Hey ...relax.
I own some GAP from 2-3 weeks ago when it was first getting attention here just in case it pulled off a coup. I haven't sold or bought new shares. Bash and pump isn't my game. You should know that by now.
It doesn't change the facts. GAP has $ 6550 in the kitty and no revenue in the last reported quarter.
Could they have a cure for cervical cancer? sure, but trading activity is very light. One would think that pharmaceutical co's would be all over this thing if its prospects were high.
In any event the facts are as follows:
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 1 - Date of Report –May 27, 2009 The Company had cash of $6,550 at March 31, 2009 as compared to $402,105 at December 31, 2008. This decrease was mainly a result of the cash used in operating activities and the repayment of promissory notes, partially offset by cash received from the exercise of warrants. As at March 31, 2009, the Company had a working capital deficiency of $2,406,628 compared to a working capital deficiency of $6,036,275 at December 31, 2008. This decrease in the working capital deficiency of $3,629,647 was due to the conversion of all the convertible secured promissory notes in February as well as the use of working capital for operating activities during the period.
The conundrum you place before me now Red is, do I get bullied out of posting anything factual in the future because it doesn't mesh with Reds opinion or agenda? Your response was unnecessarily harsh.
For anyone interested, the following are full Sedars put out a few days ago:
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 1 - Date of Report –May 27, 2009 This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist in the understanding and assessment of trends and significant changes in the results of operations and financial condition of the Company. As such, it should be read in conjunction with the Company’s unaudited interim financial statements for the three months ended March 31, 2009 and the audited financial statements and management discussion and analysis of the Company for the year ended December 31, 2008. This MD&A is the responsibility of management and has been reviewed by the Audit Committee and approved by the Board of Directors. The Board of Directors carries out its responsibilities for the financial statements and management’s discussion and analysis principally through the Audit Committee, which is comprised partially of independent directors. All figures in this MD&A are expressed in Canadian dollars, unless otherwise indicated. We wish to caution readers that this report includes certain forward-looking information and statements. These forward-looking statements contain information that is generally stated to be anticipated, expected or projected by PharmaGap Inc. (“Pharmagap” or “Company”), and involve known and unknown risks, uncertainties and other factors which may cause the actual results and performance of PharmaGap to be materially different from any future results and performance expressed or implied by such forward-looking information. Potential risks and uncertainties include, without limitation, the uncertainties inherent in the development of drugs for administration to humans, PharmaGap’s need for significant additional funding to continue as a going concern, extensive government regulation of the Company’s products, and rapid developments in technology, including developments by competitors. Overview PharmaGap Inc. is a biotechnology company with a core focus on designing and developing novel therapeutic drugs for the treatment of cancer and other human diseases associated with the protein kinase C enzyme (“PKC”). Founded in 1999, the Company is a spin-off from Canada’s pre-eminent biological research organization, the National Research Council (NRC). Using its proprietary drug development platform, the Company is developing a pipeline of novel compounds targeting PKC. PKC activity is often expressed in abnormal levels in many types of cancer and other diseases, such as diabetes. PharmaGap’s lead drug compound, PhG-alpha-1, is currently in the pre-clinical testing stage and has shown in vitro and in vivo efficacy in selected cancer types. On February 12, 2009, the Company announced that its lead cancer drug, PhG-alpha-1 was accepted for testing at the National Cancer Institute in Bethesda MD. On March 16, 2009 the Company announced a collaboration with MD Biosciences of Zurich, Switzerland for development of an inhibitor of PKC theta for use in inflammation and neurology diseases. On March 24, 2009 the Company announced the testing of the lead cancer drug PhG-alpha-1 will be undertaken at the Ottawa Health Research Institute on a panel of human Ovarian cancers. The Company’s business strategy is to license its drug compounds to third parties for completion of human trials and subsequent commercialization in return for initial license payments, milestone payments as the compounds progress through clinical trials, and, in the event the compound reaches the point of clinical sales, royalties on sales of the compound. There is no assurance as to the realization, form or size of any of these potential payments in the future. The Company is actively seeking capital and seeking a business collaboration with other companies in the business of pharmaceutical development, including licensing arrangements and other business arrangements including but not limited to a sale of the Company or its assets, or a merger, or joint venture.
