UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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x | Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 |
For the Fiscal Year Ended December 31, 2013
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o | 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)
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Nevada | 27-1877179 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
2681 Parleys Way, Ste 204, Salt Lake City, UT 84109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 322-3401
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.005 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨ No X
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
Yes ¨ No X
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 preceding 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 x
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.¨
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
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Large accelerated filer ¨ | Accelerated filer x |
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
The aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing sales price, or the average bid and asked price on such stock, as of June 30, 2013, the last business day of the registrant’s most recently completed second quarter, was $95,754. Shares of the registrant’s common stock held by each executive officer and director and by each entity or person that, to the registrant’s knowledge, owned 10% or more of registrant’s outstanding common stock as of June 30, 2013 have been excluded in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of the registrant’s common stock outstanding as of April 14, 2014 was 44,573,012.
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained in Part IV, Item 15.
Protect Pharmaceutical Corporation
TABLE OF CONTENTS
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PART I |
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Item 1. | Business | 4 |
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Item 1A. | Risk Factors | 13 |
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Item 1B. | Unresolved Staff Comments | 13 |
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Item 2. | Description of Properties | 13 |
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Item 3. | Legal Proceedings | 13 |
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Item 4. | Removed and Reserved | 13 |
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PART II |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer | |
| Purchases of Equity Securities | 13 |
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Item 6. | Selected Financial Data | 15 |
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Item 7. | Management's Discussion and Analysis of Financial Condition and Results | |
| of Operations | 17 |
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 17 |
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Item 8. | Financial Statements and Supplementary Data | 18 |
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Item 9. | Changes in and Disagreements with Accountants on Accounting and | |
| Financial Disclosure | 31 |
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Item 9A(T). | Controls and Procedures | 31 |
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Item 9B | Other Information | 31 |
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PART III |
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Item 10. | Directors, Executive Officers and Corporate Governance | 32 |
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Item 11. | Executive Compensation | 32 |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related | |
| Stockholder Matters | 33 |
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Item 13. | Certain Relationships and Related Transactions and Director Independence | 33 |
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Item 14. | Principal Accounting Fees and Services | 35 |
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PART IV |
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Item 15. | Exhibits, Financial Statement Schedules. | 36 |
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| Signatures | 37 |
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PART I
Item 1. Business.
History
Protect Pharmaceutical Corporation was originally incorporated in the State of Idaho on August 5, 1987, under the name of Interstate Mining and Development Properties, Inc., for the purpose of engaging in the acquisition and development of mining prospects. The company staked certain gold placer mining claims, however the claims did not yield a sufficient amount of ore and the company never became profitable. Operational activities were halted in approximately 1989.
The company remained inactive until January 9, 1996 when it was reinstated in the State of Idaho. On August 2, 1996, the company changed its name to Interstate Development, Inc. During that same month H. Deworth Williams and Geoff Williams acquired controlling interest of the company through the purchase of common stock from the company’s two largest shareholders. The company then became engaged in the search for and evaluation of prospective business opportunities and, if justified, potentially to acquire and/or merge with one or more businesses or business opportunities.
On July 3, 2006 at a special meeting of stockholders, the stockholders approve the change of the corporation’s domicile from Idaho to Nevada. Stockholders also approved the acquisition of Nanolution Technologies, Inc., a Delaware corporation focused on developing technologies for medical devices, device coatings, and pharmaceutical dosage forms to repurpose drugs and develop novel, improved drug delivery methods for existing, approved drugs. However, the acquisition was never finalized and was abandoned.
On December 14, 2006, the change of domicile to Nevada was finalized by way of merging with and into Interstate Acquisition, Inc. (incorporated in Nevada on June 15, 2006) for the sole purpose of changing domicile. The Idaho entity was then dissolved. On December 15, 2006, we changed the name of the Nevada entity to Pro-Tect, Inc. and continued to explore possible business opportunities.
On February 12, 2010, we entered into a Patent Acquisition Agreement with Nectid, Inc., a privately held Princeton, New Jersey based company, whereby we acquired from Nectid a portfolio of pending patent applications relating to three drug delivery technologies:
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| ● | a gastro-retentive platform for drugs that otherwise have short time windows for absorption: |
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| ● | an abuse deterrent platform for prescription drugs that are prone to abuse, especially narcotic pain-killers; and |
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| ● | a once-daily platform that allows two or more drugs commonly taken in combination to be delivered via a single dose with fewer side effects. |
At the closing of the acquisition, Ramesha Sesha, President of Nectid and the inventor of all the acquired technology, was appointed to our board of directors and as Chief Operating Officer and Chief Scientific Officer.
In exchange for the acquired patent applications, we issued to Nectid 5.0 million shares of our common stock and agreed to issue an additional 2.0 million shares upon realizing financing of $2.0 million. The acquisition agreement provided certain registration rights whereby the company would use its best efforts to file with the SEC a registration statement under the Securities Act of 1933, which would include shares issued to Nectid under the agreement. Any shares included in the registration statement may be subject to certain limitations. As of the date hereof, we have not realized the financing nor issued the additional 2 million shares and, accordingly, we have not filed a registration statement under the 1933 Act.
As further consideration, upon commercialization of the patent applications, the acquisition agreement provided that we would pay Nectid a royalty of 20% of the gross revenues realized from third parties, including license fees and milestone payments, or 20% of the net sales if from direct sales. If we realize milestone payments from our direct from exploitation of the patent applications, we will pay Nectid 10% of those payments. For example, if a project is licensed to another pharmaceutical company, we are obligated to pay Nectid 20% of the licensing and milestone payments and share 20% of the royalty revenue received from our licensing partner. However, if a product is developed and marketed directly by the company, we will be obligated to pay Nectid 20% of net sales (after deducting returns discounts and allowances) and/or 10% of any milestone payments received. In December 2010, we amended the acquisition agreement to provide that in the event the company sold outright 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 Protect.
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On January 31, 2011, we finalized a Patent Purchase Agreement with Grünenthal GmbH, a company organized under the laws of Germany. Pursuant to the terms of that agreement, we 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, including without limitation, all extensions, continuations, provisionals, derivatives and related applications thereof. The sold patents relate to Opioid Formulations and Methods of treating acute and chronic pain.
In exchange for the patents, Grünenthal paid the Company the cash consideration of $1.6 million. Pursuant to our agreement with Nectid, because the patents were sold outright without first undertaking any development of the patents, the proceeds from such sale would be divided, 60% to Nectid and 40% to Protect. Accordingly, we realized 40%, or $640,000 from the proceeds of the sale and the balance was paid to Nectid. Protect retains all other inventions, patents and technologies initially acquired from Nectid.
Current Business
As a result of the acquisition, we intend to develop for possible commercialization the acquired drugs and related technologies. On March 25, 2010, in order to reflect our current business our board of directors unanimously agreed to change the corporate name to Protect Pharmaceutical Corporation. The name change was approved by the written consent a majority of the outstanding shares of common stock. A Certificate of Amendment was filed with the State of Nevada on April 26, 2010 to reflect the change.
On January 24, 2012, Ramesha Sesha tendered his resignation as an officer and director of the Company. He was replaced on February 12, 2012 by Geoff Williams as the Company’s chief executive officer, president, and treasurer, and as a member of the Company’s board of directors. Also on February 12, 2012 Nancy Ah Chong was appointed to serve as the Company’s corporate secretary, and as a member of the Company’s board of directors.
Our principal offices are currently located at 2681 Parleys Way, Suite 204, Salt Lake City, UT84109 and our telephone number is (801) 322-3401.
In June 2010, we filed with the SEC a registration statement on Form 10 under the Securities Exchange Act of 1934. As a result of filing the registration statement, we are obligated to file with the SEC certain interim and periodic reports, including an annual report containing audited financial statements.
Our primary purpose is to develop drug delivery technologies and solutions through innovative dosing and/or delivery. We intend to focus on the research, development, and commercialization of drug delivery technologies that minimize the pharmaceutical dose, frequency, and side effects.
While the oral route is the most convenient method of drug administration, we believe there is a need to develop advances in oral drug delivery technologies that can make significant differences in (i) enhancing patient compliance, (ii) drug bioavailability, (iii) preventing abuse of prescription drugs and (iv) reducing dosages. Although there are a number of once daily drugs and a number of combination drugs on the market, we believe that there is not a single once daily combination drug approved for treating pain. Similarly, one of the significant challenges in oral drug delivery is to develop gastric retention platforms for long-term (ranging from 6 to 24 hours) delivery of drugs by oral administration. Additionally, prescription drug abuse is a major social and medical issue and efforts to develop abuse deterrent drug delivery design have met with limited success.
Management believes that the application of drug delivery platform technologies to pain drugs provides a significant business opportunity because fewer new pain drugs are being developed. Also, potential demand for pain drugs will be driven by the increasing demographic segment of elderly population who often consume pain drugs over a long period of time. Medical efforts to treat pain, known as pain management, address a large market. Clinical pain is a worldwide problem with serious health and economic consequences.
Further, although most people take medicines only for the reasons their doctors prescribe them, prescription drug abuse remains a serious problem in the United States and around the world. The major abused drugs include narcotic painkillers, sedatives and tranquilizers, and stimulants. Abuse of prescription drugs to get high has become increasingly prevalent among teens and young adults. Thus, there is a serious need to develop abuse deterrent drugs and abuse deterrent drug delivery systems that can be used to minimize prescription drug abuse.
