U.
S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-QSB/A
[
X
]
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended March 31, 2006
[ ]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ___________ to _____________
Commission
File Number: 0-32917
PROTOKINETIX,
INC.
Nevada
|
94-3355026
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Suite
1500-885 West Georgia Street
Vancouver,
British Columbia Canada V6C3E
________________________________________________________________________
(Address
of principal executive offices, including zip
code)
|
Registrant’s
telephone number, including area
code:
(
604)
687-9887
Securities
registered pursuant to Section 12(b) of the
Act:
None
Securities
registered pursuant to Section 12(g) of the
Act:
$.0000053 par value common
stock
Check
whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.Yes
X
No
___
Indicate
by a check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act. Yes _ No
X
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of
securities under a plan confirmed by a court. Yes ___ 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:
41,496,835
common shares outstanding, $0.0000053 par value, at May 8, 2006.
Transitional
Small Business Disclosure Format: Yes __ No
X
This Form
10-QSB/A This form 10-QSB/A for the period ended March 31, 2006 is being filed
in order to amend incorrect financial statements on form 10-QSB for the period
ending March 31, 2006.
PART
I
ITEM
1. FINANCIAL
STATEMENTS
Our
Financial Statements are attached on Pages F1 – F5.
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
|
FORWARD-LOOKING
STATEMENTS
|
The
information in this Quarterly Report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements involve risks and uncertainties, including
statements regarding our capital needs, business plans, and expectations. These
risks and uncertainties could cause actual results to differ materially from
those expressed in forward-looking statements. We base these
forward-looking statements on our expectations and projections about future
events, which we derive from the information currently available to
us. Such forward-looking statements relate to future events or our
future performance. Forward-looking statements are only
predictions. The forward-looking events discussed in this Quarterly
Report, the documents to which we refer you, and other statements made from time
to time by us or our representatives, may not occur, and actual events and
results may differ materially and are subject to risks, uncertainties, and
assumptions about us. For these statements, we claim the protection
of the “bespeaks caution” doctrine. The forward-looking statements
speak only as of the date hereof, and we expressly disclaim any obligation to
publicly release the results of any revisions to these forward-looking
statements to reflect events or circumstances after the date of this
filing.
Critical
Accounting Policies
Our
critical and significant accounting policies, including the assumptions and
judgments underlying them, are disclosed in the Notes to the Financial
Statements. These policies have been consistently applied in all
material respects and address such matters as revenue recognition and
depreciation methods. The preparation of the financial statements in
conformity with generally accepted accounting principles in the United States
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 reported period. Actual results
could differ from those estimates. The accounting treatment of a
particular transaction is specifically dictated by accounting principles,
generally accepted in the United States of America, with no need for
management’s judgment in their application. There are also areas in
which management’s judgment in selecting any viable alternative would not
produce a materially different result. See our audited financial
statements and notes thereto which contain accounting policies and other
disclosures required by accounting principles, generally accepted in the United
States of America.
Overview
We are a
biotechnical company headquartered in Vancouver, British Columbia that owns the
world-wide rights to a family of synthetic anti-freeze glycoproteins
(trademarked by us as AAGP™). We are dedicated to the commercial
development of AAGP™ for use in human and veterinary medicine, food additives
and supplements, and the biotechnology and cosmetic industry. We are
making rapid and meaningful progress in this domain by coordinating a team of
world recognized intellectual talent in a networked environment. This team has
been able to use previously published research on native antifreeze proteins and
antifreeze glycoproteins as a guide to the expansion and development of markets
for this valuable family of molecules.
The
ProtoKinetix business plan is based primarily on the furtherance of certain
intellectual property rights obtained by way of "sub-licenses" of technology
from other companies. At present, although we have engaged the
prestigious patent law firm of Cabinet-Moutard of Versaille, France, to file a
number of international patent applications (consistent with our agreements with
the licensors of various technologies we license), we have no finished
commercial product or products, and have received no final patents awards or FDA
approvals for any product or diagnostic procedures. We are focused on
the research and development of one primary compound known as AFGP, which we
have filed a trademark application for.
Employees
We
currently have no full time employees. We operate with a skeletal
management team headed by John Todd, M.D. In addition to Dr. Todd, we
receive advice and counsel from our Scientific Advisory Board.
Our
Main Project
We are
currently developing and testing synthetic antifreeze glycoproteins
(AFGP). ProtoKinetix has entered into agreements to acquire the
exclusive right to develop products derived from patent pending technologies
related to synthetic AFGPs. Our intellectual property rights were
developed by Dr. Jean-Charles Quirion.
Background
on our AFGP Project
One of
many accomplishments from pioneering research of the U.S. Antarctic Program was
the discovery, in the early sixties, that fish living year-long in subzero
temperature are extremely resistant to freezing. The substances that
prevent these fish from freezing were isolated, characterized and designated as
antifreeze glycoproteins or AFGP. Over the years, various kinds of
AFGP were isolated from many species of fishes, and in some amphibians, plants
and insects. All of the AFGPs share a common characteristic that
prevents ice crystals from growing and connecting to each other.
