U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 000-49655
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LIPIDVIRO TECH, INC.
-----------------------
(Exact Name of Small Business Issuer as specified in its Charter)
Nevada 87-0678927
---- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.
incorporation or organization)
2120 South 700 East, #H183
Salt Lake City, Utah 84106
--------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 583-9900
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
N/A
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the Registrant's
classes of common equity, as of the latest practicable date:
March 31, 2004
Common Voting Stock 10,031,863 shares
Transitional Small Business Disclosure Format (Check one): Yes X No
ITEM 1 Financial Information
The Financial Statements of the Company required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Company.
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2004
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
CONTENTS
PAGE
Unaudited Condensed Consolidated Balance
Sheets, March 31, 2004 and December 31, 2003 2
Unaudited Condensed Consolidated Statements of
Operations, for the three months ended
March 31, 2004 and from inception on May 6,
2003 through March 31, 2004 3
Unaudited Condensed Consolidated Statements of
Cash Flows, for the three months ended
March 31, 2004 and from inception on May 6,
2003 through March 31, 2004 4
Notes to Unaudited Condensed Consolidated
Financial Statements 5 - 12
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2004 2003
___________ ___________
CURRENT ASSETS:
Cash $ 3,789 $ 3,702
Prepaid expense 5,058 3,919
___________ ___________
Total Current Assets 8,847 7,621
___________ ___________
PROPERTY AND EQUIPMENT, net 2,963 2,118
___________ ___________
OTHER ASSETS:
Definite-life intangible assets, net 3,826 -
Goodwill 290,317 269,006
___________ ___________
Total Other Assets 294,143 269,006
___________ ___________
$ 305,953 $ 278,745
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 39,174 $ 26,387
Shareholder advances 95,000 65,000
___________ ___________
Total Current Liabilities 134,174 91,387
___________ ___________
STOCKHOLDERS' EQUITY [Restated]:
Common stock, $.001 par value,
150,000,000 shares authorized,
10,031,862 and 9,818,750 shares
issued and outstanding, respectively 10,032 9,819
Capital in excess of par value 344,352 323,254
Deficit accumulated during the
development stage (182,605) (145,715)
___________ ___________
Total Stockholders' Equity 171,779 187,358
___________ ___________
$ 305,953 $ 278,745
___________ ___________
Note: The balance sheet at December 31, 2003 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
From Inception
For the Three on May 6, 2003
Months Ended Through
March 31, 2004 March 31, 2004
____________ ____________
REVENUE $ - $ -
EXPENSES:
General and administrative 12,097 92,254
Research and development 24,793 90,351
____________ ____________
Total Expenses 36,890 182,605
____________ ____________
LOSS BEFORE INCOME TAXES (36,890) (182,605)
CURRENT TAX EXPENSE (BENEFIT) - -
DEFERRED TAX EXPENSE (BENEFIT) - -
____________ ____________
NET LOSS $ (36,890) $ (182,605)
____________ ____________
LOSS PER COMMON SHARE $ (.00) $ (.02)
____________ ____________
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
From Inception
For the Three on May 6, 2003
Months Ended Through
March 31, 2004 March 31, 2004
____________ ____________
Cash Flows from Operating Activities:
Net loss $ (36,890) $ (182,605)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation expense 115 300
Non-cash expenses paid by issuance
of common stock - 750
Non-cash services paid by issuance
of common stock - 113
Changes in assets and liabilities:
(Increase) in prepaid expense (1,139) (5,058)
Increase in accounts payable 12,787 39,174
____________ ____________
Net Cash (Used) by
Operating Activities (25,127) (147,326)
____________ ____________
Cash Flows from Investing Activities:
Payments for property and equipment (960) (3,263)
Payments for definite-life intangible assets (3,826) (3,826)
Payments for goodwill - (269,006)
____________ ____________
Net Cash (Used) by
Investing Activities (4,786) (276,095)
____________ ____________
Cash Flows from Financing Activities:
Proceeds from shareholder advances 30,000 95,000
Proceeds from issuance of common stock - 293,700
Proceeds from sale of warrants - 38,510
____________ ____________
Net Cash Provided by
Financing Activities 30,000 427,210
____________ ____________
Net Increase (Decrease) in Cash 87 3,789
Cash at Beginning of Period 3,702 -
____________ ____________
Cash at End of Period $ 3,789 $ 3,789
____________ ____________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period from inception on May 6, 2003 through March 31, 2004:
In January 2004, the Company issued 213,112 shares of common stock as
part of a downstream merger [See Note 2].
