10QSB 1 v095054_10qsb.htm
 
FORM 10-QSB 
 
 
SECURITIES AND EXCHANGE COMMISSION 
 
Washington, D.C. 20549 
 
(Mark One)  
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2007
 
OR
 
 
 
 
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                     to                     
 
Commission File No.   000-29462

ADVANCED PLANT PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
59-2762023
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
43 West 33rd Street
New York, NY
 
10001
(Address of principal executive office)
 
(Zip Code)
 
 
 
Registrant’s telephone number, including area code:
 
(212)695-3334
 
 
Former name, former address and former fiscal year, if changed since last report.
 

 
 
 
 
Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes x     No o 
 
Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
 
Yes o     No x 
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
 
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date:
 
880,000,000 shares of Common Stock, $.0007 par value as of September 30, 2007
 
 
2
 

INDEX
 
PART I. - FINANCIAL INFORMATION
 
Item 1. Financial Statements
4
     
 
Consolidated Balance Sheets at September 30, 2007 (unaudited) and December 31, 2006
F-1
     
 
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2007 and September 30, 2006 (unaudited)
F-2
     
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and September 30, 2006 (unaudited)
F-3
     
 
Notes to Financial Statements as of September 30, 2007
F-4
     
Item 2
Management’s Discussion and Analysis or Plan of Operations
5
     
Item 3
Controls and Procedures
7
 
PART II. - OTHER INFORMATION
 
Item 1
Legal Proceedings
8
     
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
8
     
Item 3
Defaults upon senior securities
8
     
Item 4
Submission of matters to a vote of security holders
8
     
Item 5
Other information
8
     
Item 6
Exhibits and reports on Form 8-K
8
 
 
3
 
 
PART I. FINANCIAL INFORMATION
 

INDEX TO FINANCIAL STATEMENTS


Consolidated Balance Sheets
F-1
 
 
Consolidated Statements of Operations
F-2
   
Consolidated Statements of Cash Flows
F-3
   
Notes to Consolidated Financial Statements
F-5
 
 
4
 
 

ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
   
September 30,
  
December 31, 
  
   
2007
  
2006 
  
   
Unaudited
       
ASSETS
              
CURRENT ASSETS
              
Prepaid consulting expenses
  
$
-
  
$
7,600
 
 Total Current Assets
    
-
   
7,600
 
               
OFFICE EQUIPMENT, net of accumulated depreciation of $4,353 and $4,058, respectively
    
-
   
295
 
               
OTHER ASSETS
              
Goodwill
    
328,648
   
-
 
Due from related companies
    
7,120
   
16,120
 
Other assets
    
5,479
   
5,679
 
 Total Assets
  
$
341,247
  
$
29,694
 
               
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
              
CURRENT LIABILITIES
              
Bank overdraft
  
$
6,062
  
$
5,468
 
Accounts payable
    
205,866
   
181,946
 
Accrued payroll taxes
    
413,331
   
299,194
 
Accrued expenses
    
10,300
   
126,500
 
Accrued expenses payable in common stock
    
119,096
   
-
 
Accrued expenses - stockholders
    
1,057,370
   
871,549
 
Due to related companies
    
11,882
   
8,484
 
Deposit to acquire stock
    
100,000
   
-
 
Acquisition payable in common stock
    
300,000
   
-
 
Loans payable
    
99,000
   
-
 
Loans payable - stockholders
    
338,040
   
305,993
 
 Total Current Liabilities
    
2,660,947
   
1,799,134
 
               
STOCKHOLDERS' DEFICIENCY
              
Preferred stock, authorized 10,000,000 shares;
              
$0.0007 par value; 5,000,000 shares issued and 
              
outstanding at September 30, 2007 and December 31, 2006 
    
3,500
   
3,500
 
Common stock, authorized 880,000,000 shares;
              
$0.0007 par value; 880,000,000 and 875,157,996 
              
shares issued and outstanding at September 30, 2007 
              
and December 31, 2006, respectively 
    
616,000
   
612,611
 
Additional paid-in capital
    
22,163,268
   
21,982,453
 
Accumulated deficit
    
(25,102,468
)
  
(24,368,004
)
TotalStockholders' Deficiency
    
(2,319,700
)
  
(1,769,440
)
 Total Liabilities and Stockholders' Deficiency
  
$
341,247
  
$
29,694
 
 
See accompanying notes to financial statements.
 