Glossary of Terms
To better understand the information provided herein, we are including the following description of some of the terms used herein.
Fibromyalgia Syndrome (FMS): A complex, chronic condition that causes widespread pain and severe fatigue. FMS is a syndrome because it is a set of signs and symptoms that occur together, affecting muscles and their attachments to bones.
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GABA Analog Therapy: y-Aminobutyric acid (GABA) is the chief inhibitory neurotransmitter in the mammalian central nervous system. It plays a role in regulating neuronal excitability throughout the nervous system. In humans, GABA is also directly responsible for the regulation of muscle tone. GABA Analogues are modulators and they include gabapentin, pregabalin that binds to a (alpha2delta) subunit of the voltage-dependent calcium channel in the central nervous system. This reduces calcium influx into the nerve terminals thereby reducing the neorpathic and other pain.
Naloxone Methiodide and Methyl Naltrexone: Methylnaltrexone (MNTX, trade name Relistor) and Naloxone Methiodide are opioid antagonists that act to reverse some of the side effects of opioid drugs (for example Tramadol) such as constipation without affecting analgesia or precipitating withdrawals.
Neuropathic Pain: Neuropathic pain results from damage to or dysfunction of the peripheral or central nervous system, rather than stimulation of pain receptors. Although neuropathic pain responds to opioids, treatment is often with adjuvant drugs such as antidepressants, anticonvulsants, baclofen and topical drugs.
Opioid: A chemical that works by binding to opioid receptors, which are found principally in the central nervous system and the gastrointestinal tract. The receptors in these organ systems mediate both the beneficial effects and the side effects of opioids.
Postherpetic Neuralgia: Postherpetic neuralgia is a kind of pain involving damage to restricted regions of the peripheral nervous system. PHN is, therefore, a type of neuropathic pain that has a regional topographic restriction. Current clinical practitioners use, among others, Pregabalin, Gabapentin, anti-depressants such as Cymbalta/Nucynta, traditional painkillers like tramadol and Oxycontin, and localized patches like lidocaine and capsaicin.
Pregabalin/Gabapentin: Analogues of γ-Aminobutyric acid (GABA), the chief inhibitory neurotransmitter in the mammalian central nervous system.
Tapentadol/Tramadol: Tapentadol and Tramadol are synthetic opioid drugs, similar to morphine and Oxycodone that occur naturally, which modulate mu-opioid and other pain receptors to reduce pain.
Technologies
The acquired patent applications enabled three key drug delivery platform technologies: Once daily (“Pro24™”), gastro-retentive (“ProRet™”) and abuse-deterrent (“ProProof™”) platform technologies. Following the sale of two patents to Grunenthal, the Company no longer owns the intellectual properties and technologies related to Once daily (“Pro24™”) platform technology. Our remaining technologies are intended to deploy these three proprietary drug delivery technologies to enable a number of new-generation drugs with enhanced clinical benefits in multiple therapeutic areas. Our primary focus is to develop novel and clinically efficient drugs for chronic and acute pain.
ProRet™: ProRet™ is a unique gastro-retentive delivery platform that we believe can formulate drugs with a narrow absorption window. We also believe that the ProRet™ gastro-retentive systems has the potential to remain in the gastric region for several hours, thus significantly prolonging the absorption window for a number of key drugs. ProRet™ system includes both prolonged resident osmotic cup and pouch based delivery of drugs over 24 hours. We believe ProRet™’s prolonged gastric formulation enabled by one of the acquired patents has the potential to improve bioavailability and solubility for drugs that are less soluble in a high pH environment. Its anticipated applications include those that require local drug delivery to the stomach and proximal small intestines. We have not conducted clinical studies or formulated the ProRet™ platform. Our expectations are premised on the patent application for the technology supported by 12 examples and accompanying dissolution studies involving seven different drugs that all are hard to formulate as gastro-retentive dosage forms.
ProProof™: We believe the ProProof™ abuse-deterrent platform, enabled by one of our acquired patents, could potentially reduce the abuse of drugs that are prone for abuse. The technology uses twin methods of efficacy enhancement and abuse neutralization to achieve its objectives. We believe ProProof™ has the potential to reduce specific forms of prescription opioid abuse and can be applied to a number of prescription drugs that are prone for abuse. We have not formulated any ProProof™ abuse deterrent drugs nor have we conducted any studies using such products. Our acquired patent application provides 13 examples of a number of abuse prone products such as morphine, oxycodone, tapentadol, hydromorphone, hydrocodone, tramadol and tapentadol. The patent application also provides some clinical data and experimental data on marketed and inventive products that we believe supports the possibility of the platform’s ability to lower the abuse of such drugs.
According to the current understanding of pain treatment methods, opioid painkillers produce their pain relieving effect by activating an inhibitory pathway in the nervous system. Inhibitory pathways inhibit the transmission of pain signals into the brain. There are reports that opioids also stimulate an excitatory pathway in the nervous system. The excitatory pathway partially counteracts pain inhibition and is believed to be a major cause of adverse side effects associated with opioid use, including the development of tolerance and addiction. At the normal clinical doses, the activation of the excitatory pathway was previously undetected probably due to masking by the inhibitory
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pathway. We believe that the selective blockade of the excitatory pathway promotes the pain relieving potency of opioid by blocking the excitatory pain-enhancing effect.
We believe that the excitatory pathway plays an important role in modulating the adverse side effects of opioid use and low doses and that opioid antagonists can enhance the clinical efficacy of the opioids. In the product designs enabled by the acquired patent applications, this efficacy enhancement is combined with the abuse deterrence using either the same or a different antagonist, either singly or in combination with a gelling agent or an irritating agent. The design uses activity modifiers, physical barriers to tampering, agonist-antagonist formulations and aversion agents. It is our belief that ProProof™ has the potential to reduce specific forms of prescription opioid abuse.
Business Development Strategies
Our business strategy is focused on the development and commercialization of differentiated products based on our proprietary oral drug delivery technologies acquired from Nectid. We plan to combine known molecules with innovative proprietary technologies to enhance the therapeutic potential of existing medications that could possibly provide a revenue stream through licensing and royalty. Project selection is based on a clear, unmet and under-served market, large business potential and strong intellectual property protection with innovation.
After the Patent Sale Agreement with Grunenthal, we no longer own the rights to PRTT-100 as envisaged. In the near term, we intend to proceed with a comprehensive program to develop and commercialize PRTT-200 that is used for diabetic neuropathic pain, fibromyalgia, postherpetic neuralgia and epilepsy. We also have future plans to develop and commercialize once-daily opioid combinations as well as abuse-deterrent opioid combinations (PRTT-300) for moderate to severe pain.
We intend to optimize the use and value of our drug delivery technologies in three ways. First, we are seeking to assemble a number of pharmaceutical products that can be highly differentiated from existing versions of the compounds upon which they are based. These unique drugs may be promoted together within a specialty pharmaceutical field, such as pain and ER specialists.
Second, we plan to out-license product candidates after we have increased their value through our formulation and clinical development efforts. Third, we plan to enter into collaborative partnerships whereby the unique capabilities of our technology can provide value to a partner's product, particularly for non-analgesic drug markets.
Our goal is to become a drug discovery company focusing on inventing and developing better drugs, initially for pain and pain related disorders like depression later for therapeutic areas, where better medication and compliance can improve the clinical benefits and quality of life. We intend to achieve this goal by:
Building Proprietary Drug Discovery and Delivery Platforms: As adequate funding becomes available, we intend to strengthen the two drug delivery technologies; ProRet™ and ProProof™ that can be used to develop novel and efficient drugs. While we believe these platform technologies can be use to develop a new-generation of drugs with improved clinical benefits in multiple therapeutic areas, we are focusing initial resources to develop only pain drugs, more specifically PRTT-200 and PRTT-300, once daily drugs to treat moderate to severe pain, diabetic neuropathic pain and fibromyalgia. If approved by the Food and Drug Administration (“FDA”), we believe our proprietary drugs could replace certain existing pain drugs commonly used to treat moderate to severe pain, diabetic neuropathic pain and fibromyalgia.
Building a Drug Franchise in Pain Medications: Our long-term goal is to develop drugs that we believe may have broad use for patients with moderate to severe pain, diabetic neuropathic pain and to treat fibromyalgia. We believe this approach may help alleviate physicians’ current tendency to under-prescribe opioid painkillers and prescribe off-label drugs for diabetic neuropathic pain and fibromyalgia
Retaining Significant Rights: We currently retain worldwide commercialization rights to all of our technology and pain management product candidates in all markets and indications. In general, we intend to independently develop product candidates through late-stage clinical trials. As a result, we expect to capture a greater percentage of the profits from drug sales than we would if we out-licensed our drugs earlier in the development process. In market segments that require large or specialized sales forces, such as the market for opioids or diabetic neuropathic pain products, we may seek sales and marketing alliances with third parties. We believe that such alliances will enable us to deploy our resources effectively and commercialize our drugs rapidly and cost-effectively.
Using Our Technology to Develop Multiple Drugs for Both Pain and Non-Pain Indications: We are initially focusing our efforts on developing pain drugs. However, we believe our technology can be broadly applied to additional therapeutic areas enabling us to target wider and deeper business opportunities.
