SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
AMENDMENT NO. 1
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest reported): November 7, 2003
Organetix, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
000-29462 73-1556428
(Commission File Number) (IRS Employer Identification No.)
603 - 7th Avenue S.W., Calgary, Alberta, Canada T2P 2T5
(Address of Principal Executive Offices)(Zip Code)
(403) 261-8888
(Registrant's Telephone Number, Including Area Code)
Diamond International Group, Inc.
(Former Name or Former Address, if Changed Since Last Report)
1
The Registrant this Amendment NO. 1 to its Form 8-K dated November 7, 2003, as
previously filed with the SEC on November 18, 2003, to include certain financial
statements pursuant to Item 7 of the Form 8-K, commencing on Page F-1
immediately following the signatures.
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On November 7, 2003 (the "Effective Date"), pursuant to a Share Exchange
Agreement between Diamond International Group, Inc. ("Diamond"), a Delaware
corporation and Organetix, Inc. ("Organetix"), a Delaware corporation and all of
the shareholders of Organetix (Agreement"), Diamond acquired all of the shares
of Organetix from the Organetix consideration for the issuance of 64,000,000
restricted shares of Diamond to the Organetix shareholders. Pursuant to the
Agreement, Organetix became a wholly owned subsidiary of the Company and the
Company has filed a Certificate of Amendment with the State of Delaware changing
its name to Organetix, Inc.
Pursuant to the terms of the Agreement, Sylvio Martini resigned as the sole
director of Diamond and L.B. (Brad) Clarke was appointed to the Board of
Directors. In addition, Sylvio Martini resigned as President, Chief Executive
Officer and Chief Financial Officer of Diamond and Brad Clarke was named as
President, Chief Executive Officer and Chief Financial Officer of Diamond.
The Acquisition was approved by the unanimous consent of the Board of Directors
of Diamond and by unanimous consent of the Board of Directors of Organetix on
October 31, 2003.
The following table sets forth information regarding the beneficial ownership of
the shares of the Common Stock (the only class of shares previously issued by
Diamond) at November 14, 2003, by (i) each person known by Diamond to be the
beneficial owner of more than five percent (5%) of Diamond's outstanding shares
of Common Stock, (ii) each director of Diamond, (iii) the executive officers of
Diamond, and (iv) by all directors and executive officers of the Company as a
group, prior to and upon completion of this Offering. Each person named in the
table, has sole voting and investment power with respect to all shares shown as
beneficially owned by such person and can be contacted at the address of
Diamond.
NAME OF SHARES OF
TITLE OF CLASS BENEFICIAL OWNER COMMON STOCK PERCENT OF CLASS
- --------------------------------------------------------------------------------
Common Amma Corporation 46,200,000 60.50%
Common Dr. Jose Cabanillas 4,000,000 5.24%
Common L.B. (Brad) Clarke (1) (1)
DIRECTORS AND (1) (1)
OFFICERS AS A
GROUP
(1) Mr. Brad Clarke, the sole Officer and Director of the Company, does not
directly own any shares of Diamond. However, Mr. Clarke is the principal
shareholder of Amma Corporation which owns 46,200,000 shares of Diamond.
The following is a biographical summary of the directors and officers of the
Company:
2
L.B. (BRAD) CLARKE, 48, has been President, Chief Executive Officer, Chief
Financial Officer and Director of Diamond since November 7, 2003. Brad Clarke
has over 28 years of business experience. For twenty-three (23) of these years
he has been providing management consulting in Canada and internationally, in
the United States, Barbados, Peru, China, and India. His experience ranges from
being on project management teams of mega projects to being the president of a
successful accounting and management consulting practice.
Mr. Clarke has assisted numerous firms and individuals in managing their affairs
through both the good and the bad times. His domestic and international
experience, industry contacts, finance, negotiating and management skills have
been proven by meeting and accomplishing the short and long-term goals of
clients. Mr. Clarke specializes in project management, accounting; joint venture
and internal auditing; personnel; production, revenue, and royalty consulting;
software systems; management consulting, joint venture management of operated &
non-operated properties and project construction.
