x |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
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o |
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
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California
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91-2021600
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(State
or Other Jurisdiction of Organization)
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(IRS
Employer Identification Number)
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PART
I. FINANCIAL INFORMATION
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||
Item
1. Financial Statements
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||
Consolidated
Balance Sheet as of September 30, 2006
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1
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Consolidated
Statements of Operations for the three and nine months
ended
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||
September
30, 2006 and 2005
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2
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Consolidated
Statements of Cash Flows for the nine months ended
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||
September
30, 2006 and 2005
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3
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Notes
to Unaudited Consolidated Financial Statements
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4
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Item
2. Management’s Discussion and Analysis of Financial Condition or Plan of
Operations
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9
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Item
3. Controls and Procedures
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14
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PART
II. OTHER INFORMATION
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||
Item
1. Legal Proceedings
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15
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|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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15
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Item
3. Defaults Upon Senior Securities
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15
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Item
4. Submission of Matters to a Vote of Security Holders
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15
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Item
5. Other Information
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16
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Item
6. Exhibits
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16
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SIGNATURES
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17
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ASSETS
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||||
Current
assets:
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||||
Cash
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$
|
53,875
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||
Inventory
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11,425
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|||
Total
current assets
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65,300
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|||
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||||
Property
and equipment, net
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39,585
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|||
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||||
Other
assets
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34,399
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|||
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||||
TOTAL
ASSETS
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$
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139,284
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||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT)
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||||
Current
liabilities:
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||||
Accounts
payable
|
$
|
101,495
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||
Accrued
expenses
|
438,057
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|||
Due
to officers
|
999,224
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|||
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||||
Total
current liabilities
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1,538,776
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|||
Stockholders'
(deficit):
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||||
Common
stock, $0.001 par value, 2.0 billion shares
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||||
authorized;
73,211,432 shares issued and outstanding
|
73,211
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|||
Additional
paid-in capital
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18,000,426
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|||
(Deficit)
accumulated during the development stage
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(19,473,129
|
)
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||
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||||
Total
stockholders' (deficit)
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(1,399,492
|
)
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||
TOTAL
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
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$
|
139,284
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Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
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For
the Period
From February
1, 2000
(Inception)
Through
September
30,
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||||||||||||||
2005
|
2006
|
2005
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2006
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2006
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||||||||||||
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|
|
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||||||||||||
Sales
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$
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-
|
$
|
400
|
$
|
-
|
$
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20,200
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$
|
20,200
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||||||
Cost
of sales
|
-
|
66
|
-
|
3,472
|
3,472
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|||||||||||
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-
|
-
|
-
|
-
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||||||||||||
Gross
profit
|
-
|
334
|
-
|
16,728
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16,728
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|||||||||||
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|
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||||||||||||
Costs
and expenses:
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||||||||||||||||
General
and administrative
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419,299
|
340,191
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1,328,488
|
1,047,339
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6,037,840
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|||||||||||
Research
and development
|
66,320
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181,617
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171,819
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331,750
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1,661,067
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|||||||||||
General
and administrative - stock based compensation
|
555,385
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85,053
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1,355,190
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597,803
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6,318,989
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|||||||||||
Write-off
of advances to potential acquiree
|
-
|
-
|
-
|
-
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629,000
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|||||||||||
Finance
costs
|
-
|
-
|
-
|
-
|
786,000
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|||||||||||
Interest
expense
|
-
|
-
|
269,684
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-
|
274,390
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|||||||||||
Amortization
of license agreement
|
-
|
-
|
-
|
-
|
155,210
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|||||||||||
Amortization
of intangibles
|
-
|
-
|
-
|
-
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656,732
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|||||||||||
Losses
on settlements
|
-
|
-
|
-
|
-
