grantlife_10q-033108.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
ý
|
Quarterly
report under Section 13 or 15(d) of the Securities Exchange Act of
1934.
|
|
|
|
For
the quarterly period ended March 31, 2008
|
|
|
o
|
Transition
report under Section 13 or 15(d) of the Securities Exchange Act of
1934
|
|
|
|
For
the transition period
from _________ to ___________
|
|
|
|
Commission
File Number: 000-50133
|
GRANT
LIFE SCIENCES, INC.
(Exact
Name of Small Business Issuer as Specified in its Charter)
Nevada
|
|
82-0490737
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
|
(I.R.S.
Employer Identification
Number)
|
1787 E. Fort Union Blvd.,
Suite 202, Salt Lake City, UT 84121
(Address
of Principal Executive Offices)
(801)
733-0878
(Issuer’s
Telephone Number, Including Area Code)
Not
Applicable
(Former
Address, if Changed Since Last Report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
|
|
Non-accelerated
filer o
|
Smaller
reporting company þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING
THE PRECEDING FIVE YEARS
Indicate
by check mark whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan
confirmed by a court. Yes o No o
APPLICABLE
ONLY TO CORPORATE ISSUERS
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the last practicable date: As of May 15, 2008, there were
374,717,332 shares of Common Stock, par value $0.001 per share, issued and
outstanding.
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
FORM
10-Q
INDEX
PART
I FINANCIAL INFORMATION
|
|
|
|
|
Item
1
|
Condensed
Financial Statements (unaudited)
|
|
|
|
|
|
Condensed
Balance Sheets – As of March 31, 2008 and December 31,
2007
|
3
|
|
|
|
|
Condensed
Statements of Operations – For the three months ended March 31, 2008 and
2007, and for the period from July 9, 1998 (date of inception) through
March 31, 2008
|
4
|
|
|
|
|
Condensed
Statements of Deficiency in Stockholders’ Equity – For the period from
July 9, 1998 (date of inception) through March 31, 2008
|
5-7
|
|
|
|
|
Condensed
Statements of Cash Flows – For the three months ended March 31, 2008 and
2007, and for the period from July 9, 1998 (date of inception) through
March 31, 2008
|
8-9
|
|
|
|
|
Notes
to Condensed Financial Statements
|
10
|
|
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition or Plan of
Operation
|
14
|
|
|
|
Item
3
|
Qualitative
and Qualitative Disclosures about Market Risk
|
15
|
|
|
|
Item
4T
|
Controls
and Procedures
|
15
|
|
|
|
PART
II OTHER INFORMATION
|
|
|
|
|
Item
1
|
Legal
Proceedings
|
17
|
|
|
|
Item
1A
|
Risk
Factors
|
17
|
|
|
|
Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
17
|
|
|
|
Item
3
|
Defaults
upon Senior Securities
|
17
|
|
|
|
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
17
|
|
|
|
Item
5
|
Other
Information
|
17
|
|
|
|
Item
6
|
Exhibits
|
17
|
|
|
|
Signatures
|
18
|
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
BALANCE SHEETS
(Unaudited)
|
|
March
31,
|
|
|
December
31,
|
|
ASSETS
|
|
2008
|
|
|
2007
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
2,673 |
|
|
$ |
183,386 |
|
Refunds
receivable
|
|
|
470 |
|
|
|
2,550 |
|
Prepaid
expenses
|
|
|
31,245 |
|
|
|
1,667 |
|
Deposits
and other
|
|
|
7,140 |
|
|
|
18,140 |
|
Total
current assets
|
|
|
41,528 |
|
|
|
205,743 |
|
|
|
|
|
|
|
|
|
|
Deferred
financing fees, net of accumulated amortization of $113,388 and $99,117 as
of
March
31, 2008 and December 31, 2007, respectively
|
|
|
29,062 |
|
|
|
43,333 |
|
Total
assets
|
|
$ |
70,590 |
|
|
$ |
249,076 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
DEFICIENCY IN STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
89,769 |
|
|
$ |
34,818 |
|
Accrued
liabilities
|
|
|
181,843 |
|
|
|
138,252 |
|
Advances
from officers/directors
|
|
|
4,104 |
|
|
|
- |
|
Accrued
interest payable
|
|
|
70,789 |
|
|
|
249,936 |
|
Notes
payable in default
|
|
|
363,125 |
|
|
|
363,125 |
|
Total
current liabilities
|
|
|
709,630 |
|
|
|
786,131 |
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Convertible
notes payable, net of discount of $802,456 and $953,092 as of March 31,
2008
and
December 31, 2007, respectively
|
|
|
218,036 |
|
|
|
162,000 |
|
Derivative
liability related to convertible notes
|
|
|
6,432,020 |
|
|
|
1,941,335 |
|
Derivative
liability related to warrants
|
|
|
309,577 |
|
|
|
541,915 |
|
Total
long-term liabilities
|
|
|
6,959,633 |
|
|
|
2,645,250 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
7,669,263 |
|
|
|
3,431,381 |
|
|
|
|
|
|
|
|
|
|
Contingencies
(Note A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficiency
in stockholders' equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, par value $.001; authorized 20,000,000 shares; none issued and
outstanding
|
|
|
- |
|
|
|
- |
|
Common
stock, par value $.001; authorized 750,000,000 shares; 357,078,332 and
311,125,613
shares
issued and outstanding as of March 31, 2008 and December 31, 2007,
respectively
|
|
|
357,078 |
|
|
|
311,126 |
|
Additional
paid-in capital
|
|
|
15,287,878 |
|
|
|
14,617,560 |
|
Deficit
accumulated during the development stage
|
|
|
(23,243,629 |
) |
|
|
(18,110,991 |
) |
Total
deficiency in stockholders' equity
|
|
|
(7,598,673 |
) |
|
|
(3,182,305 |
) |
Total
liabilities and deficiency in stockholders' equity
|
|
$ |
70,590 |
|
|
$ |
249,076 |
|
See
accompanying notes to condensed financial statements.