Some major clients include Marathon Canada Limited, Conoco Canada Resources
Limited, Total Petroleum Canada Ltd., Goldman Sachs (J. Aron Resources Ltd.),
Signalta Resources Ltd., Shell Canada Ltd., Harvard International Group, and
Esso Resources Canada Ltd. (Exxon). As a consultant, he has developed an
extensive list of contacts through his many years of helping clients with
management of all aspects of their business. His experience in making
appropriate recommendations and decisions is demonstrated through the success of
his consulting practice.
Mr. Clarke has also been directly involved in the complementary and integrated
medicine industry for the past 11 years. He is a devoted student of Qi Gong,
Traditional Chinese Medicine and herbology. He is also currently the Director
and head instructor of Qi Gong at the Calgary Qi Gong Centre. One of his key
areas of focus is teaching and informing children through to the elderly of
simple self help, preventative medicine practices and therapies that can
significantly reduce anger, negative stress and improve their immune system and
foster happiness.
Mr. Clarke also teaches Joint Venture Agreements, Accounting and Auditing
courses that he authored and which are sponsored by the PJVA and CAPPA through
SAIT, Mount Royal College and private seminars. He was a director and treasurer
of the Petroleum Joint Venture Association (PJVA) for three years. He has spoken
at two Insight Conferences and has chaired one other Insight Conference.
Mr. Clarke is President of a company that established harvesting, manufacturing,
production and packaging of medicinal plant products from remote parts of the
world.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the Agreement, Diamond acquired one hundred percent (100%) of the
issued and outstanding shares of common stock of Organetix for 64,000,000 shares
of common stock of the Company. Pursuant to the Agreement, Organetix became a
wholly owned subsidiary of Diamond.
Organetix is a biotechnology company that has the exclusive worldwide option to
acquire the formula and license for a proprietary medical discovery relating to
the liver. Organetix is focused on patenting, researching and developing,
producing and selling this proprietary liver product initially as a
nutraceutical and to evaluate the pharmaceutical option later. This liver
product has been used specifically to treat patients with Hepatitis C. Limited
research shows it is regenerating liver tissue thus allowing the liver to begin
3
functioning again despite years of damage from the virus. Thus, this product may
be useful for all liver disorders and might someday eliminate most liver
transplants.
Management, together with research and medical advisors are reporting that the
formula in the limited tests conducted to date, eliminates most of the symptoms
of Hepatitis "C" quickly and effectively without any known side effects. The
liver product may directly compete in a billion dollar market that currently
exists in North America and around the world. Significant additional testing is
required. Analog products will also be evaluated.
We have established a pipeline of many plant based medicines through a medical
doctor in Peru. We specialize in researching, developing and patenting bioactive
compounds and their unique formulas and processes from plants having a unique
history of medicinal use. We feel that Nutraceuticals and Bioceuticals are the
foundations for the new and exciting drugs to be discovered in the 21st Century.
Much like insulin being used for diabetes, this proprietary liver product does
not cure Hepatitis C, but has the capability of regenerating the liver at a
cellular level.
The following describes Diamond's immediate priorities:
1. Register patents and research synthesis of the existing nutraceuticals and
bioceuticals from the licensed liver product;
2. Develop new nutraceuticals and bioceuticals from the licensed liver
product;
3. Sub-license, market and distribute the licensed liver products with
strategic partners.
ALLIANCES & COLLABORATIONS
The following sets forth alliances and collaborations which we have established
in further of our goals:
1. A World Wide License with Dr. Jose G. Cabanillas which includes a lump sum
bonus and royalty based on a percentage of gross sales for an initial term
of 40 years with a buyout option.
2. A consulting agreement with Jose G. Cabanillas to manage the manufacturing
of the products and provide research and development on new and existing
products.
3. Canadian Institute for Natural and Integrative Medicine (CINIM), under the
directorship of Dr. Badri Rickhi, for independently evaluating treatments
and assisting on research.
4. Dr. Eloy Rodriguez of Cornell University and the University of Miami will
assist in the research and phytochemistry of the Liver product. Further
collaboration could result in Diamond's use of research facilities in the
Dominican Republic, in the Amazon, in Miami and in New York.
