10-Q 1 g2368.txt QTRLY REPORT FOR THE QTR ENDED 3-31-08 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2008; or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number: 000-52263 CAVIT SCIENCES, INC. (Exact Name of Small Business Issuer in Its Charter) Florida 03-0586935 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 1600 South Dixie Highway, Suite 500 Boca Raton, Florida 33432 (561) 544-6988 (Address and telephone number of principal executive offices and principal place of business) Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "accelerated filer," "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by section 12,13 or 15 of the Exchange Act after distribution of securities under a plan confirmed by a court Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS As of May 15, 2008 there were 19,473,760 shares of the issuer's common stock and outstanding, par value $0.01. CAVIT SCIENCES, INC. INDEX TO FORM 10-Q March 31, 2008 Page No. -------- PART I FINANCIAL INFORMATION Item 1. Financial Statements 3 Balance Sheet dated March 31, 2008 3 Statements of Operations for the Three Months Ended March 31, 2008 and 2007, and the Period from April 12, 2006 (Inception) to March 31, 2008 (unaudited) 4 Statement of changes in Stockholders' Deficit for the period from April 12, 2006 (Inception) to March 31, 2008 (unaudited) 5 Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007, and the Period from April 12, 2006 (Inception) to March 31, 2008 (unaudited) 6 Notes to Financial Statements (unaudited) 7 Item 2. Management's Plan of Operation 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 27 Item 4. Controls and Procedures 28 PART II OTHER INFORMATION Item 1. Legal Proceedings 29 Item 2. Recent Sales of Unregistered Securities 29 Item 3. Defaults Upon Senior Securities 29 Item 4. Submission of Matters to a Vote of Security Holders 29 Item 5. Other Information 29 Item 6. Exhibits 29 Signatures 30 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CAVIT SCIENCES, INC (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET (Unaudited) March 31, 2008 -------------- ASSETS Current assets: Cash $ 201,309 ----------- Total current assets 201,309 Intangible assets 54,311 Other asset 5,336 ----------- Total assets $ 260,956 =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 7,798 Accrued expenses 32,212 Accrued wages payable 160,574 Note payable 225,000 ----------- Total current liabilities 425,584 ----------- Stockholders' deficit Preferred stock - $.01 par value; 5,000,000 shares authorized, none issued or outstanding -- Common stock - $.01 par value; 45,000,000 shares authorized, 19,399,356 shares issued and outstanding 193,994 Additional paid-in capital 1,618,659 Stock to be issued 18,726 Deficit accumulated during the development stage (1,996,007) ----------- Total stockholders' deficit (164,628) ----------- Total liabilities and stockholders' deficit $ 260,956 =========== The accompanying notes are an integral part of these financial statements. 3 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (Unaudited)

The accompanying notes are an integral part of these financial statements. 4 CAVIT SCIENCES, INC (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS (Unaudited)

The accompanying notes are an integral part of these financial statements. 5 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM APRIL 12, 2006 (INCEPTION) TO MARCH 31, 2008 (Unaudited)

The accompanying notes are an integral part of these financial statements. 6 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS March 31, 2008 Note 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE AND CONTINUANCE OF OPERATIONS Cavit Sciences, Inc. ("The Company" or "Cavit") is engaged in developing treatments of cancer, viral infections, opportunistic infections, and immune enhancers. The Company's strategy is to develop and commercialize intellectual property rights for acquisition by a drug company. Cavit is also a manufacturer, marketer and distributor of supplements lines that have been designed and formulated to enhance and improve the prostate, maintain and support cardiovascular system and beneficially affect arthritis, osteoporosis and other conditions. Cavit was incorporated on April 12, 2006 under the laws of the State of Florida, as a wholly owned subsidiary of Hard to Treat Diseases, Inc. ("Parent"), and was spun-off as a separate entity from the Parent effective May 31, 2006. The Company's registration statement on Form SB-2 became effective with the Securities and Exchange Commission on October 16, 2006. The financial statements for the three months ended March 31, 2008 and 2007 and for the period from April 12,2006 (inception) to March 31, 2008, together with the balance sheet as of March 31, 2008 included herein have not been audited by the Company's independent public accountants. In the opinion of management, all adjustments necessary to present fairly the financial position at March 31, 2008 and the results of operations and cash flows for the periods presented herein have been made. The financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such regulations. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2007. The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may vary from these estimates. At March 31, 2008, the Company has negative working capital of $224,275, has incurred losses since inception totalling $1,996,007 and has yet to achieve profitable operations. The Company's ability to continue as a going concern is dependent on raising additional capital to fund future operations and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. These financial statements do not give affect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Management plans to continue raising funds in order to provide for the Company's capital needs, however, there are no assurances that management's plans will be attained. 7 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS March 31, 2008 Note 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T) CASH For purposes of the statement of cash flows, the Company considers all investments purchased with a maturity of three months or less to be cash equivalents. CONCENTRATION OF CREDIT RISK The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. Occasionally, such balances exceed Federal insured limits. DEVELOPMENT STAGE COMPANY The Company complies with Financial Accounting Standards Board Statement No. 7 and for it's characterization of the Company as a Development Stage Enterprise. FINANCIAL INSTRUMENTS The carrying value of accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. INCOME TAXES The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, 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. Under Statement 109, 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. LONG-LIVED ASSETS The Company accounts for long-lived assets under the Statements of Financial Accounting Standards Nos. 142 and 144 "Accounting for Goodwill and Other Intangible Assets" and "Accounting for Impairment or Disposal of Long-Lived Assets" ("SFAS No. 142 and 144"). In accordance with SFAS No. 142 and 144, long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets and intangible assets, the recoverability test is performed using undiscounted net future cash flows related to the long-lived assets. LOSS PER SHARE Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, "Earnings Per Share." RECLASSIFICATIONS Certain reclassifications have been made to prior period financial statements for them to conform with the 2008 presentation. 