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, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-17232
STEM CELL THERAPY INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0374180
(State or other jurisdiction of (IRS Employer Identification
Incorporation or organization) Number)
2203 N. Lois Avenue, 9th Floor, Tampa, FL 33607
(Address of principal executive offices)
(813) 600-4088
(Issuer's telephone number)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
34,495,369 shares of common stock, $0.001 par value, as of January 18, 2007.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Table of Contents
Part I. Financial Information
Item 1. Financial Statements 4
Balance Sheets as of December 31, 2006 (unaudited) and March 31, 2006 5
Statements of Operations for the three and nine months ended December
31, 2006 and 2005 (unaudited) and for the period from December 2,
2004 (Date of Inception) through December 31, 2006 (unaudited) 6
Statements of Changes in Stockholders' (Deficit) for the period from
December 2, 2004 (Date of Inception) through December 31, 2006
(unaudited) 7
Statements of Cash Flows for the nine months ended December 31, 2006
and 2005 (unaudited) and for the period from December 2, 2004 (Date
of Inception) through December 31, 2006 (unaudited) 8
Notes to Financial Statements 9
Item 2. Managements Discussion and Analysis 21
Item 3. Controls and Procedures 27
Part II. Other Information
Item 1. Legal Proceedings 28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28
Item 3. Defaults from Senior Securities 28
Item 4. Submission of Matters to a Vote of Security Holders 28
Item 5. Other Information 28
Item 6. Exhibits 28
Signatures 31
Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002:
Chief Executive Officer 32
Chief Financial Officer and Chief Accounting Officer 33
Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:
Chief Executive Officer 34
Chief Financial Officer and Chief Accounting Officer 35
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions for Form 10-QSB and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. All such adjustments are of a normal recurring
nature. Operating results for the three and nine month periods ended December
31, 2006 and 2005 are not necessarily indicative of the results that may be
expected for the year ending March 31, 2007. This report should be read in
conjunction with the financial statements and footnotes thereto included in the
Company's Registration Statement filed on amended Form 10-SB filed with the
Securities and Exchange Commission on January 19, 2007.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Balance Sheets
December 31, March 31,
2006 2006
(unaudited)
ASSETS
Current assets:
Cash $ 87,267 $ 32,642
Inventory 5,988 -
Prepaid expenses 43,267 77,531
------------ ----------
Total current assets 136,522 110,173
Certificate of deposit, restricted 3,860 120,000
Deposits 1,589 1,589
Prepaid expenses, long-term 57,712 1,417
Intangible asset, net 4,333 4,708
------------ ----------
Total assets $ 204,016 $ 237,887
============ ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 44,561 $ 28,370
Accrued expenses 75,000 75,000
Accrued payroll 167,355 35,000
Deferred revenue 84,250 -
Stockholder advances 48,753 48,377
Due to related party 225,200 224,972
------------ ----------
Total current liabilities 645,119 411,719
------------ ----------
Commitments and contingencies (Note 9) - -
Stockholders' deficit:
Preferred stock; $.001 par value; 10,000,000 shares
authorized and 500,000 issued and outstanding 500 500
Common stock; $.001 par value; 100,000,000 shares
authorized and 34,495,369 and 33,672,510 issued
and outstanding as of December 31, 2006 and
March 31, 2006, respectively 34,496 33,672
Additional paid-in capital 660,574 324,398
Deficit accumulated during development stage (1,136,673) (532,402)
------------ ----------
Total stockholders' deficit (441,103) (173,832)
------------ ----------
Total liabilities and stockholders' deficit $ 204,016 $ 237,887
============ ==========
The accompanying notes are an integral part of the financial statements.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Statements of Operations
(unaudited)
Period from
December 2,
2004 (Date of
Three Months Ended Nine Months Ended Inception) through
December 31, December 31, December 31,
-------------------- -------------------- -------------------
2006 2005 2006 2005 2006
-------------------- -------------------- -------------------
Revenue $ 90,000 $ 27,464 $ 236,260 $ 50,934 $ 317,194
Cost of goods sold 32,435 17,500 241,060 34,600 293,160
Gross margin 57,565 9,964 (4,800) 16,334 24,034
Operating expenses
Selling general & administrative 157,363 115,569 601,706 273,452 1,165,060
--------------------------------------------------------------
157,363 115,569 601,706 273,452 1,165,060
Loss from operations (99,798) (105,605) (606,506) (257,118) (1,141,026)
Other (expense) income:
Interest (expense) income, net (219) 572 2,235 1,096 4,353
--------------------------------------------------------------
Net loss before taxes (100,017) (105,033) (604,271) (256,022) (1,136,673)
Income tax expense - - - - -
--------------------------------------------------------------
Net loss (100,017) (105,033) (604,271) (256,022) (1,136,673)
Less dividends on preferred stock - - - - (10,000)
--------------------------------------------------------------
Loss attributable to common shareholders $(100,017) (105,033) (604,271) (256,022) (1,146,673)
==============================================================
Net loss per share, basic & diluted $ (.00) $ (.00) $ (.02) $ (.01) $ (.04)
==============================================================
Weighted average number
of common shares, basic & diluted 34,495,369 33,408,481 34,248,756 24,251,611 28,001,954
==============================================================
The accompanying notes are an integral part of the financial statements.
