Attached files
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EX-31.1 - PROTECT PHARMACEUTICAL Corp | v197218_ex31-1.htm |
EX-32.1 - PROTECT PHARMACEUTICAL Corp | v197218_ex32-1.htm |
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q/A
(Amendment No. 2)
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
|
|
THE
SECURITIES EXCHANGE ACT OF 1934
|
For
the Quarter Ended June 30, 2010
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
For
the transition period from _______ to
Commission
File Number 000-54001
PROTECT
PHARMACEUTICAL CORPORATION
(Exact
name of registrant as specified in its charter)
Nevada
|
27-1877179
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
|
incorporation
or organization)
|
759
Bloomfield Avenue, Suite 411, West Caldwell, New Jersey 07006
(Address
of principal executive offices)
(973)
568-1617
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
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 has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). Yes ¨ 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
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
|
(Do
not check if a smaller reporting company)
|
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 CORPORATE ISSUERS
Indicate the number of shares
outstanding of each of the issuer's classes of common equity, as of the latest
practicable date.
Class
|
Outstanding
as of September 22, 2010
|
|
Common
Stock, $0.005 par value
|
43,368,012
|
TABLE
OF CONTENTS
Heading
|
Page
|
|||
PART I
— FINANCIAL INFORMATION
|
||||
Item
1.
|
Unaudited
Financial Statements
|
3
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results
|
|||
of
Operations
|
14
|
|||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
16
|
||
Item
4(T).
|
Controls
and Procedures
|
16
|
||
PART
II — OTHER INFORMATION
|
||||
Item
1.
|
Legal
Proceedings
|
17
|
||
Item
1A.
|
Risk
Factors
|
17
|
||
Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
17
|
||
Item
3.
|
Defaults
Upon Senior Securities
|
17
|
||
Item
4.
|
(Removed
and Reserved)
|
17
|
||
Item
5.
|
Other
Information
|
17
|
||
Item
6.
|
Exhibits
|
17
|
||
Signatures
|
18
|
2
PART I — FINANCIAL
INFORMATION
Item
1.
|
Financial
Statements
|
The accompanying unaudited balance
sheets of Protect Pharmaceutical Corporation at June 30, 2010 and related
unaudited statements of operations, stockholders' equity (deficit) and cash
flows for the three and six months ended June 30, 2010 and 2009, have been
prepared by management in conformity with United States generally accepted
accounting principles. The statements of operations for the three months
ended June 30, 2010 have been restated and note 8 to the financial
statements has been added to discuss the restatement. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. It is suggested that
these financial statements be read in conjunction with the financial statements
and notes thereto included in the December 31, 2009 audited financial statements
included in our registration statement on Form 10. Operating results
for the period ended June 30, 2010, are not necessarily indicative of the
results that can be expected for the fiscal year ending December 31, 2010 or any
other subsequent period.
3
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Balance
Sheets
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | - | $ | - | ||||
Total
Current Assets
|
- | - | ||||||
TOTAL
ASSETS
|
$ | - | $ | - | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 2,500 | $ | 3,500 | ||||
Related
party payable
|
7,846 | 1,731 | ||||||
Total
Current Liabilities
|
10,346 | 5,231 | ||||||
TOTAL
LIABILITIES
|
10,346 | 5,231 | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
Common
stock; 50,000,000 shares authorized, at $0.005 par value, 43,368,012 and
33,163,012 shares issued and outstanding, respectively
|
216,840 | 165,815 | ||||||
Additional
paid-in capital
|
7,109,625 | 601,550 | ||||||
Deficit
accumulated during the development stage
|
(7,336,811 | ) | (772,596 | ) | ||||
Total
Stockholders' Equity (Deficit)
|
(10,346 | ) | (5,231 | ) | ||||
TOTAL
LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT)
|
$ | - | $ | - |
The
accompanying notes are an integral part of these financial
statements.
