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GTHR Genethera

Filed: 12 May 21, 4:43pm
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended March 31, 2021

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM ______ TO _________

 

000-27237

Commission File Number:

 

(GENA THERA LOGO)

 

GeneThera, Inc.

(Exact name of registrant as Specified in its Charter)

 

Nevada65-0622463
(State or Other Jurisdiction of(Internal Revenue Service
Incorporation or Organization)Employer Identification Number)

 

3051 W. 105th Ave. #350251, Westminster, CO80035
(Address of Principal Executive Offices)(Zip Code)

 

Registrant’s telephone number, including area code:  

(720) 587-5100

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

 

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.001 per share

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

 

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-Q or any amendment to this Form 10-Q. Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer oAccelerated filer o
Non-accelerated filer o

Smaller reporting company x

Emerging growth company o

 

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

 

State the number of shares of the issuer’s common stock outstanding, as of the latest practicable date: 25,571,255 shares of common stock issued and outstanding as of May 12, 2021.

1

 

PART I – FINANCIAL INFORMATION

 

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

 

Sections of this Form 10-Q, including Business and Management’s Discussion and Analysis or Plan of Operation, contain “forward-looking statements”. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as may, will, should, would, could, plan, goal, potential, expect, anticipate, estimate, believe, intend, project, and similar words and variations thereof. This report contains forward-looking statements that address, among other things:

 

*Our financing plans,

 

*Regulatory environments in which we operate or plan to operate, and

 

*Trends affecting our financial condition or results of operations, the impact of competition, the start-up of certain operations and acquisition opportunities.

 

Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements (“Cautionary Statements”) include, among others:

 

*Our ability to raise capital,

 

*Our ability to execute our business strategy in a very competitive environment,

 

*Our degree of financial leverage, risks associated with our acquiring and integrating companies into our own,

 

*Risks relating to rapidly developing technology, and regulatory considerations,

 

*Risks related to international economies,

 

*Risks related to market acceptance and demand for our products and services,

 

*The impact of competitive services and pricing, and

 

*Other risks referenced from time to time in our SEC filings.

 

All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.

2

 

Item 1. Financial Statements.

 

GeneThera, Inc.

 

March 31, 2021

 

Index to the Condensed Consolidated Financial Statements

 

Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 20204
  
Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2021 and 2020 (unaudited)5
  
Condensed Consolidated Statements of Stockholder’s Deficit for the Three Months Ended March 31, 2021 and 2020 (unaudited)6
  
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2021 and 2020 (unaudited)7
  
Notes to the Condensed Consolidated Financial Statements (unaudited)8

3

 

GeneThera, Inc.

Condensed Consolidated Balance Sheets

 

    March 31, 2021    December 31, 2020 
  (unaudited)    
ASSETS        
Current assets        
Cash $-  $- 
Prepaid expenses  1,022   1,022 
Total current assets  1,022   1,022 
Property and equipment        
Automobile & Trucks  26,400   26,400 
Less: Accumulated depreciation  (17,160)  (15,840)
Total property and equipment, net  9,240   10,560 
Other assets - Deposit  -   - 
TOTAL ASSETS $10,262  $11,582 
         
LIABILITIES & STOCKHOLDERS’ DEFICIT        
Current liabilities        
Accounts payable $81,070  $81,070 
Accrued expenses  6,936,018   6,798,920 
Notes payable  25,800   25,800 
Convertible notes payable, net of discount  54,500   54,500 
Loan from shareholder  744,119   731,796 
         
Total liabilities  7,841,507   7,692,086 
         
Commitments and Contingencies  -   - 
Stockholders’ deficit:        
Series A preferred stock, par value $0.001 per share, 20,000,000 Shares authorized, 0 shares issued and outstanding, respectively  -   - 
Series B preferred stock, par value $0.001 per share, 30,000,000 shares authorized, 26,038,572 shares issued and outstanding, respectively  26,039   26,039 
Common stock, par value $0.001 per share, 300,000,000 shares authorized, 25,571,255 and 24,071,255 shares issued and outstanding, respectively  25,571   24,071 
Common stock to be issued  53,572   53,572 
Additional paid-in capital  23,529,776   23,475,776 
Accumulated deficit  (31,466,202)  (31,259,962)
Total stockholders’ deficit of GeneThera, Inc.  (7,831,245)  (7,680,504)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT $10,262  $11,582 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4

 

GeneThera, Inc.

