SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-QSB/A
(Mark
One)
[ X
] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the
quarterly period ended March 31, 2005 or
[
] Transitional Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period
____________________________________________
Commission
File No. 0-32917
|
PROTOKINETIX,
INC.
(Name
of small business issuer in its
charter)
|
_____________________________________________
Nevada
|
94-3355026
|
(State
or other Jurisidiction
of
Incorporation or Organization)
|
(IRS
Employer
Identification
Number)
|
_____________________________________________
Suite
1500-885 West Georgia Street
Vancouver,
British Columbia Canada
|
V6C
3E8
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Issuer's
Telephone Number: (604)
687-9887
Check
whether the issuer (1) 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 Company 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 check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).
Yes
[ ] No [ X ].
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
As of May
3, 2005, there were 35,309,038 shares of the Company's USD $0.0000053 par value
common stock issued and outstanding.
Transitional
Small Business Disclosure Format: Yes [ ] No [ X
].
This form
10-QSB/A for the period ended March 31, 2005 is being filed in order to amend
incorrect financial statements in the original filing of form 10-QSB for the
period ending March 31, 2005.
TABLE
OF CONTENTS
FORM
10-QSB/A QUARTERLY REPORT
_________________________
PROTOKINETIX,
INC.
Section
|
Heading
|
|
|
Part
I
|
Financial
Information
|
|
|
Item 1
|
Financial
Statements
|
|
Balance
Sheet at March 31, 2005 (Unaudited)
|
|
Statements
of Operations (Unaudited) for the three months ended March 31, 2005 and
2004 and for the period from December 23, 1999 (Date
of Inception) to March 31, 2005
|
|
Statements
of Shareholders' Equity (Deficit) (Unaudited)
for
the three months ended March 31, 2005 and for the period from
December 23, 1999 (Date of Inception) to March 31,
2005
|
|
Statements
of Cash Flows (Unaudited) for the three months ended March 31, 2005 and
2004 and for the period from December 23, 1999 (Date
of Inception) to March 31, 2005
|
|
Notes
to Financial Statements
|
Item 2
|
Management's
Plan of Operation
|
Item 3
|
Controls
and Procedures
|
|
|
Part
II
|
Other
Information
|
|
|
Item 1
|
Legal
Proceedings
|
Item 2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
Item 3
|
Defaults
Upon Senior Securities
|
Item 4
|
Submission
of Matters to a Vote of Security Holders
|
Item 5
|
Other
Information
|
Item 6
|
Exhibits
and Reports on Form 8-K
|
|
|
|
Signatures
|
|
Sarbanes-Oxley
Certification
|
PART
I - FINANCIAL INFORMATION
ProtoKinetix
Inc.
Financial
Statements
at
March 31,
2005
________________________________
Balance
Sheet
|
Statements
of Operations
|
Statements
of Shareholders' Equity (Deficit)
|
Statements
of Cash Flows
|
Notes
to Financial Statements
|
PROTOKINETIX
, INCORPORATED
(A
Development Stage Company)
BALANCE
SHEET
March 31,
2005
(Unaudited)
(Restated)
ASSETS
|
|
|
|
|
|
Current
Asset, as restated
|
|
|
|
Cash
|
|
|
|
|
$
|
340,029
|
|
Computer
Equipment, net
|
|
1,304
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
|
|
$
|
341,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Due
to outside management consultants
|
|
|
|
|
$
|
393,850
|
|
Accounts
payable
|
|
|
|
|
|
109,114
|
|
Accrued
interest
|
|
|
|
|
|
28,828
|
|
Total
current liabilities
|
|
|
|
|
|
531,792
|
|
Convertible
Note Payable
|
|
229,250
|
|
Total
liabilities
|
|
|
|
|
|
761,042
|
|
Stockholders'
Equity
|
|
|
|
Common
stock, $.0000053 par value; 100,000,000 common
|
|
|
|
|
|
|
|
shares
authorized; 30,793,206 shares issued and outstanding
|
|
|
|
|
$
|
165
|
|
Common
