | | | $ | - | | | $ | 13,796 | |
| | | | | | | | | | | | | |
| Accounts payable paid on behalf of Company by stockholder. | | $ | - | | | $ | - | | | $ | 27,900 | |
| | | | | | | | | | | | | |
| Conversion of preferred shares for common. | | $ | - | | | $ | - | | | $ | 8,750 | |
Read accompanying Notes to Financial Statements.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
Viridax Corporation was incorporated on July 1, 1998 under the laws of the State of Florida as Media Advisory Group, Inc. and on August 6, 2001 changed its name to I & E Tropicals, Inc. On April 5, 2005, the company amended its Articles of Incorporation to change its name to Viridax Corporation. With the acquisition of the bacteriophage material on April 24, 2005, the Company is pursuing its plan to expedite the bacteriophage material’s commercialization. This bacteriophage material is expected to be used for the treatment of bacterial infections incited by Staphylococcus aureus and other Staphlylococcus species. The Company has decided to discontinue its original business plan for the importing and exporting of exotic marine life. The company’s headquarters is in Boca Raton, Florida.
The Company has insignificant revenue to date. Since its inception, the Company has been dependent upon the receipt of capital investment or other financing to fund its continuing activities. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s product development will be successfully completed or that it will be a commercial success.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
| NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The accompanying condensed financial statements are unaudited. These statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto for the year ended April 30, 2009, included in the Company’s Form 10-K as filed with the SEC. The results of operations and cash flows for the period are not necessarily indicative of the results of operations or cash flows that can be expected for the year ending April 30, 2010.
(Loss) Per Share
(Loss) per share is computed by dividing net (loss) for the period by the weighted average number of common shares outstanding. The effect of the conversion of the preferred stock is excluded from the calculation of net loss per share as the effect was anti-dilutive.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Accordingly, actual results could vary from the estimates that were assumed in preparing the financial statements and those differences could be material.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
| NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Fair Value of Financial Instruments
The carrying amounts of the Company’s financial instruments including notes receivable and note payable – related parties, note payable - bank and accounts payable and accrued expenses approximate fair value due to the relatively short period to maturity for these instruments.
Recent Accounting Pronouncements
In June 2009, the FASB issued Financial Accounting Standards Codification No. 860 - Transfers and Servicing. FASB ASC No. 860 improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement, if any, in transferred financial assets. FASB ASC No. 860 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The Company is evaluating the impact the adoption of FASB ASC No. 860 will have on its financial statements.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
| NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Recent Accounting Pronouncements (Continued)
In June 2009, the FASB issued changes to the consolidation guidance applicable to a variable interest entity (VIE). FASB ASC Topic 810, "Consolidation," amends the guidance governing the determination of whether an enterprise is the primary beneficiary of a VIE, and is, therefore, required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity's economic performance and who has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. This standard also requires continuous reassessments of whether an enterprise is the primary beneficiary of a VIE. FASB ASC 810 also requires enhanced disclosures about an enterprise's involvement with a VIE. Topic 810 is effective as of the beginning of interim and annual reporting periods that begin after November 15, 2009. This will not have an impact on the Company’s financial position, results of operations or cash flows.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
| NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Recent Accounting Pronouncements (Continued)
In June 2009, the FASB issued ASC 105 Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles. The FASB Accounting Standards Codification TM (the “Codification”) has become the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”). All existing accounting standard documents are superseded by the Codification and any accounting literature not included in the Codification will not be authoritative. Rules and interpretive releases of the SEC issued under the authority of federal securities laws, however, will continue to be the source of authoritative generally accepted accounting principles for SEC registrants. Effective September 30, 2009, all references made to GAAP in our consolidated financial statements will include references to the new Codification. The Codification does not change or alter existing GAAP and, therefore, will not have an impact on our financial position, results of operations or cash flows.