In June 2003, the Company issued 3,750 shares of common stock for
services rendered valued at $113.
In May 2003, the Company issued 25,000 shares of common stock as
repayment of organization costs of $750.
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - LipidViro Tech, Inc. ("Parent") was organized under the
laws of the State of California on October 19, 1954 as Anticline
Uranium, Inc. In October 2001, Parent changed its domicile from
California to Nevada by merging with and into a wholly owned subsidiary
with the same name and the Nevada entity being the surviving entity. In
January 2004, Parent changed its name to LipidViro Tech, Inc. On June
24, 2003, Subsidiary acquired 95.9% of the outstanding stock of Parent
pursuant to a Share Purchase Agreement. The agreement called for
Subsidiary to pay $65,718 to the former shareholders of Parent for
5,000,000 shares of Parent's common stock wherein Parent became a 95.9%
owned subsidiary of Subsidiary [See Note 3]. On January 14, 2004,
Parent issued 9,818,750 shares of its common stock for all 9,818,750
outstanding shares of Subsidiary's common stock wherein Subsidiary
became a wholly owned subsidiary of Parent in a transaction which has
been accounted for as a downstream merger [See Note 2]. Accordingly,
the equity transactions have been restated to reflect the
recapitalization of Subsidiary and the operations of Parent prior to
June 24, 2003 have been eliminated. The financial statements reflect
the operations of Subsidiary from its inception.
Lipidviro Tech Inc. ("Subsidiary") was organized under the laws of the
State of Utah on May 6, 2003.
LipidViro Tech, Inc. and Subsidiary ("the Company") plans to research
and market substances and compounds for antiviral and antibacterial
purposes. The Company has not generated any revenues from their planned
principal operations and is considered a development stage company as
defined in Statement of Financial Accounting Standards No. 7. The
Company has, at the present time, not paid any dividends and any
dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Condensed 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 at March 31, 2004 and for the periods then
ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles 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, 2003 audited
financial statements. The results of operations for the periods ended
March 31, 2004 are not necessarily indicative of the operating results
for the full year.
Consolidation - The consolidated financial statements include the
accounts of Parent and Parent's wholly owned Subsidiary. All
significant intercompany transactions have been eliminated in
consolidation.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
5
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Property and Equipment - Property and equipment are stated at cost.
Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized upon being placed in
service. Expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets of five years. In
accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
Company periodically reviews their property and equipment for
impairment.
Website Costs - The Company has adopted the provisions of Emerging
Issues Task Force 00-2, "Accounting for Web Site Development Costs."
Costs incurred in the planning stage of a website are expensed as
research and development while costs incurred in the development stage
are capitalized and amortized over the life of the asset, estimated to
be five years. As of March 31, 2004, the Company has capitalized a
total of $2,830 of website costs which are included in property and
equipment. The Company did not incur any planning costs and did not
record any research and development costs for the three months ended
March 31, 2004.
Intangible Assets - The Company accounts for their intangible assets in
accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 142 establishes three
classifications for intangible assets including definite-life intangible
assets, indefinite-life intangible assets and goodwill and requires
different accounting treatment and disclosures for each classification.
In accordance with SFAS No. 142, the Company periodically reviews their
intangible assets for impairment. No impairment was recorded during the
three months ended March 31, 2004.