 
F-1
 
 
ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
   
   
 For the Three Months ended September 30,  
  
 For the Nine Months ended September 30,  
  
   
 2007
  
 2006 
  
 2007 
  
 2006 
  
                       
REVENUE - SALES
  
$
657
 
$
3,224
 
$
4,879
 
$
7,775
 
                           
COSTS AND EXPENSES
                          
Cost of goods sold
    
1,800
   
3,450
   
2,378
   
3,450
 
Salaries and consulting fees - officers
    
79,500
   
5,369,241
   
238,500
   
5,528,241
 
Selling, general and administrative expenses
    
49,732
   
(6,252
)
  
498,063
   
192,941
 
Depreciation
    
-
   
279
   
295
   
837
 
                           
 Total Costs and Expenses
    
131,032
   
5,366,718
   
739,236
   
5,725,469
 
                           
NET OPERATING LOSS
    
(130,375
)
  
(5,363,494
)
  
(734,357
)
  
(5,717,694
)
                           
OTHER INCOME (EXPENSE)
                          
Gain on sale of investment
    
-
   
-
   
-
   
69,500
 
Interest expense
    
(39
)
  
(220
)
  
(107
)
  
(4,388
)
                           
 Net Other Income (Expense)
    
(39
)
  
(220
)
  
(107
)
  
65,112
 
                           
LOSS BEFORE DISCONTINUED
                          
OPERATIONS
    
(130,414
)
  
(5,363,714
)
  
(734,464
)
  
(5,652,582
)
Loss from discontinued operations
    
-
   
(1,805,778
)
  
-
   
(2,471,156
)
                           
NET LOSS
  
$
(130,414
)
$
(7,169,492
)
$
(734,464
)
$
(8,123,738
)
                           
                           
NET LOSS PER SHARE OF COMMON STOCK
                          
Loss before discontinued operations
                          
 (basic and fully diluted)
  
$
-
 
$
(0.01
)
$
-
 
$
(0.01
)
                           
Net loss (basic and fully diluted)
  
$
-
 
$
(0.01
)
$
-
 
$
(0.01
)
                           
                           
WEIGHTED AVERAGE NUMBER OF
                          
COMMON SHARES OUTSTANDING
                          
 (basic and fully diluted)
    
880,000,000
   
798,157,996
   
879,933,968
   
798,157,996
 
 
See accompanying notes to financial statements.
 
 
F-2
 

ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
   
   
 For the Nine Months Ended September 30,   
  
   
 2007
  
 2006
  
CASH FLOWS FROM OPERATING ACTIVITIES
              
Net loss
  
$
(734,464
)
$
(8,123,738
)
Adjustments to reconcile net loss to cash flows
              
from operating activities: 
              
 Stock issued for services
    
267,300
   
1,947,500
 
 Gain on sale of investment
    
-
   
(69,500
)
 Stock held for investment issued for services
    
-
   
5,289,741
 
 Depreciation expense
    
295
   
837
 
Changes in assets and liabilities:
              
Decrease in accounts receivable 
    
-
   
1,188
 
Decrease in prepaid expenses - officers 
    
-
   
31,550
 
Decrease in prepaid consulting expenses 
    
7,600
   
-
 
Decrease (increase) in due from related companies 
    
9,000
   
(4,500
)
Increase in accounts payable 
    
64,120
   
72,727
 
Increase in accrued payroll taxes 
    
114,137
   
75,100
 
Increase (decrease) in accrued expenses 
    
(116,200
)
  
58,303
 
Increase in accrued expenses - stockholders 
    
201,821
   
371,218
 
Increase in due to related companies 
    
3,398
   
-
 
 Net cash used in operating activities
    
(182,993
)
  