4
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Operations
(Unaudited)
From
Inception
|
||||||||||||||||||||
on
August 5,
|
||||||||||||||||||||
For
the Three Months Ended
|
For
the Six Months Ended
|
1987
Through
|
||||||||||||||||||
June
30,
|
June
30,
|
June
30,
|
||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
||||||||||||||||
(restated)
|
||||||||||||||||||||
REVENUES
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
EXPENSES
|
||||||||||||||||||||
Research
and development
|
- | - | 1,250,000 | - | 1,250,000 | |||||||||||||||
Executive
compensation
|
5,156,100 | - | 5,156,100 | - | 5,156,100 | |||||||||||||||
General
and administrative
|
156,450 | - | 158,115 | - | 311,870 | |||||||||||||||
LOSS
FROM OPERATIONS
|
(5,312,550 | ) | - | (6,564,215 | ) | - | (6,717,970 | ) | ||||||||||||
LOSS
FROM DISCONTINUED OPERATIONS
|
- | - | - | - | (4,340,551 | ) | ||||||||||||||
Income
Taxes
|
- | - | - | - | - | |||||||||||||||
NET
LOSS
|
$ | (5,312,550 | ) | $ | - | $ | (6,564,215 | ) | $ | - | $ | (11,058,521 | ) | |||||||
BASIC
AND DILUTED LOSS PER SHARE OF
|
||||||||||||||||||||
COMMON
STOCK
|
$ | (0.13 | ) | $ | 0.00 | $ | (0.17 | ) | $ | 0.00 | ||||||||||
WEIGHTED
AVERAGE NUMBER OF
|
||||||||||||||||||||
SHARES
OUTSTANDING
|
40,107,737 | 33,163,012 | 37,980,526 | 33,163,012 |
The
accompanying notes are an integral part of these financial
statements.
5
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity/(Deficit)
|
||||||||||||||||
Balance
August 5, 1987
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Net
loss for the period ended December 31, 1987
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1987
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Common
stock issued for services rendered at $15.00 per share on January 27,
1988
|
624,000 | 3,120 | 2,336,880 | - | 2,340,000 | |||||||||||||||
Common
stock issued for Midway Mining Development Corp. at $15.00 per share on
January 27, 1988
|
359,592 | 1,798 | 1,346,672 | - | 1,348,470 | |||||||||||||||
Common
stock issued for mining claims at predecessor cost on May 24,
1988
|
19,420 | 97 | (97 | ) | - | - | ||||||||||||||
Common
stock cancelled due to the acquisition agreement on Midway Mining and
Development Corp. being rescinded on July 6, 1988
|
(209,112 | ) | (1,046 | ) | - | - | (1,046 | ) | ||||||||||||
Common
stock issued for services rendered at $0.00 per share on July 6,
1988
|
209,112 | 1,046 | - | - | 1,046 | |||||||||||||||
Additional
capital contributed
|
- | - | 33,000 | - | 33,000 | |||||||||||||||
Net
loss for the year ended December 31, 1988
|
- | - | - | (3,721,500 | ) | (3,721,500 | ) | |||||||||||||
Balance,
December 31, 1988
|
1,003,012 | 5,015 | 3,716,455 | (3,721,530 | ) | (60 | ) | |||||||||||||
Net
loss for the year ended December 31, 1989
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1989
|
1,003,012 | $ | 5,015 | $ | 3,716,455 | $ | (3,721,560 | ) | $ | (90 | ) |
The
accompanying notes are an integral part of these financial
statements.
