UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED OCTOBER 31, 2003
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.,
A DEVELOPMENT STAGE COMPANY)
(Exact name of registrant as specified in its charter)
Delaware 000-31653 95-4766094
- ------------------------------- ---------- ----------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
1285 Avenue of the Americas, 35th Floor, New York, NY 10019
- ------------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (212) 561-1716
---------------
Check whether the registrant: (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 [_]
Class Outstanding at December 15, 2003
----- ------------------------------
Common stock, $0.001 par value 16,469,900
TABLE OF CONTENTS
PART I. - FINANCIAL INFORMATION........................................... F-1
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
BALANCE SHEETS .................................................... F-1
STATEMENTS OF OPERATIONS........................................... F-2
STATEMENT OF STOCKHOLDERS' EQUITY.................................. F-3
STATEMENTS OF CASH FLOWS........................................... F-4
NOTES TO FINANCIAL STATEMENTS...................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.......................................... 9
ITEM 3. CONTROLS AND PROCEDURES............................................ 12
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.................................................. 12
ITEM 2. CHANGES IN SECURITIES.............................................. 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................... 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 12
ITEM 5. OTHER INFORMATION.................................................. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................... 12
i
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.,
A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 2003
(UNAUDITED)
ASSETS
CURRENT ASSETS - Other Receivables .......................... $ 3
OTHER ASSETS - Goodwill ..................................... 17,000
-----------
TOTAL ASSETS .................................... $ 17,003
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Related party payable ................................ $ 90,000
Payable to DMI Biosciences ........................... 676,450
Accounts payable and accrued expenses ................ 859,831
Accrued wages ........................................ 206,000
Notes payable, related parties ....................... 200,330
-----------
TOTAL CURRENT LIABILITIES ..................... $ 2,032,611
STOCKHOLDERS' (DEFICIT)
Common stock
Authorized - 25,000,000 shares, par
value $.001 per share
Issued and outstanding - 16,469,900
shares .......................................... 16,470
Additional paid in capital ........................... 153,379
Deficit accumulated in the development
stage ........................................... (2,014,538)
Comprehensive loss ................................... (170,919)
-----------
TOTAL STOCKHOLDERS' (DEFICIT) ................. (2,015,608)
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) .................... $ 17,003
===========
F-1
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.,
A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2003 AND 2002
(UNAUDITED)
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
REVENUES ..................... $ 0 $ 0 $ 0 $ 0
GENERAL AND ADMINISTRATIVE
EXPENSES .................. 402,113 2,416 709,896 12,891
RESEARCH AND DEVELOPMENT
EXPENSES .................. 281,327 0 1,032,830 0
------------ ------------ ------------ ------------
OPERATING LOSS BEFORE INTEREST $ (683,440) $ (2,416) $ (1,742,726) $ (12,891)
------------ ------------ ------------ ------------
INTEREST EXPENSE ............. (2,157) 0 (2,157) 0
------------ ------------ ------------ ------------
NET LOSS ..................... (685,597) $ (2,416) $ (1,744,883) $ (12,891)
============ ============ ============ ============
NET (LOSS) PER COMMON SHARE:
Basic and diluted ......... $ (0.04) $ (0.00) $ (0.26) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING ............... 16,469,900 1,612,900 6,672,633 1,612,900
============ ============ ============ ============
F-2
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.,
A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE NINE MONTHS ENDED OCTOBER 31, 2003
(UNAUDITED)
Common Stock
-------------------------
Shares Amount
---------- ----------
BALANCE, FEBRUARY 1, 2003 ........................ 1,612,900 $ 1,613
ACQUISITION OF ENHANCE LIFESCIENCES, INC ......... 14,516,000 14,516
ADDITIONAL SHARES ISSUED DURING THE THIRD QUARTER 341,000 341
---------- ----------
BALANCE, OCTOBER 31, 2003 ........................... 16,469,900 $ 16,470
========== ==========
Deficit
Accumulated
Additional in Comprehensive
Paid-in Development Income
Capital Stage (Loss) Total
-------- ----------- --------- -----------
BALANCE, FEBRUARY 1, 2003 ... $ 91,650 $ (269,655) $(10,033) $ (186,425)
ACQUISITION OF ENHANCE
LIFESCIENCES, INC. ....... (40,230) (25,714)
NET (LOSS) FOR THE NINE
MONTHS ENDED
OCTOBER 31, 2003 ........ (1,744,883) (1,744,883)
COMPREHENSIVE INCOME ........ (160,886) (160,886)
----------
(1,905,769)
ADDITIONAL PAID IN CAPITAL
