SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 **FORM
10-KSB**
 
 **[
X ]**  **Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of**  **1934
for the fiscal year ended December 31, 2004.**
 **[   
 ]**  **Transitional
Report Under Section 13 or 15(d) of the Securities Exchange Act of**  **1934
for the transition period from _______________ to
________________.**
 
 ____________________________________________
 
 Commission
      File No. 0-32917**PROTOKINETIX,
      INC.**
      **Formerly
      known as RJV Networks, Inc.**
      (Name
      of small business issuer in its charter)
      **a
      development stage business**
 _____________________________________________
 
 Nevada
    94-3355026(State
      or other Jurisidiction
      of
      Incorporation or Organization)
    (IRS
      Employer
      Identification
      Number)
 _____________________________________________
 
 Suite
      1500-885 West Georgia Street
      Vancouver,
      British Columbia Canada
    V6C
      3E8(Address
      of Principal Executive Offices)
    (Zip
      Code)Issuer's
      Telephone No.: (604) 687-9887
 
 Securities
      registered under
      Section
      12(g) of the Act:
    NoneSecurities
      to be registered under
      Section
      12(g) of the Act:
    None
 
 Check
      whether the issuer (1) filed all reports required to be filed by Section
      13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
      12
      months (or for such shorter period that the Company was required to file
      such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.
    Yes
      [ X ] No [ ]Check
      if disclosure of delinquent filers in response to Item 405 of Regulation
      S-B is not contained in this form, and no disclosure will be contained, to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or
      any amendment to this Form 10-KSB.
    Yes
      [ ] No [ X ]Issuer's
      revenues for its most recent fiscal year:
    USD
      $0State
      the aggregate market value of the voting stock held by non-affiliates,
      computed by reference to the price at which the stock was sold, or the
      average bid and asked prices of such stock, as of a specified date within
      the past 60 days:
    As
      of April 11, 2005, based on $.64 per share,
  $19,986,584.00State
      the number of shares outstanding of each of the issuer's classes of common
      equity, as of the latest practicable date:
    As
      of April 12, 2005, 34,129,038 common shares
 
 Documents
Incorporated by Reference: None
 
 Transitional
Small Business Disclosure Format: Yes [ X ] No [   ].
 
 This Form
10-KSB consists of 39 pages.
 
  
  TABLE OF
CONTENTS
 FORM
10-KSB ANNUAL REPORT
 _________________________
 
 PROTOKINETIX,
INC.
 
 **Section**
    **Heading**
    **Page**Part
      IItem 1
    Description
      of Business
    4Item 2
    Description
      of Property
    9Item 3
    Legal
      Proceedings
    9Item 4
    Submission
      of Matters to a Vote of Security Holders
    9Part
      IIItem 5
    Market
      for the Registrant's Common Equity and Related Stockholder
      Matters
    10Item 6
    Management's
      Discussion and Analysis of Financial Condition and Results of Operations
      or Plan of Operation
    14Item 6A
    Quantitative
      and Qualitative Disclosures About Market Risk
    20Item 7
    Financial
      Statements
    20Item 8
    Changes
      in and Disagreements on Accounting and Financial
Disclosure
    20Item 8A
    Controls
      and Procedures
    20Item 8B
    Other
      Information
    21Part
      IIIItem 9
    Directors,
      Executive Officers, Promoters and Control Persons, Compliance with Section
      16(a) of the Exchange Act
    21Item 10
    Executive
      Compensation
    22Item 11
    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
    23Item 12
    Certain
      Relationships and Related Transactions
    23Part
      IVItem 13
    Exhibits
      and Reports on Form 8-K
    23Item 14
    Principal
      Accountant Fees and Services
    24Certifications
      and Signatures
    25
 
  
  **PART
I**
 
 **ITEM
1.**  **DESCRIPTION
OF BUSINESS**
 
 *Important
Disclosures and Disclaimers* .
 
 *Please
note that ProtoKinetix, Inc. (the "Company") is a development stage company that
has not yet sold or marketed any products. The Company had no revenues for the
year ended December 31, 2004.*
 
 *It is
important to understand that although the Company (as is discussed below) is
focused on various promising operational efforts, to date, there has not been a
commercial product developed by the Company. The Company continues to conduct
research; however, the ultimate commercialization of a viable product may never
occur. Further, even if a product is developed, the desired results for which it
was originally intended may not be achieved.*
 
 **General**
 
 ProtoKinetix
is a biologic research company based in Vancouver, British Columbia, Canada. The
Company's mission is to conduct high quality medical research in order to
address opportunities to treat specific conditions. All of the Company's
research is conducted by third party laboratories by contracted entities and
scientists in various parts of the world.
 
 The
ProtoKinetix business plan is based primarily on the furtherance of certain
intellectual property rights obtained by way of "sub-licenses" of technology
from other companies. At present, the Company has no product or products, and
has received no patents or FDA approval for any product or diagnostic
procedures.
 
 The
Company currently has no full time employees. The Company operates with a
skeletal management team headed by John Todd, M.D. In addition to Dr. Todd, the
Company receives advice and counsel from its Scientific Advisory Board. A short
biography of Dr. Todd may be found within the document, and the biographies of
other members of the ProtoKinetix Scientific Advisory Board may be found within
the "Mgmt & Bios" section of the Company's website located at
www.protokinetix.com.
 
 There are
two areas of research the Company is currently focused on. Below is a brief
discussion of these efforts. Additionally, in order to assist you in better
understanding the concepts of the Company's research, here are three definitions
of some of the terms used below:
 
 **Super-Antibody**
    This
      is an industry-adopted term used to describe genetically-engineered
      antibodies, isolated from a single blood cell, which have been expanded in
      the laboratory to attack or have a desired effect on certain targeted
      antigens, such as cancer cells.**"RECAF"
      or Receptor Alpha Fetaprotein**
    This
      is a carbohydrate molecule that is located on the surface of cancer
      cells.**"Receptor"**
    A
      structure exposed on the cell surface used for signaling or transport of
      molecules into the cell.
 
 **RECAF
Antibody Project**
 
 The
Company's first project, the development of a cancer chemotherapeutic agent
based upon RECAF, a receptor for Alphafeta protein which is found on the cell
surface of many types of malignant cells. The Company has a license from
Biocurex, Inc. to develop superantibody therapies for the RECAF receptor site.
As of the date of this report, the Company is engaged in efforts to validate the
existence of the RECAF receptor site.
 
 The
Company has an agreement with BioCurex which provides us the exclusive rights to
develop biologic therapies against cancer cells using: (i) the patented platform
developed by InNexus; and (ii) the "conjugate approach" from Perigene.
 
 During
this past year ProtoKinetix Inc. has contracted with Dr. Dianne Damotte to
conduct tests on the RECAF antibody at the George Pompidou Hospital in Paris
France. The RECAF antibody was used to determine its efficacy in tagging onto
cancer cells and not on to normal healthy cells. This was done to have a third
party validate the claims of BioCurex and to determine the suitability of RECAF
for the development of a therapeutic antibody against a variety of malignancies.
 
 The
testing by Dr. Diane Damotte demonstrated some interesting results that are
still being assessed. ProtoKinetix Inc. has not yet made a decision to proceed
with the development of a catalytic antibody. Further, if the Company does
proceed to develop a catalytic antibody, we have not yet decided which platform
to use.
 
 **AFGP
Project**
 
 The
second project that the Company has undertaken is to develop and test synthetic
antifreeze proteins (AFP) and antifreeze glycoproteins (AFGP).
 
 ProtoKinetix
has entered into agreements to acquire the exclusive right to develop products
derived from patent pending technologies related to synthetic AFGPs. The
ProtoKinetix intellectual property rights were developed by Dr. Jean-Charles
Quirion.
 
 As of the
date of this report, although the Company's development agents, including the
parties the Company has licensed AFGP technologies from, have applied to receive
patents for technologies ProtoKinetix has licensed and continues to primarily
base it's research efforts on, *no* patents
have issued by a governmental or quasi-governmental agency.
 
 **Competition**
 
 The
markets that the Company is attempted to enter are multi-billion dollar
international industries. They are intensely competitive. Many of our
competitors (from every perspective) are substantially larger and have greater
financial, research, manufacturing, and marketing resources.
 
 Industry
competition in general is based on the following:
 
 ·
    Scientific
      and technological capability;
 ·
    Proprietary
      know-how;
 ·
    The
      ability to develop and market products and
processes;
 ·
    The
      ability to obtain FDA or other required regulatory
    approvals;
 ·
    The
      ability to manufacture products that meet applicable FDA requirements,
      (i.e. FDA’s Quality System Regulations) see Governmental Regulation
      section;
 ·
    Access
      to adequate capital;
 ·
    The
      ability to attract and retain qualified personnel;
and
 ·
    The
      availability of patent protection.
 
 We
believe our scientific and technological capabilities are significant.
 
 Our
ability to develop our research is in large measure dependent on our having
additional resources and/or collaborative relationships, particularly where we
can have our product development efforts funded on a project or milestone basis.
We believe that our know-how with our AFGP project, in spite of not yet
receiving any patent protected rights, has been instrumental in our obtaining
the collaborations we have developed.
 
