As filed
with the Securities and Exchange Commission on June 8, 2010
Registration
No. 000–________
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10
GENERAL
FORM FOR REGISTRANTS OF SECURITIES
Pursuant
to Section 12(b) or (g) of the Securities Exchange Act of 1934
Protect
Pharmaceutical Corporation
(Exact
name of registrant as specified in its charter)
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Nevada
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27-1877179
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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759
Bloomfield Ave, Suite 411, West Caldwell, New Jersey 07006
(Address
of principal executive officers) (Zip Code)
Registrant’s
telephone number, including area code:
(973) 568-1617
Securities
to be registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Name
of each exchange on which
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to
be so registered
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each
class is to be registered
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N/A
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N/A
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Securities
to be registered pursuant to Section 12(g) of the Act:
Common
Stock, $0.005 par value
(Title of
Class)
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
(Check
one)
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Large
accelerated filer
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¨
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Accelerated
filer
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¨
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Non-accelerated
filer
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x
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Smaller
reporting company
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(Do not
check if a smaller reporting company)
Protect
Pharmaceutical Corporation
FORM
10
TABLE
OF CONTENTS
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PAGE
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Item
1.
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Business
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3
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Item
1A.
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Risk
Factors
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14
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Item
2.
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Financial
Information
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24
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Item
3.
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Properties
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27
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Item
4.
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Security
Ownership of Certain Beneficial Owners and Management
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27
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Item
5.
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Directors
and Executive Officers
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28
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Item
6.
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Executive
Compensation
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29
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Item
7.
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Certain
Relationships and Related Transactions and Director
Independence
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29
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Item
8.
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Legal
Proceedings
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30
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Item
9.
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Market
Price of and Dividends on the Registrant’s Common Equity and Related
Stockholder Matters
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30
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Item
10.
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Recent
Sales of Unregistered Securities
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32
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Item
11.
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Description
of Registrant’s Securities to be Registered
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32
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Item
12.
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Indemnification
of Directors and Officers
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32
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Item
13.
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Financial
Statements and Supplementary Data
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33
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Item
14.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosures
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33
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Item
15.
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Financial
Statements and Exhibits
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34
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Signatures
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S-1
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EXPLANATORY
NOTE
You should rely only on the information
contained in this registration statement or in a document referenced
herein. We have not authorized anyone to provide you with any other
information that is different. You should assume that the information
contained in this registration statement is accurate only as of the date hereof
except where a different specific date is set forth.
To simplify the language in this
registration statement, Protect Pharmaceutical Corporation, a Nevada
corporation, is also referred to herein as “Protect”, the “company”, “we,”,
“our”, “us” or similar terms.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This registration statement contains
forward-looking statements that involve substantial risks and
uncertainties. These forward-looking statements are not historical
facts, but rather are based on current expectations, estimates and projections
about us, our industry, our beliefs and assumptions. Words such as
“anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,”
“would,” “should,” “scheduled,” “projects,” and variations of these words and
similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future performance
and are subject to risks, uncertainties, and other factors, some of which are
beyond our control and difficult to predict and which could cause actual results
to differ materially from those expressed or forecasted in the forward-looking
statements.
Forward-looking statements speak only
as of the date hereof and caution should be taken not to place undue reliance on
any such statements. Forward-looking statements are subject to certain events,
risks and uncertainties that may be beyond our control. When
considering forward-looking statements, you should carefully review the risks,
uncertainties and other cautionary statements in this registration statement as
they identify certain important factors that could cause actual results to
differ materially from those expressed in or implied by the forward-looking
statements. These factors include, among others, risks described
under Item 1A and elsewhere in this registration statement.
Information regarding market and
industry statistics contained in this registration statement is included based
on information available to us which we believe is accurate. We cannot assure
the accuracy or completeness of such data included in this registration
statement.
WHERE
YOU CAN FIND MORE INFORMATION ABOUT US
When this registration statement
becomes effective, we will begin to file reports, proxy statements, information
statements and other information with the United States Securities and Exchange
Commission (“
SEC
”). You
may read and copy this information, for a copying fee, at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for more information on its Public Reference
Room. Our SEC filings will also be available to the public from
commercial document retrieval services and at the Website maintained by the SEC
at
http://www.sec.gov
.
.
Item 1. Business
Business
Development
History
Protect Pharmaceutical Corporation was
originally incorporated in the state of Idaho on August 5, 1987, under the name
of Interstate Mining and Development Properties, Inc. for the purpose of
engaging in the acquisition and development of mining prospects. The
company staked certain gold placer mining claims, however the claims did not
yield a sufficient amount of ore and the company never became
profitable. Operational activities were halted in approximately
1989.
The company remained inactive until
January 9, 1996 when it was reinstated in the State of Idaho. On
August 2, 1996, the company changed its name to Interstate Development, Inc.
During that same month H. Deworth Williams and Geoff Williams acquired
controlling interest of the company through the purchase of common stock from
the company’s two largest shareholders. The company then
became engaged in the search for and evaluation of prospective
business opportunities and, if justified, potentially to acquire and/or merge
with one or more businesses or business opportunities.
On July 3, 2006 at a special meeting of
stockholders, the stockholders approve the change of the corporation’s domicile
from Idaho to Nevada. Stockholders also approved the acquisition of
Nanolution Technologies, Inc., a Delaware corporation focused on developing
technologies for medical devices, device coatings, and pharmaceutical dosage
forms to repurpose drugs and develop novel, improved drug delivery methods for
existing, approved drugs. However, the acquisition was never
finalized and was abandoned.
On December 14, 2006, the change of
domicile to Nevada was finalized by way of merging with and into Interstate
Acquisition, Inc. (incorporated in Nevada on June 15, 2006) for the sole purpose
of changing domicile. The Idaho entity was then
dissolved. On December 15, 2006, we changed the name of the Nevada
entity to Pro-Tect, Inc. and continued to explore possible business
opportunities.
In January 2008, we began preliminary
discussions with Medvices Corporation concerning the possible acquisition of
certain technology and related proprietary, manufacturing, marketing and
distribution rights related to the technology. An agreement to
acquire the technology was reached in January 2009. The Medvices
technology related to certain processes and equipment of a selected algae
cultivation used for production of health products and
cosmetics. However, no operations were conducted in connection with
the technology and the acquisition was abandoned later in 2009.
On February 12, 2010, we entered into a
Patent Acquisition Agreement with Nectid, Inc., a privately held Princeton, New
Jersey based company, whereby we acquired from Nectid a portfolio of pending
patent applications relating to three drug delivery technologies:
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A
gastro-retentive platform for drugs that otherwise have short time windows
for absorption:
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An
abuse deterrent platform for prescription drugs that are prone to abuse,
especially narcotic pain-killers;
and
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A
once-daily platform that allows two or more drugs commonly taken in
combination to be delivered via a single dose with fewer side
effects.
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Ramesha
Sesha, President of Nectid and the inventor of all the acquired technology, has
joined the company as Chief Operating Officer and Chief Scientific
Officer.
Consideration for the acquired patent
applications consisted of 7,000,000 shares of Protect common stock, 5,000,000
shares issuable upon the closing and 2,000,000 shares upon realizing financing
of $2.0 million. As a result of the acquisition, we are proceeding
with a comprehensive program to develop and commercialize the acquired drugs and
related technologies. In March 2010 we relocated our principal
offices to West Caldwell, New Jersey and installed a new Board of Directors
consisting of Bill Abajian, Ramesha Sesha, Anna Gluskin and Anthony
Pichelli. Mr. Pichelli resigned in May 2010 for personal reasons and
was replaced by Dr. Gerald Bernstein.
On March 25, 2010, in order to reflect
our current business our board of directors unanimously agreed to change the
corporate name to Protect Pharmaceutical Corporation. The name change
was approved by the written consent a majority of the outstanding
shares of common stock. A Certificate of Amendment was filed with the
State of Nevada on April 26, 2010 to reflect the change.
Our principal offices are currently
located at 759 Bloomfield Ave, Suite 411, West Caldwell, New Jersey 07006 and
our telephone number is(973) 568-1617. We also maintain a Website at
http://www.protectpharma.com
.
We are voluntarily filing this
registration statement in order to make information concerning our company more
readily available to the public. As a result of filing this
registration statement, we become obligated to file with the SEC certain interim
and periodic reports, including an annual report containing audited financial
statements.
Current Business
Protect is engaged in developing drug
delivery technologies and solutions through innovative dosing and/or
delivery. Using the portfolio of patents applications acquired from
Nectid, Inc., our goal is to develop innovative drug delivery technologies and
drugs that will improve the quality of life for people who suffer from
pain. In doing so we are focusing on the research, development, and
commercialization of drug delivery technologies that minimize the pharmaceutical
dose, frequency, and side affects.
While the oral route is the most
convenient method of drug administration, we believe there is a need to develop
advances in oral drug delivery technologies that can make significant
differences in (i) enhancing patient compliance, (ii) drug
bioavailability, (iii) preventing abuse of prescription drugs and
(iv) reducing dosages. Although there are a number of once daily
drugs and a number of combination drugs on the market, we believe that there is
not a single once daily combination drug approved for treating
pain. Similarly, one of the significant challenges in oral drug
delivery is to develop gastric retention platforms for long-term (ranging from 6
to 24 hours) delivery of drugs by oral administration. Additionally,
prescription drug abuse is a major social and medical issue and efforts to
develop abuse deterrent drug delivery design have met with limited
success.
Management believes that the
application of drug delivery platform technologies to pain drugs provides a
significant business opportunity because fewer new pain drugs are being
developed. Also, potential demand for pain drugs will be driven by
the increasing demographic segment of elderly population who often consume pain
drugs over a long period of time. Medical efforts to treat pain,
known as pain management, addresses a large market. Clinical pain is a worldwide
problem with serious health and economic consequences.
Further, although most people take
medicines only for the reasons their doctors prescribe them, prescription drug
abuse remains a serious problem in the United States and around the
world. The major abused drugs include narcotic painkillers,
sedatives and tranquilizers, and stimulants. Abuse of prescription
drugs to get high has become increasingly prevalent among teens and young
adults. Thus, there is a serious need to develop abuse deterrent
drugs and abuse deterrent drug delivery systems that can be used to minimize
prescription drug abuse.
Glossary
of Terms
To better understand the information
provided in this registration statement, we are including the following
description of some of the terms used herein.
Fibromyalgia
Syndrome (FMS)
: A complex, chronic condition that causes widespread pain
and severe fatigue. FMS is a syndrome because it is a set of signs and symptoms
that occur together, affecting muscles and their attachments to
bones.
GABA Analog
Therapy
: y-Aminobutyric acid (GABA) is the chief inhibitory
neurotransmitter in the mammalian central nervous system. It plays a role in
regulating neuronal excitability throughout the nervous system. In humans, GABA
is also directly responsible for the regulation of muscle tone. GABA Analogues
are modulators and they include gabapentin, pregabalin that binds to a
(alpha2delta) subunit of the voltage-dependent calcium channel in the central
nervous system. This reduces calcium influx into the nerve terminals thereby
reducing the neorpathic and other pain.
Naloxone
Methiodide
and
Methyl
Naltrexone
: Methylnaltrexone (MNTX, trade name Relistor) and
Naloxone Methiodide are opioid antagonists that act to reverse some of the side
effects of opioid drugs (for example Tramadol) such as constipation
without affecting analgesia or precipitating withdrawals.
Neuropathic
Pain
: Neuropathic pain results from damage to or dysfunction
of the peripheral or central nervous system, rather than stimulation of pain
receptors. Although neuropathic pain responds to opioids, treatment is often
with adjuvant drugs such as antidepressants, anticonvulsants, baclofen
and topical drugs.
Opioid
: A
chemical that works by binding to opioid receptors, which are found principally
in the central nervous system and the gastrointestinal tract. The
receptors in these organ systems mediate both the beneficial effects and the
side effects of opioids.
Postherpetic
Neuralgia
: Postherpetic neuralgia is a kind of pain involving
damage to restricted regions of the peripheral nervous system. PHN
is, therefore, a type of neuropathic pain that has a regional topographic
restriction. Current clinical practitioners use, among others,
Pregabalin, Gabapentin, anti-depressants such as Cymbalta/Nucynta, traditional
painkillers like tramadol and Oxycontin, and localized patches like lidocaine
and capsaicin.
Pregabalin/Gabapentin
: Analogues of
γ
-Aminobutyric acid (GABA), the chief inhibitory neurotransmitter in the
mammalian central nervous system.
Tapentadol/Tramadol
: Tapentadol
and Tramadol are synthetic opioid drugs, similar to morphine and Oxycodone that
occur naturally, which modulate mu-opioid and other pain receptors to reduce
pain.
Technologies
The acquired patent applications enable
three key drug delivery platform technologies: Once daily (“
Pro24™
”),
gastro-retentive (“
ProRet™
”)
and abuse-deterrent (“
ProProof™
”)
platform technologies. Our technologies are intended to deploy these
three proprietary drug delivery technologies to enable a number of
new-generation drugs with enhanced clinical benefits in multiple therapeutic
areas. Our primary focus is to develop novel and clinically efficient
drugs for chronic and acute pain.
Pro24™:
This is an innovative
technology used to develop very high potency, controlled-release tablets that
enable drug release over a 24-hour period. Pro24™ platform can be used for both
single and combination drugs where the release of one or both drugs can be
controlled over a period. The product design involves both osmotic
and non-osmotic cores that optionally involves spherical and layered active
agents whose release is protected by one or more coatings. The cores
can also include drug matrices depending on the characteristics of an active
agent.
ProRet™:
ProRet™ is
a unique gastro-retentive delivery platform to formulate drugs with a narrow
absorption window. ProRet™ gastro-retentive systems can remain in the gastric
region for several hours thus significantly prolonging the absorption window for
a number of key drugs. ProRet™ system includes both prolonged
resident osmotic cup and pouch based delivery of drugs over 24 hours. We believe
ProRet™’s prolonged gastric retention improves bioavailability, reduces drug
waste, and improves solubility for drugs that are less soluble in a high pH
environment. Its applications include those that require local drug
delivery to the stomach and proximal small intestines.
ProProof™
: ProProof™
abuse-deterrent formulations platform limits the abuse potential of drugs that
are prone for abuse. The technology uses twin methods of efficacy enhancement
and abuse neutralization to achieve its objectives. We believe
ProProof™ has the potential to reduce specific forms of prescription opioid
abuse and can be applied to a number of prescription drugs that are prone for
abuse.
According to the current understanding
of pain treatment methods, opioid painkillers produce their pain relieving
effect by activating an inhibitory pathway in the nervous
system. Inhibitory pathways inhibit the transmission of pain signals
into the brain. There are reports that opioids also stimulate an
excitatory pathway in the nervous system. The excitatory pathway partially
counteracts pain inhibition and is believed to be a major cause of adverse side
effects associated with opioid use, including the development of tolerance and
addiction. At the normal clinical doses, the activation of the
excitatory pathway was previously undetected probably due to masking by the
inhibitory pathway. We believe that the selective blockade of the
excitatory pathway promotes the pain relieving potency of opioid by blocking the
excitatory pain-enhancing effect.
We believe that the excitatory pathway
plays an important role in modulating the adverse side effects of opioid use and
low doses and that opioid antagonists can enhance the clinical efficacy of the
opioids. In the product designs enabled by the acquired patent
applications, this efficacy enhancement is combined with the abuse deterrence
using either the same or a different antagonist, either singly or in combination
with a gelling agent or an irritating agent. The design uses activity
modifiers, physical barriers to tampering, agonist-antagonist formulations and
aversion agents. It is our belief that ProProof™ has the potential to
reduce specific forms of prescription opioid abuse.
We believe our platform technologies
enable drugs that offer enhanced pain relief either at lower dosages and or
reduced tolerance/physical dependence or addiction potential as compared to many
of today’s commonly prescribed opioid painkillers. If approved by the
FDA, we believe our drugs could replace many commonly used opioid painkillers,
diabetic neuropathic pain and fibromyalgia treatments. We also believe our drugs
could be used in chronic pain cases where physicians have been reluctant to
prescribe opioid painkillers due to concerns about adverse side effects or
addiction.
Business
Development Strategies
Our business strategy is focused on the
development and commercialization of differentiated products based on our
proprietary oral drug delivery technologies acquired from Nectid. We
plan to combine known molecules with innovative proprietary technologies to
enhance the therapeutic potential of existing medications that could possibly
provide a revenue stream through licensing and royalty. Project
selection is based on a clear, unmet and under-served market, large business
potential and strong intellectual property protection with
innovation.
In the near term, we intend to proceed
with a comprehensive program to develop and commercialize once-daily drugs for
diabetic neuropathic pain, fibromyalgia, postherpetic neuralgia and
epilepsy. We also have future plans to develop and commercialize
once-daily opioid combinations as well as abuse-deterrent opioid combinations
for moderate to severe pain.
We intend to optimize the use and value
of our drug delivery technologies in three ways. First, we are seeking to
assemble a number of pharmaceutical products that can be highly differentiated
from existing versions of the compounds upon which they are
based. These unique drugs may be promoted together within a specialty
pharmaceutical field, such as pain and ER specialists.
Second, we plan to out-license product
candidates after we have increased their value through our formulation and
clinical development efforts. Third, we plan to enter into
collaborative partnerships whereby the unique capabilities of our technology can
provide value to a partner's product, particularly for non-analgesic drug
markets.
Our goal is to be a drug delivery
company focusing on developing better drugs, initially for pain and later for
therapeutic areas. Our proprietary technologies can be applied not just to pain
drugs, but across therapeutic sectors like psychiatric disorders and Alzheimer’s
disease, where better medication and compliance improves the clinical benefits
and quality of life. We intend to achieve this goal by:
Building Proprietary Drug Delivery
Platforms:
We intend to strengthen the three drug delivery technologies;
ProRet™ , ProProof™ and Pro24™ , that can be used to develop novel
and efficient drugs. While these platform technologies enable a
number of new-generation of drugs with improved clinical benefits in multiple
therapeutic areas, we are focusing initial resources to develop pain drugs, more
specifically abuse deterrent opioids, once daily drugs to treat moderate to
severe pain, diabetic neuropathic pain and fibromyalgia. We believe our drugs
will offer better clinical efficacy with enhanced pain relief and often at lower
doses compared to existing drugs. In case of its abuse deterrent
drugs, our technologies could provide reduced tolerance/physical dependence or
addiction potential without compromising the extent of pain. If
approved by the Food and Drug Administration (“
FDA
”), we
believe our proprietary drugs could replace certain existing pain drugs commonly
used to treat moderate to severe pain, diabetic neuropathic pain and
fibromyalgia.
Building a Drug Franchise in Pain
Medications:
We intend to develop drugs that we believe may
have broad use for patients with moderate to severe pain, diabetic neuropathic
pain and to treat fibromyalgia. We believe this approach may help alleviate
physicians’ current tendency to under-prescribe opioid painkillers and prescribe
off-label drugs for diabetic neuropathic pain and fibromyalgia
Focusing on Clinical Development and
Late Stage Products:
We believe that our clinical development
focus will enable us to generate product revenues earlier than if we were
discovering and developing new chemical entities. We also believe
this focus enables us to explore a wider range of product
candidates
Retaining Significant
Rights:
We currently retain worldwide commercialization rights
to all of our technology and pain management product candidates in all markets
and indications. In general, we intend to independently develop
product candidates through late-stage clinical trials. As a result, we expect to
capture a greater percentage of the profits from drug sales than we would if we
out-licensed our drugs earlier in the development process. In market
segments that require large or specialized sales forces, such as the market for
opioids or diabetic neuropathic pain products, we may seek sales and marketing
alliances with third parties. We believe that such alliances will enable us to
deploy our resources effectively and commercialize our drugs rapidly and
cost-effectively.
Using Our Technology to Develop
Multiple Drugs for Both Pain and Non-Pain Indications:
We are
initially focusing our efforts on developing pain drugs. However, we
believe our technology can be broadly applied to additional therapeutic areas
enabling us to target wider and deeper business opportunities.
Outsourcing Key
Functions:
We intend to outsource preclinical studies,
clinical trials, formulation and manufacturing. We believe outsourcing will
produce significant time savings and allow for more efficient deployment of our
resources.
Products
in Development
We currently have other proprietary
drug candidates in various stages of development. We use our
proprietary technologies, ProRet™, ProProof™ and Pro24™ to develop
novel drugs. We are developing a number of products to the proof of
concept stage before seeking a partner.
PRTT-100:
PRTT-100
is a synergistic combination of Pregabalin/Gabapentin with Tapentadol/Tramadol.
The product is developed using our 24-hours proprietary delivery platform,
Pro24™. We anticipate that PRTT-100 will enable significant reduction
in the dosage of Pregabalin /Gabapentin without compromising the extent of pain
relief.
PRTT-200:
PRTT-200
is a gastro-retentive once daily calcium channel inhibitor to treat diabetic
neuropathic pain and fibromyalgia. It uses Protect’s proprietary
gastro-retentive platform ProRet™ to overcome absorption window
challenges.
PRTT-300:
PRTT-300
is an abuse deterrent once daily opioid combination with antagonist that
provides significant clinical benefit over existing opioid
formulations. It uses Protect’s proprietary abuse deterrent platform
ProProof™ design. We expect that PRTT-300 will enhance analgesic
property by minimizing the side effects of nausea, vomiting, dizziness and head
ache.
Other
Product Candidates
Our acquired patent applications and
technologies also enable us to explore the possible development of other
analgesic drugs that are currently being formulated and
evaluated. These include the following:
PRTT-400:
PRTT-400
is a once daily abuse deterrent opioid formulation with a second analgesic. If
successful, it would be the first once daily and first abuse deterrent
combination of two or more drugs. Though there are number of once daily opioids
and combinations, we are not aware of a single approved once daily combination
of two analgesic drugs.
PRTT-500:
PRTT-500
is a combination of an opioid and selective peripheral opioid receptor
Antagonist such as Methyl Naltrexone or Naloxone
Methiodide. Peripheral opioid receptors are responsible for opioid
induced constipation, opioid induced respiratory depression and post operative
nausea. We believe that approximately half of opioid users are
affected by opioid induced constipation. PRTT-500 is intended to
provide a novel delivery system that is devoid of opioid induced respiratory
depression.
There is no assurance that we will
successfully complete development of any of the above projects in the near
future or than any project will result in a commercially viable
product. We do not plan to conduct significant clinical activities on
these projects until such time as we have additional funding to advance the
projects.
Research
and Development
We have not made any expenditures on
research and development activities prior to acquiring the patent applications
from Nectid. Because we have no research facilities and limited
qualified personnel, we intend to rely on collaborative agreements with other
companies to conduct our research and development activities. We
intend to rely on contractual partners to formulate, test, supply, store and
distribute drug supplies for our clinical trials. Presently, we have
not entered into any such agreements and there is no assurance that we can
secure a favorable partnership arrangement in the future.
Our near term goal is to proceed with a
comprehensive program to develop and commercialize once-daily drugs for diabetic
neuropathic pain, fibromyalgia, postherpetic neuralgia and
epilepsy. Subsequently and as capital and resources permit, we intend
to develop and commercialize once-daily opioid combinations as well as
abuse-deterrent opioid combinations for moderate to severe pain. In
order to conduct our research and development activities we will have to raise
capital, most likely through a private placement of our
securities. We estimate that research and development expenses will
be approximately $2.5 million during the next 12 months. We are
currently exploring possible funding sources, but we have no assurance that we
will be able to raise the necessary funds on terms favorable to the company, or
at all.
Manufacturing
Presently we have no manufacturing or
research and development facilities. We plan to enter into agreements and rely
upon qualified third parties for the formulation and manufacture of our
drugs. These supplies and the manufacturing facilities must comply
with U.S. Drug Enforcement Agency (“
DEA
”)
regulations and current good manufacturing practices enforced by the FDA and
other government agencies. Drug manufacturers are subject to ongoing
periodic, unannounced inspection by the FDA, the DEA and corresponding state and
foreign government agencies to ensure strict compliance with good manufacturing
practices and other government regulations. We plan to continue to
outsource all formulation and manufacturing and related activities.
Marketing
Currently we are engaged in the
research and development of future products. As such time as we have
finalized a commercially viable product, we intend to formulate a comprehensive
marketing plan.
Employees
As of May 31, 2010, we had
two employees. We are presently considering the possibility of
additional employees, but will add employees only as our business demands
warrant and we have the necessary available funds. We also plan to
engage consultants from time to time to perform services on a per diem or hourly
basis.
We have entered into employment
agreements with William D. Abajian, our President and Chief Executive Officer,
and Ramesha Sesha, our Chief Operating Officer. Mr. Sesha’s agreement
is for a term of three years and provides for an annual salary of $250,000 for
the first year, $300,000 for the second year and $350,000 for the third year,
subject to the company having sufficient capitalization . The
agreement is subject to review and revision annually by the board of directors
and may also be supplemented by bonus and/or stock options or warrants, also at
the discretion of the board. The agreement also provides for
customary employee benefits, insurance and expense allowance.
Mr. Abajian’s agreement is also for a
term of three years. Upon the execution of the agreement, we issued 5
million shares of our common stock to Mr. Abajian in consideration for services
in connection with the acquisition of our patents and related technology and
other services performed. The agreement also provides that Mr.
Abajian may earn additional shares of our common stock upon the company
achieving certain funding thresholds as a result of his efforts as set forth
below:
● 1.5
million shares upon the initial financing of $2,000,000; and
● 1.5
million shares of upon the closing of a “pharma deal” that involves either (i) a
licensing deal for one or more of our patents, technologies or products, or (ii)
a development deal with research and development expenses covered, the value of
either “pharma deal” to be a minimum of $3 million.
Mr. Abajian’s agreement may be
supplemented by an annual bonus in either cash and/or stock options at the
discretion of the board. The agreement also provides for customary
employee benefits, insurance and expense allowance.
