june 30,2004
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2004 or
[ ] Transitional Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____ to _____.
____________________________________________
|
Commission File No. 000-32917 |
|
PROTOKINETIX, INC.
a development stage corporation
(formerly known as RJV NETWORK, INC.)
(Name of small business issuer in its charter) |
_____________________________________________
|
Nevada |
94-3355026 |
|
(State or other Jurisdiction
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) |
(604) 687-6607
Issuer's Telephone Number
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 August 10, 2004, there were 27, 005,806 shares of the Company's USD $0.0000053 par value common stock issued and outstanding.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X ]
FORM 10-QSB QUARTERLY REPORT
_________________________
PROTOKINETIX, INC.
a development stage corporation
(formerly known as RJV NETWORK, INC.)
|
Section |
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6 |
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7 |
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8-10 |
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11-12 |
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12-13 |
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14 |
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14 |
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14 |
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14 |
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14 |
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14-15 |
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16 |
ProtoKinetix, Inc.
Financial Statements for the
Period Ended June 30, 2004
PROTOKINETIX, INC.
(formerly known as RJV Network, Inc.)
(A Development Stage Company)
June 30, 2004
(Unaudited)
|
ASSETS |
|
|
|
|
|
Current Asset |
|
|
|
|
|
Cash |
|
$ |
49,643 |
|
|
Computer equipment |
|
|
1,683 |
|
|
Intangible Assets |
|
|
2,445,756 |
|
| |
|
$ |
2,497,082 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Due to outside management consultants |
|
$ |
107,149 |
|
|
Accounts payable |
|
|
66,963 |
|
|
Accrued interest |
|
|
12,600 |
|
|
Total current liabilities |
|
|
186,712 |
|
|
Long-term Debt, related party |
|
|
315,000 |
|
|
Total liabilities |
|
|
501,712 |
|
|
Stockholders' Equity, as restated |
|
|
|
|
|
Common stock, $.0000053 par value; 100,000,000 common |
|
|
|
|
|
shares authorized; 26,896,050 shares issued and outstanding |
|
|
143 |
|
|
Common stock issuable; 2,000,000 shares |
|
|
11 |
|
|
Additional paid-in capital |
|
|
5,036,476 |
|
|
Deficit accumulated during the development stage |
|
|
(3,041,260 |
) |
| |
|
|
1,995,370 |
|
| |
|
$ |
2,497,082 |
|
PROTOKINETIX, INC.
(formerly known as RJV Network, Inc.)
(A Development Stage Company)
For the Three and Six Months Ended June 30, 2004 and 2003, and for the Period From
December 23, 1999 (Date of Inception) to June 30, 2004
(Unaudited)
| |
|
Three Months
Ended
June 30, 2004 |
|
Three Months
Ended
June 30, 2003 |
|
Six Months
Ended
June 30, 2004 |
|
Six Months
Ended
June 30, 2003 |
|
Cumulative During the Development Stage |
|
|
Revenues |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
23,593 |
|
|
|
|
|
1,033,667 |
|
|
|
|
|
1,553,241 |
|
|
Consulting fees |
|
|
515,000 |
|
|
|
|
|
522,626 |
|
|
|
|
|
1,184,016 |
|
|
Rent |
|
|
6,189 |
|
|
|
|
|
12,126 |
|
|
|
|
|
34,626 |
|
|
Administrative fees |
|
|
1,238 |
|
|
|
|
|
2,308 |
|
|
|
|
|
18,808 |
|
|
Promotional |
|
|
|
|
|
|
|
|
1,287 |
|
|
|
|
|
13,130 |
|
|
Utilities |
|
|
894 |
|
|
|
|
|
2,944 |
|
|
|
|
|
10,067 |
|
|
Research |
|
|
100,001 |
|
|
|
|
|
109,533 |
|
|
|
|
|
109,533 |
|
|
Investor relations |
|
|
26,659 |
|
|
|
|
|
38,403 |
|
|
|
|
|
38,403 |
|
|
Interest |
|
|
6,300 |
|
|
|
|
|
12,600 |
|
|
|
|
|
12,600 |
|
|
Other |
|
|
7,730 |
|
|
|
|
|
11,206 |
|
|
|
|
|
23,370 |
|
| |
|
|
687,604 |
|
|
- |
|
|
1,746,700 |
|
|
- |
|
|
2,997,794 |
|
|
Loss from continuing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations |
|
|
(687,604 |
) |
|
- |
|
|
(1,746,700 |
) |
|
|
|
|
(2,997,794 |
) |
|
Discontinued Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations of the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
discontinued segment |
|
|
|
|
|
(3,441 |
) |
|
|
|
|
(9,651 |
) |
|
(43,466 |
) |
|
Net loss |
|
$ |
(687,604 |
) |
$ |
(3,441 |
) |
$ |
(1,746,700 |
) |
$ |
(9,651 |
) |
$ |
(3,041,260 |
) |
|
Net Loss per Share (basic and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
fully diluted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.02 |
) |
$ |
0.00 |
|
$ |
(0.06 |
) |
$ |
0.00 |
|
$ |
(0.20 |
) |
|
Discontinued operations |
|
|
0.00 |
|
|
(0.00 |
) |
|
0.00 |
|
|
(0.00 |
) |
|
(0.00 |
) |
|
Net loss per common |
|
$ |
(0.02 |
) |
$ |
(0.00 |
) |
$ |
(0.06 |
) |
$ |
(0.00 |
) |
$ |
(0.20 |
) |
|
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding |
|
|
28,665,281 |
|
|
15,093,750 |
|
|
27,854,793 |
|
|
15,093,750 |
|
|
15,443,345 |
|
PROTOKINETIX, INC.