RELATING TO NEW SHARES ISSUED 101,959 102,300
-------- ----------- -------- -----------
BALANCE, OCTOBER 31, 2003 ... $153,379 $(2,014,538) $(170,919) $(2,015,608)
======== =========== ======== ===========
F-3
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.,
A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 31, 2003 AND 2002
(UNAUDITED)
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ................................ $(1,744,883) $ (12,891)
Common stock issued for expenses .......... 102,300 0
----------- -----------
Adjustments to reconcile net (loss) to net
cash (used) in operating activities:
(Increase) in other accounts receivable ... (3) 0
Changes in operating assets and
liabilities
Accounts Payable and accrued expenses ..... 1,373,644 5,441
----------- -----------
NET CASH (USED) IN OPERATING
ACTIVITIES ...................... (268,942) (7,450)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Cash acquired in acquisition .............. 899 0
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings ................................ 82,157 6,250
Contributed capital ....................... 0 1,200
Debt acquired in acquisition .............. 25,000 0
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ............ 107,157 7,450
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES .................. 160,886 0
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS ........ 0 0
CASH AND CASH EQUIVALENTS, AT
BEGINNING OF PERIOD ........................... 0 0
----------- -----------
CASH AND CASH EQUIVALENTS, AT
END OF PERIOD ................................. $ 0 $ 0
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during year for:
Interest ............................... $ 0 $ 0
=========== ===========
Taxes .................................. $ 0 $ 0
=========== ===========
NON-CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of common stock for acquisition
of Enhance Lifesciences, Inc. ........ $ 17,000 $ 0
Additional common stock issued during the
third quarter ........................ 102,300 0
----------- -----------
TOTAL COMMON STOCK ISSUED DURING THE PERIOD ...... $ 119,300 $ 0
=========== ===========
F-4
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.,
A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Enhance Biotech, Inc. (formerly Becor Communications, Inc.; hereinafter referred
to as the Company) was organized on December 31, 1996, under the laws of the
State of Delaware. The Company operates as a holding company for its subsidiary,
Enhance Lifesciences, Inc. ("ELSI").
ELSI is a company in the development stage which is focusing on developing
various pharmaceutical products.
The Company also owns approximately 43% of Advanced Media, Inc., a distributor
of management and general workforce training videos. The investment in Advanced
Media, Inc. has been written down to $-0- based on its negative stockholders'
equity. The Company is in the process of spinning off the shares of Advanced
Media, Inc. to its shareholders.
The interim consolidated financial statements of the Company are condensed and
do not include some of the information necessary to obtain a complete
understanding of the financial data. Management believes that all adjustments
necessary for a fair presentation of results have been included in the unaudited
consolidated financial statements for the interim periods presented. Operating
results for the nine-month period ended October 31, 2003 are not necessarily
indicative of the results that may be expected for the year ended January 31,
2004. Accordingly, your attention is directed to footnote disclosures found in
the January 31, 2003 Annual Report of ELSI and particularly to Note 1 which
includes a summary of significant accounting policies.
On April 29, 2003, the Company acquired 100% of the outstanding stock of ELSI in
exchange for 14,516,000 shares of its common stock. For accounting purposes,
ELSI is treated as the acquirer and the financial statements (current and
historical) represent the operations of ELSI.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, ELSI.
All material inter-company accounts and transactions have been eliminated.
RESEARCH AND DEVELOPMENT
The Company expenses research and development costs as incurred.
INCOME TAXES
Provisions for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount of
taxable income and pretax financial income and between the tax bases of assets
and liabilities and their reported amounts in the financial statements. Deferred
tax assets and liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled as prescribed in
FASB Statement No.109, Accounting for Income Taxes. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
5
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.
A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET (LOSS) PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128 that
requires the reporting of both basic and diluted (loss) per share. Basic (loss)
per share is computed by dividing net (loss) available to common stockholders by
the weighted average number of common shares outstanding for the period. Diluted
(loss) per share reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common
stock. In accordance with FASB 128, any anti-dilutive effects on net (loss) per
share are excluded.