Research and Development - Research and development costs are expensed
as incurred. The Company expensed $24,793 in research and development
costs during the three months ended March 31, 2004.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" [See Note 8].
Minority Interest - From June 24, 2003 through January 14, 2004,
Subsidiary owned 95.9% of Parent. The net loss of Parent applicable to
the non-controlling minority interest was not allocated to the minority
interests as there was no obligation of the non-controlling minority
interests to share in such losses. On January 14, 2004, Subsidiary
acquired the minority interest in a downstream merger [See Note 2].
Loss Per Share - The computation of loss per share is based on the
weighted average number of shares outstanding during the period
presented in accordance with Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" [See Note 11].
6
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimated.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards ("SFAS") No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", SFAS No. 147, "Acquisitions of
Certain Financial Institutions - an Amendment of FASB Statements No. 72
and 144 and FASB Interpretation No. 9", SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an Amendment of
FASB Statement No. 123", SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", and SFAS No. 150,
"Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity", were recently issued. SFAS No. 146, 147,
148, 149 and 150 have no current applicability to the Company or their
effect on the financial statements would not have been significant.
Reclassification - The financial statements for periods prior to March
31, 2004 have been reclassified to conform to the headings and
classifications used in the March 31, 2004 financial statements.
Restatement - The financial statements have been restated for all
periods presented to reflect the recapitalization of Subsidiary [See
Note 2] and to reflect a 1-for-100 reverse stock split that Parent
effected on October 4, 2001 and a 4-for-1 forward stock split that
Parent effected on December 31, 2001 [See Note 7].
NOTE 2 - DOWNSTREAM MERGER
On January 14, 2004, Subsidiary acquired the minority interests in
Parent and Subsidiary was reorganized as a subsidiary of Parent in a
transaction in which Parent issued 9,818,750 shares of its common stock
in exchange for all 9,818,750 outstanding shares of Subsidiary's common
stock. Accordingly, the equity transactions have been restated to
reflect the recapitalization of Subsidiary. The Company recorded
goodwill of $21,311 as a result of the downstream merger. The financial
statements reflect the operations of Subsidiary from its inception. As
part of the downstream merger, Parent issued 1,915,000 Class A warrants
and 1,915,000 Class B warrants to replace similar warrants of
Subsidiary. Parent also cancelled 5,000,000 shares of its common stock
which had previously been owned by Subsidiary.
7
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - ACQUISITION OF 95.9% OF LIPIDVIRO TECH, INC.
On June 24, 2003, Subsidiary acquired 95.9% of the outstanding stock of
Parent pursuant to a Share Purchase Agreement. The agreement called for
Subsidiary to pay $65,718 to the former shareholders of Parent for
5,000,000 shares of Parent's common stock wherein Parent became a 95.9%
owned subsidiary of Subsidiary. The agreement also called for
Subsidiary to advance an additional $203,282 to pay costs associated
with the acquisition and to reduce the liabilities of Parent. The
acquisition closed June 24, 2003 and has been accounted for as a
purchase of Parent. The Company recorded goodwill of $269,006 as a
result of the acquisition. The financial statements reflect the
operations of Parent from June 24, 2003.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
March 31, December 31,
2004 2003
___________ ___________
Office equipment $ 433 $ 433
Website 2,830 1,870
___________ ___________
3,263 2,303
Less: accumulated depreciation (300) (185)
___________ ___________
Net property and equipment $ 2,963 $ 2,118
___________ ___________
Depreciation expense for the three months ended March 31, 2004 was $115.
NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS
Definite-life intangible assets consist of the following at:
March 31, December 31,
2004 2003
___________ ___________
Patent applications in process $ 3,826 $ -
Less: Accumulated amortization - -
__________ ___________
Net Definite-life Intangible Assets $ 3,826 $ -
__________ ___________
The Company's definite-life intangible assets are amortized, upon being
placed in service, over the estimated useful lives of the assets of 20
years with no residual value. Amortization expense for the three months
ended March 31, 2004 was $0. The Company estimates that their
amortization expense for each of the next five years will be
approximately $200 per year.
