-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CY3mzkwPFOPyTisz0A+Cxbvi2ee8xrdM7QK7zm3KZGe8QfA6AIe0LdpVJJ0ITj4f ijmJ9n+Jg7aX1uLabwisRw== 0000897101-03-000758.txt : 20030714 0000897101-03-000758.hdr.sgml : 20030714 20030714113225 ACCESSION NUMBER: 0000897101-03-000758 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030531 FILED AS OF DATE: 20030714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CELOX LABORATORIES INC CENTRAL INDEX KEY: 0000883720 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 363384240 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19866 FILM NUMBER: 03784839 BUSINESS ADDRESS: STREET 1: 1311 HELMO AVE CITY: ST PAUL STATE: MN ZIP: 55128 BUSINESS PHONE: 6517301500 MAIL ADDRESS: STREET 1: 1311 HELMO AVE CITY: ST PAUL STATE: MN ZIP: 55128 FORMER COMPANY: FORMER CONFORMED NAME: CELOX CORPORATION DATE OF NAME CHANGE: 19930328 10QSB 1 protide032993_10qsb.txt PROTIDE PHARMACEUTICALS, INC. FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) Quarterly report under Section 13 of 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended MAY 31, 2003 or ------------ () Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________ . Commission file number 0-19866 ---------------------------- PROTIDE PHARMACEUTICALS, INC. (Exact name of small business issuer as specified in its charter) MINNESOTA 36-3384240 - -------------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1311 HELMO AVENUE, SAINT PAUL, MINNESOTA 55128 - --------------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Issuers telephone number, including area code: (651) 730-1500 Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or for such shorter periods that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ State the number of shares outstanding of each the issuer's classes of common equity, as of the latest practicable date. THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING ON JUNE 30, 2003 WAS 4,029,134. Transitional small business format disclosure: Yes _____ No __X__ 1 Table of Contents PROTIDE PHARMACEUTICALS, INC. ----------------------------- Report on Form 10-QSB for fiscal quarter ended May 31, 2003
PART I-- FINANCIAL INFORMATION Page ---- ITEM 1. Financial Statements Balance Sheet as of August 31, 2002 and May 31, 2003 3 Statement of Operations -- Three months ended May 31, 2003 and May 31, 2002 and nine months ended May 31, 2003 and May 31, 2002 5 Statement of Changes in Shareholders' Equity for the year ended August 31, 2002 and the nine months ended May 31, 2003 6 Statement of Cash Flows -- Nine months ended May 31, 2003 and May 31, 2002 7 Notes to Financial Statements 8 ITEM 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations 9 PART II-- OTHER INFORMATION 14
2 PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS PROTIDE PHARMACEUTICALS, INC. BALANCE SHEET May 31, August 31, ASSETS 2003 2002 --------- --------- (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 144,444 $ 200,751 Certificates of deposit 80,934 80,934 Trade receivables 41,733 37,191 Accrued interest receivable 2,433 1,057 Inventories 62,699 56,997 Other 2,587 1,787 --------- --------- Total current assets 334,830 378,717 --------- --------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS Laboratory and production equipment 229,474 226,937 Office furniture and equipment 94,822 94,822 Leasehold improvements 138,426 138,426 --------- --------- 462,722 460,185 Less accumulated depreciation (432,372) (412,012) --------- --------- 30,350 48,173 OTHER ASSETS Patents, net 42,194 44,828 --------- --------- TOTAL ASSETS $ 407,374 $ 471,718 ========= ========= See Notes to Financial Statements. 3 PROTIDE PHARMACEUTICALS, INC. BALANCE SHEET May 31, August 31, LIABILITIES AND SHAREHOLDERS' EQUITY 2003 2002 ----------- ----------- (Unaudited) CURRENT LIABILITIES Accounts payable $ 10,419 $ 23,427 Accrued liabilities 31,265 30,056 Bank note payable - current 71,498 71,498 ----------- ----------- Total current liabilities 113,182 124,981 ----------- ----------- SHAREHOLDERS' EQUITY Common stock issued and outstanding 40,291 40,291 Additional paid-in capital 5,832,291 5,832,291 ----------- ----------- 5,872,582 5,872,582 Accumulated deficit (5,578,390) (5,525,845) ----------- ----------- Total shareholders' equity 294,192 346,737 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 407,374 $ 471,718 =========== =========== See Notes to Financial Statements. 4 PROTIDE PHARMACEUTICALS, INC. STATEMENT OF OPERATIONS (Unaudited)
