UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4 TO FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Clinical Trials Assistance Corporation
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(Name of Small Business Issuer in its charter)
Nevada 27-0009939
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2078 Redwood Crest, Vista, California 92083-7340
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(Address of principal executive offices) (zip code)
Issuer's telephone number: (760) 727-8448 Fax number: (760) 598-2611
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Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
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Securities to be registered under section 12(g) of the Act:
Common Stock, $.001 par value per share, 20,000,000 shares authorized,
12,000,000 issued and outstanding as of December 31, 2002. Preferred
Stock, $0.001 par value per share, 5,000,000 shares authorized, none
issued nor outstanding as of December 31, 2002.
1
FORWARD LOOKING STATEMENTS
Clinical Trials Assistance Corporation, a developmental stage company
(afterwards referred to ("Clinical Trials ") or the ("Company") cautions
readers that certain important factors may affect the Company's actual results
and could cause such results to differ materially from any forward-looking
statements that may be deemed to have been made in this Form 10-SB or that are
otherwise made by or on behalf of the Company. For this purpose, any
statements contained in the Form 10-SB that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
generality of the foregoing, words such as "may," "expect," "believe,"
"anticipate," "intend," "could," "estimate," "plans," or "continue" or the
negative or other variations thereof or comparable terminology are intended
to identify forward-looking statements. With respect to any forward-looking
statements contained herein, the Company believes that it is subject to a
number of risk factors, including: a limited operating history, its dependence
on certain key personnel, the eventual need for additional capital, potential
competition, the possible inability to find suitable employees, possible
regulatory hurdles performing pharmaceutical and biotechnology clinical trials,
difficulties encountered creating a national presence in the recruitment of
patients for physician researchers, the inability to pay dividends, possible
liabilities for service provided, and general economic and business conditions.
Any forward-looking statements in this report should be evaluated in light of
these important risk factors.
2
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ......................................................... 4
Item 1. Description of Business.................................. 4
Item 2. Management's Discussion and Analysis or Plan of
Operation................................................ 22
Item 3. Description of Property.................................. 26
Item 4. Security Ownership of Management and Others and Certain
Security Holders......................................... 27
Item 5. Directors, Executives, Officers and Significant
Employees................................................ 28
Item 6. Executive Compensation................................... 31
Item 7. Interest of Management and Others in Certain Transactions 32
Part II ......................................................... 33
Item 1. Legal Proceedings........................................ 33
Item 2. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters.............. 33
Item 3. Recent Sales of Unregistered Securities.................. 34
Item 4. Description of Securities................................ 37
Item 5. Indemnification of Directors and Officers................ 39
Part F/S ......................................................... 42
Item 1. Financial Statements..................................... 42
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure...................... 44
Part III ......................................................... 45
Item 1. Index to Exhibits........................................ 45
Item 2. Description of Exhibits.................................. 45
Signatures........................................................ 46
3
Part I
Item 1. Description of Business
(i) Business Development, Organization and Acquisition Activities
Clinical Trials Assistance Corporation, a developmental stage company,
hereinafter referred to as "the Company" or "CTAC", was organized by the
filing of Articles of Incorporation with the Secretary of State of the State
of Nevada on April 22, 2002. The original articles of the Company authorized
the issuance of twenty million (20,000,000) shares of Common Stock at par
value of $0.001 per share and five million (5,000,000) shares of Preferred
Stock at par value of $0.001. On April 30, 2002, the Company issued ten
million (10,000,000) shares of its $0.001 par value Common Stock for cash
of $10,000, held by one (1) shareholders of record.
On September 30, 2002, the Company completed a private offering of shares
of common stock of the Company pursuant to Regulation D, Rule 504 of the
Securities Act of 1933, as amended, which resulted in the sale of an
additional 2,000,000 shares of its $0.001 par value common stock to
approximately 46 shareholders. As of December 31, 2002, therefore, the
number of common shares issued and outstanding is twelve million
(12,000,000).
The Company anticipates that the proceeds from the sale of the common
shares offered in the 504 Offering referred to above were sufficient to
provide the capital requirements to implement the Company's initial plans
over the next twelve months to evaluate its business model.
The Company's president and CEO, Kamill Rohny, has been actively involved in
the pharmaceutical industry for the past thirty-two years. Prior to his
retirement from Procter & Gamble Pharmaceuticals, he developed recruiting
methodologies for patient studies. This included the identification of
computer data bases to help research physicians find patients for their
investigative studies.
From inception through December of 2002, the Company's efforts has been
devoted primarily to startup and development activities, which include the
following:
1. Formation of the Company and obtaining start-up capital;
2. Developing services;
3. Developing new recruitment tools.
4. Testing the identified recruitment tools.
Clinical Trials Assistance Corporation is a development stage company which
plans to help physician researchers recruit appropriate patients to participate
in specific clinical research trials sponsored by the pharmaceutical industry.
In helping the investigative sites to recruit patients for clinical studies, by
developing effective recruitment programs, which enlist patients to participate
in the early stages of these studies, clinical recruitment companies help
the pharmaceutical industry shorten its development cycles and reduce the cost
for evaluating new pharmaceutical products. There are no assurances that the
Company will be able to recruit patients faster than its competition.
4
The Company has begun evaluating its business model to identify prospective
customers for its clinical recruiting services. Initially, the customer
list will be derived from known physician acquaintances and past contacts
made by Kamill Rohny, during his 32 years in the pharmaceutical industry.
This would include known clinical researchers in the industry who conduct
clinical trials. Management views this as the most efficient and
cost effective manner to develop a customer base.
The company expects to develop its business over a number of years with the
first stage taking approximately a year to complete. The Company's plan of
operations for the next twelve months includes:
1. The success of this development program will be measured by the amount
dollars a physician researcher is willing to spend versus the time and
dollars spent to recruit patients for clinical research trials.
If the cost to recruit patients exceeds the amount a physician can spend
based on his research budget, the Company will need to find a more
economical means to recruit patients. Management believes the Company
has sufficient funding to complete this development period. Management
expects this development period will take one year to complete and
estimates a cost of approximately $20,000 to complete this development
period.
2. If the Company can identify a successful financial success model to
recruit patients for clinical studies through this, during its
development period, management plans to expand its operations beyond
Southern California. This expansion would be scheduled for Fiscal Year
2004, and would require additional funding of approximately $50,000-
$75,000 to hire and train recruiters as well as identify physician
researchers as a client base. It should be noted that Southern
California's population provides a sufficient number of participants
for clinical studies. However, the sufficiency of the population
base is dependent on the particular disease state or conditions for
which a clinical trial is being conducted or designed to address.
Additionally, the area provides other investigative sites, such as,
private practice physicians, hospitals, major medical centers, health
maintenance organizations, pharmaceutical and biotechnology companies,
all who conduct clinical studies. This offers the Company with a solid
base to expand its operations.
If this developmental period can become financially successful for the Company,
management's future plans, following this developmental period would include the
raising of an additional $50,000-$75,000 in funding to expand its operations
beyond Southern California in Fiscal Year 2004. If in the future the Company
should seek to raise additional capital it would be accomplished via a private
placement offering pursuant to Regulation D, Rule 505. To do so, management
believes the Company should be a fully reporting entity with the U.S.
Securities and Exchange Commission. In this sense, potential investors will
have the opportunity to review the company's activities and financial status.
There is no guarantee that such financing will be available to the Company,
or if available, will be on terms and conditions satisfactory to management.
5
As a fully reporting company with the U.S. Securities and Exchange Commission,
("SEC") the company will be required to pay for financial audits and quarterly
financial reviews, along with the legal preparation of the required documents
to maintain its reporting status. Based on the future complexity of the
business, the accounting and legal fees could cost the Company a minimum of
$5,000 to $10,000 per year. If the company fails to raise or generate
sufficient funding to maintain its full reporting status, it will be required
to withdraw its Registration with the SEC.
The Company currently has no understandings, commitments or agreements
with respect to engage in any material acquisitions and no material acquisition
is currently being pursued. Additionally, the Company does not plan to be
acquired. If appropriate opportunities present themselves, the Company would
consider acquiring businesses, technologies, services or product(s) that the
Company believes are strategic to its operations.
(ii) Principal Products and Principal Markets
Clinical Trials Assistance Corporation plans to help physician researchers
find patients for ongoing clinical studies. These clinical trials would be
conducted in a physician's office, hospital setting, or private clinic, who
have separately contracted with a major pharmaceutical Company or U.S.
Government agency to test developmental pharmaceutical products, which have
been approved by the Food and Drug Administration ("FDA") for testing in humans.
In some case, the pharmaceutical companies themselves conduct clinical research
studies. The Company plans to solely focus on patient recruitment for these
clinical studies. Said differently, the Company helps these researchers find
patients for on-going studies. The researchers screen and evaluate whether
these patients qualify for these studies. The Company does not plan to
involve itself with data analysis, regulatory services, quality assurance and
other consultation services. The actual clinical trials are performed at the
investigative sites as approved by the FDA. The Company's business is
currently focused on the U.S. markets.
Management believes the Company's services to the investigative sites would
allow them to build and maintain successful clinical research businesses.
Patient Recruitment
-------------------
CTAC will need to develop a series of patient recruitment tools for the
investigative sites. These tools might include: an 1-800 phone number for
patients to obtain information and schedule an appointment, an attractive
newspaper ad, mail flyers or radio commercials. To date, the Company's best
success in developing patient recruitment tools has been with first class
pre-sorted postcard directed to specific age groups in targeted geographic
locations.
6
Business Strategy
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The first priority for Clinical Trials Assistance Corporation is to create
new business and evaluate its recruiting concepts with physician researchers in
Southern California. The Company's business plans encompasses the following
strategies:
o Market its services to physicians who conduct research projects.
The clientele would include investigative sites, such as, private
practice physicians, hospitals, major medical centers, health
maintenance organizations, pharmaceutical and biotechnology
companies, all who conduct clinical studies.
o Identify physician researchers and offer the services of patient
recruitment for these studies.
o Based on the type of studies performed, such as targeted age group
or specific illness, develop specific patient data base to target.
The database would include purchasing names and addresses and
sorting by age group and gender to determine who is most likely to
suffer from a particular disease state. The Company plans to
rent mailing labels from brokers who specialize collecting this
type of demographic data. These mailing labels will be rented on
a Quarterly basis, when the Company undertakes a specific recruitment
program. There is no way of knowing, who has a particular disease
state to target; therefore, a mass population is targeted to receive
a mailer, which invites them to participate in a study. Patients who
participate in a clinical study receive free medication and a small
fee to entice them to participate.
o Utilize known networking groups, e.g., senior centers, churches,
social clubs, ethnic groups, who conduct regular meetings among their
members. to recruit these patients. These groups consists of people
who talk among themselves to give the studies a word-of mouth
endorsement, where the recommend that their friends are evaluated
for the study. CTAC plans to utilize these groups to by scheduling
the investigative physician(s), as guest speakers, for their regular
scheduled meetings. This gives the audience an opportunity to determine
whether or not they wish to participate in the study, by meeting the
investigative physician who will be conducting the study. CTAC has
already enrolled three patients, in a clinical study, by working with
a senior center and church group. In each case, management of the
Company had not difficulty in contacting the administrators' to
schedule a presentation at one of their monthly social meetings.
o Advertise for patients utilizing newspapers, radio, and television
to recruit these patients.
o Schedule these subject patients with the physician researchers as
candidates to be evaluated for their studies.
o Establish a reputation for Clinical Trials Assistance Corporation as
a premier patient recruitment company.
7
In order to accomplish these objectives, the Company has established a business
development program with Eugene Boling, MD, a Rheumatologist at Boling Clinical
Trials, located at 8263 Grove Avenue, Suite 100, Rancho Cucamonga, CA 91730.
Boling Clinical Trials is one of the larger patient research centers in
Southern California. This is measured by the number of patients enrolled in
their clinical trials. This was shared with Dr. Boling by the sponsoring
pharmaceutical companies who are conducting these studies. They can conduct
as many has sixteen different patients studies at the same time. Each study
seeks to enroll anywhere from 24 to 60 patients, on average. Boling Clinical
Trials is situated in an area of Southern California with a surrounding
population of 500-600,000 inhabitants. CTAC has participated in recruiting
patients for two separate studies at Boling Clinical Trails, and the Company
is in process of recruiting patients two additional patient studies for Boling
Clinical Trials. The clinical studies included recruitment for an osteoporosis
study and a rheumatoid arthritis study. The Company's best results in the
recruitment of patients for these two studies came from a targeted mail program
directed to an older age group, in zip codes adjacent to Boling Clinical Trials.
The Company evaluated two different postcard recruitment initiatives, they are:
a) Through a mailing of ten thousand postcards per month for a three month
period, which commenced on July 11, 2002, for a total of 30,000 postcards,
the Boling Clinic received appointment calls from approximately 150 patients
per month. These patients were initially interviewed over the telephone
by the staff of Boling Clinical Trials. They invited approximately 100 of
these patients into their offices for a screening test, approximately 9
patients qualified for the study, and approximately 6 patients were
ultimately enrolled in a clinical trial during a three month period.