Outsourcing Key Functions: We intend to outsource preclinical studies, clinical trials, formulation and manufacturing. We believe outsourcing will produce significant time savings and allow for more efficient deployment of our resources. However, these development activities all require substantial expenditures and
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currently we do not have revenues or capital to fund these activities. We have commenced preliminary discussions with prospective investors to capitalize the company, fund the development of potential products and to license one or more products. Our ability to fund development activities depends on achieving success in either licensing or finding an industry partner, of which there can be no assurance.
Products
We intend to use our proprietary technologies, ProRet™, and ProProof™ to potentially develop novel drugs. It is our plan to develop a number of products to the proof of concept stage and then see a partner.
PRTT-200: PRTT-200 is a gastro-retentive once daily calcium channel inhibitor that we believe has the potential to treat diabetic neuropathic pain and fibromyalgia. It uses Protect’s proprietary gastro-retentive platform ProRet™ to overcome absorption window challenges. We have not conducted any clinical studies or formulated the PRTT-200.
We have not incurred any developmental costs in connection with PRTT-200 except for those associated with the patent acquisition agreement. We have not identified an external development partner that will be necessary to first formulate the product and then conduct dose ranging studies with between 40 to 50 patients. This will be followed by pivotal studies using several hundred patients to gather data sufficient for FDA submission. We estimate the costs to includes approximately $2.0 million for formulation, $2.0 million for dose ranging studies and several million dollars for pivotal studies. We expect that we will know the details of patients size and type of patients after completing formulation and dose ranging studies and then meet with the FDA officials to provide an indicative cost for pivotal studies.
If we are successful in securing adequate funding for product development, we estimate that it will take 12 to 18 months for product formulation, an additional 6 to 12 months for dosage finding studies, followed by additional 24 to 36 months of pivotal studies and 12 months of FDA review period. If product development is successful, we estimate that we could realize a revenue stream from PRTT-200 after a minimum of 50 to 60 months.
PRTT-200 is a gastro-retentive drug delivery of GABA analog and unless we are able to demonstrate that it provides better clinical benefit than the currently marketed GABA analog, product development will fail. Product development could also fail if the designed product is not retained in the stomach long enough. If the event the FDA and/or other regulators require a higher clinical efficacy bar to approve the product, our cost and time estimates may escalate significantly. Further, similar and competitive products may enter the marketplace that would limit the potential market opportunities for PRTT-200. We believe there are two competitive products currently under development. Depomed and Pfizer are developing similar products and their approval may limit the opportunities for PRTT-200.
PRTT-300: We believe that PRTT-300 could potentially be an abuse deterrent, once daily opioid combination with antagonist that could provide clinical benefits over existing opioid formulations. PRTT-300 uses Protect’s proprietary abuse deterrent platform ProProof™ design. We believe that PRTT-300 has the possibility of enhancing analgesic property by minimizing the side effects of nausea, vomiting, dizziness and head ache. We have not conducted any clinical studies or formulated the PRTT-300.
We have not incurred any developmental costs in connection with PRTT-300 except for those associated with the patent acquisition agreement. We have not identified an external development partner that will be necessary to first formulate the product and then conduct dose ranging studies with between 40 to 50 patients. This will be followed by pivotal studies using several hundred patients to gather data sufficient for FDA submission. We expect that we will have to demonstrate that the product is indeed abuse deterrent, which will require several comparative studies with normal non-abuse deterrent products currently marketed. We estimate costs to includes approximately $3.0 million for formulation, $3.0 million for dose ranging studies and several million dollars for pivotal studies. We expect that we will know details of patients size and type of patients after completing formulation and dose ranging studies and then meet with the FDA officials to provide an indicative cost for pivotal studies, which we estimate will be $10 to $15 million.
If we are successful in securing adequate funding for product development, we estimate that it will take 12 to 24 months for product formulation, an additional 12 to 24 months for dosage finding studies, followed by additional 24 to 36 months of pivotal studies and 12 months of FDA review period. If product development is successful, we estimate that we could realize a revenue stream from PRTT-300 after a minimum of 50 to 60 months. If product development is successful, we estimate that we could realize a revenue stream from PRTT-300 after a minimum of 60 to 72 months.
Unless we can demonstrate PRTT-300 is clinically non-inferior to the currently marketed products, product development will fail. Also, we must demonstrate PRTT-300 is abuse deterrent enough for regulators to approve it. PRTT-300 is an abuse deterrent delivery of an opioid and we will need to demonstrate that it provides clinical benefit that is not inferior to that from currently marketed drugs. The product may fail to meet this requirement if not delivered enough or long enough to show non-inferiority. In the event FDA and other regulators require a higher
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clinical efficacy bar to approve the product, our cost and time estimates may escalate significantly. We are aware that there is at least one similar approved product in the marketplace, EMBEDA® from King Pharmaceuticals, Inc. Further , similar and competitive products may enter the marketplace that would limit the potential market opportunities for PRTT-300. We believe there are several competitive products in under development including Remoxy® and Acurox from King Pharmaceuticals/ Pain Therapeutics and King/Acura Pharmaceuticals respectively, and other unknown products from Labopharm, Grünenthal, Theraquest whose product approval may also limit the our opportunities.
Research and Development
We have not made any expenditure on research and development activities prior to acquiring the patent applications from Nectid. Because we have no research facilities and limited qualified personnel, we intend to rely on collaborative agreements with other companies to conduct our research and development activities. We intend to rely on contractual partners to formulate, test, supply, store and distribute drug supplies for our clinical trials. Presently, we have not entered into any such agreements and there is no assurance that we can secure a favorable partnership arrangement in the future.
Our initial intention is to commence with a comprehensive program to develop and commercialize PRTT-200, with once-daily drug for diabetic neuropathic pain, fibromyalgia, postherpetic neuralgia and epilepsy. Subsequently and as capital and resources permit, we intend to develop and commercialize once-daily opioid combinations (PRTT-300) and abuse-deterrent opioid combinations for moderate to severe pain. In order to conduct our research and development activities we will have to raise capital, most likely through a private placement of our securities. We estimate that research and development expenses will be approximately $2.5 million during the next 12 months. We are currently exploring possible funding sources, but we have no assurance that we will be able to raise the necessary funds on terms favorable to the company, or at all.
Manufacturing
Presently we have no manufacturing or research and development facilities. We plan to enter into agreements and rely upon qualified third parties for the formulation and manufacture of our drugs. These supplies and the manufacturing facilities must comply with U.S. Drug Enforcement Agency (“DEA”) regulations and current good manufacturing practices enforced by the FDA and other government agencies. Drug manufacturers are subject to ongoing periodic, unannounced inspection by the FDA, the DEA and corresponding state and foreign government agencies to ensure strict compliance with good manufacturing practices and other government regulations. We plan to continue to outsource all formulation and manufacturing and related activities.
Marketing
Currently we are not engaged in the research and development of any products. We intend to rely on contractual partners to develop our potential products. When we have finalized a commercially viable product, we intend to formulate a comprehensive marketing plan.
Employees
We currently have no employees. Daily functions are administered by our current directors. We are presently considering the possibility of additional employees, but will add employees only as our business demands warrant and we have the necessary available funds. We also plan to engage consultants from time to time to perform services on a per diem or hourly basis.
Intellectual Properties
We seek to protect our technology by, among other methods, filing and prosecuting U.S. and foreign patents and patent applications with respect to our technology and products and their uses. The acquired patent applications, if successfully granted, will not expire earlier than September 2028. We currently hold 4 patent applications that are summarized below.
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| ● | Abuse Proof Delivery Systems, dated June 1, 2009 |
| ● | Novel GABA Analog Dosage Form, dated March 17, 2011 |
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| ● | Tapentadol Compositions, Dated May 24, 2010 |
| ● | Novel Slow Release Tapentadol Compositions dated June 1, 2010 |
We plan to prosecute and defend our patent applications, issued patents and proprietary information. Our competitive position and potential future revenues will depend in large part upon our ability to protect our intellectual property from challenges and to enforce our patent rights against potential infringers. We will continue to file new patent applications based on additional developments. If competitors are able to successfully challenge
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the validity of our patent rights, claims, based on the existence of prior art, tests, experiments or otherwise, they would be able to market products that contain features and clinical benefits similar to those of our products, and demand for our products could decline as a result.
There can be no assurance that any current or future patent application will result in patents being issued, or that existing patent pending applications, or any new patents applications, if issued, will afford meaningful protection from competitors. Also, there can be no assurance that we will have the financial resources necessary to enforce any patent rights we may hold. We are not aware of any claim that our patent pending application may infringe, or will infringe any existing patent. However, in the event such a claim is made and we are unsuccessful against such claim, we may be required to obtain licenses to such other patents or proprietary technology in order to develop or market our services. There can be no assurance that we will be able to obtain such licenses on commercially reasonable terms or that the patents underlying the licenses will be valid and enforceable.
If we are unable to secure patent protection for our technology and products, current competitors and/or other businesses could duplicate the same technology, products and services in direct competition with us. Presently, we anticipate filing additional patent applications if new and/or improved product services are developed. We do not hold any registered trademarks.
Government Regulation
Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacture and marketing of pharmaceuticals and in our ongoing research and development activities.