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
For
the
|
|
|
|
|
|
|
|
|
|
Period
from
|
|
|
|
|
|
|
|
|
|
July
9, 1998
|
|
|
|
|
|
|
|
|
|
(Date of
|
|
|
|
|
|
|
|
|
|
Inception)
|
|
|
|
For
the Three Months
|
|
|
through
|
|
|
|
Ended
March 31
|
|
|
March
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
Sales
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
72,675 |
|
Cost
of sales
|
|
|
- |
|
|
|
- |
|
|
|
62,805 |
|
Gross
margin
|
|
|
- |
|
|
|
- |
|
|
|
9,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
315,196 |
|
|
|
321,100 |
|
|
|
7,805,365 |
|
Research
and development
|
|
|
4,500 |
|
|
|
12,058 |
|
|
|
1,750,253 |
|
Total
|
|
|
319,696 |
|
|
|
333,158 |
|
|
|
9,555,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(319,696 |
) |
|
|
(333,158 |
) |
|
|
(9,545,748 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in fair value of derivative liability related to convertible notes and
warrants
|
|
|
(4,413,657 |
) |
|
|
(87,368 |
) |
|
|
(10,042,353 |
) |
Interest
expense and financing costs
|
|
|
(399,185 |
) |
|
|
(501,028 |
) |
|
|
(4,065,673 |
) |
Loss
on impaired and abandoned assets
|
|
|
- |
|
|
|
- |
|
|
|
(32,048 |
) |
Gain
on extinguishment of debt
|
|
|
- |
|
|
|
- |
|
|
|
510,105 |
|
Acquisition
costs
|
|
|
- |
|
|
|
- |
|
|
|
(65,812 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before provision for income taxes
|
|
|
(5,132,538 |
) |
|
|
(921,554 |
) |
|
|
(23,241,529 |
) |
Provision
for income taxes
|
|
|
100 |
|
|
|
- |
|
|
|
2,100 |
|
Net
loss
|
|
$ |
(5,132,638 |
) |
|
$ |
(921,554 |
) |
|
$ |
(23,243,629 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share - basic and diluted
|
|
$ |
(0.02 |
) |
|
$ |
(0.01 |
) |
|
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic and diluted
|
|
|
321,619,663 |
|
|
|
146,941,923 |
|
|
|
n/a |
|
See
accompanying notes to condensed financial statements.
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
STATEMENTS OF DEFICIENCY IN STOCKHOLDERS’ EQUITY
FOR
THE PERIOD FROM JULY 9, 1998 (Date of Inception) THROUGH
MARCH
31, 2008
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Deficiency
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
in
|
|
|
|
Common
|
|
|
Common
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
Balance,
July 9, 1998 (inception)
|
|
|
9,272,200 |
|
|
$ |
9,272 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(9,272 |
) |
|
$ |
- |
|
|
$ |
- |
|
Issued
stock for subscription receivable at $0.005 per share
|
|
|
18,795,000 |
|
|
|
18,795 |
|
|
|
(100,000 |
) |
|
|
|
|
|
|
81,205 |
|
|
|
|
|
|
|
- |
|
Balance,
December 31, 1998
|
|
|
28,067,200 |
|
|
|
28,067 |
|
|
|
(100,000 |
) |
|
|
- |
|
|
|
71,933 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
stock for cash at $0.004 per share
|
|
|
1,253,000 |
|
|
|
1,253 |
|
|
|
|
|
|
|
|
|
|
|
3,747 |
|
|
|
|
|
|
|
5,000 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,053 |
) |
|
|
(5,053 |
) |
Balance,
December 31, 1999
|
|
|
29,320,200 |
|
|
|
29,320 |
|
|
|
(100,000 |
) |
|
|
- |
|
|
|
75,680 |
|
|
|
(5,053 |
) |
|
|
(53 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
of subscription receivable
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(43,641 |
) |
|
|
(43,641 |
) |
Balance,
December 31, 2000
|
|
|
29,320,200 |
|
|
|
29,320 |
|
|
|
- |
|
|
|
- |
|
|
|
75,680 |
|
|
|
(48,694 |
) |
|
|
56,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
stock for cash at $0.004 per share
|
|
|
250,600 |
|
|
|
251 |
|
|
|
|
|
|
|
|
|
|
|
749 |
|
|
|
|
|
|
|
1,000 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(522,213 |
) |
|
|
(522,213 |
) |
Balance,
December 31, 2001
|
|
|
29,570,800 |
|
|
|
29,571 |
|
|
|
- |
|
|
|
- |
|
|
|
76,429 |
|
|
|
(570,907 |
) |
|
|
(464,907 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
stock for cash at $0.13 per share
|
|
|
689,150 |
|
|
|
689 |
|
|
|
|
|
|
|
|
|
|
|
91,811 |
|
|
|
|
|
|
|
92,500 |
|
Issued
stock for services at $0.06 per share
|
|
|
1,591,310 |
|
|
|
1,591 |
|
|
|
|
|
|
|
|
|
|
|
101,659 |
|
|
|
|
|
|
|
103,250 |
|
Issued
stock in satisfaction of debt at $0.14 per share
|
|
|
1,790,000 |
|
|
|
1,790 |
|
|
|
|
|
|
|
|
|
|
|
248,210 |
|
|
|
|
|
|
|
250,000 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(646,201 |
) |
|
|
(646,201 |
) |
Balance,
December 31, 2002
|
|
|
33,641,260 |
|
|
|
33,641 |
|
|
|
- |
|
|
|
- |
|
|
|
518,109 |
|
|
|
(1,217,108 |
) |
|
|
(665,358 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
stock for cash at $0.13 per share
|
|
|
930,800 |
|
|
|
931 |
|
|
|
|
|
|
|
|
|
|
|
119,069 |
|
|
|
|
|
|
|
120,000 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(253,881 |
) |
|
|
(253,881 |
) |
Balance,
December 31, 2003
|
|
|
34,572,060 |
|
|
|
34,572 |
|
|
|
- |
|
|
|
- |
|
|
|
637,178 |
|
|
|
(1,470,989 |
) |
|
|
(799,239 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
stock for cash at $0.0838 per share
|
|
|
238,660 |
|
|
|
239 |
|
|
|
|
|
|
|
|
|
|
|
19,761 |
|
|
|
|
|
|
|
20,000 |
|
Issued
stock for services at $0.08 per share
|
|
|
500,000 |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
39,500 |
|
|
|
|
|
|
|
40,000 |
|
Issued
stock for cash at $0.1835 per share
|
|
|
9,560,596 |
|
|
|
9,561 |
|
|
|
|
|
|
|
|
|
|
|
1,485,376 |
|
|
|
|
|
|
|
1,494,937 |
|
Reverse
merger with Grant Ventures, Inc.