8 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS March 31, 2008 Note 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T) SHARE-BASED PAYMENT Effective January 1, 2006, the Company adopted SFAS No. 123 (R), "Share Based Payment," using the modified prospective transition method. SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, it supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123 (R) addresses all forms of share-based payment awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. During the periods ended March 31, 2008 and 2007, the Company did not issue any stock to an employee of the Company. The cost of stock-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or of the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Emerging Issues Task Force ("EITF") Issue No. 96-18, "Accounting for Equity Instruments that Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." During the periods ended March 31, 2008 and 2007, the Company issued 328,932 and 0 shares, respectively, of common stock with a value of $187,681 (of which $20,171 pertained to expenses accrued in the prior year) and $0, respectively, to certain providers of outside services. These amounts have been recorded in General and Administrative expenses in the accompanying statements of operations. RECENT ACCOUNTING PRONOUNCEMENTS In February 2007, the FASB issued SFAS No. 159, "Establishing the Fair Value Option for Financial Assets and Liabilities ("SFAS No. 159"). SFAS No. 159 was to permit all entities to choose to elect, at specified election dates, to measure eligible financial instruments at fair value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as incurred and not deferred. SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an equity that has also elected to apply the provisions of SFAS No. 157, "Fair Value Measurements". An entity is prohibited from retrospectively applying SFAS No. 159, unless it chooses early adoption. SFAS No. 159 also applies to eligible items existing at November 15, 2007 (or early adoption date). The Company is evaluating the potential impact of the adoption of SFAS No. 159 on the Company's financial statements. In December 2006, the Financial Accounting Standards Board (FASB) issued Staff Position (FSP) EITF 00-19-2, "Accounting for Registration Payment Arrangements". This FSP specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with FASB Statement No. 5, "Accounting for Contingencies". The guidance is effective for fiscal years beginning December 15, 2006. The Company is evaluating the potential impact of the adoption of SFAS No. 159 on the Company's financial statements. 9 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS March 31, 2008 Note 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T) In September 2006 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157), which provides expanded guidance for using fair value to measure assets and liabilities. SFAS 157 establishes a hierarchy for data used to value assets and liabilities, and requires additional disclosures about the extent to which a company measures assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. Implementation of SFAS 157 is required on December 1, 2007. The Company is evaluating the potential impact of the adoption of SFAS No. 157 on the Company's financial statements. Note 2 RELATED PARTIES During the period ended March 31, 2008, the Company issued 328,932 common shares with a value of $187,681 (of which $20,171 pertained to expenses accrued in the prior years)to providers of outside services which are also stockholders. There were no shares issued during the period ended March 31, 2007 Note 3 INCOME TAXES As of March 31, 2008, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $2,000,000 that may be offset against future taxable income through 2026. Current tax laws limits the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. Deferred tax assets: Approximate operating loss carryforwards $ 2,000,000 ----------- Gross deferred tax assets 680,000 Less: valuation allowance (680,000) ----------- Net deferred tax asset $ -- =========== 10 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS March 31, 2008 Note 4 STOCKHOLDERS' DEFICIT The Company is authorized to issue 5,000,000 shares of preferred stock $.01 par value and 45,000,000 shares of common stock $.01 par value. The Board of Directors may modify the provisions of the preferred stock prior to issuance. As of March 31, 2008, no shares of preferred stock have been issued. During the period from inception through March 31, 2008, the Company issued 19,399,356 shares of common stock to pay for services, for cash, and to acquire patent application rights. During the three months ended March 31, 2008 the Company issued 2,828,932 shares of common stock at prices ranging from $.20 to $.60 for various matters. Of the total shares, 328,932 shares were issued for director fees, legal fees, transfer agent fees, compensation and consulting fees. The remaining 2,500,000 of the company's unregistered common stock was sold at $.20 per share. As a result of the latter sale the Company raised $500,000 (of which $25,000 was received in the prior year). During the three months ended March 31, 2008 the Company issued 3,000,000 warrants to investors pursuant to common stock purchase agreements. These warrants for common stock have strike prices ranging from $0.40 to $3.00 per share with varying expiration dates from the day of issuance not to exceed the commitment amount. Set forth below is the activity related to options and warrants: Options at an exercise price of 80% Warrants at of the average an exercise price for the price five days prior ranging from to exercise $0.40 to $3.00 Total ----------- -------------- ----- Outstanding at December 31, 2006 -- -- -- Issued during the quarter ended March 31, 2007 125,000 -- 125,000 Issued after March 31, 2007 2,375,000 313,334 2,688,334 Expired or cancelled -- -- -- Exercised -- -- -- --------- --------- --------- Outstanding at December 31, 2007 2,500,000 313,334 2,813,334 Issued -- 3,000,000 3,000,000 --------- --------- --------- Outstanding at March 31, 2008 2,500,000 3,313,334 5,813,334 ========= ========= ========= Note 5 COMMITMENTS The Company has executed a one year consulting agreement with its Chief Financial Officer. The agreement began on January 21, 2008 and calls for annual compensation of $60,000. The Company has executed a three year employment agreement with its President and CEO. The agreement began on May 1, 2006 and calls for annual compensation of $180,000. The agreement also allows for annual increases of 10% from the prior year's base salary, 50,000 shares of restricted common stock every six months, and the other benefits standard to an executive employee. Under the "2006 Employee and Consultant Stock Incentive Plan", the directors of the Company shall be compensated $3,000 per quarter. The CEO and CFO are each eligible for year end bonuses. 11 CAVIT SCIENCES, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS March 31, 2008 Note 6 INTANGIBLE ASSETS During the three months ended March 31, 2008, the Company's intangible assets are comprised of $50,000 disbursed for two proprietary formulas to Daycon Investors Associates, Inc. ("Daycon") and $4,311 in capitalized legal fees relating to our intellectual property rights. The proprietary formulas will be subject to the outcome of the matters discussed in Note 9 below. Note 7 NON-CASH FINANCING ACTIVITIES During the Quarter ended March 31, 2008, the Company issued 328,932 common shares to outside service providers and shareholders with a value of $187,681, of which $20,171 pertained to expenses accrued in the prior year. There were no issuances of stock to outside service providers during the quarter ended March 31, 2007. Note 8 NOTE PAYABLE The Company issued a $250,000 note payable upon its acquisition of the supplement Line purchased from Daycon on December 28, 2007. A $25,000 payment was made on the note during January 2008 to reduce the principal balance to $225,000. Additional payments on the note are to be made by paying the note holder 20% of the gross amount of additional financing received by the Company until the note is paid in full. This is an unsecured non-interest bearing note. This note payable will be subject to the outcome of the matters discussed in Note 9 below. Note 9 SUBSEQUENT EVENTS On May 8, 2008, the Registrant terminated the following three agreements: 1) a Lease Agreement with Daycon for facility space in Miami, Florida 2) the Amended Asset Purchase & Royalty Agreement with Daycon for the purchase of a product line and additional formulas and 3) a Consulting Agreement with Dr. Joseph P. D'Angelo, (President of Daycon) for consulting services on behalf of the Company. The Lease Agreement with Daycon was terminated due to Daycon's default under the Lease Agreement. From inception of the lease on January 1, 2008, Daycon was in material breach of the Lease Agreement, since the required amount of space was not made available to the Registrant as provided for in the Lease Agreement. The Registrant has demanded reimbursement of a portion of the rent paid and the security deposit from Daycon. The Amended Asset Purchase & Royalty Agreement was terminated due to Daycon's inability to provide the Registrant with the required representations and warranties. Daycon has been unable to provide the Registrant with credible documentation and unable to warrant the formulation ingredients and efficacy of certain products purchased. The Registrant has demanded the return of all consideration paid to Daycon regarding this agreement. The Consulting Agreement was terminated due to D'Angelo's failure to provide consulting services outlined in the Agreement and D'Angelo's material breach of the confidentiality provision by divulging confidential information to third parties. The Companys' termination of the above agreements may result in a legal action. The Company intends to vigorously defend its rights resulting from any legal actions. On May 9, 2008, the Registrant relocated its offices and will conduct its operations from its new corporate headquarters located at 1600 South Dixie Highway, Suite 500, Boca Raton, Florida 33432. 