UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

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

 

For the fiscal year ended: December 31, 2020.

 

OR

 

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

 

Commission File No. 000-27237

 

(GENETHERA, INC. LOGO)
 
GeneThera, Inc.
(Exact name of registrant as specified in its charter)

 

Nevada   65-0622463
(State or other jurisdiction of
incorporation)
  (I.R.S. Employer Identification No.)

 

3051 W 105th Ave. #350251, Westminster, CO   80035
(Address of principal executive offices)   (Zip Code)

 

(720) 587-5100
(Registrant’s telephone number, including area code)
 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

 

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

 

Large Accelerated Filer o Accelerated Filer o
Non-Accelerated Filer o Smaller reporting company x
  Emerging growth company o
   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

 

As of June 30, 2020, the last business day of the Registrant’s most recently completed second fiscal quarter, the market value of our common stock held by non-affiliates was $1,024,337 based on the closing price of $0.04 on the same day.

 

The number of shares of the Registrant’s common stock, $0.001 par value per share, outstanding as of April 14, 2021, was 24,071,255.

 

Documents incorporated by reference: NONE

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FORM 10-K
TABLE OF CONTENTS

 

PART I
Item 1. Business   4
Item 1A. Risk Factors   11
Item 1B. Unresolved Staff Comments   17
Item 2. Properties   17
Item 3. Legal Proceedings   17
Item 4. Mine Safety Disclosures   18
       
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.   18
Item 6. Selected Financial Data   18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations   19
Item 7A. Quantitative and Qualitative Disclosure About Market Risk   23
Item 8. Financial Statements and Supplementary Data   23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   24
Item 9A. Controls and Procedures   24
Item 9B. Other Information   25
       
PART III
Item 10. Directors, Executive Officers and Corporate Governance   25
Item 11. Executive Compensation   27
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters   28
Item 13. Certain Relationships and Related Transactions, and Director Independence   29
Item 14. Principal Accounting Fees and Services   29
       
PART IV
Item 15. Exhibits, Financial Statement Schedules   30
Item 16. Form 10-K Summary   30

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Forward-Looking Statements

 

CERTAIN STATEMENTS IN THIS ANNUAL REPORT MAY CONSTITUTE “FORWARD LOOKING STATEMENTS”. WHEN THE WORDS “BELIEVES,” “EXPECTS,” “PLANS,” “PROJECTS,” “ESTIMATES” AND SIMILAR EXPRESSIONS ARE USED, THEY IDENTIFY FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT’S CURRENT BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. INFORMATION CONCERNING FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS CAN BE FOUND IN OUR PERIODIC REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WE UNDERTAKE NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES OR REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

Unless otherwise indicated, references in this report to “we,” “us, “our”, “GeneThera”, and the “Company” refer to, collectively, GeneThera, Inc., a Nevada corporation, and its consolidated subsidiary, GeneThera, Inc., a Colorado corporation.

 

Special Note Regarding Forward Looking Statements

 

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, which are subject to the “safe harbor” created by those sections / acts. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions intended to identify forward-looking statements.

 

  Our ability to raise capital;

 

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

 

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

 

  Our ability to attract and retain the necessary personnel with the expertise needed to ensure that we can operate the Company effectively;

 

  Risks relating to rapidly developing technology, and regulatory considerations;

 

  Actions or inactions of third-party contractors and vendors;

 

  Risks related to international economies;

 

  Our ability to successfully patent and protect our intellectual property;

 

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

 

  The potential that our competitors will get their products to market ahead of us;

 

  The impact of competitive services and pricing;

 

  General economic conditions; and

 

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

 

These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this Annual Report on Form 10-K in greater detail under the heading “Risk Factors.” Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

 

The specific discussions herein about the Company include financial projections and future estimates and expectations about our business. The projections, estimates and expectations are presented in this report only as a guide about future possibilities and do not represent actual amounts or assured events. All the projections and estimates are based exclusively on our management’s own assessment of our business, the industry in which we work and the economy at large and other operational factors, including capital resources and liquidity, financial condition, fulfillment of contracts and opportunities. The actual results may differ significantly from the projections. Potential investors should not make an investment decision based solely on our projections, estimates or expectations.

 

PART I

 

ITEM 1. BUSINESS

 

Company Overview

 

We are a biotechnology company dedicated to eradicating zoonotic diseases such as COVID-19 (Novel Coronavirus), Paratuberculosis (Johne’s disease), Mad Cow Disease, Chronic Wasting Disease, and E.coli and Salmonella infections, by applying our advanced proprietary molecular sciences and technologies. Diseases of terrestrial, avian and aquatic life animals influence a number of economic and global security issues, including food for an increasing world population, access to international trade, species conservation and protection of those endangered, and economic growth in developing and re-organizing nations. Because more than 80% of animal bacteria and viruses are zoonotic (i.e. transmissible between humans and animals, causing infection in both species), their management and prevention are crucial to improving public health on a global scale. Zoonotic diseases are the major cause of global pandemics throughout human history. These diseases are capable of altering human history by causing significant loss of life, and major economic and social upheaval. We focus on developing novel molecular diagnostic tests, therapeutics, and vaccines through our proprietary robotic technologies with the belief that improved technologies and methodologies must be developed and implemented in order to aid mankind’s control of emerging diseases in animals and in humans. We believe that, if not properly addressed, diseases in animals will continue to cause serious and growing global problems with respect to economics, human health and biodiversity.

 

We previously developed proprietary diagnostic assays for use in the agricultural and veterinary markets, and we intent to develop proprietary, genetics-based diagnostic assays and vaccine solutions through our robotic technologies with the goal of controlling the spread of zoonotic infection in the human population. Our mission is to continually apply our scientific research to the more effective management of zoonotic diseases and, in so doing, realize the commercial potential of our molecular biotechnologies.

 

We will require significant additional funding in order to implement our business plan. There is no guarantee that we will be successful in securing the required financing, and if such financing is secured, there is no guarantee that we will fully achieve our business goals.

 

Target Zoonotic Diseases

 

COVID-19

 

COVID-19 is an infectious disease caused by SARS- CoV-2. Common symptoms include fever, cough and shortness of breath. Other symptoms may include muscle pain, diarrhea, sore throat, and loss of smell. The majority of cases result in mild symptoms. However, some cases progress to viral pneumonia and multi-organ failure. SARS-Cov-2 coronavirus is the latest example of a long list of viruses and bacteria that can cause widespread global infection in humans. As of early June 2020, the number of infectious cases worldwide were close to seven and a half million with more than 415,000 deaths. In December 2019, SARS- Cov-2 was first discovered in the city of Wuhan, China. In February 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. The SARS-Cov-2 is a genetically mutated strain of the SARS-Cov-1 virus that caused SARS in 2003-2004 epidemic. Coronaviruses are opportunistic viruses that are harbor in the Asian bat population. Pangolins, nocturnal mammals, native to Asia and Africa especially tropical forests, are the most likely intermediate carriers of the SARS-Cov-2 between bats and humans. In 2002–03, Civet cats, nocturnal mammals found in Asia and Africa sold for meat in local markets of China’s Yunnan province carried the SARS virus from bats to humans.

 

SARS-CoV-1 and 2’s abilities to genetically mutate through passages into humans is one of the reasons of their enhanced virulence. Coronaviruses are easily transmitted by human-to-human close contact primarily through saliva droplets. Coronaviruses are “positive single stranded (ss) RNA virus. These types of viruses can replicate into human cells without using the host DNA as a template. Positive single stranded RNA viruses have genetic material that can function both as genome and messenger RNA. This feature allows the Coronaviruses to work more efficiently once it infects its target. SARS-Cov-2 is the etiological cause of COVID-19, a highly infectious respiratory disease causing an atypical pneumonia.

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The mechanism of infections to humans is through saliva droplets caused by persistent cough and sneezing. Indirect contact with contaminated surfaces is another way of infection although it is not a very efficient way of transmission. Viral RNA is also being found in the stools of infected patients. SARS-Cov-2 is able to enter human cells by binding to the ACE2 cell receptor. Once inside the cells, the virus starts the process of replication by using its own RNA polymerase enzyme. The incubation time COVID-19 varies between 2-14 days. It is not clear if during the incubation period, the virus is able to infect humans.

 

Major clinical symptoms and epidemiological risk factors related to COVID-19:

 

  High Fever (>101)

 

  Persistent Cough

 

  Sneeze

 

  Dyspnea (severe cases)

 

  Pneumonia (severe cases)

 

  Fatigue

 

  Muscle pain

 

  Sore throat

 

  Organ failure (terminal cases)

 

  Higher mortality rate compared to influenza (>0.1-1%)

 

  Pre-existing medical conditions (cancer, cardiovascular diseases, diabetes, immunodeficiency diseases)

 

  Mortality Age factor (individuals >65yrs old)

 

  Saliva droplets transmission

 

  Aerosol transmission

 

  Virus can survive in the air up to 3 hours and on surfaces up to 72 hours

 

  Unknown asymptomatic transmission

 

  Global pandemic

 

Epidemiological evidences support the hypothesis that SARS-CoV-2 neuronal cells in the medulla oblongata region of the brain could become infected with the virus. Anosmia (loss of smell) and ageusia (loss of taste) are reported to be early signs of COVID-19. In some cases the neuronal infection of the medulla oblongata can contribute to a patient’s breathing problems and respiratory failure within five days from the infection. SARS-CoV-2 enters human cell by binding the ACE2 receptor. The ACE2 protein regulates cardiovascular function and is express in many human cells including lung, heart, kidney, intestine, and brain tissue. There are multiple ways the virus could invade the central nervous system. A possible mechanism of action is that the SARS-CoV-2 is in the blood of infected patients and through this infectious route binds to ACE2 receptors in the endothelial cells of the blood capillaries in the brain, breaching the blood-brain barrier and invading neurons through that route. A breached blood-brain barrier could also cause brain swelling, compressing the brain stem and affecting respiration. The cells innervating the lungs could also become infected, making involuntary respiration more difficult.

 

Evidence from experiments in mice also suggest that the virus might target the nervous system through the olfactory bulb. A study published in 2008 (Netland et al. J Virology 2008 Aug (15): 7264-7275) showed that SARS-CoV-1 — the virus that caused the SARS outbreak in 2003 — entered the brains of transgenic mice expressing human ACE2 through neurons in the nose. The virus then rapidly spread to connecting nerve cells. The extensive nerve damage was the major cause of death, even though, low levels of the virus were detected in the animals’ lungs. It is therefore possible that the respiratory failure in patients with COVID-19 could be caused from the extensive neuronal damages in the cardiorespiratory area of the medulla oblongata.

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Diagnostics assays and Treatment of COVID -19

 

Nasopharyngeal, oropharyngeal swabs and saliva specimen are collected from patients to detect the SARS-Cov-2 viral infection. Viral RNA is extracted from the swab and amplified using the Real Time Polymerase Chain reaction (RT-PCR) technology. The COVID-19 detection molecular assay is a multi-step procedure that requires up to 72 hours to obtain a result. Because of the complexity of the assay, a limited number of samples can be manually processed daily. Limitations in the number of samples to be process is the main reason of the spreading of the COVID-19. Automated systems such as the Roche COBA 8800 are capable of processing up to 4,000 samples/daily. However, due to the sheer number of potentially infected people globally, this system could not fully meet assay demand.

 

Currently, no treatment is available to treat COVID-19. Influenza vaccines are not effective to stop the spread of COVID-19 infection. Several COVID-19 vaccines are currently in Phase I clinical trials. Estimated development time is between 15-18 months. Alternatively, “off label” drug combination protocols have been used, with various degree of success, to treat COVID-19 patients.

 

Paratuberculosis

 

Paratuberculosis, also known as Johne’s disease in Stage III clinical phase, is a worldwide problem in domestic livestock animals including dairy cattle, sheep and goats. A significant public health concern is associated with Paratuberculosis, which results from an infection with the Mycobacterium Avium Sub Paratuberculosis (MAP) bacteria. This bacterial organism grows very slowly, causes a gradually worsening disease condition, and is highly resistant to the infected animal’s immune defenses. Therefore, infected animals harbor the organism for years before they test positive or develop disease signs.

 

Major factors related to a MAP infection include:

 

  Global widespread infection

 

  Reduction in milk production to 25%+

 

  High culling rate which increases costs

 

  Link between MAP infection and Immunodeficiency Diseases

 

  Highest at-risk animals are young calves or pre-born

 

  Bacterium can survive pasteurization process

 

  MAP present in infant formula products

 

  MAP present in contaminated soil, water, dairy products

 

  Spread in herds can occur by fecal contamination, colostrum, milk, and trans placental

 

  For every “clinical stage” animal in a herd, there are 15-20 silently infected plus an additional 6-8 carriers

 

Seventy to ninety percent of the herds worldwide are infected with MAP. Most of the infected animals do not show any clinical signs of the disease. The majority of infected animals are capable of shedding billions of bacteria mostly in the soil and milk without ever developing clinical signs of paratuberculosis and are responsible for the spreading of the disease to other animals and for the transmission of MAP to humans, mostly through milk. Lack of routine testing has resulted in the inability of managing MAP infection worldwide. MAP is resistant to conventional pasteurization protocols. Therefore, many of the dairy products, infant formula, and milk sold in stores are contaminated with the bacterium.

 
Stage I: Silent, subclinical, non-detectable infection. Typically, this stage occurs in all calves, heifers, and young stock less than two years of age and many adult animals exposed to small doses of disease-causing organisms. Infected animals at this early stage are rarely detected with currently available diagnostic tests, including fecal culture or serologic tests (ELISA). This stage progresses slowly over many months or years to stage II.

 

Stage II: Subclinical infection. Typically, this stage occurs in older heifers or adults. Animals at this stage appear healthy but are shedding adequate numbers of Mycobacterium Avian Para tuberculosis organisms in their manure to be detected on fecal culture. Blood tests will detect some, but not all animals at this stage. Blood test (ELISA) positive animals should be confirmed positive by fecal culture.

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Stage III: Clinical Johne’s disease. It is categorized as any animal with advanced infection, the onset of which is often associated with a period of stress such as recent calving. Cattle at this stage have intermittent, watery pea-soup manure. Animals lose weight and gradually drop in milk production but continue to maintain a healthy appetite. Some animals appear to recover but often relapse in the next stress period. Most of these animals are shedding billions of organisms and are positive on culture. Most are positive on serologic tests (ELISA). Clinical signs often last several weeks to months before the animals are sent to slaughter in a thin, emaciated condition. In the final and terminal aspects of stage III of the fatal disease, animals become emaciated with fluid diarrhea and develop “bottle jaw.” The carcass may not pass meat inspection for human consumption in the later phases of stage III.