|
|
|
6,000,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
Warrants
issued as part of restructuring
of debt
(89,500
valued at
$0.03779)
|
|
|
|
|
|
|
|
3,382 |
|
|
|
|
|
|
|
3,382 |
|
Recognition
of beneficial conversion feature
on
issuance
of note payable
|
|
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
200,000 |
|
Conversion
of note payable and accrued interest at $0.07569 per share
|
|
|
2,720,000 |
|
|
|
2,720 |
|
|
|
|
|
|
|
|
|
|
|
203,165 |
|
|
|
|
|
|
|
205,885 |
|
Issued
stock in satisfaction of debt at $0.1835 per share
|
|
|
249,475 |
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
45,530 |
|
|
|
|
|
|
|
45,779 |
|
Exercise
of $0.01 warrants
|
|
|
2,403,000 |
|
|
|
2,403 |
|
|
|
|
|
|
|
|
|
|
|
21,627 |
|
|
|
|
|
|
|
24,030 |
|
Issued
250,000 warrants for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000 |
|
|
|
|
|
|
|
11,000 |
|
Stock
options issued to employees, directors,
and
consultants
|
|
|
|
|
|
|
|
(1,523,966 |
) |
|
|
1,523,966 |
|
|
|
|
|
|
|
- |
|
Vesting
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
426,081 |
|
|
|
|
|
|
|
|
|
|
|
426,081 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,910,351 |
) |
|
|
(1,910,351 |
) |
Balance,
December 31, 2004
|
|
|
56,243,791 |
|
|
$ |
56,244 |
|
|
$ |
- |
|
|
$ |
(1,097,885 |
) |
|
$ |
4,190,485 |
|
|
$ |
(3,381,340 |
) |
|
$ |
(232,496 |
) |
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
STATEMENTS OF DEFICIENCY IN STOCKHOLDERS’ EQUITY
FOR
THE PERIOD FROM JULY 9, 1998 (Date of Inception) THROUGH
MARCH
31, 2008
(Unaudited)
(Continued
from Preceding Page)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Deficiency
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
in
|
|
|
|
Common
|
|
|
Common
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
Balance,
December 31, 2004
|
|
|
56,243,791 |
|
|
$ |
56,244 |
|
|
$ |
- |
|
|
$ |
(1,097,885 |
) |
|
$ |
4,190,485 |
|
|
$ |
(3,381,340 |
) |
|
$ |
(232,496 |
) |
Conversion
of notes payable and accrued interest at $0.092178 per
share
|
|
|
1,395,322 |
|
|
|
1,395 |
|
|
|
|
|
|
|
|
|
|
|
127,225 |
|
|
|
|
|
|
|
128,620 |
|
Stock
options issued to new director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,725 |
) |
|
|
26,725 |
|
|
|
|
|
|
|
- |
|
Value
of 250,000 warrants issued as part
of
bridge
loan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,540 |
|
|
|
|
|
|
|
65,540 |
|
Shares
issued for services at $0.40 per share
|
|
|
500,000 |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
199,500 |
|
|
|
|
|
|
|
200,000 |
|
Stock
options granted to employee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(327,197 |
) |
|
|
327,197 |
|
|
|
|
|
|
|
- |
|
Stock
options exercised
|
|
|
50,000 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
8,950 |
|
|
|
|
|
|
|
9,000 |
|
Reclassify
warrants to liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(656,607 |
) |
|
|
|
|
|
|
(656,607 |
) |
Shares
issued for legal services at $0.22 per share
|
|
|
200,000 |
|
|
|
200 |
|
|
|
|
|
|
|
|
|
|
|
43,800 |
|
|
|
|
|
|
|
44,000 |
|
Conversion
of convertible notes payable at conversion rates ranging from $0.00423
to $0.0105 per share, including applicable derivative
value
|
|
|
67,580,405 |
|
|
|
67,581 |
|
|
|
|
|
|
|
|
|
|
|
2,708,685 |
|
|
|
|
|
|
|
2,776,266 |
|
Stock
options issued to interim CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,762 |
) |
|
|
3,762 |
|
|
|
|
|
|
|
- |
|
Shares
issued on exercise of warrant
|
|
|
250,000 |
|
|
|
250 |
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
|
|
|
|
|
2,750 |
|
Shares
issued at $0.09 on exercise of warrant
|
|
|
267,000 |
|
|
|
267 |
|
|
|
|
|
|
|
|
|
|
|
2,403 |
|
|
|
|
|
|
|
2,670 |
|
Vesting
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
976,987 |
|
|
|
|
|
|
|
|
|
|
|
976,987 |
|
Cancellation
of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,275 |
|
|
|
|
|
|
|
|
|
|
|
193,275 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,644,857 |
) |
|
|
(7,644,857 |
) |
Balance,
December 31, 2005
|
|
|
126,486,518 |
|
|
|
126,487 |
|
|
|
- |
|
|
|
(285,307 |
) |
|
|
7,050,165 |
|
|
|
(11,026,197 |
) |
|
|
(4,134,852 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,972 |
|
|
|
|
|
|
|
|
|
|
|
84,972 |
|
Reclassification
of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
200,335 |
|
|
|
(200,335 |
) |
|
|
|
|
|
|
- |
|
Vesting
of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,577 |
|
|
|
|
|
|
|
153,577 |
