Even if we receive regulatory approval for our product candidates, including regulatory approval of a commercial scale manufacturing facility, we may not ever receive significant revenues from our product candidates. To the extent that we are not successful in commercializing our product candidates, our product revenues will suffer, we will incur significant additional losses and the price of our common stock will be negatively affected.
WE WILL REQUIRE CAPITAL IN ORDER TO PURSUE OUR PLAN OF OPERATION. IF WE ARE NOT ABLE TO OBTAIN FURTHER FINANCING, OUR BUSINESS OPERATIONS MAY FAIL
At May 31, 2010, we had a working capital of $(130,191). The independent auditor’s report for the year ended May 31, 2010, includes an explanatory paragraph to their audit opinion stating that the Company had limited capital and suffered losses from operations and negative cash flows from operations that raise substantial doubt about our ability to continue as a going concern. We have an operating cash flow deficit of $338,887 for the three months ending February 28, 2010, an operating cash flow deficit of $199,597 for the three months ending November 30, 2009, an operating cash flow deficit of $126,725 for the three months ending August 31, 2009, and for the year ended May 31, 2009, an operating cash flow deficit of $79,180. We do not currently have sufficient financial resources to fund our operations or t hose of our subsidiaries. Therefore, we need additional funds to continue these operations.
WE HAVE A HISTORY OF LOSSES AND NO REVENUES, WHICH RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN
From incorporation to May 31, 2010, we have incurred aggregate net losses of $2,460,063 from operations. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of technology development, the demand for our products, the level of competition and general economic conditions.
Our company’s operations will be subject to all risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of any significant operating history. No assurance can be given that we will be able to operate on a profitable basis.
Due to the nature of our business and the early stage of our development, our securities must be considered highly speculative. We have not realized a profit from our operations to date and there is little likelihood that we will realize any profits in the short or medium term. Any profitability in the future from our business will be dependent upon the successful development of our technology into commercial products, which is itself subject to numerous risk factors described herein.
We expect to continue to incur development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flows until our products gain market acceptance sufficient to generate a commercially viable sustainable level of sales, and/or additional products are developed and commercially released and sales of such products enable us to operate in a profitable manner.
A DECLINE IN THE PRICE OF OUR COMMON SHARES COULD AFFECT OUR ABILITY TO RAISE FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR OPERATIONS
WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING BUSINESS OPERATIONS
We have yet to establish any history of profitable operations. We have incurred annual operating losses of $2,177,023, $173,259, and $65,168 respectively, during the past three fiscal years of operation. As a result, at May 31, 2010 we had an accumulated deficit of $2,460,063. We have incurred net losses from continuing operations of $173,259 and $65,168 for the fiscal years ending May 31, 2009 and May 31, 2008, respectively. Our revenues have not been sufficient to sustain our operations. We expect that our revenues will not be sufficient to sustain our operations for the foreseeable future. Our profitability will require the successful commercialization of our products. No assurances can be given when this will occur or that we will ever be profitable.
TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SECURITIES AND EXCHANGE COMMISSION’S PENNY STOCK REGULATIONS, WHICH MAY LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK
The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purch aser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, OR FINRA, HAS ADOPTED SALES PRACTICE REQUIREMENTS WHICH MAY ALSO LIMIT A STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK
Our principal office is located at 409 Granville Street, Suite 1023, Vancouver, BC V6C 1T2 Canada. We believe our current premises are adequate for our current operations and we do not anticipate that we will require any additional premises in the foreseeable future. When and if we require additional space, we intend to move to new premises.
We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Our shares of common stock were initially approved for quotation on the OTC Bulletin Board under the symbol “ACSU.OB”. Effective September 20, 2007, our trading symbol changed from “ACSU.OB” to “GTWV.OB” in connection with our change of name from “Acting Scout Inc.” to “Goldtown Investments Corp.”. Effective, October 24, 2009, our trading symbol changed from “GTWV.OB” to “GHLV.OB”, in connection with a change of name from “Goldtown Investments Corp.” to “Global Health Ventures Inc.”. The high and low bid information for our common shares for each full financial quarter on the OTC Bulletin Board for the two most recent full fiscal years were as follows:
We do not have any common stock subject to outstanding options. We have a total of 2,958,333 warrants outstanding that are exercisable into shares of common stock of our company. The Warrants exercise price and expiration dates are as follows:
As of August 27, 2010, there were approximately 103 holders of record of our common stock. As of such date, 69,635,172 common shares of our company were issued and outstanding.
Island Stock Transfer is the registrar and transfer agent for our common shares. Their address is 100 2nd Avenue South, Suite 705 S, St. Petersburg, FL 33701 (telephone number: 727.289.0010).
We have not declared or paid any cash dividends since inception. Although there are no restrictions that limit our ability to pay dividends on our common shares, we intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future.
We do not have any equity compensation plans.
Other than as disclosed in previous quarterly reports on Form 10-Q or current reports on Form 8-K, we did not issue any equity securities that were not registered under the Securities Act during the fiscal year ended May 31, 2010.
Not Applicable.
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report.
Our audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
We have not generated any revenues from inception to May 31, 2010. We do not anticipate generating any revenues until we have developed our products to the point where they are suitable for commercial production. In order to generate revenues, we will incur substantial expenses in the development of our business and current products and the location and acquisition of new healthcare technologies. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon which to base any assumption as to the likelihood that we will be successful in our plan of operation, and we can provide no assurance to investors that we will generate any operating revenues or achieve profitable operations.
During the year ended May 31, 2010, our operating expenses totaled $2,177,023 compared to $173,259 for the year ended May 31, 2009. From April 25, 2006 to May 31, 2010, our total operating expenses were $2,485,664, including $519,273 in professional fees, $300,004 in general and administrative expenses, $847,645 in salaries and $281,790 in interest expense. We reported a loss from operations of $2,177,023 for the year ended May 31, 2010, compared to a loss from operations of $173,259 for the year ended May 31, 2009.
Our general and administrative expenses consist of rent,, travel, advertising and promotion, office maintenance, communication expenses (cellular, internet, fax, and telephone), courier, postage costs, and office supplies. General and administrative expenses increased from $28,549 for the year ended May 31, 2009 to $216,710 for the year ended May 31, 2010. The increase in general and administrative expenses was primarily attributable to an increase in rent, travel and office supplies. As we work at transforming from a shell company to an operating entity, a considerable amount of administrative expenses been required. As such, an increase in administration costs has occurred.
Professional fees increased by $316,310 to $377,852 for the year ended May 31, 2010 from $61,542 for the same period in 2009. This increase in professional fees was primarily attributable to an increase in legal and accounting fees.
Operating activities used cash of $983,234 for the year ended May 31, 2010, compared to using cash of $79,180 for the year ended May 31, 2009. The increase in cash used during the year ended May 31, 2010 was primarily attributable to legal and accounting fees, research and development, and salaries.
Financing activities provided cash of $1,806,191 for the year ended May 31, 2010 compared to providing cash of $412,448 for the year ended May 31, 2009. The increase in financing activities was primarily due to the completion of private placements of 1,958,333 units for gross proceeds of $1,492,864.
We had cash of $1,045,958 and current liabilities of $1,239,339 as of May 31, 2010. We had working capital of $(130,191) as of May 31, 2010.
To date, we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We expect this situation to continue for the foreseeable future. We anticipate that we will have negative cash flows during the next twelve month period ended May 31, 2011.
On January 2, 2009, we agreed to settle an outstanding amount of $115,000 owed to our president through the issuance to the president of 460,000 units at a price of $0.25 per unit. Each unit consisted of one common share and one common share purchase warrant exercisable to acquire an additional common share at an exercise price of $0.40 per share until January 20, 2011. We issued the 460,000 units to our president on January 20, 2009.
Also on January 20, 2009, we completed a private placement of 1,540,000 units of our company at a price of $0.25 per unit for gross proceeds of $385,000. Each unit consisted of one common share and one common share purchase warrant exercisable to acquire an additional common share at an exercise price of $0.40 per share until January 20, 2011.
We expect to require approximately $1,300,000, as set out below, to carry out our business plan over the twelve months beginning in June 2010. Our expenditures for the next twelve months include:
We do not anticipate generating positive internal operating cash flow until we can generate substantial revenues from the commercial production of our products. There is no assurance that we will achieve profitable operations in the future. We have historically financed our operations primarily by cash flows generated from the sale of our equity securities and through cash infusions from officers and affiliates in exchange for debt and/or common stock. No officer or affiliate has made any commitment or is obligated to continue to provide cash through loans or purchases of equity.
We have generated no revenues and incurred significant operating losses from operations. Since we anticipate we will expand operational activities in the future, we may continue to experience net negative cash flows from operations and will be required to obtain additional financing to fund operations through equity securities’ offerings and bank borrowings to the extent necessary to provide working capital. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from stockholders or other outside sources to sustain operations and meet our obligations on a timely basis and ultimately to attain profitability. We have limited capital with which to pursue our business plan. There can be no assurance that our future operations will be significant and profitable or that we will have sufficien t resources to meet our objectives.
There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further financing. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming such loans would be available, will increase our liabilities and future cash commitments.