5. Dr. Brad Thompson, President and Dr. Matt Coffey, Vice President of
Oncolytics Biotech Inc. (a publicly held Canadian company), both PhD' s,
have agreed to assist with the research and patent process and all
subsequent drug and or nutraceutical registration steps accordingly.
THE SALES AND MARKETING FOR THE LIVER PRODUCT
Our sales and marketing strategy plans are to immediately start selling the
Liver Product as soon as the patents are filed. We plan to be selling within 12
4
months or sooner. Strategic alliances and sub-licensing with allow us to
distribute larger volumes.
Because Hepatitis C is experiencing explosive growth, we plan to use the
multi-media already available. There are Hepatitis C patients and web sites and
organizations and liver specialists all over the world very well connected by
e-mail and newsletters. The news media will also be used to expand the
information knowledge base of our products. Word of mouth alone will be powerful
and world wide.
We have budgeted for a major advertising and marketing approach but we will
modify this according to the success of the multi-media program.
The database of doctors and patients available today will allow us an
inexpensive way of communicating our message. Also, it is hoped that foundations
around the world will be most interested in providing our product to less
fortunate children and adults who cannot afford to purchase our liver product
directly or through an insurance plan.
Insurance companies may also become interested. By eliminating the symptoms of
Hepatitis C, patients may return to normal lives thus saving insurance companies
significant amounts of money.
PATENT PROTECTION
Patent protection or our product is one of our primary goals. Completion of the
phytochemistry along side of the patent process will offer us accurate and
precise research that will allow us to have multiple levels of patents. This
will protect our shareholders and offer a strong secure position for
sub-licensing and selling around the world. Management is currently engaged in
discussions with research professionals for purposes of providing scientific DNA
fingerprinting, active ingredient identification, HPLC testing and patent
protection of all products.
The skills, training, expertise and international reputations of the individuals
that provide scientific and medical consulting services are unpeered. We are
confident that the services relating to protocol design, scientific testing,
clinical trial design, and assistance in securing patent protections in the
United States and Canada will be invaluable to the success and credibility of
the products.
RISK FACTORS
LIMITED OPERATING HISTORY: Diamond has a limited operating history and the
Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in early stages of development.
Such risks include, but are not limited to, an evolving and unproven business
model and the management of growth. To address these risks, Diamond must, among
other things, significantly increase its customer base, implement and
successfully execute its business and marketing strategy, respond to competitive
developments, and attract, retain and motivate qualified personnel. There is no
assurance that the Company's business strategy will be successful, or that
additional capital will not be required to continue business operations. The
Company is in the process of restructuring and therefore is essentially in the
early stages of its development. Diamond has limited material tangible assets.
To date, Diamond has created little revenues and as a result of the significant
expenditures that Diamond plans to make in sales and marketing, research and
development and general and administrative activities over the near term,
Diamond expects that it will continue to incur significant operating losses and
negative cash flows from operations on both a quarterly and annual basis for the
5
foreseeable future. For these and other reasons, there can be no assurance that
the Company will ever achieve or be able to sustain profitability.
DEPENDENCE ON KEY MANAGEMENT. Diamond is highly dependent on the services of
Brad Clarke, the sole officer and director of Diamond as well as Dr. Jose
Cabanillas. The loss of the services of these individuals could have a
materially adverse impact on the Company. The Company does not currently
maintain any key-man life insurance policy with respect to these key management
personnel.
LIMITED FINANCIAL RESOURCES. Diamond has limited financial resources, has no
source of operating cash flow and has no assurance that additional funding will
be available to it for further development of its product or to fulfil its
obligations under any applicable agreements. If the Company's product is
successful, additional funds will be required for the development and marketing
of the product. The only source of future funds presently available to the
Company is through the sale of equity capital.