6
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity/(Deficit)
|
||||||||||||||||
Balance,
December 31, 1989
|
1,003,012 | $ | 5,015 | $ | 3,716,455 | $ | (3,721,560 | ) | $ | (90 | ) | |||||||||
Net
loss for the year ended December 31, 1990
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1990
|
1,003,012 | 5,015 | 3,716,455 | (3,721,590 | ) | (120 | ) | |||||||||||||
Net
loss for the year ended December 31, 1991
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1991
|
1,003,012 | 5,015 | 3,716,455 | (3,721,620 | ) | (150 | ) | |||||||||||||
Net
loss for the year ended December 31, 1992
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1992
|
1,003,012 | 5,015 | 3,716,455 | (3,721,650 | ) | (180 | ) | |||||||||||||
Net
loss for the year ended December 31, 1993
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1993
|
1,003,012 | 5,015 | 3,716,455 | (3,721,680 | ) | (210 | ) | |||||||||||||
Quasi
- reorganization (Note 2)
|
- | - | (3,721,710 | ) | 3,721,710 | - | ||||||||||||||
Net
loss for the year ended December 31, 1994
|
- | - | - | (30 | ) | (30 | ) | |||||||||||||
Balance,
December 31, 1994
|
1,003,012 | 5,015 | (5,255 | ) | - | (240 | ) | |||||||||||||
Common
stock issued for services rendered at $15.00 per share on June 12,
1995
|
160,000 | 800 | 599,200 | - | 600,000 | |||||||||||||||
Additional
capital contributed
|
- | - | 2,605 | - | 2,605 | |||||||||||||||
Net
loss for the year ended December 31, 1995
|
- | - | - | (605,105 | ) | (605,105 | ) | |||||||||||||
Balance,
December 31, 1995
|
1,163,012 | $ | 5,815 | $ | 596,550 | $ | (605,105 | ) | $ | (2,740 | ) |
The
accompanying notes are an integral part of these financial
statements.
7
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity/(Deficit)
|
||||||||||||||||
Balance,
December 31, 1995
|
1,163,012 | $ | 5,815 | $ | 596,550 | $ | (605,105 | ) | $ | (2,740 | ) | |||||||||
Common
stock issued for expenses paid at $0.01 per share
|
2,000,000 | 10,000 | 5,000 | - | 15,000 | |||||||||||||||
Net
loss for the year ended December 31, 1996
|
- | - | - | (12,260 | ) | (12,260 | ) | |||||||||||||
Balance,
December 31, 1996
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 1997
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 1997
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 1998
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 1998
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 1999
|
- | - | - | - | ||||||||||||||||
Balance,
December 31, 1999
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 2000
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2000
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 2001
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2001
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 2002
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2002
|
3,163,012 | $ | 15,815 | $ | 601,550 | $ | (617,365 | ) | $ | - |
The
accompanying notes are an integral part of these financial
statements.
8
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity/(Deficit)
|
||||||||||||||||
Balance,
December 31, 2002
|
3,163,012 | $ | 15,815 | $ | 601,550 | $ | (617,365 | ) | $ | - | ||||||||||
Net
loss for the year ended December 31, 2003
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2003
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 2004
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2004
|
3,163,012 | 15,815 | 601,550 | (617,365 | ) | - | ||||||||||||||
Net
loss for the year ended December 31, 2005
|
- | - | - | (1,476 | ) | (1,476 | ) | |||||||||||||
Balance,
December 31, 2005
|
3,163,012 | 15,815 | 601,550 | (618,841 | ) | (1,476 | ) | |||||||||||||
Net
loss for the year ended December 31, 2006
|
- | - | - | - | - | |||||||||||||||
Balance,
December 31, 2006
|
3,163,012 | 15,815 | 601,550 | (618,841 | ) | (1,476 | ) | |||||||||||||
Common
stock issued for services at $0.005 per share on May 9,
2007
|
30,000,000 | 150,000 | - | - | 150,000 | |||||||||||||||
Net
loss for the year ended December 31, 2007
|
- | - | - | (150,000 | ) | (150,000 | ) | |||||||||||||
Balance,
December 31, 2007
|
33,163,012 | 165,815 | 601,550 | (768,841 | ) | (1,476 | ) | |||||||||||||
Net
loss for the year ended December 31, 2008
|
- | - | - | (1,605 | ) | (1,605 | ) | |||||||||||||
Balance,
December 31, 2008
|
33,163,012 | 165,815 | 601,550 | (770,446 | ) | (3,081 | ) | |||||||||||||
Net
loss for the year ended December 31, 2009
|
- | - | - | (2,150 | ) | (2,150 | ) | |||||||||||||
Balance,
December 31, 2009
|
33,163,012 | 165,815 | 601,550 | (772,596 | ) | (5,231 | ) | |||||||||||||
Common
stock issued for patents at $0.25 per share (unaudited)
|
5,000,000 | 25,000 | 1,225,000 | - | 1,250,000 | |||||||||||||||
Common
stock issued for services at $1.02 per commnon share
(unaudited)
|
5,205,000 | 26,025 | 5,283,075 | - | 5,309,100 | |||||||||||||||
Net
loss for the six months ended June 30, 2010 (unaudited)
|
- | - | (6,564,215 | ) | (6,564,215 | ) | ||||||||||||||
Balance,
June 30, 2010 (unaudited)
|
43,368,012 | $ | 216,840 | $ | 7,109,625 | $ | (7,336,811 | ) | $ | (10,346 | ) |
The
accompanying notes are an integral part of these financial
statements.