During the twelve month period ending February 28, 2011, we intend to work on the formulation of our drugs, including the study and investigation of the rate of blood absorption into the blood stream. Further, we intend to evaluate the dose ratio between active chemicals and other ingredients. We want to improve the drug availability and maximize absorption. We also intend to set out a formula for drug to body mass ratio. Research will also be conducted on other ingredients which can be used for enhancement of skin penetration.
We are a multi-product company. Our current portfolio of products includes:
During the twelve month period ending February 28, 2011, we intend to purchase a tablet maker which will produce at least 100 tablets a minute. This tablet maker will cost approximately $50,000. We also intend to purchase an automated tablet packager. The automated tablet packager will automatically drop a certain number of tablets into each bottle. The bottles then go for sealing, capping and labeling. Once the sealing, capping and labeling are completed, the automated tablet packager will produce a complete packed bottle. The cost of this fully automated equipment is approximately $200,000.
As of May 31, 2010, our company had no off-balance sheet arrangements, including outstanding derivative financial statements, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. Our company does not engage in trading activities involving non-exchange traded contracts.
Our Company is currently operated by Hassan Salari as our President, Secretary, Treasurer and Chief Executive Officer and Audrey Lew as our Chief Financial Officer. Currently we have three employees. Our company may hire employees when circumstances warrant, however we do not anticipate hiring additional employees in the near future. We presently conduct our business through agreements with consultants and arms-length third parties.
Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on our annual financial statements for the year ended May 31, 2010, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.
The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to defer income tax asset valuation allowance. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results expe rienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations.
Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless we believe a development project meets generally accepted accounting criteria for deferral and amortization. No such costs have been deferred as at May 31, 2010 and 2009.
Not applicable.
GLOBAL HEALTH VENTURES INC.
(a development stage company)
CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN U.S. DOLLARS)
MAY 31, 2010
Global Health Ventures Inc.
(A Development Stage Company)
May 31, 2010
| | Index |
| | |
| Report of Independent Registered Certified Public Accountant | F-1 |
| | |
| Consolidated Balance Sheets | F-2 |
| | |
| Consolidated Statements of Operations | F-3 |
| | |
| Consolidated Statements of Cash Flows | F-4 |
| | |
| Consolidated Statement of Stockholders’ Deficit | F-5 |
| | |
| Notes to the Consolidated Financial Statements | F-6 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of:
Global Health Ventures Inc.
We have audited the accompanying consolidated balance sheets of Global Health Ventures Inc. (a Development Stage Company) as at May 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended May 31, 2010 and 2009, and cumulative for the period from April 25, 2006 (inception) to May 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The cumulative statements of operations, stockholders' equity and cash flows for the period from April 25, 2006 (inception) to Ma y 31, 2010 include amounts for the period from April 25, 2006 (inception) to May 31, 2008 which were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the period April 25, 2006 (inception) to May 31, 2008 is based solely on the reports of other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control ov er financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Global Health Ventures, Inc. (a Development Stage Company) as at May 31, 2010 and 2009 and the results of its operations and cash flows for the years ended May 31, 2010 and 2009 and cumulative for the period from April 25, 2006 (inception) to May 31, 2010 and 2009 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has limited capital and has suffered losses from operations and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ UHY LDMB Advisors Inc.
Chartered Accountants
Surrey, British Columbia, Canada
August 30, 2010
A member of UHY, an international association of independent accounting and consulting firms.
Global Health Ventures Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in US Dollars)
| | | May 31, | | | May 31, | |
| | | 2010 | | | 2009 | |
| | | $ | | | $ | |
| ASSETS | | | | | | |
| | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | | 1,045,958 | | | | 332,716 | |
| Accounts receivable | | | 40,458 | | | | - | |
| Prepaid expenses | | | 5,127 | | | | 15,892 | |
| Due from shareholders | | | 13,525 | | | | - | |
| Due from related party | | | 4,080 | | | | - | |
| | | | 1,109,148 | | | | 348,608 | |
| | | | | | | | | |
| Property, Plant and Equipment | | | | | | | | |
| Laboratory equipment | | | 141,748 | | | | 3,769 | |
| Accumulated depreciation | | | (16,816 | ) | | | (377 | ) |
| Computer Hardware | | | 12,394 | | | | - | |
| Accumulated depreciation | | | (3,714 | ) | | | - | |
| Office furniture and fixtures | | | 4,692 | | | | - | |
| Accumulated depreciation | | | (2,647 | ) | | | - | |
| Office machines and equipment | | | 550 | | | | - | |
| Accumulated depreciation | | | (302 | ) | | | - | |
| | | | 135,905 | | | | 3,392 | |
| | | | | | | | | |
| Intangible Assets | | | | | | | | |
| Website development costs | | | 2,509 | | | | 2,509 | |
| Accumulated amortization | | | (2,509 | ) | | | (418 | ) |
| Patents | | | 53,093 | | | | - | |
| Deferred finance charges (Note 6) | | | 1,214,654 | | | | - | |
| | | | 1,267,747 | | | | 2,091 | |
| | | | | | | | | |
| Total Assets | | | 2,512,800 | | | | 354,091 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | | 350,150 | | | | 3,788 | |
| Accrued liabilities (Note 3) | | | 666,966 | | | | 67,063 | |
| Due to related party (Note 5) | | | - | | | | 1,499 | |
| Convertible debenture (Note 4) | | | 222,223 | | | | - | |
| | | | 1,239,339 | | | | 72,350 | |
| | | | | | | | | |
| Commitments (Note 12) | | | | | | | | |
| | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
Preferred Stock: 80,000,000 shares authorized, $0.0001 par value No shares issued and outstanding | | | - | | | | - | |
Common Stock: 196,000,000 shares authorized, $0.0001 par value 68,871,946 shares issued and outstanding (May 31, 2009 – 62,722,000 shares) | | | 6,868 | | | | 6,272 | |
| Additional Paid-In Capital | | | 3,856,777 | | | | 567,478 | |
| | | | | | | | | |
| Donated Capital | | | 2,474,000 | | | | 2,474,000 | |
| | | | | | | | | |
| Accumulated other comprehensive income | | | 25,601 | | | | 41,632 | |
| | | | | | | | | |
| Deficit accumulated during the development stage | | | (5,089,785 | ) | | | (2,807,641 | ) |
| | | | | | | | | |
| | | | 1,273,461 | | | | 281,741 | |
| | | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | | 2,512,800 | | | | 354,091 | |
(The accompanying notes are an integral part of these consolidated financial statements)
Global Health Ventures Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in US Dollars)
| | | | | | | | | | | | | | | Accumulated from April 25, 2006 | |
| | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | (Date of inception) | |
| | | May 31, 2010 | | | May 31, 2009 | | | May 31, 2008 | | | May 31, 2007 | | | to May 31, 2010 | |
| | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | |
| | | | | | | | | | | | | | | | | | | | | |
| Revenue | | | - | | | | – | | | | – | | | | – | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Amortization | | | 2,090 | | | | 418 | | | | – | | | | – | | | | 2,508 | |
| Depreciation | | | 18,232 | | | | 377 | | | | – | | | | – | | | | 18,609 | |
| General and administrative | | | 216,710 | | | | 28,549 | | | | 16,757 | | | | 32,539 | | | | 300,004 | |
| Interest expense | | | 280,885 | | | | 147 | | | | 499 | | | | 259 | | | | 281,790 | |
| Professional fees: | | | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | | | 137,609 | | | | – | | | | – | | | | – | | | | 137,609 | |
| Incurred | | | 240,243 | | | | 61,542 | | | | 47,912 | | | | 28,376 | | | | 381,664 | |
| Research and development | | | 482,502 | | | | 33,333 | | | | – | | | | – | | | | 515,835 | |
| Salaries and wages: | | | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | | | 383,768 | | | | – | | | | – | | | | – | | | | 383,768 | |
| Incurred | | | 414,984 | | | | 48,893 | | | | – | | | | – | | | | 463,877 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Expenses | | | 2,177,023 | | | | 173,259 | | | | 65,168 | | | | 61,174 | | | | 2,485,664 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss | | | (2,177,023 | ) | | | (173,259 | ) | | | (65,168 | ) | | | (61,174 | ) | | | (2,485,664 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Other Comprehensive Income | | | | | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustment | | | (16,031 | ) | | | 41,632 | | | | – | | | | – | | | | 25,601 | |
| | | | | | | | | | | | | | | | | | | | | |
| Comprehensive Loss | | | (2,160,992 | ) | | | (131,627 | ) | | | (65,168 | ) | | | (61,174 | ) | | | (2,460,063 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss Per Share – Basic and Diluted | | | (0.03 | ) | | | – | | | | – | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted Average Shares Outstanding | | | 65,361,702 | | | | 58,358,000 | | | | 92,301,000 | | | | 142,310,000 | | | | | |
(The accompanying notes are an integral part of these consolidated financial statements)
Global Health Ventures Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
| | | | | | | | | | | | | | | Accumulated from April 25, 2006 | |
| | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | (Date of inception) to | |
| | | May 31, 2010 | | | May 31, 2009 | | | May 31, 2008 | | | May 31, 2007 | | | May 31, 2010 | |
| | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | |
| Operating Activities | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | (2,160,992 | ) | | | (131,627 | ) | | | (65,168 | ) | | | (61,174 | ) | | | (2,428,001 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Adjustment to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Donated services | | | - | | | | 5,250 | | | | 9,000 | | | | 9,000 | | | | 24,000 | |
| Amortization | | | 2,090 | | | | 418 | | | | - | | | | - | | | | 2,508 | |
| Depreciation | | | 18,231 | | | | 377 | | | | - | | | | - | | | | 18,608 | |
| Amortization of debt discount and deferred finance charges | | | 278,398 | | | | | | | | | | | | | | | | 278,398 | |
| Stock based compensation | | | 521,377 | | | | - | | | | - | | | | - | | | | 521,917 | |
| | | | | | | | | | | | | | | | | | | | | |
| Change in operating assets and liabilities: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Accounts receivable | | | (7,806 | ) | | | - | | | | - | | | | - | | | | (7,806 | ) |
| Prepaid expenses | | | 17,842 | | | | (15,892 | ) | | | - | | | | - | | | | 1,950 | |
| Accounts payable and accrued liabilities | | | 347,626 | | | | 62,294 | | | | (5,115 | ) | | | 13,672 | | | | 418,478 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Cash Used In Operating Activities | | | (983,234 | ) | | | (79,180 | ) | | | (61,283 | ) | | | (38,502 | ) | | | (1,170,488 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Investing Activities | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash acquired on investment in Posh | | | 61,649 | | | | - | | | | - | | | | - | | | | 61,649 | |
| Purchase of equipment | | | (140,829 | ) | | | (3,769 | ) | | | - | | | | - | | | | (144,598 | ) |
| Website development costs | | | - | | | | (2,509 | ) | | | - | | | | - | | | | (2,509 | ) |
| Patents | | | (30,536 | ) | | | - | | | | - | | | | - | | | | (30,536 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Cash Used in Investing Activities | | | (109,715 | ) | | | (6,278 | ) | | | - | | | | - | | | | (115,994 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Financing Activities | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Payment of share offering costs | | | - | | | | - | | | | - | | | | (28,400 | ) | | | (28,400 | ) |
| Advances from (repayments to) shareholders | | | (13,525 | ) | | | - | | | | - | | | | - | | | | (13,525 | ) |
| Advances from (repayments to) a related party | | | 3,849 | | | | 32,305 | | | | 49,241 | | | | (958 | ) | | | 121,348 | |
| Proceeds from issuance of common stock | | | 1,472,868 | | | | 385,000 | | | | - | | | | 51,150 | | | | 1,910,018 | |
| Proceeds from debenture payable | | | 400,000 | | | | - | | | | - | | | | - | | | | 400,000 | |
| Proceeds (repayments) of loan payable | | | - | | | | (4,857 | ) | | | (1,293 | ) | | | 5,679 | | | | (471 | ) |
| Deferred charges | | | (57,001 | ) | | | - | | | | - | | | | - | | | | (57,0001 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Cash Provided by (Used In) Financing Activities | | | 1,806,191 | | | | 412,448 | | | | 47,948 | | | | 27,471 | | | | 2,331,969 | |
| | | | | | | | | | | | | | | | | | | | | |
| Effect of exchange rate changes on cash | | | - | | | | - | | | | 122 | | | | 349 | | | | 471 | |
| | | | | | | | | | | | | | | | | | | | | |
| Increase (decrease) in Cash | | | 713,242 | | | | 326,990 | | | | (13,213 | ) | | | (10,682 | ) | | | 1,045,958 | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash – Beginning of Period | | | 332,716 | | | | 5,726 | | | | 18,939 | | | | 29,621 | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash - End of Period | | | 1,045,958 | | | | 332,716 | | | | 5,726 | | | | 18.939 | | | | 1.045,958 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Supplemental Disclosures | | | | | | | | | | | | | | | | | | | | |
| Interest paid | | | – | | | | 184 | | | | 499 | | | | 219 | | | | 902 | |
| Income taxes paid | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | |
| Non-cash Financing Transactions | | | | | | | | | | | | | | | |
| Common Stock Issued for shares of Posh | | | 400 | | | | – | | | | – | | | | – | | | | 400 | |
| Shares issued in settlement of advances from related party | | | – | | | | 116,000 | | | | – | | | | – | | | | 116,000 | |
| Shares issued for deferred finance costs | | | 895,250 | | | | | | | | | | | | | | | | 895,250 | |
(The accompanying notes are an integral part of these consolidated financial statements)
Global Health Ventures Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders’ Deficit
For the Period from April 25, 2006 (Date of Inception) to May 31, 2010
(Expressed in US Dollars)
| | | Common Stock | | | Additional | | | | | | Accumulated Other | | | Deficit Accumulated During the | | | | |
| | | Shares | | | Amount | | | Paid-In Capital | | | Donated Capital | | | Comprehensive Income | | | Development Stage | | | Total | |
| | | | # | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance – April 25, 2006 (Date of inception) | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
| April 26, 2006 – common shares issued for cash at $0.0001 per share | | | 140,000,000 | | | | 14,000 | | | | (13,000 | ) | | | – | | | | – | | | | – | | | | 1,000 | |
| Donated services and rent | | | – | | | | – | | | | – | | | | 750 | | | | – | | | | – | | | | 750 | |
| Net loss for the period | | | – | | | | – | | | | – | | | | – | | | | – | | | | (9,040 | ) | | | (9,040 | ) |
| Balance – May 31, 2006 | | | 140,000,000 | | | | 14,000 | | | | (13,000 | ) | | | 750 | | | | – | | | | (9,040 | ) | | | (7,290 | ) |
| April 2, 2007 – common shares issued for cash at $0.0036 per share | | | 14,322,000 | | | | 1,432 | | | | 49,718 | | | | – | | | | – | | | | – | | | | 51,150 | |
| Share issuance costs | | | | | | | | | | | (28,400 | ) | | | | | | | – | | | | | | | | (28,400 | ) |
| Donated services and rent | | | – | | | | – – | | | | – | | | | 9,000 | | | | – | | | | – | | | | 9,000 | |
| Net loss for the year | | | – | | | | – | | | | – | | | | – | | | | – | | | | (61,174 | ) | | | (61,174 | ) |
| Balance – May 31, 2007 | | | 154,322,000 | | | | 15,432 | | | | 8,318 | | | | 9,750 | | | | | | | | (70,214 | ) | | | (36,714 | ) |
| Cancellation of shares | | | (93,800,000 | ) | | | (9,380 | ) | | | 9,380 | | | | – | | | | – | | | | – – | | | | – | |
| Donated services and rent | | | – | | | | – | | | | – | | | | 9,000 | | | | – | | | | – | | | | 9,000 | |
| Net loss for the year | | | – | | | | – | | | | – | | | | – | | | | – | | | | (65,168 | ) | | | (65,168 | ) |
| Balance – May 31, 2008 | | | 60,522,000 | | | | 6,052 | | | | 17,698 | | | | 18,750 | | | | – | | | | (135,382 | ) | | | (92,882 | ) |
| Donated services and rent | | | – | | | | – | | | | – | | | | 5,250 | | | | – | | | | – | | | | 5,250 | |
| Sep 30, 2008 – common shares issued at $0.0001 per share in loan settlement | | | 10,000,000 | | | | 1,000 | | | | 2,499,000 | | | | – | | | | – | | | | (2,499,000 | ) | | | 1,000 | |
| Sep 30. 2008 – common shares returned to treasury | | | (9,800,000 | ) | | | (980 | ) | | | (2,449,020 | ) | | | 2,450,000 | | | | – | | | | – | | | | – | |
| Jan 20, 2009 – common shares issued at $0.25 per share in loan settlement | | | 460,000 | | | | 46 | | | | 114,954 | | | | – | | | | – | | | | – | | | | 115,000 | |
| Jan 20, 2009 - common shares issued for cash at $0.25 per share | | | 1,540,000 | | | | 154 | | | | 384,846 | | | | – | | | | – | | | | – | | | | 385,000 | |
| Foreign currency translation adjustment | | | – | | | | – | | | | – | | | | – | | | | 41,632 | | | | – | | | | 41,632 | |
| Net loss for the year | | | | | | | | | | | | | | | | | | | | | | | (173,259 | ) | | | (173,259 | ) |
| Balance – May 31, 2009 | | | 62,722,000 | | | | 6,272 | | | | 567,478 | | | | 2,474,000 | | | | 41,632 | | | | (2,807,641 | ) | | | 281,741 | |
| Oct 28, 2009 - common shares issued for cash at $0.75 per share (Note 6) | | | 133,333 | | | | 13 | | | | 99,987 | | | | – | | | | – | | | | – | | | | 100,000 | |
| Oct 28, 2009 - common shares issued for cash at $0.75 per share (Note 6) | | | 666,667 | | | | 67 | | | | 499,933 | | | | – | | | | – | | | | – | | | | 500,000 | |
| Dec 8, 2009 - common shares issued for cash at $0.75 per share (Note 6) | | | 533,333 | | | | 53 | | | | 392,815 | | | | – | | | | – | | | | – | | | | 392,868 | |
| Dec 11, 2009 – share exchange with Posh | | | 4,000,000 | | | | 400 | | | | – | | | | – | | | | – | | | | (105,121 | ) | | | (104,721 | ) |
| Apr 7, 2010 – common shares issued for cash at $0.80 per share (Note 6) | | | 625,000 | | | | 63 | | | | 479,937 | | | | – | | | | – | | | | – | | | | 480,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 27, 2010 – Cashless exercise of warrants | | | 191,613 | | | | | | | | – | | | | – | | | | – | | | | – | | | | | |
| | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | | |
| Convertible debenture financing | | | | | | | | | | | 1,231,983 | | | | | | | | | | | | | | | | 1,231,983 | |
| Beneficial conversion feature related to convertible debenture | | | – | | | | – | | | | 63,267 | | | | – | | | | – | | | | | | | | 63,267 | |
| Foreign currency translation adjustment | | | – | | | | – | | | | – | | | | – | | | | (16,031 | ) | | | – | | | | (16,031 | ) |
| Stock-based compensation | | | – | | | | – | | | | 521,377 | | | | – | | | | – | | | | – | | | | 521,377 | |
| Net loss for the period | | | – | | | | – | | | | – | | | | – | | | | – | | | | (2,177,023 | ) | | | (2,177,023 | ) |
| Balance – May 31, 2010 | | | 68,871,946 | | | | 6,868 | | | | 3,856,777 | | | | 2,474,000 | | | | 25,601 | | | | (5,089,785 | ) | | | 1,273,461 | |
(See Note 6 for return and issuance of common shares)
(The accompanying notes are an integral part of these consolidated financial statements)
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
1. Development Stage Company
Global Health Ventures Inc. (the “Company”) was incorporated in the State of Nevada on April 25, 2006 under the name Acting Scout Inc. The Company changed its name to Goldtown Investments Corp. on September 20, 2007 and on October 6, 2008 changed its name to Global Health Ventures Inc. The Company is located in British Columbia, Canada. The Company is a healthcare technology financial institution that is in the business of acquiring and licensing current outstanding and promising healthcare related technologies for further development and re-licensing to major pharmaceutical companies. The Company is a Development Stage Company, as defined under ASC 915 “Development stage entities”.