Intellectual
Properties
We seek to protect our technology by,
among other methods, filing and prosecuting U.S. and foreign patents and patent
applications with respect to our technology and products and their
uses. The acquired patent applications, if successfully granted, will
not expire earlier than September 2028. We currently hold 13 patent
applications.
We plan to prosecute and defend our
patent applications, issued patents and proprietary information. Our
competitive position and potential future revenues will depend in large part
upon our ability to protect our intellectual property from challenges and to
enforce our patent rights against potential infringers. We will
continue to file new patent applications based on additional
developments. If
competitors
are able to successfully challenge the validity of our patent rights, claims,
based on the existence of prior art, tests, experiments or otherwise, they would
be able to market products that contain features and clinical benefits similar
to those of our products, and demand for our products could decline as a
result.
There can be no assurance that any
current or future patent application will result in patents being issued, or
that existing patent pending applications, or any new patents applications, if
issued, will afford meaningful protection from competitors. Also, there can be
no assurance that we will have the financial resources necessary to enforce any
patent rights we may hold. We are not aware of any claim that our patent pending
application may infringe, or will infringe any existing patent. However, in the
event such a claim is made and we are unsuccessful against such claim, we may be
required to obtain licenses to such other patents or proprietary technology in
order to develop or market our services. There can be no assurance that we will
be able to obtain such licenses on commercially reasonable terms or that the
patents underlying the licenses will be valid and enforceable.
If we are unable to secure patent
protection for our technology and products, current competitors and/or other
businesses could duplicate the same technology, products and services in direct
competition with us. Presently, we anticipate filing additional
patent applications if new and/or improved product services are
developed. We do not hold any registered trademarks.
Government
Regulation
Regulation by governmental authorities
in the United States and other countries is a significant factor in the
manufacture and marketing of pharmaceuticals and in our ongoing research and
development activities.
All of our products will require
regulatory approval by governmental agencies prior to commercialization. In
particular, human therapeutic products are subject to rigorous preclinical
testing and clinical trials and other pre-marketing approval requirements by the
FDA and regulatory authorities in other countries. In the United
States, various federal and in some cases state statutes and regulations, also
govern or impact upon the manufacturing, safety, labeling, storage, record
keeping and marketing of our products. The lengthy process of seeking
required approvals and the continuing need for compliance with applicable
statutes and regulations require us to spend substantial
resources. Regulatory approval, when and if obtained, may be limited
in scope which may significantly limit the indicated uses for which our products
may be marketed. Further, approved drugs, as well as their
manufacturers, are subject to ongoing review and discovery of previously unknown
problems with such products which may result in restrictions on their
manufacture, sale or use or in their withdrawal from the market.
Applicable FDA regulations treat our
combination of opioid painkillers, once daily gastro-retentive drugs and once
daily combination drugs as new drugs and require the filing of a New Drug
Application, or NDA, and approval by the FDA prior to commercialization in the
United States. Our clinical trials will seek to demonstrate that our
formulations and designs produce greater beneficial effects than either drug
alone or against an existing drug.
The
Drug Approval Process
We will be required to complete several
activities before we can market any of our drugs for human use in the United
States, including:
● submission
to the FDA of an Investigational New Drug Application (“
IND
”),
that is a request for authorization from the FDA to administer an
investigational drug or biological product to humans, which must become
effective before human clinical trials commence;
● adequate
and well-controlled human clinical trials to establish the safety and efficacy
of the product candidate;
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submission
to the FDA of an NDA; and
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● FDA
approval of the NDA prior to any commercial sale or shipment of the
drug.
Preclinical tests include laboratory
evaluation of product chemistry and formulation, as well as animal studies to
assess the potential safety of the product. Preclinical safety tests must be
conducted by laboratories that comply with FDA regulations regarding Good
Laboratory Practice, or GLP regulations. We plan to conduct and submit the
results of preclinical tests to the FDA as part of our INDs prior to commencing
clinical trials. We may be required to conduct extensive toxicology studies
concurrently with the clinical trials.
Based on preclinical testing, an
IND is filed with the FDA to begin human testing of the drug. The IND becomes
effective if not rejected by the FDA within 30 days. The IND must indicate the
results of previous experiments, how, where and by whom the new studies will be
conducted, the chemical structure of the compound, the method by which it is
believed to work in the human body, any toxic effects of the compound found in
the animal studies and how the compound is manufactured. All clinical trials
must be conducted in accordance with good clinical practice, or GCP,
regulations. In addition, an Institutional Review Board, or IRB, generally
comprised of physicians at the hospital or clinic where the proposed studies
will be conducted, must review and approve the IND. The IRB also continues to
monitor the study. We must submit progress reports detailing the results of the
clinical trials to the FDA at least annually. In addition, the FDA may, at any
time during the 30-day period or at any time thereafter, impose a clinical hold
on proposed or ongoing clinical trials. If the FDA imposes a clinical hold,
clinical trials cannot commence or recommence without FDA authorization and then
only under terms authorized by the FDA. In some instances, the IND application
process can result in substantial delay and expense.
Clinical trials are typically conducted
in three sequential phases that may overlap. Phase I tests typically take
approximately one year to complete. The tests study a drug’s safety profile, and
may include the safe dosage range. Phase I clinical studies also
determine how a drug is absorbed, distributed, metabolized and excreted by the
body, and the duration of its action. In addition, we may, to the extent
feasible, assess pain relief in our Phase I trials. In Phase II
clinical trials, controlled studies are conducted on volunteer patients with the
targeted disease or condition. The primary purpose of these tests is to evaluate
the effectiveness of the drug on the volunteer patients as well as to determine
if there are any side effects. These studies may be conducted concurrently with
Phase I clinical trials. In addition, Phase I/II clinical trials may
be conducted to evaluate not only the efficacy of the drug on the patient
population, but also its safety. During Phase III clinical trials, the drug
is studied in an expanded patient population and in multiple sites. Physicians
monitor the patients to determine efficacy and to observe and report any
reactions that may result from long-term or expanded use of the
drug.
The FDA publishes industry guidelines
specifically for the clinical evaluation of painkillers. We rely in
part on these guidelines to design a clinical strategy for the approval of each
of our product candidates. In particular, FDA guidelines recommend
that we demonstrate efficacy of our new pain drugs in more than one clinical
model of pain. Acceptable clinical models of pain include different
neuropathic pains, fibromyalgia, post-operative pain, and various types of
trauma and arthritis pain. Since models differ in their pain intensity and their
sensitivity to detect pain, we expect to complete several Phase II studies in
multiple clinical models of pain. Upon a clear demonstration of the safety and
efficacy of painkillers in multiple clinical models of pain, the FDA has
historically approved painkillers with broad indications. Such general purpose
labeling often takes the form of “for the management of moderate to severe
pain.”
We plan to formulate the drugs and
carry on the clinical development. We may not successfully complete
Phase I, Phase II or Phase III testing within any specified time
period, or at all, with respect to any of our product candidates. Furthermore,
we or the FDA may suspend clinical trials at any time in response to concerns
that participants are exposed to an unacceptable health risk.
After the completion of clinical
trials, if there is substantial evidence that the drug is safe and effective, an
NDA is filed with the FDA. The NDA must contain all of the information on the
drug gathered to that date, including data from the clinical trials. NDAs are
often over 100,000 pages in length.
The FDA reviews all NDAs submitted
before it accepts them for filing and may request additional information rather
than accepting a NDA for filing. In such an event, the NDA must be resubmitted
with the additional information and, again, is subject to review before filing.
Once the submission is accepted for filing, the FDA begins an in-depth review of
the NDA. Under the Federal Food, Drug and Cosmetic Act, the FDA has
365 days in which to review the NDA and respond to the applicant. The
review process is often significantly extended by FDA requests for additional
information or clarification regarding information already provided in the
submission. The FDA may refer the application to an appropriate advisory
committee, typically a panel of clinicians, for review, evaluation and a
recommendation as to whether the application should be approved.
The FDA is not bound by the
recommendation of an advisory committee. If FDA evaluations of the NDA and the
manufacturing facilities are favorable, the FDA may issue either an approval
letter, or an approvable letter which usually contains a number of conditions
that must be met in order to secure final approval of the NDA. When and if those
conditions have been met to the FDA’s satisfaction, the FDA will issue an
approval letter, authorizing commercial marketing of the drug for certain
indications. If the FDA’s evaluation of the NDA submission or manufacturing
facilities is not favorable, the FDA may refuse to approve the NDA or issue a
not approvable letter.
If the FDA approves the NDA, the
drug becomes available for physicians to prescribe. Periodic reports must be
submitted to the FDA, including descriptions of any adverse reactions reported.
The FDA may request additional post marketing studies, or Phase IV studies, to
evaluate long-term effects of the approved drug.
Other
Regulatory Requirements
The FDA mandates that drugs be
manufactured in conformity with current GMPs. If the FDA approves any of our
product candidates, we will be subject to requirements for labeling,
advertising, record keeping and adverse experience reporting. Failure to comply
with these requirements could result, among other things, in suspension of
regulatory approval, recalls, injunctions or civil or criminal sanctions. We may
also be subject to regulations under other federal, state, and local laws,
including the Occupational Safety and Health Act, the Environmental Protection
Act, the Clean Air Act, national restrictions on technology transfer, and
import, export, and customs regulations. In addition, any of our products that
contain narcotics will be subject to DEA regulations relating to manufacturing,
storage, distribution and physician prescribing procedures. It is possible that
any portion of the regulatory framework under which we operate may change and
that such change could have a negative impact on our current and anticipated
operations.
The Controlled Substances Act imposes
various registrations, record-keeping and reporting requirements, procurement
and manufacturing quotas, labeling and packaging requirements, security controls
and a restriction on prescription refills on certain pharmaceutical products. A
principal factor in determining the particular requirements, if any, applicable
to a product is, its actual or potential abuse profile. The DEA regulates
chemical compounds as Schedule I, II, III, IV or V substances, with
Schedule I substances considered to present the highest risk of substance
abuse and Schedule V substances the lowest risk. Any of our product
candidates that contain a scheduled substance will be subject to regulation by
the DEA.
Competition
Our future success will depend, in
part, upon our ability to develop products and achieve market share at the
expense of existing and established and future products in the relevant target
markets. Existing and future products, therapies, technological approaches or
delivery systems will compete directly with our products. Competing products may
provide greater therapeutic benefits for a specific indication, or may offer
comparable performance at a lower cost. Companies that currently sell generic or
proprietary pain drugs and novel formulations include, but are not limited to,
Pfizer, Depomed, Pain Therapeutics, Roxane Laboratories, Purdue Pharma,
Grunenthal, Janssen Pharmaceutica, Abbott Laboratories, Cephalon, Endo
Pharmaceuticals, Elkins-Sinn, Watson Laboratories, Ortho-McNeil Pharmaceutical
and Forest Pharmaceuticals. Alternative technologies are being developed to
increase opioid potency, as well as alternatives to GABA Analog therapy for pain
management, several of which are in clinical trials or are awaiting approval
from the FDA.
We compete with fully integrated
pharmaceutical companies, smaller companies that are collaborating with larger
pharmaceutical companies, academic institutions, government agencies and other
public and private research organizations. Many of these competitors have pain
products, such as opioids and GABA analogs and SNRIs already approved by the FDA
or in development and operate larger research and development programs in these
fields than we do. In addition, many of these competitors, either alone or
together with their collaborative partners, have substantially greater financial
resources than we do, as well as significantly greater experience
in:
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undertaking
preclinical testing and human clinical
trials;
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obtaining
FDA and other regulatory approvals of
drugs;
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formulating
and manufacturing drugs; and
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launching,
marketing, distributing and selling
drugs.
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Developments by competitors may render
our product candidates or technologies obsolete or non-competitive.
Alternatively, competitors may challenge our patents and prevail in a court of
law rendering our products, even if they are successfully developed, tested and
approved, unmarketable.
Facilities
Our principal offices are located at
759 Bloomfield Ave, Suite 411, West Caldwell, New Jersey
07006. Because all of our products will be developed by contract
manufacturers, we will not initially require production or research
space. Management believes that the current facilities are adequate
for the immediate future.
Industry
Segments
No information is presented regarding
industry segments. We are presently engaged in the development of
certain patents and technology related to drug delivery technologies and
drugs. We have no current plans to participate in another business or
industry. Reference is made to the statements of income included
herein in response to Item 13 of this Form 10 for a report of our operating
history for the past two fiscal years.
We are subject to certain substantial
risks inherent to our business and set forth or referred to
herein. Before considering an investment in our common stock,
prospective investors should carefully consider, among other potential risks,
the following risk factors as well as all other information set forth or
referred to herein. An investment in our shares involves a high
degree of risk. If any of the following events or outcomes actually occur,
business operating results and financial condition would likely
suffer. As a result, the trading price of our common stock could
decline and an investor may lose all or part of the money they invested in our
shares.
Risk
Factors Related to Our Business
Our auditors have expressed a going
concern opinion.
Our independent auditors
include a statement in their report to our financial statements that certain
matters regarding the company raise substantial doubt as to our ability to
continue as a going concern. Note 3 to the financial statements
states that we do not have significant cash or other material assets, nor do we
have an established source of revenues sufficient to cover operating costs and
allow us to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
We
have a limited operating history and have not recorded revenues or profits
since inception. Continuing losses may exhaust capital
resources and force us to discontinue operations.
Although the company was formed in
1983, we have had only limited operations and no significant revenues since
inception. We are considered a development stage company, which are
considered inherently more risky than established companies. Because
we have no earnings history and there is no assurance that we will realize
future revenues, there is doubt as whether we will ever achieve
profitability. If we are unsuccessful in the development and
commercialization of differentiated products based on our proprietary oral drug
delivery technologies, the substantial negative effect on our business would be
substantial and our future would be questionable.
The
success of future operations depends on our ability to develop our patent
applications and technology and generate revenues from the commercialization of
products developed therefrom, which may be subject to many
factors.
Our operations to date have been
limited to acquiring the patent applications and organizing and staffing our
company. We have not yet demonstrated the ability to formulate and
manufacture commercially viable products, obtain regulatory approval or organize
sales and marketing activities. There can be no assurance that we
will be able to develop commercially viable products from our patents and
technology, or that we will realize material revenues or achieve profitability
in the foreseeable future. The potential to generate revenues and
profits from our business depends on many factors, including, but not limited to
the following:
● our
ability to secure adequate funding to complete development of our patents and
technology into commercially viable products and to market those
products;
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our
ability to obtain regulatory approval of our
products;
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the
cost and expenses associated with developing products and gaining
regulatory approvals;
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size and timing of future customer orders, product delivery and customer
acceptance, if required;
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the costs of maintaining and expanding operations;
● our
ability to compete with existing and new entities that offer the same or similar
products and services; and
● our
ability to attract and retain a qualified work force as business
warrants.
There can be no assurance that we will
be able to achieve any of the foregoing factors or realize profitability in the
immediate future, or at any time.
If
outside collaborators fail to devote sufficient time and resources to our drug
development programs, or if their performance is substandard, our regulatory
submissions and product introductions will be materially and negatively
affected.
We depend on independent investigators
and collaborators, such as universities and medical institutions, to conduct our
clinical trials under agreements with us. Presently, we do not have any
definitive agreements for the performance of these duties. These
collaborators are not our employees and we cannot control the amount or timing
of resources that they devote to our programs. These investigators
may not assign as great a priority to our programs or pursue them as diligently
as we would if we were undertaking such programs ourselves. If
outside collaborators fail to devote sufficient time and resources to our drug
development programs, or if their performance is substandard, the approval of
our regulatory submissions and our introductions of new drugs will be
delayed.
Our collaborators may also have
relationships with other commercial entities, some of which may compete with
us. If outside collaborators assist our competitors to our detriment,
the approval of our regulatory submissions will be delayed and future sales from
our products will be less than expected.
If
we are unable to design, conduct and complete clinical trials successfully, we
will not be able to submit a new drug application to the FDA.
In order to obtain FDA approval of any
of our product candidates, we must submit to the FDA a New Drug Application that
demonstrates the product candidate is safe for humans and effective for its
intended use. This demonstration requires significant research and animal tests,
which are referred to as preclinical studies, as well as human tests, which are
referred to as clinical trials.
We have acquired patent applications
that potentially enable several drug candidates. We are currently seeking
capital to complete technology optimization for clinical
development. We expect to complete technology development, production
of clinical supplies and patient enrollment for PRTT-100, PRTT-200 and PRTT-300
during the current fiscal year and early next year. If clinical data from the
studies does not support our hypothesis, we may also elect to discontinue
further development of drug candidates that use our technology.
Product development and clinical trials
are very expensive. They are difficult to design and implement, in
part because they are subject to rigorous requirements. The clinical
trial process is also time consuming. Furthermore, if we or the FDA
believe that production process may not be safe, or the participating patients
are being exposed to unacceptable health risks, we will have to suspend
development and or clinical trials. Failure can occur at any stage of
the development and clinical trials, and we could encounter problems that cause
us to abandon development and clinical trials or to repeat formulations and or
clinical studies.
Success
in early trials may not predict success of future trials.
Success in formulation, manufacturing
and pre-clinical testing and early clinical trials does not ensure that products
will be successful. Results of later clinical trials may not replicate the
results of prior clinical trials and pre-clinical testing.
Even if formulation, manufacturing and
clinical trials are completed as planned, their results may not support our
product claims. The clinical trial process may fail to demonstrate
that our product candidates are safe for humans and effective for indicated
uses. Such failure would cause us to abandon a product candidate and
could delay development of other product candidates.
Developments
by competitors may establish standards of care that affect our ability to
conduct our clinical trials as planned.
Changes in standards related to
clinical trial design could affect our ability to design and conduct clinical
trials as planned. For example, regulatory authorities may not allow
us to compare our drug to a placebo in a particular clinical indication where
approved products are available. In that case, both the cost and the
amount of time required to conduct a trial could increase and have a negative
affect on our financial condition
If
we fail to obtain necessary regulatory approvals, we will not be allowed to
commercialize our drugs and we will not generate revenues.
Satisfaction of all regulatory
requirements typically takes many years, is dependent upon the type, complexity
and novelty of the product candidate, and requires the expenditure of
substantial resources for research and development and testing. Our
research and clinical approaches may not lead to drugs that the FDA considers
safe for humans and effective for indicated uses. The FDA may require
us to conduct additional clinical testing, in which case we would have to expend
additional time and resources. The approval process may also be delayed by
changes in government regulation, future legislation or administrative action or
changes in FDA policy that occur prior to or during our regulatory review.
Delays in obtaining regulatory approvals may:
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delay
commercialization of, and product revenues from, our product
candidates;
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impose
costly procedures on us; and
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diminish
the competitive advantages that we would otherwise
enjoy.
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Even if we comply with all FDA
requests, the FDA may ultimately deny one or more of our NDAs, and we may never
obtain regulatory approval for any of our product candidates. If we
fail to achieve regulatory approval of any of our leading product candidates we
will have fewer saleable products and corresponding product
revenues. Even if we receive regulatory approval of our products,
such approval may involve limitations on the indicated uses or marketing claims
we may make for our products. Further, later discovery of previously unknown
problems could result in additional regulatory restrictions, including
withdrawal of products. The FDA may also require us to commit to
perform post-approval studies, for which we would have to expend additional
resources, which could have an adverse effect on our operating results and
financial condition.
In foreign jurisdictions, we must
receive marketing authorizations from the appropriate regulatory authorities
before we can commercialize our drugs. Foreign regulatory approval processes
generally include all of the aforementioned requirements and risks associated
with FDA approval.
Government
agencies may establish and promulgate guidelines that directly apply to us and
our products that may affect the use of our drugs.
Government agencies, professional
societies, and other groups may establish guidelines that apply to our drugs.
These guidelines could address such matters as usage and dose, among other
factors. Application of such guidelines could mitigate the use of our
drugs.
If
physicians and patients do not accept and use our drugs, we will not achieve
sufficient product revenues and our business will suffer.
Even if we are successful in
successfully formulating, manufacturing and testing our drugs and if FDA
approves the drugs, physicians and patients may not accept and use them.
Acceptance and use of our drugs will depend on a number of factors
including:
● perceptions
by members of the healthcare community, including physicians, about the safety
and effectiveness of our drugs;
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cost-effectiveness
of our drugs relative to competing
products;
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● availability
of reimbursement for our products from government or healthcare payers;
and
● effectiveness
of marketing and distribution efforts by us and our licensees and distributors,
if any.
We expect to rely on sales generated by
our current lead product candidates for substantially all of our product
revenues for the foreseeable future. However, we have not performed a
feasibility study related to the potential market of our proprietary oral drug
delivery technologies, nor have we commissioned anyone else to do so. Because
there has not been a market analysis made, we have no evidence to support the
potential demand for our future products. Failure of our products and
services to achieve and maintain meaningful levels of market acceptance would
materially and adversely affect our business, financial condition and results of
operations and market penetration.
We
plan to rely on third party commercial drug manufacturers that could fail to
devote sufficient time and resources to our concerns resulting in delayed
product introductions and higher costs than expected.
We have no manufacturing facilities and
limited experience in drug product development and commercial manufacturing. We
lack the resources and expertise to formulate, manufacture or test the technical
performance of our product candidates. We intend to rely on a very limited
number of company personnel and a small number of contract manufacturers and
other vendors to formulate, test, supply, store and distribute drug supplies for
our clinical trials. If these manufacturers fail to devote sufficient
time and resource to our product candidates, or if their performance is
substandard, our clinical trials and product introduction would be adversely
affected. Drug manufacturers are subject to ongoing periodic,
unannounced inspection by the FDA, the DEA and corresponding state and foreign
government agencies to ensure strict compliance with good manufacturing
practice, other government regulations and corresponding foreign
standards. We have no control over third-party manufacturers’
compliance with these regulations and standards.
The use of
alternate manufacturers may be difficult because of the limited number of
potential manufacturers that have the necessary governmental licenses to produce
narcotic products.
The FDA must approve any alternative
manufacturer of our product before we may use them to produce our supplies and
products. It may be difficult or impossible for us to find a replacement
manufacturer on acceptable terms quickly, or at all. Our contract manufacturers
and vendors may not perform as agreed or may not remain in the contract
manufacturing business for the time required to successfully produce, store and
distribute our products. If any third party manufacturer makes
improvements in the manufacturing process for our products, we may not own, or
may have to share, the intellectual property rights to such
innovation.
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Our
collaborative agreements may not succeed or may give rise to disputes over
intellectual property.
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Our strategy to focus on drug discovery
of novel drugs discovered by third parties requires us to enter into
collaborative agreements from time to time. Collaborative agreements are
generally complex and contain provisions that could give rise to legal disputes.
Such disputes can delay the development of potential new drug products, or can
lead to lengthy, expensive litigation or arbitration. Collaborative agreements
often take longer to conclude and may be more expensive than originally
expected. Other factors relating to collaborative agreements may adversely
affect the success of our potential products, including:
● the
development of parallel products by our collaborators or by a
competitor;
● arrangements
with collaborative partners that limit or preclude us from developing certain
products or technologies;
● premature
termination of a collaborative agreement; or
● failure
by a collaborative partner to devote sufficient resources to the development of
our potential products.
If
we are unable to develop our own sales, marketing and distribution capabilities,
or if we are not successful in contracting with third parties for these services
on favorable terms, our product revenues could be adversely
affected.
We currently have no sales, marketing
or distribution capabilities. In order to commercialize our products, if any are
approved by the FDA, we will either have to develop such capabilities internally
or collaborate with third parties who can perform these services for us. If we
decide to commercialize any of our drugs ourselves, we may not be able to hire
the necessary experienced personnel and build sales, marketing and distribution
operations which are capable of successfully launching new drugs and generating
sufficient product revenues. In addition, establishing such operations will take
time and involve significant expense.
If we decide to enter into co-promotion
or other licensing arrangements with third parties, we may be unable to locate
acceptable collaborators because the significant number of recent business
combinations among pharmaceutical companies has resulted in a reduced number of
potential future collaborators. Even if we are able to identify one or more
acceptable collaborators, we may not be able to enter into any collaborative
arrangements on favorable terms, or at all.
In addition, due to the nature of the
market for pain management products, it may be necessary for us to license all,
or substantially all of our product candidates to a single collaborator, thereby
eliminating our opportunity to commercialize other pain management products
independently. If we enter into any collaborative arrangements, our product
revenues are likely to be lower than if we marketed and sold our products
ourselves.
Any revenues we receive will depend
upon the collaborators’ efforts, which may not be adequate due to lack of
attention or resource commitments, management turnover, change of strategic
focus, further business combinations or other factors outside of our control.
Depending upon the terms of our collaboration, the remedies we have against an
under-performing collaborator may be limited. If we were to terminate the
relationship, it may be difficult or impossible to find a replacement
collaborator on acceptable terms, or at all.
If
we cannot compete successfully for market share against other drug companies, we
may not achieve sufficient product revenues and our business will
suffer.
The market for our product candidates
is characterized by intense competition and rapid technological advances. If our
products receive FDA approval, they will compete with a number of existing and
future drugs and therapies developed, manufactured and marketed by others.
Existing or future competing products may provide greater therapeutic
convenience or clinical or other benefits for a specific indication than our
products, or may offer comparable performance at a lower cost. If our products
are unable to capture and maintain market share, we may not achieve sufficient
product revenues and our business will suffer.
We will compete for market share
against fully integrated pharmaceutical companies or other companies that are
collaborating with larger pharmaceutical companies, academic institutions,
government agencies and other public and private research organizations. Many of
these competitors have opioid painkillers already approved or in development. In
addition, many of these competitors, either alone or together with their
collaborative partners, operate larger research and development programs and
have substantially greater financial resources than we do, as well as
significantly greater experience in:
● developing
drugs;
● undertaking
preclinical testing and human clinical trials;
● obtaining
FDA and other regulatory approvals of drugs;
● formulating
and manufacturing drugs; and
● launching,
marketing, distributing and selling drugs.
Developments
by competitors may render our products or technologies obsolete or
non-competitive.
