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<SEC-DOCUMENT>0001165527-10-000845.txt : 20101112
<SEC-HEADER>0001165527-10-000845.hdr.sgml : 20101111
<ACCEPTANCE-DATETIME>20101112154935
ACCESSION NUMBER: 0001165527-10-000845
CONFORMED SUBMISSION TYPE: 10-Q/A
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 20060331
FILED AS OF DATE: 20101112
DATE AS OF CHANGE: 20101112
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: UPSTREAM BIOSCIENCES INC.
CENTRAL INDEX KEY: 0001174891
STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835]
IRS NUMBER: 000000000
FISCAL YEAR END: 1130
FILING VALUES:
FORM TYPE: 10-Q/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-50331
FILM NUMBER: 101186311
BUSINESS ADDRESS:
STREET 1: 71130, 198-8060 SILVER SPRING BLVD.
CITY: CALGARY
STATE: A0
ZIP: T3B 5K2
BUSINESS PHONE: 403-537-2516
MAIL ADDRESS:
STREET 1: 71130, 198-8060 SILVER SPRING BLVD.
CITY: CALGARY
STATE: A0
ZIP: T3B 5K2
FORMER COMPANY:
FORMER CONFORMED NAME: FORCE ENERGY CORP.
DATE OF NAME CHANGE: 20090415
FORMER COMPANY:
FORMER CONFORMED NAME: UPSTREAM BIOSCIENCES INC.
DATE OF NAME CHANGE: 20060209
FORMER COMPANY:
FORMER CONFORMED NAME: INTEGRATED BRAND SOLUTIONS INC
DATE OF NAME CHANGE: 20020605
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<FILENAME>g4511.txt
<DESCRIPTION>AMENDMENT NO. 2 TO FORM 10-Q
<TEXT>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 000-50331
UPSTREAM BIOSCIENCES INC.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0371433
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Suite 100 - 570 West 7th Avenue, Vancouver, British Columbia, Canada V5Z 4S6
(Address of principal executive offices)
604.707-5800
(Issuer's telephone number)
800 - 885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). (Check one): Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
44,800,000 common shares issued and outstanding as of May 10, 2006
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
EXPLANATION OF THE AMENDED FILING: THIS FORM 10-QSB AND THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2006 INCLUDED HEREIN
HAVE BEEN AMENDED. OUR COMPANY HAS RESTATED THE FINANCIAL STATEMENTS TO
CORRECT THE CALCULATION OF THE CONSOLIDATED ACCOUNTING FOR THE ACCRUAL SEVERANCE
LIABILITIES TO TWO EMPLOYEES.. ACCORDINGLY, OUR COMPANY HAS RESTATED THE BALANCE
SHEET, STATEMENT OF OPERATIONS AND DEFICIT, AND STATEMENT OF CASH FLOWS FOR THE
PERIOD ENDING MARCH 31, 2006 TO CORRECTLY PRESENT THESE REVISED CALCULATIONS.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Our financial statements are stated in United States dollars and are prepared in
accordance with United States generally accepted accounting principles.
It is the opinion of management that the consolidated interim financial
statements for the quarter ended March 31, 2006 includes all adjustments
necessary in order to ensure that the consolidated financial statements are not
misleading.
3
<PAGE>
UPSTREAM BIOSCIENCES INC.
Vancouver, BC
CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended March 31, 2006
4
<PAGE>
UPSTREAM BIOSCIENCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
2006
(Unaudited) December 31,
(Restated - 2005
see Note 8) (Audited)
---------- ----------
<S> <C> <C>
ASSETS $ $
CURRENT ASSETS
Cash 359,453 21,434
Receivables 301 1,286
Prepaid expenses 4,692 5,926
---------- ----------
364,446 28,646
========== ==========
LIABILITIES $ $
CURRENT LIABILITIES
Accounts payable and accrued liabilities 69,640 8,089
Accrued license fees (Notes 7(a) and (b)) 23,706 23,706
Amounts owing to related parties 398,690 78,487
---------- ----------
492,036 110,282
CONVERTIBLE DEBENTURE (Note 4) 329,545 --
---------- ----------
821,581 110,282
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' DEFICIENCY
COMMON STOCK (Note 5)
750,000,000 shares authorized at $0.001 par value
44,800,000 issued and outstanding (December 31, 2005 - 6,000,000) 845 345
ADDITIONAL PAID IN CAPITAL 1,014,614 --
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE (1,472,594) (81,981)
---------- ----------
(457,135) (81,636)
---------- ----------
364,446 28,646
========== ==========
</TABLE>
The accompanying notes are an integral part of these
interim consolidated financial statements.
5
<PAGE>
UPSTREAM BIOSCIENCES INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
From Inception
(June 14, 2004) to
For the Three Months Ended March 31, March 31,
2006 2006
(Restated - (Restated -
see Note 8) 2005 see Note 8)
----------- ----------- -----------
<S> <C> <C> <C>
$ $ $
REVENUE
Consulting revenue -- 20,000 67,600
----------- ----------- -----------
OPERATING EXPENSES
Interest and bank charges 149,034 -- 149,266
Investor communications 6,281 -- 6,281
License fees and royalties 5,927 -- 22,948
Management compensation 377,429 36,806 480,060
Office and general administration 2,490 2,964 15,997
Professional fees 51,456 -- 67,646
Stock-based compensation to consultant 700,150 -- 700,150
----------- ----------- -----------
1,292,767 39,770 1,442,348
----------- ----------- -----------
NET LOSS (1,292,767) (19,770) (1,374,748)
DEFICIT, BEGINNING (81,981) 382 --
Reverse take over re-capitalization adjustment
(Note 3) (97,846) -- (97,846)
----------- ----------- -----------
DEFICIT, ENDING (1,472,594) (19,388) (1,472,594)
=========== =========== ===========
BASIC NET LOSS PER SHARE (0.02) (0.003)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 64,164,835 6,000,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
interim consolidated financial statements
6
<PAGE>
UPSTREAM BIOSCIENCES INC
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
From Inception
(June 14, 2004) to
For the Three Months Ended March 31, March 31,
2006 2006
(Restated - (Restated -
see Note 8) 2005 see Note 8)
----------- ----------- -----------
<S> <C> <C> <C>
$ $ $
CASH FLOW USED IN OPERATING ACTIVITIES
Net loss (1,292,767) (19,770) (1,374,748)
Non-cash items included in net loss:
Stock based operating expenses 700,150 -- 700,150
Interest expense 144,509 -- 144,509
Accrued severance 300,000 -- 300,000
Changes in non-cash working capital:
Receivables 985 14,330 (301)
Prepaid expenses 1,234 -- (4,692)
Accounts payable and accrued liabilities (36,295) 2,361 (28,206)
Amounts owing to related parties 20,203 -- 98,690
Accrued license fees -- -- 23,706
---------- ---------- ----------
NET CASH FLOW USED IN OPERATING ACTIVITIES (161,981) (3,079) (140,892)
---------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from convertible debentures 500,000 -- 500,000
Issuance of common stock for cash -- -- 345
Amounts owing to related parties -- 18,609 --
---------- ---------- ----------
NET CASH FLOW FROM FINANCING ACTIVITIES 500,000 18,609 500,345
---------- ---------- ----------
INCREASE IN CASH 338,019 15,530 359,453
CASH, BEGINNING 21,434 6,480 --
---------- ---------- ----------
CASH, ENDING 359,453 22,010 359,453
========== ========== ==========
</TABLE>
Supplemental disclosure with respect to cash flows (note 6)
The accompanying notes are an integral part of these
interim consolidated financial statements.
7
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
(1) NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS
By Share Exchange Agreement amended and dated February 24, 2006, Upstream
Biosciences Inc. (formerly Integrated Brand Solutions Inc) (called "UBSI" or
"the Company"), a Nevada corporation, incorporated on March 20, 2002 under the
laws of the State of Nevada, acquired 100% of the issued and outstanding shares
of Upstream Biosciences Inc. ("Upstream Canada"), in exchange for 24,000,000
shares of common stock of the Company representing 54.2% of the total issued and
outstanding shares of the Company at the time (See Note 3). In connection with
this transaction, UBSI changed its name to Upstream Biosciences Inc.
This acquisition has been accounted for as a reverse acquisition with Upstream
Canada being treated as the accounting parent (legal subsidiary) and UBSI being
treated as the accounting subsidiary (legal parent). Accordingly, the
consolidated results of operations of the Company include those of Upstream
Canada for the period from its inception on June 14, 2004 and those of UBSI
since the date of the reverse acquisition, February 24, 2006.
Upstream Canada was incorporated on June 14, 2004 under the laws of Canada for
the purpose of developing genetic diagnostic biomarkers for use in determining a
patient's susceptibility to disease and predicting a patient's response to
drugs. The business strategy is to generate revenues through licensing
proprietary technologies or collaborating with third parties in the disease
susceptibility, biomarkers identification, and drug response areas of cancer,
primarily to companies that develop and/or market developing diagnostic
products.
The Company is currently considered a Development Stage Enterprise, under the
guidelines of Statement of Financial Accounting Standards ("SFAS") No. 7.
GOING CONCERN
These consolidated financial statements have been prepared in accordance with
United States generally accepted accounting principles, on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. As at March 31,
2006, the Company has a working capital deficiency of $127,590 and has incurred
losses since inception of $1,472,594. Further losses are anticipated in the
development of its business and there can be no assurance that the Company will
be able to achieve or maintain profitability.
The continuing operations of the Company and the recoverability of the carrying
value of assets is dependent upon the ability of the Company to obtain necessary
financing to fund its working capital requirements, and upon future profitable
operations. The accompanying financial statements do not include any adjustments
relative to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result from the outcome
of this uncertainty.
There can be no assurance that capital will be available as necessary to meet
the Company's working capital requirements or, if the capital is available, that
it will be on terms acceptable to the Company. The issuances of additional
equity securities by the Company may result in dilution in the equity interests
of its current stockholders. Obtaining commercial loans, assuming those loans
would be available, will increase the Company's liabilities and future cash
commitments. If the Company is unable to obtain financing in the amounts and on
terms deemed acceptable, the business and future success may be adversely
affected.