These consolidated 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 significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant 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, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a goi ng concern. As at May 31, 2010, the Company has never generated any significant revenue and has accumulated losses of $5,089,785 since inception. These consolidated 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.
The Company’s common shares trade on the Over the Counter Bulletin Board (“OTCBB”) under the symbol “GHLV”.
2. Summary of Significant Accounting Policies
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Posh Cosmeceuticals Ltd., and its inactive wholly-owned subsidiary, Global Health (BC) Ventures Inc.
The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowance. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and e xpenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
2. Summary of Significant Accounting Policies (continued)
c) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
d) Revenue Recognition
The Company recognizes revenue in accordance with ASC 605 “Revenue Recognition”. The Company has not generated any revenue since inception.
ASC 220, “Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.
f) Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
g) Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is provided annually at rates calculated to write off the assets over their estimated useful lives as follows:
| Laboratory equipment | 20% diminishing balance |
| Computer hardware | 45% diminishing balance |
| Office furniture and fixtures | 20% diminishing balance |
| Office machines and equipment | 20% diminishing balance |
In the year of acquisition, these rates are reduced by one-half.
In accordance with ASC 360 “ Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the us e of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
2. Summary of Significant Accounting Policies (continued)
i) Website Development Costs
The Company capitalizes website development costs in accordance with ASC 350 “Intangibles – Goodwill and Other”, whereby costs related to the preliminary project stage of development are expensed and costs related to the application development stage are capitalized. Any additional costs for upgrades and enhancements which result in additional functionality will be capitalized. Capitalized costs will be amortized based on their estimated useful life over three years. Internal costs related to the development of website content are charged to operations as incurred.
j) Financial Instruments
The fair value of financial instruments, which include cash, accounts payable and amounts due to a related party, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company’s operations will be in Canada and the United States, resulting in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
k) Income Taxes
The Company follows the asset and liability method of accounting for income taxes. Under this method, current taxes are recognized for the estimated income taxes payable for the current period.
Deferred income taxes are provided based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases as well as the benefit of losses available to be carried forward to future years for tax purposes.
Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be covered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.
l) Foreign Currency Translation
The functional currency of the Company is the Canadian dollar with the reported amounts being stated in the United States dollar. In accordance with ASC 830 “Foreign Currency Matters”, assets and liabilities are translated at the rates of exchange at the balance sheet dates. Income and expense items are translated at average annual rates of exchange. The resulting translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.
m) Research and development costs
Research costs are expensed in the period incurred. Development costs are expensed in the period incurred unless the Company believes a development project meets generally accepted accounting criteria for deferral and amortization. No such costs have been deferred as at May 31, 2010 and 2009.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
2. Summary of Significant Accounting Policies (continued)
n) Stock-based Compensation
In accordance with ASC 718 “Stock Compensation”, the Company accounts for share-based payments using the fair value method. Common shares issued to third parties for non-cash consideration are valued based on the fair market value of the services provided or the fair market value of the common stock on the measurement date, whichever is more readily determinable
| | o) | Recent Accounting Pronouncements |
In May 2009, the FASB issued FAS No. 165, “Subsequent Events”. This pronouncement establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). FAS 165 requires an entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The adoption of FAS 165 did not have a material impact on the Company’s financial condition or res ults of operation.
In June 2009, the FASB issued FAS 166, “Accounting for Transfers of Financial Assets”, an amendment of FAS 140. FAS 140 is intended to improve 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. This statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. The adoption of FAS 166 did not have an impact on the Company’s results of operations, financial condition or cash flows.
In June 2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)”. FAS 167 is intended to (1) address the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FAS 166, and (2) constituent concerns about the application of certain key provisions of Interpretation 46R, including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variabl e interest entity. This statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. The adoption of FAS 167 did not have an impact on the Company’s results of operations, financial condition or cash flows.
In June 2009, the FASB issued FAS 168, “The FASB Accounting Standards Codification and the Hierarchy of General Accepted Accounting Principles”. FAS 168 will become the source of authoritative U.S. general accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Adoption of FAS 168 did not have an impact on the Company’s results of operations, financial condition or cash flows.
In September 2009, the FASB issued ASC 820-10 Measuring Liabilities at Fair Value (“ASC 820-10”). ASC 820-10 provides additional guidance on how companies should measure liabilities at fair value. Specifically, the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. Adoption of ASC 820.20 did not have a material impact on the Company’s financial position, results of operations, or cash flows.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
2. Summary of Significant Accounting Policies (continued)
| | o) | Recent Accounting Pronouncements (continued) |
In January 21, 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-06, amending Accounting Standards Codification (ASC) 820 (formerly Statement of Financial Accounting Standards No. 157) to add new requirements. The new requirements are disclosures about transfers into and out of Levels 1 and 2 measurements and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. ASU 2010-06 clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The adoption of ASC 820 did not have an impact on the Company’s results of operations, financial condition or cash flows.
In February 24, 2010, the FASB issued ASU 2010-09, which amends ASC 855 to address certain implementation issues related to an entity's requirement to perform and disclose subsequent events procedures. ASU 2010-09 requires entities that make filings with the Securities and Exchange Commission (SEC) to evaluate subsequent events through the date the financial statements are issued. The new guidance became effective immediately for financial statements that are issued or available to be issued.
3. Accrued Liabilities
| | | May 31, 2010 $ | | | May 31, 2009 $ | |
| Accrued interest | | | 6,578 | | | | - | |
| Professional fees | | | 25,000 | | | | 10,830 | |
| Research and development | | | 30,833 | | | | 33,333 | |
| Salaries | | | 292,555 | | | | 22,900 | |
| Accrued finance costs | | | 312,000 | | | | - | |
| | | | 666,966 | | | | 67,063 | |
4. Convertible Debenture
On March 19, 2010, the Company sold to one investor a $4,200,000 convertible debenture (“Debenture”) due March 18, 2014.
The debenture bears interest at a rate of 6% per annum payable on maturity. The debenture matures on March 2014, unless previously converted in accordance with the repayment terms prior to such date.
The debenture is unsecured and ranks equally to any of the Company’s existing and future unsecured debts.
The debenture was sold with a 25% discount from face value for a net book value of $3,150,000. The $3,150,000 consists of cash of $400,000 paid at closing and eleven “Investor Notes” in the amount of $250,000 each. The investor notes are mandatorily pre-payable in sequence, at the rate of one note per month commencing on the seven month anniversary of the closing date.
Beginning six months from the closing date, the lender may require the Company to repay the principal amount and accrued interest, in full or in part, in fully-paid and non-assessable shares of the Company’s common stock at a rate per share equal to the market price as calculated under the debenture agreement. The lender is not permitted to deliver a request for repayment where the dollar amount of the request for repayment would exceed 125% of the amounts outstanding under the debenture.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
4. Convertible Debenture (continued)
As long as any amounts due under the debenture are outstanding, the Company is prohibited, unless consented to by the lender, from selling, leasing or otherwise disposing of any of its assets other than in its ordinary course of business, from merging or consolidating with any other person unless the debenture is assumed by the surviving entity and from adopting any plan or arrangement for the dissolution or liquidation of the Company. Debenture covenants also prohibit the Company from redeeming or repurchasing any of its capital stock or making any advance or loan to any person, firm or corporation except for reasonable business expenses advanced to Company employees or independent contractors in the ordinary course of business.
In connection with the issuance of the debenture, the Company incurred $952,250 of issuance costs which consisted of $895,250 of non-cash costs for warrants issued to the lender and for warrants issued as a finders fee and $57,000 of cash costs for commissions and related professional fees. These costs are being amortized and are recorded as interest expense through March 18, 2014 the maturity date of the debenture.
