UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
Table of Contents
PART I – FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Item 4. Controls and Procedures
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. [Removed and Reserved]
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited interim financial statements for the three and nine months ended October 31, 2011 form part of this quarterly report. All currency references in this report are to Canadian dollars unless otherwise noted.
3
NEUROKINE PHARMACEUTICALS INC. Financial Statements (Expressed in Canadian dollars) Period ended October 31, 2011 (unaudited) and January 31, 2011 |
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Balance Sheets
(Expressed in Canadian dollars)
| October 31, 2011 $ (unaudited) | January 31, 2011 $ |
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Assets |
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Current Assets |
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Cash | 5,526 | 15,037 |
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Total Current Assets | 5,526 | 15,037 |
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Property and equipment (Note 3) | 1,897 | 2,238 |
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Total Assets | 7,423 | 17,275 |
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Liabilities and Stockholders’ Deficit |
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Current Liabilities |
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Accounts payable and accrued liabilities | 23,734 | 12,608 |
Due to related parties (Note 9) | 146,475 | 17,269 |
Note payable (Note 4) | 91,609 | – |
Convertible debenture, net of unamortized discount of $73,849 (Note 5) | 77,522 | 10,698 |
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Total Current Liabilities | 339,340 | 40,575 |
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Derivative liabilities (Note 6) | 56,293 | 2,927,928 |
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Total Liabilities | 395,633 | 2,968,503 |
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Nature of operations and continuance of business (Note 1) |
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Stockholders’ Deficit |
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Common stock: 200,000,000 shares authorized, without par value 35,767,073 and 33,621,618 shares issued and outstanding, respectively | 1,086,148 | 915,893 |
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Additional paid-in capital | 67,086 | 52,410 |
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Accumulated deficit during the development stage | (1,541,444) | (3,919,531) |
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Total Stockholders’ Deficit | (388,210) | (2,951,228) |
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Total Liabilities and Stockholders’ Deficit | 7,423 | 17,275 |
(The accompanying notes are an integral part of these financial statements)
5
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Statements of Operations
(Expressed in Canadian dollars)
(unaudited)
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| Three Months Ended October 31, 2011 $ | Three Months Ended October 31, 2010 $ | Nine Months Ended October 31, 2011 $ | Nine Months Ended October 31, 2010 $ | Accumulated from June 10, 2002 (Date of Inception) to October 31, 2011 $ |
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Revenue |
| – | – | – | – | – |
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Expenses |
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Amortization |
| 113 | – | 341 | – | 379 |
Foreign exchange (gain) loss |
| 1,944 | 1,034 | 3,489 | 821 | 9,736 |
General and administrative |
| 132,249 | 4,081 | 262,934 | 26,357 | 397,711 |
Management fees (Note 9) |
| 12,325 | 9,000 | 45,185 | 23,476 | 124,161 |
Professional fees |
| 7,737 | 6,071 | 40,623 | 39,103 | 136,720 |
Research and development |
| – | – | 48,541 | – | 273,215 |
Royalties |
| – | – | – | – | 500,000 |
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Total Expenses |
| 154,368 | 20,186 | 401,113 | 89,757 | 1,441,922 |
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Loss from Operations |
| (154,368) | (20,186) | (401,113) | (89,757) | (1,441,922) |
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Other Income (Expenses) |
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Accretion of discount on convertible debt (Note 5) |
| (12,949) | – | (88,100) | – | (98,798) |
Gain (loss) on change in fair value of derivative liability (Note 6) |
| 324,528 | – | 2,909,141 | – | 41,117 |
Interest expense |
| (27,638) | – | (41,841) | – | (41,841) |
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Total Other Income (Expenses) |
| 283,941 | – | 2,779,200 | – | (99,522) |
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Net Income (Loss) |
| 129,573 | (20,186) | 2,378,087 | (89,757) | (1,541,444) |
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Net income (loss) per share, basic |
