ALTEROLA BIOTECH INC. - Quarter Report: 2010 December (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended December 31, 2010 | |
[ ] | Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to __________ | |
Commission File Number: 333-156091 |
Alterola
Biotech, Inc.
(Exact name of registrant as specified in its charter)
Nevada | TBA |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
340 S Lemon Ave # 4041 Walnut, California |
(Address of principal executive offices) |
909-584 5853 |
(Registrant’s telephone number) |
_______________________________________________________________ |
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days
[ ] Yes [X] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
[ ] Large accelerated filer Accelerated filer | [ ] Non-accelerated filer |
[X] Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 114,980,000 shares as of August 28, 2013 .
1 |
TABLE OF CONTENTS |
Page | |
PART I – FINANCIAL INFORMATION | ||
Item 1: | Financial Statements | 3 |
Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
Item 3: | Quantitative and Qualitative Disclosures About Market Risk | 7 |
Item 4: | Controls and Procedures | 7 |
PART II – OTHER INFORMATION | ||
Item 1: | Legal Proceedings | 8 |
Item 1A: | Risk Factors | 8 |
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 8 |
Item 3: | Defaults Upon Senior Securities | 8 |
Item 4: | Mine Safety Disclosures | 8 |
Item 5: | Other Information | 8 |
Item 6: | Exhibits | 8 |
2 |
PART I - FINANCIAL INFORMATION
Our consolidated financial statements included in this Form 10-Q are as follows:
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended December 31, 2010 are not necessarily indicative of the results that can be expected for the full year.
3 |
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
(Unaudited)
December 31, | September 30, | |||||||
ASSETS | 2010 | 2010 | ||||||
Current asset | ||||||||
Cash | $ | — | $ | 28 | ||||
Prepaid expenses | 500 | 500 | ||||||
Total current assets | 500 | 528 | ||||||
Intellectual property – Note 5 | — | 21,500 | ||||||
Website | 6,200 | 6,200 | ||||||
Total assets | $ | 6,700 | $ | 28,228 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 4,660 | $ | 3,660 | ||||
Accrued interest | 4,490 | 2,090 | ||||||
Notes payable – Note 6 | 80,000 | 80,000 | ||||||
Total current liabilities | 89,150 | 85,750 | ||||||
Total liabilities | 89,150 | 85,750 | ||||||
Stockholders’ Deficit | ||||||||
Preferred stock, $0.001 par value 10,000,000 shares authorized, none outstanding | — | — | ||||||
Common stock, $0.001 par value – Note 8 140,000,000 shares authorized 92,980,000 issued (September 30, 2010: 92,730,000 issued) | 92,980 | 92,730 | ||||||
Additional paid-in capital | 105,892 | 56,142 | ||||||
Deficit accumulated during the development stage | (281,322 | ) | (206,394 | ) | ||||
Total stockholders’ deficit | (82,450 | ) | (57,522 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 6,700 | $ | 28,228 |
F-1 |
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2010 and 2009
FOR THE PERIOD FROM JULY 21, 2008 TO DECEMBER 31, 2010
(Stated in US Dollars)
(Unaudited)
(Cumulative) | ||||||||||||
July 21, | ||||||||||||
2008 | ||||||||||||
(Date of | ||||||||||||
Three Months Ended | Three Months Ended | Inception) to | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2010 | 2009 | 2010 | ||||||||||
Operating Expenses | ||||||||||||
Administrative and general | $ | 1,028 | $ | 24,990 | $ | 176,543 | ||||||
Mineral property option and exploration costs | — | 1,866 | 19,873 | |||||||||
Management fee | 50,000 | 3,000 | 84,134 | |||||||||
Impairment | 21,500 | — | 21,500 | |||||||||
Stock based compensation | — | — | 26,000 | |||||||||
Total operating expenses | 72,528 | 29,856 | 329,078 | |||||||||
Operating loss | (72,528 | ) | (29,856 | ) | (329,078 | ) | ||||||
Other expenses | ||||||||||||
Interest expense | (2,400 | ) | — | (4,490 | ) | |||||||
Total other expenses | (2,400 | ) | — | (4,490 | ) | |||||||
Net loss | $ | (74,928 | ) | $ | (29,856 | ) | $ | (333,568 | ) | |||
Basic loss per share | $ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted average number of common shares basic | 92,813,333 | 99,940,000 |
F-2 |
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009
FOR THE PERIOD FROM JULY 21, 2008 TO DECEMBER 31, 2010
(Stated in US Dollars)