12 ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS The following discussion of our plan of operations should be read together with the financial statements and related notes that are included elsewhere in this Form 10-Q. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors," "Disclosure Regarding Forward-Looking Statements" or in other parts of this Form 10-Q. We undertake no obligation to update any information in our forward-looking statements except as required by law. PATENT ACQUISITION INFORMATION Hard to Treat began to internally develop the intellectual property rights during 2004, that were acquired by Cavit on May 31, 2006, as part of the operations of Hard to Treat's biotechnology division. During 2004, research and development commenced, which was the foundation for the first patent application being filed during December of 2004. As a result of additional research and development in 2005, two additional patent applications were filed in December 2005. The boards of directors of Cavit Sciences and Hard to Treat determined the value of the intangible assets and related costs acquired to be $145,459; comprised of $56,997 in capitalized legal fees associated with the development of the rights from inception and $88,462 of direct research and development which are considered purchased R&D and have been expensed in the December 31, 2006 financial statements. The $145,459 carved out cost determined the value of the intangible assets. The acquisition costs do not include $47,060 of certain overhead expenses incurred by Hard to Treat during the development of the intellectual property rights from inception that began in 2004. The overhead expenses of $47,060 that were not part of the purchase price paid by Cavit included wages, rent, phone and other expenditures that Hard to Treat incurred to develop the intellectual properties. Cavit was incorporated on April 12, 2006 and acquired intellectual property rights from Hard to Treat on May 31, 2006. In July 2006, Cavit acquired additional rights in some of these intellectual property rights, resulting in Cavit owning 100% of such rights. During 2007, Cavit filed an additional PCT Utility patent application, six National Phase applications, and two Continuation-In-Part applications. Cavit's intellectual property rights currently consist of twelve patent applications. At December 31, 2007 and 2006, due to Financial Accounting Standards, the Company recorded impairment charges of $250,000 and $86,997, respectively, which was primarily due to the fact that such assets and patents are not currently producing revenues or cash flows. The book value of the assets and patent application rights do not reflect the future potential of our supplement line and patents as the supplement line is being manufactured and the patent rights are still in the application phase. During the three months ended March 31, 2008, the Companies intangible assets are comprised of the $50,000 disbursed for two proprietary formulas and $4,311 in capitalized legal fees relating to our intellectual property rights. OVERVIEW We are a development-stage company and have a limited operating history. Cavit Sciences, Inc. was formed on April 12, 2006, as a wholly owned subsidiary of Hard to Treat Diseases, Inc., to acquire certain intellectual property rights from Hard to Treat Diseases and to develop and market the acquired rights. 13 Major drug companies are interested in drugs that are safe and effective in treating and preventing certain indications and conditions, have secure intellectual property rights and have an available source and supply of the composition. Cavit's board has decided to focus on and to pursue the best course of action in the interest of patients and shareholders. Our initial plan was to market our intellectual property rights to major drug companies. We have been and are currently negotiating with other drug companies regarding securing rights to their drug compositions. The combination of our current utility rights and the acquisition of composition rights should allow Cavit to develop market and commercialize these drugs successfully. In addition, Cavit acquired a food supplement line during February 2007. The foundation of Cavit's two supplement lines were finalized during 2008. The core products in Cavit's supplement lines will enhance and improve the prostate, maintain and support the cardiovascular system, and beneficially effect arthritis and osteoporosis. Cavit's current products and formulas are the result of research and testing of the most effective ingredients with nutrients that support and supplement each other at the optimum dosage of each ingredient. Cavit intends to manufacture, market, distribute and commercialize a range of supplements to act as powerful antioxidants and immune enhancers which have beneficial effects upon many serious diseases. Cavit relocated its operating facilities on May 8 and 9, 2008 for the benefit of the Company and its shareholders. Cavit's new facilities accommodate its corporate offices and provide ample room for the development of the food supplement lines. Manufacturing, warehousing and distribution is outsourced to third parties, resulting in substantial savings to Cavit. The food supplement lines are an ideal match with our drug development process. In addition to creating a full range biotech company, the supplement lines will create a steady stream of cash flow to support the commercialization of our drugs. Cavit's offshore line is AMERICARE HEALTH PRODUCTS(TM) and the premium maintenance formula line is MD Solution(TM). We have not generated any profits since our entry into the biotechnology business, have no source of revenues and have incurred operating losses. We expect to incur additional operating losses for the foreseeable future. We do anticipate sources of revenues from our supplement lines in the near future. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007. Cavit has not had any revenue since its inception on April 12, 2006. General and administrative expenses increased by 333% from $118,000 for the quarter ended March 31, 2007 to $393,000 for the quarter ended March 31, 2008. General and administrative expenses consist of office expenses, wages and professional fees. The increase is primarily related to front loaded rent payments and payments for wages, consultants and professionals. The Company reported a net loss of $393,000, or $(0.03) per share for the quarter ended March 31, 2008 and a net loss of $118,000, or ($0.01) per share for the period ended March 31, 2007. We need to obtain additional capital resources from sources including equity and/or debt financings, license arrangements, grants and/or collaborative research arrangements in order to develop products and continue Cavit's business. We need to raise additional working capital in order to have sufficient working capital to finance operations. Our current burn rate is approximately $19,000 per month excluding capital expenditures. The timing and degree of any future capital requirements will depend on many factors, including: 14 Research and development - We expect to make investments in research and development in order to develop and market our technology. Research and development costs will consist primarily of general and administrative and operating expenses related to research and development activities. We will expense research and development costs as incurred. Property, plant and equipment for research and development that has an alternative future use will be capitalized and the related depreciation will be expensed as research and development costs. We expect our research and development expense to increase as we continue to invest in the development of our technology. General and administrative - General and administrative expenses will consist primarily of salaries and benefits, office expense, professional services fees, and other corporate overhead costs. We anticipate increases in general and administrative expenses as we continue to develop and prepare for marketing of our technology. OFF-BALANCE SHEET ARRANGEMENTS As of May 15, 2008, we had no off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our most significant judgments and estimates used in preparation of our consolidated financial statements. Impairment of Long-Lived Assets. We review long-lived assets and certain identifiable assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, further impairment analysis is performed. An impairment loss is measured as the amount by which the carrying amount exceeds the fair value of assets. Stock-Based Compensation. Effective September 26, 2006, we adopted the provisions of Statement of Financial Accounting Standards No.. 123R, "Share-Based Payment," which establishes accounting for equity instruments exchanged for employee service. We do not believe the adoption of these provisions will have an adverse effect on our financial statements. Research and Development. The costs of materials and equipment or facilities that are acquired or constructed for research and development activities and that have alternative future uses will be capitalized as tangible assets when acquired or constructed. The cost of such materials consumed in research and development activities and the depreciation of such equipment or facilities used in those activities will be research and development costs. However, the costs of materials, equipment, or facilities acquired or constructed for research and development activities that have no alternative future uses will be considered research and development costs and will expensed at the time the costs are incurred. 