 Although
there is no such immediate need to make any regulatory filing in the United
States or abroad, one should know that we have limited experience with regard to
obtaining FDA or other required regulatory approvals, and no experience with
obtaining pre-marketing approval of a biologic product. (See “Governmental
Regulation” for definition of pre-marketing approval.) For this reason, should
our research efforts continue to show promise, we will likely need to hire
consultants to assist the Company with such governmental regulations.
 
 Our
access to capital is much less than that of most of our competitors, and this is
a competitive disadvantage. We believe however that our access to capital may
increase as we get closer to the development of a commercially viable
product.
 
 To date,
we believe our research has enabled us to attract and retain qualified
consultants. Because of the greater financial resources of many of our
competitors, we may not be able to complete effectively for the same individuals
to the extent that a competitor uses its substantial resources to attract any
such individuals.
 
 As is
discussed above, with respect to the availability of patent protection, we do
not have our own portfolio of patents or the financial resources to develop
and/or acquire a portfolio of patents similar to those of our larger
competitors. We have been able to obtain access to patent-pending technology by
entering into licensing arrangements. However, there can be no certainty that
any of the patent-pending technologies we have licensed will ever receive final
approval by any patent office. This could significantly affect and undermine the
Company's efforts in any of the two key Company projects.
 
 **Governmental
Regulation**
 
 As was
discussed above, the Company currently has no commercially viable products. The
below discussion relates to factors that may come into play ***when
and if*** the
Company has a commercially viable product.
 
 All of
the Company’s research relates to products that are regulated by the FDA, U.S.
Department of Agriculture, certain state and local agencies, and/or comparable
regulatory bodies in other countries. This regulation governs almost all aspects
of development, production, and marketing, including product testing,
authorizations to market, labeling, promotion, manufacturing, and record
keeping. The FDA - and U.S. Department of Agriculture - regulated products
require some form of action by that agency before they can be marketed in the
United States, and, after approval or clearance, the Company must continue to
comply with other FDA requirements applicable to marketed products. Both before
and after approval or clearance, failure to comply with the FDA’s requirements
can lead to significant penalties.
 
 The
Company's proposed AFGP products may be regulated as medical devices and/or
biologics. There are two review procedures by which medical devices can receive
FDA clearance or approval. Some products may qualify for clearance under Section
510(k) of the Federal Food, Drug and Cosmetic Act, in which the manufacturer
provides a pre-market notification that it intends to begin marketing the
product, and shows that the product is substantially equivalent to another
legally marketed product (i.e., that it has the same intended use and is as safe
and effective as a legally marketed device and does not raise different
questions of safety and effectiveness). In some cases, the submission must
include data from human clinical studies. Marketing may commence when the FDA
issues a clearance letter finding such substantial equivalence. An applicant
must submit a 510(k) application at least 90 days before marketing of the
affected product commences. Although FDA clearance may be granted within that
90-day period, in some cases as much as a year or more may be required before
clearance is obtained, if at all.
 
 If the
medical device does not qualify for the 510(k) procedure (either because it is
not substantially equivalent to a legally marketed device or because it is
required by statute and the FDA’s implementing regulations to have an approved
application), the FDA must approve a pre-market approval application before
marketing can begin. Pre-market approvals must demonstrate, among other matters,
that the medical device provides a reasonable assurance of safety and
effectiveness. A pre-market approval is typically a complex submission,
including the results of preclinical and clinical studies. Preparing a
pre-market approval is a detailed and time-consuming process. Once a pre-market
approval has been submitted, the FDA is required to review the submission within
a statutory period of time. However, the FDA’s review may, and often is, much
longer, often requiring one year or more, and may include requests for
additional data.
 
 Biologic
products must be the subject of an approved biologics license application before
they can be marketed. The FDA approval process for a biologic product is similar
to the pre-market approval process, involving a demonstration of the product’s
safety and effectiveness based in part on both preclinical and clinical studies.
 
 The
Company's ***proposed*** AFGP
products may be considered by FDA to be a biologic and will therefore be
submitted to the biologics division of FDA, the Center for Biologics Evaluation
and Research.
 
 Every
company that manufactures biologic products or medical devices distributed in
the United States must comply with the FDA’s Quality System Regulations. These
regulations govern the manufacturing process, including design, manufacture,
testing, release, packaging, distribution, documentation, and purchasing.
Compliance with the Quality System Regulations is required before the FDA will
approve an application, and these requirements also apply to marketed products.
Companies are also subject to other post-market and general requirements,
including compliance with restrictions imposed on marketed products, compliance
with promotional standards, record keeping, and reporting of certain adverse
reactions or events. The FDA regularly inspects companies to determine
compliance with the Quality System Regulations and other post-approval
requirements. Failure to comply with statutory requirements and the FDA’s
regulations can lead to substantial penalties, including monetary penalties,
injunctions, product recalls, seizure of products, and criminal
prosecution.
 
 The
Clinical Laboratory Improvement Act of 1988 prohibits laboratories from
performing in vitro tests for the purpose of providing information for the
diagnosis, prevention or treatment of any disease or impairment of, or the
assessment of, the health of human beings unless there is in effect for such
laboratories a certificate issued by the U.S. Department of Health and Human
Services applicable to the category of examination or procedure performed.
Although a certificate is not required for ProtoKinetix, ProtoKinetix considers
the applicability of the requirements of the Clinical Laboratory Improvement Act
in the potential design and development of its products.
 
 In
addition, the FDA regulates the export of medical devices that have not been
approved for marketing in the United States. The Federal Food, Drug and Cosmetic
Act contains general requirements for any medical device that may not be sold in
the United States and is intended for export. Specifically, a medical device
intended for export is not deemed to be adulterated or misbranded if the
product: (1) accords to the specifications of the foreign purchaser; (2) is not
in conflict with the laws of the county to which it is intended for export; (3)
is labeled on the outside of the shipping package that it is intended for
export; and (4) is not sold or offered for sale in the United States. Some
medical devices face additional statutory requirements before they can be
exported. If an unapproved device does not comply with an applicable performance
standard or premarket approval requirement, is exempt from either such
requirement because it is an investigational device, or is a banned device, the
device may be deemed to be adulterated or misbranded unless the FDA has
determined that exportation of the device is not contrary to the public health
and safety and has the approval of the country to which it is intended for
export. However, the Federal Food, Drug and Cosmetic Act does permit the export
of devices to any country in the world, if the device complies with the laws of
the importing country and has valid marketing authorization in one of several
“listed” countries under the theory that these listed countries have
sophisticated mechanisms for the review of medical devices for safety and
effectiveness.
 
 ProtoKinetix
is also subject to regulations in foreign countries governing products, human
clinical trials and marketing, and may need to obtain approval or evaluations by
international public health agencies, such as the World Health Organization, in
order to sell products in certain countries. Approval processes vary from
country to country, and the length of time required for approval or to obtain
other clearances may in some cases be longer than that required for U.S.
governmental approvals. The extent of potentially adverse governmental
regulation affecting ProtoKinetix that might arise from future legislative or
administrative action cannot be predicted.
 
 **Environmental
Laws**
 
 To date,
we have not encountered any costs relating to compliance with any environmental
laws.
 
 **Intellectual
Property**
 
 Subject
to our available financial resources, our intellectual property strategy is: (1)
to pursue licenses, trade secrets, and know-how within the Company's primary
research areas, and (2) to develop and acquire proprietary positions to reagents
and new platforms for the development of products related to these technologies.
 
 **Trade
Secrets and Know-How**
 
 We
believe that even if the Company's intellectual property position is ultimately
diminished as a result of our development agents and licensors to receive patent
protection for the licenses ProtoKinetix has contracted to access, we have
developed a substantial body of trade secrets and know-how relating to the
development of AFGP, including but not limited to the optimization of materials
for efforts, and how to maximize sensitivity, speed-to-result, specificity,
stability and reproducibility.
 
 **ITEM
2.**  **DESCRIPTION
OF PROPERTY**
 
 The
Company does not own any real property. The Company is not currently paying a
rental fee where it is located.
 
 **ITEM
3.**  **LEGAL
PROCEEDINGS**
 
 There are
currently no legal matters pending.
 
 **ITEM
4.**  **SUBMISSION
OF MATTERS TO A VOTE OF SECURITY** **HOLDERS**
 
 A
shareholder meeting was not held during fiscal year 2004.
 
  
  **PART
II**
 
 **ITEM
5.**  **MARKET
FOR THE REGISTRANT'S COMMON EQUITY AND**  **RELATED
STOCKHOLDER MATTERS**
 
 Trades of
our common stock are subject to Rule 15g-9 of the Securities and Exchange
Commission, known as the Penny Stock Rule. This rule imposes requirements on
broker/dealers who sell securities subject to the rule to persons other than
established customers and accredited investors. For transactions covered by the
rule, brokers/dealers must make a special suitability determination for
purchasers of the securities and receive the purchaser’s written agreement to
the transaction prior to sale. The Securities and Exchange Commission also has
rules that regulate broker/dealer practices in connection with transactions in
“penny stocks.” Penny stocks generally are equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in that security is provided by the
exchange or system). The Penny Stock Rules requires a broker/ dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker/dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker/dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer’s account. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer’s confirmation. These disclosure requirements have the effect
of reducing the level of trading activity in the secondary market for our common
stock. As a result of these rules, investors may find it difficult to sell their
shares.
 