8
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
BASIS OF PRESENTATION
The unaudited interim consolidated financial statements included herein have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. In the opinion of management, all adjustments
(consisting of normal recurring accruals and stock transactions) considered
necessary for a fair presentation have been included. Operating results for the
restated three months ended March 31, 2006 are not necessarily indicative of the
results that may be expected for any interim period or the entire year. For
further information, these interim consolidated financial statements and the
related notes should be read in conjunction with the Company's audited financial
statements for the year ended December 31, 2005, included in the Company's
annual report on Form 10-KSB.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Upstream Canada, which was acquired by reverse
acquisition on February 24, 2006. All significant inter-company transactions and
account balances have been eliminated.
(B) CASH AND CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments that are readily
convertible into cash with maturity of three months or less when purchased. As
at March 31, 2006, the cash and cash equivalents consists of bank deposits.
(C) FURNITURE AND EQUIPMENT
Furniture and equipment is recorded at cost. Depreciation is computed to
depreciate the cost of the furniture and equipment less residual values over its
useful lives, estimated to be 4 years from date of acquisition.
(D) DISPOSAL OF LONG-LIVED ASSETS
In accordance with SFAS 144, "Accounting for the Impairment on Disposal of
Long-Lived Assets" ("SFAS 144"), the Company measures all long-lived assets that
are to be disposed of by sale at the lower of book value or fair value less
disposal costs. As of March 31, 2006, management has determined that there are
no material asset impairment obligations on disposal of long-lived assets.
(E) FOREIGN CURRENCY TRANSACTIONS
The functional currency of the Company is the US dollar and of Upstream Canada
is the Canadian dollar. In accordance with SFAS No. 52, "Foreign Currency
Translation", the foreign currency financial statements of Upstream Canada are
re-measured into U.S. dollars. Monetary assets and liabilities are remeasured
using the foreign exchange rate that prevailed at the balance sheet date.
Revenue and expenses are translated at weighted average rates of exchange during
the period and stockholders' equity accounts and capital asset accounts are
translated by using historical exchange rates. The resulting re-measurement gain
or loss is included in the consolidated statement of operations.
(F) REVENUE RECOGNITION
Revenue from all sources is recognized when the amount is fixed or determinable,
delivery has occurred or initial services have been performed, and collection is
reasonably assured. Any amounts received in advance of the goods being delivered
or services being performed are recorded as deferred revenue.
9
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
(G) GOVERNMENT ASSISTANCE
The Company has received and may receive government assistance in the future
regarding the research and development work of certain Company employees. When
the work is performed, the related assistance amount is set up in receivables
and credited to compensation expense.
(H) INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the deferred
tax consequences attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective tax balances.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to the taxable income in the years in which those differences
are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment.
For deferred tax assets, the full amount of the potential future benefit is
recorded. A valuation allowance is then used to adjust for the probability of
realization.
(I) FINANCIAL INSTRUMENTS
In accordance with the requirements of SFAS No. 107, the Company has determined
the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of financial
instruments classified as current assets or liabilities (cash, receivables,
accounts payable and advances from related parties) approximate carrying value
due to the immediate or short-term maturity of these financial instruments.
Fair values of long-term debt are based on market prices where available. When
quoted market prices are not available, fair values are estimated using
discounted cash flow analysis, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.
(J) 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 revenue and expenses during
the reporting period. Actual results could differ from these estimates.
Significant estimates used in preparing these financial statements are: (i) the
capital transactions pertaining to the convertible debenture, including the fair
value calculation of the detachable warrants and the embedded beneficial
conversion feature; and (ii) the fair value of stock compensation expense.
(K) STOCK-BASED COMPENSATION
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123R, "Share-Based Payment", which replaced SFAS No. 123, "Accounting for
Stock-Based Compensation" and superseded APB Opinion No. 25, "Accounting for
Stock Issued to Employees". In January 2005, the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 107,
"Share-Based Payment", which provides supplemental implementation guidance for
SFAS No. 123R. SFAS No. 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial
statements based on the grant date fair value of the award. SFAS No. 123R was to
10
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
be effective for interim or annual reporting periods beginning on or after June
15, 2005, but in April 2005 the SEC issued a rule that will permit most
registrants to implement SFAS No. 123R at the beginning of their next fiscal
year, instead of the next reporting period as required by SFAS No. 123R. The
pro-forma disclosures previously permitted under SFAS No. 123 no longer will be
an alternative to financial statement recognition. Under SFAS No. 123R, the
Company must determine the appropriate fair value model to be used for valuing
share-based payments, the amortization method for compensation cost and the
transition method to be used at date of adoption.
The transition methods include prospective and retroactive adoption options.
Under the retroactive options, prior periods may be restated either as of the
beginning of the year of adoption or for all periods presented. The prospective
method requires that compensation expense be recorded for all unvested stock
options and restricted stock at the beginning of the first quarter of adoption
of SFAS No. 123R, while the retroactive methods would record compensation
expense for all unvested stock options and restricted stock beginning with the
first period restated. The Company adopted the modified prospective approach of
SFAS No. 123R for the fiscal year beginning on January 1, 2006. The Company
recorded compensation expense in the first quarter of 2006 because there were
vested stock options existing prior to the adoption. Stock-based compensation
expense for awards granted prior to January 1, 2006 were based on the grant date
fair-value as determined under the pro-forma provisions of SFAS No. 123.
(L) EARNINGS (LOSS) PER SHARE
The computation of basic earnings (loss) per share is computed by dividing net
earnings (loss) available to common stockholders by the weighted average number
of outstanding common shares of the company during the period. The diluted loss
per share gives effect to all potentially dilutive common shares outstanding
during the period. The computation of diluted loss per share does not assume
conversion, exercise or contingent exercise of securities that would have an
anti-dilutive effect on net loss.
As of March 31, 2006, the Company had 600,000 potentially dilutive securities
outstanding in the form of 200,000 share purchase warrants attached to the
convertible debenture and 400,000 stock options granted. The accompanying
presentation in the consolidated statements of operations only includes the
basic net earnings (loss) per share since the potentially dilutive securities
are anti-dilutive to the basic net earnings (loss) per share.
(M) COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform to the current
period's presentation.
(N) RECENT ACCOUNTING PRONOUNCEMENTS
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140", to
simplify and make more consistent the accounting for certain financial
instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", to permit fair value re-measurement for any
hybrid financial instrument with an embedded derivative that otherwise would
require bifurcation, provided that the whole instrument is accounted for on a
fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the
Impairment or Disposal of Long-Lived Assets", to allow a qualifying
special-purpose entity to hold a derivative financial instrument that pertains
to a beneficial interest other than another derivative financial instrument.
SFAS No. 155 applies to all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. This standard is not expected to have a
significant effect on the Company's future reported financial position or
results of operations.
11
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
This statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing
assets and servicing liabilities at fair value eliminates the necessity for
entities that manage the risks inherent in servicing assets and servicing
liabilities with derivatives to qualify for hedge accounting treatment and
eliminates the characterization of declines in fair value as impairments or
direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year
beginning after September 15, 2006. This standard is not expected to have a
significant effect on the Company's future reported financial position or
results of operations.
(3) SHARE EXCHANGE AGREEMENT WITH UPSTREAMCANADA
On February 24, 2006, the Company entered into an amended and restated share
exchange agreement with Upstream Canada and the former shareholders of Upstream
Canada. The amended share exchange agreement amended and restated the terms of a
share exchange agreement initially dated February 3, 2006 that was entered into
among the same parties.
The closing of the transactions contemplated in the amended share exchange
agreement and the acquisition of all of the issued and outstanding common stock
of Upstream Canada occurred on March 1, 2006. In accordance with the closing of
this agreement, the Company issued 24,000,000 common shares to the former
shareholders of Upstream Canada in exchange for the acquisition by the Company
of all 6,000,000 issued and outstanding common shares of Upstream Canada on the
basis of four common shares of the company for every one common share of
Upstream Canada.
The Company had 44,300,000 common shares issued and outstanding as of March 1,
2006 after the issuance of the 24,000,000 common shares to former shareholders
of Upstream Canada and the cancellation without consideration of 68,650,000
common shares held by two former significant shareholders of the Company. As of
the closing date, the former shareholders of Upstream Canada held 24,000,000
common shares, representing approximately 54.2% of the issued and outstanding
common shares of our company. The share exchange was deemed to be a reverse
acquisition for accounting purposes whereby Upstream Canada is treated as the
accounting parent (legal subsidiary) and UBSI is treated as the accounting
subsidiary (legal parent). Upstream Canada, the acquired entity, is regarded as
the predecessor entity as of March 1, 2006.
12
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
(4) CONVERTIBLE DEBENTURE
During the restated three months ended March 31, 2006, the Company issued a
three year 5% $500,000 convertible debenture due on February 1, 2009. The
debenture is convertible into 500,000 shares of common stock anytime at the
Company's option. In addition, 200,000 share purchase warrants were issued to
the debenture holder exercisable at $1.25 per share until the earlier of (a)
December 31, 2006 or (b) when two patents have been filed with the US patent
office claiming novel applications of the Company's technology to assist in the
diagnosis of two diseases other than prostate cancer. The 5% interest is being
accrued during the three year term of the debenture but is not payable until
maturity. At restated March 31, 2006, accrued interest of $4,167 has been
recorded.
In accordance with EITF 98-5 "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios",
the Company recognized the value of the embedded beneficial conversion feature
of $134,482. This value was recorded immediately as non-cash interest expense
for the three months ended March 31, 2006 since the debenture can be converted
at any time.
In addition and in accordance with EITF 00-27 "Application of Issue No. 98-5 to
Certain Convertible Instruments", the Company has allocated the proceeds of
issuance between the convertible debt and the detachable warrants based on their
relative fair values. Accordingly, the Company recognized the fair value of the
detachable warrants of $180,482 as additional paid-in capital and will record
further interest expense over the term of the Convertible Debenture resulting
from this difference between the stated value and carrying value at the date of
issuance. As an offset, the carrying value of the Convertible Debenture will be
accreted to the face value of $500,000 at maturity. In this connection, interest
expense of $10,027 has been accreted for the restated three months ended March
31, 2006, increasing the carrying value of the Convertible Debenture from
$319,516 at the date funds were received to $329,543 at March 31, 2006.