stock issuable; 5,270,832 shares
|
|
|
|
|
|
28
|
|
Additional
paid-in capital
|
|
|
|
|
|
10,020,795
|
|
Stock
subscriptions receivable
|
|
|
|
|
|
(90,000)
|
|
Deficit
accumulated during the development stage, as restated
|
|
|
|
|
|
(10,350,697)
|
|
|
|
|
|
|
|
(419,709)
|
|
TOTAL
LIABILITIES AND STOCKHOLDER'S EQUITY
|
|
|
|
|
$
|
341,333
|
|
|
|
|
|
|
|
|
|
See Notes
to Financial Statements
PROTOKINETIX
, INCORPORATED
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
For the
Three Months Ended March 31, 2005 and 2004, and for the
Period
from December 23, 1999 (Date of Inception) to March 31, 2005
(Unaudited)
(Restated)
|
|
Three
Months
Ended
March
31, 2005
|
|
Three
Months
Ended
March
31, 2004
|
|
Cumulative
During the Development Stage
|
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
General
and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
Licenses,
as restated
|
|
|
|
|
|
45,756
|
|
|
3,379,756
|
|
Professional
fees
|
|
|
75,690
|
|
|
1,010,074
|
|
|
2,169,197
|
|
Consulting
fees
|
|
|
11,476
|
|
|
7,626
|
|
|
4,133,479
|
|
Research
and development
|
|
|
142,802
|
|
|
9,532
|
|
|
352,334
|
|
General
and administrative
|
|
|
52,411
|
|
|
25,564
|
|
|
243,637
|
|
Interest
|
|
|
5,728
|
|
|
6,300
|
|
|
28,828
|
|
|
|
|
288,107
|
|
|
1,059,096
|
|
|
6,927,475
|
|
Loss
from continuing operations, as restated
|
|
|
(288,107)
|
|
|
(1,104,852)
|
|
|
(10,307,231)
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations of the
|
|
|
|
|
|
|
|
|
|
|
discontinued
segment
|
|
|
|
|
|
|
|
|
(43,466)
|
|
Net
loss, as restated
|
|
$
|
(288,107)
|
|
$
|
(1,104,852)
|
|
$
|
(10,350,697)
|
|
Net
Loss per Share (basic and
|
|
|
|
|
|
|
|
|
|
|
fully
diluted), as restated
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.01)
|
|
$
|
(0.04)
|
|
|
|
|
Discontinued
operations
|
|
|
(0.00)
|
|
|
(0.00)
|
|
|
|
|
Net
loss per common share, as restated
|
|
$
|
(0.01)
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common
|
|
|
|
|
|
|
|
|
|
|
shares
outstanding
|
|
$
|
35,948,798
|
|
$
|
27,044,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes
to Financial Statements
PROTOKINETIX
, INCORPORATED
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS' EQUITY
For the
Three Months Ended March 31, 2005 and for the
Period
from December 23, 1999 (Date of Inception) to March 31, 2005
(Unaudited)
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
- 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, as restated
|
|
|
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, as restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,368,030
|
)
|
|
(6,368,030
|
)
|
Balance,
December 31, 2004, as restated
|
|
|
28,793,206
|
|
|
154
|
|
|
6,950,000
|
|
|
37
|
|
|
9,924,547
|
|
|
(330,000
|
)
|
|
(10,062,590
|
)
|
|
(467,852)
|
|
Subscriptions
received
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
240,000
|
|
|
-
|
|
|
240,000
|
|
Issuance
of common stock issuable
|
|
|
2,000,000
|
|
|
11
|
|
|
(2,000,000
|
)
|
|
(11
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Options
exercised, February 2005
|
|
|
-
|
|
|
-
|
|
|
35,000
|
|
|
1
|
|
|
10,499
|
|
|
-
|
|
|
-
|
|
|
10,500
|
|
Note
payable conversion, February 2005
|
|
|
-
|
|
|
-
|
|
|
285,832
|
|
|
1
|
|
|
85,749
|
|
|
-
|
|
|
-
|
|
|
85,750
|
|
Net
loss for period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(288,107
|
)
|
|
(288,107
|
)
|
Balance,
March 31, 2005, as restated
|
|
|
30,793,206
|
|
$
|
165
|
|
|
5,270,832
|
|
$
|
28
|
|
$
|
10,020,795
|
|
$
|
(90,000
|
)
|
$
|
(10,350,697
|
)
|
$
|
(419,709)
|
|
See Notes
to Financial Statements
PROTOKINETIX
, INCORPORATED
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
For the
Three Months Ended March 31, 2005 and 2004, and for the
Period
from December 23, 1999 (Date of Inception) to March 31, 2005