8
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - GOODWILL
The Company has no indefinite-life or definite-life intangible assets.
The following is a summary of the transactions affecting the Company's
goodwill.
From Inception
For the Three on May 6, 2003
Months Ended Through
March 31, 2004 March 31, 2004
____________ ____________
Goodwill at beginning of period $ 269,006 $ -
Goodwill from the acquisition of
95.9% of Parent - 269,006
Goodwill from the acquisition of
the minority interests in Parent 21,311 21,311
____________ ____________
Goodwill at end of period $ 290,317 $ 290,317
____________ ____________
NOTE 7 - CAPITAL STOCK
Common Stock - The Company has authorized 150,000,000 shares of common
stock with a par value of $.001.
In January 2004, the Company issued 213,112 shares of their previously
authorized but unissued common stock to the former shareholders of
Subsidiary as part of a downstream merger [See Note 2].
In June 2003, the Company issued 3,750 shares of their previously
authorized but unissued common stock to an officer of the Company for
services rendered valued at $113, or $.03 per share.
In June 2003, the Company issued 7,875,000 shares of their previously
authorized but unissued common stock for cash of $236,250, or .03 per
share.
In May 2003, the Company issued 1,915,000 units. Each unit consisted of
one share of the Company's previously authorized but unissued common
stock, one Class A warrant and one Class B warrant. The units were
issued for cash of $95,960, or approximately $.05 per unit.
In May 2003, in connection with their organization, the Company issued
25,000 shares of their previously authorized but unissued common stock
to an officer of the Company as repayment of organization costs of $750,
or $.03 per share.
Stock Splits - On December 31, 2001, Parent effected a 4-for-1 forward
stock split. On October 4, 2001, Parent effected a 1-for-100 reverse
stock split. The financial statements for all periods presented have
been restated to reflect these stock splits.
9
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - CAPITAL STOCK [Continued]
Class A Warrants - In May 2003, the Company issued 1,915,000 Class A
Warrants for cash of $19,255, or approximately $.01 per warrant, as part
of a private placement offering. The warrants vested immediately and
are exercisable at $5.00 per share. The warrants were originally
exercisable for two years. In August 2003, the Company changed the
exercise period so the warrants are only exercisable during June 2006.
At March 31, 2004, none of these warrants had been exercised, forfeited
or cancelled.
Class B Warrants - In May 2003, the Company issued 1,915,000 Class B
Warrants for cash of $19,255, or approximately $.01 per warrant, as part
of a private placement offering. The warrants vested immediately and
are exercisable at $10.00 per share. The warrants were originally
exercisable for two years. In August 2003, the Company changed the
exercise period so the warrants are only exercisable during June 2006.
At March 31, 2004, none of these warrants had been exercised, forfeited
or cancelled.
Stock Option Plan - In March 2003, the Board of Directors of Parent
approved and adopted the "2003 Stock Option/Stock Issuance Plan" ("the
Plan") with a maximum of 1,500,000 shares of common stock reserved for
issuance under the Plan. The Plan provides for both the direct award of
shares and for the grant of options to purchase shares. The Board of
Directors has authorized options to purchase 500,000 common shares to be
granted at a purchase price of $0.01 per share, but to date the Company
has not granted any options to their employees, officers or directors.
Under the Plan, the Board of Directors shall determine which eligible
persons are to receive Incentive Options, Non-Statutory grants or stock
issuances. The Board of Directors also sets the exercise price for
options granted. The option terms are not to exceed ten years from the
option grant date. At March 31, 2004, total awards available to be
granted from the Plan amounted to 1,500,000.
NOTE 8 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes".