(5) COMMON STOCK
The authorized capital of the Company consists of 750,000,000 voting common
shares with $0.001 par value. The combined changes in common stock and
additional paid-in capital for the restated three months ended March 31, 2006
are as follows:
<TABLE>
<CAPTION>
No. of
Shares Amount
---------- ------
<S> <C> <C>
$
Balance December 31, 2005 88,950,000 49,000
Shares issued in exchange for 100% of Upstream Canada shares 24,000,000
Shares of former Company shareholders cancelled as part of
the acquisition (68,650,000)
----------- ---------
Balance March 1, 2006 after share exchange 44,300,000 49,000
Shares issued as compensation to a consultant 500,000 600,000
Fair value of stock options granted 100,150
Capital transactions re. convertible debenture
Fair value of detachable warrants 180,482
Embedded beneficial conversion feature 134,482
Par value of Upstream Canada shares issued 345
Consolidation elimination at date of acquisition (49,000)
----------- ---------
Balance March 31, 2006 44,800,000 1,015,459
=========== =========
</TABLE>
13
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
During the three months ended March 31, 2006:
(i) the Company issued 24,000,000 shares of common stock to the former
shareholders of Upstream Canada, representing 54.2% of the Company's outstanding
shares at the closing date, in exchange for 100% of the shares of Upstream
Canada. At the same time, 68,650,000 shares held by two former significant
shareholders of the Company were cancelled without consideration. (See Note 3)
(ii) the Company issued 500,000 shares of common stock and 400,000 stock options
pursuant to a consulting agreement for financial and administrative services.
The estimated fair values were $600,000 and $100,150 respectively, based on the
Black-Scholes option pricing model, which amounts were recorded as compensation
expense in the three months ended March 31, 2006.
STOCK PURCHASE WARRANTS
At March 31, 2006, the Company had 200,000 detachable warrants outstanding for
the purchase of 200,000 common shares exercisable at $1.25 per share in
connection with the convertible debenture described in Note 5.
STOCK OPTIONS
At March 31, 2006, the Company has granted 400,000 stock options to one Company
officer exercisable until March 1, 2016 in accordance with the terms and
conditions of a stock option plan currently under development, with 100,000
options vesting immediately and 300,000 options vesting at the rate of 100,000
per year over the following three years until February 2009.
In addition, the Company has agreed to grant 800,000 stock options to two
Company officers in the future under the terms and conditions of a stock option
plan presently under development. Of this 800,000 stock options, 300,000 options
will vest on February 28, 2007, 300,000 on February 28, 2008 and the balance of
200,000 on February 20, 2009.
(6) SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
From Inception
Six months ended Six months ended (June 14, 2004) to
March 31, 2006 March 31, 2005 March 31, 2006
-------------- -------------- --------------
<S> <C> <C> <C>
Cash paid during period for:
Interest and bank charges $4,525 $ -- $4,757
Income taxes -- -- --
====== ====== ======
</TABLE>
14
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
A summary of the shares of common stock issued by the Company for non-cash
consideration during the six months ended June 30, 2006 is presented below.
During the restated three months ended March 31, 2006:
(i) the Company issued 24,000,000 shares of common stock to the former
shareholders of Upstream Canada, representing 54.2% of the Company's outstanding
shares at the closing date, in exchange for 100% of the shares of Upstream
Canada. At the same time, 68,650,000 shares held by two former significant
shareholders of the Company were cancelled without consideration. (See Note 3)
(ii) the Company issued 500,000 shares of common stock and 400,000 stock options
pursuant to a consulting agreement for financial and administrative services.
The estimated fair values were $600,000 and $100,150 respectively, based on the
Black-Scholes option pricing model, which amounts were recorded as compensation
expense in the three months ended March 31, 2006.
(7) COMMITMENTS AND CONTINGENCIES
(A) LICENSE AGREEMENT WITH THE UNIVERSITY OF BRITISH COLUMBIA
Upstream Canada entered into a License Agreement with the University of British
Columbia ("UBC") on March 23, 2005 for a term of ten years regarding
bioinformatics technology developed at UBC. Under the contract, Upstream Canada
agreed to pay a license fee consisting of $7,500 cash and an equity component
yet to be determined. Due to the share exchange agreement with Upstream Canada
described in Note 3, the Company is currently negotiating with the University of
British Columbia to issue common shares of the Company instead of Upstream
Canada shares in order to meet the equity portion of the license fee commitment.
In addition to the license fee, Upstream Canada has agreed to pay minimum annual
royalties commencing in March 2005 as follows:
Years 1 and 2 $ 7,500
Years 3 through 7 15,000
Years 8 through 10 20,000
(B) LICENSE AGREEMENT WITH BRITISH COLUMBIA CANCER AGENCY BRANCH
The Company entered into a License Agreement with the British Columbia Cancer
Agency Branch ("BCCA") on March 10th, 2005 for a term of three years regarding
Bioinformatics technology developed at UBC. Under the terms of the contract, the
Company has agreed to pay a license fee of $20,000, payable in shares of the
Company at a fair value which is subject to BCCA approval.
In addition to the license fee, the Company has agreed to pay annual royalties
equal to 10% of gross revenue from the sales of licensed product or $10,000,
whichever is greater.
(C) EMPLOYMENT CONTRACTS WITH COMPANY OFFICERS
The Company has entered into employment contracts with three officers of the
Company. The total annual compensation commitment is $300,000 with an additional
$50,000 bonus payable to two of the officers pending the filing of US patents
for DNA biomarkers for two additional diseases.
15
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
(C) EMPLOYMENT CONTRACTS WITH COMPANY OFFICERS CONT'D
After the first year anniversary of April 30, 2007, a 40% bonus will be payable
to the two officers based on achieving the yet to be determined mutually agreed
performance milestones.
In addition and pursuant to these contracts: (i) 500,000 shares were issued as a
signing bonus of which 300,000 shares were issued immediately and 200,000 shares
were put into escrow pending achievement of specific performance; and (ii)
400,000 stock options were granted and 800,000 stock options were committed to
be granted all in accordance with the terms and conditions of a stock option
plan currently under development.
In the event of contract termination and subject to a 90 day termination clause
under two of the three contracts, retiring allowances of approximately $300,000
will become immediately payable to the three Company officers and have been
expensed in the current reporting period.
8) RESTATEMENTS
The Company has restated its financial statements for the three months ended
March 31, 2006 to reflect the following adjustments:
<TABLE>
<CAPTION>
As At March 31, 2006
----------------------------------------------------------
As Originally
Reported Adjustments As Restated
-------- ----------- -----------
<S> <C> <C> <C>
$ $ $
BALANCE SHEET
Advances to related parties 98,690 300,000 398,690
Accumulated deficit (1,172,594) (300,000) (1,472,594)
For The Three Months Ended March 31, 2006
----------------------------------------------------------
As Originally
Reported Adjustments As Restated
-------- ----------- -----------
$ $ $
STATEMENT OF OPERATIONS AND DEFICIT
Management compensation 77,429 300,000 377,429
Net Loss increase (992,767) (300,000) (1,292,767)
STATEMENT OF CASH FLOWS
Net cash flow (used in) operating
activities (182,184) (320,203) (161,981)
Net cash flow from financing activities 520,203 320,203 500,000
</TABLE>
16
<PAGE>
UPSTREAM BIOSCIENCES, INC
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
RESTATED MARCH 31, 2006
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative From Inception (June 14, 2004) to March 31, 2006
------------------------------------------------------------
As Originally
Reported Adjustments As Restated
-------- ----------- -----------
<S> <C> <C> <C>
$ $ $
STATEMENT OF OPERATIONS AND DEFICIT
Management compensation 180,060 300,000 480,060
Net Loss increase (1,142,348) (300,000) (1,442,348)
STATEMENT OF CASH FLOWS
Net cash flow (used in) operating
activities (239,582) (320,203) (140,892)
Net cash flow from financing activities 599,035 (98,690) 500,345
</TABLE>
(i) Employment Contract with Comp any Officers
In connection with the employment contract with company officers, the Company
has corrected the following:
- The entire $300,000 of severance payable to officers and directors of
the company has now been recognized in the March 31, 2006 reporting
period rather than deferred over the life of the contracts as
previously recorded.
(ii) Other
The net loss per share increased from $0.01 to $0.02 resulting from the
restatement
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements as that term is
defined in Section 27A of the United States Securities Act of 1933 and section
21E of the United States Securities Exchange Act of 1934. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States dollars and are prepared in
conformity with generally accepted accounting principles in the United States of
America for interim financial statements. The following discussion should be
read in conjunction with our financial statements and the related notes that
appear elsewhere in this quarterly report.
As used in this quarterly report and unless otherwise indicated, the terms "we",
"us" and "our" refer to Upstream Biosciences Inc., formerly known as Integrated
Brand Solutions Inc., and our wholly-owned subsidiary. The term "Upstream
Nevada" specifically refers to our company and the term "Upstream Canada"
specifically refers to our wholly-owned subsidiary, Upstream Biosciences Inc., a
Canadian corporation. Unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.
CORPORATE HISTORY
We were incorporated pursuant to the laws of the State of Nevada on March 20,
2002 under the name Integrated Brand Solutions Inc. On February 6, 2006, we
changed our name to Upstream Biosciences Inc. after we entered into a share
exchange agreement dated February 3, 2006 with Upstream Canada. The share
exchange agreement contemplated our company acquiring all of the issued and
outstanding common shares of Upstream Canada in exchange for the issuance by our
company of 18,000,000 common shares. Following negotiations amongst the parties
to the share exchange agreement, however, we entered into an amended and
restated share exchange agreement dated February 24, 2006, whereby our company
agreed to acquire all of the issued and outstanding stock of Upstream Canada in
exchange for the issuance by our company of 24,000,000 common shares. The
closing of the transactions contemplated in the amended share exchange agreement
and the acquisition of all of the issued and outstanding shares of Upstream
Canada occurred on March 1, 2006. As at the closing date, the former
shareholders of Upstream Canada held approximately 54.2% of the issued and
outstanding common shares of our company. The acquisition of Upstream Canada was
deemed to be a reverse acquisition for accounting purposes. Upstream Canada, the
acquired entity, is regarded as the predecessor entity as of March 1, 2006.
