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LARREA BIOSCIENCES CORP - 10KSB/A - 20040830 - PART_I
PART I
This Form 10-KSB contains forward looking statements relating to the development
of the Company's products and services and future operation results, including
statements regarding the Company that are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. The words "believe," "expect," "anticipate," "intend," variations of
such words, and similar expressions, identify forward looking statements, but
their absence does not mean that the statement is not forward looking. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict. Factors that
could affect the Company's actual results include the progress and costs of the
development of products and services and the timing of the market acceptance.
ITEM 1 - BUSINESS
GENERAL
Larrea Biosciences Corporation (F/K/A Sonic Media Corporation, "LBC" or the
"Company") entered into an agreement dated March 26, 2004 to acquire Global
Botanics International, Inc. ("GBI") in March, but only recently issued shares
to the selling shareholders of GBI. As this transaction was consummated after
the end of the Company's April 30, 2004 fiscal year end, the financial
information contained in this document does not reflect GBI operations. The
closing of the GBI transaction, puts the Company, through GBI, in the business
of harvesting, producing and licensing Virastatin(TM), a multifunctional
ingredient produced according to patented extraction and purification
technologies. Because Virastatin(TM) has proven antiviral, anti-inflammatory,
antimicrobial and antioxidant properties, the ingredient is beneficial in a wide
variety of health and consumer products. Current arrangements support the
purchase of Virastatin for inclusion in private labeled products. GBI's product
is marketed and sold in the U.S. and Canada by LarreaRx, Inc. To date, LarreaRx,
Inc. has licensed the right to market and sell Virastatin-based dietary
supplement and topical cosmetic products in the U.S. and Canada. Virastatin(TM)
is the key active ingredient in the product lines sold under the tradenames
Shegoi(TM) and Virox(TM). Shegoi(TM) products are marketed through direct
marketing channels and Virox(TM) products are already being marketed through
retail chain outlets in Canada and USA.
In addition to the profits generated from the sale of Virastatin(TM) ingredient,
GBI may earn royalties on all products sold by licensees. GBI plans to penetrate
the global market through similar licensing arrangements with multiple marketing
partners, who specialize in marketing via such specific channels. GBI retains
the rights to license the use of Virastatin(TM) in over-the-counter
pharmaceutical products and for the possible development of ethical drugs. The
global marketplace for antiviral products is extremely large and compared to
other categories of pharmaceuticals, has limited competition. A March 2003
Reuters report states that, "The global antivirals market is forecast to grow
from $8.7 billion in 2001 to $14 billion in 2007, largely due to the high
incidence of viral infections and the inadequate efficacy of the drugs currently
available". The family of human herpes viruses, currently with nine members,
presents a good example of the extremely large potential marketplace for
antiviral products. This family of contagious viruses infects almost everyone on
the planet regardless of their geographic location. The best available data
suggests that herpes simplex-1 (the cold sore virus) infects around 60% of the
population; herpes simplex-2 (the genital herpes virus) infects around 26% of
the population; varicella (the chicken pox and shingles virus) infects around
90% of the population; Epstein-Barr virus (the mononucleosis virus) infects
around 60% of the population; cyomegalovirus infects around 95% of the
population; and human herpes viruses 6 and 7 infect between 75 and 98% of the
population. These viruses, in addition to causing classical herpes virus
diseases, are now being linked as a contributing factor in the development of at
least three diseases, which are the leading causes of death in developed
nations. These diseases are heart disease, cancer and Alzheimer's disease.
Herpes virus infections have also been recently linked with development of other
serious conditions such as, hypertension, atherosclerosis, multiple sclerosis,
Bell's palsy, trigeminal neuralgia, Hodgkin's disease, lymphoma and leukemia.
Many medical professionals have suggested exploring the expanded use of
antiviral agents as a treatment for many of these diseases. GBI's flagship
antiviral product, Virastatin(TM), has demonstrated exceptional efficacy in
products targeted against the herpes family of viruses. Additionally, several
other very important viral diseases are the subjects of pending patent
applications by GBI. These new viral disease indications will expand even
further the impact that GBI's antiviral products, such as Virastatin(TM), will
have on global health.
To produce Virastatin(TM), Larrea plant material is harvested from native stands
of the plant growing in pristine areas of the Sonoran Desert. The
environmentally friendly harvesting methods designed exclusively for GBI, do not
kill or permanently damage the Larrea plants thereby providing a sustainable
natural resource. To keep initial capital investment to a minimum, GBI currently
outsources the manufacturing of Virastatin(TM) resin. However, the Company may
begin insourcing production of Virastatin(TM) and other Larrea-based products at
GBI-owned and operated facilities in the near future. These manufacturing
advances would decrease the cost of goods sold, thereby increasing the Company's
profitability. GBI has also employed the resources of Four Square Group
(Phoenix, Arizona), a governmental and public affairs firm, working on behalf of
GBI to secure Larrea harvesting rights on large tracts of government-owned lands
in the Southwest U.S.
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COMPANY BUSINESS MODEL
Since the acquisition of GBI, the Company's business model focuses on
production, marketing and selling of its products, Virastatin(TM) proprietary
resin, Shegoi(TM) and Virox nutriceutical and cosmeceutical products.
Global Botanics currently utilizes a laboratory facility located at the Maricopa
Agricultural Center, University of Arizona. With the complete establishment of
this lab they will have the capacity to extract and process enough plant
material into finished resin to produce (in house) enough resin for up to 15,000
bottles per day of the dietary supplement.
In addition, and as a back up, the Company utilizes the services of Pioneer
Laboratories (Tonopah, AZ), to extract and process the plant material, using
proprietary methods. Pioneer has current resin production capacity to satisfy
the needs of approximately 666,000 finished dietary supplement bottles per month
(60 capsules/bottle).
The Products
GBI specializes in the research and development of products from the desert
shrub, Larrea tridentata. The Company's flagship product is a proprietary
extract from the plant, which is marketed under the tradename Virastatin. The
extract and products based on the extract are protected by four (4) US patents
(#6,039,955; #6,004,559; #5,945,106; #5,837,252). The patented extract functions
as a natural remedy for herpes-related disorders and inflammatory conditions.