 The
Company's Common Stock is quoted on the over-the-counter market and quoted on
the National Association of Securities Dealers Electronic Bulletin Board ("OTC
Bulletin Board") under the symbol "PKTX". The high and low bid prices for the
Common Stock, as reported by the National Quotation Bureau, Inc., are indicated
for the periods described below. Such prices are inter-dealer prices without
retail markups, markdowns or commissions, and may not necessarily represent
actual transactions.
 
 **2003**
    **Low**
    **High**As
      of March 31, 2003
    $.10
    .65As
      of June 30, 2003
    .08
    .24As
      of September 30, 2003
    .11
    .22As
      of December 31, 2003
    .09
    .72
 
 **2004**
    **Low**
    **High**As
      of March 31, 2004
    $.47
    .55As
      of June 30, 2004
    .90
    .98As
      of September 30, 2004
    .54
    .62As
      of December 31, 2004
    .60
    .70
 ****
 **Dividends**
  We have
never paid cash dividends and have no plans to do so in the foreseeable future.
Our future dividend policy will be determined by our board of directors and will
depend upon a number of factors, including our financial condition and
performance, our cash needs and expansion plans, income tax consequences, and
the restrictions that applicable laws, our current preferred stock instruments,
and our future credit arrangements may then impose.
  Currently
under Nevada law, a dividend may not be made by a corporation if, after giving
it effect:
  ·
    the
      corporation would not be able to pay its debts as they become due in the
      usual course of business; or
 ·
    except
      as otherwise specifically allowed by the corporation’s articles of
      incorporation, the corporation’s total assets would be less than the sum
      of its total liabilities plus the amount that would be needed, if the
      corporation were to be dissolved at the time of distribution, to satisfy
      the preferential rights upon dissolution of stockholders whose
      preferential rights are superior to those receiving the
      distribution.
  **Holders**
 
 As of
April 12, 2005, there were approximately 64 shareholders of record of the
company's Common Stock.
 
 As of
April 12, 2005, the Company had 34,129,038 shares issued and outstanding. During
the year ended December 31, 2004, the Company issued a total of 4,049,456 new
common shares. Included in the earnings per share calculation as of December 31,
2004, are 5,050,000 common shares which were issuable as of December 31, 2004,
and which were ultimately issued in the first and second calendar quarters of
2005. From January 1, 2005 through April 12, 2005, as discussed in the previous
sentence, the Company has issued 5,335,832 common shares.
 
 **Recent
Sales of Unregistered Securities; Use of Proceeds From Registered
Securities**
 
 The
previously filed Form 10-QSBs outline transactions related to new issuances for
the first, second and third calendar quarters of 2004. Below is a table showing
the number of newly issued shares by quarter:
 
 **Period**
    **Number
      of Newly Issued Common Shares**First
      Quarter
    1,652,300Second
      Quarter
    500,000Third
      Quarter
    209,756Fourth
      Quarter
    1,687,400**Total**
    **4,049,456**
 
 There
have been no sales of unregistered securities during calendar 2004 which would
be required to be disclosed pursuant to Item 701 of Regulation S-B, except for
the following:
 
 On March
17, 2004 the Company issued a total of 1,652,300 common shares. These issuances
were made in lieu of cash payments for services rendered or to be rendered and
were considered exempt transactions made under the Securities Act of 1933,
Section 4(2).
 
 On May
12, 2004, the Company issued 500,000 common shares pursuant to a consulting
agreement. These issuances were made in lieu of cash payments for services
rendered and were considered exempt transactions made under the Securities Act
of 1933, Section 4(2).
 
 On July
13, 2004, the Company issued 109,756 common shares pursuant to two consulting
agreements. These issuances were made in lieu of cash payments for services
rendered and were considered exempt transactions made under the Securities Act
of 1933, Section 4(2).
 
 On July
29, 2004, the Company issued 50,000 common shares pursuant to two consulting
agreements. These issuances were made in lieu of cash payments for services
rendered and were considered exempt transactions made under the Securities Act
of 1933, Section 4(2).
 
 On August
25, 2004, the Company issued 100,000 common shares pursuant to a consulting
agreement. These issuances were made in lieu of cash payments for services
rendered and were considered exempt transactions made under the Securities Act
of 1933, Section 4(2).
 
 On
October 1, 2004, the Company issued 132,400 common shares pursuant to two
consulting agreements. These issuances were made in lieu of cash payments for
services rendered and were considered exempt transactions made under the
Securities Act of 1933, Section 4(2).
 
 On
October 27, 2004, the Company issued 600,000 common shares pursuant to four
consulting agreements. These issuances were made in lieu of cash payments for
services rendered and were considered exempt transactions made under the
Securities Act of 1933, Section 4(2).
 
 On
November 15, 2004, the Company issued 650,000 common shares pursuant to two
consulting agreements. These issuances were made in lieu of cash payments for
services rendered and were considered exempt transactions made under the
Securities Act of 1933, Section 4(2).
 
 On
December 22, 2004, the Company issued 255,000 common shares. These issuances
were made in lieu of cash payments pursuant to three consulting agreements for
services rendered and were considered exempt transactions made under the
Securities Act of 1933, Section 4(2).
 
 **Warrants**
 
 On
October 15, 2004, in lieu of payment for services rendered to the Company, the
Company issued the following parties warrants to purchase common shares of the
Company's stock. All warrants were exercised or subscribed to as of December 31,
2004, and no warrants remain outstanding at December 31, 2004.
 
 No.
      of shares
    Exercise
      Price
    Date
      Exercised
    Date
      Warrants
      Approved
      by BoardWalter
      Paton
    50,000
    0.30
    10/15/2004
    10/15/2004Ted
      Olive
    100,000
    0.15
    10/15/2004
    10/15/2004Malita
      Investments
    100,000
    0.15
    10/18/2004
    10/15/2004Nina
      Moore
    100,000
    0.15
    10/18/2004
    10/15/2004Lesia
      Muzlowsky
    100,000
    0.30
    10/15/2004
    10/15/2004Max
      Fugman
    200,000
    0.30
    10/29/2004
    10/15/2004Michael
      Jantz
    150,000
    0.15
    12/07/2004
    10/15/2004Margreat
      Inc.
    300,000
    0.30
    12/15/2004
    10/15/2004Gary
      Segal
    200,000
    0.30
    12/15/2004
    10/15/2004Claude
      Boulanger
    300,000
    0.15
    12/28/2004
    10/15/2004Harry
      Vouitsis
    50,000
    0.15
    12/23/2004
    10/15/2004Dr.
      J. Todd
    200,000
    0.15
    12/30/2004
    10/15/2004Raymond
      Todd
    100,000
    0.30
    12/30/2004
    10/15/2004Suzanne
      Corrie
    100,000
    0.15
    12/30/2004
    10/15/2004Dr.
      S.J. Gourdrey
    100,000
    0.15
    12/30/2004
    10/15/2004Ken
      Greybeal
    300,000
    0.15
    12/27/2004
    10/15/2004Dr.
      Jean Marie Dupuy
    150,000
    0.15
    12/28/2004
    10/15/2004Lynda
      Young
    200,000
    0.15
    12/27/2004
    10/15/2004Richard
      Bullock
    100,000
    0.30
    12/30/2004
    10/15/2004Ralston
      Communication
    200,000
    0.30
    12/30/2004
    10/15/2004Enavest
      International
    350,000
    0.15
    12/30/2004
    10/15/2004Total
    3,450,000
 
 **Disclosure
Related to Form S-8 Issuances**
 
 Prior to
issuing any common shares under Form S-8, the Company requests and receives an
executed verification from all issuees stating that the issuee is a natural
person and that: (a) the shares being issued are not being provided to create or
sustain a market for the Company's securities, and (b) that the shares are not
being issued as a part of a capital raising transaction. All consultants to the
Company are required to provide work product as a part of and condition to their
relationship with the Company. Consultant work product is delivered in
accordance with the terms and conditions of each respective Consultants'
agreement.
 
  
  **ITEM
6.**  **MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF** **OPERATION**
 
 This
discussion and analysis should be read in conjunction with the accompanying
Consolidated Financial Statements and related notes. 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
accounting principles generally accepted in the United States. The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States of America requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of any contingent liabilities at the financial statement date and
reported amounts of revenue and expenses during the reporting period. On an
on-going basis we review our estimates and assumptions. Our estimates were based
on our historical experience and other assumptions that we believe to be
reasonable under the circumstances. Actual results are likely to differ from
those estimates under different assumptions or conditions, but we do not believe
such differences will materially affect our financial position or results of
operations. Our critical accounting policies, the policies we believe are most
important to the presentation of our financial statements and require the most
difficult, subjective and complex judgments, are outlined below in "Critical
Accounting Policies," and have not changed significantly.
 
 In
addition, certain statements made in this report may constitute “forward-looking
statements”. These forward-looking statements involve known or unknown risks,
uncertainties and other factors that may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. Specifically, 1) our ability to obtain necessary regulatory
approvals for our products; and 2) our ability to increase revenues and
operating income, is dependent upon our ability to develop and sell our
products, general economic conditions, and other factors. You can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continues" or the negative of these terms or other
comparable terminology. Although we believe that the expectations reflected-in
the forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.
 
