SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
-----------
Quarterly Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
For the period ended March 31, 2002
PANAMED CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 0-17268 77-0583516
------------------------------- ------------ -------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
537 Constitution Ave., Suite A
Camarillo, California 93012
(Address of principal executive office)
Issuer's telephone number: 805-383-3924
The issuer (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
On May 31, 2002, 22,337,520 shares of the issuer's common stock were
outstanding.
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Table of Contents
Part I. Financial Information.................................................................................................2
Item No. 1. Financial Statements.....................................................................................2
Item No. 2 Management's Discussion and Analysis.....................................................................15
Part II Other Information....................................................................................................17
Item No. 2. Changes in Securities and Use of Proceeds...............................................................17
Item No. 6. Exhibits and Reports on Form 8-K........................................................................17
Exhibits.....................................................................................................................17
Reports on Form 8-K..........................................................................................................17
Signatures...................................................................................................................17
Item 1. Financial Statements
PANAMED CORPORATION
(A development stage company)
BALANCE SHEETS - MARCH 31, 2002 AND DECEMBER 31, 2001
ASSETS
March 31, 2002 Dec. 31, 2001
(Unaudited)
-------- --------
CURRENT ASSETS:
Cash $ 34,977 $ 106
Prepaid expenses -- 21,000
-------- --------
Total current assets 34,977 21,106
-------- --------
PROPERTY AND EQUIPMENT (net of accumulated
depreciation of $122 and $0, respectively) 5,984 --
-------- --------
OTHER ASSETS:
Investment 109,012 176,783
Notes receivable - related parties -- 29,593
-------- --------
109,012 206,376
-------- --------
$149,973 $227,482
======== ========
The accompanying notes are an integral part of the
financial statements.
2
PANAMED CORPORATION
(A development stage company)
BALANCE SHEETS - MARCH 31, 2002 AND DECEMBER 31, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 2002 Dec. 31, 2001
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 6,399 $ 5,887
Note payable - related party -- 7,400
Other current liabilities -- 20,000
----------- -----------
Total current liabilities 6,399 33,287
----------- -----------
OTHER LIABILITIES 43,500 --
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock - $0.01 and $ 0.0001 par
value, respectively Authorized - 100,000,000
shares Issued and outstanding - 23,485,020 and
19,750,000 shares, respectively 234,850 1,975
Additional paid-in capital 3,608,094 255,987
Deficit accumulated during the development stage (3,692,870) (63,767)
----------- -----------
150,074 194,195
Less subscriptions receivable (50,000) --
----------- -----------
Total stockholders' equity 100,074 194,195
----------- -----------
$ 149,973 $ 227,482
=========== ===========
The accompanying notes are an integral part of the
financial statements.
3
PANAMED CORPORATION
(A development stage company)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND
FOR THE PERIOD FROM AUGUST 21, 2001 (DATE OF INCEPTION)
THROUGH MARCH 31, 2002
(Unaudited)
Period from
Three months August 21, 2001
ended (Inception) to
March 31, 2002 March 31, 2002
----------- -----------
(Unaudited) (Unaudited)
SALES $ -- $ --
COST OF SALES -- --
----------- -----------
Gross margin -- --
OPERATING EXPENSES 3,142,152 3,196,501
----------- -----------
Loss from operations (3,142,152) (3,196,501)
----------- -----------
OTHER EXPENSES:
Acquisition expense (445,000) (445,000)
Loss on sale of investment (29,240) (29,240)
Loss on investment (11,911) (21,329)
----------- -----------
(486,151) (495,569)
----------- -----------
Net loss before income taxes (3,628,303) (3,692,070)
PROVISION FOR INCOME TAXES (800) (800)
----------- -----------
Net loss $(3,629,103) $(3,692,870)
=========== ===========
NET LOSS PER SHARE
Basic and diluted $ (0.17) $ (0.20)
=========== ===========
The accompanying notes are an integral part of the
financial statements.