GBI's major product categories include nutriceutical, cosmeceutical and
over-the-counter pharmaceutical products based on the Virastatin(TM) extract.
The product line, which consists of a dietary supplement product, a topical
spray and topical lotion product have been obtained through a licensing
agreement, by LarreaRx, Inc., GBI's primary customer.
LarreaRx, Inc. distributes the products via two different distribution channels.
Products sold under the Virox tradename are distributed and marketed through
retail channels and are available throughout Canada and the US in numerous
pharmacies and health food retail outlets. The same product line is also
marketed under the brandname and label, Shegoi, and is distributed and marketed
through direct marketing channels.
Larrea BioSciences Corporation maintains a website at www.labsci.com. LarreaRx,
Inc. maintains websites at www.virox.ca and www.shegoi.com
STATUS OF NEW PRODUCTS AND SERVICES
Larrea Biosciences Corporation is engaged in the industrial field of applied
biosciences research and development. The Company plans to become the world
leader in the industrialization and commercialization of Larrea for a wide range
of health and consumer products. The Company anticipates the introduction of
several different grades of Virastatin resin extract over the next fiscal year.
The goal of this strategy will be to lower production costs, while at the same
time, expanding the target market for the Company. Numerous products in the
consumer health products category, anti-aging products, health and beauty
products, dental products and veterinary products will be introduced.
Growth through Establishing Partners Network
Larrea Biosciences has announced the intended acquisition of LarreaRx, Inc., its
major licensee. This acquisition will result in the envelopment of LarreaRx's
operations under the Larrea Biosciences umbrella, such that Larrea Biosciences
will enjoy the substantial revenues and benefits of the retail distribution and
direct marketing efforts of the Licensee.
Strategic Alliances
Larrea Biosciences will provide opportunities for additional licensing
relationships with other companies in the nutriceutical, cosmeceutical,
pharmaceutical and network marketing industries. Specifically, the proprietary
extract will continue to be manufactured and produced under the control of GBI
and GBI will aid any new licensees with product development as necessary.
Larrea Biosciences' strategic sub-licensing agreements will accelerate
distribution and could result in immediate revenue from licensing fees, and
ongoing revenues from product sales, royalty or resin purchases. Sub-licensees
will cultivate and develop network marketing, direct sales endeavors and retail
marketing in those countries with proven industry track records.
MARKETING AND SELLING
The Marketing Program
While affiliations and partnering result in potential growth for the Company,
marketing and selling remain essential to building Company revenue. The
objective of the Company's marketing program is to create and sustain preference
and loyalty for Larrea Biosciences and GBI, as a leading providers of
proprietary Virastatin resin extract.
The major marketing functions for the retail sector are performed by the major
marketing partner of GBI, LarreaRx Inc. This marketing partner has the overall
responsibility for communications, advertising, public relations and the
establishment of the retail and product information websites. Virox products are
distributed throughout the US through Tree of Life, United Natural Foods
Incorporated, Select Nutrition and selected Whole Foods outlets. Puresource Inc.
and Asenda Pharmaceuticals represent the products in Canada. Consumers can
purchase Virox through Whole Foods, Akin's, Chamberlain's, Vitamin Cottage,
selected Vitamin World and other health food retailers in the US. Safeway,
London Drugs, Save-On Foods, Whole Foods, Capers, Overwaitea, Thrifty Foods and
other health food stores retail the products in Canada.
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Shegoi products are available through a network distribution channel, which
currently consists of 2,700 distributors. The initial launch of the Shegoi
products occurred in October, 2003. Additional network and direct marketing
outlets will be secured this year in order to increase the powerful reach that
this type of marketing campaign can deliver.
The Markets
Larrea Biosciences is targeting the global antiviral and dermatology markets
with it's Virastatin(TM)-based products. The global antiviral market is forecast
to grow to $14 billion by 2007, while the dermatology market is valued at $15
billion. With a major R&D focus on herpes treatments, a market valued at
approximately $1.8 billion will be readily available over the next four years.
There are over 100 million herpes virus sufferers in North America alone.
Virastatin(TM)-based products have demonstrated excellent results in treating
conditions caused by the herpes class of viruses including cold sores, genital
herpes and shingles; inflammatory conditions, including joint disorders,
sinusitis, gastrointestinal disorders, psoriasis; and various microbial and
fungal conditions. Currently, GBI has licensed the use of its proprietary
ingredient to LarreaRx, Inc. for incorporation into a line of nutriceutical, and
cosmeceutical products for sale and distribution through retail and direct
marketing channels. LarreaRx provides its products primarily to customers for
personal use and also to healthcare practitioners.
CURRENT MARKET OPPORTUNITIES INCLUDES:
o HEALTHY INDIVIDUALS
general health, illness prevention via antioxidant activity
o AGING INDIVIDUALS
anti-aging, health and beauty needs
o ELDERLY INDIVIDUALS
shingles, post-herpetic neuralgia & other age-related diseases induced by
viral infection or inflammatory problems such as arthritis and psoriasis,
etc.
o FEMALE INDIVIDUALS
cosmetics, health and beauty needs
o SEXUALLY ACTIVE INDIVIDUALS
prevention and/or health maintenance of STD's (herpes virus, papilloma
virus)
o IMMUNE COMPROMISED INDIVIDUALS (SUFFERING FROM OPPORTUNISTIC INFECTIONS)
AID's infected individuals with Kaposi's sarcoma, genital herpes,
cytomegalovirus, etc., transplant patients, etc.
MARKET EXPANSION OPPORTUNITIES INCLUDE:
o PREVENTION/MAINTENANCE OF AGE-RELATED DISEASES
(cancer, heart disease, liver disease, arthritis)
o PREVENTION/MAINTENANCE OF NEURODEGENERATIVE DISEASE
(multiple sclerosis, Alzheimers)
o PREVENTION/TREATMENT OF INFECTION
(viral infections, bacterial infections, fungal infections)
o DENTAL APPLICATIONS
(canker sores, gingivitis, etc.)
o SPORTS INJURY APPLICATIONS
(joint inflammation)
o COSMETICS/COSMETIC SURGERY APPLICATIONS
(scar reduction, anti-wrinkle, etc.)
o VETERINARY APPLICATIONS
Manufacturing and production activities for the proprietary extract take place
in Phoenix, Arizona, which has the most abundant stands of the Larrea tridentata
plant. Thus far, LarreaRx, Inc. has been the major licensee of GBI's proprietary
extract. Thus, all of the revenues since the GBI's inception have been generated
through sales of Virastatin(TM) resin to LarreaRx. GBI itself intends to enter
additional licensing agreements within the next several months to increase the
revenue stream. Additionally, LarreaRx has also begun negotiations for expanded
product distribution and partnerships through their retail and network marketing
channels, which would translate into increased demand for GBI's proprietary
resin extract.