| – | – | 0.07 | – |
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Net income (loss) per share, diluted |
| – | – | 0.06 | – |
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Weighted average shares outstanding - basic |
| 35,349,682 | 31,934,661 | 34,260,979 | 26,636,241 |
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Weighted average shares outstanding - diluted |
| 39,949,682 | 31,934,661 | 38,860,978 | 26,636,241 |
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(The accompanying notes are an integral part of these financial statements)
6
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in Canadian dollars)
(unaudited)
| For The Nine Months Ended October 31, 2011 | For The Nine Months Ended October 31, 2010 | Accumulated from June 10, 2002 (Date of Inception) to October 31, 2011 |
Operating Activities |
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Net income (loss) for the period | 2,378,087 | (89,757) | (1,541,444) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Accretion of discount on convertible debt | 88,100 | - | 98,798 |
Amortization | 341 | - | 379 |
Loss (gain) on change in fair value of derivative liability | (2,909,141) | - | (41,117) |
Shares issued for royalties | - | - | 500,000 |
Shares issued for services | 126,519 | 6,400 | 224,919 |
Stock-based compensation | 14,676 | 5,076 | 61,911 |
Changes in operating assets and liabilities: |
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Accounts payable and accrued liabilities | 39,831 | 20,476 | 57,439 |
Due to related parties | 129,206 | - | 146,475 |
Net Cash Used in Operating Activities | (132,381) | (57,805) | (492,640) |
Investing Activities |
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Purchase of property and equipment | - | - | (2,276) |
Net Cash Used in Investing Activities | - | - | (2,276) |
Financing Activities |
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Proceeds from loan payable | 235,000 | - | 240,000 |
Repayment of loan payable | (150,000) | - | (150,000) |
Proceeds from issuance of convertible debenture | 37,870 | - | 65,079 |
Proceeds form issuance of common shares | - | 40,726 | 345,363 |
Net Cash Provided by Financing Activities | 122,870 | 40,726 | 500,442 |
Increase (Decrease) in Cash | (9,511) | (17,079) | 5,526 |
Cash- Beginning of Period | 15,037 | 18,979 | - |
Cash- End of Period | 5,526 | 1,900 | 5,526 |
Supplemental disclosures: |
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Interest paid | 9,000 | - | 9,000 |
Income tax paid | - | - | - |
Non-cash investing and financing activities: |
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Shares issued for settlement of debt | 43,736 | 10,000 | 53,736 |
Fair value of options and warrants exercised | - | - | 5,175 |
(The accompanying notes are an integral part of these financial statements)
7
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 1-
Nature of Operations and Continuance of Business
Neurokine Pharmaceuticals Inc. (the “Company”) was incorporated in British Columbia under the Business Corporations Act on June 10, 2002. The Company is a development stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities, and is in the business of developing and commercializing new uses for existing prescription drugs for diseases mediated by acute and chronic inflammatory reactions as well as developing proprietary encapsulation technology in the treatment of neurodegenerative diseases.
These financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at October 31, 2011, the Company has not earned any revenue, has a working capital deficit of $312,396 and an accumulated deficit of $1,520,026. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 2-
Significant Accounting Policies
(a)
Basis of Presentation
The financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars. The Company’s fiscal year-end is January 31.
(b)
Interim Financial Statements
These interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended January 31, 2011.
The financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at October 31, 2011, and the results of its operations and cash flows for the three and nine month periods ended October 31, 2011 and 2010. The results of operations for the periods ended October 31, 2011 are not necessarily indicative of the results to be expected for future quarters or the full year.
8
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 2-
Significant Accounting Policies (continued)
(c)
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles in the United States 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. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets, valuation of convertible debenture, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
(d)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
(e)
Property and Equipment
Property and equipment is comprised of office equipment and is recorded at cost. The Company amortizes the cost of equipment on a straight-line basis over their estimated useful lives of five years.