4
PANAMED CORPORATION
(A development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED MARCH 31, 2002 AND
FOR THE PERIOD FROM AUGUST 21, 2001 (DATE OF INCEPTION)
THROUGH MARCH 31, 2002
(Unaudited)
Deficit
Accumulated
Additional During The Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------------------------------------------------------------------------------------
Balance, August 21, 2001 -- $ -- $ -- $ -- $ --
Issuance of stock for cash
September 4, 2001
($0.0001 per share) 17,610,000 1,761 -- -- 1,761
Issuance of stock for cash
September 19, 2001
($0.50 per share) 60,000 6 29,994 -- 30,000
Issuance of stock for stock
October 15, 2001
($0.931 per share) 2,000,000 200 186,001 -- 186,201
Issuance of stock for cash
October 24, 2001
($0.50 per share) 20,000 2 9,998 -- 10,000
Issuance of stock for cash
October 30, 2001
($0.50 per share) 60,000 6 29,994 -- 30,000
Net loss -- -- -- (63,767) (63,767)
------------------------------------------------------------------------------------------
Balance, Dec. 31, 2001 19,750,000 1,975 255,987 (63,767) 194,195
Issuance of stock for cash
February 20, 2002
($1.00 per share) 63,380 634 62,746 -- 63,380
Issuance of stock for services
February 20, 2002
($1.00 per share) 126,620 1,266 125,354 -- 126,620
The accompanying notes are an integral part of the
financial statements.
5
PANAMED CORPORATION
(A development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED MARCH 31, 2002 AND
FOR THE PERIOD FROM AUGUST 21, 2001 (DATE OF INCEPTION)
THROUGH MARCH 31, 2002
(Unaudited)
(Continued)
Deficit
Accumulated
Additional During The Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------------------------------------------------------------------------------------
Issuance of stock for cash
March 1, 2002
($0.80 per share) 60,000 600 47,400 -- 48,000
Issuance of stock for cash
received in prior period
March 1, 2002
($1.00 per share) 20,000 200 19,800 -- 20,000
Issuance of stock for cash
March 1, 2002
($1.00 per share) 312,000 3,120 308,880 -- 3 12,000
Issuance on subscription
March 1, 2002
($1.00 per share) 50,000 500 49,500 -- 50,000
Issuance of stock for services
March 1, 2002
($1.00 per share) 2,715,000 27,150 2,687,850 -- 2,7 15,000
Acquisition of Micron
Solutions, Inc., a public shell
March 1, 2002
($0.01 par value) 396,520 3,965 4,542 -- 8,507
Change in par value of
common stock
March 1, 2002
(from $.0001 to $.01 per
share) -- 193,050 (193,050) -- --
Issuance of stock for cash
March 18, 2002
($1.00 per share) 132,500 1,325 131,175 -- 1 32,500
6
PANAMED CORPORATION
(A development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED MARCH 31, 2002 AND
FOR THE PERIOD FROM AUGUST 21, 2001 (DATE OF INCEPTION)
THROUGH MARCH 31, 2002
(Unaudited)
(Continued)
Deficit
Accumulated
Additional During The Total
Common Stock Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
------------------------------------------------------------------------------------------
Issuance of stock for services
March 18, 2002
($1.00 per share) 109,000 1,090 107,910 -- 109,000
Cancellation of stock
March 27, 2002
($0.0001 per share) (250,000) (25) -- -- (25)
Net loss -- -- -- (3,629,103) (3,629,103)
----------------------------------------------------------------------- -----------------
Balance, March 31, 2002 23,485,020$ 234,850 $ 3,608,094 $ (3,692,870) $ 150,074
======================================================================= =================
The accompanying notes are an integral part of the
financial statements.
7
PANAMED CORPORATION
(A development stage company)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND
FOR THE PERIOD FROM AUGUST 21, 2001 (DATE OF INCEPTION)
THROUGH MARCH 31, 2002
(Unaudited)
Period from
Three months August 21, 2001
ended (Inception) to
March 31, 2002 March 31, 2002
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,629,103) $(3,692,870)
Adjustments to reconcile net loss to net cash
used by operating activities -
Non-cash items included in net loss:
Common stock issued for services 2,950,620 2,950,620
Other operating activities 85,527 12109,425
----------- -----------
Net cash used in operating activities (592,956) (632,825)
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 79,347 49,754
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 555,880 12627,641
Other financing activities (7,400) (9,593)
----------- -----------
Net cash provided by financing activities 548,480 618,048
----------- -----------
NET INCREASE IN CASH 34,871 34,977
CASH, BEGINNING OF PERIOD 106 --
----------- -----------
CASH, END OF PERIOD $ 34,977 $ 34,977
=========== ===========
The accompanying notes are an integral part of the
financial statements.