SFAS No. 109 requires the Company to provide a net deferred tax
asset/liability equal to the expected future tax benefit/expense of
temporary reporting differences between book and tax accounting methods
and any available operating loss or tax credit carryforwards. The
Company has available at March 31, 2004 unused operating loss
carryforwards of approximately $239,000 which may be applied against
future taxable income and which expire in various years through 2024.
Due to substantial changes in the Company's ownership, there will be an
annual limitation on the amount of net operating loss carryforwards
which can be utilized.
10
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - INCOME TAXES [Continued]
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the Company,
and other future events, the effects of which cannot be determined.
Because of the uncertainty surrounding the realization of the deferred
tax assets, the Company has established a valuation allowance equal to
the tax effect of the loss carryforwards, therefore, no deferred tax
asset has been recognized. The net deferred tax assets, which consist
of difference in book and tax basis of fixed assets and net operating
losses, are approximately $48,000 and $38,400 as of March 31, 2004 and
December 31, 2003, respectively, with an offsetting valuation allowance
of the same amount, resulting in a change in the valuation allowance of
approximately $9,600 during the three months ended March 31, 2004.
NOTE 9 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any cash compensation
to any officer or director of the Company. However, in June 2003, the
Company issued 3,750 shares of common stock to an officer of the Company
for services rendered valued at $113 [See Note 7].
Office Space - The Company has not had a need to rent office space. A
shareholder (former officer) of the Company is allowing the Company to
use her mailing address, as needed, at no expense to the Company.
Stock Issuance - In May 2003, in connection with their organization, the
Company issued 25,000 shares of their previously authorized but unissued
common stock to an officer of the Company as repayment of organization
costs of $750, or $.03 per share.
Shareholder Advances - During the three months ended March 31, 2004, a
shareholder of the Company advanced $30,000 to the Company. At March
31, 2004, the Company owes a total of $95,000 to the shareholder. The
shareholder has agreed to advance up to $100,000 to the Company. The
advances bear no interest and are due December 31, 2004.
NOTE 10 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America, which contemplate continuation of the Company as a going
concern. However, the Company was only recently formed and has not yet
been successful in establishing profitable operations. Further, the
Company has current liabilities in excess of current assets. These
factors raise substantial doubt about the ability of the Company to
continue as a going concern. In this regard, management is proposing to
raise any necessary additional funds not provided by operations through
loans or through additional sales of their common stock. There is no
assurance that the Company will be successful in raising this additional
capital or in achieving profitable operations. The financial statements
do not include any adjustments that might result from the outcome of
these uncertainties.
11
LIPIDVIRO TECH, INC. AND SUBSIDIARY
(Formerly Anticline Uranium, Inc.)
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
From Inception
For the Three on May 6, 2003
Months Ended Through
March 31, 2004 March 31, 2004
____________ ____________
Loss from continuing operations
available to common
shareholders (numerator) $ (36,890) $ (182,605)
____________ ____________
Weighted average number of
common shares outstanding
used in loss per share for the
period (denominator) 9,999,076 8,939,340
____________ ____________
At March 31, 2004, the Company had 1,915,000 Class A warrants and
1,915,000 Class B warrants outstanding which were not used in the
computation of dilutive loss per share because their effect would be
anti-dilutive. Dilutive loss per share was not presented, as the
Company had no common stock equivalent shares for all periods presented
that would effect the computation of diluted loss per share.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
Agreements - In October 2003, the Company signed one-year agreements for
the use of a research facility and staff to conduct research on behalf
of the Company and to have a researcher coordinate the activities. The
Company will pay up to $76,325 for supplies, facilities, a laboratory
technician and coordination efforts.
Possible Claims Related to Previously Leased Mining Property - In August
2001, Parent obtained 96.5% of the rights to certain mining claims in
the Tintic Mining District of Juab County, Utah under the terms of a 5-
year Mining Lease. Under the terms of the lease, Parent was obligated
to spend $15,000 over the term of the lease for exploration, mining,
development or similar costs for the benefit of the property subject to
the lease. Parent was also obligated to pay a 3.5% net smelter royalty
on all mineral-bearing ores sold. The lease also gave a credit to
Parent for the first $30,000 of net smelter royalties. The lessor also
agreed to indemnify and hold Parent harmless from any Environmental
Protection Agency claim or claims by a similar state agency based solely
on past mining contaminations or other environmental violations or
damage. In June 2003, Parent paid $3,459 to cancel the Mining Lease.