Alternative technologies, drugs and
products are being developed by other companies to improve or replace the use of
opioids and calcium channel inhibitors and for pain management, several of which
are in clinical trials or are awaiting approval from the FDA. In addition,
companies that sell generic opioid and calcium channel inhibitors, such as
gabapentin, represent substantial competition. Most of these organizations
competing with us have substantially greater capital resources, larger research
and development staffs and facilities, greater experience in drug development
and in obtaining regulatory approvals and greater manufacturing and marketing
capabilities than we do. These organizations also compete with us to attract
qualified personnel and partners for acquisitions, joint ventures or other
collaborations.
If
we are unable to protect our intellectual property our competitors could develop
and market products with similar features that may reduce demand for our
products.
Our future success, competitive
position and potential revenues will depend in part on our ability to protect
our intellectual property. If either we, or our other collaborators fail to
file, prosecute or maintain certain patents, our competitors could market
products that contain features and clinical benefits similar to those of our
products, and demand for our products could decline as a
result. Also, it may be possible for unauthorized third parties to
copy or reverse engineer aspects of our products, develop similar products
independently or otherwise obtain and use information that we regard as
proprietary. Policing the unauthorized use of our technology and
products will be difficult. Litigation may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets or patents that
we may obtain, or to determine the validity and scope of the proprietary rights
of others.
We intend to file additional patent
applications relating to our technology, products and processes. We may direct
Nectid, Inc. or our collaborators to file additional patent applications
relating to the licensed technology or we may do so ourselves. However, our
competitors may challenge, invalidate or circumvent any of our current or future
patents. These patents may also fail to provide us with meaningful competitive
advantages.
We
may become involved in expensive litigation or other legal proceedings related
to our existing intellectual property rights, including patents.
We expect to rely upon trade
secrets, know-how, continuing technological innovations and licensing
opportunities to develop and maintain our competitive position. Others may
independently develop substantially equivalent proprietary information or be
issued patents that may prevent the sale of our products or know-how, or require
us to license such information and pay significant fees or royalties in order to
produce our products.
Our technology could infringe upon
claims of patents owned by others. If we were found to be infringing on a patent
held by another, we might have to seek a license to use the patented technology.
In that case, we might not be able to obtain such a license on terms acceptable
to us, or at all. If a legal action were to be brought against us or our
licensors, we could incur substantial defense costs and any such action might
not be resolved in our favor. If such a dispute were to be resolved against us,
we could have to pay the other party large sums of money and our use of our
technology and the testing, manufacture, marketing or sale of one or more of our
proposed products could be restricted or prohibited.
The
DEA limits the availability of the active ingredients in our current product
candidates and, as a result, our quota may not be sufficient to complete
clinical trials, meet commercial demand or may result in clinical
delays.
The DEA regulates chemical compounds as
Schedule I, II, III, IV or V substances, with Schedule I substances
considered to present the highest risk of substance abuse and Schedule V
substances the lowest risk. The active ingredients in some of our current
product candidates, including Tramadol, Tapentadol, or Morphine, Oxycodeine are
listed by the DEA as Schedule II or III substances under the Controlled
Substances Act of 1970. Consequently, their manufacture, shipment, storage, sale
and use are subject to a high degree of regulation. For example, all
Schedule II drug prescriptions must be signed by a physician, physically
presented to a pharmacist and may not be refilled without a new prescription.
Furthermore, the amount of Schedule II substances we can obtain for
clinical trials and commercial distribution is limited by the DEA and our quota
may not be sufficient to complete clinical trials or meet commercial demand.
There is a risk that DEA regulations may interfere with the supply of the drugs
used for our drug formulation and formulated drugs used in our clinical trials,
and in the future, our ability to produce and distribute our products in the
volume needed to meet commercial demand.
Conducting
clinical trials of our product candidates exposes us to expensive product
liability claims and we may not be able to obtain or maintain product liability
insurance on reasonable terms or at all.
The risk of product liability is
inherent in the testing of medical products. If we cannot successfully defend
ourselves against product liability claims, we may incur substantial liabilities
or be required to limit or terminate testing of one or more of our
products. Our inability to obtain sufficient product liability
insurance at an acceptable cost to protect against potential product liability
claims could prevent or inhibit the commercialization of our products. We
currently do not carry clinical trial insurance or product liability insurance.
We may not be able to obtain such insurance at a reasonable cost, if at all. If
our agreements with any future corporate collaborators entitle us to
indemnification against product liability losses, such indemnification may not
be available or adequate should any claim arise.
Our
ability to generate product revenues will be diminished if we fail to obtain
acceptable prices or an adequate level of reimbursement for our products from
healthcare payers.
Our ability to commercialize our drugs,
alone or with collaborators, will depend in part on the extent to which
reimbursement will be available from:
● government
and health administration authorities;
● private
health maintenance organizations and health insurers; and
● other
healthcare payers.
Significant uncertainty exists as to
the reimbursement status of newly approved healthcare products. Healthcare
payers, including Medicare, health maintenance organizations and managed care
organizations, are challenging prices charged for medical products and services
and/or are seeking pharmacoeconomic data to justify formulary acceptance and
reimbursement practices. Government and other healthcare payers increasingly are
attempting to contain healthcare costs by limiting both coverage and the level
of reimbursement for drugs and by refusing, in some cases, to provide coverage
for uses of approved products for disease indications for which the FDA has or
has not granted labeling approval. Third-party insurance coverage may not be
available to patients for any products we discover and develop, alone or with
collaborators. If government and other healthcare payers do not provide adequate
coverage and reimbursement levels for our products, market acceptance could be
limited.
Law
enforcement concerns over diversion of opioids and social issues around abuse of
opioids may make the regulatory approval process very difficult for our drug
candidates.
Media stories regarding the diversion
of opioids and other controlled substances are commonplace. Law enforcement
agencies or regulatory agencies may apply policies that seek to limit the
availability of opioids. Such efforts may adversely affect the regulatory
approval process for our drug candidates.
If
we cannot raise adequate capital on acceptable terms, we may be unable to
complete planned formulation, manufacturing and additional clinical trials of
any or some of our product candidates.
We plan to fund our near term
operations with proceeds from the sale of equity or debt securities, either
privately or publicly. No assurance can be made that such financing
will be available on acceptable terms, or at all. Debt
financing could be in the form of a loan from an individual or financial
institution. Such loans could put us at risk for amounts greater than
our assets and, if such loan is not promptly repaid, could result in
bankruptcy. In such case, our common stock would most likely become
worthless. Equity financing could take the form of either a private
placement or a secondary public offering. Even if we succeed in
selling additional equity or debt securities, existing stockholders’ ownership
percentage would be reduced and new investors may demand rights, preferences or
privileges senior to those of existing stockholders.
If we do not succeed in raising
additional funds, we may be unable to complete formulations, conduct the planned
clinical trials or obtain FDA approval of our product candidates. In
that event we could be forced to discontinue product development, reduce sales
and marketing efforts and forego attractive business opportunities.
Because we are preparing to develop
and market new products and we are significantly smaller than the majority of
our competitors, we may lack the financial resources required to capture a
significant market share
.
The future market for our drugs derived
from our technology will be highly competitive and rapidly changing. We are
significantly smaller than most of our competitors and face such competition on
a local, regional and international basis. If we compete for the same
geographical markets, our competitors’ financial strength could prevent us from
capturing those markets. Additional new competitors may enter the
market and competition may intensify. Our inability to successfully
compete with companies offering similar products will have a material, negative
impact on our results of operations.
Our
future success depends on retaining existing key employees and hiring and
assimilating new key employees.
In order to achieve success, we must
retain our current officers, particularly our Chief Executive Officer and Chief
Operating Officer, and also be able to attract new, qualified personnel as
needed. We anticipate securing key employees by using employment
contracts. Our ability to attract and retain key personnel is
influenced by a variety of factors, including compensation, which could be
adversely affected by our financial or market performance. It would
be difficult for us to replace key individuals. Additionally, as we grow we will
need to hire additional qualified key personnel. We may not be able
to identify and attract high quality employees or successfully assimilate new
employees into our existing management structure.
Competition for qualified personnel in
the pharmaceutical industry is intense. We will compete for qualified
individuals with numerous biopharmaceutical companies, universities and other
research institutions, however there is no assurance that our search will be
successful. Attracting and retaining qualified personnel will be
critical to our success.
As
a reporting company under the Securities Exchange Act of 1934, our cost of doing
business will increase significantly because of necessary expenses, including
compliance with SEC reporting requirements.
Pursuant to the regulations under the
Exchange Act, we will incur significant legal, accounting and other expenses to
comply with certain SEC requirements, in particular, the Sarbanes-Oxley Act of
2002. Sarbanes-Oxley and other rules implemented by the SEC, require
management to assess its internal controls over financial reporting and require
auditors to attest to that assessment. Current
regulations require us to include this assessment and attestation in
our annual report on Form 10-K.
Management will need to invest
significant time and energy to stay current with the requisite reporting
responsibilities of the Exchange Act, which will limit their time they can apply
to other tasks associated with operating company business. Management
estimates that compliance with the Exchange Act reporting requirements will cost
in excess of $35,000 annually. This is in addition to other costs of
doing business. It is important that we maintain adequate cash flow,
not only to operate our business, but also to pay the legal and accounting costs
associated with reporting requirements. If we fail to pay these costs
as such costs are incurred, we could become delinquent in our reporting
obligations and our shares may no longer remain qualified for quotation on a
public market, if one should develop. Further, investors may lose confidence in
the reliability of our financial statements causing our stock price to
decline.
Risks
Relating to Ownership of Our Common Stock
There
is a limited public trading market for our common stock.
Our common stock is currently traded in
the over-the-counter market and included on the Pink Sheets under the trading
symbol “PRTT”. Following the filing of this registration statement
with the SEC, we intend to request a broker/dealer to make an initial
application to the Financial Industry Regulatory Authority to have our shares
quoted on the OTC Bulletin Board (“
OTCBB
”). Inclusion
on the OTCBB would permit price quotations for our shares to be published by
that service. However, we do not anticipate a substantial public trading market
in our shares in the immediate future.
Except for the application to the
OTCBB, there are no plans, proposals, arrangements or understandings with any
person concerning the development of a trading market in any of our securities.
There can be no assurance that our shares will be accepted for trading on the
OTCBB or any other recognized trading market. Also, there can be no
assurance that an active public trading market will develop following acceptance
by the OTCBB or at any other time in the future or, that if such a market does
develop, that it can be sustained.
Only companies that report their
current financial information to the SEC may have their securities included on
the OTCBB. Therefore, we must keep current in our filing obligations with the
SEC, including periodic and annual reports and the financial statements required
thereby. In the event that we become delinquent in our filings or
otherwise lose our status as a "reporting issuer," any future quotation of our
shares on the OTC Bulletin Board would be jeopardized.
A number of states require that an
issuer's securities be registered in their state or appropriately exempted from
registration before the securities are permitted to trade in that state.
Presently, we have no plans to register our securities in any particular
state. Whether stockholders may trade their shares in a particular
state is subject to various rules and regulations of that state.
The
stock price of our common stock in the public market may be volatile and subject
to numerous factors.
There can be no assurance that our
shares will be accepted for trading on the OTC Bulletin Board or other
recognized trading market, or that if they are, there will be an active trading
market for the shares. Accordingly, it could be difficult for holders
of our common stock to liquidate their shares. Any trading market for
our shares will most likely be very volatile and subject to numerous factors,
many beyond our control. Some of the factors that may influence the
price of our shares are:
|
|
●
|
our
ability to develop our patents and technology into commercially viable
products;
|
● our
ability to achieve and maintain profitability;
● changes in
earnings estimates and recommendations by financial analysts;
● actual or
anticipated variations in our quarterly and annual results of
operations;
● changes in
market valuations of similar companies;
● announcements
by us or our competitors of significant contracts, new products or drugs,
acquisitions, commercial relationships, joint ventures or capital commitments;
and
● general
market, political and economic conditions.
In the past, following periods of
extreme volatility in the market price of a company's securities, securities
class action litigation has often been instituted. A securities class action
suit against us could result in substantial costs and divert our management's
time and attention, which would otherwise be used to benefit our
business.
Future
operating results are difficult to predict.
We may experience significant
quarter-to-quarter fluctuations in revenues and net income
(loss). Initially, we will be dependent on securing funding to
complete development of our proprietary oral drug delivery
technologies. Thus, we believe that quarter-to-quarter comparisons of
our historical operating results will not be a good indication of future
performance. It is likely that in some future quarter, operating
results may fall below expectations of securities analysts and investors, which
would have negative impact on the price of our common stock.
Effective
voting control of our company is held by directors and certain principal
stockholders.
Approximately 98% of our outstanding
shares of common stock are held by our directors and a small number of principal
stockholders. These persons have the ability to exert significant
control in matters requiring a stockholder vote and may have interests that
conflict with other stockholders. As a result, a relatively small
number of stockholders acting together, have the ability to control all matters
requiring stockholder approval, including the election of directors and approval
of acquisitions, mergers and other significant corporate
transactions. This concentration of ownership may have the effect of
delaying, preventing or deterring a change in control of our company. It could
also deprive stockholders of an opportunity to receive a premium for their
shares as part of a sale of our company and it may affect the market price of
our common stock.
We
do not expect to pay dividends in the foreseeable future, which could make our
stock less attractive to potential investors.
We anticipate that we will retain any
future earnings and other cash resources for operation and business development
and do not intend to declare or pay any cash dividends in the foreseeable
future. Any future payment of cash dividends will be at the
discretion of our board of directors after taking into account many factors,
including operating results, financial condition and capital
requirements. Corporations that pay dividends may be viewed as a
better investment than corporations that do not.
Trading
of our shares in the public market may be subject to certain "penny stock”
regulation which could have a negative effect on the price of our shares in the
public market.
Public trading of our common stock,
whether on the Pink Sheets or the OTCBB, if accepted, may be subject to certain
regulations commonly referred to as penny stock rules. A penny stock
is generally defined to be any equity security that has a market price less than
$5.00 per share, subject to certain exceptions. If our stock is
deemed to be a penny stock, trading in the shares will be subject to additional
sales practice requirements on broker-dealers. These may require a
broker-dealer to make a special suitability determination for purchasers of
penny stocks and to receive the purchaser's prior written consent to the
transaction. A broker-dealer may also be required to deliver to a
prospective purchaser of a penny stock, prior to the first transaction, a risk
disclosure document relating to the penny stock market.
Consequently, penny stock rules may
restrict the ability of broker-dealers to trade and/or maintain a market in our
common stock and may affect the ability of stockholders to sell their
shares. These requirements may be considered cumbersome by
broker-dealers and could impact the willingness of a particular broker-dealer to
make a market in our shares, or they could affect the price at which our shares
trade. Also, many prospective investors may not want to get involved
with the additional administrative requirements, which may have a material
adverse effect on the trading of our shares.
Future
sales or the potential for sale of a substantial number of shares of our common
stock, could cause our market value to decline.
We currently have outstanding
43,368,012 shares of common stock, of which 42,803,112 shares are considered
restricted securities and may be sold only pursuant to a registration statement
or the availability of an appropriate exemption from
registration. Sales of a substantial number of these shares in the
public markets, or the perception that these sales may occur, could cause the
market price of our common stock to decline and materially impair our ability to
raise capital through the sale of additional equity securities.
|
Item
2.
|
Financial
Information
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The following information should be
read in conjunction with the financial statements and related notes thereto
included elsewhere in this Form 10.
We are considered a development stage
company with limited capital and no current revenues. We do not
expect to realize any revenues until we are successful in developing, achieving
approval and marketing one or more of our drug delivery technologies or
solutions. We anticipate that in the near term, ongoing expenses,
including the costs associated with the preparation and filing of this
registration statement, will be paid for by advances from stockholders or from
the private sale of securities, either debt or equity. However, there
is no assurance that we will be able to realize such funds on terms favorable to
us, or at all.
Results
of Operations
We did not realized any revenues for
the years ended December 31, 2009 and 2008, nor did we realize any revenues
during the three month periods ended March 31, 2010 and 2009. General
and administrative expenses for 2009 were $2,150 compared to $1,605 for 2008,
resulting in a net loss of $2,150 for 2009 and $1,605 compared for
2008. General and administrative expenses for the three months ended
March 31, 2010 were $1,665 compared to $0 for the 2009 period, resulting in a
net loss of $1,665 for the 2010 period and $0 for the 2009
period.
Liquidity
and Capital Resources
Total assets at March 31, 2010 were
$1,250,000, representing the acquired patent applications, compared to $0 assets
at fiscal year end December 31, 2009. Total liabilities at March 31,
2010 were $6,896, consisting of $5,165 in accounts payable and $1,731 in payable
related party. At December 31, 2009, total liabilities were $5,231
consisting of $3,500 in accounts payable and $1,731 in payable related
party.
Because currently we have no revenues
and only limited cash reserves, for the immediate future we will have to rely on
our directors and/or stockholders to pay expenses or raise funds through the
private placement of securities. There is no assurance that we will
be able to raise adequate capital in the immediate future to satisfy cash
needs. At March 31, 2010, we had stockholders’ equity of $1,245,194
compared to a stockholders’ deficit of $5,231 at December 31,
2009. The increase in equity is directly related to the acquisition
of patents.
In the opinion of management, inflation
has not and will not have a material effect on the ongoing operations of our
company.
Plan
of Operation
Protect Pharmaceutical is developing
new generation drug delivery technologies that enable products with improved
clinical benefits. We believe our drugs will offer enhanced pain
relief and reduced tolerance/physical dependence, reduced addiction potential
and side effects compared to existing neuropathic and fibromyalgia drugs and
opioid painkillers. We will conduct our research and development
through collaborative programs. We anticipate relying on arrangements with third
party drug developers such as contract research organizations and clinical
research sites for a significant portion of our product development
efforts.
We acquired a portfolio of patent
applications in March 2010, although we are yet to formulate products or receive
approvals from regulatory agencies or generate any revenues from product sales.
We have not been profitable since our inception through March 31,
2010.
We expect to incur significant
operating losses for the next several years and until we are able to formulate a
commercially viable product. We also expect to continue to incur
significant operating and capital expenditures and anticipate that our expenses
will increase substantially in the foreseeable future as we:
● continue
to undertake formulation of novel products and subsequent preclinical
and clinical trials for our product candidates;
● seek
regulatory approvals for our product candidates;
● develop,
formulate, manufacture and commercialize our drugs;
● implement
additional internal systems and develop new infrastructure;
● acquire
or in-license additional products or technologies, or expand the use of our
technology;
● maintain,
defend and expand the scope of our intellectual property; and
● hire
additional personnel.
Product revenue will depend on our
ability to receive regulatory approvals for, and successfully market, our
product candidates. In the event that our development efforts result in
regulatory approval and successful commercialization of our product candidates,
we will generate revenue from direct sales of our products and/or, if we license
our products to future collaborators, from the receipt of license fees and
royalties from licensed products.
Management estimates that our research
and development expenses for the next 12 months will be approximately $2.5
million, primarily for research and pilot studies. We also estimate
that other expenses, including personnel, general and administrative and
miscellaneous expenses could be as much as $1.5 million during the same time
period. Because we currently have no revenues, most likely the only
source of funding these expenses will be through he private sale of our
securities, either equity or debt. We are currently exploring
possible funding sources, but we have not entered into any arrangements or
agreements for funding as of this time. If we are unable to raise the
necessary funding, our research and development plans will be delayed
indefinitely. There can be no assurance that we will be able to raise
the funds necessary to carry out our business plan on terms favorable to the
company, or at all.
Net
Operating Loss
We have accumulated approximately
$21,150 of net operating loss carryforwards as of December 31,
2009. This loss carry forward may be offset against taxable income
and income taxes in future years and expires starting in the year 2010 through
2030. The use of these losses to reduce future income taxes will
depend on the generation of sufficient taxable income prior to the expiration of
the net operating loss carryforwards. In the event of certain changes
in control, there will be an annual limitation on the amount of net operating
loss carryforwards which can be used. No tax benefit has been
reported in the financial statements for fiscal years ended December 31, 2009
and 2008 or the three months ended March 31, 2010 because it has been fully
offset by a valuation reserve. The use of future tax benefit is
undeterminable because presently we have not started full
operations.
Recent
Accounting Pronouncements
In October 2009, the Financial
Accounting Standards Board (“
FASB
”)
issued
Accounting Standards
Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation
of Convertible Debt Issuance or Other Financing
. This Accounting
Standards Update amends FASB Accounting Standard Codification for EITF
09-1.
In October 2009, the FASB issued
Accounting Standards Update 2009-14,
Software (Topic 985): Certain Revenue Arrangements That Include Software
Elements
. This update changed the accounting model for revenue
arrangements that include both tangible products and software elements.
Effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early adoption is
permitted. We do not expect the provisions of ASU 2009-14 to have a material
effect on our financial position, results of operations or cash
flows.
In October 2009, the FASB issued
Accounting Standards Update 2009-13,
Revenue Recognition (Topic 605): Multiple-Deliverable Revenue
Arrangements
. This update addressed the accounting for
multiple-deliverable arrangements to enable vendors to account for products or
services (deliverables) separately rather than a combined unit and will be
separated in more circumstances that under existing US GAAP. This amendment has
eliminated that residual method of allocation. Effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted. We do not
expect the provisions of ASU 2009-13 to have a material effect on our financial
position, results of operations or cash flows.
In September 2009, the FASB issued
Accounting Standards Update
2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in
Certain Entities That Calculate Net Asset Value per Share (or its
equivalent)
. This update provides amendments to Topic 820 for the fair
value measurement of investments in certain entities that calculate net asset
value per share (or its equivalent). It is effective for interim and annual
periods ending after December 15, 2009. Early application is permitted in
financial statements for earlier interim and annual periods that have not been
issued. We do not expect the provisions of ASU 2009-12 to have a material effect
on our financial position, results of operations or cash flows.
In July 2009, the FASB ratified the
consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1,
(ASC Topic 470)
Accounting for
Own-Share Lending Arrangements in Contemplation of Convertible Debt
Issuance
("EITF 09-1"). The provisions of EITF 09-1, clarifies the
accounting treatment and disclosure of share-lending arrangements that are
classified as equity in the financial statements of the share lender. EITF 09-1
is effective for fiscal years that beginning on or after December 15, 2009 and
requires retrospective application for all arrangements outstanding as of the
beginning of fiscal years beginning on or after December 15, 2009.
We do not presently own any property,
but instead we lease a small office in West Caldwell, New Jersey, which is used
as general office space. We believe that this facility will be adequate and
suitable for our immediate current needs.
|
Item
4.
|
Security
Ownership of Certain Beneficial Owners and
Management
|
The following table sets forth
information, based upon stockholder records and the representations of our
officers and directors, as of June 8, 2010, with respect to each person known to
own beneficially more than 5% of the outstanding common stock, each director and
all directors and officers as a group. The address of each person
listed below, unless otherwise indicated, is c/o Protect Pharmaceutical
Corporation, 759 Bloomfield Ave, Suite 411, West Caldwell, New Jersey
07006.
|
Name and Address
|
|
Amount and Nature of
|
|
|
Percent
|
|
|
of Beneficial Owner
|
|
Beneficial Ownership
|
|
|
of Class
(1)
|
|
|
Directors and Executive
Officers
|
|
|
|
|
|
|
|
William
D. Abajian
|
|
|
5,000,000
|
|
|
|
11.5%
|
|
|
Anna
E. Gluskin
|
|
|
20,000
|
|
|
|
.05%
|
|
|
Gerald
Bernstein, MD
|
|
|
20,000
|
|
|
|
.05%
|
|
|
|
|
|
|
|
|
|
|
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
|
Nectid
Inc.
(2)
|
|
|
5,000,000
|
|
|
|
11.5%
|
|
|
116,
Village Boulevard
|
|
|
|
|
|
|
|
|
|
Princeton,
NJ 0854
|
|
|
|
|
|
|
|
|
|
Edward
F. Cowle
|
|
|
8,250,000
|
|
|
|
19.0%
|
|
|
20
West 64
th
Street
|
|
|
|
|
|
|
|
|
|
New
York, NY 10023
|
|
|
|
|
|
|
|
|
|
GBB
Limited
(3)
|
|
|
|
|
|
|
|
|
|
c/o
Lion Corporate Services
|
|
|
15,000,000
|
|
|
|
34.6%
|
|
|
Cumberland
House
|
|
|
|
|
|
|
|
|
|
#27
Cumberland Street / Box N-10818
|
|
|
|
|
|
|
|
|
|
Nassau,
New Providence
|
|
|
|
|
|
|
|
|
|
Geoff
Williams
|
|
|
2,785,556
|
|
|
|
6.4%
|
|
|
175
South Main Street, Suite 740
|
|
|
|
|
|
|
|
|
|
Salt
Lake City, UT 84111
|
|
|
|
|
|
|
|
|
|
H.
Deworth Williams
|
|
|
6,562,556
|
|
|
|
15.1%
|
|
|
175
South Main Street, Suite 740
|
|
|
|
|
|
|
|
|
|
Salt
Lake City, UT 84111
|
|
|
|
|
|
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|
|
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All
directors and officers a group (4 persons)
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10,040,000
(4)
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23.2%
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|
Note:
|
Unless
otherwise indicated, we have been advised that each person above has sole
voting power over the shares indicated
above.
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(1)
|
Based
upon 43,368,012 shares of common stock outstanding on June 8,
2010.
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|
(2)
|
Nectid
Inc. is a Delaware corporation with offices in Princeton, New Jersey and
principally owed by Ramesha Sesha, our director and Chief Operating
Officer who has voting control and investment power over the
shares.
|
|
|
(3)
|
GBB
Limited is a Bahamian corporation entity principally controlled by Barry
Herman, who has voting control and investment power over the
shares.
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(4)
|
Includes
5,000,000 shares held in the name of Nectid Inc., that is controlled by
Ramesha Sesha, our director and Chief Operation
Officer.