(349,574
)
               
CASH FLOWS FROM INVESTING ACTIVITIES
              
Proceeds from disposition of stock held for investment
    
-
   
65,000
 
 Net cash provided by investing activities
    
-
   
65,000
 
               
CASH FLOWS FROM FINANCING ACTIVITIES
              
Cash received in acquisition of subsidiary
    
1,417
   
-
 
Bank overdraft
    
594
   
2,055
 
Proceeds from deposits to acquire stock
    
50,000
   
52,275
 
Proceeds from loans payable
    
99,000
   
-
 
Proceeds from loans payable - stockholders
    
34,832
   
12,599
 
Payments on loans payable - stockholders
    
(2,850
)
      
Proceeds from issuance of former subsidiay's common stock
    
-
   
206,000
 
 Net cash provided by financing activities
    
182,993
   
272,929
 
               
 Net decrease in cash
    
-
   
(11,645
)
               
CASH AT BEGINNING OF PERIOD
    
-
   
11,688
 
               
CASH AT END OF PERIOD
  
$
-
 
$
43
 
 
See accompanying notes to financial statements.
 
 
F-3
 

ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
  
   
 For the Nine Months Ended September 30,  
  
   
 2007
  
 2006
  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
              
CASH PAID FOR:
              
Interest
  
$
107
 
$
4,388
 
               
               
NON-CASH INVESTING AND FINANCING ACTIVITIES:
              
Issuance of common stock as compensation
    
267,300
   
-
 
Issuance of Mazal common stock for services classified as
              
a deferred credit 
    
-
   
1,947,500
 
Miscellaneous receivable from sale of stock held for investment
    
-
   
5,000
 
Issuance of stock held for investment in payment of
             
accrued expenses - stockholders 
    
16,000
   
455,550
 
Issuance of stock held for investment in payment of
             
due to stockholder - asset acquisition 
    
-
   
1,315,000
 
Issuance of stock held for investment in payment of
             
loans payable - stockholders 
    
-
   
13,709
 
Gain on stock held for investment transferred to related parties
              
in payment of debt classified as additional paid-in capital 
    
-
   
7,072,005
 
Issuance of common stock in satisfaction of
              
accounts payable 
    
40,200
   
-
 
Common stock in excess of authorized number of shares
              
reclassified to accrued expenses payable in common stock 
    
119,096
   
-
 
Common stock in excess of authorized number of shares
              
reclassified to deposits to acquire common stock 
    
50,000
   
-
 
Assets acquired and liabilities assumed in acquisition of subsidiary:
              
Cash 
    
1,417
   
-
 
Due from related company 
    
5,618
   
-
 
Goodwill 
    
328,648
   
-
 
Loans payable - stockholders 
    
(5,683
)
  
-
 
Acquisition payable in common stock 
    
(300,000
)
  
-
 
Issuance of common stock 
    
(30,000
)
  
-
 
 
See accompanying notes to financial statements.
 
 
F-4
 
 
ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

September 30, 2007
 
1.
CONDENSED FINANCIAL STATEMENTS

In the opinion of the Company, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosure, normally included in the financial statements prepared in accordance with generally accepted accounting principles, have been condensed and omitted. The results of operations for the three and nine month periods ended September 30, 2007 are not indicative of the results of operations for the year ended December 31, 2007. The condensed financial statements should be read in conjunction with the Company’s financial statements included in its annual Form 10 KSB for the year ended December 31, 2006.

2.
PRINCIPLES OF CONSOLIDATION

The consolidated financial statements for the nine months ended September 30, 2007 include the accounts of Advanced Plant Pharmaceuticals, Inc. (“APPI”) and its wholly owned subsidiary World Health Energy, Inc. (“WHE”) acquired on February 8, 2007. The results of operations for WHE are included from January 1, 2007 through September 30, 2007 as WHE had minimal operating activity. All intercompany transactions have been eliminated.

WHE has the technical knowledge to operate Bio-Diesel fuel plants.

