UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarterly Period Ended December 31, 2004
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition Period from _________ to _________
Commission file number: 0-32835
GAMMACAN INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0956433
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11 Ben Gurion Street
54100 Givat Shmuel, Israel
(Address of principal executive offices)
972 3 5774475
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, 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 past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
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 Securities Exchange Act
of 1934 after the distribution of securities under a plan confirmed by a court.
Yes |_| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the registrant's classes of
common equity, as of the latest practicable date: 26,231,510 shares issued and
outstanding as of January 31, 2005.
ITEM 1. - FINANCIAL STATEMENTS
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
2
GAMMACAN INTERNATIONAL INC.
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
TABLE OF CONTENTS
Page
Balance sheet F-2
Statement of operations F-3
Statement of stockholder's equity F-4
Statement of cash flows F-5
Notes to the financial statements F-6-10
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
December 31, September 30,
2004 2004
(Unaudited) (Audited)
------------ ------------
A s s e t s
CURRENT ASSETS:
Cash and cash equivalent $ 1,529,265 $ 705,868
Prepaid expenses 52,661 11,029
Other 14,060 5,971
------------ ------------
T o t a l current assets 1,595,986 722,868
------------ ------------
PROPERTY AND EQUIPMENT, net 11,126 3,899
------------ ------------
T o t a l assets $ 1,607,112 $ 726,767
============ ============
Liabilities and stockholders' equity
CURRENT LIABILITIES:
Accounts payable $ 120,161 $ 140,901
Payroll and related expenses 25,517 16,317
------------ ------------
T o t a l current liabilities 145,678 157,218
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, ($ 0.0001 par value, 20,000,000 shares authorized:
none issued and outstanding)
Common stock ($ 0.0001 par value, 100,000,000 authorized, 26,199,510 and
25,221,510 shares issued and outstanding as of December 31, 2004 and
September 30, 2004,
respectively) 2,619 2,522
Additional paid-in capital 1,809,512 941,619
Warrants 406,123 139,494
Deficit accumulated during development stage (756,820) (514,086)
------------ ------------
T o t a l stockholders' equity 1,461,434 569,549
------------ ------------
T o t a l liabilities and stockholders' equity $ 1,607,112 $ 726,767
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
F-2
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
Period from
Three months ended October 6,
December 31 1998* through
---------------------------- December 31,
2004 2003 2004
------------ ------------ ------------
RESEARCH AND DEVELOPMENT COSTS $ 51,366 $ - $ 218,358
GENERAL AND ADMINISTRATIVE EXPENSES 192,510 36 551,979
FINANCIAL INCOME, NET (1,142) (1,142)
MINORITY INTERESTS IN LOSSES OF SUBSIDIARY (12,375)
------------ ------------ ------------
NET LOSS FOR THE PERIOD $ (242,734) $ (36) $ (756,820)
============ ============ ============
BASIC AND DILUTED LOSS PER 1000
COMMON SHARES $ (9.44) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED IN COMPUTING BASIC AND
DILUTED LOSS PER COMMON SHARE 25,710,510 56,281,500
============ ============
* Incorporation date, see note 1.
The accompanying notes are an integral part of these condensed financial
statements.
