Form 10-QSB
[As last amended in Release No. 33-7505,
effective January 1, 1999, 63 F.R. 9632.]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from N/A to N/A
Commission file number 0-28385
Protalex, Inc.
(Exact name of small business issuer as
specified in its charter)
New Mexico 91-2003490
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P.O. Box 30952, Albuquerque, NM 87190
(Address of principal executive offices)
(505) 260-1726
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Common Stock no Par Value 10,608,635
as of April 5, 2001.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Protalex, Inc.
(A Company in the Development Stage)
BALANCE SHEET
(Unaudited)
February 28, 2001
ASSETS
CURRENT ASSETS
Cash and cash equivalents .................... $ 372,569
Prepaid expense .............................. 29,820
---------
Total current assets .................. $ 402,389
EQUIPMENT
Lab equipment ................................ 142,796
Office and computer equipment ................ 118,031
---------
260,827
Less accumulated depreciation ................ (57,820) 203,007
---------
OTHER ASSETS
Intellectual technology license, net of
accumulated amortization of $1,354 ......... 18,946
---------
$ 624,342
=========
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LIABILITIES
CURRENT LIABILITIES
Professional fees payable ...................... $ 2,229
Payroll and withholding taxes payable .......... 3,019
Interest payable ............................... 3,121
Current maturities of long-term liabilities .... 29,208
Related party advance and license fee payable .. 40,000
Note payable to individual ..................... 142,830
Accrued compensation ........................... 5,120
---------
Total current liabilities ............... $ 225,527
LONG-TERM LIABILITIES, less current maturities
Equipment note payable ......................... 44,526 44,526
--------- ---------
Total liabilities ....................... 270,053
STOCKHOLDERS' DEFICIT
Common stock, no par value, authorized
40,000,000 shares, 10,847,135 shares
issued, 10,608,635 shares outstanding.
238,500 shares in the treasury at -0- cost 1,390,891
Common stock, contra ........................ (368,547)
Deficit accumulated during the
development stage ......................... (668,055) 354,289
--------- ---------
$ 624,342
=========
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Protalex, Inc.
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
(Unaudited)
For the Nine Months Ended February 28, 2001 and Period Ended February 29, 2000
and from Inception (September 17, 1999) through February 28, 2001
From Inception
Nine Months Ended Period ended Through
February 28, February 29, February 28,
2001 2000 2001
------------ ------------ ------------
Interest income ............... $ 12,883 $ 5,164 $ 23,552
Expenses
Research and development .... 303,137 62,560 428,312
Administrative .............. 39,475 16,489 67,288
Professional fees ........... 35,612 52,163 113,132
Depreciation and amortization 33,610 1,879 38,469
Interest .................... 18,415 16,054 44,406
------------ ------------ ------------
NET LOSS ............. $ (417,366) $ (143,981) $ (668,055)
============ ============ ============
Loss per common share - Basic . $ (.04) $ (.02) $ (.08)
============ ============ ============
Loss per common share - Diluted $ (.04) $ (.02) $ (.08)
============ ============ ============
Shares used in per share
calculation - Basic ......... 10,323,325 8,466,087 8,817,373
============ ============ ============
Shares used in per share
Calculation - Diluted ....... 10,352,755 8,495,517 8,846,803
============ ============ ============
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Protalex, Inc.
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
(Unaudited)
For the Nine Months Ended February 28, 2001 and Period Ended February 29, 2000
and from Inception (September 17, 1999) through February 28, 2001
From Inception
Nine Months Ended Period ended Through
February 28, February 29, February 28,
2001 2000 2001
----------- ----------- -----------
Cash flows from operating activities
Net loss ........................................... $ (417,366) $ (143,981) $ (668,055)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization .................. 52,629 1,879 57,820
Non cash expenses .............................. -- -- 16,644
Decrease (increase) in interest receivable ..... 10,669 (5,164) --
(Increase) in prepaid expense .................. (29,320) -- (29,820)
Increase in payroll taxes payable .............. 2,244 1,391 3,019
(Decrease) increase in interest payable ........ (4,641) 16,054 3,121
Increase (decrease) in professional fees payable (5,553) 16,367 2,229
Increase in compensation payable ............... -- -- 5,120
Increase in related party advance
and licenses fee payable ...................... -- 40,000 40,000
----------- ----------- -----------
Net cash used in operating activities ....... (391,338) (73,454) (569,922)
----------- ----------- -----------
Cash flows from investing activities
Acquisition of intellectual technology license
- fee portion .................................... -- (20,000) (20,000)
Acquisition of equipment ........................... (96,716) (45,111) (168,044)
Excess of amounts paid for Public Shell
over assets acquired to be accounted for
as a recapitalization ............................ -- (250,000) (250,000)
Note receivable from individual .................... 118,547 (118,547) --
Issuance of note payable to individual ............. -- 368,546 368,546
Payment on note payable to individual .............. (225,716) -- (225,716)
Payment on equipment note payable .................. (17,695) -- (17,695)
----------- ----------- -----------
Net cash used in investing activities ....... (221,580) (65,112) (312,909)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from stock issuance ....................... 425,000 190,400 1,255,400
----------- ----------- -----------
Net cash provided by financing activities ... 425,000 190,400 1,255,400
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH ...................... (187,918) 51,834 372,569
Cash and cash equivalents, beginning of period ....... 560,487 -- --
----------- ----------- -----------
Cash and cash equivalents, end of period ............. $ 372,569 $ 51,834 $ 372,569
=========== =========== ===========
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Protalex, Inc.