The Company's management believes that the Company would not be
responsible for any future claims against the property which Parent
previously leased, but the possibility exists that claims may arise
against the property and the Company may be named in such claims based
on the previous leasing arrangements. The Company's management believes
that the Company would be successful in defending against any such
claims that may arise. No accrual for possible losses or settlements
has been recorded in the accompanying financial statements.
12
ITEM 2 Management Discussions and Analysis or Plan of Operation
Plan of Reorganization
----------------------
On June 24, 2003, a Share Purchase Agreement (the Agreement") was
executed by and between North Beck Joint Venture, LLC, a Utah limited
liability company ("North Beck"), that was the owner of approximately 96% of
the outstanding voting securities of the Company, as "Seller," and
LipidViro Tech, Inc., a privately-held Utah corporation ("LipidViro-Utah"), as
"Buyer." Pursuant to the terms of the Agreement, LipidViro-Utah acquired
5,000,000 shares of the Company's common stock, or approximately 96% of its
outstanding voting securities. See the 8-K Current Report of the Company
dated June 24, 2003, which was previously filed with the Securities and
Exchange Commission on June 27, 2003, and which is incorporated herein by
reference. See Item 6.
The Company and LipidViro-Utah entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement"), a copy of which was attached
to the 8-K Current Report filed with the Securities and Exchange
Commission on September 9, 2003, and which is incorporated by reference, by
which LipidViro-Utah was to be acquired as a wholly-owned subsidiary of the
Registrant. See Item 6.
On August 19, 2003, LipidViro-Utah filed a Petition for Fairness
Hearing and a Motion for Expedited Hearing in the Third Judicial District
Court in and for Salt Lake County, State of Utah, respecting the
Reorganization Agreement, copies of which were also attached to the 8-K
Current Report filed with the Securities and Exchange Commission on September
9, 2003. The Petition for Fairness Hearing was filed because of the 95%
ownership of the Company by LipidViro-Utah and the fact that following the
closing of the Agreement with North Beck, the directors and executive officers
of LipidViro-Utah had been designated to serve as directors and executive
officers of the Company too. See Item 7. The Fairness Hearing was requested
in order for LipidViro-Utah's shareholders to receive the contemplated
issuance of securities under the Reorganization Agreement in accordance with
United States and Utah securities laws, and pursuant to the exemption from
registration provided in Section 3(a)(10) of the Securities Act of 1933, as
amended ("the Securities Act"). The Fairness Hearing was held on September 8,
2003, and the Court took LipidViro Utah's Petition under advisement, after
hearing oral argument, with the Court eventually deferring to the Utah
Division of Securities to conduct the Fairness Hearing, based upon the recent
adoption of an amendment to Section 61-1-11.1 of the Utah Uniform Securities
Act that granted the Utah Division of Securities authority to conduct such
hearings. With (i) the Company being a Nevada corporation, (ii) there being
some question as to whether the Company or LipidViro-Utah should petition for
the Fairness Hearing and (iii) the Utah Division of Securities having not
formally adopted rules and regulations to implement such hearings, the Company
filed another Petition for Fairness Hearing in the Fourth Judicial District
Court of the State of Nevada, in and for the County of Elko, for a Fairness
Hearing on the Reorganization Agreement.