PANAMED CORPORATION
(A Development stage company)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND FOR THE PERIOD FROM
AUGUST 21, 2001 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited financial
statements of PanaMed Corporation (the "Company") include all
adjustments (consisting only of normal recurring adjustments)
considered necessary to present fairly its financial position as of
March 31, 2002, the results of operations for the three months ended
March 31, 2002 and the period from August 21, 2001 (date of inception)
through March 31, 2002, and cash flows for the three months ended March
31, 2002 and the period from date of inception through March 31, 2002.
The results of operations are not necessarily indicative of the results
to be expected for the full year or for any future period. The
information included in this Form 10-QSB should be read in conjunction
with Management's Discussion and Analysis and financial statements and
notes thereto included in the Company's 2001 Form 10-KSB and 8-K.
(a) Nature of Business - Development Stage Company
The Company is an enterprise in the development stage as defined
by Statement No. 7 of the Financial Accounting Standards Board and
has not engaged in any significant business other than
organizational efforts and has therefore sustained substantial
operating losses.
PanaMed Africa, Inc (later changed to "PanaMed, Inc") was
established on August 21, 2001, as a California corporation for
the purpose of testing and distributing a unique line of
therapeutic products supplied by Havel Investment, LTD ("Havel").
The therapeutics are used for treating serious illness such as
HIV/AIDS, Herpes, and Shingles. To date, these therapeutics have
been used only in private treatments and they do not have FDA
approval and have not been tested in any clinical trials.
(b) Basis of Accounting
The Company reports on the accrual basis for both financial
statement and income tax purposes.
(c) 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.
8
PANAMED CORPORATION
(A Development stage company)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND FOR THE PERIOD FROM
AUGUST 21, 2001 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Concentration of Credit Risk - Cash
The Company maintains its cash balances in various financial
institutions. The balances are insured by the Federal Deposit
Insurance Corporation up to $100,000. Periodically throughout the
period the Company has maintained cash balances in excess of
federally insured limits. The Company's uninsured balances totaled
$-0- at March 31, 2002.
(e) Equity Method of Accounting for Investments
Investment in Quintek Technologies, Inc. in which the Company has
a 3.8% interest, is carried at cost, adjusted for the Company's
proportionate share of undistributed earnings or losses.
(f) Property, Equipment, and Depreciation
Property is recorded at cost. Depreciation of equipment is
provided using the straight line and accelerated methods over the
following estimated useful lives:
Estimated
Asset Classification Useful Life
Computer equipment 5 Years
Expenditures for repairs and maintenance are charged against
operations when incurred.
(g) Income Taxes
The Company accounts for income taxes using the liability approach
to financial accounting and reporting. Current income taxes are
based on the year's income taxable for federal and state reporting
purposes.
The Company has a deferred tax asset due to net operating loss
carryforwards and temporary taxable differences due to stock-based
compensation for income tax purposes.
9
PANAMED CORPORATION
(A Development stage company)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND FOR THE PERIOD FROM
AUGUST 21, 2001 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
(Unaudited)
The deferred tax asset is $817,056 as of March 31, 2002. However,
due to the ongoing nature of the losses and the potential
inability of the Company to ever realize the benefit, a valuation
allowance has been established for 100% of the deferred tax asset.
Net operating loss carryforwards of $817,056 expire at various
times through the year 2021.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Income taxes (continued)
The effect of temporary differences that give rise to significant
portions of the deferred tax benefit are presented below:
Net operating loss carryforward $ 152,759
Stock-based compensation 646,200
-----------------
798,959
Less valuation allowance (798,959)
-----------------
Total $ --
=================
(2) GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern; however, the Company
has sustained substantial operating losses. In view of this matter,
realization of a major portion of the assets in the accompanying
balance sheet is dependent upon continued operations of the Company,
which in turn is dependent upon the Company's ability to meet its
financing requirements, and the success of its future operations.
Management believes the Company's current cash and cash generated from
operations may not be sufficient to meet its anticipated cash needs for
the year ended December 2002. Accordingly, the Company will require an
additional capital infusion or revenues from sales to continue
operations. Management is not certain if additional capital or sales
proceeds will become available. If unsuccessful in obtaining an
additional capital infusion, the Company may be required to cease
operations.
10
PANAMED CORPORATION
(A Development stage company)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND FOR THE PERIOD FROM
AUGUST 21, 2001 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
(Unaudited)
(3) NOTES RECEIVABLE - RELATED PARTIES
Mar. 31, 2002 Dec. 31, 2001
(Unaudited)
Note receivable from Thomas Sims, President and Chairman of
the Board, due on demand, interest at the applicable
federal rates ("AFR"). $ -- $ 5,536
Note receivable from Phillip Butler, CEO, due on demand, interest at
the applicable federal rates ("AFR").