(Unaudited)
Date of | ||||||||||||
Inception | ||||||||||||
Three months ended | Three months ended | (July 21,2008) | ||||||||||
December 31, | to December 31, | December 31, | ||||||||||
2010 | 2009 | 2010 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net loss | $ | (74,928 | ) | $ | (29,856 | ) | $ | (333,568 | ) | |||
Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||||||
Mineral property option costs | 1,866 | |||||||||||
Impairment | 21,500 | 21,500 | ||||||||||
Foreign exchange adjustment on promissory note | — | 40 | — | |||||||||
Stock based compensation | — | — | 26,000 | |||||||||
Change in non-cash working capital items: | ||||||||||||
Prepaid expenses | — | — | (500 | ) | ||||||||
Accounts payable and accrued liabilities | 3,400 | 21,817 | 9,150 | |||||||||
Net cash used in operating activities | (50,028 | ) | (6,133 | ) | (277,418 | ) | ||||||
Cash flows from investing activities | ||||||||||||
Acquisition of intellectual property | — | — | (5,000 | ) | ||||||||
Website development | — | — | (6,200 | ) | ||||||||
Net cash used in investing activities | — | — | (11,200 | ) | ||||||||
Cash flows from financing activities | ||||||||||||
Capital stock issued for cash | 50,000 | — | 263,618 | |||||||||
Capital stock returned to treasury | — | — | (55,000 | ) | ||||||||
Proceeds from issuance of notes payable | — | — | 80,000 | |||||||||
Net cash provided by financing activities | 50,000 | — | 288,618 | |||||||||
Increase (decrease) in cash during the period | (28 | ) | (6,133 | ) | — | |||||||
Cash, beginning of the period | 28 | 7,224 | — | |||||||||
Cash, end of the period | $ | — | $ | 1,091 | $ | — | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for: | ||||||||||||
Interest | $ | 2,400 | $ | — | $ | 4,490 | ||||||
Income taxes | $ | — | $ | — | $ | — | ||||||
Non- cash investing and financing activities: | ||||||||||||
Common stock issued for intellectual property | $ | — | $ | — | $ | 16,500 | ||||||
Common stock cancelled on sale of subsidiary | $ | — | $ | — | $ | 52,246 |
F-3 |
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010
(Stated in US Dollars)
Note 1 Nature of Operations and Ability to Continue as a Going Concern
The Company was incorporated in the state of Nevada, United States of America on July 21, 2008. The Company was formed for the purpose of acquiring exploration and development stage mineral properties. The Company’s year-end is September 30.
On October 1, 2008, the Company incorporated JRE Exploration Ltd, (“JRE”) a wholly owned subsidiary in Canada for the purpose of holding its Canadian mineral claims.
On May 3, 2010, the Company changed its focus to the development of intellectual property and accordingly sold JRE to the former president. (See Note 3). In keeping with the change of business focus, on July 9, 2010 the Company changed its name to Alterola Biotech Inc.
Effective July 9, 2010, the Board of Directors authorized a 10 for 1 forward stock split on the issued common shares. The authorized number of common shares was increased from 90,000,000 to 140,000,000 common shares with a par value of $0.001. The number of authorized Preferred shares remained unchanged at 10,000,000 with a par value of $0.001. All references in the accompanying financial statements to the number of common shares have been restated to reflect the forward stock split.
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2010, the Company has a negative working capital of $88,650, has yet to achieve profitable operations, has accumulated losses of $333,568 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due.
F-4 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 2
Note 1 Nature of Operations and Ability to Continue as a Going Concern – (cont’d)
Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 2 Summary of Significant Accounting Policies
The following is a summary of significant accounting policies used in the preparation of these financial statements.
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are stated in US dollars. |
Basis of Presentation
The accompanying unaudited interim financial statements of Alterola Biotech Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s registration statement filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2010 as reported in Form 10-K, have been omitted.
Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates. |
F-5 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 3
Note 2 Summary of Significant Accounting Policies – (cont’d)
Principles of Consolidation
These consolidated financial statements include the results of the Company and JRE Exploration Ltd., (“JRE”) a wholly owned subsidiary from incorporation on October 1, 2008 until disposal on May 3, 2010. All significant inter-company transactions and balances have been eliminated.
Exploration Stage Company
The Company is an exploration stage company. All losses accumulated since inception have been considered as part of the Company’s exploration stage activities.
Cash
Cash consists of all highly liquid investments that are readily convertible to cash within 90 days when purchased.
Mineral Property
Mineral property exploration costs are charged to operations as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property, are capitalized. Such costs will be depleted using the units-of-production method over the estimated life of the probable reserve.
Research and Development
Costs of research and development are expensed as incurred. |
Intangible assets
Intellectual Property
The Company does not amortize intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company amortizes its intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment. The Company will amortize its acquired intangible assets with definite lives over the estimated economic life of the completed product. During the period ending December 31, 2010, the value of intellectual property was impaired by $21,500.
F-6 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 4
Note 2 Summary of Significant Accounting Policies – (cont’d)
Website Development Costs
Costs incurred in developing and maintaining a website are charged to expense when incurred for the planning, content population, and administration or maintenance of the website. All development costs for the application, infrastructure, and graphics development are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Capitalized costs will be amortized using straight-line basis over two years, the estimated economic life of the completed website. As of December 31, 2010, the Company’s website was not in service; accordingly no amortization has been recorded during the period ended December 31, 2010.
Stock-based Compensation
The Company is required to record compensation expense, based on the fair value of the awards, for all awards granted after the date of the adoption.
Foreign Currency Translation
The Company’s functional currency is the US dollar as substantially all of the Company’s operations are in the United States of America. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).
Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Accumulated Other Comprehensive Income account in Stockholder’s Equity, if applicable. Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses are included in the Statement of Operations and Comprehensive Loss.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
F-7 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 5
Note 2 Summary of Significant Accounting Policies – (cont’d)
Basic and Diluted Loss Per Share
Basic loss per share is computed using the weighted average number of shares outstanding during the period. Fully diluted earnings (loss) per share are computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net income (loss) position at the calculation date. As there are no common stock equivalents outstanding, diluted and basic loss per share are the same.
Long-Lived Assets
Management reviews useful lives and obsolescence and assesses commercial viability of these assets periodically, at least annually. Based on these reviews, management estimates that the undiscounted future cash flows expected to result from the use of these assets exceeds the current carrying value of these assets. Any adverse change in the estimate of these undiscounted future cash flows could necessitate an impairment charge that would adversely affect operating results.
Management also estimates useful lives for estimates of assets’ commercial lives, and the likelihood of technological obsolescence. Should the actual useful life of a class of assets differ from the estimated useful life, the Company would record an impairment charge.
Comprehensive Income
The Company is required to report comprehensive income, which includes net loss as well as changes in equity from non-owner sources.
Note 3 Sale of Subsidiary
Pursuant to an agreement dated May 3, 2010, the Company sold its wholly-owned subsidiary, JRE Exploration Ltd., to the Company’s former president. In consideration for the sale the purchaser returned 55,000,000 shares of Jedediah to the Company for cancellation, and the Company forgave all amounts owed by JRE to the Company.
F-8 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 6
Note 3 Sale of Subsidiary – (cont’d)
The following table summarizes the identifiable assets and liabilities of JRE that were disposed of and the consideration received.
May 3, 2010 | ||||
Identifiable Assets and Liabilities | ||||
Mineral Property | $ | — | ||
Amount owed to Jedediah Resources Corp | (21,843 | ) | ||
Net liabilities of JRE | (21,843 | ) | ||
Consideration Received | ||||
Elimination of consolidated losses of JRE | 21,843 | |||
Gain/(Loss) on Disposal | $ | — | ||
Receipt and cancellation of 55,000,000 shares returned to treasury, recorded in statement of equity. | $ | (52,246 | ) |
Note 4 Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-
performance risk including our own credit risk.
