UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2005.
[_] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from --- to ---
Commission file number: 000-31883
PROTON LABORATORIES, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Washington 91-2022700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1135 Atlantic Avenue, Suite 101
Alameda, CA 94501
(Address of principal executive offices)
(510) 865-6412
Issuer's telephone number
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] [_] No
Indicate by check whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] [X] No
On November 8, 2005, the registrant had outstanding 14,222,600 shares of
Common Stock, $0.0001 par value per share.
Transitional Small Business Disclosure Format: Yes [_] No [X]
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PROTON LABORATORIES, INC.
TABLE OF CONTENTS
PAGE
Condensed Consolidated Balance Sheets - September 30, 2005 and
December 31, 2004 (Unaudited) F-1
Condensed Consolidated Statements of Operations for the three
and nine months ended September 30, 2005 and 2004 (Unaudited) F-2
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 2005 and 2004 (Unaudited) F-3
Notes to Condensed Consolidated Financial Statements (Unaudited) F-4
PROTON LABORATORIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2005 2004
------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 12,396 $ 14,412
Accounts receivable, less allowance for doubtful accounts of $16,522 17,786 10,633
Inventory 63,798 34,097
------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 93,980 59,142
------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Furniture and fixtures 19,709 18,438
Equipment and machinery 161,502 95,039
Leasehold improvements 11,323 10,995
Deposit on equipment - 69,500
LESS: ACCUMULATED DEPRECIATION (35,530) (19,160)
------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 157,004 174,812
DEPOSITS 6,131 -
------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 257,115 $ 233,954
------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 102,201 $ 134,780
Accrued expenses 219,270 110,562
Deferred revenue 52,506 -
Preferred dividends payable 8,000 3,200
Note payable 164,000 -
Stockholder loans, current portion 262,000 84,000
------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 807,977 332,542
------------------------------------------------------------------------------------------------------
STOCKHOLDER LOANS, NET OF CURRENT PORTION 48,642 178,000
------------------------------------------------------------------------------------------------------
STOCKHOLDERS' DEFICIT
Series A convertible preferred stock, 400,000 shares authorized
with a par value of $0.0001; 8,000 shares issued and outstanding;
liquidation preference of $80,000 80,000 80,000
Undesignated preferred stock, 19,600,000 shares authorized with a
par value of $0.0001; no shares issued or outstanding - -
Common stock, 100,000,000 common shares authorized with a par
value of $0.0001; 14,270,100 and 12,975,000 shares issued and
outstanding, respectively 1,429 1,299
Additional paid in capital 1,856,602 1,350,616
Accumulated deficit (2,537,535) (1,708,503)
------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' DEFICIT (599,504) (276,588)
------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 257,115 $ 233,954
------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these
condensed consolidated financial statements.
F-1
PROTON LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- --------------------------------
2005 2004 2005 2004
-----------------------------------------------------------------------------------------------------------------
SALES $ 116,791 $ 120,902 $ 274,501 $ 278,907
COST OF GOODS SOLD 113,786 99,401 214,649 172,371
-----------------------------------------------------------------------------------------------------------------
GROSS PROFIT 3,005 21,501 59,852 106,536
-----------------------------------------------------------------------------------------------------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 114,219 178,361 793,599 341,119
-----------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (111,214) (156,860) (733,747) (234,583)
-----------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (EXPENSE)
Loss on disposal of property and equipment - (943) - (943)
Interest income 61 - 161 -
Interest expense (17,826) (5,117) (90,645) (10,588)
-----------------------------------------------------------------------------------------------------------------
NET OTHER EXPENSE (17,765) (6,060) (90,484) (11,531)
-----------------------------------------------------------------------------------------------------------------
NET LOSS (128,979) (162,920) (824,231) (246,114)
PREFERRED STOCK DIVIDEND (1,600) (1,600) (4,800) (1,600)
-----------------------------------------------------------------------------------------------------------------
LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (130,580) $ (164,520) $ (829,031) $ (247,714)
-----------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER
COMMON SHARE $ (0.01) $ (0.01) $ (0.06) $ (0.02)
-----------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 14,234,230 11,268,481 13,534,217 11,256,230
-----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these
condensed consolidated financial statements.