15 GENERAL Cavit Sciences, Inc., a Florida corporation (the "Company" or "Cavit") filed a Registration Statement with respect to its outstanding shares of common stock, $.01 par value. The Company's common stock is quoted on the OTC Bulletin Board. The registration statement filed with the Securities and Exchange Commission ("SEC") was declared effective on October 16, 2006. On the same date, the Company filed a Form 10-SB Registration Statement with the SEC, which caused the Company to become a reporting issuer under the Securities Exchange Act of 1934. FORWARD LOOKING STATEMENTS This Form 10-Q contains forward-looking statements. These statements relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause Cavit or its industry's 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 the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. The Company is under no duty to update any of the forward-looking statements after the date of this Form 10-Q to conform its prior statements to actual results. Further, this Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. Such statements include, without limitation, all statements as to expectation or belief and statements as to our future results of operations, the progress of any research, product development and clinical programs, the need for, and timing of, additional capital and capital expenditures, partnering prospects, the protection of and the need for additional intellectual property rights, effects of regulations, the need for additional facilities and potential market opportunities. The Company's actual results may vary materially from those contained in such forward-looking statements because of risks to which the Company is subject, such as lack of available funding, competition from third parties, intellectual property rights of third parties, regulatory constraints, litigation and other risks to which the Company is subject. OVERVIEW We are a biotechnology company engaged in developing treatments of cancer and viral infections. Our strategy is to develop and commercialize intellectual property rights to treat, prevent and inhibit several major diseases, including cancers, viral infections, diseases associated with cancers and viral infections, opportunistic infections and enhancement of the immune system. We currently own twelve patent applications. Cancers and viral infections destroy the lives of millions of people each year. Drug companies are spending millions of dollars on research and testing in order to bring new drugs to market. Current treatments are normally expensive, painful and do not always promote better health. 16 In addition to the treatment of cancer and viral infections, our patent applications claim the treatment of numerous additional diseases. These substances act to increase the strength of the immune system by warding off, inhibiting and treating diseases. LICENSES, PATENTS AND PROPRIETARY RIGHTS We believe that proprietary protection of our technologies will be critical to the development of our business. We intend to protect our proprietary intellectual property through patents and other appropriate means. We rely upon trade secret protection for certain types of confidential and proprietary information and take active measures to control access to that information. We currently have non-disclosure agreements with all of our employees and consultants. RESEARCH COLLABORATIONS We anticipate entering into collaborative research agreements with academic and research institutions. We will use these agreements to enhance our research capabilities. In our industry, these agreements typically provide the industry partner with rights to license the intellectual property created through the collaboration. We may also enter into collaborative research agreements with other pharmaceutical companies if necessary to support the development and commercialization of our technology. COMMERCIALIZATION THROUGH THIRD PARTIES We may grant sublicenses for certain applications of our technologies. Sublicensing certain rights in our technology to pharmaceutical companies and other third parties help us to efficiently develop some applications of our technologies. COMPETITION The development of therapeutic cancer and viral infection products for human disease is intensely competitive. Major pharmaceutical companies currently offer a number of pharmaceutical products to treat cancers, infectious diseases and other diseases for which our technologies may be applicable. Many pharmaceutical and biotechnology companies are investigating new drugs and therapeutic approaches for the same purposes, which may achieve new efficacy profiles, extend the therapeutic window for these products, alter the prognosis of these diseases or prevent their onset. We believe our products, when and if successfully developed, will compete with these products on the basis of improved and extended efficacy and safety and their overall economic benefit to the health care system. We expect intense competition. Our most significant competitors will be fully integrated pharmaceutical companies and established biotechnology companies. Smaller companies may also be significant competitors, particularly through collaborative arrangements with large pharmaceutical or biotechnology companies. Many of our competitors have significant products in development that could compete with our potential products. Practically all of our competitors have more money and expertise than we have. DESCRIPTION OF PROPERTY Our principal executive and administrative offices have been recently relocated to Boca Raton, Florida at 1600 South Dixie Highway, Suite 500, Boca Raton, Florida 33432. 17 GOVERNMENT REGULATION Our research and development activities and the future manufacturing and marketing of our potential products are, and will be, subject to regulation for safety and efficacy by a number of governmental authorities in the United States and other countries. In the United States, pharmaceuticals, biological and medical devices are subject to Food and Drug Administration regulation. The Federal Food, Drug and Cosmetic Act, as amended, and the Public Health Service Act, as amended, the regulations promulgated thereunder, and other Federal and state statutes and regulations govern, among other things, the testing, manufacture, safety, efficacy, labeling, storage, export, record keeping, approval, marketing, advertising and promotion of our potential products. Product development and approval within this regulatory framework take several years, cost a lot of money and involve significant uncertainty. We are also subject to regulations under the Occupational Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act and other present and potential future foreign, Federal, state and local regulations. EMPLOYEES As of May 15, 2008, we had two full time employees, Mr. Colm King, who is our President and Chief Executive Officer, and Susan King, who is our Accountant and Administrator. We believe that our relations with our employees are good. Our employees are not represented by a union or covered by a collective bargaining agreement. We believe Mr. King is best suited to oversee the operations of Company during the next several months due to his intimate knowledge of our biotechnology business. From November 1, 2006 to January 18, 2008, Mr. Julio De Leon served as the Company's Chief Financial Officer on an independent contractor basis. As of January 21, 2008 Mr. Matthew J. Cohen became the Chief Financial Officer on an independent contractor basis. As of November 11, 2007, Miles Benzler became the Marketing Director on an independent contractor basis. We will actively recruit and hire a new chief operating officer and additional technical employees when funds become available. We intend to fill these posts with individuals having pharmaceutical and/or biotechnology experience and expertise. RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and the other information in this prospectus before investing in our common stock. Our business and results of operations could be seriously harmed by any of the following risks. RISKS RELATED TO OUR BUSINESS OUR INDEPENDENT AUDITOR HAS RAISED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. The Independent Auditor's Report to our audited financial statements for the period ended December 31, 2007, included in Form 10-K filed with the Securities and Exchange Commission, indicated that there are a number of factors that raise substantial doubt about our ability to continue as a going concern. Such doubts identified in the report include the fact that we currently have no source of revenue and we need to obtain adequate financing. If we are not able to continue as a going concern, it is likely that investors will lose all or a part of their investment. 