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 2 - 1. Overall Performance The Company is in its development phase and there was no revenue for the three months ended March 31, 2009 and the three months ended March 31, 2008. Expenses were $754,378 for the three months ended March 31, 2009 as compared to $594,379 for the same period of the prior year. The increase in expenses was mainly due to an increase in consulting costs and supplies relating to research and development for PhG-alpha-1 as well as stock option compensation expense associated with the February 2009 grants, partially offset by a decrease in patent costs and a decrease in interest expense on convertible secured promissory notes following conversion of these notes in February 2009. The net loss for the three months ended March 31, 2009 was $754,378 as compared to $594,379 for the same period of the prior year. Cash at March 31, 2009 was $6,550 as compared to $402,105 at December 31, 2008. The Company had a working capital deficit of $2,406,628 at March 31, 2009 as compared to a working capital deficit of $6,036,275 at December 31, 2008. The recent downtown in economic conditions has not impacted the Company’s performance at this time though given very little certainty exists about future economic conditions for the balance of 2009 and beyond, it is not certain the risks this may pose to the Company’s performance as well as to it’s pursuit of the business strategy as outlined in the “Overview” section of this MD&A. 2. Results of Operations The following revenue and expense analysis of the Statements of Operations and Deficit compares the revenue and expenses for the three months ended March 31, 2009 to the same period of the prior year. 20092008ChangeRevenue-$ -$ -$ Expenses: Research and development264,482 123,231 141,251 General and administrative170,163 83,828 86,335 Professional fees163,076 186,990 (23,914) Sales and marketing17,517 2,966 14,551 Interest on convertible secured promissory notes and capital leases104,940 173,861 (68,921) Interest and bank charges34,200 23,503 10,697 Gain on settlement of lease obligation- 754,378 594,379 159,999 Net loss($754,378)($594,379)($159,999)Three months ended March 31, Revenue There was no revenue for the three months ended March 31, 2009 and three months ended March 31, 2008. The Company is not yet earning revenues from its principal operations (drug development) and continues to be in the development stage.
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 3 -Expenses Expenses were $754,378 for the three months ended March 31, 2009 as compared to $594,379 for the same period of the prior year. Three months ended March 31, 2009Three months ended March 31, 2008Salaries and benefits$68,501$83,998Consultants and contractors81,83222,041Stock based compensation77,8667,424Materials and supplies32,0214,492Lab rent3,3133,313Depreciation7,7887,827Other4,1822,386Less: Grants and contributions(11,021)(8,250)$264,482$123,231Research and development Research and development expenses consist primarily of payroll, consultants' fees, material purchases and related expenses for development of the Company’s lead therapeutic drug compound. Research and development expense represented 35% of the total expenses for the three months ended March 31, 2009 and 21% for the prior year. Research and development expense for the three months ended March 31, 2009 was $264,482 as compared to $123,231 for the same period of the prior year. The increase was due to a combination of higher consultant and materials expense relating to PhG-alpha-1 testing and stock option compensation expense associated with the February 2009 option grants. Three months ended March 31, 2009Three months ended March 31, 2008Salaries and benefits$69,735$57,209Stock compensation77,24311,511Depreciation759355Supplies and communications2,2633,483Office rent7,7307,730Other12,4333,540$170,163$83,828General and administrative General and administrative expense represented 23% of the Company’s total expense for the three months ended March 31, 2009 as compared to 14% for the same period of the prior year. General and administrative expense for the three months ended March 31, 2009 was $170,163 as compared to $83,828 for the same period of the prior year. This increase was mainly a result of the stock option compensation expense associated with the February 2009 option grants. Professional fees decreased to $163,076 for the three months ended March 31, 2009 as compared to $186,990 for the same period of the prior year. This decrease related mainly to a decrease in patent and legal expenses.