-- 24,057
-------------------- -------------------
$ -- $ 29,593
==================== ===================
(4) INVESTMENT
The investment held by the Company consists of a 3.8% ownership
interest in Quintek Technologies, Inc., a California corporation
related by common management. The investment is accounted for on the
equity method.
Pertinent financial information of Quintek Technologies, Inc. as of March 31,
2002 is as follows:
Mar. 31, 2002
(Unaudited)
Balance sheet:
Assets $ 427,014
====================
Liabilities $ 1,286,887
Equity (859,873)
--------------------
$ 427,014
====================
Income statement:
Revenues $ 121,084
Expenses 371,403
--------------------
Net loss (250,319)
Weighted average ownership for three months ended 4.76%
--------------------
Company's share of net loss $ (11,911)
====================
11
PANAMED CORPORATION
(A Development stage company)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND FOR THE PERIOD FROM
AUGUST 21, 2001 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
(Unaudited)
(5) COMMITMENTS AND CONTINGENCIES
(a) Operating Lease
Effective September 1, 2001, the Company entered into an agreement
to lease its operating facilities under an operating lease from
Quintek Technologies, Inc., related by common management. The
lease expires August 31, 2002. Rent expense for the period ended
March 31, 2002 was $6,000.
Minimum future rental commitments under this non-cancelable
operating lease are as follows:
Year ended December 31, 2002 $ 10,000
==================
(6) PURCHASE AGREEMENT
As of March 1, 2002, the Company, then known as Micron Solutions, Inc.
("Micron"), entered into an Exchange Agreement with PanaMed, Inc., a
California corporation, and all of its shareholders, under which; (a)
Micron and its existing shareholders were to effect a one for ten
reverse stock split of the 3,965,200 shares of its common voting stock
then issued and outstanding; (b) the PanaMed Inc shareholders were then
to transfer and assign their PanaMed shares to Micron, thereby causing
PanaMed Inc to become its wholly owned subsidiary, and in exchange such
shareholders were to receive an identical number of Micron's authorized
but previously unissued shares of voting common stock, $.01 par value;
(c) Micron's board of directors and officers were to resign and be
replaced by PanaMed Inc nominees; (d) Micron was then to change its
name to PanaMed Corporation; and (e) certain of Micron's former
management were to be engaged as consultants to the Company, in
connection with which engagement they were to receive $225,000 in cash
payments and 210,000 Company shares. Such transaction was concluded as
of that same date, resulting in the receipt by the former PanaMed
shareholders of 23,121,000 Company shares, or 98% of its equity
ownership. Micron's assets and liabilities, as distinguished from those
of the Company being reported herein as of March 31, 2002 and December
31, 2001, were immaterial, and have not been separately identified. Its
audited balance sheet as of December 31, 2001, does appear, however, in
Micron's Form 10-KSB, as filed with the Securities and Exchange
Commission on April 16, 2002.
12
PANAMED CORPORATION
(A Development stage company)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND FOR THE PERIOD FROM
AUGUST 21, 2001 (DATE OF INCEPTION) THROUGH MARCH 31, 2002
(Unaudited)
(7) NET LOSS PER SHARE
Basic net loss per share is based on the weighted average number of
common shares outstanding of 21,021,612 for the three-month period
ended March 31, 2002. The weighted average number of common shares
outstanding for the period from August 21, 2001 (date of inception)
through March 31, 2002 was 18,543,431. The basic and diluted earnings
per share calculations are the same because the Company has no dilutive
securities outstanding.
(8) LICENSING AGREEMENT
Effective October 23, 2001, PanaMed Inc. entered into a licensing
agreement with Havel Investments, Ltd. ("Havel") whereby PanaMed, Inc.
received exclusive rights to market Havel's therapeutic product for the
treatment of HIV/AIDS throughout continental Africa. In consideration
for this license, PanaMed, Inc. was obligated to remit to Havel 50-80%
of all proceeds from the sale of its stock up to a maximum of $23
million. Under this agreement, Havel reserved the right to reduce the
territory within which PanaMed, Inc could market Havel's therapeutic if
the $23 million wasn't fully funded by February 1, 2002. PanaMed, Inc.
did not meet its obligation under this agreement; however, on February
1, 2002 Havel agreed to extend the agreement for an undetermined period
of time.