STEM CELL THERAPY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM DECEMBER 2, 2004 (DATE OF INCEPTION) THROUGH DECEMBER 31
2006 (UNAUDITED)
COMMON STOCK PREFERRED STOCK
------------ ---------------
DEFICIT
ACCUMULATED
ADDITIONAL DURING
PAID IN DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE TOTAL
---------- -------- -------- ----- -------- ------------ -----------
Issuance of common stock for cash 13,550,000 $13,550 - $ - $ - $ - $ 13,550
Exercise of stock options for services 500,000 500 - - - - 500
Issuance of common stock and options for
acquisition deposit 5,000,000 5,000 - - 2,749 - 7,749
Stock options issued for services - - - - 906 - 906
Issuance of common stock for services 2,170,000 2,170 - - - - 2,170
Net loss for the period - - - - - (26,241) (26,241)
---------- -------- -------- ----- -------- ------------ -----------
Balance, March 31, 2005 21,220,000 21,220 - - 3,655 (26,241) (1,366)
Cancellation of common stock issued and options
awarded for services (5,600,000) (5,600) - - (2,749) - (8,349)
Issuance of common stock for services 3,741,832 3,741 - - 299,898 - 303,639
Issuance of common stock for intangible asset 5,000,000 5,000 - - - - 5,000
Reverse acquisition, September 1, 2005 6,310,678 6,311 - - (906) - 5,405
Issuance of common stock for a reduction
in stockholder advances 3,000,000 3,000 - - - - 3,000
Issuance of preferred stock for cash - - 500,000 500 34,500 - 35,000
Dividend on preferred stock - - - - (10,000) - (10,000)
Net loss for the year ended March 31, 2006 - - - - - (506,161) (506,161)
---------- -------- -------- ----- -------- ------------ -----------
Balance, March 31, 2006 33,672,510 33,672 500,000 500 324,398 (532,402) (173,832)
Issuance of common stock for services (unaudited) 822,859 824 - - 336,176 - 337,000
Net loss for the nine months ended December 31, 2006
(unaudited) - - - - - (604,271) (604,271)
---------- -------- -------- ----- -------- ------------ -----------
Balance, December 31, 2006 (unaudited) 34,495,369 $34,496 500,000 $500 $660,574 ($1,136,673) ($441,103)
========== ======== ======== ===== ======== ============= ===========
The accompanying notes are an integral part of the financial statements.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Statements of Cash Flows
December 2, 2004
Nine Months Nine Months (Date of Inception)
Ended Ended Through
December 31, December 31, December 31,
2006 2005 2006
--------- ---------- ----------
(unaudited) (unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss $(604,271) $(256,022) $(1,136,673)
Adjustments to reconcile net loss to net
cash used by operating activities:
Stock based compensation 315,205 125,660 552,478
Investment income reinvested (2,884) - (2,884)
Amortization 375 167 667
(Increase) decrease in:
Inventory (5,988) - (5,988)
Prepaid expenses (236) (56,638) (4,437)
Deposits - 11,160 (1,589)
Increase in:
Accounts payable 16,191 (5,507) 44,561
Accrued payroll 132,355 - 167,355
Accrued expenses - 60,000 75,000
Deferred revenue 84,250 - 84,250
--------- ---------- ----------
Net cash used by operating activities (65,003) (121,180) (227,260)
--------- ---------- ----------
INVESTING ACTIVITIES
(Investment in)/Proceeds from
certificate of deposit, restricted 119,024 - (976)
--------- ---------- ----------
Net cash provided (used) by investing
activities 119,024 - (976)
--------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from advances from stockholder 376 24,686 52,528
Payments to stockholder - (775) (775)
Advances from related party 228 224,582 225,200
Proceeds from sale of stock - 25,000 38,550
--------- ---------- ----------
Net cash provided by financing
activities 604 273,493 315,503
--------- ---------- ----------
NET INCREASE IN CASH 54,625 152,313 87,267
CASH AT BEGINNING OF PERIOD 32,642 7,310 -
--------- ---------- ----------
CASH AT END OF PERIOD $ 87,267 $ 159,623 $ 87,267
========= ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH FINANCING ACTIVITIES:
Cash paid for interest $ 900 $ 79 $ 979
========= ========== ==========
Common stock issued for a reduction
in advance from stockholder $ $ 3,000 $ 3,000
========= ========== ==========
Common stock issued for purchase of
intangible assets $ $ 5,000 $ 5,000
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
1. BACKGROUND INFORMATION AND BASIS OF PRESENTATION
Company Background:
Stem Cell Therapy International, Inc. (the "Company"), was originally
incorporated in the state of Nevada on December 28, 1992 as Arklow Associates,
Inc. The Company's operating business is Stem Cell Therapy International Corp.
("Stem Cell Florida") a wholly owned subsidiary which is a development stage
enterprise and was incorporated in the state of Nevada on December 2, 2004. The
corporate headquarters is located in Tampa, Florida.
The Company is engaged in the licensing of stem cell technology, the sale
of stem cell products, and information, education, and referral services
relating to potential stem cell therapy patients. The Company purchases allo
stem cell biological solutions that are currently being used in the treatment of
patients suffering from degenerative disorders of the human body such as
Alzheimer's, Parkinson's Disease, ALS, leukemia, muscular dystrophy, multiple
sclerosis, arthritis, spinal cord injuries, brain injury, stroke, heart disease,
liver and retinal disease, diabetes as well as certain types of cancer. The
Company has established agreements with two highly specialized, professional
medical treatment facilities in locations outside of the United States where
stem cell transplantation therapy is approved by the appropriate local
government agencies. The Company intends to provide these biological solutions
containing stem cell products in the United States to universities, institutes
and privately funded laboratory facilities for research purposes and clinical
trials. Its products, which are available now, include various allo stem cell
biological solutions (containing human stem cells), low-molecular proteins and
human growth factor hormones. The Company intends to deliver stem cell
transplants worldwide and educate and consult with physicians and patients in
the clinical aspects of stem cell transplantation.