18 WE ARE SERIOUSLY UNDERCAPITALIZED AND HAVE LIMITED LIQUIDITY. Historically, Cavit has financed its operations primarily from the sale of its equity securities. As of March 31, 2008, Cavit had cash of approximately $201,000. Our current burn rate is approximately $19,000 per month excluding capital expenditures. As a result of current financing, Cavit believes that it has sufficient working capital to fund operations through the end of August 2008.. Thereafter, Cavit will need to raise additional capital to fund its working capital needs. Cavit does not have any material commitments from investors or any credit facilities available with financial institutions or any other third parties. Therefore, it is expected that Cavit will need to enter into agreements with investors or engage in best efforts sales of its securities to raise needed working capital. There is no assurance that we will be successful in any funding effort. The failure to raise such funds will necessitate the curtailment of operations and delay of the start of any additional testing. WE DO NOT HAVE AN INDEPENDENT AUDIT OR COMPENSATION COMMITTEE. Our audit and compensation committees are made up of members of our board of directors and are, therefore, not considered independent. The absence of an independent audit and compensation committee could lead to conflicts of interest between committee members and our officers and directors, which could work as a detriment to our shareholders. WE ARE A DEVELOPMENT STAGE COMPANY AND WE HAVE NO SIGNIFICANT OPERATING HISTORY. We are a development stage company that has not had prior operations. See "Management's Plan of Operations - Patent Acquisition Information" and "Description of Business - History of Intellectual Property Rights" for a more detailed discussion of prior operations. Our plans and businesses are "proposed" and "intended," but we may not be able to successfully implement them. Our primary business purpose is to collaborate with and market our intellectual property rights to major drug companies. We may not obtain sufficient capital or achieve a significant level of operations and, even if we do, we may not be able to conduct such operations on a profitable basis. IF WE DO NOT SUCCESSFULLY COMMERCIALIZE OUR PRODUCTS, WE MAY NEVER ACHIEVE PROFITABILITY. We have never commercially introduced a product. Our research and development programs are at an early stage. Potential drug candidates are subject to inherent risks of failure. These risks include the possibilities that no drug candidate will be found safe or effective, meet applicable regulatory standards or receive necessary regulatory clearances. Even safe and effective drug candidates may never be developed into commercially successful drugs. If we are unable to develop safe, commercially viable drugs, we may never achieve profitability and if we become profitable, we may not remain profitable. AS A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET SHARES TO BE PROFITABLE. The biotechnology and pharmaceutical industries are intensely competitive. We have numerous competitors in the United States and elsewhere. Because we are pursuing potentially large markets, our competitors include major, multinational pharmaceutical and chemical companies, specialized biotechnology firms, universities and other research institutions. Several of these competitors have already successfully marketed and commercialized products that will compete with our products, assuming that our products gain regulatory approval. 19 Most of our competitors have greater financial resources, larger research and development staffs and more effective marketing and manufacturing organizations than we do. In addition, academic and government institutions have become increasingly aware of the commercial value of their research findings. These institutions are now more likely to enter into exclusive licensing agreements with commercial enterprises, including our competitors, to develop and market commercial products. Our competitors may succeed in developing or licensing technologies and drugs that are more effective or less costly than any we are developing. Our competitors may succeed in obtaining FDA or other regulatory approvals for drug candidates before we do. If competing drug candidates prove to be more effective or less costly than our drug candidates, our drug candidates, even if approved for sale, may not be able to compete successfully with our competitors' existing products or new products we may develop. If we are unable to compete successfully, we will not be able to sell enough products at a price sufficient to permit us to generate profits. EXISTING PRICING REGULATIONS AND REIMBURSEMENT LIMITATIONS MAY REDUCE OUR POTENTIAL PROFITS FROM THE SALE OF OUR PRODUCTS. The requirements governing product licensing, pricing and reimbursement vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after product-licensing approval is granted. As a result, we may obtain regulatory approval for a drug candidate in a particular country, but then be subject to price regulations that reduce our profits from the sale of the product. In some foreign markets, pricing of prescription pharmaceuticals is subject to continuing government control even after initial marketing approval. In addition, certain governments may grant third parties a license to manufacture our product without our permission. Such compulsory licenses typically would be on terms that are less favorable to us and would have the effect of reducing our revenues. Varying price regulation between countries can lead to inconsistent prices and some re-selling by third parties of products from markets where products are sold at lower prices to markets here those products are sold at higher prices. This practice of exploiting price differences between countries could undermine our sales in markets with higher prices and reduce the sales of our future products, if any. The decline in the size of the markets in which we may in the future sell commercial products could cause the perceived market value of our business and the price of our common stock to decline. Our ability to commercialize our products successfully also will depend in part on the extent to which reimbursement for the cost of our products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Third-party payers are increasingly challenging the prices charged for medical products and services. If we succeed in bringing any of our potential products to the market, such products may not be considered cost effective and reimbursement may not be available or sufficient to allow us to sell such products on a profitable or competitive basis. OUR ABILITY TO ACHIEVE ANY SIGNIFICANT REVENUE WILL DEPEND ON OUR ABILITY TO ESTABLISH EFFECTIVE SALES AND MARKETING CAPABILITIES. Our efforts to date have focused on the development and evaluation of our drug candidates. As we conduct clinical studies and prepare for commercialization of our drug candidates, we may need to build a sales and marketing infrastructure. As a company, we have no experience in the sales and marketing of pharmaceutical products. If we fail to establish a sufficient marketing and sales force or to make alternative arrangements to have our products marketed and sold by others on attractive terms, it will impair our ability to commercialize our drug 20 candidates and to enter new or existing markets. Our inability to effectively enter these