FISCAL YEAR 2004 PERFORMANCE OVERVIEW
Prior to the acquisition of GBI, there were no operations in Larrea Biosciences.
Since the acquisition of GBI, the revenue potential of Larrea Biosciences has
increased tremendously.
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EMPLOYEES
As of April 30, 2004, Larrea Biosciences had no employees.
COMPETITION
No toxicity has been recognized from any Company sponsored in vitro and in vivo
animal studies, independent in vitro and in vivo animal studies,
Company-sponsored non-controlled human clinical studies or in non-controlled
human clinical studies conducted by independent researchers utilizing
Virastatin(TM). Likewise, no consumer use reports have indicated toxicity or
adverse effects from the use of or Virastatin(TM) in topical or oral form.
The products have been in test market for over six years with great success.
While there are other Larrea-based products on the market, these products do not
produce the same medicinal results as Virastatin(TM). Also, their performance is
limited, because the products are not readily absorbed into the digestive tract.
More important is the fact that toxins capable of inducing liver damage have
been associated with other larrea-based products. The proprietary processing
methods of Virastatin(TM) provide the non-toxic quality to the Company's extract
and products. Thus, key is the fact that each of the Virastatin(TM)-based
products are formulated to achieve the highest degree of potency without the
toxicity risks found in other Larrea-based products.
Additionally, no other patents award the right to use the current proprietary
extract or any other extract of larrea for the purpose of treating herpes and
inflammatory conditions. The Company is in the process of expanding its current
patent and product portfolio to encompass greater utility of the plant.
CUSTOMERS
Larrea Biosciences current customer base includes LarreaRx, Inc. As of April 30,
2004, and prior to the consummation of the GBI acquisition, the Company had no
customers and thus no revenue.
OPERATIONS
The Company's headquarters are in Vancouver, British Columbia. One hundred
percent of the proprietary resin is harvested in Arizona. Nearly 45% of
LarreaRx's production of final product occurs in Canada and 55% of the final
products are manufactured in the United States.
ORGANIZATION
Larrea Biosciences Corporation (formerly Sonic Media Corporation) was organized
as a Nevada corporation. The Company amended its Articles of Incorporation on
June 1, 2004 to change its name to Larrea BioSciences Corporation.
Intellectual Property
The Company, through GBI owns U.S. Patents 5,837,252; 5,945,106; 6,004,559 and
6,039,955. These patents relate to the production and use of proprietary
extracts from the North American plant species, Larrea tridentata. The current
patented technology broadly covers extraction and purification technologies as
well as utility of extracts as antiviral, anti-inflammatory, antimicrobial and
antioxidant agents. Specific claims allowed in the issued patents include: a
method of treating herpes lesions and herpes viruses in humans using an
effective amount of an extract of Larrea tridentata; a method of treating herpes
viruses and symptomatic herpes virus lesions of the group: herpes simplex 1
(cold sores), herpes simplex 2 (genital herpes), varicella-zoster virus
(chickenpox and shingles), human herpes virus 4 (Epstein-Barr virus,
mononucleosis), human herpes virus 5 (cytomegalovirus), human herpes viruses 6
and 7 (roseoloviruses), and herpes virus 8 (Kaposi's sarcoma); stimulation of
human immune system function; a herpes treatment agent comprising a formulation
of Larrea tridentata; and an agent for treatment of inflammation and
inflammatory disease comprising a formulation of Larrea tridentata. These
patents, which issued between 1998 and 2000, remain as an effective barrier to
competition for twenty years from the date filed. In addition to the existing
patents, GBI will aggressively prosecute pending patent applications to secure
final issuance of multiple U.S. and international patents, which expand on the
already patented technologies. GBI will actively pursue new licensees for its
patented technologies both domestically and overseas.
The Company relies upon a combination of nondisclosure and other contractual
arrangements, as well as common law trade secret, copyright and trademark laws
to further protect its proprietary rights. The Company enters into
confidentiality agreements with its consultants and clients and limits access to
and distribution of its proprietary information. The product names Virastatin
and Shegoi are trademarked in the U.S.
GOVERNMENTAL APPROVAL AND REGULATION
Like all companies, including those with multinational operations, we are
subject to the laws of the countries in which the Company maintains subsidiaries
and conducts operations. Additionally, there are regulatory guidelines that are
to be followed when selling natural plant extracts, dietary supplement and
cosmetic products. The specific regulations and extent of the regulations vary
from country to country. Larrea Biosciences relies on the advice of regulatory
affairs consultants and legal council to stay within any guidelines and
regulations imposed by each government on our industry.
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ITEM 2 - PROPERTIES
COMPANY FACILITIES
The Company's current facilities are located at 55-400 Water Street, Vancouver,
British Columbia V6B1A1.
ITEM 3 - LEGAL PROCEEDINGS
No law suits are currently threatened or filed against or by Larrea Biosciences
or GBI.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 3, 2004, LBC filed a definitive proxy statement for an action by written
consent of the stockholders to vote on an amendment of the Company's Articles of
Incorporation to effect a name change from Sonic Media Corporation to Larrea
BioSciences Corporation. As of the record date of April 13, 2004, there were
16,230,760 shares issued and outstanding. 8,300,000 (51.14%) voted in favor of
the name change. Pursuant to the above-mentioned proxy statement, the Company
implemented the name change by filing the amended articles of incorporation with
the Nevada Secretary of state on May31, 2004. On June 5, 2004, the Company's
symbol was changed from SMED to LRRA.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS;
RECENT SALES OF UNREGISTERED SECURITIES
(a) MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION - Common stock of Larrea BioSciences Corporation is traded on
the NASD's Over the Counter Bulletin Board under the symbol "LRRA."