Effective September 1, 2005, Stem Cell Florida entered into a
Reorganization and Stock Purchase Agreement (the Agreement) with the Company,
which was then named Altadyne, Inc., a company quoted on the Pink Sheets and
which has no ongoing operations. Under the terms of the agreement, the Company
(then Altadyne, Inc.) acquired Stem Cell Florida and changed its name to Stem
Cell Therapy International, Inc.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
1. BACKGROUND INFORMATION AND BASIS OF PRESENTATION (CONTINUED)
Basis of presentation:
In the opinion of management, the accompanying financial statements include all
adjustments, consisting only of normal recurring items, necessary for their fair
presentation in conformity with accounting principles generally accepted in the
United States of America. The results of operations for the nine months ended
December 31, 2006 are not necessarily indicative of the results for a full year.
The financial statements for the period ended December 31, 2006 and notes
thereto should be read in conjunction with the financial statements and notes
thereto for the year ended March 31, 2006 as filed in the Form 10-SB, as
amended, filed with the Securities and Exchange Commission as amended on January
19, 2007.
2. LIQUIDITY AND MANAGEMENT'S PLANS
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. For the nine months ended December 31, 2006
and the period since December 2, 2004 (date of inception) through December 31,
2006, the Company has had a net loss of $604,271 and $1,136,673, respectively
and cash used by operations of $65,003 and $227,260, respectively, and negative
working capital of $508,597 at December 31, 2006. As of December 31, 2006, the
Company has not emerged from the development stage. In view of these matters,
the ability of the Company to continue as a going concern is dependent upon the
Company's ability to generate additional financing and ultimately increase
operations and to achieve a level of profitability. Since inception, the
Company has financed its activities principally from the sale of equity
securities and related party advances. The Company intends on financing its
future development activities and its working capital needs largely from the
sale of equity securities and loans from the Company's Chief Executive Officer,
until such time that funds provided by operations are sufficient to fund working
capital requirements. There can be no assurance that the Company will be
successful at achieving its financing goals at reasonably commercial terms, if
at all.
3. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates:
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of credit risk:
Cash balances are maintained with a major financial institution in the United
States. Deposits with this bank may exceed the amount of insurance provided on
such deposits. Generally, these deposits may be redeemed upon demand and,
therefore, bear minimal risk.
Intangible asset:
Intangible asset consists of licensing rights. Intangibles are amortized using
the straight-line method over a period of 10 years, the term of the licensing
rights agreement.
Impairment of long-lived assets:
The Company evaluates the recoverability of its long-lived assets or asset
groups whenever adverse events or changes in business climate indicate that the
expected undiscounted future cash flows from the related assets may be less than
previously anticipated. If the net book value of the related assets exceeds the
undiscounted future cash flows of the assets, the carrying amount would be
reduced to the present value of their expected future cash flows and an
impairment loss would be recognized. There have been no impairment losses in
the periods presented.
Revenue recognition:
Revenue is derived from the licensing of stem cell technology, the sale of stem
cell products, and providing informational and referral services. Revenue
related to these licenses, sales and services is recognized upon delivering the
license or product, or rendering the services, respectively. Any payments
received prior to delivery of the products or services are included in deferred
revenue and recognized once the products are delivered or the services are
performed.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income taxes:
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective income
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 as income in the
period that included the enactment date.
Loss per common share:
Basic and diluted earnings per share are computed based on the weighted average
number of common stock outstanding during the period. Common stock equivalents
are not considered in the calculation of diluted earnings per share for the
periods presented because their effect would be anti-dilutive. The Company had
no common stock equivalents outstanding at December 31, 2006.
Stock-based compensation:
In April 2006, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123R - Share-based Payments ("FAS 123R") replacing
Accounting for Stock-Based Compensation ("FAS 123"), which are similar and
require the use of the fair-value based method to determine compensation for all
arrangements under which employees and others receive shares of stock or equity
instruments (warrants and options). The adoption of this standard had no
significant impact on the Company's results of operations during the nine months
ended December 31, 2006.
Reclassifications:
Certain reclassifications have been made to the accompanying fiscal 2006
financial statements to conform to the December 31, 2006 presentation. Such
reclassifications had no impact on net loss as previously reported.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently issued accounting pronouncements:
In February 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 155 ("SFAS 155"), Accounting for
Certain Hybrid Financial Instruments - An Amendment of FASB Statements No. 133
and 140, to simplify and make more consistent the accounting for certain
financial instruments. Specifically, SFAS No. 155 amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, to permit fair
value re-measurement for any hybrid financial instrument with an embedded
derivative that otherwise would require bifurcation provided that the whole
instrument is accounted for on a fair value basis. Prior to fair value
measurement, however, interests in securitized financial assets must be
evaluated to identify interests containing embedded derivatives requiring
bifurcation. The amendments to SFAS No. 133 also clarify that interest-only and
principal-only strips are not subject to the requirements of the SFAS, and that
concentrations of credit risk in the form of subordination are not embedded
derivatives. Finally, SFAS No. 155 amends SFAS No. 140, Accounting for the
Impairment or Disposal for Long-Lived Assets, to allow a qualifying
special-purpose entity (SPE) to hold a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument. SFAS No. 155 applies to all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins after
September 15, 2006, with earlier application allowed. The Company does not
anticipate that the adoption of this statement will have a material impact on
its financial statements.
In September 2005, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP) and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require
any new fair value measurements. However, for some entities, the application of
this Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007.
Management believes this Statement will have no material impact on the financial
statements of the Company once adopted.
In May 2005, the FASB issued Statement of Financial Accounting Standards No.
154, Accounting Changes and Error Corrections. ("SFAS 154")SFAS No. 154 changes
the requirements for the accounting for and reporting of a change in accounting
principle. In addition, it carries forward without change the guidance contained
in APB Opinion No. 20 for reporting the correction of an error in previously
issued financial statements
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and a change in accounting estimate. SFAS No. 154 requires retrospective
application to prior
Recently issued accounting pronouncements (continued):
periods' financial statements of changes in accounting principle in most
circumstances. The provisions of SFAS No. 154 are effective in fiscal years
beginning after December 15, 2005. The adoption of SFAS No. 154 did not have a
material impact on its financial statements.
FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
(FIN 48), which will be effective for fiscal years beginning after December 15,
2006. FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
Statement No 109, "Accounting for Income Taxes". FIN 48 prescribes a recognition
threshold and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition. The Company has not determined the impact of the adoption of FIN 48
on its financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements," ("SAB 108"). SAB 108
provides guidance on the consideration of effects of prior year misstatements in
quantifying current year misstatements for the purpose of a materiality
assessment. The SEC staff believes registrants must quantify errors using both
a balance sheet and income statement approach to evaluate whether either
approach results in quantifying a misstatement that, when all relevant
quantitative and qualitative factors are considered, is material. SAB 108 is
effective for the Company at the end of fiscal year 2007. The Company is
currently evaluating the effects of SAB 108 on its financial statements.
4. BUSINESS REORGANIZATION
Effective September 1, 2005, Stem Cell Florida entered into a Reorganization and
Stock Purchase Agreement (the "Agreement") with the Company, then named
Altadyne, Inc., a company quoted on the Pink Sheets, which had no assets,
liabilities or ongoing operations. Under the terms of the agreement, the
Company, (then Altadyne) acquired 100% of the issued and outstanding shares of
common stock of Stem Cell Florida in a non-cash transaction and Stem Cell
Florida became a wholly owned subsidiary of the Company. Subsequent to the
merger, Altadyne changed its name to Stem Cell Therapy International
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
4. BUSINESS REORGANIZATION (CONTINUED)
Inc. This transaction is accounted for as a reverse merger, with Stem Cell
Florida treated as the accounting acquirer for financial statement purposes.
The results of operations for Stem Cell Florida, the accounting acquirer, for
the period from December 2, 2004 (Date of Inception) have been included in the
statements of operations of the Company.
5. INTANGIBLE ASSET
Intangible asset consists of the following:
December 31,
2006 March 31,
(unaudited) 2006
----------- ----------
Licensing rights $ 5,000 $ 5,000
Less: accumulated amortization ( 667) ( 292)
----------- ----------
$ 4,333 $ 4,708
=========== ==========
Expected future amortization of the intangible asset is as follows:
Year ending December 31,
------------------------
2007 $ 500
2008 500
2009 500
2010 500
2011 500
Thereafter 1,833
-----
$ 4,333
=====
6. RELATED PARTY TRANSACTIONS
Stockholder advances consist of advances from an officer and stockholder of the
Company to assist the Company in meeting its financial obligations. These
advances are non-interest bearing, unsecured and due on demand.
Due to related party represents a demand note payable to a consulting company
owned by a significant stockholder. The note is non-interest bearing and
unsecured.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
7. STOCKHOLDERS' EQUITY
Capitalization:
The Company has 100,000,000 shares of common stock authorized. In addition,
there are 10,000,000 authorized shares of participating convertible preferred
stock, $.001 par value, the issuance of which is subject to approval by the
Board of Directors. The Board of Directors has the authority to declare
dividends. The voting rights of the convertible preferred stockholders are
equivalent to that of the common stockholders. Each share of convertible
preferred stock can be converted at any time by the holder into one share of
common stock. As of December 31, 2006, the Company had 500,000 shares of
convertible preferred stock issued and outstanding valued at $25,000. Upon
issuance of the preferred stock, management determined that the convertible
preferred stock contained a beneficial conversion feature calculated as of the
date of commitment, September 15, 2006, based on the fair value of the closing
price of the common stock, $0.07 per share, and an exercise price of $0.05 per
share, calculated as $25,000 paid for the preferred stock divided by the 500,000
shares of convertible preferred stock received. Each share of the preferred
stock is convertible into one share of common stock with no additional
investment. The beneficial conversion was recorded as a dividend, as the
preferred stock can be converted at any time after the issue date.
Stock options:
The following table summarizes the activity related to all Company stock options
for the nine months ended December 31, 2006 and 2005 and the period from
December 2, 2004 (Date of Inception) through December 31, 2006:
Weighted Average
Exercise Price Exercise Price
Stock per Share per Share
Options Options Options
----------- -------------- -------------
Outstanding at December 2, 2004 - $ - $ -
Granted 6,000,000 $ 0.001-0.75 $ 0.18
Exercised (500,000) $ 0.001 $ 0.001
-----------
Outstanding at March 31, 2005 5,500,000 $ 0.003-0.75 $ 0.196
Canceled or expired (5,500,000) $ 0.003-0.75 $ 0.196
-----------
Outstanding at December 31, 2006 -
===========
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
8. INCOME TAXES
The income tax provision differs from the amount of tax determined by applying
the Federal statutory rate as follows:
Period from
December 2, 2004
Nine Months Ended December 31, through
2006 2005 December 31, 2006
-------------- ----------- ------------------
Income tax provision at statutory rate ($205,400) ($87,000) ($ 386,600)
Increase (decrease) in income tax due to:
Nondeductible expenses 1,400 (9,300) 1,500
State income taxes, net (21,900) (9,000) ( 41,100)
Change in valuation allowance 225,900 105,300 426,200
-------------- ----------- ------------------
$ - $ - $ -
============== =========== ==================
December 31, March 31,
2006 2006
------------ ----------
Deferred tax assets:
Accrued payroll $ 76,200 $ 13,200
Net operating loss carryforward 350,000 187,100
------------ ----------
426,200 200,300
Less: Valuation allowance (426,200) (200,300)
------------ ----------
$ - $ -
============ ==========
Income taxes are based on estimates of the annual effective tax rate and
evaluations of possible future events and transactions and may be subject to
subsequent refinement or revision.