F-2
PROTON LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 2005 2004
-----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(824,231) $(246,114)
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation 16,370 8,495
Provision for allowance for doubtful accounts - 6,430
Loss on disposal of property and equipment - 943
Common stock issued for services 459,040 40,000
Amortization of loan costs 27,075 -
Changes in operating assets and liabilities
Accounts receivable (7,153) (591)
Inventory (29,701) (67,034)
Deposits (1,131) -
Deferred revenue 52,506 -
Accounts payable (32,579) (28,437)
Accrued expenses 108,708 55,862
-----------------------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES (231,096) (230,446)
-----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (3,562) (24,760)
-----------------------------------------------------------------------
NET CASH FROM INVESTING ACTIVITIES (3,562) (24,760)
-----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 20,000 -
Proceeds from sale of preferred stock - 80,000
Proceeds from notes payable 164,000 -
Proceeds from shareholder loans 48,642 178,000
-----------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES 232,642 258,000
-----------------------------------------------------------------------
NET INCREASE IN CASH (2,016) 2,794
CASH AT BEGINNING OF PERIOD 14,412 4,423
-----------------------------------------------------------------------
CASH AT END OF PERIOD $ 12,396 $ 7,217
-----------------------------------------------------------------------
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Transfer of inventory to equipment $ 64,500 $ 27,377
Issuance of common stock for loan costs $ 27,075 $ -
Accrual of preferred stock dividends $ 4,800 $ -
The accompanying notes are an integral part of these
condensed consolidated financial statements.
F-3
PROTON LABORATORIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF OPERATIONS
BASIS OF PRESENTATION - The condensed consolidated financial statements include
the accounts of Proton Laboratories, Inc., and its wholly owned subsidiary
("Proton" or the "Company"). All significant intercompany transactions and
balances have been eliminated in consolidation.
In April 2004, the Company changed its name from BentleyCapitalCorp.com, Inc. to
Proton Laboratories, Inc. The Company's subsidiary also changed its name from
Proton Laboratories, Inc. to Water Science, Inc.
CONDENSED FINANCIAL STATEMENTS - The accompanying unaudited condensed
consolidated financial statements are condensed and, therefore, do not include
all disclosures normally required by accounting principles generally accepted in
the United States of America. These statements should be read in conjunction
with the Company's annual financial statements included in the Company's
December 31, 2004 Annual Report on Form 10-KSB. In particular, the Company's
significant accounting principles were presented as Note 1 to the consolidated
financial statements in that report. In the opinion of management, all
adjustments necessary for a fair presentation have been included in the
accompanying condensed consolidated financial statements and consist of only
normal recurring adjustments. The results of operations presented in the
accompanying condensed consolidated financial statements for the nine months
ended September 30, 2005 are not necessarily indicative of the results that may
be expected for the full year ending December 31, 2005.
NATURE OF OPERATIONS - The Company's operations are located in Alameda,
California. The core business of the Company consists of the sales and
marketing of the Company's industrial, environmental and residential systems
throughout the United States of America which alter the properties of water to
produce functional water. The Company acts as an exclusive importer and master
distributor of these products to various companies. Additionally, the Company
formulates intellectual properties under licensing agreements, supplies consumer
products, consults on projects utilizing functional water, facilitates between
manufacturer and industry and acts as educators on the benefits of functional
water.
BASIC AND DILUTED LOSS PER COMMON SHARE - Basic loss per common share is
calculated by dividing net loss by the weighted-average number of common shares
outstanding. Diluted loss per common share is calculated by dividing net loss by
the weighted-average number of Series A convertible preferred shares and common
shares outstanding to give effect to potentially issuable common shares except
during loss periods when those potentially issuable shares are anti-dilutive.
Potential common shares from convertible preferred stock have not been included
as they are anti-dilutive.
NOTE 2 - BUSINESS CONDITION
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern. The
company has incurred losses applicable to common shareholders of $829,031 for
the nine months ended September 30, 2005. The Company had a working capital
deficit of $713,997 and $273,400 at September 30, 2005 and December 31, 2004,
respectively. Loans were required to fund operations.
F-4
NOTE 2 - BUSINESS CONDITION (continued)
The Company is working towards raising public funds to expand its marketing and
revenues. The Company has spent considerable time in contracting with several
major overseas corporations for the co-development of enhanced antioxidant
beverages for distribution into the overseas markets. In addition, the Company
is working with its Canadian business associates to identify institutional
businesses to market various disinfection applications based upon functional
water, pending government approval.