Following our incorporation, we commenced the business as a start-up integrated
marketing services company. We offered integrated marketing services such as
advertising design, advertisement placement strategies, advertising sales,
branding services, website development, marketing plans, and tools to establish
focus groups and media strategies to prospective clients. Additionally, we
offered advertising and integrated marketing and branding services in hopes of
assisting companies in describing their products and services.
We were not successful in implementing our business plan as a marketing and
branding services business. As management of our company investigated
opportunities and challenges in the business of being a marketing and branding
18
<PAGE>
services company, management realized that the business did not present the best
opportunity for our company to realize value for our shareholders. Accordingly,
we abandoned our previous business plan and focussed on the identification of
suitable businesses with which to enter into a business opportunity or business
combination.
SHARE EXCHANGE WITH UPSTREAM CANADA
On February 24, 2006, we entered into an amended and restated share exchange
agreement with Upstream Canada and the former shareholders of Upstream Canada.
The amended share exchange agreement amended and restated the terms of a share
exchange agreement dated February 3, 2006 that was entered into among the same
parties.
The closing of the transactions contemplated in the amended share exchange
agreement and the acquisition of all of the issued and outstanding common stock
of Upstream Canada occurred on March 1, 2006. In accordance with the closing of
the amended share exchange agreement, we issued 24,000,000 common shares to the
former shareholders of Upstream Canada in exchange for the acquisition by our
company of all of the 6,000,000 issued and outstanding common shares of Upstream
Canada on the basis of four common shares of our company for every one common
share of Upstream Canada.
Our company had 44,300,000 common shares issued and outstanding as of March 1,
2006 as a result of the issuance of 24,000,000 common shares to the former
shareholders of Upstream Canada and the cancellation without consideration of
68,650,000 common shares held by two former significant shareholders of our
company. As of the closing date, the former shareholders of Upstream Canada held
24,000,000 common shares, representing approximately 54.2% of the issued and
outstanding common shares of our company. The share exchange was deemed to be a
reverse acquisition for accounting purposes. Upstream Canada, the acquired
entity, is regarded as the predecessor entity as of March 1, 2006.
BUSINESS SUBSEQUENT TO THE ACQUISITION OF UPSTREAM CANADA
As of the closing date of the amended share exchange agreement on March 1, 2006,
our company commenced the business of developing genetic diagnostic biomarkers
for use in determining a patient's susceptibility to disease and predicting a
patient's response to drugs. Our business strategy is to generate revenues
through licensing our technologies or collaborating with third parties in the
disease susceptibility, biomarkers identification, and drug response areas of
cancer, primarily to companies that develop and/or market developing diagnostic
products.
Our company focuses our research on variations in the untranslated regions of
the human genome. Variations in these regions can be used as diagnostic markers
to predict or aid in the prediction of susceptibility to disease or to predict a
patient's response to drugs. We have identified and filed a provisional patent
application on genetic markers that, following successful development and
testing, may assist in determining the susceptibility of patients to liver
cancer. These markers may also be important for determining the susceptibility
of patients to other types of cancer, such as prostate or colorectal cancer. We
have also filed a provisional patent application on an assay for identifying
genetic markers that may predict a patient's response to a drug. On March 22,
2006, we have identified and filed a provisional patent application on genetic
markers that, following successful development and testing, may assist in
determining the susceptibility of patients to prostate cancer.
We incorporate data, ideas and methods from disciplines such as mathematics,
computer science, biochemistry, evolutionary biology, literature mining, pattern
recognition and network analysis and apply such information in a manner that
permits us to understand the genetic basis of human disease and the role that
variations in genes and their related gene regulatory regions play in the onset
of disease, particularly cancer. If successful, we believe that our research and
development will result in predictive models, discovery engines and related
technologies, which will enable us to develop potential diagnostic markers. The
presence, absence, varying quantities, and varying composition of molecules
provide information about the development of a disease or other physiological
condition. A molecule that provides this information is referred to as a
diagnostic marker. In order to develop a diagnostic marker, we must identify a
correlation between the presence of a particular variation of a molecule and a
disease or other physiological condition. Once a correlation is identified, we
must develop a method for identifying the correlation. Our goal is to develop
our research into marketable diagnostic markers that are easy to perform,
sensitive, consistent, safe, inexpensive and cover an attractive market segment.
19
<PAGE>
We are currently developing platforms and related technologies that we hope will
enable the discovery of marketable diagnostic markers to aid in the disease
susceptibility and drug response areas of cancer. We are currently developing
our technologies which will enable us to identify and prioritize potential
diagnostic markers. Our goal is to develop our platforms and related
technologies to identify a variety of novel gene regulatory regions with
potential applications in diagnostics. Our business strategy is to understand
the relationship between genetic regulation, proteins and human diseases in
order to develop molecular diagnostic products. Through our research and
development, we intend to identify important disease genes, the proteins they
produce, and the biological pathways in which they are involved to better
understand the underlying molecular basis for the cause of human disease.
We have not generated any revenues from our technologies to date, including the
quarter ended March 31, 2006. We are a development stage company and we
anticipate that we will require significant time and financing before our
technologies are developed to a marketable state. Once we have developed our
technologies to commercialization, we intend to generate revenues in one of two
ways. We may elect to license our diagnostic biomarkers to third parties or we
may elect to enter into joint ventures or other collaborations with third
parties such as pharmaceutical, biotechnology and diagnostics companies, with
the aim that they will develop and commercialize our discoveries into
therapeutic or diagnostic products. If such a collaboration is successful, we
will seek to receive payments upon the successful completion of certain
predetermined developmental stages and milestones, and receive royalties from
the sales of the drugs and/or diagnostics kits, which will be based on our
discoveries.
During the three months ended March 31, 2006, we did not generate any revenues
from the licensing of our technologies.
Our company had 44,800,000 common shares issued and outstanding as of March 31,
2006
PLAN OF OPERATIONS
As of March 31, 2006, our company had cash and cash equivalents of $359,453 and
working capital deficiency of $127,590. We estimate our operating expenses and
working capital requirements for the next twelve month period to be as follows:
Estimated Expenses for the Next Twelve Month Period
Operating Expenses
Employee and Consultant Compensation $480,000
Business Development and Travel Expenses $194,000
Professional Fees $170,000
Royalties $ 50,000
General and Administrative Expenses $ 40,000
--------
Total $934,000
========
PRODUCT RESEARCH AND DEVELOPMENT
Except for approximately $15,000 that we may spend in connection with the
development of our website, we do not anticipate that we will expend any
significant additional funds on research and development, other than the
salaries of Joel Bellenson, our Chief Executive Officer, and Dexster Smith, our
President, over the next twelve month period.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment over the twelve months
period.
EMPLOYEES
As of May 10, 2006, we had four employees consisting of Joel Bellenson as our
Chief Executive Officer, Dexster Smith as our President, Tim Fernback as our
Chief Financial Officer and Steve Bajic as our Secretary and Treasurer. We plan
to hire additional employees when circumstances warrant.
20
<PAGE>
EMPLOYEE AND CONSULTANT COMPENSATION
We estimate that our employee and consultant compensation expenses for the next
twelve month period will be approximately $480,000. Most of our employee and
consultant compensation expense consists of research and development costs of
our technology by Joel Bellenson, our Chief Executive Officer, and Dexster
Smith, our President.
All of our current research and development is carried out by Mr. Bellenson and
Mr. Smith. Both individuals have entered into employment agreements with our
company. Pursuant to the terms of the employment agreements, our company agreed
to pay Mr. Bellenson and Mr. Smith a base salary of $85,000. Upon our company's
filing of a provisional patent application on the application of our DNA
biomarkers to enhance the accuracy of existing prostrate cancer diagnostic
tests, our company increased their respective salaries to $120,000. Our company
is also required to increase the respective salaries to $150,000 if our company
files provisional patent applications for DNA biomarkers for two additional
diseases. In addition to options that are anticipated to be issued to Mr.
Bellenson and Mr. Smith, our company has also agreed to pay a bonus of $25,000
upon the filing of a provisional patent application on the same terms set out
above. This bonus was paid to Mr. Bellenson and Mr. Smith on March 31, 2006, in
conjunction with reaching this provisional patent application milestone. Our
company has also agreed to pay a further bonus of $25,000 upon the filing of
provisional patent applications for DNA biomarkers for two additional diseases.
Our company has also retained TCF Ventures Corp., a company beneficially owned
by Mr. Tim Fernback, as a consultant to provide financial advisory services to
our company pursuant to the terms of a Consultant Engagement Agreement dated
February 7, 2006, as amended on February 13, 2006. In addition to the issuance
of common shares and options as set out in the agreement, our company has agreed
to pay the consultant $4,510 (CDN$5,000) per month plus applicable taxes subject
to adjustment as set out in the consulting agreement. Upon reaching the first
milestone as described in the consulting agreement on March 31, 2006, our
company has agreed to pay the consultant approximately $5,410 (CDN$6,000) per
month plus applicable taxes subject to further adjustment as set out in the
consulting agreement. On April 12, 2006, Mr. Fernback became our company's Chief
Financial Officer.
Although our company anticipates that the majority of our research and
development requirements will be met from the efforts of Mr. Bellenson and Mr.
Smith, we may retain additional services as and when circumstances warrant. In
the event we require such services, we intend to hire such persons as
independent contractors based upon terms to be determined when needed.
BUSINESS DEVELOPMENT AND TRAVEL EXPENSES
We estimate our business development and travel expenses for the next twelve
month period to be the approximately $194,000. We anticipate that will incur
$94,000 in investor relations and marketing costs and $100,000 in travel costs
and attending industry conferences. We have hired an investor relations person
to, among other things, produce investor and marketing materials. Our company
also intends to incur traveling expenses to attend biotech related conferences
and investigate additional financing opportunities should our company require
additional financing during the next twelve month period.