All of our products will require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous preclinical testing and clinical trials and other pre-marketing approval requirements by the FDA and regulatory authorities in other countries. In the United States, various federal and in some cases state statutes and regulations, also govern or impact upon the manufacturing, safety, labeling, storage, record keeping and marketing of our products. The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations require us to spend substantial resources. Regulatory approval, when and if obtained, may be limited in scope which may significantly limit the indicated uses for which our products may be marketed. Further, approved drugs, as well as their manufacturers, are subject to ongoing review and discovery of previously unknown problems with such products which may result in restrictions on their manufacture, sale or use or in their withdrawal from the market.
Applicable FDA regulations treat our combination of opioid painkillers, once daily gastro-retentive drugs and once daily combination drugs as new drugs and require the filing of a New Drug Application, or NDA, and approval by the FDA prior to commercialization in the United States. Our clinical trials will seek to demonstrate that our formulations and designs produce greater beneficial effects than either drug alone or against an existing drug.
The Drug Approval Process
We will be required to complete several activities before we can market any of our drugs for human use in the United States, including:
● submission to the FDA of an Investigational New Drug Application (“IND”), that is a request for authorization from the FDA to administer an investigational drug or biological product to humans, which must become effective before human clinical trials commence;
● adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate;
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| ● submission to the FDA of an NDA; and |
● FDA approval of the NDA prior to any commercial sale or shipment of the drug.
Preclinical tests include laboratory evaluation of product chemistry and formulation, as well as animal studies to assess the potential safety of the product. Preclinical safety tests must be conducted by laboratories that comply with FDA regulations regarding Good Laboratory Practice, or GLP regulations. We plan to conduct and submit the results of preclinical tests to the FDA as part of our INDs prior to commencing clinical trials. We may be required to conduct extensive toxicology studies concurrently with the clinical trials.
Based on preclinical testing, an IND is filed with the FDA to begin human testing of the drug. The IND becomes effective if not rejected by the FDA within 30 days. The IND must indicate the results of previous experiments, how, where and by whom the new studies will be conducted, the chemical structure of the compound, the method by
10
which it is believed to work in the human body, any toxic effects of the compound found in the animal studies and how the compound is manufactured. All clinical trials must be conducted in accordance with good clinical practice, or GCP, regulations. In addition, an Institutional Review Board, or IRB, generally comprised of physicians at the hospital or clinic where the proposed studies will be conducted, must review and approve the IND. The IRB also continues to monitor the study. We must submit progress reports detailing the results of the clinical trials to the FDA at least annually. In addition, the FDA may, at any time during the 30-day period or at any time thereafter, impose a clinical hold on proposed or ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA. In some instances, the IND application process can result in substantial delay and expense.
Clinical trials are typically conducted in three sequential phases that may overlap. Phase I tests typically take approximately one year to complete. The tests study a drug’s safety profile, and may include the safe dosage range. Phase I clinical studies also determine how a drug is absorbed, distributed, metabolized and excreted by the body, and the duration of its action. In addition, we may, to the extent feasible, assess pain relief in our Phase I trials. In Phase II clinical trials, controlled studies are conducted on volunteer patients with the targeted disease or condition. The primary purpose of these tests is to evaluate the effectiveness of the drug on the volunteer patients as well as to determine if there are any side effects. These studies may be conducted concurrently with Phase I clinical trials. In addition, Phase I/II clinical trials may be conducted to evaluate not only the efficacy of the drug on the patient population, but also its safety. During Phase III clinical trials, the drug is studied in an expanded patient population and in multiple sites. Physicians monitor the patients to determine efficacy and to observe and report any reactions that may result from long-term or expanded use of the drug.
The FDA publishes industry guidelines specifically for the clinical evaluation of painkillers. We rely in part on these guidelines to design a clinical strategy for the approval of each of our product candidates. In particular, FDA guidelines recommend that we demonstrate efficacy of our new pain drugs in more than one clinical model of pain. Acceptable clinical models of pain include different neuropathic pains, fibromyalgia, post-operative pain, and various types of trauma and arthritis pain. Since models differ in their pain intensity and their sensitivity to detect pain, we expect to complete several Phase II studies in multiple clinical models of pain. Upon a clear demonstration of the safety and efficacy of painkillers in multiple clinical models of pain, the FDA has historically approved painkillers with broad indications. Such general purpose labeling often takes the form of “for the management of moderate to severe pain.”
We plan to outsource the formulation and clinical development of all of our products. We may not successfully complete Phase I, Phase II or Phase III testing within any specified time period, or at all, with respect to any of our product candidates. Furthermore, we or the FDA may suspend clinical trials at any time in response to concerns that participants are exposed to an unacceptable health risk. At this time we have no potential products that could be submitted to FDA testing in the forseeable future. Our ability to develop a product to the testing level will be dependent on our securing adequate funding.
After the completion of clinical trials, if there is substantial evidence that the drug is safe and effective, an NDA is filed with the FDA. The NDA must contain all of the information on the drug gathered to that date, including data from the clinical trials. NDAs are often over 100,000 pages in length.
The FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting a NDA for filing. In such an event, the NDA must be resubmitted with the additional information and, again, is subject to review before filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Federal Food, Drug and Cosmetic Act, the FDA has 365 days in which to review the NDA and respond to the applicant. The review process is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. The FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved.
The FDA is not bound by the recommendation of an advisory committee. If FDA evaluations of the NDA and the manufacturing facilities are favorable, the FDA may issue either an approval letter, or an approvable letter which usually contains a number of conditions that must be met in order to secure final approval of the NDA. When and if those conditions have been met to the FDA’s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug for certain indications. If the FDA’s evaluation of the NDA submission or manufacturing facilities is not favorable, the FDA may refuse to approve the NDA or issue a not approvable letter.
If the FDA approves the NDA, the drug becomes available for physicians to prescribe. Periodic reports must be submitted to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional post marketing studies, or Phase IV studies, to evaluate long-term effects of the approved drug.
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Other Regulatory Requirements
The FDA mandates that drugs be manufactured in conformity with current GMPs. If the FDA approves any of our product candidates, we will be subject to requirements for labeling, advertising, record keeping and adverse experience reporting. Failure to comply with these requirements could result, among other things, in suspension of regulatory approval, recalls, injunctions or civil or criminal sanctions. We may also be subject to regulations under other federal, state, and local laws, including the Occupational Safety and Health Act, the Environmental Protection Act, the Clean Air Act, national restrictions on technology transfer, and import, export, and customs regulations. In addition, any of our products that contain narcotics will be subject to DEA regulations relating to manufacturing, storage, distribution and physician prescribing procedures. It is possible that any portion of the regulatory framework under which we operate may change and that such change could have a negative impact on our current and anticipated operations.
The Controlled Substances Act imposes various registrations, record-keeping and reporting requirements, procurement and manufacturing quotas, labeling and packaging requirements, security controls and a restriction on prescription refills on certain pharmaceutical products. A principal factor in determining the particular requirements, if any, applicable to a product is, its actual or potential abuse profile. The DEA regulates chemical compounds as Schedule I, II, III, IV or V substances, with Schedule I substances considered to present the highest risk of substance abuse and Schedule V substances the lowest risk. Any of our product candidates that contain a scheduled substance will be subject to regulation by the DEA.
Competition
Our future success will depend, in part, upon our ability to develop products and achieve market share at the expense of existing and established and future products in the relevant target markets. Existing and future products, therapies, technological approaches or delivery systems will compete directly with our products. Competing products may provide greater therapeutic benefits for a specific indication, or may offer comparable performance at a lower cost. Companies that currently sell generic or proprietary pain drugs and novel formulations include, but are not limited to, Pfizer, Depomed, Pain Therapeutics, Roxane Laboratories, Purdue Pharma, Grünenthal, Janssen Pharmaceutica, Abbott Laboratories, Cephalon, Endo Pharmaceuticals, Elkins-Sinn, Watson Laboratories, Ortho-McNeil Pharmaceutical and Forest Pharmaceuticals. Alternative technologies are being developed to increase opioid potency, as well as alternatives to GABA Analog therapy for pain management, several of which are in clinical trials or are awaiting approval from the FDA.
If we are successful in developing a product or technology we will ultimately compete with fully integrated pharmaceutical companies, smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations. Many of these competitors have pain products, such as opioids and GABA analogs and SNRIs already approved by the FDA or in development and operate larger research and development programs in these fields than we do. In addition, many of these competitors, either alone or together with their collaborative partners, have substantially greater financial resources than we do, as well as significantly greater experience in:
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| ● | undertaking preclinical testing and human clinical trials; |
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| ● | obtaining FDA and other regulatory approvals of drugs; |
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| ● | formulating and manufacturing drugs; and |
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| ● | launching, marketing, distributing and selling drugs. |
Developments by competitors may render our product candidates or technologies obsolete or non-competitive. Alternatively, competitors may challenge our patents and prevail in a court of law rendering our products, even if they are successfully developed, tested and approved, unmarketable.
Facilities
We currently use as our principal place of business the business office of our director, Geoff Williams, located at 2681 Parleys Way, Suite 204, Salt Lake City, UT84109. We anticipate that in the future our products will have to be developed by contract manufacturers and, accordingly, we will not initially require production or research space. Management believes that the current facilities are adequate for the immediate future.