9
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Cash Flows
(Unaudited)
From Inception
|
||||||||||||
on August 5,
|
||||||||||||
For the Six Months Ended
|
1987 Through
|
|||||||||||
June 30,
|
June 30,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
loss
|
$ | (6,564,215 | ) | $ | - | $ | (11,058,521 | ) | ||||
Adjustments
to reconcile loss to cash flows from operating activities
|
||||||||||||
Common
stock issued for services
|
5,309,100 | - | 9,183,270 | |||||||||
Common
stock issued for research and development costs
|
1,250,000 | 1,250,000 | ||||||||||
Loss
from disposition of subsidiary
|
- | - | 564,300 | |||||||||
Expenses
paid on behalf of the Company
|
6,115 | - | 58,451 | |||||||||
Changes
in operating assets and liabilities Increase in accounts
payable
|
(1,000 | ) | - | 2,500 | ||||||||
Net
Cash Used in Operating Activities
|
- | - | - | |||||||||
INVESTING
ACTIVITIES
|
- | - | - | |||||||||
FINANCING
ACTIVITIES
|
||||||||||||
Net
Cash Provided by Financing Activities
|
- | - | - | |||||||||
NET
INCREASE IN CASH
|
- | - | - | |||||||||
CASH
AT BEGINNING OF PERIOD
|
- | - | - | |||||||||
CASH
AT END OF PERIOD
|
$ | - | $ | - | $ | - | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
CASH
PAID FOR:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
$ | - | $ | - | $ | - | ||||||
NON
CASH FINANCING ACTIVITIES
|
The
accompanying notes are an integral part of these financial
statements.
10
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Notes to
the Financial Statements
June 30,
2010 and December 31, 2009
NOTE
1 - CONDENSED FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows at June 30, 2010, and for all
periods presented herein, have been made.
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 condensed or omitted. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's December
31, 2009 audited financial statements. The results of operations for
the periods ended June 30, 2010 and 2009 are not necessarily indicative of the
operating results for the full years.
NOTE
2 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not yet Established
an ongoing source of revenues sufficient to cover its operating costs and allow
it to continue as a going concern. The ability of the Company to continue as a
going concern is dependent on the Company obtaining adequate capital to fund
operating losses until it becomes profitable. If the Company is unable to obtain
adequate capital, it could be forced to cease operations.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
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 reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Recent Accounting
Pronouncements
The
Company has evaluated recent accounting pronouncements and their adoption has
not had or is not expected to have a material impact on the Company’s financial
position, or statements.
11
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Notes to
the Financial Statements
June 30,
2010 and December 31, 2009
NOTE
4 - PAYABLE RELATED PARTY
A
shareholder of the Company has advanced the corporation $7,846 and $1,731 as of
June 30, 2010 and December 31, 2009. The liability is non interest
bearing, is unsecured and is due and payable upon demand.
NOTE
5 - EQUITY TRANSACTIONS
On May
28, 2010, the company issued 5,205,000 shares of common stock for
services. The services were valued at the common stock trading price
of $1.02 per share.