(Unaudited)
(Restated)
|
|
Three
Months Ended
March
31, 2005
|
|
Three
Months Ended
March
31, 2004
|
|
Cumulative
During the Development Stage
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
Net
loss for period, as restated
|
|
$
|
(288,107)
|
|
$
|
(1104,852)
|
|
$
|
(10,350,697)
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
used
in operating activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
126
|
|
|
-
|
|
|
379
|
|
Issuance
of common stock for services
|
|
|
|
|
|
|
|
|
|
|
and
expenses, as restated
|
|
|
-
|
|
|
991,380
|
|
|
7,240,501
|
|
Warrants
issued for consulting services
|
|
|
-
|
|
|
-
|
|
|
1,716,253
|
|
Stock
options issued for consulting services
|
|
|
-
|
|
|
-
|
|
|
212,734
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Increase
in amounts due to outside
|
|
|
|
|
|
|
|
|
|
|
management
consultants
|
|
|
-
|
|
|
12,483
|
|
|
393,850
|
|
Increase
(decrease) in accounts payable
|
|
|
88,226
|
|
|
(7,256)
|
|
|
109,114
|
|
Increase
in interest payable
|
|
|
5,728
|
|
|
6,300
|
|
|
28,828
|
|
Net
cash flows used in operating activities, as restated
|
|
|
(194,027)
|
|
|
(101,945)
|
|
|
(649,038)
|
|
Cash
Flows from Investing Activities, as restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of computer equipment
|
|
|
-
|
|
|
-
|
|
|
(1,683)
|
|
Net
cash flows used in investing activities
|
|
|
-
|
|
|
-
|
|
|
(1,683)
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
received
|
|
|
240,000
|
|
|
-
|
|
|
615,000
|
|
Stock
options exercised
|
|
|
10,500
|
|
|
-
|
|
|
40,500
|
|
Issuance
of common stock for cash
|
|
|
-
|
|
|
-
|
|
|
20,250
|
|
Convertible
Note Payable
|
|
|
-
|
|
|
315,000
|
|
|
315,000
|
|
Net
cash flows provided by financing activities
|
|
|
250,500
|
|
|
315,000
|
|
|
990,750
|
|
Net
change in cash
|
|
|
56,473
|
|
|
213,055
|
|
|
340,029
|
|
Cash,
beginning of period
|
|
|
283,556
|
|
|
104
|
|
|
-
|
|
Cash,
end of period
|
|
$
|
340,029
|
|
$
|
213,159
|
|
$
|
340,029
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary
information - Non-cash Transactions:
|
|
|
|
|
|
|
|
|
|
|
Common
stock issuable for acquisition of intangible assets
|
|
$
|
-
|
|
$
|
-
|
|
$
|
934,000
|
|
Stock
subscriptions received
|
|
|
-
|
|
|
-
|
|
|
90,000
|
|
Note
payable converted to common stock
|
|
|
85,750
|
|
|
-
|
|
|
85,750
|
|
See Notes
to Financial Statements
NOTES
TO FINANCIAL STATEMENTS
Note
1. Organization and Significant Accounting Policies
Organization
ProtoKinetix,
Inc. (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, 2004 and 2003. 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.
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, 2005. 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, 2005 and 2004, 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.
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
effects of the restatement on the March 31, 2004 financial statements are as
follows:
Intangible
assets decreased by $2,445,756 and the Accumulated Deficit increased by
$2,445,756.
Expenses,
specifically Licenses, increased by $45,756 to $45,756, increasing the Loss from
Continuing Operations and the Net Loss by the same amount to ($1,104,852)
each. The loss per share of $(0.04) did not
change
For
purposes of the Statement of Cash Flows, the Net Loss for the Period increased
to ($1,104,852) and the Acquisition of Intangible Assets for $45,756 was
eliminated.
The
effect of the restatement on the amounts in the Cumulative During the
Development Stage period are as follows:
Expenses,
specifically Licenses, increased by $3,379,756 to $3,379,756, increasing total
expenses to $10,307,231. The Loss from Continuing Operations increased by
$3,379,756 to ($10,307,231) and the Net Loss increased by $3,379,756 to
($10,350,697).