(formerly known as RJV Network, Inc.)
(A Development Stage Company)
For the Six Months Ended June 30, 2004, and for the Period From
December 23, 1999 (Date of Inception) to June 30, 2004
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
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|
| |
|
|
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|
|
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|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Common |
|
|
|
|
|
|
|
|
|
| |
|
Common Stock |
|
|
|
Stock
Issuable |
|
|
|
|
|
|
|
|
|
| |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
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, as restated |
|
|
2,125,000 |
|
|
11 |
|
|
|
|
|
|
|
|
424,989 |
|
|
|
|
|
425,000 |
|
|
August 2003 |
|
|
300,000 |
|
|
2 |
|
|
|
|
|
|
|
|
14,998 |
|
|
|
|
|
15,000 |
|
|
September 2003, as restated |
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,262,745 |
) |
|
(1,262,745 |
) |
|
Balance, December 31, 2003, as restated |
|
|
24,743,750 |
|
|
131 |
|
|
2,000,000 |
|
|
11 |
|
|
3,530,108 |
|
|
(1,294,560 |
) |
|
2,235,690 |
|
|
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 |
|
|
Net loss for period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,746,700 |
) |
|
(1,746,700 |
) |
|
Balance, June 30, 2004 |
|
|
26,896,050 |
|
$ |
143 |
|
|
2,000,000 |
|
$ |
11 |
|
$ |
5,036,476 |
|
$ |
(3,041,260 |
) |
$ |
1,995,370 |
|
PROTOKINETIX, INC.
(formerly known as RJV Network, Inc.)
(A Development Stage Company)
For the Six Months Ended June 30, 2004 and 2003, and for the Period From
December 23, 1999 (Date of Inception) to June 30, 2004
(Unaudited)
| |
|
Six Months Ended
June 30, 2004 |
|
|
|
Six Months Ended
June 30, 2003 |
|
|
|
Cumulative During the Development Stage |
|
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for period |
|
$ |
(1,746,700 |
) |
|
|
|
$ |
(9,651 |
) |
|
|
|
$ |
(3,041,260 |
) |
|
Issuance of common stock for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and expenses |
|
|
1,506,380 |
|
|
|
|
|
|
|
|
|
|
|
2,616,380 |
|
|
Change in amounts due to outside |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
management consultants |
|
|
(15,717 |
) |
|
|
|
|
|
|
|
|
|
|
107,149 |
|
|
Change in accounts payable |
|
|
25,415 |
|
|
|
|
|
10,986 |
|
|
|
|
|
66,963 |
|
|
Increase in interest payable |
|
|
12,600 |
|
|
|
|
|
|
|
|
|
|
|
12,600 |
|
|
Net cash flows (used in) provided |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by operating activities |
|
|
(218,022 |
) |
|
|
|
|
1,335 |
|
|
|
|
|
(238,168 |
) |
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of license rights |
|
|
(45,756 |
) |
|
|
|
|
|
|
|
|
|
|
(45,756 |
) |
|
Purchase of computer equipment |
|
|
(1,683 |
) |
|
|
|
|
|
|
|
|
|
|
(1,683 |
) |
|
Net cash flows used in investing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
activities |
|
|
(47,439 |
) |
|
|
|
|
|
|
|
|
|
|
(47,439 |
) |
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,250 |
|
|
Loan from related party |
|
|
315,000 |
|
|
|
|
|
|
|
|
|
|
|
315,000 |
|
|
Payment of shareholders' loans |
|
|
|
|
|
|
|
|
(1,255 |
) |
|
|
|
|
|
|
|
Net cash flows provided by (used in) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financing activities |
|
|
315,000 |
|
|
|
|
|
(1,255 |
) |
|
|
|
|
335,250 |
|
|
Net change in cash |
|
|
49,539 |
|
|
|
|
|
80 |
|
|
|
|
|
49,643 |
|
|
Cash, beginning of period |
|
|
104 |
|
|
|
|
|
579 |
|
|
|
|
|
|
|
|
Cash, end of period |
|
$ |
49,643 |
|
|
|
|
$ |
659 |
|
|
|
|
$ |
49,643 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROTOKINETIX, INC.