|
Conversion
of convertible notes at conversion rates ranging from $0.00633 to $0.0278
per share, including applicable derivative value
|
|
|
2,594,644 |
|
|
|
2,595 |
|
|
|
|
|
|
|
|
|
|
|
241,973 |
|
|
|
|
|
|
|
244,568 |
|
Issued
stock at $0.01 per share in satisfaction of debt
|
|
|
5,226,534 |
|
|
|
5,226 |
|
|
|
|
|
|
|
|
|
|
|
47,039 |
|
|
|
|
|
|
|
52,265 |
|
Issued
stock at $0.038 per share for services rendered
|
|
|
1,150,627 |
|
|
|
1,150 |
|
|
|
|
|
|
|
|
|
|
|
163,397 |
|
|
|
|
|
|
|
164,547 |
|
Issued
stock on exercise of options at $0.18 per share
|
|
|
150,000 |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
26,850 |
|
|
|
|
|
|
|
27,000 |
|
Repricing
of warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,422 |
|
|
|
|
|
|
|
17,422 |
|
Cashless
exercise of $0.01 warrants, includng applicable derivative
value
|
|
|
812,100 |
|
|
|
812 |
|
|
|
|
|
|
|
|
|
|
|
114,593 |
|
|
|
|
|
|
|
115,405 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,384,933 |
) |
|
|
(3,384,933 |
) |
Balance,
December 31, 2006
|
|
|
136,420,423 |
|
|
$ |
136,420 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
7,614,681 |
|
|
$ |
(14,411,130 |
) |
|
$ |
(6,660,029 |
) |
(Continued
on Next Page)
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
STATEMENTS OF DEFICIENCY IN STOCKHOLDERS’ EQUITY
FOR
THE PERIOD FROM JULY 9, 1998 (Date of Inception) THROUGH
MARCH
31, 2008
(Unaudited)
(Continued
from Preceding Page)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Deficiency
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
in
|
|
|
|
Common
|
|
|
Common
|
|
|
Subscription
|
|
|
Deferred
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Stock
|
|
|
Receivable
|
|
|
Compensation
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
Balance,
December 31, 2006
|
|
|
136,420,423 |
|
|
$ |
136,420 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
7,614,681 |
|
|
$ |
(14,411,130 |
) |
|
$ |
(6,660,029 |
) |
Conversion
of convertible notes payable at conversion rates ranging from $0.0096
to $0.0387 per share, including applicable derivative
value
|
|
|
167,901,969 |
|
|
|
167,902 |
|
|
|
|
|
|
|
|
|
|
|
6,459,597 |
|
|
|
|
|
|
|
6,627,499 |
|
Issued
stock at $0.0782 per share for services rendered
|
|
|
95,000 |
|
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
7,331 |
|
|
|
|
|
|
|
7,426 |
|
Issued
stock at $0.01333 per share in settlement of liability
|
|
|
470,250 |
|
|
|
471 |
|
|
|
|
|
|
|
|
|
|
|
5,799 |
|
|
|
|
|
|
|
6,270 |
|
Issued
stock at $0.0217 per share for legal services
|
|
|
2,075,000 |
|
|
|
2,075 |
|
|
|
|
|
|
|
|
|
|
|
42,925 |
|
|
|
|
|
|
|
45,000 |
|
Issued
stock at $0.0100 per share for legal services
|
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
|
|
|
|
|
|
|
|
36,000 |
|
|
|
|
|
|
|
40,000 |
|
Cashless
exercise of $0.01 warrants, including applicable derivative
value
|
|
|
64,879 |
|
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
2,465 |
|
|
|
|
|
|
|
2,530 |
|
Exercise
of warrant at $0.01 per share, including applicable derivative
value
|
|
|
98,092 |
|
|
|
98 |
|
|
|
|
|
|
|
|
|
|
|
2,306 |
|
|
|
|
|
|
|
2,404 |
|
Vesting
of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
446,456 |
|
|
|
|
|
|
|
446,456 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,699,861 |
) |
|
|
(3,699,861 |
) |
Balance,
December 31, 2007
|
|
|
311,125,613 |
|
|
|
311,126 |
|
|
|
- |
|
|
|
- |
|
|
|
14,617,560 |
|
|
|
(18,110,991 |
) |
|
|
(3,182,305 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of convertible notes payable at conversion rates ranging from $0.0096
to $0.0387 per share, including applicable derivative
value
|
|
|
45,542,719 |
|
|
|
45,542 |
|
|
|
|
|
|
|
|
|
|
|
617,791 |
|
|
|
|
|
|
|
663,333 |
|
Issued
stock at $0.0782 per share for services rendered
|
|
|
100,000 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
1,400 |
|
|
|
|
|
|
|
1,500 |
|
Issued
stock at $0.0782 per share for services rendered
|
|
|
310,000 |
|
|
|
310 |
|
|
|
|
|
|
|
|
|
|
|
5,890 |
|
|
|
|
|
|
|
6,200 |
|
Vesting
of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,237 |
|
|
|
|
|
|
|
45,237 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,132,638 |
) |
|
|
(5,132,638 |
) |
Balance,
March 31, 2008
|
|
|
357,078,332 |
|
|
$ |
357,078 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
15,287,878 |
|
|
$ |
(23,243,629 |
) |
|
$ |
(7,598,673 |
) |
See
accompanying notes to condensed financial statements.