 

MAP and Immunodeficiency Diseases

 

A large number of studies show that several immunodeficiency diseases including, Crohn’s Disease (CD) a chronic inflammatory disease of the intestine and colon, Type 1 Diabetes and Multiple Sclerosis can be triggered by MAP. The bacterium is therefore a zoonotic infectious organism which can be transmitted through contaminate milk, infant formula and water.

 

MAP Related Immunodeficiency Diseases

 

  Crohn’s Disease

 

  Multiple Sclerosis

 

  Type I Diabetes

 

  Systemic Lupus Erythematosus

 

  Sjogren Syndrome

 

  Hashimoto’s Thyroiditis

 

Crohn’s Disease

 

Crohn’s disease is an inflammatory disease of the intestines that may affect any part of the gastrointestinal tract from anus to mouth, causing a wide variety of symptoms. It primarily causes abdominal pain, diarrhea (which may be bloody), vomiting, or weight loss, but may also cause complications outside of the gastrointestinal tract such as skin rashes, arthritis, and inflammation of the eye.

 

Crohn’s disease is an immunodeficiency disease, in which the body’s immune system attacks the gastrointestinal tract, causing inflammation. It is classified as a type of inflammatory bowel disease. There has been evidence of a genetic link to Crohn’s disease, putting individuals with siblings afflicted with the disease at higher risk. It is understood to have a large environmental component as evidenced by the higher number of cases in western industrialized nations. Males and females are equally affected. Smokers are three times more likely to develop Crohn’s disease than non-smokers. Crohn’s disease affects between 400,000 and 600,000 people in North America. Prevalence estimates for Northern Europe have ranged from 27–48 per 100,000. Crohn’s disease tends to present initially in the teens and twenties, with another peak incidence in the fifties to seventies; although, the disease can occur at any age.

 

Histological alterations found in Crohn’s patients’ intestinal tract, closely resembles similar tissue changes observed in the intestine of Johne’s disease cattle.

 

Similar to Paratuberculosis in cattle, no known pharmaceutical or surgical cure for Crohn’s disease currently exists for humans. Furthermore, Mycobacterium Avian Paratuberculosis have been found in human patients and we believe that individuals that are genetically predisposed could be contracting the disease through digestion of MAP - infected dairy products.

 

Business Model

 

Molecular Robotic Artificial Intelligence (AI) Integrated Platform (MORAP)

 

It has become evident from the COVID-19 global pandemic that current systems and related technologies are not capable of preventing or successfully controlling the spreads of zoonotic infectious agents. One of the features of these infectious organisms is their ability to infect both people and animals while some carriers remain asymptomatic for a period of time or for the entire duration of the infection. We believe it is imperative that during pandemic outbreaks the entire population must be tested for the presence of infection agents. In addition, we believe that AI models should be developed to analyze data and forecast zoonotic diseases outbreak and ultimately prevent epidemics and pandemics from occurring in the future. GeneThera’s goal is to develop the infrastructure of a nationwide zoonotic infectious agents “alert shield” which would operate to predict, detect and manage the spread of pandemics and ultimately prevent pandemics from developing, similar to a “nuclear shield,” which is designed to detect incoming nuclear warheads and destroy them before they can be deployed. We believe that a nationwide network of AI controlled laboratory robotic systems may be able to perform such a task.

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

 

We have designed the MORAP’s second generation molecular robotic/AI laboratory system prototype. Upon development subject to securing the requisite funding, each individual MORAP system would be capable, in a full-scale commercial platform, to perform over 100,000 samples/daily with minimal human intervention.

 

We envision the MORAP’s cloud-based AI-integrated software system with a dual purpose: 1) data obtained from each individual robotic laboratory system would be sent to the cloud to be stored where data could be analyzed and risk factors could be evaluated; and 2) each individual robotic laboratory system as part of the MORAP network could be configured in the cloud. The individual robotic laboratory systems, identical in each location, would be controlled and operated through MORAP’s cloud-based software.

 

The MORAP’s cloud software architecture would:

 

  1) Collect and analyze data from each run performed by each robotic clone;

 

  2) Compare data between runs from individual robotic clones and determined risk factors;

 

  3) Send commands to operate each robotic clone; and

 

  4) Run diagnostics for each clone and alert and possibly fix any software or hardware problem the system may experience.

 

Each individual robotic unit is composed of different equipment controlled by the integrated software. The MORAP cloud-base system would be function as the ‘brain’ of the entire network.

 

Our MORAP system is designed to targeted zoonotic diseases in general; however, we intend to focus our robotic/AI and therapeutic vaccine technologies on SARS-Cov-2 and MAP related diseases.

 

Zoonotic Diseases Vaccine Development

 

Our therapeutic vaccine technology is based on the use of CRISPR gene editing technology. CRISPR technology is a new technique that is based on the use of short RNA sequences complementary to a specific target gene. Once the RNA sequence binds to the gene, the gene is deactivated or “silenced” and no longer able to produce the specific protein. It also allows for the efficient, effective, and continuous testing, management and treatment of animal populations. We plan to deliver CRISPR modified RNA sequences motif using our proprietary PURIVAX technology. Our focus will be to develop CRISPR based vaccines for SARS-COV-2 and MAP. Our strategy is to silence the expression of gene pathways, which are activated by the infectious agents to gain entry into the host cells.

 

PURIVAX Technology

 

We have developed a large-scale process for highly purified and high viral titer (viral concentration) Adenovirus and AAV genetically engineered viruses. This technology enables us to develop Adenovirus and AAV-based recombinant DNA vaccines for zoonotic pathogens. Our PURIVAX is a purification system that dramatically improves biological purity and viral titer of recombinant Adenovirus and AAV vectors. PURIVAX is intended to completely eliminate toxic side effects associated with Adenoviruses and AAV vectors, thereby making it possible to develop highly immunogenic and safe recombinant DNA vaccines. Importantly, recombinant DNA (rDNA) vaccine technology represents a powerful tool for an innovative vaccine design process known as “genetic immunization.”

 

rAD and rAAV vectors are the ideal candidates for a gene delivery system. These viruses can efficiently deliver genetic material to both dividing and non-dividing cells, thereby overcoming some of the obstacles encountered with first generation retroviral vectors.

 

Equally important, rAD and rAAV are engineered virus genomes that contain no viral gene. One of the key features for rAD and rAAV is their ability to infect a large variety of cells. However, two technical challenges had to be overcome to fully utilize rAD and rAAV in the development of rDNA vaccines:

 

  1. Lack of large-scale purification system; and

 

  2. Low viral titer.

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Traditional technologies and first-generation chromatography processes are limited both in terms of purity and yield. Due to the limitation of these purification technologies, adequate viral titers may not be achieved. We believe the result is that there is currently no efficient system to deliver immunogenic genetic sequences into cells.

 

This is the significance of our PURIVAX, rAD and rAAV system for rDNA vaccine development. Succinctly stated, it is designed to be able to achieve both high purity and high viral titer (up to 10e16 viral particles/eluate) based on its propriety multi-resin anion exchange chromatography system. We believe that biological contaminants such as endogenous retrovirus, bacterial, mycoplasma, non-specific nucleic acids, lipids, proteins, carbohydrates and endotoxins are eliminated during the purification process.

 

Product Development

 

We provide a comprehensive solution that allows diagnosing, treating and managing zoonotic diseases in animals and humans. Our proprietary Molecular Robotic/AI Platform and Therapeutic strategy (MORAPAT) is design to prevent the spread of disease from animals and at the same time, allow to better control of zoonotic infectious agents. More importantly, we believe that our platform could prevent the spread of viruses and bacteria into the food chain and subsequent infection of human population. An important part of this strategy is our ability to detect the presence of a low number of infected particles in different specimen tested for the presence of zoonotic virus and bacteria such as SARS- CoV-2 and MAP. Consequentially, our platform is not only able to detect infected animals, but can also prevent human infections.

 

We have developed a molecular system for the detection of Mycobacterium Avian Paratuberculosis in the milk of infected dairy cows. Samples from milk obtained from supermarket shelves were either ’spiked’ with different concentrations of Mycobacterium Avian Para tuberculosis or ‘naturally processed.’ The bacterial DNA was isolated using both, manual and robotic-based DNA extraction procedures and analyzed using the real time PCR technology. Using this methodology, we can detect between two (2) and twenty (20) bacterial particles from 10 ml of milk. We believe that our test will be very useful for early detection of Mycobacterium Avian Para tuberculosis, both in milk samples and in infected cows.

 

We are currently evaluating several robotic systems for nucleic acid extraction. We believe that we can further increase the sensitivity of the molecular assay by using robotic driven DNA and RNA extraction methods.

 

We are currently developing a vaccine for MAP infection. Our approach for developing this vaccine is based on the use our Molecular Robotic/AI Platform and Therapeutic (MORAPAT) technology which also includes our PURIVAX technology, genetically engineered Adenoviral and AVV, and CRISPR technology.

 

At the present time, we do not have sufficient financial resources to implement further development work; therefore, we will need to secure substantial funding to continue the development of the MAP vaccine.

 

To date, we have developed a prototype computer program to track samples that will be received and processed in our planned commercial laboratory. This program will initially be used to track samples that will be sent out and received by our laboratory. Upon raising the additional requisite funding, of which there is no guarantee, we will then work on improving the system in order to track samples during the different phases of DNA and RNA extraction procedures. In addition, we will continue to develop a database system to store and analyze data collected during sample analysis.

 

Future Development Plans

 

We anticipate that research and development, or R&D, will be the source for both assay development and vaccine design/development. If we are successful in developing assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by us. We anticipate that R&D will be ongoing during the life of the Company, as this is the source for new products to be introduced to the market. Our plan is to seek new innovations in the biotechnology field. We cannot assure that we will be successful in developing or validating any new assays or, if we are successful in developing and validating any such assays, that we can successfully commercialize them or earn profits from sales of those assays. Furthermore, we cannot assure that we will be able to design, develop, or successfully commercialize any vaccines as a result of our research and development efforts.

 

It is our intention to continue with the research and development and validation of the molecular tests and DNA vaccines. Future plans of the Company include initiating validation procedures for MAP and SARS-CoV-2 molecular tests.

 

In parallel, we will continue R&D phases for the MAP vaccine. We intend to initiate development of a SARS-CoV-2 vaccine. We plan on initiating an experimental animal protocol to determine the safety of our vaccines. Moreover, upon raising the necessary capital, we plan to initiate the experimental animal studies within 12-18 months.

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Research and Development

 

We anticipate that R&D will be the source for both assay development and vaccine design/development. If we are able to develop assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by us. We anticipate that R&D will be ongoing during the life of the Company, as this is the source for new products to be introduced to the market. Our plan is to seek new innovations in the biotechnology field. We cannot assure that we will be successful in developing or validating any new assays or, if we are successful in developing and validating any such assays, that we can successfully commercialize them or earn profits from sales of those assays. Furthermore, we cannot assure that we will be able to design, develop, or successfully commercialize any vaccines as a result of our research and development efforts.

 

Marketing Strategy

 

Our goal is to focus on both the domestic and international markets for the commercialization of our MORAP and MORAPAT systems.

 

Our marketing approach is to align ourselves with both the private sector and government agencies.

 

Commercial Diagnostic Testing

 

In the event that we are able to develop assays for the detection of diseases in animals, we intend to establish a series of diagnostic testing laboratories geographically proximate to the primary sources of individual diseases and/or according to specific available operating efficiencies. The specific number of labs to be built and operated will be based on assay demand (demand facilitated by the number of specific disease assays we develop), our ability to obtain the capital to build the labs, and our ability to successfully manage them from our principal offices.

 

Licensing

 

We intend to manage the marketing and sales of our vaccines developed as through our R&D. As we do not intend to be a vaccine manufacturer, we plan to use our licensing division to license the technology related to any vaccines that may be developed and to manage the revenue potential available from the successful development and validation of specific vaccines. We cannot provide any assurance that we will develop any vaccines or that, if they are developed, we will be able to license them successfully or that any such license will produce significant revenues.

 

Intellectual Property

 

We do not own any patents on any of our technology and have not filed any applications for patents in any country. We cannot give any assurance that we will be able to file any patent applications or that, if we file one or more applications for patents, any patents will issue or that, if issued, the claims granted in any such patents will afford us adequate protection against competitors with similar technology.

 

We believe that we own common law proprietary rights with respect to our technologies and we intend to use our best efforts to protect such rights through maintaining trade secret protections and entering into confidentiality agreements.

 

We also depend upon the skills, knowledge, and experience of our scientific and technical personnel, none of which is patentable. To help protect our proprietary know-how, which is not patentable, and for inventions for which patents may be difficult to endorse, we rely on trade secret protection to shield our interests.

 

Competition

 

We face competition from many companies, universities, and research institutions in the United States and abroad. Virtually all of our competitors have substantially greater resources, experience in product commercialization, and obtaining regulatory approvals for their products, operating experience, research and development, marketing capabilities, and manufacturing capabilities that we do. We will face competition from companies marketing existing products or developing new products for diseases targeted by our technologies. The development of new products for those diseases for which we are attempting to develop products could render our product candidates noncompetitive and obsolete.

 

Our current competitors include primarily, Roche Diagnostics, Abbott Laboratories, IDEXX Laboratories, Inc., and academic and government institutions are also carrying out a significant amount of research in the field of health, particularly in the field zoonotic diseases. We anticipate that these institutions will become more aggressive in pursuing patent protection and negotiating licensing arrangements to collect royalties for the use of technologies they have developed and to market commercial products similar to those that we seek to develop, either on their own or in collaboration with our competitors. Any resulting increase in the cost or decrease in the availability of technology or product candidates from these institutions may affect our business.

10

 

Competition with respect to our robotic technologies and potential products is and will be based, among other things, on effectiveness, safety, reliability, availability, price, and patent protection. Another important factor will be the timing of market introduction of products that we may develop and for which we may receive regulatory approval. Accordingly, the speed with which we can develop products, complete the required animal studies or trials and approval processes and ultimately supply commercial quantities of the products to the market is expected to be an important competitive factor. Our competitive position will also depend upon our ability to attract and retain qualified personnel, to obtain patent protection or otherwise develop propriety products or processes, and to secure sufficient capital resources for the often-substantial period between technological conception and commercial sales.