PROFESSIONAL FEES
We expect to incur significant legal expenses to prepare and file a number of
provisional patent applications over the next twelve month period, as new
discoveries are made in our research and development process. Furthermore, as a
publicly traded company, we expect the incur on-going legal and accounting
expenses to comply with our reporting responsibilities as public company under
the United States Securities Exchange Act of 1934, as amended. During the next
twelve month period, we intend to obtain director and officer insurance and
perhaps general insurance for our company. We estimate our legal, accounting and
insurance expenses for the next fiscal year to be approximately $170,000.
21
<PAGE>
ROYALTIES
We estimate our royalty related expenditures on licensing complementary
technology for the next twelve month period to be in the aggregate amount of
$50,000.
GENERAL AND ADMINISTRATIVE EXPENSES
We anticipate spending $40,000 on general and administrative costs in the next
twelve month period. These costs primarily consist of expenses such as rent,
office supplies and office equipment.
TRENDS AND UNCERTAINTIES
Our ability to generate revenues in the future is dependent on whether we
successfully develop our technologies and create a marketable product and
license or otherwise commercialize our products. We cannot predict whether or
when this may happen and this causes uncertainty with respect to the growth of
our company and our ability to generate revenues.
FINANCING
To date, we have had negative cash flows from operations and we have been
dependent on sales of our equity securities and debt financing to meet our cash
requirements. We expect this situation to continue for the foreseeable future.
We anticipate that we will have negative cash flows in the next twelve month
period.
Our company incurred a loss of $1,292,767 for the three months ended March 31,
2006. The majority of this loss was a direct result of incurring a stock
compensation expense of $700,150. As of March 31, 2006, we had working a capital
deficiency of $127,590. On March 1, 2006, effective February 1, 2006, we issued
a 5% $1,000,000 convertible debenture and 400,000 warrants to purchase shares of
our common stock. Each warrant entitles the holder to purchase one share of our
common stock for an exercise price of $1.25 per share. The terms of the
convertible debenture are set out in Item 1.01 of our Current Report on Form 8-K
filed on March 7, 2006. As indicated above, our estimated working capital
requirements and projected operating expenses for the next twelve month period
total $934,000. As we had cash of $359,453 and current assets of $364,446 as at
March 31, 2006, we anticipate that such funds will not be sufficient to pay our
estimated expenses for the next twelve month period. We intend to fulfill any
additional cash requirement through the sale of our equity securities.
There are no assurances that we will be able to obtain funds required for our
continued operation. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain additional financing
on a timely basis, we will not be able to meet our other obligations as they
become due and we will be forced to scale down or perhaps even cease the
operation of our business.
Given that we are a development stage company and have not generated significant
revenues to date, our cash flow projections are subject to numerous
contingencies and risk factors beyond our control, including market acceptance
of our products, competition from well-funded competitors, and our ability to
manage our expected growth. We can offer no assurance that our company will
generate cash flow sufficient to meet our cash flow projections or that our
expenses will not exceed our projections. If our expenses exceed estimates, we
will require additional monies during the next twelve months to execute our
business plan.
There is substantial doubt about our ability to continue as a going concern as
the continuation of our business is dependent upon obtaining further long-term
financing, successful development of our technologies into a marketable product
and successful and sufficient market acceptance of our products once developed
and, finally, achieving a profitable level of operations. The issuance of
additional equity securities by us could result in a significant dilution in the
equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
22
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2006, we had cash and cash equivalents of $359,453 and $492,036
in current liabilities. The current liabilities primarily consisted of accrued
license fees of $23,706, amounts due to shareholders in the amount of $398,690
and accounts payable and accrued liabilities of $69,640. We had a working
capital deficiency of $127,590 as of March 31, 2006.
During the three months ended March 31, 2006, our company issued a 5% $1,000,000
convertible debenture on March 1, 2006, effective as of February 1, 2006 to
Novar Capital Corp. The terms of the convertible debenture are set out in Item
1.01 of our Current Report on Form 8-K filed on March 7, 2006.
There are no assurances that we will be able to obtain further funds required
for our continued operations. We intend to pursue various financing alternatives
to meet our immediate and long-term financial requirements. There can be no
assurance that additional financing will be available to us when needed or, if
available, that it can be obtained on commercially reasonable terms. If we are
not able to obtain additional financing on a timely basis, we will be unable to
conduct our operations as planned, and we will not be able to meet our other
obligations as they become due. In such event, we will be forced to scale down
or perhaps even cease our operations.
GOING CONCERN
Due to the uncertainty of our ability to meet our current operating and capital
expenses, in their report on Upstream Canada's audited financial statements for
the year ended December 31, 2005, Upstream Canada's independent auditors
included an explanatory paragraph regarding substantial doubt about its ability
to continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors. Our March 31, 2006 financial statements also reflect an
explanatory paragraph regarding substantial doubt about our ability to continue
as a going concern.
OFF-BALANCE SHEET ARRANGEMENTS
Our company has no outstanding derivative financial instruments, off-balance
sheet guarantees, interest rate swap transactions or foreign currency contracts.
Neither our company nor our operating subsidiary engages in trading activities
involving non-exchange traded contracts.
CAPITAL EXPENDITURES
We incurred a negligible amount of capital expenditures during the three months
ended March 31, 2006 and 2005. As of May 10, 2006, our company did not have any
material commitments for capital expenditures and management does not anticipate
that our company will spend additional material amounts on capital expenditures
in the next twelve month period.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying disclosures of our company. Although these estimates are based on
management's knowledge of current events and actions that our company may
undertake in the future, actual results may differ from such estimates.
DEFERRED INCOME TAX
We use the liability method in accounting for income taxes. Under this method,
our future tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and
unutilized non-capital assets, and measured using the substantially enacted
rates and laws that are in effect when the differences are expected to reverse.
Future tax expense was based on the benefits of tax losses that was reported in
different years in the financial statements and tax returns and measured at the
23
<PAGE>
tax rate in effect in the year the difference originated. The carrying in value
of future income tax assets is limited to the amount that is more likely than
not to be realized.
RISK FACTORS
Much of the information included in this current report includes or is based
upon estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other
"forward-looking statements".
Our common shares are considered speculative during the development of our new
business operations. Prospective investors should consider carefully the risk
factors set out below.
RISKS RELATED TO OUR BUSINESS
WE HAVE HAD NEGATIVE CASH FLOWS FROM OPERATIONS SINCE INCEPTION. WE WILL REQUIRE
SIGNIFICANT ADDITIONAL FINANCING, THE AVAILABILITY OF WHICH CANNOT BE ASSURED,
AND IF OUR COMPANY IS UNABLE TO OBTAIN SUCH FINANCING, OUR BUSINESS MAY FAIL.
To date, we have had negative cash flows from operations and have depended on
sales of our equity securities and debt financing to meet our cash requirements.
Our ability to develop and, if warranted, commercialize our technologies, will
be dependent upon our ability to raise significant additional financing. If we
are unable to obtain such financing, we will not be able to fully develop our
business. Specifically, we will need to raise additional funds to:
- support our planned growth and carry out our business plan;
- continue scientific progress in our research and development programs;
- address costs and timing of conducting clinical trials and seek
regulatory approvals and patent prosecutions;
- address competing technological and market developments;
- establish additional collaborative relationships; and
- market and develop our technologies.
We may not be able to obtain additional equity or debt financing on acceptable
terms as required. Even if financing is available, it may not be available on
terms that are favorable to us or in sufficient amounts to satisfy our
requirements. If we require, but are unable to obtain, additional financing in
the future, we may be unable to implement our business plan and our growth
strategies, respond to changing business or economic conditions, withstand
adverse operating results and compete effectively. More importantly, if we are
unable to raise further financing when required, we may be forced to scale down
our operations and our ability to generate revenues may be negatively affected.
WE HAVE A HISTORY OF LOSSES AND NOMINAL OPERATING RESULTS, WHICH RAISE
SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
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Since inception through March 31, 2006, we have incurred aggregate net losses of
$1,472,594 from operations. We can offer no assurance that we will operate
profitably or that we will generate positive cash flow in the future. In
addition, our operating results in the future may be subject to significant
fluctuations due to many factors not within our control, such as the level of
competition and general economic conditions.
Our company's operations will be subject to all the risks inherent in the
establishment of a developing enterprise and the uncertainties arising from the
absence of a significant operating history. No assurance can be given that we
may be able to operate on a profitable basis.
Due to the nature of our business and the early stage of our development, our
securities must be considered highly speculative. We are engaged in the business
of developing and commercializing genetic biomarkers, which technology is in the
development stage and we have not commenced the regulatory approval process for
our technology. We have not realized a profit from our operations to date and
there is little likelihood that we will realize any profits in the short or
medium term. Any profitability in the future from our business will be dependent
upon the successful commercialization or licensing of our core technology, which
itself is subject to numerous risk factors as set forth herein.
We expect to continue to incur development costs and operating costs.
Consequently, we expect to incur operating losses and negative cash flows until
our technology gains market acceptance sufficient to generate a sustainable
level of income from the commercialization or licensing of our technology. Our
history of losses and nominal operating results raise substantial doubt about
our ability to continue as a going concern, as described in the explanatory
paragraph in Upstream Canada's independent registered public accounting firm's
report dated February 14, 2006, as well as in the notes to our March 31, 2006
quarterly financial statements.
WE HOLD NO PATENTS ON OUR PROPRIETARY TECHNOLOGY AND IF WE ARE NOT ABLE TO
PROTECT OUR PROPRIETARY TECHNOLOGY, OUR COMPANY WILL SUFFER A MATERIAL ADVERSE
EFFECT.
We currently have three provisional patent applications of our technologies. We
currently rely on the provisional patent applications and trade secrets to
protect our proprietary intellectual property.
The departure of any of our management or any significant technical personnel or
consultants we hire in the future, the breach of their confidentiality and
non-disclosure obligations, or the failure to achieve our intellectual property
objectives may have a material adverse effect on our business, financial
condition and results of operations. We believe our success depends upon the
knowledge and experience of our management and our ability to market our
existing technology and to develop new technologies.