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|
Item
5.
|
Directors
and Executive Officers
|
The executive officers and directors of
the company are as follows:
|
Name
|
|
Age
|
|
Position
|
|
William
D. Abajian
|
|
52
|
|
President,
CEO, Treasurer and Director
|
|
Ramesha
Sesha
|
|
45
|
|
COO,
Secretary and Director
|
|
Anna
E. Gluskin
|
|
58
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|
Director
|
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Gerald
Bernstein, MD
|
|
77
|
|
Director
|
All directors hold office until the
next annual meeting of stockholders and until their successors have been duly
elected and qualified. There are no agreements with respect to the
election of directors. We have not compensated directors for service
on the board of directors or any committee thereof, although two outside
director have each received 20,000 shares of our common stock upon becoming a
director. Directors are entitled to be reimbursed for expenses
incurred for attendance at meetings of the board and any committee of the
board. However, directors may defer expenses and/or take payment in
shares of Protect common stock. As of the date hereof, no director
has accrued any expenses or compensation. Officers are appointed
annually by the board and each executive officer serves at the discretion of the
board. Presently we do not have any standing committees.
No director, officer or affiliate has,
within the past five years, filed any bankruptcy petition, been convicted in or
been the subject of any pending criminal proceedings, or is any such person the
subject or any order, judgment, or decree involving the violation of any state
or federal securities laws.
Two of our directors are employed by
the company. Our two outside directors currently devote only such
time to company affairs as needed. The time devoted could amount to
as little as 1% of the time they devote to their own business affairs, or if
business conditions ultimately warrant, they could possibly elect to devote
their full time to our business. Presently, there are no other
persons whose activities are material to our operations.
Currently, there is no arrangement,
agreement or understanding between management and non-management stockholders
under which non-management stockholders may directly or indirectly participate
in or influence the management of our affairs. Present management
openly accepts and appreciates any input or suggestions from
stockholders. However, the board of directors is elected by
stockholders and the stockholders have the ultimate say in who represents them
on the board. There are no agreements or understandings for any
officer or director to resign at the request of another person and none of the
current offers or directors are acting on behalf of, or will act at the
direction of any other person.
The business experience of each of the
persons listed above during the past five years is as
follows:
William D.
Abajian
became a director in February 2010 and serves as our President,
Chief Executive Officer and Treasurer. Mr. Abajian is a Business
Development Consultant and has served in senior management and executive
positions with various businesses for the past 25 years. He has been
involved in the development and launches of a number of pharmaceutical and
device products. In 1988, he founded CPG Inc. in Lincoln Park, New
Jersey, where he served as Chief Executive Officer until 2002. CPG Inc.
invented, manufactured and sold DNA Synthesis products, chromatography media’s
and molecular biology kits to researchers. This privately-held
company was sold to Millipore Corporation in 2002. Prior to running
his own company, Mr. Abajian served as the Vice President of Sales and Marketing
at Electro Nucleonics Inc. in Fairfield, New Jersey between 1981 and 1988.
Electro Nucleonics Inc. invented, manufactured and sold blood chemistry systems
and diagnostic kits worldwide. In 2004, he founded The Abajian Group
LLC, a company that advises CEOs on strategic planning and assists in the
commercialization of technologies and sales and marketing. He
continues to serve as a trustee of Eva’s Village, a non-for-profit organization
in Paterson, New Jersey and of St. Joseph’s Hospital in Paterson, New Jersey,
where he previously held the positions of Chairman of the OPEC Committee and a
member of the hospital’s Finance and Pension Committee and the Executive
Committee. Mr. Abajian also serves as a Business Development Consultant to
Generex Biotechnology Corporation.
Ramesha
Sesha
has been a director and Chief Operating Officer and Secretary since
March 2010. Mr. Sesha has over 15 years experience in both the brand
and generic pharmaceutical industry. In November 2007, he founded
Nectid Inc, a privately held, Princeton based pharmaceutical research and
development firm. Nectid successfully outsourced the development of
three platform technologies and a portfolio of combination and slow release
drugs in diabetes and pain therapeutic area. Mr. Sesha continues to
be the honorary President of Nectid. From 2001 to October 2007, Mr.
Sesha was the Senior Vice President of Intellectual Property and Corporate3
Development at Wockhardt Limited in Bedminster, New Jersey, a generic
pharmaceutical company. Mr. Sesha holds a Ph. D, Degree to be
conferred (1984 – 1987), Raman Research Institute, Bangalore, India, and a
Masters of Science in 1984 from the University of Mysore, Mysore, India, with a
focus on organic chemistry.
Anna E.
Gluskin
became a director in March 2010. Ms. Gluskin has been
a director of Generex Biotechnology Corporation since September 1997 and served
its President and Chief Executive Officer since October 1997 and Chairperson of
the Generex Board of Directors since November 2002. She held comparable
positions with Generex Pharmaceuticals Inc. from its formation in 1995 until its
acquisition by Generex in October 1997. Ms. Gluskin holds a Masters
degree in Microbiology and Genetics from Moscow State University.
Gerald Bernstein,
MD
became a director in May 2010. Dr. Bernstein, M.D.,
F.A.C.P. graduated from Dartmouth College and Tufts University School of
Medicine. He is board certified in internal medicine (1966) and endocrinology
and metabolism (1973). Dr. Bernstein is an associate clinical
professor at the Albert Einstein College of Medicine in New York. He
is an attending physician at Beth Israel Medical Center, and physician emeritus
at Lenox Hill Hospital and Montefiore Medical Center, all in New
York. He was formerly Director of the Beth Israel Health Care Systems
Diabetes Management Program. Dr. Bernstein was president of the American
Diabetes Association in 1998-99 and was for many years a member of the ADA's
Board of Directors and its Executive Committee. Dr. Bernstein
presently serves on several ADA committees and on the Board of Directors of the
American Diabetes Association Research Foundation. He also serves as
Vice President Medical Affairs for Generex Biotechnology
Corporation.
|
Item
6.
|
Executive
Compensation
|
We have not had a bonus, profit
sharing, or deferred compensation plan for the benefit of employees, officers or
directors. We have not paid any salaries or other compensation to our
officers, directors or employees for the three-month period ended March 31, 2010
and fiscal year ended December 31, 2009 and 2008. We have entered
into employment agreements with our Chief Executive Officer and Chief Operating
Officer. We believe that it will be necessary for these persons to
defer any compensation until such time as operations provide sufficient cash
flow to provide for salaries. As of the date hereof, no person has
accrued any compensation.
|
Item
7.
|
Certain
Relationships and Related Transactions and Director
Independence
|
During the last three years, to the
best knowledge of the company, there was no person who had or has a direct or
indirect material interest in any transaction or proposed transaction to which
the company was or is a party.
Currently we have four directors
serving on our board of directors. Two directors, Anne E. Gluskin and
Dr. Gerald Bernstein are outside directors and considered
independent. We do not presently have any standing committees,
although our Bylaws empower the board to establish one or more committees,
including an audit and compensation committee.
|
Item
8.
|
Legal
Proceedings
|
There are presently no material pending
legal proceedings to which the company is a party or to which any of our
property is subject and, to the best of our knowledge, no such actions against
the company are contemplated or threatened.
|
Item
9.
|
Market
Price of and Dividends on the Registrant’s Common Equity and Related
Stockholder Matters
|
Our common stock currently trades in
the over-the-counter market and is included on the Pink Sheets under the trading
symbol of “PRTT.” There is currently a limited public trading market
for our shares and there has only been sporadic trades. Accordingly,
no trading history is being presented. The last reported trade by the
Pink Sheets was at $1.02 per share on May 18, 2010.
Following the effectiveness of this
registration statement, we intend to request a broker/dealer to make an initial
application to the Financial Industry Regulatory Authority to have our shares
quoted on the OTCBB. Inclusion on the OTCBB would permit price
quotations for our shares to be published by that service. Except for
our application to the OTCBB, there are no other plans, proposals, arrangements
or understandings with any person concerning the development of a trading market
in any of our securities. Also, there can be no assurance that an active public
trading market in our shares will develop or, that if such a market does
develop, that it can be sustained.
The ability of individual stockholders
to trade their shares in a particular state may be subject to various rules and
regulations of that state. A number of states require that an issuer's
securities be registered in their state or appropriately exempted from
registration before the securities are permitted to trade in that state.
Presently, we have no plans to register our securities in any particular
state.
It is most unlikely that our securities
will be listed on any national or regional exchange or on The Nasdaq Stock
Market in the near future. Therefore our shares most likely will be
subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act,
commonly referred to as the "penny stock" rule. Section
15(g) sets forth certain requirements for broker-dealer transactions in penny
stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as
that used in Rule 3a51-1 of the Exchange Act.
The SEC generally defines penny stock
to be any equity security that has a market price less than $5.00 per share,
subject to certain exceptions. Rule 3a51-1 provides that any equity
security is considered to be a penny stock unless that security is:
|
|
●
|
registered
and traded on a national securities exchange meeting specified criteria
set by the SEC;
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|
|
●
|
authorized
for quotation on The Nasdaq Stock
Market;
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|
|
●
|
issued
by a registered investment company;
|
|
|
●
|
excluded
from the definition on the basis of price (at least $5.00 per share) or
the issuer's net tangible assets;
or
|
|
|
●
|
exempted
from the definition by the SEC.
|
Broker-dealers who sell penny stocks to
persons other than established customers and accredited investors (generally
persons with assets in excess of $1,000,000 or annual income exceeding $200,000,
or $300,000 together with their spouse), are subject to additional sales
practice requirements. Broker-dealers must also make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the first transaction,
of a risk disclosure document relating to the penny stock market. A
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, and current quotations for
the securities. Finally, monthly statements must be sent to
clients disclosing recent price information for the penny stocks held in the
account and information on the limited market in penny stocks.
Consequently, these rules may restrict
the ability of broker-dealers to trade and/or maintain a market in Protect
common stock and may affect the ability of stockholders to sell their
shares. These requirements may be considered cumbersome by
broker-dealers and could impact the willingness of a particular broker-dealer to
make a market in our shares, or they could affect the value at which the shares
trade. Classification of Protect shares as penny stocks increases the risk of an
investment in the shares.
As of June 8, 2010, there were
approximately 55 holders of record of our common stock. All of the
outstanding shares of common stock were issued pursuant to exemptions under the
1933 Act.
Rule
144
Rule 144 is the common means for a
stockholder to resell restricted securities and for an affiliate to sell
securities, either restricted or non restricted (control)
shares. Rule 144 was amended by the SEC, effective February 15,
2008.
Under the amended Rule 144, an
affiliate of a company filing reports under the Exchange Act who has held their
shares for more than six months, may sell in any three-month period an amount of
shares that does not exceed the greater of:
●
the average weekly trading volume in the common stock, as reported through the
automated quotation system of a registered securities association, during the
four calendar weeks preceding such sale, or
● 1%
of the shares then outstanding.
Sales by
affiliates under Rule 144 are also subject to certain requirements as to the
manner of sale, filing appropriate notice and the availability of current public
information about the issuer.
A non affiliate stockholder of a
reporting company, who has held restricted shares for more than six months, may
make unlimited resales under Rule 144,
provided
only that the issuer
has available current public information about itself. After a
one-year holding period, a non affiliate may make unlimited sales with no other
requirements or limitations.
If a company is not a reporting company
under the Exchange Act, restricted shares cannot be sold in reliance on Rule
144, by either an affiliate or a non affiliate, until the stockholder has
satisfied a one year holding period. After the one year holding
period, an affiliate may sell restricted shares pursuant to the same Rule 144
provisions as an affiliate of a reporting company having satisfied a six month
holding period. A non affiliate of a non reporting company, who has
held their restricted shares for more than one year, may make unlimited resales
under Rule 144 with no other requirements or limitations.
Current holders of restricted shares
may in the future elect to sell shares of our common stock pursuant to Rule 144,
provided
they comply
with the appropriate holding periods and volume limitations. We
cannot predict the effect any future sales under Rule 144 may have on the market
price of our common stock, but such sales could have a substantial depressing
effect on the market price.
Dividend
Policy
We have not declared or paid cash
dividends or made distributions in the past on our common stock, and we do not
anticipate paying cash dividends or making distributions in the foreseeable
future. It is our present intention to retain and invest any future
earnings to finance operations.
Item
10. Recent Sales of Unregistered
Securities
Upon the acquisition of patent
applications from Nectid in February 2010 we issued 5 million shares of our
authorized, but previously unissued common stock to Ramesha Sesha pursuant to
the terms of the acquisition agreement. In May 2010, we issued 5
million shares of our common stock to William D. Abajian pursuant tot he terms
of his employment agreement. Also in May 2010, we issued 40,000
shares to two new directors (20,000 shares each), and an aggregate of 165,000
shares to two persons for services. These shares were all issued
pursuant to an exemption from registration under the Securities Act of 1933
provided by Section 4(2) of that Act.
Item
11. Description of Registrant’s
Securities to be Registered
Common
Stock
We are authorized to issue 50 million
shares of common stock, par value $0.005 per share, of which 43,368,012 shares
are issued and outstanding as of the date hereof. All shares of
common stock have equal rights and privileges with respect to voting,
liquidation and dividend rights. Each share of common stock entitles
the holder thereof to:
|
|
(i)
|
One
non-cumulative vote for each share held of record on all matters submitted
to a vote of the stockholders;
|
|
|
(ii)
|
to
participate equally and to receive any and all such dividends as may be
declared by the board of directors out of funds legally available
therefor; and
|
|
|
(iii)
|
to
participate pro rata in any distribution of assets available for
distribution upon liquidation of the
company.
|
Stockholders have no preemptive rights
to acquire additional shares of common stock or any other
securities. The common stock is not subject to redemption and carries
no subscription or conversion rights. All outstanding shares of
common stock are fully paid and non-assessable.
Item
12. Indemnification of Directors
and Officers
As permitted by the provisions of the
Nevada Revised Statutes (the “
NRS
”), we
have the power to indemnify any person made a party to an action, suit or
proceeding because the person was a director, officer, employee or agent of the
company. Under the NRS, director immunity from liability to a company
or its stockholders for monetary liabilities applies automatically unless it is
specifically limited by a company's articles of incorporation, which is not the
case with our articles of incorporation.
Excepted from that immunity
are:
(1) a
willful failure to deal fairly with the company or our stockholders in
connection with a matter in which the director has a material conflict of
interest;
(2) a
violation of criminal law, unless the director had reasonable cause to believe
that his or her conduct was lawful or no reasonable cause to believe that his or
her conduct was unlawful;
(3) a
transaction from which the director derived an improper personal profit;
and
(4) willful
misconduct.
Our by-laws provide that we will
indemnify all officers and directors, past, present and future, against any and
all expenses incurred, including, but not limited to, legal fees, judgments and
penalties that may be incurred in any legal action brought against them for any
act or omission alleged to have been committed while acting within the scope of
their duties as officers or directors.
We may pay the expenses of an officer
or director incurred in defending a civil or criminal action, suit or
proceeding, as the expenses are incurred and in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that they are not entitled to be
indemnified by the company.
The NRS also permits a corporation to
purchase and maintain liability insurance or make other financial arrangements
on behalf of any person who is or was a director, officer, employee or agent, or
is or was serving at the request of the corporation as a director, officer,
employee or agent, of another entity. Coverage may include any
liability asserted against them and liability and expenses incurred by them in
their capacity as a director, officer, employee or agent, or arising out of
their status as such, whether or not the Company has the authority to indemnify
them against such liability and expenses. Presently, the Company does
not carry such insurance.
Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers and control persons pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the SEC, such
indemnification is against public policy and is, therefore,
unenforceable.
Transfer
Agent
We have designated as our transfer
agent Interstate Transfer Company, 6084 South 900 East, Suite 101, Salt Lake
City, Utah 84121.
|
Item
13.
|
Financial
Statements and Supplementary Data
|
Our financial statements for the fiscal
years ended December 31, 2009 and 2008 have been examined to the extent
indicated in their reports by Sadler, Gibb & Associates, L.L.C., independent
certified public accountants. The financial statements have been
prepared in accordance with generally accepted accounting principles, pursuant
to Regulation S-X as promulgated by the SEC, and are included herein in response
to Item 13 of this Form 10. The unaudited financial statements for
the three-month period ended March 31, 2010 have been prepared by the
company.
|
Item
14.
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
On April 19, 2010, we engaged Sadler,
Gibb and Associates as our independent certifying accountants. For
the three years prior to the engagement of Sadler, Gibb and Associates, we did
not have audited financial statements prepared for the
company. During the two most recent fiscal years and the
interim periods preceding the engagement, we have not consulted Sadler, Gibb and
Associates regarding any of the matters set forth in Item 304(a)(2)(i) or (ii)
of Regulation S-B.
Item
15. Financial Statements and Exhibits
|
|
(a)
|
Index to Financial
Statements
|
Annual
Financial Statements for the Fiscal Years Ended June 30, 2009 and
2008
|
Cover
Page
|
F-1
|
|
Table
of Contents
|
F-2
|
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
|
Balance
Sheets
|
F-4
|
|
Statements
of Operations
|
F-5
|
|
Statements
of Stockholders’ Equity
|
F-6
|
|
Statements
of Cash Flows
|
F-10
|
|
Notes
to Financial Statements
|
F-11
to F-16
|
Financial Statements for the Three
Months Ended March 31, 2010
|
Balance
Sheets
|
F-17
|
|
Statements
of Operations
|
F-18
|
|
Statements
of Stockholders’ Equity
|
F-19
|
|
Statements
of Cash Flows
|
F-23
|
|
Notes
to Financial Statements
|
F-24 to
F-25
|
|
|
(b)
|
The following exhibits are
filed with this registration
statement:
|
|
Exhibit No.
|
|
Exhibit Name
|
|
2.1
|
|
Patent
Acquisition Agreement
|
|
2.2
|
|
Patent
Portfolio
|
|
3.1
|
|
Articles
of Incorporation
|
|
3.2
|
|
Certificate
of Amendment - Capitalization Change
|
|
3.3
|
|
Certificate
of Amendment - Name Change 2006
|
|
3.4
|
|
Certificate
of Amendment - Name Change 2010
|
|
3.5
|
|
By-Laws
|
|
4.1
|
|
Instrument
defining rights of holders - Specimen Stock Certificate
|
|
10.1
|
|
Employment
Agreement – Ramesha Sesha
|
|
10.2
|
|
Form
of Employment Agreement – William D.
Abajian
|
PROTECT
PHARMACEUTICAL CORPORATION
AUDIT
REPORT OF INDEPENDENT ACCOUNTANTS
AND
FINANCIAL
STATEMENTS
December
31, 2009 and 2008
PROTECT
PHARMACEUTICAL CORPORATION
TABLE
OF CONTENTS
|
|
|
Page
|
|
|
|
|
|
Audit
Report of Independent Accountants
|
|
F-3
|
|
|
|
|
|
Balance
Sheets – December 31, 2009 and 2008
|
|
F-4
|
|
|
|
|
|
Statements
of Operations for the years ended December 31, 2009 and 2008 and from
inception through December 31, 2009
|
|
F-5
|
|
|
|
|
|
Statements
of Stockholder’s Equity for the years ended December 31, 2009 and 2008 and
from inception through December 31, 2009
|
|
F-6
|
|
|
|
|
|
Statements
of Cash Flows for the years ended December 31, 2009 and 2008 and from
inception through December 31, 2009
|
|
F-10
|
|
|
|
|
|
Notes
to Financial Statements
|
|
F-11
|
S
ADLER
, G
IBB
& A
SSOCIATES,
L.L.C.
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
Protect
Pharmaceutical Corporation
(A
development stage company)
We have
audited the accompanying balance sheet of Protect Pharmaceutical Corporation as
of December 31, 2009 and 2008, and the related statements of income,
stockholders’ equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Protect Pharmaceutical Corporation
as of December 31, 2009 and 2008, and the results of their operations and their
cash flows for the years then ended, in conformity with U.S. generally accepted
accounting principles.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has had a loss from operations since inception of
$153,755, an accumulated deficit of $772,596, and working capital deficit of
$5,231, which raises substantial doubt about its ability to continue as a going
concern. Management’s plans concerning these matters are also described in Note
3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
|
|
SADLER,
GIBB AND ASSOCIATES, LLC
|
|
|
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|
Salt
Lake City, UT
|
|
|
May
17, 2010
|
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
BALANCE
SHEETS
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
3,500
|
|
|
$
|
1,500
|
|
|
Payable
related party
|
|
|
1,731
|
|
|
|
1,581
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
5,231
|
|
|
|
3,081
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
5,231
|
|
|
|
3,081
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock; 50,000,000 shares authorized, at $0.005 par value, 33,163,012 and
33,163,012 shares issued and outstanding, respectively
|
|
|
33,163
|
|
|
|
33,163
|
|
|
Additional
paid-in capital
|
|
|
734,202
|
|
|
|
734,202
|
|
|
Deficit
accumulated during the development stage
|
|
|
(772,596
|
)
|
|
|
(770,446
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity (Deficit)
|
|
|
(5,231
|
)
|
|
|
(3,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
|
|
|
|
|
|
|
on August 5,
|
|
|
|
|
For the Year Ended
|
|
|
1987 Through
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
2,150
|
|
|
|
1,605
|
|
|
|
153,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(2,150
|
)
|
|
|
(1,605
|
)
|
|
|
(153,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM DISCONTINUED OPERATIONS
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,340,551
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(2,150
|
)
|
|
$
|
(1,605
|
)
|
|
$
|
(4,494,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED LOSS PER SHARE OF COMMON STOCK
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
|
|
33,163,012
|
|
|
|
33,163,012
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
August 5, 1987
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period ended December 31, 1987
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1987
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered at $15.00 per share on January 27,
1988
|
|
|
624,000
|
|
|
|
624
|
|
|
|
2,339,376
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for Midway Mining Development Corp. at $15.00 per share on
January 27, 1988
|
|
|
359,592
|
|
|
|
360
|
|
|
|
1,348,110
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for mining claims at predecessor cost on May 24,
1988
|
|
|
19,420
|
|
|
|
19
|
|
|
|
(19
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock cancelled due to the acquisition agreement on Midway Mining and
Development Corp. being rescinded on July 6, 1988
|
|
|
(209,112
|
)
|
|
|
(1,046
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered at $0.00 per share on July 6,
1988
|
|
|
209,112
|
|
|
|
1,046
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
capital contributed
|
|
|
-
|
|
|
|
-
|
|
|
|
33,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1988
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,721,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1988
|
|
|
1,003,012
|
|
|
|
1,003
|
|
|
|
3,720,467
|
|
|
|
(3,721,530
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1989
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1989
|
|
|
1,003,012
|
|
|
$
|
1,003
|
|
|
$
|
3,720,467
|
|
|
$
|
(3,721,560
|
)
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1989
|
|
|
1,003,012
|
|
|
$
|
1,003
|
|
|
$
|
3,720,467
|
|
|
$
|
(3,721,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1990
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1990
|
|
|
1,003,012
|
|
|
|
1,003
|
|
|
|
3,720,467
|
|
|
|
(3,721,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1991
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1991
|
|
|
1,003,012
|
|
|
|
1,003
|
|
|
|
3,720,467
|
|
|
|
(3,721,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1992
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1992
|
|
|
1,003,012
|
|
|
|
1,003
|
|
|
|
3,720,467
|
|
|
|
(3,721,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1993
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1993
|
|
|
1,003,012
|
|
|
|
1,003
|
|
|
|
3,720,467
|
|
|
|
(3,721,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quasi
- reorganization (Note 2)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,721,710
|
)
|
|
|
3,721,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1994
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1994
|
|
|
1,003,012
|
|
|
|
1,003
|
|
|
|
(1,243
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered at $15.00 per share on June 12,
1995
|
|
|
160,000
|
|
|
|
160
|
|
|
|
599,840
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
capital contributed
|
|
|
-
|
|
|
|
-
|
|
|
|
2,605
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1995
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(605,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1995
|
|
|
1,163,012
|
|
|
$
|
1,163
|
|
|
$
|
601,202
|
|
|
$
|
(605,105
|
)
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1995
|
|
|
1,163,012
|
|
|
$
|
1,163
|
|
|
$
|
601,202
|
|
|
$
|
(605,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for expenses paid at $0.01 per share
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
13,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1996
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1996
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1997
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1997
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1998
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1998
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1999
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1999
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2000
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2000
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2001
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2002
|
|
|
3,163,012
|
|
|
$
|
3,163
|
|
|
$
|
614,202
|
|
|
$
|
(617,365
|
)
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2002
|
|
|
3,163,012
|
|
|
$
|
3,163
|
|
|
$
|
614,202
|
|
|
$
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2003
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2003
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2005
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(618,841
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2006
|
|
|
3,163,012
|
|
|
|
3,163
|
|
|
|
614,202
|
|
|
|
(618,841
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services at $0.005 per share on May 9,
2007
|
|
|
30,000,000
|
|
|
|
30,000
|
|
|
|
120,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(150,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
33,163,012
|
|
|
|
33,163
|
|
|
|
734,202
|
|
|
|
(768,841
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,605
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2008
|
|
|
33,163,012
|
|
|
|
33,163
|
|
|
|
734,202
|
|
|
|
(770,446
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2009
|
|
|
33,163,012
|
|
|
$
|
33,163
|
|
|
$
|
734,202
|
|
|
$
|
(772,596
|
)
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
|
|
|
|
|
|
|
on August 5,
|
|
|
|
|
For the Year Ended
|
|
|
1987 Through
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(2,150
|
)
|
|
$
|
(1,605
|
)
|
|
$
|
(4,494,306
|
)
|
|
Adjustments
to reconcile loss to cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
3,874,170
|
|
|
Loss
from disposition of subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
564,300
|
|
|
Expenses
paid on behalf of the Company
|
|
|
150
|
|
|
|
105
|
|
|
|
52,336
|
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in accounts payable
|
|
|
2,000
|
|
|
|
1,500
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AT BEGINNING OF PERIOD
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AT END OF PERIOD
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:CASH PAID FOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
PAID FOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income
taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2009 and 2008
NOTE
1 - ORGANIZATION AND HISTORY
Business
and Organization
The
financial statements presented are those of Protect Pharmaceutical, Corp. (a
development stage company) (“the Company”). The Company was
originally incorporated under the laws of the state of Idaho on August 5,
1987. The Company was incorporated for the purpose of purchasing,
leasing or otherwise acquiring mining claims and rights and also to develop
mines. The Company was unable to raise development money and the
Company’s operations ceased. The Company has been seeking new
business opportunities believed to hold a potential profit or to merge with an
existing, operating company. On July 15, 1996 the Company changed its
name from Interstate Mining and Development Properties, Inc. to Interstate
Development, Inc.