 

Several attempts have been made to develop technologies that compete with Real-time-PCR (RT-PCR). To our knowledge none of these technologies have resulted to date in any product available on the market. The field of biotechnology is very dynamic. The possibility that more advanced technologies could be developed into products that may compete with ours is very strong. However, it is very difficult to predict the length of time necessary for this scenario to take place.

 

Manufacturing

 

We do not manufacture any products. We do not intend to establish a manufacturing facility to manufacture any products that we may develop anywhere in the world.

 

Product Liability

 

The testing, manufacturing, and marketing of our proposed products involves an inherent risk of product liability attributable to unwanted and potentially serious health effects in animals that may receive any vaccines that we may develop and market. To the extent we elect to test, manufacture, or market veterinary vaccines and other products, we will bear the risk of product liability directly. We do not currently have product liability insurance. There is no guarantee that we can obtain product liability insurance at a reasonable cost, or at all, or that the amount of such insurance will be adequate to cover any liability that we may be exposed to. In the absence of such insurance, one or more product liability lawsuits against us can be expected to have a material adverse effect on our business and could result in our ceasing operations.

 

Government Regulation

 

Our unique approach to the testing for zoonotic diseases allows us to begin commercialization of our diagnostic tests without the need for a long and enduring approval process from the USDA. USDA approval will be required for commercialization of animal vaccines. However, it is our intention not to seek, in the foreseeable future, any approval either from the USDA or the U.S. Food & Drug Administration for any of the products we develop both, diagnostic and therapeutic. It is our intention to perform any validation or clinical trials of our product both domestically and abroad. Our commercial laboratories will require a validation study to be performed to demonstrate the effectiveness of the system. Validation studies will be performed according to each country’s guidelines. It is expected that validation studies will be conducted in collaboration with each country’s government guidelines over the next 18 to 36 month period. We will need the approval of the U.S. Department of Agriculture, or USDA, before the vaccines can be manufactured or sold. The approval process for animal vaccines is time-consuming and expensive. We anticipate that such approval, if it is obtained, may require more than $75 million and may require more than two years for each vaccine for which approval is sought. Currently, we do not have the capital necessary to seek approval of any of our candidate vaccines, and we cannot provide any assurance that we will be able to raise the capital necessary for such approval on terms that are acceptable to us, if at all. Failure to raise the necessary capital will likely cause us to curtail or cease operations. In addition, even if we are successful in raising the capital necessary to seek approval of any vaccine, there are no assurances that such an approval will be granted, or if granted, whether we will be able to produce and sell such vaccines following such an approval in commercial quantities or to make a profit from such production and sales.

 

Employees

 

We had a total of two full-time employees as of December 31, 2020. No changes in full-time employees have occurred subsequently. None of our employees is represented by a collective bargaining unit. We will be hiring more scientists, laboratory technicians, administrative and IT employees soon.

 

ITEM 1A. RISK FACTORS

 

Investment in our common stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this report, including the financial statements and the related notes, before making a decision to buy our common stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our common stock could decline, and you may lose part or all of your investment.

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Risks Related to Our Business

 

Our success depends on our ability to resume development of our MORAP technology.

 

We focused on the development of MORAP technology for zoonotic disease diagnostic detection and vaccine development. As a result, our success depends entirely on our ability to finalize the development and commercialize the of molecular robotic/AI laboratory platform. If we are unable to achieve this goal, we may not be able to earn sufficient revenue to continue our business.

 

Business interruptions, including any interruptions resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on the Company if the situation continues. Under Colorado Updated Public Health Order 20-24 Implementing Stay At Home Requirements (the “Order”), GeneThera falls under the definition of a “Critical Business”, as, pursuant to the Order “Critical Business” means (1) research and laboratory services, and (2) pharmaceutical and biotechnology companies.

 

Further, all employees, including our specialized scientific and technical staff, are working from home or in a virtual environment. The Company always maintains the ability for team members to work virtual and we will continue to stay virtual, until the State and or the Federal government indicate the environment is safe to return to work.

 

The ongoing coronavirus outbreak which began in China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If the coronavirus outbreak situation should worsen, we may experience disruptions to our business including, but not limited to equipment, to our workforce, or to our business relationships with other third parties.

 

The extent to which the coronavirus impacts our operations or those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Any such disruptions or losses we incur could have a material adverse effect on our financial results and our ability to conduct business as expected.

 

Our recurring operating losses have raised substantial doubt regarding our ability to continue as a going concern, and our auditors issued a “going concern” audit opinion in their report on our financial statements.

 

Our independent auditors have indicated in their report on our audited consolidated financial statements as of December 31, 2019, which are included in this report, that there is substantial doubt about our ability to continue as a going concern. A “going concern” opinion indicates that the financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. As of this Annual Report on Form 10-K, the circumstances have not been changed, and therefore, the aforementioned going concern situation remains current. Therefore, you should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors and potentially be available for distribution to shareholders in the event of liquidation.

 

We need to raise additional capital in 2020 to continue operations. If we fail to obtain additional financing, we would be forced to delay the development of our MORAP or liquidate the Company.

 

We are a development stage company with limited operating history. We will need significant, additional capital to continue development of the molecular robotic/AI laboratory platform and to develop diagnostic assays and vaccine product candidates. As of December 31, 2020, we had cash and cash equivalents (excluding restricted cash) of $0 and negative working capital of $7,691,065.

 

Based on our current operating plan, we don’t expect that our existing cash and cash equivalents as of December 31, 2020, will enable us to maintain our operating expenses in 2021. We will need to raise additional capital in 2021 to execute our current operating plan. Securing additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to operate our business, including our ability to develop and commercialize our product candidates.

 

We cannot guarantee that additional capital will be available in sufficient amounts or on terms acceptable to us, if at all. If we are unable to raise additional capital, when required in 2021 or thereafter in the future, or on acceptable terms, we may be required to:

 

  Significantly delay, scale back or discontinue the development of the MORAP;

 

  Seek corporate partners for the development of our diagnostic assays and vaccine product candidates than other wise desirable or on terms that are less favorable than might otherwise be available; or

 

  Significantly curtail or cease operations.

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If we are unable to raise additional capital in sufficient amounts or on terms acceptable to use, we will be prevented from pursuing development and commercialization efforts, which will have a material adverse impact on our business operating results and prospects, including possible liquidation of the company.

 

In addition, we may secure additional capital using credit facilities and other debt and may substantially increase our reliance on such debt in the future. Such debt may be secured by a portion or substantially all of our assets. If we do not repay such indebtedness in a timely fashion, secured lenders could declare a default and foreclose upon our assets, which would result in harmful disruption to our business, the sale of assets for less than their fully realizable value, and possible bankruptcy. Such credit facilities also typically include several operational and financial covenants. If we fail to comply with the covenants and our other obligations under any credit facility, the secured lenders would be able to accelerate the required repayment of amounts due and, if they are not repaid, could foreclose upon our assets, which would result in harmful disruption to our business, the sale of assets for less than their fully realizable value, and possible bankruptcy. In addition, future credit facilities may limit our ability to incur incremental debt without our lenders’ permission.

 

Future sales and issuances of our common stock or rights to purchase common stock by us will result in additional dilution of the percentage ownership of our shareholders and may cause our share price to decline.

 

Until such time, if ever, as we can generate substantial product revenues, we expect that significant additional capital will be needed to continue our planned operations, including securing regulatory approvals, commercialization efforts, expanding research and development activities and costs associated with operating as a public company. We may sell shares of our common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner that we determine from time to time. If we sell shares of our common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing shareholders and new investors. In addition, new shareholders could gain rights superior to our existing shareholders.

 

We have identified material weaknesses in our internal control over financial reporting. If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results and prevent fraud. As a result, current and potential shareholders could lose confidence in our financial statements, which would harm the trading price of our common shares.

 

We are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404. SOX 404 requires management to establish and maintain a system of internal control over financial reporting and annual reports on Form 10-K filed under the Securities Exchange Act of 1934, as amended, or the Exchange Act, to contain a report from management assessing the effectiveness of a company’s internal control over financial reporting. During its evaluation of the effectiveness of internal control over financial reporting, the Company’s management identified material weaknesses. These material weaknesses were associated with our lack of sufficient accounting resources and internal personnel with GAAP knowledge. We are undertaking remedial measures, which measures will take time to implement and test, to address these material weaknesses. We cannot assure you that such measures will be sufficient to remedy the material weaknesses identified or that additional material weaknesses or other control or significant deficiencies will not be identified in the future. If we continue to experience material weaknesses in our internal controls or fail to maintain or implement required new or improved controls, such circumstances could cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements, or adversely affect the results of periodic management evaluations and, if required, annual auditor attestation reports. Each of the foregoing results could cause investors to lose confidence in our reported financial information and lead to a decline in our stock price.

 

Our technology is not protected by patents.

 

Our technology and know-how are not patented. We rely on trade secret protections and confidentiality agreements to protect our intellectual property. We cannot assure you that these trade secrets and confidentiality agreements will provide meaningful protection for our intellectual property. Furthermore, in absence of patent protection, competitors who independently develop substantially equivalent technology may harm our business.

 

Loss of key personnel will adversely affect the Company.

 

We depend in large part on the efforts and continued employment of Dr. Antonio Milici, M.D., Ph.D., our President, Chairman and Chief Executive Officer. The loss of Dr. Milici would have a material adverse effect on our business, results of operations and financial condition. In addition, the loss of Dr. Milici would force us to seek a replacement, who may have less experience, fewer contacts, or less understanding of the business. Further, we may be unable to find a suitable replacement for Dr. Milici. Finding qualified personnel in the biotechnology industry is very challenging, but feasible. Smaller biotechnology companies are potentially at a disadvantage in the employment marketplaces due to their limited financial resources; something like reliable funding can resolve with ease. Dr. Milici continues interviewing highly experienced scientists in molecular biology and robotic engineers in order to expanding our current projects globally.

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We may be unable to compete against other more establish biotechnology companies.

 

We operate in a very competitive and difficult area. Biotechnology business is notoriously challenging and risky. We compete with more established and better funded companies that are involved in the development of similar products. Several of these companies have significantly greater financial resources as well as greater production and marketing capabilities. The field of biotechnology requires extensive research and development. Better funded competitors may be able to develop and market superior or less expensive products that will make our products less valuable or unmarketable unless we acquire reliable funding from trustworthy investors in order to have an excellent advantage to succeed with our competitors.

 

If we fail to anticipate or respond adequately to technological developments, our ability to operate could suffer. We cannot assure that research and discoveries by other biotechnology, agriculture, pharmaceutical or other companies will not render our technologies or products uneconomical or result in products superior to those we develop, depend on new and evolving technologies. If our technologies do not produce satisfactory results, our business may be harmed.

 

Increased competition from and technological advances by our competitors could negatively affect our operating results.

 

We face intense competition, and we expect that future competition may become even more intense as new products, services and technologies become available and other new competitors enter the market. Competition could negatively affect our sales and profitability in a number of ways. Other new competitors may enter our markets through the development of innovative new technology, the acquisition of rights to use existing technologies or the use of existing technologies when patents protecting such existing technologies expire. New or existing competitors may introduce new, innovative, and competitive products and services, which could be superior or perceived by our customers to be superior to our products and services or lead to the obsolescence of one or more of our products or services. Some of our competitors and potential competitors may choose to differentiate themselves by offering products and services perceived in the eyes of customers as similar, at substantially lower sales prices, which could have an adverse effect on our results of operations through loss of market share or a decision to lower our own sales prices to remain competitive. In addition, our ability to attract and retain customers depends on the effectiveness of our customer marketing and incentive programs and multiple competitors could bundle product and service offerings through co-marketing or other arrangements, which could enhance their ability to compete with our broad product and service offering. Certain of our competitors and potential competitors, have substantially greater financial and managerial resources than us, as well as greater experience in manufacturing, marketing, research and development, and obtaining regulatory approvals than we do. Once we secure reliable funding, we can increase our success astronomically.

 

Changes in testing patterns could negatively affect our operating results.

 

The market for our products could be negatively impacted by a number of factors impacting diagnostic assaying practices. Market acceptance of vaccines or preventatives for the diseases and conditions for which we sell diagnostic assays and services could result in a decline in testing. Changes in accepted medical protocols regarding the diagnosis of certain diseases and conditions could have a similar effect. Eradication or substantial declines in the prevalence of certain diseases also could lead to a decline in diagnostic assaying for such diseases. Changes in government regulations or in the availability of government funds available for monitoring programs could negatively affect sales of our products. In addition, changes and trends in local food markets around the world could negatively affect the related production markets resulting in a decline in demand for our diagnostic assaying products. Declines in testing for any reason could have an adverse effect on our results of operations. As we can attest, the market for our products is in high demand and we are eager to improve the healthcare of both humans and animals.

 

Various U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our business.

 

Our business is subject to numerous states, federal and international rules and regulations. Several of these regulations may require that we obtain approval from the related governmental agency prior to the marking or sale of our products. Delays in obtaining regulatory approvals for new products or product upgrades could have a negative impact on our growth and profitability.

 

We have never successfully undertaken a clinical trial for animal testing. Our experience in this area is limited. We have never obtained regulatory approvals for any of our products. As such, we may be unable to ever successfully undertake a clinical trial of our products and may be forced to curtail or modify our current business plan.

 

In addition, the manufacture, import, and sale of our products, as well as our research and development processes, may be subject to similar or more stringent laws in other countries. Compliance with these regulations may require the expenditure of significant time and resources by the Company, and could require the registration, redesign or reformulation of our products in order to conform. Any redesign or reformulation or restricted supply of parts and components may negatively affect the availability or performance of our products and services, add assaying lead-times for products and reformulated products, reduce our margins, result in additional costs, or have other similar effects. Any of these could adversely affect our business, financial condition, or results of operations. These legal and regulatory requirements are complex and subject to change, and we continue to evaluate their impact. Additionally, foreign governments may require us to register our products, and these product registration requirements, which vary among the applicable jurisdictions and change from time to time, are often complex and require us to engage in lengthy and costly processes. We cannot assure you that we will be able to obtain or maintain any product registration required by one or more foreign governments. Any inability to obtain or maintain a required product registration in a jurisdiction could adversely affect our ability to market and sell the applicable product in that jurisdiction, which could have a negative effect on our business, financial condition and results of operations.