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 4 - Interest expense on convertible secured promissory notes and capital leases for the three months ended March 31, 2009 was $104,940 as compared to $173,861 for the same period of the prior year. This decrease was a result of conversion of all of the convertible secured promissory notes in February 2009. 3. Summary of Quarterly Results Quarters ended (in $000s except per share data) 30-Jun30-Sep31-Dec31-Mar30-Jun30-Sep31-Dec31-Mar20072007200720082008200820082009Revenue$ - 2$ 10$ $ - $ - $ - -$ $ - Net loss(549) (577) (713) (594) (604) (496) (636) (754) Net loss per share - basic and diluted(0.02)$ (0.03)$ (0.03)$ (0.02)$ (0.02)$ (0.01)$ (0.01)$ (0.02)$ Though the Company has earned incidental services revenue during prior quarters, the Company is not yet earning revenues from its principal operations (drug development) and continues to be considered in the development stage. Expenses have been funded through cash advances and the issuance of convertible secured promissory notes and promissory notes over these periods as well as the exercise of warrants. 4. Liquidity and Capital Resources As at March 31As at December 3120092008ChangeCash6,550$ 402,105$ (395,555)$ Working capital deficiency(2,406,628)(6,036,275)3,629,647Net cash provided by (used in):20092008ChangeOperating activities(299,244)$ (255,870)$ (43,374)$ Investing activities(1,163) - (1,163) Financing activities(95,148) 262,689 (357,837) Three months ended March 31 The Company had cash of $6,550 at March 31, 2009 as compared to $402,105 at December 31, 2008. This decrease was mainly a result of the cash used in operating activities and the repayment of promissory notes, partially offset by cash received from the exercise of warrants. As at March 31, 2009, the Company had a working capital deficiency of $2,406,628 compared to a working capital deficiency of $6,036,275 at December 31, 2008. This decrease in the working capital deficiency of $3,629,647 was due to the conversion of all the convertible secured promissory notes in February as well as the use of working capital for operating activities during the period. Cash used in operations for the three months ended March 31, 2009 was $299,244 compared to cash used in operations for the same period of the prior year of $255,870. The $43,374 increase in cash used was mainly a result of the change in non-cash working capital items during the three months ended March 31, 2009 as compared to the prior year. Cash used in financing activities was $95,148 for the three months ended March 31, 2009 as compared to cash provided by financing activities of $262,689 for the same period of the prior year. The increase was mainly due to the repayment of promissory notes partially offset by the exercise of warrants, in the current year’s period, as compared to the cash provided from the issuance of promissory notes in the prior year’s same period.
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 5 - Pursuit of revenue as well as additional financing is expected to fund Company operations and fund development of PharmaGap’s technology. At this time, while the Company is pursuing additional sources of financing, there can be no assurance that the additional financing will be available to the Company when needed, on commercially reasonable terms, or at all. In addition, any equity financing may involve substantial dilution to the Company’s existing shareholders (see “Outlook”). On January 2, 2009 $105,467 of promissory notes was repaid to SC Stormont Holdings Inc. pursuant to the promissory note dated February 23, 2006. On February 17, 2009, 280,000 warrants were exercised for 280,000 common shares at $0.165 per share for total cash proceeds of $46,200. On February 19, 2009, the Company granted 1,190,000 options to Directors and Officers and 1,300,000 stock options to employees and consultants. These stock options have an exercise price of $0.15 per common share, expire on February 18, 2014 and vest immediately. On February 25, 2009, Stormont Holdings converted all of the Series 1, 2, 3, and 4 Convertible Secured Promissory notes held by it, in the total amount of $4,116,556, into equity units in accordance with their terms. Series 1 in the amount of $307,047 converted at $0.13554 per share into 2,265,359 common shares and 2,265,359 warrants with a two year term and an exercise price of $0.20331. Series 2 in the amount of $2,126,401 converted at $0.13 per share into 16,356,929 common shares. Series 3 Tranches 4, 5, and 6 in the total amount of $1,002,232 converted at $0.13 per share into 7,709,479 common shares. Series 3 Tranche 7 in the amount of $123,415 converted at $0.175 per share into 705,226 common shares and 705,226 warrants with an exercise price of $0.20331, which warrants expired unexercised on February 26, 2009. Series 4 in the amount of $557,461 converted at $0.13 per share into 4,288,157 common shares and 4,288,157 warrants with an exercise price of $0.195, which warrants expired unexercised on February 26, 2009. On February 26, 2009, conversion of Series 3 Convertible Secured Promissory Notes in the amount of $61,537 held by parties at arm’s length to the Corporation and to Stormont were automatically converted at $0.175 per share according to their terms into 351,642 common shares and 351,642 warrants with a two year term and an exercise price of $0.2625 per warrant. See note 11, which discloses debt, warrants and options exercised subsequent to March 31, 2009. 