 **Critical
Accounting Policies**
 
 Our
critical and significant accounting policies, including the assumptions and
judgments underlying them, are disclosed in the Notes to the Financial
Statements. These policies have been consistently applied in all material
respects and address such matters as revenue recognition and depreciation
methods. The preparation of the financial statements in conformity with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates. The accounting treatment of a particular transaction is specifically
dictated by accounting principles, generally accepted in the United States of
America, with no need for management’s judgment in their application. There are
also areas in which management’s judgment in selecting any viable alternative
would not produce a materially different result. See our audited financial
statements and notes thereto which contain accounting policies and other
disclosures required by accounting principles, generally accepted in the United
States of America.
 
 **Overview**
 
 ProtoKinetix
is a biologic research company based in Vancouver, British Columbia, Canada. The
Company's mission is to conduct high quality medical research in order to
address opportunities to treat specific conditions. All of the Company's
research is conducted by third party laboratories by contracted entities and
scientists in various parts of the world.
 
 The
ProtoKinetix business plan is based primarily on the furtherance of certain
intellectual property rights obtained by way of "sub-licenses" of technology
from other companies. At present, the Company has no product or products, and
has received no patents or FDA approval for any product or diagnostic
procedures.
 
 The
Company currently has no full time employees. The Company operates with a
skeletal management team headed by John Todd, M.D. In addition to Dr. Todd, the
Company receives advice and counsel from its Scientific Advisory Board. A short
biography of Dr. Todd may be found within the document, and the biographies of
other members of the ProtoKinetix Scientific Advisory Board may be found within
the "Mgmt & Bios" section of the Company's website located at
www.protokinetix.com.
 
 There are
two areas of research the Company is currently focused on. Below is a brief
discussion of these efforts. Additionally, in order to assist you in better
understanding the concepts of the Company's research, here are three definitions
of some of the terms used below:
 
 **Super-Antibody**
    This
      is an industry-adopted term used to describe genetically-engineered
      antibodies, isolated from a single blood cell, which have been expanded in
      the laboratory to attack or have a desired effect on certain targeted
      antigens, such as cancer cells.**"RECAF"
      or Receptor Alpha Fetaprotein**
    This
      is a carbohydrate molecule that is located on the surface of cancer
      cells.**"Receptor"**
    A
      structure exposed on the cell surface used for signaling or transport of
      molecules into the cell.
 
 **RECAF
Antibody Project**
 
 The
Company's first project, the development of a cancer chemotherapeutic agent
based upon RECAF, a receptor for Alphafeta protein which is found on the cell
surface of many types of malignant cells. The Company has a license from
Biocurex, Inc. to develop superantibody therapies for the RECAF receptor site.
As of the date of this report, the Company is engaged in efforts to validate the
existence of the RECAF receptor site.
 
 The
Company has an agreement with BioCurex which provides us the exclusive rights to
develop biologic therapies against cancer cells using: (i) the patented platform
developed by InNexus; and (ii) the "conjugate approach" from Perigene.
 
 During
this past year ProtoKinetix Inc. has contracted with Dr. Dianne Damotte to
conduct tests on the RECAF antibody at the George Pompidou Hospital in Paris
France. The RECAF antibody was used to determine its efficacy in tagging onto
cancer cells and not on to normal healthy cells. This was done to have a third
party validate the claims of BioCurex and to determine the suitability of RECAF
for the development of a therapeutic antibody against a variety of malignancies.
 
 The
testing by Dr. Diane Damotte demonstrated some interesting results that are
still being assessed. ProtoKinetix Inc. has not yet made a decision to proceed
with the development of a catalytic antibody. Further, if the Company does
proceed to develop a catalytic antibody, we have not yet decided which platform
to use.
 
 *The
following is further discussion of the Company's RECAF R&D
project* :
 
 The RECAF
is a site which the Company believes exists on many cancer cells. Think of the
RECAF site as a "lock on a door". Cancer cells by their very nature are antigens
or foreign invaders to the way the body functions normally. The body has cells
which create what are called antibodies. Antibodies are the way in which the
human body attacks antigens and to cause them to die. The problem with cancer
cells is that in an effort to destroy the cancer cell, it is difficult for an
antibody to gain access to and bind to a cancer cell. The Company believes that
should the RECAF receptor site exist, it will be able to design a superantibody
(or enhanced daisy chain antibody) which will bind to the RECAF receptor site
(like a key going into the lock of the door) and destroy the cancer cell.
 
 With
respect to the RECAF receptor site, on November 22, 2002, BioKinetix, Inc.
entered into an agreement with BioCurex, Inc. which provided BioKinetix with
exclusive world wide certain intellectual property rights to produce a therapy
using superantibodies for the RECAF receptor site. On July 2, 2003, BioCurex
assented to the assignment of all of BioKinetix's rights to the Company. On
March 18, 2004, in consideration of the Company's commitment to issue 400,000
common shares, BioCurex executed a letter agreement ("BioCurex Letter
Agreement") with the Company which made the "effective date" of the November 22,
2002, agreement - March 14, 2004. Additionally, the BioCurex Letter Agreement
provided the Company with additional intellectual property rights with respect
to the RECAF receptor site.
 
 In terms
of creating an antibody, the Company's efforts are being led by Professor Max
Arella (please see the Company's press release dated September 4, 2003). Once an
antibody is created, it must be enhanced or converted into a superantibody. In
order to create a superantibody, the Company has acquired access to various
technologies from (a) Innexus Corporation; and (b) Perigene
Corporation.
 
 On
November 22, 2002, a BioKinetix, Inc., a research and development subsidiary of
Begland Corporation, entered into an agreement with Innexus Corporation which
provided BioKinetix with certain intellectual property rights to develop up to
four (4) antibodies into superantibodies using the related Innexus Corporation
technology. On July 3, 2003, Innexus Corporation assented to an assignment of
all of BioKinetix's rights under the November 22, 2002 agreement to the
Company.
 
 On
December 3, 2003, Perigene Corporation entered into an agreement with the
Company whereby the Company had the right to access various Perigene
intellectual property resources in order to create superantibodies.
 
 As is
discussed above, the very existence of the RECAF has yet to be determined. Both
BioCurex and the Company have entered into agreement with research institutions
in order to prove that a RECAF does in fact exist on some, if not many malignant
cancer cells. Of course, should the RCAF not exist, the consequences to the
Company and its current research efforts could be catastrophic.
 
 **AFGP
Project**
 
 The
second project that the Company has undertaken is to develop and test synthetic
antifreeze proteins (AFP) and antifreeze glycoproteins (AFGP).
 
 ProtoKinetix
has entered into agreements to acquire the exclusive right to develop products
derived from patent pending technologies related to synthetic AFGPs. The
ProtoKinetix intellectual property rights were developed by Dr. Jean-Charles
Quirion.
 
 As of the
date of this report, although the Company's development agents, including the
parties the Company has licensed AFGP technologies from, have applied to receive
patents for technologies ProtoKinetix has licensed and continues to primarily
base it's research efforts on, *no* patents
have issued by a governmental or quasi-governmental agency.
 
 *Below
is a further discussion of the Company's AFGP Project* :
 
 One of
many accomplishments from pioneering research of the U.S. Antarctic Program was
the discovery, in the early sixties, that fish living year-long in subzero
temperature are extremely resistant to freezing. The substances that prevent
these fish from freezing were isolated, characterized and designated as
antifreeze glycoproteins or AFGP. Over the years, various kinds of AFGP were
isolated from many species of fishes, and in some amphibians, plants and
insects. All of the AFGPs share a common characteristic that prevents ice
crystals from growing and connecting to each other.
 
 A review
of the scientific literature will confirm that there has been a great deal of
interest around the world in these natural antifreeze glycoproteins which are
able to protect a great many creatures which are subjected to freezing
temperatures. A further review will also confirm that the natural antifreeze is
able to preserve mammalian cells tissue and organs. The metabolic rate in living
cells is reduced as the temperature is lowered. Keeping cells and tissue at a
low temperature enables their preservation for a longer time than cells can be
preserved for at a higher temperature. Yet, when cells are exposed to sub zero
temperatures, they are destroyed by the formation of ice crystals which disrupts
the cell membrane.
 
 Scientists
have conducted many experiments in which they extracted naturally occurring AFGP
from a variety of fish and then used these naturally occurring antifreeze
glycoproteins to reduce the temperature at which ice crystals are formed. It has
been determined in experiments by many scientists that mammalian cells in a
solution containing natural AFGP could be successfully preserved at temperatures
several degrees below zero C (see attached). At this temperature the metabolic
rate of the cells is very low, and these cells can be preserved for a longer
period of time at sub zero temperatures as long as the cells are not destroyed
by the formation of ice crystals. However, until today, applications of AFGP
were limited since researchers were unable to produce sufficient quantities or
stable enough copies of these antifreeze glycoproteins for commercial
applications, and the use of naturally occurring compounds extracted from fish
is too labour and cost-intensive to be practical.
 