On
January 27, 1988, the Company acquired Midway Mining and Development
Corp. in a stock-for-stock reorganization pursuant to Section 36B (a)
(1) (B) of the Internal Revenue Code. In the reorganization,
shareholders of Midway Mining and Development Corp. transferred all of their
shares of common stock to the Company in exchange for 89,898 shares of common
stock of the Company. However, since the Company was unable to begin
operations and had no operating assets, 52,278 of the original shares issued for
Midway Mining and Development Corp. were later cancelled on July 6, 1988 and the
subsidiary was transferred back to its original owners.
As of
June 15, 2006, the name of the Company changed to Pro-Tect, Inc. and its
domicile was moved to the state of Nevada. Subsequently, the Company
changed its name on March 25, 2010 to Protect Pharmaceutical, Corp.
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES
These
financial statements and related notes are presented in accordance with
accounting principles generally accepted in the United States, and are expressed
in US dollars. The Company’s fiscal year-end is December 31. The Company has not
realized revenues as of December 31, 2009 and is classified as a development
stage enterprise.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates
Cash and
Cash Equivalents
The
Company considers all highly liquid instruments with maturity of three months or
less at the time of issuance to be cash equivalents. As of December 31, 2009 and
2008 the Company had $-0- and $-0- of cash and cash
equivalents, respectively.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2009 and 2008
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue
Recognition
The
Company currently has no source of revenues. The Company will
recognize revenue from the performance of its services and/or sale of its
products in accordance with Securities and Exchange Commission Staff Bulletin
No. 104 (“SAB 104”), “Revenue Recognition in Financial Statements”. Revenue will
be recognized only when the price is fixed or determinable, persuasive evidence
of an arrangement exists, the service is provided, and collectability is
assured.
Advertising
Costs
The
Company follows the policy of expensing advertising costs during the period in
which they are incurred. The Company incurred no advertising costs during the
years ended December 31, 2009 and 2008, respectively.
Stock-based
Compensation
The
Company adopted SFAS No. 123-R (ASC 718) effective January 1, 2006
using the modified prospective method. Under this transition method, stock
compensation expense includes compensation expense for all stock-based
compensation awards granted on or after January 1, 2006, based on the
grant-date fair value estimated in accordance with the provisions of ASC 718. As
of December 31, 2009, the Company has not issued any share-based payments to its
employees.
Provision
for Taxes
The
Company applies SFAS No. 109 (ASC 740), which requires the asset and liability
method of accounting for income taxes. The asset and liability method
requires that the current or deferred tax consequences of all events recognized
in the financial statements are measured by applying the provisions of enacted
tax laws to determine the amount of taxes payable or refundable currently or in
future years. Deferred tax assets are reviewed for recoverability and the
Company records a valuation allowance to reduce its deferred tax assets when it
is more likely than not that all or some portion of the deferred tax assets will
not be recovered.
The
Company adopted FIN 48(ASC 740), at the beginning of fiscal year 2009. This
interpretation requires recognition and measurement of uncertain tax positions
using a “more-likely-than-not” approach, requiring the recognition and
measurement of uncertain tax positions. The adoption of FIN 48 (ASC 740) had no
material impact on the Company’s financial statements.
Basic
(Loss) per Common Share
Basic
(loss) per share is calculated by dividing the Company’s net loss applicable to
common shareholders by the weighted average number of common shares during the
period. Diluted earnings per share is calculated by dividing the Company’s net
income available to common shareholders by the diluted weighted average number
of shares outstanding during the year. The diluted weighted average number of
shares outstanding is the basic weighted number of shares
adjusted
for any potentially dilutive debt or equity. There are no such common stock
equivalents outstanding as of December 31, 2009 and 2008.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2009 and 2008
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic
(Loss) per Common Share (continued)
|
|
|
For the
Year Ended
December 31,
2009
|
|
|
For the
Year Ended
December 31,
2008
|
|
|
Loss
(numerator)
|
|
$
|
(2,150
|
)
|
|
$
|
(1,605
|
)
|
|
Shares
(denominator)
|
|
|
33,163,012
|
|
|
|
33,163,012
|
|
|
Per
share amount
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Recent
Accounting Pronouncements
In
January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation
(Topic 810): Accounting and Reporting for Decreases in Ownership of a
Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset de-recognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the
Company.
In
January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic
505): Accounting for Distributions to Shareholders with Components of Stock and
Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to
Topic 505 clarifies the stock portion of a distribution to shareholders that
allows them to elect to receive cash or stock with a limit on the amount of cash
that will be distributed is not a stock dividend for purposes of applying Topics
505 and 260. Effective for interim and annual periods ending on or after
December 15, 2009, and would be applied on a retrospective basis. The Company
does not expect the provisions of ASU 2010-01 to have a material effect on the
financial position, results of operations or cash flows of the
Company.
In
December 2009, the FASB issued Accounting Standards Update 2009-17,
Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities. This Accounting Standards Update
amends the FASB Accounting Standards Codification for Statement
167.
In
December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers
and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This
Accounting Standards Update amends the FASB Accounting Standards Codification
for Statement 166.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2009 and 2008
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent
Accounting Pronouncements (continued)
In
October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting
for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance
or Other Financing. This Accounting Standards Update amends the FASB Accounting
Standard Codification for EITF 09-1.
In
October 2009, the FASB issued Accounting Standards Update 2009-14, Software
(Topic 985): Certain Revenue Arrangements That Include Software Elements. This
update changed the accounting model for revenue arrangements that include both
tangible products and software elements. Effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010. Early adoption is permitted. The Company does not expect
the provisions of ASU 2009-14 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In
October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue
Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update
addressed the accounting for multiple-deliverable arrangements to enable vendors
to account for products or services (deliverables) separately rather than a
combined unit and will be separated in more circumstances that under existing US
GAAP. This amendment has eliminated that residual method of allocation.
Effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early adoption is
permitted. The Company does not expect the provisions of ASU 2009-13 to have a
material effect on the financial position, results of operations or cash flows
of the Company.
In
September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value
Measurements and Disclosures (Topic 820): Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent). This update provides
amendments to Topic 820 for the fair value measurement of investments in certain
entities that calculate net asset value per share (or its equivalent). It is
effective for interim and annual periods ending after December 15, 2009. Early
application is permitted in financial statements for earlier interim and annual
periods that have not been issued. The Company does not expect the provisions of
ASU 2009-12 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In July
2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task
Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The
provisions of EITF 09-1, clarifies the accounting treatment and disclosure of
share-lending arrangements that are classified as equity in the financial
statements of the share lender. An example of a share-lending arrangement is an
agreement between the Company (share lender) and an investment bank (share
borrower) which allows the investment bank to use the loaned shares to enter
into equity derivative contracts with investors. EITF 09-1 is effective for
fiscal years that beginning on or after December 15, 2009 and requires
retrospective application for all arrangements outstanding as of the beginning
of fiscal years beginning on or after December 15, 2009.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2009 and 2008
NOTE
2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent
Accounting Pronouncements (continued)
Share-lending
arrangements that have been terminated as a result of counterparty default prior
to December 15, 2009, but for which the entity has not reached a final
settlement as of December 15, 2009 are within the scope. Effective for
share-lending arrangements entered into on or after the beginning of the first
reporting period that begins on or after June 15, 2009. The Company does not
expect the provisions of EITF 09-1 to have a material effect on the financial
position, results of operations or cash flows of the Company.
NOTE
3 – GOING CONCERN
The
Company’s financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs which raises substantial
doubt regarding its ability to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on the
Company obtaining adequate capital to fund operating losses until it becomes
profitable. If the Company is unable to obtain adequate capital, it could be
forced to cease operations. Management’s plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
NOTE
4 – RELATED PARTY PAYABLE
Various
startup expenses of the Company including purchase of property and equipment,
officer’s compensation and general and administrative expenses have been paid
for using funds provided by the shareholders of the Company. The loans are non
interest bearing, unsecured and due upon demand. The Company owes $1,731 and
$1,581 for such loans as of December 31, 2009 and 2008,
respectively.
NOTE
5 – INCOME TAXES
The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (ASC 740). ASC 740 requires the
use of an asset and liability approach in accounting for income taxes. Deferred
tax assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
December
31, 2009 and 2008
NOTE
5 – INCOME TAXES (CONTINUED)
ASC 740
requires the reduction of deferred tax assets by a valuation allowance if, based
on the weight of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized.
The
provision for income taxes differs from the amounts which would be provided by
applying the statutory federal income tax rate of 39% to net loss before
provision for income taxes for the following reasons:
|
|
|
December 31,
2009
|
|
|
December 31,
2008
|
|
|
Income
tax expense at statutory rate
|
|
$
|
(839
|
)
|
|
$
|
(626
|
)
|
|
Valuation
allowance
|
|
|
839
|
|
|
|
626
|
|
|
Income
tax expense per books
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
deferred tax assets consist of the following components as of:
|
|
|
December 31,
2009
|
|
|
December 31,
2008
|
|
|
NOL
carryover
|
|
$
|
8,249
|
|
|
$
|
7,410
|
|
|
Valuation
allowance
|
|
|
(8,249
|
)
|
|
|
(7,410
|
)
|
|
Net
deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards of $21,150 for federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur net operating
loss carry forwards may be limited as to use in future years.
NOTE
6 – SUBSEQUENT EVENTS
On
February 6, 2010 the Company entered into a Patent Acquisition Agreement,
whereby it was assigned various patents for pharmaceutical products in exchange
for 7,000,000 shares of the Company’s common stock. 5,000,000 shares were
delivered immediately to the assignor and 2,000,000 shares are held to be
delivered upon the successful completion of $2,000,000 financing. The patents
are also subject to a 20% royalty on revenues, a 10% milestone payment and an
employment agreement. The Company is responsible for the completion of a
development program to commercialize products using the patented technologies
within 5 years.
The
employment agreement provides that the patent holder will become the Company’s
Chief Operating Officer. The agreement provides for an annual salary $250,000 in
year one, $300,000 in year two and $350,000 in year three. The agreement also
provides for compensatory common stock purchase warrants to be issued at not
less than 20% of the shares issued for financing and other standard employee
benefits.
In
accordance with ASC 855-10, Company management reviewed all material events and
determined that there are no other material subsequent events to
report.
(A
Development Stage Company)
Balance
Sheets
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
|
Patents,
net
|
|
|
1,250,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
1,250,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
5,165
|
|
|
$
|
3,500
|
|
|
Payable
related party
|
|
|
1,731
|
|
|
|
1,731
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
6,896
|
|
|
|
5,231
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
6,896
|
|
|
|
5,231
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock; 50,000,000 shares authorized, at $0.005 par value, 38,163,012 and
33,163,012 shares issued and outstanding, respectively
|
|
|
170,815
|
|
|
|
165,815
|
|
|
Additional
paid-in capital
|
|
|
1,846,550
|
|
|
|
601,550
|
|
|
Deficit
accumulated during the development stage
|
|
|
(772,171
|
)
|
|
|
(772,596
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity (Deficit)
|
|
|
1,245,194
|
|
|
|
(5,231
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
$
|
1,252,090
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Operations
(unaudited)
|
|
|
|
|
|
|
|
|
From Inception
|
|
|
|
|
|
|
|
|
|
|
on August 5,
|
|
|
|
|
For the Three Months Ended
|
|
|
1987 Through
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
1,665
|
|
|
|
-
|
|
|
|
155,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(1,665
|
)
|
|
|
-
|
|
|
|
(155,420
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM DISCONTINUED OPERATIONS
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,340,551
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(1,665
|
)
|
|
$
|
-
|
|
|
$
|
(4,495,971
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED LOSS PER SHARE OF COMMON STOCK
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
|
|
35,774,123
|
|
|
|
33,163,012
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
August 5, 1987
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period ended December 31, 1987
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1987
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered at $15.00 per share on January 27,
1988
|
|
|
624,000
|
|
|
|
3,120
|
|
|
|
2,336,880
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for Midway Mining Development Corp. at $15.00 per share on
January 27, 1988
|
|
|
359,592
|
|
|
|
1,798
|
|
|
|
1,346,672
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for mining claims at predecessor cost on May 24,
1988
|
|
|
19,420
|
|
|
|
97
|
|
|
|
(97
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock cancelled due to the acquisition agreement on Midway Mining and
Development Corp. being rescinded on July 6, 1988
|
|
|
(209,112
|
)
|
|
|
(1,046
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered at $0.00 per share on July 6,
1988
|
|
|
209,112
|
|
|
|
1,046
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
capital contributed
|
|
|
-
|
|
|
|
-
|
|
|
|
33,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1988
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,721,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1988
|
|
|
1,003,012
|
|
|
|
5,015
|
|
|
|
3,716,455
|
|
|
|
(3,721,530
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1989
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1989
|
|
|
1,003,012
|
|
|
$
|
5,015
|
|
|
$
|
3,716,455
|
|
|
$
|
(3,721,560
|
)
|
The
accompanying notes are an integral part of these financial
statements.
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1989
|
|
|
1,003,012
|
|
|
$
|
5,015
|
|
|
$
|
3,716,455
|
|
|
$
|
(3,721,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1990
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1990
|
|
|
1,003,012
|
|
|
|
5,015
|
|
|
|
3,716,455
|
|
|
|
(3,721,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1991
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1991
|
|
|
1,003,012
|
|
|
|
5,015
|
|
|
|
3,716,455
|
|
|
|
(3,721,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1992
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1992
|
|
|
1,003,012
|
|
|
|
5,015
|
|
|
|
3,716,455
|
|
|
|
(3,721,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1993
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1993
|
|
|
1,003,012
|
|
|
|
5,015
|
|
|
|
3,716,455
|
|
|
|
(3,721,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quasi
- reorganization (Note 2)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,721,710
|
)
|
|
|
3,721,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1994
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1994
|
|
|
1,003,012
|
|
|
|
5,015
|
|
|
|
(5,255
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services rendered at $15.00 per share on June 12,
1995
|
|
|
160,000
|
|
|
|
800
|
|
|
|
599,200
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
capital contributed
|
|
|
-
|
|
|
|
-
|
|
|
|
2,605
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1995
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(605,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1995
|
|
|
1,163,012
|
|
|
$
|
5,815
|
|
|
$
|
596,550
|
|
|
$
|
(605,105
|
)
|
The
accompanying notes are an integral part of these financial
statements.
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1995
|
|
|
1,163,012
|
|
|
$
|
5,815
|
|
|
$
|
596,550
|
|
|
$
|
(605,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for expenses paid at $0.01 per share
|
|
|
2,000,000
|
|
|
|
10,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1996
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1996
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1997
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1997
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1998
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1998
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 1999
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 1999
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2000
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2000
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2001
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2002
|
|
|
3,163,012
|
|
|
$
|
15,815
|
|
|
$
|
601,550
|
|
|
$
|
(617,365
|
)
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During
the
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Development
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2002
|
|
|
3,163,012
|
|
|
$
|
15,815
|
|
|
$
|
601,550
|
|
|
$
|
(617,365
|
)
|
|
Net
loss for the year ended December 31, 2003
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2003
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
Net
loss for the year ended December 31, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(617,365
|
)
|
|
Net
loss for the year ended December 31, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2005
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(618,841
|
)
|
|
Net
loss for the year ended December 31, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2006
|
|
|
3,163,012
|
|
|
|
15,815
|
|
|
|
601,550
|
|
|
|
(618,841
|
)
|
|
Common
stock issued for services at $0.005 per share on May 9,
2007
|
|
|
30,000,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended December 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(150,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
33,163,012
|
|
|
|
165,815
|
|
|
|
601,550
|
|
|
|
(768,841
|
)
|
|
Net
loss for the year ended December 31, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2008
|
|
|
33,163,012
|
|
|
|
165,815
|
|
|
|
601,550
|
|
|
|
(768,841
|
)
|
|
Net
loss for the year ended December 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2009
|
|
|
33,163,012
|
|
|
|
165,815
|
|
|
|
601,550
|
|
|
|
(770,506
|
)
|
|
Net
loss for the year ended December 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2009
|
|
|
33,163,012
|
|
|
|
165,815
|
|
|
|
601,550
|
|
|
|
(770,506
|
)
|
|
Common
stock issued for patents at $0.25 per share (unaudited)
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
1,245,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the three months ended March 31, 2010 (unaudited)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2010 (unaudited)
|
|
|
38,163,012
|
|
|
$
|
170,815
|
|
|
$
|
1,846,550
|
|
|
$
|
(772,171
|
)
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Statements
of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
From
Inception
|
|
|
|
|
|
|
|
|
|
|
on
August 5,
|
|
|
|
|
For
the Three Months Ended
|
|
|
1987
Through
|
|
|
|
|
March 31,
|
|
|
March
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,665
|
)
|
|
$
|
-
|
|
|
$
|
(4,495,971
|
)
|
|
Adjustments
to reconcile loss to cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
3,874,170
|
|
|
Loss
from disposition of subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
564,300
|
|
|
Expenses
paid on behalf of the Company
|
|
|
-
|
|
|
|
-
|
|
|
|
52,336
|
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in accounts payable
|
|
|
1,665
|
|
|
|
-
|
|
|
|
5,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Operating Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
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FINANCING
ACTIVITIES
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Net
Cash Provided by Financing Activities
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|
|
-
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|
|
|
-
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|
|
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-
|
|
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NET
INCREASE IN CASH
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|
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-
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-
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-
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CASH
AT BEGINNING OF PERIOD
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|
|
-
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|
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-
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|
|
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-
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CASH
AT END OF PERIOD
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$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
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SUPPLEMENTAL
CASH FLOW INFORMATION:
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CASH
PAID FOR:
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Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income
taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these financial
statements.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Notes to
Financial Statements
March 31,
2010 and December 31, 2009
NOTE
1 - CONDENSED FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows at March 31, 2010, and for all
periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's December
31, 2009 audited financial statements. The results of operations for
the periods ended March 31, 2010 and 2009 are not necessarily indicative of the
operating results for the full years.
NOTE
2 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not yet
Established
an ongoing source of revenues sufficient to cover its operating costs and allow
it to continue as a going concern. The ability of the Company to continue as a
going concern is dependent on the Company obtaining adequate capital to fund
operating losses until it becomes profitable. If the Company is unable to obtain
adequate capital, it could be forced to cease operations.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
PROTECT
PHARMACEUTICAL CORPORATION
(A
Development Stage Company)
Notes to
Financial Statements
March 31,
2010 and December 31, 2009
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements
In
January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation
(Topic 810): Accounting and Reporting for Decreases in Ownership of a
Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset derecognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the
Company.
In
January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic
505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that will be distributed is not a stock dividend for purposes
of applying Topics 505 and 260. Effective for interim and annual
periods ending on or after December 15, 2009, and would be applied on a
retrospective basis. The Company does not expect the provisions of ASU 2010-01
to have a material effect on the financial position, results of operations or
cash flows of the Company.
NOTE
4 - PAYABLE RELATED PARTY
A
shareholder of the Company has advanced the corporation $1,731. The
liability is non interest bearing, is unsecured and is due and payable upon
demand.
NOTE
5 - EQUITY TRANSACTIONS
On
February 12, 2010, the Company issued 5,000,000 shares of its common stock
pursuant to a Patent Acquisition Agreement. The patents were valued at the
trading price of the shares on the issuance date of $0.25 per
share.
NOTE
6 – SUBSEQUENT EVENTS
On May
28, 2010, the Company issued 5,000,000 shares of its common stock to an officer
and director under the terms of his employment contract. The Company also issued
150,000 shares to its legal counsel, 20,000 shares each to 2 directors and
15,000 shares to a consultant.
In
accordance with SFAS 165 (ASC 855-10) Company management reviewed all material
events through June 8, 2010, and determined that there are no additional
material subsequent events to report.
SIGNATURES
Pursuant to the requirements of Section
12 of the Securities Exchange Act of 1934, the registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly organized.
|
|
Protect
Pharmaceutical Corporation
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(Registrant)
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Date:
June 8, 2010
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By:
|
/S/ Williams D.
Abajian
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Williams
D. Abajian
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President,
Chief Executive Officer and
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Director
|
PATENT
ACQUISITION AGREEMENT
This
Patent Acquisition Agreement (the “Agreement”) is entered into and effective as
of February 12, 2010 (the “Effective Date”), by and among
Nectid Inc.
, a Delaware
corporation having a principal place of business at 116, Village Boulevard,
Princeton, NJ 08540 (the “Assignor”), and
Pro-Tect, Inc.
, a Nevada
corporation, mailing address c/o Leonard E. Neilson, Attorney at Law, 8160 South
Highland Drive, Suite 104, Salt Lake City, Utah (the “Assignee or “Company”).
The Assignee and Assignor are individually referred to as “Party” and
collectively as “Parties”
WITNESSETH
WHEREAS,
Assignor is willing to sell its right, title and interest in certain of its
patents and patent applications to Assignee; and
WHEREAS,
Assignee wishes to acquire such patents and patent applications in a transaction
described herein (the “Acquisition”),
NOW
THEREFORE
In view
of the foregoing premises and the mutual covenants set forth herein, the parties
agree as follows:
1.1
Assigned Patents
. The
Assigned Patents means all issued patents and pending patent applications,
including any provisional, divisional, continuation, continuation-in-part,
reissue or re-examination applications, or patents issuing therefrom (and
further including any foreign counterpart patents and applications corresponding
thereto), as more particularly set forth in Exhibit A, annexed hereto and by
this reference made a part hereof.
1.2 “Capitalization”
means the financing of the Assignee immediately after the closing date wherein
the financing is to be no less than $ 2.0 million.
1.3 “Commercially
Reasonable Efforts” means, with respect to the efforts to be expended by Company
with respect to any objective, those reasonable, diligent, good faith efforts to
accomplish such objective as a pharmaceutical company would normally use to
accomplish a similar objective under similar circumstances with respect to a
product owned by such company, taking into account the proprietary position of
the product, pricing, the potential profitability of the product, regulatory
considerations and other commercially or scientifically relevant
factors.
1.1 “Company
Disclosure Letter” has the meaning set forth in Section 6.0.
1.2 “Company
RSU” means an award of restricted stock units granted under a Company Equity
Plan that is outstanding as of the relevant date.
1.3 “Company
Option” means an option to acquire Company Common Stock granted under a Company
Equity Plan that is outstanding and unexercised as of the relevant
date.
1.4 “Company
ESPP or Company Equity Plan” means the Company Employee Stock Purchase or
Incentive Plan.
1.5 “Company
SEC Reports” has the meaning set forth in Section 6.5.
1.6 “Developmental
Milestones” means performance or developmental requirements required should
Assignee license the patents from Exhibit A to a third party.
1.7 “DEA”
means United States Drug Enforcement Administration.
1.8 “Effective
Time” means as defined in Section 2.4.
1.9 “Exchange”
means Over The Counter Bulletin Board or NASDAQ
1.10 “FDA”
means Federal Drug Administration.
1.11 “Gross
Revenues” means the total revenues from upfront licensing fees and Milestone
Payments from the Commercialization of the Assigned Patents received from third
parties in a year, as calculated prior to any deductions or
adjustments.
1.12 “Material
Adverse Effect” means any event, change, development or occurrence that, either
individually or in the aggregate with all other events, changes, developments or
occurrences, would have, or could reasonably be expected to have, a material
adverse effect on: (i) the properties, assets, liabilities, business, results of
operations, financial condition of the Company taken as a whole, but excluding
any such event, change, development or occurrence resulting from or arising out
of (A) changes in the financial markets generally in the United States or that
are the result of acts of war or terrorism (B) general national, international
or regional economic, financial, political or business conditions (including
changes in Law or GAAP or the interpretation thereof) affecting generally the
generic pharmaceutical industry or the pharmaceutical industry, which do not
have a materially disproportionate effect (relative to other industry
participants) on the Company taken as a whole, (C) the execution, announcement
and performance of this Agreement, or any actions taken, delayed or omitted to
be taken by the Company pursuant to this Agreement or at the request of
Assignor, (D) any matter of which Assignor or its Representatives has actual
knowledge on the date of this Agreement, and (E) any matter set forth in Section
6 of the Company Disclosure Letter; or (ii) the ability of the Company to
consummate the Acquisition.
1.13 “Milestone
Payments” means all non-royalty income received by the Assignee during the
course of and related to Commercialization of the Assigned Patents.
1.14 “Net
Sales” means the amount of sales generated by a company after the deduction of
returns, allowances for damaged or missing goods and any discounts
allowed.
1.15 “Permits”
means any material governmental licenses, franchises, permits, certificates,
consents, orders, approvals, filings or other similar authorizations or
notifications required under applicable Law.
1.16 “Person”
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a Governmental Entity or any department, agency
or political subdivision thereof.
1.17 “Products”
means the pharmaceutical products and services developed during the course of
Commercialization of the Assigned Patents”.
1.18 “Restrictive
Legend” means the restrictive legend on the stock issued to the Assignor under
this Agreement.
1.19 “Royalty”
means the percentage of income to be paid to Assignor based on revenue received
from the commercialization of the Assigned Patents. This includes the recurring
consideration (revenue) received from third parties and the revenue earned by
direct marketing.
1.20 “SEC”
has the meaning set forth in Section 6.5.
1.21 “Securities”
has the meaning set forth in Section 6.4.
1.22 “Securities
Act” means the Securities Act of 1933, as amended.