A review
of the scientific literature will confirm that there has been a great deal of
interest around the world in these natural antifreeze glycoproteins which are
able to protect a great many creatures which are subjected to freezing
temperatures. A further review will also confirm that the natural
antifreeze is able to preserve mammalian cells tissue and organs. The metabolic
rate in living cells is reduced as the temperature is
lowered. Keeping cells and tissue at a low temperature enables their
preservation for a longer time than cells can be preserved for at a higher
temperature. Yet, when cells are exposed to sub zero temperatures,
they are destroyed by the formation of ice crystals which disrupts the cell
membrane.
Scientists
have conducted many experiments in which they extracted naturally occurring AFGP
from a variety of fish and then used these naturally occurring antifreeze
glycoproteins to reduce the temperature at which ice crystals are
formed. It has been determined in experiments by many scientists that
mammalian cells in a solution containing natural AFGP could be successfully
preserved at temperatures several degrees below zero Celsius. At this
temperature the metabolic rate of the cells is very low, and these cells can be
preserved for a longer period of time at sub zero temperatures as long as the
cells are not destroyed by the formation of ice crystals. However, until today,
applications of AFGP were limited since researchers were unable to produce
sufficient quantities or stable enough copies of these antifreeze glycoproteins
for commercial applications, and the use of naturally occurring compounds
extracted from fish is too labor and cost-intensive to be
practical.
Researchers,
headed by Dr. Jean Charles Quirion in Rouen, France have developed an innovative
and patented chemical synthesis protocol for manufacturing and stabilizing AFGP
molecules using a chemical bond that protects these compounds from degradation
by naturally occurring enzymes. Dr. Quirion and his team have
produced several synthetic antifreeze glycoproteins and have the ability to
produce many more different types of these molecules. The synthetic
AFGP which has been made has been tested and we were able to show:
·
|
The
molecules are stable down to a pH of
1.8
|
·
|
There
is no toxicity demonstrated in 2 separate
trials
|
·
|
The
molecules tested have shown that they reduce the freezing point to minus
18 degrees Celcius
|
·
|
We
have been able to preserve red cells at temperatures below zero Celcius
using 1 mg per ml of the synthetic
antifreeze
|
Current
research is being conducted to confirm the efficacy of these chemically
synthesized new molecules and applications are being sought for the use of the
synthetic AFGP to prolong the shelf-life of human blood and blood products as
well as for other cell types, live vaccines, tissue and organs. The market for
the preservation of blood and blood products is very large, as is the market for
the preservation of human and animal cells for research purposes. The subzero
cryopreservation of organs using our synthetic AFGP will be a major milestone in
transplantation medicine
ProtoKinetix
will continue to conduct research on the synthetic AFGP which are being
manufactured. This work will be conducted by government agencies as well as by
contract with private laboratory facilities.
Intellectual
Property
As of the
date of this Report, although our development agents, including the parties we
have licensed AFGP technologies from, have applied to receive patents for
technologies ProtoKinetix has licensed and continues to primarily base it's
research efforts on, no patents have issued by a governmental or
quasi-governmental agency. The references of applications that we
have filed to date are PCT/IB2005/003940, filed on December 2, 2005 under the
priority of the French patent application FR 0412782 which was filed on December
2, 2004.
Subject
to our available financial resources, our intellectual property strategy
is: (1) to pursue licenses, trade secrets, and know-how within our
primary research areas, and (2) to develop and acquire proprietary positions to
reagents and new platforms for the development of products related to these
technologies.
Trade
Secrets and Know-How
We
believe that even if our intellectual property position is ultimately diminished
as a result of our development agents and licensors to receive patent protection
for the licenses ProtoKinetix has contracted to access, we have developed a
substantial body of trade secrets and know-how relating to the development of
AAGP™, including but not limited to the optimization of materials for efforts,
and how to maximize sensitivity, speed-to-result, specificity, stability and
reproducibility.
Competition
The
markets that we are attempting to enter are multi-billion dollar international
industries. They are intensely competitive. Many of our
competitors (from every perspective) are substantially larger and have greater
financial, research, manufacturing, and marketing resources.
Industry
competition in general is based on the following:
·
|
Scientific
and technological capability;
|
·
|
The
ability to develop and market products and
processes;
|
·
|
The
ability to obtain FDA or other required regulatory
approvals;
|
·
|
The
ability to manufacture products that meet applicable FDA requirements,
(i.e. FDA’s Quality System Regulations) see Governmental Regulation
section;
|
·
|
Access
to adequate capital;
|
·
|
The
ability to attract and retain qualified personnel;
and
|
·
|
The
availability of patent protection.
|
We
believe our scientific and technological capabilities are
significant. Some of the results of our research are available at our
website located at www.protokinetix.com.
Our
ability to develop our research is in large measure dependent on our having
additional resources and/or collaborative relationships, particularly where we
can have our product development efforts funded on a project or milestone
basis. We believe that our know-how with our AFGP project, in spite
of not yet receiving any patent protected rights, has been instrumental in our
obtaining the collaborations we have developed.