markets would materially and adversely affect our ability to generate significant revenues. WE DEPEND HEAVILY ON MANAGEMENT TEAM AND CONSULTANTS. Our business strategy and success is dependent on the skills and knowledge of our management team. Our operations will also be dependent on the efforts, ability and experience of key members of our prospective management staff. We also operate with a small number of advisors and consultants and, therefore, have little backup capability for their activities. The loss of services of one or more members of our management team or the loss of one or more of our advisors could weaken significantly our management expertise and our ability to efficiently run our business. We do not maintain key man life insurance policies on any of our officers, although we intend to obtain such insurance policies in the future. WE MAY FACE PRODUCT LIABILITY CLAIMS RELATED TO THE USE OR MISUSE OF OUR PRODUCTS, WHICH MAY CAUSE US TO INCUR SIGNIFICANT LOSSES. We may be exposed to the risk of product liability claims due to administration of our drug candidates in our clinical trials, since the use or misuse of our drug candidates during a clinical trial could potentially result in injury or death. If we are able to commercialize our products, we will also be subject to the risk of losses in the future due to product liability claims in the event that the use or misuse of our commercial products results in injury or death. We currently do not maintain liability insurance. In the event we choose to purchase liability insurance, we cannot predict the magnitude or the number of claims that may be brought against us in the future. Accordingly, we do not know what coverage limits would be adequate. In addition, insurance is expensive, difficult to obtain and may not be available in the future on acceptable terms or at all. Any claims against us, regardless of their merit, could substantially increase our costs and cause us to incur significant losses. THE MARKETABILITY AND PROFITABILITY OF OUR PRODUCTS IS SUBJECT TO UNKNOWN ECONOMIC CONDITIONS. The marketability and profitability of our products may be adversely affected by local, regional, national and international economic conditions beyond our control and/or the control of our management. Favorable changes may not necessarily enhance the marketability or profitability of the products. Even under the most favorable marketing conditions, there is no guarantee that our products can be sold or, if sold, that such sale will be made upon favorable prices and terms. RISKS RELATED TO OUR INTELLECTUAL PROPERTY IF WE FAIL TO PROTECT OUR PROPRIETARY TECHNOLOGY, THEN OUR COMPETITIVE POSITION WILL BE IMPAIRED. We have obtained and are in the process of obtaining United States and foreign patent applications for our products. Our success will depend in part on our ability to obtain additional United States and foreign patent protection for our drug candidates and processes, preserve our trade secrets and operate without infringing the proprietary rights of others. We place considerable importance on obtaining patent protection for significant new technologies, products and processes. Legal standards relating to the validity of patents covering pharmaceutical and biotechnology inventions and the scope of claims made under such patents are still developing. In some of the countries in which we intend to market our products, pharmaceuticals are either not patentable or have only recently become patentable. Past enforcement of intellectual property rights in many of these countries has been limited or non-existent. Future enforcement of 21 patents and proprietary rights in many other countries may be problematic or unpredictable. Moreover, the issuance of a patent in one country does not assure the issuance of a similar patent in another country. Claim interpretation and infringement laws vary by nation, so the extent of any patent protection is uncertain and may vary in different jurisdictions. Our domestic patent position is also highly uncertain and involves complex legal and factual questions. The applicant or inventors of subject matter covered by patent applications or patents owned by us may not have been the first to invent or the first to file patent applications for such inventions. Due to uncertainties regarding patent law and the circumstances surrounding our patent applications, the pending or future patent applications we own may not result in the issuance of any patents. Existing or future patents owned by us may be challenged, infringed upon, invalidated, found to be unenforceable or circumvented by others. Further, any rights we may have under any issued patents may not provide us with sufficient protection against competitive products or otherwise cover commercially valuable products or processes. LITIGATION OR OTHER DISPUTES REGARDING PATENTS AND OTHER PROPRIETARY RIGHTS MAY BE EXPENSIVE, CAUSE DELAYS IN BRINGING PRODUCTS TO MARKET AND HARM OUR ABILITY TO OPERATE. The manufacture, use, marketing or sale of our drug candidates may infringe on the patent rights of others. If we are unable to avoid infringement of the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, or fail to successfully defend an infringement action or have the patents we are alleged to infringe declared invalid, we may: * incur substantial money damages; * encounter significant delays in bringing our drug candidates to market; * be precluded from participating in the manufacture, use or sale of our drug candidates or methods of treatment without first obtaining licenses to do so; and/or * not be able to obtain any required license on favorable terms, if at all. In addition, if another party claims the same subject matter or subject matter overlapping with the subject matter that we have claimed in a United States patent application or patent, we may decide or be required to participate in interference proceedings in the United States Patent and Trademark Office in order to determine the priority of invention. Loss of such an interference proceeding would deprive us of patent protection sought or previously obtained and could prevent us from commercializing our products. Participation in such proceedings could result in substantial costs, whether or not the eventual outcome is favorable. These additional costs could adversely affect our financial results. CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT DISCLOSURE OF TRADE SECRETS AND OTHER PROPRIETARY INFORMATION. In order to protect our proprietary technology and processes, we also rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover 22 trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. RISKS RELATED TO OUR INDUSTRY WE MUST OBTAIN GOVERNMENT REGULATORY APPROVAL FOR OUR PRODUCTS BEFORE WE CAN SELL THEM AND GENERATE REVENUES. Our principal development efforts are currently centered around research and development of drugs for treatment of cancer and viral infections. However, all drug candidates require FDA and foreign government approvals before they can be commercialized in the U.S. or in foreign countries. These regulations change from time to time and new regulations may be adopted. None of our drug candidates has been approved for commercial sale. We will incur significant operating losses over the next few years as we fund development, clinical testing and other expenses while seeking regulatory approval. While limited clinical trials of our drug candidates have been conducted to date, significant additional trials are required and we may not be able to demonstrate that these drug candidates are safe or effective. If we are unable to demonstrate the safety and effectiveness of a particular drug candidate to the satisfaction of regulatory authorities, the drug candidate will not obtain required government approval. If we do not receive FDA or foreign approvals for our drug products, we will not be able to sell our drug products and will not generate revenues. If we receive regulatory approval of a drug product, such approval may impose limitations on the indicated uses for which we may market the drug, further limiting our ability to generate significant revenues. AS A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH MARKET SHARES TO BE PROFITABLE. The biotechnology and pharmaceutical industries are intensely competitive. We have numerous competitors in the United States and elsewhere. Because we are pursuing potentially large markets, our competitors include major, multinational pharmaceutical and chemical companies, specialized biotechnology firms, universities and other research institutions. Several of these competitors have already successfully marketed and commercialized products that will compete with our products, assuming that our products gain regulatory approval. Most of our competitors have greater financial resources, larger research and development staffs and more effective marketing and manufacturing organizations than we do. In addition, academic and government institutions have become increasingly aware of the commercial value of their research findings. These institutions are now more likely to enter into exclusive licensing agreements with commercial enterprises, including our competitors, to develop and market commercial products. Our competitors may succeed in developing or licensing technologies and drugs that are more effective or less costly than any we are developing. Our competitors may succeed in obtaining FDA or other regulatory approvals for drug candidates before we do. If competing drug candidates prove to be more effective or less costly than our drug candidates, our drug candidates, even if approved for sale, may not be able to compete successfully with our competitors' existing products or new products we may develop. If we are unable to compete successfully, we will not be able to sell enough products at a price sufficient to permit us to generate profits. 