In addition to defining fair value, the disclosure requirements around fair value establishes a fair value hierarchy for valuation inputs which is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in
F-9 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 7
Note 4 Financial Instruments – (cont’d)
markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The carrying value of the Company’s financial assets and liabilities which consist of cash, accounts payable and accrued liabilities, and notes payable are valued using level 1 inputs. The Company believes that the recorded values approximate their fair value due to the short maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.
Note 5 Intellectual Property
Pursuant to an Assignment Agreement dated May 3, 2010 (the “Agreement”), the Company acquired from the president of the Company a 100% undivided right in and to all intellectual property relating to certain chewing gum compositions having appetite suppressant activity. Consideration given for the acquisition was 55,000,000 Common shares of the Company with a fair value of $16,500. During the year ended September 30, 2010, the Company incurred a further $5,000 in patent application fees. For the period ended December, 31, 2010 the Company has recognized an impairment in the value of the intellectual property of $21,500.
Note 6 Notes Payable
December 31, 2010 | September 30, 2010 | |||||||
Note payable, unsecured, bearing interest at 12% per annum, due on June 26, 2011. | $ | 30,000 | $ | 30,000 | ||||
Convertible note payable, unsecured, bearing interest at 12% per annum, due on July 24, 2011 | 50,000 | 50,000 | ||||||
$ | 80,000 | $ | 80,000 |
.
The Convertible note is convertible at the option of the holder. The number of shares of common stock into which the convertible note will be converted is determined by the Fair Market Price (“FMV”) of the common stock at the date of conversion. In the event there is no determinable market price the FMV shall be:
a) | The share price at the last private offering of the common stock, or, |
b) | The 30 day moving average of the Common Stock in the event a public listing of |
the common stock has taken place.
The notes payable are currently in default as of the date of issuance of these financial statements.
F-10 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 8
Note 7 Related Party Transactions and Balances – Notes 3, 5 and 8
In addition to those related party transactions disclosed elsewhere in the financial statements the Company paid or accrued management fees of $50,000 (2009 - $3,000) to a company controlled by the former president of the Company.
Note 8 Capital Stock – Notes 3 and 5
a) Authorized:
10,000,000 preferred shares with a par value of $0.001.
140,000,000 common shares with a par value of $0.001.
b) | Issued: |
On August 6, 2008, the Company issued 55,000,000 common shares to the Company’s president at $0.001 per share for total proceeds of $55,000. |
On September 22, 2008, the incumbent president resigned as both an officer and director and a new president and director was appointed. At the request of the departing president, the Company’s board of directors rescinded his share subscription for 55,000,000 common shares and repaid the subscription proceeds of $55,000.
On September 22, 2008, the Company issued 55,000,000 common shares to the Company’s new president at $0.00095 (CDN$0.001) per share for total proceeds of $52,246 (CDN$55,000).
On September 22, 2008, the Company issued 39,600,000 common shares at approximately $0.00149 (CDN$0.0015) per share for total proceeds of $55,740 (CDN$59,400) pursuant to a private placement. On September 30, 2008, the Company issued 2,400,000 common shares at approximately $0.00149 (CDN$0.0015) per share for total proceeds of $3,467 (CDN$3,600) pursuant to a private placement. The Company paid a commission of $5,700 for net proceeds of $53,507 for these private placements.
F-11 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 9
Note 8 Capital Stock – Note 3 and 5 – (cont’d)
On October 29, 2008, the Company issued 2,400,000 common shares at approximately $0.00119 (CDN$0.015) per share for total proceeds of $2,865 (CDN$3,600) pursuant to a private placement.
On January 5, 2010, pursuant to a share subscription agreement, the Company issued 33,330,000 Common Shares at $0.0015 for aggregate proceeds of $50,000.
On May 3, 2010, pursuant to the sale of JRE Exploration Ltd. (Note 3) the Company received 55,000,000 of its Common stock from the former Company president with a fair value of $52,246 for cancellation, as consideration for the sale of JRE, our wholly owned subsidiary.
On May 3, 2010, pursuant to an assignment agreement for the acquisition of certain intellectual property, (Note 5) the Company issued 55,000,000 Common shares with a fair value of $16,500 to the president of the Company.