Commencing March 1, 2009, the Company entered into an agreement with an agency of the United States Department of Agriculture to continue the laboratory work necessary to evaluate and commercialize the bacteriophage material for a fee of $150,000. A deposit of $50,000 was paid with the balance due in three monthly installments. These installments have not been paid as scheduled, however, during the six months ended October 31, 2009, a total of $7,375 has been paid. The original agreement ended February 28, 2010 but was extended to January 10, 2011. The fee is being expensed over the remaining term of the agreement. As of October 31 and April 30, 2009, prepaid expense relating to this agreement was $0 and $25,342, respectively. As of October 31 and April 30, 2009, included in accounts payable was $1,199 and $0 relating to this agreement. For the three and six months ended October 31, 2009, the amount expensed was $16,958 and $33,916, respectively.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
| NOTE 4. | RELATED PARTY TRANSACTIONS |
Notes Receivable and Accrued Interest
The total notes receivable - related parties balance as of October 31 and April 30, 2009 includes accrued interest of $1,397 and $1,329, respectively.
Notes Payable and Accrued Interest
During the six months ended October 31, 2009, the Company received additional advances totaling $6,000. These advances are unsecured, bear interest at 5% per annum and are due on demand. As of October 31 and April 30, 2009, total notes payable - related parties includes accrued interest of $349 and $33, respectively.
Legal and Consulting Fees
During the three months ended October 31, 2009 and 2008, $2,000 was paid and $15,000 was charged by a stockholder for legal services rendered, respectively. For the six months ended October 31, 2009 and 2008, $2,000 was paid and $30,000 was charged, respectively.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
| NOTE 4. | RELATED PARTY TRANSACTIONS (CONTINUED) |
Legal and Consulting Fees (Continued)
During the six months ended October 31, 2009, the Company paid $2,000 to its vice-president of research and development for consulting services rendered.
During the six months ended October 31, 2009, the Company paid $2,000 to its president for grant and patent application services rendered.
The Company has 3,000,000 shares of Class A non-cumulative, convertible preferred stock of $1 par value authorized. The preferred shares are non-cumulative, non-voting and convertible to common shares during the first 3 years under the following schedule: shares converted within the first year of purchase shall receive 4 shares of common for every share of preferred; shares converted within the second year after purchase shall receive 4.4 shares of common for every share of preferred; shares converted within the third year after purchase shall receive 4.6 shares of common for every share of preferred; after 3 years of ownership, the shareholder hall receive 5 shares of common for every share of preferred, but the right to convert must be exercised within 30 days after the third year anniversary of purchase or the conversion right will lapse.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
| NOTE 5. | CAPITAL STOCK (CONTINUED) |
Preferred Stock (Continued)
On April 1, 2006, the Company entered into an Agency Agreement for the sale of up to 3,000,000 shares of the Company’s Class A Preferred Stock. The stock is being offered for sale in Germany and elsewhere in Europe at $7 per share ($3.50 per share net proceeds to the Company), as determined by the Company’s management, such sale being exempt from registration under Regulation S of the Securities Act of 1933. During the six months ended October 31, 2009, 12,500 preferred shares were sold for net proceeds totaling $43,750.
As of October 31 and April 30, 2009, 347,429 and 334,929 preferred shares were issued and outstanding. Subsequent to October 31, 2009, 11,100 preferred shares were sold for net proceeds totaling $38,850.
The Company has 50,000,000 shares of $.001 par value common stock authorized. Shareholders of common stock have one vote per share.
As of October 31 and April 30, 2009, 24,349,090 shares of common stock were issued and outstanding. Subsequent to October 31, 2009, the Company issued 2,200,000 common shares in a private sale at $.01 per share, as determined by the Company’s management, such sale being exempt from registration under Regulation S of the Securities Act of 1933.
VIRIDAX CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
Subsequent to October 31, 2009, additional advances and repayments relating to the note payable – bank was $18,000 and $16,000, respectively.
On April 30, 2010, the Company received proceeds of a loan totaling $20,000. The loan is unsecured, bears interest at 2% per annum and is due on demand.
As reflected on the balance sheet, the Company is still in the development stage with an accumulated deficit of $2,314,136, and since inception, a negative cash flow from operations of $1,839,110. These factors raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to raise additional capital. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Management has secured continued approval from the German exchange for the sale of preferred stock and is continuing to pursue other contracts and/or grants to secure additional funding. Management believes that the direction it is taking will secure additional funding and that the Company will be able to continue as a going concern.