POSSIBLE DIFFICULTY IN RAISING ADDITIONAL EQUITY CAPITAL. There is no assurance
that the Company will be able to raise equity capital in an amount which is
sufficient to continue operations. In the event Diamond requires financing,
Diamond will seek such financing through bank borrowing, debt or equity
financing, corporate partnerships or otherwise. There can be no assurance that
such financing will be available to Diamond on acceptable terms, if at all.
Diamond does not presently have a credit line available with any lending
institution. Any additional equity financing may involve the sale of additional
shares of Diamond's Common Stock or Preferred Stock on terms that have not yet
been established.
RISKS OF RAPID GROWTH. Diamond anticipates a period of rapid growth, which may
place strains upon Diamond's management and operational resources. The Company's
ability to manage growth effectively will require Diamond to integrate
successfully its business and administrative operations into one dynamic
management structure.
POSSIBLE ISSUANCE OF ADDITIONAL SHARES. Diamond has authorized 100,000,000
shares of Common Stock. The Company presently has issued and outstanding
76,361,014 shares of Common Stock, the only class of stock of Diamond for which
shares have been previously issued. As of November 17, 2003, Diamond will have
authorized, but un-issued, 23,638,986 shares of Common Stock which are available
for future issuance. Diamond may issue shares of Common Stock beyond those
already issued for cash, services, or as further employee incentives. To the
extent that additional shares of Common Stock or Preferred Stock are issued, the
percentage of Diamond's issued and outstanding shares of stock shall be
increased and the issuance may cause dilution in the book value per share.
DIVIDENDS NOT LIKELY. No dividends on the Company's Common Stock have been
declared or paid by Diamond to date. Diamond does not presently intend to pay
dividends on shares for the foreseeable future, but intends to retain all
earnings, if any, for use in Diamond's business. There can be no assurance that
dividends will ever be paid on the Common Stock of Diamond.
COMPLIANCE WITH GOVERNMENT REGULATION. Diamond will be required to comply with
all regulations, rules and directives of governmental authorities and agencies
applicable to medical industry in the United States generally. There can be no
assurance that such approvals will be obtained. The cost and delay involved in
attempting to obtain such approvals cannot be known in advance.
6
The FDA and comparable regulatory authorities in foreign countries extensively
and rigorously regulate our products, product development activities and
manufacturing processes. In the U.S., the FDA regulates the introduction of
medical devices as well as the manufacturing, labeling and record-keeping
procedures for such products. We are required to:
o obtain clearance before we can market and sell our product;
o satisfy content requirements applicable to our labeling, sales and
promotional materials;
o comply with manufacturing and reporting requirements; and
o undergo rigorous inspections.
In the event that we need to obtain marketing clearance from the FDA, it may be
costly and time consuming. We cannot assure you that our future products will
obtain FDA clearance on a timely basis, or at all. Our product must also comply
with laws and regulations in foreign countries in which we market such products.
In general, the extent and complexity of medical regulation is increasing
worldwide. This trend may continue, and the cost and time required to obtain
marketing clearance in any given country may increase as a result. We cannot
assure you that our products will obtain any necessary foreign clearances on a
timely basis, or at all.
SUCCESS OF OUR PRODUCT. We cannot assure you that our product will be proven
success and approved by the FDA. While we will focus on patenting, researching
and developing, producing and selling this proprietary liver product here is no
assurance that this product will be successful in treating patients with
Hepatitis C. Limited research shows that this product assist in the regeneration
of liver tissue thus allowing the liver to begin functioning again despite years
of damage from the virus and management, together with research and medical
advisors are reporting that our formula in the limited tests conducted to date,
eliminates most of the symptoms of Hepatitis "C" quickly and effectively without
any known side effects. However, to date, extensive testing on this product has
not been completed and therefore we are not sure if this product will be proven
successful. We will need to fund multiple research studies throughout the
lifecycle of our products to provide statistically significant scientific data
to regulatory agencies.
The FDA and foreign regulatory agencies will require scientific clinical
outcomes data and cost effectiveness data. We will need to provide this data
throughout our products' lifecycles. Governmental agencies may change the
frequency and breadth of clinical research required, potentially significantly
increasing our costs. We cannot assure you that our outcomes data will be
adequate to meet FDA requirements. If our outcomes data does not meet such
requirements, we may be unable to sell our product.