While we believe that we have adequately protected our proprietary technology,
and we intend to take all appropriate and reasonable legal measures to protect
it in the future, the use of our technology by a competitor could have a
material adverse effect on our business, financial condition and results of
operations. Our ability to compete successfully and achieve future revenue
growth will depend, in part, on our ability to protect our proprietary
technology and operate without infringing upon the rights of others. We may not
be able to successfully protect our proprietary technology, and our proprietary
technology may otherwise become known or similar technology may be independently
developed by competitors. Competitors may discover novel uses, develop similar
or more marketable technologies or offer services similar to our company at
lower prices. We cannot predict whether our technologies and services will
compete successfully with the technologies and services of existing or emerging
competitors.
OUR INABILITY TO COMPLETE OUR PRODUCT DEVELOPMENT ACTIVITIES SUCCESSFULLY MAY
SEVERELY LIMIT OUR ABILITY TO OPERATE AND FINANCE OPERATIONS.
Commercialization of our core technology will require significant additional
research and development as well as substantial clinical trials. We believe that
the United States will be the principal market for our technology, although we
may elect to expand into Japan and Western Europe. We may not be able to
successfully complete development of our core technology, or successfully market
our technology. We, and any of our potential collaborators, may encounter
problems and delays relating to research and development, regulatory approval
and intellectual property rights of our technology. Our research and development
programs may not be successful. Our core technology may not prove to be safe and
efficacious in clinical trials, and we may not obtain the intended regulatory
approvals for our core technology. Whether or not any of these events occur, we
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may not have adequate resources to continue operations for the period required
to resolve the issue delaying commercialization and we may not be able to raise
capital to finance our continued operation during the period required for
resolution of that issue.
WE MAY LOSE OUR COMPETITIVENESS IF WE ARE NOT ABLE TO PROTECT OUR PROPRIETARY
TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS AGAINST INFRINGEMENT, AND ANY
RELATED LITIGATION MAY BE TIME-CONSUMING AND COSTLY.
Our success and ability to compete depends to a significant degree on our
proprietary technology. If any of our competitors copy or otherwise gain access
to our proprietary technology or develop similar technologies independently, we
may not be able to compete as effectively. The measures we have implemented to
protect our proprietary technology and other intellectual property rights are
currently based upon a combination of provisional patent applications and trade
secrets. This, however, may not be adequate to prevent the unauthorized use of
our proprietary technology and our other intellectual property rights. Further,
the laws of foreign countries may provide inadequate protection of such
intellectual property rights. We may need to bring legal claims to enforce or
protect such intellectual property rights. Any litigation, whether successful or
unsuccessful, may result in substantial costs and a diversion of our company's
resources. In addition, notwithstanding our rights to our intellectual property,
other persons may bring claims against us alleging that we have infringed on
their intellectual property rights or claims that our intellectual property
rights are not valid. Any claims against us, with or without merit, could be
time consuming and costly to defend or litigate, divert our attention and
resources, result in the loss of goodwill associated with our business or
require us to make changes to our technology.
IF OUR PROVISIONAL PATENT APPLICATIONS AND PROPRIETARY RIGHTS DO NOT PROVIDE
SUBSTANTIAL PROTECTION, THEN OUR BUSINESS AND COMPETITIVE POSITION WILL SUFFER.
Our success depends in large part on our ability to develop, commercialize and
protect our proprietary technology. However, patents may not be granted on any
of our provisional or future patent applications. Also, the scope of any future
patent may not be sufficiently broad to offer meaningful protection. In
addition, any patents granted to us in the future may be successfully
challenged, invalidated or circumvented so that such patent rights may not
create an effective competitive barrier.
OUR COMPANY MAY BECOME SUBJECT TO INTELLECTUAL PROPERTY LITIGATION WHICH MAY
HARM OUR BUSINESS.
Our success depends in part on our ability to develop commercially viable
products without infringing the proprietary rights of others. Although we have
not been subject to any filed infringement claims, other patents could exist or
could be filed which may prohibit or limit our ability to market our products or
maintain a competitive position. In the event of an intellectual property
dispute, we may be forced to litigate. Intellectual property litigation may
divert management's attention from developing our technology and may force us to
incur substantial costs regardless of whether we are successful. An adverse
outcome could subject us to significant liabilities to third parties, and force
us to curtail or cease the development and commercialization of our technology.
IF OUR COMPANY COMMERCIALIZES OR TESTS OUR TECHNOLOGY, OUR COMPANY WILL BE
SUBJECT TO POTENTIAL PRODUCT LIABILITY CLAIMS WHICH MAY AFFECT OUR EARNINGS AND
FINANCIAL CONDITION.
We face an inherent business risk of exposure to product liability claims in the
event that the use of our core technology during research and development
efforts, including clinical trials, or after commercialization, results in
adverse affects. As a result, we may incur significant product liability
exposure, which may exceed any insurance coverage that we obtain in the future.
Even if we elect to purchase such issuance in the future, we may not be able to
maintain adequate levels of insurance at reasonable cost and/or reasonable
terms. Excessive insurance costs or uninsured claims may increase our operating
loss and affect our financial condition.
WE HAVE NOT GENERATED ANY REVENUES FROM OPERATIONS AND IF WE ARE UNABLE TO
DEVELOP MARKET SHARE AND GENERATE SIGNIFICANT REVENUES FROM THE
COMMERCIALIZATION OR LICENSING OF OUR TECHNOLOGY, THEN OUR BUSINESS MAY FAIL.
We operate in a highly competitive industry and our failure to compete
effectively and generate income through the commercialization or licensing of
our technology may adversely affect our ability to generate revenue. The
business of developing genetic biomarkers is highly competitive and subject to
frequent technological innovation with improved price and/or performance
characteristics. There can be no assurance that our new or existing technologies
will gain market acceptance. Management is aware of similar technologies which
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our technology, when developed to a stage of commercialization, will compete
directly against. Many of our competitors have greater financial, technical,
sales and marketing resources, better name recognition and a larger customer
base than ours. In addition, many of our large competitors may offer customers a
broader or superior range of services and technologies. Some of our competitors
may conduct more extensive promotional activities and offer lower
commercialization and licensing costs to customers than we do, which could allow
them to gain greater market share or prevent us from establishing and increasing
our market share. Increased competition in the genetic biomarker industry may
result in significant price competition, reduced profit margins or loss of
market share, any of which may have a material adverse effect on our ability to
generate revenues and successfully operate our business. Our competitors may
develop technologies superior to those that our company is currently developing.
In the future, we may need to decrease our prices if our competitors lower their
prices. Our competitors may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. Such competition will
potentially affect our chances of achieving profitability, and ultimately affect
our ability to continue as a going concern.
RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY MAY RENDER OUR TECHNOLOGY
NON-COMPETITIVE OR OBSOLETE AND CONSEQUENTLY AFFECT OUR ABILITY TO GENERATE
FUTURE REVENUES.
The genetic biomarker industry is characterized by rapidly changing technology,
evolving industry standards and varying customer demand. We believe that our
success will depend on our ability to generate income through the
commercialization and licensing of our technology and that it will require us to
continuously develop and enhance our technology that is currently being
developed and introduce new and more technologically advanced technologies
promptly into the market. We can make no assurance that our technology will not
become obsolete due to the introduction of alternative technologies. If we are
unable to continue to develop and introduce new genetic biomarkers to meet
technological changes and changes in market demands, our business and operating
results, including our ability to generate revenues, may be adversely affected.
IF WE FAIL TO EFFECTIVELY MANAGE THE GROWTH OF OUR COMPANY AND THE
COMMERCIALIZATION OR LICENSING OF OUR TECHNOLOGY, OUR FUTURE BUSINESS RESULTS
COULD BE HARMED AND OUR MANAGERIAL AND OPERATIONAL RESOURCES MAY BE STRAINED.
As we proceed with the development of our technology and the expansion of our
marketing and commercialization efforts, we expect to experience significant
growth in the scope and complexity of our business. We will need to add staff to
market our services, manage operations, handle sales and marketing efforts and
perform finance and accounting functions. We anticipate that we will be required
to hire a broad range of additional personnel in order to successfully advance
our operations. This growth is likely to place a strain on our management and
operational resources. The failure to develop and implement effective systems,
or to hire and retain sufficient personnel for the performance of all of the
functions necessary to effectively service and manage our potential business, or
the failure to manage growth effectively, could have a material adverse effect
on our business and financial condition.
FAILURE TO OBTAIN AND MAINTAIN REQUIRED REGULATORY APPROVALS WILL SEVERELY LIMIT
OUR ABILITY TO COMMERCIALIZE OUR TECHNOLOGY.
We believe that it is important for the success of our business to obtain the
approval of the Food and Drug Administration in the United States (FDA) before
we commence commercialization of our technology in the United States, the
principal market for our technology. We may also be required to obtain
additional approvals from foreign regulatory authorities to apply for any sales
activities we may carry out in those jurisdictions. If we cannot demonstrate the
safety, reliability and efficacy of our technology, the FDA or other regulatory
authorities could delay or withhold regulatory approval of our technology.
Even if we obtain regulatory approval of our technology, that approval may be
subject to limitations on the indicated uses for which it may be marketed. Even
after granting regulatory approval, the FDA and other regulatory agencies and
governments in other countries will continue to review and inspect any future
marketed products as well as any manufacturing facilities that we may establish
in the future. Later discovery of previously unknown problems with a product or
facility may result in restrictions on the product, including a withdrawal of
the product from the market. Further, governmental regulatory agencies may
establish additional regulations which could prevent or delay regulatory
approval of our technology.
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EVEN IF WE OBTAIN REGULATORY APPROVAL TO COMMERCIALIZE OUR TECHNOLOGY, LACK OF
COMMERCIAL ACCEPTANCE MAY IMPAIR OUR BUSINESS.
Our product development efforts are primarily directed toward obtaining
regulatory approval to market genetic diagnostic markers. Diagnostic markers for
cancer have been widely available for a number of years, and our technology may
not be accepted by the marketplace as readily as these or other competing
products, processes and methodologies. Additionally, our technology may not be
employed in all potential applications being investigated, and any reduction in
applications may limit the market acceptance of our technology and our potential
revenues. As a result, even if our technology is developed into a marketable
technology and we obtain all required regulatory approvals, we cannot be certain
that our technology will be adopted at a level that would allow us to operate
profitably.