The table shows the high and low bid and ask of the Company's common stock as
reported for each quarter during the last two fiscal years:
2003-2004 2002-2003
Fiscal
Quarter High Low High Low
------- ---- --- ----- ---
1st (ended July 31) 0.0 0.00 0.00 0.00
2nd (ended October 31) 0.25 0.25 0.00 0.00
3rd (ended January 31) 1.63 1.53 0.00 0.00
4th (ended April 30) 1.20 1.20 0.00 0.00
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RECORD HOLDERS - As of July 25, 2004, the number of holders of record of the
Company's common stock was eight (8). As of July 25, 2004, there were 16,230,760
shares of common stock issued and outstanding.
DIVIDENDS - The Company has not paid dividends on its Common Stock in the past
and does not anticipate doing so in the foreseeable future. The Company
currently intends to retain future earnings, if any, to fund the development and
growth of its business.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
As of April 30, 2004, the Company had no equity compensation plans in place.
(b) RECENT SALES OF UNREGISTERED SECURITIES
On March 26, 2004, the Company entered into an agreement with the shareholders
of GBI whereby the Company acquired all of the issued and outstanding shares of
GBI in exchange for 3,500,000 shares of restricted common stock of the Company.
As all the shareholders of GBI were non-U.S. residents, the shares were issued
in reliance on an exemption from registration available under Regulation S of
the Securities Act of 1933. The shares, due to the shareholders of GBI from the
Company, were not issued until August 2004.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
At April 30, 2004, the Company had no operations. With the acquisition of GBI,
the Company's entire management and global marketing and sales team have set
clear goals and objectives to expand distribution and marketing of the
Virastatin(TM) resin on a global basis. As well, the Company will continue to
engage in research and new product development.
Going forward, the management has set new goals to achieve over the next two
quarters.
o The acquisition of LarreaRx, Inc., GBI's primary licensee
o Expanded distribution of Virastatin(TM)to new licensees for private
label use
o Expanded distribution of Virastatin-based products for license to
nutriceutical, cosmeceutical, pharmacueitcal and veterinary markets
o Broadening of Intellectual property portfolio for increased security
and protection of claims, utility and processing methods
o Reducing cost of production via in-house manufacturing and/or
increased volume production
o Research and Development - clinical studies, product development,
etc.
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CHANGE IN MANAGEMENT AND BOARD OF DIRECTORS
During the fiscal year 2003-2004, the directors of SMED appointed David T.
Kalenuik and Robert T. Sinnott as members of the board of directors filling
available vacancies. After the resignation of Messieurs Finkelstein and Jarva,
Mr. Kalenuik and Mr. Sinnott constitute the sole members of the board of
directors. Mr. Kalenuik also acts as CEO of the Company. Mr. Sinnott acts as the
Treasurer and Secretary.
Committees
The Company is in the process of forming an Audit, Compensation and Nominating
and Corporate Governance Committee. Currently Mr. Kalenuik and Mr. Sinnott are
acting as members of these committees.
RESULTS OF OPERATIONS
THE YEAR ENDED APRIL 30, 2004 COMPARED TO THE YEAR ENDED APRIL 30, 2003
The Company incurred a net loss of $112,733 as compared to $7,333 for the year
ended April 30, 2003 an increase of $105,400. The increased loss is directly
attributable to an increase in management and consulting fees and professional
fees.
Management and consulting fees increased by $82,328 for the year ended April 30,
2004. The increase is due to an increase in the number of outside consultants
utilized during the year.
Professional fees, which include legal and audit fees, increased by $21,236 for
the year ended April 30, 2004. Legal and accounting expenses relate to financial
and regulatory requirements.
Loss per share was $0.01 in 2004 compared to $0.00 in 2003 after giving effect
to a 6.5 to 1 stock split. The increasing loss per share is due to the increase
in the loss during the 2004 fiscal year. The weighted average number of shares
outstanding for the years ending April 30, 2004 and 2003 was 16,230,760 after
giving effect to a 6.5 to 1 stock split.
Stockholder deficiency as at April 30, 2004 was $19,862 compared to stockholder
equity of $92,871 as at April 30, 2003.
Going Concern Qualification
The Company's independent auditors have included an explanatory paragraph in
their report on the April 30, 2004 consolidated financial statements discussing
issues which raise substantial doubt about the Company's ability to continue as
a "going concern." The going concern qualification is attributable to recurring
losses. For the year ended April 30, 2004, the Company continued to experience a
negative cash flow from operations, and projects that it will need certain
additional capital to enable it to continue operations at its current level
beyond the near term. The Company believes it can raise additional funds though
equity or debt financing.
Liquidity And Capital Resources
As of April 30, 2004 the Company's working capital deficiency (current assets
less current liabilities) totaled $19,862 compared to working capital of $92,871
as of April 30, 2003. Cash flows used in operating activities totaled $99,307
for the year ended April 30, 2004 compared to $759 for the year ended April 30,
2003. As of April 30, 2004, the Company had cash on hand of $138 and a working
capital deficiency of $19,682. In the opinion of management, cash on hand is not
sufficient to meet the Company's current needs.
Dividends and Redemption
It has been the Company's policy to invest earnings in the growth of the Company
rather than distribute earnings as dividends. This policy, under which dividends
have not been paid since the Company's inception and is expected to continue,
but is subject to regular review by the Board of Directors.
Forward-Looking Statements
All statements contained in this annual report, or in any document filed by the
Company with the Securities and Exchange Commission, or in any press release or
other written or oral communication by or on behalf of the Company, that do not
directly and exclusively relate to historical facts constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements represent the Company's expectations and beliefs, and
no assurance can be given that the results described in such statements will be
achieved.
These statements are subject to risks, uncertainties and other factors, many of
which are outside of the Company's control that could cause actual results to
differ materially from the results described in such statements. These Factors
include, without limitation, the following: (i) competitive pressures; (ii) the
Company's ability to consummate strategic acquisitions and alliances; (iii) the
Company's ability to attract and retain key personnel; (iii) the Company's
ability to continue to develop and expand its product offerings to address
emerging business demands and technological trends; (iv) changes in the
financial condition of the Company's customers; (v) the future profitability of
the Company's customer contracts, and (vi) general economic conditions and
fluctuations in currency exchange rates in countries in which we do business.