23 EXISTING PRICING REGULATIONS AND REIMBURSEMENT LIMITATIONS MAY REDUCE OUR POTENTIAL PROFITS FROM THE SALE OF OUR PRODUCTS. The requirements governing product licensing, pricing and reimbursement vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after product-licensing approval is granted. As a result, we may obtain regulatory approval for a drug candidate in a particular country, but then be subject to price regulations that reduce our profits from the sale of the product. In some foreign markets, pricing of prescription pharmaceuticals is subject to continuing government control even after initial marketing approval. In addition, certain governments may grant third parties a license to manufacture our product without our permission. Such compulsory licenses typically would be on terms that are less favorable to us and would have the effect of reducing our revenues. Varying price regulation between countries can lead to inconsistent prices and some re-selling by third parties of products from markets where products are sold at lower prices to markets where those products are sold at higher prices. This practice of exploiting price differences between countries could undermine our sales in markets with higher prices and reduce the sales of our future products, if any. The decline in the size of the markets in which we may in the future sell commercial products could cause the perceived market value of our business and the price of our common stock to decline. Our ability to commercialize our products successfully also will depend in part on the extent to which reimbursement for the cost of our products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Third-party payers are increasingly challenging the prices charged for medical products and services. If we succeed in bringing any of our potential products to the market, such products may not be considered cost effective and reimbursement may not be available or sufficient to allow us to sell such products on a profitable or competitive basis. OUR PRODUCTS IN DEVELOPMENT WILL BE SUBJECT TO REIMBURSEMENT FROM GOVERNMENT AGENCIES AND OTHER THIRD PARTIES. PHARMACEUTICAL PRICING AND REIMBURSEMENT PRESSURES MAY REDUCE PROFITABILITY. Successful commercialization of our products depends, in part, on the availability of governmental and third party payer reimbursement for the cost of such products and related treatments. Government health administration authorities, private health insurers and other organizations generally provide reimbursement. Government authorities and third-party payers increasingly are challenging the price of medical products and services, particularly for innovative new products and therapies. This has resulted in lower average sales prices. Our business may be adversely affected by an increase in U.S. or international pricing pressures. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement and pricing in general. New legislation has been proposed at the federal and state levels that would effect major changes in the U.S. health care system, either nationally or at the state level. These proposals have included prescription drug benefit proposals for Medicare beneficiaries recently passed by Congress. Additionally, some states have enacted health care reform legislation. Further federal and state developments are possible. Our results of operations could be adversely affected by future health care reforms. In Europe, the success of our products will also depend largely on obtaining and maintaining government reimbursement because in many European countries, including the United Kingdom and France, patients are reluctant to pay for 24 prescription drugs out of their own pocket. We also expect that the success of our products in development, particularly in Europe, will depend on the ability to obtain reimbursement. Even if reimbursement is available, reimbursement policies may adversely affect our ability to sell our products on a profitable basis. Delays in the conduct or completion of our preclinical or clinical studies or the analysis of the data from our preclinical or clinical studies may result in delays in our planned filings for regulatory approvals or adversely affect our ability to enter into collaborative arrangements. * We may encounter problems with some or all of our completed or ongoing studies that may cause us or regulatory authorities to delay or suspend our ongoing studies or delay the analysis of data from our completed or ongoing studies. * We rely, in part, on third parties to assist us in managing and monitoring our preclinical and clinical studies. Our reliance on these third parties may result in delays in completing or failure to complete studies if third parties fail to perform their obligations to us. RESULTS OF CLINICAL TRIALS ARE UNCERTAIN AND MAY NOT SUPPORT CONTINUED DEVELOPMENT OF A PRODUCT PIPELINE, WHICH WOULD ADVERSELY AFFECT OUR PROSPECTS FOR FUTURE REVENUE GROWTH. We are required to demonstrate the safety and effectiveness of products we develop in each intended use through extensive preclinical studies and clinical trials. The results from preclinical and early clinical studies do not always accurately predict results in later, large-scale clinical trials. Even successfully completed large-scale clinical trials may not result in marketable products. A number of companies in our industry have suffered setbacks in advanced clinical trials despite promising results in earlier trials. If any of our products under development fail to achieve their primary endpoint in clinical trials or if safety issues arise, commercialization of that drug candidate could be delayed or halted. RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES OUR COMMON STOCK IS CONSIDERED TO BE A "PENNY STOCK" AND, AS SUCH, THE MARKET FOR OUR COMMON STOCK MAY BE FURTHER LIMITED BY CERTAIN SEC RULES APPLICABLE TO PENNY STOCKS. As long as the price of our common stock remains below $5.00 per share or we have net tangible assets of $2,000,000 or less, our shares of common stock are likely to be subject to certain "penny stock" rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally, an institution with assets in excess of $5,000,000 or an individual with a net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices and disclosure of the compensation to the brokerage firm and disclosure of the sales person working for the brokerage firm. These rules and regulations make it more difficult for brokers to sell shares of our common stock and limit the liquidity of our shares. See "Plan of Distribution" for a more detailed discussion of the penny stock rules and related broker-dealer restrictions. 