F-3
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(Formerly- San Jose International, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Common Additional
Common stock Paid-in
Stock amount Warrants Capital
---------- ----------- ----------- -----------
Beginning balance -- $ -- $ -- $ --
Stock issued for cash on October 6, 1998 1,650,000 165 (155)
Stock issued for cash on October 9, 1998 2,722,500 272 (107)
Stock issued for cash on October 10, 1998 198,000 20 100
Stock issued for services on December 1, 1998 9,900,000 990 2,010
Stock issued for cash on April 7, 1999 561,000 56 284
Net loss
---------- ----------- ----------- -----------
Balance at September 30, 1999 (audit) 15,031,500 1,503 2,132
Stock issued for cash on September 30, 2000 41,250,000 4,125 875
---------- ----------- ----------- -----------
Balance at September 30, 2000 (audit) 56,281,500 5,628 3,007
Net loss
---------- ----------- ----------- -----------
Balance at September 30, 2001 (audit) 56,281,500 5,628 3,007
Net loss
---------- ----------- ----------- -----------
Balance at September 30, 2002 (audit) 56,281,500 5,628 3,007
Contributed capital 7,025
Net loss
---------- ----------- ----------- -----------
Balance at September 30, 2003 (audit) 56,281,500 5,628 10,032
Cancellation of shares at June 8, 2004 (32,284,988) (3,228) 3,228
Economic value of exercised option 62,600
Common stock and warrants issued on August 13, 2004 1,224,998 122 139,494 779,134
Gain on issuance of subsidiary stock on August 17, 2004 86,625
Net loss
---------- ----------- ----------- -----------
Balance at September 30, 2004 (audit) 25,221,510 2,522 139,494 941,619
Common stock and warrants issued on November 11, 2004 978,000 97 266,629 867,893
Net loss
---------- ----------- ----------- -----------
Balance at December 31, 2004 (unaudit) 26,199,510 $ 2,619 $ 406,123 $ 1,809,512
========== =========== =========== ===========
Deficit
accumulated
during
development
stage Total
----------- -----------
Beginning balance $ -- $ --
Stock issued for cash on October 6, 1998 19
Stock issued for cash on October 9, 1998 165
Stock issued for cash on October 10, 1998 120
Stock issued for services on December 1, 1998 3,000
Stock issued for cash on April 7, 1999 340
Net loss (3,444) (3,444)
----------- -----------
Balance at September 30, 1999 (audit) (3,444) 191
Stock issued for cash on September 30, 2000 5,000
----------- -----------
Balance at September 30, 2000 (audit) (3,444) 5,191
Net loss (3,108) (3,108)
----------- -----------
Balance at September 30, 2001 (audit) (6,552) 2,083
Net loss (4,231) (4,231)
----------- -----------
Balance at September 30, 2002 (audit) (10,783) (2,148)
Contributed capital 7,025
Net loss (4,857) (4,857)
----------- -----------
Balance at September 30, 2003 (audit) (15,640) 20
Cancellation of shares at June 8, 2004
Economic value of exercised option 62,600
Common stock and warrants issued on August 13, 2004 918,750
Gain on issuance of subsidiary stock on August 17, 2004 86,625
Net loss (498,446) (498,446)
----------- -----------
Balance at September 30, 2004 (audit) (514,086) 569,549
Common stock and warrants issued on November 11, 2004 1,134,619
Net loss (242,734) (242,734)
----------- -----------
Balance at December 31, 2004 (unaudit) $ (756,820) $ 1,461,434
=========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
F-4
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(Formerly - San Jose International, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Period from
Three months ended October 6, 1998*
December 31 through
---------------------------- December 31,
2004 2003 2004
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (242,734) $ (36) $ (756,820)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation 285 344
Common stock issued for services 3,000
Minority interests in losses of subsidiary (12,375)
Acquisition of research and development in
Process 100,000
Option exercise costs 62,600
Changes in assets and liabilities:
Increase in prepaid expenses (41,632) (52,661)
Increase in other current assets (8,089) (14,060)
Increase (decrease) in current liabilities (11,540) 16 144,678
------------ ------------ ------------
Net cash used in operating activities (303,710) (20) (525,294)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES -
purchase of property and equipment (7,512) (11,470)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and warrants 1,134,619 2,053,710
Contribution to additional paid in capital 12,319
------------ ------------
Net cash provided by financing activities 1,134,619 2,066,029
------------ ------------ ------------
Net increase (decrease) in cash 823,397 (20) --
CASH AND CASH EQUIVALENT AT
BEGINNING OF PERIOD 705,868 20 --
------------ ------------ ------------
CASH AND CASH EQUIVALENT AT
END OF PERIOD $ 1,529,265 $ -- $ 1,529,265
============ ============ ============
* Incorporation date, see note 1.