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ITEM 7. FINANCIAL STATEMENTS
The Financial Statements that constitute Item 7 are included at the end of this
report on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On June 21, 2004, the Company changed accountants beginning with the audit of
the financial statements for the fiscal year ended April 30, 2004, from Anderson
Accounting to LDMB Advisors, Inc. ("LDMB"). The Board of Directors of Larrea
Biosciences approved the change in auditors at a special meeting of the Board of
Directors.
The report of Anderson on the Company's financial statements for the fiscal
year ended April 30, 2003 and LDMB's report on the Company's financial
statements for the fiscal year ended April 30, 2004, did not contain an adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles, except for a going concern
uncertainty.
In connection with the audit of the Company's financial statements for the
fiscal years ended April 30, 2003, there were no disagreements, disputes, or
differences of opinion with Anderson on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures,
which, if not resolved to the satisfaction of Anderson would have caused
Anderson to make reference to the matter in its report.
In connection with the audit of the Company's financial statements for the
fiscal year ended April 30, 2004 there were no disagreements, disputes, or
differences of opinion with LDMB on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures,
which, if not resolved to the satisfaction of LDMB would have caused LDMB to
make reference to the matter in its report.
ITEM 8A. CONTROLS AND PROCEDURES
Management, under the supervision and with the participation of the chief
executive officer and chief financial officer, conducted an evaluation of the
disclosure controls and procedures as of the effective date of this Annual
Report on Form 10-KSB. Based on their evaluation, the chief executive officer
and chief financial officer have concluded that as of the evaluation date, the
disclosure controls and procedures are effective to ensure that all material
information required to be filed in this Annual Report on Form 10-KSB has been
made known to them.
Other than as described above, there have been no changes, including corrective
actions with regard to deficiencies or weaknesses in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the evaluation date set forth above.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that
the Company's directors and executive officers and persons owning more than 10%
of the outstanding Common Stock, file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and beneficial owners of more than 10% of the Company's
Common Stock are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on copies of such forms furnished as provided above, or written
representations that no Forms 5 were required, the Company believes that during
the fiscal year ended April 30, 2004, all Section 16(a) filing requirements
applicable to its executive officers, directors and beneficial owners of more
than 10% of its Common Stock were complied with, except as follows: Mr. David
Kalenuik did not timely file a Form 5; however, the form 5 was filed on August
3, 2004. Mr. Robert Sinnott did not timely file a Form 5; however, the form was
filed on August 3, 2004.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the current directors and
executive officers of the Company, the principal offices and positions with the
Company held by each person and the date such person became a director or
executive officer of the Company. The Board of Directors elects the executive
officers of the Company annually. Each year the stockholders elect the Board of
Directors. The executive officers serve terms of one year or until their death,
resignation or removal by the Board of Directors. In addition, there was no
arrangement or understanding between any executive officer and any other person
pursuant to which any person was selected as an executive officer.
The directors and executive officers of the Company are as follows:
----------------------- -------------------------- ------- -------------------------------------- -----------------
Name Year First Elected As an Age Position
Officer Held with Family
Or Director the Registrant Relationship
----------------------- -------------------------- ------- -------------------------------------- -----------------
David Kalenuik 2004 46 CEO; Director None
----------------------- -------------------------- ------- -------------------------------------- -----------------
Robert Sinnott 2004 39 Treasurer, Secretary; Director None
----------------------- -------------------------- ------- -------------------------------------- -----------------
|
Business Experience of Officers and Directors:
DAVID KALENUIK has been a Director of the Company since 2004. Mr. Kalenuik is
currently the Chief Executive Officer of the Company. Mr. Kalenuik is a
businessman, consultant and marketing entrepreneur. He has been involved in the
Direct Marketing/Multi-Level Marketing and Tele-Marketing industry for over 25
years. He has consulted to and supplied products to a number of Network
Marketing companies. He was also the founder and President of a Network
Marketing company, FIM, where he grew an Independent Distributor base of over
65,000 people within a calendar year. Additionally, he was Co-founder and
President of Mitropolis Solutions Inc, an Investment Banking firm, which funded
over $6,000,000 USD in private placement funding to private companies during the
late 1990's. David has owned and successfully operated over ten companies within
Canada and the United States and has been a director and officer in publicly
traded companies.
ROBERT SINNOTT has been a Director of the Company since 2004. Mr. Sinnott is
currently the Chief Financial Officer and Secretary of the Company. Dr. Sinnott
is Chief Executive Officer and Director of Larreacorp and is a businessman,
researcher and consultant. He holds a Doctor of Philosophy from Arizona State
University specializing in plant genetic engineering and agricultural
biotechnology. Dr. Sinnott was the founder of Gaiaventures, Ltd., the
predecessor of Larreacorp, based in Chandler, Arizona. Gaiaventures provided
technology assessment and product development for contract clients in the
biotechnology, pharmaceuticals, and functional food industries. Past clients
include start-up companies and Fortune 500 companies such as Mars Corporation
and IMPRA, now a subsidiary of Bard. Dr. Sinnott has taught biotechnology and
biotech-based business courses at the college level at several institutions.
ITEM 10-EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE AND OPTIONS
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities during each of the last three fiscal years
by the executive officers of the Company who received compensation of or in
excess of $100,000 during the fiscal year ended April 30, 2004. The following
information for the officers includes the dollar value of base salaries, bonus
awards, the number of stock options granted and certain other compensation, if
any, whether paid or deferred.
SUMMARY COMPENSATION TABLE
---------------------------------- --------------- -----------------------------
Annual Compensation(1)(2)
---------------------------------- --------------- -----------------------------
Fiscal Year
Name and Principal Position Ended Salary Bonus
---------------------------------- --------------- ------------ ----------------
David Kalenuik, Chief Executive 2004 $ 0 -0-
Officer Director
2003 n/a -0-
2002 n/a -0-
---------------------------------- --------------- ------------ ----------------
Robert Sinnott, Treasurer, 2004 $0 -0-
Secretary and Director
2003 n/a -0-
2002 n/a -0-
---------------------------------- --------------- ------------ ----------------
|
(1) No officers received or will receive any bonus or other annual compensation,
nor any benefits other than those available to all other employees that are
required to be disclosed.