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
For
the
|
|
|
|
|
|
|
|
|
|
Period
from
|
|
|
|
|
|
|
|
|
|
July
9, 1998
|
|
|
|
|
|
|
|
|
|
(Date
of
|
|
|
|
|
|
|
|
|
|
Inception)
|
|
|
|
For
the Three Months
|
|
|
through
|
|
|
|
Ended
March 31
|
|
|
March
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(5,132,638 |
) |
|
$ |
(921,554 |
) |
|
$ |
(23,243,629 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
- |
|
|
|
9,703 |
|
|
|
60,287 |
|
Change
in fair value of derivative liabilities related to convertible notes and
warrants
|
|
|
4,413,657 |
|
|
|
87,368 |
|
|
|
10,042,353 |
|
Loss
on impaired and abandoned assets
|
|
|
- |
|
|
|
4,304 |
|
|
|
32,048 |
|
Vesting
of stock options
|
|
|
45,237 |
|
|
|
26,870 |
|
|
|
2,133,309 |
|
Common
stock or warrants issued in exchange for services
|
|
|
7,700 |
|
|
|
7,426 |
|
|
|
692,356 |
|
Cancellation
of stock options
|
|
|
- |
|
|
|
- |
|
|
|
193,275 |
|
Accreted
interest on convertible notes payable
|
|
|
371,618 |
|
|
|
451,945 |
|
|
|
3,173,432 |
|
Beneficial
conversion feature discount
|
|
|
- |
|
|
|
- |
|
|
|
298,507 |
|
Gain
on extinguishment of debt
|
|
|
- |
|
|
|
- |
|
|
|
(510,105 |
) |
Acquisition
costs
|
|
|
- |
|
|
|
- |
|
|
|
65,812 |
|
Change
in working capital components:
|
|
|
|
|
|
|
|
|
|
|
|
|
Refunds
and accounts receivable
|
|
|
2,080 |
|
|
|
- |
|
|
|
(470 |
) |
Prepaid
expenses
|
|
|
(29,578 |
) |
|
|
(29,791 |
) |
|
|
(31,245 |
) |
Deposits
and other assets
|
|
|
11,000 |
|
|
|
(25,625 |
) |
|
|
(7,140 |
) |
Accounts
payable
|
|
|
54,951 |
|
|
|
(116,223 |
) |
|
|
89,769 |
|
Short-term
notes payable
|
|
|
- |
|
|
|
(2,398 |
) |
|
|
13,125 |
|
Accrued
liabilities
|
|
|
43,591 |
|
|
|
2,247 |
|
|
|
181,843 |
|
Advances
from officers/directors
|
|
|
4,104 |
|
|
|
- |
|
|
|
4,104 |
|
Accrued
interest payable
|
|
|
27,565 |
|
|
|
20,359 |
|
|
|
277,501 |
|
Net
cash used in operating activities
|
|
|
(180,713 |
) |
|
|
(485,369 |
) |
|
|
(6,534,868 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of furniture and equipment
|
|
|
- |
|
|
|
- |
|
|
|
(42,334 |
) |
Net
cash used in investing activities
|
|
|
- |
|
|
|
- |
|
|
|
(42,334 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sale of common stock and exercise of warrants, net
|
|
|
- |
|
|
|
- |
|
|
|
1,898,869 |
|
Proceeds
from issuance of notes payable, net of origination fees
|
|
|
- |
|
|
|
285,000 |
|
|
|
4,697,805 |
|
Repricing
of warrants and other
|
|
|
- |
|
|
|
- |
|
|
|
(16,799 |
) |
Net
cash provided by financing activities
|
|
|
- |
|
|
|
285,000 |
|
|
|
6,579,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash
|
|
|
(180,713 |
) |
|
|
(200,369 |
) |
|
|
2,673 |
|
Cash
at beginning of the period
|
|
|
183,386 |
|
|
|
287,992 |
|
|
|
- |
|
Cash
at end of the period
|
|
$ |
2,673 |
|
|
$ |
87,623 |
|
|
$ |
2,673 |
|
(Continued
on Next Page)
GRANT LIFE
SCIENCES, INC.
(A
Development Stage Company)
CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued
from Preceding Page)
Supplemental
disclosure of non-cash investing and financing activities:
During
the three months ended March 31, 2008, the Company issued 45,542,719 shares of
common stock upon conversion of $301,312 of secured convertible notes
payable. The value of the related derivative at the time of
conversion was $362,021, which was credited to additional paid-in
capital.
During
the three months ended March 31, 2008, the Company satisfied $206,712 of accrued
interest payable by issuance of a convertible note payable, having essentially
the same terms and conditions as other outstanding convertible notes
payable.
During
the three months ended March 31, 2007, the Company issued 22,000,000 shares of
common stock upon conversion of $648,040 of secured convertible notes
payable. The value of the related derivative at the time of
conversion was $1,460,732, which was credited to additional paid-in
capital.
See
accompanying notes to condensed financial statements.
GRANT
LIFE SCIENCES, INC.
