(unaudited)
|
|
June
30,
2008
|
|
|
December
31,
2007
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
|
|
$
|
1,089
|
|
|
$
|
24,115
|
|
Prepaid
Expenses
|
|
|
22,850
|
|
|
|
51,480
|
|
Total
Current Assets
|
|
|
23,939
|
|
|
|
75,595
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net of accumulated depreciation of $1,823
|
|
|
4,611
|
|
|
|
5,254
|
|
License
rights
|
|
|
400,000
|
|
|
|
400,000
|
|
Deposits
|
|
|
5,978
|
|
|
|
4,642
|
|
Total
Assets
|
|
$
|
434,528
|
|
|
$
|
485,491
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
188,511
|
|
|
$
|
151,693
|
|
Accrued
expense
|
|
|
3,068
|
|
|
|
16,717
|
|
Advances
from affiliates
|
|
|
838,341
|
|
|
|
640,708
|
|
Total
Current Liabilities
|
|
|
1,029,920
|
|
|
|
809,118
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Deficit
|
|
|
|
|
|
|
|
|
Common
stock, $0.0001 par value, 425,000,000 shares authorized, 272,012,347 and
272,000,000 shares issued and outstanding, respectively
|
|
|
27,201
|
|
|
|
27,200
|
|
Additional
paid-in capital
|
|
|
1,040,212
|
|
|
|
477,773
|
|
Deficit
accumulated during the development stage
|
|
|
(1,662,805
|
)
|
|
|
(828,600
|
)
|
Total
Shareholders’ Deficit
|
|
|
(595,392
|
)
|
|
|
(323,627
|
)
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders’ Deficit
|
|
$
|
434,528
|
|
|
$
|
485,491
|
|
See notes
to financial statements
Immunosyn
Corporation
(A
Development Stage Company)
Statements
of Expenses
(unaudited)
|
|
Three
Months
Ended
June
30, 2008
|
|
|
Three
Months
Ended
June
30, 2007
|
|
|
Six
Months
Ended
June
30, 2008
|
|
|
Six
Months
Ended
June
30, 2007
|
|
|
Inception
Through
June
30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
& administrative
|
|
$
|
629,884
|
|
|
$
|
71,025
|
|
|
$
|
805,516
|
|
|
|
233,738
|
|
|
$
|
1,608,056
|
|
Interest
expense
|
|
|
15,297
|
|
|
|
4,810
|
|
|
|
28,690
|
|
|
|
8,524
|
|
|
|
54,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(645,181
|
)
|
|
$
|
(75,835
|
)
|
|
$
|
(834,206
|
)
|
|
|
(242,262
|
)
|
|
$
|
(1,662,806
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
$
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding
|
|
|
272,008,412
|
|
|
|
272,000,000
|
|
|
|
272,004,206
|
|
|
|
272,000,000
|
|
|
|
258,332,519
|
|
See notes
to financial statements
Immunosyn
Corporation
(A
Development Stage Company)
Statements
of Cash Flows
(unaudited)
|
|
Six
Months
Ended
June
30, 2008
|
|
|
Six
Months
Ended
June
30, 2007
|
|
|
Inception
Through
June
30, 2008
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(834,206
|
)
|
|
$
|
(242,262
|
)
|
|
$
|
(1,662,806
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
643
|
|
|
|
536
|
|
|
|
1,823
|
|
Imputed
interest on advances from affiliates
|
|
|
28,690
|
|
|
|
8,524
|
|
|
|
54,750
|
|
Services
rendered for stock
|
|
|
533,750
|
|
|
|
|
|
|
|
600,163
|
|
Changes
in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
28,630
|
|
|
|
|
|
|
|
(22,850
|
)
|
Deposits
|
|
|
(1,336
|
)
|
|
|
|
|
|
|
(5,978
|
)
|
Accounts
payable
|
|
|
28,127
|
|
|
|
31,040
|
|
|
|
179,819
|
|
Accrued
expenses
|
|
|
(13,649
|
)
|
|
|
|
|
|
|
3,068
|
|
Net
cash used in operating activities
|
|
|
(229,351
|
)
|
|
|
(202,162
|
)
|
|
|
(852,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
|
|
|
|
(6,433
|
)
|
|
|
(6,433
|
)
|
Net
cash used in investing activities:
|
|
|
-
|
|
|
|
(6,433
|
)
|
|
|
(6,433
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
advances from affiliates
|
|
|
206,325
|
|
|
|
215,712
|
|
|
|
847,033
|
|
Sale
of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
12,500
|
|
Net
cash provided by financing activities
|
|
|
206,325
|
|
|
|
215,712
|
|
|
|
859,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
change in cash