Condensed Consolidated Statements of Operations

 

  Three Months Ended 
  March 31, 
    2021    2020 
  (unaudited)  (unaudited) 
Expenses        
General and administrative expenses $86,775  $23,887 
Payroll expenses  116,500   116,500 
Depreciation  1,320   1,320 
Total operating expenses  204,595   141,707 
Loss from operations  (204,595)  (141,707)
Other expenses        
Interest expense  (1,646)  (1,646)
   -   - 
Total other expense  (1,646)  (1,646)
Other Income        
   -   - 
Total other Income  -   - 
Net income (loss) before income taxes  (206,241)  (143,353)
 Provision for income taxes  -   - 
Net income (loss)  (206,241)  (143,353 
Loss per common share - Basic and diluted  (0.01)  0.00 
Weighted average common shares outstanding - Basic and diluted  24,105,588   35,902,602 

 

See accompanying notes to unaudited condensed consolidated financial statements.

5

 

GeneThera, Inc.

Condensed Consolidated Statement of Stockholders’ Deficit (unaudited)

 

Three Months Ended March 31, 2021

 

  Series A
Preferred Stock
  Series B
Preferred Stock
  Common Stock  Additional
Paid-In
  Accumulated  Stock to    
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  be Issued  Total 
Balance at December 31, 2020  -  $-   26,038,572  $26,039   24,071,255  $24,071  $23,475,776  $(31,259,962) $53,572  $(7,680,504)
Stock issued to advisory                  1,500,000   1,500   54,000           55,500 
Net income  -   -   -   -   -   -   -   (206,241)  -   (206,241)
Balance at March 31, 2021  -  $-   26,038,572  $26,039   24,071,255  $25,571  $23,529,776  $(31,466,202) $53,572  $(7,831,245)

 

Three Months Ended March 31, 2020

 

  Series A
Preferred Stock
  Series B
Preferred Stock
  Common Stock  Additional
Paid-In
  Accumulated  Stock to    
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  be Issued  Total 
Balance at December 31, 2019  -  $-   26,038,572  $26,039   35,902,602  $35,904  $23,448,986  $(30,485,499) $53,572  $(6,920,998)
Net Loss  -   -   -   -   -   -   -   (143,353)  -   (143,353 
Balance at March 31, 2020  -  $-   26,038,572  $26,039   35,902,602  $35,904  $23,448,986  $(30,628,852) $53,572  $(7,064,351)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

6

 

GeneThera, Inc.

Condensed Consolidated Statements of Cash Flows

 

  For the Three Months Ended 
  March 31, 
  2021  2020 
    (unaudited)    (unaudited) 
Cash flows from operating activities        
Net loss $(206,241) $(143,353)
Adjustments to reconcile net loss to net cash used in operating activities:        
Stock-based compensation  -   - 
Amortization of discount on debt  -   - 
Depreciation and amortization  1,320   1,320 
Shares issued for services  55,500   - 
Changes in operating assets and liabilities:        
Prepaids        
Deposit  -   - 
Fixed Assets  -   - 
Accounts receivable - related parties  -   - 
Accounts payable and accrued expenses - related parties  12,323   (4,102)
Accounts payable and accrued expenses  137,098   398,853 
Net cash used in operating activities  -   (5,309)
         
Cash flows from investing activities        
Purchase of Fixed Asset  -   - 
Net cash used in investing activities  -   - 
         
Cash flows from financing activities        
Proceeds from issuance of stock  -   - 
Proceeds from notes payable  -   - 
Net advance from related parties  -   - 
Proceeds from convertible notes  -   - 
Net cash provided by financing activities  -   - 
         
Net decrease (increase) in cash  -   (5,309)
Cash at the beginning of the year  -   5,309 
Cash at the end of the year $-  $- 

 

See accompanying notes to unaudited condensed consolidated financial statements.