(f)
Long-lived Assets
In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
(g)
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock-Based Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
9
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 2-
Significant Accounting Policies (continued)
(h)
Derivative Financial Instruments
Derivative financial instruments that are not classified as equity and are not used in hedging relationships are measured at fair value. Subsequent changes to fair value are recorded in the statement of operations.
(i)
Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
(j)
Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at October 31, 2011 and 2010, the Company had no items representing comprehensive income or loss.
(k)
Financial Instruments and Fair Value Measures
ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
10
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 2-
Significant Accounting Policies (continued)
(k)
Financial Instruments and Fair Value Measures (continued)
The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(l)
Research and Development Costs
Research costs are expensed in the period that they are incurred.
(m)
Foreign Currency Translation
The Company’s functional currency and its reporting currency is the Canadian dollar and foreign currency transactions are primarily undertaken in United States dollars. Monetary assets and liabilities are translated using the exchange rate prevailing at the balance sheet date. Expenses are translated at average rates for the period. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
(n)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Note 3-
Property and Equipment
| Cost $ | Accumulated amortization $ | October 31, 2011 Net carrying value $ (unaudited) | January 31, 2011 Net carrying value $ |
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Office furniture and equipment | 2,276 | 379 | 1,897 | 2,238 |
Note 4-
Note Payable
(a)
On April 6, 2011, the Company issued a note payable with a non-related party for $150,000. The note is unsecured, due interest at 24% per annum, due on July 6, 2011. On July 6, 2011, the note was repaid.
(b)
On July 4, 2011, the Company issued a note payable with a non-related party for $85,000. The note is unsecured, due interest at 24% per annum, and due on October 4, 2011. On October 4, 2011, the note was extended to January 4, 2012 under the same terms.
11
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 5- Convertible Debentures
On December 17, 2010, the Company issued a convertible debenture with a non-related party for $61,659 (US$65,000). The debenture is unsecured, bears interest at 8% per annum, and matures on September 17, 2011. The note is convertible into common shares at a conversion price equal to 55% of the average closing market price of the lowest three trading prices of the Company’s common stock during the preceding ten days prior to conversion. The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $65,079 with a corresponding discount to the convertible debenture. On June 23, 2011, US$12,000 of the convertible debenture was converted to 145,455 common shares. On June 29, 2011, US$14,000 of the convertible debenture was converted to 169,697 common shares. During the nine months ended October 31, 2011, the Company recorded accretion expense of the discount on the convertible debenture of $52,779 (US$54,302) (2010 - $nil). As of October 31, 2011, the carrying value of the convertible debenture is $38,871 (US$39,000) (January 31, 2011 - US$10,698) plus accrued penalty for default of $21,381. As at October 31, 2011, the fair value of the conversion option derivative liability was $nil (January 31, 2011 - $86,355).
On February 23, 2011, the Company issued a convertible debenture with a non-related party for $37,944 (US$40,000). The debenture is unsecured, bears interest at 8% per annum, and matures on December 23, 2011. The note is convertible into common shares at a conversion price equal to 55% of the average closing market price of the lowest three trading prices of the Company’s common stock during the preceding ten days prior to conversion. The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $37,944 with a corresponding discount to the convertible debenture. On July 11, 2011, US$19,000 of the convertible debenture was converted to 230,303 common shares. During the nine months ended October 31, 2011, the Company recorded accretion expense of the discount on the convertible debenture of $35,321 (US$36,327) (2010 - $nil). As of October 31, 2011, the carrying value of the convertible debenture is $17,270 (US$17,327) (January 31, 2011 - $nil), and the fair value of the conversion option derivative liability was $17,131 (US$17,187) (January 31, 2011 - $nil). The calculation of the fair value of the conversion option derivative liability was determined using the Black-Scholes option pricing model with the following assumptions: expected life of 0.03 years, volatility of 125%, and risk-free rate of 0.02%.