IF WE DO NOT KEEP PACE WITH OUR COMPETITORS, TECHNOLOGICAL ADVANCEMENTS AND
MARKET CHANGES, OUR TECHNOLOGY MAY BECOME OBSOLETE AND OUR BUSINESS MAY SUFFER.
The market for our technology is very competitive, is subject to rapid
technological changes and varies for different individual products. We believe
that there are potentially many competitive approaches being pursued that
compete with our technology, including some by private companies for which
information is difficult to obtain.
Many of our competitors have significantly greater resources and have developed
products and processes that directly compete with our technology. Our
competitors may develop, or may in the future develop, new technologies that
directly compete with our technology or even render our technology obsolete. Our
technology is designed to develop diagnostic products. Even if we are able to
demonstrate improved or equivalent results from our technology, researchers and
practitioners may not use our technology and we may suffer a competitive
disadvantage. Finally, to the extent that others develop new technologies that
address the targeted application for our current technology, our business will
suffer.
OUR ABILITY TO HIRE AND RETAIN KEY PERSONNEL WILL BE AN IMPORTANT FACTOR IN THE
SUCCESS OF OUR BUSINESS AND A FAILURE TO HIRE AND RETAIN KEY PERSONNEL MAY
RESULT IN OUR INABILITY TO MANAGE AND IMPLEMENT OUR BUSINESS PLAN.
We are highly dependent upon our management personnel such Joel Bellenson and
Dexster Smith because of their experience developing genetic diagnostic markers.
The loss of the services of one or more of these individuals may impair
management's ability to operate our company. We have not purchased key man
insurance on any of these individuals, which insurance would provide us with
insurance proceeds in the event of their death. Without key man insurance, we
may not have the financial resources to develop or maintain our business until
we could replace the individual or to replace any business lost by the death of
that person. The competition for qualified personnel in the markets in which we
operate is intense. In addition, in order to manage growth effectively, we must
implement management systems and recruit and train new employees. We may not be
able to attract and retain the necessary qualified personnel. If we are unable
to retain or to hire qualified personnel as required, we may not be able to
adequately manage and implement our business.
WE WILL DEPEND UPON THE ESTABLISHMENT OF RELATIONSHIPS WITH THIRD PARTIES TO
TEST OUR TECHNOLOGIES AND ANY RELATIONSHIP MAY REQUIRE OUR COMPANY TO SHARE
REVENUES AND TECHNOLOGY.
Management anticipates that it will be crucial to identify the degree of
elevated or reduced risk of a particular disease or medication based on a
particular variation or combination of variations. To do so will require access
to samples of patients who have had the diseases in question as well as normal
populations. And for each of these collections of samples, it will be important
to note the demographic and epidemiological ranges covered by the collection.
This would entail establishing relationships with clinics, hospitals,
universities and companies that have repositories of biological samples with
carefully curated patient disease and demographic information. These
relationships have various confidentiality provisions that require negotiations
that can span several months. In addition, some of these institutions have
national or provincial mandates for providing access to these samples that may
require us to make our test results publicly available for these jurisdictions
or institutions at a reduced rate and could also require us to provide a flow
back of intellectual property licensing for their further research process. Any
such requirement may reduce our revenues.
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OUR COMPANY WILL BE DEPENDENT ON VARIOUS OUTSOURCING ACTIVITIES FOR TESTING OUR
TECHNOLOGY AND FAILURE TO OUTSOURCE CERTAIN ACTIVITIES WILL HAVE A MATERIAL
ADVERSE EFFECT ON OUR COMPANY.
We intend to establish relationships with various vendors of biological
laboratory services. Such laboratory services may include DNA SNP profiling,
gene expression profiling, cell culturing, recombinant techniques for inserting
reporter genes into artificial constructs for testing purposes, profiling of
transcription factors active in different disease states, and other laboratory
and analytical services depending upon the outcome of the results at various
stages. Our ability to secure and maintain these future relationships will be
critical to the success of our business objectives, and conversely the inability
to secure these future relationships on reasonable commercial terms represents a
risk and could have a material adverse effect on our operations or financial
condition.
MOST OF OUR ASSETS AND ALL OF OUR DIRECTORS AND OFFICERS ARE OUTSIDE THE UNITED
STATES, WITH THE RESULT THAT IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE WITHIN
THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR DIRECTORS OR
OFFICERS.
Although we are organized under the laws of the State of Nevada, United States,
our principal business office is located in Vancouver, British Columbia, Canada.
Outside the United States, it may be difficult for investors to enforce
judgements against us that are obtained in the United States in any action,
including actions predicated upon civil liability provisions of federal
securities laws. In addition, all of our directors and officers reside outside
the United States, and nearly all of the assets of these persons and our assets
are located outside of the United States. As a result, it may not be possible
for investors to effect service of process within the United States upon such
persons or to enforce against us or such persons judgements predicated upon the
liability provisions of United States securities laws. There is substantial
doubt as to the enforceability against us or any of our directors and officers
located outside the United States in original actions or in actions of
enforcement of judgments of United States courts or liabilities predicated on
the civil liability provisions of United States federal securities laws. In
addition, as the majority of our assets are located outside of the United
States, it may be difficult to enforce United States bankruptcy proceedings
against us. Under bankruptcy laws in the United States, courts typically have
jurisdiction over a debtor's property, wherever it is located, including
property situated in other countries. Courts outside of the United States may
not recognize the United States bankruptcy court's jurisdiction. Accordingly,
you may have trouble administering a United States bankruptcy case involving a
Nevada company as debtor with most of its property located outside the United
States. Any orders or judgements of a bankruptcy court obtained by you in the
United States may not be enforceable.
OUR BUSINESS IS SUBJECT TO COMPREHENSIVE GOVERNMENT REGULATION AND ANY CHANGE IN
SUCH REGULATION MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR COMPANY.
There is no assurance that the laws, regulations, policies or current
administrative practices of any government body, organization or regulatory
agency in the United States or any other jurisdiction, will not be changed,
applied or interpreted in a manner which will fundamentally alter the ability of
our company to carry on our business. The actions, policies or regulations, or
changes thereto, of any government body or regulatory agency, or other special
interest groups, may have a detrimental effect on our company. Any or all of
these situations may have a negative impact on our operations.
RISKS RELATED TO OUR COMMON STOCK
A DECLINE IN THE PRICE OF OUR COMMON STOCK COULD AFFECT OUR ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR ABILITY TO CONTINUE OPERATIONS.
A prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because a significant portion of our operations has been and will be
financed through the sale of equity securities, a decline in the price of our
common stock could be especially detrimental to our liquidity and our
operations. Such reductions may force us to reallocate funds from other planned
uses and may have a significant negative effect on our business plans and
operations, including our ability to develop new products and continue our
current operations. If our stock price declines, we can offer no assurance that
we will be able to raise additional capital or generate funds from operations
sufficient to meet our obligations. If we are unable to raise sufficient capital
in the future, we may not be able to have the resources to continue our normal
operations.
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The market price for our common stock may also be affected by our ability to
meet or exceed expectations of analysts or investors. Any failure to meet these
expectations, even if minor, may have a material adverse effect on the market
price of our common stock.
IF WE ISSUE ADDITIONAL SHARES IN THE FUTURE, IT WILL RESULT IN THE DILUTION OF
OUR EXISTING SHAREHOLDERS.
Our certificate of incorporation authorizes the issuance of up to 750,000,000
shares of common stock. Our board of directors may choose to issue some or all
of such shares to acquire one or more businesses or to provide additional
financing in the future. The issuance of any such shares will result in a
reduction of the book value and market price of the outstanding shares of our
common stock. If we issue any such additional shares, such issuance will cause a
reduction in the proportionate ownership and voting power of all current
shareholders. Further, such issuance may result in a change of control of our
corporation.
TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SECURITIES EXCHANGE COMMISSION'S
PENNY STOCK REGULATIONS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
OUR STOCK.
The Securities and Exchange Commission has adopted regulations which generally
define "penny stock" to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities are covered by the penny
stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
"accredited investors". The term "accredited investor" refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
NASD SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY
AND SELL OUR STOCK.
In addition to the "penny stock" rules described above, the National Association
of Securities Dealers (NASD) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.
OUR COMMON STOCK IS ILLIQUID AND THE PRICE OF OUR COMMON STOCK MAY BE NEGATIVELY
IMPACTED BY FACTORS WHICH ARE UNRELATED TO OUR OPERATIONS.
Our common stock currently trades on a limited basis on the OTC Bulletin Board.
Trading of our stock through the OTC Bulletin Board is frequently thin and
highly volatile. There is no assurance that a sufficient market will develop in
the stock, in which case it could be difficult for shareholders to sell their
stock. The market price of our common stock could fluctuate substantially due to
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a variety of factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of our competitors, trading volume
in our common stock, changes in general conditions in the economy and the
financial markets or other developments affecting our competitors or us. In
addition, the stock market is subject to extreme price and volume fluctuations.
This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance
and could have the same effect on our common stock.
ITEM 4. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the
end of the period covered by this quarterly report, being March 31, 2006, we
have carried out an evaluation of the effectiveness of the design and operation
of our company's disclosure controls and procedures. This evaluation was carried
out under the
supervision and with the participation of our company's management, including
our company's Chief Executive Officer and our Chief Financial Officer. Based
upon that evaluation, our company's Chief Executive Officer and our Chief
Financial Officer concluded that our company's disclosure controls and
procedures are effective as at the end of the period covered by this report
On July 7, 2006, and following the filing of the original Form 10-QSB on May 15,
2006, our board of directors authorized the termination of our previous
independent auditor, HLB Cinnamon Jang Willoughby, Chartered Accountants and
authorized the appointment of Dale Matheson Carr-Hilton Labonte, Chartered
Accountants ("DMCL"), as independent auditor of our company. Our company is of
the opinion that DMCL is duly qualified for auditing our financial statements on
a going forward basis. In addition to the appointment of DMCL, we appointed a
chartered accountant with AYL Enterprises Ltd. to provide additional accounting
services to our company in late July 2006.