25 TRADING IN OUR SECURITIES COULD BE SUBJECT TO EXTREME PRICE FLUCTUATIONS THAT COULD ADVERSELY AFFECT YOUR INVESTMENT. The market prices for securities of biotechnology companies, particularly hose that are not profitable, have been highly volatile, especially recently. Publicized events and announcements may have a significant impact on the market price of our common stock. For example, any of the following may have the effect of temporarily or permanently driving down the price of our common stock: * Biological or medical discoveries by competitors; * Public concern about the safety of our drug candidates; * Delays in the conduct or analysis of our clinical trials; * Unfavorable results from clinical trials; * Unfavorable developments concerning patents or other proprietary rights; or * Unfavorable domestic or foreign regulatory developments; In addition, the stock market from time to time experiences extreme price and volume fluctuations which particularly affect the market prices for emerging and life sciences companies, such as ours, and which are often unrelated to the operating performance of the affected companies. SUBSTANTIAL SALES OF OUR STOCK MAY IMPACT THE MARKET PRICE OF OUR COMMON STOCK. Future sales of substantial amounts of our common stock, including shares that we may issue upon exercise of options and warrants, could adversely affect the market price of our common stock. Further, if we raise additional funds through the issuance of common stock or securities convertible into or exercisable for common stock, the percentage ownership of our shareholders will be reduced and the price of our common stock may fall. WE DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE. We will use any earnings generated from our operations to finance our business and will not pay any cash dividends to our shareholders in the foreseeable future. ISSUING PREFERRED STOCK WITH RIGHTS SENIOR TO THOSE OF OUR COMMON STOCK COULD ADVERSELY AFFECT HOLDERS OF COMMON STOCK. Our charter documents give our board of directors the authority to issue series of preferred stock without a vote or action by our shareholders. The board also has the authority to determine the terms of preferred stock, including price, preferences and voting rights. The rights granted to holders of preferred stock may adversely affect the rights of holders of our common stock. For example, a series of preferred stock may be granted the right to receive a liquidation preference - a pre-set distribution in the event of a liquidation that would reduce the amount available for distribution to holders of common stock. In addition, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock. As a result, common shareholders could be prevented from participating in transactions that would offer an optimal price for their shares. 26 RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS This Form 10-Q contains certain forward-looking statements regarding management's plans and objectives for future operations including plans and objectives relating to our planned marketing efforts and future economic performance. The forward-looking statements and associated risks set forth in this Form 10-QSB include or relate to, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our ability to obtain and retain sufficient capital for future operations, and (e) our anticipated needs for working capital. These statements may be found under "Management's Plan of Operations," as well as in this Form 10-Q, generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Form 10-Q, generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Form 10-Q will, in fact, occur. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. FORWARD-LOOKING INFORMATION An investment in our securities involves a high degree of risk. Prior to making an investment, prospective investors should carefully consider the following factors, among others, and seek professional advice. In addition, this Form 10-Q contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements, which are often identified by words such as "believes", "anticipates", "expects", "estimates", "should", "may", "will" and similar expressions, represent our expectations or beliefs concerning future events. Numerous assumptions, risks, and uncertainties could cause actual results to differ materially from the results discussed in the forward-looking statements. Prospective purchasers of our securities should carefully consider the information contained herein or in the documents incorporated herein by reference. This Form 10-Q contains certain estimates, predictions, projections and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) that involve various risks and uncertainties. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect management's current judgment regarding the direction of the business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, or other future performance suggested herein. Such factors include, but are not limited to, the following: * the possibility that the results of clinical trials will not be successful; * the possibility that our development efforts relating to our product candidates will not be successful; * the inability to obtain regulatory approval of our product candidates; * our reliance on third-parties to develop our product candidates; * our lack of experience in developing and commercializing pharmaceutical products; * our ability to obtain additional financing; * our ability to protect our proprietary technology. Any forward-looking statement speaks only as of the date on which it is made. For further details and a discussion of these and other risks and uncertainties, investors and security holders are cautioned to review the Cavit's Form 10-K, for the year ended December 31, 2007, filed on April 18, 2008, including the Forward-Looking Statement section therein, and other subsequent filings with the U.S. Securities and Exchange Commission including Current Reports on Form 8-K. The Company undertakes no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 27 ITEM 4. CONTROLS AND PROCEDURES Colm J. King, our Chief Executive Officer, and Matthew J. Cohen, our ChiefFinancial Officer, (i) are responsible for establishing and maintaining adequate internal control over financial reporting of the Company and (ii) have evaluatedthe effectiveness of our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the 1934 Act as of the end of the quarter covered by this 10-Q ("Evaluation Date"). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as the Evaluation Date, our disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to us(including our consolidated subsidiaries) required to be included in our reports filed or submitted under the 1934 Act, except as discussed below.. The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S.generally accepted accounting principles. As of March 31, 2008, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were : (1) lack of functioning audit committee and lack of majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures, and, (2) inadequate segregation of duties consistent with control objectives. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the audit of our financial statements as of December 31, 2007 and communicated the matters to our management. Management believes that the material weaknesses set forth in items (1) and (2) above did not have an affect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors could result in ineffective oversight in the establishment and monitoring of required internal controls and procedures. Management's goals are to have a functional audit committee and a majority of outside directors on the Company's board of directors when funds are available. 28 (b) CHANGES IN INTERNAL CONTROLS In addition, no change in our internal control over financial reporting (as defined in Rules 13a-15 or 15d-15 under the 1934 Act) occurred during the first quarter of the year ended December 31, 2008, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the three months ended March 31, 2008 the Company issued 2,828,932 shares of common stock at prices ranging from $.20 to $.60 for various matters. Of the total shares, 328,932 shares were issued for director fees, legal fees, transfer agent fees, compensation and consulting fees. The remaining 2,500,000 of the company's unregistered common stock was sold at $.20 per share. As a result of the latter sale the Company raised $500,000. These transactions were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 and did not involve any public offering.. Each recipient either received adequate information about us and we determined that each recipient had such knowledge and experience in financial and business matters that they were able to evaluate the merits and risks of an investment in us. The recipients of securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate restrictive legends were affixed to the share certificates and other instruments issued in such transactions. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit 31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted by Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 Exhibit 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 29 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Cavit Sciences, Inc. Date: May 15, 2008 By: /s/ Colm J. King --------------------------------- Colm J. King President/Chief Executive Officer (Principal Executive Officer) Date: May 15, 2008 By: /s/ Matthew Cohen --------------------------------- Matthew Cohen Chief Financial Officer (Principal Financial Officer) 30

Cavit Sciences, Inc. 10-Q