7

 

GENETHERA, INC.
March 31, 2021

Notes to the Condensed Consolidated Financial Statements
(unaudited)

 

Note 1 – Organization and nature of operations and summary of significant accounting policies

 

Organization and nature of operations

 

The consolidated financial statements include GeneThera, Inc. and its wholly owned subsidiary GeneThera, Inc. (Colorado) (collectively, the “Company”). The Company had a long-standing research collaboration with GTI Research.

 

The Company is a biotechnology company that develops molecular assays and therapeutics for the detection and treatment for COVID-19 and other zoonotic diseases.

 

Basis of Presentation – Unaudited Financial Information

 

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2020 and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC.

 

Use of estimates

 

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.

 

Principles of consolidation

 

The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany accounts are eliminated upon consolidation.

 

Cash and cash equivalents

 

Cash equivalents are highly liquid investments with an original maturity of three months or less.

 

Fair Value of Financial Instruments

 

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments.

 

Property and equipment, net

 

Property and equipment consist primarily of office and laboratory equipment, leasehold improvements, vehicle, and is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives ranging from five to seven years. Leasehold improvements are amortized over the shorter of their economic lives or lease terms.

8

 

Fair Value Measurements

 

The Company follows ASC 820-10 of the FASB Accounting Standards Codification to measure the fair value of its financial instruments and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by ASC 820-10 are described below:

  

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
   
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
   
Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist.

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform to current period presentation.

 

Impairment of Long-Lived Assets

 

The Company reviews the recoverability of its long-lived assets to determine whether events or changes in circumstances occurred that indicate the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset from the expected future cash flows of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between the estimated fair value and carrying value. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

 

Revenue recognition

 

There were no revenues as of March 31, 2021 and 2020, respectively.

 

The Company follows the FASB Accounting Standards Codification ASC 606 – Revenues from Contracts with Customers for revenue recognition. The Company considers revenue realized or realizable and earned when all the following criteria are met:

  

1)identification of the contract with a customer;

 

2)identification of the performance obligations in the contract;

 

3)determination of the transaction price;

 

4)allocation of the transaction price to the performance obligations in the contract; and

 

5)recognition of revenue when or as a performance obligation is satisfied. Revenue is recognized when each performance obligation is satisfied by the entity. An estimate of the variable consideration or performance obligations that an entity ultimately expects to be entitled to is included in the transaction price, and revenue is recognized upon satisfaction of the related performance obligation(s). An implicit or explicit significant financing component is taken into consideration. IP licenses must be analyzed. Each contract with customers is analyzed for multiple elements if any element must stand alone.

9

 

Leases

 

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and will recognize a right of use (“ROU”) asset and liability in the consolidated balance sheet when and if the Company enters into a qualifying lease agreement.

 

At contract inception, the Company determines whether an arrangement is or contains a lease and whether the lease should be classified as an operating or a financing lease. A contract is or contains a lease if the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Control is determined based on the right to obtain all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. ROU assets for operating leases represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments.

 

Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement, as well as any variable rate payments that depend on an index, initially measured using the index at the lease commencement date. Non-lease components are accounted for separately from the fixed lease component for all leases. Most of the Company’s leases do not provide an implicit rate that can readily be determined. Therefore, the applied discount rate is based on the Company’s incremental borrowing rate, which is determined using its credit rating and other information available as of the commencement date and is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Lease terms may include options to renew, which the Company factors into the determination of the lease term when it is reasonably certain that the Company will exercise that option. The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

 

Operating lease expense is recognized on a straight-line basis over the lease term and is included in “Cost of sales” and “Selling, general and administrative” line items in the Company’s consolidated statements of comprehensive income. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases is recognized on a straight-line basis over the lease term.

