Exhibit 99.1
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Disease Sciences, Inc.
We have audited the accompanying balance sheet of Disease Sciences, Inc. as
of April 30, 2001 and the related statements of operations, stockholders' equity
and cash flows from April 17, 2001 (Inception) to April 30, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
the financial position of Disease Sciences, Inc. as of April 30, 2001 and the
results of its operations and its cash flows from April 17, 2001 (Inception) to
April 30, 2001 in conformity with generally accepted accounting principles.
/s/Feldman Sherb & Co., P.C.
Feldman Sherb & Co., P.C.
Certified Public Accountants
New York, New York
May 26, 2001
DISEASE SCIENCES, INC.
(A Development Stage Enterprise)
April 30, 2001
BALANCE SHEET
ASSETS
Cash $ 59,100
------------
$ 59,100
============
STOCKHOLDERS' EQUITY
Stockholders' equity:
Common stock, $.001 par value; 100,000,000 authorized,
60,000,000 issued and outstanding $ 60,000
Accumulated deficit (900)
------------
Total stockholders' equity 59,100
------------
$ 59,100
============
See notes to financial statements
DISEASE SCIENCES, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
April 17, 2001
(inception) through
April 30, 2001
-------------------
OPERATING EXPENSES $ 900
-------------------
NET LOSS $ (900)
===================
NET LOSS PER WEIGHTED AVERAGE
SHARES OUTSTANDING - Basic and Diluted $ 0.00
===================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Basic and Diluted 60,000,000
===================
See notes to financial statements
DISEASE SCIENCES, INC.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock
($.001 par value) Total
---------------------- Accumulated Stockholders'
Shares Amount Deficit Equity
---------- -------- ----------- -------------
April 17, 2001 (Inception)
Issuance of common stock 60,000,000 $ 60,000 $ - $ 60,000
Net loss - - (900) (900)
---------- -------- ----------- -------------
April 30, 2001 60,000,000 $ 60,000 $ (900) $ 59,100
========== ======== =========== =============
See notes to financial statements
DISEASE SCIENCES, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
April 17, 2001
(inception) through
April 30, 2001
--------------------
NET LOSS $ (900)
--------------------
NET CASH USED IN OPERATIONS (900)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common Stock 60,000
--------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 60,000
--------------------
NET INCREASE IN CASH 59,100
CASH, beginning of period -
--------------------
CASH, end of period $ 59,100
===================
See notes to financial statements
DISEASE SCIENCES, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
APRIL 17, 2001 (Inception) THROUGH APRIL 30, 2001
1. BUSINESS:
Disease Sciences, Inc., a Delaware corporation (the "Company" or
"DSCI") is a developmental stage biopharmaceutical/clinical
diagnostics company planning to employ a broad array of technologies
to detect, identify and quantify substances in blood or other bodily
fluids and tissues. DCSI intends to target and develop proprietary
pharmaceutical compounds and new technologies, it's primary goal will
be a Transmissible Spongiform Encephalopty (TSE) test, useful in the
diagnosis of TSE diseases such as Scrapie in sheep, Bovine Spongiform
Encephalopathy (BSE) in cattle, (commonly known as "mad-cow disease"),
Chronic Wasting Disease (CWD) in wild deer and elk and
Creutzfeldt-Jakob Disease (CJD). Test results are to be used in the
diagnosis, detection, evaluation, monitoring and potential treatment
of diseases and other medical conditions. DSCI's plans to: (1)
identify, acquire and exploit rights to new technologies and compounds
relating to BSE, CJD and other neurological disorders; (2) enhance the
value of those assets through further research and clinical testing;
(3) perform clinical studies towards regulatory approval and attempt
to market its drugs through profitable licensing agreements with major
pharmaceutical companies and (4) work to develop other promising
compounds in-house and in collaboration with third parties. DSCI
intends to develop corporate partnerships with established and
well-capitalized pharmaceutical companies for the clinical development
of its compounds and for their production, commercialization and
marketing. The Company intends to derive its revenues from patent
sub-licensing fees, royalties from pharmaceutical sales, appropriate
milestone payments and research and development contracts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reporting amounts of revenues
and expenses during the reported period. Actual results could
differ from those estimates.
B. Income Taxes - The Company follows Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes,
which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax
returns. Under this method, deferred tax assets and
liabilities are based on the differences between the financial
statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the
differences are expected to reverse.
3. STOCKHOLDERS' EQUITY
The Company is authorized to issue 100,000,000 shares of common
stock with a par value of $.001. The Company issued 60,000,000 shares
at par value to its founders.
4. SUBSEQUENT EVENT
The Company is offering for sale to persons who qualify as
Accredited investors or otherwise qualified investors up to 4,000,000
Units (the Units). Each Unit consists of one share of Common Stock,
$.10 par value (the Common Stock) and four common stock purchase
warrants designated Series A, Series B, Series C and Series D common
stock purchase warrants (collectively the Warrants). The Series A
Warrant included in each Unit entitles the holder to purchase one
share of Common Stock of the Company at a purchase price of $.30 per
share. The Series B Warrant included in each Unit entitles the holder
to purchase one share of Common Stock of the Company at a purchase
price of $.60 per share. The Series C Warrant included in each Unit
entitles the holder to purchase One share of Common Stock of the
Company at a purchase price of $1.00 per share. The Series D Warrant
included in each Unit entitles the holder to purchase one share of
common Stock of the Company at the Purchase Price of $2.00 per share.
The Warrants will expire on May 1, 2006. The Company may call any
Warrant series or all of the Warrants at a call price of $.001 per
underlying share should the Company's Common Stock trade at or above
$5.00 per share, based on the reported closing bid price of the Common
Stock, for ten consecutive trading days following 15 days prior
written notice of the Company's intention to call the Warrants. In the
event the Warrants or Warrant series subject to call have not been
exercised by written notice within such 15-day notice period, the
Warrants will cease to exist. Each Unit will be offered at a price of
$1,000. The Units are being offered on a "best efforts" basis. There
is no minimum offering and all proceeds received will be deposited
directly in the treasury of the Company. The minimum investment is one
Unit, subject to the discretion of management to accept subscriptions
for a fractional amount of a Unit.