Although
there is no such immediate need to make any regulatory filing in the United
States or abroad, you should be aware that we have limited experience with
regard to obtaining FDA or other required regulatory approvals, and no
experience with obtaining pre-marketing approval of a biologic
product. For this reason, should our research efforts continue to
show promise, we will likely need to hire consultants to assist us with such
governmental regulations.
Our
access to capital is more challenging, relative to most of our
competitors. This is a competitive disadvantage. We
believe, however, that our access to capital may increase as we get closer to
the development of a commercially viable product.
To date,
we believe our research has enabled us to attract and retain qualified
consultants. Because of the greater financial resources of many of
our competitors, we may not be able to complete effectively for the same
individuals to the extent that a competitor uses its substantial resources to
attract any such individuals.
As is
discussed above, with respect to the availability of patent protection, we do
not have our own portfolio of patents or the financial resources to develop
and/or acquire a portfolio of patents similar to those of our larger
competitors. We have been able to obtain access to patent-pending
technology by entering into licensing arrangements. However, there
can be no certainty that any of the patent-pending technologies we have licensed
will ever receive final approval by any patent office.
Plan
of Operation
Our
current operations are centered around our relationships with various research
and development consultants who are conducting research on our behalf at
discrete and established laboratories in various parts of the
world. We intend to continue these efforts for the next 12 months and
believe, that due to our relatively minimal cash obligations, that we can
satisfy our cash requirements during this period. We intend to help
meet our corporate obligations by selling our common stock. However
our common stock is at a low price and is not actively traded.
Sales
and Marketing
We are
not currently selling or marketing any products.
Expenses
Expenses
for the period ending March 31, 2006 arose primarily from professional and
consulting fees. We incurred professional fees relating to costs
associated with our being a reporting company under the Securities Exchange Act
of 1934, as amended. We also incurred consulting fees which
contributed to a net loss of $215,046 during the three month period ended March
31, 2006.
Liquidity
and Capital Resources
At March
31, 2006, we had $451,205 in cash and $485,554 in total current
assets. As of the date of this report, we do not believe that we
require additional capital investments or borrowed funds to meet cash flow
projections and carry forward our business objectives. In the event
that we need to raise additional capital, there can be no assurance that we will
be able to raise capital from outside sources in sufficient amounts to fund our
new business.
The
failure to secure adequate outside funding would have an adverse affect on our
plan of operation and results therefrom and a corresponding negative impact on
shareholder liquidity.
Inflation
Although
management expects that our operations will be influenced by general economic
conditions, we do not believe that inflation had a material effect on our
results of operations for the period ending March 31, 2006.
Going
Concern
The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate our continuation as
a going concern. The history of losses and our inability to make a
profit from selling a good or service has raised substantial doubt about our
ability to continue as a going concern.
Results
of Operations for the Period Ending March 31, 2006
We had $0
in net revenues.
We had a
$215,046 loss from operations for the Period Ending March 31, 2006.
Operating
expenses were $215,046 for the period ending March 31, 2006. These
expenses were primarily incurred for professional fees, consulting services
related to the operations of the Company's business, specifically, research and
development related expenses, and other general and administrative
expenses.
ITEM
3. CONTROLS
AND PROCEDURES
As
required by Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange
Act”) we carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of March 31, 2006, being
the date of our most recently completed fiscal quarter. This
evaluation was carried out under the supervision and with the participation of
our Chief Executive Officer and Chief Financial Officer. Based upon
that evaluation, they concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized, and reported within the time
periods specified in the Securities and Exchange Commission’s rules and forms,
and that such information is accumulated and communicated to them to allow
timely decisions regarding required disclosure.
During
our most recently completed quarter ended March 31, 2006, there were no changes
in our internal control over financial reporting that have materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.
PART
II
ITEM
1. LEGAL
PROCEEDINGS
We are
not party to any legal proceedings and to our knowledge, no such proceedings are
threatened or contemplated against us.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We did
not complete any sales of securities without registration under the Securities
Act of 1933 during our first quarter ended March 31, 2006.
ITEM
3. DEFAULT
UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
No
matters were submitted to our security holders for a vote during our first
quarter ended March 31, 2006.
ITEM
5. OTHER
INFORMATION
None
ITEM
6. EXHIBITS
AND REPORTS ON FORM 8-K.
Ex. #
|
|
Description
|
|
|
|
3(i).1
|
|
Certificate
of Incorporation filed as an exhibit to the Company's registration
statement on Form 10SB/A filed on July 24, 2001 and incorporated herein by
reference.
|
|
|
|
3(ii).1
|
|
By-Laws
filed as an exhibit to the Company's registration statement on Form 10SB/A
filed on July 24, 2001 and incorporated herein by
reference.
|
|
|
|
14.1
|
|
ProtoKinetix,
Inc. Code of Ethics file as an exhibit to our annual report on Form 10-KSB
filed on April 13, 2006.
|
|
|
|
23.1
|
|
Consent
of Peterson Sullivan PLLC
|
|
|
|
31.1
|
|
Rule
13a-12(a)/15d-14(a) Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant
to Section 302 the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Signatures
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report, for the period ended March 31, 2006 to be signed
on its behalf by the undersigned, thereunto duly authorized.
Protokinetix,
Inc.