Note 1. Organization and Plan of Operations
ProtoKinetix, Inc. (formerly known as RJV Network, Inc.) (the "Company"), a development stage company, was incorporated under the laws of the State of Nevada on December 23, 1999. The Company was formed for the purpose of developing an internet-based listing site that would provide detailed commercial real estate property listings and related data. In 2002, the Company suspended its original business plan while it considered a potential merger with another company, BioKinetix. In 2003, the Company discontinued its original business plan and entered into the licensing agreement described below. Effective as of the date of the license agreement, the Company became a medical research company in the development stage.
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 stock to the shareholders of BioKinetix. Also, the Company's existing directors agreed to resign and the Company cancelled 9,325,000 common shares owned by the former president (representing the majority of his shares). New Company directors were installed. In October 2003, 14,000,000 of the committed shares were issued. The remaining 2,000,000 shares are expected to be issued in 2004.
Note 2. Summary of Significant Accounting Policies
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, 2003 and 2002. In the opinion of the Company, the unaudited financial statements contained herein contain all adjustments necessary to present a fair statement of the results of the interim periods presented.
PROTOKINETIX, INC.
NOTES TO FINANCIAL STATEMENTS
Note 3. 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 of $3,041,260 at June 30, 2004. These factors raise substantial doubt about the Company's ability to continue as a going concern.
The Company will need 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.
Note 4. Prior Period Adjustment
The number of shares outstanding was restated to correct for an error made in the third quarter of 2003 in an overstatement of shares issued for services in that quarter. The effect of the adjustment was to reduce professional fees expense and net loss for the third quarter of 2003 by $266,250. Accordingly, the deficit accumulated during the development stage as of September 30, 2003 was reduced by $266,250. Additional paid-in capital at September 30, 2003, was reduced by $266,233 and common stock at September 30, 2003, was reduced by $17.
As a result of this adjustment, total shares outstanding at September 30, 2003, was reduced by 3,225,000 shares which also reduced the weighted average number of shares at September 30, 2003, by 29,670 shares. There was no effect on reported earnings per share at September 30, 2003.
There was no effect on net loss or earnings per share or cash flows for the three or six months ended June 30, 2004 and 2003 as a result of this adjustment.
Note 5. Intangible Assets
The intangible assets consist of license rights to proprietary medical research technologies. The cost of the license rights is stated at cost or the value of the shares issued by the Company to acquire the license rights. The cost is not amortized because the licenses have indefinite lives. At June 30, 2004, management has determined that there is no impairment in the license rights that should be recorded against the carrying amount of the assets.
PROTOKINETIX, INC.
NOTES TO FINANCIAL STATEMENTS
Note 6. Long-Term Debt, Related Party
On February 1, 2004, the Company executed a subscription agreement under which the Company issued to a corporation owned by a stockholder an 8% secured convertible note in exchange for $315,000. The note is due February 1, 2005, and is convertible into shares of the Company's common stock at the lower of $.30 per share or 70% of the average of the three lowest trading prices for the 30 days prior to the conversion date.
Note 7. 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 earnings per share for the periods ended June 30, 2004 and 2003, and the period cumulative during the development stage have been adjusted accordingly. Diluted earnings per share takes into consideration common shares 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.
During 2003, the Company obtained certain licensing rights in exchange for 16,000,000 common shares of the Company's stock, 2,000,000 of which shares remain to be issued. For purposes of earnings per share computations, all of these shares have been included as outstanding as of October 2003, the date of the original issuance of the shares to affect the acquisition of the license rights.
Note 8. 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 internet-based real estate listing segment have been presented as discontinued operations in these financial statements for all periods presented.
