NOTE
1 - FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and
cash flows as of September 30, 2017 and for all periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31,
2016 audited financial statements. The results of operations for the period ended September 30, 2017 (unaudited) are not necessarily
indicative of the operating results for the year ended December 31, 2017.
NOTE
2 - GOING CONCERN
The
Company’s financial statements are prepared using accounting principles generally accepted in the United States of America
applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course
of business. However, the Company does not have cash or other material assets, nor does it have an established source of revenues
to cover its operating costs and to allow it to continue as a going concern. It is the intent of the Company to seek a merger
with an existing, operating company. In the interim, shareholders of the Company have committed to meeting its minimal operating
expenses.
In
addition, the inability of The Company to become current in periodic reporting obligations under the federal securities laws during
the third quarter limited the information that the Company was able to provide to the public, to investors and to other interested
parties, including customers and certain lenders. Furthermore, such inability to become current limited the Company’s ability
to use equity incentives to attract, retain and motivate employees. Such inability to become current also restricted the Company’s
ability to raise capital through the issuance of equity or debt securities, use equity securities for acquisitions of complementary
companies and businesses and engage in other strategic transactions.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Basic
Loss per Common Share
Basic
loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average
number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income
available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted
average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
There was a convertible note in default as of September 30, 2017 that was subsequently converted into 246,918 shares of common
stock on December 11, 2018.
Convertible
notes with fixed rate conversion options
The
Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding
principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the
common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount.
The Company records the convertible note liability at its fixed monetary amount by measuring and recording a discount, as applicable,
on the Note date with a charge of interest expense in accordance with ASC 480 – “Distinguishing Liabilities from Equity.”
Convertible
debt
In
July 2017, the FASB issued Accounting Standards Update No. 2017-11 Earnings Per Share (Topic 260) Distinguishing Liabilities from
Equity (Topic 480) Derivatives and Hedging (Topic 8115) (“ASU 2017-11”), which changes the classification analysis
of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain
financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity
classification when assessing whether the instrument is indexed to an entity’s own stock. ASU 2017-11 also clarifies existing
disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or
embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence
of a down round feature. For freestanding equity classified financial instruments, ASU 2017-11 requires entities to present earnings
per share (EPS) in accordance with ASC Topic 260 to recognize the effect of the down round feature when it is triggered. That
effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. For the Company, ASU
2017-11 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early
adoption is permitted, including adoption in an interim period. The Company adopted this standard on July 1, 2017, and applied
it retroactively to the Company’s financial reporting starting on April 1, 2017.
Recent
Accounting Pronouncements
Management
has considered all other recent accounting pronouncements issued since the last audit of the Company’s financial statements.
The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s
financial statements.
NOTE
4 – RELATED-PARTY TRANSACTIONS
The
Company has recorded advances from related parties and expenses paid by related parties on behalf of the Company as related party
payables. As of September 30, 2017 and December 31, 2016, the related party payable outstanding balance totaled $35,280 and $10,880,
respectively. These payables are non-interest bearing, unsecured, and are due on demand.
NOTE
5 – CONVERTIBLE NOTES
On
April 15, 2017, the Company issued a convertible promissory note (the “Convertible Note”) for $101,000 ($100,000 principal
plus a 1% original issue discount) to Trident Cap X Corp. (“Trident”), a Florida Limited Liability Company. The Convertible
Note has a maturity date of October 15, 2017, with a 15% default interest rate in the case that the principle is not paid off
in full by the maturity date or covenants are not met. In the case of default, the holder has the right to convert all or any
portion of the value of the Convertible Note, including unpaid principal, unpaid interest (including default interest), and costs
incurred by the holder related to the conversion, into common stock of the Company. The per share conversion price of this Convertible
Note into common stock shall be 75% of the lowest traded price of the common stock during the ten consecutive trading days prior
to receipt of a notice of conversion from the holder.
On
August 15, 2017, the Company failed to file Form 10-Q for the three months ended June 30, 2017 with the SEC. As a result, the
Convertible Note failed to meet covenant 3.9 “Failure to Comply with the 1934 Act,” triggering an event of default
and requiring payment of default interest at an annual rate of 15%. As of September 30, 2017 and December 31, 2016, default interest
payable on the Convertible Note was $2,485 and $0, respectively.