The accompanying notes are an integral part of these condensed financial
statements.
F-5
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004
(Unaudited)
NOTE 1. - ORGANIZATION AND DESCRIPTION OF BUSINESS
GammaCan International Inc. (A Development Stage Company; "the
Company") was incorporated on October 6, 1998, under the laws of
the State of Delaware, as San Jose International, Inc. The Company
has no significant revenues and no material operations and in
accordance with Statement of financial Accounting Standard
("SFAS") No. 7 "Accounting and Reporting by Development Stage
enterprises", the Company is considered a development stage
company.
Through December 31, 2004, the Company has incurred losses in an
aggregate amount of $756,820. Such losses have resulted from the
Company's activities as a development stage company. The Company's
management estimated that it would be able to finance its
operations from the cash raised in August and November 2004 until
September 30, 2005. Continuation of the Company's current
operations after utilizing the mentioned reserves until September
30, 2005, is dependent upon obtaining financial support from
investors until profitable results are achieved.
On August 19, 2004, the name of the company was changed from "San
Jose International, Inc." into "GammaCan International Inc.".
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of accounting
The accompanying unaudited consolidated financial statements
of the Company and its subsidiary GammaCan Ltd. ( "the
Subsidiary ") have been prepared in accordance with
accounting principles generally accepted in the United
States for interim financial information and with the
instructions to Form 10-QSB and Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and
footnotes required by accounting principles generally
accepted in the United States for complete financial
statements.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
three-month period ended December 31, 2004, are not
necessarily indicative of the results that may be expected
for the year ended September 30, 2005. For further
information, refer to the financial statements and footnotes
thereto included in the consolidated annual report on Form
10-KSB for the year ended September 30, 2004.
F-6
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
b. Use of estimates
The preparation of financial statements in conformity with
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 at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
c. Cash equivalents
The Company and its subsidiary consider all highly liquid
investments, which include short-term bank deposits (up to
three months from date of deposit) that are not restricted
as to withdrawal or use, to be cash equivalents.
d. Principles of consolidation
The consolidated financial statements include the accounts
of the Company and its subsidiary. All material intercompany
transactions and balances have been eliminated in
consolidation.
e. Loss per share
Basic and diluted net losses per common share are presented
in accordance with FAS No. 128 "Earning per share"
("FAS128"), for all periods presented. Outstanding share
options and warrants have been excluded from the calculation
of the diluted loss per share because all such securities
are antidilutive for all periods presented. The total number
of common stocks related outstanding options and warrants,
excluded from the calculations of diluted net loss was
3,652,998 for the period ended December 31, 2004.
f. Stock based compensation
The Company accounts for employee stock based compensation
in accordance with Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" ("APB 25") and
related interpretations. In accordance with FAS 123 -
"Accounting for Stock-Based Compensation" ("FAS 123"), the
Company discloses pro forma data assuming the Company had
accounted for employee stock option grants using the fair
value-based method defined in FAS 123.