/s/
Ross Senior
____________________________
By: Ross
Senior
Its: President, CEO
and CFO
In accordance with the requirements of
the Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
|
|
|
/s/Ross
Senior
Ross
Senior
|
President,
CEO and Chief Financial Officer
|
April
30, 2008
|
|
PROTOKINETIX,
INC.
|
|
|
|
|
|
|
|
Balance
Sheet at March 31, 2006
|
|
|
|
|
Statements
of Operations for the three months ended March 31, 2006 and 2005
and
|
|
|
for
the Period from December 23, 1999 (Date of Inception) to March 31,
2006
|
|
|
Statements
of Stockholder’s Equity for the Period from December 23,
1999
|
|
(Date
of Inception) to March 31, 2006
|
|
|
|
|
Statements
of Cash Flows for the three months ended March 31, 2006 and 2005
and
|
|
|
for
the Period from December 23, 1999 (Date of Inception) to March 31,
2006
|
|
|
|
|
Notes
to Financial Statements
|
|
|
|
|
|
|
|
PROTOKINETIX,
INC.
(a
Development Stage Company)
|
BALANCE
SHEET
|
March
31, 2006
|
(Unaudited)
|
(Restated)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
Asset, as restated
|
|
|
Cash
|
|
|
$ 451,205
|
|
Accounts
receivable
|
34,149
|
|
Prepaid
expenses
|
200
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
485,554
|
|
|
|
|
|
|
Computer
equipment, net
|
2,206
|
|
|
|
|
|
|
|
$ 487,760
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Due
to outside management consultants
|
$ 306,892
|
|
Accounts
payable
|
122,406
|
|
Accrued
interest
|
38,760
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
468,058
|
Convertible
Note Payable
|
123,323
|
|
|
|
|
Total
liabilities
|
591,381
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Common
stock, $.0000053 par value; 100,000,000 common
|
|
|
|
shares
authorized; 40,967,556 shares issued and outstanding
|
|
|
221
|
|
Common
stock issuable; 1,420,000 shares
|
8
|
|
Additional
paid-in capital
|
15,000,326
|
|
Deficit
accumulated during the development stage, as restated
|
(15,104,176)
|
|
|
|
|
|
(103,621)
|
|
|
|
|
|
$ 487,760
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
PROTOKINETIX,
INCORPORATED
|
(A
Development Stage Company)
|
STATEMENTS
OF OPERATIONS
|
For
the Three Months Ended March 31, 2006 and 2005, and for
the
|
Period
from December 23, 1999 (Date of Inception) to March 31,
2006
|
(Unaudited)
|
(Restated)
|
|
|
|
|
|
Three
Months
Ended
March
31, 2006
|
|
Three
Months
Ended
March
31, 2005
|
|
Cumulative
During the Development Stage
|
Revenues
|
|
$ -
|
|
$ -
|
|
$ 2,000
|
General
and administrative expenses
|
|
|
|
|
|
|
Licenses,
as restated
|
|
|
|
|
3,379,756
|
|
Professional
fees
|
102,025
|
|
75,690
|
|
2,528,718
|
|
Consulting
fees
|
31,500
|
|
11,476
|
|
8,069,179
|
|
Research
and development
|
37,063
|
|
142,802
|
|
657,245
|
|
General
and administrative
|
41,992
|
|
52,411
|
|
389,053
|
|
Interest
|
|
2,466
|
|
5,728
|
|
38,759
|
|
|
|
|
|
215,046
|
|
288,107
|
|
15,062,710
|
Loss
from continuing operations
|
(215,046)
|
|
(288,107)
|
|
(15,060,710)
|
Discontinued
Operations
|
|
|
|
|
|
|
Loss
from operations of the
|
|
|
|
|
|
|
discontinued
segment
|
-
|
|
-
|
|
(43,466)
|
|
|
|
|
Net
loss
|
$ (215,046)
|
|
$ (288,107)
|
|
$(15,104,176)
|
Net
Loss per Share (basic and
|
|
|
|
|
|
|
fully
diluted)
|
|
|
|
|
|
|
Continuing
operations
|
$ (0.01)
|
|
$ (0.01)
|
|
|
|
Discontinued
operations
|
(0.00)
|
|
(0.00)
|
|
|
|
|
|
|
Net
loss per common share
|
$ (0.01)
|
|
$ (0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
|
|
|
|
|
|
|
shares
outstanding
|
42,019,236
|
|
35,948,798
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
PROTOKINETIX,
INCORPORATED
|
|
|
(A
Development Stage Company)
|
|
|
STATEMENTS
OF STOCKHOLDERS' EQUITY
|
|
|
For
the Three Months Ended March 31, 2006, and for the Period
From
|
|
|
December
23, 1999 (Date of Inception) to March 31, 2006
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Additional
|
|
Stock
|
|
During
the
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Issuable
|
|
Paid-in
|
|
Subscriptions
|
|
Development
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Receivable