(2) No officers received or will receive any long-term incentive plan (LTIP)
payouts or other payouts during fiscal 2003.
(3) No officers received any options or other forms of compensation in the 3
most recent fiscal years.
10
COMPENSATION OF DIRECTORS
Directors of the Company do not receive cash compensation for attendance at
board meetings but are entitled to reimbursement of their reasonable expenses
incurred in attending Directors' Meetings.
ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, its only class of outstanding voting
securities as of July 15, 2004, by (i) each person who is known to the Company
to own beneficially more than 5% of the outstanding Common Stock with the
address of each such person, (ii) each of the Company's present directors and
officers, and (iii) all officers and directors as a group:
Percentage
Name and Number of Beneficially
Address Shares(1)(2) owned
------- ------------ ------------
David Kalenuik (3) 4,150,000 25.56%
Robert Sinnott (3) 4,150,000 25.56%
All officers and directors
as a group (two persons) 8,300,000 51.12%
|
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed below, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities.
(2) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect to
securities. Shares of Common Stock relating to options currently exercisable or
exercisable within 60 days of July 15, 2004 are deemed outstanding for computing
the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by footnote, and subject to community property laws where applicable,
the persons named in the table above have sole voting and investment power with
respect to all shares shown as beneficially owned by them.
(3) Address c/o David Kalenuik 400-55 Water Street, Vancouver, British Columbia
V6B 1A1, Canada.
ITEM 12-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company's management believes that the terms of these transactions are no
less favorable to the Company than would have been obtained from an unaffiliated
third party in similar transactions. All future transactions with affiliates
will be on terms no less favorable than could be obtained from unaffiliated
third parties, and will be approved by a majority of the disinterested
directors.
PART IV
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
21.1 A list of all subsidiaries of the Company *
31.1 Section 302 Certification *
31.2 Section 302 Certification *
32.1 Section 906 Certification *
32.2 Section 906 Certification *
* Filed herewith.
(b) Reports on Form 8-K
On February 3, 2004, the Company filed a current report on form 8-K
announcing the change of auditors from Sellers and Anderson LLC to Madsen &
Associates. The change in auditors occurred because of a move of the auditing
partner to a new firm. There was no disagreement with the Company's previous
auditors.
On February 11, 2004, the Company filed a current report on form 8-K
announcing its intention to acquire Global Botanics, Inc.
11
On March 15, 2004, the Company filed a current report on form 8-K
announcing a change in control whereby the controlling shareholders of the
Company sold 9,750,000 shares of the Company's common stock to various
shareholders including David Kalenuik and Robert Sinnott in exchange for a total
consideration of $100,000. This current report also announced the resignation of
Kenneth Finkelstein and Robert Jarva and the appointment of David T. Kalenuik
and Robert Sinnott, Ph.D. to act as directors and officers of the Company until
its next annual meeting.
On March 16, 2004, the Company filed a current report announcing the
replacement of its attorney Kenneth Finkelstein with Patti L. W. McGlasson, a
Professional law corporation.
On April 20, 2004, the Company filed a current report announcing the
acquisition of all of the shares of common stock of Global Botanics, Inc. in
exchange for 3,500,000 shares of common stock of the Company.
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LARREA BIOSCIENCES COPORATION
Date: August 30, 2004 BY: /S/ DAVID KALENUIK
----------------------
David Kalenuik, Acting CEO
Date: August 30, 2004 BY: /S/ ROBERT SINNOTT
----------------------
Robert Sinnott, Acting CFO
|
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Date: August 30, 2004 BY: /S/ DAVID KALENUIK
----------------------
David Kalenuik, Director
Date: August 30, 2004 BY: /S/ ROBERT SINNOTT
----------------------
Robert Sinnott, Director
|
12
LARREA BIOSCIENCES CORPORATION
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
APRIL 30, 2004
LARREA BIOSCIENCES CORPORATION
CONTENTS
APRIL 30, 2004
PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to the Financial Statements F-6
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of:
Larrea Biosciences Corporation (formerly Sonic Media Corp.)
We have audited the balance sheet of Larrea Biosciences Corporation (a
development stage company) as at April 30, 2004 and the statements of
operations, stockholders' equity and cash flows for the year 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. The financial statements as of April 30, 2003 and for the year then
ended were audited by other auditors whose report dated June 20, 2003, expressed
an unqualified opinion on these statements. The cumulative statements of
operations, stockholders' equity and cash flows for the period from May 1, 2002
(inception) to April 30, 2003 include amounts for the period from May 1, 2002
(inception) to April 30, 2003, which were audited by other auditors whose
reports have been furnished to us, and in our opinion, insofar as it relates to
the amounts included for the period May 1, 2002 through April 30, 2003 is based
solely on the reports of other auditors.
We conducted our audit in accordance with Standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance 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
statements. 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, based on our audits and the report of other auditors, these
financial statements present fairly, in all material respects, the financial
position of the Company as at April 30, 2004 and the results of its operations
and cash flows for the year then ended and cumulative for the period from May 1,
2002 (inception) to April 30, 2004 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and negative cash flows from operations that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ LDMB Advisors Inc.
Chartered Accountants
Langley, British Columbia, Canada
August 6, 2004
|
F-1
LARREA BIOSCIENCES CORPORATION
The accompanying notes are an integral part of these financial statements.
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
--------------------------------------------------------------------------------------------
AS AT APRIL 30, 2004 2003
--------------------------------------------------------------------------------------------
ASSETS
CURRENT
Cash $ 138 $ 99,445
============================================================================================
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 20,000 $ 6,574
--------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value
Authorized: 100,000,000 shares
Issued: 2004 - 16,230,760; 2003 - 4,997,040 1,623 500
Additional paid-in capital 98,581 99,704
Deficit accumulated during the development stage (120,066) (7,333)
--------------------------------------------------------------------------------------------
Total stockholders' equity (19,862) 92,871
--------------------------------------------------------------------------------------------
$ 138 $ 99,445
============================================================================================
|
COMMITMENTS (Note 6)
APPROVED BY THE DIRECTORS:
/s/ David Kalenuik
--------------------------
Director
/s/ Robert Sinott
--------------------------
Director
|
The accompanying notes are an integral part of these financial statements.