14

 

We are also subject to a variety of federal, state, local, and international laws and regulations, as well as the associated legal and political environments, concerning, among other things, the importation and exportation of products; our business practices in the U.S. and abroad, such as anti-corruption, anti-money laundering, and anti-competition laws; and immigration and travel restrictions. These legal, regulatory, and political requirements and environments differ among jurisdictions around the world and are rapidly changing and increasingly complex. The costs associated with compliance with these legal and regulatory requirements and adjusting to changing legal and political environments are significant and likely to increase in the future.

 

Any failure by us to comply with applicable legal and regulatory requirements, or to adjust to changing legal and political environments, could result in fines, penalties, and sanctions; product recalls; suspensions or discontinuations of, or limitations or restrictions on, our ability to design, manufacture, market, import, export or sell our products; and damage to our reputation. Any of these could negatively impact our business.

 

Future operating results could be negatively affected by changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.

 

We are subject to local, state, regional and federal tax laws in jurisdictions around the world. Our future tax expense could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation. Additionally, tax rules governing cross-border activities are continually subject to modification as a result of both coordinated actions by governments and unilateral measures designed by individual countries, both intended to tackle concerns over base erosion and profit shifting and perceived international tax avoidance techniques.

 

Our income tax filings may become subject to an audit by various tax authorities, and the final determination of tax audits could be materially different than that which is reflected in historical income tax provisions and accruals. Significant judgment is required in determining our provision for income taxes. We assess our exposures related to our provision for income taxes to determine the adequacy of our provision for taxes. Any reduction in these contingent liabilities or additional assessments would increase or decrease income, respectively, in the period such determination is made.

 

Natural and other disasters, information technology system failures and network disruptions and cybersecurity breaches and attacks could adversely affect our business.

 

Our business and results of operations could be negatively affected by certain factors beyond our control, such as natural disasters and/or climate change-related events (such as hurricanes, earthquakes, fires, and floods); civil unrest; negative geopolitical conditions and developments; war, terrorism, or other man-made disasters; and information technology system failures, network disruptions and cybersecurity breaches and attacks. Any of these events could result in, among other things, damage to or the temporary closure of our facilities; a temporary lack of an adequate work force in one or more markets; an interruption in power supply; a temporary or long-term disruption in our supply chain (including a disruption to our ability to obtain critical components for the development of our product candidates); and short- or long-term damage to our prospective customers’ businesses (which would adversely impact demand for our products and services).

 

We rely on our own information systems, as well as those of our third-party business partners and suppliers. Despite the introduction of system backup measures and engage in information system redundancy planning and processes, such measures, planning and processes may be ineffective or inadequate to address all eventualities. Further, our information systems and our business partners’ and suppliers’ information systems may be vulnerable to attacks by hackers and other security breaches, including computer viruses and malware, through the internet (including via devices and applications connected to the internet), email attachments and persons with access to these information systems, such as our employees or third parties with whom we do business. As information systems and the use of software and related applications by us, our business partners, suppliers, and customers become more cloud-based and connected to the internet, there has been an increase in global cybersecurity vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our information systems and networks and the confidentiality, availability and integrity of data and information. Any such attack or breach could compromise our networks and the information stored thereon could be accessed, publicly disclosed, lost, or stolen.

 

If we or our business partners or suppliers were to experience a system disruption, attack or security breach that impacts any of our critical functions, or our customers were to experience a system disruption, attack or security breach via any of our connected products and services, it could result in a period of shutdown of information systems during which we may not be able to operate, the loss of sales and customers, financial misstatement, potential liability for damages to our customers, reputational damage and significant incremental costs, which could adversely affect our business, results of operations and profitability. Furthermore, any access to, public disclosure of, or other loss of data or information (including any of our confidential or proprietary information or personal data or information) as a result of an attack or security breach could result in governmental actions or private claims or proceedings, which could damage our reputation, cause a loss of confidence in our products and services, damage our ability to develop (and protect our rights to) our proprietary technologies and adversely affect our business.

15

 

Risks Related to Ownership of our Common Stock

 

Our common stock is quoted on the OTC Markets, which may have an unfavorable impact on our stock price and liquidity.

 

Our common stock is quoted on the OTC Markets under the symbol “GTHR.” The OTC Markets is a significantly more limited market than the New York Stock Exchange or the NASDAQ stock market. The quotation of our shares on the OTC Markets may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

 

We cannot predict the extent to which an active public trading market for our common stock will develop or be sustained. If an active public trading market does not develop or cannot be sustained, you may be unable to liquidate your investment in our common stock.

 

Currently there is minimal public trading in our common stock. We cannot predict the extent to which an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares of common stock until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot assure you that an active public trading market for our common stock will develop or be sustained. If such a market cannot be sustained, you may be unable to liquidate your investment in our common stock.

 

Our common stock may be subject to significant price volatility, which may have an adverse effect on your ability to liquidate your investment in our common stock.

 

The market for our common stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the indefinite future. The potential volatility in our share price is attributable to a number of factors. First, our shares of common stock may be sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our shares of common stock are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price. Secondly, an investment in us may be considered a speculative investment due to our lack of profits to date and uncertainty of future profits. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer.

 

We are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

 

The United States Securities and Exchange Commission, or SEC, has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a “penny stock” and is subject to Rule 15g-9, or the Penny Stock Rule, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by the Penny Stock Rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for us to raise additional capital.

 

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

 

We cannot assure you that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

16

 

We have never paid cash dividends on our stock and do not intend to pay dividends for the foreseeable future.

 

We have paid no cash dividends on any class of our stock to date, and we do not anticipate paying cash dividends in the near term. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.

 

Fluctuations in our quarterly or annual results may cause our stock price to decline.

 

Our operating results could fluctuate due to a number of factors, including changes in our accounting estimates; litigation and claim-related expenditures; increase in the number and type of competitors; changes in competitors’ product offerings; and other matters. Similarly, our future operating results may vary significantly from quarter to quarter or year to year due to these and other factors, many of which are beyond our control. If our operating results or projections of future operating results do not meet the expectations of securities analysts or investors in future periods, our stock price may fall.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

Our previous offices and laboratory premises, which included our headquarters and our research and development facilities, were located in Denver, Colorado, where we subleased approximately 7,990 square feet of office and laboratory space. Effective April 29, 2019, we terminated our sublease with the facilities in Denver, Colorado.

 

Presently, we are in negotiations to lease a new laboratory space, and we are currently reviewing the terms of lease agreements for three (3) prospective laboratory spaces located in Lafayette, Westminster, and Lakewood, CO. We intend to enter into a lease agreement and secure a laboratory space in the third quarter 2021. We believe that any of these three facilities are more than adequate for our needs and for the immediate future and that, should it be required, additional space can be leased to accommodate any future growth.

 

ITEM 3. LEGAL PROCEEDINGS

 

From time to time, we may be involved in litigation relating to claims arising out of our operations. We are not currently a party to, and our property is not subject to, any material legal proceedings.

 

On November 14, 2014, Litchfield Church Ranch, LLC filed a Summons in Forcible Entry and Detainer against the Company after the owner was unable to sell the building to us because he was upended for over $800,000 in his mortgage. As per the Summons, the plaintiff claimed $364,968.69 in past due rent. As per our accounting records, the Company had accrued $242,000 in rent expense with the offer to purchase such property at $1,850,000 plus scheduled payments for the past due rent. The owner’s bank did not allow him to sell the property. We participated in a mediation resulting in a settlement for $115,000 with the contingency to pay the goodwill amount of $15,000 by September 12, 2015. The Company had an additional six months to complete the remaining $100,000 settlement. If not paid off prior to August 12, 2016, there would be no discount and the Company shall owe the judgment balance in the amount of $325,885. The mediator, a retired judge, found in our favor. Therefore, the settlement was agreed upon by both parties. The Company did not pay the settlement agreement as of December 31, 2019 and default interest of 18% was accrued on the outstanding judgment balance through December 31, 2018. In July 2019, Litchfield Church Ranch, LLC was dissolved after the ownership sold the property. The Company claims that no money is owed.

 

Milestones Investment Agreement

 

In March 2018, we entered into a Milestones Investment Agreement with FOGT, LLC (in part controlled by a former member of the Board of Directors), pursuant to which FOGT, LLC had agreed to invest and purchase up to $5 million of Series A Convertible Preferred Stock pending completion of certain milestones. As of December 31, 2018, FOGT, LLC has invested $550,000 and we agreed to issue 5,500 shares of Series A Convertible Preferred Stock. FOGT, LLC had agreed to invest additional amounts as follows: (i) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (ii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. A dispute arose between FOGT, LLC and the Company. As a result, FOGT, LLC ceased further investments in the Company. 

 

On September 6, 2019, FOGT, LLC and GeneThera, Inc. reached a settlement in the amount of $425,000. The legal team received $171,000 from this settlement resulting in net proceeds to the Company of approximately $254,000.

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ITEM 4. MINE SAFETY PROCEDURES

 

Not applicable.

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

Our common stock currently eligible for quotation on the OTC Markets under the symbol “GTHR.” The following table sets forth, for the periods indicated, the high and low closing prices of our common stock as reported by OTC Markets, Inc. These prices reflect inter-dealer prices, without retain mark-up or commission, and may not represent actual transactions.

 

    High   Low
Year Ended December 31, 2019:                
First Quarter   $ 0.01680     $ 0.00600  
Second Quarter     0.01680       0.00270  
Third Quarter     0.00910       0.00270  
Fourth Quarter     0.00700       0.00250  
                 
Year Ended December 31, 2020:                
First Quarter   $ 0.02000     $ 0.00350  
Second Quarter     0.11970       0.00150  
Third Quarter     0.11000       0.00820  
Fourth Quarter     0.03000       0.00600  

  

Holders of our Common Stock

 

As of December 31, 2020, there were approximately 279 holders of record of our common stock. This number excludes the shares owned by stockholders holding shares under nominee security position listings.

 

Dividends

 

We have not declared or paid a cash dividend. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future, if at all. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We do not have any compensation plans under which our securities are authorized for issuance.

 

Recent Sales of Unregistered Securities

 

We did not sell any unregistered securities during the year ended December 31, 2020.

 

Purchases of Equity Securities by Issuer and Affiliated Purchasers

 

There were no purchases of our common stock by us or on our behalf, or by or on behalf of any of our affiliates, during the year ended December 31, 2020.

 

ITEM 6. SELECTED FINANCIAL DATA

 

As a smaller reporting company, the Company is not required to provide the information under this item.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and result of operations should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report on Form 10-K. This discussion contains forward-looking statements that relate to future events or our future financial performance. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include, among others, those listed under “Forward-Looking Statements” and “Risk Factors” and those included elsewhere in this report. Our financial statements are prepared in U.S. dollars and in accordance with United States generally accepted accounting principles, or GAAP.

 

Overview

 

We continue to be a biotechnology company dedicated to eradicating “cross-over” zoonotic diseases, such as COVID-19 (Coronavirus), Paratuberculosis (Johne’s disease), Mad Cow Disease, Chronic Wasting Disease, E.coli and Salmonella infections, by applying our advanced proprietary molecular sciences and robotic technologies. We focus on developing molecular diagnostic tests, therapeutics, and vaccines through our proprietary robotic technologies with the belief that improved technologies and methodologies must be developed and implemented in order to aid mankind’s control of emerging diseases in animals and in humans. We believe it has become increasingly evident that, if not properly addressed, diseases in animals may continue to cause serious and growing global problems with respect to economics, human health and biodiversity.

 

We previously developed proprietary diagnostic assays for use in the agricultural and veterinary markets, and we are currently developing proprietary, genetics-based diagnostic assays and vaccine solutions through our robotic technologies with the goal of controlling the spread of zoonotic infection in the human population. Our mission is to continually apply our scientific research to the more effective management of zoonotic diseases and, in so doing, realize the commercial potential of our molecular biotechnologies.

 

We will require significant additional funding in order to implement and achieve our business plan. There is no guarantee that we will be successful in securing the required financing, and if such financing is secured, there is no guarantee that we will fully achieve our business goals. We provide a comprehensive solution that allows diagnosing, treating and managing zoonotic diseases in animals and humans.

 

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

 

Our proprietary Molecular Robotic and Therapeutic Platform (MORAPAT) is designed to prevent the spread of disease from animals and; at the same time, allow to better control of zoonotic infectious agents. More importantly, we believe that our platform can prevent the spread of viruses and bacteria in animals and /or food products and subsequent infection of human population. We have developed a molecular system for the detection of Mycobacterium Avian Paratuberculosis in the milk of infected dairy cows.

 

To date, we have developed a prototype computer program to track samples that will be received and processed in our commercial laboratory. This program will initially be used to track samples that will be sent out and received by our laboratory. We anticipate that research and development, or R&D, will be the source for both assay development and vaccine design/development. If we are successful in developing assays for different diseases, we intend to formalize the procedure into a commercial application through a series of laboratories to be owned and operated by us. We anticipate that R&D will be ongoing during the life of the Company, as this is the source for new products to be introduced to the market.

 

Our plan is to seek new innovations in the robotic biotechnology field. Our goal is to focus on both the domestic and international markets for the commercialization of our zoonotic molecular robotics and AI integrated platform. Our current competitors include primarily, Roche Diagnostics, Abbott Laboratories, IDEXX Laboratories, Inc., and academic and government institutions are also carrying out a significant amount of research in the field of health, particularly in the field zoonotic diseases. We anticipate that these institutions will become more aggressive in pursuing patent protection and negotiating licensing arrangements to collect royalties for the use of technologies they have developed and to market commercial products similar to those that we seek to develop, either on their own or in collaboration with our competitors. Any resulting increase in the cost or decrease in the availability of technology or product candidates from these institutions may affect our business.

19

 

We do not manufacture any products. We do not intend to establish a manufacturing facility to manufacture any products that we may develop anywhere in the world. Our unique approach to the testing for zoonotic diseases allows us to begin commercialization of our diagnostic tests without the need for a long and enduring approval process from the USDA. USDA approval will be required for commercialization of animal vaccines. However, it is our intention not to seek, in the foreseeable future, any approval either from the USDA or the U.S. Food & Drug Administration for any of the products we develop both, diagnostic or therapeutic. Our commercial laboratories will require a validation study to be performed to demonstrate the effectiveness of the system. Validation studies will be performed according to each country’s guidelines. We had a total of two full-time employees as of December 31, 2020.