INTELLECTUAL PROPERTY PROTECTION. We will depend on our intellectual property
and any failure to protect that intellectual property could adversely affect our
ability to meet future expectations. Failure to protect our existing
intellectual property rights may result in the loss of our exclusivity and thus
could reduce our sales potential. We will rely on patent and trademark law to
protect our intellectual property but we may be forced to rely upon common-law
protection with respect to our trade secrets and other proprietary matters. To
date we have not applied for a patent for our product. In the absence of patent
protection, we may be vulnerable to competitors who attempt to copy our products
or methods. Consequently, it may be extremely difficult for us to enforce our
proprietary rights and thereby prevent competitors from selling or otherwise
infringing on our products. Outside the U.S., Canada, and Mexico, effective
patent and trademark protection may not be applied for or may be limited or
costly. We believe that we have obtained all rights necessary to patent our
product without infringement on rights or patents. We will seek to achieve
7
profitability through aggressive promotion and marketing of our patents and by
developing customer relationships, which could provide a contractual basis for
profits irrespective of proprietary infringements.
SUBSTANTIAL COMPETITION. A number of the Company's competitors have
significantly greater financial, technical, administrative, manufacturing,
marketing and other resources than Diamond. These competitors may be able to
respond more quickly to new or changing opportunities and technologies than we
can. Moreover, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties or
may consolidate to enhance their services and products. We expect that new
competitors or alliances among competitors will emerge and may acquire
significant market share.
Company must overcome significant barriers to enter into this business as a
result of its limited operating history and financial resources. Many of its
competitors have substantially greater financial, technical, managerial and
marketing resources, longer operating histories and name recognition. Such
competitors may be able to devote more resources than us. There can be no
assurance that Diamond will be able to compete effectively with current or
future competitors or that the competitive pressures faced by Diamond will not
have a material adverse effect on the Company's business, financial condition
and operating results.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired
8
ORGANETIX, INC.
A Development Stage Company
FOR THE PERIOD FROM INCEPTION (MAY 28, 2003)
TO OCTOBER 15, 2003
INDEX
Page(s)
Independent Auditors' Report F-1.
Financial Statements:
Balance Sheet F-2.
Statement of Operations F-3.
Statement of Shareholders' Equity F-4.
Statement of Cash Flows F-5.
Notes to Financial Statements F-6 to F-8
9
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Organetix, Inc.
New York, New York
We have audited the accompanying balance sheet of Organetix, Inc. (a development
stage company) as of October 15, 2003, and the related statements of operations,
shareholders' equity and cash flows for the period from inception (May 28, 2003)
to October 15, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 financial statements referred to above, present fairly, in
all material respects, the financial position of Organetix, Inc. (a development
stage company) as of October 15, 2003, and the results of its operations and its
cash flows for the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred a net loss from inception to date of $227,288 and, as
of October 15, 2003, had a working capital deficiency of $22,388 and negative
tangible net worth of $22,388. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence. Management's
actions in regard to these matters are more fully described in Note 1.
LAZAR LEVINE & FELIX LLP
New York, New York
November 13, 2003
F-1
ORGANETIX, INC.
(A Development Stage Company)
BALANCE SHEET
OCTOBER 15, 2003
- ASSETS -
CURRENT ASSETS:
Cash $ 25,379
-----------
TOTAL CURRENT ASSETS 25,379
OTHER ASSETS:
License agreement 2,040,000
-----------
$ 2,065,379
===========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Due to affiliate $ 36,559
Due to shareholders 11,208
-----------
TOTAL CURRENT LIABILITIES 47,767
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value;
30,000,000 shares authorized;
16,000,000 shares issued and outstanding $ 16,000
Additional paid-in capital 2,256,000
Subscription receivable (27,100)
Deficit accumulated during the development stage (227,288) 2,017,612
----------- -----------
$ 2,065,379
===========
See accompanying notes.