The cost to enroll these 6 patients was $8,850 or $1,475 per patient
enrolled.
b) The second initiative was a scaled-up version of the first initiative.
Through a mailing of thirty thousand postcard mailings, per month, over a
three month period, which commenced on August 23, 2002, for a total of
90,000 postcards, the Boling Clinic received appointment calls from
approximately 450 patients per month. These patients were initially
interviewed over the telephone by the staff of Boling Clinical Trials.
They invited approximately 300 of these patients in for a screening test,
approximately 27 patients qualified for the study, and approximately 18
patients were ultimately enrolled in a clinical trial during this three
month period. The cost to enroll 18 patients was approximately $26,000
or $1,444 per patient enrolled.
Based on the results of these two postcard mailing initiatives, the end results
per enrolled patient were proportionally the same based on the size of the
mailing. There are no assurances CTAC can duplicate these results for similar
studies conducted by different investigative centers. The Company was
compensated for its efforts with these two initiatives through an oral
understanding it has in place with Boling Clinical Trials. This oral
understanding includes:
a) CTAC and Boling Clinical Trials will work together to recruit patients
for clinical studies conducted by Boling Clinical Trials.
8
b) CTAC bills Boling Clinical Trials 50 percent of the amount of its
estimated invoice for recruitment services, and the balance is due 30
days after the completion of services, for that particular invoice.
This invoice includes any agreed upon hard cost, such as the rental of
mailing labels, printing costs, the cost of a mailing, or newspaper
advertising. The final invoice will include actual costs plus a 20
percent mark-up.
c) Boling Clinical Trials is responsible to hire and pay for additional
personnel. This would include the hiring of two additional technicians
for screening patients, two clerical personnel and one registered nurse
to help screen patients. They are also responsible for paying for an
answering service, which screens initial enrollees and sets appointments.
d) Boling Clinical Trials and the Company agreed to work together to measure
the financial costs of this developmental program to recruit patients for
clinical studies. They agreed to evaluate recruitment for clinical trails
per individual disease state. Initially, they are focusing on osteoporosis
and rheumatoid arthritis patient recruitment. The initial data indicates
that it after a twenty (20) percent mark-up, it costs $1,475 in recruitment
fees per patient enrolled in the clinical study. The measurements are based
on the final costs of the six patients enrolled in the studies.
e) The oral understanding can be cancelled by either party, without notice
or penalties to the party who cancels this agreement.
At this time, until CTAC can further develop its recruitment programs, the
Company does not plan into enter into a formal written agreement with Boling
Clinical Trials. It should be noted that Dr. Eugene Boling, who is the head
of Boling Clinical Trials is a director of CTAC.
The purpose of this development period is to help the company establish a
cost effective business model which it can duplicate and market its services
at other research centers. According to Dr. Boling, of Boling Clinical
Trials, they paid CTAC approximately $8,850 to recruit six (6) patients per
study during one month, this equates to a 20% mark-up cost of $1,475 per
enrolled patient. This development period includes:
a) Establish what a physician researcher is willing to pay to recruit a
particular patient type for a clinical study. For example, based on the
disease state to be studied, what is a physician researcher willing to pay
to recruit a patient with diabetes versus osteoporosis versus
osteoarthritis? Management recognizes that certain disease states would
be difficult to recruit patients, e.g. Crohn's disease, AIDS patients,
heart disease. In these cases, the patients would most likely be unwilling
to forego their present treatment regimen, to participate in a study. For
this reason, management plans to be selective in the types of studies the
Company would undertake recruitment activities.
9
(Note: There are no clear payment schedules for patient recruitment
services. Some clinical researchers, such as Boling Clinical Trials, have
advanced payments to recruitment companies for standard services to be
rendered, e.g., newspaper and radio advertising, without any guarantees
of results. These payment advances come from their own pockets, rather
than sponsoring pharmaceutical Company. Other clinical researchers, wait
until they receive an advance from the sponsoring pharmaceutical company
before they spend any monies on patient recruitment. Based on past
recruitment costs from Boling Clinical Trials, recruitment costs
can account for one-third of the total budget for a clinical trial.)
b) Determine what are the best services to recruit patients versus advertising
dollars to be spent, e.g., newspaper advertising, radio advertising, mail
flyers, contacting church and social groups.
c) Determine the amount of time it will take to recruit patients for these
clinical studies based on their particular disease states.
d) Determine a dollar value to recruit patients by disease types, based on
geographic and demographic data. For example, it is more or less costly to
recruit patients with diabetes versus osteoporosis versus other disease
states.
e) Develop of cost versus revenue model for each of these disease states to
determine which patient studies offer the greatest return for the Company
to pursue.
The Company will use this model to market its services. In addition, if the
Company can establish a successful model, management plans to attend trade
shows and conventions to market its services and keep abreast of new
opportunities.
Since CTAC has begun its recruiting activities, the average cost, to recruit
patients for Boling Clinical Trials has been $1,475 per enrolled patient. These
figures include a twenty (20)percent mark-up fee the Company charges Boling
Clinical Trails. This mark-up fee does not include the cost of any salaries.
The Company has yet to determine additional mark-ups to cover the costs of
salaries. This cost is based a targeted postcard mail program directed to an
older age group, in zip codes adjacent to Boling Clinical Trials. The data is
based on a three month postcard mailing program of 30,000 mailings per month for
a total of 90,000 mailings. The results of this postcard program has enrolled,
on average, six (6) patients per month at a 20% mark-up cost of $8,850 ($1,475
times 6 patients) per month versus Boling's historic patient recruitment costs
of $2,950 per enrolled patient. The historic $2,950 cost includes mark-ups paid
by Boling Clinical Trials, which includes salary costs paid to a third party
recruiting company. These patient recruitment costs do not include the costs
incurred by Boling Clinical Trials in screening potential patients. During this
developmental stage, as of December 31, 2002, CTAC has received $7,200 from
Boling Clinical Trials for its hard costs, which includes postcard printing and
postage. There are no assurances CTAC can duplicate these results for similar
studies conducted by different investigative centers.
10
The Pharmaceutical Industry
---------------------------
Before a new pharmaceutical or biotechnology product can be marketed in the
United States, it must undergo extensive testing and regulatory review to
determine its relative safety and effectiveness. Companies seeking approval
of these products are responsible for performing and analyzing the results
of preclinical and multi-phase clinical trials. Preclinical trials can last
for up to three years and involve animal testing and laboratory analysis to
determine the basic biological activity and safety of the product. Upon
successful completion of the preclinical phase, the product undergoes a
series of clinical tests in humans, this includes healthy volunteers as well
as patients with the specific disease. Clinical trials generally take longer
to perform than preclinical trials, typically lasting five to seven years.
in the United States, preclinical and clinical testing must comply with the
requirements of Good Clinical Practices and other standards promulgated by
the Food and Drug Administration, or the FDA, and other federal and state
governmental authorities. The FDA defines Good Clinical Practices as
"a standard for the design, conduct, performance, monitoring, auditing,
recording, analyses, and reporting of clinical trials that provides
assurance that the data and reported results are credible and accurate and
that the rights, integrity, and confidentiality of trial subjects are
protected."
According to clinical trials data provided by the National Institutes of Health
website, at www.clinicaltrials.gov, they list approximately 7,000 on-going
clinical studies, with approximate enrollment of 200 patients per study being
conducted throughout the United States. These clinical studies are sponsored
by the National Institutes of Health, other federal agencies, and the
pharmaceutical industry.
Clinical trials often represent the most expensive and time-consuming part
of the overall drug development process. The information generated during
these trials is critical for gaining marketing approval from the FDA or other
regulatory agencies. After the successful completion of Phase III trials, the
sponsor of a new drug must submit a New Drug Application ("NDA") to the FDA.
The NDA is a comprehensive filing that includes, among other things, the
results of all preclinical and clinical studies, information about the drug's
composition and the sponsor's plans for producing, packaging and labeling the
drug. Most of the clinical data contained in an NDA is generated during the
Phase II and III trials. The FDA's review of an NDA can last from several
months to several years, with the average review lasting two years. Drugs that
successfully complete this review may be marketed in the United States, subject
to the conditions imposed by the FDA in its approval.
Pharmaceutical and biotechnology companies face increased pressure to bring
new drugs to market in the shortest possible time, thereby reducing costs,
maintaining market share and accelerating realization of revenue. Currently,
total development of a new drug takes approximately eight to twelve years, a
significant portion of a drug's twenty year period for protection under
United States patent laws. Certain pharmaceutical companies have initiated
11
plans to reduce this time to approximately five to seven years. Pharmaceutical
and biotechnology companies are attempting to increase the speed of new product
development, and thereby maximize the period of marketing exclusivity and
economic returns for their products, by outsourcing development activities.
The clinical research process generally has been inefficient and costly for
sponsors, requiring the expenditure of considerable resources and efforts
associated with study start-up, meeting enrollment quotas and collecting
complete and consistent data. Historically, sponsors have had to identify
and negotiate contracts and study budgets with numerous geographically
dispersed clinical research investigators, a process which impedes quick
study start-up. These clinical trials are generally reviewed and approved
by an independent institutional review board ("IRB") for each research site
participating in a study. There is a separate IRB for each ongoing clinical
trial.
The IRB has been established to assure the protection of all human subjects
in research projects. In accordance with U. S. Department of Health and Human
Services Regulations for Protection of Human Subjects (45 CFR 46), an
institutional review board committee, composed of members from a variety of
scientific disciplines as well as community members, assists investigators in
the protection of the rights and welfare of human subjects. The IRB also
serves to facilitate valuable human subject research as well as protect the
investigator and the institution through a comprehensive review process. All
human research projects must be reviewed and approved by the IRB prior to
initiation and then conducted in full compliance with the IRB guidelines
established by U. S. Department of Health and Human Services.
The clinical research industry is driven by the need of the pharmaceutical
and biotechnology companies to produce new drugs at low costs while at the
same time maintaining compliance with governmental regulations principally
imposed by the FDA. Competition and the increasing pressure to control
costs are forcing pharmaceutical and biotechnology companies to become more
efficient in developing new drugs. The pharmaceutical and biotechnology
companies are actively seeking improved ways to save time in the clinical
development process in order to bring products to market faster. The benefit
in bringing their products to the market faster, helps these companies
recover their research and development costs and achieve higher prices on
their patented products before they lose their patent protection and
generics enter the market. In an effort to save time and cut costs,
physician researchers are outsourcing certain aspects of the clinical
research process to third parties, including research networks.
It is the burden of the Clinical Investigators to obtain IRB approval for
post card designs and related flyers designed by Clinical Trials Assistance
Corporation to be used in patient recruitment.
12
The IRB is required to apply institutional rules, federal, state laws and
regulation in reviewing study protocols, evaluating risks and benefits,
ensuring the selection of subjects is equitable, monitoring the data collected
to ensure the safety of subjects, protecting the privacy of subjects and to
maintain the confidentiality of files. During their regularly scheduled board
meetings, they also review and approve brochures, advertisements post card
designs and related flyers to ensure compliance with the study protocol. CTAC
will present post card designs and related flyers to the Clinical Investigators,
who will present these materials to the IRB for approval. The Company will not
interact directly with the IRB. This is the requirement CTAC with regards to
IRB approval.
Investigative Sites
-------------------
The investigative site industry includes all of the clinical investigators
who enroll patients in clinical trials and collect information at the patient
level for pharmaceutical and biotechnology companies and contract research
organizations ("CRO"). The investigative site industry is facing significant
cost reduction pressures as a result of the pressures on pharmaceutical and
biotechnology companies to reduce costs and the amount of time required to
bring a drug to market. As a result of increased pressures, pharmaceutical
and biotechnology companies who need to conduct clinical research have reduced
their use of academic medical centers for clinical studies and have increased
their use of private practice research sites. In many instances, private
practice physician sites can provide greater access to patients and the
ability to conduct trials more rapidly and efficiently than academia. In
addition, participation in clinical trials by private physicians has increased
as healthcare providers discover that they are able to offer patients access
to more advanced therapies and the opportunity to receive free or reduced-cost
medical care.
