U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2009
OR
| ¨ | TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934 |
From the transition period from ____________ to ___________.
Commission File Number 000-50541
Oncolin Therapeutics, Inc.
(Exact name of small business issuer as specified in its charter)
(Former Name if Applicable)
| Nevada | | 88-0507007 |
(State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification Number) |
710 North Post Oak Suite 410, Houston, Texas 77024
(Address of principal executive offices)
(713) 780-0806
(Issuer's telephone number)
Check whether the issuer has (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ¨
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 |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No x
As of May 19, 2010 there were outstanding 463,655,263 shares of common stock, $0.01 par value per share.
This quarterly report on Form 10-Q is being filed as Amendment No. 1 to our Quarterly Report on Form 10-Q which was originally filed on May 14, 2010 with the Securities and Exchange Commission. We are amending and restating our financial statements to record a year end adjustment that was inadvertently omitted from the March 31, 2009 financial statements included in our original filing. The error occurred as a result of our simultaneously preparing delinquent Forms 10-K and 10-Q in order to become current in our SEC filings. The adjustment is necessary so that the financial statements in this Form 10-Q are consistent with our financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2009, which was filed with the SEC on May 5, 2010.
Except as specifically referenced herein, this Amendment No. 1 to the Quarterly Report on Form 10-Q does not reflect any event occurring subsequent to May 14, 2010, the filing date of the original report.
ONCOLIN THERAPEUTICS, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q/A
June 30, 2009
| Part I | Financial Information |
| | | | | |
| | Item 1. | Financial Statements | | |
| | | | | |
| | | Consolidated Balance Sheets (unaudited) | | |
| | | June 30, 2009 and March 31, 2009 | | 3 |
| | | | | |
| | | Consolidated Statements of Operations (unaudited) | | |
| | | Three Months Ended June 30, 2009 and 2008, and | | |
| | | Inception (May 9, 2007) through June 30, 2009 | | 4 |
| | | | | |
| | | Consolidated Statements of Cash Flow (unaudited) | | |
| | | Three Months Ended June 30, 2009 and 2008, and | | |
| | | Inception (May 9, 2007) through June 30, 2009 | | 5 |
| | | | | |
| | | Notes to Unaudited Consolidated Financial Statements | | 6 |
| | | | | |
| | Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 7 |
| | | | | |
| | Item 3. | Quantitative and Qualitative Disclosures About Market Risk | | 8 |
| | | | | |
| | Item 4. | Controls and Procedures | | 8 |
| | | | | |
| Part II | Other Information | | |
| | | | | |
| | Item 5. | Exhibits | | |
PART I. FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
ONCOLIN THERAPEUTICS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | June 30, 2009 | | | March 31, 2009 | |
| | | (Restated) | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Cash and cash equivalents | | $ | 14 | | | $ | 300 | |
| Total current assets | | | 14 | | | | 300 | |
| Property and equipment, net | | | 3,745 | | | | 4,002 | |
| Total assets | | $ | 3,759 | | | | 4,302 | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' DEFICIT | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 225,166 | | | $ | 226,113 | |
| Accounts payable – related parties | | | 102,173 | | | | 102,173 | |
| Accrued liabilities | | | 30,478 | | | | 28,102 | |
| Notes payable – related parties | | | 99,478 | | | | 95,302 | |
| Total current liabilities | | | 457,295 | | | | 451,690 | |
| | | | | | | | | |
| Shareholders deficit: | | | | | | | | |
| Common stock, $.001 par value, 500,000,000 shares authorized; 462,055,263 shares issued and outstanding | | | 462,055 | | | | 462,055 | |
| Additional paid-in capital | | | 1,875,942 | | | | 1,875,942 | |
| Deficit accumulated during the development stage | | | (2,791,533 | ) | | | (2,785,385 | ) |
| Total shareholders’ deficit | | | (453,536 | ) | | | (447,388 | ) |
| Total liabilities and shareholders' deficit | | $ | 3,759 | | | $ | 4,302 | |
See accompanying notes to unaudited consolidated financial statements.