The Company's ability to continue as a going concern is dependent upon its
ability to generate sufficient cash flows to meet its obligations on a timely
basis, to obtain additional financing as may be required, and ultimately to
attain profitable operations. However, there is no assurance that profitable
operations or sufficient cash flows will occur in the future.
NOTE 3 - RELATED PARTY TRANSACTIONS
During 2005, two shareholders advanced the Company $48,642. These advances bears
interest at 7% with principal and accrued interest due between November 2005 and
January 2007. At September 30, 2005 and December 31, 2004, the company owed the
two shareholders $310,642 and $262,000, respectively. At September 30, 2005 and
December 31, 2004, the accrued interest was $31,604 and $15,946, respectively.
During the nine months ended September 30, 2005, the Company accrued $45,000 as
salaries payable to the majority shareholder resulting in $139,890 of salaries
payable at September 30, 2005.
NOTE 4 - NOTES PAYABLE
In March 2005 the Company issued a note payable in the amount of $164,000. The
note was originally due in May 2005 and has been extended to December 2005
secured by inventory. The original terms of the loan provided for an interest
payment of $28,500 or 106% per annum; when the note was extended in May 2005,
the interest rate was amended to 30% on the original principal balance. At
September 30, 2005 $47,776 of interest had been accrued. In addition, the
Company issued the lender 47,500 shares of common stock, which was recorded as a
$27,075 loan cost and was amortized over the original term of the note.
NOTE 5 - COMMON STOCK
During the nine months ended September 30, 2005, the Company issued 131,600
shares of its common stock to a director for compensation of services. The
shares were valued at $52,640 based on the market value of the Company's stock
on the date of issuance.
In June 2005, the Company issued 1,016,000 of its common stock to consultants
for services. The shares were valued at $406,400 based on the market value of
the Company's stock on the date of issuance.
In August 2005, the Company sold 100,000 shares of restricted common stock at a
sale price of $0.20 per share for total consideration of $20,000 in cash.
F-5
NOTE 6 - COMMITMENTS
In June 2005, the Company entered into an agreement with Mitachi, a Japanese
electronics component manufacturer, to aid in the production of enhanced
drinking water generators. Pursuant to this agreement, Mitachi agreed to pay
the Company 25,000,000 Yen for engineering design, molding, tooling and
preparation costs, and the exclusive product distribution rights for China,
Taiwan, and Japan. As of September 30, 2005, Mitachi had paid 6,000,000 Yen, or
$52,506, for the above mentioned distribution rights. Since the project is not
yet completed and no units have been sold, this amount is classified as deferred
revenue.
F-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
FORWARD-LOOKING STATEMENT
Certain statements contained in this report, including, without limitation,
statements containing the words, "believes," "anticipates," "expects," and other
words of similar meaning, constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. We disclaim any obligation to update any such
factors or to announce publicly the results of any revision of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments. In addition to the forward-looking
statements contained in this Form 10-QSB, the following forward-looking factors
could cause our future results to differ materially from our forward-looking
statements: competition, funding, government compliance and market acceptance of
our products.
INTRODUCTION
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the audited financial
statements and accompanying notes and the other financial information appearing
in our annual report on Form 10-KSB for the year ended December 31, 2004. The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the U.S.A., which contemplate
our continuation as a going concern.
Our independent auditors made a going concern qualification in their report
dated March 7, 2005 (contained in our annual report on Form 10-KSB for the year
ended December 31, 2004), which raises substantial doubt about our ability to
continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should we be unable to
continue in existence. Our ability to continue as a going concern is dependent
upon our ability to generate sufficient cash flows to meet our obligations on a
timely basis, to obtain additional financing as may be required, and ultimately
to attain profitable operations. However, there is no assurance that profitable
operations or sufficient cash flows will occur in the future.
We incurred net losses applicable to common shareholders of $829,031 for
the nine months ended September 30, 2005. We have incurred net losses of
$965,840 for the year ended December 31, 2004, and $217,333 for the year ended
December 31, 2003. We had a working capital deficit of $713,997 at September 30,
2005 and $273,400 at December 31, 2004. Loans were required to fund operations.