|
|
Stage
|
|
Total
|
Issuance
of common stock, December 1999
|
9,375,000
|
|
$ 50
|
|
-
|
|
$ -
|
|
$ 4,950
|
|
$ -
|
|
$ -
|
|
$ 5,000
|
Net
loss for period
|
|
|
|
|
|
|
|
|
|
|
|
|
(35)
|
|
(35)
|
Balance,
December 31, 2000
|
9,375,000
|
|
50
|
|
-
|
|
-
|
|
4,950
|
|
|
|
(35)
|
|
4,965
|
Issuance
of common stock, April 2001
|
5,718,750
|
|
30
|
|
|
|
|
|
15,220
|
|
|
|
|
|
15,250
|
Net
loss for year
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,902)
|
|
(16,902)
|
Balance,
December 31, 2001
|
15,093,750
|
|
80
|
|
-
|
|
-
|
|
20,170
|
|
|
|
(16,937)
|
|
3,313
|
Net
loss for year
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,878)
|
|
(14,878)
|
Balance,
December 31, 2002
|
15,093,750
|
|
80
|
|
-
|
|
-
|
|
20,170
|
|
|
|
(31,815)
|
|
(11,565)
|
Issuance
of common stock for services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
2003
|
|
|
2,125,000
|
|
11
|
|
|
|
|
|
424,989
|
|
|
|
|
|
425,000
|
|
August
2003
|
|
300,000
|
|
2
|
|
|
|
|
|
14,998
|
|
|
|
|
|
15,000
|
|
September
2003
|
1,000,000
|
|
5
|
|
|
|
|
|
49,995
|
|
|
|
|
|
50,000
|
|
October
2003
|
1,550,000
|
|
8
|
|
|
|
|
|
619,992
|
|
|
|
|
|
620,000
|
Issuance
of common stock for licensing rights
|
14,000,000
|
|
74
|
|
|
|
|
|
2,099,926
|
|
|
|
|
|
2,100,000
|
Common
stock issuable for licensing rights
|
|
|
|
|
2,000,000
|
|
11
|
|
299,989
|
|
|
|
|
|
300,000
|
Shares
cancelled on September 30, 2003
|
(9,325,000)
|
|
(49)
|
|
|
|
|
|
49
|
|
|
|
|
|
-
|
Net
loss for year, as restated
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,662,745)
|
|
(3,662,745)
|
Balance,
December 31, 2003
|
24,743,750
|
|
131
|
|
2,000,000
|
|
11
|
|
3,530,108
|
|
-
|
|
3,694,560)
|
|
(164,310)
|
Issuance
of common stock for services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
2004
|
|
1,652,300
|
|
9
|
|
|
|
|
|
991,371
|
|
|
|
|
|
991,380
|
|
May
2004
|
|
500,000
|
|
3
|
|
|
|
|
|
514,997
|
|
|
|
|
|
515,000
|
|
July
2004
|
|
|
159,756
|
|
1
|
|
|
|
|
|
119,694
|
|
|
|
|
|
119,695
|
|
August
2004
|
|
100,000
|
|
1
|
|
|
|
|
|
70,999
|
|
|
|
|
|
71,000
|
|
October
2004
|
732,400
|
|
4
|
|
|
|
|
|
479,996
|
|
|
|
|
|
480,000
|
|
November
2004
|
650,000
|
|
4
|
|
|
|
|
|
454,996
|
|
|
|
|
|
455,000
|
|
December
2004
|
255,000
|
|
1
|
|
|
|
|
|
164,425
|
|
|
|
|
|
164,426
|
Common
stock issuable for AFGP license
|
|
|
|
|
1,000,000
|
|
5
|
|
709,995
|
|
|
|
|
|
710,000
|
Common
stock issuable for Recaf License
|
|
|
|
|
400,000
|
|
2
|
|
223,998
|
|
|
|
|
|
224,000
|
Warrants
granted (for 3,450,000 shares) for services,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
2004
|
|
|
|
|
|
|
|
|
1,716,253
|
|
|
|
|
|
1,716,253
|
Options
granted for services, October 2004
|
|
|
|
|
|
|
|
|
212,734
|
|
|
|
|
|
212,734
|
Stock
subscriptions receivable
|
|
|
|
|
1,800,000
|
|
10
|
|
329,990
|
|
(330,000)
|
|
|
|
-
|
Warrants
exercised:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
August
2004
|
|
|
|
|
|
50,000
|
|
|
|
15,000
|
|
|
|
|
|
15,000
|
|
October
2004
|
|
|
|
|
600,000
|
|
3
|
|
134,997
|
|
|
|
|
|
135,000
|
|
December
2004
|
|
|
|
|
1,000,000
|
|
5
|
|
224,995
|
|
|
|
|
|
225,000
|
Options
exercised, December 2004
|
|
|
|
|
100,000
|
|
1
|
|
29,999
|
|
|
|
|
|
30,000
|
Net
loss for period
|
|
|
|
|
|
|
|
|
|
|
-
|
|
(6,368,030)
|
|
(6,368,030)
|
Balance,
December 31, 2004
|
28,793,206
|
|
$ 154
|
|
6,950,000
|
|
$ 37
|
|
$ 9,924,547
|
|
$ (330,000)
|
|
$ (10,062,590)
|
|
$ (467,852)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock subscriptions receivable
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
|
|
240,000
|
Issuance
of common stock for licensing rights
|
2,000,000
|
|
11
|
|
(2,000,000)
|
|
(11)
|
|
|
|
|
|
|
|
-
|
Issuance
of stock for warrants exercised
|
2,050,000
|
|
10
|
|
(2,050,000)
|
|
(10)
|
|
|
|
|
|
|
|
-
|
Options
exercised,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
2005
|
|
|
|
|
35,000
|
|
1
|
|
10,499
|
|
|
|
|
|
10,500
|
|
May
2005
|
|
200,000
|
|
1
|
|
|
|
|
|
59,999
|
|
|
|
|
|
60,000
|
Note
payable conversion, February 2005