The Company has incurred operating losses since its inception and, therefore, no
tax liabilities have been incurred for the periods presented. The amount of
unused tax losses available to carry forward and apply against taxable income in
future years totaled approximately $930,000 at December 31, 2006. The loss carry
forwards expire beginning in 2025. Due to the Company's continued losses,
management has established a valuation allowance equal to the amount of deferred
tax assets due to it being more likely than not that the Company will not
realize this benefit.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
9. COMMITMENTS AND CONTINGENCIES
Letter of credit:
The Company had a standing letter of credit with a financial institution for
$120,000 which was available to be drawn against accounts maintained by the
Company with the financial institution. This letter of credit served as a
guarantee of payment for a third party vendor. This standing letter of credit
was collateralized by a $120,000 certificate of deposit of which this third
party had drawn $116,320 against this letter of credit as of December 31, 2006.
Following the draw, the Company has not replenished the letter of credit as of
December 31, 2006.
Consulting agreements:
The Company has entered into several consulting agreements with other companies
and individuals to provide consulting and advisory services to the Company. The
agreements provide for terms ranging from one to three years. Additionally, the
consulting agreements required the issuance of 4,239,000 shares of the Company's
common stock valued at $382,409 on the date of the performance commitment. As
of December 31, 2006, the Company had issued these shares of common stock and
has included $96,542 in prepaid expenses for services not yet performed pursuant
to the agreements.
The Company has entered into several consulting agreements with doctors to
provide consulting and advisory services to the Company. The agreements provide
for six months to one year service terms. In exchange for these services, the
Company issued a total of 110,000 shares of common stock valued at $114,230 on
the date of the performance commitment. As of December 31, 2006, the Company
had issued these shares of common for services performed pursuant to the
agreements.
Effective May 4, 2005, the Company entered into an agreement with Westminster
Securities Corporation ("Westminster") for consulting services and to secure
funding and/or lines of credit. In exchange for these services, the Company
paid Westminster a $20,000 retainer and had agreed to pay 10% of any
equity-based funding, 8% of any debt-based convertible funding, 5% of any
nonconvertible debt-based funding, as well as, issue warrants equal to 10% of
the number of shares of stock issued in connection with the funding. As of
December 31, 2006, no funding has been secured; however, Westminster did
facilitate the acquisition of Altadyne, and therefore received 379,000 shares of
common stock in September 2005. The Agreement with Westminster was mutually
terminated effective January 4, 2006.
Stem Cell Therapy International, Inc.
(a development stage enterprise)
Notes to Financial Statements
For the Three and Nine Months Ended December 31, 2006 and 2005 (unaudited)
and for the period from December 2, 2004 (Date of Inception)
through December 31, 2006 (unaudited)
9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Licensing agreement:
Effective September 1, 2005, the Company entered into a ten year licensing
agreement with the Institute of Cell Therapy, a company incorporated and
organized under the laws of Kiev, Ukraine ("ICT"). The agreement grants the
Company an exclusive right and license in most parts of the world to utilize
patents, processes and products owned or produced by ICT in connection with the
operation of the Company's business. In exchange for the license, the Company
agrees to exclusively purchase all biological solution of stem cell Allo
Transplant materials from ICT for a three year period. Such Allo Transplant
materials shall be at a cost of $6,500 per patient per condition. The licensing
agreement guarantees a minimum purchase of 60 portions per twelve month period.
In the event that the Company is unable to purchase the minimum quantities, ICT
will be entitled to draw upon the irrevocable letter of credit at the rate of
$2,000 for every portion less than the minimum required purchase. The Company
has provided ICT with a $120,000 irrevocable letter of credit in ICT's favor for
the first three years of the agreement. In the event the Letter of Credit is
drawn upon, the Company agrees to replenish the Letter of Credit to the extent
of any such draws. As of December 31, 2006, the Company did not meet the
minimum purchase requirement and ICT has drawn on the letter of credit for
$116,000 and the Company has not yet replenished the Letter of Credit.
Pursuant to the agreement, the Company issued ICT 5,000,000 shares of the
Company's common stock recorded at the fair market value of the Company's common
stock of $5,000 and is included as intangible assets in the accompanying balance
sheets.
During the nine months ended December 31, 2006, the Company entered into an
agreement to locate financing with a third party for three years. As
consideration for these consulting services, the Company has agreed to issue
500,000 shares of restr icted common stock and a 10% finder's fee for any funds
brought into the Company. As of December 31, 2006, the Company has not entered
into any funding agreements, and therefore the third party is not owed any
consideration.
ITEM 2. MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS OF STEM CELL THERAPY INTERNATIONAL, INC. AND THE NOTES
THERETO APPEARING ELSEWHERE IN THIS FILING. STATEMENTS IN THIS MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION AND ELSEWHERE IN THIS FILING ON
FORM 10-QSB THAT ARE NOT STATEMENTS OF HISTORICAL OR CURRENT FACT CONSTITUTE
"FORWARD-LOOKING STATEMENTS."
The following management discussion should be read together with the Stem Cell
Therapy International, Inc. financial statements included in this Form 10QSB and
other reports filed with the SEC, including the amended Form 10SB Registration
Statement filed on January 19, 2007. See "Index to Financial Statements". Those
financial statements have been prepared in accordance with generally accepted
accounting principles of the United States of America.
General Overview
Stem Cell Therapy International, Inc. (the "Company") was originally
incorporated in Nevada on December 28, 1992 as Arklow Associates, Inc., and
after several name changes was renamed Altadyne, Inc. By March, 2005, the
Company (then Altadyne, Inc.) had no assets, liabilities, or ongoing business.