This condition raises a substantial doubt about our ability to
continue as a going concern.
Our ability to continue as a going concern is dependent upon our ability to
generate sufficient cash flows to meet our obligations on a timely basis, to
obtain additional financing for us as may be required, and ultimately to attain
profitable operations. However, there is no assurance that profitable
operations or sufficient cash flows will occur in the future.
Our operations are located in Alameda, California. Our business consists of
the sales and marketing of the industrial, environmental and residential systems
throughout the U.S.A. which alter the properties of water to produce functional
water. We act as an exclusive importer and master distributor of these products
to various companies in which uses for the product range from food processing to
retail water sales. We are working towards raising funds to expand our
marketing and revenues. We have spent considerable time negotiating with
several overseas corporations for the co-development of enhanced antioxidant
beverages for distribution into the overseas markets. In addition, we are
working with Canadian businesses to identify markets for various disinfection
applications of functional water, pending government approval. We are working
on agricultural applications of functional water. We are working on packaging
for a spray-on application of function water for pathogen counter-measures.
We: formulate intellectual properties under licensing agreements; supply
consumer products; consult on projects utilizing functional water; facilitate
usage, uses and users of functional water between manufacturer and industry; and
act as educators on the benefits of functional water. Our business has been
focused on marketing functional water equipment and systems.
Alkaline-concentrated functional water may have health-beneficial properties and
may be used for drinking and cooking purposes. Acidic-concentrated functional
water may be used as a topical, astringent medium.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances. These estimates and assumptions provide a basis for us
to make judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Our actual results may differ from
these estimates under different assumptions or conditions, and these differences
may be material.
We recognize revenue when all four of the following criteria are met: (i)
persuasive evidence that an arrangement exists; (ii) delivery of the products
and/or services has occurred; (iii) the selling price is both fixed and
determinable and; (iv) collectibility is reasonably probable. Our revenues are
derived from sales of our industrial, environmental and residential systems
which alter the properties of water to produce functional water. We believe that
this critical accounting policy affects our more significant judgments and
estimates used in the
preparation of our consolidated financial statements.
Our fiscal year end is December 31.
We began a joint research and development program with Weber Farms located
in Washington State. Weber Farms is family-owned with a long history of raising
and marketing quality potatoes, wheat and corn. In 1979, Weber Farms built a
fresh pack potato warehouse to ensure better quality and more oversight of the
marketing of open potatoes both to domestic and foreign markets. In 1997, a
state-of- the-art potato storage facility capable of storing 50,000 tons was
built. End uses of Weber Farm potatoes are generally in the areas of boxed and
bagged potatoes for retail stores, hash browns, French fires and other
retail-type products. We will work together in various areas where Proton's
electrolyzed water, with its unique efficacies, can be integrated into potato
production and post-harvesting processes. Understanding that Proton's water
brings about certain potato maintenance efficacies, environmental and worker
safety, on-site production abilities and cost efficiencies, both parties are
looking forward to a mutually rewarding relationship.
RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
We had revenue of $274,501 for the nine months ended September 30, 2005
Compared to revenue of $278,907 for the nine months ended September 30, 2004.
We had Selling, General and Administrative Expenses of $793,599 for the
nine months ended September 30, 2005 compared to Selling, General and
Administrative Expenses of $341,119 for the nine months ended September 30,
2004. This increase in Selling, General and Administrative Expenses was due
primarily to stock compensation we paid to a consultant that we valued at
$459,040 during the second quarter
We had a net loss of $824,231 for the nine months ended September 30, 2005
compared to a net loss of $246,114 for the nine months ended September 30, 2004.
This increase in net loss was due primarily to the increase in expenses for
Selling, General and Administrative Expenses.
Net cash used by operating activities was $231,096 for the nine months
Ended September 30, 2005 compared to cash used by operating activities of
$230,446 for the none months ended September 30, 2004.
LIQUIDITY
As of September 30, 2005, we had cash on hand of $12,396. Our growth is
dependent on attaining profit from our operations and our raising of additional
capital either through the sale of stock or borrowing. There is no assurance
that we will be able to raise any equity financing or sell any of our products
to generate a profit.
During 2005, two of our shareholders advanced us an aggregate of $48,642.