3.
COMMITMENTS AND CONTINGENCIES

The Company has employment agreements with two employees and a consulting contract with a key consultant, who are also stockholders of the Company. At September 30, 2007, the Company has a total liability for accrued salaries and consulting expense to stockholders of $924,050. There could be certain payroll tax liabilities owed to the IRS on some of the payments for services to certain consultants that were paid in prior years, pursuant to these employment agreements.

The Company has been named as a defendant in an action filed in September 2007 in the United States District Court of New Jersey. The complaint was filed a former consultant to the Company and alleges breach of contract for services rendered. The Plaintiff seeks damages of approximately $1.2 million. The Company believes that it has a meritorious defense to the claims set forth in the complaint. The Company has accrued approximately $115,400 in fees and royalties due to the plaintiff and believes that this amount properly reflects its liability to its former consultant.

 
F-5
 
 
ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

September 30, 2007
 
4.
ACCRUED EXPENSES PAYABLE IN COMMON STOCK

Accrued expenses payable in common stock in the amount of $119,096 represents the value of 32,157,996 shares of common stock approved for issuance by the Company’s director. These shares were recorded as issued and outstanding in 2005 and 2006 for services rendered pursuant to unanimous consents of the sole director of the Company, contracts and agreements. The shares were reclassified from common stock and additional paid in capital in January 2007 as the Company issued stock through its transfer agent to others that exceeded the number of shares of common stock authorized for issuance by the Company pursuant to its Articles of Incorporation. See Note 7.

5.
DEPOSITS TO ACQUIRE STOCK

The deposits to acquire stock includes $50,000 received as part of a letter of intent with H & H Equipment Company, Inc (“H&H”) to provide $1,200,000 for the construction of two Bio-Diesel plants for the Company in exchange for a 33% interest in the Company in the form of convertible preferred stock.

Deposits to acquire stock also include $50,000 received from Ezriel Silberberg pursuant to a stock purchase agreement to acquire 25,000,000 shares of the Company’s common stock. The proceeds were received in 2006 and the shares were included in shares issued and outstanding at December 31, 2006. The deposit was reclassified from common stock and additional paid in capital in January 2007 as the company issued stock through its stock transfer agent to others and exceeded the number of shares of common stock authorized for issuance by the Company pursuant to its Articles of Incorporation. See Note 7.

6.
LOANS PAYABLE

The Company has several demand loans payable with unrelated parties totaling $99,000 for funds received to meet its working capital requirements.

From March to June 2007, the company borrowed amounts totaling $11,000 due on demand and bearing no interest.

In April 2007, the Company borrowed $8,000 due on demand and bearing an interest rate of 6% per annum.

In July 2007, the Company borrowed $80,000 due on demand and bearing an interest rate of 6% per annum.

 
F-6
 
 
ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

September 30, 2007
 
7.
ISSUANCE OF COMMON STOCK

The Company’s Articles of Incorporation allow for the issuance of no more than 880,000,000 shares of its common stock. At September 30, 2007, the Company has approved through the approval of unanimous consents of the sole director of the Company, and executed contracts and agreements with numerous third parties, the issuance of 107,157,996 shares in excess of the authorized number of shares allowed to be issued. In addition, common stock issued and outstanding at September 30, 2007 includes 11,592,004 shares approved for issuance by the Company but which have not been issued by the company’s stock transfer agent.

On January 4, 2007, the Company issued 4,000,000 shares of its common stock to its attorneys in consideration of accrued legal services at $0.0072 per share. The aggregate remuneration of $28,800 has been treated as payment of accrued liabilities to the attorneys.

On January 8, 2007, the Company issued 6,000,000 shares of its common stock to a consultant as a penalty for late payment at $0.0063 per share. The aggregate remuneration of $37,800 has been treated as stock based compensation and expensed in the current year.

On January 25, 2007, the Company issued 30,000,000 shares of its common stock to a consultant for services at $0.0053 per share. The aggregate remuneration of $159,000 has been treated as stock based compensation and expensed in the current period.