CTAC plans to assist the investigative sites, with planning and coordinating
the patient recruitment of independent clinical trials on drugs for
pharmaceutical and biotechnology companies. By assisting these investigative
sites in patient recruitment, and helping them identify and enroll patients
in the early stages of their clinical studies, the Company plans to
facilitate faster study start-up. It is not uncommon for an investigate site
to undertake a clinical study project, and not begin their patient recruitment
efforts for six months after the study is scheduled to begin. CTAC by assisting
physician researches in recruiting patients for their studies, at the outset of
the study, plans to help will be helping the pharmaceutical and biotechnology
companies conducting clinical trials to complete the clinical research process
efficiently and cost effectively, by saving them time in completing these
studies. According to Boling Clinical Trials, based on historical data,
compiled by Boling Clinical Trials, the costs to conduct a clinical trial
research project for an osteoporosis and rheumatoid arthritis study it can cost,
on average, $500,000 per study, of which one-third ($166,000) of these funds are
used to recruit approximately 57 patients for each study. Initial cost data
from CTAC results and Boling Clinical Trials indicates that it costs the Company
13
$1,475 after mark-up charges, in recruitment fees per patient enrolled in a
similar osteoporosis and rheumatoid arthritis clinical study versus $2,950 paid
in recruitment fees per enrolled patient for similar studies conducted in the
past. When monies are spent on recruiting patients for a clinical trial, it can
take a year just to recruit patients for a study and there are no guarantees
that advertising methodologies used will bring in any patients for trial
evaluation. If CTAC can develop a cost-effective methodology to recruit
patients, it could reduce the time and money spent on recruiting patients. A
cost-effective methodology benefits the investigate site.
The investigative sites typically perform the clinical trials, focusing on
Phases II through IV of the drug development process. The clinical
research portion of the drug development process involves selection of
investigative sites to conduct the trials. The physician researchers are
responsible for the actual conduct of the trials and the gathering and
completion of the data generated during the trials. CTAC solely assists these
sites by helping them find patients, who are subsequently screen by these
physician recruiters who are in the process of conducting research studies.
The physician researchers are responsible to determine whether or not these
patients should be enrolled in their studies, based on the criteria of the
study protocols.
In conducting these studies, the investigative sites administer medical
evaluations, healthcare procedures and study medications to patients in
accordance with the protocol under the direction of a qualified principal
investigator. A "qualified principal investigator" has been approved by both
the FDA and sponsoring pharmaceutical/biotechnology company to conduct
human clinical trials.
A "qualified principal investigator" requires sufficient knowledge, scientific
training, a medical degree and accreditation as evidenced by their credentials,
to conduct clinical studies to investigate the effectiveness and in-use safety
of investigational products in conducting clinical trials on human patients.
The qualified principal investigator needs to be familiar with the background
and requirement of the study before taking receipt of the investigational
product. The qualified principal investigator is responsible for all aspects
of the conduct of the study. This would include: the dispensing and the
administration of the investigational product(s), the implementation of the
study protocol, the collection and reporting of the study data and the
protection of the health and welfare of the personnel and patients involved in
the study. The qualified principal investigator is employed by the sponsor or
a contract research organization. The investigator may be assisted by trained
technical assistants in collecting, recording and the subsequent processing of
data.
Clinical Trials Assistance Corporation plans to focus it patient recruitment
activities with investigative sites that are owned by private practice
physicians. The size of the private physician practices range from one
physician to approximately twenty physicians. Typically, management expects
the investigative sites in its network will consist of two to four partners
in a private practice medical office.
14
Marketing Strategies
--------------------
CTAC also plans to assist pharmaceutical and biotechnology companies in
developing and implementing patient recruitment programs to speed completion
of these studies. These services would include the development and
implementation of advertising programs, public service announcements and other
tools to assist sites in finding and enrolling suitable patients into studies.
These can include, but not limited to newspaper, radio, television, senior
centers, churches, social clubs, and ethnic groups. The Company is
investigating the utilization and subcontracting of a phone room as a tool
to help the clinical investigators screen patients and set appointments. These
phone rooms are third-party services with multiple clients who outsource their
services. The management and training of the phone room staff would be the
responsibility of the clinical investigators. These phone rooms would serve as
the answering and screening service for the clinical investigators who are under
staffed. The Company plans to provide the clinical investigators with a list
of phone rooms to outsource these services. The purpose of the phone room is to
hire and train an 24-hour answering service to screen patients and answer basic
questions about the clinical study. They would subsequently set an appointment
for the patient to come into the office for further evaluation. This service
would relieve the investigators staff in screening these initial calls. It was
initially discovered that where investigate offices are understaffed, phone
calls were unanswered and potential study patients did not pursue enrolling in
a clinical study.
The Company plans to contact known physicians who participate in medical
studies and pharmaceutical companies who wish to conduct a pharmaceutical
study. Based on the results of the Company's pilot program development period,
the Company will decide which specific disease states to target, based on the
cost effectiveness to recruit patients. Once this known, the Company will plans
market its services to specific physician who specialize in conducting clinical
trials with these known disease states.
The industry is highly fragmented with many small, limited-service providers
as well as in-house research departments, universities and teaching hospitals,
have substantially greater resources than the Company. However, the Company
believes it has an opportunity to take advantage of the trend toward
outsourcing. Physicians who conduct clinical trials do not have the time or
staff to recruit patients for their studies. They are busy with their own
medical practices and qualifying patients for the clinical studies. They
prefer to outsource the patient recruitment job to a third party. The
Company's strategy is to help facilitate patent enrollment in these
preclinical trials.
CTAC plans to market its patient recruitment services to investigative sites,
so that the physicians at these sites are not encumbered in devoting a greater
percentage of their time in recruiting patients versus attending to their own
practice.
The Company's success is dependent upon its ability to attract and retain high
quality investigative sites and recruit patients for their active studies.
15
Competition
-----------
The clinical research industry is highly fragmented. The Company will primarily
compete with Clinical Research Organizations, other patient recruitment
organizations and private practice research sites who are competing to
recruit the same patient based in Southern California. The majority of these
private practice research sites are single sites. CTAC will also compete with
hospitals and academic medical centers and site management organizations
("SMO"), who recruit patients for their clinical studies. No single
competitor or group of competitors has a substantial presence in the recruitment
of patients for clinical trials. All of the Company's competitors, who recruit
patients, have greater financial resources and name recognition, greater
experience in specific diseases and conditions and larger medical specialist
networks than Clinical Trials Assistance Corporation.
CTAC has little experience in competing favorably in most of these areas,
there are no assurances that the Company will be able to respond to these
pressures or changes. Further, there are no significant barriers to entry
into the recruitment of patients for clinical trials. A better funded company
with knowledge of the industry could capture any potential business from CTAC.
(iii) Risk Factors
a) LIMITED OPERATING HISTORY AND DEVELOPMENT PERIOD MAKES POTENTIAL
DIFFICULT TO ASSESS.
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The Company was incorporated in the State of Nevada on April 22, 2002 (Nevada
File Number: C9967-20). As of the date of this document, the Company has
developed a business plan, established administrative offices and an operating
facility in Vista, California and begun the process of testing its model
for recruiting patients for human pharmaceutical research studies. During the
development period, the company hopes to evaluate methodologies to recruit
patients in a timely, cost effective basis for investigative clinical
research centers. There are no assurances the company will be able to identify
efficient and cost effective methodologies to recruit patients during this
development period. Failure to find effective patient recruitment
methodologies can have an adverse effect on the Company's future.
The Company has limited operating history and must be considered to be
a developmental stage company. Prospective investors should be aware of the
difficulties encountered by such new enterprises, as the Company faces all of
the risks inherent in any new business and especially with a developmental
stage company. The likelihood of success of the Company must be considered
in light of these problems, expenses that are frequently incurred in the
operation of a new business and the competitive environment in which the
Company will operate.
16
b) EVENTUAL NEED FOR ADDITIONAL CAPITAL TO REMAIN A GOING CONCERN.
---------------------------------------------------------------
As of September, 2002, the Company initiated a 504 Offering and was able to
generate enough working capital to implement plans for the first year of its
operations. However, management believes the Company will need $50,000-
$75,000 of additional capital in order to expand its operations, provided it
can create a successful business model. Management believes the Company
will need $50,000-$75,000 reserve of capital from which to draw in order to
expand its operations and identify customer bases of physician researchers,
outside of Southern California. These funds would be use to hire and train
staff on how to duplicate the business model in other areas of the country.
The funds would also be used to duplicate the Company's database for other
geographic areas. This need for additional funds will be derived from any
future revenues and earnings the Company might generate, further management
believes the majority of funding will be received from future private placement
stock offerings pursuant to Regulation "D" Rule 505 or 506. Without this
funding, the Company might exhaust all of its cash reserves to remain as a
Going Concern.
c) ISSUANCE OF STOCK TO FUND THE COMPANY MAY DILUTE YOUR INVESTMENT AND
REDUCE YOUR EQUITY INTEREST IN THE COMPANY.
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It is likely that the Company will issue additional shares of common stock or
preferred stock to expand operations. The proceeds of any offering will
be used for the operations of the business. This would include, but not
limited to hiring additional personnel, upgrading demographic data bases, and
the development of marketing materials to attract new business. The
consequences may be a significant dilution to shareholders' investment, and a
material decrease in shareholders' equity interest in the company. Since CTAC
has not made any determination with respect to new equity funding, management
cannot speculate on the amount of securities which CTAC might issue. At its
sole discretion, the board of directors may issue additional company
securities without seeking shareholder approval. These future offerings could
significantly dilute the value of any previous investor's investment value.
d) OPERATING LOSSES, NEGATIVE CASH FLOW FROM OPERATIONS LIKELY FOR
FORESEEABLE FUTURE.
---------------------------------------------------------------
In its initial operating period from April 22, 2002 (date of inception)
through September 30, 2002, the Company incurred an operating net loss of
$12,767 and a negative cash flow of $26,767 from operations. From the
period April 22, 2002 (date of inception) through December 31, 2002, the
Company incurred an operating net loss of $28,691 and a negative cash flow
of $19,091 from operations. There is no guarantee that the Company will ever
be able to operate profitably or derive any significant revenues from its
operation. The Company could be required to raise additional $50,000-$75,000
through a Regulation D, 505 or 506 Offering to expand its business plan to
other markets.
17
e) COMPANY MAY FAIL TO CONVINCE ENOUGH CUSTOMERS TO USE ITS SERVICES.
------------------------------------------------------------------
The Company's plans to establish a patient recruitment business with a
primary emphasis in Southern California with physician researchers. Despite
contacts and a referral base from the Company's management, if CTAC cannot
establish itself as an effective business in its home market CTAC will not
be able to expand its business plan regionally or subsequently nationally.
There can be no assurances that its market acceptance will be forthcoming.
f) THE COMPANY IS DEPENDENT ON ONE KEY OFFICER TO DEVELOP AND IMPLEMENT ITS
BUSINESS PLAN.
------------------------------------------------------------------------
The Company plans to rely heavily on the expertise from its sole officer,
Mr. Kamill Rohny, who has knowledge of the pharmaceutical industry. Should
the Company be deprived of the services of its sole officer for any reason
during this period of initial and expansion, the results would be devastating
to the Company and could lead to its dissolution. Although this sole officer
has had experience in helping physician researchers in the past recruit
patients, he cannot be sure that this business model will be successful in
other markets. For example, the Company may be unable to train other personnel
on how to develop another market to recruit patients for clinical studies.
Future operating results would be adversely affected if the Company is unable
to expand its operations. The Company does not have an employment agreement
with Mr. Rohny and Mr. Rohny is engaged in other business activities which
may detract his attention from the Company.
g) THE COMPANY'S MANAGEMENT HAS LITTLE EXPERIENCE IN PROVIDING PATIENT
RECRUITMENT SERVICES
-----------------------------------------------------------------------
Our sole officer/director, Kamill Rohny, has limited business experience in
providing patient recruitment services for clinical studies. As such, the
business model and methodologies he develops may be unsuccessful. As a
consequence, failure to identify effective patient recruitment methodologies
and build a customer base can have an adverse effect on the Company's future.
h) THERE IS A LACK OF INFORMATION ON THE DOLLARS SPENT BY THE
PHARMAECEUTICAL INDUSTRY FOR CLINICAL TRIALS AND PATIENT RECRUITING.
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The majority of the company's expected revenue is expected to be derived
from pharmaceutical spending in clinical research projects. Pharmaceutical
companies generally do not break down their expenses relating to patient
recruitment. As such, it is difficult to collect data on pharmaceutical
spending for clinical trials and patient recruitment. Therefore, there are
no spending trends to evaluate. This means the Company could be facing
declines in pharmaceutical research spending without the knowledge this is
taking place. Any event that results in decreased pharmaceutical research
would likely have a negative effect on the Company's operating results.
18
i) PLANS FOR EXPANSION MAY BE UNREALISTIC BASED ON UNPROVEN BUSINESS MODEL.
------------------------------------------------------------------------
The management of Clinical Trials Assistance Corporation has confidence in its
vision for the Company and believes that in time, if the Company can create
a successful business model, the Company may wish to expand its clinical
trials recruitment business to other geographic area. However the fact that
the Company has not developed a successful business model is indicative of the
strong possibility that the difficulties and challenges in creating such a
company are too great to be overcome. Other companies, pursing this market
have had such a vision and have been unsuccessful in their attempts to realize
it. Potential investors should carefully consider the possibility that the
Company's plans to expand may not be realistic and could ultimately prove to
be unworkable.
j) PATIENT RECRUITMENT MAY INFRINGE ON PRIVACY CONCERNS.