The Company has separately accounted for the liability and equity components of the convertible debenture by allocating the proceeds from the issuance of the debenture between the liability component and the embedded conversion option, or equity component. The fair value of the embedded conversion option was valued using the Black-Scholes valuation model to bifurcate the instrument using the following assumptions:
| Risk-free interest rate | 2.85% |
| Expected term to exercise | 6 months |
| Expected volatility of | 253% |
| Expected dividend yield | 0% |
Based on this calculation, $336,733 was allocated to the equity component. During the year ended May 31, 2010, the Company recorded amortization of the debt discount in the amount of $195,861 which was charged to interest expense.
| | | 2010 | | | 2009 | |
| Principal amount of liability component | | $ | 533,333 | | | $ | - | |
| Unamortized discount | | | (311,110 | ) | | | - | |
| Net carrying amount | | $ | 222,223 | | | $ | - | |
5. Related Party Transactions
| a) | During the twelve month period ended May 31, 2010, the President of the Company advanced $nil (2009 - $20,500) to the Company, was repaid $4,557 (2009 - $nil) by the Company and incurred $17,256 (2009 - $6,206) of expenses on behalf of the Company. During the twelve month period ended May 31, 2010, the Company loaned the President $75,712, of which $64,825 has been repaid and of which $10,887 has been offset by expenses incurred by the President. The balance of the loan, which bears no interest and can be offset by expenses the President incurs on behalf of the Company, was fully repaid by the President on May 26, 2010. Included in Accrued Liabilities (see Note 3) are $292,555 for salaries owed to the President of the Company. |
| b) | During the year, the Company paid $27,132 (2009 - $Nil) to a relative of the President for finder’s fees incurred on two private placements. |
| c) | During the year, the Company paid $36,719 (2009 - $8,600) to two Companies related to the President for rent of office and laboratory space. |
| d) | On March 15, 2009, the Company entered into a research contract with Globe Laboratories Inc. (“Globe”), a company controlled by 2 individuals related to the President of the Company, to engage Globe for research on the sublingual technologies developed by Globe. The Company agreed to pay $50,000 per quarter to Globe from April 1, 2009 until the technology is put into commercial production, or the technologies are sold or sublicensed. To date, $233,333 in research costs have been accrued under this agreement, of which $202,500 has been paid to Globe. |
| | e) | Effective December 11, 2009, the Company issued an aggregate of 4,000,000 shares of its common stock to the shareholders of Posh Cosmeceuticals Inc., a company controlled by the President of the Company, pursuant to share exchange agreements dated June 12, 2009. The Company issued the securities to twenty-seven non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. Due to the fact that the two companies were not dealing at arm’s length, and due to the transaction not being in the normal course of business, the transaction was recorded at the carrying value of the Company acquired. |
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
5. Related Party Transactions (continued)
The following table sets forth the allocation of the purchase price for the investment in Posh Cosmeceuticals:
| Working capital deficiency acquired | | $ | (205,685 | ) |
| Property, Plant and Equipment | | | 9,916 | |
| Patents and rights | | | 22,557 | |
| Other long-term assets | | | 68,492 | |
| | | $ | (104,720 | ) |
| | | | | |
| Consideration: | | | | |
| Common shares of the Company | | $ | (400 | ) |
| Related party adjustment on purchase charged to deficit | | | 105,120 | |
| | | $ | 104,720 | |
| | | | | |
6. Deferred Financing Costs
On March 19, 2010, the Company sold to one investor a $4,200,000 convertible debenture (“Debenture”) due March 18, 2014. As part of the debenture financing the Company issued share purchase warrants to purchase up to $800,000 worth of company stock and also issued warrants to purchase 100,000 common shares as a finders fee. These warrants were valued using the Black-Scholes model using the following assumptions:
| Risk-free interest rate | 2.85% |
| Expected term to exercise | 4 years |
| Expected volatility of | 253% |
| Expected dividend yield | 0% |
Based on this calculation $895,250 was recorded as a deferred financing cost.
The company also incurred direct cash costs relating to this financing of $57,000 which were also recorded as a deferred financing cost.
The deferred financing costs are being amortized over the term of the debt.
| | | 2010 | | | 2009 | |
| Deferred financing costs | | $ | 952,250 | | | $ | - | |
| Accumulated amortization | | | (49,596 | ) | | | - | |
| Net carrying amount | | | 902,654 | | | | - | |
| Share purchase agreement commitment fee (Note 8) | | | 312,000 | | | | - | |
| | | $ | 1,214,654 | | | $ | - | |
7. Income Taxes
The Company accounts for income taxes using the liability method of tax allocation. Deferred income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Deferred income tax assets are evaluated periodically and if realization is not considered likely, a valuation allowance is provided.
a) Deferred tax assets and liabilities
| | | May 31, 2010 $ | | | May 31, 2009 $ | |
| Property and equipment | | | 8,218 | | | | - | |
| Intangible assets | | | 878 | | | | | |
| Operating loss carry forwards | | | 630,350 | | | | 99,750 | |
| Valuation allowance | | | (639,446 | ) | | | (99,750 | ) |
| Net future tax asset | | | - | | | | - | |
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
7. Income Taxes (continued)
Management believes that it is not more likely than not that it will create sufficient taxable income sufficient to realize its deferred tax assets. Due to this, the Company has no income tax expense.
b) Loss carry forwards
The Company has estimated accumulated non-capital losses of approximately $1,801,000 which will expire as follows:
| | | | |
| 2026 | | $ | 9,000 | |
| 2027 | | | 52,000 | |
| 2028 | | | 56,000 | |
| 2029 | | | 168,000 | |
| 2030 | | | 1,516,000 | |
| | | $ | 1,801,000 | |
8. Share Purchase Agreement
Pursuant to a Purchase Agreement dated May 28, 2010 and a Registration Rights Agreement dated May 28, 2010 with Lincoln Park Capital Fund, LLC (“LPC”), the Company may sell to LPC up to $20,000,000 of its common stock over a thirty month period.
Under the terms of the Registration Rights Agreement, the Company must file a registration statement that includes a prospectus with the U.S. Securities and Exchange Commission (the “SEC”) covering the shares that may be issued to LPC under the Purchase Agreement. The Company does not have the right to commence any additional sales of shares to LPC until the SEC has declared the registration statement effective. Thereafter, over approximately 30 months, the Company has the right to direct LPC to purchase up to $20,000,000 of its common stock in amounts up to $100,000 as often as every two business days under certain conditions. The Company can also accelerate the amount of its stock to be purchased under certain circumstances . No sales of shares may occur below $0.20 per share. The purchase price of the shares will be based on the market prices at the time of sale as computed under the Purchase Agreement without any fixed discount. The Company may at any time in its sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one business days notice. The Company is required to issue 600,000 shares of its stock to LPC as a commitment fee for entering into the Purchase Agreement.
9. Warrants
On January 20, 2009, pursuant to the completion of a total of 2,000,000 units private placement, the Company issued 2,000,000 share purchase warrants exercisable to acquire 2,000,000 common shares of the Company at $0.40 per share, expiring January 20, 2011. On May 27, 2010, 540,000 of the warrants were exercised and at May 31, 2010, 1,460,000 (2009 – 2,000,000) warrants issued are still outstanding.
On October 28, 2009, pursuant to the completion of a total of 800,000 units private placement, the Company issued 800,000 share purchase warrants exercisable to acquire 800,000 common shares of the Company at $1.00 per share, expiring October 28, 2011. At May 31, 2010, the 800,000 warrants issued are still outstanding.
On December 8, 2009, pursuant to the completion of a 533,333 units private placement, the Company issued 533,333 share purchase warrants exercisable to acquire 533,333 common shares of the Company at $1.00 per share, expiring December 8, 2011. At May 31, 2010, the 533,333 warrants issued are still outstanding.
In March 2010, pursuant to the Company signing an agreement with a Chicago-based investment fund for a convertible debenture for the principle amount of U$4,200,000, the investor has been granted warrants for 700,000 shares of the Company at $1 per share. The debenture has a maturity of 48 months unless called earlier by either party and bears interest at 6% per annum.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
9. Warrants (continued)
On April 7, 2010, pursuant to the completion of a 625,000 units private placement, the Company issued 625,000 share purchase warrants exercisable to acquire 625,000 common shares of the Company at $1.20 per share, expiring April 7, 2012. At May 31, 2010, the 625,000 warrants issued are still outstanding.
A summary of share purchase warrants outstanding is presented below:
| | | Number of Warrants | | | Weighted Average Exercise Price $ | |
| Warrants outstanding at June 1, 2009 | | | 2,000,000 | | | $ | 0.40 | |
| Granted in 2010 | | | 2,658,333 | | | | 0.84 | |
| Exercised May 27, 2010 | | | (540,000 | ) | | | - | |
| Warrants outstanding at May 31, 2010 | | | 4,118,333 | | | $ | 0.68 | |
10. Stock Option Plan
The Company may grant options to purchase common shares of the Company. Options may be issued under the stock option plan as determined at the sole discretion of the Company’s board of directors. Options may be issued for a term of up to 10 years at an exercise price based on the market price at the time of granting. All options vest at a rate of four per cent of the total number of Options granted to an Optionee vesting each month on a monthly basis during the two-year period and the total remainder of such Options vesting on the second anniversary of the date of grant.