 

Liquidity and Capital Resources – Going Concern

 

As of December 31, 2020, we had cash and cash equivalents of $0. We have historically financed activities with cash from the private placement of equity and debt securities and advances from related parties. Our auditors have issued a going concern opinion. This means that our auditors believe there is a substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. We have had negligible revenues since inception and had an accumulated deficit of $31,259,962 and negative working capital of $7,691,065 as of December 31, 2020.

 

Our current cash balance is not sufficient to fund our business objectives and we will need significant additional capital over the next 12 to 18 months in order to fund our planned operations. Specifically, we intend to spend significant funds on completing our robotic prototype system, validating and testing our products, seeking necessary regulatory approvals and focusing on international expansion. We will attempt to raise capital through one or more private offerings of debt or equity securities or both. We may not be able to secure the financing that we believe is necessary to implement our strategic objectives and, even if additional financing is secured, we may not achieve our strategic objectives. As of the date of this report, we do not have any firm commitments from any investors for any additional funding.

 

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

 

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

 

Capital Expenditures and Resources

 

Our operations require capital expenditures primarily for lab equipment and software development. Capital expenditures for the years ended December 31, 2020 and 2019 were $0, respectively.

 

Results of Operations

 

The following table sets forth key components of our results of operations during the years ended December 31, 2020 and 2019.

 

    Years Ended December 31,  
    2020     2019  
Expenses                
General and administrative expenses   $ 274,611     $ 138,152  
Payroll expenses     466,000       601,000  
Total operating expenses     740,611       739,152  
Loss from operations     (740,611 )     (739,152 )
Other income (expenses)                
Interest (expense)     (33,852 )     (28,582 )
Proceeds from settlement     -       250,083  
Total other income (expense)     (33,852 )     221,501  
Net loss before income taxes     (774,463 )     (517,651 )
Provision for income taxes     -       -  
Net loss   $ (774,463 )   $ (517,651 )

20

 

Revenue. We did not generate any revenue for the years ended December 31, 2020 or December 31, 2019.

 

General and administrative expenses. Our general and administrative expenses consist primarily of office lease, overhead, insurance, professional advisor fees, and other expenses incurred in connection with general operations. Our total general and administrative expenses increased by $136,459 to $274,611 for the year ended December 31, 2020 from $138,152 for the year ended December 31, 2019. Such increase was primarily due to increased professional and consulting fees and moving expenses.

 

Payroll expenses. Our payroll expenses include employee salaries and bonuses plus related payroll taxes. Our accrued payroll expenses were $466,000 for the year ended December 31, 2020 compared to $601,000 for the year ended December 31, 2019. The employment agreements of the officers provide that the officers be awarded $135,000 worth of Series B Preferred Stock annually. The Company does not have enough authorized shares of Series B Preferred stock to satisfy the agreement. Therefore, the Company accrued $135,000 of compensation expense in 2019, but did not make the accrual for 2020, which accounts for the decrease of compensation expense from 2020 compared to 2019.

 

The entire amount of accrued payroll expense incurred in 2020 and 2019 was deferred due to lack of funds.

 

Total other expenses. We had $33,852 and $28,582 in interest expenses for the years ended December 31, 2020 and 2019, respectively. The amounts for both years relate to accrued interest expense on related party and other notes payable.

 

Total other income. The Company recorded a gain on the settlement with FOGT LLC of approximately $250,000 for the year ended December 31, 2019, as compared no other income for the year ended December 31, 2020.

 

Net loss. The Company incurred net losses of $774,463 and $517,651 for the years ended December 31, 2020 and 2019, respectively, due mainly to the $250,083 of other income recognized in 2019 from the gain on the settlement with FOGT LLC.

 

Summary of Cash Flow

 

The net cash used in operating activities was $5,309. For the year ended December 31, 2020, the net loss of $774,463 was offset by the accrual of compensation expense and other accrued expenses and depreciation expense.

 

Net cash provided by financing activities was $269 for the year ended December 31, 2019, but was augmented by the settlement proceeds of approximately $250,000.

 

Contractual Obligations and Commitments

 

There were no contractual obligations or commitments of any kind.

 

Convertible Notes

 

In previous years we borrowed money from investors and issued convertible notes due on demand and bearing interest at an annual rate of 8%. The notes are convertible into shares our common stock at a conversion price of $0.01 to $0.05 per share. As of December 31, 2020 and 2019, the outstanding aggregate principal and interest on these notes was $54,500, respectively.

 

The Company has approximately $366,000 of convertible notes whose holders have presented conversion notices. The Company’s Stock Transfer Agent has not been able to issue shares for these notes due to the lack of beneficiaries’ communications with their investments. The Company has regularly sent Letters of Confirmations through our auditors, but the holders of Convertible Notes not yet converted, have not validated their investments and/or Promissory Notes’ outstanding debts with the Company’s auditing team. The $366,000 is included in accrued liabilities.

 

Related Party Loans

 

From time to time, certain directors, officers and stockholders have made loans to the Company.

 

As of December 31, 2020 and 2019, the Company has outstanding loan payables to Dr. Antonio Milici, its Chairman, Chief Executive Officer and principal stockholder, in the amounts of $679,783 and $673,092, respectively. This loan is unsecured, due on demand, and bears interest at 2.41%.

 

As of December 31, 2020 and 2019, the Company has outstanding loan payables to Tannya Irizarry, its Chief Administrative Officer and stockholder, in the amounts of $58,704 and $61,995, respectively. This loan is unsecured, due on demand, and bears interest at 8%.

21

 

Investment Agreement

 

In March 2018, the Company entered into a Milestone Investment Agreement (the “Agreement”) with FOGT, LLC (an entity controlled in part by a former member of the Company’s Board of Directors), pursuant to which FOGT, LLC (“FOGT”) agreed to invest in and purchase from the Company up to $5 million of Series A Convertible Preferred Stock pending the Company’s completion of certain operational milestones. As of December 31, 2020, FOGT had invested $550,000 and the Company issued 5,500 shares of Series A Convertible Preferred Stock to FOGT pursuant to the terms of the Agreement. Subsequently, FOGT agreed to invest additional amounts as follows: (i) $1,500,000 upon the Company’s completion of design, assembly and validation of an advanced robotic system; and (ii) $1,750,000 upon the Company entering into a commercial agreement with a government organization and/or private entity. Subsequently, a dispute arose between the parties. FOGT ceased any further investments in the Company resulting in arbitration.

 

The Board member resigned. In 2019 the Company received a net settlement of approximately $250,000, which was included in Other Income, and the 10,350 shares of Series A Convertible Preferred Stock were cancelled.

 

Capital Expenditures

 

Our operations require capital expenditures primarily for lab equipment and software development. The Company lost its lab equipment and other capital assets when the office space lease was terminated in April 2019. The equipment was fully depreciated. The Company removed these assets from its books in 2019. The Company’s fixed assets include a vehicle purchased in 2017 in the amount of $26,400 with a net book value of $10,560 as of December 31, 2020.

 

Inflation

 

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost control in operations.

 

Seasonality

 

Our operating results and operating cash flows historically have not been subject to significant seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.

 

Off-Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements.

 

Effect of Inflation and Market Prices on Net Sales and Revenues

 

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost control in operations.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with accounting principles GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

 

Property and Equipment, Net.

 

Property and equipment consist primarily of office and laboratory equipment, leasehold improvements, vehicle, and is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives ranging from three to seven years. The Company has one vehicle recorded in property and equipment with a net book value of $10,560 as of December 31, 2020.

22

 

Impairment of Long-Lived Assets.

 

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

 

Stock-Based Compensation.

 

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

 

Fair Value of Financial Instruments.

 

The carrying value of cash, accounts payable, accrued expenses and notes payable approximates fair value due to the short-term nature of these accounts.

 

Recently Issued Accounting Standards

 

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard.

 

In June 2018, the FASB issued Accounting Standards Update 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”)”. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statement presentation or disclosures.

 

In August 2018, the FASB issued Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, which changes the fair value measurement disclosure requirements of ASC 820. This update is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. The Company does not expect the adoption of ASU 2018-13 to have a material impact on its consolidated financial statements.

 

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

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The financial statements required by this item are set forth beginning on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference.

23

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There have been no changes in our independent registered public accounting firm or disagreements with our accountants on matters of accounting and financial disclosure.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We are responsible for maintaining disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Based on our management’s evaluation (with the participation of our principal executive officer and our principal financial officer) of our disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were not effective to achieve their stated purpose as of December 31, 2020, the end of the period covered by this Annual Report on Form 10-K, because of the material weaknesses described below.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting refers to the process designed by, or under the supervision of, our principal executive officer and principal financial and accounting officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, and includes those policies and procedures that:

 

  (1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

  (2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

 

  (3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this evaluation, management used the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on our evaluation, we determined that, as of December 31, 2020, our internal control over financial reporting was not effective due to the following material weaknesses.

 

  Insufficient accounting resources. Management had insufficient accounting resources, which insufficiency resulted in delays associated with our reporting of our operating results.

 

  Lack of GAAP knowledge. We lack internal personnel with GAAP knowledge. While management has engaged an external consultant to counter the lack of internal GAAP knowledge, the work of the external consultant does not entirely compensate for this internal deficiency.

 

To cure the foregoing material weakness, we will look to increase our personnel resources, including those with GAAP knowledge, as funds become available. Management believes that hiring additional knowledgeable personnel with technical accounting expertise and GAAP knowledge will remedy the foregoing weakness.

24

 

We intend to complete the remediation of the material weaknesses discussed above as soon as practicable, but we cannot assure you that we will be able to do so. Designing and implementing an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we intend to take may not fully address the material weaknesses that we have identified, and material weaknesses in our disclosure controls and procedures may be identified in the future. Should we discover such conditions, we intend to remediate them as soon as practicable. We are committed to taking appropriate steps for remediation, as needed.

 

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the year ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

Effective April 29, 2019, we terminated our sublease arrangement with GTI Research, Inc. for our prior facilities in Denver, Colorado. In connection with such termination, we entered into a Sublease Termination Agreement that, among other things, terminated any and all of our future rent and other financial commitments under the sublease arrangement. The lease deposit related to the sublease termination was written off in the amount of $12,000.

 

The Company lost its lab equipment and other assets when the lease was terminated. The lab equipment and capital assets were fully depreciated, and the Company removed the amounts from its records in 2019. There was no impact to the net loss.

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officers

 

The following sets forth information about our directors and executive officers as of the date hereof:

 

Name   Age   Position
Antonio Milici   66   Chairman of the Board, Chief Executive Officer and Chief Scientific Officer
Tannya L. Irizarry   62   Chief Administrative Officer and Interim Chief Financial Officer
Jeremiah Bartley   66   Director

 

Officers are elected annually by the Board of Directors (subject to the terms of any employment agreement), to hold such office until an officer’s successor has been duly appointed and qualified, unless an officer sooner dies, resigns or is removed by the Board.

 

The principal occupation and business experience during at least the past five years for our executive officers and directors is as follows:

 

Antonio Milici. Dr. Milici founded the Company in 1998 and has served as its Chairman and Chief Executive Officer since inception. Prior to founding the Company, Dr. Milici served as Chief Executive Officer and President of Genetrans, Inc., a genetic diagnostic company from 1993 to 1998. Dr. Milici was also an assistant professor in the department of Molecular Pathology at the University of Texas M.D. Anderson Cancer Center. Dr. Milici was selected to serve on our board of directors due to his tenure, having founded the Company and served as its Chief Executive Officer since inception, as well as his extensive experience in the industry in which we operate.

 

Tannya L. Irizarry. Ms. Irizarry has served as our Interim Chief Financial Officer since May 2006 and as our Chief Administrative Officer since 1999. Ms. Irizarry has over 23 years of experience in medical technology and biotechnology industries. She was the Vice President of Genetrans, Inc. from 1994 to 1998. Ms. Irizarry worked at the University of Texas M.D. Anderson Cancer Center in the department of Neuro-Oncology with Dr. William S. Fields and the Office of Education with Dr. James Bowen. She also worked at the Medical College of Georgia and subsequently, at the St. Joseph Hospital in the biotechnology division.

 

Jeremiah Bartley. Dr. Bartley has served as a member of our board of directors since April 2, 2018. He has served as the Director of Women’s Health Care at Rocky Mountain Internal Medicine in Denver, Colorado since 1990. He is a past President of the Colorado Section of the American College of Obstetrics and Gynecology. Dr. Bartley was a member of the Hospital Provider Fee Oversight and Advisory Board from 2009 to 2016. Dr. Bartley received a BA degree from Yale University and MD degree from University of Miami. He completed his residency in Obstetrics and Gynecology at Case Western University. Dr. Bartley was selected to serve on our board of directors due to his extensive medical experience.

25

 

There are no arrangements or understandings known to us pursuant to which any director was or is to be selected as a director or nominee. There are no agreements or understandings for any of our executive officers or directors to resign at the request of another person and no officer or director is acting on behalf of; nor will any of them act at the direction of any other person. The Company has a Code of Conduct which provides specific expectations from each director and senior management officers, and the penalty of permanent dismissal from any public traded company in his/her future.

 

Except as set forth in our discussion below in Item 13 “Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

 

Family Relationships

 

Dr. Antonio Milici and Ms. Tannya L. Irizarry are married.

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, with no exceptions, except as described below, none of our directors or executive officers has, during the past ten years:

 

  been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

  had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

 

  been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

 

  been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

  been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

  been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Compliance with Section 16(A) of the Exchange Act.

 

Section 16(a) of the Exchange Act requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. We believe, based solely on a review of the copies of such reports furnished to us, that all reports required to be filed have been timely filed for the year ended December 31, 2020.

 

Code of Ethics

 

We have adopted a Code of Conduct that applies to all of our directors and senior management, including our principal executive officer, principal financial officer and principal accounting officer. Such code of conduct addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, and reporting of violations of the code. This Code of Conduct is incorporated by reference to the Company’s Form 10-K filed on February 27, 2020. In addition, we intend to post on our website all disclosures that are required by law or the listing standards of our applicable trading platform or market concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this report.

26

 

Material Changes to Director Nomination Procedures

 

There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors since such procedures were last disclosed.