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1,261,284
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|||||||||||
Write-down
of investment in subsidiary
|
-
|
-
|
-
|
-
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620,805
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|||||||||||
Equity
in loss of unconsolidated subsidiary
|
-
|
-
|
-
|
-
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853,540
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|||||||||||
Write-off
of investment in Portage BioMed
|
-
|
-
|
-
|
-
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60,000
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|||||||||||
Write-off
of investment in Xenacare
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-
|
-
|
-
|
-
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175,000
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|||||||||||
|
|
|
|
|
||||||||||||
Total
costs and expenses
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1,041,004
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606,861
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3,125,181
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1,976,892
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19,489,857
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|||||||||||
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|
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||||||||||||
Net
loss before provision (benefit) for income taxes
|
(1,041,004
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)
|
(606,527
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)
|
(3,125,181
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)
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(1,960,164
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)
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(19,473,129
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)
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||||||
Provision
(benefit) for income taxes
|
-
|
-
|
-
|
-
|
-
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|||||||||||
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|
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||||||||||||
Net
loss
|
$
|
(1,041,004
|
)
|
$
|
(606,527
|
)
|
$
|
(3,125,181
|
)
|
$
|
(1,960,164
|
)
|
$
|
(19,473,129
|
)
|
|
|
|
|
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||||||||||||
Per
share information - basic and diluted:
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||||||||||||||||
Loss
per common share
|
$
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(0.02
|
)
|
$
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(0.01
|
)
|
$
|
(0.05
|
)
|
$
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(0.03
|
)
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||||
Weighted
average common shares outstanding
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67,900,878
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72,520,021
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62,863,086
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71,092,017
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Nine
Months Ended
September
30,
|
For
the Period
From
February
1, 2000
(Inception)
Through
September
30,
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|||||||||
2005
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2006
|
2006
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||||||||
Cash
flows from operating activities:
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||||||||||
Net
cash (used in) operating activities
|
$
|
(1,369,678
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)
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$
|
(1,398,054
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)
|
$
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(4,543,718
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)
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Cash
flows from investing activities:
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||||||||||
Cash
reduction due to deconsolidation of Nanologix
|
-
|
-
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(2,997
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)
|
||||||
Cash
acquired in acquisition of Nanologix
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-
|
-
|
3,004
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|||||||
Acquisition
of property and equipment
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(5,114
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)
|
-
|
(86,140
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)
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|||||
Amounts
paid for investments
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(130,000
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)
|
-
|
(235,000
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)
|
|||||
|
|
|
||||||||
Net
cash (used in) investing activities
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(135,114
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)
|
-
|
(321,133
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)
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|||||
Cash
flows from financing activities:
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||||||||||
Common
stock issued for cash
|
1,079,800
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622,000
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2,679,500
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|||||||
Proceeds
from convertible loans
|
-
|
-
|
304,750
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|||||||
Loans
from stockholders, net of repayments
|
33,000
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760,902
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1,934,476
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|||||||
|
|
|||||||||
Net
cash provided by financing activities
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1,112,800
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1,382,902
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4,918,726
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|||||||
|
|
|
||||||||
Net
increase (decrease) in cash
|
(391,992
|
)
|
(15,152
|
)
|
53,875
|
|||||
Cash
- beginning of period
|
409,432
|
69,027
|
-
|
|||||||
|
|
|
||||||||
Cash
- end of period
|
$
|
17,440
|
$
|
53,875
|
$
|
53,875
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Number
of
shares
|
Weighted
average
exercise
price
|
Weighted
average
fair
value
|
||||||||
Balance
at December 31, 2005
|
-
|
|||||||||
Issued
|
3,000,000
|
$
|
.25
|
$
|
.16
|
|||||
Balance
at September 30, 2006
|
3,000,000
|
$
|
.25
|
$
|
.16
|
|
Outstanding
|
|||||||||
Exercise
Prices
|
Weighted
Average
Number
Outstanding
|
|
Weighted
Average
Contractual
Life
|
|
Weighted-
Average
Exercise
Price
|
|||||
$.20
|
1,000,000
|
4.3
years
|
$
|
.20
|
||||||
$.27
|
2,000,000
|
1.5
years
|
$
|
.27
|
||||||
3,000,000
|
· |
Successful
drugs by our competitors that may render our technologies difficult
to
market;
|
· |
Whether
we are successful in establishing licensing agreements and/or establishing
strategic partnerships or alliances with pharmaceutical companies,
biotechnology companies, and clinical diagnostic laboratories that
would
provide us with licensing fees; and
|
· |
Whether
the Federal Food and Drug Administration imposes additional requirements
in connection with drug approvals, which will lead to additional
costs and
delays;
|
Type
Expenditure
|
Total
Expenditure
|
|
Monthly
Expenditure
|
||||
Salaries*
|
$
|
175,000
|
$
|
14,583
|
|||
Travel
related expenses for our Chief Executive Officer
|
$
|
40,000
|
$
|
3,333
|
|||
pertaining
to research and due diligence
|
|||||||
Professional
Fees -Legal and
Accounting
|
$
|
165,000
|
$
|
13,750
|
|||
Total
|
$
|
380,000
|
$
|
31,666
|
Type
Expenditure
|
Total
Expenditure
|
|
Monthly
Expenditure
|
||||
Operating
Expenses
|
|||||||
(Rent,
supplies, utilities)
|
$
|
50,000
|
$
|
4,167
|
|||
Salaries
(President)
|
$
|
70,000
|
$
|
5,833
|
|||
Total:
|
$
|
120,000
|
$
|
10,000
|
· |
In
February 2006, we completed the initial funding of ReceptoPharm in
the
amount of $2,000,000.
|
· |
In
January 2006, we established Designer Diagnostics to sell NonTuberculois
Mycobacterium test kits.
|
· |
To
date, we have invested a total of $175,000 of a $250,000 committed
investment in XenaCare for the investment in 15 Site of Care physician’s
offices with XenaCare, LLC, a healthcare management
company.
|
· |
On
January 24, 2006, we obtained NanoLogix’s intellectual property pertaining
to the manufacture of test kits for the rapid isolation, detection
and
antibiotic sensitivity testing of certain microbacteria, which includes
reassignment to us of 11 key patents protecting the diagnostics test
kit
technology and NanoLogix licensing to us the remaining 18 patents
that
protect the diagnostics test kit
technology.
|
· |
Designer
Diagnostics held a Continuing Medical Education Seminar at the Mahatma
Gandhi Institute in India on March 24, 2006 during the World Stop
TB Day.