-----------------------------------------------------
The Company collects and utilizes data derived from various sources to recruit
patients for clinical studies. The Company has access to names and addresses
of potential patients who may participate in these studies. This subjects the
Company to knowledge of what studies are taking place, and who may be
participating in these studies. In order to deliver a targeted mail program,
the Company compiles specific demographic information. This information needs
to be protected to circumvent privacy concerns. The information keyed to a
specific disease state could inadvertently fall into the wrong hands without
the consent of the patient.
Due to privacy concerns, the company must take steps to ensure patient lists
remain confidential. There can be no assurance that any protection will be
available for such data or that others will not claim rights to such data.
k) GOVERNMENT REGULATION COULD UNDERMINE THE COMPANY'S PROFITABILITY.
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Though the Company plans on obtaining all required federal and state
permits, licenses, and bonds to operate its facilities, there can be no
assurance that the Company's operation and profitability will not be subject
to more restrictive regulation. The services Clinical Trials Assistance
Corporation plans to provide are subject to various federal regulations.
For example, it is the burden of the Clinical Investigators to obtain
Independent Review Board approval for post card designs and related flyers
by Clinical Trials Assistance Corporation to be used in patient recruitment.
(See Independent Review Board Section under "The Pharmaceutical Industry.")
19
l) SHARES SUBJECT TO RULE 144, IF SOLD COULD HAVE A MATERIAL NEGATIVE
IMPACT UPON THE MARKET PRICE OF THE COMPANY'S SHARES.
------------------------------------------------------------------
On December 31, 2002, the Company had 10,000,000 Common Shares issued and
outstanding that have not been registered with the Commission or any State
securities agency and which are currently restricted pursuant to Rule 144
promulgated by the Commission under the 1933 Act. Rule 144 provides,
in essence, that a person holding restricted securities for two years from the
date the securities were purchased from the issuer, or an affiliate of the
issuer, and fully paid, may sell limited quantities of the securities to the
public without registration, provided there shall be certain public
information with respect to the issuer. Pursuant to Rule 144, securities
held by non-affiliates for more than three years may generally be sold
without reference to the current public information or broker transaction
requirements, or the volume limitations. None of the current outstanding
restricted shares are available for resale pursuant to Rule 144. The sale of
some or all of the currently restricted Common Shares could have a material
negative impact upon the market price of the Common Shares if a market for
the Common Shares should develop in the future. (See "PRINCIPAL STOCKHOLDERS")
m) RISKS ASSOCIATED WITH ACQUISITIONS MAY NOT BENEFIT THE COMPANY AND
DILUTE THE VALUE OF THE COMPANY'S SHARES.
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If appropriate opportunities present themselves, the Company would acquire
businesses, technologies, or service(s) that the Company believes are
strategic and would help it to expand its operations and/or future customer
base.
The Company currently has no understandings, commitments or agreements with
respect to any other material acquisition and no other material acquisition
is currently being pursued. There can be no assurance that the Company will
be able to identify, negotiate or finance future acquisitions successfully, or
to integrate such acquisitions with its current business. The process of
integrating an acquired business, technology, service or product(s) into the
Company may result in unforeseen operating difficulties and expenditures and
may absorb significant management attention that would otherwise be available
for ongoing development of the Company's business. Further, there can be no
assurance that the anticipated benefits of any acquisition will be realized.
Future acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or amortization
expenses related to goodwill and other intangible assets, which could
materially adversely affect the Company's business, results of operations and
financial condition. Any future acquisitions of other businesses, technologies,
services or product(s) might require the Company to obtain additional equity or
debt financing, which might not be available on terms favorable to the Company,
or at all, and such financing, if available, might be dilutive.
20
n) NO MARKET EXISTS FOR THE COMPANY'S STOCK WHICH MAKES IT DIFFICULT TO
FIND A BUYER FOR THE COMPANY'S STOCK.
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There is currently no established public trading market for Clinical Trails
Assistance Corporation securities. A trading market in the Company's securities
may never develop or, if developed, it may not be able to be sustained. If for
any reason Clinical Trials Assistance Corporation's common stock is not listed
on the OTC Bulletin Board or a public trading market does not otherwise develop,
purchasers of the shares may have difficulty selling their common stock should
they desire to do so. Various factors, such as the Company's operating results,
changes in laws, rules or regulations, general market fluctuations, and other
factors may have a significant impact on the market price of Clinical Trials
Assistance Corporation's securities.
o) LOW-PRICED STOCKS MAY AFFECT THE RESELL THE COMPANY'S SHARES.
-------------------------------------------------------------
Penny Stock Regulation Broker-dealer practices in connection with transactions
in "Penny Stocks" are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system). The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the risk associated
with the penny stock market. The broker-dealer must also provide the customer
with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer must make a written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. When the Registration Statement becomes effective and the
Company's securities become registered, the stock will likely have a trading
price of less than $5.00 per share and will not be traded on any exchanges.
Therefore, the Company's stock is initially selling at $0.01 per share they will
become subject to the penny stock rules and investors may find it more difficult
to sell their securities, should they desire to do so.
p) RISKS ASSOCIATED WITH INFRINGEMENT OF INTELLECTUAL PROPERTY.
------------------------------------------------------------
If the Company is successful in developing materials from its evaluation program
which demonstrates above average results in recruiting patients, the Company is
subject to intellectual property infringement from its competition. Likewise,
the competitors in the industry, hold their recruiting methods highly
confidential. The more widely the Company employs any methods which are
successful, the more likely these methods become vulnerable to duplication by
other recruiting centers. The are no assurances that the Company will be able
to protect, even if it copyrights its recruiting methodologies, from the
competition.
21
(iv) Customers
The Company has yet to establish a customer base of physician researchers.
There are no assurances that the Company will be able to offer its services
that would attract future customers from its competition.
(v) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements, or Labor Contracts
The Company regards substantial elements of its future and underlying
infrastructure and technology as proprietary and attempts to protect them
by relying on trademark, service mark, copyright and trade secret laws and
restrictions on disclosure and transferring title and other methods. This
would include the methodologies the Company develops to recruit patients for
clinical studies. The Company plans to enter into confidentiality agreements
with its future physician researchers and employees. Despite these precautions,
it may be possible for a third party to copy or otherwise obtain and use the
Company's proprietary information without authorization or to develop similar
technology independently. Legal standards relating to the validity,
enforceability and scope of protection of certain proprietary rights in the
clinical trials business may be uncertain, and no assurance can be given as
to the future viability or value of any of the Company's proprietary rights.
This can be no assurance that the steps taken by the Company will prevent
misappropriation or infringement of its proprietary information, which could
have a material adverse effect on the Company's business, results of operations
and financial condition.
(vi) Employees
As of December 31, 2002, the Company currently has one (1) employee who is the
Company's President and Chief Executive Officer. In order to implement its
business plan of the Company, management recognizes that additional staff may
be required.
No assurances can be given that the Company will be able to find suitable
employees that can support the future needs of the Company or that these
employees can be hired on terms favorable to the Company.
Item 2. Management's Discussion and Analysis or Plan of Operation
A. Management's Plan of Operation
(i) In its initial operating period from April 22, 2002 (date of inception)
through September 30, 2002, the Company incurred an operating net loss of
$12,767 and a negative cash flow of $26,767 from operations. From the
period April 22, 2002 (date of inception) through December 31, 2002, the
Company generated $7,200 in revenues, and incurred an operating net loss of
$28,691 and a negative cash flow of $19,091 from operations. The majority of
these costs were State incorporation fees, accounting costs, business license
fees, legal fees and the rental of mailing lists for of patient databases.
Clinical Trials Assistance Corporation has yet to receive any positive net
income from operations.
22
Management wants to develop a fee structure for its services based on results
versus effort made. In other words, the Company cannot be held responsible for
the number of patients enrolled in a study, and the enrollment screening process
in controlled by the investigative physician. The Company believes it should be
compensated for the number of patients it can generate to call the research
center for a screening appointment. The other patient recruiters charge
investigative research centers for an advertising campaign. They receive a
flat fee for advertising, and no incentive as to whether or not they recruit
one or one hundred patients for appointment screening. By establishing a fee
structure based on patient inquiry results, the Company plans to set
itself apart from its competition. The Company has yet to determine a fee
schedule for results produced. According to Boling Clinical Trials, based on
historical data compiled by Boling Clinical Trials, the costs to conduct a
clinical trial research project for an osteoporosis and rheumatoid arthritis
study it can cost, on average, $500,000 per study, of which one-third ($166,000)
of these funds are used to recruit approximately 57 patients for each study.
Initial cost data from CTAC and Boling Clinical Trials indicates that it costs
$1,475 after a twenty percent mark-up, in recruitment fees per patient enrolled
in a similar osteoporosis and rheumatoid arthritis clinical study versus
Boling's historic patient recruitment costs of $2,950 per enrolled patient.
The $1,475 fee does not include the cost of any CTAC salaries, whereas the
$2,950 fee does include the cost of salaries. The Company has yet to determine
additional mark-ups to cover the costs of salaries. These patient recruitment
costs do not include the costs incurred by Boling Clinical Trials in screening
potential patients. There are no assurances CTAC can duplicate these results
for similar studies conducted by different investigative centers. Management
believes it can currently handle a work capacity of ten studies per year. Based
on the costs of advertising, developing data bases, and mailing flyers to these
data bases, management expects its hard costs of services to represent
approximately forty percent of revenues generated.
The major components to expenses faced by the company in its day to day
operations includes auditor fees, legal fees, developing databases of potential
patients, based on demographic information, and general administrative expenses.
If the Company becomes profitable, the company will access salaries and
adding additional personnel to the payroll. Management intends to continue
minimize costs until such a time in its discretion it believes expansion would
be prudent. One element in making this determination is positive cash flow on
a quarterly basis. If or when the company is successful in achieving this
quarterly positive cash flow, it is likely that the company will consider
expanding its personnel which will increase costs.
In April of 2002, one (1) founding shareholder purchased 10,000,000 shares
of the Company's authorized treasury stock for cash totaling $10,000. This
original stock offering was made pursuant to Nevada Revised Statues Chapter
90.490. Additionally, in September of 2002, the Company completed an offering
of two million (2,000,000) shares of the Common Stock of the Company to
approximately forty-six (46) unaffiliated shareholders, which resulted in
$20,000 to the company. This offering was made in reliance upon an
exemption from the registration provisions of Section 4(2) of the Securities
Act of 1933, as amended, pursuant to Regulation D, Rule 504 of the Act. As of
the date of this filing, the Company has twelve million (12,000,000) shares
of its $0.001 par value common voting stock issued and outstanding which are
held by approximately forty-seven (47) shareholders of record. This number
includes the founding shareholder. Management has determined that the
proceeds from the sale of all of the Common Shares sold in the public offering
23
delineated above and revenues the Company hopes to generate will be sufficient
to provide the Company's capital needs for the next twelve (12) months. The
Company currently has no arrangements or commitments for accounts and accounts
receivable financing. There can be no assurance that any such financing can be
obtained or, if obtained, that it will be on reasonable terms.
Additionally, management believes the Company will need to implement the
following before it can fully proceed with its business plan:
a) Management anticipates the Company will incur additional start-up costs
which include but is not limited to: telephone expenses, utilities,
insurance, office expenses, travel expenses, computer expenses, and the
development of customer demographic data bases. To date, the Company has
rented its mailing data bases from a local mailing labeler supplier,
who breaks the mailing labels into zip codes and age groups. The Company
rented these mailing labels from brokers who specialize collecting this
data. The Company plans to rent this information on a Quarterly basis,
when it undertakes a specific recruitment program. The Company has
developed a postcard which has been sent to senior citizens who reside
near the clinical researcher's office. Management still needs to
understand distance a patient will travel to participate in one of these
studies. Management anticipates this phase will take an additional three
months to complete. Management estimates the cost for start-up expenses
between $10,000 and $20,000 for the calendar year.
b) Develop promotional tools to generate new business and new customers.
Management estimates the cost to develop promotional tools could range
between $5,000 to $10,000 depending on graphics, art work, quality of
paper and printing costs. Management anticipates this phase will take
an additional twelve months to complete.
c) Initiate marketing efforts of its recruitment services through the use of
promotional activities. Promotional activities would include contacting
known clinical trials research centers and physician researchers.
Management estimates the cost of advertising could range from $10,000 to
$15,000 based on reach of audience. Management anticipates this phase will
take an additional twelve months to complete.
d) The Company needs to evaluate its patient recruitment strategies with
physician researchers to determine costs, results, efficiencies and
deficiencies. This includes performing a cost analysis on patient
recruitment. It is a time consuming process to analyze the cost versus
potential return on patients who ultimately qualify for patient studies.