 

Audit Committee and Audit Committee Financial Expert

 

We do not have an audit committee or an audit committee financial expert serving on the audit committee. Our board of directors is currently responsible for the functions that would otherwise be managed by an audit committee.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Compensation of Executive Officers

 

The following table sets forth information concerning all compensation awarded to, earned by or paid to the named Executive Officers for services rendered in all capacities during the fiscal year ended December 31, or who earned compensation exceeding $100,000 during fiscal year 2020, for services as executive officers for the last two fiscal years.

 

Summary Compensation Table

 

Name and Principal Position   Year   Salary
($)
    Stock Awards
($)
    Total
($)
 
Antonio Milici, Chief Executive Officer   2020     258,000       -       258,000  
    2019     258,000       90,000       348,000  
Tannya L. Irizarry, Interim Chief Financial Officer   2020     208,000       -       208,000  
    2019     208,000       45,000       253,000  

 

On January 8, 2017, we entered into an employment agreement with Antonio Milici, M.D., Ph.D., to serve as the Chief Executive Officer and Chief Scientific Officer of the Company through January 31, 2022. Unless either party provides notice to terminate the agreement at least thirty days prior to expiration of the agreement, the agreement will automatically be extended for an additional two-year period. In consideration for his services, Dr. Milici receives a base salary of $258,000 per annum, plus $90,000 Series B Preferred Stock annually. We also agreed to pay Dr. Milici bonus compensation or a lump sum equal to two (2) times the salary at the time we have net income of at least $2,000,000 dollars each year based on performance. In addition, we agreed to pay a onetime payment of $26,900 at the renewal of the employment agreement. We are also required to pay all living expenses to Dr. Milici during the time his deferred salary is not entirely released during the term of his employment agreement. Once deferred salary is entirely released to Dr. Milici, he is responsible for his taxes. However, during deferred salary, we are obligated to accrue deferred tax debt in our balance sheet. Dr. Milici is also entitled to a leased Company vehicle of his selection. At the end of aforementioned lease, Dr. Milici is authorized to either purchase the vehicle and/or exchange leased vehicle for another vehicle. The Company did not issue $90,000 worth of Series B Preferred Stock in 2020 or 2019 as the Company did not have enough authorized shares of Series B Preferred stock. The Company accrued $0 and $90,000 in the annual salary accrual for Dr. Milici for the years ended December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, all salary was deferred.

 

On January 8, 2017, we entered into an employment agreement with Tannya L. Irizarry to serve as the Chief Administrative Officer and Interim Chief Financial Officer of the Company through January 31, 2022. Unless either party provides notice to terminate the agreement at least thirty days prior to expiration of the agreement, the agreement will automatically be extended for an additional two-year period. In consideration for her services, Ms. Irizarry receives a base salary of $208,000 per annum, plus $45,000 worth of Series B Preferred Stock annually. We also agreed to pay Ms. Irizarry bonus compensation or a lump sum equal to two (2) times the salary at the time we have net income of at least $2,000,000 dollars each year based on performance. In addition, we agreed to pay a onetime payment of $18,000 at the renewal of the employment agreement. We are also required to pay all living expenses to Ms. Irizarry during the time her deferred salary is not entirely released during the term of her employment agreement. Once deferred salary is entirely released to Ms. Irizarry, she is responsible for her taxes. However, during deferred salary, we are obligated to accrue deferred tax debt in its balance sheet. Ms. Irizarry is also entitled to a leased Company vehicle of her selection. At the end of aforementioned lease, Ms. Irizarry is authorized to either purchase the vehicle and/or exchange leased vehicle for another vehicle. The Company did not issue $45,000 worth of Series B Preferred Stock in 2019 as the Company did not have enough authorized shares of Series B Preferred stock. The Company accrued $0 and $45,000 in the annual salary accrual for Ms. Irizarry for the years ended December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, all salary was deferred.

 

Outstanding Equity Awards Value at Fiscal Year-End

 

There were no unexercised options or unvested shares of restricted stock previously awarded to the executive officers named above at the fiscal year ended December 31, 2020.

27

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We do not have any compensation plans in effect under which our equity securities are authorized for issuance.

 

Director Compensation

 

Dr. Jeremiah Bartley of our board of directors received 100,000 shares of common stock for services as a director. The Company recognized an expense in the amount of $5,000 during 2020.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS’ MATTERS

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information regarding beneficial ownership of our voting stock as of May 26, 2020, by (i) each of our officers and directors; (ii) all of our officers and directors as a group; and (iii) each person who is known by us to beneficially own more than 5% of each class of our voting stock. Unless otherwise indicated, the address of each person or entity named below is c/o GeneThera, Inc., 3051 W. 105th Ave., #350251, Westminster, CO 80035.

 

    Amount of Beneficial Ownership(1)           Percent of   Percent of     Percent of  
          Series A     Series B     Percent     Series A   Series B     Total  
    Common     Preferred     Preferred     of Common     Preferred   Preferred     Voting  
Name and Address of Beneficial Owner   Stock     Stock     Stock     Stock(2)     Stock(3)   Stock(4)     Stock(5)  
Antonio Milici (6)     1,812,797       0       17,559,593       7.5 %   *     67.0 %   (5) %
Tannya L. Irizarry (7)     1,425,033       0       8,478,979       5.9 %   *     33.0 %   (5) %
Jeremiah Bartley     100,000       0       0       *     *     *     *  
All directors and officers as a group (3 persons named above)     3,337,830       0       26,038,572       13.9 %   *     100.0 %   (5) %
Other (8)(9)                                                  

 

* Less than 1%

 

  (1) Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as set forth below, each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of its stock. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.

 

  (2) Based on 24,071,255 shares of common stock outstanding as of December 31, 2020.

 

  (3) It was based on 10,350 shares of Series A Convertible Preferred Stock, which were cancelled as of December 31, 2019. Shares of Series A Convertible Preferred Stock were, upon the occurrence of certain events, convertible into shares of common stock on the basis of 400 shares of common stock for each share of Series A Preferred Stock. Holders of Series A Convertible Preferred Stock would have voted with the holders of common stock on all matters on an as converted to common stock basis. As of December 31, 2020, all shares were cancelled, and there were no issued and outstanding shares of Series A Convertible Preferred Stock.

 

  (4) Based on 26,038,572 shares of Series B Convertible Preferred Stock outstanding as of December 31, 2020. Shares of Series B Convertible Preferred Stock are, upon the occurrence of certain events, convertible into shares of common stock on the basis of 10 shares of common stock for each share of Series B Preferred Stock. Holders of Series B Convertible Preferred Stock are entitled to 20 votes per share and vote with the holders of common stock on all matters.

 

  (5) Percentage of Total Voting Stock represents total ownership with respect to all shares of common stock, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, as a single class. The Series B Convertible Preferred Stockholders have 20 votes per share resulting in 100% voting power.

 

  (6) Includes 2,519,567 shares of common stock held by Kalos Holdings, LLC. Dr. Milici’s son was the managing director of Kalos Holdings, LLC until 2014 and has no voting and dispositive power over the securities held by it. Dr. Milici has no beneficial ownership of such securities; neither does Tannya L. Irizarry, Dr. Milici’s wife.

 

  (7) Includes shares held by Antonio Milici, Ms. Irizarry’s husband.

 

  (8) A total of 4,003,860 shares of common stock was issued to Gold X Change, Inc. and Pavel Kolesnikov, the President. Currently, Gold X Change, Inc. holds 1,189,300 shares of common stock. Mr. Kolesnikov disbursed much of the remaining shares to other parties and has no voting and dispositive power over the securities held by these parties. Mr. Kolesnikov disclaims beneficial ownership of such securities except to the extent of his pecuniary interest in such securities, if any.

 

  (9) GeneThera, Inc. held 7,064,967 shares of common stock controlled by the Board of Directors.

28

 

Changes in Control

 

We do not currently have any arrangements which, if consummated, may result in a change of control of the Company.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Transactions with Related Persons

 

The following includes a summary of transactions since the beginning of the 2020 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Item 11. Executive Compensation”).

 

From time to time, certain directors, officers and stockholders have made loans to the Company. As of December 31, 2020, and 2019, the Company has outstanding loan payables to Antonio Milici, its Chairman, Chief Executive Officer and stockholder, in the amounts of $679,783 and $673,092, respectively. These loans are unsecured, due on demand, and bear interest at 2.41%. As of December 31, 2020, and 2019, the Company has outstanding loan payables to Tannya Irizarry, its Chief Administrative Officer and stockholder, in the amounts of $61,995 and $90,523, respectively. These loans are unsecured, due on demand, and bear interest at 8%.

 

Tannya Irizarry owns one-third of GTI Corporate Transfer Agents, LLC, and the Company’s in-house transfer agency. During the years ended December 31, 2020, and 2019, the Company made payments to GTI Corporate Transfer Agents, LLC in the amounts of $23,616 and $4,170, respectively.

 

The Company utilizes Elia Holdings, LLC for construction and other maintenance services to conserve the Company’s office and lab space. Elia Holdings, LLC is controlled by Tannya Irizarry’s brother. Costs incurred related to such services were $5,715 and $12,245 for the years ended December 31, 2020, and 2019, respectively.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Independent Auditors’ Fees

 

The following is a summary of the fees billed to us by our principal accountants during the years ended December 31, 2020 and 2019.

 

    Year Ended December 31,  
    2020     2019  
Audit Fees   $ 35,000     $ 27,000  
Audit-Related Fees     -       -  
Tax Fees     -       -  
All Other Accounting Fees     -       -  
TOTAL   $ 35,000       $76, 820  

 

“Audit Fees” consisted of fees billed for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Form 10-K and 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.

 

“Audit-Related Fees” consisted of fees billed for assurance and related services by the principal accountant that were reasonably related to the performance of the audit or review of our financial statements and are not reported under the paragraph captioned “Audit Fees” above.

 

“Tax Fees” consisted of fees billed for professional services rendered by the principal accountant for tax returns preparation.

 

“All Other Fees” consisted of fees billed for products and services provided by the principal accountant, other than the services reported above under other captions of this Item 14.

 

Pre-Approval Policies and Procedures

 

On March 9, 2019 the Company engaged the audit firm MaughanSullivan LLC to audit its financial statements for the years ended December 31, 2018 through 2020.

29

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) The following documents are filed as part of this Annual Report on this Form 10-K:

 

  (1) Financial Statements. The financial statements required by this item are set forth beginning at F-1 of this Annual Report on this Form 10-K and are incorporated herein by reference.

 

  (2) Financial Statement Schedules. None. Financial statement schedules have been omitted because they are not applicable.

 

  (3) Exhibits: See Item 15(b) below.

 

(b) Exhibits. The following exhibits are included herein or incorporated herein by reference:

 

Exhibit No.   Description
31.1   Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2   Certifications of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1   Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2   Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

  Executive Compensation Plan or Agreement

 

ITEM 16. FORM 10-K SUMMARY

 

None.

30

 

FINANCIAL STATEMENTS

 

  Page No.
Audited Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019 F-2
   
Report of Registered Independent Public Accounting Firm F-3
   
Consolidated Balance Sheets as of December 31, 2020 and 2019 F-4
   
Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019 F-5
   
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020 and 2019 F-6
   
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019 F-7
   
Notes to Consolidated Financial Statements F-8

 

 

GENETHERA, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2020 and 2019

F-2

 

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

 

To the Stockholders and the Board of Directors of GeneThera Inc.:

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of GeneThera Inc. (the “Company”) as of December 31, 2020 and 2019, the related statements of operations, changes in stockholders’ equity, and cash flows for each of the years then ended. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the two-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Going Concern

 

The accompanying financials have been prepared assuming the Company will continue as a going concern. As of December 31, 2020, the Company had an accumulated deficit of approximately $31,259,962 and may experience losses in the near term. These factors and the need for additional financing in order for the Company to meet its business plan, raise substantial doubt about its ability to continue as a going concern. Management’s plan to continue as a going concern is also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ MaughanSullivan LLC

 

We have served as the Company’s auditor since 2019.

 

Manchester, VT
April 14, 2021

F-3

 

GeneThera, Inc.
Consolidated Balance Sheets
December 31,

 

    2020     2019  
ASSETS                
Current assets                
Cash   $ -     $ 5,309  
Prepaid expenses     1,022       -  
Total current assets     1,022       5,309  
Office and laboratory equipment and leasehold improvements     -       -  
Automobile & trucks     26,400       26,400  
Less: Accumulated depreciation     (15,840 )     (10,560 )
Total property and equipment, net     10,560       15,840  
Other assets - deposit     -       -  
TOTAL ASSETS   $ 11,582     $ 21,149  
                 
LIABILITIES & STOCKHOLDERS’ DEFICIT                
Current liabilities                
Accounts payable   $ 81,070     $ 27,705  
Accrued expenses     6,798,920       6,092,364  
Notes payable     25,800       25,800  
Convertible notes payable, net of discount     54,500       54,500  
Loan from shareholder     731,796       741,778  
Total liabilities     7,692,087       6,942,147  
                 
Commitments and Contingencies     -       -  
                 
Stockholders’ deficit:                
Series A preferred stock, par value $0.001 per share, 20,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2020 and 2019, respectively     -       -  
Series B preferred stock, par value $0.001 per share, 30,000,000 shares authorized, 26,038,572 shares issued and outstanding as of December 31, 2020 and 2019, respectively     26,039       26,039  
Common stock, par value $0.001 per share, 300,000,000 shares authorized; 24,071,255 and 35,902,602 shares issued and outstanding as of December 31, 2020 and 2019, respectively     24,071       35,904  
Common stock to be issued     53,572       53,572  
Additional paid-in capital     23,475,776       23,448,986  
Accumulated deficit     (31,259,962 )     (30,485,499 )
Total stockholders’ deficit of GeneThera, Inc.     (7,680,504 )     (6,920,998 )
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT   $ 11,582     $ 21,149  

 

See accompanying notes to the consolidated financial statements.

F-4

 

GeneThera, Inc.
Consolidated Statements of Operations

 

    For the Years Ended
December 31,
 
    2020     2019  
Expenses                
General and administrative expenses   $ 274,611     $ 138,152  
Payroll expenses     466,000       601,000  
Total operating expenses     740,611       739,152  
Loss from operations     (740,611 )     (739,152 )
Other expenses                
Interest expense     (33,852 )     (28,582 )
Proceeds from settlement     -       250,083  
Total other expense     (33,852 )     (221,501 )
Other income                
Gain recognized on write off of liabilities     -       -  
Total other income     -       -  
Net loss before income taxes     (774,463 )     (517,651 )
Provision for income taxes     -       -  
Net loss   $ (774,463 )   $ (517,651 )
                 
Loss per common share - basic and diluted   $ (0.04 )   $ (0.01 )
Weighted average common shares outstanding - basic and diluted     20,310,149       35,902,602  

 

See accompanying notes to the consolidated financial statements.