F-2
LARREA BIOSCIENCES CORPORATION
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------------------------------
PERIOD FROM
MAY 1, 2002 (INCEPTION)
TO APRIL 30,
FOR THE YEARS ENDED APRIL 30, 2004 2003 2004
------------------------------------------------------------------------------------------------------
REVENUE $ -- $ -- $ --
------------------------------------------------------------------------------------------------------
EXPENSES
Bank charges 75 -- 75
Investor relations 741 -- 741
Management and consulting fees 82,328 -- 82,328
Office and miscellaneous 271 418 689
Professional fees 24,068 2,832 26,900
Regulatory and share transfer
fees 457 1,943 2,400
Rent and occupancy costs 1,378 1,698 3,076
Telephone 3,600 150 3,750
Travel -- 292 292
------------------------------------------------------------------------------------------------------
112,918 7,333 120,251
------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (112,918) (7,333) (120,251)
Interest income 185 -- 185
------------------------------------------------------------------------------------------------------
NET LOSS $ (112,733) $ (7,333) $ (120,066)
======================================================================================================
Loss per share (Note 2(f)) $ (0.01) $ 0.00
====================================================================================================
Weighted average number of shares outstanding 16,230,760 16,230,760
======================================================================================================
|
The accompanying notes are an integral part of these financial statements.
F-3
LARREA BIOSCIENCES CORPORATION
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED APRIL 30, 2004
---------------------------------------------------------------------------------------------------------
Deficit
Common stock Accumulated
------------------------- Additional During Total
Number Paid-in Development Stockholders'
of Shares Amount Capital Stage Equity
---------------------------------------------------------------------------------------------------------
Issue of common stock for
cash on organization of
the Company 4,000,000 $ 400 $ 100 $ -- $ 500
Issue of common stock for
cash 997,040 100 99,604 -- 99,704
Net loss for the period -- -- -- (7,333) (7,333)
---------------------------------------------------------------------------------------------------------
Balance April 30, 2003 4,997,040 500 99,704 (7,333) 92,871
Common stock returned to
treasury (2,500,000) (250) 250 -- --
Stock split 6.5 for 1 13,733,720 1,373 (1,373) -- --
Net loss for the period -- -- -- (112,733) (112,733)
---------------------------------------------------------------------------------------------------------
Balance April 30, 2004 16,230,760 $ 1,623 $ 98,581 $ (120,066) $ (19,862)
=========================================================================================================
|
The accompanying notes are an integral part of these financial statements.
F-4
LARREA BIOSCIENCES CORPORATION
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------------------------------------
PERIOD FROM
MAY 1, 2002 (INCEPTION)
TO APRIL 30,
FOR THE YEARS ENDED APRIL 30, 2004 2003 2004
-------------------------------------------------------------------------------------------------------------
CASH FLOWS (USED IN) PROVIDED BY:
OPERATING ACTIVITIES
Net loss $(112,733) $ (7,333) $(120,066)
Adjustments for items not affecting cash:
Accounts payable and accrued liabilities 13,426 6,574 20,000
-------------------------------------------------------------------------------------------------------------
(99,307) (759) (100,066)
-------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Common stock issued for cash -- 100,204 100,204
-------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (99,307) 99,445 138
CASH, beginning 99,445 -- --
-------------------------------------------------------------------------------------------------------------
CASH, ending $ 138 $ 99,445 $ 138
=============================================================================================================
SUPPLEMENTAL INFORMATION Cash paid during the year to:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
|
The accompanying notes are an integral part of these financial statements.
F-5
LARREA BIOSCIENCES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
APRIL 30, 2004
1. ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES AND GOING CONCERN
The Company changed its name from Sonic Media Corp. to Larrea Biosciences
Corporation on June 1, 2004.
The Company was incorporated under the laws of the State of Nevada on May
1, 2002. The Company is focusing its operations on manufacturing, licensing
and distributing "Green" pharmaceuticals. The Company has not yet generated
business from these principal business activities and is therefore
considered to be in the development stage.
These financial statements have been prepared on a going concern basis in
accordance with United States generally accepted accounting principles. The
going concern basis of presentation assumes the Company will continue in
operation throughout the next fiscal year and into the foreseeable future
and will be able to realize its assets and discharge its liabilities and
commitments in the normal course of business. Certain conditions, discussed
below, currently exist which raise substantial doubt upon the validity of
this assumption. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
As of April 30, 2004, the Company is considered to be in the development
stage as the Company has not generated revenues from its principal business
activities. The Company's future operations are dependent upon it's ability
to obtain third party financing in the form of debt and equity and
ultimately to generate future profitable operations or income from its
operations. The Company is currently seeking additional funds through
future debt or equity financing to offset future cash flow deficiencies.
Such financing may not be available or may not be available on reasonable
terms. The resolution of this going concern issue is dependent on the
realization of management's plans. If management is unsuccessful in raising
future debt or equity financing, the Company will be required to liquidate
assets and curtail or possibly cease operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States. Because
a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period
necessarily involves the use of estimates which have been made using
careful judgement.
The financial statements have, in management's opinion, been properly
prepared within reasonable limits of materiality and within the framework
of the accounting policies summarized below:
(a) Cash and cash equivalents
The Company considers all short-term investments, including investments
in certificates of deposit, with a maturity date at purchase of three
months or less to be cash equivalents.
(b) Revenue recognition
Revenue is recognized on the sale and transfer of goods and services.
(c) Foreign currencies
The functional currency of the Company is the United States dollar.
Transactions in foreign currencies are translated into United States
dollars at the rates in effect on the transaction date. Exchange gains
or losses arising on translation or settlement of foreign currency
denominated monetary items are included in the statement of operations.
F-6
LARREA BIOSCIENCES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
APRIL 30, 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(d) Financial instruments
The Company's financial instruments consist of cash and accounts
payable and accrued liabilities.
Management is of the opinion that the Company is not subject to
significant interest, currency or credit risks on the financial
instruments included in these financial statements. The fair market
values of these financial instruments approximate their carrying
values.
(e) Income taxes
The Company follows the asset and liability method of accounting for
income taxes. Under this method, current taxes are recognized for the
estimated income taxes payable for the current period.