(A
Development Stage Company)
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2008 and 2007
(Unaudited)
NOTE
A – ORGANIZATION AND BASIS OF PRESENTATION
Organization and
Business
On July
30, 2004, Grant Ventures, Inc., a Nevada corporation, acquired Impact
Diagnostics, Inc., a Utah corporation organized on July 9, 1998, through the
merger of Grant Ventures, Inc.’s wholly owned subsidiary, Impact Acquisition
Corporation, with Impact Diagnostics, Inc. Grant Ventures, Inc. was
an inactive publicly registered shell corporation with no significant assets or
operations. For accounting purposes, the merger was treated as
a recapitalization. Grant Ventures, Inc. changed its name to Grant
Life Sciences, Inc. (the Company) in November 2004. Impact
Acquisition Corporation and Impact Diagnostics, Inc. were subsequently
dissolved.
The
Company’s purpose is to research, develop, market and sell diagnostic kits for
detecting disease with emphasis on the detection of low-grade cervical
cancer.
Development Stage
Company
Since
July 9, 1998 (date of inception), the Company has operated as a development
stage company as defined in Statement of Financial Accounting Standards (“SFAS”)
No. 7, Accounting and
Reporting by Development Stage Companies. The Company’s development stage
activities have consisted primarily of the development of medical diagnostic
kits. These development stage activities have been funded primarily
through debt and equity financing. The Company has not yet
established a significant source of revenue.
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. Continuing as a going concern is
dependent upon successfully obtaining additional working capital through debt or
equity financing and, eventually, achieving profitable
operations. There can be no assurance of either obtaining additional
funding or achieving profitable operations. No adjustments have been
made to the accompanying condensed financial statements that might result from
the outcome of this uncertainty.
The
Company plans to seek additional debt and/or equity funding. The
Company also plans to investigate the feasibility of out-licensing the
technologies controlled by the Company, the feasibility of merging with an
operating company generating positive cash flow, and/or the feasibility of
collaborating with other research and development companies that are better
funded than the Company. There can be no assurance, however, that any
of these plans will materialize.
Interim Financial
Information
The
interim financial information as of March 31, 2008 and for the three-month
periods ended March 31, 2008 and 2007, is unaudited. The condensed balance sheet
as of December 31, 2007 is derived from audited financial statements, the report
on which included an explanatory paragraph that there is substantial doubt as to
the Company’s ability to continue as a going concern. The accompanying financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information. Accordingly,
they do not include all of the information and notes required by U.S. generally
accepted accounting principles for complete financial statements. The
accompanying condensed financial statements and notes should be read in
conjunction with the financial statements and notes included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2007.
In the
opinion of management, all adjustments that are necessary for a fair
presentation of the financial information for the interim periods reported have
been made, which consist only of normal recurring adjustments. The
results of operations for the three-month period ended March 31, 2008 are not
necessarily indicative of the results that can be expected for future quarters
or for the entire year ending December 31, 2008.
Certain
reclassifications have been made to prior period financial statements to
conform with the current presentation.
NOTE
B – SIGNIFICANT ACCOUNTING POLICIES
Cash
Equivalents
The
Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. There were no cash
equivalents as of March 31, 2008 and December 31, 2007.
Concentration of Credit
Risk
Financial
instruments and related items that potentially subject the Company to
concentrations of credit risk consist primarily of cash. The Company
places its cash and temporary cash investments with credit quality institutions.
At times, such investments may be in excess of the insurance limit of the
Federal Deposit Insurance Corporation.
Convertible Notes and
Related Discount
The
convertible notes give the holder the right to convert such notes to common
stock at a specified discount from the market price of the Company’s common
stock at the time of conversion. The size of the discount provides
the holder with substantial incentive to convert the notes to common stock, such
that it is expected that the notes will be converted to common stock rather than
repaid. Thus, when a convertible note is issued, a note discount
equivalent to the face amount of the note is established. The note
discount is subsequently accreted to interest expense over the life of the
note.
Derivative Liability Related
to Convertible Notes and Warrants
The
derivative liability related to convertible notes and warrants arises because
the conversion price of the Company’s convertible notes is solely a function of
the market price of the Company’s common stock. Thus, the number of
shares that may be issued upon conversion of such notes is indeterminate, which
gives rise to the possibility that the Company may not be able to fully settle
its convertible note and warrant obligations by the issuance of common
stock.
The
derivative liability related to convertible notes and warrants is adjusted to
fair value as of each date that a note is converted or a warrant is exercised,
as well as at each reporting date, using the Black-Scholes pricing
model. Any change in fair value between reporting dates that arises
because of changes in market conditions is recognized as a gain or
loss. To the extent the derivative liability is reduced as a
consequence of the conversion of notes or the exercise of warrants, such
reduction is recognized as additional paid-in capital as of the conversion or
exercise date.
Revenue
Recognition
Revenues
are recognized in the period that the following four criteria are
met: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred; (3) the selling price is fixed or determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4) are
based on management's judgments regarding the fixed nature of the selling prices
of the products delivered and the collectibility of those amounts. Provisions
for discounts and rebates to customers, estimated returns and allowances, and
other adjustments are provided for in the same period the related sales are
recorded. The Company defers any revenue for which the product has not been
delivered or is subject to refund until such time that the Company and the
customer jointly determine that the product has been delivered or no refund will
be required. The Company has had no revenue since 2005.
Stock-Based Compensation and
Other Stock Based Payments
The cost
of employee and board member services received in exchange for an award of an
equity instrument is based on the grant-date fair value of the award, determined
by using the Black-Scholes pricing model. This cost is recognized over the
period during which the award recipient is required to provide service in
exchange for the award, which generally corresponds to the vesting
period.
From time
to time, the Company acquires services from or settles obligations to
non-employees and non-directors by the issuance of common stock. In
these instances, the transaction is recorded at the fair value of the underlying
service or obligation, unless the fair value of the issued equity instrument is
considered to be a more reliable measure of fair value.
Research and Development
Costs
Research
and development costs are expensed as incurred. These costs include direct
expenditures for goods and services, as well as some indirect expenditures such
as consulting fees.