Other than the termination and subsequent appointment of a new independent
auditor, and the addition of the accounting services of AYL Enterprises Ltd.,
there has been no changes in our company's internal controls or in other
factors, which could affect internal control subsequent to the date we carried
out our evaluation.
Disclosure controls and procedures and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time period specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934 is accumulated and communicated to management including our
Chief Executive Officer and our Chief Financial Officer as appropriate, to allow
timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, active or pending legal proceedings against us, nor are
we involved as a plaintiff in any material proceedings or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered beneficial shareholder are an adverse party or has a material
interest adverse to us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On February 13, 2006, we granted stock options to a consultant for the option to
purchase an aggregate of 400,000 shares of our common stock at an exercise price
of $0.80 per share, exercisable until March 1, 2016. The options are subject to
vesting provisions as set forth in the stock option and subscription agreement
dated February 13, 2006. We issued the securities to a non U.S. person (as that
term is defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933. On April 12, 2006, and subsequent to the end of the quarter ended March
31, 2006, our company appointed the consultant as our Chief Financial Officer.
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<PAGE>
In connection with the closing of the amended and restated share exchange
agreement on March 1, 2006, our company issued 24,000,000 shares of our common
stock to the two former shareholders of Upstream Canada. The shares were issued
to the two former shareholders of Upstream Canada, who were not U.S. Persons (as
that term is defined in Regulation S under the Securities Act of 1933), in an
offshore transaction relying on Regulation S and/or Section 4(2) of the
Securities Act of 1933.
Additionally, in connection with the closing of the amended and restated share
exchange agreement on March 1, 2006, effective February 1, 2006, our company
issued a 5% $1,000,000 convertible debenture and 400,000 warrants. Each warrant
entitles the holder to purchase one share of our common stock for an exercise
price of $1.25 per share. The terms of the convertible debenture are set out in
Item 1.01 of our Current Report on Form 8-K filed on March 7, 2006. Our company
received $500,000 of the debenture proceeds following the closing of the share
exchange agreement and received the remaining $500,000 on April 4, 2006,
subsequent to the quarter ended March 31, 2006. The convertible debenture and
the warrants were issued (and the issuance of common shares upon the conversion
of the convertible debenture and the exercise of the warrants will be issued) in
reliance upon an exemption from registration in an offering of securities in an
offshore transaction to a non U.S. Person (as that term is defined in Regulation
S of the Securities Act of 1933), relying on Regulation S and/or Section 4(2) of
the Securities Act of 1933.
On March 17, 2006, we issued 500,000 shares of common stock to a consultant of
our company pursuant to a consultant engagement agreement. The shares were
issued in consideration for the consultant providing financial services to our
company. We issued the shares in an offshore transaction to the consultant as a
non-U.S. person (as that term is defined in Regulation S under the Securities
Act of 1933) relying on Section 4(2) or Regulation S promulgated under the
Securities Act of 1933. On April 12, 2006, and subsequent to the end of the
quarter ended March 31, 2006, our company appointed the consultant as our Chief
Financial Officer.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibits required by Item 601 of Regulation S-B
Exhibit
Number Description
- ------ -----------
(2) PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
2.1 Share Exchange Agreement dated February 3, 2006, among our company,
Upstream Canada, the shareholders of Upstream Canada and Steve Bajic
(incorporated by reference from our Current Report on Form 8-K filed
on February 6, 2006).
2.2 Amended and Restated Share Exchange Agreement dated February 24, 2006,
among our company, Upstream Canada, the shareholders of Upstream
Canada and Steve Bajic (incorporated by reference from our Current
Report on Form 8-K filed on February 27, 2006).
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on July 5, 2002).
32
<PAGE>
3.2 Bylaws (incorporated by reference from our Registration Statement on
Form SB-2 Filed on July 5, 2002).
3.3 Certificate of Amendment filed with the Nevada Secretary of State on
March 8, 2005 (incorporated by reference from our Current Report on
Form 8-K filed on March 10, 2005).
3.4 Certificate of Change filed with the Nevada Secretary of State on
December 20, 2005 (incorporated by reference from our Current Report
on Form 8-K filed on December 29, 2005).
3.5 Articles of Merger filed with the Nevada Secretary of State on
February 6, 2006 (incorporated by reference from our Current Report on
Form 8-K filed on February 9, 2006).
(10) MATERIAL CONTRACTS
10.1 Master Consulting Services Agreements dated August 6, 2004, between
Upstream Canada and Kinexus Bioinformatics Corporation (incorporated
by reference from our Current Report on Form 8-K filed on March 7,
2006).
10.2 Collaborative Research Agreement dated August 11, 2004, among Upstream
Canada, the University of British Columbia and Vancouver Coastal
Health Authority (incorporated by reference from our Current Report on
Form 8-K filed on March 7, 2006).
10.3 Contract Service Agreement dated December 20, 2004, between Inimex
Pharmaceuticals Inc. and Upstream Canada (incorporated by reference
from our Current Report on Form 8-K filed on March 7, 2006).
10.4 License Agreement dated March 10, 2005, between British Columbia
Cancer Agency Branch and Upstream Canada (incorporated by reference
from our Current Report on Form 8-K filed on March 7, 2006).
10.5 License Agreement dated March 23, 2005, between The University of
British Columbia and Upstream Canada (incorporated by reference from
our Current Report on Form 8-K filed on March 7, 2006).
10.6 Letter Agreement dated July 17, 2005 between Integrated Brand
Solutions Inc. and ABS Capital Finance (incorporated by reference from
our Current Report on Form 8-K filed on July 21, 2005).
10.7 Termination Agreement dated September 19, 2005 between Integrated
Brand Solutions Inc. and ABS Capital Finance Inc. (incorporated by
reference from our Current Report on Form 8-K filed on September 27,
2005).
10.8 5% $1,000,000 Convertible Debenture dated February 1, 2006 issued to
Novar Capital Corp. by our company (incorporated by reference from our
Current Report on Form 8-K filed on March 7, 2006).
10.9 Consultant Engagement Agreement dated February 7, 2006 among TCF
Ventures Corp., our company and Upstream Canada (incorporated by
reference from our Current Report on Form 8-K filed on March 7, 2006).
10.10 Stock Option and Subscription Agreement dated February 13, 2006,
between our company and TCF Ventures Corp. (incorporated by reference
from our Current Report on Form 8-K filed on March 7, 2006).
10.11 Amendment Agreement dated February 13, 2006, among TCF Ventures Corp.,
our company and Upstream Canada (incorporated by reference from our
Current Report on Form 8-K filed on March 7, 2006).
10.12 Assignment of Invention Agreement dated February 27, 2006 among Joel
Bellenson, Dexster Smith and our company (incorporated by reference
from our Current Report on Form 8-K filed on March 7, 2006).
33
<PAGE>
10.13 Assignment of Invention Agreement dated February 27, 2006 among Joel
Bellenson, Dexster Smith and our company (incorporated by reference
from our Current Report on Form 8-K filed on March 7, 2006).
10.14 Employment Agreement dated March 1, 2006, between our company and Joel
Bellenson (incorporated by reference from our Current Report on Form
8-K filed on March 7, 2006).
10.15 Employment Agreement dated March 1, 2006 between our company and
Dexster Smith (incorporated by reference from our Current Report on
Form 8-K filed on March 7, 2006).
(31) SECTION 302 CERTIFICATIONS
31.1* Section 302 Certification.
31.2* Section 302 Certification.
(32) SECTION 906 CERTIFICATIONS
32.1* Section 906 Certification.
32.2* Section 906 Certification.
- ----------
* Filed herewith
34
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UPSTREAM BIOSCIENCES INC.
By:
/s/ Joel Bellenson
- ----------------------------------------------------
Joel Bellenson, Chief Executive Officer and Director
(Principal Executive Officer)
November 10, 2010
/s/ Tim Fernback
- ----------------------------------------------------
Tim Fernback, Chief Financial Officer
(Principal Financial Officer and Accounting Officer)
November 10, 2010
35
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>ex31-1.txt
<DESCRIPTION>CEO SECTION 302 CERTIFICATION
<TEXT>
Exhibit 31.1
CERTIFICATION
I, Joel Bellenson, certify that:
1. I have reviewed this report on Form 10-Q/A of Upstream Biosciences Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant is made known to me particularly during the period in which
this report is being prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: November 10, 2010
/s/ Joel Bellenson
- ----------------------------------------------------
Joel Bellenson, Chief Executive Officer and Director
(Principal Executive Officer)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>ex31-2.txt
<DESCRIPTION>CFO SECTION 302 CERTIFICATION
<TEXT>
Exhibit 31.2
CERTIFICATION
I, Tim Fernback, certify that:
1. I have reviewed this report on Form 10-Q/A of Upstream Biosciences Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant is made known to me particularly during the period in which
this report is being prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: November 10, 2010
/s/ Tim Fernback
- ----------------------------------------------------
Tim Fernback, Chief Financial Officer
(Principal Financial Officer and Accounting Officer)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>ex32-1.txt
<DESCRIPTION>CEO SECTION 906 CERTIFICATION
<TEXT>
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Upstream Biosciences Inc. (the
"Company") on Form 10-Q/A for the period ending March 31, 2006 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Joel
Bellenson, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Company.
IN WITNESS WHEREOF, the undersigned has executed this certification as of the
10th day of November, 2010.
/s/ Joel Bellenson
- ----------------------------------------------------
Joel Bellenson, Chief Executive Officer and Director
(Principal Executive Officer)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>ex32-2.txt
<DESCRIPTION>CFO SECTION 906 CERTIFICATION
<TEXT>
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Upstream Biosciences Inc. (the
"Company") on Form 10-Q/A for the period ending March 31, 2006 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Tim
Fernback, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of
the Company.
IN WITNESS WHEREOF, the undersigned has executed this certification as of the
10th day of November, 2010.
/s/ Tim Fernback
- ----------------------------------------------------
Tim Fernback, Chief Financial Officer
(Principal Financial Officer and Accounting Officer)
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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