F-7
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
The following table illustrates the pro - forma effect on
net loss and loss per common share assuming the Company had
applied the fair value recognition provisions of FAS 123 to
its stock-based employee compensation for the three months
ended December 31, 2004:
Net loss as reported $(242,734)
Deduct: stock based employee compensation
expense determined under fair value
method for all awards, net of related tax effects (231,504)
---------
Pro forma loss $(474,238)
=========
Net loss per 1000 common shares:
Basic and diluted - as reported $(9.44)
=========
Basic and diluted - pro forma $(18.45)
=========
g. Recently issued accounting pronouncements
In December 2004, the Financial Accounting Standards Board
("FASB") issued the revised Statement of Financial
Accounting Standards ("FAS") No. 123, Share-Based Payment
(FAS 123R), which addresses the accounting for share-based
payment transactions in which the Company obtains employee
services in exchange for (a) equity instruments of the
Company or (b) liabilities that are based on the fair value
of the Company's equity instruments or that may be settled
by the issuance of such equity instruments. This Statement
eliminates the ability to account for employee share-based
payment transactions using APB Opinion No. 25, Accounting
for Stock Issued to Employees, and requires instead that
such transactions be accounted for using the grant-date fair
value based method. This Statement will be effective as of
the beginning of the first interim or annual reporting
period that begins after December 15, 2005, for small
business issuers (January 1, 2006 for the Company). Early
adoption of FAS 123R is encouraged. This Statement applies
to all awards granted or modified after the Statement's
effective date. In addition, compensation cost for the
unvested portion of previously granted awards that remain
outstanding on the Statement's effective date shall be
recognized on or after the effective date, as the related
services are rendered, based on the awards' grant-date fair
value as previously calculated for the pro-forma disclosure
under FAS 123.
The Company estimates that the cumulative effect of adopting
FAS 123R as of its adoption date by the Company (January 1,
2006), based on the awards outstanding as of December 31,
2004, will be approximately $1,150,000. This estimate does
not include the impact of additional awards, which may be
granted, or forfeitures, which may occur subsequent to
December 31, 2004 and prior to our adoption of FAS 123R. The
Company expects that upon the adoption of FAS 123R, the
Company will apply the modified prospective application
transition method, as permitted by the Statement. Under such
transition method, upon the adoption of FAS 123R, the
Company's financial statements for periods prior to the
effective date of the Statement will not be restated.
F-8
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 3. - GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has
net losses for the period from inception (October 6, 1998) through
December 31, 2004 of $756,820. The Company's continuation as a
going concern is dependent on its ability to meet its obligations,
to obtain additional financing as may be required and ultimately
to attain profitability. These financial statements do not include
any adjustments that might result from the outcome of this
uncertainty. See also note 1.
NOTE 4. - RELATED PARTY TRANSACTIONS
On November 4, 2004, the Subsidiary entered into a consulting
agreement with PBD Ltd., a company controlled by a related party
(the "Consultant"). Pursuant to the terms of the agreement, the
Subsidiary will pay the Consultant a total fee of $50,000 for the
services provided as detailed in the agreement. Mainly the
services include:
o Summary of pre-clinical data and collection of historical
research data.
o Preparation of clinical trial.
o Oncologists survey for cancer indication.
o Survey of complementary technologies o Survey of potential
IVIg collaborators
o Initiation of contacts with potential partners.
The work has been completed and the sum of $50,000 paid to the
Consultant is included in "General & administrative expenses ".
Additionally, it was also agreed that the Subsidiary shall
reimburse the Consultant for out of pocket expenses incurred in
connection with the performance of its duties under the agreement
only if it has been approved in writing by the Subsidiary. The
expenses of hiring a clinical expert to advise on the specifics of
the protocol , for a total cost that will not exceed $8,000 ,was
approved by the Subsidiary .
NOTE 5. - STOCK TRANSACTIONS
On November 11, 2004 the Company entered into subscription
agreements for the sale of 978,000 units at a purchase price of
$1.25 per unit for a total consideration of $1,222,500. Each unit
consisted of one common share and one share purchase warrant. Each
share purchase warrant entitles the holder to purchase one
additional common share for a period of two years after the date
of the subscription agreement at an exercise price of $1.50 in the
first 15 months and $2.00 for the next nine months. The fair value
of the warrants estimated by using the Black & Scholes
option-pricing model is $266,629.
F-9
GAMMACAN INTERNATIONAL INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
NOTE 6. - SUBSEQUENT EVENTS
On January 25, 2005 the Company entered into a subscription
agreement for the sale of 32,000 units at a purchase price of
$1.25 per unit for a total consideration of $40,000. Each unit
consisted of one common share and one share purchase warrant. Each
share purchase warrant entitles the holder to purchase one
additional common share for a period of two years after the date
of the subscription agreement at an exercise price of $1.50 in the
first 15 months and $2.00 for the next nine months. The fair value
of the warrants estimated by using the Black & Scholes
option-pricing model is approximately $9,000.