 

The Company monitors for events or changes in circumstances that require a reassessment of its leases. When a reassessment results in the premeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the ROU asset unless doing so would reduce the ROU asset to an amount less than zero, in which case the remaining adjustment would be recorded in the consolidated statements of comprehensive income.

 

The Company has no leased laboratory space and a month-to-month office space lease. No right of use asset and liability were recorded for this lease.

 

Stock-Based Compensation

 

Stock-based compensation is accounted for under FASB ASC Topic No. 718 – Compensation – Stock Compensation. The guidance requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). The guidance also requires measurement of the cost of employee services received in exchange for an award based on the grant-date fair value of the award. The Company accounts for non-employee share-based awards in accordance with guidance related to equity instruments that are issued to other than employees for acquisition, or in conjunction with selling, goods or services.

 

Research and development costs

 

R&D cost are currently expensed as incurred and primarily include cost associated with R&D arrangements with external parties in connection with the Company’s robotic technology project.

 

Income taxes

 

Income taxes are accounted for in accordance with the provisions of FASB ASC Topic No. 740 - Income Taxes. Deferred 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 their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

10

 

Basic and diluted net loss per common share

 

Basic and diluted net loss per share calculations are presented in accordance with FASB ASC Topic No. 260 – Earnings per Share and are calculated on the basis of the weighted average number of common shares outstanding during the period. Diluted per share calculations includes the dilutive effect of common stock equivalents in years with net income. As the Company is in a loss position, any calculation of the dilutive effects of the Company’s convertible securities would reduce the loss per share amount, and, as such, the Company will not perform the calculation.

 

Shipping and Handling Costs

 

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of revenue as incurred.

 

Shipping and handling costs were $0 and $0 for the nine months ended March 31, 2021 and 2020, respectively.

 

Recently issued accounting pronouncements

 

In August 2020, the FASB issued ASU 2020-06, Debt—“Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company has determined that there is currently no impact of the guidance on its consolidated financial statements.

 

Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company.

 

Note 2- Going Concern

 

As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $31,466,202 and negative working capital of $7,840,485 as of March 31, 2021. This raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. The consolidated condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Presently the Company is considering ways to apply its molecular robotic technology to address the COVID-19 pandemic. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

Note 3 - Property and Equipment

 

As of March 31, 2021, the Company had a vehicle with a net book value of $9,240.

 

Note 4 – Related party transactions

 

The Company has an outstanding loan payable and accrued interest to Antonio Milici, its CEO and stockholder amounting to $673,092 as March 31, 2021 and December 31, 2020, respectively. This outstanding loan to the Company is unsecured and bears interest at 2.41%. The Company has an outstanding loan and accrued interest payable to Tannya Irizarry, its interim CFO and stockholder, amounting to $71,027 and $58,704 as March 31, 2021 and December 31, 2020, respectively. This outstanding loan to the Company is unsecured and bears interest at 8%.

 

Tannya Irizarry owns 50% interest in GTI Corporate Transfer Agents, LLC, the Company’s transfer agent. During the three months ended March 31, 2021 and 2020, the Company made payments to GTI Corporate Transfer Agents, LLC in the amounts of $80 and $1,600, respectively.

 

The Company utilizes Elia Holding, LLC for construction and other maintenance services to maintain the Company’s office and lab space. Elia Holding, LLC is controlled by Rene Irizarry related to the CFO. The Company made payments to Elia Holding, LLC in the amounts of $82 and $200, respectively.

11

 

Note 5 – Accrued expenses

 

The Company’s accrued expenses consisted of the following:

 

  March 31, 2021  December 31, 2020 
Accrued officer salaries (see below)  $5,656,915   $5,338,900 
Accrued interest  267,942   252,546 
Other  1,011,161   1,207,474 
   $6,936,018   $6,798,920 

 

Note 6 – Convertible notes payable

 

The Company’s issued convertible notes are due on demand, bearing interest at an annual rate of 8%. The notes are convertible into shares of Company common stock at a conversion price of $0.01 to $0.05 per share. As of March 31, 2021, and December 31, 2020, the total outstanding principal and interest is $54,500.