 Researchers,
headed by Dr. Jean Charles Quirion in Rouen, France have developed an innovative
and patented chemical synthesis protocol for manufacturing and stabilizing AFGP
molecules using a chemical bond that protects these compounds from degradation
by naturally occurring enzymes. Dr. Quirion and his team have produced several
synthetic antifreeze glycoproteins and have the ability to produce many more
different types of these molecules. The synthetic AFGP which has been made have
been tested and we were able to show:
 
 ·
    The
      molecules are stable down to a pH of 1.8
 ·
    There
      is no toxicity demonstrated in 2 separate
trials
 ·
    The
      molecules tested have shown that they reduce the freezing point to minus
      18 degrees celcius
 ·
    We
      have been able to preserve red cells at temperatures below zero Celcius
      using 1 mg per ml of the synthetic
antifreeze
 
 Current
research is being conducted to confirm the efficacy of these chemically
synthesized new molecules and applications are being sought for the use of the
synthetic AFGP to prolong the shelf-life of human blood and blood products as
well as for other cell types, live vaccines, tissue and organs. The market for
the preservation of blood and blood products is very large, as is the market for
the preservation of human and animal cells for research purposes. The subzero
cryopreservation of organs using our synthetic AFGP will be a major milestone in
transplantation medicine
 
 ProtoKinetix
will continue to conduct research on the synthetic AFGP which are being
manufactured. This work will be conducted by government agencies as well as by
contract with private laboratory facilities.
 
 **Expenses**
 
 Expenses
in 2004 arose primarily from professional and consulting fees. We incurred
professional fees relating to costs associated with our being a reporting
company under the Securities Exchange Act of 1934, as amended. We also incurred
consulting fees which contributed to a net loss of $5,388,274 during the twelve
month period ended December 31, 2004 (approximately $.18 per
share).
 
 **Plan
of Operation**
 
 Our
current operations are centered around the Company's relationships with various
research and development consultants who are conducting research on behalf of
the company at discrete and established laboratories in various parts of the
world. The Company intends to continue these efforts throughout
2005.
 
 **Sales
and Marketing**
 
 The
Company is currently not selling or marketing any products.
 
 **Liquidity
and Capital Resources**
 
 At
December 31, 2004, we had $283,556 in cash and total current assets. As of the
date of this report, we require additional capital investments or borrowed funds
to meet cash flow projections and carry forward our business objectives. There
can be no assurance that we will be able to raise capital from outside sources
in sufficient amounts to fund our new business.
 
 The
failure to secure adequate outside funding would have an adverse affect on our
plan of operation and results therefrom and a corresponding negative impact on
shareholder liquidity.
 
 **Inflation**
 
 Although
management expects that our operations will be influenced by general economic
conditions, we do not believe that inflation had a material effect on our
results of operations during the year ending December 31, 2004.
 
 **Going
Concern**
 
 The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. The history of losses and the inability for the
Company to make a profit from selling a good or service has raised substantial
doubt about our ability to continue as a going concern.
 
 In spite
of the fact that the current cash obligations of the Company are relatively
minimal, given the cash position of the Company, we
have very little cash to operate .
 
 We intend
to fund the Company and attempt to meet corporate obligations by selling common
stock. However the Company's common stock is at a low price and is not actively
traded.
 
 **Results
of Operations for the Year Ended December 31, 2004**
 
 We had no
revenue.
 
 We had a
$5,388,274 loss from operations for 2004.
 
 Operating
expenses were $5,388,274 in 2004. These expenses were primarily incurred for
professional fees, consulting services related to the operations of the
Company's business, specifically, research and development related expenses, and
other general and administrative expenses.
 ****
 **Quantitative
and Qualitative Disclosures About Market Risk**
 
 We face
exposure to fluctuations in the price of our common stock due to the very
limited cash resources we have. For example, the Company has very limited
resources to pay legal and accounting professionals. If we are unable to pay a
legal or accounting professional in order to perform various professional
services for the company, it may be difficult, if not impossible, for the
Company to maintain its reporting status under the '34 Exchange Act. If the
Company felt that it was likely that it would not be able to maintain its
reporting status, it would make a disclosure by filing a Form 8-K with the SEC.
In any case, if the Company was not able to maintain its reporting status, it
would become "delisted" and this would potentially cause an investor or an
existing shareholder to lose all or part of his investment.
 
 **ITEM
7.**  **FINANCIAL
STATEMENTS**
 
 The
Consolidated Financial Statements and schedules that constitute Item 7 are
attached at the end of this Annual Report on Form 10-KSB.
 
 An index
to these Financial Statements and schedules is also included on page F-1 of this
Annual Report on Form 10-KSB.
 
 **ITEM
8.**  **CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS** **ON
ACCOUNTING AND FINANCIAL DISCLOSURE**
 
 Not
applicable.
 
  **ITEM
8A.**  **CONTROLS
AND PROCEDURES**
 
 As of the
end of the period covered by this report, the Company conducted an evaluation
under the supervision and with the participation of the principal executive
officer and principal financial officer, of the Company’s disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the
principal executive officer and principal financial officer concluded that the
Company’s disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company’s internal controls over financial
reporting during the Company’s most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
 
 **ITEM
8B.**  **OTHER
INFORMATION**
 
 Not
applicable.
 
 **PART
III**
 
 **ITEM
9.**  **DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND** **CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF** **THE
EXCHANGE ACT**
 
 As of
April 12, 2005, the Company's current officers and directors consist of the
following persons:
 
 **Name**
    **Age**
    **Office**
    **Since**Dr.
      John Todd
    61
    Chairman
      and President
    InceptionDr.
      Jean-Marie Dupuy
    67
    Director
    2004
 
 Resume
of Dr. John Todd
 
 ** See
previously filed Form 10-KSB for the year ended December 31, 2003
 
 Resume
of Dr. Jean-Marie Dupuy
 
 ** See
previously filed Form 10-KSB for the year ended December 31, 2003
 
 **Section
16(a) Beneficial Ownership Reporting Compliances**
 
 Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires the Company’s directors, executive officers and holders of more than
10% of the Company’s common stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company. The Company believes
that during the year ended December 31, 2004, its officers, directors and
holders of more than 10% of the Company’s common stock complied with all Section
16(a) filing requirements.
 
 **Code
of Ethics**
 
 The
Company currently does not have a Code of Ethics that applies to the Company’s
principal executive and financial officers. The Company plans to establish and
adopt a code of ethics in the third quarter of the current fiscal
year.
 
 **Identification
of Audit Committee; Audit Committee Financial Expert**
 
 The
Company currently does not have an audit committee and has not made a
determination of whether there is a financial expert. The Company plans to
establish an audit committee during the third quarter of the current fiscal
year.
  **ITEM
10.**  **EXECUTIVE
COMPENSATION**
 
 The
following table summarizes the annual compensation paid to ProtoKinetix’s named
executive officers for the three years ended December 31, 2004, 2003 and
2002:
 
 **Name
      and Position**
    **Year**
    **Annual
      Comp**
      **Salary**
    **Long-Term
      Compensation Awards—Securities Underlying**
      **Stock
      Options**Dr.
      John Todd1
    2004
      
      2003
      
      2002
    $0
      
      -
      
      -
    $0
      
      -
      
      -Dr.
      Jean Marie Dupuy2
    2004
      
      2003
      
      2002
    -
      
      -
      
      -
    -
      
      -
      
      -
 
 1   On
October 15, 2004, Dr. Todd was issued a warrant to purchase 200,000  Company
common shares at $.15 per share. On December 30, 2004, Dr. Todd  exercised
this warrant and received 200,000 common shares.
 2  On
October 15, 2004, Dr. Dupuy was issued a warrant to purchase 150,000  Company
common shares at $.15 per share. On December 28, 2004, Dr. Dupuy  exercised
this warrant and received 150,000 common shares.
 
 **Options/SAR
Grants in the Last Fiscal Year**
 
 N/A
 
 **Employment
Agreements**
 
 None
 
 **Chief
Executives Officer’s compensation**
 
 During
fiscal year 2004, Dr. John Todd did not draw a salary nor did the Company accrue
a salary for any obligation.
 
 **Compensation
of Directors**
 
 Directors
receive no remuneration for their services as directors at this time. The
Company has adopted no retirement, pension, profit sharing or other similar
programs.
 
 **ITEM
11.**  **SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS** **AND
MANAGEMENT AND RELATED STOCKHOLDER** **MATTERS**
 
 The
following table sets forth certain information regarding the beneficial
ownership of the Company’s Common Stock as of December 31, 2004 based on
information available to the Company by (i) each person who is known by the
Company to own more than 5% of the outstanding Common Stock based upon reports
filed by such persons within the Securities and Exchange Commission; (ii) each
of the Company’s directors; (iii) each of the Named Executive Officers; and (iv)
all officers and directors of the Company as a group.
 
 **Name
      and Address**
    **Shares
      Beneficially Owned****(1)**
    **Percent
      of Class**Dr.
      John Todd
    2,750,000
    8.1%Dr.
      Jean-Marie Dupuy
    150,000
    .004%
 
 (1)  A person
is deemed to be the beneficial owner of securities that can be acquired  by such
person within 60 days from the date of the registration statement upon the  exercise
of options or warrants. Each beneficial owner's percentage ownership is  determined
by assuming that options or warrants that are held by such person and  which are
exercisable within 60 days of the date of this registration statement  have been
exercised. Unless otherwise indicated, the company believes that all  persons
named in the table have voting and investment power with respect to all  shares of
common stock beneficially owned by them.
  