ONCOLIN THERAPEUTICS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | | Three Months Ended June 30, | | | Inception (May 9, 2007) to | |
| | | 2009 | | | 2008 | | | June 30, 2009 | |
| | | (Restated) | | | | | | (Restated) | |
| Revenue | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | | |
| Compensation and related expenses | | | - | | | | 51,800 | | | | 1,009,324 | |
| Office administration | | | 65 | | | | 2,928 | | | | 21,070 | |
| Professional fees | | | 3,450 | | | | 165,128 | | | | 853,388 | |
| Investor relations | | | - | | | | 8,360 | | | | 292,444 | |
| Merger expenses | | | - | | | | - | | | | 8,113 | |
| Impairment of license agreement | | | - | | | | - | | | | 80,100 | |
| Acquisition costs of subsidiary | | | - | | | | - | | | | 220,000 | |
| Depreciation and amortization | | | 257 | | | | 6,888 | | | | 30,289 | |
| Other expenses | | | - | | | | 31,964 | | | | 292,026 | |
| Total costs and expenses | | | 3,772 | | | | 267,068 | | | | 2,806,754 | |
| | | | | | | | | | | | | |
| Interest expense | | | 2,376 | | | | 29,565 | | | | 463,544 | |
| Gain on deconsolidated subsidiary | | | - | | | | - | | | | (478,765 | ) |
| Net loss | | $ | (6,148 | ) | | $ | (296,633 | ) | | $ | (2,791,533 | ) |
| | | | | | | | | | | | | |
| Net loss per share: | | | | | | | | | | | | |
| Basic and diluted | | $ | (0.00 | ) | | $ | (0.01 | ) | | | | |
| | | | | | | | | | | | | |
| Weighted average number of common shares outstanding - Basic and diluted | | | 462,055,263 | | | | 42,332,533 | | | | | |
See accompanying notes to unaudited consolidated financial statements.
ONCOLIN THERAPEUTICS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | Three Months Ended June 30, | | | Cumulative from Inception (May 9, 2007) through June | |
| | | 2009 | | | 2008 | | | 30, 2009 | |
| | | (Restated) | | | | | | (Restated) | |
| Cash flows from operating activities: | | | | | | | | | |
| Net income (loss) | | $ | (6,148 | ) | | $ | (296,633 | ) | | $ | (2,791,533 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: | | | | | | | | | | | | |
| Depreciation and amortization | | | 257 | | | | 6,888 | | | | 21,400 | |
| Amortization of deferred financing costs | | | - | | | | 1,251 | | | | 15,000 | |
| Non-cash compensation expense relating to license agreement | | | - | | | | - | | | | 119,900 | |
| Impairment of license agreement | | | - | | | | - | | | | 80,100 | |
| Amortization of debt discount | | | - | | | | 22,054 | | | | 397,985 | |
| Share-based compensation | | | - | | | | 58,750 | | | | 913,481 | |
| Non-cash acquisition of subsidiary | | | | | | | - | | | | 220,000 | |
| Changes in assets and liabilities: | | | | | | | | | | | | |
| Other current assets | | | | | | | - | | | | 15,750 | |
| Accounts payable | | | (947 | ) | | | (5,491 | ) | | | 288,468 | |
| Accounts payable – related parties | | | - | | | | 12,414 | | | | 102,173 | |
| Accrued liabilities | | | 2,376 | | | | 42,827 | | | | 67,046 | |
| Net cash used in operating activities | | | (4,462 | ) | | | (157,940 | ) | | | (550,230 | ) |
| Cash flows from investing activities: | | | | | | | | | | | | |
| Investment in option agreement | | | - | | | | - | | | | (20,000 | ) |
| Property and equipment | | | - | | | | - | | | | (5,145 | ) |
| Net cash used in investing activities | | | - | | | | - | | | | (25,145 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | |
| Proceeds from notes payable – related parties | | | 4,176 | | | | - | | | | 227,176 | |
| Repayment of notes payable – related party | | | - | | | | - | | | | (13,000 | ) |
| Proceeds from issuance of common stock | | | - | | | | 90,000 | | | | 91,165 | |
| Proceeds from exercise of stock options | | | - | | | | 67,239 | | | | 270,048 | |
| Net cash provided by financing activities | | | 4,176 | | | | 157,239 | | | | 575,389 | |
| Net change in cash | | | (286 | ) | | | (701 | ) | | | 14 | |
| Cash and cash equivalents, beginning of period | | | 300 | | | | 1,174 | | | | - | |
| Cash and cash equivalents, end of period | | $ | 14 | | | $ | 473 | | | $ | 14 | |
| | | | | | | | | | | | | |
| Supplemental disclosures: | | | | | | | | | | | | |
| Interest paid | | $ | - | | | $ | - | | | | 5,633 | |
| Income taxes paid | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | |
| Non-cash financing activities: | | | | | | | | | | | | |
| Discount on convertible notes | | $ | - | | | $ | 397,985 | | | $ | 397,985 | |
| Stock issued for accounts payable | | | - | | | | 28,500 | | | | - | |
| Cancellation of stock certificate | | | - | | | | - | | | | 300 | |
| Issuance of note payable for license agreement | | | - | | | | 200,000 | | | | 200,000 | |
| Stock issued for prepaid investor relation services | | | - | | | | - | | | | 73,800 | |
| Conversion of Notes payable and Accrued Interest | | | - | | | | - | | | | 414,568 | |
See accompanying notes to unaudited consolidated financial statements.
ONCOLIN THERAPEUTICS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009
Note 1. Basis of Presentation
The accompanying unaudited financial statements of Oncolin Therapeutics, Inc. (the "Company" or "Oncolin") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X related to smaller reporting companies. These consolidated financial statements should be read in conjunction with the audited financial statements and notes, which are included as part of the Company's Form 10-K filed with the SEC on May 5, 2010. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal year ended March 31, 2009 as reported in the 10-K have been omitted.