On November 17, 2010, the President entered into a stock cancellation agreement the Company whereby 40,000,000 common shares were returned to treasury and cancelled. In consideration the Company will issue to the President options to acquire common stock pursuant to the stock option plan which will be adopted by the Company at some time in the future.
On December 21, 2010, the Company issued 250,000 shares at $0.20 for aggregate proceeds of $50,000.
F-12 |
ALTEROLA BIOTECH INC.
(formerly Jedediah Resources Corp.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010
(Stated in US Dollars) – Page 10
Note 9 Income Taxes
A reconciliation of the income tax provision computed at statutory rates to the reported tax provision is as follows: |
Three months ended December 31, 2010 | Three months ended December 31, 2009 | |||||||
Basic statutory and provincial income tax rate | 34.0 | % | 35.0 | % | ||||
Expected approximate tax recovery on net loss, before income tax | $ | 25,475 | $ | 10,150 | ||||
Valuation allowance | (25,475 | ) | (10,150 | ) | ||||
Future income tax recovery | $ | — | $ | — |
Significant components of the Company’s future tax assets and liabilities are as follows:
December 31, 2010 | ||||
Future income tax assets | ||||
Non-capital losses carried forward | $ | 113,410 | ||
Less: valuation allowance | (113,410 | ) | ||
Future income tax assets | $ | — |
At December 31, 2010 the Company has incurred accumulated non-capital losses totalling approximately $334,000 which are available to reduce taxable income in future taxation years. These losses begin to expire in 2028.
Note 10 Subsequent Events
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to May 31, 2013 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements except as noted below
In February 2011, the former president of the Company surrendered for voluntary cancellation 15,000,000 shares of common stock of the Company.
On July 16, 2013, the Company issued 37,000,000 shares of its common stock to an officer in consideration for his service from February 12, 2012.
F-13 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
Corporate History
We were incorporated in the State of Nevada on July 21, 2008 under the name “Jedediah Resources Corp.” We are a development stage company.
After our formation, we were in the business of mineral exploration. On May 3, 2010, however, we entered into two agreements with Ola S. Juvkam-Wold (“Juvkam-Wold”), who was then our Chief Executive Officer and a director of our company: a Stock Purchase Agreement and General Release and Settlement Agreement. Pursuant to the Stock Purchase Agreement, Mr. Juvkam-Wold agreed to cancel and return 55,000,000 shares of common stock owned by him to us in consideration for all of the issued and outstanding stock of our wholly owned subsidiary, JRE Exploration Ltd. (“JRE”), and the cancellation of all debt owed by JRE to us. Pursuant to the Release and Settlement, Mr. Juvkam-Wold released us from any and all claims Mr. Juvkam-Wold may have against us or our affiliates. Our mineral exploration business was housed in JRE, and the transaction jettisoned the business from our company. Mr. Juvkam-Wold resigned as our officer and director and Soren Nielson took his place.
On May 3, 2010, we entered into an Intellectual Property Assignment Agreement (“IP Agreement”) with Soren Nielsen pursuant to which Mr. Nielsen transferred his right, title and interest in all intellectual property relating to certain chewing gum compositions having appetite suppressant activity (the “IP”) to us in consideration for the issuance of 55,000,000 newly issued shares of our common stock. Following the acquisition of the IP we changed our business direction and, during the quarterly period covered by this report, were pursuing the development of a chewing gums for the delivery of Nutraceutical/functional ingredients for applications such as appetite suppressant, cholesterol suppressant, vitamin delivery, antioxidant delivery, motion sickness suppressant.
On July 9, 2010, we changed our name from “Jedediah Resources Corp.” to “Alterola Biotech Inc,” increased our authorized common stock to 140,000,000 shares and conducted a forward split of 10 for 1 of our issued and outstanding common stock.
On February 28, 2011, Mr. Nielson resigned as our officer and director and Tobias Hedstrom took his place. On March 15, 2011, we entered into an agreement with Mr. Nielsen to cancel and return 15,000,000 shares he held in our company back to treasury in exchange for a complete release of all claims.
On February 12, 2012, Mr. Hedstrom resigned as our officer and director and Rene Lauritsen took his place. Mr. Lauritsen is currently the sole member of our board of directors and our President, Chief Executive Officer, Chief Financial Officer and Secretary.