1.23 “Subsidiary”
means any corporation, company, partnership, organization or other entity of
which the securities or other ownership interests having a majority of the
ordinary voting power in electing the board of directors or other governing body
are, at the time of such determination, owned by a company or another
Subsidiary.
1.24 “Tax”
or “Taxes” means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add on minimum, sales, use, transfer,
real property gains, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, special assessment, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing;
the foregoing shall include any transferee or secondary liability for a Tax and
any liability assumed by agreement or arising as a result of being (or ceasing
to be) a member of any Affiliated Group (or by being included (or required to be
included) in any Tax Return relating thereto).
1.25 “Tax
Returns” means any return, report, information return or other document
(including schedules or any related or supporting information) filed or required
to be filed with any Governmental Entity or other authority in connection with
the determination, assessment or collection of any Tax or the administration of
any laws, regulations or administrative requirements relating to any
Tax.
|
2.0
|
CONDITIONS TO
CLOSING
|
The
“Closing” of the Acquisition is subject to the following
conditions:
2.1
Due Diligence for Assigned
Patents
. The Assignee and its attorneys, representatives and agents shall
have satisfactorily completed their due diligence investigation of the Assignor
and the Assigned Patents. Between the Effective Date and the Closing,
these representatives shall be given full access to all files owned or
controlled by Assignor (excluding all documents covered by Assignor’s
attorney-client privilege) relating to the ownership, prosecution or issuance of
the Assigned Patents (collectively, the “Assigned Patents
Files”). Assignor agrees to cause its officers and management to
cooperate fully with Assignee’s representatives and agents and to make
themselves available to the extent reasonably necessary to complete the due
diligence process and the Closing of the Acquisition.
2.2
Due Diligence for
Assignee
. The Assignor and its attorneys representatives and agents shall
have satisfactorily completed their due diligence investigation of the Assignee.
Between the Effective Date and the Closing, these representatives of the
Assignor shall be given full access to all files related to the Assignee’s
current and past, pending contracts, obligations, loans, liabilities and legal
actions against Assignee.
2.3
Closing Date
. The
Closing of the Acquisition shall take place on a date to be mutually agreed by
Assignor and Assignee, but in no event later than February 26, 2010 (the
“Closing Date”), provided, however, that the Parties allow the due diligence
process set out in Section 2.1 and Section 2.2 above (the “Due Diligence”) to
commence at least two weeks prior to the Closing Date. If the Parties
fail to do so, then the Closing Date shall be two weeks from such
date.
2.4
Effective
Time
. As soon as practicable after the Closing Date, the
Assignee hereto shall cause the filing of a registration statement on Form 10 or
other SEC forms as may be required to cause the Company Securities to be listed
on an Exchange (the date and time of such filing, or if another date and time is
specified in such filing, such specified date and time, being the “Effective
Time”).
2.5
Document Return or
Disposition
. In the event the Acquisition fails to close on or before the
Closing Date specified in Section 2.3 above, unless otherwise agreed to in a
writing signed by the Parties, the Parties shall (i) immediately return to each
other all files and materials made available by each other or their respective
attorneys or agents under Section 2.1 and Section 2.2 hereof or otherwise under
this Agreement (together with all copies of such files and materials made by the
Parties or their respective attorneys or agents, expressly excluding any
materials containing information protected by attorney-client privilege,
attorney work product, or any other applicable privilege), (ii)
immediately destroy and discard, or cause to be destroyed or discarded, all
notes, memoranda, analyses, opinions, recordings, and any other written or
recorded information or media prepared by the Parties or their respective
attorneys or agents (including materials containing information protected by
attorney-client privilege, attorney work product, or any other applicable
privilege), and (iii) Certificate of Incorporation, Articles of Association,
Financial Statements, SEC Filings, State Corporate Filings, State and Federal
Tax Filings, Corporate Record Book, Approvals, Stock Certificates as a result
of, or in connection with, the review by the Parties of any non-public files or
materials made available by the Parties to each other under Section 2.1 and
Section 2.2 hereof or otherwise under this Agreement.
3.1
Assignment of Assigned
Patents
. Assignor agrees to sell, transfer and assign its entire right,
title and interest in the Assigned Patents to Assignee pursuant to the Patent
Assignment attached hereto as Exhibit A, free and clear of all liens, mortgages,
pledges, security interests, prior assignments and encumbrances of any kind or
nature whatsoever. On the Closing Date, Assignor shall execute
and have notarized a Patent Assignment in the form attached hereto as Exhibit A
and by this reference made a part hereof, for filing by Assignee with the U.S.
Patent and Trademark Office (the “USPTO”) and any foreign patent office that is
relevant. Upon the Closing of the Acquisition, this Patent Assignment
shall be effective and, thereafter, (i) Assignee shall have sole responsibility
and authority to prosecute any pending patent application included in the
Assigned Patents, and (ii) Assignee shall assume responsibility for all fees and
expenses associated with the Assigned Patents including, without limitation, all
maintenance, annuity and prosecution-related fees and expenses.
3.2
Further Assurances as to
Assigned Patents
. At any time and from time to time after the Closing of
the Acquisition, at Assignee’s reasonable request and expense, Assignor shall
promptly execute and deliver, and shall cause its officers and employees (when
appropriate) to execute and deliver, in a form reasonably acceptable to
Assignee, such instruments of sale, transfer, conveyance, assignment and
confirmation as may reasonably be required, and shall take such other action as
Assignee may reasonably request, to more effectively transfer, convey and assign
to Assignee all of Assignor’s right, title and interest in the Assigned Patents
and to confirm such sale, transfer, conveyance and assignment by Assignor to
Assignee. In the event that a party becomes aware of any existing
patent or pending patent application that is covered by the definition of
Assigned Patents, but which is not currently listed on Exhibit A, such patent or
patent application shall automatically be added to Exhibit A and shall be deemed
to constitute Assigned Patents for all purposes hereunder. Prior to
the Closing of the Acquisition, Assignor will procure a certification from Ram
Sesha (the “Assigned Patents Inventor”), in the form attached hereto as Exhibit
B and by this reference made a part hereof, in which the Assigned Patents
Inventor certifies that (i) the inventor named in the issued U.S. patents listed
in Schedule 1 of this Agreement is the inventor of the claimed subject matter
therein, (ii) the inventor has no knowledge of any mis-joinder or non-joinder of
inventorship in the Assigned Patents, and (iii) he has assigned all of his
ownership interests in the Assigned Patents to Assignor.
3.3
Retention by Assignor of
Non-Assigned Patents and Patent Applications
. Any and all
Patents and Patent Applications currently owned by Assignor and not included as
an Assigned Patent in Exhibit A, or to be acquired in the future, shall be
deemed and referred to herein as “Non-Assigned Patents and Patent Applications.”
Assignor shall own all right, title and interest in and to the Non-Assigned
Patents and Patent Applications and, after the closing of the Acquisition as
described elsewhere in this Agreement, Assignor shall continue to own all right,
title and interest in and to Non-Assigned Patent. No portion of the Non-Assigned
Patent and Patent Applications is being sold, transferred, conveyed or assigned
by Assignor to Assignee under this Agreement or otherwise.
4.1
Payment
. In
consideration of the Acquisition, the Assignee will pay to the Assignor, or as
the Assignor may otherwise direct, an aggregate of 7,000,000 shares of
Assignee’s authorized but previously unissued common stock, which shares shall
be deemed “restricted securities” as defined by Rule 144 promulgated under the
Securities Act of 1933. Of the 7,000,000 shares, 5,000,000 shares
will be issued and delivered to Assignor at the Closing of the Acquisition and
the balance of 2,000,000 shares will be issued and delivered to Assignor, upon
completion of the immediate first round of Capitalization of the Assignee as
defined in Section 1.2.
4.1A Following the Closing
of the Acquisition, Assignee shall use its best efforts to cause to be prepared
and filed with the SEC a registration statement on an appropriate form pursuant
to the Securities Act, which registration statement shall include 2,000,000
shares of the 5,000,000 shares that are to be issued to Assignor at the
Closing. The shares to be included in the registration statement may
be subject to limitations imposed by the SEC.
4.2
Royalty
. As
further consideration for the Acquisition of the Assigned Patents, Assignee
agrees to pay to Assignor as below:
4.2A
If revenues from the Commercialization of the Assigned Patents are received from
a third party for licensing fees or Milestone Payments, Assignor shall be paid
20% of the Gross Revenues received by the Assignee for the licensing fees and
Milestone Payments;
4.2B
If the earnings from the Commercialization of the Assigned Patents, are by
direct sales, the Assignor shall be paid 20 % of Net Sales:
The
Royalty, in either case, shall be paid in cash on a quarterly basis within
ninety (90) days from filing the Form 10-Q for the applicable quarterly
period.
4.3.
Milestone
Payments
. As further consideration for the Acquisition of the
Assigned Patents, Assignee agrees to pay to Assignor 10% of all the Milestone
Payments received by Assignee from the commercial exploitation of the Assigned
Patents. The Milestone Payment shall be paid in cash within sixty (60) days of
its receipt.
4.4
Employment Agreement
.
Upon the Closing of the Acquisition, the President and Chief Executive Officer
of the Assignor would become the Chief Operating Officer of the Assignee under
an Employment Agreement effective concurrently with entering into this
Agreement. The terms of the Employment Agreement shall be similar to those
applicable to the Chief Executive Officer and President of the Assignee and to
be negotiated by the Parties in good faith. During the employment period, the
Chief Operating Officer of the Assignee shall serve as a member of the Board of
Directors of the Company.
4.5
Directors and
Officers
. Upon the Closing of the Acquisition, the
Assignor would nominate two individuals of repute to the Board of Directors of
the Assignee, under the terms of an agreement similar to those applicable to
other Board of Directors, each to hold office in accordance with the certificate
of incorporation and bylaws of the Assignee. The officers of the
Company immediately prior to the Closing of the Acquisition, save for Section
4.4, shall be the current officers of the Assignee, each to hold office in
accordance with the certificate of incorporation and bylaws of the
Assignee.
4.6
Removal of Restrictive
Legend
. Assignee shall consent to the removal of Restrictive
Legend on the stock issued to Assignor hereunder, upon receiving a written
request from the Assignor. The consent shall be provided within thirty days of
receipt of a written request from the Assignor and shall be subject to any
exceptions and limitations imposed by relevant securities and corporate
laws.
4A.1
Development
Program.
The Assignee shall prepare and implement a
development program in respect of the Assigned Patents. The development program
must be consistent with the usual practice followed in the industry to develop
and commercialize Products, covered by the Assigned Patents listed in Exhibit A,
through a commercialization program, which program shall include but not be
limited to the development, marketing, promotion, distribution and sale of
Products.
4A.2
Developmental Obligations of
Assignee
. The Assignee shall, at its sole cost and expense,
diligently prepare, manage, implement, and prosecute the Development Program and
commercialize the Assigned Patents in accordance with Section 4.A.
|
|
(i)
|
Commercially
Reasonable Efforts must begin within 12 months of Effective Date. The
Assignee shall provide regular (not less than annual) updates to the Chief
Operating Officer of the Assignor in respect of the management,
implementation, and prosecution of the Development
Program.
|
4A.3
Developmental
Milestones
. As partial satisfaction of the requirements or the
developmental program above and subject to the subsequent paragraph, Assignee
shall achieve the following developmental milestones by the dates set forth
below:
|
|
(i)
|
File
an IND application for at least one Product within two years of Closing of
this Agreement;
|
|
|
(ii)
|
Initiate
clinical studies for at least one Product within three years of Closing of
this Agreement;
|
|
|
(iii)
|
Commercialize
at least one Product within five years of Closing this
Agreement;
|
|
|
(iv)
|
Other
diligence provisions as agreed on by the Parties in
writing;
|
|
5.0
|
REPRESENTATIONS, WARRANTIES AND
DISCLAIMERS OF ASSIGNOR
|
Assignor
represents and warrants to Assignee as follows:
5.1
Assigned Patents
.
Exhibit A hereto lists all patents and patent applications included within the
definition of Assigned Patents under this Agreement.
5.2
Ownership of Assigned
Patents
. Assignor is the sole and exclusive owner of the Assigned
Patents, and it has the unencumbered right to sell and transfer its entire
right, title and interest in the Assigned Patents to Assignee as contemplated
hereby. The Assigned Patents are free and clear of all liens,
mortgages, pledges, security interests, prior assignments or encumbrances, and
any restrictions on transfer.
5.3
Files
. Assignor shall
use its best efforts to provide to Assignee all existing files and records
specified in Section 2.1 hereof as the Assigned Patents Files.
5.4
Licenses as to Assigned
Patents
. Assignor has not granted any license or right under any of the
Assigned Patents to any third party.
5.5
Status of Assigned
Patents
. All maintenance fees required to be paid as of the Closing Date
with respect to all issued U.S. patents listed in Exhibit A hereto have been or
shall be paid by Assignor.
5.6
Sufficiency of Rights as to
Assigned Patents
. All issued patents included as Assigned Patents are
existing and in full force and effect. At the Closing of the
Acquisition, Assignor will assign its entire right, title and interest in the
Assigned Patents to Assignee. The execution of this Agreement will
not result in the loss or impairment of the right, title and interest in the
Assigned Patents that Assignor will convey to Assignee at Closing.
5.7
Claims as to Assigned
Patents
. To the best of Assignor’s knowledge, there are no actions,
suits, investigations, claims or proceedings threatened, pending or in progress
relating to the Assigned Patents. To the best of Assignor’s
knowledge, none of the Assigned Patents have been or are currently involved in
any reexamination, reissue, interference proceeding or any similar proceeding
and no such proceedings are pending or threatened. No settlement
agreements, consents, judgments, orders, forbearance to sue or similar
obligations limit or restrict Assignor’s rights in and to any of the Assigned
Patents. Assignor has not asserted any claim against any third party
relating to infringement of the Assigned Patents.
5.8
No Prior Disclosures as to
Assigned Patents
. To the best of Assignor’s knowledge, Assignor has made
no public disclosures of any non-public portion of the claimed subject matter
contained in the Assigned Patents prior to filing with the USPTO a U.S. patent
application pertaining to any such non-public portion.
5.9
Status of
Assignor
. Assignor is duly organized, validly existing and in
good standing under the laws of the State of Delaware, has the corporate power
to own its property and to carry on its business as now being conducted and is
duly qualified to do business in any jurisdiction where so required except where
the failure to so qualify would have no material negative impact.
5.10
Authorization of
Assignor
. Assignor hereby represents and warrants that this Agreement has
been duly and validly executed and delivered by Assignor, and constitutes the
valid and legally binding obligation of Assignor, enforceable in accordance with
its terms and conditions. The execution, delivery, and performance of
this Agreement have been duly authorized by Assignor, and no other corporate
proceedings on the part of Assignor are necessary to authorize this Agreement or
the transactions contemplated hereby.
5.11
No Tax Advice from Assignee
or its Agents.
Assignor has had an opportunity to review with
its own tax advisors the foreign, federal, state and local tax consequences of
the transactions contemplated by this Agreement. Assignor is relying
solely on such advisors and not on any statements or representations of Assignee
or any of its agents and understands that Assignor (and not Assignee) shall be
responsible for its own tax liability that may arise as a result of the
transactions contemplated by this Agreement.
5.12
No Legal Advice from
Assignee or its Agents.
Assignor acknowledges that it has had the
opportunity to review this Agreement and the transactions contemplated by this
Agreement with its own legal counsel. Assignor is relying solely on
such counsel and not on any statements or representations of Assignee or any of
its agents for legal advice with respect to this investment or the transactions
contemplated by this Agreement, except for representations, warranties and
covenants set forth under Section 6.0 herein.
5.13
Restricted
Securities
. Assignor acknowledges that the shares of
Assignee’s common stock that Assignor will receive hereunder in consideration
for assigning the Assigned Patents to Assignee, are deemed “restricted
securities” within the meaning of Rule 144 promulgated under the Securities Act
of 1933, and are being issued pursuant to an exemption or exemptions from such
Act. Assignor further acknowledges that it may not sell or otherwise
transfer the subject shares except pursuant to a registration statement or in
reliance upon an exemption to registration under the Securities Act of
1933.
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6.0
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REPRESENTATIONS AND
WARRANTIES OF ASSIGNEE
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Except as
set forth in this Agreement, the Assignee’s SEC Reports or in the corresponding
section of the Company Disclosure Letter delivered to Assignor by the Company
concurrently with entering into this Agreement (the “Company Disclosure Letter”)
(it being understood that any information set forth in a particular section of
the Company Disclosure Letter shall be deemed to be disclosed in each other
section of the Company Disclosure Letter to which the relevance of such
information is reasonably apparent), the Assignee represents and warrants to
Assignor that:
6.1
Status of
Assignee
. Assignee is a duly organized corporation, validly
existing and in good standing under the laws of the State of Nevada, has the
corporate power to own its property and to carry on its business as now being
conducted and is duly qualified to do business in any jurisdiction where so
required except where the failure to so qualify would have no material negative
impact. The Assignee has made available to Assignor a complete and correct copy
of the certificate of incorporation and bylaws, each as amended to date, of the
Assignee.
6.2
Subsidiaries
. Except
as set forth in Section 6.2 of the Company Disclosure Letter, the does not have
any subsidiaries.
6.3
Authorization of
Assignee
. Assignee has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate, on the terms and subject to the conditions of this Agreement, the
transactions contemplated by this Agreement. This Agreement has been
duly executed and delivered by the Company and assuming that this Agreement is a
valid and binding obligation of Assignor, this Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy laws, other similar laws
affecting creditors’ rights and general principles of equity affecting the
availability of specific performance and other equitable remedies. As
of the date of this Agreement, the Board of Directors of the Company has
approved and adopted this Agreement and, subject to Section X.X has resolved to
recommend that the Company’s stockholders approve this Agreement.
6.4
Capitalization
. Assignee
has an authorized capitalization of 50,000,000 shares of common stock, $0.005
par value, of which 33,163,012 shares are presently issued and
outstanding. All outstanding shares of Assignee’s common stock are,
and will be at the Closing Date, duly authorized, validly issued, fully paid and
nonassessable. There are no existing options, calls, claims, warrants,
preemptive rights, registration rights or commitments of any character relating
to the issued or unissued common stock or other securities of Company. Except as
set forth in Section 6.4 of the Company Disclosure Letter and other than
pursuant to (i) the Rights Agreement and (ii) the Company Equity Plans, there
are no outstanding, and there have not been reserved for issuance any, (i)
shares of capital stock or other voting securities of the Company; (ii)
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Assignee or its Subsidiaries; (iii) Company
Options, Company RSUs or other rights or options to acquire from the Company, or
obligations of the Company to issue, any shares of capital stock, voting
securities or securities convertible into or exchangeable for shares of capital
stock or voting securities of the Company, as the case may be, or (iv) equity
equivalent interests in the ownership or earnings of the Company or other
similar rights (the items in clauses (i) through (iv) collectively,
“Securities”). There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Securities. There are no
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which the Assignee is bound relating to the
voting or registration of any shares of capital stock of the Company or
preemptive rights with respect thereto.
6.5
Company SEC
Reports
. The Company currently does not have any securities
registered with the Securities and Exchange Commission (“SEC”), either under the
Securities Act of 1933 or the Securities Exchange Act of 1934, nor is the
Company currently obligated to file such registration statements or to make any
annual, quarterly or periodic reports with the SEC or to make and file any other
SEC Reports.
6.6.
No
Liabilities
. There are no liabilities or obligations of the
Company (whether accrued, contingent, absolute, determined or determinable) that
would be required by GAAP to be reflected on a consolidated balance sheet of the
Company other than liabilities or obligations disclosed or provided for in the
unaudited consolidated balance sheet of the Assignee as of Closing Date under
Section 6.6 of the Company Disclosure Letter. The Company represents
there are no liabilities or obligations under any agreement, contracts, lease,
note, mortgage, indenture or other obligation of the Company, which is not in
violation of the terms of this Agreement.
6.7
Absence of Certain Changes
or Events
. Except as disclosed in the Company Disclosure
Letter of this agreement, since its incorporation and prior to the date of this
Agreement, the business of the Company has been conducted in all material
respects in the ordinary course consistent with past practice. Since
its incorporation till the Closing Date, there has not been any event,
occurrence or development that has had, either individually or in the aggregate,
a Material Adverse Effect.
6.8
Tax
Matters
. The Company has filed all material federal, foreign,
state, county and local income, excise, property and other Tax Returns that are
required to be filed by them (taking into account any extensions of time to file
that have been duly perfected). Except as set forth on the Section
6.8 of the Company Disclosure Letter, all Taxes shown as owing by the Company on
all such Tax Returns have been fully paid or properly accrued. The
Company has no knowledge that (i) the provision for Taxes on the Current Balance
Sheet is insufficient for all accrued and unpaid Taxes as of the date thereof
and (ii) all material Taxes which the Company or any Subsidiary is obligated to
withhold from amounts owing to any employee, creditor or third party have not
been fully paid or properly accrued. There are no material Liens with
respect to any Taxes upon any of the Company’s assets, other than (i) Taxes, the
payment of which is not yet due, or (ii) Taxes or charges being contested in
good faith by appropriate proceedings.
6.9
Litigation
. Except
as set forth in Section 6.9 of the Company Disclosure Letter, there is no
action, suit, claim, investigation, arbitration or proceeding pending or, to the
Company 's knowledge, threatened against the Company or its assets or
properties, or its officers and directors, in their capacity as such, before or
by any court, arbitrator or Governmental Entity, that, would have, either
individually or in the aggregate, a Material Adverse Effect. There
are no unsatisfied judgments or awards, decrees, injunctions, rules or orders of
any Governmental Entity, court or arbitrator outstanding against the Assignee
that would materially and adversely affect the Company’s ability to consummate
the transactions contemplated by this Agreement.
6.10.
Employee Benefit
Plans
. Except as listed in Section 6.10 of the Company
Disclosure Letter, with respect to employees of the Company, the Company does
not maintain or contribute to any “employee benefit plans” (as defined under
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) or any other material employee benefit plans, policies, stock option
plan, agreements, arrangements or program (collectively, the “Employee Benefit
Plans”). Except as listed in Section 6.10 of the Company Disclosure Letter, (i)
the consummation of the transactions contemplated by this Agreement will not
give rise to any material severance liability, or accelerate the time of payment
or vesting or increase the amount or value of compensation or benefits due to
any employee of the Company solely by reason of such transactions or by reason
of a termination of employment following such transactions.
6.11.
Compliance with Laws;
Permits
. Except as set forth in Section 6.11 of the Company
Disclosure Letter or as would not have a Material Adverse Effect, the Company is
in compliance in all material respects with all Laws applicable to the Company,
including without limitation the Laws enforced and regulations issued by the
DEA, the Department of Health and Human Services and its constituent agencies,
the FDA, the Centers for Medicare & Medicaid Services, and Office of
Inspector General, including without limitation the anti-kickback law (Social
Security Act § 1128B(b)) and analogous Laws of the various states, the drug
price reporting requirements of titles XVIII and XIX of the Social Security Act,
and the Laws precluding off-label marketing of drugs. The
Company is not debarred under the Generic Drug Enforcement Act of
1992 and, to the Company’s knowledge, the Company does not employ or use the
services of any individual who is debarred. Except as would not have
a Material Adverse Effect, to Company’s knowledge, the Company is not under
investigation with respect to, or has the Company been threatened in writing to
be charged with or been given written notice of any violation of, any applicable
Law.
6.12.
Affiliated
Transactions
. Except as set forth in Section 6.12 of the
Company Disclosure Letter, the Company has no knowledge that any officer,
director, stockholder or Affiliate of the Company is a party to any material
agreement, contract, commitment or transaction with the Company or has any
material interest in any material property used by the Company.
6.13.
Employees
. Except
as set forth in Section 6.13 of the Company Disclosure Letter, the Company has
not experienced any strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute within the past two
years. The Company has not committed any material unfair labor
practice. Except as set forth in Section 6.12 of the Company
Disclosure Letter, the Company has no knowledge that any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company.
6.14.
Brokerage
. Except
as set forth in Section 6.14 of the Company Disclosure Letter, no Person is
entitled to any brokerage, finder’s or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Company for which Assignor could become
liable or obligated.
6.15.
Contracts
. Except
as set forth in Section 6.15 of the Company Disclosure Letter, to the Company’s
knowledge neither the Company nor any other party, is in breach, default or
violation (and no event has occurred or not occurred through the Company’s
action or inaction or, to the Company’s knowledge, through the action or
inaction of any third party, that with notice or the lapse of time or both would
constitute a breach, default or violation) of any term, condition or provision
of any Contract to which the Company is now a party, or by which its properties
or assets may be bound, except for breaches, defaults or violations that would
not have, either individually or in the aggregate, a Material Adverse
Effect.
6.16
Vote
Required
. No shareholder approval is required for the Company
to execute and perform the transactions contemplated by this Agreement and no
such shareholder vote is anticipated.
6.17.
Approval
. The
Board of Directors of the Company has approved the Acquisition, this Agreement
and the transactions contemplated by this Agreement, and such approval is
sufficient to render this Agreement effective.
6.18.
Conduct of the
Business
. The Company covenants and agrees, as set forth in
Section 6.18 of the Company Disclosure Letter, that from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, as required by Law or to the extent
Assignor shall otherwise consent in writing, which decision regarding any such
consent shall not be unreasonably withheld, conditioned or delayed:
(a) the
Company shall conduct its business in all material respects only in the ordinary
and usual course and, to the extent consistent therewith, it shall use its
commercially reasonable efforts to (i) subject to prudent management of
workforce needs and ongoing programs currently in force, preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates, (ii) maintain and keep material properties and assets in good repair
and condition and (iii) maintain in effect all material governmental Permits
pursuant to which such party currently operates; and
(b) the
Company shall not (i) issue, sell or redeem any shares of its capital stock,
(ii) issue, sell or redeem any securities convertible into, or options with
respect to, warrants to purchase, or rights to subscribe for, any shares of its
capital stock (other than pursuant to the terms of the Company ESPP, any
Employee Benefit Plan or any awards made under the Company Equity Plans), (iii)
effect any recapitalization, reclassification, stock dividend, stock split or
like change in its capitalization, (iv) amend its certificate or articles of
incorporation or bylaws (or equivalent organizational documents), except for
amendments, which would not prevent or materially impair the consummation of the
transactions contemplated by this Agreement or (v) except as set forth in
Section 6.18 of the Company Disclosure Letter, make any acquisition
of, or investment in, assets or stock (whether by way of merger, consolidation,
tender offer, share exchange or other activity) in any transaction or any series
of related transactions.