F-5

 

GeneThera, Inc.
Consolidated Statement of Stockholders’ Deficit

 

                                        Additional                 Total  
    Series A Preferred Stock     Series B Preferred Stock     Common Stock     Paid-in     Accumulated     Stock to     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     be Issued     Deficit  
Balance at December 31, 2018     10,350     $ 12       26,038,572     $ 26,039       35,902,602     $ 35,904     $ 24,448,977     $ (29,967,849 )   $ 53,572     $ (6,403,349 )
                                                                                 
Cancellation of preferred stock     (10,350 )     (12 )     -       -       -       -       12       -       -       -  
                                                             
Net loss     -       -       -       -       -       -       -       (517,651 )     -       (517,651 )
                                                                                 
adjustments     -       -       -       -       -       -       (3 )     1       -       2  
Balance at December 31, 2019     -     $ -       26,038,572     $ 26,039       35,902,602     $ 35,904     $ 24,448,986     $ (30,485,499 )   $ 53,572     $ (6,920,998 )
                                                                                 
Canceled shares     -       -       -       -       (13,426,728 )     (13,427 )     13,427       -       -       -  
Stock issued to Director     -       -       -       -       100,000       100       4,900       -       -       5,000  
Stock issued to consultant     -       -       -       -       995,381       995       8,959       -       -       9,954  
Stock Certificate reissued     -       -       -       -       500,000       500       (500 )     -       -       -  
adjustments     -       -       -       -       -       -       4       -       -       3  
Net loss     -       -       -       -       -       -       -       (774,463 )     -       (774,463 )
Balance at December 31, 2020     -     $ -       26,038,572     $ 26,039       24,071,255     $ 24,072     $ 23,475,776     $ (31,259,962 )   $ 53,572     $ (7,680,504 )

 

 

 

See accompanying notes to the consolidated financial statements.

F-6

 

GeneThera, Inc.
Consolidated Statements of Cash Flows

 

    For the Years Ended December 31,  
    2020     2019  
Cash flows from operating activities                
                 
Net loss   $ (774,463 )   $ (517,651 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
Depreciation expense     5,280       5,280  
Shares issued for services     -       -  
Extinguishment of liabilities     -       -  
Shares canceled     14,956       -  
Changes in operating assets and liabilities:                
Deposit     -       12,000  
Prepaid and other assets     (1,022 )     -  
Accounts payable and accrued expenses - related parties     (9,982 )     (28,976 )
Accounts payable and accrued expenses     759,921       529,616  
Net cash provided by (used in) operating activities     (5,309 )     (269 )
                 
Cash flows from investing activities                
Purchase of fixed asset     -       -  
Net cash used in investing activities     -       -  
                 
Cash flows from financing activities                
Proceeds from issuance of stock     -       -  
Net cash provided by financing activities     -       -  
                 
Net (decrease) increase in cash     (5,309 )     269  
Cash at the beginning of the year     5,309       5,040  
Cash at the end of the year   $ -     $ 5,309  
                 
Supplemental disclosures of cash flow information:                
Cash paid for interest   $ -     $ -  
Cash paid for income taxes   $ -     $ -  
                 
Non-cash investing and financing transactions:                
Conversion of convertible notes payable to common stock   $ -     $ -  
Cancellation of common stock shares   $ 26,790     $ 12  

 

See accompanying notes to the consolidated financial statements.

F-7

 

GeneThera, Inc.

Notes to Consolidated Financial Statements

December 31, 2020

 

Note 1 – Organization, Nature of Operations and Summary of Significant Accounting Policies

 

Organization and Nature of Operations

 

The consolidated financial statements include GeneThera, Inc. and its wholly owned subsidiary GeneThera, Inc. (Colorado) (collectively, the “Company”). The Company had a long-standing research collaboration with GTI Research. GTI Research was assisting the Company in managing the robotic technology project. The Company’s CEO is collaborating with this project with another group in order for the Company’s research and development to finally become commercial in order to generate revenues.

 

The Company is a biotechnology company that develops molecular assays and therapeutics for the detection and treatment of zoonotic diseases.

 

Use of Estimates

 

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

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company, it is a controlled subsidiary. Intercompany accounts are eliminated upon consolidation.

 

Cash and Cash Equivalents

 

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

 

Fair Value of Financial Instruments

 

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

 

Property and Equipment, Net

 

Property and equipment consist of a vehicle and is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful life of five years. Leasehold improvements are amortized over the shorter of their economic lives or lease terms.

 

Fair Value Measurements

 

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

 

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
   
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
   
Level 3

Pricing inputs that are generally unobservable inputs and not corroborated by market data.

F-8

 

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

 

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

 

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

 

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

 

Reclassifications

 

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

 

Impairment of Long-Lived Assets

 

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

 

Revenue Recognition

 

There were no revenues during the years ended December 31, 2020 and 2019.

 

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

 

1) Identification of the contract with a customer;

 

2) Identification of the performance obligations in the contract;

 

3) Determination of the transaction price;

 

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

 

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

 

Leases

 

The Company leased laboratory space from GTIR. The lease agreement was terminated in April 2019. No right of use asset and liability were recorded for this lease.

 

On January 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and will recognize a right of use (“ROU”) asset and liability in the consolidated balance sheet when and if the Company enters into a qualifying lease agreement. At contract inception, the Company determines whether an arrangement is or contains a lease and whether the lease should be classified as an operating or a financing lease. A contract is or contains a lease if the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Control is determined based on the right to obtain all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. ROU assets for operating leases represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments.

F-9

 

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

 

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

 

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

 

Stock-Based Compensation

 

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

 

Research and development costs

 

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

 

Income Taxes

 

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

 

Basic and Diluted Net Loss per Common Share

 

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

 

Shipping and Handling Costs

 

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

 

Shipping and handling costs were $0 and $0 for the years ended December 31, 2020 and 2019, respectively.

F-10

 

Recently issued accounting pronouncements

 

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met. The amendments of ASU No. 2020-04 are effective immediately, as of March 12, 2020, and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company is evaluating the impact that the amendments of this standard would have on the Company’s consolidated financial statements.

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes(Topic 740): “Simplifying the Accounting for Income Taxes”, which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by clarifying and amending existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Certain amendments within this ASU are required to be applied on a retrospective basis, certain other amendments are required to be applied on a modified retrospective basis and all other amendments on a prospective basis. The Company is currently evaluating the impact the adoption of this standard will have on the consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt—“Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

 

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

 

Note 2 – Going Concern

 

As reflected in the accompanying consolidated financial statements, the Company has an accumulated deficit of $31,259,962 and negative working capital of $7,691,065 as of December 31, 2020. This raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

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

 

Note 3 – Accrued Expenses

 

The following is the breakdown of the Company’s accrued expenses as of December 31, 2020 and 2019:

 

    2020     2019  
Accrued officer salaries   $ 5,338,900     $ 4,872,900  
Accrued interest     252,546       192,895  
Accrued expenses- other     1,207,474       1,026,569  
Total accrued expenses   $ 6,798,920     $ 6,092,364  

 

Note 4 – Related Party Transactions 

 

The Company has an outstanding loan payable and accrued interest to Antonio Milici, its CEO and stockholder amounting to $673,092 and $679,783 as of December 31, 2020 and 2019, respectively. This outstanding loan to the Company is unsecured and bears interest at 2.41%. The Company has an outstanding loan and accrued interest payable to Tannya Irizarry, its interim CFO interim and stockholder, amounting to $58,704 and $61,995 as December 31, 2020 and 2019, respectively. This outstanding loan to the Company is unsecured and bears interest at 8%.

 

Tannya Irizarry owns 50% of GTI Corporate Transfer Agents, LLC, the Company’s transfer agent. During the years ended December 31, 2020 and 2019, the Company made payments to GTI Corporate Transfer Agents, LLC in the amounts of $29,723 and $23,616, respectively.

F-11

 

The Company utilizes Elia Holdings, LLC for construction and other maintenance services to maintain the Company’s office and lab space. Elia Holdings, LLC is controlled by Ms. Irizarry’s ex-husband. Costs incurred related to such services were $11,495 and $5,715 during the years December 31, 2020 and 2019, respectively.

 

On January 1, 2018, the Company entered into a sublease for a 7,990 square foot office and lab space on 6860 Broadway in Denver, Colorado 80221, with GTI Research, Inc. a related party, the Company’s scientific robotic technology collaborator, for 75 months. The lease termed on April 29, 2019, and the Company expensed the security deposit of $12,000 and $4,861 of other expenses in 2019. There were no expenses related to this lease during 2020.

 

The lease terminated on April 29, 2019. No right of use asset and corresponding liability were included in the Balance Sheet.

 

Note 5 – Other Income

 

In March 2018, we entered into a Milestones Investment Agreement with FOGT, LLC (in part controlled by a former member of the Board of Directors), pursuant to which FOGT, LLC had agreed to invest and purchase up to $5 million of Series A Convertible Preferred Stock pending completion of certain milestones. As of December 31, 2018, FOGT, LLC has invested $550,000 and we agreed to issue 5,500 shares of Series A Convertible Preferred Stock. FOGT, LLC had agreed to invest additional amounts as follows: (i) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (ii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. A dispute arose between FOGT, LLC and the Company. As a result, FOGT, LLC ceased further investments in the Company.

 

On September 6, 2019, FOGT, LLC and GeneThera, Inc. reached a settlement in the amount of $425,000. The legal team received $171,000 from this settlement resulting in net proceeds to the Company of approximately $254,000.

 

Note 6 – Convertible Notes Payable

 

In previous years the Company borrowed additional money from investors and issued convertible notes, due on demand, bearing interest at an annual rate of 8%. The notes are convertible into shares of Company common stock at a conversion price of $0.01 to $0.05 per share. As December 31, 2020 and 2019, the outstanding principal and interest on these notes was $54,5000, respectively.

 

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

 

No holders of convertible notes payable elected conversion to common stock during the year ended December 31,2020.

 

Note 7- Stockholders’ Equity

 

Convertible preferred stock rights

 

Preferred Stock (Series A) shall be convertible into Common Stock any time at the holder’s sole discretion in part or in whole by dividing the Purchase Price per Share by 110% of the Market Value on the Closing Date. ‘Market Value’ on any given date shall be defined as the average of the lowest three intra-day trading prices of the Company’s common stock during the 15 immediately preceding trading days. Preferred Stock (Series B) shall be convertible into ten common shares at any time and holders are entitled to 20 common share votes per such preferred shares.

 

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

 

As of December 31, 2020 and 2019, the Company had 0 shares Series A Preferred Stock issued and outstanding respectively. The Company still has 20,000,000 preferred A stock availability.

 

As of December 31, 2020 and 2019, the Company had 26,038,572 shares of Series B Preferred Stock issued and outstanding respectively of the total authorized shares of 30,000,000. 

 

Common Stock

 

The Company has authorized 300,000,000 shares of common stock, $.001 par value. As of December 31, 2020 and 2019, there were 24,071,255 and 35,902,602 shares of common stock issued and outstanding, respectively.

F-12

 

During the year ended December 31, 2020, the Company canceled 13,426,728 common shares in an effort to update its stock ledger. The cancelled shares consisted of shares issued to consultants for failure to perform the duties of their contracts, the lack of compliance on the part of some entities that did not renewal its charter, dissolution of other corporate entities, the deletion of stock held in escrow and treasury by the Company and other true-up efforts.

 

During the year ended December 31, 2020, the Company issued 1,591,381 shares of common stock in exchange for services and property:

 

100,000 shares to a director on the board for services rendered. The Company recognized an expense of $5,000.

 

995,381 shares to a consultant for services. The Company recognized an expense of $9,954.

 

500,000 shares representing a reissuance of a certificate to a shareholder.

 

Designation of Series A Convertible Preferred Stock

 

On August 29, 2018, the Company filed a certificate of designation (the “Series A Certificate of Designation”) with the Nevada Secretary of State to set forth the terms of the Series A Convertible Preferred Stock. Pursuant to the Series A Certificate of Designation, the Company designated 20,000,000 shares of its preferred stock as Series A Convertible Preferred Stock. Following is a summary of the material terms of the Series A Convertible Preferred Stock:

 

Dividends. Holders of shares of Series A Convertible Preferred Stock are not entitled to dividends.

 

Liquidation. Upon any dissolution or winding up of the Company, whether voluntary or involuntary (a “Liquidation”), holders of Series A Convertible Preferred Stock shall be entitled to receive out of the assets of the Company, before any distribution of assets is made to holders of any other class of capital stock of the Company, an amount equal to $100 per share (the “Series A Liquidation Preference”). If upon any Liquidation the amounts payable with respect to the Series A Convertible Preferred Stock and any other shares of stock of the Company ranking as to any such distribution on parity with the Series A Convertible Preferred Stock are not paid in full, the holders of Series A Convertible Preferred Stock and of such other shares shall share ratably in any such distribution in proportion to the full respective preferential amounts to which they are entitled. After the payment of the Series A Liquidation Preference shall have been made in full to the holders of the Series A Convertible Preferred Stock, the remaining assets of the Company legally available for distribution to its stockholders shall be distributed among the holders of any junior capital stock that has a liquidation preference senior to holders of common stock, and after such holders have received in full their liquidation preference, the remaining amounts shall be distributed among the holders of the Series A Convertible Preferred Stock and the common stock, collectively, as one class.

 

Voting. On any matter presented to stockholders for their action or consideration, each holder of Series A Convertible Preferred Stock shall be entitled to cast the number of votes equal to the number of shares of common stock into which the shares of Series A Convertible Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Series A Certificate of Designation, the holders shall vote together with the holders of shares of common stock as a single class. However, so long as at least 50% of the shares of Series A Convertible Preferred Stock originally issued remains outstanding, the Company may not, without the affirmative vote or the written consent of the holders of at least 51% of the then outstanding shares of Series A Convertible Preferred Stock, voting separately as a class, (i) create, authorize or issue any equity security, or any security convertible into or exercisable for any equity security, unless such security is junior to the Series A Convertible Preferred Stock, in terms of dividend and liquidation preference; or (ii) increase the total number of authorized shares of Series A Convertible Preferred Stock.