 **ITEM
12.**  **CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 N/A
 
 **ITEM
13.**  **EXHIBITS
AND REPORTS ON FORM 8-K**
 
 (a)
Exhibits.
 
 *3.1  Certificate
of Incorporation filed as an exhibit to the Company's registration statement on
Form 10SB/A filed on July 24, 2001 and incorporated herein by
reference.
 *3.2  By-Laws
filed as an exhibit to the Company's registration statement on Form 10SB/A filed
on July 24, 2001 and incorporated herein by reference.
 
 *
Previously filed
 
 ·
    A
      Form 8-K was filed by the Company during August 27, 2001, disclosing a
      1:75 forward split of the Company's common
shares.
 ·
    On
      July 5, 2003 (SEC Film Number 03769335), the Company disclosed that it had
      withdrawn its 14(c) Information Statement with the SEC and that it was
      however committed to the effect of the transaction with BioKinetix.
 ·
    On
      July 7, 2003 (SEC Film Number 03777407), the Company disclosed that it had
      rescinded its merger agreement with BioKinetix, and that it had instead
      executed an assignment of license agreement in order to effect the
      principles of the previously executed BioKinetix-RJV Merger Agreement. In
      this disclosure, the company additionally disclosed that its entire board
      of directors had resigned and that a new board had been installed for a
      one year term.
 ·
    On
      August 21, 2003 (SEC Film Number 03859209), the Company filed a Form 8-K
      that disclosed that the articles of incorporation had been amended and
      that the name of the Company had changed to ProtoKinetix, Incorporated.
 ·
    On
      September 23, 2004, the Company filed an 8-K announcing the execution of
      the License Agreement with Perigene.
 
 **ITEM
14.**  **PRINCIPAL
ACCOUNTANT FEES AND SERVICES**
 
 **Audit
Fees**
 
 For the
years ended December 31, 2004 and December 31, 2003, Peterson Sullivan PLLC, the
Company’s principal accountants, billed the Company $33,894 and $12,644,
respectively, for fees for the audit of the Company’s annual financial
statements and review of financial statements included in the Company’s Forms
10-QSB.
 
 **Audit-Related
Fees**
 
 For the
years ended December 31, 2004 and December 31, 2003, Peterson Sullivan PLLC did
not provide the Company with any assurances or related services reasonably
related to the performance of the audit or review of the Company’s financial
statements and are not reported above under "Audit Fees."
 
 **Tax
Fees**
 
 For the
years ended December 31, 2004 and December 31, 2003, Peterson Sullivan PLLC did
not bill for professional services for tax compliance, tax advice, and tax
planning.
 
 **All
Other Fees**
 
 For the
years ended December 31, 2004 and December 31, 2003, Peterson Sullivan PLLC did
not bill the Company for fees associated with the preparation and filing of the
Company’s registration statements, the creation of pro forma financial
statements and other related matters.
 
 **Audit
Committee Pre-Approval Policies**
 
 The
Company currently does not have an audit committee. The Company’ Board of
Directors currently approves in advance all audit and non-audit related services
performed by the Company’s principal accountants.
 
 
  
  **SIGNATURES**
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 **PROTOKINETIX,
      INC.**
      (Registrant)Date:  April
      15, 2005
    
    
    
    By:
    
    /s/
      Dr. John ToddDr.
      John Todd*Chairman
      of the Board of Directors, CEO and CFO*(Principal
      Accounting Officer)
 
 In
accordance with the requirements of 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.
 
 Signatures
    Title
    Date/s/Dr.
      John Todd
      Dr.
      John Todd
    Chief
      Executive Officer, President and Chairman Of The Board
      (Principal
      Executive and Financial Officer)
    4/
      15, 2005/s/Dr.
      Jean-Marie Dupuy
      Dr.
      Jean Marie Dupuy
    Director
    4/
      15, 2005
 
  
  **PROTOKINETIX,
INC.**
 **Index
to Financial Statements**
 **—INDEX—**
 **Page(s)**
 
 Report
      of Registered Independent Public Accounting Firm
    27Financial
      Statements:Balance
      Sheet
      December
      31, 2004
    28Statements
      of Operations
      Years
      ended December 31, 2004 and 2003
    29Statements
      of Stockholders’ Equity
    30-31Years
      ended December 31, 2004 and 2003Statements
      of Cash Flows
      Years
      ended December 31, 2004 and 2003
    32Notes
      to Financial Statements
    33-39
 
  
  **REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To the
Board of Directors and Shareholders
 ProtoKinetix,
Inc.
 
 
 We have
audited the accompanying balance sheet of Protokinetix, Incorporated (a
development stage company) as of December 31, 2004, and the related
statements of operations, stockholders' deficit, and cash flows for the years
ended December 31, 2004 and 2003, and for the period from December 23, 1999
(date of inception) through December 31, 2004. 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 audits.
 
 We
conducted our audits in accordance with auditing standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. The Company has determined that it
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. 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
audits provide a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Protokinetix, Incorporated (a
development stage company) as of December 31, 2004, and the results of its
operations and its cash flows for the years ended December 31, 2004 and 2003,
and for the period from December 23, 1999 (date of inception) through December
31, 2004, in conformity with accounting principles generally accepted in the
United States.
 
 The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
the Company has not generated revenues or positive cash flows from operations
and has an accumulated deficit of $6,682,834 at December 31, 2004. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plan regarding those matters is also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 
 /s/
Peterson Sullivan PLLC
 
 March 10,
2005
 Seattle,
Washington
 
 
 
  
  **PROTOKINETIX** **,
INCORPORATED**
 (A
Development Stage Company)
  ***BALANCE
SHEET***
  December
31, 2004
 ASSETSCurrent
      AssetCash
    
    
    $
      283,556Computer
      Equipment, net
    
    1,430Intangible
      Assets
    
    3,379,756$
      3,664,742LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesDue
      to outside management consultants
    
    $
      393,850Accounts
      payable
    
    20,888Accrued
      interest
    
    23,100Total
      current liabilities
    
    437,838Convertible
      Note Payable
    
    315,000Total
      liabilities
    
    752,838Stockholders'
      EquityCommon
      stock, $.0000053 par value; 100,000,000 commonshares
      authorized; 28,793,206 shares issued and outstanding
    
    154Common
      stock issuable; 6,950,000 shares
    
    37Additional
      paid-in capital
    
    9,924,547Stock
      subscriptions receivable
    
    (330,000)Deficit
      accumulated during the development stage
    
    (6,682,834)2,911,904$3,664,742
 
 *See
Notes to Financial Statements*
  
  **PROTOKINETIX** **,
INCORPORATED**
 (A
Development Stage Company)
  ***STATEMENTS
OF OPERATIONS***
  For the
Years Ended December 31, 2004 and 2003, and for the
 Period
from December 23, 1999 (Date of Inception) to December 31, 2004
 
 CumulativeDuring
      theDevelopment2004
    
    2003
    
    StageRevenues
    $ -
    
    $ -
    
    $ -ExpensesProfessional
      fees
    1,573,933
    
    519,574
    
    2,093,507Consulting
      fees
    3,460,613
    
    661,390
    
    4,122,003Research
      and development
    209,532
    
    -
    
    209,532General
      and administrative
    121,096
    
    70,130
    
    191,226Interest
    23,100
    
    
    
    23,1005,388,274
    
    1,251,094
    
    6,639,368Loss
      from continuing operations
    (5,388,274)
    
    (1,251,094)
    
    (6,639,368)Discontinued
      OperationsLoss
      from operations of the discontinuedsegment
    -
    
    (11,651)
    
    (43,466)Net
      loss
    $(5,388,274)
    
    $(1,262,745)
    
    $(6,682,834)Net
      Loss per Common Share (basic andfully
      diluted)Continuing
      operations
    $
      (0.18)
    
    $
      (0.07)Discontinued
      operations
    (0.00)
    
    (0.00)Net
      loss per common share
    $
      (0.18)
    
    $
      (0.07)Weighted
      average number of commonshares
      outstanding
    29,941,359
    
    17,153,955
 
 *See
Notes to Financial Statements*
  
  **PROTOKINETIX** **,
INCORPORATED**
 (A
Development Stage Company)
  ***STATEMENTS
OF STOCKHOLDERS' EQUITY***
  For the
Years Ended December 31, 2004 and 2003, and for the
 Period
from December 23, 1999 (Date of Inception) to December 31, 2004
 
 DeficitAccumulatedCommon
      Stock
    
    Additional
    
    Stock
    
    During
      theCommon
      Stock
    
    Issuable
    
    Paid-in
    
    Subscriptions
    
    DevelopmentShares
    
    Amount
    
    Shares
    
    Amount
    
    Capital
    
    Receivable
    
    Stage
    
    TotalIssuance
      of common stock, December 1999
    9,375,000
    
    $
      50
    
    -
    
    $ -
    
    $
      4,950
    
    $ -
    
    $ -
    
    $
      5,000Net
      loss for period
    
    
    
    
    
    
    
    
    
    
    
    
    (35)
    
    (35)Balance,
      December 31, 2000
    9,375,000
    
    50
    
    -
    
    -
    
    4,950
    
    
    
    (35)
    
    4,965Issuance
      of common stock, April 2001
    5,718,750
    
    30
    
    
    