6.19
No Control of the Company’s
Business
. Nothing contained in this Agreement shall give
Assignor, directly or indirectly, the right to control or direct the Company’s
operations prior to the Effective Time. For the avoidance of doubt,
nothing in this Agreement shall be construed as prohibiting or requiring the
consent of Assignor with respect to any of the matters described in Section 6.19
of the Company Disclosure Letter.
6.20
Shareholder
List
. There are no existing options, calls, claims, warrants,
preemptive rights, registration rights or commitments of any character relating
to the issued or unissued common stock or other securities of Company, except as
set forth in Section 6.20 of the Company Disclosure Letter. Section 6.20 of the
Company Disclosure Letter constitutes the complete copy of the Company's
shareholder records.
6.21
No Other Representations or
Warranties
. Except for the representations and warranties
contained in this Agreement, neither the Company nor any other Person makes any
other express or implied representation or warranty on behalf of the
Company.
7.1 The
Assigned Patents Files shall be treated by Assignee as “Confidential
Information” of Assignor until the Closing of the
Acquisition. Thereafter, the Assigned Patents Files and the Assigned
Application Files shall be treated by Assignor as “Confidential Information” of
Assignee. If, for any reason, the Acquisition does not close,
Assignee shall continue to treat the Assigned Patents Files and the Assigned
Application Files as “Confidential Information” of Assignor and, further,
Assignee shall comply with the provisions of Section 2.5 hereof in connection
with the return or disposal of such files and materials.
7.2 Each
party agrees that it will not disclose, publish, or disseminate Confidential
Information of the other to anyone other than those of its employees, legal
counsel or other persons with a demonstrated need to know, and further agrees to
take reasonable precautions to prevent any unauthorized use, disclosure,
publication, or dissemination of Confidential Information. The
obligations of confidentiality contained in this Section will not apply to the
extent that it can be established by the recipient of “Confidential Information”
hereunder that such Confidential Information was; a) was generally available to
the public or otherwise part of the public domain at the time of its disclosure
to the recipient; b) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the recipient in breach of this Agreement; c) was rightfully
disclosed to recipient by a third party without restriction after the date
hereof or d) is required to be disclosed to comply with any law, order, decree
or government or stock exchange request, in which case (i) the recipient will
provide the disclosing party with prompt written notice so that said disclosing
party may seek a protective order or other appropriate remedy or waive
compliance with the confidentiality provisions hereof and (ii) in the event such
protective order or other remedy is not obtained, or that compliance with the
confidentiality provisions hereof is waived, the recipient will furnish only
such portion of such information which it is advised in writing by counsel is
legally advisable to furnish and will use its reasonable best efforts at the
expense of the disclosing party to obtain reliable assurance, to the extent
available, that confidential treatment will be accorded such information. For
purposes of this Section 7.2, the Party disclosing information will be deemed
the “disclosing party” and the Party receiving the information will be
deemed as the “recipient”..
7.3 The
provisions of this Section 7.0 will survive any termination or expiration of
this Agreement.
8.1
Governing Law and
Jurisdiction
. This Agreement will be governed by and construed in
accordance with the laws of the United States and the State of New York without
regard to principles of conflicts of law. Each party hereby agrees to
jurisdiction and venue in the courts of the State of New York or the Federal
courts sitting therein for all disputes and litigation arising under or relating
to this Agreement.
8.2
No Waiver
. Failure by
either party to enforce any provision of this Agreement will not be deemed a
waiver of future enforcement of that or any other provision.
8.3
Independent
Contractors
. The relationship of Assignor and Assignee established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement shall be construed (i) to give either party the power to direct or
control the day-to-day activities of the other, or (ii) to constitute the
parties as partners, joint venturers, co-owners or otherwise as participants in
a joint or common undertaking.
8.4
Section Headings
. The
section headings contained herein are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
8.5
Interpretation
. The
parties agree that this Agreement shall be fairly interpreted in accordance with
its terms without any strict construction in favor of or against either party
and that ambiguities shall not be interpreted against the drafting
party.
8.6
Severability
. If for
any reason a court of competent jurisdiction finds any provision of this
Agreement, or portion thereof, to be unenforceable, that provision of the
Agreement will be enforced to the maximum extent permissible so as to effect the
intent of the parties, and the remainder of this Agreement will continue in full
force and effect.
8.7
Disclaimers
. This
Agreement does not confer by implication, estoppel, laches or by any other means
any license or any right other than those expressly granted
herein.
8.8
Expenses
. Except as
otherwise expressly provided herein, all parties will be responsible for their
own costs and expenses, including counsel fees, incurred in connection with this
Agreement.
8.9
Injunctive Relief
.
The parties agree that a material default of the provisions of this Agreement by
a party hereto could cause irreparable injury to the other party for which
monetary damages would not be an adequate remedy and such other party shall be
entitled to seek equitable relief, including injunctive relief and specific
performance, in addition to any remedies it may have hereunder or at
law.
8.10
Infringement
. In
the event that Assignee or Assignor is named as a defendant in any patent
infringement lawsuit brought as a result of Assignee’s efforts to market a
Product during the commercialization of the Assigned Patents, Assignor shall
fully cooperate with Assignee in the handling of all such claims or lawsuits,
assist in production and location of evidence and provide other assistance as
requested by Assignee, including assistance with discovery, depositions and
expert testimony. Assignee shall have the obligation to undertake the control
and defense of such Infringement Action, including the satisfaction of resulting
legal fees and expenses, whether such action was brought against Assignor or
Assignee. Assignee shall be responsible for the coordination and payment of
legal activities and shall promptly reimburse all costs incurred by the
Assignor. Assignee shall be solely responsible for, and hereby agrees to
indemnify and hold harmless Assignor and its affiliates against, damages,
claims, penalties, all legal fees and related expenses incurred by the Assignee
in the satisfaction of its obligations.
8.11
Notices
. All notices
required or permitted to be given hereunder shall be in writing, shall make
reference to this Agreement, and shall be delivered by hand or dispatched by
prepaid air courier or by registered or certified airmail, postage prepaid,
addressed to the President or Chief Financial Officer of the party to be
notified at the address first listed herein as the principal place of business
for such party. Such notices shall be deemed served when received by the
addressee or, if delivery is not accomplished due to some fault of addressee,
when tendered for delivery. Either party may give written notice to
the other of a change of address and, after notice of such change has been
received, any notice or request shall thereafter be given to such party at such
changed address.
8.11
Entire Agreement
.
This Agreement, including any Schedules and Exhibits attached hereto, which are
hereby incorporated by reference, constitutes the entire understanding of the
parties with respect to the subject matter hereof, and supersedes all prior
agreements or representations, oral or written, regarding such subject
matter. This Agreement may not be modified or amended except in a
writing signed by a duly authorized representative of both parties.
8.12
Counterparts
. This
Agreement may be executed in two or more counterparts, each of which shall be an
original and all of which shall constitute together the same
document. It is further agreed that the delivery by facsimile, e-mail
or other recognized electronic medium of an executed counterpart of this
Agreement will be deemed to be an original and will have the full force and
effect of an original executed copy.
8.13
Assignment
. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto, in whole or in part (whether by
operation of Law or otherwise), without the prior written consent of the other
parties, and any attempt to make any such assignment without such consent shall
be null and void.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized representatives:
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Pro-Tect,
Inc.
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Nectid
Inc.
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By:
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By:
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Name:
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Name:
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Title:
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President
&
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Title:
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President
&
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Chief
Executive Officer
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Chief
Executive Officer
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By:
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Name:
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EXHIBIT
A
PATENT
ASSIGNMENT
For good
and valuable consideration, the receipt of which is hereby acknowledged,
Nectid Inc.
(“
ASSIGNOR
”), hereby
sells, assigns, transfers, and sets over its entire right, title, and interest
in and to the patents and patent applications listed below as the “
Assigned Patents
”,
including any divisional, continuation, continuation-in-part, reissue or
re-examination applications, or patents issuing therefrom to Pro-Tect,
Inc. (“
ASSIGNEE
”) and its
successors and assigns.
Assigned
Patents
:
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1
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Novel
Tapentadol combinations for treating pain
61/004,029
dated November 23, 2007
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2
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TAPENTADOL
COMPOSITIONS (WO2009067703)
PCT/US2008/0844
dated November 21, 2008
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3
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Novel
Slow Release Tapentadol Compositions 61/215,846 dated May 11,
2009
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4
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Novel
Slow Release Tapentadol Compositions 61/216, 399 Dated May 18,
2009
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5
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Novel
Slow Release Tapentadol Compositions 61/269,450 Dated June 25,
2009
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6
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Novel
Slow Release Tapentadol Compositions 61/215, 010 Dated May 1,
2009
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7
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Novel
and Potent Tapentadol Compositions 61/197,625 Dated October 30,
2008
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8
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Novel
and Potent Tapentadol Compositions 61/205, 312 Dated January 21,
2009
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9
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Novel
and Potent Tapentadol Compositions 61/ /268, 630 Dated June 15,
2009
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10
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NOVEL
AND POTENT TAPENTADOL DOSAGE FORMS PCT/US2009/05866 Dated
Oct 29, 2009
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11
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Novel
Tapentadol Formulations 61/210, 469 Dated March 20,
2009
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12
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Abuse
Proof Delivery Systems 61/217,434 Dated June 1,
2009
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13
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Novel
GABA Analog Dosage Forms
(NTD01302010)
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ASSIGNOR
hereby further sells, conveys, assigns, transfers, and sets over unto ASSIGNEE
ASSIGNOR’s entire right, title, and interest in and to the aforesaid patents and
patent applications in the United States and each and every country foreign to
the United States; and ASSIGNOR further conveys to ASSIGNEE all priority rights
resulting from the Assigned Patents, and all ASSIGNOR’s rights under any claim,
including all causes of action for infringement, which arose at any time prior
and up to the conveyance of said Assigned Patents to ASSIGNEE under this Patent
Assignment.
At any
time and from time to time after the date of this Patent Assignment, at
ASSIGNEE’s reasonable request and expense, ASSIGNOR promptly shall execute and
deliver, and shall cause its officers and employees (when appropriate) to
execute and deliver, in a form reasonably acceptable to ASSIGNOR, such
instruments of sale, transfer, conveyance, assignment and confirmation as may
reasonably be required, and shall take such other action as ASSIGNEE may
reasonably request, to more effectively transfer, convey and assign to ASSIGNEE
all of ASSIGNOR’s right, title and interest in the Assigned Patents and to
confirm such sale, transfer, conveyance and assignment by ASSIGNOR to
ASSIGNEE.
IN
WITNESS WHEREOF, ASSIGNOR has hereunto set its hand and seal on the date
below.
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By:
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Name:
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Title:
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President
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Date:
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n
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State
of
n
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County
of
n
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)
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Subscribed
and sworn to before me
this
n
day of
n
,
200
n
My
commission expires:
n
EXHIBIT
B
CERTIFICATION OF
CO-INVENTORS
In
connection with a certain patent acquisition agreement dated
n
between Nectid Inc. (“
Nectid
”) and
Pro-Tect, Inc. (“Pro-Tect”), Nectid has been asked
n
to
provide a certification as to certain matters relating to the patents and patent
applications listed below as “
Nectid
Patents
”).
Nectid
Patents
:
|
|
·
|
Novel
Tapentadol combinations for treating pain
61/004,029
dated November 23, 2007
|
|
|
·
|
TAPENTADOL
COMPOSITIONS (WO2009067703)
PCT/US2008/0844
dated November 21,
2008
|
|
|
·
|
Novel
Slow Release Tapentadol Compositions 61/215,846 dated May 11,
2009
|
|
|
·
|
Novel
Slow Release Tapentadol Compositions 61/216, 399 Dated May 18,
2009
|
|
|
·
|
Novel
Slow Release Tapentadol Compositions 61/269,450 Dated June 25,
2009
|
|
|
·
|
Novel
Slow Release Tapentadol Compositions 61/215, 010 Dated May 1,
2009
|
|
|
·
|
Novel
and Potent Tapentadol Compositions 61/197,626 Dated October 27,
2008
|
|
|
·
|
Novel
and Potent Tapentadol Compositions 61/205, 312 Dated January 21,
2009
|
|
|
·
|
Novel
and Potent Tapentadol Compositions 61/ 61/268, 630 Dated June 15,
2009
|
|
|
·
|
NOVEL
AND POTENT TAPENTADOL DOSAGE FORMS PCT/US2009/05866 Dated
Oct 29, 2009
|
|
|
·
|
Novel
Tapentadol Formulations 61/210, 469 Dated March 20,
2009
|
|
|
·
|
Abuse
Proof Delivery Systems 61/217,434 Dated June 1,
2009
|
|
|
·
|
Novel
GABA Analog Dosage Forms
(NTD01302010)
|
I, the
undersigned, hereby certify that (i) I am the inventor of the claimed subject
matter in the Nectid Patents listed above, (ii) I have no knowledge of any
mis-joinder or non-joinder of inventorship in the Nectid Patents, and (iii) I
have assigned all of my ownership interests in the Nectid Patents to
Nectid. Such assignments of U.S. patents by the undersigned to Nectid
have been filed with the United States Patent and Trademark Office and recorded
at the following respective reel and frame numbers: (a) U.S. Patent No.
n
– Reel/Frame
n
; (b)
U.S. Patent No.
n
–
Reel/Frame
n
; and
(c) U.S. Patent No.
n
– Reel/Frame
n
. I
make no other representations, warranties or assurances of any kind whatsoever
concerning the Nectid Patents or any provisions of, or transactions contemplated
by, the above-referenced patent acquisition agreement between Nectid and
Pro-Tect.
IN
WITNESS WHEREOF,
n
has hereunto set his
hand and seal on the date below.
|
State
of
n
|
)
|
|
|
)
|
|
County
of
n
|
)
|
Subscribed
and sworn to before me
this
n
day of
n
,
200
n
My
commission expires:
n
BY–LAWS
OF
PROTECT
PHARMACEUTICAL CORPORATION
|
Article I
|
–
|
OFFICES
|
|
Article II
|
–
|
MEETINGS
OF SHAREHOLDERS
|
|
Article III
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–
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DIRECTORS
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Article IV
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–
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OFFICERS
|
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Article V
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–
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EXECUTION
OF INSTRUMENTS, BORROWING OF MONEY AND DEPOSIT OF CORPORATE
FUNDS
|
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Article VI
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–
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CAPITAL
SHARES
|
|
Article VII
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–
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EXECUTIVE
COMMITTEE AND OTHER COMMITTEES
|
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Article VIII
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–
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INDEMNIFICATION,
INSURANCE, AND OFFICER AND DIRECTOR CONTRACTS
|
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Article IX
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–
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FISCAL
YEAR
|
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Article X
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–
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DIVIDENDS
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Article XI
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–
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AMENDMENTS
|
ARTICLE I
OFFICES
Section 1.01
Location of
Offices
. The corporation may maintain such offices within or
without the State of Nevada as the Board of Directors may from time to time
designate or require.
Section 1.02
Principal
Office
. The address of the principal office of the corporation
will be at the address of the registered office of the corporation as so
designated in the office of the Secretary of State of the state of
incorporation, or at such other address as the Board of Directors will from time
to time determine.
ARTICLE II
MEETINGS
OF SHAREHOLDERS
Section 2.01
Annual
Meeting
. The annual meeting of the shareholders will be held
the second Wednesday of April of each year, or at such other time designated by
the Board of Directors and as is provided for in the notice of the meeting, for
the purpose of electing directors and for the transaction of such other business
as may come before the meeting. If the election of directors will not
be held on the day designated for the annual meeting of the shareholders, or at
any adjournment thereof, the Board or Directors will cause the election to be
held at a special meeting of the shareholders as soon thereafter as may be
convenient.
Section 2.02
Special Meetings
.
Special meetings of the shareholders may be called at any time by the Chairman
of the Board, the President, or by the Board of Directors, or in their absence
or disability, by any Vice President; and will be called by the President or, in
his or her absence or disability, by a Vice President or by the Secretary upon
the written request of the holders of not less than 15% of all the shares
entitled to vote at the meeting, such written request to state the purpose or
purposes of the meeting and to be delivered to the President, each Vice
President, or Secretary. In case of failure to call such meeting
within 60 days after such request, such shareholder or shareholders may call the
same.
Section 2.03
Place of
Meetings
. The Board of Directors may designate any place,
either within or without the state of incorporation, as the place of meeting for
any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or without the state of
incorporation, as the place for the holding of such meeting. If no
designation is made, or if the special meeting be otherwise called, the place of
meeting will be at the principal office of the corporation.
Section
2.04
Notice
of Meetings
. The Secretary or Assistant Secretary, if any,
will cause notice of the time, place, and purpose or purposes of all meetings of
the shareholders (whether annual or special), to be mailed at least 10 days, but
not more than 60 days, prior to the meeting, to each shareholder of record
entitled to vote.
Section 2.05
Waiver of
Notice
. Any shareholder may waive notice of any meeting of
shareholders (however called or noticed, whether or not called or noticed and
whether before, during, or after the meeting), by signing a written waiver of
notice or a consent to the holding of such meeting, or an approval of the
minutes thereof. Attendance at a meeting, in person or by proxy, will
constitute waiver of all defects of call or notice regardless of whether waiver,
consent, or approval is signed or any objec6ons are made. All such
waivers, consents, or approvals will be made a part of the minutes of the
meeting.
Section 2.06
Fixing Record
Date
. For the purpose of determining shareholders entitled to
notice of or to vote at any annual meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any dividend or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors of the corporation may provide that the share transfer books will
be closed, for the purpose of determining shareholders entitled to notice of or
to vote at such meeting, but not for a period exceeding 60 days. If
the share transfer books are closed for the purpose of determining shareholders
entitled to notice of or to vote at such meeting, such books will be closed for
at least 10 days immediately preceding such meeting.
In lieu of closing the share transfer
books, the Board of Directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than 60 days and, in case of a meeting of shareholders, not less than 10 days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer books are not
closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting or to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, will be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote
at any meeting of shareholders has been made as provided in this Section, such
determination will apply to any adjournment thereof. Failure to
comply with this Section will not affect the validity of any action taken at a
meeting of shareholders.
Section 2.07
Voting
Lists
. The officer or agent of the corporation having charge
of the share transfer books for shares of the corporation will make, at least 10
days before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of, and the number of shares held by each,
which list, for a period of 10 days prior to such meeting, will be kept on file
at the registered office of the corporation and will be subject to inspection by
any shareholder during the whole time of the meeting. The original
share transfer book will be
prima facie
evidence
as to the shareholders who are entitled to examine such list or transfer books,
or to vote at any meeting of shareholders.
Section 2.08
Quorum
. A
majority of the total voting power of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, will constitute a quorum at
a meeting of the shareholders. If a quorum is present, the
affirmative vote of the majority of the voting power represented by shares at
the meeting and entitled to vote on the subject will constitute action by the
shareholders, unless the vote of a greater number or voting by classes is
required by the laws of the state of incorporation of the corporation or the
Articles of Incorporation. If less than a majority of the outstanding
voting power is represented at a meeting, a majority of the voting power
represented by shares so present may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum
will be present or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed.
Section 2.09
Voting of
Shares
. Each outstanding share of the corporation entitled to
vote will be entitled to one vote on each matter submitted to vote at a meeting
of shareholders, except to the extent that the voting rights of the shares of
any class or series of stock are determined and specified as greater or lesser
than one vote per share in the manner provided by the Articles of
Incorporation.
Section 2.10
Proxies
. At
each meeting of the shareholders, each shareholder entitled to vote will be
entitled to vote in person or by proxy;
provided
, however, that the
right to vote by proxy will exist only in case the instrument authorizing such
proxy to act will have been executed in writing by the registered holder or
holders of such shares, as the case may be, as shown on the share transfer of
the corporation or by his or her or her attorney thereunto duly authorized in
writing. Such instrument authorizing a proxy to act will be delivered
at the beginning of such meeting to the Secretary of the corporation or to such
other officer or person who may, in the absence of the Secretary, be acting as
Secretary of the meeting. In the event that any such instrument will
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one will (unless the
instrument will otherwise provide) have all of the powers conferred by the
instrument on all persons so designated. Persons holding stock in a
fiduciary capacity will be entitled to vote the shares so held and the persons
whose shares are pledged will be entitled to vote, unless in the transfer by the
pledge or on the books of the corporation he or she will have expressly
empowered the pledgee to vote thereon, in which case the pledgee, or his or her
or her proxy, may represent such shares and vote thereon.
Section 2.11
Written Consent to Action by
Shareholders
. Any action required to be taken at a meeting of
the shareholders, or any other action which may be taken at a meeting of the
shareholders, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, will be signed by shareholders holding at least a
majority of the shares entitled to vote with respect to the subject matter
thereof, except that if a different proportion of voting power is required for
such an action at a meeting, then that proportion of written consents is
required..
ARTICLE III
DIRECTORS
Section 3.01
General
Powers
. The property, affairs, and business of the corporation
will be managed by its Board of Directors. The Board of Directors may
exercise all the powers of the corporation whether derived from law or the
Articles of Incorporation, except such powers as are by statute, by the Articles
of Incorporation or by these By–Laws, vested solely in the shareholders of the
corporation.
Section 3.02
Number, Term, and
Qualifications
. The Board of Directors will consist of one to seven
persons. Increases or decreases to said number may be made, within the numbers
authorized by the Articles of Incorporation, as the Board of Directors will from
time to time determine by amendment to these By–Laws. An increase or a decrease
in the number of the members of the Board of Directors may also be had upon
amendment to these By–Laws by a majority vote of all of the shareholders, and
the number of directors to be so increased or decreased will be fixed upon a
majority vote of all of the shareholders of the corporation. Each director will
hold office until the next annual meeting of shareholders of the corporation and
until his or her successor will have been elected and will have qualified.
Directors need not be residents of the state of incorporation or shareholders of
the corporation.
Section 3.03
Classification of
Directors
. In lieu of electing the entire number of directors
annually, the Board of Directors may provide that the directors be divided into
either two or three classes, each class to be as nearly equal in number as
possible, the term of office of the directors of the first class to expire at
the first annual meeting of shareholders after their election, that of the
second class to expire at the second annual meeting after their election, and
that of the third class, if any, to expire at the third annual meeting after
their election. At each annual meeting after such classification, the
number of directors equal to the number of the class whose term expires at the
time of such meeting will be elected to hold office until the second succeeding
annual meeting, if there be two classes, or until the third succeeding annual
meeting, if there be three classes.
Section 3.04
Regular
Meetings
. A regular meeting of the Board of Directors will be
held without other notice than this By–Law immediately following, and at the
same place as, the annual meeting of shareholders. The Board of
Directors may provide by resolution the time and place, either within or without
the state of incorporation, for the holding of additional regular meetings
without other notice than such resolution.
Section 3.05
Special Meetings
.
Special meetings of the Board of Directors may be called by or at the request of
the President, Vice President, or any two directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the state of incorporation, as the place for
holding any special meeting of the Board of Directors called by
them.
Section 3.06
Meetings by Telephone
Conference Call
. Members of the Board of Directors may participate in a
meeting of the Board of Directors or a committee of the Board of Directors by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can bear each other, and
participation in a meeting pursuant to this Section will constitute presence in
person at such meeting.
Section 3.07
Notice
. Notice
of any special meeting will be given at least 3 business days prior thereto by
written notice delivered personally or sent by U.S. mail to each director at his
or her regular business address or residence, or sent by telegram or electronic
mail. A mailed notice will be deemed to be delivered when received by
the addressee. If notice be given by telegram or electronic mail,
such notice will be deemed to be delivered when the telegram is delivered to the
telegraph company or when the electronic mailed is properly
transmitted. Any director may waive notice of any meeting. Attendance
of a director at a meeting will constitute a waiver of notice of such meeting,
except where a director attends a meeting solely for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 3.08
Quorum
. A
majority of the number of directors will constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but if less than a
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 3.09
Manner of
Acting
. The act of a majority of the directors present at a
meeting at which a quorum is present will be the act of the Board of Directors,
and the individual directors will have no power as such.
Section 3.10
Vacancies and Newly Created
Directorship
. If any vacancies will occur in the Board of Directors by
reason of death, resignation or otherwise, or if the number of directors will be
increased, the directors then in office will continue to act and such vacancies
or newly created directorships will be filled by a vote of the directors then in
office, though less than a quorum, in any way approved by the
meeting. Any directorship to be filled by reason of removal of one or
more directors by the shareholders may be filled by election by the shareholders
at the meeting at which the director or directors are removed.
Section 3.11
Compensation
. By
resolution of the Board of Directors, the directors may be paid their expenses,
if any of attendance at each meeting of the Board of Directors, and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment will preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
Section 3.12
Presumption of
Assent
. A director of the corporation who is present at a
meeting of the Board of Directors at which action on any corporate matter is
taken will be presumed to have assented to the action taken unless his or her or
her dissent will be entered in the minutes of the meeting, unless be or she will
file his or her or her written dissent to such action with the person acting as
the Secretary of the meeting before the adjournment thereof, or will forward
such dissent by registered or certified mail to the Secretary of the corporation
immediately after the adjournment of the meeting. Such right to
dissent will not apply to a director who voted in favor of such
action.