|
|
|
(23,026
|
)
|
|
|
7,117
|
|
|
|
1,089
|
|
Cash
at beginning of period
|
|
|
24,115
|
|
|
|
9,232
|
|
|
|
-
|
|
Cash
at end of period
|
|
$
|
1,089
|
|
|
$
|
16,349
|
|
|
$
|
1,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash
paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash
Investing and Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for license rights
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
400,000
|
|
See notes
to financial statements
Immunosyn
Corporation
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
(unaudited)
NOTE 1 -
BASIS OF PRESENTATION
The accompanying unaudited interim
financial statements of Immunosyn Corporation have been prepared in accordance
with accounting principles generally accepted in the United States of America
and the rules of the Securities and Exchange Commission, and should be read in
conjunction with Immunosyn’s audited 2007 year end financial statements and
notes thereto contained in Immunosyn’s Annual Report on Form 10-KSB filed with
the Securities and Exchange Commission. In the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of financial position and the results of operations for the
interim period have been reflected herein. The results of operations
for interim periods are, however, not necessarily indicative of the results to
be expected for the full year. Notes to the financial statements
which substantially duplicate the disclosure contained in the audited financial
statements for fiscal 2007 as reported in the Company’s Annual Report on Form
10-KSB have been omitted.
NOTE 2 -
GOING CONCERN
During the six months ended June 30,
2008 and since inception, Immunosyn has been unable to generate cash flows
sufficient to support its operations and has been dependent on advances from its
affiliates. In addition to negative cash flow from operations,
Immunosyn has experienced recurring net losses, and has a negative working
capital.
These factors raise substantial doubt
about Immunosyn’s ability to continue as a going concern. The
financial statements do not include any adjustments that might be necessary if
Immunosyn is unable to continue as a going concern.
NOTE 3 -
ADVANCES FROM AFFILIATES
Since inception, Immunosyn has borrowed
$829,782 from Argyll Equities, LLC and Argyll Biotechnologies, LLC who together
own approximately 60% of Immunosyn’s common stock. These advances are
unsecured and are to be repaid on demand. Interest expense in the
amount of $28,690 was imputed using an interest rate of 7.5% for the six months
ended June 30, 2008 and is included in additional paid in
capital. Advances from Stephen D. Ferrone, CEO and President of
Immunosyn, in the amount of $8,559 are due and payable on
demand. These advances are unsecured and carry no interest
rate.
NOTE 4 –
COMMON STOCK
On April 23, 2008, Immunosyn entered
into an agreement to receive services in exchange for 150,000 shares of common
stock. Immunosyn also entered into an agreement to receive placement
services in exchange for a fee upon selling securities. These shares
were valued at $524,750.
Immunosyn issued 2,347 shares of common
stock on April 29, 2008 to The Blaine Group pursuant to a contract entered
into on October 12, 2007 for The Blaine Group to provide financial
relations and investor relations services to Immunosyn. On
June 12, 2008, The Blaine Group earned another 1,595 shares. The
total value of such shares is $9,000.
NOTE 5 –
COMMITMENTS AND CONTINGENT LIABILITIES
On April 23, 2008, Immunosyn agreed to
receive services in exchange for 150,000 shares of common
stock. Immunosyn also agreed to receive placement services in
exchange for a fee contingent upon selling securities.