Deferred income taxes are provided based on the estimated future tax
effects of temporary differences between financial statement carrying
amounts of assets and liabilities and their respective tax bases as
well as the benefit of losses available to be carried forward to future
years for tax purposes.
Deferred tax assets and liabilities are measured using enacted tax
rates that are expected to apply to taxable income in the years in
which those temporary differences are expected to be covered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in operations in the period that includes
the enactment date. A valuation allowance is recorded for deferred tax
assets when it is more likely than not that such deferred tax assets
will not be realized.
(f) Loss per share
Basic loss per share is computed by dividing loss for the period
available to common stockholders by the weighted average number of
common stock outstanding during the periods. Diluted loss per share is
computed using the weighted average number of common stock and
potentially dilutive common stock issuances, outstanding during the
period. As the Company has a net loss in each of the periods presented,
basic and diluted loss per share are the same.
(g) Recent accounting pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB")
issued Financial Interpretation No. 46 ("FIN 46"), "Consolidation of
Variable Interest Entities", which addresses the consolidation of
variable interest entities (formerly referred to as "Special-Purpose
Entities"). The Interpretation is generally in effect for interim or
annual periods beginning after December 15, 2003. The adoption of FIN
No. 46 had no material impact on the Company's financial condition or
results of operations.
In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and
Equity". SFAS No. 150 requires that certain financial instruments
issued in the form of shares that are mandatorily redeemable as well as
certain other financial instruments be classified as a liability in the
financial statements. SFAS No. 150 was effective for financial
instruments entered into or modified after May 31, 2003. The Company
has reviewed the requirements of SFAS No. 150 and has determined that
it did not have an impact on its financial condition or results of
operations.
(h) Comparative figures
Certain comparative figures have been reclassified to conform to the
basis of presentation adopted for the current year.
F-7
LARREA BIOSCIENCES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(FORMERLY SONIC MEDIA CORP.)
(A DEVELOPMENT STAGE COMPANY)
APRIL 30, 2004
3. STOCKHOLDERS' EQUITY
Common stock offering:
During 2003, the Company completed a private placement offering of
4,000,000 common shares to its officers and directors for $500 and a
registered public offering of 997,040 common shares for $99,704.
On January 16, 2004, the Company's officers and directors returned
2,500,000 common shares to the Company's treasury.
On January 23, 2004, the Company declared a 6.5 for 1 stock split.
4. RELATED PARTY TRANSACTIONS
(a) Accounts payable include $NIL (2003 - $4,719) owing to a former officer
and director of the Company.
(b) During the year, former directors of the Company returned 2,500,000
(pre-split) common shares to the Company's treasury.
5. INCOME TAXES
Deferred tax assets and liabilities:
2004 2003
--------------------------------------------------------------------------------
Deferred tax assets:
Operating loss carry-forwards $ 40,823 $ 2,493
Valuation allowance (40,823) (2,493)
--------------------------------------------------------------------------------
Net deferred tax asset $ -- $ --
================================================================================
|
Management believes that it is not more likely than not that it will create
sufficient taxable income sufficient to realize its deferred tax assets. It
is reasonably possible these estimates could change due to future income
and the timing and manner of the reversal of deferred tax liabilities. Due
to its losses, the Company has no income tax expense.
The Company has operating loss carry-forwards for income tax purposes at
April 30, 2004 of approximately $120,067. Operating losses begin to expire
in fiscal year 2023.
6. COMMITMENTS
Pursuant to the terms of a stock purchase agreement ("Agreement") dated
March 26, 2004, the Company has agreed to purchase all of the issued and
outstanding capital stock of Global Botanics, Inc. ("Global"), a
corporation organized under the laws of Niue.
Global's major assets consist of four United States patents relating to the
production and use of proprietary extracts from the plant species 'Larrea
Tridentata'. These patents were acquired by Global for $1,200,000 from a
company which is controlled by a director of the Company.
The terms of the agreement require the Company to issue 3,500,000
restricted common shares to the shareholders of Global. These shares were
issued August 5, 2004.
F-8
Exhibit 21.1
List of Subsidiaries
1. Global Botanics Inc., a corporation organized in Niue.
13
Section 1350
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, David Kalenuik, certify that:
1. I have reviewed this annual report on Form 10-KSB of Larrea
BioSciences Corporation;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report.
4. Larrea BioSciences Corporation's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for Larrea BioSciences Corporation and, have:
a. Have caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to Larrea BioSciences is made known to us
by others within this entity, particularly during the period
in which this report is being prepared; and,
b. Evaluated the effectiveness of Larrea BioSciences' disclosure
controls and procedures and present in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report, and the date of this report, based on such evaluation.
Date: August 13, 2004 /s/David Kalenuik
------------------------------------
David Kalenuik
Chief Executive Officer
|
Section 1350
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Robert Sinnott, certify that:
1. I have reviewed this annual report on Form 10-KSB of Larrea
BioSciences Corporation;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report.
4. Larrea BioSciences Corporation's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for Larrea BioSciences Corporation and, have:
a. Have caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to Larrea BioSciences is made known to us
by others within this entity, particularly during the period
in which this report is being prepared; and,
b. Evaluated the effectiveness of Larrea BioSciences' disclosure
controls and procedures and present in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report, and the date of this report, based on such evaluation.
Date: August 13, 2004 /s/Robert Sinnott
------------------------------------
Robert Sinnott
Chief Financial Officer
|
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Larrea BioSciences Corporation, formerly
known as Sonic Media Corp. on Form 10-KSB for the period ending April 30, 2004,
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned, David Kalenuik Chief Executive Officer of the
Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 (a) or 15 (d)
of the Securities Exchange Act of 1934; and,
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
Date: August 25, 2004
/s/ David Kalenuik
------------------
David Kalenuik, Chief Executive Officer
|
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Larrea BioSciences Corporation, formerly
known as Sonic Media Corp. on Form 10-KSB for the period ending April 30, 2004,
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned, Robert Sinnott, Chief Financial Officer of the
Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 (a) or 15 (d)
of the Securities Exchange Act of 1934; and,
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
Date: August 25, 2004
/s/ Robert Sinnott
------------------
Robert Sinnott, Chief Financial Officer
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