|
|
|
|
|
285,832
|
|
1
|
|
85,749
|
|
|
|
|
|
85,750
|
Issuance
of common stock for Note payable conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
2005
|
|
285,832
|
|
1
|
|
(285,832)
|
|
(1)
|
|
|
|
|
|
|
|
-
|
|
May
2005
|
|
353,090
|
|
2
|
|
|
|
|
|
105,925
|
|
|
|
|
|
105,927
|
Issuance
of common stock for AFGP license
|
1,000,000
|
|
5
|
|
(1,000,000)
|
|
(5)
|
|
|
|
|
|
|
|
-
|
Issuance
of common stock for stock subscriptions received
|
1,400,000
|
|
6
|
|
(1,400,000)
|
|
(6)
|
|
|
|
90,000
|
|
|
|
90,000
|
Issuance
of stock for options exercised
|
135,000
|
|
2
|
|
(135,000)
|
|
(2)
|
|
|
|
|
|
|
|
-
|
Issuance
of common stock for services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
2005
|
|
30,000
|
|
1
|
|
|
|
|
|
14,999
|
|
|
|
|
|
15,000
|
|
May
2005
|
|
3,075,000
|
|
15
|
|
|
|
|
|
3,320,985
|
|
|
|
|
|
3,321,000
|
|
June
2005
|
|
50,000
|
|
1
|
|
|
|
|
|
50,499
|
|
|
|
|
|
50,500
|
|
August
2005
|
|
(250,000)
|
|
(1)
|
|
|
|
|
|
(257,499)
|
|
|
|
|
|
(257,500)
|
|
August
2005
|
|
111,111
|
|
1
|
|
(92,593)
|
|
(1)
|
|
15,000
|
|
|
|
|
|
15,000
|
|
October
2005
|
36,233
|
|
1
|
|
(36,233)
|
|
(1)
|
|
-
|
|
|
|
|
|
-
|
|
November
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
2005
|
311,725
|
|
2
|
|
(245,000)
|
|
(1)
|
|
36,249
|
|
|
|
|
|
36,250
|
|
December
2005
|
1,220,000
|
|
8
|
|
|
|
|
|
756,392
|
|
|
|
|
|
756,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issuable for services rendered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
2005
|
|
|
|
|
|
200,000
|
|
1
|
|
149,999
|
|
|
|
|
|
150,000
|
|
August
2005
|
|
|
|
|
|
36,233
|
|
1
|
|
21,739
|
|
|
|
|
|
21,740
|
|
September
2005
|
|
|
|
|
125,000
|
|
1
|
|
74,999
|
|
|
|
|
|
75,000
|
|
September
2005(Proteocell)
|
|
|
|
|
100,000
|
|
1
|
|
57,999
|
|
|
|
|
|
58,000
|
|
December
2005
|
|
|
|
|
120,968
|
|
1
|
|
74,999
|
|
|
|
|
|
75,000
|
Net
loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,826,540)
|
|
(4,826,540)
|
Balance,
December 31, 2005
|
40,801,197
|
|
$ 220
|
|
608,375
|
|
$ 6
|
|
$ 14,503,079
|
|
$ -
|
|
$ (14,889,130)
|
|
$ (385,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issuable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
2006 private placement
|
|
|
|
|
900,000
|
|
2
|
|
352,145
|
|
|
|
|
|
352,147
|
|
February/March
2006 services
|
|
|
|
|
20,000
|
|
1
|
|
10,499
|
|
|
|
|
|
10,500
|
Warrants
granted from private placement (450,000)
|
|
|
|
|
|
|
|
|
97,853
|
|
|
|
|
|
97,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
2006
|
166,359
|
|
1
|
|
(108,375)
|
|
(1)
|
|
36,750
|
|
|
|
|
|
36,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(215,046)
|
|
(215,046)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2006
|
40,967,556
|
|
$ 221
|
|
1,420,000
|
|
$ 8
|
|
$ 15,000,326
|
|
$ -
|
|
$ (15,104,176)
|
|
$ (103,621)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
PROTOKINETIX,
INCORPORATED
|
(A
Development Stage Company)
|
STATEMENTS
OF CASH FLOWS
|
For
the Three Months Ended March 31, 2006 and 2005, and for the Period
From
|
December
23, 1999 (Date of Inception) to March 31, 2006
|
(Unaudited)
|
|
|
|
|
|
Three
Months Ended
March
31, 2006
|
|
Three
Months Ended
March
31, 2005
|
|
Cumulative
During the Development Stage
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
Net
loss for period, as restated
|
$ (215,046)
|
|
$ (288,107)
|
|
$
(15,104,176)
|
|
Adjustments
to reconcile net loss to net cash flows
|
|
|
|
|
|
|
|
provided
by (used in) operating activities
|
|
|
|
|
|
|
|
Depreciation
expense
|
255
|
|
126
|
|
1,182
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for services
|
|
|
|
|
|
|
|
and
expenses, as restated
|
47,250
|
|
-
|
|
11,604,141
|
|
Warrants
issued for consulting services
|
-
|
|
-
|
|
1,716,253
|
|
Stock
options issued for consulting services
|
-
|
|
-
|
|
212,734
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
Accounts
receivable
|
(27,610)
|
|
|
|
(34,149)
|
|
|
Prepaid
expenses
|
6,000
|
|
|
|
(200)
|
|
|
Due
to outside
|
|
|
|
|
|
|
|
|
management