At that meeting, Designer Diagnostics officially began marketing
their
test kits for the rapid isolation, detection and antibiotic-sensitivity
testing of microbacteria. In March 2006, we made our first sales
of
Designer Diagnostics’ test kits.
|
· |
In
approximately October 2005, we completed pre-clinical studies with
various
companies that ReceptoPharm has agreements with pertaining to
ReceptoPharm’s Multiple Sclerosis (MS) and HIV drugs, which consisted of
(a) and (b) below:
|
· |
In
May of 2006, ReceptoPharm, received approval from the Medicines Health
and
Regulatory Agency (MHRA) for its application of human clinical trials
for
the treatment of Adrenomyeloneuropathy (AMN). The MHRA is the medical
regulatory agency within the British Department of
Health.
|
· |
From
March and April of 2006, ReceptoPharm published two clinical trials
on the
use of their technology in the treatment of
pain.
|
· |
In
June of 2006, ReceptoPharm published the results of their EAE rat
model of
Multiple Sclerosis (MS), which showed that their drug, RPI-78M, had
promising results in an accepted animal model of the
disease.
|
· |
In
June of 2006, ReceptoPharm signed a non-binding Letter-of-Intent
to be
acquired in full by Nutra Pharma.
|
· |
In
October of 2006, ReceptoPharm received Ethics Committee approval
in the UK
to begin its Phase IIb human clinical trial for the treatment of
AMN. This
approval allows for the late Phase II/early Phase III (IIb/IIIa)
trial to
begin.
|
· |
Hospitals;
|
· |
Pharmaceutical
companies;
|
· |
Biotechnology
companies;
|
· |
Medical
device distributors; and
|
· |
Governmental
organizations.
|
· |
Recruitment
of 20 patients with AMN;
|
· |
Administering
ReceptoPharm's AMN drug under development;
and
|
· |
Monitoring
patients throughout a 15-month
protocol.
|
· |
Sell
or dispose of our assets, if any;
|
· |
Pay
our liabilities in order of priority, if we have available cash to
pay
such liabilities;
|
· |
If
any cash remains after we satisfy amounts due to our creditors, distribute
any remaining cash to our shareholders in an amount equal to the net
market value of our net assets;
|
· |
File
a Certificate of Dissolution with the State of California to dissolve
our
corporation and close our business;
|
· |
Make
the appropriate filings with the Securities and Exchange Commission
so
that we will no longer be required to file periodic and other required
reports with the Securities and Exchange Commission, if, in fact,
we are a
reporting company at that time; and
|
· |
Make
the appropriate filings with the Securities and Exchange Commission
so
that we will no longer be required to file periodic and other required
reports with the Securities and Exchange Commission, if, in fact,
we are a
reporting company at that time; and
|
· |
Make
the appropriate filings with the National Association of Security
Dealers
to effect a delisting of our common stock, if, in fact, our common
stock
is trading on the Over-the-Counter Bulletin Board at that
time.
|
· |
We
are not and were not a blank check company at the time of the offer
or
sale;
|
· |
The
investors had business experience and were accredited investors as
defined
by Rule 501 of Regulation D of the
Act;
|
· |
All
offers and sales of the investment were made privately and no party
engaged in any general solicitation or advertising of the proposed
investment;
|
· |
Each
investor had a preexisting social, personal or business relationship
with
us and members of our management;
|
· |
The
investors were provided with all information sufficient to allow
them to
make an informed investment
decision;
|
· |
The
investors had the opportunity to inspect our books and records and
to
verify statements made to induce them to
invest;
|
· |
The
securities representing the investment were issued with a restrictive
legend indicating the securities represented by the certificate have
not
been registered; and
|
· |
No
party received any transaction-based compensation such as commissions
in
regard to locating any investor for the
venture.
|
Exhibit
No.
|
Title
|
|
31.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
Section
302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to
18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
Dated: November 14, 2006 | |||
NUTRA
PHARMA CORP.
Registrant
|
|||
/s/ Rik J. Deitsch | |||
Rik J. Deitsch |
|||
Chief Executive Officer and Chief Financial Officer |