NOTE
6 – SUBSEQUENT EVENTS
Conversion
of Convertible Note
On
February 8, 2018, Trident assigned the Convertible Note issued by the Company on April 15, 2017 to Global Startup League LLC (“Global”)
a Florida Limited Liability Company. As of the date of the assignment, the Company had not paid any principal or interest and
the Convertible Note remained in default.
On
August 6, 2018, GLOBAL filed a Complaint in the Superior Court for the District of Columbia, styled Global Startup League, LLC
v. Protect Pharmaceutical Corporation, alleging that the Company had breached the Convertible Note and owed Global $100,000, plus
default interest of at least 15% annually as provided for in the Convertible Note, along with the related attorney’s fees.
We
reached a settlement with Global on September 14, 2018, including a release, and had the Company’s transfer agent issue
246,918 shares of Common Stock to Global on December 11, 2018 to satisfy the obligation.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
Following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this
Form 10-Q.
Forward-Looking
and Cautionary Statements
Unless
otherwise indicated, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our”
are to the Company, unless the context requires otherwise. The following discussion and analysis by our management of our financial
condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements and
the accompanying related notes included in this quarterly report and our audited financial statements and related notes and Management’s
Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year
ended December 31, 2016 filed with the Securities and Exchange Commission.
Cautionary
Statement Regarding Forward-Looking Statements
This
report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking
statements are based on our management’s beliefs and assumptions and on information currently available to our management.
Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Risk Factors.” Forward-looking statements include information concerning
our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment,
potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical
facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,”
“expects,” “hopes,” “intends,” “may,” “plans,” “potential,”
“predicts,” “projects,” “should,” “will,” “would” or similar expressions.
This
report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking
statements are based on our management’s beliefs and assumptions and on information currently available to our management.
Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Risk Factors.” Forward-looking statements include information concerning
our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment,
potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical
facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,”
“expects,” “hopes,” “intends,” “may,” “plans,” “potential,”
“predicts,” “projects,” “should,” “will,” “would” or similar expressions.
Forward-looking
statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking
statements. We discuss many of these risks in greater detail in “Risk Factors.” Given these uncertainties, you should
not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s
beliefs and assumptions only as of the date of this report. You should read this report and the documents that we reference in
this report and have filed as exhibits to the report completely and with the understanding that our actual future results may
be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking
statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
Additional
information concerning these and other risks and uncertainties is contained in our filings with the Securities and Exchange Commission,
including the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.
Unless
otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,”
“our,” “our company,” “Protect” refer to Protect Pharmaceutical Corporation.
Our
Ability to Continue as a Going Concern
Our
independent registered public accounting firm has issued its report dated March 31, 2017, in connection with the audit of our
annual financial statements as of December 31, 2016, that included an explanatory paragraph describing the existence of conditions
that raise substantial doubt about our ability to continue as a going concern and Note 2 to the unaudited financial statements
for the period ended September 30, 2017 also describes the existence of conditions that raise substantial doubt about our ability
to continue as a going concern.
Results
of Operations
Three
Months Ended September 30, 2017 and 2016 (unaudited)
We
did not realize revenues for the three-month periods ended September 30, 2017 and 2016 (unaudited). For the three months ended
September 30, 2017 (“third quarter”), the Company did not have any operating expenses. Interest expense for the third
quarter was $2,985, with the entire amount related to a convertible note with Trident.
Total
operating expenses for the comparable third quarter of 2016 were $8,532, consisting of $7,290 in professional fees and $1,150
in executive compensation, and $92 in general and administrative expenses.
The
net loss for the third quarter of 2017 was $2,985 (-$0.00 per share; -$0.00 diluted loss per share, including 246,918 shares attributable
to convertible note), compared to a net loss of $8,532 (-$0.01 per share) for the third quarter of 2016.