F-2
ORGANETIX, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (MAY 28, 2003)
TO OCTOBER 15, 2003
REVENUES $ --
COSTS AND EXPENSES:
Operating expenses - research facility $ 28,200
Research and development expenses 80,619
Consulting fees 32,898
Professional fees 52,024
Travel and accommodations 11,678
Telephone 4,885
Insurance 4,603
Rent 3,065
Shipping expense 1,230
Office and other expense 8,086 227,288
------------ ------------
NET LOSS $ (227,288)
============
LOSS PER SHARE:
Basic and diluted $ (.02)
============
Weighted average number of common
shares outstanding 12,956,000
============
See accompanying notes.
F-3
ORGANETIX, INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (MAY 28, 2003)
TO OCTOBER 15, 2003
Deficit
Accumulated
Common Shares Additional During the
------------------------- Paid-in Subscription Development Shareholders'
Number Amount Capital Receivable Stage Equity
----------- ----------- ----------- ----------- ----------- -----------
Issuance at inception to founders 7,200,000 $ 7,200 $ 64,800 $ (27,100) $ -- $ 44,900
Issuance pursuant to private placement 640,000 640 159,360 -- -- 160,000
Assignment of license agreement 8,160,000 8,160 2,031,840 -- -- 2,040,000
Net loss for period from inception
to October 15, 2003 -- -- -- -- (227,288) (227,288)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE AT OCTOBER 15, 2003 16,000,000 $ 16,000 $ 2,256,000 $ (27,100) $ (227,288) $ 2,017,612
=========== =========== =========== =========== =========== ===========
See accompanying notes.
F-4
ORGANETIX, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MAY 28, 2003)
TO OCTOBER 15, 2003
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (227,288)
Changes in assets and liabilities:
Due to affiliates 36,559
Due to shareholders 11,208
----------
Net cash utilized by operating activities (179,521)
CASH FLOWS FROM INVESTING ACTIVITIES --
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock to founders $ 44,900
Proceeds from private placement of common stock 160,000
----------
Net cash provided by financing activities 204,900
----------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 25,379
==========
See accompanying notes.
F-5
ORGANETIX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 15, 2003
NOTE 1 - DESCRIPTION OF COMPANY/OPERATIONS:
Organetix, Inc. ("the Company" or "Organetix"), a Delaware
Corporation, was incorporated on May 28, 2003.
The Company is a biotechnology company that has the exclusive
worldwide license (see Note 5) for the formula of a proprietary
medical discovery relating to the liver. Organetix will patent,
research, develop, produce and sell this proprietary liver product
initially as a nutra-ceutical/herbal supplement, referred to as "A4+L
Compound". This liver product has been used specifically to treat
patients with Hepatitis C. Organetix will also specialize in
researching, developing and patenting bioactive compounds and their
unique formulas and processes from plants having a distinctive history
of medicinal use.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the
financial statements, the Company has incurred a net loss from
inception to date of $227,288 and, as of October 15, 2003, had a
working capital deficiency of $22,388 and negative tangible net worth
of $22,388. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the event
the Company cannot continue in existence. The Company is presently
selling its securities in private offerings, and in November 2003,
subsequent to the balance sheet date, entered into a share exchange
transaction with a publicly held entity. It is the Company's intention
to raise additional funds in a public offering of its securities in
the future.
In view of these matters, realization of the assets on the
accompanying balance sheet is dependent upon continued operations of
the Company, which in turn is dependent upon the Company's ability to
meet its financing requirements, and the success of its future
operations.
The Company has been devoting its time towards establishing its
business and no revenues have been generated to date. As such, the
Company is considered as being in the development stage, since its
inception, in accordance with Statement of Financial Accounting
Standards No. 7, and its year-end is December 31.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with accounting
principles generally accepted in the United States of America.
Outlined below are those policies considered particularly significant.
(a) Use of Estimates:
In preparing financial statements in accordance with accounting
principles generally accepted in the United States of America,
management makes certain estimates and assumptions, where applicable,
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. While actual results could
differ from those estimates, management does not expect such
variances, if any, to have a material effect on the financial
statements.