On March 20, 2005, R Capital Partners ("R Capital") acquired the Company (then
Altadyne, Inc.), and on September 1, 2005, Stem Cell Therapy International
Corp., a Nevada corporation ("Stem Cell Florida") acquired the Company by way of
a reverse acquisition. Following the transaction, Stem Cell Florida was a
wholly owned subsidiary of the Company, and Stem Cell Florida's shareholders
became shareholders of the Company. On October 5, 2005, the Company changed its
name to Stem Cell Therapy International, Inc. to reflect the new business of the
Company. This transaction is accounted for as a reverse merger, with Stem Cell
Florida treated as the accounting acquirer for financial statement purposes.
Stem Cell Florida was incorporated in Nevada on December 2, 2004.
Following the reverse acquisition, the Company assumed and is continuing the
operations of Stem Cell Florida. The Company's executive management team is:
Calvin C. Cao, Chairman and Chief Executive Officer and Daniel J. Sullivan,
Chief Financial Officer. The Company's supplier in the Ukraine also has the
following non-executive officers: Dr. Yuriv Gladkikh, Chief Scientist; Dr.
Galina Lobyntseva, Chief of Manufacture; Sergei Martynenko, Director of Clinic
in Kiev; Dr. Vladimir Gladkikh, Medical Director; and Dr. Dimitriy Lobyntsev,
Director of Research. Although these individuals are not employees of the
Company, we consider them vital to the success of our business.
We are indirectly involved in research and development and practical
application within the field of regenerative medicine. We provide allo (human)
stem cell biological solutions that are currently being used in the treatment of
patients suffering from degenerative disorders of the human body. These
treatments occur outside of the United States. We have established agreements
with highly specialized, professional medical treatment facilities around the
world in locations where Stem Cell Transplantation therapy is approved by the
appropriate local government agencies.
We intend to provide these biological solutions containing allo stem cell
products also in the United States to universities, institutes and privately
funded laboratory facilities for research purposes and clinical trials.
We will initially devote most of our efforts toward organization and fund
raising for planned clinics and patient operations and limited revenues have
been generated from any such operations. The Company has experienced recurring
losses from operations since its inception and as at December 31, 2006, we had a
working capital deficit of $508,597 and an accumulated deficit from operations
of $1,136,673. As noted in the financial statements for the period from
inception to December 31, 2006, these factors raise doubt about the ability of
the Company to continue as a going concern. Realization of the Company's
business plan is dependent upon the Company's ability to meet its future
financing requirements, and the success of future operations. Our only other
source for cash at this time is through investments or loans from management.
We must raise cash to implement our project and stay in business.
Critical accounting policies
The accounting policies of the Company are in accordance with generally
accepted accounting principles of the United States of America, and their basis
of application is consistent. Outlined below are those policies considered
particularly significant:
Revenue recognition:
We derive revenue from the licensing of stem cell technology, the sale of
stem cell products, and providing informational and referral services. We
recognize revenue related to these licenses, sales and services upon delivering
the license or product, or rendering the services, respectively. Any payments
received prior to delivery of the products or services are included in deferred
revenue and recognized once the products are delivered or the services are
performed.
Stock-based compensation:
In April 2006, we adopted the accounting provisions of Statement of
Financial Accounting Standards No. 123R - Share-based Payments (FAS 123R)
replacing Accounting for Stock-Based Compensation ("FAS 123"), which are similar
and require the use of the fair-value based method to determine compensation for
all arrangements under which employees and others receive shares of stock or
equity instruments (warrants and options).
Recently issued accounting pronouncements
In February 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 155 ("SFAS 155"), Accounting for
Certain Hybrid Financial Instruments - An Amendment of FASB Statements No. 133
and 140, to simplify and make more consistent the accounting for certain
financial instruments. Specifically, SFAS No. 155 amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, to permit fair
value re-measurement for any hybrid financial instrument with an embedded
derivative that otherwise would require bifurcation provided that the whole
instrument is accounted for on a fair value basis. Prior to fair value
measurement, however, interests in securitized financial assets must be
evaluated to identify interests containing embedded derivatives requiring
bifurcation. The amendments to SFAS No. 133 also clarify that interest-only and
principal-only strips are not subject to the requirements of the SFAS, and that
concentrations of credit risk in the form of subordination are not embedded
derivatives. Finally, SFAS No. 155 amends SFAS No. 140, Accounting for the
Impairment or Disposal for Long-Lived Assets, to allow a qualifying
special-purpose entity (SPE) to hold a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument. SFAS No. 155 applies to all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins after
September 15, 2006, with earlier application allowed. The Company does not
anticipate that the adoption of this statement will have a material impact on
its financial statements.
In September 2006, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP) and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require
any new fair value measurements. However, for some entities, the application of
this Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007.
Management believes this Statement will have no material impact on the financial
statements of the Company once adopted.
In May 2005, the FASB issued Statement of Financial Accounting Standards
No. 154, Accounting Changes and Error Corrections. ("SFAS 154")SFAS No. 154
changes the requirements for the accounting for and reporting of a change in
accounting principle. In addition, it carries forward without change the
guidance contained in APB Opinion No. 20 for reporting the correction of an
error in previously issued financial statements and a change in accounting
estimate. SFAS No. 154 requires retrospective application to prior periods'
financial statements of changes in accounting principle in most circumstances.
The provisions of SFAS No. 154 are effective in fiscal years beginning after
December 15, 2005. The adoption of SFAS No. 154 did not have a material impact
on its financial statements.