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS - CONTINUED
(Unaudited)
For the Nine Months Ended February 28, 2001 and Period Ended February 29, 2000
and from Inception (September 17, 1999) through February 28, 2001
From Inception
Nine Months Ended Period ended Through
February 28, February 29, February 28,
2001 2000 2001
----------- ----------- -----------
Interest paid ........................................ $ 19,320 $ -- $ 41,285
=========== =========== ===========
Taxes paid ........................................... $ 50 $ -- $ 50
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
10,000 shares of company stock were issued as
part of the cost of acquisition of the
intellectual technology license at inception
- value at $.03 per share ......................... $ -- $ 300 $ 300
=========== =========== ===========
100,000 shares of company stock were issued in
exchange for legal services performed .............. $ -- $ -- $ 15,000
=========== =========== ===========
1,644 shares of company stock were issued in
exchange for interest payable ...................... $ -- $ -- $ 1,644
=========== =========== ===========
Lab equipment was acquired through issuance
of installment contract to seller .................. $ -- $ -- $ 91,430
=========== =========== ===========
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Protalex, Inc.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
From Inception (September 17, 1999) through February 28, 2001
NOTE A - NOTES TO INTERIM FINANCIAL STATEMENTS
The interim financial data is unaudited, however in the opinion of
management, the interim data includes all adjustments, consisting of normal
recurring adjustments, necessary for a fair statement of the results for the
interim period. The financial statements included herein have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included
herein are adequate to make the information presented not misleading.
The organization and business of the Company, accounting policies followed
by the Company and other information are contained in the notes to the
Company's financial statements filed as part of the Company's May 31, 2000
Form 10-QSB. This quarterly report should be read in conjunction with such
annual report.
NOTE B - GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. The Company is a development stage
enterprise and does not have operating revenue nor anticipate generating
operating revenue for the foreseeable future. The ability of the Company to
continue as a going concern is dependent initially on its ability to raise
sufficient investment capital to fund all necessary operations and product
development activities. Secondly, the Company must develop products that are
regulatory approved and market accepted to generate operating revenue. There
is no assurance that these plans will be realized in whole or in part. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
NOTE C - LOSS PER COMMON SHARE
Loss per common share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding for
the period. Diluted earnings per share assume the exercise of outstanding
stock options.
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Protalex, Inc.
(A Company in the Development Stage)
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS INCLUDING PLAN OF OPERATION
In December of 2000 the Company raised funds, through a private placement of
its common stock, for general corporate purposes and outside contracting.
Specifically with these funds the Company continues its animal studies,
laboratory work, and intellectual property coverage. A clear majority of
past and current funding is dedicated to these pursuits. The December round
of funding was $400,000. The Company's expenditures have decreased slightly
and management still believes the Company will have sufficient funds to meet
needs into the fall or early winter of 2001. Also, in addition to ordinary
operational expenses, the Company continues to acquire various pieces of
laboratory equipment which are both needed now and will help in future
product development.
Animal studies and laboratory work continue to yield positive results. An
acute arthritis animal model study was begun in late January of 2001. Early
results should be available in April 2001. This study is usually an
important step in the introduction of a new compound into clinical arthritis
trials.
The Company continues to explore different opportunities for its longer term
funding. Management continues to believe that funds in the range of
$15,000,000 to $20,000,000 are necessary for the full implementation of its
bioregulator technology. Currently the Company is pursuing its previously
stated near term goal of raising $5,000,000. The timetable for securing this
nearer term financing remains at raising $1,500,000 in the spring of this
year and an additional $1,500,000 at the end of the year. The remaining
funds of approximately $2,000,000 would be required in the fall of 2002.
Please refer to the Company's 10-KSB filing for its most recent year-end May
31, 2000 (filed August 25, 2000) for more information on the Company's
business concept, development stage status, intellectual technology and risk
factors.
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Protalex, Inc.
(A Company in the Development Stage)
PART II - OTHER INFORMATION
ITEM 6 - EXIBITS AND REPORTS ON FORM 8-K
6.1 Index of Exhibits.
Exhibit
Number Exhibit Name
6.2 Reports on Form 8-K. None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PROTALEX, INC.
DATE: April 12, 2001 BY: John E. Doherty
---------------------------- -------------------------------
John E. Doherty
President and Director,
Principal Financial Officer
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