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Industry Segments
No information is presented regarding industry segments. We are presently engaged in the development of certain patents and technology related to drug delivery technologies and drugs. We have no current plans to participate in another business or industry. Reference is made to the statements of income in our financial statements included herein for a report of our operating history for the past two fiscal years.
Item 1A. Risk Factors.
This item is not required for a smaller reporting company.
Item 1B
Unresolved Staff Comments.
This item is not required for a smaller reporting company.
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Item 2. | Description of Property. |
We do not own any real property. We currently occupy office space that serves as our principal place of business located at 2681 Parleys Way, Ste 204, Salt Lake City, UT 84109.
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Item 3. | Legal Proceedings. |
There are no material pending legal proceedings to which the company or any subsidiary is a party, or to which any property is subject and, to the best of our knowledge, no such action against us is contemplated or threatened.
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Item 4. | (Removed and Reserved). |
PART II
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Our common stock is currently quoted on the OTCQB under the symbol PRTT. There is currently a limited public trading market for our shares and there has been only sporadic trades. The last reported trade on March 10, 2014 was $0.08. Accordingly, we are not including a historical trading table.
As of the date hereof there are approximately 55 stockholders of record of our common stock.
Secondary trading of our shares may be subject to certain state imposed restrictions. Except for the OTCQB, we have no immediate plans, proposals, arrangements or understandings with any person concerning the development of a trading market in any of our securities. The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state.
Recent Issuances of Securities
During the year ended December 31, 2011 the Company issued an aggregate of 1,205,000 common shares as consideration for services rendered. Of these shares, 145,000 shares were issued at $1.05 per share, 150,000 were issued at $1.01 per share, 35,000 shares were issued at $0.98 per share, and 875,000 shares were issued at $1.00 per share. All of the aforementioned shares were all issued pursuant to an exemption from registration under the Securities Act of 1933 provided by Section 4(2) of that Act.
Penny Stock Rule
The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Further, our common stock most likely will be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
It is unlikely that our securities will be listed on any national or regional exchange or The Nasdaq Stock Market in the foreseeable future. Therefore our shares most likely will be subject to the provisions of Section 15(g) and Rule
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15g-9 of the Exchange Act, commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for broker-dealer transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is:
● registered and traded on a national securities exchange meeting specified criteria set by the SEC;
● authorized for quotation on The Nasdaq Stock Market;
● issued by a registered investment company;
● excluded from the definition on the basis of price (at least $5.00 per share) or the issuer's net tangible assets; or
● exempted from the definition by the SEC.
Broker-dealers who sell penny stocks to persons other than established customers and accredited investors are subject to additional sales practice requirements. An accredited investor is generally defined as a person with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must receive the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent to clients disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in our common stock and may affect the ability of stockholders to sell their shares.
These requirements may be considered cumbersome by broker-dealers and could impact the willingness of a particular broker-dealer to make a market in our shares, or they could affect the value at which our shares trade. Classification of the shares as penny stocks increases the risk of an investment in our shares.
Rule 144
Rule 144 is the common means for a stockholder to resell restricted securities and for an affiliate to sell securities, either restricted or non restricted (control) shares. Rule 144 was amended by the SEC, effective February 15, 2008.
Under the amended Rule 144, an affiliate of a company filing reports under the Exchange Act who has held their shares for more than six months, may sell in any three-month period an amount of shares that does not exceed the greater of:
● the average weekly trading volume in the common stock, as reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding such sale, or
● 1% of the shares then outstanding.
Sales by affiliates under Rule 144 are also subject to certain requirements as to the manner of sale, filing appropriate notice and the availability of current public information about the issuer.
A non-affiliate stockholder of a reporting company who has held their shares for more than six months, may make unlimited resales under Rule 144, provided only that the issuer has available current public information about itself. After a one-year holding period, a non-affiliate may make unlimited sales with no other requirements or limitations.
An important exception to the above described availability of the amended Rule 144 is that Rule 144 is not available for either a reporting or non-reporting shell company, unless the company:
● has ceased to be a shell company;
● is subject to the Exchange Act reporting obligations;
● has filed all required Exchange Act reports during the preceding twelve months; and
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● at least one year has elapsed from the time the company filed with the SEC current Form 10 type information reflecting its status as an entity that is not a shell company.
Because we were considered a shell company prior to our acquisition of patent applications, in February 2010, Rule 144 was not available to our stockholders until one year after the filing or our registration statement on Form 10 in June 2010. Thus, commencing on June 9, 2011, our stockholders became able to avail themselves to the provisions of Rule 144.
We cannot predict the effect any future sales under Rule 144 may have on the market price of our common stock, but such sales may have a substantial depressing effect on such market price.
Dividends Policy
We have never declared cash dividends on our common stock, nor do we anticipate paying any dividends on our common stock in the foreseeable future.
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Item 6. | Selected Financial Data. |
This item is not required for a smaller reporting company.
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.
We are considered a development stage company with 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 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 years ended December 31, 2013 and 2012. Our operating expenses totaled $23,939 and $554,298, respectively. Our 2013 expenses consisted of $17,759 in professional fees, $6,000 in executive compensation and $180 in general and administrative expenses. Our 2012 expenses consisted $512,619 in professional fees, $25,726 in executive compensation, and $15,953 in general and administrative expenses. The reduction of professional fees in 2013 was attributed to numerous expenses incurred in 2012 relating to the initial acquisition of patents and technologies and the sale of a portion of these patents. These factors resulted in net losses of $23,939 and $554,298 for the years ended December 31, 2013 and 2012, respectively.
Liquidity and Capital Resources
Total assets at December 31, 2013 and 2012 were $681 and $860, respectively. All of the Company’s assets at December 31, 2013 and 2012 consisted of cash. Total liabilities at December 31, 2013 and 2012 were $595,809 and $578,049, respectively. In 2013 the Company’s liabilities consisted primarily of $60,104 in accounts payable and accrued expenses, $23,939 in accounts payable to related parties, and $486,826 in accrued officer salaries. At December 31, 2012, these liabilities consisted primarily of $70,825 in accounts payable and accrued expenses, $20,398 in accounts payable to related parties and related party payables, and $486,826 in accrued officer salaries.
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 December 31, 2013, we had stockholders’ deficit of $595,128 compared to a stockholders’ deficit of $577,189 at December 31, 2012.
Plan of Operation
Protect Pharmaceutical intends to develop new generation drug delivery technologies that enable products with improved clinical benefits. We believe our potential 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.
15
We acquired a portfolio of patent applications in 2010, although we are yet to formulate products or receive approvals from regulatory agencies or generate any revenues from product sales. We have not had profitable operations since our inception through December 31, 2013.
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 $500,000, 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 $100,000 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 raise 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 $2,868,948 of net operating loss carryforwards as of December 31, 2013. This loss carry forward may be offset against taxable income and income taxes in future years and expires starting in the year 2013 through 2033. 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, 2013 and 2012 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.
Recent Accounting Pronouncements
Management has considered all 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.
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Cautionary Statement Concerning Forward-Looking Information
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, including those risks discussed in the “Risk Factors” section above. 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.
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
This item is not required for a smaller reporting company.
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Item 8. | Financial Statements and Supplementary Data. |
Financial statements for the fiscal years ended December 31, 2013 and 2012 have bee examined to the extent indicated in their reports by Sadler, Gibb & Associates, LLC, independent registered public accountants and have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to regulations promulgated by the SEC.