- ---------------------------------------------------------------------------------------------- Three months ended Nine months ended May 31, May 31, 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------------- REVENUES Net sales $ 109,573 $ 123,503 $ 391,630 $ 285,443 Cost of products sold 27,302 36,484 89,289 109,570 - ---------------------------------------------------------------------------------------------- GROSS MARGIN 82,271 87,019 302,341 175,873 - ---------------------------------------------------------------------------------------------- OPERATING EXPENSES Research and development 36,910 37,185 110,031 111,292 Sales and operations 30,769 27,702 87,258 83,818 Administration 47,398 49,481 158,071 159,705 - ---------------------------------------------------------------------------------------------- Total operating expenses 115,077 114,368 355,360 354,815 OPERATING INCOME (LOSS) (32,806) (27,349) (53,019) (178,942) OTHER INCOME (EXPENSE) Interest and investment income 828 1,693 2,635 5,554 Other income 0 0 0 3,645 Interest expense (699) (818) (2,161) (2,693) - ---------------------------------------------------------------------------------------------- Total other income, net 129 875 474 6,506 NET INCOME (LOSS) ($ 32,677) ($ 26,474) ($ 52,545) ($ 172,436) ============================================================================================== BASIC AND DILUTED LOSS PER COMMON SHARE ($ 0.01) ($ 0.01) ($ 0.01) ($ 0.05) - ---------------------------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,029,134 3,736,386 4,029,134 3,734,253 ==============================================================================================
See Notes to Financial Statements 5 PROTIDE PHARMACEUTICALS, INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
- ----------------------------------------------------------------------------------------------------- Common Stock Additional ------------------- Paid-in Accumulated Shares Amount Capital Deficit Total - ----------------------------------------------------------------------------------------------------- BALANCE AT AUGUST 31, 2002 4,029,134 $ 40,291 $ 5,832,291 ($5,525,845) $ 346,737 Net loss for the period -- -- -- (52,545) (52,545) - ----------------------------------------------------------------------------------------------------- BALANCE AT MAY 31, 2003 4,029,134 $ 40,291 $ 5,832,291 ($5,578,390) $ 294,192
6 PROTIDE PHARMACEUTICALS, INC. STATEMENT OF CASH FLOWS (Unaudited)
- ---------------------------------------------------------------------------------------- Nine months ended May 31, --------------------- 2003 2002 - ---------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss for the period ($ 52,545) ($172,436) Adjustments to reconcile net loss to Net cash used in operating activities: Depreciation and amortization 22,994 23,926 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable (4,542) (20,293) Accrued interest receivable (1,376) (1,720) Inventories (5,702) (4,140) Other (800) (959) Increase (decrease) in: Accounts payable (13,008) (4,685) Accrued liabilities 1,209 (22,905) - ---------------------------------------------------------------------------------------- Net cash used in operating activities (53,770) (203,212) - ---------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Maturity of bank certificates of deposit, net 0 40,000 Capital expenditures (2,537) 0 - ---------------------------------------------------------------------------------------- Net cash from investing activities (2,537) 40,000 - ---------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING: Proceeds from issuing common stock subscriptions 0 65,004 Principal payments on bank note payable 0 (649) - ---------------------------------------------------------------------------------------- Net cash provided by financing activities 0 64,355 Net decrease in cash and cash equivalents (56,307) (98,857) CASH AND CASH EQUIVALENTS: Beginning of period 200,751 197,200 - ---------------------------------------------------------------------------------------- End of period $ 144,444 $ 98,343 ========================================================================================
See Notes to Financial Statements. 7 PROTIDE PHARMACEUTICALS, INC. NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2003 NOTE A - BASIS OF PRESENTATION The accompanying financial statements 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 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The organization and business of the Company, accounting policies followed by the Company and other information is contained in the notes to the Company's financial statements filed as part of the Company's August 31, 2002 Form 10-KSB. This quarterly report should be read in connection with such annual report. NOTE B - CASH AND CASH EQUIVALENTS For purposes of reporting the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. NOTE C - SHORT-TERM INVESTMENTS As of May 31, 2003, the Company had investments of $80,934 in certificates of deposit. Certificates of deposit are made only with the highest rated banks. The Company also utilizes a money market fund, which is restricted by its charter to Tier 1 instruments, for a portion of its investments. At times throughout the year, the Company's cash, cash equivalents and certificates of deposit in financial institutions may exceed FDIC insurance limits. The Company has not experienced any losses in such accounts. NOTE D - NOTES PAYABLE BANK During April 1997 the Company borrowed $100,000 from a local bank with the proceeds used for financing a portion of the tenants' improvements in the Company's new facility. In February 2001 the loan was renegotiated with a different Bank and has been renewed annually. The new loan is secured by a certificate of deposit at this bank. The interest rate for this loan, currently 4%, is tied to the certificate of deposit rate. NOTE E -LOSS PER COMMON SHARE Basic loss per share is computed based upon the weighted average number of common shares outstanding during the period. Stock options for 307,000 shares were not included in the computation of diluted loss per share as the results were antidilutive. 