On
February 12, 2010, the Company issued 5,000,000 shares of its common stock
pursuant to a Patent Acquisition Agreement. The cost of patents were valued at
the trading price of the shares on the issuance date of $0.25 per share and
expensed as research and development costs (see note 6).
NOTE
6 – RESEARCH AND DEVELOPMENT COSTS
On
February 12, 2010, the Company issued 5,000,000 shares of its common stock
pursuant to a Patent Acquisition Agreement to purchase various patents to be
used in the commercialization of certain drugs. In accordance with ASC 730, the
Company has recorded the cost of these expenses as research and development
expenses.
As part
of the Patent Acquisition Agreement, the Company has agreed to pay a royalty
equal to 20% of gross sales from licensing fees or net
sales. Additionally, the Company is obligated to achieve the
following developmental milestones:
|
a)
|
Commercially
reasonable efforts must begin within 12 months of the
agreement
|
|
b)
|
File
an IND application for at least one product within two years of
closing
|
|
c)
|
Initiate
clinical studies for at least one product within three years of
closing
|
|
d)
|
Commercialize
at least one product within five years of
closing
|
NOTE
7 – SUBSEQUENT EVENTS
In
accordance with SFAS 165 (ASC 855-10) Company management reviewed all material
events through the date of this report and determined that there are no
additional material subsequent events to report.
12
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Notes to
Financial Statements
June 30,
2010 and December 31, 2009
NOTE
8 – RESTATED FINANCIAL STATEMENTS
The
Company’s statement of operations for the three months ended June 30, 2010 has
been restated to remove $1,250,000 of research and development expense which
actually occurred during the three months ended March 31, 2010. The correction
reduced the net loss for the three months ended June 30, 2010 by $1,250,000 and
$0.03 per share. A comparison of the original and restated financial statement
is as follows:
For
the Three Months Ended
|
||||||||
June
30,
|
||||||||
2010
|
2010
|
|||||||
(restated)
|
(original)
|
|||||||
REVENUES
|
$ | - | $ | - | ||||
EXPENSES
|
||||||||
Research
and development
|
- | 1,250,000 | ||||||
Executive
compensation
|
5,156,100 | 5,156,100 | ||||||
General
and administrative
|
156,450 | 156,450 | ||||||
LOSS
FROM OPERATIONS
|
(5,312,550 | ) | (6,562,550 | ) | ||||
LOSS
FROM DISCONTINUED OPERATIONS
|
- | - | ||||||
Income
Taxes
|
- | - | ||||||
NET
LOSS
|
$ | (5,312,550 | ) | $ | (6,562,550 | ) | ||
BASIC
AND DILUTED LOSS PER SHARE OF
|
||||||||
COMMON
STOCK
|
$ | (0.13 | ) | $ | (0.16 | ) | ||
WEIGHTED
AVERAGE NUMBER OF
|
||||||||
SHARES
OUTSTANDING
|
40,107,737 | 40,107,737 |
13
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
The following information should be
read in conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this Form 10-Q.
Forward-Looking
and Cautionary Statements
This report contains forward-looking
statements relating to future events or our future financial
performance. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will” “should," “expect," "intend,"
"plan," anticipate," "believe," "estimate," "predict," "potential," "continue,"
or similar terms, variations of such terms or the negative of such
terms. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors included in our periodic reports
with the SEC. Although forward-looking statements, and any
assumptions upon which they are based, are made in good faith and reflect our
current judgment, actual results could differ materially from those anticipated
in such statements. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
We are considered a development stage
company with limited capital and no current revenues. We do not
expect to realize any revenues until we are successful in developing, achieving
approval and marketing one or more of our drug delivery technologies or
solutions. We anticipate that in the near term, ongoing expenses,
including the costs associated with the preparation and filing of requisite
reports with the SEC, will be paid for by advances from stockholders or from the
private sale of securities, either debt or equity. However, there is
no assurance that we will be able to realize such funds on terms favorable to
us, or at all.