The principal terms of the Reorganization Agreement were:
1. The LipidViro-Utah shareholders would deliver all of the LipidViro-
Utah securities held by LipidViro-Utah shareholders which shares and warrants
shall represented all of the issued and outstanding shares of LipidViro-Utah
common stock and "A" and "B" warrants, and the Company agreed to acquire such
securities in exchange for an aggregate of 9,818,750 shares of the Company's
common stock, par value $0.001 per share, for the LipidViro-Utah common stock,
and 1,915,000 "A" warrants and 1,915,000 "B" like warrants of the Registrant
for the LipidViro-Utah warrants.
2. At the closing, the 5,000,000 shares of common stock of the
Company acquired by LipidViro-Utah from North Beck would be cancelled.
3. After giving effect to the Reorganization Agreement, the Company
would own all the issued and outstanding shares of LipidViro-Utah, and
LipidViro-Utah would become a wholly-owned subsidiary of the Company,
operating under the name "LipidViro Tech, Inc." or such other name selected by
the shareholders and management of LipidViro-Utah.
On January 12, 2004, the Nevada Court conducted a Fairness Hearing
and found that the terms and provisions of the Reorganization Agreement and
the issuance and exchange of the securities of the Company and LipidViro-Utah
contemplated thereunder were fair to the Company's shareholders, based upon
the Company's acceptance of the terms of the Reorganization Agreement and
the information concerning the business and finances of the Company and
LipidViro-Utah, all of which was proffered to the Court by the Company's legal
counsel.
Copies of the Petition for Fairness Hearing and the Court's Order
Granting Petition of Fairness are attached hereto and incorporated herein by
reference. See Item 6.
Plan of Operation
-----------------
We are a development-stage biotechnology company, conducting
research focused on developing drug and biological products to treat
infectious pathogens and disease in which lipids or fat components play a key
role. We have developed a technology based on a process that utilizes our
lipid-targeting investigational compound LVT3. LVT3 is produced and delivered
to target pathogens by our proprietary drug production and delivery equipment.
We believe LVT3 and our proprietary process targets the lipids of certain
pathogens rendering them non-infectious. Utilizing our proprietary process
and LVT3, we have commenced pre-clinical product development research designed
to: (i) demonstrate the capacity of our technology to inactivate pathogens;
(ii) evaluate the toxicity and potential safety of our process; and (iii)
identify potential products for further development.
Products we are currently evaluating for development include,
therapeutic treatments for diseases caused by infectious pathogens,
therapeutic treatments for lipid associated diseases and viral free
biologics. We believe our unique lipid targeting technology has the potential
for inactivating or destroying a range of infectious and lipid rich pathogens,
including, the virus that cause SARS, West Nile, Asian Bird Flu, AIDS,
hepatitis B and C. Many of the diseases caused by these viruses have
ineffective or poor treatment options.
Our primary activities since incorporation have been developing drug
production and delivery equipment and conducting research to evaluate and
identify potential drug and biological products utilizing our proprietary
lipid targeting technology. In addition, we have been performing business,
strategic and financial planning and raising capital. We currently have no
approved, saleable products or services and we are accordingly, considered to
be a biotechnology company in the development stage. During the first quarter
of 2004, we funded operations and research from monies advanced from a
shareholder of the company. We continue to seek long term financing to
support our research and operational activities.
Pre-Clinical Laboratory Research, Product Development.
------------------------------------------------------
Our pre-clinical, product development research is designed to
evaluate our proprietary technology and process to inactivate various
pathogens including viruses, bacteria and prions. The purpose of this
research is to evaluate efficacy, toxicity and the ability to deliver LVT3 to
a target pathogen. Where appropriate, research results will be submitted for
peer review publication. Our pre-clinical product development research is
currently in progress.
We utilize the results of our pre-clinical research studies to
identify potential products. Each potential product is ranked for development
priority based on our assessment of the product's prospects for commercial
success. Our evaluation includes studying the efficacy and toxicity of LVT3
in-vitro, the time, expense and anticipated regulatory hurdles likely required
to reach commercialization, and, competition in that product category.