On June 29, 2009, the Company granted 2,000,000 options to directors and officers of the Company. At May 31, 2010, the fair value of the options of $521,377 has been expensed and 800,000 of the options are exercisable.
A summary of stock options outstanding is presented below:
| | | Number of Options | | | Weighted Average Exercise Price $ | |
| Options outstanding at June 1, 2009 | | | - | | | | - | |
| Granted July 29, 2009 | | | 2,000,000 | | | $ | 0.70 | |
| Options outstanding at May 31, 2010 | | | 2,000,000 | | | $ | 0.70 | |
The Company has estimated the fair value of each option on the date of grant using the Black-Scholes Options Pricing Model with the following weighted average assumptions:
| Risk-free interest rate | 3.09% |
| Expected life of options | 5-10 years |
| Expected volatility in the market price of the shares | 155% |
| Expected dividend yield | 0.0% |
11. Fair Value Measures
ASC 820 “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Global Health Ventures Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
May 31, 2010
11. Fair Value Measures (continued)
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Our financial instruments consist principally of cash and accounts payable. Pursuant to ASC 820, ”Fair Value Measurements and Disclosures”, or, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
12. Commitments
Pursuant to an agreement dated November 12, 2009 the Company has entered into a non-exclusive agreement with an investment bank to raise funds for the Company on a “best efforts” basis. Under the terms of this agreement, the investment bank (“Agent”) will receive a success fee subject to the following fee structure:
| i. | 8% of the amount of debt or equity raised. |
| ii. | 50% (i) above of the Aggregate Consideration received by the Company from any transactions closed, including multiple successive transactions, with an investor candidate or a strategic candidate (or upon closing a transaction with a covered party, including multiple successive transactions, within twelve months after the termination date), which amount will be paid when the Company receives proceeds from the transaction. |
| iii. | Warrants to purchase that number of shares of the Company’s common stock equal to 10% of the value of such transactions for successful common stock equity raised at the closing of such transaction for a period of 1 year, and/or to grant the Agent warrants to purchase that number of shares of the Company’s common stock equal to 10% of the value of such transactions for successful preferred stock, debt, hybrid debt of any kind or debt and equity combination raised at the closing of such transaction for a period of 1 year. These stocks shall be delivered in cashless exercise and issuable from the investment closing date up to no more than 5 years from the date and upon exercise thereof shall be fully paid and non-assessable. The stock obtainable upon exercise of such warrants shall carry unlimited “piggy back” registration rights of the Company. |
13. Subsequent Event
Subsequent to the year end, the Compan:
| · | Issued 163,226 common shares on the cashless exercise of 540,000 warrants |
| · | Issues 600,000 common shares to settle the commitment fee required under a share purchase agreement (Note 8) |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit rela tionship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives.
As required by SEC Rule 13a-15(b), our management carried out an evaluation, with the participation of our Chief Executive and Chief Financial Officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over our financial reporting. Our company’s internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance wit h generally accepted accounting principles in the United States of America, and that our company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Management has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2010.
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management’s report on internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
| ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
Directors and Executive Officers
As of August 27, 2010, our directors and executive officers, their ages, positions held, and duration of such, are as follows:
| Name | | Position Held with our Company | | Age | | Date First Elected or Appointed |
| Hassan Salari | | President, Secretary, Treasurer Chief Executive Officer and Director | | 57 | | September 29, 2008 |
| | | | | | | |
| Audrey Lew | | Chief Financial Officer | | 46 | | May 14, 2009 |
| | | | | | | |
| Dr. David Filer | | Director | | 63 | | May 14, 2009 |
| | | | | | | |
| Christian Bezy | | Director | | 54 | | May 14, 2009 |
Business Experience
The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which he was employed.
HASSAN SALARI is an entrepreneur and scientist. Dr. Salari has over 25 years’ experience in the biotechnology field, specializing in highly sophisticated research and drug development programs and business development.
Currently, Dr. Salari is the Chairman, President and Chief Executive Officer of Global Health Ventures. Dr. Salari is also the chief executive officer of Kids Book Writer Inc. (OTCBB: KBKW), a company that offers an online service designed to give children and parents the ability to create their own book. Further, Dr. Salari is a director of Neurokine Pharmaceutical Inc (OTCBB: NEUKF), a company with an emphasis in neurological diseases. Prior to that, Dr. Salari was a director of Pacgen Biopharmaceuticals Inc., a public company with its shares listed on the TSX Venture Exchange. From 1998 to 2007, Dr. Salari was the chief executive officer and president of Chemokine Therapeutics Corp., a company established as a focused biotechnology company to develop chemokine-based therapeutic products for human diseases. Chemokine was a public com pany listed on OTC bulletin board and TSX. From 1992 to 1998, Dr. Salari was the chief executive officer and president of Inflazyme Pharmaceuticals Ltd., a company founded by Dr. Salari. Dr. Salari maintained the responsibility of managing the company’s business affairs as well as its drug discovery and development programs (focused on allergies and asthma). While there, he negotiated and closed several licensing deals with biotechnology and pharmaceutical companies.
From 1991 to 1998, Dr. Salari was a Professor, Department of Medicine at the University of British Columbia. From 1987 to 1990, he was an Assistant Professor at the University of British Columbia. From 1986 to 1987, he was a research associate in the Department of Medicine at the University of British Columbia. He was the lead project investigator in cytokine research and drug development. From 1984 to 1986, he worked as a research associate at the Department of Physiology, Laval University. Dr. Salari carried out research work on the biology of human blood cells and their control by cytokines. From 1981 to 1982, Dr. Salari worked at the Department of Immunology at McGill University in Montreal as a research associate. He is the author of over 200 scientific articles, abstracts and books in var ious subjects of medicine.
AUDREY LEW is a certified general accountant (CGA) with the Certified General Accountants Association of British Columbia. She has served for more than 15 years as a controller and financial officer of a number of technology and health care companies, including: from 2007 to present, Casting Workbook Services Inc.; from 2004 to 2007, J. Lew Law Corporation; and from 2002 to 2004, Chemokine Therapeutics Corp./Globe Laboratories Inc. From 1993 to 2002, she was the corporate accountant for CML Global Capital Ltd. She has experience in accounting practices and GAAP for both public and private companies. Ms. Lew has a Bachelor of Arts degree from the University of British Columbia.
DR. DAVID FILER from 1983 to present, has been self-employed working on a consultant basis for various organizations. He obtained a PhD in Microbiology and Molecular Biology in 1977 from the Tel Aviv University. From 1977 to 1982, Dr. Filer was an NIH fellow with Drs. Anthony Furano and Herbert Tabor. From 1982 to 1983, he attended the EMBO Pasteur Institute Paris and from 1984 to 1999, Dr. Filer was a faculty member in the Cell Biology Department of the NYU Medical Center. Dr. Filer has extensive experience in public companies in the filed of healthcare. He has been an independent analyst with a number of Wall Street firms and gained extensive contact for fund raising and management of biotechnology companies. During the last 10 years, Dr. Filer has been self employed and worked as a healthcare analyst in New York for a number of investment bankers and brokerage firms as well as biotechnology companies. He has assisted companies such as Paramount Biocapital, Sunrise Equities, Centercort Capital, Spencer Trask Ventures, Altira Capital, Cornerstone Pharmaceuticals, Cleveland Biolabs, Advaxis, Biocancell, United Therapeutics and Enzon Inc. He works with investors, professional managers and inventors to establish and guide them and their companies through the process of seeking clinical investigation and commercial development of cutting edge technologies and products. In addition, he managed the merger of Unigene and Pfizer in 2008, a deal valued at $60 million. Dr. Filer has a Ph.D. in Microbiology and Molecular Biology and worked at the New York University Medical Center as teaching instructor from 1984 to 1999.
CHRISTIAN BEZY is a businessman with over 30 years experience in the mining industry, managing a large number of employees in several million dollar companies. From 2008 to present, he has been a Senior Geologist for Genivar Income Fund (Mining and Geology). From November 2006 to February 2008, Mr. Bezy was the Chief Geologist with Semafo Inc. From 2004 to 2006, he was the Senior Geologist at Richmont Mines Ltd. (East Amphil). Between 2002 and 2003, he was the Senior Geologist at Mines McWatters, Sigma-Lamaque Complex in Canada. Prior to that date, he was a geologist at the les Mines d’or Kiena in Quebec. He has worked for several resource companies in Canada, including Kiena, Sigma, East-Amphi, Abcourt, Dorval, Mt-Laurier, and Mt-Wr ight at Fermont, and Samira in West Africa. He obtained his B.Sc. in Geology from the University of Quebec in Montreal in 1978. Mr. Bezy has experience in managing employees and consummation of business deals. He is helping the Company in gaining market recognition and obtaining partnership with other companies in the same field.
Significant Employees
We have no significant employees other than our officers and directors.
Family Relationships
There are no family relationships among our directors or officers.
Involvement in Certain Legal Proceedings
None of the members of the board of directors or other executives has been involved in any bankruptcy proceedings, criminal proceedings, any proceeding involving any possibility of enjoining or suspending members of our board of directors or other executives from engaging in any business, securities or banking activities, and have not been found to have violated, nor been accused of having violated, any Federal or State securities or commodities laws.