FASB issued Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" (FIN 48), which will be effective for fiscal years beginning after
December 15, 2006, FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise's financial statements in accordance with FASB
Statement No 109, "Accounting for Income Taxes". FIN 48 prescribes a recognition
threshold and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition. The Company has not determined the impact of the adoption of FIN 48
on its financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements," ("SAB 108"). SAB 108
provides guidance on the consideration of effects of prior year misstatements in
quantifying current year misstatements for the purpose of a materiality
assessment. The SEC staff believes registrants must quantify errors using both
a balance sheet and income statement approach to evaluate whether either
approach results in quantifying a misstatement that, when all relevant
quantitative and qualitative factors are considered, is material. SAB 108 is
effective for the Company at the end of fiscal year 2007. The Company is
currently evaluating the effects of SAB 108 on its financial statements.
Results of Operations
Nine months ended December 31, 2006 and 2005
We had revenue of $236,260 during the nine months ended December 31, 2006
as compared to $50,934 of revenue for the comparable period in 2005. Our cost
from ICT for the stem cell biological material delivered during the nine months
ended December 31, 2006 was $241,060 as compared to $34,600 for the same period
ended 2005. The increase in cost of goods sold is due to the increased number
of treatments and a $116,000 charge for an additional payment made to ICT for
not meeting the contractual minimum purchase requirement. Our net loss for the
nine month period ended December 31, 2006 was $604,271 as compared to $256,022
during the same period in 2005. The loss primarily reflects increases in
payroll, professional fees and the additional payment to ICT for not meeting the
minimum purchase requirement. Revenues during 2006 reflected the treatment of
nine patients compared with only two patients treated during the same period in
2005.
Gross margin for the nine months ended December 31, 2006 was a loss of
$4,800 as compared to $16,334 for the nine months ended December 31, 2005. The
decrease in gross margin is primarily due to the $116,000 charge for an
additional payment made to ICT for not meeting the contractual minimum purchase
requirement. We anticipate positive gross margins on future patient services
and delivery of our stem cell biological products.
Three months ended December 31, 2006 and 2005
We had revenues of $90,000 during the three months ended December 31, 2006
as compared to $27,464 of revenue for the comparable period in 2005. Our cost
from ICT for the stem cell biological material delivered during the three months
ended December 31, 2006 was $32,435 as compared to $17,500 for the same period
ended 2005. Our net loss for the three month period ended December 31, 2006
was $100,017, compared to $105,033 during the same period in 2005. The decrease
in net loss is primarily due to the increased number of patient's treated in
2006 as compared to 2005.
Gross margin for the three months ended December 31, 2006 was $57,565 as
compared to $9,964 for three months ended September 30, 2005. The increased
gross margin is primarily due to an increase in the number of patient's treated
in 2006 as compared to 2005.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial statements have been prepared assuming that the
Company will continue as a going concern. For the nine months ended December
31, 2006 and the period since December 2, 2004 (Date of Inception) through
December 31, 2006, the Company has had a net loss of $604,271 and $1,136,673,
respectively and cash used by operations of $65,003 and $227,260, respectively,
and negative working capital of $508,597 at December 31, 2006. As of December
31, 2006, the Company has not emerged from the development stage. In view of
these matters, continuation of the Company as a going concern is dependent upon
our ability to generate additional financing and ultimately to increase
operations and to achieve a level of profitability. Since inception, we have
financed our activities principally from shareholder advances and some
relatively minor sales of equity securities. We intend on financing our future
development activities and our working capital needs largely from the sale of
equity securities and loans from the Company's Chief Executive Officer, until
such time that funds provided by operations are sufficient to fund working
capital requirements. There can be no assurance that the Company will be
successful in achieving its financing goals at reasonably commercial terms, if
at all.
Unpredictability of future revenues; Potential fluctuations in quarterly
operating results; Seasonality
As a result of our limited operating history and the emerging nature of the
biotechnological markets in which we compete, we are unable to accurately
forecast future revenues. Our current and future expense levels are based
largely on our investment plans and estimates of future revenues and are to a
large extent fixed and expected to increase.
Sales and operating results generally depend on the volume of, timing of,
and ability to fulfill the number of orders received for the biological solution
and the number of patients treated, which are difficult to forecast. We may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Accordingly, any significant shortfall in revenues in
relation to our planned expenditures would have an immediate adverse effect on
our business, prospects, financial condition, and results of operations.
Further, as a strategic response to changes in the competitive environment, we
may from time to time make certain pricing, service, or marketing decisions
which could have a material adverse effect on our business, prospects, financial
condition and results of operations.
We expect to experience significant fluctuations in our future quarterly
operating results due to a variety of factors, many of which are outside our
control. Factors that may adversely affect our quarterly operating results
include (i) our ability to retain existing patients, attract new patients at a
steady rate and maintain patient satisfaction, (ii) our ability to manage our
affiliated production facility and maintain gross margins, (iii) the
announcement or introduction of new treatments and/or patents by the Company and
its competitors, (iv) price competition or higher prices in the industry, (v)
the level of use of the Internet and on-line patient services, (vi) the
Company's ability to upgrade and develop its systems and infrastructure and
attract new personnel in a timely and effective manner, (vii) the level of
traffic on our website, (viii) technical difficulties, system downtime, (ix) the
amount and timing of operating costs and capital expenditures relating to
expansion of our business, operations and infrastructure, (x) governmental
regulation, and (xi) general economic conditions.
OFF-BALANCE SHEET ARRANGEMENTS
The Company is not currently engaged in any off-balance sheet arrangements,
as defined by Item 303(c)(2) of Regulation S-B. The Company has not engaged in
any off-balance sheet arrangement during the last fiscal year, and is not
reasonably likely to engage in any off-balance sheet arrangement in the near
future.