Deferred Income
Taxes
Deferred
income taxes are provided using the asset and liability method for financial
reporting purposes. Under this method, deferred income tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled. The effect on deferred income tax assets and
liabilities of a change in income tax rates is recognized in the statements of
operations in the period that includes the enactment date. Valuation allowances
are provided when it is more likely than not that some or all of the net
deferred income tax assets may not be realized.
Net Loss Per Common
Share
The
computation of basic net loss per common share is based on the weighted average
number of shares outstanding during each period. The computation of
diluted earnings per common share is based on the weighted average number of
common shares outstanding during the period plus common stock equivalents,
unless the effect of their inclusion is anti-dilutive. During periods
of net losses, basic and diluted net loss per common share are
equivalent.
Use of Estimates in the
Preparation of Financial Statements
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of reporting dates and the reported amounts
of revenue and expenses during the reporting periods. Actual results
could differ from those estimates.
New Accounting
Pronouncements Applicable to the Company
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, Fair Value
Measurements, which defines fair value, establishes a framework for
measuring fair value in U.S. generally accepted accounting principles, and
expands disclosures about fair value measurements. SFAS No. 157 does not
require any new fair value measurements, but provides guidance on how to measure
fair value by providing a fair value hierarchy used to classify the source of
the information. This statement is effective for the Company beginning
January 1, 2008. The Company is currently assessing the potential impact
that adoption of SFAS No. 157 will have on its financial
statements.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities-Including an Amendment of SFAS No.
115. SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Most of
the provisions of this statement apply only to entities that elect the fair
value option. This statement is effective for the Company beginning
January 1, 2008. The Company is currently assessing the potential impact
that adoption of SFAS No. 159 will have on its financial
statements.
NOTE
C – CONVERTIBLE NOTES PAYABLE AND WARRANTS
During
the three months ended March 31, 2008, the Company issued 45,542,719 common
shares upon the conversion of $301,312 of convertible notes payable in several
separate transactions. The fair values of the related derivative
liabilities at the dates of the respective conversions totaled $362,021 which
amounts were credited to additional paid-in capital.
Also
during the three months ended March 31, 2008, the Company issued $206,712 of
convertible notes in payment of accrued interest on previously issued
convertible notes.
As of
March 31, 2008, the remaining convertible notes were convertible into
607,435,714 shares of the Company’s common stock based on the then market price
of the common stock.
As of
March 31, 2008, there were outstanding warrants to purchase 33,379,542 shares of
the Company’s common stock at a weighted average purchase price per share of
$0.16. These warrants expire between July 2009 and November
2014. These amounts are unchanged from December 31,
2007.
NOTE
D – STOCK OPTIONS
As of
March 31, 2008, there were outstanding stock options on 22,226,218 shares of the
Company’s common stock at a weighted average exercise price per share of
$0.049. These options expire between August 2013 and June
2017. These amounts are unchanged from December 31,
2007.
The
Company recorded $45,237 and $26,870 of compensation expense related to these
stock options for the three-month periods ended March 31, 2008 and 2007,
respectively. Unrecognized compensation expense applicable to
unvested options as of March 31, 2008, was $75,087.
NOTE
E – INCOME TAXES
For
income tax reporting purposes, the Company’s net operating loss carryforwards
approximate $13,550,000 and unused federal tax credits approximate $90,000,
which begin expiring in 2019, subject to Section 382 of the Internal Revenue
Code, which places limitations on the amount of taxable income which can be
offset by net operating loss carryforwards and other tax attributes after a
change in control of a loss corporation. As a result, there can be no
assurance that some or all of the Company’s net operating loss carryforwards and
other tax attributes will be available to offset future taxable income and
associated tax, if any.
The
Company has established a valuation allowance to fully reserve against all of
its net deferred income tax assets, as management has determined that it is more
likely than not that those assets will not be realized based on the Company’s
operating history. As a result, there are no net deferred income tax
assets presented in the Company’s condensed balance sheets.
NOTE
F – SUBSEQUENT EVENTS
Subsequent
to March 31, 2008 and through May 15, 2008, the Company issued 17,639,000 shares
of common stock upon the conversion of $89,959 of convertible
notes.
On May 1,
2008, the Company’s Board of Directors approved cancellation of the 2007 stock
option plan and implementation of a 2008 stock option plan, subject to
shareholder approval, under which options on 68,000,000 shares may be
granted.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this report. References in
this section to "Grant Life Sciences, Inc.," the "Company," "we," "us," and
"our" refer to Grant Life Sciences, Inc. and our direct and indirect
subsidiaries on a consolidated basis unless the context indicates
otherwise.
Forward-Looking and
Cautionary Statements
This
report contains certain forward-looking statements. These statements
relate to future events or the Company’s future performance and involve known
and unknown risks and uncertainties. Actual results may differ
substantially from such forward-looking statements, including, but not limited
to, the following:
•
The Company’s ability to fund its cash and working capital needs;
•
The Company’s ability to maintain its corporate existence as a viable entity;
and
•
Other risks detailed in the Company’s periodic report filings with the
SEC.
In some
cases, you can identify forward-looking statements by terminology such as “may”,
“will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”,
“estimates”, “predicts”, “potential”, “continue”, or the negative of these terms
or other comparable terminology. These statements are only
predictions. Although the Company believes that the expectations reflected
in the forward-looking statements are reasonable, it cannot guarantee future
results, levels of activity, performance or achievements.
Overview
The
Company is a development stage company. From inception in 1998
through March 31, 2008, it has not generated significant
revenues. All audit reports issued to date have included an
explanatory paragraph that there is substantial doubt as to the Company’s
ability to continue as a going concern.