Management anticipates this phase will take an additional twelve months
to complete.
The Company has no current commitments or other long-term debt. Additionally,
the Company has and may in the future invest in short-term investments from
time to time. There can be no assurance that these investments will result in
profit or loss.
24
As of December 31, 2002, the Company has generated $7,200 in revenues from its
development period with one physician researcher, Eugene Boling, M.D., Boling
Clinical Trials, Rancho Cucamonga, CA 91730. The Company presented Dr. Boling
with an invoice for expenses it incurred in recruiting patients through a mail
program. Boling Clinical Trials paid the Company for this invoice of $7,200.
The Company does not have any formal agreement in place with Boling Clinical
Trials, as it needs to determine how to structure its fee for recruitment
services. The Company does not expect to generate positive cash flows from
operations until it can further define its it patient recruitment abilities,
and develop a client base. The company believes that it has sufficient
liquidity and cash reserves for the next 12 months. If management can develop
successful patient recruitment methodologies during its development period, in
order to expand its operations beyond Southern California, management believes
it will need to raise approximately $50,000-$75,000. While these expectations
are formulated based upon prudent and conservative presumptions, there can be
no assurance that in fact such projections will indeed come to fruition. The
company does believe however, that by positioning itself as a fully reporting
company with the U.S. Securities and Exchange Commission, it will secure a
more optimal position in the view of the investing public to invest funds in
the Company. As such management believes that it would be more likely to
attract additional investors via potential private placements for additional
capitalization.
It should be noted that any investor investing in a private placement will hold
restricted securities. In order for such investor to sell such securities,
they must register the resale or the investor must have a valid exemption.
Notwithstanding such an assessment, the company is not presently aware of any
specific interest from potential investors, nor is management certain that
such additional private capital will be available or that the company will in
fact be successful in securing additional capital. The raising an additional
$50,000 to $75,000 privately via the issuance of common stock, debt, or hybrid
instruments as of yet not determined. This capital infusion shall be used
mainly for furtherance of the company's business plan to expand its customer
base and enhance its patient recruitment strategies. If the company cannot
succeed in implementing such a strategy, then its prospects for growth are
substantially undermined. There are no guarantees that such financing will
be available to the Company, or if available, will be on terms and conditions
satisfactory to management. If additional financing does not become available
to the Company, Clinical Trials may be forced to terminate it business.
The Company does not have any preliminary agreements or understandings
between the company and its stockholders/officers and directors with
respect to loans or financing to operate the company. The Company
currently has no arrangements or commitments for accounts and accounts
receivable financing. There can be no assurance that any such financing
can be obtained or, if obtained, that it will be on reasonable terms.
There remains no guarantees that other companies might not be working on
similar plans and that some of these may have better funding or more
workable business plans. These could curtail the Company's earning
potential or even force it out of business entirely.
25
(ii) Management believes that the Company's future growth and success
will be largely dependent on its ability to find physician researchers who
need help in recruiting patients for their clinical studies.
(iii) The Company does not expect to purchase or sell any of its
facilities or equipment.
(iv) Management does not anticipate any significant changes in the
number of its employees over the next approximately twelve (12) months.
B. Segment Data
Clinical Trials has only one business segment, therefore, no table showing
percentage breakdown of revenue by business segment or product line is
included.
Item 3. Description of Property
A. Description of Property
The Company's administrative offices/corporate headquarters and operating
facility are located at: 2078 Redwood Crest, Vista, California 92083-7340.
Telephone number: (760) 727-8448. An officer of the Company provides the
Company with 120 square feet of office space. The estimated fair market
value of the office space is valued at $2,400 per year.
B. Investment Policies
The Company does not currently own and the Company has not made any
investments in real estate, including real estate mortgages, and the
Company does not intend to make such investments in the near future.
26
Item 4. Security Ownership of Management and Certain Security Holders
A. The following table sets forth information concerning stock ownership
of (i) each director, (ii) each executive officer, (iii) the directors and
officers of the Company as a group, (iv) and each person known by the
Company to own beneficially more than five percent (5%) of the Common Stock
of the Company. Unless otherwise indicated, the owners have sole voting and
investment power with respect to their respective shares.
Amount
Title Name and Address of shares Percent
of of Beneficial held by Date of
Class Owner of Shares Position Owner Acquired Class
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Common Kamill Rohny Pres./CEO 10,000,000 04/30/02 83.33%
Eugene P. Boling, M.D. Director 0 - -
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All Executive Officers as
a Group (2 persons) 10,000,000 83.33%
(1) c/o Clinical Trials Assistance Corporation, 2078 Redwood Crest, Vista,
California 92083.
B. Persons Sharing Ownership of Control of Shares
Kamill Rohny owns and shares the power to vote ten percent (10%) or more
of the Company's securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
There are no options, warrants or rights to purchase securities of the
Company.
E. Parents of the Issuer
Under the definition of parent, as including any person or business
entity who controls substantially all (more than 80%) of the issuers of
common stock, the Company has no parents.
27
Item 5. Directors, Executive Officers and Significant Employees
A. Directors, Executive Officers and Significant Employees
The names, ages and positions of the Company's directors and executive officers
are as follows:
Name Age Position Appointed
------------ --- --------------------------- ---------
Kamill Rohny 62 Chairman of the Board April, 2002
President, CEO, CFO
Secretary
Eugene P. Boling, M.D. 52 Director Nov., 2002
-----------------------------------------------------------------------------
B. Family relationships
None.
C. Work Experience
Kamill Rohny, Director, President, CEO/CFO, Secretary
-----------------------------------------------------
Kamill Rohny had 32-years of service (December, 1969 through February, 2002)
with Procter & Gamble Pharmaceuticals (formerly known as Norwich Eaton
Pharmaceuticals). He voluntarily retired from the Company in February,
2002.
While at Procter and Gamble Pharmaceuticals, Kamill Rohny was a Regional
Scientific Manager of the Professional Scientific Organization of Procter &
Gamble Pharmaceuticals, leading and executing educational and clinical
research projects, disseminating scientific data to national and regional
physician thought leaders, in one-on-one and group settings. This resulted
in the education of current and future treatment modalities and included
patient recruitment activities.
Key strategies and activities included but were not limited to, working with
clinical research departments in identifying investigators, clinical research
centers, including site assessment and pre-study visits and served as a
conduit for handling independent research proposals.
28
During his last year at Procter and Gamble Pharmaceuticals, Mr. Rohny designed,
tested and implemented a patient recruitment program for people with
osteoporosis that helped participants improve their bone health through self
management. The company implemented his recruitment programs on a national
level. These programs were not offered to physicians by any other
pharmaceutical company. Pharmaceutical companies are in business to sell their
pharmaceutical products through physician prescriptions. This was a patient
recruitment program offered by a pharmaceutical which helped build goodwill and
did not directly sell pharmaceutical products. After Mr. Rohny retired from
Procter and Gamble Pharmaceuticals, his former employer did not actively pursue
patient recruitment programs.
He plans to develop 25-30 hours per week to Clinical Trials Assistance
Corporation ("CTAC").
Eugene P. Boling, M.D., F.A.C.P., F.A.C.R., Director
----------------------------------------------------
Office Address: 8283 Grove Avenue, Suite 203, Rancho Cucamonga, California
91730; Medical License # G57099
Private Practice Physician: Establishment of a single specialty group
rheumatology practice. The practice services an area in Southern California
populated by of 500-600,000 people. Practice employs and is supported by
twelve full time and five part-time personnel (not including the physician).
1986 to present.
Research Practice: Boling Clinical Trials a.k.a. Inland Clinical Research.
1989 to present. Boling Clinical Trials works with approximately fifteen
pharmaceutical and biotechnology companies, in conducting human clinical
trials for pharmaceutical products in their final stages of approval by the
FDA. Dr. Boling is responsible for screening clinical study candidates and
evaluating their response to these treatment modalities. The results of
his work will help determine whether or not a pharmaceutical product offers
any marked patient benefit and its subsequent FDA approval.
Clinical Assistant Professor, Rheumatology Department University of Southern
California/ Los Angeles County Hospital 1987-1994 Clinical Assistant
Professor, Rheumatology Department, Department of Medicine, Loma Linda
University Loma Linda, California 1987-1997.
Military Service: Staff Internist, Malcolm Grow USAF Hospital, Andrew AFB,
Wash. D.C. 1979-1981; Fellowship 1981-1983; Staff Rheumatologist, Malcolm Grow,
USAF Hospital, 1983-1986; Visiting Research Institute, Naval Medical Research
Institute, Bethesda, Maryland, 1983-1986; Acting Director, Malcolm Grow U.S.
Air Force Rheumatology fellowship program, 1983-1986.
29
Education: FELLOWSHIP: Johns Hopkins University, 1981-1983. Baltimore,
Maryland Rheumatology fellowship; RESIDENCY: University of Utah, 1977-1979.
Salt Lake City, Utah. INTERNSHIP: University of Utah, 1976-1977. Bachelor
of Science, University of California at Los Angeles School of Medicine,
1972-1976; M.D. Degree. Loyola University Los Angeles, 1968-1972.
D. Involvement on Certain Material Legal Proceedings During the Last Five
Years
(1) No director, officer, significant employee or consultant has been
convicted in a criminal proceeding, exclusive of traffic violations
or is subject to any pending criminal proceeding.
(2) No bankruptcy petitions have been filed by or against any business or
property of any director, officer, significant employee or consultant
of the Company nor has any bankruptcy petition been filed against a
partnership or business association where these persons were general
partners or executive officers.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or otherwise
limited from involvement in any type of business, securities or
banking activities.
(4) No director, officer or significant employee has been convicted of
violating a federal or state securities or commodities law.
30
Item 6. Executive Compensation
(i) Remuneration of Directors and Executive Officers
Compensation of Executive Officer/Director
Name Title Salary Bonus Common Stock
----------------------------------------------------------------------
Kamill Rohny(1) President/CEO (1) None None
Eugene P. Boling, M.D. Director None None None
All Executive Officers as a Group (2 persons)
(1) An officer of the Company agreed to take no salary until the Company can
generate enough revenues to support salaries on a regular basis. The estimated
fair market value of the services rendered is valued at $12,000 per year.
Total officer compensation expense is $5,000 for the 5 months ended September
30, 2002. The sole officer will not be compensated for services previously
provided, he will only be compensated on a going forward bases at the time until
the Company can generate enough revenues to support salaries on a regular basis.
The Company currently does not have employment agreements with its executive
officers. The executive officer will not draw any salary until the Company can
generate a profit for three consecutive Quarters. Kamill Rohny, is currently
involved in other activities.
(ii) Compensation of Directors
There were no arrangements pursuant to which any director of the Company was
compensated for the period from April 22, 2002 to November 13, 2002 for any
service provided as a director. In addition, no such arrangement is
contemplated for the foreseeable future.
31
Item 7. Interest of Management and Others in Certain Transactions
By Board Resolution, the Company hired the professional services of Beckstead
and Watts, LLP, Certified Public Accountants, 3340 Wynn Road, Suite C,
Las Vegas, NV 89102, Phone: (702) 257-1984. There Certified Public
Accountants were hired to perform audited financials for the Company.
Beckstead and Watts, LLP, own no stock in the Company. The company
has no formal contracts its CPA, who is paid on a fee-for-service basis.
The Company is conducting an evaluation of its recruiting methods at Boling
Clinical Trials, a.k.a. Inland Clinical Research in Rancho Cucamonga,
California. This research facility is owned and operated by Eugene P. Boling,
M.D. who is a Director of the Company. This arrangement benefits both the
Company and Dr. Boling, in that, it helps the Company develop and define its
methodologies for recruiting patients in a real clinical setting; and, it helps
Dr. Boling recruit patients for his clinical studies. Dr. Boling receives
no direct compensation from the Company other than the Company helping him to
recruit patients. Dr. Boling provides the management of the Company with
feedback as to which methodologies work best in recruiting patients during
this developmental program. Once the Company defines its methodologies, and
markets its services to other medical research centers, it will most likely
to continue recruiting patients for Dr. Boling's research clinic to further
refine and develop its recruiting methods.
Because of the Company's development stage nature and its relatively recent
inception, April 22, 2002, the Company has no other relationships or
transactions to disclose.
32
Part II
Item 1. Legal Proceedings
The Company is not currently involved in any legal proceedings nor does it have
knowledge of any threatened litigation.
Item 2. Market Price of and Dividends of the Registrant's Common Equity and
Other Stockholder Matters.
A. Market Information
(1) The common stock of the Company is currently not traded on the OTC
Bulletin Board or any other formal or national securities exchange. There is
no trading market for the Company's Common Stock at present and there has
been no trading market to date. At this time, management has not undertaken
any discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities, but the Company may initiate such discussions in the
future. In addition, being a start-up, there is no fiscal history to disclose.