    
    
    15,220
    
    
    
    
    
    15,250Net
      loss for year
    
    
    
    
    
    
    
    
    
    
    
    
    (16,902)
    
    (16,902)Balance,
      December 31, 2001
    15,093,750
    
    80
    
    -
    
    -
    
    20,170
    
    
    
    (16,937)
    
    3,313Net
      loss for year
    
    
    
    
    
    
    
    
    
    
    
    
    (14,878)
    
    (14,878)Balance,
      December 31, 2002
    15,093,750
    
    80
    
    -
    
    -
    
    20,170
    
    
    
    (31,815)
    
    (11,565)Issuance
      of common stock for services:July
      2003
    2,125,000
    
    11
    
    
    
    
    
    424,989
    
    
    
    
    
    425,000August
      2003
    300,000
    
    2
    
    
    
    
    
    14,998
    
    
    
    
    
    15,000September
      2003
    1,000,000
    
    5
    
    
    
    
    
    49,995
    
    
    
    
    
    50,000October
      2003
    1,550,000
    
    8
    
    
    
    
    
    619,992
    
    
    
    
    
    620,000Issuance
      of common stock for licensing rights
    14,000,000
    
    74
    
    
    
    
    
    2,099,926
    
    
    
    
    
    2,100,000Common
      stock issuable for licensing rights
    
    
    
    
    2,000,000
    
    11
    
    299,989
    
    
    
    
    
    300,000Shares
      cancelled on September 30, 2003
    (9,325,000)
    
    (49)
    
    
    
    
    
    49
    
    
    
    
    
    -Net
      loss for year
    
    
    
    
    
    
    
    
    
    
    
    
    (1,262,745)
    
    (1,262,745)Balance,
      December 31, 2003
    24,743,750
    
    131
    
    2,000,000
    
    11
    
    3,530,108
    
    -
    
    (1,294,560)
    
    2,235,690Issuance
      of common stock for services:March
      2004
    1,652,300
    
    9
    
    
    
    
    
    991,371
    
    
    
    
    
    991,380May
      2004
    500,000
    
    3
    
    
    
    
    
    514,997
    
    
    
    
    
    515,000July
      2004
    159,756
    
    1
    
    
    
    
    
    119,694
    
    
    
    
    
    119,695August
      2004
    100,000
    
    1
    
    
    
    
    
    70,999
    
    
    
    
    
    71,000October
      2004
    732,400
    
    4
    
    
    
    
    
    479,996
    
    
    
    
    
    480,000November
      2004
    650,000
    
    4
    
    
    
    
    
    454,996
    
    
    
    
    
    455,000December
      2004
    255,000
    
    1
    
    
    
    
    
    164,425
    
    
    
    
    
    164,426Common
      stock issuable for AFGP license
    
    
    
    
    1,000,000
    
    5
    
    709,995
    
    
    
    
    
    710,000Common
      stock issuable for Recaf License
    
    
    
    
    400,000
    
    2
    
    223,998
    
    
    
    
    
    224,000Warrants
      granted (for 3,450,000 shares) for services,October
      2004
    
    
    
    
    
    
    
    
    1,716,253
    
    
    
    
    
    1,716,253Options
      granted for services, October 2004
    
    
    
    
    
    
    
    
    212,734
    
    
    
    
    
    212,734Stock
      subscriptions receivable
    
    
    
    
    1,800,000
    
    10
    
    329,990
    
    (330,000)
    
    
    
    -Warrants
      exercised:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -August
      2004
    
    
    
    
    50,000
    
    
    
    15,000
    
    
    
    
    
    15,000October
      2004
    
    
    
    
    600,000
    
    3
    
    134,997
    
    
    
    
    
    135,000December
      2004
    
    
    
    
    1,000,000
    
    5
    
    224,995
    
    
    
    
    
    225,000Options
      exercised, December 2004
    
    
    
    
    100,000
    
    1
    
    29,999
    
    
    
    
    
    30,000Net
      loss for period
    
    
    
    
    
    
    
    
    
    
    -
    
    (5,388,274)
    
    (5,388,274)Balance,
      December 31, 2004
    28,793,206
    
    $
      154
    
    6,950,000
    
    $
      37
    
    $9,924,547
    
    $
      (330,000)
    
    $
      (6,682,834)
    
    $2,911,904
 
 *See
Notes to Financial Statements*
  
  **PROTOKINETIX** **,
INCORPORATED**
 (A
Development Stage Company)
  ***STATEMENTS
OF CASH FLOWS***
  For the
Years Ended December 31, 2004 and 2003, and for the
 Period
from December 23, 1999 (Date of Inception) to December 31, 2004
 
 2004
    
    2003
    
    Cumulative
      During
      the
      Development
      StageCash
      Flows from Operating ActivitiesNet
      loss for period
    $
      (5,388,274)
    
    $
      (1,262,745)
    
    $
      (6,682,834)Adjustments
      to reconcile net loss to net cash providedby
      (used in) operating activitiesDepreciation
      expense
    253
    
    
    
    253Issuance
      of common stock for servicesand
      expenses
    2,796,501
    
    1,110,000
    
    3,906,501Warrants
      issued for consulting services
    1,716,253
    
    
    
    1,716,253Stock
      options issued for consulting services
    212,734
    
    
    
    212,734Changes
      in operating assets and liabilitiesIncrease
      in amounts due to outsidemanagement
      consultants
    270,984
    
    122,866
    
    393,850Decrease
      in accounts payable
    (20,660)
    
    34,559
    
    20,888Increase
      in interest payable
    23,100
    
    
    
    23,100Net
      cash flows (used in) providedby
      operating activities
    (389,109)
    
    4,680
    
    (409,255)Cash
      Flows from Investing ActivitiesAcquisition
      of intangible assets
    (45,756)
    
    
    
    (45,756)Purchase
      of computer equipment
    (1,683)
    
    
    
    (1,683)Net
      cash flows used in investing activities
    (47,439)
    
    
    
    (47,439)Cash
      Flows from Financing ActivitiesWarrants
      exercised
    375,000
    
    
    
    375,000Stock
      options exercised
    30,000
    
    
    
    30,000Issuance
      of common stock for cash
    
    
    
    
    20,250Loan
      proceeds
    315,000
    
    
    
    315,000Payment
      of shareholders' loans
    
    
    (5,155)Net
      cash flows provided by (used in)financing
      activities
    720,000
    
    (5,155)
    
    740,250Net
      change in cash
    283,452
    
    (475)
    
    283,556Cash,
      beginning of period
    104
    
    579Cash,
      end of period
    $
      283,556
    
    $
      104
    
    $
      283,556Cash
      paid for interest
    $ -
    
    $ -
    
    $ -Cash
      paid for income taxes
    $ -
    
    $ -
    
    $ -Supplementary
      Information - Non-cash Transactions:Common
      stock issuable for acquisition of intangible assets
    $
      934,000
    
    $ -
    
    $
      934,000Stock
      subscriptions received
    330,000
    
    -
    
    330,000
 
 *See
Notes to Financial Statements*
  
  **NOTES
TO FINANCIAL STATEMENTS**
 
 **Note
1. The Company and Significant Accounting Policies**
 
 **The
Company**
 
 Protokinetix,
Incorporated (the "Company"), a development stage company, was incorporated
under the laws of the State of Nevada on December 23, 1999. The Company was
formed for the purpose of developing an internet-based listing site that would
provide detailed commercial real estate property listings and related data. In
2003, the Company discontinued its original business plan and entered into the
licensing agreement described below. Effective as of the date of the license
agreement, the Company became a medical research company (still in the
development stage.)
 
 In 2003,
the Company entered into an assignment of license agreement (the "Agreement")
with BioKinetix, Inc., an Alberta, Canada, corporation. The Agreement provided
the Company with an exclusive assignment of all of the rights (the "Rights")
that BioKinetix possessed relating to two proprietary technologies that are
being developed for the creation and commercialization of "superantibodies,'' an
enhancement of antibody technology that makes ordinary antibodies much more
lethal. In consideration, the Company's Board of Directors authorized the
Company to issue 16,000,000 shares of its stock to the shareholders of
BioKinetix. A lso, the
Company's existing directors agreed to resign and the Company cancelled
9,325,000 common shares owned by the former president (representing the majority
of his shares). New Company directors were installed. In October 2003,
14,000,000 of the committed shares were issued. The remaining
2,000,000 shares are included in common stock issuable at December 31,
2004.
 
 **Going
Concern**
 
 As shown
in the financial statements, the Company has not developed a commercially viable
product, has not generated any revenues to date and has incurred losses since
inception resulting in a net accumulated deficit of $6,682,834 at December 31,
2004. These factors raise substantial doubt about the Company's ability to
continue as a going concern.
 
 The
Company will need additional working capital to continue its medical research or
to be successful in any future business activities and continue to pay its
liabilities. Therefore, continuation of the Company as a going concern is
dependent upon obtaining the additional working capital necessary to accomplish
its objective. Management is presently engaged in seeking additional working
capital.
 
 The
accompanying financial statements do not include any adjustments to the recorded
assets or liabilities that might be necessary should the Company fail in any of
the above objectives and is unable to operate for the coming year.
 
 **Cash**
 
 Cash
consists of funds held in checking accounts.
 