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PROTECT PHARMACEUTICAL CORPORATION
AUDIT REPORT OF INDEPENDENT ACCOUNTANTS
AND
FINANCIAL STATEMENTS
December 31, 2013 and 2012
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Protect Pharmaceutical Corporation
We have audited the accompanying balance sheets of Protect Pharmaceutical Corporation (the Company) as of December 31, 2013 and 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Protect Pharmaceutical Corporation as of December 31, 2013 and 2012, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had accumulated losses of $9,172,973 for the period from inception through December 31, 2013 which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
Salt Lake City, UT
April 11, 2014
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PROTECT PHARMACEUTICAL CORPORATION |
(A Development Stage Company) |
Balance Sheets |
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ASSETS |
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CURRENT ASSETS |
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| Cash | $ | 681 |
| $ | 860 |
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| Total Current Assets | | 681 |
| | 860 |
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| TOTAL ASSETS | $ | 681 |
| $ | 860 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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CURRENT LIABILITIES |
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| Accounts payable and accrued expenses | $ | 60,104 |
| $ | 70,825 |
| Accounts payable - related parties |
| 23,939 |
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| 16,319 |
| Related party payables |
| 24,940 |
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| 4,079 |
| Accrued officer salaries | | 486,826 |
| | 486,826 |
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| Total Current Liabilities | | 595,809 |
| | 578,049 |
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| TOTAL LIABILITIES | | 595,809 |
| | 578,049 |
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STOCKHOLDERS' DEFICIT |
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| Preferred stock; 10,000,000 shares authorized, |
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| at $0.001 par value, no shares issued or outstanding |
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| Common stock; 100,000,000 shares authorized, |
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| at $0.005 par value, 44,573,012 and 44,573,012 |
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| shares issued and outstanding, respectively |
| 222,865 |
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| 222,865 |
| Additional paid-in capital |
| 8,354,980 |
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| 8,348,980 |
| Deficit accumulated during the development stage | | (9,172,973) |
| | (9,149,034) |
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| Total Stockholders' Deficit | | (595,128) |
| | (577,189) |
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| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 681 |
| $ | 860 |
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The accompanying notes are an integral part of these financial statements. |
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PROTECT PHARMACEUTICAL CORPORATION | |
(A Development Stage Company) | |
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REVENUES |
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| - |
|
| - |
|
| 1,353,540 | |
| Professional Fees |
|
| 17,759 |
|
| 512,619 |
|
| 1,498,743 | |
| Executive compensation |
|
| 6,000 |
|
| 25,726 |
|
| 5,894,730 | |
| General and administrative |
| | 180 |
| | 15,953 |
| | 447,119 | |
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| (23,939) |
|
| (554,298) |
|
| (9,194,132) | |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from sale of patents |
| | - |
| | - |
| | 640,000 | |
|
|
|
|
|
|
|
|
|
|
| |
LOSS BEFORE DISCONTINUED OPERATIONS | | (23,939) |
| | (554,298) |
| | (8,554,132) | |
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS |
| - |
|
| - |
|
| (4,340,551) | |
|
|
|
|
|
|
|
|
|
|
|
|
| Income Taxes |
| | - |
| | - |
| | - | |
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | (23,939) |
| $ | (554,298) |
| $ | (12,894,683) | |
|
|
|
|
| |
|
| |
|
|
|
BASIC AND DILUTED LOSS PER SHARE OF |
|
|
|
|
|
|
|
| |
| COMMON STOCK |
| $ | (0.00) |
| $ | (0.01) |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF |
|
|
|
|
|
|
|
|
| |
SHARES OUTSTANDING |
| | 44,573,012 | | | 44,573,012 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. | |
| | | | | | | | | | | | | | |
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 |
| Deficit |
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 |
| 5,000,000 |
|
| 25,000 |
|
| 1,225,000 |
|
| - |
|
| 1,250,000 |
Common stock issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $1.02 per commnon share |
| 5,205,000 |
|
| 26,025 |
|
| 5,283,075 |
|
| - |
|
| 5,309,100 |
Contibuted capital |
| - |
|
| - |
|
| 13,284 |
|
| - |
|
| 13,284 |
Net loss for the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
| - |
| | - |
| | |
| | (7,026,356) |
| | (7,026,356) |
Balance, December 31, 2010 |
| 43,368,012 |
|
| 216,840 |
|
| 7,122,909 |
|
| (7,798,952) |
|
| (459,203) |
Common stock issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $1.05 per share |
| 145,000 |
|
| 725 |
|
| 151,525 |
|
| - |
|
| 152,250 |
Common stock issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $1.01 per share |
| 150,000 |
|
| 750 |
|
| 150,750 |
|
| - |
|
| 151,500 |
Common stock issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $1.00 per share |
| 875,000 |
|
| 4,375 |
|
| 870,625 |
|
| - |
|
| 875,000 |
Common stock issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at $0.98 per share |
| 35,000 |
|
| 175 |
|
| 34,125 |
|
| - |
|
| 34,300 |
Contributed Capital |
| - |
|
| - |
|
| 13,046 |
|
| - |
|
| 13,046 |
Net loss for the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
| - |
| | - |
| | - |
| | (795,784) |
| | (795,784) |
Balance, December 31, 2011 |
| 44,573,012 |
| $ | 222,865 |
| $ | 8,342,980 |
| $ | (8,594,736) |
| $ | (28,891) |
Services contributed by officers |
| - |
|
| - |
|
| 6,000 |
|
| - |
|
| 6,000 |
Net loss for the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
| - |
| | - |
| | - |
| | (554,298) |
| | (554,298) |
Balance, December 31, 2012 |
| 44,573,012 |
| $ | 222,865 |
| $ | 8,348,980 |
| $ | (9,149,034) |
| $ | (577,189) |
Services contributed by officers |
| - |
|
| - |
|
| 6,000 |
|
| - |
|
| 6,000 |
Net loss for the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013 |
| - |
| | - |
| | - |
| | (23,939) |
| | (23,939) |
Balance, December 31, 2013 |
| 44,573,012 |
| $ | 222,865 |
| $ | 8,354,980 |
| $ | (9,172,973) |
| $ | (595,128) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
| | | | | | | | | | | |
PROTECT PHARMACEUTICAL CORPORATION |
(A Development Stage Company) |
Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| From Inception |
|
|
|
|
|
|
|
|
|
| on August 5, |
|
|
|
| For the Year Ended |
| 1987 Through |
|
|
|
| December 31, |
| December 31, |
|
|
|
| 2013 |
| 2012 |
| 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss | $ | (23,939) |
| $ | (554,298) |
| $ | (12,894,683) |
Adjustments to reconcile loss |
|
|
|
|
|
|
|
|
to cash flows from operating activities |
|
|
|
|
|
|
|
|
| Services contributed by an officer |
| 6,000 |
|
| 6,000 |
|
| 12,000 |
| Common stock issued for services |
| - |
|
| - |
|
| 9,904,653 |
| Common stock issued for research and |
|
|
|
|
|
|
|
|
| development costs |
| - |
|
| - |
|
| 1,250,000 |
| Loss from disposition of subsidiary |
| - |
|
| - |
|
| 564,300 |
| Expenses paid on behalf of the Company |
| 20,860 |
|
| 3,979 |
|
| 90,459 |
| Gain on sale of patent |
| - |
|
| - |
|
| (640,000) |
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
| Accounts payable |
| (10,720) |
|
| 9,840 |
|
| 60,105 |
| Account payable - related parties |
| 7,620 |
|
| 11,812 |
|
| 167,701 |
| Prepaied expenses |
| - |
|
| 491,667 |
|
| 491,667 |
| Other accrued expenses | | - |
| | 9,589 |
| | 486,826 |
|
| Net Cash Provided by (Used |
|
|
|
|
|
|
|
|
|
| in) Operating Activities | | (179) |
| | (21,411) |
| | (506,972) |
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Gain on sale of patent | | - |
| | - |
| | 640,000 |
|
| Net Cash Provided by (Used |
|
|
|
|
|
|
|
|
|
| in) Financing Activities | | - |
| | - |
| | 640,000 |
|
| |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Capital contributed by officer |
| - |
|
| - |
|
| 13,046 |
| Proceeds from related party payables |
| - |
|
| 100 |
|
| 100 |
| Repayment of related party payable | | - |
| | - |
| | (145,493) |
|
| Net Cash Provided by (Used |
|
|
|
|
|
|
|
|
|
| in) Financing Activities | | - |
| | 100 |
| | (132,347) |
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
| (179) |
|
| (21,311) |
|
| 681 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT BEGINNING OF PERIOD | | 860 |
| | 22,171 |
| | - |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT END OF PERIOD | $ | 681 |
| $ | 860 |
| $ | 681 |
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
| NON-CASH FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
| Common stock issued for prepaid services | $ | - |
| $ | - |
| $ | 750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. |
PROTECT PHARMACUETICAL CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31,2013 and2013
NOTE 1 - ORGANIZATION AND HISTORY
Business and Organization
The financial statements presented are those of Protect Pharmaceutical Corporation, a development stage company, (the Company). The Company was originally incorporated under the laws of the state of Idaho on August 5, 1987. The Company was incorporated for the purpose of purchasing, leasing or otherwise acquiring mining claims and rights and also to develop mines. The Company was unable to raise development money and the Company’s operations ceased. The Company has been seeking new business opportunities believed to hold a potential profit or to merge with an existing, operating company.
As of June 15, 2006, the name of the Company changed to Pro-Tect, Inc. and its domicile was moved to the state of Nevada. Subsequently, the Company changed its name on March 25, 2010 to Protect Pharmaceutical Corporation. Since that date the Company has engaged in licensing its patented pharmaceuticals technologies.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. The Company’s fiscal year-end isDecember 31. The Company has realizednorevenuesfrom operations as of December 31,2013 and is classified as a development stage enterprise.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As of December 31,2013 and2012 the Company had $681 and $860of cash and cash equivalents, respectively.
Revenue Recognition
The Company’s source of revenue is the sale of patents.The Company will recognize revenue from the performance of its services and/or sale of its products in accordance withASC 605 “Revenue Recognition. Revenue will be recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is provided, and collectability is assured.
Advertising Costs
The Company follows the policy of expensing advertising costs during the period in which they are incurred. The Company incurred no advertising costs during the years ended December 31,2013 and2012, respectively.
25
PROTECT PHARMACUETICAL CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31,2013 and2013
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-based Compensation
The Company adopted ASC 718 effective January 1, 2006 using the modified prospective method. Under this transition method, stock compensation expense includes compensation expense for allshare-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 718.During the years ending December 31,2013 and 2012, the Company issued$-0- and $-0-, respectively, in share-basedpaymentsfor services.
Provision for Taxes
The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.
The Company adopted ASC 740 at the beginning of fiscal year 2009. This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.
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 December 31,2013 and 2012.
| | | | | | | | |
| | For the Year Ended December 31, 2013 | | | For the Year Ended December 31, 2012 | |
| | | | | | | | |
Loss (numerator) | | $ | (23,939 | ) | | $ | (554,298 | ) |
Shares (denominator) | | | 44,573,012 | | | | 44,573,012 | |
Per share amount | | $ | (0.00 | ) | | $ | (0.01 | ) |
Recent Accounting Pronouncements
Management has considered all 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.