Audit Committee
We do not have a separately designated audit committee at this time, but rather our entire Board of Directors serves as our audit committee.
Audit Committee Financial Expert
Our board of directors has determined that our company has one audit committee financial expert serving on the audit committee. Our president and chairman has experience serving on audit committees of other public companies. He was a member of the audit committee on Pacgen Bipharma, a publicly traded company on the TSX Venture Exchange from 2004 to 2009.
Nomination Procedures For Appointment of Directors
As of August 27, 2010, we had not effected any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the president of our company at the address on the cover of this annual report.
Code of Ethics
On July 28, 2009, our company’s board of directors adopted a Code of Ethics and Business Conduct that applies to, among other persons, our company’s president, secretary and treasurer (being our principal executive officer) and our company’s chief financial officer (being our principal financial officer and principal accounting officer), as well as persons performing similar functions. As adopted, our Code of Ethics and Business Conduct sets forth written standards that are designed to deter wrongdoing and to promote:
| · | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| · | full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us; |
| · | compliance with applicable governmental laws, rules and regulations; |
| · | the prompt internal reporting of violations of the Code of Ethics and Business Conduct to an appropriate person or persons identified in the Code of Ethics and Business Conduct; and |
| · | accountability for adherence to the Code of Ethics and Business Conduct. |
Our Code of Ethics and Business Conduct requires, among other things, that all of our company’s personnel shall be accorded full access to our president, secretary and treasurer and our chief financial officer with respect to any matter which may arise relating to the Code of Ethics and Business Conduct. Further, all of our company’s personnel are to be accorded full access to our company’s board of directors if any such matter involves an alleged breach of the Code of Ethics and Business Conduct by our president, secretary and treasurer or our chief financial officer.
In addition, our Code of Ethics and Business Conduct emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our company’s president, secretary and treasurer. If the incident involves an alleged breach of the Code of Ethics and Business Conduct by the president, secretary and treasurer, the incident must be reported to any member of our board of directors. Any failure to report such inappropriate o r irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company’s Code of Ethics and Business Conduct.
Our Code of Ethics and Business Conduct is filed as Exhibit 14.1 to this year’s annual report on Form 10-K. We will provide a copy of the Code of Ethics and Business Conduct to any person without charge, upon request. Requests can be sent to: Global Health Ventures Inc., 409 Granville Street, Suite 1023, Vancouver, British Columbia, V6C 1T2 Canada.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended May 31, 2010, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with.
| ITEM 11. EXECUTIVE COMPENSATION. |
The following table sets forth all compensation received during the two years ended May 31, 2010 and May 31, 2009 by our principal executive officer and principal financial officer and each of the other most highly compensated executive officers whose total compensation exceeded $100,000 in such fiscal year. These officers are referred to as the Named Executive Officers in this report.
SUMMARY COMPENSATION TABLE
Name and Principal Position (1) | | Year Ended May 31 | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation Earnings ($) | | | Non- Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | |
| Hassan Salari, | | 2010 | | | 451,668 | | | | 0 | | | | 0 | | | | 383,768 | | | | 0 | | | | 0 | | | | 0 | | | | 835,436 | |
| CEO (1) | | 2009 | | | 33,138 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 33,138 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Audrey Lew, | | 2010 | | | 15,646 | | | | 0 | | | | 0 | | | | 27,414 | | | | 0 | | | | 0 | | | | 0 | | | | 43,060 | |
| CFO (2) | | 2009 | | | 3,102 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 3,102 | |
(1) Hassan Salari was appointed as our Chief Executive Officer, Secretary, Treasurer and Director on September 29, 2008.
(2) Audrey Lew was appointed as our Chief Financial Officer on May 14, 2009.
Options/SAR Grants
The Company has granted 2,000,000 stock options or SAR grants since its inception.
Compensation of Directors
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named directors paid by us during the periods ended May 31, 2010 and 2009.
Name and Principal Position | | Year Ended May 31 | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation Earnings ($) | | | Non- Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) | |
| Hassan Salari, | | 2010 | | | 451,668 | | | | 0 | | | | 0 | | | | 383,768 | | | | 0 | | | | 0 | | | | 0 | | | | 835,436 | |
| CEO | | 2009 | | | 33,138 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 33,138 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| David Filer | | 2010 | | | 0 | | | | 0 | | | | 0 | | | | 54,827 | | | | 0 | | | | 0 | | | | 7,000 | | | | 61,827 | |
| Director | | 2009 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Christian Bezy | | 2010 | | | 0 | | | | 0 | | | | 0 | | | | 54,827 | | | | 0 | | | | 0 | | | | 0 | | | | 54,827 | |
| Director | | 2009 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Employment Contracts and Change-in-Control Arrangements
We have an employment contract with our President and CEO. We are obligated to pay him a base salary of $300,000 per year. If we let go our CEO, we are obligated to pay him a two (2) year base salary and all of the options granted to him will become vested immediately. Our CEO’s employment contract is for 5 year with an automatic renewal of another 5 years.
Compensation Discussion and Analysis
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors from time to time. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.
Outstanding Equity Awards at Fiscal Year-End
As at May 31, 2010, we had not adopted any equity compensation plan and no stock or other equity securities were awarded to our executive officers.
Aggregated Option Exercises
There were no options granted or exercised by any officer or director of our company during the twelve month period ended May 31, 2010.
Long-Term Incentive Plan
Our company does not have a long-term incentive plan in favor of any director, officer, consultant or employee of our company.
Directors Compensation
We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. During the year ended May 31, 2010, no director received and/or accrued any compensation for their services as a director, including committee participation and/or special assi gnments.
Pension and Retirement Plans
Currently, we do not offer any annuity, pension or retirement benefits to be paid to any of our officers, directors or employees in the event of retirement.
| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
As of August 27, 2010, there were 69,635,172 shares of our common stock outstanding. The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of that date by (i) each of our directors, (ii) each of our executive officers, and (iii) all of our directors and executive officers as a group. Except as set forth in the table below, there is no person known to us who beneficially owns more than 5% of our common stock.
| Shareholder | | Shares Owned Beneficially | | Percent of Class (1) |
Hassan Salari 1517 West 58th Avenue, Vancouver, British Columbia V6P 1W6 Canada | | | 10,623,226 | | | | 15.3 | % |
| | | | | | | | | |
Audrey Lew 7229 Stirling Street Vancouver, British Columbia V5P 4H6 Canada | | | 0 | | | | 0 | % |
| | | | | | | | | |
Dr. David Filer 165 East 32nd Avenue New York, NY 10016 | | | 0 | | | | 0 | % |
| | | | | | | | | |
Christian Bezy 175 Baie de la Paix, Val d’Or (Dubuisson), Quebec J9P 4N7 Canada | | | 0 | | | | 0 | % |
| | | | | | | | | |
| All directors and officers as a group (2 persons) | | | 10,623,226 | | | | 15.3 | % |
Based on 69,635,172 shares of common stock issued and outstanding as of August 27, 2010. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable
Changes in Control
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company.
| ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
Other than as listed below, no director, officer, principal shareholder holding at least 5% of our common shares, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction, since the beginning of our last fiscal year ended May 31, 2010, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years.
During the twelve month period ended May 31, 2010, our former president advanced $nil (2009 - $5,374) to our company, was repaid $nil (2009 - $2,112) by our company and incurred $nil (2009 - $0) of expenses on behalf of our company. On November 30, 2009, an amount of $88,456 was owed to our former president who assigned the full amount to our current president.
During the twelve month period ended May 31, 2010, our president advanced $nil (2009 - $20,500) to our company, was repaid $4,557 (2009 - $nil) by the Company and incurred $17,256 (2009 - $6,206) of expenses on behalf of our company. During the twelve month period ended May 31, 2010, the Company loaned the President $75,712, of which $64,825 has been repaid and of which $10,887 has been offset by expenses incurred by the President. The balance of the loan, which bears no interest and can be offset by expenses the President incurs on behalf of the Company, was fully repaid by the President on May 26, 2010.
During the twelve month period ended May 31, 2010, we recognized a total of $nil (2009 - $3,500) for donated services at $nil per month (2009 - $500 per month) and $nil (2009 - $1,750) for donated rent at $nil per month (2009 - $250 per month) provided by our president.
On September 30, 2008, we issued 10,000,000 common shares at $0.0001 per share in settlement of $1,000 owed to our president.
On January 20, 2009, we issued 460,000 units, at a price of $0.25 per unit, in settlement of $115,000 owed to our president. At the same time, we issued 540,000 units, at a price of $0.25 per unit, for gross proceeds of $135,000 to an individual related to our president.
On March 15, 2009, we entered into a research contract with Globe Laboratories Inc., a company controlled by two individuals related to our president, to engage Globe Laboratories to conduct research on the sublingual technologies developed by Globe Laboratories. We agreed to pay $50,000 per quarter to Globe Laboratories from April 1, 2009 until the technology is put into commercial production, or the technologies are sold or sublicensed. As of May 31, 2010, $30,833 in research costs had accrued under this agreement.
Corporate Governance
Director Independence
We currently have three directors, consisting of Dr. Hassan Salari, Dr. David Filer and Christian Bezy. We have determined that Dr. Salari is not independent as that term is used in Rule 4200(a)(15) of the Nasdaq Marketplace Rules and National Instrument 52-110 due to the fact that Dr. Salari is our president, secretary and treasurer. Messrs. Filer and Bezy are independent directors.