consultants
|
-
|
|
-
|
|
306,892
|
|
|
Accounts
payable
|
91,319
|
|
88,226
|
|
122,406
|
|
|
Accrued
interest
|
2,466
|
|
5,728
|
|
38,760
|
|
|
|
|
Net
cash flows used in operating activities
|
(95,366)
|
|
(194,027)
|
|
(1,136,157)
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of computer equipment
|
-
|
|
-
|
|
(3,388)
|
|
|
|
|
Net
cash flows used in investing
|
|
|
|
|
|
|
|
|
|
activities
|
-
|
|
-
|
|
(3,388)
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
Warrants
exercised
|
-
|
|
240,000
|
|
705,000
|
|
Stock
options exercised
|
-
|
|
10,500
|
|
100,500
|
|
Issuance
of common stock and warrants for cash
|
450,000
|
|
85,750
|
|
470,250
|
|
Proceeds
from (payments) convertible notes
|
-
|
|
(85,750)
|
|
315,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash flows provided by financing activities
|
450,000
|
|
250,500
|
|
1,590,750
|
|
|
|
|
Net
change in cash
|
354,634
|
|
56,473
|
|
451,205
|
Cash,
beginning of period
|
96,571
|
|
283,556
|
|
|
Cash,
end of period
|
$ 451,205
|
|
$ 340,029
|
|
$ 451,205
|
Cash
paid for interest
|
$ -
|
|
$ -
|
|
$ -
|
Cash
paid for income taxes
|
$ -
|
|
$ -
|
|
$ -
|
|
|
|
|
|
|
|
|
|
|
Supplementary
information - Non-cash Transactions:
|
|
|
|
|
|
|
Common
stock issuable for acquisition of intangible assets
|
-
|
|
-
|
|
934,000
|
|
Stock
subscriptions received
|
|
|
-
|
|
330,000
|
|
Note
payable converted to common stock
|
|
|
|
|
191,677
|
|
|
|
|
|
|
|
|
|
|
See
Notes to Financial Statements
|
NOTES
TO FINANCIAL STATEMENTS
Note
1. Organization and Significant Accounting Policies
Organization
ProtoKinetix,
Incorporated (the "Company"), a development stage company, was incorporated
under the laws of the State of Nevada on December 23, 1999. The
Company is a medical research company whose mission is the advancement of human
health care.
In 2003,
the Company entered into an assignment of license agreement (the "Agreement")
with BioKinetix, Inc., an Alberta, Canada, corporation. The Agreement
provided the Company with an exclusive assignment of all of the rights (the
"Rights") that BioKinetix possessed relating to two proprietary technologies
that are being developed for the creation and commercialization of
"superantibodies," an enhancement of antibody technology that makes ordinary
antibodies much more lethal. In consideration, the Company's Board of
Directors authorized the Company to issue 16,000,000 shares of its common stock
to the shareholders of BioKinetix.
The
Company is also currently researching the benefits and feasibility of
proprietary synthesized Antifreeze Glycoproteins ("AFGP"). In
preliminary studies, AFGP has demonstrated an ability to protect and preserve
human cells at temperatures below freezing.
Interim Period Financial
Statements
The
interim period financial statements have been prepared by the Company pursuant
to the rules and regulations of the U.S. Securities and Exchange Commission (the
"SEC"). Certain information and footnote disclosure normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted pursuant
to such SEC rules and regulations. The interim period financial
statements should be read together with the audited financial statements and
accompanying notes included in the Company's audited financial statements for
the years ended December 31, 2005 and 2004. In the opinion of the
Company, the unaudited financial statements contained herein contain all
adjustments (consisting of a normal recurring nature) necessary to present a
fair statement of the results of the interim periods presented.
Stock Based
Compensation
Prior to
January 1, 2006, the Company accounted for stock-based awards under the
intrinsic value method, which followed the recognition and measurement
principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”,
and related Interpretations. The intrinsic value method of accounting
resulted in compensation expense for stock options to the extent that the
exercise prices were set below the fair market price of the Company’s stock at
the date of grant.