Note 6-
Derivative Liabilities
Derivative financial liabilities consist of convertible debenture and warrants originally issued in private placements with exercise prices denominated in United States dollars, which differs from the Company’s functional currency. The fair value of these derivative liabilities is as follows:
Exercise Price $ | October 31, 2011 $ | January 31, 2011 $ | |
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US$65,000 convertible debenture | US$0.05 | – | 86,355 |
US$40,000 convertible debenture | US$0.05 | 17,131 | – |
3,800,000 warrants expiring on July 30, 2015 | US$0.005 | 39,162 | 2,841,573 |
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| 56,293 | 2,927,928 |
12
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 6-
Derivative Liabilities (continued)
The fair values of derivative financial liabilities were determined using the Black-Scholes option pricing model, using the following assumptions:
2011 | |
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Risk-free Interest rate | 0.02-0.70% |
Expected life (in years) | 0.03-3.75 |
Expected volatility | 125% |
Note 7-
Common Shares
(a)
On June 23, 2011, the Company issued 145,455 common shares to settle $11,674 (US $12,000) of convertible debentures.
(b)
On June 29, 2011, the Company issued 169,697 common shares to settle $13,792 (US $14,000) of convertible debentures.
(c) On June 29, 2011, the Company issued 230,303 common shares to settle $18,270 (US $19,000) of convertible debentures.
(d) On August 24, 2011, the Company issued 1,600,000 common shares for services with a fair value of $126,519 (US$128,000).
Note 8-
Share Purchase Warrants
On April 6, 2011, the Company issued 100,000 share purchase warrants as part of the $150,000 proceeds received from the note payable in Note 4. The warrants are exercisable at $0.15 per share and expire on April 6, 2012. On July 4, 2011, the Company issued 75,000 share purchase warrants as part of the $85,000 proceeds received from the note payable in Note 4. The fair values of the share purchase warrants was $14,676, calculated using the Black-Scholes option pricing model using assumptions of volatility of 125%, stock price at grant date of $0.15 to $0.18 per share, risk free rate of 0.29% to 0.46%, and no expected dividends.
The following table summarizes the continuity of share purchase warrants:
| Number of Warrants | Weighted Average Exercise Price $ |
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Balance, January 31, 2010 | – | – |
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Issued | 5,000,000 | 0.005 |
Exercised | (1,200,000) | 0.005 |
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Balance, January 31, 2011 | 3,800,000 | 0.005 |
Issued | 175,000 | 0.15 |
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Balance, October 31, 2011 | 3,975,000 | 0.011 |
13
NEUROKINE PHARMACEUTICALS INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine months ended October 31, 2011
(Expressed in Canadian dollars)
(unaudited)
Note 8-
Share Purchase Warrants (continued)
As at October 31, 2011, the following share purchase warrants were outstanding:
Number of Warrants | Exercise Price $ | Expiry Date |
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3,800,000 | 0.005 | July 30, 2015 |
75,000 | 0.15 | July 4, 2013 |
100,000 | 0.15 | April 6, 2012 |
Note 9-
Stock Options
The following table summarizes the continuity of the Company’s stock options:
| Number | Weighted | Weighted average remaining contractual life (years) | Aggregate intrinsic value (US$) |
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Outstanding and exercisable, January 31, 2010 | 300,000 | 0.20 |
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Granted | 1,200,000 | 0.005 |
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Exercised | (400,000) | 0.005 |
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Expired | (300,000) | 0.20 |
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Outstanding and exercisable, January 31, 2011 and October 31, 2011 | 800,000 | 0.005 | 3.6 | 68,000 |
Additional information regarding stock options as of October 31, 2011, is as follows:
Number of Options | Exercise Price $ | Expiry Date |
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800,000 | 0.005 | May 25, 2015 |
As of October 31, 2011 and 2010, the Company had no unrecognized compensation expense relating to unvested options.
Note 10-
Related Party Transactions
(a)
As at October 31, 2011, the Company owed $146,475 (January 31, 2011 - $17,269) to the President of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.
(b)
During the nine months ended October 31, 2011, the Company incurred $45,185 (2010 - $18,400) of management fees to directors and officers of the Company.
