Item 1.
NOTE 1 - 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 March 31, 2017 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, 2016 audited financial statements. The results of operations for the period ended March 31, 2017 are not necessarily indicative of the operating results for the year ended December 31, 2017.
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 March 31, 2017
Recent Accounting Pronouncements
Management has considered all other recent accounting pronouncements issued since the last audit of the Company’s financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
PROTECT PHARMACEUTICAL CORPORATION
Notes to Financial Statements
March 31, 2017
(Unaudited)
NOTE 4 – RELATED-PARTY TRANSACTIONS
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 March 31, 2017 and December 31, 2016, respectively, the related party payable outstanding balance totaled $35,280 and $10,880, respectively. These payables are non-interest bearing, unsecured, and are due on demand.
NOTE 5 – 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.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The Following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Forward-Looking and Cautionary Statements
Unless otherwise indicated, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” are to the Company, unless the context requires otherwise. The following discussion and analysis by our management of our financial condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements and the accompanying related notes included in this quarterly report and our audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission.
Cautionary Statement Regarding Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.
This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors.” Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You
should read this report and the documents that we reference in this report and have filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Additional information concerning these and other risks and uncertainties is contained in our filings with the Securities and Exchange Commission, including the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.
Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” “our company,” “Protect” refer to Protect Pharmaceutical Corporation.
Our Ability to Continue as a Going Concern
Our independent registered public accounting firm has issued its report dated March 31, 2017, in connection with the audit of our annual financial statements as of December 31, 2016, that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern and Note 2 to the unaudited financial statements for the period ended March 31, 2017 also describes the existence of conditions that raise substantial doubt about our ability to continue as a going concern.
Results of Operations
Three months Ended March 31, 2017 and 2016
We did not realize revenues for the three-month periods ended March 31, 2017 and 2016. For the three months ended March 31, 2017 (“first quarter”), total operating expenses were $15,400, consisting of $15,200 in professional fees and $200 in general and administrative expenses. Total operating expenses for the comparable first quarter of 2016 were $3,672, consisting of $2,080 in professional fees, $1,500 in executive compensation and $92 in general and administrative expenses. The net loss for the first quarter of 2017 was $15,400, ($0.01 per share), compared to net loss of $3,672 ($0.00 per share) for the first quarter of 2016. The increase in professional fess in the first quarter of 2017 is attributable to an increase in legal fees $9,000 and audit fees $5,000.
Liquidity and Capital Resources
Total assets were $0 as of March 31, 2017 and December 31, 2016. Total liabilities at March 31, 2017 were $36,230, consisting of $950 in accounts payable and accrued expenses, and $35,280 in related-party payables. At December 31, 2016, total liabilities were $20,830.
Because we currently have no revenues and no cash, for the immediate future we believe we will have to rely on potential advances from stockholders to continue to implement our business activities. There is no assurance that our stockholders will continue indefinitely to provide additional funds or pay our expenses. It is likely the only other source of funding future operations will be through the private sale of our securities, either equity or debt.
At March 31, 2017, we had stockholders’ deficit of $36,230 compared to stockholders’ deficit of $20,830 at December 31, 2016.
Plan of Operation
As reported on Schedule 14f, filed with the Securities and Exchange Commission on September 9, 2016, effective September 9, 2016, Deworth Williams, the principal stockholder of the Company (“Williams”), entered into a Stock Purchase Agreement (the “Agreement”), as amended (the “Amended Agreement���), dated, August 30, 2016, with Taylor Group Holdings, LLC (the “Buyer”), a Florida Limited Liability Company, pursuant to which, among other things, Williams agreed to sell to the Buyer, and the Buyer agreed to purchase from Williams, a total of 937,063 shares of Common Stock owned of record and beneficially by Williams (the“Purchased Shares”). The Purchased Shares represented approximately 84.3% of our issued and outstanding shares of Common Stock as of the Record Date. In connection with the transactions contemplated by the Agreement, the Board of Directors appointed Una Taylor and Theodore Faison to fill vacancies on the our Board of Directors, effective September 19, 2016.
Our current business plan is to contemplate a possible future merger by the Company and either an affiliated entity or an as yet unknown other entity.
Our common stock is currently quoted on the QB tier of the OTC Markets under the ticker symbol “PRTT”.
We may be referred to as a reporting shell corporation. Shell corporations have zero or nominal assets and typically no stated or contingent liabilities. Private companies wishing to become publicly trading may wish to merge with a shell (a reverse merger or reverse acquisition) whereby the shareholders of the private company become the majority of the shareholders of the combined company. The private company may purchase for cash all or a portion of the common shares of the shell corporation from its major stockholders. Typically, the Board and officers of the private company become the new Board and officers of the combined Company and often the name of the private company becomes the name of the combined entity.
We have very limited capital, and it is unlikely that we will be able to take advantage of more than one such business opportunity. However, at the present time, we have not identified any business opportunity that it plans to pursue, nor have we reached any agreement or definitive understanding with any person concerning an acquisition.
It is anticipated that business opportunities will come to our attention from various sources, including its officers and directors, its other stockholders, professional advisors such as attorneys and accountants, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals. We have no plan, understandings, agreements, or commitments with any individual for such person to act as a finder of opportunities for our company.
Because we currently have no cash, it may be necessary for officers, directors or stockholders to advance funds and we will most likely accrue expenses until a funding can be accomplished. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, we expect directors to defer any compensation until such time as we have sufficient funds. We have not yet entered into any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital.
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 raise the necessary funding, our expansion 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.
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required under Regulation S-K for “smaller reporting companies.”
Item 4. 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 March 31, 2017, 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 quarter of fiscal 2017. 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 quarter of fiscal 2017 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
Not required under Regulation S-K for “smaller reporting companies.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities during the period ended March 31, 2017.
Item 4. Mine Safety Disclosures
This Item is not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
| Exhibit No. | | Exhibit Name |
| | | |
| 2.1* | | Patent Acquisition Agreement |
| 2.2* | | Patent Portfolio |
| 3.1* | | Articles of Incorporation |
| 3.2* | | Certificate of Amendment - Capitalization Change |
| 3.3* | | Certificate of Amendment - Name Change 2006 |
| 3.4* | | Certificate of Amendment - Name Change 2010 |
| 3.5* | | By-Laws |
| 4.1* | | Instrument defining rights of holders – Specimen Stock Certificate |
| 10.1* | | Employment Agreement – Ramesha Sesha |
| 10.2** | | Employment Agreement – William D. Abajian |
| 10.3*** | | Patent Purchase Agreement with Grünenthal GmbH |
| 14.1**** | | Financial Code of Ethics |
| 31.1 | | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | | Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | | Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101 INS | | XBRL Instance Document |
| 101 SCH | | XBRL Taxonomy Extension Schema Document |
| 101 CAL | | XBRL Taxonomy Calculation Linkbase Document |
| 101 DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
| 101 LAB | | XBRL Taxonomy Labels Linkbase Document |
| 101 PRE | | XBRL Taxonomy Presentation Linkbase Document |
| * | Previously filed as exhibit to Form 10 filed June 8, 2010. |
| ** | Previously filed as exhibit to Amendment No.1 Form 10 filed July 21, 2010. |
| *** | Previously files as exhibit to Form 8-K filed on February 4, 2011. |
| **** | Previously files as exhibit to Form 8-K filed on September 20, 2016. |
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: May 19, 2017 | By: | /s/ UNA TAYLOR | |
| | | Una Taylor |
| | | C.E.O. and Director Principal Accounting Officer |