As of
January 1, 2006, the Company adopted SFAS No. 123(R) using the modified
prospective method, which requires measurement of compensation cost for all
stock-based awards at fair value on the date of grant and recognition of
compensation over the service period for awards expected to vest. The
fair value of stock options is determined using the Black-Scholes valuation
model, which is consistent with the Company’s valuation techniques previously
utilized for options in footnote disclosures required under SFAS No. 123,
“Accounting for Stock Based Compensation”, as amended by SFAS No. 148,
“Accounting for Stock Based Compensation Transition and
Disclosure”.
Since the
Company did not issue stock options to employees during the three months ended
March 31, 2006 or 2005, there is no effect on net loss or earnings per share had
the Company applied the fair value recognition provisions of SFAS No. 123(R) to
stock-based employee compensation. When the Company issues shares of
common stock to employees and others, the shares of common stock are valued
based on the market price at the date the shares of common stock are approved
for issuance.
Going
Concern
As shown
in the financial statements, the Company has not developed a commercially viable
product, has not generated any revenues to date and has incurred losses since
inception, resulting in a net accumulated deficit at March 31,
2006. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
The
Company needs additional working capital to continue its medical research or to
be successful in any future business activities and continue to pay its
liabilities. Therefore, continuation of the Company as a going
concern is dependent upon obtaining the additional working capital necessary to
accomplish its objective. Management is presently engaged in seeking
additional working capital.
The
accompanying financial statements do not include any adjustments to the recorded
assets or liabilities that might be necessary should the Company fail in any of
the above objectives and is unable to operate for the coming year.
Earnings per
Share
Basic
loss per share is computed by dividing the net loss available to common
shareholders by the weighted average number of common shares outstanding in the
period. The Company's stock split 1:75 on August 24,
2001. In April 2002, the Board of Directors approved a 2.5 for 1
split of the Company's stock. The accompanying financial statements
are presented on a post-split basis. The loss per share for the
periods ended March 31, 2006 and 2005, have been adjusted
accordingly. Diluted earnings per share takes into consideration
common shares of outstanding (computed under basic earnings per share) and
potentially dilutive securities. The effect of debt convertible into
common shares was not included in the computation of diluted earnings per share
for all periods presented because it was anti-dilutive due to the Company's
losses. Common stock issuable is considered outstanding as of the
original approval date for purposes of earnings per share
computations.
Note
2. Restatement
During
2003 and 2004, the Company acquired license rights to proprietary medical
research technologies, which were capitalized at the time of acquisition as
intangible assets having indefinite lives. While the Company's management
continues to believe the license rights are of probable future benefit to the
Company in its continuing efforts to pursue the development of commercially
viable products, it was appropriate for accounting purposes to expense the cost
of the acquisition of the license rights. Accordingly, the accompanying
financial statements have been restated to correct the error and recognize as
expense the cost of those acquired license rights at the time of their
acquisition.
During
2005, one of the acquired license rights was deemed to have had no remaining
useful life and, accordingly, an impairment loss of $269,756 was recognized.
Because of the 2003 and 2004 restatements, this impairment expense is eliminated
for 2005.
The
effects of the restatement on the March 31, 2006 financial statements are as
follows:
Intangible
assets decreased by $3,110,000 and the Accumulated Deficit increased by
$3,110,000
The
effects of the restatement on the March 31, 2005 financial statements are as
follows:
Intangible
assets decreased by $3,379,756 and the Accumulated Deficit increased by
$3,379,756.
The
effect of the restatement on the March 31, 2006 amounts in the
Cumulative During the Development Stage period are as follows:
Expenses,
specifically Licenses, increased by $3,379,756 to $3,379,756, and the Impairment
Loss of $269,756 was eliminated, increasing total expenses by a net amount of
$3,110,000 to $15,062,710. The Loss from Continuing Operations increased by
$3,110,000 to ($15,060,710) and the Net Loss increased by $3,110,000 to
($15,104,176).
For
purposes of the Statement of Cash Flows, the Net Loss for the Period increased
to ($15,104,176) and the Issuance of Common Stock for Services and Expenses
increased by $3,334,000 to $11,604,141, and the Acquisition of Intangible Assets
for $45,756 was eliminated.
Note
3. Convertible Note Payable
On
February 1, 2004, the Company executed a subscription agreement under which
the Company issued to a corporation an 8% secured convertible note in exchange
for $315,000. The note is due February 1, 2006, and is
convertible into shares of the Company's common stock at the lower of $0.30 per
share or 70% of the average of the three lowest trading prices for the 30 days
prior to the conversion date. No beneficial conversion feature was
applicable to this convertible note.
In March
2005, 285,832 common shares and in May 2005, 353,090 common shares were issued
in lieu of payment on this note.
Note
4. Discontinued Operations
In 2003,
the Company signed the licensing agreement described in
Note 1. This agreement changed the Company's business plan to
that of a medical research company. Accordingly, the operating
results related to the Company's research prior to the licensing agreement have
been presented as discontinued operations in these financial statements for all
periods presented.
Note
5. Subsequent Events
On May 1,
2006 the company received a Notice of Conversion from the Convertible Note
Holder to convert $158,783.60 of principal and interest into 529,279 shares of
common stock.
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