Audit Committee
Our board of directors struck an audit committee on July 28, 2010. Following this date, Dr. Salari, Mr. Bezy and Dr. Filer have acted as the members of the audit committee. Dr. Filer and Mr. Bezy are independent as defined by Nasdaq Marketplace Rule 4200(a)(15) or National Instrument 52-110 as adopted by the British Columbia Securities Commission. Dr. Salari is not independent as he is our president, secretary and treasurer. The audit committee is directed to review the scope, cost and results of the independent audit of our books and records, the results of the annual audit with management and the adequacy of our accounting, financial and operating controls; to recommend annually to the board of directors the selection of the independent registered accountants; to consider proposals made by the independent registered chartered account ants for consulting work; and to report to the board of directors, when so requested, on any accounting or financial matters. The board of directors adopted its charter for the audit committee on July 28, 2010.
Audit Committee Financial Expert
Our board of directors has determined that our company has one audit committee financial expert serving on the audit committee.
Compensation Committee – Compensation Committee Interlocks and Insider Participation
Our board of directors acts as our compensation committee. We believe that striking a compensation committee and appointing additional independent directors to such committee would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date. Our board of directors’ responsibilities in acting as our compensation committee is to oversee our company’s compensation and benefit plans, including our compensation plan. Our board of directors also monitors and evaluates matters relating to the compensation and benefits structure of our company. Our company has not adopted a Compensation Committee Charter. We have determined that Dr. Salari is not independent as that term is used in Rule 4200(a)(15) of the Nasdaq Marketpl ace Rules and National Instrument 52-110 due to the fact that Dr. Salari is our president, secretary and treasurer. Messrs. Filer and Bezy are independent directors.
Transactions with Independent Directors
We have determined that Dr. Hassan Salari is not independent as that term is used in Rule 4200(a)(15) of the NASDAQ Marketplace Rules and National Instrument 52-110 due to the fact that Dr. Salari is our president, secretary and treasurer. Messrs. Filer and Bezy are independent directors. There have been no transactions, relationships or arrangements with either of Messrs. Filer or Bezy that would be required to be disclosed pursuant to Item 404 of Regulation S-K.
National Instrument 52-110
We are a reporting issuer in the Province of British Columbia. National Instrument 52-110 of the Canadian Securities Administrators requires our company, as a venture issuer, to disclose annually in our annual report certain information concerning the constitution of our audit committee and our relationship with our independent auditor. As defined in National Instrument 52-110, Messrs. Filer and Bezy are independent directors. For a description of the education and experience of our audit committee members that is relevant to the performance of their respective responsibilities as audit committee members, please see the disclosure under the heading “Item 10. Directors, Executive Officers and Corporate Governance – Business Experience.”
Dr. Salari, an audit committee member, is “financially literate”, as defined in National Instrument 52-110, as he has the industry experience necessary to understand and analyze financial statements of our company, as well as the understanding of internal controls and procedures necessary for financial reporting. Dr. Salari served for four years as a member of the audit committee of Pacgen Biopharma (TSX-V.PGA) and has the necessary financial expertise to be classified as “financially literate.”
The audit committee is responsible for review of both interim and annual financial statements for our company. For the purposes of performing their duties, the members of the audit committee have the right at all times, to inspect all the books and financial records of our company and any subsidiaries and to discuss with management and the external auditors of our company any accounts, records and matters relating to the financial statements of our company. The audit committee meets periodically with management and annually with the external auditors.
Since the commencement of our company’s most recently completed financial year, our company’s board of directors has not failed to adopt a recommendation of the audit committee to nominate or compensate an external auditor.
Since the commencement of our company’s most recently completed financial year, our company has not relied on the exemptions contained in sections 2.4 or 8 of National Instrument 52-110. Section 2.4 (De Minimis Non-audit Services) provides an exemption from the requirement that the audit committee must pre-approve all non-audit services to be provided by the auditor, where the total amount of fees related to the non-audit services are not expected to exceed 5% of the total fees payable to the auditor in the fiscal year in which the non-audit services were provided. Section 8 (Exemptions) permits a company to apply to a securities regulatory authority for an exemption from the requirements of National Instrument 52-110 in whole or in part.
The audit committee has adopted specific policies and procedures for the engagement of non-audit services as set out in the Audit Committee Charter of our company. A copy of our company’s Audit Committee Charter is filed as an exhibit to this annual report.
National Instrument 58-110
We are a reporting issuer in the Province of British Columbia. National Instrument 58-110 of the Canadian Securities Administrators requires our company, as a venture issuer, to disclose annually in our annual report certain information concerning corporate governance disclosure.
Board of Directors
Our board of directors currently acts with three members consisting of Dr. Hassan Salari, Dr. David Filer and Christian Bezy. We have determined that Dr. Salari is not independent as that term is defined in National Instrument 52-110 due to the fact that Dr. Salari is our president, secretary and treasurer. Messrs Filer and Bezy are independent.
Our board of directors facilitates its exercise of independent supervision over management by endorsing the guidelines for responsibilities of the board as set out by regulatory authorities on corporate governance in Canada and the United States. Our board’s primary responsibilities are to supervise the management of our company, to establish an appropriate corporate governance system, and to set a tone of high professional and ethical standards.
The board is also responsible for:
| · | selecting and assessing members of the board; |
| · | choosing, assessing and compensating the president, secretary and treasurer of our company, approving the compensation of all executive officers and ensuring that an orderly management succession plan exists; |
| · | reviewing and approving our company’s strategic plan, operating plan, capital budget and financial goals, and reviewing its performance against those plans; |
| · | adopting a code of conduct and a disclosure policy for our company, and monitoring performance against those policies; |
| · | ensuring the integrity of our company’s internal control and management information systems; |
| · | approving any major changes to our company’s capital structure, including significant investments or financing arrangements; and |
| · | reviewing and approving any other issues which, in the view of the board or management, may require board scrutiny. |
Directorships
Our directors are not currently directors of any other reporting issuers (or the equivalent in a foreign jurisdiction).
Orientation and Continuing Education
We have an informal process to orient and educate new recruits to the board regarding their role on the board, our committees and our directors, as well as the nature and operations of our business. This process provides for an orientation with key members of the management staff, and further provides access to materials necessary to inform them of the information required to carry out their responsibilities as a board member. This information includes the most recent board approved budget, the most recent annual report, the audited financial statements and copies of the interim quarterly financial statements.
The board does not provide continuing education for its directors. Each director is responsible to maintain the skills and knowledge necessary to meet his obligations as director.
Nomination of Directors
The board is responsible for identifying new director nominees. In identifying candidates for membership on the board, the board takes into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the board. As part of the process, the board, together with management, is responsible for conducting background searches, and is empowered to retain search firms to assist in the nominations process. Once candidates have gone through a screening process and met with a number of the existing directors, they are formally put forward as nominees for approval by the board.
Assessments
The board intends that individual director assessments be conducted by other directors, taking into account each director’s contributions at board meetings, service on committees, experience base, and their general ability to contribute to one or more of our company’s major needs. However, due to our stage of development and our need to deal with other urgent priorities, the board has not yet implemented such a process of assessment.
| ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Audit fees
The aggregate fees billed by UHY LDMB Advisors Inc. for the completed fiscal periods ended May 31, 2010 and 2009 for professional services rendered for the audit of our annual financial statements, quarterly reviews of our interim financial statements and services normally provided by the independent accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
| | | Year Ended May 31, 2010 | | | Year Ended May 31, 2009 | |
| Audit Fees and Audit Related Fees | | $ | ,47,266 | | | $ | 18,144 | |
| Tax Fees | | $ | 0 | | | $ | 0 | |
| All Other Fees | | $ | 0 | | | $ | 0 | |
| Total | | $ | 47,266 | | | $ | 18,144 | |
In the above tables, “audit fees” are fees billed by our company’s external auditor for services provided in auditing our company’s annual financial statements for the subject year. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit review of our company’s financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
The board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
The board of directors has considered the nature and amount of fees billed by UHY LDMB Advisors Inc. and believes that the provision of services for activities unrelated to the audit is compatible with maintaining UHY LDMB Advisors Inc.
PART IV
ITEM 15. EXHIBITS.
(a) The following documents are filed as a part of this Report.
Exhibit Number | | Description of Exhibit |
| 31.1* | | Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 31.2* | | Certification of Principal Financial Officer and Principal Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 32.1* | | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 32.2* | | Certification of Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* Filed herewith.
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.
/s/ Hassan Salari
By: Hassan Salari,
Chief Executive Officer
(Principal Executive Officer)
Dated: August 30, 2010
/s/ Audrey Lew
By: Audrey Lew
Chief Financial Officer
(Principal Accounting Officer)
Dated: August 30, 2010
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.
/s/ Hassan Salari
By: Hassan Salari
President, Secretary, Treasurer,
Chief Executive Officer and Director
(Principal Executive Officer)
Dated: August 30, 2010
/s/ Audrey Lew
By: Audrey Lew
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Dated: August 30, 2010
/s/ Dr. David Filer
By: Dr. David Filer
Director
Dated: August 30, 2010
/s/ Christian Bezy
By: Christian Bezy
Director
Dated: August 30, 2010