5. Off-Balance Sheet Arrangements Under the terms of a technology license agreement with the National Research Council of Canada, the Company is committed to pay a royalty equal to 3% of sales of the licensed technology for a maximum of ten years ending September 26, 2010. No royalties have been earned or paid to date. The Company does not have any other off-balance sheet arrangements outside of indemnification clauses in customer contracts in the normal course of business, equipment operating leases, and the executive and strategic direction agreement entered into with SC Stormont Inc. on December 3, 2004 which has been extended to November 17, 2009. 6. Related Party Transactions As at March 31, 2009 the Company was indebted to certain shareholders for $187,833 (primarily relating to management compensation earned prior to 2004). The amounts payable to shareholders are non-interest bearing and have no terms of repayment. As at March 31, 2009 the Company was indebted to SC Stormont Inc. for $1,476,240 and SC Stormont Holdings Inc. for $70,588. In addition, the Company was indebted to SC Stormont Holdings Inc. (“Stormont”) for convertible secured promissory notes and unsecured and secured promissory notes as outlined below. Both companies are controlled by a director of the Company. The amounts payable to
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 6 -SC Stormont Inc. relate to the strategic management services agreement between this entity and the Company that was initiated in December 2004 and which has been extended to November 2009. During the three months ended March 31, 2009, a related party, SC Stormont Inc., loaned the Company a total of $nil (March 31, 2008 - $269,800), in the form of cash advances. The promissory notes bear interest at an annual rate of 1% per month, compounded monthly, due on demand and ranking senior to any other unsecured debt. During the three months ended March 31, 2009 the Company repaid $139,000 (March 31, 2008 - $nil) of promissory notes. As at March 31, 2009 the balance owing by the Company to SC Stormont Holdings Inc. on advances and promissory notes was $80,000 (December 31, 2008 - $219,000). Accrued interest on the notes and advances was $29,379 (December 31, 2008 - $65,980) and is recorded in accounts payable and accrued liabilities. On February 25, 2009, Stormont Holdings converted all of the Series 1, 2, 3, and 4 Convertible Secured Promissory notes held by it, in the total amount of $4,116,556, into equity units in accordance with their terms. Series 1 in the amount of $307,047 converted at $0.13554 per share into 2,265,359 common shares and 2,265,359 warrants with a two year term and an exercise price of $0.20331. Series 2 in the amount of $2,126,401 converted at $0.13 per share into 16,356,929 common shares. Series 3 Tranches 4, 5, and 6 in the total amount of $1,002,232 converted at $0.13 per share into 7,709,479 common shares. Series 3 Tranche 7 in the amount of $123,415 converted at $0.175 per share into 705,226 common shares and 705,226 warrants with an exercise price of $0.20331, which warrants expired unexercised on February 26, 2009. Series 4 in the amount of $557,461 converted at $0.13 per share into 4,288,157 common shares and 4,288,157 warrants with an exercise price of $0.195, which warrants expired unexercised on February 26, 2009. As at March 31, 2009, Stormont’s ownership interest in the total shares outstanding of 77,359,122 (91,880,723 following full warrant exercise) is 43.9 % (39.5% assuming full warrant exercise). 