F-6
ORGANETIX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 15, 2003
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(b) Statements of Cash Flows:
For purposes of the statement of cash flows the Company considers all
highly liquid investments purchased with a remaining maturity of three
months or less to be cash equivalents.
(c) Amortization - License Agreement:
The cost of the license is being amortized on the straight-line method
over its contractual life of 40 years.
(c) Loss per Share:
Basic and diluted earnings (loss) per common share is computed using
the weighted average number of shares of common stock outstanding for
the period.
NOTE 3 - DUE TO AFFILIATE/SHAREHOLDERS:
The Company is indebted to certain of its shareholders and an
affiliate, Amma Corporation, for expenses incurred in connection with
the Company's operations from inception. These amounts are
non-interest bearing and are payable on demand.
NOTE 4 - SHARE EXCHANGE AGREEMENT:
On November 7, 2003 (the "Effective Date"), pursuant to a Share
Exchange Agreement ("the Agreement") between the shareholders of the
Company and Diamond International Group, Inc. ("Diamond"), a Delaware
corporation, Diamond acquired all of the shares of Organetix in
exchange for 64,000,000 restricted shares of Diamond issued to the
shareholders of Organetix. Pursuant to the Agreement, Organetix became
a wholly owned subsidiary of Diamond.
NOTE 5 - ASSIGNMENT OF LICENSE AND CONSULTING AGREEMENTS:
(a) License Agreement:
On July 15, 2003, Amma Corporation ("Amma"), a privately held entity
domiciled in Alberta, Canada, assigned all of its right, title and
interest in and to the A4+L compound as defined in a License
Agreement, dated June 5, 2003, between Amma and Dr. Jose Cabanillas
Coral, a Canadian resident and citizen of Peru, in exchange for
8,160,000 shares of Company common stock.
F-7
ORGANETIX, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 15, 2003
NOTE 5 - ASSIGNMENT OF LICENSE AND CONSULTING AGREEMENTS (Continued):
(b) License Agreement (continued):
The A4+L compound (the "technology"), is a multiple plant formulation
used for the relief of certain medical symptoms associated with
Hepatitis C.
This license grants the Company the exclusive right to use and
sublicense the technology, and any improvements, and to research,
manufacture, distribute and sell products throughout the world
excluding Peru.
This 40-year license requires that the Company pay a royalty equal to
3% of gross sales and sublicensing revenues to Dr. Coral.
(c) Consulting Agreement:
Concurrently with the assignment of the license agreement described
above, Amma also assigned its consulting agreement, dated June 1,
2001, with Dr. Coral to the Company.
This agreement, which expires on June 1, 2006, requires that Dr. Coral
provide general and research duties as requested, in exchange for a
monthly fee of $12,000.
NOTE 6 - STOCKHOLDERS' EQUITY:
The Company has authorized 30 million shares of common stock, par
value $.001 per share. There are issued and outstanding, 1.6 million
shares of common stock as of October 15, 2003.
In May 2003, the Company issued 7,200,000 shares of common stock to
its founders, at a per share price of $.01, for aggregate proceeds of
$72,000 of which $27,100 had not been received as of October 15, 2003.
In November 2003, subsequent to the balance sheet, the Company
received $10,860 of this subscription receivable.
In June 2003, the Company began offering its common stock in a private
offering of such securities and, through October 15, 2003, has
generated proceeds of $160,000, for the sale of 640,000 shares of its
common stock at a per share price of $.25.
In July 2003, the Company issued 8,160,000 shares of its common stock
in connection with the assignment of a license agreement (see Note 5).
These shares were deemed to have a fair value of $.25 per share at the
time of issuance.
F-8
(b) Pro forma financial information
The pro forma financial information will be filed by an amendment to
this Report within 60 days after this report must be filed.
(c) Exhibits
Number Exhibit
- ------ -------
2.1 Share Exchange Agreement dated October 31, 2003 by and among Diamond
International Group, Inc. and Organetix, Inc.*
* filed with the original 8-K filing on November 18, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
DIAMOND INTERNATIONAL GROUP, INC.
By: /s/ Brad Clarke
---------------------------------------
Brad Clarke
President
December 24, 2003