Early research suggests our proprietary technology and process
possess a capacity to inactivate viruses. While our research is preliminary
and incomplete, and will require additional research to verify, it does
suggests the potential for multiple products that we believe are worthy of
further investigation. Product categories we are evaluating include: (i)
processing biologicals for pathogen removal and purification; (ii) developing
therapeutics to treat serious infectious diseases; and, (iii) developing
therapeutics for treating lipid associated diseases.
Equipment Development and Pre-Clinical Research.
------------------------------------------------
During the first fiscal quarter of 2004, we designed, engineered and
constructed the first generation of our proprietary drug manufacturing
equipment utilized in producing our investigational compound, LVT3. We also
engineered and constructed the first ("GEN-1") and second generation ("GEN-2")
of our proprietary LVT3 drug deliver devices utilized in our viral
inactivation process. After constructing and testing the equipment, we
commenced pre-clinical research of LVT3 in an independent laboratory setting.
On March 29, 2004, we released pre-clinical research results that
utilized LVT3 and our GEN-2 technology. These results demonstrated
substantial inactivation of four different infectious viruses, including: a
DNA and a RNA virus, both with simple lipid envelopes; a DNA virus with a
complex lipid envelope; and, a small, non-enveloped virus. The research was
sponsored by LipidViro Tech and conducted at an independent laboratory. The
studies were performed in a variety of biological media chosen to represent
potential candidates for commercial products.
Demonstrating antiviral efficacy in four differently structured
viruses is a milestone achievement for LipidViro and the Company's proprietary
GEN-2 technology. These studies were part of the Company's ongoing
pre-clinical research program designed to evaluate the efficacy and toxicity
of LVT3 and the Company's process. (See Item 6.)
Most recently, the Company completed engineering and construction of
its third generation ("GEN-3") drug delivery device. We have initiated study
of LVT3 utilizing the new GEN-3 technology to evaluate efficacy and toxicity
against various pathogens as compared to our GEN-1 and GEN-2 technologies. We
have filed for patent protection covering our LVT3 drug production and GEN-1,
GEN-2 and GEN-3 drug delivery devices, and for proprietary methods utilized in
our viral inactivation process. (See Item 6.)
ITEM 3 Controls and Procedures
As of the end of the period covered by this Quarterly Report, we carried
out an evaluation, under the supervision and with the participation of our
President of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our President concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information required to be included in our periodic
Securities and Exchange Commission reports. It should be noted that the
design of any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions, regardless of how remote. In addition, we reviewed our internal
controls, and there have been no significant changes in our internal controls
or in other factors that could significantly affect those controls subsequent
to the date of their last evaluation.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None; not applicable.
Item 2. Changes in Securities.
----------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
See the Definitive Information Statement that was filed with the
Securities and Exchange Commission on July 23, 2003, and which is incorporated
herein by reference. See Part II, Item 6.
Item 5. Other Information.
------------------
At a Board of Directors' meeting held on January 9, 2004, the
Company adopted new Bylaws, a copy of which is attached hereto and
incorporated herein by reference. See Item 7.
On January 19, 2004, Adina Hamik resigned as a Director and Chief
Operating Officer. See Item 7.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
31 302 Certification of Kenneth P. Hamik
32 906 Certification
(b) Reports on Form 8-K.
8-K/A Report dated August 19, 2003, and filed March 26, 2004
regarding Certificate of Amendment to the Articles of
Incorporation, Bylaws, Petition for Fairness Hearing, Agreement
and Plan of Reorganization, Motion for Expedited Hearing, Petition
for Fairness Hearing in the State of Nevada, Nevada Court Order
Granting Petition of Fairness.
8-K Report dated August 19, 2003, and filed September 9, 2003
8-K Current Report of the Company dated June 24, 2003, which was
previously filed with the Securities and Exchange Commission on
June 27, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIPIDVIRO TECH, INC.
Date: 14 May, 2004 By/s/Kenneth P. Hamik
-------------- -------------------
Kenneth P. Hamik
President and Director