 

Conversion. Each holder of shares of Series A Convertible Preferred Stock may, at holder’s option and at any time, convert any or all such shares into shares of common stock. The number of shares of common stock into which each share of Series A Convertible Preferred Stock may be converted (the “Conversion Rate”) shall be determined according to the terms of a stock purchase agreement between the Company and the holder. In addition, each share of Series A Convertible Preferred Stock shall automatically convert into shares of common stock, at the then applicable Conversion Rate, upon the earlier of (i) the closing of a public offering of equity or equity equivalent securities resulting in minimum gross proceeds to the Company of $20 million and (ii) upon the Company’s common stock trading at or above $6.00 per share for 20 out of 30 consecutive trading days; provided that prior to the event specified by (ii) above, the Company shall have (y) an effective registration statement on file with the SEC registering the resale of the common stock issuable upon conversion of the Series A Convertible Preferred Stock and (ii) obtained the approval for listing the common stock on any national securities exchange. The Conversion Rate is subject to customary adjustments as described in the Series A Certificate of Designation.

 

Redemption. The Series A Convertible Preferred Stock is not redeemable.

 

The Company entered in a stock purchase agreement with the holder of the Series A Convertible Preferred Stock, FOGT, LLC, pursuant which the parties agreed on the conversion rate of 400 shares of common stock for each share of Series A Convertible Preferred Stock. As of December 31, 2019, the purchase agreement, subject to the terms of a settlement in a dispute with FOGT, LLC has been cancelled along with 10,350 shares of Series A Convertible Preferred Stock previously issued.

F-13

 

Designation of Series B Convertible Preferred Stock

 

On August 29, 2018, the Company filed a certificate of designation (the “Series B Certificate of Designation”) with the Nevada Secretary of State to set forth the terms of the Series B Convertible Preferred Stock. Pursuant to the Series B Certificate of Designation, the Company designated 30,000,000 shares of its preferred stock as Series B Convertible Preferred Stock. Following is a summary of the material terms of the Series B Convertible Preferred Stock:

 

Dividends. Holders of shares of Series B Convertible Preferred Stock are not entitled to dividends.

 

 

 

 

Liquidation. Upon any Liquidation, holders of Series B Convertible Preferred Stock shall be entitled to receive out of the assets of the Company, before any distribution of assets is made to holders of any other class of capital stock of the Company, an amount equal to $100 per share (the “Series B Liquidation Preference”). If upon any Liquidation the amounts payable with respect to the Series B Convertible Preferred Stock and any other shares of stock of the Company ranking as to any such distribution on parity with the Series B Convertible Preferred Stock are not paid in full, the holders of Series B Convertible Preferred Stock and of such other shares shall share ratably in any such distribution in proportion to the full respective preferential amounts to which they are entitled. After the payment of the Series B Liquidation Preference shall have been made in full to the holders of the Series B Convertible Preferred Stock, the remaining assets of the Company legally available for distribution to its stockholders shall be distributed among the holders of any junior capital stock that has a liquidation preference senior to holders of common stock, and after such holders have received in full their liquidation preference, the remaining amounts shall be distributed among the holders of the Series B Convertible Preferred Stock and the common stock, collectively, as one class.

 

Voting. On any matter presented to stockholders for their action or consideration, each holder of Series A Convertible Preferred Stock shall be entitled to cast 20 votes per share. Except as provided by law or by the other provisions of the Series B Certificate of Designation, the holders shall vote together with the holders of shares of common stock as a single class. However, so long as at least 50% of the shares of Series B Convertible Preferred Stock originally issued remains outstanding, the Company may not, without the affirmative vote or the written consent of the holders of at least 51% of the then outstanding shares of Series B Convertible Preferred Stock, voting separately as a class, (i) create, authorize or issue any equity security, or any security convertible into or exercisable for any equity security, unless such security is junior to the Series B Convertible Preferred Stock, in terms of dividend and liquidation preference; or (ii) increase the total number of authorized shares of Series B Convertible Preferred Stock.

 

Conversion. Each holder of shares of Series B Convertible Preferred Stock may, at holder’s option and at any time, convert any or all such shares into shares of common stock. The number of shares of common stock into which each share of Series B Convertible Preferred Stock may be converted is ten shares of common stock for each share of Series B Convertible Preferred Stock.

 

Redemption. The Series B Convertible Preferred Stock is not redeemable.

 

As of December 31, 2020, the Company has issued to Dr. Milici, CEO and Tannya Irizarry, CAO, CFO a total of 26,038,572 shares of Series B Preferred Stock pursuant to the terms of their employee agreements.

 

Note 8 – Commitments and Contingencies

 

Employment Agreements

 

On January 8, 2017, the Company entered into an employment agreement with Antonio Milici, its chief executive officer and chief scientific officer, for a five-year term. On the same date, the Company also entered into an employment agreement with Tannya L. Irizarry, its chief administrative officer and interim chief financial officer, for a five-year term.

 

The Company agreed to pay Dr. Milici a base salary of $258,000 per annum, plus $90,000 worth of Series B Convertible Preferred Stock in March of each year. The Company also agreed to pay Dr. Milici bonus compensation or a lump sum equal to two (2) times the salary at the time the Company has net income of at least two million ($2,000,000) dollars each year based on performance. In addition, the Company agreed to pay a onetime payment of $26,900 at the renewal of the employment agreement. The Company is also required to pay all living expenses to Dr. Milici during the time his deferred salary is not entirely released during the term of his employment agreement. Once deferred salary is entirely released to Dr. Milici, he is responsible for his taxes. Dr. Milici is also entitled to a leased Company vehicle of his selection. At the end of aforementioned lease, Dr. Milici is authorized to either purchase the vehicle and/or exchange leased vehicle for another vehicle. The Company did not issue $90,000 worth of Series B Preferred Stock in 2019 as the Company did not have enough authorized shares of Series B Preferred stock. The Company included $0 and $90,000 in the annual salary accrual for Dr. Milici as of December 31, 2020 and 2019, respectively. For the fiscal years 2020 and 2019, all salary was deferred.

F-14

 

The Company agreed to pay Ms. Irizarry a base salary of $208,000 per annum, plus $45,000 worth of Series B Convertible Preferred Stock in March of each year. The Company also agreed to pay Ms. Irizarry bonus compensation or a lump sum equal to two (2) times the salary at the time the Company has net income of at least two million ($2,000,000) dollars each year based on performance. In addition, the Company agreed to pay a onetime payment of $18,000 at the renewal of the employment agreement. The Company is also required to pay all living expenses to Ms. Irizarry during the time her deferred salary is not entirely released during the term of her employment agreement. Once deferred salary is entirely released to Ms. Irizarry, she is responsible for her taxes. Ms. Irizarry is also entitled to a leased Company vehicle of her selection. At the end of aforementioned Lease, Ms. Irizarry is authorized to either purchase the vehicle and/or exchange leased vehicle for another vehicle. The Company did not issue $45,000 worth of Series B Preferred Stock in 2019 as the Company did not have enough authorized shares of Series B Preferred stock. The Company included $0 and $45000 in the annual salary accrual for Ms. Irizarry as of December 31, 2020 and 2019, respectively. For the fiscal years 2020 and 2019, all salary was deferred.

 

As of December 31, 2020, the Company has issued to Dr. Milici, CEO and Tannya Irizarry, CAO, CFO a total of 26,038,572 shares of Series B Preferred Stock pursuant to the terms of their employee agreements.

 

Legal Contingencies

 

The Company is involved in claims arising during the ordinary course of business resulting from disputes with vendors and stockholders over various contracts and agreements. The Company has outstanding judgments that are deemed to be lapsed and passed Colorado’s statute of limitations. Other than those outstanding judgments listed below, no other legal claims have been made or are known at this time.

 

On November 14, 2014, Litchfield Church Ranch, LLC filed a Summons in Forcible Entry and Detainer against the Company after the owner was unable to sell the building to us because he was upended for over $800,000 in his mortgage. As per the Summons, the plaintiff claimed $364,968.69 in past due rent. As per our accounting records, the Company had accrued $242,000 in rent expense with the offer to purchase such property at $1,850,000 plus scheduled payments for the past due rent. The owner’s bank did not allow him to sell the property. We participated in a mediation resulting in a settlement for $115,000 with the contingency to pay the goodwill amount of $15,000 by September 12, 2015. The Company had an additional six months to complete the remaining $100,000 settlement. If not paid off prior to August 12, 2016, there will be no discount and the Company shall owe the judgment balance in the amount of $325,885. The mediator, a retired judge, found in our favor. Therefore, the settlement was agreed upon by both parties. The Company did not pay the settlement agreement as of December 31, 2020 and default interest of 18% was accrued on the outstanding judgment balance through December 31, 2018. In July 2019, Litchfield Church Ranch, LLC was dissolved after the ownership sold the property. The Company claims that no money is owed. The Company has not received subsequent correspondence relating to the judgment.

 

Milestones Investment Agreement

 

In March 2018, we entered into a Milestones Investment Agreement with FOGT, LLC (in part controlled by a former member of the Board of Directors), pursuant to which FOGT, LLC had agreed to invest and purchase up to $5 million of Series A Convertible Preferred Stock pending completion of certain milestones. As of December 31, 2018, FOGT, LLC has invested $550,000 and we agreed to issue 5,500 shares of Series A Convertible Preferred Stock. FOGT, LLC had agreed to invest additional amounts as follows: (i) $1,500,000 upon completion of design, assembly and validation of an advanced robotic system; and (ii) $1,750,000 upon entering into a commercial agreement with a government organization or private entity. A dispute arose between FOGT, LLC and the Company. As a result, FOGT, LLC ceased further investments in the Company.

 

On September 6, 2019, FOGT, LLC and GeneThera, Inc. reached a settlement in the amount of $425,000. The legal team received $171,000 from this settlement resulting in net proceeds to the Company of approximately $254,000.

 

Lease Agreement

 

On January 1, 2018, the Company entered into a sublease for a 7,990 square foot office and lab space on 6860 Broadway in Denver, Colorado 80221, with GTI Research, Inc. a related party, the Company’s scientific robotic technology collaborator, for 75 months. GTI Research, Inc. a related party, required payment of $12,000 security deposit in December of 2017.

 

The lease was terminated on April 29, 2019, and the deposit of $12,000 was expensed at the date of the lease termination. No ROU asset or liability was established or recorded by the Company as of December 31, 2020 and 2019, respectively. The Company has not incurred any expense in 2020 related to this lease.

 

The Company currently has a temporary office space at 3051 W 105th Ave., in Westminster, CO until a permanent space is located. The lease term does not warrant the establishment of a right of use asset or liability. No asset or liability has been recorded on the balance sheet. 

F-15

 

Note 9 – Income Taxes

 

Deferred Tax Assets

 

At December 31, 2020, the Company has available for U.S. federal income tax purposes a net operating loss (“NOL”) carry-forwards of approximately $14.3 million that may be used to offset future taxable income through the fiscal year ending December 31, 2036. If not used, these NOLs may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. The Company plans on undertaking a detailed analysis of any historical and/or current Section 382 ownership changes that may limit the utilization of the net operating loss carryovers. No tax benefit has been reported with respect to these net operating loss carry forwards in the accompanying consolidated financial statements since the Company believes that the realization of its net deferred tax asset of approximately $3.0 million was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $3.0 million.

 

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its reliability. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation for taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, Management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. The valuation allowance increased by approximately $156,337 and $108,707 for the years ended December 31, 2020 and 2019, respectively.

 

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.

 

If applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as “Other expenses – Interest expense” in the statement of operations. Penalties would be recognized as a component of “General and administrative.”

 

No material interest or penalties on unpaid tax were recorded during the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year.

 

Net deferred tax assets consist of the following components as of December 31:

 

    2020     2019  
Deferred Tax Assets:                
NOL Carryover   $ 3,011,294     $ 2,854,957  
Deferred tax liabilities                
Less valuation allowance     (3,011,294 )     (2,854,957 )
Net deferred tax assets   $ -     $ -  

 

Income Tax Provision in the Consolidated Statement of Operations

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows for the years ended December 31,

 

    2020     2019  
Federal statutory income tax rate     21.0 %     21.0 %
Change in valuation allowance on net operating loss carry-forwards     (21.0 )%     (21.0 )%
                 
Effective income tax rate     0.0 %     0.0 %

F-16

 

Note 10 – Subsequent Events

 

The impact of COVID-19 on the Company is unknown at this time. The financial consequences of this situation cause uncertainty as to the future and its effects on the economy and the Company. Presently, the Company continuous to considering ways to apply its molecular robotic technology to address the COVID-19 pandemic.

 

On March 11, 2021, a Board Resolution was presented by the Board of Directors of the Company for the cancellation of the stock issuance to a consultant of 995,381 restricted common shares due to their failure to complete such endeavor to the satisfaction of the Company. The contract was signed on and restricted shares were issued August 31. 2020. The Company reversed the expense of $9,954.

 

On April 2, 2021, the Company signed a Master Agreement with Intrado Digital Media, LLC for 12 press releases distributed to the US and/or Canada National with unlimited words per release. This agreement is renewable at $6,000 per year.

 

In April 2021, the Company signed a consulting agreement with Aberdeen Equity (AE) to develop an outward campaign to generate indications of interest for funding on an eight-week period from the date of execution of this agreement. AE will also provide a website engineer to update all the Company’s data and its design. The contract terms state that the Company will issue AE 1,500,000 restricted shares of common stock and pay a cash bonus of 5% of funds raised up to $750,000.

 

As of April 14, 2021, no additional conversions have occurred, and no new convertible notes have been issued.

F-17

 

SIGNATURES

 

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: April 14, 2021 GENETHERA, INC.
   
  /s/ Antonio Milici
  Name: Antonio Milici
  Title: Chief Executive Officer
   
  /s/ Tannya L. Irizarry
  Name: Tannya L. Irizarry
  Title: Interim Chief Executive Officer

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Antonio Milici and Tannya L. Irizarry, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and any of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ Antonio Milici   Chairman and Chief Executive Officer (Principal Executive Officer)   April 14, 2021
Antonio Milici, MD, PhD
         
/s/ Tannya L. Irizarry   Interim Chief Financial Officer (Principal Financial and Accounting Officer)   April 14, 2021
Tannya L. Irizarry        
         
/s/ Jeremiah Bartley   Director   April 14, 2021
Jeremiah Bartley, MD        

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