Results
of Operations
We did not realize revenues for the
three and six month periods ended June 30, 2010 and 2009, nor did we record any
expenses for the six month period ended June 30, 2009. Thus, there
was a $0 net loss for the 2009 periods. During
the three months ended June 30, 2010 (“second quarter”), we recorded total expenses
of $5,312,550,
comprised of executive compensation of $5,156,100 related to the
issuance of stock for services, and general and administrative expenses of $156,450, primarily for stock
issued for professional and consulting services. This resulted in a net loss of
$5,312,550 ($0.13 per
share) for the period.
For the
six months ended June 30, 2010, we recorded total expenses of $6,564,215, which
included $1,250,000 for research and development related to the acquisition of
patent applications for stock during the first quarter of 2010. Total expenses
also included the $5,156,100 for the issuance of stock for services during the
second quarter, and $158,115 for general and administrative expenses, of which
$156,450 occurred during the second quarter. This resulted in a net loss of
$6,564,215 ($0.17) for the six months ended June 30, 2010.
Liquidity
and Capital Resources
Total assets at June 30, 2010 were $0
as the acquisition of the patent applications in March 2010 was treated as an
expense. Total assets were also $0 at fiscal year end December 31,
2009. Total liabilities at June 30, 2010 were $10,346, consisting of
$2,500 in accounts payable and $7,846 in payable related party due to a cash
advance from a stockholder. At December 31, 2009, total liabilities
were $5,231 consisting of $3,500 in accounts payable and $1,731 in payable
related party.
Because currently we have no revenues
or cash reserves, for the immediate future we will have to rely on our directors
and/or stockholders to pay expenses or raise funds through the private placement
of securities. There is no assurance that we will be able to raise
adequate capital in the immediate future to satisfy cash needs. At
June 30, 2010, we had stockholders’ deficit of $10,346 compared to a
stockholders’ deficit of $5,231 at December 31, 2009. The increased
deficit is primarily due to the increase in related party payable during the
first six months of 2010.
14
In the opinion of management, inflation
has not and will not have a material effect on the ongoing operations of our
company.
Plan
of Operation
We are developing new generation drug
delivery technologies that we believe will enable products with improved
clinical benefits. We believe our drugs will offer enhanced pain
relief and reduced tolerance/physical dependence, reduced addiction potential
and side effects compared to existing neuropathic and fibromyalgia drugs and
opioid painkillers. We intend to conduct our research and development
through collaborative programs. We anticipate relying on arrangements with third
party drug developers such as contract research organizations and clinical
research sites for a significant portion of our product development
efforts.
We acquired a portfolio of patent
applications in March 2010, although we are yet to formulate products or receive
approvals from regulatory agencies or generate any revenues from product sales.
We have not been profitable since our inception through June 30,
2010.
We expect to incur significant
operating losses for the next several years and until we are able to formulate a
commercially viable product. We also expect to continue to incur
significant operating and capital expenditures and anticipate that our expenses
will increase substantially in the foreseeable future as we:
● continue
to undertake formulation of novel products and subsequent preclinical and
clinical trials for our product candidates;
● seek
regulatory approvals for our product candidates;
● develop,
formulate, manufacture and commercialize our drugs;
● implement
additional internal systems and develop new infrastructure;
● acquire
or in-license additional products or technologies, or expand the use of our
technology;
● maintain,
defend and expand the scope of our intellectual property; and
● hire
additional personnel.
Product revenue will depend on our
ability to receive regulatory approvals for, and successfully market, our
product candidates. In the event that our development efforts result in
regulatory approval and successful commercialization of our product candidates,
we will generate revenue from direct sales of our products and/or, if we license
our products to future collaborators, from the receipt of license fees and
royalties from licensed products.