 

As of December 31, 2020, an analysis of the principal amount of convertible notes payable that have elected conversion to common stock amounted to $366,000. The Company’s transfer agent has been constrained in its efforts to issue the common stock for these convertible notes due to the noncompliance of the Company’s filing requirements. The Company has ceased accruing interest on these convertible notes but continues to accrue interest on the remaining convertible notes of $54,500. The convertible notes that have elected conversion without the stock being issued have been included in ‘Accrued liabilities’ on the Balance Sheet.

 

Note 7 - Shareholders’ equity

 

Preferred Stock

 

The Company has authorized 20,000,000 shares of Series A Preferred Stock, $.001 par value, and 30,000,000 shares of Series B Preferred Stock, $.001 par value.

 

As of March 31, 2021, and December 31, 2020, the Company had 0 shares of Series A Preferred Stock issued and outstanding, respectively.

 

As of March 31, 2021, and December 31, 2020, the Company had 26,038,572 shares of Series B Preferred Stock issued and outstanding, respectively.

 

Common stock

 

The Company has authorized 300,000,000 shares of its common stock, $.001 par value. The Company had issued and outstanding 24,071,255 shares as of March 31, 2021 and December 31, 2020, respectively.

 

On March 18, 2021, the Company issued 1,500,000 restricted common shares to Venus Capital Fund, LLC for consulting services related to security and capital raise efforts. The Company recorded a consulting expense of $55,500.

 

Note 8 – Commitments

 

Employment Agreements

 

In 2017, the Company entered into five-year employment agreements with its chief executive and scientific officer and its chief administrative and financial officer. The agreements provide for compensation of $21,500 and $17,333 per month, respectively, and expires on January 31, 2022. The total accrued quarterly compensation for the periods ended March 31, 2021 and 2020 was $116,500, respectively.

 

Office Space Lease

 

The Company has a temporary office space on a month-to-month basis. No asset or liability has been recorded on the balance sheet.

 

On April 3, 2020, GeneThera entered into a preliminary agreement with Green RV Storage LLC for the purchase of a 16,000 square foot building located in the planned Northwest 36 Biotechnology Center in Broomfield, Colorado. The new state of the art facility will not be the Company administrative and R&D facility due to the owner’s failure in paying their mortgage obligations. The development is no longer scheduled to be completed in fall of 2021.

12

 

On March 9, 2021, the Company entered into a consulting agreement with Cumming Management Group, Inc. for project management services for our new administrative office and state-of-the-art laboratory building.

 

Note 9 – Subsequent events

 

The impact of COVID-19 on the Company is unknown at this time. The financial consequences of this situation cause uncertainty as to the future and its effects on the economy and the Company.

 

Presently the Company is considering ways to apply its molecular robotic technology to address the COVID-19 pandemic.

 

As of March 31, 2021, no additional conversions of convertible notes have occurred, and no new convertible notes have been issued.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Sections of this Form 10-Q, including the Management’s Discussion and Analysis or Plan of Operation, contain “forward-looking statements”. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as “may,” “will,” “should,” “would,” “could,” “plans,” “goal,” “potential,” “expect,” “anticipate,” “estimate,” “believe,” “intent,” “project,” and similar words and variations thereof. This report contains forward-looking statements that address, among other things,

 

*Our financing plans

 

*Regulatory environments in which we operate or plan to operate

 

*Trends affecting our financial condition or results of operations

 

*The impact of competition, the start-up of certain operations and acquisition opportunities.

 

Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements (“Cautionary Statements”) include, among others,

  

*Our ability to raise capital

 

*Our ability to execute our business strategy in a very competitive environment

 

*Our degree of financial leverage

 

*Risks associated with our acquiring and integrating companies into our own

 

*Risks relating to rapidly developing technology

 

*Regulatory considerations

 

*Risks related to international economies

 

*Risks related to market acceptance and demand for our products and services

 

*The impact of competitive services and pricing

 

*Other risks referenced from time to time in our SEC filings

 

All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.