(9) SUBSEQUENT EVENTS
On May 13, 2002, PanaMed Corporation entered into an agreement with
Havel which superseded the October 23, 2001 agreement. The new
agreement allowed the Company to conduct treatment programs and retain
exclusive rights to distribute Havel's therapeutics for HIV/AIDS,
Herpes 1&2 and Shingles within the Ivory Coast of Africa. The Company
does not have rights to market the therapeutics in any other location.
Subsequent to March 31, 2002 the Company issued 91,000 shares of common
stock for cash in the amount of $91,000.
13
Item 2. Management's Discussion and Analysis
1.1 Results of Operations
The Company is engaged in the bio-tech industry, with a primary focus on testing
and distributing a patented line of therapeutic products manufactured by Havel
Investments Limited ("Havel") for use in treating certain medical disorders. The
Company currently has an exclusive license to test and distribute "Viro-Net" in
the African country of Ivory Coast. Viro-Net is the name given to Havel's
product for treating HIV/AIDS, Herpes Simplex 1, Herpes Simplex 2, and Shingles.
The descriptions herein will be oriented primarily towards the treatment of
HIV/AIDS.
Viro-Net can be described as an immuno-modulating biological compound which
signals the body's own immune system to fight off the virus by blocking the
receptors of healthy cells, boosting the immune system, and halting the
replication of viral cells. The Company believes that Viro-Net may provide an
effective means to reverse the HIV virus to a non-detect level while providing a
number of advantages over conventional HIV/AIDS medication. The expected
benefits include; simple to administer (sublingual application), minimal side
effects, effective against different HIV viral derivatives, cost effective,
non-patient specific and suitable for large scale treatment programs. These
expectations are based primarily on theory and results from the treatment of 3
AIDS patients in an uncontrolled environment.
The Company intends to conduct a Viro-Net based treatment program for 60
patients in the country of Ivory Coast, Africa starting in mid summer 2002. If
positive results are achieved, the company plans to launch a second trial with
2,000 patients and distribution of Viro-Net to an estimated 2 million HIV
infected people living in the Ivory Coast.
The Company is faced with competition from a wide variety of pharmaceutical
companies with well equipped staff and research facilities. Most of these
competitors are better financed and operate with greater capital than the
Company. There can be no assurance that the current and future competitors of
the Company will not succeed in developing products and pricing that are more
widely accepted in the marketplace or that will render the Company's products
noncompetitive.
In addition, certain of such current and future competitors of the Company will
have the resources required to respond effectively to market changes or to
compete successfully with more aggressive pricing policies than the Company.
There can be no assurance that the Company will be able to compete successfully
with current or future competitors or that competitive pressures will not have a
material adverse effect on the Company's business, financial condition, and
results of operations.
The Company currently does not have a base of customers. Management anticipates
that the demand for its products will come primarily from the general public
with the illnesses identified above.
The Company's products are subject to various FDA regulations and/or foreign
regulatory bodies which govern or influence the research, testing,
manufacturing, safety, labeling, storage, record keeping, advertising and
promotion of pharmaceutical products and medical devices.
The Company believes it is in compliance with all material foreign, domestic and
state laws and regulations. There can be no assurance, however, that the Company
will be able, for financial and other reasons, to continue to comply with
applicable laws, rules and regulations. Failure or delay by the Company and/or
its designated agents to comply with FDA regulations or other applicable
regulatory requirements could subject the Company to civil remedies, including
fines, suspensions, delays of approvals, injunctions, recalls or seizures of
products, operating restrictions, as well as potential criminal sanctions, which
could have a material adverse effect on the Company.
The research, development, clinical trials, manufacturing and marketing of
pharmaceutical products, are subject to an extensive, rigorous and frequently
changing regulatory review process by the FDA and other regulatory agencies in
the U.S. and various foreign countries. The process of obtaining and maintaining
required regulatory approvals is lengthy, expensive and uncertain. For example,
FDA procedures for approval of pharmaceuticals and biologics involve clinical
testing which occurs in three phases to demonstrate the safety and efficacy of
the product.
14
There can be no assurance that regulatory clearance will not take longer than
currently anticipated because of delays, problems or unforeseen safety
difficulties or that regulatory clearance will ever be granted, although the
Company believes that the appropriate regulatory clearance ultimately will be
forthcoming. Failure to obtain the proper regulatory approval will prevent the
Company from marketing the product, which would have a material adverse effect
on the Company's business, financial condition and results of operations. Even
if regulatory approval is obtained, a marketed pharmaceutical product and its
manufacturer are subject to continuing regulatory review, and discovery of
previously unknown problems or amendments to existing statutes or regulations or
the adoption of new statutes or regulations could result in restrictions on such
product or manufacturer, including withdrawal of the product from the market.