26
PROTECT PHARMACUETICAL CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31,2013 and2013
NOTE 3 – 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 Companythe Company had accumulated losses of $9,172,973 for the period from inception through December 31, 2013 which raises substantial doubt about its ability 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 4 – REORGANIZATION
A special meeting of the shareholders of the Company was held on June 15, 1995. It was agreed upon at the meeting to effect a quasi – reorganization whereby the accumulated deficit of the Company up to December 31, 1994in the amount of $3,721,710was eliminated against the paid-in capital of the Company.
NOTE 5 – RELATED PARTYTRANSACTIONS
Various startup expenses of the Company including purchase of property and equipment, officer’s compensation and general and administrative expenses have been paid for using funds provided by two directors of the Company. The liabilities are non-interest bearing, unsecured and due upon demand. The Company owed $23,939 and $16,319 for such payables as of December 31, 2013 and 2012, respectively.These amounts due are for services rendered by related parties.
TheCompany hasrecorded advances from related parties and expenses paid by related parties on behalf of the Company as related party payables.As ofDecember 31,2013 and December 31,2012, respectively, the related party payable outstanding balancetotaled$24,940 and$4,079. These payables are non-interest bearing, unsecured, and are due on demand.
NOTE6 – SALE OF PATENTS
On January 31,2011, the Company finalized and closed a Patent Purchase Agreement (the “Agreement”) withGrünenthal GmbH (“Grünenthal”), a company organized under the laws of Germany. Pursuant to the terms of the Agreement, the Company sold toGrünenthal 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.
In exchange for the Patents,Grünenthal paid the Company $1,600,000. The Company originally acquired the subject Patents sold toGrünenthal, together with other inventions and patents, in February 2010 pursuant to a Patent Acquisition Agreement withNectid, 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 fromNectid without first undertaking any development of the patents, the proceeds from such sale would be divided, 60% toNectid 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 toNectid. The Company retains all other inventions, patents and technologies initially acquired fromNectid.
NOTE7 - STOCK PURCHASE AGREEMENT
On June 17,2012, 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
27
PROTECT PHARMACUETICAL CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31,2013 and2013
NOTE7 - STOCK PURCHASE AGREEMENT (CONTINUED)
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 had not initiated any activity with respect to the Investment Agreement other than the initial issuance of 150,000 common shares. The Company had not registered with the SEC the shares to be issued to Kodak. The Agreement expired on June 17, 2013.
NOTE8 – COMMONAND PREFERREDSTOCK
On June 20,2011, the Company received written consent from its majority stockholders to amend the Company’s articles of incorporation to change the authorized capitalization. The board of directors previously approved the resolution to increase the number of authorized common stock from 50,000,000 to 100,000,000 shares and to authorize 10,000,000 shares of “blank check” preferred shares.
The newly authorized preferred shares may be issued from time to time in one or more series in the discretion of the board of directors. The board will have the authority to establish the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof.
28
PROTECT PHARMACUETICAL CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31,2013 and2013
NOTE8 – COMMON STOCK (CONTINUED)
On April 11,2011, the Board of Directors appointed a new Chief Financial Officer, effective immediately and for a term of twelve months. The Company issued 60,000 shares of its common stock at $1.05 per share to the officer as compensation for his services for an aggregate value of $63,000. On the same date, the Company also issued 85,000 shares of its common stock at $1.05 per share to two consultants as compensation for professional services for an aggregate value of $89,250.
On June 17,2011, the Company issued 150,000 shares of common stock at $1.01 per share to a consultant for services rendered. The cost of the shares was valued at the trading price on the issuance date of $1.01 per share for an aggregate value of $151,500.
On August 29,2011 the Company issued 125,000 shares of its common stock to board members as compensation. The cost of the shares was valued at the trading price on the issuance date of $1.00 per share for an aggregate value of $125,000.
On August 29,2011 the Company issued 750,000 shares of common stock pursuant to a consulting agreement. The cost of services was valued at the trading price of the shares on the issuance date of $1.00 per share for an aggregate value of $750,000. This amount was amortized as appropriate for2012, with the balance recorded as a prepaid asset as of December 31,2012.
On October 4, 2011, the Company issued 35,000 shares of common stock for services. The cost of the shares was valued at the trading price on the issuance date of $0.98 per share for an aggregate value of $34,300.
NOTE9 – 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 Investigational New Drug (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
|
Asof December 31, 2013, these milestones have not been completed.
NOTE 10 – INCOME TAXES
The Company provides for income taxes under ASC 740 “Tax Provisions”. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
29
PROTECT PHARMACUETICAL CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31,2013 and2013
NOTE 10 – INCOME TAXES (CONTINUED)
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of34% to net loss before provision for income taxes for the following reasons:
| | | | | | | | | | |
| | December 31, 2013 | | | December 31, 2012 | |
Income tax expense at statutory rate | | $ | (8,138 | ) | | $ | (188,461 | ) | |
Contributed services | | | 2,040 | | | | 2,040 | | |
Change in valuation allowance | | | 6,098 |
| | | (186,421) | | |
Income tax expense per books | | $ |
| | | $ | - | | |
Net deferred tax assets consist of the following components as of:
| | | | | | | | |
| | December 31, 2013 | | | December 31, 2012 | |
NOL carryover | | $ | (2,868,948 | ) | | $ | (2,860,810 | ) |
Contributed services | | | 2,642,531 | | | | 2,642,531 | |
Contributed Services |
|
| 4,080 |
|
|
| 2,040 |
|
Valuation allowance | | | 222,337 |
| | | 216,239 |
|
Net deferred tax asset | | $ | - | | | $ | - | |
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of$2,868,948 for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in futureyears.
NOTE 11 – SIGNIFICANT AGREEMENTS
On February 6, 2009, the Company entered into a Patent Acquisition Agreement, whereby it was assigned various patents for pharmaceutical products in exchange for 7,000,000 shares of the Company’s common stock. 5,000,000 shares were delivered immediately to the assignor and 2,000,000 shares are held to be delivered upon the successful completion of $2,000,000 financing. The patents are also subject to a 20% royalty on revenues, a 10% milestone payment and an employment agreement. The Company is responsible for the completion of a development program to commercialize products using the patented technologies within 5 years.
The employment agreement provides that the patent holder will become the Company’s Chief Operating Officer. The agreement provides for an annual salary $250,000 in year one, $300,000 in year two and $350,000 in year three. The agreement also provides for compensatory common stock purchase warrants to be issued at not less than 20% of the shares issued for financing and other standard employee benefits. In January,2013,the Chief Operating Officer resigned and the employment agreement expired, leaving a remaining balance owing in Accrued officer salaries of $486,826 on the balance sheet for both December 31, 2013 and 2012.
NOTE 12 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report, and there are no other material subsequent events to report.
| |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Not applicable.
| |
Item 9A(T) | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this annual report, management, with the participation of our chief executive officer and principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures”, as defined in the Securities Exchange Act of 1934, Rules 13a-15(e) and 15-d-15(e). Based upon that evaluation, our principal executive officer and financial officer concluded that as of December 31, 2013, our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is:
(i) recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms; and
(ii) accumulated and communicated to our management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. 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.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Our control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principals. Our internal control over financial reporting includes those policies and procedures that :
● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets;
● provide reasonable assurance that the transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are being made only with proper authorizations; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Over Financial Reporting – Guidance for Smaller Public Companies. Based on our assessment and those criteria, our management concluded that our internal control over financial reporting was ineffective as of December 31, 2013.
Changes in Internal Control over Financial Reporting
31
Management has concluded that controls over both disclosure controls and financial reporting controls are ineffective due to material weaknesses in maintaining sufficient segregation of duties. Due our size and limited resources, we are unable at this time to implement and maintain proper segregation of duties.
There have been no significant changes in our internal controls over financial reporting or in other factors that could materially affect, or would be likely to materially affect, our internal controls over financial reporting subsequent to the date we carried out our evaluation.
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Item 9B. | Other Information. |
Not applicable.
PART III
| |
Item 10. | Directors, Executive Officers and Corporate Governance. |
The executive officers and directors of the company are as follows:
| | | | |
Name | | Age | | Position |
Geoff Williams | | 40 | | President, Chief Operating Officer, Secretary and Director
|
Keith M Elison |
| 40 |
| Chief Financial Officer |
| |
|
|
|
Nancy Ah Chong
42 Treasurer, Director
All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. We have not compensated directors for service on the board of directors or any committee thereof. However, two former outside directors, Anna E. Gluskin and Dr. Gerald Bernstein each received 20,000 shares of our common stock upon becoming a director. The shares were issued as of May 28, 2010. Directors are entitled to be reimbursed for expenses incurred for attendance at meetings of the board and any committee of the board. However, directors may defer expenses and/or take payment in shares of Protect common stock. As of the date hereof, no director has accrued any expenses or compensation. Officers are appointed annually by the board and each executive officer serves at the discretion of the board. Presently we do not have any standing committees.