(2)(i) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the Company's
Common Stock.
(ii) There is currently no common Stock of the Company which could be sold
under Rule 144 under the Securities Act of 1933, as amended, or that the
registrant has agreed to register for sale by the security holders.
(iii) There is currently no common equity that is being or is proposed to be
publicly offered by the registrant, the offering of which could have a material
effect on the market price of the issuer's common equity.
B. Dividends
The Company has never paid or declared any dividend on its Common Stock and
does not anticipate paying cash dividends in the foreseeable future.
C. Holders
As of December 31, 2002, the Company has approximately 47 stockholders of
record.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports containing
audited financial statements and such other periodic reports as the Company
may determine to be appropriate or as may be required by law. Upon the
effectiveness of this Registration Statement, the Company will be required
to comply with periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
33
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the Company is
Holladay Stock Transfer, 2939 North 67th Place, Scottsdale, Arizona,
Phone: 480-481-3940.
Item 3. Recent Sales of Unregistered Securities
On April 30, 2002, the Company issued ten million (10,000,000) shares of
its $0.001 par value Common Stock for cash of $10,000, purchased by Mr.
Kamill Rohny, President and founder of the Company.
On September 10, 2002, Clinical Trials was issued a permit to sell securities
by the State of Nevada, pursuant to our application for registration by
qualification of our offering of Common Stock in that state (See Exhibit 99
"Notice of Effectiveness"). The application for registration by qualification
was filed pursuant to the provisions of NRS 90.490, which requires the public
filing and delivery to investors of a substantive disclosure document before
sale. On September 30, 2002, Clinical Trials completed a private offering of
shares of our common stock pursuant to Regulation D, Rule 504 of the Securities
Act of 1933, as amended, and the registration by qualification of said offering
in the State of Nevada, whereby Clinical Trials sold 2,000,000 shares of Common
Stock for an accumulated total of $20,000 to approximately 46 unaffiliated
shareholders of record, none of whom were or are officers, directors or
affiliates of the Company. The entire offering was conducted exclusively in
the State of Nevada, pursuant to the permit issued by the State of Nevada. The
Company filed an original Form D with the Securities and Exchange Commission on
or about September 30, 2002.
The 46 investors in the Rule 504 offering include the following:
Shares
Shareholders Purchased
------------------------ ----------
1. Arnone, Angela 80,000
2. Arnone, Frank 90,000
3. Artis, Michael 150,000
4. Berger, Shawn 2,500
5. Bishop, Jacquelyn 10,000
6. Bishop, Jamie 10,000
7. Camarena, Enrique 2,500
8. Carlson, Daniel 50,000
9. Colello, Anthony 20,000
10. Corchado, Fe 2,500
11. Corchado, Jesus 2,500
12. Corchado, Liszet 2,500
13. Daniels, Justine 10,000
14. Galanto, Arnold 2,500
34
15. Gropp, Tommy 40,000
16. Guidry, Chad 110,000
17. Hegerty, Patrick 40,000
18. Jarvela, Keith 140,000
19. Kirk, Rose 20,000
20. Mares, Juan 2,500
21. McGrath, Sherrie 60,000
22. Melki, Jean 2,500
23. Moody, Jon 50,000
24. Moroney, Brendan 30,000
25. Mura, Marion 30,000
26. Myestyechkina, Iryna 185,000
27. Narcross, David 25,000
28. Natko, Peter 20,000
29. Palacio, Gene 30,000
30. Perrino, EJ 190,000
31. Pike, Linda 150,000
32. Pike, Branden 60,000
33. Pinney, Aaron 50,000
34. Roth, Shannon 30,000
35. Salazar, Arturo 2,500
36. Salazar, Irma 2,500
37. Serrano, Noe 2,500
38. Sisson, James 10,000
39. Surgeoner, Alicia 2,500
40. Toliver, Seth 50,000
41. Tucker, Albert 2,500
42. Tucker, Sandra 2,500
43. Vasquez-Esparza, Esther 150,000
44. Vitiello, Ralph 10,000
45. Westenfield, Brian 25,000
46. Williams, Laura 40,000
---------
Sub Total: 2,000,000
47. Kamill Rohny, President 10,000,000
TOTALS: 12,000,000
As of December 31, 2002, therefore, the number of common shares issued and
outstanding is twelve million (12,000,000).
35
In addition, this offering was made on a best efforts basis and was not
underwritten. In regards to the September, 2002 offering, listed below are
the requirements set forth under Regulation D, Rule 504 and the facts which
support the availability of Rule 504 to the September, 2002 offering:
a. Exemption. Offers and sales of securities that satisfy the conditions in
paragraph (b) of this Rule 504 by an issuer that is not:
1. subject to the reporting requirements of section 13 or 15(d) of the
Exchange Act;
2. an investment company; or
3. a development stage company that either has no specific business plan or
purpose or has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity or
person, shall be exempt from the provision of section 5 of the Act under
section 3(b) of the Act.
At the time of the September, 2002 offering, Clinical Trials was not subject
to the reporting requirements of section 13 or section 15(d) of the Exchange
Act. Further, the Company is not now, nor at the time of the September,
2002 offering, considered to be an investment company. Finally, since its
inception, the Company has pursued a specific business plan of providing
patient recruitment services to physician researchers in Southern California.
b. Conditions to be met.
1. General Conditions. To qualify for exemption under this Rule 504, offers
and sales must satisfy the terms and conditions of Rule 501 and Rule 502 (a),
(c) and (d), except that the provisions of Rule 502 (c) and (d) will not
apply to offers and sales of securities under this Rule 504 that are made:
i. Exclusively in one or more states that provide for the registration of
the securities, and require the public filing and delivery to investors of a
substantive disclosure document before sale, and are made in accordance with
those state provisions;
ii. In one or more states that have no provision for the registration of the
securities or the public filing or delivery of a disclosure document before
sale, if the securities have been registered in at least one state that
provides for such registration, public filing and delivery before sale, offers
and sales are made in that state in accordance with such provisions, and the
disclosure document is delivered before sale to all purchasers (including
those in the states that have no such procedure); or
iii. Exclusively according to state law exemptions from registration that
permit general solicitation and general advertising so long as sales are made
only to "accredited investors" as defined in Rule 501(a). Clinical Trials was
issued a permit to sell securities by the State of Nevada, pursuant to our
application for registration by qualification of our offering of Common Stock
in Nevada.
36
2. The aggregate offering price for an offering of securities under this Rule
504, as defined in Rule 501(c), shall not exceed $1,000,000, less the
aggregate offering price for all securities sold within the twelve months
before the start of and during the offering of securities under this Rule 504,
in reliance on any exemption under section 3(b), or in violation of section
5(a) of the Securities Act.
Item 4. Description of Securities
A. Common Stock
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - The holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefore at
such times and in such amounts as the Board of Directors of the Company may
from time to time determine. The board of directors of the Company will
review its dividend policy from time to time to determine the desirability
and feasibility of paying dividends after giving consideration the Company's
earnings, financial condition, capital requirements and such other factors
as the board may deem relevant.
ii. Voting Rights - Each holder of the Company's common stock are entitled
to one vote for each share held of record on all matters submitted to the
vote of stockholders, including the election of directors. All voting is
noncumulative, which means that the holder of fifty percent (50%) of the
shares voting for the election of the directors can elect all the directors.
The board of directors may issue shares for consideration of previously
authorized but unissued common stock without future stockholder action.
iii. Liquidation Rights - Upon liquidation, the holders of the common stock
are entitled to receive pro rata all of the assets of the Company available
for distribution to such holders.
iv. Preemptive Rights - Holders of common stock are not entitled to
preemptive rights.
v. Conversion Rights - No shares of common stock are currently subject to
outstanding options, warrants, or other convertible securities.
vi. Redemption rights - no such rights exist for shares of common stock.
vii. Sinking Fund Provisions - No sinking fund provisions exist.
viii. Further Liability For Calls - No shares of common stock are subject
to further call or assessment by the issuer. The Company has not issued
stock options as of the date of this registration statement.
(2) Potential Liabilities of Common Stockholders to State and Local
Authorities
37
No material potential liabilities are anticipated to be imposed on stock-
holders under state statutes. Certain Nevada regulations, however, require
regulation of beneficial owners of more than 5% of the voting securities.
Stockholders that fall into this category, therefore, may be subject to
fines in circumstances where non-compliance with these regulations are
established.
B. Preferred Stock
The authorized preferred stock of the corporation consists of 5,000,000
shares with a par value of $0.001 per share.
Two million (2,000,000) authorized Series A Preferred Shares with a par value
of $0.001 and such other terms as determined by the board of Directors of the
corporation prior to their issuance. Each Series A Preferred Share shall have
voting rights and shall carry a voting weight equal to ten (10) Common Shares.
Each Series A Preferred Share may be converted into ten (10) Common Shares
upon approval by the Board of Directors of the corporation.
Two million (2,000,000) authorized Series B Preferred Shares with a par value
of $0.001 per share and such other terms as may be determined prior to their
issuance by the Board of Directors. Each Series B Preferred Share shall have
voting rights and shall carry a voting weight equal to two (2) Common Shares.
Each Series B Preferred Share may be converted into two (2) Common Shares
upon approval by the Board of Directors.
One million (1,000,000) authorized Series C Preferred Shares with a par value
of $0.001 per share and such other terms as may be determined by the Board
of Directors prior to their issuance. No Series C Preferred Share shall
have voting rights.
The Company has not issued any preferred stock to date, nor have they
developed the descriptive attributes of these preferred shares. The Company
can issue shares of preferred stock in series with such preferences and
designations as its board of directors may determine. The board of
directors can, without shareholder approval, issue preferred stock with
voting, dividend, liquidation, and conversion rights. This could dilute
the voting strength of the holders of common stock and may help the
Clinical Trials' management impede a takeover or attempted change in control.
C. Debt Securities
The Company is not registering any debt securities, nor are any outstanding.
D. Other Securities To Be Registered
The Company is not registering any security other than its Common Stock.
38
E. Nevada Anti-Takeover Provisions
The anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada
Corporation Law apply to Clinical Trials. Section 78.438 of the Nevada law
prohibits the Company from merging with or selling Clinical Trials or more than
5% of our assets or stock to any shareholder who owns or owned more than 10% of
any stock or any entity related to a 10% shareholder for three years after the
date on which the shareholder acquired the Clinical Trials shares, unless the
transaction is approved by Clinical Trials' Board of Directors. The provisions
also prohibit the Company from completing any of the transactions described
in the preceding sentence with a 10% shareholder who has held the shares more
than three years and its related entities unless the transaction is approved
by our Board of Directors or a majority of our shares, other than shares
owned by that 10% shareholder or any related entity. These provisions could
delay, defer or prevent a change in control of Clinical Trials .
Item 5. Indemnification of Directors and Officers
The Bylaws of the Company provide for indemnification of its directors,
officers and employees as follows:
Every director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities,
including counsel fees, reasonably incurred by or imposed upon him/her in
connection with any proceeding to which he/she may be made a party, or in
which he/she may become involved, by reason of being or having been a
director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee or agent
of the Corporation, partnership, joint venture, trust or enterprise, or any
settlement thereof, whether or not he/she is a director, officer, employee
or agent at the time such expenses are incurred, except in such cases
wherein the director, officer, employee or agent is adjudged guilty of
willful misfeasance or malfeasance in the performance of his/her duties;
provided that in the event of a settlement the indemnification herein shall
apply only when the Board of Directors approves such settlement and
reimbursement as being for the best interests of the Corporation.
The Bylaws of the Company further state that the Company shall provide to
any person who is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of the corporation, partnership, joint
venture, trust or enterprise, the indemnity against expenses of a suit,
litigation or other proceedings which is specifically permissible under
applicable Nevada law. The Board of Directors may, in its discretion,
direct the purchase of liability insurance by way of implementing the
provisions of this Article. However, the Company has yet to purchase any
such insurance and has no plans to do so.
39
The Articles of Incorporation of the Company states that a director or
officer of the corporation shall not be personally liable to this
corporation or its stockholders for damages for breach of fiduciary duty as
a director or officer, but this Article shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of the law or (ii) the
unlawful payment of dividends. Any repeal or modification of this Article
by stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the corporation for acts or omissions prior to such repeal or
modification.