Section 3.13
Resignations
. A
director may resign at any time by delivering a written resignation to either
the President, a Vice President, the Secretary, or Assistant Secretary, if
any. The resignation will become effective on its acceptance by the
Board of Directors;
provided
, that if the board
has not acted thereon within 10 days from the date presented, the resignation
will be deemed accepted.
Section 3.14
Written Consent to Action by
Directors
. Any action required to be taken at a meeting of the
directors of the corporation or any other action which may be taken at a meeting
of the directors or of a committee, may be taken without a meeting, if a consent
in writing, setting forth the action so taken, will be signed by all of the
directors, or all of the members of the committee, as the case may
be. Such consent will have the same legal effect as a unanimous vote
of all the directors or members of the committee.
Section 3.15
Removal
. Any
director may be removed for cause by action of the Board of
Directors. At a meeting of shareholders expressly called for that
purpose, one or more directors may be removed by a vote of a majority of the
shares of outstanding stock of the corporation entitled to vote at an election
of directors.
ARTICLE IV
OFFICERS
Section 4.01
Number
. All
officers must be natural persons and the officers of the corporation will be a
President one or more Vice Presidents, as will be determined by resolution of
the Board of Directors, a Secretary, a Treasurer, and such other officers as may
be appointed by the Board of Directors. The Board of Directors may
elect, but will not be required to elect, a Chairman of the Board and the Board
of Directors may appoint a Chief Executive Officer.
Section 4.02
Election, Term of Office,
and Qualifications
. The officers will be chosen by the Board of Directors
annually at its annual meeting. In the event of failure to choose
officers at an annual meeting of the Board of Directors, officers may be chosen
at any regular or special an annual meeting of the Board of
Directors. Each such officer (whether chosen at an annual meeting of
the Board of Directors to fill a vacancy or otherwise) will hold his or her
office until the next ensuing annual meeting of the Board of Directors and until
his or her successor will have been chosen and qualified, or until his or her
death, or until his or her resignation or removal in the manner provided in
these By–Laws. Any one person may hold any two or more of such
offices. The Chairman of the Board, if any, will remain a
director of the
corporation during the term of his or her office. No other officer
need be a director.
Section 4.03
Subordinate Officers,
Etc.
The Board of Directors from time to time may appoint such
other officers or agents as it may deem advisable, each of which will have such
title, old office for such period, have such authority, and perform such duties
as the Board of Directors from time to time may determine. The Board
of Directors from time to time may delegate to any officer or agent the power to
appoint any such subordinate officer or agents and to prescribe their respective
titles, terms of office, authorities, and duties. Subordinate
officers need not be shareholders or directors.
Section 4.04
Resignations
. Any
officer may resign at any time by delivering a written resignation to the Board
of Directors, the President, or the Secretary. Unless otherwise
specified therein, such resignation will take effect on delivery.
Section 4.05
Removal
. Any
officer may be removed from office at any special meeting of the Board of
Directors called for that purpose or at a regular meeting, by vote of a majority
of the directors, with or without cause. Any officer or agent
appointed in accordance with the provisions of Section 4.03 hereof may also be
removed, either with or without cause, by any officer on whom, such power of
removal will have been conferred by the Board of Directors.
Section 4.06
Vacancies and Newly Created
Offices
. If any vacancy will occur in any office by reason of death,
resignation, removal, disqualification, or any other cause, or if a new office
will be created, then such vacancies or new created offices may be filled by the
Board of Directors at any regular or special meeting.
Section 4.07
Chairman of the
Board
. The Chairman of the Board, if there be such an officer,
will have the following powers and duties.
|
|
(a)
|
He
or she will preside at all shareholders'
meetings;
|
|
|
(b)
|
He
or she will preside at all meetings of the Board of Directors;
and
|
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|
(c)
|
He
or she will be a member of the executive committee, if
any.
|
Section
4.08
President
. The
President will have the following powers and duties:
(a) If
no Chief Executive Officer has been appointed, he or she will be the chief
executive officer of the corporation, and, subject to the direction of the Board
of Directors, will have general charge of the business, affairs, and property of
the corporation and general supervision over its officers, employees, and
agents;
(b) If
no Chairman of the Board has been chosen, or if such officer is absent or
disabled, he or she will preside at meetings of the shareholders and Board of
Directors;
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(c)
|
He
or she will be a member of the executive committee, if
any;
|
(d) He
or she will be empowered to sign certificates representing shares of the
corporation, the issuance of which will have been authorized by the Board of
Directors; and
(e) He
or she will have all power and will perform all duties normally incident to the
office of a President of a corporation, and will exercise such other powers and
perform such other duties as from time to time may be assigned to him or her by
the Board of Directors.
Section 4.09
Vice Presidents
. The
Board of Directors may, from time to time, designate and elect one or more Vice
Presidents, one of whom may be designated to serve as executive Vice
President. Each Vice President will have such powers and perform such
duties as from time to time may be assigned to him or her by the Board of
Directors or the President. At the request or in the absence or
disability of the President, the Executive Vice President or, in the absence or
disability of the Executive Vice President, the Vice President designated by the
Board of Directors or (in the absence of such designation by the Board of
Directors) by the President, the Senior Vice President, may perform all the
duties of the President, and when so acting, will have all the powers of, and be
subject to all the restrictions upon, the President.
Section 4.10
Secretary
. The
Secretary will have the following powers and duties:
(a) He
or she will keep or cause to be kept a record of all of the proceedings of the
meetings of the shareholders and of the board or directors in books provided for
that purpose;
(b) He
or she will cause all notices to be duly given in accordance with the provisions
of these By–Laws and as required by statute;
(c) He
or she will be the custodian of the records and of the seal of the corporation,
and will cause such seal (or a facsimile thereof) to be affixed to all
certificates representing shares of the corporation prior to the issuance
thereof and to all instruments, the execution of which on behalf of the
corporation under its seal will have been duly authorized in accordance with
these By–Laws, and when so affixed, he or she may attest the same;
(d) He
or she will assume that the books, reports, statements, certificates, Articles
of Incorporation, By–Laws and other documents and records required by statute
are properly kept and filed;
(e) He
or she will have charge of the share books of the corporation and cause the
share transfer books to be kept in such manner as to show at any time the amount
of the shares of the corporation of each class issued and outstanding, the
manner in which and the time when such stock was paid for, the names
alphabetically arranged and the addresses of the holders of record thereof, the
number of shares held by each holder and time when each became such holder or
record; and he or she will exhibit at all reasonable times to any director, upon
application, the original or duplicate. share register. He or she
will cause the share book referred to in Section 6.04 hereof to be kept and
exhibited at the principal office of the corporation, or at such other place as
the Board of Directors will determine, in the manner and for the purposes
provided in such Section;
(f) He
or she will be empowered to sign certificates representing shares of the
corporation, the issuance of which will have been authorized by the Board of
Directors; and
(g) He
or she will perform in general all duties incident to the office of Secretary
and such other duties as are given to him or her by these By–Laws or as from
time to time may be assigned to him or her by the Board of Directors or the
President.
Section
4.11
Treasurer
. The
Treasurer will have the following powers and duties:
(a) He
or she will have charge and supervision over and be responsible for the monies,
securities, receipts, and disbursements of the corporation;
(b) He
or she will cause the monies and other valuable effects of the corporation to be
deposited in the name and to the credit of the corporation in such banks or
trust companies or with such banks or other depositories as will be selected in
accordance with Section 5.03 hereof;
(c) He
or she will cause the monies of the corporation to be disbursed by checks or
drafts signed as provided in Section 5.04 hereof drawn on the authorized
depositories of the corporation, and cause to be taken and preserved property
vouchers for all monies disbursed;
(d) He
or she will render to the Board of Directors or the President, whenever
requested, a statement of the financial condition of the corporation and of all
of this transactions as Treasurer, and render a full financial report at the
annual meeting of the shareholders, if called upon to do so;
(e) He
or she will cause to be kept correct books of account of all the business and
transactions of the corporation and exhibit such books to any director on
request during business hours;
(f) He
or she will be empowered from time to time to require from all officers or
agents of the corporation reports or statements given such information as he or
she may desire with respect to any and all financial transactions of the
corporation; and
(g) He
or she will perform in general all duties incident to the office of Treasurer
and such other duties as are given to him or her by these By–Laws or as from
time to time may be assigned to him or her by the Board of Directors or the
President.
Section 4.12
Chief Executive
Officer
. The Board of Directors may employ and appoint a Chief Executive
Officer who may, or may not, be one of the officers or directors of the
corporation. The Chief Executive Officer, if any will have the
following powers and duties:
(a) He
or she will be the chief executive officer of the corporation and, subject to
the directions of the Board of Directors, will have general charge of the
business affairs and property of the corporation and general supervision over
its officers, employees, and agents:
(b) He
or she will be charged with the exclusive management of the business of the
corporation and of all of its dealings, but at all times subject to the control
of the Board of Directors;
(c) Subject
to the approval of the Board of Directors or the executive committee, if any or
she will employ all employees of the corporation, or delegate such employment to
subordinate officers, and will have authority to discharge any person so
employed; and
(d) He
or she will make a report to the President and directors as often as required,
setting forth the results of the operations under his or her charge, together
with suggestions looking toward improvement and betterment of the condition of
the corporation, and will perform such other duties as the Board of Directors
may require.
Section 4.13
Salaries
. The
salaries and other compensation of the officers of the corporation will be fixed
from time to time by the Board of Directors, except that the Board of Directors
may delegate to any person or group of persons the power to fix the salaries or
other compensation of any subordinate officers or agents appointed in accordance
with the provisions of Section 4.03 hereof. No officer will be
prevented from receiving any such salary or compensation by reason of the fact
that he or she is also a director of the corporation.
Section 4.14
Surety
Bond.
In case the Board of Directors will so require, any
officer or agent of the corporation will execute to the corporation a bond in
such sums and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his or her duties to the
corporation, including responsibility for negligence and for the accounting of
all property, monies, or securities of the corporation which may come into his
or her hands.
ARTICLE V
EXECUTION
OF INSTRUMENTS, BORROWING OF MONEY
AND
DEPOSIT OF CORPORATE FUNDS
Section 5.01
Execution of
Instruments
. Subject to any limitation contained in the
Articles of Incorporation or these By–Laws, the President or Chief Executive
Officer, if any, or any Vice President duly designated by the Board of Directors
as a signatory, may, in the name and on behalf of the corporation, execute and
deliver any contract or other instrument authorized in writing by the Board of
Directors. The Board of Directors may, subject to any limitation
contained in the in the Articles of Incorporation or in these By–Laws, authorize
in writing any officer or agent to execute and delivery any contract or other
instrument in the name an behalf of the corporation; any such authorization may
be general or confined to specific instances.
Section 5.02
Loans
. No
loans or advances will be contracted on behalf of the corporation, no negotiable
Paper or other evidence of its obligation under any loan or advance will be
issued in its name, and no property of the corporation will be mortgaged,
pledged, hypothecated, transferred, or conveyed as security for the payment of
any loan, advance, indebtedness, or liability of the corporation, unless and
except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
Section 5.03
Deposits
. All
monies of the corporation not otherwise employed will be deposited from time to
time to its credit in such banks and/or trust companies or with such bankers or
other depositories as the Board of Directors may select, or as from time to time
may be selected by any officer or agent authorized to do so by the Board of
Directors.
Section 5.04
Checks, Drafts,
Etc.
All notes, drafts, acceptances, checks, endorsements,
and, subject to the provisions of these By–Laws, evidences of indebtedness of
the corporation, will be signed by such officer or officers or such agent or
agents of the corporation and in such manner as the Board of Directors from time
to time may determine. Endorsements for deposit to the credit of the
corporation in any of its duly authorized depositories will be in such manner as
the Board of Directors from time to time may determine.
Section 5.05
Bond and
Debentures
. Every bond or debenture issued by the
corporation will be evidenced by an appropriate instrument which will be signed
by the President, or a Vice President duly authorized to so act by the Board of
Directors, and by the Secretary and sealed with the seal of the
corporation. The seal may be a facsimile, engraved or
printed. Where such bond or debenture is authenticated with the
manual signature of an authorized officer of the corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, should cease to
be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be adopted
by the corporation and issued and delivered as through the person who signed it
or whose facsimile signature has been used thereon had not ceased to be such
officer.
Section 5.06
Sale, Transfer, Etc. of
Securities
. Sales transfers, endorsements, and assignments of
stocks, bonds, and other securities owned by or standing in the name of the
corporation, and the execution and delivery on behalf of the corporation of any
and all instruments in writing incident to any such sale, transfer, endorsement,
or assignment, will be effected by the President, or by any Vice President duly
authorized to so act by the Board of Directors, together with the Secretary, or
by any other officer or agent thereunto authorized by the Board of
Directors.
Section 5.07
Proxies
. Proxies
to vote with respect to shares of other corporations owned by or standing in the
name of the corporation will be executed and delivered on behalf of the
corporation by the President, or any Vice President duly authorized by the Board
of Directors, and the Secretary or Assistant Secretary of the corporation, or by
any officer or agent thereunder authorized by the Board of
Directors.
ARTICLE VI
CAPITAL
SHARES
Section 6.01
Share
Certificates
. Every holder of shares in the corporation will
be entitled to have a certificate, signed by the President or any Vice President
and the Secretary or Assistant Secretary, and sealed with the seal (which May be
a facsimile, engraved printed) of the corporation, certifying the number and
kind, class or series of shares owned by him or her in the corporation;
provided
, however, that where
such a certificate is countersigned by (a) a transfer agent or an assistant
transfer agent, or (b) registered by a registrar, the signature of any such
President, Vice President, Secretary, or Assistant Secretary may be a
facsimile. In case any officer who will have signed, or whose
facsimile signature or signatures will have been used on any such certificate,
will cease to be such officer of the corporation, for any reason, before the
delivery of such certificate by the corporation, such certificate may
nevertheless be adopted by the corporation and be issued and delivered as though
the person who signed it, or whose facsimile signature or signatures will have
been used thereon, has not ceased to be such officers. Certificates
representing shares of the corporation will be in such form as provided by the
statutes of the state of incorporation. There will be entered on the share books
of the corporation at the time of issuance of each share, the number of the
certificate issued, the name and address of the person owning the shares
represented thereby, the number and kind, class or series of such shares, and
the date of issuance thereof. Every certificate exchanged or returned
to the corporation will be marked "Canceled" with the date of
cancellation.
Section 6.02
Transfer of
Shares
. Transfers of shares of the corporation will be made on
the books of the corporation by the holder of record thereof, or by his or her
attorney thereunto duly authorized by a power of attorney duly executed in
writing and filed with the Secretary of the corporation or any of its transfer
agents, and on surrender of the certificate or certificates, properly endorsed
or accompanied by proper instruments of transfer, representing such
shares. Except as provided by law, the corporation and transfer
agents and registrars, if any, will be entitled to treat the holder of record of
any such stock as the absolute owner thereof for all purposes, and accordingly,
will not be bound to recognize any legal, equitable, or other claim to or
interest in such shares on the part of any other person whether or not it or
they will have express or other notice thereof.
Section 6.03
Regulations
. Subject
to the provisions of this Article VI and of the Articles of Incorporation, the
Board of Directors may make such rules and regulations as they deem expedient
concerning the issuance, transfer, redemption, and registration of certificates
for shares of the corporation.
Section 6.04
Maintenance of Stock Ledger
at Principal Place of Business
. A share book (or
books where more than one kind, class, or series of stock is outstanding) will
be kept at the principal place of business of the corporation, or at such other
place as the Board of Directors will determine, containing the names,
alphabetically arranged, of original shareholders of the corporation, their
addresses, their interest, the amount paid on their shares, and all transfers
thereof and the number and class of shares held by each. Such share
books will at all reasonable hours be subject to inspection by persons entitled
by law to inspect the same.
Section 6.05
Transfer Agents and
Registrars
. The Board of Directors may appoint one or more
transfer agents and one or more registrars with respect to the certificates
representing shares of the corporation, and may require all such certificates to
bear the signature of either or both. The Board of Directors may from
time to time define the respective duties of such transfer agents and
registrars. No certificate for shares will be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such
shares.
Section
6.06
Closing
of Transfer Books and Fixing of Record Date
.
(a) The
Board of Directors will have power to close the share books of the corporation
for a period of not to exceed 10 days preceding the date of any meeting of
shareholders, or the date for payment of any dividend, or the date the allotment
of rights, or capital shares will go into effect, or a date in connection with
obtaining the consent of shareholders for any purpose.
(b) In
lieu of closing the share transfer books as aforesaid, the Board of Directors
may fix in advance a date, not exceeding 60 days preceding the date of any
meeting of shareholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital shares will go into effect, or a date in connection with
obtaining any such consent, as a record date for the determination of the
shareholders entitled to a notice of, and to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such
consent.
(c) If
the share transfer books will be closed or a record date set for the purpose of
shareholders entitled to notice of or to vote at a meeting of shareholders. such
books will be closed for, or such record date will be, at least 10 days
immediately preceding such meeting.
Section 6.07
Lost or Destroyed
Certificates
. The corporation may issue a new certificate for
shares of the corporation of any certificate theretofore issued by it, alleged
to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate or his or her
legal representatives, to give the corporation a bond in such form and amount as
the Board of Directors may direct, and with such surety or sureties as may be
satisfactory to the board, to indemnify the corporation and its transfer agents
and registrars, if any, against any claims that may be made against it or any
such transfer agent or registrar on account of the issuance of such new
certificate. A new certificate may be issued without requiring any
bond when, in the judgment of the Board of Directors, it is proper to do
so.
Section 6.08
No Limitation on Voting
Rights; Limitation on Dissenter’s Rights
. To the extent
permissible under the applicable law of any jurisdiction to which the
corporation may become subject by reason of the conduct of business, the
ownership of assets, the residence of shareholders, the location of offices or
facilities, or any other item, the corporation elects not to be governed by the
provisions of any statute that (i) limits, restricts, modified, suspends,
terminates, or otherwise affects the rights of any shareholder to cast one vote
for each share of common stock registered in the name of such shareholder on the
books of the corporation, without regard to whether such shares were acquired
directly from the corporation or from any other person and without regard to
whether such shareholder has the power to exercise or direct the exercise of
voting power over any specific fraction of the shares of common stock of the
corporation issued and outstanding or (ii) grants to any shareholder the right
to have his or her stock redeemed or purchased by the corporation or any other
shareholder on the acquisition by any person or group of persons of shares of
the corporation. In particular, to the extent permitted under the
laws of the state of incorporation, the corporation elects not to be governed by
any such provision, including the provisions of the Nevada Control Share
Acquisitions Act, Sections 78.378 to 78.3793, inclusive, of the Nevada Revised
Statutes, or any statute of similar effect or tenor.
ARTICLE VII
EXECUTIVE
COMMITTEE AND OTHER COMMITTEES
Section 7.01
How
Constituted
. The Board of Directors may designate and
executive committee and such other committees as the Board of Directors may deem
appropriate, each of which committees will consist of two or more
directors. Members of the executive committee and of any such other
committees will be designated annually at the annual meeting of the Board of
Directors;
provided
,
however, that at any time the Board of Directors may abolish or reconstitute the
executive committee or any other committee. Each member of the
executive committee and of any other committee will hold office until his or her
resignation or removal in the manner provided in these By–Laws.
Section 7.02
Powers
. During
the intervals between meetings of the Board of Directors, the executive
committee will have and may exercise all powers of the Board of Directors in the
management of the business and affairs of the corporation, except for such
powers as by law may not be delegated by the Board of Directors to an executive
committee.
Section 7.03
Proceedings
. The
executive committee, and such other committees as may be designated hereunder by
the Board of Directors, may fix its own presiding and recording officer or
officers, and may meet at such place or places, at such time or times and on
such notice (or without notice) as it will determine from time to
time. It will keep a record of its proceedings and will report such
proceedings to the Board of Directors at the meeting of the Board of Directors
next following.
Section 7.04
Quorum and Manner of
Acting
. At all meetings of the executive committee, and of
such other committees as may be determined hereunder by the Board of Directors,
the presence of members constituting a majority of the total authorized
membership of the committee will be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority of the members
present at any meeting at which a quorum is present will be the act of such
committee. The members of the executive committee, and of such other
committees as may be designated hereunder by the Board of Directors, will act
only as a committee and the individual members thereof will have no powers as
such.
Section 7.05
Resignations
. Any
member of the executive committee, and of such other committees as may be
designated hereunder by the Board of Directors, may resign at any time by
delivering a written resignation to either the President, the Secretary, or
Assistant Secretary, or to the presiding officer of the committee of which he or
she is a member, if any will have been appointed and will be in
office. Unless otherwise specified herein, such resignation will take
effect on delivery.
Section 7.06
Removal
. The
Board of Directors may at any time remove any member of the executive committee
or of any other committee designated by it hereunder either for or without
cause.
Section 7.07
Vacancies
. If
any vacancies will occur in the executive committee or of any other committee
designated by the Board of Directors hereunder, by reason of disqualification,
death, resignation, removal, or otherwise, the remaining members will, until the
filling of such vacancy, constitute the then total authorized membership of the
committee and,
provided
that two or more members are remaining, continue to act. Such vacancy
may be filled at any meeting of the Board of Directors.
Section 7.08
Compensation
. The
Board of Directors may allow a fixed sum and expenses of attendance to any
member of the executive committee, or of any other committee designated by it
hereunder, who is not an active salaried employee of the corporation for
attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION,
INSURANCE, AND
OFFICER
AND DIRECTOR CONTRACTS
Section 8.01
Indemnification: Third Party
Actions
. The corporation will have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation. partnership, joint venture, trust, or other enterprise,
against expenses (including attorneys' fees) judgments, fines, and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
any such action, suit or proceeding, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or upon a plea of
nolo contendere
or
its equivalent, will not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and with respect to
any criminal action or proceeding, he or she had reasonable cause to believe
that his or her conduct was unlawful.
Section 8.02
Indemnification: Corporate
Actions
. The corporation will have the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee, or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership joint venture, trust, or
other enterprise, against expenses (including attorney’s fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit, if be or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification will be made in respect of any
claim, issue, or matter as to which such a person will have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
corporation, unless and only to the extent that the court in which the action or
suit was brought will determine on application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as the court deems
proper.
Section 8.03
Determination
. To
the extent that a director, officer, employee, or agent of the corporation has
been successful on the merits or other-wise in defense of any action, suit, or
proceeding referred to in Sections 8.01 and 8.02 hereof, or in defense of any
claim, issue, or matter therein, he or she will be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith. Any other indemnification under Sections 8.01 and 8.02
hereof, will be made by the corporation upon a determination that
indemnification of the officer, director, employee, or assent is proper in the
circumstances because be or she has met the applicable standard of conduct set
forth in Sections 8.01 and 8.02 hereof. Such determination will be made either
(i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding; or (ii) by
independent legal counsel on a written opinion; or (iii) by the shareholders by
a majority vote of a quorum at any meeting duly called for such
purpose.
Section 8.04
General
Indemnification
. The indemnification provided by this Section will not be
deemed exclusive of any other indemnification granted under any provision of any
statute, in the corporation's Articles of Incorporation, these By–Laws,
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and will continue as to a person who has
ceased to be a director, officer, employee, or agent, and will inure to the
benefit of the heirs and legal representatives of such a
person.
Section 8.05
Advances
. Expenses
incurred in defending a civil or criminal action, suit, or proceeding as
contemplated in this Section may be paid by the corporation in advance of the
final disposition of such action, suit, or proceeding upon a majority vote of a
quorum of the Board of Directors and upon receipt of an undertaking by or on
behalf of the director, officers, employee, or agent to repay such amount or
amounts unless if it is ultimately determined that he or she is to agent to
indemnified by the corporation as authorized by this Section.
Section 8.06
Scope of
Indemnification
. The indemnification authorized by this
Section will apply to all present and future directors, officers, employees, and
agents of the corporation and will continue as to such persons who ceases to be
directors, officers, employees, or agents of the corporation, and will inure to
the benefit of the heirs, executors, and administrators of all such persons and
will be in addition to all other indemnification permitted by law.
Section 8.07
Insurance
. The
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against any such
liability and under the laws of the state of incorporation, as the same may
hereafter be amended or modified.
ARTICLE IX
FISCAL
YEAR
The
fiscal year of the corporation will be fixed by resolution of the Board of
Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to
time declare, and the corporation may pay, dividends on its outstanding shares
in the manner and on the terms and conditions provided by the Articles of
Incorporation and these By–Laws.
ARTICLE XI
AMENDMENTS
These By–Laws may be altered or
repealed at any regular meeting of the stockholders or of the Board of
Directors, or at any special meeting of the stockholders or Board of Directors
if notice of such alteration or repeal be contained in the notice of such
special meeting. These By–Laws will be subject to amendment,
alteration, or repeal and new By–Laws may be made, except that:
(a) No
By–Laws adopted or amended by the shareholders will be altered or repealed by
the Board of Directors.
(b) No
By–Laws will be adopted by the Board of Directors which will require more than a
majority of the voting shares for a quorum at a meeting of shareholders, or more
than a majority of the votes cast to constitute action, by the shareholders,
except where higher percentages are required by law;
provided
, however, that (i)
if any By–Law regulating an impending election of directors is adopted, amended
or repealed by the Board of Directors, there will be set forth in the notice of
the next meeting of shareholders for the election of directors, the By–Laws so
adopted, amended or
repealed, together with
a concise statement of the changes made; and (ii) no amendment, alteration or
repeal of this Article XI will be made except by the
shareholders.
CERTIFICATE
OF SECRETARY
The undersigned does hereby certify
that he or she is the Secretary of Protect Pharmaceutical Corporation, a
corporation duly organized and existing under and by virtue of the laws of the
State of Nevada; that the above and foregoing By–Laws of said corporation were
duly and regularly adopted as such by the Board of Directors of the Corporation
at a meeting of the Board of Directors, which was duly regularly held on the
28
th
day of May 2010, and that the above and foregoing By–Laws are now in
full force and
effect.
DATED
THIS 28
th
day of
May 2010.
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Ramesha
Sesha
, Secretary
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