Note 2. Going Concern
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenue since its inception and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. As of June 30, 2009, the Company has accumulated losses since inception. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
Note 3. Related Party Advances
During the three months ended June 30, 2010, a director advanced $4,176 to the Company for working capital purposes. The advances do not bear interest and have no specified date of repayment.
Note 4. Subsequent Events
On March 31, 2010, the Company approved the issuance of 1,600,000 shares of common stock to a director for services.
Note 5. Restatement
The Company inadvertently failed to record a year end journal entry when preparing its quarterly financial statements. In addition, the Company inserted the incorrect audited financial statements for the year ended March 31, 2009. As a result, common stock at March 31, 2009 and at quarter end was over stated by $6,000, additional paid-in capital was overstated by $174,000, and compensation expense, net loss, and accumulated deficit were overstated by $180,000 for the same periods.
| ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion and analysis of the Company’s financial condition as of June 30, 2009 and 2008, and its results of operations for the three months ended June 30, 2009 and 2008, and for period inception (May 9, 2007) through June 30, 2009, should be read in conjunction with the audited consolidated financial statements and notes included in Edgeline Holdings’ Form 10-K for the year ended March 31, 2009, filed with the Securities and Exchange Commission.
Overview
In January 2008, the Company determined to primarily focus its business on developing products to treat cancer, infectious diseases and other medical conditions associated with compromised immune systems. As a development stage company, substantially all of the Company’s efforts will be devoted to performing research and experimentation, conducting clinical trials, developing and acquiring intellectual properties, raising capital and recruiting and training personnel.
Results of Operations – Inception (May 9, 2007) to June 30, 2009
The Company has had no revenue for period from inception (May 9, 2007) through June 30, 2009.
The Company’s expenses were $2,791,533, which were primarily comprised of compensation and related expenses of $1,009,324, professional fees of $853,388, investor relations expenses of $292,444, interest expense of $463,544 and other miscellaneous expenses of $292,026.
In addition to the foregoing expenses, the Company performed an impairment test on the carrying value of the license agreement it had acquired from Secure Voice Communications, Inc. (Florida) and determined an impairment charge for the full carrying value of $80,100 was warranted. In connection with the license agreement acquisition, Secure Voice Communications, Inc. (Texas) issued a promissory note to Secure Voice Communications, Inc. (Florida) in the principal amount of $200,000. This amount exceeded the estimated fair value of the license agreement of $80,100 and the excess amount of $119,900 was charged to compensation expense.
In November 2007, the Company issued 500,000 shares of its restricted common stock to the shareholders of Intertech Bio Corporation for 100% of the capital stock of Intertech Bio, with Intertech Bio becoming a wholly-owned subsidiary of the Company. Based upon the fair market value on the date of acquisition, the Company valued the common stock issued at $220,000 and charged the entire amount to acquisition costs during the quarter ended June 30, 2008.
As a result of the foregoing, the Company’s net operating loss for the period inception (May 9, 2007) through June 30, 2009 was $2,791,533.
Comparison of Three Months Ended June 30, 2009 and 2008.
The Company has had no revenue for the three months ended June 30, 2009 and 2008.
The Company’s expenses decreased from $267,068 for three months ended June 30, 2008 to $3,772 for three months ended June 30, 2009. The decrease of $263,296 was attributed to the low activity in 2009.
As a result of the foregoing, the Company’s net loss for the three months ended June 30, 2009 totaled $6,148 and the net loss for the same period in 2008 was $296,663.
Liquidity and Capital Resources
As of June 30, 2009, the Company had cash in non-restrictive accounts of $14 and negative working capital of $457,281.
Net cash used in operating activities for the three months ended June 30, 2009 was $4,462 compared to $157,940 for same period in 2008.
For the three months ended June 30, 2000, cash provided by financing activities totaled $4,176 compared to $157,239 for same period in 2008.
The Company needs to obtain significant additional capital resources through equity and/or debt financings. As of June 30, 2009, the Company had minimal assets in cash and cash equivalents and negative working capital. The Company can provide no assurance it will be successful in seeking this or any additional financing, and the failure to obtain any such financing may cause it to curtail its operations.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
| ITEM 4. | CONTROLS AND PROCEDURES |
| (a) | Evaluation of Disclosure Controls and Procedures |
As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were not effective as of June 30, 2009 due to a lack of segregation of duties and an overreliance on consultants in the accounting and financial reporting process.
(b) Changes in Internal Controls Over Financial Reporting
There were no changes that occurred during the quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
| Exhibit No. | | Description |
| | | |
| 31.1 | | Certification of J. Leonard Ivins. |
| 32.1 | | Certification for Sarbanes-Oxley Act of J. Leonard Ivins. . |