For
purposes of the Statement of Cash Flows, the Net Loss for the Period increased
to ($10,350,697) and the Issuance of Common Stock for Services and Expenses
increased by $3,334,000 to $7,240,501, 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 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 Event
In April
2005, the Company issued 1,180,000 shares of its common stock for consulting
services.
ITEM 2.
MANAGEMENT'S PLAN OF
OPERATION
This
discussion and analysis should be read in conjunction with the accompanying
Consolidated Financial Statements and related notes. Our discussion and analysis
of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States of America requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of any contingent liabilities at the financial statement date and
reported amounts of revenue and expenses during the reporting period. On an
on-going basis we review our estimates and assumptions. Our estimates were based
on our historical experience and other assumptions that we believe to be
reasonable under the circumstances. Actual results are likely to differ from
those estimates under different assumptions or conditions, but we do not believe
such differences will materially affect our financial position or results of
operations. Our critical accounting policies, the policies we believe are most
important to the presentation of our financial statements and require the most
difficult, subjective and complex judgments, are outlined below in "Critical
Accounting Policies," and have not changed significantly.
In
addition, certain statements made in this report may constitute “forward-looking
statements”. These forward-looking statements involve known or unknown risks,
uncertainties and other factors that may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. Specifically, 1) our ability to obtain necessary regulatory
approvals for our products; and 2) our ability to create revenues and
operating income, is dependent upon our ability to develop and sell our
products, general economic conditions, and other factors. You can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continues" or the negative of these terms or other
comparable terminology. Although we believe that the expectations reflected-in
the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.
The
Company has not had revenues from operations in each of the last two fiscal
years. Therefore, the Company is required to report under Regulation SB, Section
228.303(a) and (c) in this Form 10-QSB.
Plan
of Operation
Our
current operations are centered around the Company's relationships with various
research and development consultants who are conducting research on behalf of
the company at discrete and established laboratories in various parts of the
world. The Company intends to continue these efforts throughout
2005.
The
Company currently has no full time employees. The Company operates with a
skeletal management team headed by John Todd, M.D. In addition to Dr. Todd, the
Company receives advice and counsel from its Scientific Advisory Board. A short
biography of Dr. Todd may be found within the document, and the biographies of
other members of the ProtoKinetix Scientific Advisory Board may be found within
the "Mgmt & Bios" section of the Company's website located at
www.protokinetix.com. The Company does not expect to add more than 1 to 2 full
time employees during the balance of the calendar 2005 year.
There are
two areas of research the Company is currently focused on. Below is a brief
discussion of these efforts. Additionally, in order to assist you in better
understanding the concepts of the Company's research, here are three definitions
of some of the terms used below:
Super-Antibody
|
This
is an industry-adopted term used to describe genetically-engineered
antibodies, isolated from a single blood cell, which have been expanded in
the laboratory to attack or have a desired effect on certain targeted
antigens, such as cancer cells.
|
"RECAF" or Receptor Alpha Fetaprotein
|
This
is a carbohydrate molecule that is located on the surface of cancer
cells.
|
"Receptor"
|
A
structure exposed on the cell surface used for signaling or transport of
molecules into the cell.
|
RECAF
Antibody Project
The
Company's first project, the development of a cancer chemotherapeutic agent
based upon RECAF, a receptor for Alphafeta protein which is found on the cell
surface of many types of malignant cells. The Company has a license from
Biocurex, Inc. to develop superantibody therapies for the RECAF receptor site.
As of the date of this report, the Company is engaged in efforts to validate the
existence of the RECAF receptor site.
The
Company has an agreement with BioCurex which provides us the exclusive rights to
develop biologic therapies against cancer cells using: (i) the patented platform
developed by InNexus; and (ii) the "conjugate approach" from
Perigene.
During
this past year ProtoKinetix Inc. has contracted with Dr. Dianne Damotte to
conduct tests on the RECAF antibody at the George Pompidou Hospital in Paris
France. The RECAF antibody was used to determine its efficacy in tagging onto
cancer cells and not on to normal healthy cells. This was done to have a third
party validate the claims of BioCurex and to determine the suitability of RECAF
for the development of a therapeutic antibody against a variety of
malignancies.
The
testing by Dr. Diane Damotte demonstrated some interesting results that are
still being assessed. At this time, the Company has not yet made a decision to
proceed with the development of a catalytic antibody. Further, if the Company
does proceed to develop a catalytic antibody, we have not yet decided which
platform to use.