According to a board of directors' resolution from January 11,
2005 the following are entitled to receive option under the 2004
Employees and Consultant Stock Option Plan:
o 50,000 options to each of the three board members.
o Up to 68,000 options to a consultant, as a success bonus based
on certain milestones.
o 50,000 options to each of two scientific advisors.
F-10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We currently have no revenue from operations, we are in a start-up phase with
our existing assets and we have no significant assets, tangible or intangible.
There can be no assurance that we will generate revenues in the future, or that
we will be able to operate profitably in the future, if at all. We have incurred
net losses in each fiscal year since inception of our operations.
Our initial focus over the next several years is to demonstrate efficacy of IVIG
cancer immunotherapy in human clinical trials. Efficacy is the ability of a drug
or other treatment to produce the desired result when taken by its intended
users. If ultimately proven to be successful, and there can be no assurance that
it will be, we could be well-positioned to enter a licensing agreement with a
major pharmaceutical partner for commercial market development and sales.
We plan to begin enrolling patients in the first two quarters of 2005, for a
Phase II study using IVIG immunotherapy for a range of metastatic cancers. Since
IVIG is an established, safe therapy, we will not be required to conduct Phase I
studies. Phase II clinical trials will be conducted at no less than two medical
centers in Israel. It is expected to take at least six months to enroll
patients. We are planning on including several different cancers in the trial,
and preliminary results should be available during the first year of trial. We
may decide to continue to monitor patients for an extended period of time in
order to observe positive and negative effects arising at a later stage. If
successful or promising, and at this preliminary stage there is no assurance
they will be, results of these clinical trials will be used to enter into
discussions with a major pharmaceutical partner to work with us to potentially
commercialize the products.
We expect that it will take a number of years to receive final approval and
registration of an IVIg preparation for use as an anti-cancer reagent. However,
the company's strategy is to collaborate with a suitable IVIg manufacturer and
license them the rights to use IVIg as an anti-cancer agent, wherefore the
company's expected revenue stream is not entirely dependent upon the
registration of the IVIg products.
We are also contemplating to conduct additional clinical trials to test new
formulations of IVIG and to test IVIG immunotherapies for different cancers at
different stages of disease progression with varying dosages and routes of
administration. Our goal is to partner with a pharmaceutical company to conduct
these further Phase II and Phase III trials, in order to attain broad-based
regulatory approval.
Long Term Business Strategy
As noted previously, if IVIG shows significant promise thorough clinical trials,
we plan to ultimately seek a strategic commercial partner, or partners, with
extensive experience in commercialization and marketing of cancer drugs and or
therapeutic proteins. It is envisaged that the partner, or partners, would be
responsible for ensuring regulatory approvals and registrations in a timely
manner and for the penetration of the IVIG immunotherapies to the market. This
planned strategic partnership, or partnerships, could provide a marketing and
sales infrastructure for our products as well as financial and operational
support for global trials and other FDA requirements concerning future clinical
development. Our future strategic partner, or partners, could also provide
capital and expertise that would enable the partnership to develop new
formulations of IVIG cancer immunotherapy suitable for patients at different
stages of disease progression as well as IVIg derivatives.
Other Research and Development Plans
3
In addition to conducting early-stage clinical trials, we plan to conduct
research to develop alternative delivery systems, to determine the optimal
dosage for different patient groups and to investigate alternative sources of
immunoglobulin other than human plasma. We plan to conduct research to isolate
the fraction of IVIG, which is responsible for its anti-metastatic effects and
to develop a potential synthetic version of IVIG. These formulations will be
suitable for:
o Low-dose, preventative therapy for disease-free, high-risk
individuals,
o Strong dose for use in conjunction with surgery and other cancer
treatments, and
o Maintenance dose for use to prevent recurrence of cancer growth.
o Others
Our plan is to patent any successful inventions resulting from our further
research activities.