8 ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION A. BACKGROUND AND PRODUCTS In January 2001 Celox Laboratories, Inc. and Protide Pharmaceuticals, Inc., merged with the surviving corporation named Protide Pharmaceuticals, Inc. Protide Pharmaceuticals, Inc. ("Protide" or the "Company") is a biotechnology company devoted to the discovery, development and commercialization of technologies and processes in clinical cell therapy and transfusion medicine, specifically in the areas of cancer, genetic disorders, cell engineering and transplantation. Protide also provides contract manufacturing for companies and educational institutions. Celox Laboratories, Inc. will continue to market products that are sold for research purposes. Celox was formed in 1985 as a Company that researches, develops, manufactures, and markets cell biology products that are used in the propagation of cells derived from mammals, including humans, and other species. These specialized cell growth products are used primarily in academic, pharmaceutical and other commercial laboratories to improve the growth, productivity and quality of cell-derived medical and other biological products such as vaccines, monoclonal antibodies, interferons, and human growth factor. The Company has developed non-serum based products for the growth of human and other mammalian cells. The Company markets more than 16 different research products under the Celox Laboratories brand name. The Company's proprietary products consist of four different serum-free supplements and two cell freezing solutions. The Company also manufactures five basal media formulations, a series of buffered saline solutions, other cell biology reagents, and a variety of custom formulations. During the first quarter of fiscal 2001 the Company introduced the new product STEMSOL(TM). STEMSOL(TM) is a sterile filtered, USP Grade Dimethyl Sulfoxide (DMSO) used in a cryopreservation solution for, among other things, bone marrow, peripheral-blood stem cells and cord blood preservations. In addition, DMSO/Dextran was introduced in the first quarter of fiscal 2001 and is also used as a cryopreservative for cord blood stem cells. These products are labeled for research use only, not for human use. During the third quarter of fiscal 2000, the Company entered into an agreement to manufacture specialized solutions for the processing of pancreatic islet cells for transplants. These cells may be used instead of whole organ transplants. During the first quarter of fiscal 2002 an order was received from a second transplant center for these specialized solutions. The revenue from this order was reflected in the second quarter of fiscal 2002. Orders for these solutions have continued in fiscal 2003. B. VIASTEM(TM) In March 1995, the Company filed a patent application for ViaStem(TM) in the U.S. Patent and Trademark Office. The Company received the U.S. Patent in early December 1996. This patent provides protection of the Company's ViaStem(TM) technology through March of 2015. A second U.S. Patent was received in August 1998. This second patent broadened the patented uses of ViaStem(TM) in bone marrow transplantation and related therapies. The Company has also filed the documents needed for an International Patent Application as required by the Patent Cooperation Treaty. In October 1998 the Company received notice from the New Zealand and Australian Patent Office that a patent on ViaStem(TM) had been granted by each of the respective countries. 9 In March 2000 notice was received from the Patent Office in Canada that a patent had been issued for ViaStem(TM). The Company received notice from the Russian Patent Office in May 2000 of the official issue date for the patent for ViaStem(TM) in Russia. In March 2002 a patent for ViaStem(TM) was received from the Mexican Patent Office. Protide received notice from the Japan Patent Office that a patent on ViaStem(TM) had been granted in Japan. In March 2003 Protide received notice that the European Patent Office intended to grant a patent for ViaStem(TM). Initial reports from other countries that have reviewed the international patent application have been positive. Due to the unique nature of ViaStem(TM), the Company pursued the patent process for this product. On March 12, 2003 the Company signed an agreement with the University of Minnesota Physicians Outreach Laboratories (UMPOL), a Minnesota nonprofit Corporation, to complete the preclinical testing for the Company's ViaStem(TM) product. This agreement supersedes an agreement which was executed on March 31, 2000, by Protide with Fairview-University Medical Center (FUMC) University of Minnesota, Minneapolis, MN. FUMC was to provide collecting, processing and assaying of human peripheral blood stem cells as part of Protide's clinical investigation of ViaStem(TM). In the second quarter of fiscal 2002, the FUMC named a new Principal Investigator (PI) at the University of Minnesota to complete the additional information requested by the FDA after the departure