(c)
On May 25, 2010, the Company issued 800,000 stock options, exercisable at US$0.005 per share until May 25, 2015, to the President of the Company.
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our unaudited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$) and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Neurokine Pharmaceuticals Inc., unless otherwise indicated.
General Overview
We are a development stage biopharmaceutical company. We were incorporated in the Province of British Columbia, Canada under the name “649186 B.C. Ltd.” on June 10, 2002. On September 9, 2003 we changed our name to “Xerxes Health Corp.” and on June 26, 2007 we adopted our current name, “Neurokine Pharmaceuticals Inc.”. We have no subsidiaries.
Our principal executive office is located at 1275 West 6th Avenue, Vancouver, British Columbia, Canada, V6H 1A6. Our telephone number is (604) 221-0595.
We are engaged in the development and commercialization of therapeutic pharmaceutical products with a strategic emphasis on research and development to innovate applications for existing drugs. This is commonly known as drug re-profiling. Our research and development activities are focused on assessing known drugs and compounds, developing hypotheses concerning their usage for new indications (diseases), and conducting experimentation and clinical research to test those hypotheses. Where appropriate based on our research, we intend to depart from a strict re-profiling strategy to develop new variants of, or delivery methods for, existing drugs or compounds.
15
Our Current Business
We are a development stage biopharmaceutical company engaged in the development and commercialization of therapeutic pharmaceutical products, with a strategic emphasis on the innovation of new therapeutic uses for existing drugs. This is commonly known as drug re-profiling. Our research and development activities are focused on assessing known drugs and compounds, developing hypotheses concerning their usage for new indications (diseases), and conducting experimentation and clinical research to test those hypotheses. Where appropriate based on our research, we intend to depart from a strict re-profiling strategy to develop new variants of, or delivery methods for, existing drugs or compounds. Our focus on drug re-profiling, although not uncommon amongst pharmaceutical companies, differs from traditional drug development practices which focus largely on the development of new drugs.
To date, we have concentrated our research on innovating applications for existing drugs for the treatment of diseases and conditions mediated by acute and chronic inflammatory reactions. The diseases and conditions that have been the subject of our research include:
[ ] neurocognitive impairment, and specifically, neurocognitive impairment in post-coronary artery bypass graft (also known as “CABG” or ”heart bypass”) surgery patients;
[ ] degenerative central nervous system diseases, and specifically, Alzheimer’s disease; and
[ ] degenerative disk disease, and specifically, discogenic neck and back pain conditions.
Through our research we have identified and, where required, secured the rights necessary to develop two anti-inflammatory products, NK-001 and NK-002, that we believe hold promising prospects for the treatment of neurocognitive impairment and Alzheimer’s disease, respectively. Of these, NK-001 falls under our re-profiling strategy, as it is a new application of the drug Etanercept, which is marketed under FDA approval as a treatment for rheumatoid arthritis. Accordingly, we do not anticipate that NK-001 will require pre-clinical, preliminary safety or pharmacokinetic (the process by which the drug is metabolized by the body) studies. Because Etanercept has already been the subject of safety studies on a patient population similar to patients targeted by NK-001, we do not anticipate requiring additional pre-clinical or safety studies before proceeding to later stage clinical trials, and we have received approval to conduct clinical trials in South Africa on that basis.
In contrast, NK-002 is a new formulation for the delivery of Etanercept and is therefore properly classified as a new drug. As a new drug, NK-002 will require a full development program, including a full range of successful pre-clinical, safety, and pharmacokinetic studies before advanced clinical testing will be permitted to occur. Both of our planned products, including our flagship product NK-001, are in the development stage as of the date of this quarterly report and neither has been approved for sale to the public in any country.