 **Computer
Equipment**
 
 Computer
equipment is stated at cost and is depreciated using straight-line methods over
the estimated useful lives.
 
 **Intangible
Assets**
 
 The
intangible assets consist of license rights to proprietary medical research
technologies. The cost of the license rights is stated at cost or the value of
the shares issued by the Company to acquire the license rights. The cost is not
amortized because the licenses have indefinite lives.
 
 Intangible
assets that have indefinite useful lives are not amortized but are tested
annually for impairment. At
December 31, 2004, management has determined that there is no impairment in the
license rights that should be recorded against the carrying amount of the
assets.
 
 **Due
to Outside Management Consultants**
 
 The
Company's offices are currently provided by outside management consultants and
costs are allocated to the Company. The amounts due are unsecured, bear no
interest and are due on demand.
 
 **Convertible
Note Payable**
 
 On
February 1, 2004, the Company executed a subscription agreement under which the
Company issued to a corporation an 8% secured convertible note in exchange for
$315,000. The note is due February 1, 2006, and is convertible into shares of
the Company's common stock at the lower of $.30 per share or 70% of the average
of the three lowest trading prices for the 30 days prior to the conversion
date. No beneficial conversion feature was applicable to this convertible
note.
 
 **Fair
Value of Financial Instruments**
 
 Financial
instruments consist of cash, stock subscriptions receivable, due to outside
management consultants, accounts payable, accrued interest and convertible note
payable. The fair value of these financial instruments approximates the carrying
amounts due to the short-term nature.
 
 **Income
Taxes**
 
 The
Company accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax consequences, the
Company generally considers all expected future events other than enactments of
changes in the tax laws or rates.
 
 **Research
and Development Costs**
 
 Research
and development costs are expensed as incurred.
 
 **Earnings
per Share**
 
 Basic
loss per share is computed by dividing the net loss available to common
stockholders by the weighted average number of common shares outstanding in the
period. The Company's stock split 1:75 on August 24, 2001. In April 2002, the
Board of Directors approved a 2.5 for 1 split of the Company's stock. The
accompanying financial statements are presented on a post-split basis. The loss
per share for the years ended December 31, 2004 and 2003, have been adjusted
accordingly. Diluted loss per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
securities. The effect of debt convertible into common shares was not included
in the computation of diluted earnings per share for all periods presented
because it was anti-dilutive due to the Company's losses. Common stock
issuable is
considered outstanding as of the original approval date for purposes of earnings
per share computations.
 
 **Stock-Based
Compensation**
 
 The
Company has a stock-based equity incentive plan, which is described more fully
in Note 4. The Company accounts for the plan under the recognition and
measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. No stock-based employee compensation
cost is reflected in the net loss when options granted under the plan have an
exercise price equal to or greater than the market value of the underlining
common stock on the date of grant. No options have been granted to employees
under the plan therefore no reconciliation is provided of the effects on net
loss in applying the fair value recognition provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Compensation for stock options and
warrants to purchase stock granted to non-employees is measured using the
Black-Scholes valuation model at the date of grant multiplied by the number of
options or warrants granted. The issuance of common shares for services is
recorded at the quoted price of the shares on the date the services are
rendered.
 
 **Estimates**
 
 The
preparation of these financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
these financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from these
estimates.
 
 **New
Accounting Standards**
 
 Statement
of Financial Accounting Standard ("SFAS") No. 151, Inventory Costs, is effective
for fiscal years beginning after June 15, 2005. This statement amends the
guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). The adoption of SFAS 151 is expected
to have no impact on the Company's financial statements.
  
  SFAS No. 152,
Accounting for Real Estate Time-Sharing Transactions, is effective for fiscal
years beginning after June 15, 2005. This statement amends
SFAS No. 66, Accounting for Sales of Real Estate, to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions that is provided in American Institute of Certified Public
Accountants Statement of Position 04-2, Accounting for Real Estate Time-Sharing
Transactions. The adoption of SFAS No. 152 is expected to have no
impact on the Company's financial statements.
 
 SFAS No. 123(R),
Share-Based Payment, replaces SFAS No. 123, Accounting for Stock-Based
Compensation, and supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees. This statement requires that the compensation cost relating
to share-based payment transactions be recognized in the financial statements.
The Company is required to apply this statement in the first interim period that
begins after December 15, 2005. The adoption of SFAS No. 123(R)
is expected to have no impact on the Company's financial statements.
 
 SFAS No. 153,
Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29, is
effective for fiscal years beginning after June 15, 2005. This
statement addresses the measurement of exchange of nonmonetary assets and
eliminates the exception from fair-value measurement for nonmonetary exchanges
of similar productive assets in paragraph 21(b) of APB Opinion No. 29,
Accounting for Nonmonetary Transactions, and replaces it with an exception for
exchanges that do not have commercial substance. The adoption of
SFAS No. 153 is expected to have no impact on the Company's financial
statements.
 
 FIN
No. 46(R) revised FIN No. 46, "Consolidation of Variable Interest
Entities," requiring the consolidation by a business of variable interest
entities in which it is the primary beneficiary. The adoption of FIN No. 46
did not have an impact on the Company's financial statements.
 
 The
Emerging Issues Task Force ("EITF") reached consensus on Issue No. 03-1,
"The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" ("EITF 03-1") which provides guidance on determining when an
investment is considered impaired, whether that impairment is other than
temporary and the measurement of an impairment loss. The FASB issued FSP EITF
03-1-1, "Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1, 'The
Meaning of Other-Than-Temporary Impairment and Its Applications to Certain
Investments'" which delays the effective date for the measurement and
recognition criteria contained in EITF 03-1 until final application
guidance is issued. The Company does not expect the adoption of this consensus
or FSP to have a material impact on its financial statements.
 
 The EITF
reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible
Debt on Diluted Earnings Per Share ("EITF 04-8"), which addresses when the
dilutive effect of contingently convertible debt instruments should be included
in diluted earnings (loss) per share. EITF 04-8 is effective for reporting
periods ending after December 15, 2004. The adoption of EITF 04-8 did
not have an impact on diluted loss per share.
 
  
  **Note
2. Income Taxes**
 
 The
Company is liable for taxes in the United States. As of December 31, 2004, the
Company did not have any income for tax purposes and therefore, no tax liability
or expense has been recorded in these financial statements.
 
 The
Company has tax losses of approximately $6,600,000 available to reduce future
taxable income. The tax loss expires in years between 2022 and
2024.
 
 The
deferred tax asset associated with the tax loss carry forward is approximately
$2,274,000. The Company has provided a valuation allowance against the deferred
tax asset. The valuation allowance increased by $1,949,000 and $314,200 for 2004
and 2003, respectively.
 
 **Note
3. Discontinued Operations**
 
 In 2003,
the Company signed the licensing agreement described in Note 1. This agreement
changed the Company's business plan to that of a medical research company.
Accordingly, the operating results related to the internet-based real estate
listing segment have been presented as discontinued operations in these
financial statements for all periods presented. There were no revenues for the
years presented as loss from discontinued operations.
  **Note
4. Stock-Based Compensation**
 
 In 2003,
the Company adopted its 2003 and 2004 Stock Incentive Plans. Each plan provides
for the issuance of incentive and non-qualified shares of the Company's stock to
officers, directors, employees and non-employees. The Board of Directors
determines the terms of the shares or options to be granted, including the
number of shares or options, the exercise price, and the vesting schedule, if
applicable. In 2003 and 2004, the Company issued common shares from both plans
to non-employee consultants for services rendered as follows:
 
 Date
    
    Number
      of
      Shares
    
    Value
      per
      Share2003:July,
      as restated
    
    2,125,000
    
    $0.05August
    
    300,000
    
    $0.05September,
      as restated
    
    1,000,000
    
    $0.05October
    
    1,550,000
    
    $0.40Total
      2003
    
    4,975,000
 
  
  
 Date
    
    Number
      of
      Shares
    
    Value
      per
      Share2004:March
    
    1,652,300
    
    $0.60May
    
    500,000
    
    $1.03July
    
    159,756
    
    $0.75August
    
    100,000
    
    $0.71October
    
    732,400
    
    $0.65November
    
    650,000
    
    $0.70December
    
    255,000
    
    $0.65Total
      2004
    
    4,049,456
 
 In
addition, during 2004, the Company issued stock options to directors, advisors
and consultants. A summary of the Company's outstanding stock options is as
follows:
 
 Number
      of
      Options
    
    Weighted
      Average
      Exercise
      PriceOutstanding
      at December 31, 2003
    
    -Granted
    
    400,000
    
    $0.30Exercised
    
    (100,000)
    
    $0.30Outstanding
      at December 31, 2004
    
    300,000
    
    $0.30Options
      exercisable at December 31, 2004
    
    300,000
    
    $0.30
 
 The fair
value of each option granted is estimated at the date of grant using the
Black-Scholes option-pricing model. The assumptions used in calculating the fair
value of the options granted were a risk-free interest rate of 4.75%, a one-year
expected life (except for the options exercised for which a two-week expected
life was used) and a dividend yield of 0.0%.
 
 
 
 **Note
5. Subsequent Event**
 
 In March
2005, 285,832 common shares were issued to convert $85,750 of the long-term
convertible note payable.