of the original PI from the University. This new PI will be part of the UMPOL preclinical test program. During May 2000 the Company submitted an application to the Food and Drug Administration (FDA) to initiate human clinical trials for ViaStem(TM). This was the first submission ever made by the Company to the FDA for testing in human subjects. In August 2000 the Company announced that it had received notice from the FDA that the clinical trial on had been placed on clinical hold pending further information. The Company intends to submit the additional requested information to the FDA in the near future. C. DISTRIBUTION/MARKETING The Company continues to sell its products on a direct basis to customers around the world. In addition the Company has formed the following distribution avenues: The Company has a nonexclusive worldwide distribution agreement with ICN Pharmaceuticals, Inc. (NYSE:ICN), Costa Mesa, CA. Under the agreement, ICN is marketing Celox' TCM(TM), TCH(TM), TM-235(TM) serum replacement products as well as Cellvation(TM). The Company has also entered into an agreement with ICN to custom manufacture certain of the Company's basal media and balanced salt solutions to ICN for worldwide distribution. ICN manufactures and markets a broad range of prescription and over-the-counter pharmaceuticals, medical diagnostic products and biotechnology research products in North and Latin America, Eastern and Western Europe and the Pacific Rim countries. In 1997, the Company began providing its proprietary products to Sigma Chemical Company (NASDAQ:SIAL), St. Louis, MO. under a private label distribution agreement for worldwide distribution. In 1997, the Company entered into a nonexclusive distribution agreement with TaKaRa Shuzo Co., Ltd., Biomedical Group, Kyoto, Japan. Under the agreement, TaKaRa will initially market Celox' proprietary product Cellvation(TM). TaKaRa's Biomedical Group leads the industry in several areas owing to the international scope of its research operations which span from the People's Republic of China to North America and Europe. TaKaRa will market Cellvation(TM) in Japan, Taiwan, Korea and China. In addition, the Company's Celox product line is distributed in Japan through Funakoshi Co., LTD, a well-established Japanese distributor. The Company also has distribution of its STEMSOL(TM) and DMSO/Dextran products in Europe and the Pacific Rim through various non-exclusive agreements with local distributors. 10 RESULTS OF OPERATIONS During the quarter ended May 31, 2003, the Company had net sales of $109,573 which was a decrease of $13,930 or 11% from $123,503 reported in the same quarter for the prior fiscal year. For the nine months ended May 31, 2003 net sales totaled $391,630 versus $285,443 in the same period in the previous fiscal year. This is an increase of $106,187 or 37% from the previous year. The decrease between years for the current quarter as compared to the previous fiscal year is attributable to decreased orders from the Pacific Rim countries due to the SARS epidemic as well as a general reduction in repeat orders due to the Iraq conflict, tensions in the Mideast and concerns over the West Nile virus which has led to reduced cord blood collections and stem cell processing. The large increase for the nine month reporting period results primarily from increased sales of new products during the first six months of this fiscal year, the amount and timing of contract manufacturing orders, and orders received from distributors. The Company had a net loss of ($32,677) for the quarter ended May 31, 2003 compared to a net loss of ($26,474) for the same period in the previous fiscal year. For the nine months ended May 31, 2003 the company had a net loss of ($52,545) compared to a net loss of ($172,436) for the comparable period in the previous fiscal year. The net loss in the three month reporting period as compared to the loss in the previous fiscal year results from a reduction in sales as reported above coupled with a decrease in cost of sales and steady operating expenses. For the nine month reporting period, the decreased loss results from substantially increased sales, lower cost of sales and a small increase in operating expenses. On a per share basis, the loss of ($32,677) resulted in ($0.01) for the quarter ended May 31, 2003 compared to a loss of ($0.01) in the three months ended May 31, 2002. For the nine month reporting period, the loss of ($52,545) equaled ($0.01) on a per share basis compared to a loss of ($0.05) in the nine months ended May 31, 2002. The cost of products sold was $27,302 or 25% of net sales for the three months ended May 31, 2003, as compared to $36,484 or 30% of net sales for the three months ended May 31, 2002. The decreased percentage for the current quarter results from the mix of products sold to higher margin products as compared to the previous fiscal year. For the nine month period ending May 31, 2003 the cost of products sold was $89,289 or 23% of net sales compared to $109,570 or 38% of sales for the nine months ended May 31, 2002. The decrease between the nine month reporting periods results from substantially higher sales and the mix of products sold. An operating loss of ($32,806) was