CONCENTRATION OF RISK
INDUSTRY
The Company's products are intended for the lifestyle pharmaceutical industry.
This industry experiences a high degree of obsolescence and changes in buying
patterns. The Company must expend funds for research and development and
identification of new products in order to complete its business plan.
Substantially all research and development is conducted with DMI Biosciences and
Queen Mary College Hospital in London. Any disruption in the Company's
relationship with these companies could have a material impact on the Company's
future operations.
PERVASIVENESS 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.
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB recently issued the following statements:
FASB 144 - Accounting for the impairment or disposal of long-lived assets; FASB
145 - Rescission of FASB statements 4, 44 and 64 and amendment of FASB 13; FASB
146 - Accounting for costs associated with exit or disposal activities; FASB 147
- - Acquisitions of certain financial institutions; FASB 148 - Accounting for
stock based compensation; and FASB 150 - Accounting for certain financial
instruments with characteristics of both liabilities and equity.
These FASB statements did not have a material impact on the Company's financial
position and results of operations.
GOING CONCERN
These consolidated financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business over a
reasonable length of time. The following factors raise substantial doubt as to
the Company's ability to continue as a going concern:
6
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.
A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Continued operating losses
B. Negative working capital
C. Lack of cash from continuing operations
Management's plans to eliminate the going concern situation include, but are not
limited to:
A. Completion of a private placement to raise funds.
B. Introduction of products to market.
Should the Company be unsuccessful in its plans, the operations of the Company
could be discontinued.
RECLASSIFICATIONS
Certain 2002 amounts have been reclassified to conform with 2003
classifications.
NOTE 2 NOTES PAYABLE
The Company has the following notes payable at October 31, 2003:
RELATED PARTIES:
Jano Holdings, interest accrues at 6.0%. The balance is due upon the closing of
a private placement, change in control or sale of assets. The note is part of a
financing agreement which provides the Company
up to $1.0 million under the same terms. $175,330
Buddy Young, interest accrues at 8.0%, due January 31,
2004 25,000
--------
$200,330
========
NOTE 3 COMMITMENTS
FINANCING
In February 2003, the Company entered into an agreement with Jano Holdings
Limited ("Jano"), a related party, to provide up to $1.0 million in funding. In
addition, the Company granted Jano warrants to purchase 1 million shares of its
common stock at the lower of the market price of such stock, if publicly traded,
or at such price sold to investors in any financing arrangement. The warrants
expire in February 2008.
7
ENHANCE BIOTECH, INC.
(FORMERLY BECOR COMMUNICATIONS, INC.
A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2003
(UNAUDITED)
NOTE 3 COMMITMENTS (CONTINUED)
CONSULTING
In connection with the acquisition of ELSI, the Company entered into an
agreement with Buddy Young (former President of the Company) to provide
consulting services for the period June 1, 2003 through December 1, 2004. For
more information on this agreement, please review the Company's filing on Form
8-K dated April 29, 2003.
RENT
The Company rents office space in the United Kingdom on a month-to-month basis.
Rent expense for the nine months ended October 31, 2003 totaled $44,000.
NOTE 4 LICENSE AGREEMENT
In March 2003, the Company entered into two Co-Development Agreements with DMI
Biosciences, Inc. to develop and market a product for premature ejaculation and
a dermatological product. The Company is obligated to certain non-refundable
fees and royalties. See Exhibits 10.1 and 10.2 for further discussion of these
financial commitments.
NOTE 5 SUBSEQUENT EVENT
On November 1, 2003, the Company completed a $2 million fundraising.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. In consultation with our Board of Directors, we have identified two
accounting principles that we believe are key to an understanding of our
financial statements. These important accounting policies require management's
most difficult, subjective judgments.
(1) GOING CONCERN
As shown in the accompanying financial statements, the Company has incurred
significant losses, has negative working capital and needs additional capital to
finance its operations. These factors create substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern. The Company also intends to finance its operations
through sales of its securities as well as entering into loans and other types
of financing arrangements such as convertible debenture.
(2) RESEARCH AND DEVELOPMENT
The Company conducts its research and development with DMI Biosciences and Queen
Mary College Hospital in London. Such expenses are expensed as incurred. Any
disruption in the Company's relationship with these companies could have a
material impact on the Company's future operations.
