UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the Quarter Ended June 30, 2013

Commission File Number  333-180954

PROTECT PHARMACEUTICAL CORPORATION

(Exact name of registrant as specified in its charter)

2681 Parleys Way, Ste 204, Salt Lake City, UT 84109

(Address of principal executive offices)

 (801) 322-3401

(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

     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.

1

TABLE OF CONTENTS

PART  I   —   FINANCIAL INFORMATION

The accompanying unaudited balance sheets of Protect Pharmaceutical Corporation at June 30, 2013 and related unaudited statements of operations,  and cash flows for the six months ended June 30, 2013, have been prepared by management in conformity with United States generally accepted accounting principles.   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.  We suggest that these financial statements be read in conjunction with the financial statements and notes thereto included in the December 31, 2012 audited financial statements included in our registration statement on Form 10K.  Operating results for the period ended June 30, 2013, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2013 or any other subsequent period.

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, 2013, 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, 2012 audited financial statements.  The results of operations for the periods ended June 30, 2013and 2012 are not necessarily indicative of the operating results for the full years.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted 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.  However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  It is the intent of the Company to seek a merger with an existing, operating company.  In the interim, shareholders of the Company have committed to meeting its minimal operating expenses

 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.

Basic (Loss) per Common Share

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2013 and 2012.

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.

NOTE 4 – RELATED-PARTY TRANSACTIONS

The Company owed trade accounts payable to a related party in the amount of $24,294, and $16,319, as of June 30, 2013, and December 31, 2012, respectively.  These amounts related to accounting and consulting services provided by an entity that is partially owned by a Company officer.

The Company has recorded advances from related parties and expenses paid by related parties on behalf of the Company as related party payables. As of June 30, 2013 and December 31, 2012, respectively, the related party payable outstanding balance totaled $8,939  and $4,079 . These payables are non-interest bearing, unsecured, and are due on demand.

Contributed Capital

During the six months ended June 30, 2013, a related-party has contributed various administrative services to the Company. These services have been valued at $3,000 for the six months ended June 30, 2013.

NOTE 5 – SALE OF PATENTS

On January 31, 2011, Protect Pharmaceutical Corporation (the “Company”) finalized and closed a Patent Purchase Agreement (the “Agreement”) with Grünenthal GmbH (“Grünenthal”), a company organized under the laws of Germany.  Pursuant to the terms of the Agreement, the Company sold to Grünenthal all of the Company’s rights title and interest in and to certain inventions described and claimed in certain patents and patent applications (collectively “the Patents”), including without limitation, all extensions, continuations, provisions, derivatives and related applications thereof.  The Patents relate to Opioid Formulations and Methods of treating acute and chronic pain.

NOTE 5 – SALE OF PATENTS (Continued)

In exchange for the Patents, Grünenthal paid the Company $1,600,000. The Company originally acquired the subject Patents sold to Grünenthal, together with other inventions and patents, in February 2010 pursuant to a Patent Acquisition Agreement with Nectid, Inc. (“Nectid”), a privately held New Jersey company.  Under the terms of the Patent Acquisition Agreement and Addendum, the Company agreed that in the event the Company sold out right any of the patents acquired from Nectid without first undertaking any development of the patents, the proceeds from such sale would be divided, 60% to Nectid and 40% to the Company.  Accordingly, the Company realized 40%, or $640,000 from the proceeds of the sale and the balance will be paid to Nectid.  The Company retains all other inventions, patents and technologies initially acquired from Nectid.

NOTE 6 - STOCK PURCHASE AGREEMENT

On June 17, 2011, Protect Pharmaceutical Corporation finalized the execution of an Investment Agreement with Kodiak Capital Group, LLC, a Delaware limited liability company. The Agreement provides the Company with an equity line whereby the Company can sell to Kodiak, from time-to-time, shares of the Company’s common stock up to an aggregate value of $10 million dollars over a two-year period. As part of the agreement, the Company will file with the SEC a registration statement under the Securities Act of 1933 to register the common stock that may be sold to Kodiak pursuant to the Agreement.

Under the terms of the Agreement, The Company has the right to deliver to Kodiak a “put notice” stating the dollar amount of common shares we intend to sell to Kodiak, up to $250,000. The amount that the Company is entitled to sell to Kodiak under any single put notice will be equal to, at Kodiak's election, either: (i) 200% of the average daily volume (U.S. market only) of the common stock for the three trading days prior to the put notice, multiplied by the average of the three daily closing bid prices immediately preceding the put notice date; or (ii) up to $250,000.

The Company cannot submit a new put notice until after the closing of the previous notice. The purchase price for the shares pursuant to the put notice will be equal to 92% of the lowest closing best bid price of the common stock during the five trading days after the put notice is delivered. The shares must be paid for and share certificates delivered within the “pricing period,” which is seven days from the date the put notice is delivered.