On July 16, 2013, we issued Mr. Lauritsen 37,000,000 shares of our common stock in consideration for his service as our officer from February 12, 2012.
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Plan of Operation
Our plan is to use our IP develop and market Nutraceutical/functional chewing gum and in the future medicinal chewing gum. We are ardently researching new ways to use chewing gum as a delivery system, expanding on the kinds of applications chewing gum has been used for in the past. We expect to reveal functional chewing gum for new applications already by the last quarter of 2013 and in the future we plan to develop gum for the delivery of medicines.
Our mission is to improve the health and quality of life for millions of people all over the world who are unable to or have difficulty swallowing tablets. As much as 40% of the adult population and an even greater percentage of the adolescent population have difficulties swallowing pills, and we believe our solutions will greatly benefit them.
Presently, we are focused on nutrition and health chewing gum with natural based ingredients. The products below are currently under development and we are working to file patents to protect the ingredients.
- Appetite suppressor
- Cholesterol suppressor
- Antioxidant gum
- Motion sickness suppressor
- Vitamin gum
In order to implement our business plan, however, we will need to raise funds. We were able to secure a small loan of $25,000 to pay the legal and accounting fees needed to bring our reporting filings current with the Securities and Exchange Commission. We will need more funds to meet our timetable of introducing Nutraceutical/functional chewing gum by the end of 2013.
Results of Operations for the Three Months Ended December 31, 2010 and 2009
We have generated no revenues since inception and we do not anticipate earning revenues until such time that we are able to market and sell our products.
We incurred operating expenses of $72,528 for the three months ended December 31, 2010, compared with operating expenses of $29,856 for the three months ended December 31, 2009. Our operating expenses in 2010 increased from 2009 mainly as a result of management fees paid to our former officer and director of $50,000 and an impairment of $21,500. However, we incurred significantly less general and administrative expenses for the three months ended December 31, 2010, as compared with the same period ended December 31, 2009 We incurred operating expenses of $329,078 for the period from inception (July 21, 2008) to December 31, 2010.
We incurred other expenses of $2,400 in the form of interest expenses for the three months ended December 31, 2010, as compared to $0 for the three months ended December 31, 2009. We incurred other expenses of interest expenses of $4,490 for the period from inception (July 21, 2008) to December 31, 2010.
We incurred a net loss of $74,928 for the three months ended December 31, 2010, as compared with a net loss of $29,856 for the three months ended December 31, 2009. We incurred a net loss of $333,568 for the period from inception (July 21, 2008) to December 31, 2010.
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Liquidity and Capital Resources
As of December 31, 2010, we had current assets of $500 and current liabilities of $89,150. We had a working capital deficit of $88,650 as of December 31, 2010.
Operating activities used $50,028 in cash for the three months ended December 31, 2010. The decrease in cash was primarily attributable to funding the loss for the period.
Financing activities provided $50,000 for the three months ended December 31, 2010 and consisted of proceeds from the sale of our common stock.
Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Off Balance Sheet Arrangements
As of December 31, 2010, there were no off balance sheet arrangements.
Going Concern
Our financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred cumulative losses of $333,568 for the period July 21, 2008 (inception date) through December 31, 2010, expect to incur further losses in the development of our business and have been dependent on funding operations through the issuance of convertible debt and private sale of equity securities. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2010. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2010, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of December 31, 2010, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending September 30, 2013: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
We are unable to remedy our controls related to the inadequate segregation of duties and ineffective risk management until we receive financing to hire additional employees. In January 2011, we hired an outsourced controller to improve the controls for accounting and financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended December 31, 2010 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
A smaller reporting company is not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
On December 19, 2010, we issued an accredited investor 250,000 shares of our common stock at a price of $0.20 per share for total proceeds of $50,000.
On July 16, 2013, we issued Mr. Lauritsen 37,000,000 shares of our common stock in consideration for his service as our officer from February 12, 2012.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable.
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Alterola Biotech, Inc. | |
Date: | September 6, 2013 |
By: | /s/ Rene Lauritsen |
Rene Lauritsen | |
Title: | Chief Executive Officer and Director |
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