 

You should read the following discussion of our results and plan of operation in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this Form 10-Q. Statements in this Management’s Discussion and Analysis or Plan of Operation that are not statements of historical or current objective fact are “forward-looking statements.”

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OVERVIEW

 

We have developed proprietary diagnostic assays for use in the agricultural and veterinary markets. Specific assays for Chronic Wasting Disease (CWD) (among elk and deer) and Mad Cow Disease (among cattle) have been developed and are available currently on a limited basis. E. coli (predominantly cattle) and Johne’s disease (predominantly cattle and bison) diagnostics are in development. We are also working on vaccine solutions to meet the growing demands of today’s veterinary industry and tomorrow’s agriculture and healthcare industries. The Company is organized and operated both to continually apply its scientific research to more effective management of diseases and, in so doing, realize the commercial potential of molecular biotechnology.

 

Our business model is based on the development of a proprietary Molecular Robotic/AI Laboratory Platform (“MORAP”), which would combine the use of advanced robotic laboratory systems integrated with AI software systems on a global scale. Upon development, MORAP would encompass a nationwide network of interactive molecular laboratories operated using advanced integrated robotic and machine learning cloud-based software systems, which would be able to share data and interact with each other. We believe MORAP would be capable of processing millions of samples and collecting, storing and analyzing data. We believe that MORAP nationwide communications network could be accomplished through advanced cloud-based software systems, machine learning and Internet-of-Things (IoT) networks. Upon development, MORAP could be readily replicated and scaled utilizing identical instrumentation and software.

 

We have not generated significant operating revenue as of March 31, 2021. Our ability to generate substantial operating revenue will depend on our ability to develop and obtain approval for molecular assays and developing therapeutic vaccines for the detection and prevention of food contaminating pathogens, veterinary diseases, and diseases affecting human health.

 

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern in their report on our consolidated financial statements as of December 31, 2020.  For the three months ended March 31, 2021 and 2020, our operating losses were $206,241 and $143,353, respectively.  Our current liabilities exceeded current assets by $7,840,485 and $7,691,065 as of March 31, 2021 and December 31, 2020, respectively.

 

We will require significant additional funding in order to achieve our business plan.  We will attempt to raise these funds by both means of one or more private offerings of debt or equity securities.  In such events, we may need immediate additional funding.  Our capital requirements will depend on many factors including, but not limited to, the timing of further development of assays to detect the presence of infectious disease from the blood of live animals, our hiring of additional personnel, the applications for, and receipt of, regulatory approvals for any veterinary vaccines that we may develop, and other factors.  Our ability to raise capital will increase our ability to implement our business plan.

 

We also expect to spend a significant amount of our capital on research and development activities for commercialization relating to development and vaccine design/development. When we are able to develop assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by GeneThera. To date, we have introduced our diagnostic solution for Chronic Wasting Disease (CWD) and Mad Cow Disease on a very limited basis. We anticipate that significant funds will be spent on research and development throughout the life of the Company, as this is the source for new products to be introduced to the market. Our plan is to seek new innovations in the robotic biotechnology field. We may be successful in developing or validating any new assays and, when we are successful in developing and validating any such assays, we may be able to successfully commercialize them or earn profits from sales of those assays. Furthermore, we may be able to design, develop, or successfully commercialize vaccines as a result of our research and development efforts.

 

RELATED PARTY TRANSACTIONS

 

The Company has an outstanding loan payable and accrued interest to Antonio Milici, its CEO and stockholder amounting to $673,092 as March 31, 2021 and December 31, 2020, respectively. This outstanding loan to the Company is unsecured and bears interest at 2.41%. The Company has an outstanding loan and accrued interest payable to Tannya Irizarry, its CFO interim and stockholder, amounting to $71,027 and $58,704 as of March 31, 2021 and December 31, 2020, respectively. This outstanding loan to the Company is unsecured and bears interest at 8%.