The manufacturing processes of pharmaceutical products are subject to certain
regulatory guidelines. For example, the FDA establishes guidelines as GMP (Good
Manufacturing Practice). All pharmaceutical manufacturers operating or
distributing product in the USA must conform to these guidelines. The FDA
inspects these facilities on a regular basis and notes any deficiencies. The
facility must correct such deficiencies within a specified period of time.
Any new pharmaceutical facility must go through a strict inspection by the FDA,
in a full audit, and then adhere to the guidelines. Any facility not adhering to
these guidelines is subject to disciplinary action.
Our revenues totaled $0 for the three months ended March 31, 2002 and for the
period from August 21, 2001 (date of inception) through March 31, 2002. We are
an enterprise in the development stage as defined by Statement No. 7 of the
Financial Accounting Standards Board and have not engaged in any significant
business other than organizational efforts.
Operating expenses totaled $3,142,152 for the three-month period ended March 31,
2002. Operating expenses totaled $3,196,501 for the period from the date of
inception through March 31, 2002. Operating expenses for both periods consist
mainly of stock-based compensation.
1.2 Liquidity and capital resources
We have historically financed operations from the sale of common stock. At March
31, 2002, we had cash on hand of $34,977 and working capital of $28,578 as
compared to cash on hand of $106 and working capital of $(12,181) at period-end,
December 31, 2001.
Net cash used in operating activities of $592,956 for the three months ended
March 31, 2002 is attributable primarily to start-up operational expenditures
and licensing fees.
Net cash provided by investing activities of $79,347 for the three months ended
March 31, 2002 consists of purchases of fixed assets and the sale of an
investment.
Net cash provided by financing activities of $548,480 for the three months ended
March 31, 2002 is due to cash received from the issuance of common stock and
other miscellaneous adjustments.
Any significant difference between line item in the financials included in this
Form 10-QSB and the Company's Form 10-QSB filed for the same period in 2001 are
the result of the change in the Company's business which occurred in March of
2002.
We believe that the receipt of net proceeds from the sale of the common stock
will be sufficient to satisfy our future operation, working capital and other
cash requirements for the remainder of the fiscal year. However, if we are
unable to raise sufficient capital, we may need sell certain assets, enter into
new strategic partnerships, or merge with another company to effectively
maintain operations. Our audit for the period ended December 31, 2002 contained
a going concern qualification.
15
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds
Effective as of March 1, 2002, we issued a total of 23,121,000 shares of common
stock in PanaMed Corporation to the shareholders of PanaMed, Inc., a California
corporation, as part of the exchange agreement between the two companies. The
shares were issued in exchange for all the issued and outstanding shares of
PanaMed, Inc. All such shares were issued in reliance on the exemption from
registration contained in Section 4 (2) of the Securities Act of 1933, as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.
In March 2002 we issued 200,000 shares of restricted common stock in PanaMed
Corporation and assigned 600,000 sharers of restricted common stock in Quintek
Technologies, Inc. (OTCBB:QTEK) to an individual as collateral for a $100,000
loan. The 600,000 shares of Quintek stock was obtained from our holdings of two
million shares of Quintek common stock which was acquired by PanaMed, Inc in
October 2001 in a stock swap transaction between PanaMed, Inc and Quintek. All
such shares were issued in reliance on the exemption from registration contained
in Section 4 (2) of the Securities Act of 1933, as amended, and the certificates
representing such shares bear a restrictive legend reflecting the limitations on
future transfer of those shares.
In March 2002 we issued 350,000 shares of restricted stock to Phil Butler, our
CEO, as compensation for services rendered. These shares were issued in reliance
on the exemption from registration contained in Section 4 (2) of the Securities
Act of 1933, as amended, and the certificates representing such shares bear a
restrictive legend reflecting the limitations on future transfer of those
shares.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
We filed a report on Form 8K during the three-month period ended March 31, 2002,
to report the audited financial statements of PanaMed, Inc. as of December 31,
2001.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PanaMed Corporation
Date: June 13, 2002 /s/ Thomas W. Sims
----------------------------
Thomas W. Sims, President
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