These advances bear interest at 7% with principal and accrued interest due
between November 2005 and January 2007. At September 30, 2005 we owed the two
shareholders an aggregate of $310,642 and at
December 31, 2004, we owed the two shareholders an aggregate of $262,000. These
amounts include loans made to us by them prior to 2005. At September 30, 2005
and December 31, 2004, the accrued interest was $31,604 and $15,946,
respectively.
During the nine months ended September 30, 2005, we accrued $45,000 as
salaries payable to our majority shareholders resulting in $139,890 of salaries
payable at September 30, 2005. This accrual includes salary accruals that we
made prior to 2005.
In March 2005, we issued a note payable in the amount of $164,000. The
note was originally due in May 2005 and has been extended to December 2005
secured by inventory. The original terms of the loan provided for an interest
payment of $28,500 or 106% per annum; when the note was extended in May 2005,
the interest rate was amended to 30% on the original principal balance. At
September 30, 2005 $47,776 of interest had been accrued. In addition, the
Company issued the lender 47,500 shares of common stock, which was recorded as a
$27,075 loan cost and was amortized over the original term of the note. The
lender is Gary Taylor who is our President.
During July 2005, we sold 100,000 shares of our common stock to one
investor at $0.20 per share.
In June 2005, we entered into an agreement with Mitachi, a Japanese
electronics component manufacturer, to aid in the production of enhanced
drinking water generators. Pursuant to this agreement, Mitachi agreed to pay
us 25,000,000 Yen for engineering design, molding, tooling and preparation
costs, and the exclusive product distribution rights for China, Taiwan, and
Japan. Thought September 30, 2005, Mitachi had paid to us 6,000,000 Yen (US
$52,506) in connection with this agreement. Since the project is not yet
completed and no units have been sold, this amount is classified as deferred
revenue.
FUTURE CAPITAL REQUIREMENTS
Our growth is dependent on attaining profit from our operations, or our
raising additional capital either through the sale of stock or borrowing. There
is no assurance that we will be able to raise any equity financing or sell any
of our products at a profit.
Our future capital requirements will depend upon many factors, including:
- The cost to acquire equipment that we then would resell.
- The cost of sales and marketing.
- The rate at which we expand our operations.
- The results of our consulting business.
- The response of competitors.
ITEM 3. CONTROLS AND PROCEDURES.
(a) Evaluation of disclosure controls and procedures.
Based on their evaluation of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act")), our principal executive officer and principal financial
officer have concluded that as of the end of the period covered by this
quarterly report on Form 10-QSB such disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.
(b) Changes in internal control over financial reporting.
During the quarter under report, there was no change in our internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
The evaluation of our disclosure controls included a review of whether
there were any significant deficiencies in the design or operation of such
controls and procedures, material weaknesses in such controls and procedures,
any corrective actions taken with regard to such deficiencies and weaknesses and
any fraud involving management or other employees with a significant role in
such controls and procedures.
There have been no changes in our internal control over financial
reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Cure of default by reset of maturity. In March 2005, we issued a note
-----------------------------------------
payable in the amount of $164,000. The note was originally due in May 2005 and
has since been extended to mature in December 2005. The note is secured by
inventory. The original terms of the loan provided for an interest payment of
$28,500 or 106% per annum. When the note's maturity was extended in May 2005,
the interest rate was amended to 30% on the original principal balance. At
September 30, 2005 $47,776 of interest had been accrued. In addition, the
Company issued the lender 47,500 shares of common stock, which was recorded as a
$27,075 loan cost and was amortized over the original term of the note. The
lender is Gary Taylor who is our President.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibit Exhibit
Number Name
--------------------------------------------------------------
31.1 Certification pursuant to Section 13a-14 of CEO.
31.2 Certification pursuant to Section 13a-14 of CFO.
32.1 Certification pursuant to Section 1350 of CEO.
32.2 Certification pursuant to Section 1350 of CFO.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized in Alameda, California.
PROTON LABORATORIES, INC.
November 18, 2005
By: /s/ Edward Alexander
Edward Alexander
Director, Chief Executive Officer, and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Exhibit
Number Name
--------------------------------------------------------------
31.1 Certification pursuant to Section 13a-14 of CEO.
31.2 Certification pursuant to Section 13a-14 of CFO.
32.1 Certification pursuant to Section 1350 of CEO.
32.2 Certification pursuant to Section 1350 of CFO.