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GTI Corporate Transfer Agents, LLC is the Company’s transfer agency.  Michelle Torres Colón is the managing director with a 50% ownership and/or interest. Tannya Irizarry is a board member and also has a 50% ownership and/or interest. During the three months ended March 31, 2021, the Company paid GTI Corporate Transfer Agents, LLC $80.

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and find no recent accounting pronouncements that would have a material impact on the financial statements of the Company.

 

EMPLOYEES

 

As of March 31, 2021, we had a total of two full-time employees who devoted substantial effort on our behalf. None of our employees are represented by a collective bargaining unit. We entered into an employment agreement with Antonio Milici, M.D., Ph.D., to serve as our Chief Executive Officer and Chief Scientific Officer through January 31, 2022. In consideration for his services, Dr. Milici will receive a base salary of $258,000 per annum plus bonuses as may be determined by the Board of Directors at its sole discretion. As part of his employment agreement, Dr. Milici is subject to non-disclosure and non-competition obligations and has transferred to the Company all of his interests in any idea, concept, technique, invention or written work. We also entered into an employment agreement with Tannya L. Irizarry to serve as our Chief Administrative Officer through January 31, 2022. Since May 2006, Ms. Irizarry is also our Chief Financial Officer (Interim). Ms. Irizarry’s base salary is $208,000 per annum. There are no employee issues at this time. All accrued salaries have been deferred.

 

RESULTS OF OPERATIONS

 

FOR THE THREE MONTHS ENDED MARCH 31, 2021 and 2020

 

The company did not generate any revenue for the three months ended March 31, 2021 and 2020.

 

The company had total operating expenses of $204,595 for the three months ended March 31, 2021, compared to total operating expenses of $141,707 for the three months ended March 31, 2020, a decrease of $6,362 from the prior period.

 

We had a net loss of $206,241 compared to a net loss of $143,353 for the three months ended March 31, 2021 and 2020, respectively, resulting in an increase of $62,888 consisting mainly of stock-based consulting expense of $55,500.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of March 31, 2021, we had cash and cash equivalents of $0. We have historically financed activities with cash from the private placement of equity and debt securities and advances from related parties. Our auditors have issued a going concern opinion. This means that our auditors believe there is a substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. We have had negligible revenues since inception and had an accumulated deficit of $31,466,202 and negative working capital of $7,840,485 as of March 31, 2021.

 

Our current cash balance is not sufficient to fund our business objectives and we will need significant additional capital over the next twelve months in order to fund our planned operations. Specifically, we intend to spend significant funds on completing our robotic prototype system, validating and testing our products, seeking necessary regulatory approvals and focusing on international expansion. We will attempt to raise capital through one or more private offerings of debt or equity securities or both. We may not be able to secure the financing that we believe is necessary to implement our strategic objectives and, even if additional financing is secured, we may not achieve our strategic objectives. As of the date of this report, we do not have any firm commitments from any investors for any additional funding.

 

Our longer-term working capital and capital requirements will depend upon numerous factors, including revenue and profit generation, pre-clinical studies and clinical trials, the timing and cost of obtaining regulatory approvals, the cost of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights, competing technological and market developments, collaborative arrangements. Additional capital will be required in order to attain such goals. Such additional funds may not become available on acceptable terms and we cannot give assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term.

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The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of liabilities that may result from the outcome of this uncertainty. If we are unable to obtain additional working capital, our business may fail. Accordingly, we must raise cash from sources other than operations. To date, we have financed our operations primarily through cash flow from limited operations, augmented by cash proceeds from financing activities, short-term borrowings and equity contributions by our stockholders. We must raise cash to implement our projected plan of operations. Failure to obtain capital to fund short-term and long-term needs will likely result in the curtailment of our operations or cessation of certain aspects of our business strategy.