On October 12, 2007, Immunosyn agreed
to a 12 month contract with The Blaine Group, Inc. (TBG) for TBG to undertake a
national financial public relations and investors relations campaign for
Immunosyn. As part of this contract, TBG agreed to handle all public
relations matters, as agreed upon, for Immunosyn. This contract shall
continue until terminated by either party with thirty days written
notice. Immunosyn agreed to pay TBG $10,000 as a monthly retainer
fee. $8,500 of this retainer is payable in cash and $1,500 in
restricted stock to be valued at current market value on the date of
issue.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
Immunosyn
Corporation (“Immunosyn” or the “Company”) is a development stage
company that was formed in August 2006 and is headquartered in La Jolla,
California. In September 2006, it executed an exclusive license
agreement with an affiliated company, Argyll Biotechnologies, LLC (“Argyll
Biotech”), in exchange for 147,000,000 shares of its Common Stock or
approximately 53.44% of the outstanding shares of the Company’s Common
Stock. The license agreement was amended and restated in October
2007. Pursuant to the terms of the license agreement, as amended, the
Company has an exclusive worldwide license to market, distribute and sell a
biopharmaceutical drug product, currently referred to as SF-1019, for multiple
uses including the treatment of a variety of diseases, subject to the receipt of
appropriate regulatory approval in each jurisdiction where SF-1019 will be
marketed. Under the terms of its exclusive license, Immunosyn also
has a right of first offer to extend its exclusive license to include variants
of SF-1019 that may be approved by various regulatory authorities for treatment
of other diseases and pathologies. Argyll Biotech is responsible for
all research and product development, clinical testing, regulatory approvals,
production and product support. In accordance with the amended
license agreement, the parties agreed that the cost of SF-1019 to the Company
will be 40% of the gross sales price of SF-1019 as sold to a third party
customer by the Company.
As a
sales, marketing, and distribution channel for SF-1019, Immunosyn’s primary
business strategy is to build a sales and marketing force and related resources
so that if SF-1019 is approved for human use it can be sold; and secondly, to
increase awareness and acceptance of SF-1019 in the medical
community.
As of the
date of this report, we have no revenue and limited operations. Our
ability to obtain additional funding will determine our ability to continue as a
going concern. We have one principal asset, our exclusive license
from Argyll Biotech, and one full-time employee – a Chief Executive Officer
hired in October 2007 -- and one part-time employee -- a Chief Financial and
Accounting Officer. We do not expect to commence full scale
operations or generate revenues unless and until Argyll Biotech completes
development and obtains regulatory approval for SF-1019. Since
incorporation, we have not made any significant purchases or sale of assets, nor
have we been involved in any mergers, acquisitions or
consolidations.
Plan of
Operation
At June
30, 2008, the Company had an accumulated deficit of $1,662,805 and a working
capital deficit of $1,005,981. Based on its current cash balance,
management believes the Company cannot build its
operations. Currently, an affiliated company provides general support
services to the Company, without charge. In addition, since
inception, the Company has borrowed $829,782 from Argyll Equities LLC and Argyll
Biotech who together own approximately 60% of the Company’s Common
Stock. These advances are unsecured and will be repaid on
demand. See Note 3 of Notes to Financial Statements. In
October 2007, the Company hired both a Chief Executive Officer and a Chief
Financial Officer (who has since left the Company). The Company has
advances from the CEO as well which are due and payable. See Note 3
of Notes to Financial Statements. The Company needs additional
financing to continue its operations and may raise funds in the future privately
or publicly. The Company has listed its Common Stock on the OTC
Bulletin Board and trading commenced on October 26, 2007.
The
Company intends to raise working capital through one or more financings to meet
the following requirements:
·
|
paying
current administrative staff;
|
·
|
hiring
staff, a full-time controller and five sales and marketing
personnel;
|
·
|
purchasing
capital equipment, including securing its principal offices, both
executive and sales, and distribution
facilities;
|
·
|
monitoring
the progress of the research and development effort conducted by Argyll
Biotech;
|
·
|
developing
a marketing plan for the sale and distribution of
SF-1019;
|
·
|
hiring
industry consultants to assist in developing a channel strategy for sales
and marketing of SF-1019, including direct sales, third party
distributors, and strategic
partnerships;
|
·
|
developing
market awareness in the patient and medical community and educating those
effected with various diseases including CIDP, diabetic neuropathy and
diabetic ulcers and other diseases;
and
|
·
|
selecting
and compensating board members.
|
The
Company requires substantial future sources of capital in order to meet such
anticipated expenditures and to continue its operations during the period Argyll
Biotech seeks regulatory approval from the United States Food and Drug
Administration (the “FDA”) and foreign regulatory authorities. The
Company currently anticipates this process to be between three and five years
and the amount of funds required to be between $14 million and $24
million.