The
following is further discussion of the Company's RECAF R&D project
:
The RECAF
is a site which the Company believes exists on many cancer cells. Think of the
RECAF site as a "lock on a door". Cancer cells by their very nature are antigens
or foreign invaders to the way the body functions normally. The body has cells
which create what are called antibodies. Antibodies are the way in which the
human body attacks antigens and to cause them to die. The problem with cancer
cells is that in an effort to destroy the cancer cell, it is difficult for an
antibody to gain access to and bind to a cancer cell. The Company believes that
should the RECAF receptor site exist, it will be able to design a superantibody
(or enhanced daisy chain antibody) which will bind to the RECAF receptor site
(like a key going into the lock of the door) and destroy the cancer
cell.
With
respect to the RECAF receptor site, on November 22, 2002, BioKinetix, Inc.
entered into an agreement with BioCurex, Inc. which provided BioKinetix with
exclusive world wide certain intellectual property rights to produce a therapy
using superantibodies for the RECAF receptor site. On July 2, 2003, BioCurex
assented to the assignment of all of BioKinetix's rights to the Company. On
March 18, 2004, in consideration of the Company's commitment to issue 400,000
common shares, BioCurex executed a letter agreement ("BioCurex Letter
Agreement") with the Company which made the "effective date" of the November 22,
2002, agreement - March 14, 2004. Additionally, the BioCurex Letter Agreement
provided the Company with additional intellectual property rights with respect
to the RECAF receptor site.
In terms
of creating an antibody, the Company's efforts are being led by Professor Max
Arella (please see the Company's press release dated September 4, 2003). Once an
antibody is created, it must be enhanced or converted into a superantibody. In
order to create a superantibody, the Company has acquired access to various
technologies from (a) Innexus Corporation; and (b) Perigene
Corporation.
On
November 22, 2002, a BioKinetix, Inc., a research and development subsidiary of
Begland Corporation, entered into an agreement with Innexus Corporation which
provided BioKinetix with certain intellectual property rights to develop up to
four (4) antibodies into superantibodies using the related Innexus Corporation
technology. On July 3, 2003, Innexus Corporation assented to an assignment of
all of BioKinetix's rights under the November 22, 2002 agreement to the
Company.
On
December 3, 2003, Perigene Corporation entered into an agreement with the
Company whereby the Company had the right to access various Perigene
intellectual property resources in order to create superantibodies.
As is
discussed above, the very existence of the RECAF has yet to be determined. Both
BioCurex and the Company have entered into agreement with research institutions
in order to prove that a RECAF does in fact exist on some, if not many malignant
cancer cells. Of course, should the RECAF not exist, the consequences to the
Company and its current research efforts could be catastrophic.
AFGP
Project (the "AFGP Project")
The
second project that the Company has undertaken is to develop and test synthetic
antifreeze proteins (AFP) and antifreeze glycoproteins (AFGP).
The AFGP
Project is where the Company believes it will focus its research efforts and
resources over the next 6 to 12 months.
ProtoKinetix
has entered into agreements to acquire the exclusive right to develop products
derived from patent pending technologies related to synthetic AFGPs. The
ProtoKinetix intellectual property rights were developed by Dr. Jean-Charles
Quirion.
As of the
date of this report, although the Company's development agents, including the
parties the Company has 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 been
issued
by a
governmental, quasi-governmental or recognized regulatory agency.
Below is
a further discussion of the Company's 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 C (see attached). 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 have 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.
The
Company believes that should the AFGP research continue to produce successful
results, there are many viable commercial applications for its AFGP technology,
ranging from medical applications in terms of cell and organ preservation, to
consumer cosmetic applications in terms of producing AFGP-based creams, lotions
and other cosmetics.
Expenses
and Cash Requirements
As of
March 31, 2005, the Company had US $340,029.00 in available cash.
Expenses
for the quarter ending March 31, 2005, 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 related to the AFGP research that is
being conducted on an ongoing basis. All-in-all, we experienced a net loss of
$288,107 during the quarterly period ending March 31, 2005 (or approximately
$.01 per share).