RESULTS OF OPERATIONS
The three months ended October 31, 2003 compared to the three months ended
October 31, 2002:
GENERAL OVERVIEW
Enhance Lifesciences Inc., or ("the Company") is an emerging pharmaceutical
company wholly owned by Enhance Biotech Inc., developing an innovative portfolio
of products for the rapidly growing lifestyle drugs market. The Company has
identified key lifestyle product areas for which it is focusing its development
activities.
The market is recognized as growing rapidly to some $29 billion in the years to
2007 as the table below demonstrates. Added to this is the industry's spend on
lifestyle drug development in the last ten years which exceed $20 billion, each
of which demonstrates the attractive potential of this part of the global
pharmaceutical market place. In spite of this concentration on development for
the market, and the notable success of blockbuster drugs such as Viagra and
Xenical, relatively few successful solutions to the conditions recognized in
lifestyle category have actually reached market as yet. In addition there are
some conditions where very little work has been accomplished in spite of the
potential global market opportunity. Enhance's portfolio focuses upon six key
areas of the lifestyle market and in some cases is developing platform products
with potential ongoing development for related indications too. The key areas
are; sexual dysfunction, anti-aging, depression, cellulite, in vitro
fertilization and arthritis. A recent Reuters report on the lifestyle drug
sector demonstrates clearly the potential for successful participants in this
area as well as highlighting specifically some of the key areas in which the
Enhance portfolio will be active.
Enhance Biotech has and will continue to acquire and develop drug candidates
from the main lifestyle disorder categories. Through licensing in early to mid
stage products we will use our expertise and an established network of
development and commercialization partners to build long term value in to the
products for the company and shareholders.
9
By selecting the products acquired to be at varying development stages we are
able to take full benefit from the earliest opportunities to market while
looking to a strong product pipeline going forward. Amongst our five key areas
of development we have a number which while capable of achieving market
readiness with the initial science already have the ability to generate a second
phase of products offering still greater benefit and flexibility for the
lifestyle environment.
In addition to the pursuit of innovation and new development Enhance will make
use of reformulation technology in partnership with specialist, internationally
recognized technology houses to assist in meeting the needs of some lifestyle
conditions.
Revenue will be developed through a mixture of marketing license agreements with
major pharmaceutical companies where penetration of the end market for the
product justifies it and direct marketing of the products through Enhance
Biotech distribution channels and potentially direct via the internet.
To achieve this strategy the company has created and will continue to build on a
strong management, experienced in building science and technology based
businesses through partnership and licensing structures. An independent
scientific board will be appointed in addition to a supporting scientific and
commercial team. However the Enhance core business is not proposed to be a major
centralized organization. It is envisaged as a small core of Enhance staff with
a distributed support structure using the best personnel in partners and
licensed associates.
During the three month period ending October 31, 2003 work has continued on the
product development programs as planned and the individual items are detailed
below.
LIF 301: SEXUAL DYSFUNCTION THERAPY
- --------------------------------------------------------------------------------
Testing for the Phase IIa clinical trial completed at the end of the last
quarter has been the subject of data collation and preparation with final
results expected to be provided in December 2003. Following the company's
analysis of the statistical and questionnaire data the results are expected to
be published in some detail by early January. It is expected that the results
will enable design of the next trials and allow Enhance to move on in the
development process as planned. It is also clear that the questionnaires will
provide interesting and valuable supporting data on reactions to both the
Lif-301 product and to the management and control of this problem condition in
couple's daily lives. Enhance continue to see a future for this product through
a partnership in the later stages of drug development and believe the data pack
due from the trials will provide added value to this process.
LIF 316: IN-VITRO FERTILISATION
- --------------------------------------------------------------------------------
Work in the development laboratory has been continuing to build confidence in
the ability of the Lif-316 compounds to be effective. It has become clear from
the results of the program so far that the Company will now develop products and
application strategies in three closely linked key areas:
>> Enhancing or delaying activation of sperm in IVF
>> Enhancing viability of stored/frozen sperm
>> Enhancing sperm longevity
While there are clear short term opportunities in the animal market place
potentially involving the many millions of artificial inseminations annually
carried out in bovine, swine and equine fertility there is a very real prospect
of turning the last of these products in to human in vivo sperm enhancement.