 

We had total assets as of March 31, 2021 and 2020 of $10,262 and $11,582, respectively which included the vehicle and prepaid expenses of $10,262.

 

We had total liabilities of $7,841,507 as of March 31, 2021 which included $81,070 of accounts payable, $6,636,018 of accrued liabilities, and $824,419 of notes and loans payable and other liabilities.

 

No cash was provided by operating activities for the three months ended March 31, 2021. The net loss for the three months ended March 31, 2021 and 2020 was $206,241 and $143,353, respectively.

 

GOING CONCERN

 

It is estimated that we will require outside capital for the remainder of 2021 and 2022 for the commercialization of GeneThera molecular assays as well as the development of our therapeutic vaccines. The Company intends to raise these funds by means of one or more private offerings of debt or equity securities or both. The Company is still in discussions with one or two groups to obtain financing through equity. No definitive agreements have been signed. There are no guarantees whether the Company will be able to secure such financing, and if the financing is secured, there are no guarantees whether the Company can achieve the goals laid out in its business plan fully. We will require significant additional funding in order to achieve our business plan.

 

Presently, the Company is considering ways to apply its molecular robotic technology to address the COVID-19 pandemic.

 

Our longer-term working capital and capital requirements will depend upon numerous factors, including revenue and profit generation, pre-clinical studies and clinical trials, the timing and cost of obtaining regulatory approvals, the cost of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights, competing technological and market developments, and collaborative arrangements. Additional capital will be required in order to attain such goals. Such additional funds may not become available on acceptable terms and we cannot give any assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term.

 

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of liabilities that may result from the outcome of this uncertainty. If we are unable to obtain additional working capital, our business may fail. Accordingly, we must raise cash from sources other than operations. To date, we have financed our operations primarily through cash flow from limited operations, augmented by cash proceeds from financing activities, short-term borrowings and equity contributions by our stockholders. We must raise cash to implement our projected plan of operations. Failure to obtain capital to fund short-term and long-term needs will likely result in the curtailment of our operations or cessation of certain aspects of our business strategy.

 

In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders.

 

The Company has no off-balance sheet commitments or arrangements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

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Item 4. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s PEO and PFO, as appropriate, to allow timely decisions regarding required disclosure

 

(b) Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

The Company is committed to improving financial organization. As part of this commitment, management and the Board perform reviews of the Company’s policies and procedures as they relate to financial reporting in an effort to mitigate future risks of potential misstatements. The Company will continue to focus on developing and documenting internal controls and procedures surrounding the financial reporting process, primarily through the use of account reconciliations, and supervision.

 

PART II - OTHER INFORMATION

 

ITEM 1.LEGAL PROCEEDINGS

 

The Company believes that there are no current lawsuits or litigation.

  

Item 1A.Risk Factors

 

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K, filed with the Commission on April 14, 2021 and investors are encouraged to review such risk factors prior to making an investment in the Company.

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

 

As of March 31, 2021, the Company did not issue any unregistered securities.

 

Item 3.Defaults upon Senior Securities

 

None.

  

Item 4:Mine Safety Disclosures

 

Not applicable.

  

Item 5:Other Information

 

There is no other information required to be disclosed under this item which has not been previously disclosed.

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Item 6:Exhibits

 

Exhibit
Number
 Description of Exhibit
   
31.1* Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2* Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32.1* Certificate of the Chief 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* Certificate of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 12, 2021.

 

GeneThera, Inc. 

 

By: /s/ Antonio Milici 
 Antonio Milici, M.D., Ph.D.
 President
 (Principal Executive Officer)
  
By:  /s/ Tannya L. Irizarry 
 Tannya L. Irizarry
 Chief Financial Officer (Interim)
 (Principal Financial/Accounting Officer)

 

In accordance with 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.

 

Signature Title Date
/s/ Antonio Milici President, Director 05/12/21
Antonio Milici, M.D., PhD.    
     
/s/ Tannya L. Irizarry Chief Financial Officer (Interim) 05/12/21
Tannya L Irizarry    

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