Note 9. Subsequent Event
In July 2004, a total of 109,756 shares valued at $92,195 were issued in exchange for consulting services rendered.
Item 2. Management's Discussion and Analysis
Please review "Forward Looking Information and Cautionary Statement" section below.
A. Plan of Operation
General
ProtoKinetix Inc., (the "Company," or "PROTOKINETIX") is a biotechnology research and development company focused on the application of SuperAntibody-based products for the treatment and diagnosis of certain cancers.
(a) Plan of Operation. 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, PROTOKINETIX has no product or products, and has received no patents or FDA approval for any product or diagnostic procedures.
On July 5, 2003, ProtoKinetix, Inc. entered into an assignment of license agreement (the "Agreement") with BioKinetix Research, Inc. ("BioKinetix"). The Agreement provided the Company with a 100% 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 "super antibodies," an enhancement of antibody technology that makes ordinary antibodies much more lethal.
ProtoKinetix Inc.'s mission is to develop a new generation of medicines and diagnostics for the treatment of malignancies. The Company will be focused on the anti-cancer applications of certain monoclonal antibodies, termed "Super antibodies," that may improve medicinal and treatment potencies and increase sensitivity in use as diagnostics. ProtoKinetix hopes to use this technology to create new antibodies and diagnostic assays that will be able to be used to treat and detect certain cancers.
In particular, ProtoKinetix will attempt to create a SuperAntibody that will attach to RECAF molecules. The RECAF molecules with the SuperAntibody attached are theoretically expected to then attach to cancer cells, with minimal or no harm to non-cancerous cells, so that the SuperAntibody can destroy the cancer cells.
Please note that ProtoKinetix is a development stage company that has not yet begun operations. It is also important to understand that there has been no development of any product (antibodies) to date by the Company, and that such development may never begin, and there can be no certainty that any such antibodies will be developed by the Company, and, even if a product is developed, that the desired results for which it was originally intended will be achieved.
We face exposure to fluctuations in the price of our common stock due to the very limited cash resources we have. For example, the Company has very limited resources to pay legal and accounting professionals. If we are unable to pay a legal or accounting professional in order to perform various professional services for the Company, it may be difficult for the Company to maintain its reporting status under the '34 Exchange Act. If the Company felt that it was likely that it would not be able to maintain its reporting status, it would make a disclosure by filing a Form 8-K with the SEC. In any case, if the Company was not able to maintain its reporting status, it would become "delisted" and this would potentially cause an investor or an existing shareholder to lose all or part of his investment.
Definitions of the terms used above are as follows:
"SuperAntibody" 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" - 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.
Milestone Events during the Quarter Ending June 30, 2004 and Subsequent Events
On May 10, 2004, Dr. Jean-Charles Quiron agreed to serve on the Company's Scientific Board of Advisors. Mr. Quiron's resume is posted on the Company's website or it may be accessed by typing in the following url: http://www.ProtoKinetix.com/Bio/Jean-Charles_Qurion.htm.
On May 20, 2004, the Company announced that it had received a report from the Georges Pompidou Hospital in Paris on the first 40 patients studied with RECAF on mammary tissue. The report stated that there was a constant expression of RECAF on tumoral epithelial cells, mainly strong expression. Based on those results, the Georges Pompidou Hospital is proceeding to test the RECAF antibody on additional cancers. The ProtoKinetix Scientific Advisory Board was sufficiently satisfied that the third-party validation results confirmed the presence of the RECAF receptor site on cancer cells.
On June 28, 2004, the Company announced that it had reached an agreement with Perigene, Inc. to acquire a patented antifreeze glycoprotein technology known as AFGP. The initial executed agreement, which was approved by the Perigene board of directors, calls for a due diligence period. The Company believes that the two companies will be able to reach a set of final negotiated terms within the next 10 days. The final negotiated terms will be memorialized in a Final Agreement. The Company believes that the transaction should ultimately close within 30 days.
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Plan of Operation for the Next Twelve Months The Company’s short-term goal is to design a research program towards the development of a therapeutic agent. Any long term objectives will be defined by Management's ability to execute on the development of the aforementioned intellectual property rights that were the subject of the Company's public filings. |
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Plan of Operation for the Next Quarterly Period The Company’s goal is to complete the due diligence pertaining to the AFGP transaction and execute the Final Agreement. Further, the Company will seek to secure additional financing following the execution of the Final Agreement. |
A. Evaluation of disclosure controls and procedure.
Under the supervision and with the participation of our management, currently consisting of Dr. John Todd, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures within 90 days of the filing date of this quarterly report, and based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic SEC filings. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.
Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
B. Changes in Internal Controls
Not applicable.
FORWARD LOOKING INFORMATION AND CAUTIONARY STATEMENTS
Please note that ProtoKinetix (the "Company") is a development stage company that has not yet sold or marketed any products. The Company had no revenues for the quarter ended June 30, 2004.
It is important to understand that although the Company (as is discussed below) is focused on various efforts related to the use of antibodies and super antibodies in order to identify and treat malignancies, to date, there has been no development of any product (antibodies or super antibodies) by the Company. Although the Company is continuing to conduct research based on the above referred to and below stated theses, such successful research and development and the ultimate commercialization of a viable product may never occur, and there can be no certainty that any such antibodies will be developed by the Company. Further, even if a product or antibody or SuperAntibody is developed, the desired results for which it was originally intended may not be achieved.
The core of the Company's thesis regarding it's research and development efforts is that there is a protein receptor site (hereinafter referred to as "RECAF") common to many malignant or cancerous 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. However, the Company's efforts to validate the existence of the RECAF receptor site may fail and no such site may be located. If this is the case, the complete foundation of the Company's efforts may be undermined.
The Company faces exposure to fluctuations in the price of our common stock due to the very limited cash resources we have. For example, the Company has very limited resources to pay legal and accounting professionals. If we are unable to pay a legal or accounting professional in order to perform various professional services for the Company, it may be difficult, if not impossible, for the Company to maintain its reporting status as a public company. If the Company felt that it was likely that it would not be able to maintain its reporting status, it would make a disclosure by filing a Form 8-K with the SEC. In any case, if the Company was not able to maintain its reporting status, it would become "delisted" and this could potentially cause an investor or an existing shareholder to lose all or part of his investment.
The foregoing discussion, as well as the other sections of this Quarterly Report on Form 10-QSB, contains forward-looking statements that reflect the Company's current views with respect to future events and financial results. Forward-looking statements usually include the verbs "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "understands" and other verbs suggesting uncertainty. The Company reminds shareholders that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors which could cause the actual results to differ materially from the forward-looking statements. Potential factors that could affect forward-looking statements include, among other things, the Company's ability to identify, produce and complete film projects that are successful in the marketplace, to arrange financing, distribution and promotion for these projects on favorable terms in various markets and to attract and retain qualified personnel.
None
During the quarter ending June 30, 2004, the Company made the following common share issuances:
Issuances during quarter ending June 30, 2004:
On May 12, 2004, the Company issued 500,000 restricted common shares to Mohamed Verjee pursuant to consulting agreement. These issuances were made in lieu of cash payments for services rendered and were considered exempt transactions made under the Securities Act of 1933, Section 4(2).
Subsequent issuances:
On July 13, 2004, the Company issued 91,463 common shares to Mark L. Baum pursuant to consulting agreement. These issuances were made in lieu of cash payments for services rendered and were considered exempt transactions made under the Securities Act of 1933, Section 4(2).
On July 13, 2004, the Company issued 18,293 common shares to Luis Carrillo pursuant to consulting agreement. These issuances were made in lieu of cash payments for services rendered and were considered exempt transactions made under the Securities Act of 1933, Section 4(2).
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.
As of August 10, 2004, there are 27,005,806 shares of the Company's common stock issued and outstanding.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
A shareholder meeting was not held during the last calendar quarter.
There was not a matter submitted to our shareholders during the second calendar quarter of 2004.
Not applicable.
Item 6. Exhibits and Reports Filed on Form 8-K:
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-B)
3.1 Certificate and Articles of Incorporation (1)
3.2 Bylaws of Registrant (2)
31.1** Certification of Chief Executive Officer Pursuant to Section 302
31.2** Certification of Chief Financial Officer Pursuant to Section 302
32.1** Certification of Chief Executive Officer Pursuant Section 906
32.2** Certification of Chief Financial Officer Pursuant Sections 906
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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. |
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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. |
** Filed herewith.
(b) Forms 8-K
There were no reports on Form 8-K filed during the quarter ended June 30, 2004.
ProtoKinetix, Inc.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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PROTOKINETIX, INC.
(Registrant) |
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Date: August 18, 2004 |
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By: |
/s/ Dr. John Todd |
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Dr. John Todd |
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Chairman of the Board of Directors, CEO and CFO |
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(Principal Accounting Officer) |