Article VII of the Articles of Incorporation states: "Every person who was
or is a party to, or is threatened to be made a party to, or is involved in
any such action, suit or proceeding, whether civil, criminal, administrative
or investigative, by the reason of the fact that he or she or a person with
whom he or she is a legal representative, is or was a director of the
Corporation, or who is serving at the request of the Corporation as a director
or officer of another corporation, or is a representative in a partnership,
joint venture, trust or other enterprise, shall be indemnified and held
harmless to the fullest extent legally permissible under the laws of the State
of Nevada from time to time against all expenses, liability and loss (including
attorneys' fees, judgments, fines, and amounts paid or to be paid in a
settlement) reasonably incurred or suffered by him or her in connection
therewith. Such right of indemnification shall be contract right which may be
enforced in any manner desired by such person. The expenses of officers and
directors incurred in defending a civil suit or proceeding must be paid by the
Corporation as incurred and in advance of the final disposition of the action,
suit, or proceeding, under receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be
indemnified by the Corporation. Such right of indemnification shall not be
exclusive of any other right of such directors, officers or representatives
may have or hereafter acquire, and without limiting the generality of such
statement, they shall be entitled to their respective rights of indemnification
under any bylaw, agreement, vote of stockholders, provision of law, or
otherwise, as well as their rights under this article.
Without limiting the application of the foregoing, the Board of Directors may
adopt By-Laws from time to time without respect to indemnification, to provide
at all times the fullest indemnification permitted by the laws of the State
of Nevada, and may cause the Corporation to purchased or maintain insurance
on behalf of any person who is or was a director or officer."
40
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
41
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) Financial Statements
CLINICAL TRIALS ASSISTANCE CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
September 30, 2002
42
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-1a
BALANCE SHEETS F-2a
STATEMENTS OF OPERATIONS F-3a
STATEMENT OF STOCKHOLDERS' EQUITY F-4a
STATEMENTS OF CASH FLOWS F-5a
NOTES TO FINANCIAL STATEMENTS F-6-11a
b) Interim Financial Statements are provided through September 30, 2002.
c) Financial Statements of businesses acquired or to be acquired are not
provided at this time, as they are not applicable.
d) Proforma Financial Information is not provided at this time, as it is
not applicable at this time.
43
BECKSTEAD AND WATTS, LLP
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540 (fax)
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clinical Trials Assistance Corporation
Las Vegas, Nevada
We have audited the Balance Sheets of Clinical Trials Assistance Corporation
(the "Company"), as of September 30, 2002, and the related Statements of
Operations, Stockholders' Equity, and Cash Flows for the period April 22, 2002
(inception) to September 30, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statement presentation. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clinical Trials Assistance
Corporation as of September 30, 2002, and the results of its operations and
cash flows for the period April 22, 2002 (inception) to September 30, 2002, in
conformity with generally accepted accounting principles in the United States
of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has had limited operations and have not commenced
planned principal operations. This raises substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters
are also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ G. Brad Beckstead
-----------------------------
October 30, 2002
F-1a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
BALANCE SHEETS
September 30,
2002
-------------
ASSETS
Current
assets:
Cash $ 8,233
Funds held in escrow 20,000
------------
Total current assets 28,233
------------
$ 28,233
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ -
------------
Stockholders' equity:
Preferred stock - Series A, $0.001 par
value, 2,000,000 shares authorized,
no shares issued and outstanding -
Preferred stock - Series B, $0.001 par
value, 2,000,000 shares authorized,
no shares issued and outstanding -
Preferred stock - Series C, $0.001 par
value, 1,000,000 shares authorized,
no shares issued and outstanding -
Common stock - Class A, $0.001 par
value, 20,000,000 shares authorized,
12,000,000 shares issued and outstanding 12,000
Additional paid-in capital 29,000
(Deficit) accumulated during development stage (12,767)
-------------
28,233
------------
$ 28,233
============
F-2a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS
April 22, 2002
(Inception) to
September 30,
2002
--------------
Revenue $ 7,200
--------------
Expenses:
Executive Compensation 5,000
General and administrative expenses 13,967
General and administrative expenses - related party 1,000
--------------
Total expenses 19,967
--------------
Net (loss) $ (12,767)
==============
Weighted average number of common shares outstanding -
basic and fully diluted 9,518,519
==============
Net (loss) per share - basic and fully diluted $ (0.00)
==============
F-3a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Deficit)
Accumulated
Common Stock Additional During the Total
------------------ Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
---------- ------- ---------- ----------- -------------
April 2002
Founder shares
issued for cash 10,000,000 $10,000 $ 5,000 $ - $ 15,000
September 2002
504 offering
issued for cash 2,000,000 2,000 18,000 20,000
September 2002
Donated capital 6,000 6,000
Net (loss)
April 22, 2002
(inception) to
September 30, 2002 (12,767) (12,767)
---------- ------- ---------- ----------- -------------
Balance,
September 30, 2002 12,000,000 $12,000 $ 29,000 $ (12,767) $ 28,233
========== ======= ========== =========== =============
F-4a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
April 22, 2002
(Inception) to
September 30,
2002
--------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net (loss) $ (12,767)
Non-cash executive compensation 1,000
Adjustments to reconcile net (loss) 5,000
to net cash (used) by
operating activities:
(Increase) in funds held in escrow (20,000)
--------------
Net cash (used) by operating activities (26,767)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES -
--------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances of common stock 35,000
--------------
Net cash provided by financing activities 35,000
--------------
Net increase in cash 8,233
Cash - beginning -
--------------
Cash - ending $ 8,233
==============
Supplemental disclosures:
Interest paid $ -
==============
Income taxes paid $ -
==============
F-5a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized April 22, 2002 (Date of Inception) under the laws of
the State of Nevada, as Clinical Trials Assistance Corporation. The Company
has minimal operations and in accordance with SFAS #7, the Company is
considered a development stage company.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Cash and cash equivalents
-------------------------
The Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash equivalents. There
are no cash equivalents as of September 30, 2002.
Revenue recognition
-------------------
Upon recruiting the agreed upon number of patients as specified in the
contracts with its customers (physician researchers), the Company then
invoices for its services.
As of September 30, 2002, the Company recognized 100% of its $7,200 revenue
from Boling Clinical Trials ("Boling"), a related party. The revenue
represents reimbursement of expenses incurred while conducting a "test
program" for Boling. The Company has yet to commence its principle/planned
operations.
Advertising costs
-----------------
The Company expenses all costs of advertising as incurred. There were no
advertising costs included in general and administrative expenses as of
September 30, 2002.
Use of estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
F-6a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES
Fair value of financial instruments
-----------------------------------
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of September
30, 2002. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to approximate
carrying values for cash and payables because they are short term in nature
and their carrying amounts approximate fair values or they are payable on
demand.
Impairment of long-lived assets
-------------------------------
Long-lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable or is impaired. No such impairments have been
identified by management at September 30, 2002.
Reporting on the costs of start-up activities
---------------------------------------------
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up
Activities," which provides guidance on the financial reporting of start-up
costs and organizational costs, requires most costs of start-up activities and
organizational costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998. With the adoption of SOP 98-
5, there has been little or no effect on the Company's financial statements.
Loss per share
--------------
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss per
share is computed by dividing losses available to common stockholders by the
weighted average number of common shares outstanding during the period. As of
September 30, 2002, the Company had no dilutive common stock equivalents, such
as stock options or warrants.
Dividends
---------
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid or declared since inception.
Segment reporting
-----------------
The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About Segments of an Enterprise and Related Information." The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.
F-7a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES
Income taxes
------------
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision for
income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that
some portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to the
amount that is more likely than not to be realized. Future changes in such
valuation allowance are included in the provision for deferred income taxes in
the period of change.
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.
Recent pronouncements
---------------------
In July 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations," was
issued which requires the recognition of a liability for an asset retirement
obligation in the period in which it is incurred. When the liability is
initially recorded, the carrying amount of the related long-lived asset is
correspondingly increased. Over time, the liability is accreted to its
present value and the related capitalized charge is depreciated over the
useful life of the asset. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002. The impact of the adoption of SFAS No. 143 on the
Company's reported operating results, financial position and existing
financial statement disclosure is not considered to be material.
In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," was issued. This statement addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets
and broadens the definition of what constitutes a discontinued operation and
how results of a discontinued operation are to be measured and presented. The
provisions of SFAS No. 144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001. The impact of the adoption of
SFAS No. 144 on the Company's reported operating results, financial position
and existing financial statement disclosure is not considered to be material.
F-8a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES
Stock-Based Compensation
------------------------
The Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations and has adopted the disclosure-only
alternative of SFAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and other non-
employees are accounted for using the fair value method as prescribed by SFAS
No. 123.
Year end
--------
The Company has adopted December 31 as its fiscal year end.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has not commenced its planned principle operations and
it has generated minimal revenues. In order to obtain the necessary capital,
the Company raised funds via private offering. However, the Company is
dependent upon its ability to secure equity and/or debt financing and there are
no assurances that the Company will be successful, without sufficient financing
it would be unlikely for the Company to continue as a going concern.
The officers and directors are involved in other business activities and may,
in the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred
tax assets and liabilities are recorded based on the differences between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the
deferred tax assets and liabilities are expected to be settled or realized.
F-9a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES
NOTE 4 - INCOME TAXES (CONTINUED)
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
------
Total -%
As of September 30, 2002, the Company has a net operating loss carry forward of
approximately $12,767 respectively, for tax purposes, which will be available
to offset future taxable income. If not used, this carry forward will expire
in 2022.
NOTE 5 - STOCKHOLDER'S EQUITY
The Company is authorized to issue 20,000,000 shares of $0.001 par value class
A common stock, 2,000,000 shares of $0.001 par value series A preferred stock,
2,000,000 shares of $0.001 par value series B preferred stock, and 1,000,000
shares of $0.001 par value series C preferred stock. The series A preferred
stock has voting rights with each share having a voting weight equal to 10
shares of 0.001 par value class A common stock, and each share may be converted
to 10 shares of 0.001 par value class A common stock. The series B preferred
stock has voting rights with each share having a voting weight equal to 2
shares of 0.001 par value class A common stock, and each share may be converted
to 2 shares of 0.001 par value class A common stock. The series C preferred
stock has no voting rights.
On April 30, 2002, the Company issued 10,000,000 shares of its $0.001 par value
class A common stock to an individual who is an officer and director of the
Company in exchange for cash of $15,000.
On September 30, 2002, the Company closed and issued 2,000,000 shares of its
$0.001 par value class A common stock in a Regulation D, Rule 504 offering for
total cash received of $20,000.
There have been no other issuances of common and/or preferred stock.
NOTE 6 - WARRANTS AND OPTIONS
As of September 30, 2002, there are no warrants or options outstanding to
acquire any additional shares of common and/ or preferred stock.
F-10a
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FOOTNOTES
NOTE 7 - RELATED PARTY TRANSACTIONS
On April 30, 2002, the Company issued 10,000,000 shares of its $0.001 par value
class A common stock to an individual who is an officer and director of the
Company in exchange for cash of $15,000.
An officer of the Company provides the Company with 120 square feet of office
space. The estimated fair market value of the office space is valued at $2,400
per year. Total occupancy expense included in general and administrative
expenses - related party is $1,000 for the 5 months ended September 30, 2002.
The offsetting accounting entry is included in "paid-in capital" since the
officer does not expect to be reimbursed for the office space.
An officer of the Company agreed to take no salary until the Company can
generate enough revenues to support salaries on a regular basis. The estimated
fair market value of the services rendered is valued at $12,000 per year.
Total officer compensation expense is $5,000 for the 5 months ended September
30, 2002. The offsetting accounting entry is included in "paid-in capital"
since the officer does not expect to be compensated until the Company can
generate enough revenues to support salaries on a regular basis.
As of September 30, 2002, the Company generated $7,200 in revenue from its
test program with one physician researcher, Eugene Boling, M.D., owner of
Boling Clinical Trials. Dr. Boling is also a Company director. The Company
presented Dr. Boling with an invoice for expenses it incurred in recruiting
patients through a mail program. Boling Clinical Trials paid the Company for
this invoice of $7,200.