The
Company believes that significant funding will be required to provide adequate
sources of working capital during that period. There can be no
assurance that the Company will be able to raise any or all the capital required
for its operations. Failure to obtain future financing will require
the Company to delay or substantially curtail its operations or close its
business, resulting in a material adverse effect on the Company.
Off Balance Sheet
Arrangements
None.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
Not
applicable.
Item
4T. Controls and Procedures.
Controls and
Procedures
The
Company’s management is responsible for establishing and maintaining disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended) that are designed to ensure that information
required to be disclosed by the Company in reports it files or submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and
that such information is accumulated and communicated to the Company’s
management, including the Company’s Chief Executive Officer and Chief Financial
and Accounting Officer, as appropriate, to allow timely decisions regarding
required disclosures. In designing and evaluating the disclosure
controls and procedures, management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily is
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. As of the end of the period covered
by this report, and under the supervision and with the participation of
management, including its Chief Executive Officer and Chief Financial and
Accounting Officer, who are responsible for establishing and maintaining
adequate internal control over financial reporting as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act, management evaluated the
effectiveness of the design and operation of these disclosure controls and
procedures. Based on this evaluation and subject to the foregoing,
the Company’s Chief Executive Officer and Chief Financial and Accounting Officer
concluded that the Company’s disclosure controls and procedures are not
effective because there are material weaknesses in the Company’s internal
control over financial reporting. A material weakness is a
deficiency, or a combination of control deficiencies, in internal control over
reporting such that there is a reasonable possibility that a material
misstatement of Immunosyn’s annual or interim financial statements will not be
prevented or detected on a timely basis.
The
material weakness relates to the monitoring and review of work preformed by
Immunosyn’s Chief Financial and Accounting Officer in the preparation of audit
and financial statements, footnotes and financial data provided to Immunosyn’s
registered public accounting firm in connection with the annual
audit. All of Immunosyn’s accounting functions including financial
reporting are carried out by our Chief Financial and Accounting Officer with
review functions provided by our Chief Executive Officer and we do not have an
audit committee at this time. The lack of accounting staff results in
a lack of segregation of duties and technical accounting experience necessary
for an effective internal control system.
Immunosyn
recognizes the importance of internal controls. As Immunosyn is
currently a development stage company with limited ongoing financial operations,
management is making an effort to mitigate this material weakness to the fullest
extent possible. At present this is done by having the Chief
Executive Officer review Immunosyn’s financial statements, account
reconciliations and accounts payable reports that have been prepared by Chief
Financial and Accounting Officer for reasonableness. All unexpected
results are investigated. At any time, if it appears that any control
can be implemented to continue to mitigate such weakness, it will be immediately
implemented. As Immunosyn grows in size and as its finances allow,
management will hire sufficient accounting staff and implement appropriate
procedures for monitoring and review of work performed by our Chief Financial
and Accounting Officer.
This
quarterly report does not include an attestation report of the Company’s
registered public accounting firm regarding any internal control over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s response in this quarterly report.
Changes in Internal
Controls
During the quarter ended June 30, 2008,
there have not been any changes in the Company’s internal controls that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting. However, please
note the discussion above.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings.