Management estimates that our research
and development expenses for the next 12 months will be approximately $2.5
million, primarily for research and pilot studies. We also estimate
that other expenses, including personnel, general and administrative and
miscellaneous expenses could be as much as $1.5 million during the same time
period. Because we currently have no revenues, most likely the only
source of funding these expenses will be through he private sale of our
securities, either equity or debt. We are currently exploring
possible funding sources, but we have not entered into any arrangements or
agreements for funding as of this time. If we are unable to secure
the necessary funding, our research and development plans will be delayed
indefinitely. There can be no assurance that we will be able to raise
the funds necessary to carry out our business plan on terms favorable to the
company, or at all.
15
Net
Operating Loss
We have accumulated approximately
$21,150 of net operating loss carryforwards as of December 31,
2009. This loss carry forward may be offset against taxable income
and income taxes in future years and expires starting in the year 2010 through
2030. The use of these losses to reduce future income taxes will
depend on the generation of sufficient taxable income prior to the expiration of
the net operating loss carryforwards. In the event of certain changes
in control, there will be an annual limitation on the amount of net operating
loss carryforwards which can be used. No tax benefit has been
reported in the financial statements for fiscal years ended December 31, 2009
and 2008 or the six months ended June 30, 2010 because it has been fully offset
by a valuation reserve. The use of future tax benefit is
undeterminable because presently we have not started full
operations.
Inflation
In the opinion of management, inflation
has not and will not have a material effect on our operations in the immediate
future. Management will continue to monitor inflation and evaluate
the possible future effects of inflation on our business and
operations.
Off-balance
Sheet Arrangements
We have no off-balance sheet
arrangements.
Item
3.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
This item is not required for a smaller
reporting company.
Item
4(T).
|
Controls
and Procedures.
|
Evaluation of Disclosure Controls
and Procedures. Disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934) are designed to ensure that information required to be disclosed in
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms. Disclosure and control procedures are also designed to ensure
that such information is accumulated and communicated to management, including
the chief executive officer and principal accounting officer, to allow timely
decisions regarding required disclosures.
As of the end of the period covered by
this quarterly report, we carried out an evaluation, under the supervision and
with the participation of management, including our chief executive officer and
principal accounting officer, of the effectiveness of the design and operation
of our disclosure controls and procedures. In designing and
evaluating the disclosure controls and procedures, management recognizes that
there are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and
procedures. Accordingly, even effective disclosure controls and
procedures can only provide reasonable assurance of achieving their desired
control objectives. Additionally, in evaluating and implementing
possible controls and procedures, management is required to apply its reasonable
judgment. Based on the evaluation described above, our management,
including our principal executive officer and principal accounting officer, have
concluded that, as of June 30, 2010, our disclosure controls and procedures were
not effective.
16
Changes in Internal Control Over
Financial Reporting. Management has evaluated whether any
change in our internal control over financial reporting occurred during the
second quarter of fiscal 2010. Based on its evaluation, management, including
the chief executive officer and principal accounting officer, has concluded that
there has been no change in our internal control over financial reporting during
the second quarter of fiscal 2010 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
|
There are no material pending legal
proceedings to which we are a party or to which any of our property is subject
and, to the best of our knowledge, no such actions against us are contemplated
or threatened.
Item
1A.
|
Risk
Factors
|
This item is not required for a smaller
reporting company.
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
This Item is not
applicable.
Item
3.
|
Defaults
Upon Senior Securities
|
This Item is not
applicable.
Item
4.
|
(Removed
and Reserved)
|
Item
5.
|
Other
Information
|
On June 8, 2010, we filed with the SEC
a registration statement on Form 10 pursuant to the Securities Exchange Act of
1934. As a result of filing this registration statement, we become
obligated to file with the SEC certain interim and periodic reports, including
an annual report containing audited financial statements.
Item
6.
|
Exhibits
|
|
Exhibit
31.1
|
Certification
of C.E.O. and Principal Accounting Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
Exhibit
32.1
|
Certification
of C.E.O. and Principal Accounting Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
17
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
PROTECT
PHARMACEUTICAL CORPORATION
|
||
Date: September
22, 2010
|
By:
|
/S/ William D.
Abajian
|
William
D. Abajian
|
||
President,
C.E.O. and Director
|
||
(Acting
Principal Accounting
Officer)
|
18