Other Strategic Plans
We are considering additional alternatives for expanding our pipeline of
putative drugs in order to create a well balanced portfolio of future products.
Planned Expenditures
The estimate expenses referenced herein are in accordance with the business
plan. As the technology is still in the development stage, it can be expected
that there will be changes in some budgetary items. Our planned expenditures for
the next 12 months include:
Category Amount
Research &Development $1,500,000
----------------------
Marketing and Business Development $164,000
----------------------------------
General & Administrative Expenses $617,000
----------------------------------
Total $2,281,000
We are considering expanding and accelerating our planned clinical trials
program for IVIG. Ultimately, such a change may enable our company to
commercialize the product sooner if the trials prove to be successful. If we
decide to adjust our program, we anticipate that our related clinical trial
costs over the next 12 months would increase by approximately $1 million. The
decision to proceed will be based on several major factors, one of which is the
ability of our company to attract sufficient financing on acceptable terms.
Forward Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
management's current views with respect to future events and financial
performance. Those statements include statements regarding the intent, belief or
current expectations of Gammacan and members of its management team as well as
the assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
4
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made
in this report and in our other reports filed with the Securities and Exchange
Commission. Important factors currently known to Management could cause actual
results to differ materially from those in forward-looking statements. We
undertake no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or changes
in the future operating results over time. Gammacan believes that its
assumptions are based upon reasonable data derived from and known about its
business and operations and the business and operations of Gammacan. No
assurances are made that actual results of operations or the results of
GammaCan's future activities will not differ materially from its assumptions.
5
ITEM 3. CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures. As of December 31,
2004, the Company's management carried out an evaluation, under the
supervision of the Company's Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the design and operation
of the Company's system of disclosure controls and procedures
pursuant to the Securities and Exchange Act , Rule 13a-15(d) and
15d-15(d) under the Exchange Act. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that
the Company's disclosure controls and procedures were effective, as
of the date of their evaluation, for the purposes of recording,
processing, summarizing and timely reporting material information
required to be disclosed in reports filed by the Company under the
Securities Exchange Act of 1934.
b) Changes in internal controls. There were no changes in the Company's
internal controls over financial reporting, that occurred during the
period covered by this report that have materially affected, or are
reasonably likely to materially effect, the Company's internal
control over financial reporting.
6
PART II - OTHER INFORMATION
PART II
ITEM 1 LEGAL PROCEEDINGS
From time to time the Company is subject to litigation incidental to its
business. Such claims, if successful, could exceed applicable insurance
coverage. The Company is not currently a party to any material legal
proceedings.
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On November 11, 2004 we entered into subscription agreements for the sale of
978,000 units to 2 offshore investors and 5 accredited investors at a purchase
price of $1.25 per unit for total proceeds of $1,222,500. Each unit consists of
one common share and one share purchase warrant. Each share purchase warrant
entitles the holder to purchase one additional common share for a period of two
years after the date of the subscription agreement at an exercise price of $1.50
in the first 15 months and $2.00 for the next nine months. For each sale of
these units we relied on either the exemption from registration provided for
accredited investors pursuant to Rule 506 of Regulation D, or Regulation S
promulgated under the Securities Act of 1933, as amended.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5 OTHER INFORMATION
Not applicable.
ITEM 6 EXHIBITS
31.1 - Certification of Principal Executive Officer pursuant to
Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities
and Exchange Act of 1934, as amended
31.2 - Certification of Principal Financial Officer pursuant to
Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities
and Exchange Act of 1934, as amended
32.1 - Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Chief Executive Officer)
32.2 - Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Chief Financial Officer)
7
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GAMMACAN INTERNATIONAL, INC.
February 11, 2005 /s/ TOVI BEN ZEEV
------------------------
Tovi Ben Zeev,
Chief Financial Officer