generated for the quarter ended May 31, 2003 compared to an operating loss of ($27,349) for the same period in the previous fiscal year. For the nine months ended May 31, 2003 an operating loss of ($53,019) was generated compared to an operating loss of ($178,942) for the nine months ended May 31, 2002. The increase between years for the three month reporting period results from reduced sales coupled with slightly increased operating expenses. The decrease between years for the nine month reporting periods resulted from substantial sales increases offset slightly by increased operating expenses. The Company received interest and investment income of $828 during the quarter ended May 31, 2003 as compared to $1,693 in the prior fiscal year. Interest and investment income for the nine months ended May 31, 2003 totaled $2,635 versus $5,554 in the comparable reporting period in the previous fiscal year. Investment income is derived primarily from the investment of the proceeds from recent private placements. The decrease in investment income during the quarter and the nine month reporting period as compared to the previous year results from significantly lower interest rates available for investment balances. 11 Operating expenses increased $709 (1%) to $115,077 from $114,368 for the quarter ended May 31, 2003 as compared to the comparable reporting period in the prior fiscal year. The small increase between the respective reporting periods resulted from lower administrative and research and development expenses offset by a small increase in sales and operations expenses. For the nine months ended May 31, 2003 operating expenses increased by $545 to $355,360 from $354,815 for the reporting period as compared to the prior fiscal year. Research and development costs decreased by $275 (1%) to $36,910 from $37,185 for the three months ended May 31, 2003 as compared to the three months ended May 31, 2002. For the nine months ended May 31, 2003 research and development costs decreased by $1,261 (1%) to $110,031 from $111,292 from the same reporting period in the prior fiscal year. The small decrease between years for both of the respective reporting periods results from lower expenditures in the areas of salaries and professional fees as compared to the prior year. The Company expects the costs of research and development to fluctuate based on the status of preclinical and clinical trials for ViaStemTM. Sales and operations expenses increased by $3,067 (11%) to $30,769 from $27,702 for the three months ended May 31, 2003 as compared the comparable reporting period in the previous fiscal year. For the nine month reporting period ended May 31, 2003, sales and operations expenses increased by $3,440 (4%) to $87,258 from $83,818. The increase for the three month reporting period as well as the six month reporting period as compared to the comparable periods in the prior fiscal year results from increased commissions due to increased sales offset by reduced expenditures in several other areas in the sales and operations department. The Company expects that sales and operations expenses will fluctuate based on sales volume, introduction of new products, new studies, and as new advertising materials are developed. Administrative expenses decreased by $2,083 (4%) for the three months ended May 31, 2003 compared to the comparable period in the previous fiscal year to $47,398 from $49,481. The decrease for the three month reporting period as compared to the previous fiscal year is due to lower salaries and benefits offset by higher health insurance premiums. For the nine months ended May 31, 2003 administrative expenses decreased by $1,634 as compared to the previous fiscal year to $158,071 from $159,705. The small decrease is a combination of lower salaries and benefits offset by increased health insurance premiums as well as reduced legal and professional fees expended in connection with the introduction of new products, agreements and matters related to the advancement of ViaStemTM. LIQUIDITY AND CAPITAL RESOURCES Capital resources on hand at May 31, 2003 include cash and short-term investments of $144,444 and net working capital of $221,648 This represents a decrease of $56,307 (28%) in cash and short-term investments and a decrease of $32,088 (13%) in net working capital as compared to August 31, 2002. The Company is leasing approximately 9,500 square feet of office, laboratory and warehouse space in St. Paul, MN under a seven year lease. The lease term expires on January 31, 2004. The original lease contains provisions for a renewal option for the Company. There is no guarantee however, that the terms of a new lease will be equal to or better than the existing lease. The Company moved into the new facility during March 1997. As partial payment for tenant improvements in the new facility, the Company borrowed $100,000 from a local bank. In February 2000 the loan was renegotiated with a different bank. The new loan is secured by a certificate of deposit at this bank. The interest rate for this loan, currently 4%, is tied to the certificate of deposit rate. The loan is for a one year term with a maturity in February 2004. The balance of the tenant improvements over this amount was paid with Company funds. 