ITEM 3. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our Management, including
our President who serves as our principal executive officer and our Chief
Financial Officer, who serves as our principal financial officer, we conducted
an evaluation of the effectiveness of the design and operations of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as of December 31, 2006. Based upon
that evaluation, the Company's President and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures are effective in
alerting them to material information regarding the Company's financial
statements and disclosure obligations in order to allow the Company to meet its
reporting requirements under the Exchange Act in a timely manner. Moreover, the
Company's President and Chief Financial Officer concluded that such disclosure
controls and procedures were effective to ensure that information required to be
disclosed by the Company in the reports filed under the Exchange Act are
accumulated and communicated to the Company's management, including the
Company's President and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
The Company's management, with the participation of its President and Chief
Financial Officer, has determined that there has been no change in the Company's
internal control over financial reporting that occurred during the Company's
last fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITSAND REPORTS ON FORM 8-K
(a) Exhibit Index. The following exhibits are filed with or incorporated by
-------------
reference into this quarterly report:
3.1 Articles of Incorporation of Stem Cell Therapy International, Inc., as
amended*
3.2 Articles of Incorporation of Stem Cell Therapy Corp.*
3.3 Certificate of Designation of Series A Preferred Stock*
3.4 By-laws of Stem Cell Therapy International, Inc.*
10.1 Business Consulting and Services Agreement dated as of December 16,
2004 between Stem Cell Therapy International Corp. and PMS SA.*
10.2 Consulting Agreement dated as of January 4, 2005 between Stem Cell
Therapy International Corp. and RES Holdings Corp.*
10.3 Investor and Media Relations Contract dated as of February 10, 2005
between Stem Cell Therapy International Corp. and Stern & Co.*
10.4 Executive Suite Lease Agreement dated as of February 15, 2005 between
Stem Cell Therapy International Corp. and Wilder Corporation.*
10.5 Engagement Letter dated as of May 3, 2005 between the Company and
Westminster Securities Corporation.*
10.6 Reorganization and Stock Purchase Agreement dated as of September 1,
2005 between the Company (then Altadyne, Inc.), Stem Cell Therapy
International Corp. and R Capital Partners, Inc.*
10.7 Licensing Agreement dated as of September 1, 2005 between the Company
and Institute of Cell Therapy.*
10.8 Consulting Agreement dated as of September 1, 2005 between the Company
and European Consulting Group, LLC.*
10.9 Consulting Agreement dated as of September 1, 2005 between the Company
and Global Management Enterprises, LLC.*
10.10 Consulting Agreement dated as of September 1, 2005 between the Company
and USA Consulting Group, LLC.*
10.11 Professional Services Agreement dated as of September 7, 2005 between
the Company and Bridgehead Group Limited , Inc.*
10.12 Public Relations Agreement dated as of September 19, 2005 between the
Company and Stern & Co.*
10.13 Advisory Physician Agreement dated as of October 4, 2005 between the
Company and Alexey Bersenev.*
10.14 Medical and Scientific Advisory Board Member Agreement dated as of
October 10, 2005, between the Company and Dr. Weiwen Deng.*
10.15 Medical and Scientific Advisory Board Member Agreement dated as of
October 24, 2005, between the Company and Dr. Jorge Quintero.*
10.16 Medical and Scientific Advisory Board Member Agreement dated as of
October 24, 2005, between the Company and Dr. Salvador Vargas.*
10.17 Medical and Scientific Advisory Board Member Agreement dated as of
December 2, 2005 between the Company and Dr. Igor Katkov.*
10.18 Medical and Scientific Advisory Board Member Agreement dated as of
December 2, 2005, between the Company and Dr. Nikita Tregubov.*
10.19 Business Advisory Board Agreement dated as of December 5, 2005 between
the Company and Fred J. Villella.*
10.20 Business Development Advisory Agreement dated as of January 1, 2006
between the Company and Alexander Kulik.*
10.21 Termination and Modification of Engagement Letter dated January 4,
2006 between the Company and Westminster Securities Corporation.*
10.22 Business Consulting and Services Agreement dated January 20, 2006
between the Company and Julio C. Ferreira dba Sphaera Inte-Par.*
10.23 Business Development Advisory Agreement dated as of February 7, 2006
between the Company and Gus Yepes.*
10.25 Treating Physician Agreement dated as of October 24, 2005 between the
Company and Dr. Salvador Vargas.
10.26 Treating Physician Agreement dated as of October 24, 2005 between the
Company and Dr. Jorge Quintero.
10.27 Consulting Agreement dated as of June 9, 2006 between the Company and
Rick Langley.
10.28 Patient Treatment Agreement dated November 1, 2006 between the Company
and Shenshen Beike Biotechnology Company Limited.
10.29 Consulting Agreement dated as of October 12, 2006 between the Company
and SOS Resource Services, Inc.
21. List of Subsidiaries
31.1 Chief Executive Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Chief Financial Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Chief Executive Officer certification pursuant to 18 U.S.C. Section
1350
32.2 Chief Financial Officer certification pursuant to 18 U.S.C. Section
1350
_______________________
* Previously filed with the Company's initial filing of Form 10-SB, file number
000-51931, filed on April 25, 2006, and incorporated by this reference as an
exhibit to this Form 10-QSB.
(b) Reports on Form 8-K.
--------------------
Form 8-K filed on August 4, 2006 reporting that effective July 19, 2006, the
Company terminated its prior accounting firm Pender Newkirk and Company LLP, as
its accounting firm and engaged Aidman, Piser & Company, P.A. , Certified Public
Accountants, Tampa, FL, as its new auditors.
Form 8-K filed on January 19, 2007 reporting that the Company and Peter
Sidorenko, the Company's Chief Operating Officer, mutually determined that Mr.
Sidorenko would be terminated from that position. The Company is presently
seeking a replacement for Mr. Sidorenko.
SIGNATURES
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.
Date: February 12, 2007
By: /s/Calvin Cao
-------------
Name: Calvin Cao
Title: President
Date: February 12, 2007
By: /s/Daniel Sullivan
------------------
Name: Daniel Sullivan
Title: Chief Financial Officer and
Chief Accounting Officer