Many of
the persons and companies that perform services for the Company are paid in
Company common shares or warrants to acquire Company common shares. This method
of payment, although it causes dilution to the Company common stock
shareholders, allows us to conduct the Company's business with very little cash
outflow. There is no guarantee however, that our consultants will continue to
accept common stock as payment for services rendered. If there is a change in
the Company's need for cash, we may be forced to access some form of debt or
equity-based financing in order to continue operations. Obviously, there is no
guarantee that the Company will be successful in accessing the cash it requires
to operate, should the need arise. And should we be successful in selling some
of the Company's equity or debt in a financing, there is no guarantee that such
a financing would not be more dilutive to the Company common stock shareholders
than our current method of paying consultants with common stock and warrants to
acquire or common stock.
Sales
and Marketing
The
Company is currently not selling or marketing any products.
Going
Concern
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 history of losses and the inability for the
Company to make a profit from selling a good or service has raised substantial
doubt about our ability to continue as a going concern.
Off-Balance
Sheet Arrangements
None
ITEM 3.
CONTROLS AND
PROCEDURES
As of the
end of the period covered by this report, the Company, led by Chief Executive
Officer Dr. John Todd, conducted an evaluation of the Company’s disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company’s disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act are recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.
There was
no change in the Company’s internal controls over financial reporting during the
Company’s most recently completed fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control
over financial reporting.
Presently,
the Company does not have an audit committee and no member of the Board of
Directors has been designated or qualifies as a financial expert.
PART
II - OTHER INFORMATION
ITEM 1.
LEGAL
PROCEEDINGS.
None
ITEM 2.
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF
PROCEEDS
During
the quarter ending March 31, 2005, the Company made the following common share
issuances:
On March
8, 2005, the Company issued the balance of the 2,000,000 common shares dues and
payable pursuant to the July 2003 licensing agreement with BioKinetix Research.
These shares were issued pursuant to Section (4)2 of the Securities Act of
1933.
Pursuant
to Item 3.02 of Form 8-K, because the Company is a small business issuer and
these issuances, in the aggregate, equal less than 5% of the number of common
shares issued and outstanding (based on the number of issued and outstanding
shares identified in the Company's last periodic report), these sales were not
reported in a Form 8-K.
Disclosure
Related to Form S-8 Issuances
Prior to
issuing any common shares under Form S-8, the Company requests and receives an
executed verification from all issuees stating that the issuee is a natural
person and that: (a) the shares being issued are not being provided to create or
sustain a market for the Company's securities, and (b) that the shares are not
being issued as a part of a capital raising transaction. All consultants to the
Company are required to provide work product as a part of and condition to their
relationship with the Company. Consultant work product is delivered in
accordance with the terms and conditions of each respective Consultants'
agreement.
Securities
Offered for Sale and Securities Purchased
None
ITEM 3.
DEFAULTS UPON SENIOR
SECURITIES
None
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
None
ITEM 5.
OTHER INFORMATION
None
ITEM 6.
EXHIBITS AND REPORTS FILED ON FORM
8-K
(a)
Exhibits.
*3.1 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.
*3.2 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.
*
Previously filed
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·
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A
Form 8-K was filed by the Company during August 27, 2001, disclosing a
1:75 forward split of the Company's common shares.
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·
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On
July 5, 2003 (SEC Film Number 03769335), the Company disclosed that it had
withdrawn its 14(c) Information Statement with the SEC and that it was
however committed to the effect of the transaction with
BioKinetix.
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·
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On
July 7, 2003 (SEC Film Number 03777407), the Company disclosed that it had
rescinded its merger agreement with BioKinetix, and that it had instead
executed an assignment of license agreement in order to effect the
principles of the previously executed BioKinetix-RJV Merger Agreement. In
this disclosure, the company additionally disclosed that its entire board
of directors had resigned and that a new board had been installed for a
one year term.
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·
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On
August 21, 2003 (SEC Film Number 03859209), the Company filed a Form 8-K
that disclosed that the articles of incorporation had been amended and
that the name of the Company had changed to ProtoKinetix,
Incorporated.
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·
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On
September 23, 2004, the Company filed an 8-K announcing the execution of
the License Agreement with
Perigene.
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ProtoKinetix,
Inc.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report, for the period ended March 31, 2005, to be signed on
its behalf by the undersigned thereunto duly authorized.
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PROTOKINETIX,
INC.
(Registrant)
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Date: April
30, 2008
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By:
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/s/
Ross Senior
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Ross
Senior
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President,
CEO and CFO
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(Principal
Accounting Officer)
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Protokinetix (PK) (USOTC:PKTX)
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