The Company has the option to specify a floor price for any put notice. In the event our shares fall below the floor price, the put will be temporarily suspended. The put will resume if, during the pricing period for that put, the common stock trades above the floor price.

The Company has agreed to pay to Kodiak an initial fee of 150,000 shares of common stock following execution of the Agreement. Also, the Company has agreed to pay Kodiak a commitment fee equal to 3% of the total amount of the commitment, payable as follows: (i) 25% on the first closing of a put notice; (ii) 25% on the second closing, (iii) 25% on the third closing; and (iv) 25% on the fourth closing or eight months from execution of the Agreement. The commitment fee is payable in Company common stock.

In connection with the Agreement, we entered into a Registration Rights Agreement with Kodiak, whereby the Company agreed to register with the SEC the shares to be issued pursuant to the Agreement. The Company must prepare and file within 90 days from the date of the Agreement, a registration statement under the Securities Act of 1933.

The Company intends to use the proceeds from the sale of common stock pursuant to the Agreement for general corporate and working capital purposes and acquisitions of assets, businesses or operations, or for other purposes that the board of directors deems to be in the best interest of the Company.

As of December 31, 2012 the Company has not initiated any activity with respect to the Investment Agreement other than the initial issuance of 150,000 common shares.  The Company has not registered with the SEC the shares to be issued to Kodak.  The Agreement expired on June 17, 2013.

NOTE 7 – SUBSEQUENT EVENTS

In accordance with 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.

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 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

Three Months Ended June 30, 2013 and 2012

We did not realize revenues for the three-month periods ended June, 2013 and 2012. During the three months ended June 30, 2013, we recorded total expenses of $11,273, consisting of $9,727 in professional fees, $46 in general and administrative expenses, and $1,500 in executive compensation. In the comparable period of 2012 we recorded expenses totaling $191,226, consisting of $191,210 in professional fees, and $16 in general and administrative expenses. These factors resulted in a net loss for the three months ended June 30, 2013 in the amount of $11,273 ($0.00 per share), compared to net loss of $191,226 ($0.00 per share) for the three months ended June 30, 2012.  The significant decrease in our net loss results primarily from our decrease in business activities following the resignation of Ram Sesha.   

Six Months Ended June 30, 2013 and 2012

We did not realize revenues for the six-month periods ended June, 2013 and 2012. During the six months ended June 30, 2013, we recorded total expenses of $14,403, consisting of $11,313 in professional fees, $90 in general and administrative expenses, and $3,000 in executive compensation. In the comparable period of 2012 we recorded expenses totaling $422,846, consisting of $386,377 in professional fees, $19,726 in executive compensation, and $16,743 in general and administrative expenses. These factors resulted in a net loss for the six months ended June 30, 2013 in the amount of $14,403 ($0.00 per share), compared to net loss of $422,846 ($0.00 per share) for the six months ended June 30, 2012.  The significant decrease in our net loss results primarily from our decrease in business activities following the resignation of Ram Sesha.   

Liquidity and Capital Resources

Total assets at June 30, 2013 were $771 which consisted of $771 in cash, compared to $860 in cash at December 31, 2012. Total liabilities at June 30, 2013 were $589,363, consisting primarily of $486,826 in other accrued expenses and accounts payable of $69,304. At December 31, 2012, total liabilities were $578,049, consisting primarily of $486,826 in other accrued expenses and $70,825 in accounts payable.

Because we currently have no revenues, for the immediate future we will have to rely on our existing cash reserves to continue to implement our business activities.   It is likely the only source of funding our future operations will be through the private sale of our securities, either equity or debt.  

At June 30, 2013, we had stockholders’ deficit of $588,592 compared to a stockholders’ deficit of $577,189 at December 31, 2012.  The increased deficit is primarily due to the net loss of $14,403 during the six months ended June 30, 2013.

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 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.

Future 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 the private sale of our securities, either equity or debt.   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.

 Net Operating Loss

We have accumulated approximately $602,043 of net operating loss carryforwards as of December 31, 2012.  This loss carry forward may be offset against taxable income and income taxes in future years and expires starting in the year 2012 through 2032.  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 that can be used.  No tax benefit has been reported in the financial statements for fiscal years ended December 31, 2012 and 2011 or the six months ended June 30, 2013, because it has been fully offset by a valuation reserve.  The use of future tax benefit is undeterminable because 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, management, including our

principal executive officer and principal accounting officer, has concluded that, as of June 30, 2013, our disclosure controls and procedures were not effective.

Changes in Internal Control Over Financial Reporting.  Management has evaluated whether any change in our internal control over financial reporting occurred during the first half of fiscal 2013. 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 first half of fiscal 2013 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

None.

Item 6.           Exhibits

Exhibit 101*

Interactive Data File

*In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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.