7. Financial Instruments On February 25, 2009, Stormont Holdings converted all of the Series 1, 2, 3, and 4 Convertible Secured Promissory notes held by it, in the total amount of $4,116,556, into equity units in accordance with their terms. Series 1 in the amount of $307,047 converted at $0.13554 per share into 2,265,359 common shares and 2,265,359 warrants with a two year term and an exercise price of $0.20331. Series 2 in the amount of $2,126,401 converted at $0.13 per share into 16,356,929 common shares. Series 3 Tranches 4, 5, and 6 in the total amount of $1,002,232 converted at $0.13 per share into 7,709,479 common shares. Series 3 Tranche 7 in the amount of $123,415 converted at $0.175 per share into 705,226 common shares and 705,226 warrants with an exercise price of $0.20331, which warrants expired unexercised on February 26, 2009. Series 4 in the amount of $557,461 converted at $0.13 per share into 4,288,157 common shares and 4,288,157 warrants with an exercise price of $0.195, which warrants expired unexercised on February 26, 2009. On February 26, 2009, conversion of Series 3 Convertible Secured Promissory Notes in the amount of $61,537 held by parties at arm’s length to the Corporation and to Stormont were automatically converted at $0.175 per share according to their terms into 351,642 common shares and 351,642 warrants with a two year term and an exercise price of $0.2625 per warrant. 8. Adoption of New Accounting Standards International Financial Reporting Standards (IFRS) In February 2008, the Accounting Standards Board announced that publicly accountable entities will be required to prepare financial statements in accordance with International Financial Reporting Standards (“IFRS”) for interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The Company expects to issue its first financial statements in accordance with IFRS for the first quarter ended March 31, 2011. The Company has developed an IFRS changeover plan in preparation for the conversion to IFRS which addresses the following key elements:
PHARMAGAP INC.
MANAGEMENT DISCUSSION AND ANALYSIS For the three months ended March 31, 2009
- 7 -Accounting policy changes and impact on financial reporting; Financial reporting expertise and training requirements; Data systems and information technology impact; Internal control over financial reporting; Impact on business activities; The Company is currently in the process of assessing the differences in current accounting policies and IFRS. Once the required changes in accounting policy have been identified the Company will proceed to address other key elements of the plan. There may be significant changes in the presentation of the financial condition of the Company as a result of the changeover to IFRS, and in the nature and materiality of accounting policy choices that may be made by management, between the present date and the date of formal transition to IFRS, which is January 1, 2011. No inferences should be made about the individual or aggregate effects of the conversion of the financial statements to IFRS until the Company publishes its opening IFRS balance sheet as at January 1, 2010 and related IFRS 1 disclosures. 9. Summary of Outstanding Share Data Issued Capital As of the date of this MD&A, there are 78,196,722 Common Shares issued and outstanding. Description of Reserved Securities As of the date of this MD&A, the following Common Shares are reserved for issuance: a) 13,298,995 Common Shares reserved for issuance under Share Warrants, b) 4,449,000 Common Shares reserved for issuance under options granted to directors, officers, employees and consultants. 10. Subsequent events On April 15, 2009 the Company issued a Secured Promissory Note to SC Stormont Holdings Inc., with an initial advance of principal in the amount of $23,000. On April 30, 2009 SC Stormont Holdings advanced an additional $4,375 under the April 15, 2009 Secured Promissory Note. Interest accrues at a monthly rate of one percent (1%) compounded monthly and accruing to maturity. On May 7, 2009, 120,000 warrants were exercised at a price of $0.165 per share for cash proceeds of $19,800. From May 11 to May 15, 2009, 240,000 options were exercised at a prices ranging from $0.15 to $0.16 per share for cash proceeds of $37,000. On May 15, 2009, 477,600 warrants were exercised at a price of $0.165 per share for cash proceeds of $78,804. 11. Outlook PharmaGap expects to incur further losses from operations as it progresses through its development plan for its drug compounds. Based upon this and other factors discussed above there can be no assurances that the Company will continue as a going concern. The Company is actively seeking additional capital and seeking a business collaboration with other companies in the business of pharmaceutical development, including licensing arrangements and other business arrangements including but not limited to a sale of the Company or its assets, or a merger, or joint venture. Positive developments in the Company’s development could provide the potential for future issues of common stock. The Company has taken steps to reduce ongoing expenses by way of reductions in its workforce in order to allow it to focus on developmental testing while it pursues these business arrangements. These are forward looking statements and there can be no assurances that any of these will occur. |