The research and development activities required to produce the intellectual property underlying our two product candidates, NK-001 and NK-002, was carried out by Dr. Ahmad Doroudian, our director and former president, chief executive officer and secretary, Jonathan Willmer, our former chief medical officer and former director, and Dr. Hassan Salari, a former officer and former director. To date, we have outsourced all other research and development work to third parties, including clinical trial planning, laboratory services, data management, statistical services and report writing. We have relied primarily on three contractors in this regard. The first, Globe Laboratories Inc., is a center for drug research and development founded and controlled by Julian Salari, a former officer and former director of our company, that provides us with expertise in manufacturing certain generic drugs that are the basis of our planned products. The second, Virtus Clinical Development (Pty.) Limited is a South African firm that specializes in the planning and execution of clinical trials and has developed the clinical protocol of NK-001 on our behalf and entered into an agreement with us to conduct that clinical trial. The third, Northern Lipids Inc., assisted us to develop certain liposomal encapsulations for our development of NK-002. We anticipate that we will continue to rely on third parties to satisfy our research and development requirements until such time as it becomes cost effective to hire employees to satisfy those requirements.
16
Effective as of August 15, 2011 we entered into a consulting agreement with Wakabayashi Fund LLC, a Japanese limited liability company, whereby Wakabayashi Fund has agreed to provide certain institutional market awareness and public relations services to us for a six month term. In consideration of the services, on August 20, 2011 our board of directors authorized the issuance of 1,600,000 restricted shares of our common stock to Wakabayashi. The most recent closing price of our common shares at the time of issuance as quoted on the OTC Bulletin Board was $0.077 per share. Accordingly, the aggregate value of the stock consideration paid was $123,200.
Results of Operations
The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended October 31, 2011, which are included herein.
Our operating results for the three and nine months ended October 31, 2011 and 2010 are summarized as follows:
|
| Three Months Ended |
|
| Nine Months |
| ||||||
|
| October 31, |
|
| October 31, |
| ||||||
|
| 2011 |
|
| 2010 |
|
| 2011 |
|
| 2010 |
|
Revenue | $ | Nil |
| $ | Nil |
| $ | Nil |
| $ | Nil |
|
Amortization | $ | 113 |
| $ | Nil |
| $ | 341 |
| $ | Nil |
|
Foreign exchange loss (gain) | $ | 1,944 |
| $ | 1,034 |
| $ | 3,489 |
| $ | 821 |
|
General and administrative | $ | 132,249 |
| $ | 4,081 |
| $ | 262,934 |
| $ | 26,357 |
|
Management fees | $ | 12,325 |
| $ | 9,000 |
| $ | 45,185 |
| $ | 23,476 |
|
Professional fees | $ | 7,737 |
| $ | 6,071 |
| $ | 40,623 |
| $ | 39,103 |
|
Research and development | $ | Nil |
| $ | Nil |
| $ | 48,541 |
| $ | Nil |
|
Net Income (Loss) | $ | 129,537 |
| $ | (20,186 | ) | $ | (401,113 | ) | $ | (89,757 | ) |
For the three months ended October 31, 2011, our net income increased by $149,723 as compared to the three months ended October 31, 2010. Our income increased primarily due gain on change in fair value of derivative liability. Our net loss from inception is $1,541,444.
For the nine months ended October 31, 2011, our net income increased by $530,650 as compared to the nine months ended October 31, 2010. Our income increased primarily due to primarily due gain on change in fair value of derivative liability.
Revenue
We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter.
Liquidity and Financial Condition
Working Capital
|
| At |
|
| At |
|
|
| October 31, |
|
| January 31, |
|
|
| 2011 |
|
| 2011 |
|
Current Assets | $ | 5,526 |
| $ | 15,037 |
|
Current Liabilities | $ | 339,340 |
| $ | 40,575 |
|
Working Capital (Deficit) | $ | (333,814 | ) | $ | (25,538 | ) |
Our total current assets as of October 31, 2011 were $5,526 as compared to total current assets of $15,037 as of January 31, 2011. The decrease was primarily due to a decrease in cash. Our total current liabilities as of October 31, 2011 were $339,340 as compared to total current liabilities of $40,575 as of January 31, 2011. The increase was primarily due to increases in accounts payable and accrued liabilities, amounts due to related parties, notes payable and convertible debentures.