Pursuant
to a subpoena dated January 20, 2006 issued by the Securities and Exchange
Commission to an affiliate of Argyll Biotech in proceedings captioned In the
Matter of Directors Financial Group, Ltd. and In The Matter of Prime Bank
Securities, and pursuant to subpoenas issued by the SEC to affiliates of Argyll
Biotech on March 30, 2006 and to Immunosyn on December 15, 2006 in a proceeding
captioned In The Matter of The Argyll Group, LLC, Immunosyn and its affiliates
have been asked to produce all documents concerning a wide variety of topics
including many related directly to Immunosyn. Immunosyn and Argyll Biotech’s
affiliates actively cooperated with the SEC and produced documents responsive to
these subpoenas, completing their responses in early August 2007. The
Directors Financial Group matter was resolved in June 2006 through a settlement
between the SEC and the parties to the proceeding, and, accordingly, Immunosyn
will not be required to respond further to that subpoena. Immunosyn
has had no further communication with the SEC regarding the remaining subpoenas
since January 2007.
On
December 19, 2007, a shareholder of Immunosyn, Leon S. Segen, commenced an
action in the Southern District of New York derivatively on behalf of Immunosyn
to recover alleged short-swing profits from several alleged statutory insiders
of Immunosyn, including Immunosyn officer and director Douglas A. McClain Jr.
This action is in the discovery phase. The action includes
Immunosyn as a nominal defendant only and does not allege any claims of
liability against Immunosyn.
On March
19, 2008, a shareholder of the Company, Deborah Donoghue, commenced two actions
-- one in the U.S. District Court for the Southern District of California and
the other in the U.S. District Court for the Southern District of New York –
derivatively on behalf of the Company to recover alleged short-swing profits
from several alleged statutory insiders of the Company, including Company
officer and director Douglas A. McClain Jr. The actions include the
Company as a nominal defendant only and do not allege any claims of liability
against the Company. Donoghue withdrew the New York action in April
2008 and the California action has been stayed pending resolution of the related
earlier-filed action by shareholder Leon Segen currently pending in the
Southern District of New York.
On or
about July 27, 2006, Daval filed suit in the High Court of Justice, Chancery
Division in London, England against Argyll Biotech and five of Argyll Biotech’s
research scientists and others, including Douglas McClain, Sr., seeking an
injunction and damages or an account of profits based on allegations of breach
by the scientists and Mr. McClain of confidentiality agreements with Daval,
breaches by such persons of their fiduciary duties and conspiracy by Argyll
Biotech and certain of its shareholders to wrongfully disclose and use Daval’s
alleged trade secrets. Argyll Biotech has filed its defenses and continues to
investigate the merits of the suit and the basis of its defenses including,
among other grounds, that one of the active ingredients in SF-1019 disclosed in
Argyll Biotech’s 603 Application is based on independent research by Argyll
Biotech’s research scientists, and the method of producing SF-1019 is materially
different from Daval’s process. The action is listed for trial in the UK in
January 2009. Immunosyn is not involved in this litigation.
Item
1A. Risk Factors.
Reference
is made to Item 1A (the Risk Factors section) in the Company’s Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2007 previously filed with
the Securities and Exchange Commission.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
(a)
|
The
Company did not sell any unregistered equity securities during the three
months ended June 30, 2008. As previously reported, the Company
has agreed to pay The Blaine Group $1,500 per month in restricted common
stock of the Company and Basic Investors, Inc. up to 10,000 shares of
restricted common stock of the Company and the Company accrued a liability
for such shares due to The Blaine Group and Basic Investors during the
three months ended June 30, 2008. See Note 4 of Notes to
Financial Statements.
|
Item
3. Defaults Upon Senior Securities.
Item
4. Submission of Matters to a Vote of Security Holders.
Item
5. Other Information.
(a)
|
The
Company has elected to delay pursuit of agreements for the administration
and distribution of SF-1019 in the State of Utah at this
time.
|
Item
6. Exhibits.
The
following exhibits are filed with, or incorporated by reference into, this
Report.
Exhibit Number
|
|
Description
|
Page
No.
|
|
31.1*
|
Certification
of Stephen D. Ferrone, Chief Executive Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2*
|
Certification
of Douglas A. McClain Jr., Chief Financial and Accounting Officer,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1*
|
Certification
of Stephen D. Ferrone, Chief Executive Officer, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.2*
|
Certification
of Douglas A. McClain Jr., Chief Financial and Accounting Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
* Exhibit
filed with this Report.