No director, officer or affiliate has, within the past five years, filed any bankruptcy petition, been convicted in or been the subject of any pending criminal proceedings, or is any such person the subject or any order, judgment, or decree involving the violation of any state or federal securities laws.
Currently, there is no arrangement, agreement or understanding between management and non-management stockholders under which non-management stockholders may directly or indirectly participate in or influence the management of our affairs. Present management openly accepts and appreciates any input or suggestions from stockholders. However, the board of directors is elected by stockholders and the stockholders have the ultimate say in who represents them on the board. There are no agreements or understandings for any officer or director to resign at the request of another person and none of the current offers or directors are acting on behalf of, or will act at the direction of any other person.
The following sets forth the business experience of our directors, including specific qualifications to serve as director in light of our business:
Geoff Williams. Mr. Williams has served as chief executive officer, president, and director since February, 2012. From 1994 to the present, Mr. Williams has been a representative of Williams Investments Company, a Salt Lake City, Utah financial consulting firm involved in facilitating mergers, acquisitions, business consolidations and financings. Mr. Williams attended the University of Utah and California Institute of the Arts. Mr. Williams also serves as our principal financial officer and principal accounting officer.
Mr. Williams is currently a director, President and C.E.O. of Westgate Acquisitions Corp. and, until he resigned in February 2010, he was a director, President and C.E.O. of Greyhound Commissary, Inc., now known as Tanke Biosciences Corp. Mr. Williams was also a director of U.S. Rare Earths, Inc. from November 2011 to August 2012
Keith Elison. Mr. Elison has served as chief financial officer since April, 2011. From 1994 to the present, Mr. Elison has more than twelve years of experience in public company accounting and SEC compliance and reporting
32
issues. Mr. Elison was previously associated as an auditor with HJ & Associates, LLC in Salt Lake City, Utah for five years. For the past seven years, he has been a financial consultant and partner with J & J Consulting, LLC in Farmington, Utah. Mr. Elison’s professional experience has mainly involved providing accounting and financial reporting assistance for small and medium-sized publicly held companies.
Nancy Ah Chong. Ms. Ah Chong became a director and Secretary / Treasurer of our company in February, 2012. From August 2004 to the present, she has been an office manager for Williams Investment Company, a Salt Lake City, Utah financial consulting firm involved in facilitating mergers, acquisitions, business consolidations and financings. Previously, Mrs. Ah Chong was an administrative assistant for Forsgren Associates in Salt Lake City from March 2004 to August 2004. She has also worked as a customer service representative for Overstock.com from November 2003 to January 2004 and O’Currance from February 2001 to November 2003, and as a marketing and travel coordinator for MGIS from February 2000 to August 2001. From August 1991 to December 1999, Mrs. Ah Chong was with Barrick Goldstrike Mines, Inc. in Elko, Nevada, first as an exploration draftsperson and then an administrative assistant. Mrs. Ah Chong attended and graduated from the Omaha Institute of Art and Design in Omaha, Nebraska.
Ms. Ah Chong served as a director and Secretary / Treasurer of Westgate Acquisitions Corp. from September 2006 to October 2013, and, until she resigned in February 2010, she was a director and Secretary / Treasurer of Greyhound Commissary, Inc., now known as Tanke Biosciences Corp.
Committees of the Board of Directors
Currently we do not have any standing committees of the board of directors. Until such time as formal committees are established, our board of directors will perform some of the functions associated with a nominating committee and a compensation committee, including reviewing all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation. The board will also perform the functions of an audit committee until we establish a formal audit committee.
Code of Ethics
We have not adopted a Code of Ethics and Business Conduct applicable to our directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. We anticipate that we will adopt a Code of Ethics in the future.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. We believe that no reports were filed during the fiscal year 2009.
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Item 11. | Executive Compensation. |
Under the terms of Mr. Ramesha Sesha’s employment agreement, he was to receive a salary of $250,000 per year, with annual increases, for his services as Chief Operating Officer. No salary was paid to him in 2010. Only a portion of his salary was paid to him in 2011, with the unpaid balance being recorded as accrued officer salaries. Upon his resignation in January, 2012, Mr. Sesha’s accrued officer salary remained unpaid.
During the year ended December 31, 2011 we issued 60,000 common shares to Keith Elison as consideration for his services rendered as our chief financial officer.
| |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
The following table sets forth information regarding the beneficial ownership of our shares of common stock by:
● each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
● each of our directors;
● our executive officers; and
● by all directors and executive officers as a group.
33
Beneficial ownership is determined in accordance with SEC rules. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after the date of this report, are deemed outstanding, but those shares are not deemed outstanding for purposes of computing percentage ownership of any other person. The number and percentage of shares beneficially owned are based on 44,573,012 shares of common stock outstanding as of April 14, 2014. Each person named in the table has sole voting and investment power with respect to all shares shown as beneficially owned by that person, subject to community property laws, where applicable. The address of each person listed below, unless otherwise indicated, is c/o Protect Pharmaceutical Corporation, 2681 East Parleys Way, Suite 204, Salt Lake City, Utah 84109.
| | | | | | | | |
Name and Address | | Amount and Nature of | | | Percent | |
of Beneficial Owner | | Beneficial Ownership | | | of Class(1) | |
Directors and Executive Officers | | | | | | |
Geoff Williams |
|
| 2,785,556 |
|
|
| 6.3% |
|
2681 East Parleys Way, Suite 204 |
|
|
|
|
|
|
|
|
Salt Lake City, UT 84109
|
|
|
|
|
|
|
|
|
Keith M Elison |
|
| 60,000 |
|
|
| < 1.0% |
|
11544 S. Autumn Hill Dr |
|
|
|
|
|
|
|
|
Sandy, UT 84094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5% Stockholders |
|
|
|
|
|
|
|
|
Nectid Inc.(2) | | | 5,000,000 | | | | 11.2 | % |
116, Village Boulevard | | | | | | | | |
Princeton, NJ 0854 | | | | | | | | |
Edward F. Cowle | | | 8,250,000 | | | | 18. | % |
70 Garth Road, Apt. 4A | | | | | | | | |
Scarsdale, NY 10583
| | | | | | | | |
GBB Limited (3) | | | | | | | | |
c/o Lion Corporate Services | | | 15,000,000 | | | | 33.6 | % |
Cumberland House | | | | | | | | |
#27 Cumberland Street / Box N-10818 | | | | | | | | |
Nassau, New Providence
| | | | | | | | |
H. Deworth Williams | | | 6,562,556 | | | | 14.7 | % |
2681 East Parleys Way, Suite 204 | | | | | | | | |
Salt Lake City, UT 84109
| | | | | | | | |
William D. Abajian | | | 5,000,000 | | | | 11.2 | % |
|
|
|
|
|
|
|
|
|
All directors and officers | | | 2,845,556 | | | | 6.4 | % |
a group (2 person) | | | | | | | | |
| | |
| Note: | Unless otherwise indicated, we have been advised that each person above has sole voting power over the shares indicated above. |
| | |
| (1) | Based upon 44,573,012 shares of common stock outstanding on April 14, 2014. |
| | |
| (2) | Nectid Inc. is a Delaware corporation with offices in Princeton, New Jersey and principally owed by Ramesha Sesha, our former director and Chief Operating Officer who has voting control and investment power over the shares. |
| | |
| (3) | GBB Limited is a Bahamian corporation entity principally controlled by Barry Herman, who has voting control and investment power over the shares. |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
Since the beginning of the company’s last fiscal year, to the best knowledge of the company there was no person who had or has a direct or indirect material interest in any transaction, or proposed transaction to which the company was or is a party.
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Item 14. | Principal Accounting Fees and Services. |
We do not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board of directors will approve in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. As a result, we do not rely on pre-approval policies and procedures.
Audit Fees
The aggregate fees billed by our independent auditors, Sadler, Gibb & Associates, L.L.C., for professional services rendered for the audit of our annual financial statements included in our annual reports for the years ended December 31, 2013 and 2012 were $8,500, and $9,000, respectively.
Audit Related Fees
For the year ended December 31, 2013 and 2012, there were no fees billed for assurance and related services by Sadler, Gibb & Associates, L.L.C. relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above.
Tax Fees
For the years ended December 31, 2013 and 2012, no fees were billed by Sadler, Gibb & Associates, L.L.C. for tax compliance, tax advice and tax planning.
We do not use Sadler, Gibb & Associates, L.L.C. for financial information system design and implementation. These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers. We do not engage Sadler, Gibb & Associates, L.L.C. to provide compliance outsourcing services.
The board of directors has considered the nature and amount of fees billed by Sadler, Gibb & Associates, L.L.C. and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Sadler, Gibb & Associates, L.L.C.’s independence.
35
PART 1V
| |
Item 15. | Exhibits, Financial Statement Schedules
(a) Exhibits
|
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 |
| | | |
| | By: | /S/ GEOFF WILLIAMS | |
| | | Chief Operating Officer | |
| | | Dated: April 14, 2014 | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | |
Signature | | Title | | Date |
| | | | |
/S/GEOFF WILLIAMS | | Chief Operating Officer and director | | April 14, 2014 |
Geoff Williams | | Principal Executive Officer,
| | |
/S/ Keith Elison |
| Chief Financial Officer |
| April 14, 2014 |
Keith Elison |
| Principal Accounting Officer |
|
|
|
|
|
| |
37