17
Cash Flows
|
| Nine Months Ended |
| |||
|
| October 31, |
| |||
|
| 2011 |
|
| 2010 |
|
Net Cash Provided (Used) by Operating Activities | $ | (132,381 | ) | $ | (57,805 | ) |
Net Cash Provided (Used) by Financing Activities | $ | 122,870 |
| $ | 40,726 |
|
Increase (Decrease) in Cash During the Period | $ | 9,511 |
| $ | (17,079 | ) |
Operating Activities
The increase in cash used on operating activities during the nine month period in 2011 was primarily the result of increases in accretion of discount on convertible debt, amortization shares issued for services, stock-based compensation, accounts payable and accrued liabilities, and amounts due to related parties. The increase in cash provided by financing activities during the nine month period ended 2011 was primarily the result of proceeds from loans payable and from the issuance of common shares.
Investing Activities
We did not have any investing activities during the nine months ended October 31, 2011 and 2010.
Financing Activities
We will require additional funds to fund our budgeted expenses over the next 12 months. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. We need to raise additional funds in the immediate future in order to proceed with our budgeted expenses.
Specifically, we estimate our operating expenses and working capital requirements for the next 12 months to be as follows:
18
Description |
| Estimated Expenses |
|
Sales and Marketing Costs |
|
|
|
Advertising | $ | 3,600 |
|
Investor Relations | $ | 60,000 |
|
Literature | $ | 6,000 |
|
Conference Attendance | $ | 21,000 |
|
Travel | $ | 22,000 |
|
Entertainment and Promotions | $ | 2,400 |
|
Total Sales and Marketing Costs | $ | 115,000 |
|
General and Administrative Expenses |
|
|
|
Professional Fees | $ | 60,000 |
|
Consulting Support | $ | 30,000 |
|
Employee Salaries and Benefits | $ | 384,000 |
|
Office Equipment | $ | 1,600 |
|
Office Supplies | $ | 1,200 |
|
Office and Lab Lease | $ | 40,000 |
|
Telephone, Fax, Cellular, Internet | $ | 6,000 |
|
Vehicles and Transportation | $ | 14,400 |
|
Total General and Administrative Expenses | $ | 537,200 |
|
Clinical Trials |
|
|
|
NK-001 | $ | 1,355,000 |
|
NK-002 | $ | 500,000 |
|
Total Clinical Trials | $ | 1,855,000 |
|
TOTAL | $ | 2,507,200 |
|
Based on our planned expenditures, we will require additional funds of approximately $2.5 million to proceed with our business plan over the next 12 months. If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
19
Use of Estimates
The preparation of these financial statements in conformity with generally accepted accounting principles in the United States 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. Our company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets, valuation of convertible debenture, assumptions used to determine the fair value of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash and Cash Equivalents
Our company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
Property and Equipment
Property and equipment is comprised of office equipment and is recorded at cost. Our company amortizes the cost of equipment on a straight-line basis over their estimated useful lives of five years.
Long-lived Assets
In accordance with ASC 360, “Property, Plant and Equipment”, our company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Stock-Based Compensation
Our company records stock-based compensation in accordance with ASC 718, Compensation – Stock-Based Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
Derivative Financial Instruments
Derivative financial instruments that are not classified as equity and are not used in hedging relationships are measured at fair value. Subsequent changes to fair value are recorded in the statement of operations.
20
Basic and Diluted Net Loss Per Share
Our company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at October 31, 2011 and 2010, our company had no items representing comprehensive income or loss.
Financial Instruments and Fair Value Measures
ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Our company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, amounts due to related parties, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Research and Development Costs
Research costs are expensed in the period that they are incurred.