12 During the second quarter of fiscal 2001, 50,000 shares were issued as a result of a private placement participant exercising warrants. During the fourth quarter of fiscal 2001, the Company sold subscriptions for 157,659 units of common stock and a warrant at $0.47 per unit in a private offering. The Company sold additional subscriptions for 53,200 units of common stock and a warrant for $0.47 in the first quarter of fiscal 2002 and additional subscriptions for 85,106 units of common stock and a warrant for $0.47 in the second quarter of fiscal 2002. The Company intends to pursue additional financing, subject to prevailing market conditions. There is no guarantee however, that the Company will be able to successfully raise an adequate amount of additional funds with terms that are favorable to the Company. In addition, there can be no assurance that the Company will be able to obtain the necessary FDA approvals for ViaStem(TM). The Company anticipates spending approximately $10,000 during fiscal 2003 on capital expenditures. This does not include costs for preclinical and clinical trials for ViaStem(TM). Through May 2003 the Company has made capital expenditures totaling $2,537. The Company believes that its capital resources on hand at May 31, 2003 together with revenues from product sales, will be sufficient to meet its cash requirements for the fiscal year. FORWARD LOOKING INFORMATION Information contained in this Form 10-QSB contains " forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology such as "may", "will", "expect", "plan", "anticipate", "estimate" or "continue" or the negative thereof or other variations thereon or comparable terminology. There are certain important factors that could cause results to differ materially from those anticipated by some of these forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. The factors, among others, that could cause actual results to differ materially include the Company's ability to obtain FDA approval for its clinical products, the ability of the Company to raise additional capital and the ability to execute its business plan. 13 PART II -- OTHER INFORMATION ITEM I. -- LEGAL PROCEEDINGS The Company is not presently involved in any material legal proceedings. ITEM 2. -- CHANGES IN SECURITIES None ITEM 3. -- DEFAULTS UPON SENIOR SECURITIES None ITEM 4. -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. -- OTHER INFORMATION None ITEM 6. -- (A) EXHIBITS 99.1 302 and 906 Certifications (B) REPORTS ON FORM 8-K None 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. PROTIDE PHARMACEUTICALS, INC. Dated: July 11, 2003 By: /s/ Milo R. Polovina ---------------------------------- Milo R. Polovina, President & CEO (Principal Financial Officer) 14 CERTIFICATION PURSUANT TO U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Milo R. Polovina, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Protide Pharmaceuticals, Inc; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statement, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date with 90 days prior to the filing date of this report ( the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditor any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: July 11, 2003. By: /s/ Milo R. Polovina ---------------------------------- Milo R. Polovina, Chairman of the Board, President & CEO 15 CERTIFICATION PURSUANT TO U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David E. Tess, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Protide Pharmaceuticals, Inc; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statement, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date with 90 days prior to the filing date of this report ( the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditor any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: July 11, 2003. By: /s/ David E. Tess ---------------------------------- David E. Tess Vice President Finance 16 EX-99.1 3 protide032993_ex99-1.txt CERTIFICATIONS EXHIBIT 99.1 CERTIFICATION PURSUANT TO 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 Protide Pharmaceuticals, Inc. (the "Registrant") on Form 10-QSB for the period ended May 31, 2003 as filed with the Securities and Exchange Commission on July 14, 2003, hereof (the Report"), the undersigned officers certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 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 results of operations of the Registrant. PROTIDE PHARMACEUTICALS, INC. Date: July 11, 2003 By: /s/ Milo R. Polovina -------------------- Milo R. Polovina Chairman of the Board, President & CEO CERTIFICATION PURSUANT TO 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 Protide Pharmaceuticals, Inc. (the "Registrant") on Form 10-QSB for the period ended May 31, 2003 as filed with the Securities and Exchange Commission on July 14, 2003, hereof (the Report"), the undersigned officers certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 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 results of operations of the Registrant. PROTIDE PHARMACEUTICALS, INC. Date: July 11, 2003 By: /s/ David E. Tess ----------------- David E. Tess Vice President Finance -----END PRIVACY-ENHANCED MESSAGE-----