Nine
Months Ended September 30, 2017 and 2016 (unaudited)
We
did not realize revenues for the nine-month periods ended September 30, 2017 and 2016 (unaudited). For the nine months ended September
30, 2017, total operating expenses were $115,400, consisting of professional fees of $115,200 and general & administrative
expenses of $200. The increase in professional fees in the first nine months of 2017 is attributable to a contract with Trident
for professional services. Interest expense for the nine-month period was $3,318, with the entire amount related to a convertible
note with Trident.
Total
operating expenses for the comparable period of 2016 were $22,662, consisting of $18,225 in professional fees, $4,150 in executive
compensation and $287 in general and administrative expenses.
The
net loss for the nine months ended September 30, 2017 was $118,718 (-$0.11 per share; -$0.10 diluted loss per share, including
246,918 shares attributable to convertible note), compared to net loss of $22,662 (-$0.02 per share) for the same period of 2016.
Liquidity
and Capital Resources
Total
assets were $0 as of September 30, 2017 (unaudited) and $0 as of December 31, 2016. Total liabilities at September 30, 2017 (unaudited)
were $139,548, consisting of $100,833 in notes payable, $950 in accounts payable, $35,280 in related-party payables, and $2,485
in Interest Payable. At December 31, 2016, total liabilities were $20,830.
Because
we currently have limited revenues and cash, for the immediate future we believe we will have to rely on potential advances from
stockholders to continue to implement our business activities. There is no assurance that our stockholders will continue indefinitely
to provide additional funds or pay our expenses. It is likely the only other source of funding future operations will be through
the private sale of our securities, either equity or debt.
At
September 30, 2017 (unaudited), we had stockholders’ deficit of $139,548 compared to stockholders’ deficit of $20,830
at December 31, 2016.
Plan
of Operation
Our
current business plan is to contemplate a possible a future business model change by the Company to generate adequate revenue
to sustain operations and reduce dependency on shareholder funds. The Company also continues to explore acquisition of or acquisition
by either an affiliated entity or an as yet unknown other entity.
Our
common stock is currently quoted on the QB tier of the OTC Markets under the ticker symbol “PRTT”.
It
is anticipated that business opportunities will come to our attention from various sources, including its officers and directors,
its other stockholders, professional advisors such as attorneys and accountants, securities broker-dealers, venture capitalists,
members of the financial community, and others who may present unsolicited proposals. We have no plan, understandings, agreements,
or commitments with any individual for such person to act as a finder of opportunities for our company.
Because
we currently have no cash, it may be necessary for officers, directors or stockholders to advance funds and we will most likely
accrue expenses until a funding can be accomplished. Management intends to hold expenses to a minimum and to obtain services on
a contingency basis when possible. Further, we expect directors to defer any compensation until such time as we have sufficient
funds. We have not yet entered into any arrangements or definitive agreements to use outside advisors or consultants or to raise
any capital.
We
are currently exploring possible funding sources, but we have not entered into any arrangements or agreements for funding as of
this time. If we are unable to raise the necessary funding, our expansion plans will be delayed indefinitely. There can be no
assurance that we will be able to raise the funds necessary to carry out our business plan on terms favorable to the company,
or at all.
Changes
to Company Officers
November
17, 2017:
Jordan Fishman resigned as Chief Executive Officer.
November
17, 2017:
Una Taylor was appointed as Chief Executive Officer.
June
1, 2018:
Una Taylor resigned as Chief Executive Officer.
June
1, 2018:
Yvette Sanchez was appointed President.
November
12, 2018:
Yvette Sanchez resigned as President.
November
13, 2018:
Una Taylor was appointed as Chief Executive Officer.
Changes
to the Board of Directors
June
1, 2018:
Yvette Sanchez was appointed a member of the Board of Directors
.
June
5, 2018:
Yvette Sanchez removed three members from the Board of Directors by majority vote of the company’s shareholders:
Stuart Sandweiss (Director and Audit Committee Chair), Shimson Bandman (Director), and Shedrick W. Daniels (Director).
There
were no disagreements with these former directors of the Company as to its operations, policies or practices.
November
12, 2018:
Una Taylor appointed as a member of the Board of Directors.
November
12, 2018:
Yvette Sanchez resigned as a member of the Board of Directors.
Off-balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.