Foreign Currency Translation
Our company’s functional currency and its reporting currency is the Canadian dollar and foreign currency transactions are primarily undertaken in United States dollars. Monetary assets and liabilities are translated using the exchange rate prevailing at the balance sheet date. Expenses are translated at average rates for the period. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
21
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2011. Based on the evaluation of these disclosure controls and procedures the chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective.
Changes in Internal Controls
During the quarter covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On August 24, 2011, the Company issued 1,600,000 common shares for services with a fair value of $126,519 (US$128,000). These shares were issued to one (1) non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities
None.
22
Item 4. [Removed and Reserved]
Item 5. Other Information
On August 30, 2011, we accepted the resignation of Dr. Ahmad Doroudian as our president, chief executive officer and secretary. Dr. Doroudian will remain as a director and serve as chairman of the board. Dr. Doroudian’s resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.
Concurrently with Dr. Ahmad Doroudian’s resignation, we appointed Dr. Hamid Doroudian, MD, as president, chief executive officer and secretary of our company.
Item 6. Exhibits
24
*
Filed herewith
**
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.
25
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, thereunto duly authorized.
| NEUROKINE PHARMACEUTICALS INC. |
| (Registrant) |
|
|
| /s/ Hamid Doroudian |
Dated: December 15, 2011 |
|
| Dr. Hamid Doroudian |
| President, Chief Executive Officer and Secretary |
| (Principal Executive Officer) |
|
|
|
|
|
|
| /s/ Moira Ong |
Dated: December 15, 2011 |
|
| Moira Ong |
| Chief Financial Officer |
| (Principal Financial Officer and Principal Accounting |
| Officer) |
26
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Hamid Doroudian, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Neurokine Pharmaceuticals Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 15, 2011
/s/ Hamid Doroudian |
Hamid Doroudian |
President, Chief Executive Officer and Secretary |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Moira Ong, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Neurokine Pharmaceuticals Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 15, 2011
/s/ Moira Ong |
Moira Ong |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Hamid Doroudian, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
the Quarterly Report on Form 10-Q of Neurokine Pharmaceuticals Inc. for the period ended October 31, 2011 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Neurokine Pharmaceuticals Inc.
Dated: December 15, 2011 |
|
| ||
|
|
| ||
|
| /s/ Hamid Doroudian | ||
|
|
|
| |
|
| Hamid Doroudian | ||
|
| President, Chief Executive Officer and Secretary | ||
|
| Neurokine Pharmaceuticals Inc. | ||
|
|
| ||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Neurokine Pharmaceuticals Inc. and will be retained by Neurokine Pharmaceuticals Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Moira Ong, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
the Quarterly Report on Form 10-Q of Neurokine Pharmaceuticals Inc. for the period ended October 31, 2011 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Neurokine Pharmaceuticals Inc.
Dated: December 15, 2011 |
|
| ||
|
|
| ||
|
| /s/ Moira Ong | ||
|
|
|
| |
|
| Moira Ong | ||
|
| Chief Financial Officer | ||
|
| Neurokine Pharmaceuticals Inc. | ||
|
|
| ||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Neurokine Pharmaceuticals Inc. and will be retained by Neurokine Pharmaceuticals Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
|
Other Liabilities
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 31, 2011
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| Warrants and Rights Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | Note 8- Share Purchase Warrants On April 6, 2011, the Company issued 100,000 share purchase warrants as part of the $150,000 proceeds received from the note payable in Note 4. The warrants are exercisable at $0.15 per share and expire on April 6, 2012. On July 4, 2011, the Company issued 75,000 share purchase warrants as part of the $85,000 proceeds received from the note payable in Note 4. The fair values of the share purchase warrants was $14,676, calculated using the Black-Scholes option pricing model using assumptions of volatility of 125%, stock price at grant date of $0.15 to $0.18 per share, risk free rate of 0.29% to 0.46%, and no expected dividends. The following table summarizes the continuity of share purchase warrants:
Note 8- Share Purchase Warrants (continued) As at October 31, 2011, the following share purchase warrants were outstanding:
|