Plan of
Operation
The
Company is focused on developing technologies that will be useful in
commercializing rapid test products that can screen women for cervical cancer or
pre-cancerous conditions. The majority of cervical cancer is
generally believed to be caused by different strains of the human papilloma
virus (HPV). Most of the Company’s effort in prior years has centered
on HPV antibody detection tests. In 2006, the Company signed a
memorandum of understanding to in-license technology pertaining to HPV antigen
detection tests. This memorandum of understanding evolved into a
contract in November 2007. In June 2007, the Company signed another
memorandum of understanding to in-license technology based on a molecular
diagnostic test for HPV. This memorandum of understanding was also
converted to a contractual arrangement in November 2007. Due to
capital constraints, the Company has only been able to devote minimal funds to
research and development, in particular, over the past year.
The
Company’s ability to conduct further research on the technologies described in
the preceding paragraph is directly related to the Company’s ability to raise
capital to fund such research. In addition to debt and equity
funding, the Company may investigate out-licensing of the technologies presently
under its control, the feasibility of merging with a cash-flow positive
operating company, and the feasibility of collaborating with other research and
development companies that are better funded than the Company.
Liquidity and Capital
Resources
From
inception in 1998 through March 31, 2008, the Company has relied on loans and
equity infusions to fund its operations. The Company has never
generated positive cash flows from operating activities. In the near
term, and perhaps longer, the Company will continue to be dependent on its
ability to raise debt and/or equity capital. There is no assurance
that the Company will be able to continue to do so. Over a longer
term, the Company’s continuation as a going concern is dependent on its ability
to generate sufficient cash flows from operating activities to meet its
obligations on a timely basis and to obtain additional financing as may be
required. Since June 2005, the Company’s primary source of funding
has been from the sale of convertible notes.
As of
March 31, 2008, the Company had a working capital deficiency of
$668,102. The Company’s cash balance at March 31, 2008 was
$2,673. Since mid-March 2008, the Company has delayed payments to
vendors and employees to the extent possible and has relied on cash advances
from officers and directors to cover payments that could not be
delayed. The Company has obtained a waiver from the holder of its
convertible notes payable which allows the Company to seek funding from
alternate sources. As of May 15, 2008, the Company had received a
proposal from an alternate funding source which would provide working capital,
if consummated, for approximately two to three months. The Company is actively
pursuing this proposal. There can be no assurance that the Company
will be successful in obtaining adequate debt or equity financing and, as a
result, the Company may not be able to continue its existence.
Results of
Operations
The
Company has never been profitable. Since inception, aggregate losses
approximate $23,244,000. Since June 2005, the Company has incurred
non-cash charges of approximately $14,108,000 related to interest expense on the
Company’s convertible notes and charges arising from the change in fair value of
the derivative liabilities related to the convertible notes and warrants to
purchase common stock of the Company.
Aggregate
results of operations for the three month-periods ended March 31, 2008 and 2007,
are reasonably comparable except for the impact of the non-cash items
described in the preceding paragraph.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
N/A.
Evaluation
of and Report on Disclosure Controls and Procedures
The
Company’s management is responsible for establishing and maintaining adequate
disclosure controls over reports filed by the Company with the Securities and
Exchange Commission (“SEC”). The Company’s management, with the
participation of its principal executive officer and principal financial
officer, evaluated the effectiveness of the Company’s disclosure controls and
procedures for the three months ended March 31, 2008. Based on
this evaluation, because of the Company’s limited resources and limited number
of employees, the Company’s management concluded that, as of March 31, 2008, the
Company’s disclosure controls and procedures are not effective to provide
reasonable assurance that information required to be disclosed by the Company in
the reports that it files or submits under the 1934 Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC’s rules
and forms and to provide reasonable assurance that such information is
accumulated and communicated to the Company’s management, including its
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosures.
Evaluation
of and Report on Internal Control over Financial Reporting
The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting of the Company. The
Company’s management, with the participation of its principal executive officer
and principal financial officer, evaluated the effectiveness of the Company’s
internal control over financial reporting as of March 31, 2008 based on criteria
established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, because of the Company’s limited resources and limited number of
employees, the Company’s management concluded that, as of March 31, 2008, the
Company’s internal control over financial reporting is not effective in
providing reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.
Changes
in Disclosure Controls and Internal Control over Financial
Reporting
The
Company’s chief financial officer resigned on March 11, 2008. The
Company currently does not have an executive officer with substantial expertise
in matters of accounting, internal control and financial
reporting. Otherwise, there were no changes in the Company’s
disclosure controls or internal control over financial reporting during the
quarter ended March 31, 2008, that materially affected, or are reasonably
likely to materially affect, the Company’s disclosure controls or internal
control over financial reporting.
Limitations
on Controls
The
Company’s management does not expect that the Company’s disclosure controls and
procedures or its internal control over financial reporting will prevent or
detect all error and fraud. Any control system, no matter how well designed and
operated, is based upon certain assumptions and can provide only reasonable, not
absolute, assurance that its objectives will be met. Further, no evaluation of
controls can provide absolute assurance that misstatements due to error or fraud
will not occur or that all control issues and instances of fraud, if any, within
the Company have been detected.
PART
II
OTHER
INFORMATION
ITEM
1 - LEGAL PROCEEDINGS
None.
ITEM
1A. RISK FACTORS
N/A
ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5 - OTHER INFORMATION
None.
Item
6. Exhibits
Exhibit
Number
|
|
Description
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer and Principal Accounting and Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32.1
|
|
Certification
of Chief Executive Officer and Principal Accounting and Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
Signatures
In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
GRANT
LIFE SCIENCES, INC.
|
|
|
|
|
|
|
By:
|
/s/ Hun-Chi
Lin |
|
|
|
Hun-Chi
Lin
|
|
|
|
President,
Principal Accounting and Financial Officer, and Chief
Scientist
|
|
|
|
|
|
18