It is expected that publishable results will be forthcoming from this program in
the first quarter next year and in the mean time the company is entering into
discussions for field work in the AI arena in the UK and Europe. This will
provide opportunity to trial the products in a working environment out of the
laboratory.
10
LIF 303: ANTI-CELLULITE
- --------------------------------------------------------------------------------
A program of laboratory work in preparation for the formulation and trial
application of a topical product for this condition is due to be completed in
late December 2003 providing important data for the final detailed preparation
of clinical trials planned for 2004 and the controlled manufacture of material
for that trial.
LIF 313 - PSORIASIS & ATOPIC DERMATITIS
- --------------------------------------------------------------------------------
A final review of the prospective resources offered by a number of CRO's to
assist in the development program has been collated for consideration at a joint
meeting Preparation and manufacture of material to the required standards is
under way in preparation for the commitment to an extensive pre-clinical program
in 2004.
OTHER PRODUCTS
Early stage discussions have been held with two parties interested in licensing
Lif 247 for depression but progress is too early to provide detail of any
commitment at this stage although discussions will continue.
General and administrative expenses increased from $2,416 in the quarter ended
October 31, 2002, to $402,113 in 2003. The main reason for the increase was the
further development of the Company's infrastructure to support its planned
growth. Such costs were primarily wages and consulting fees.
Research & Development expenses for the quarter ending October 31, 2003, were
$281,327. The majority of these expenses were in connection with the development
for several of our products. There were no Research & Development expenses for
the corresponding 2002 period.
The nine months ended October 31, 2003 compared to the nine months ended July
31, 2002:
General and administrative expenses increased from $12,891 for the nine month
period ended October 31, 2002, to $709,896 in 2003. The main reason for the
increase was the further development of the Company's infrastructure to support
its planned growth. Such costs were primarily wages and consulting fees.
Research & Development expenses for the nine month period ending October 31,
2003, were $1,032,830. The majority of these expenses were in connection with
discovery and pre clinical development for several of our products. There were
no Research & Development expenses for the corresponding 2002 nine month period.
Liquidity & Capital Resources. We are actively seeking strategic alliances in
order to develop and market our range of products. In February 2003, we obtained
a secured $1 million line of credit facility from Jano Holdings Limited. In
addition, our officers agreed to defer salaries until we obtain sufficient
long-term funding. Our management believes that our agreement with Jano Holdings
will be sufficient to continue currently planned operations over the next 12
months. Should the Company come up against any unforeseen problem, then the
Company will revisit its budget and adjust it accordingly to allow the company
to operate until sufficient long term funding is achieved. However, a key
element of our business strategy is to continue to acquire, obtain licenses for,
and develop new technologies and products that we believe offer unique market
opportunities and/or complement our existing product lines. Subsequent to the
three month period ending October 31, 2003, the Company closed a $2 million
financing.
The Company will be using these funds to accelerate the development of its lead
products. This investment will enable Enhance to achieve significant milestones
in its lead development programs over the next three to five months, including
completing and reporting on a Phase IIa trial in premature ejaculation and the
commencement of significant new clinical programs for the dermatological
compounds under development.
11
ITEM 3. CONTROLS AND PROCEDURES
As of August 31, 2003, an evaluation was performed by our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on that evaluation, our Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of
August 31, 2003. There have been no significant changes in our internal controls
or in other factors that could significantly affect internal controls subsequent
to August 31, 2003.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
On November 1, 2003 the company completed a financing, raising $2 million.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A Form 8/K filing was filed on 4th September 2003, reporting a change in the
Company's auditor, this was subsequently amended on a Form 8-K filing filed on
the 18th November, 2003. A Form 8-K filing was filed on the 18th November, 2003
reporting the closing of the Company's $2 million financing. All 8-K's filed are
hereby incorporated by reference.
31.1 Certification of CEO Pursuant to Securities Exchange Act Rules 13a-14
and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of CFO Pursuant to Securities Exchange Act Rules 13a-14
and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned.
Enhance Biotech, Inc.
Date: December 22, 2003 By: /s/ Linden Boyne
----------------------------
Linden Boyne
Chief Financial Officer
(Principal Financial and
Accounting Officer and Duly
Authorized Officer)
13