F-11a
Clinical Trials Assistance Corporation
Balance Sheet
as of
December 31, 2002
and
Statement of Operations,
Changes in Stockholders' Equity, and
Cash Flows
for the period ended
TABLE OF CONTENTS
TABLE OF CONTENTS
PAGE
Independent Auditor's Report F-1b
Balance Sheet F-2b
Income Statement F-3b
Statement of Changes in Stockholder's Equity F-4b
Statement of Cash Flows F-5b
Notes to Financial Statements F-6-11b
BECKSTEAD AND WATTS, LLP
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540 (fax)
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clinical Trials Assistance Corporation
Las Vegas, Nevada
We have audited the Balance Sheet of Clinical Trials Assistance
Corporation (the "Company"), as of December 31, 2002, and the related
Statement of Operations, Stockholders' Equity, and Cash Flows for the
period then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement presentation. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Clinical Trials
Assistance Corporation as of December 31, 2002, and the results of its
operations and cash flows for the period then ended, in conformity with
generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has had limited operations and have not
commenced planned principal operations. This raises substantial doubt
about its ability to continue as a going concern. Management's plan in
regard to these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Beckstead and Watts, LLP
----------------------------
March 30, 2003
F-1b
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
BALANCE SHEETS
December 31,
2002
-------------
ASSETS
Assets
Current assets:
Cash $ 15,909
------------
Total current assets 15,909
------------
$ 15,909
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ -
------------
Stockholders' equity:
Preferred stock - Series A, $0.001 par
value, 2,000,000 shares authorized,
no shares issued and outstanding -
Preferred stock - Series B, $0.001 par
value, 2,000,000 shares authorized,
no shares issued and outstanding -
Preferred stock - Series C, $0.001 par
value, 1,000,000 shares authorized,
no shares issued and outstanding -
Common stock - Class A, $0.001 par
value, 20,000,000 shares authorized,
12,000,000 shares issued and outstanding 12,000
Additional paid-in capital 32,600
(Deficit) accumulated during development stage (28,691)
-------------
15,909
------------
$ 15,909
============
F-2b
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS
April 22, 2002
(Inception) to
December 31,
2002
--------------
Revenue $ 7,200
--------------
Expenses:
Executive compensation 8,000
General and administrative expenses 26,291
General and administrative expenses - related party 1,600
--------------
Total expenses 35,891
--------------
Net (loss) $ (28,691)
==============
Weighted average number of common shares outstanding -
basic and fully diluted 10,417,323
==============
Net (loss) per share - basic and fully diluted $ (0.00)
==============
F-3b
CLINICAL TRIALS ASSISTANCE CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Deficit)
Accumulated
Common Stock Additional During the Total
------------------ Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
---------- ------- ---------- ----------- -------------
April 2002
Founder shares
issued for cash 10,000,000 $10,000 $ 5,000 $ - $ 15,000
September 2002
504 offering
issued for cash 2,000,000 2,000 18,000 20,000
December 2002
Donated capital 9,600 9,600
Net (loss)
April 22, 2002
(inception) to
December 31, 2002 (28,691) (28,691)
---------- ------- ---------- ----------- -------------
Balance,
December 31, 2002 12,000,000 $12,000 $ 32,600 $ (28,691) $ 15,909
========== ======= ========== =========== =============
F-4b
CLINICAL TRIALS ASSISTANCE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
April 22, 2002
(Inception) to
December 31,
2002
--------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (28,691)
Non-cash general and administrative expense 1,600
Non-cash executive compensation 8,000
--------------
Net cash (used) by operating activities (19,091)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES -
--------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances of common stock 35,000
--------------
Net cash provided by financing activities 35,000
--------------
Net increase in cash 15,909
Cash - beginning -
--------------
Cash - ending $ 15,909
==============
Supplemental disclosures:
Interest paid $ -
==============
Income taxes paid $ -
==============
F-5b
Clinical Trials Assistance Corporation
(a Development Stage Company)
Notes
Note 1 - History and organization of the company
The Company was organized April 22, 2002 (Date of Inception) under the laws of
the State of Nevada, as Clinical Trials Assistance Corporation. The Company
has minimal operations and in accordance with SFAS #7, the Company is
considered a development stage company. The Company is authorized to issue
20,000,000 shares of $0.001 par value class A common stock, 2,000,000 shares
of $0.001 par value series A preferred stock, 2,000,000 shares of $0.001 par
value series B preferred stock, and 1,000,000 shares of $0.001 par value series
C preferred stock. The series A preferred stock has voting rights with each
share having a voting weight equal to 10 shares of 0.001 par value class A
common stock, and each share may be converted to 10 shares of 0.001 par value
class A common stock. The series B preferred stock has voting rights with each
share having a voting weight equal to 2 shares of 0.001 par value class A
common stock, and each share may be converted to 2 shares of 0.001 par value
class A common stock. The series C preferred stock has no voting rights.
Note 2 - Accounting policies and procedures
Cash and cash equivalents
-------------------------
The Company maintains a cash balance in a non-interest-bearing account that
currently does not exceed federally insured limits. For the purpose of the
statements of cash flows, all highly liquid investments with an original
maturity of three months or less are considered to be cash equivalents.
There are no cash equivalents as of December 31, 2002.
Revenue recognition
-------------------
The Company recognizes revenue and gains when earned and related costs of
sales and expenses when incurred.
Advertising costs
-----------------
The Company expenses all costs of advertising as incurred. There were no
advertising costs included in general and administrative expenses as of
December 31, 2002.
Use of estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
F-6b
Clinical Trials Assistance Corporation
(a Development Stage Company)
Notes
Fair value of financial instruments
-----------------------------------
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of December
31, 2002. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash and accounts payable. Fair values were assumed to approximate
carrying values for cash and payables because they are short term in nature
and their carrying amounts approximate fair values or they are payable on
demand.
Impairment of long-lived assets
-------------------------------
Long-lived assets held and used by the Company are reviewed for possible
impairment whenever events or circumstances indicate the carrying amount of
an asset may not be recoverable or is impaired. No such impairments have
been identified by management at December 31, 2002.
Reporting on the costs of start-up activities
---------------------------------------------
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up
Activities," which provides guidance on the financial reporting of start-up
costs and organizational costs, requires most costs of start-up activities
and organizational costs to be expensed as incurred. SOP 98-5 is effective
for fiscal years beginning after December 15, 1998. With the adoption of
SOP 98-5, there has been little or no effect on the Company's financial
statements.
Loss per share
--------------
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss
per share is computed by dividing losses available to common stockholders by
the weighted average number of common shares outstanding during the period.
As of December 31, 2002, the Company had no dilutive common stock equivalents,
such as stock options or warrants.
Dividends
---------
The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid or declared since inception.
F-7b
Clinical Trials Assistance Corporation
(a Development Stage Company)
Notes
Segment reporting
-----------------
The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About Segments of an Enterprise and Related Information." The
Company operates as a single segment and will evaluate additional segment
disclosure requirements as it expands its operations.
Income taxes
------------
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision
for income taxes. Deferred tax assets and liabilities are computed based upon
the difference between the financial statement and income tax basis of assets
and liabilities using the enacted marginal tax rate applicable when the
related asset or liability is expected to be realized or settled. Deferred
income tax expenses or benefits are based on the changes in the asset or
liability each period. If available evidence suggests that it is more likely
than not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred tax assets
to the amount that is more likely than not to be realized. Future changes in
such valuation allowance are included in the provision for deferred income
taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.
Recent pronouncements
---------------------
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", which addresses financial accounting and
reporting for costs associated with exit or disposal activities and supersedes
EITF No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred.
Under EITF No. 94-3, a liability for an exit cost was recognized at the date of
an entity's commitment to an exit plan. SFAS No. 146 also establishes that the
liability should initially be measured and recorded at fair value. The
provisions of SFAS No. 146 will be adopted for exit or disposal activities that
are initiated after December 31, 2002.
F-8b
Clinical Trials Assistance Corporation
(a Development Stage Company)
Notes
Recent pronouncements (continued)
---------------------------------
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS No. 123." This
Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The adoption of SFAS No. 148 is
not expected to have a material impact on the company's financial position or
results of operations.
In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees and Indebtedness of Others", an interpretation of FIN
No. 5, 57 and 107, and rescission of FIN No. 34, "Disclosure of Indirect
Guarantees of Indebtedness of Others". FIN 45 elaborates on the disclosures
to be made by the guarantor in its interim and annual financial statements
about its obligations under certain guarantees that it has issued. It also
requires that a guarantor recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The initial recognition and measurement provisions of this
interpretation are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002; while, the provisions of the disclosure
requirements are effective for financial statements of interim or annual
periods ending after December 15, 2002. The company believes that the adoption
of such interpretation will not have a material impact on its financial
position or results of operations and will adopt such interpretation during
fiscal year 2003, as required.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable
Interest Entities", an interpretation of Accounting Research Bulletin No. 51.
FIN No. 46 requires that variable interest entities be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or is entitled to receive a majority of
the entity's residual returns or both. FIN No. 46 also requires disclosures
about variable interest entities that companies are not required to
consolidate but in which a company has a significant variable interest. The
consolidation requirements of FIN No. 46 will apply immediately to variable
interest entities created after January 31, 2003. The consolidation
requirements will apply to entities established prior to January 31, 2003
in the first fiscal year or interim period beginning after June 15, 2003.
The disclosure requirements will apply in all financial statements issued
after January 31, 2003. The company will begin to adopt the provisions of
FIN No. 46 during the first quarter of fiscal 2003.
F-9b
Clinical Trials Assistance Corporation
(a Development Stage Company)
Notes
Stock-Based Compensation
------------------------
The Company accounts for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations and has adopted the disclosure-only
alternative of SFAS No. 123, "Accounting for Stock-Based Compensation."
Options granted to consultants, independent representatives and other non-
employees are accounted for using the fair value method as prescribed by
SFAS No. 123.
Year end
--------
The Company has adopted December 31 as its fiscal year end.
Note 3 - Going concern
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not commenced its planned principal
operations and it has generated minimal revenues. In order to obtain the
necessary capital, the Company raised funds via private offering. If the
securities offering does not provide sufficient capital, the shareholder of
the Company has agreed to provide sufficient funds as a loan over the next
twelve-month period. However, the Company is dependent upon its ability to
secure equity and/or debt financing and there are no assurances that the
Company will be successful, without sufficient financing it would be unlikely
for the Company to continue as a going concern.
The officers and directors are involved in other business activities and may,
in the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such conflicts.
Note 4 - Income taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred
tax assets and liabilities are recorded based on the differences between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets
and liabilities at the end of each period are determined using the currently
enacted tax rates applied to taxable income in the periods in which the
deferred tax assets and liabilities are expected to be settled or realized.
F-10b
Clinical Trials Assistance Corporation
(a Development Stage Company)
Notes
Note 4 - Income taxes (continued)
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The sources and tax effects of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
-------
Total -%
=======
=
As of December 31, 2002, the Company has a net operating loss carry forward
of approximately $19,086, for tax purposes, which will be available to offset
future taxable income. If not used, this carry forward will expire in 2022.
Note 5 - Stockholder's equity
The Company is authorized to issue 20,000,000 shares of its $0.001 par value
class A common stock, 2,000,000 shares of it $0.001 par value series A
preferred stock, 2,000,000 shares of it $0.001 par value series B preferred
stock, and 1,000,000 shares of it $0.001 par value series C preferred stock.
On April 30, 2002, the Company issued 10,000,000 shares of its $0.001 par
alue class A common stock to an individual who is an officer and director of
the Company in exchange for cash of $15,000.
On September 30, 2002, the Company closed and issued 2,000,000 shares of its
$0.001 par value class A common stock in a Regulation D, Rule 504 offering
for total cash received of $20,000.
There have been no other issuances of common and/or preferred stock.
Note 6 - Warrants and options
As of December 31, 2002, there are no warrants or options outstanding to
acquire any additional shares of common and/ or preferred stock.
Note 7 - Related party transactions
On April 30, 2002, the Company issued 10,000,000 shares of its $0.001 par
value class A common stock to an individual who is an officer and director
of the Company in exchange for cash of $15,000.
F-11b
Item 2. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None -- Not applicable.
44
Part III
Item 1. Index to Exhibits (Pursuant to Item 601 of Regulation SB)
EXHIBIT INDEX
The following exhibits are filed as part of this Registration statement with
the Securities and Exchange Commission, following Item 601 of Regulation
S-B. All exhibits refer to Clinical Trials Assistance Corporation, unless
otherwise indicated.
-------------------------------------------------------------------------
EXHIBITS
SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
-------------------------------------------------------------------------
3(a) Articles of Incorporation* Previously
(Filed on April 22, 2002) filed
-------------------------------------------------------------------------
3(b) Bylaws* Previously
(Adopted April 22, 2002) filed
-------------------------------------------------------------------------
4 Sample Stock Certificate* Previously
filed
-------------------------------------------------------------------------
10.1 Oral Understanding*** Previously
filed
-------------------------------------------------------------------------
23.1 Consent of CPA* Previously
filed
-------------------------------------------------------------------------
23.2 Consent of CPA** Previously
filed
-------------------------------------------------------------------------
23.3 Consent of CPA**** This filing
-------------------------------------------------------------------------
99.1 Certification of Chief Previously
Executive Officer filed
-------------------------------------------------------------------------
99.2 Notice of Effectiveness issued by Previously
Nevada Secretary of State* filed
-------------------------------------------------------------------------
99.3 Letter to Shareholders** Previously
filed
-------------------------------------------------------------------------
* Previously filed as an exhibit to the Company's Form 10SB12G filed on
November 19, 2002.
** Previously filed as an exhibit to the Company's Form 10SB12G filed on
January 14, 2003.
*** Previously filed as an exhibit to the Company's Form 10SB12G filed on
April 3, 2003.
**** This filing.
45
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Clinical Trials Assistance Corporation
--------------------------------------
(Registrant)
Dated: May 7, 2003
By: /s/ Kamill Rohny
---------------------------------
Kamill Rohny
Chairman of the Board
President
Chief Executive Officer
Chief Financial Officer
Secretary
46