On February 1, 2007, the Company issued 15,000,000 shares of its common stock to a consultant for services at $0.0047 per share. The aggregate remuneration of $70,500 has been treated as stock based compensation and expensed in the current period.

On February 7, 2007, the Company issued 5,000,000 shares of its common stock to acquire a 100% interest in World Health Energy Inc. (“WHE”) at $0.006 per share. In addition, the Company recorded a liability for the future issuance of an additional 50,000,000 shares of its common stock at $0.006 per share as part of the acquisition of WHE. The aggregate value of the acquisition was $330,000, of which $30,000 represented the value of the common stock issued and $300,000 represented the liability for future issuance of shares and is classified as acquisition payable in common stock.

On February 13, 2007, the Company issued 1,000,000 shares of its common stock to its attorneys for legal services at $0.0062 per share. The aggregate remuneration of $6,200 has been treated as legal fees and expensed in the current period.

On February 21, 2007, the Company issued 1,000,000 shares of its common stock to its attorneys for legal services at $0.0052 per share. The aggregate remuneration of $5,200 has been treated as payment of accrued liabilities to the attorneys.

 
F-7
 
 
ADVANCED PLANT PHARMACEUTICALS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

September 30, 2007
 
8.
GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLANS

As reflected in the accompanying financial statements, the Company has current liabilities in excess of current assets of $2,660,947, resulting in negative working capital and an accumulated deficit of $25,102,468. Management is presently seeking to raise permanent equity capital in the capital markets to eliminate negative working capital and provide working capital. Failure to raise equity capital or secure some other form of long-term debt arrangement will cause the Company to further increase its negative working capital deficit and could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

9.
RECLASSIFICATIONS

Certain reclassifications have been made to the financial statements for the three and nine months ended September 30, 2006 to conform to the presentation used in the financial statements as of September 30, 2007 and for the three and nine month periods then ended.
 
 
F-8
 
 
Item 1A.

Except as stated herein, there have been no material changes in our risk factors from those disclosed in our 2007 Annual Report on Form 10-KSB.
 
 
THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this quarterly report on Form 10-QSB contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
 
GENERAL

We previously focused on the research and development of plant based dietary supplements. We were not successful in this endeavor and have decided to focus our attention on the development of our wholly owned subsidiary, World Health Energy, Inc. (“WHE”).

World Health Energy Inc. is a developmental stage company with no operations to date. Its primary business objective is to produce and market high-quality, low-cost B100 biodiesel. In addition to the production of biodiesel, WHE intends to design and manufacture biodiesel production plants in varying capacities to meet the demand of the market, thereby, providing much needed complementary renewable energy solutions to the international biodiesel communities. WHE hopes to establish strategic alliances and partnerships with proposed leased and owned facilities and make resale arrangements with energy suppliers.

Due to insufficient funding, the Company has not been able to undertake these activities nor can there be any assurance that we will identify adequate funding to launch any of these programs in the future. We were not able to come to terms with H & H Equipment Company with respect to a financing in the amount of $1.2 million in exchange for a 33% interest in the Company in the form of convertible preferred stock. Closing will be subject to further due diligence and execution of a definitive stock purchase agreement.

 
5
 
 
Comparison of Operating Results for the three and nine months ended September 30, 2007 and September 30, 2006.
 
Revenues

For the three month and nine months ended September 30, 2007 we had revenues of $657 and $4,879 as compared to $3,224 and $7,775 for the three and nine months ended September 30, 2006. The decline in revenues during our latest quarter is the result of our decision to phase out our plant based dietary supplement business.

Net Loss

Net loss for the three and nine months ended September 30, 2007 was $(130,414) and $(734,464) as compared to a net loss for the comparable periods in 2006 of $(7,169,492) and $(8,123,738). The significant reduction in our net loss for the respective periods is primarily attributable to the fact that we have not utilized stock based compensation to the same extent that was used during 2006.

Our net loss per share in 2007 was negligible as compared to a net loss per share of $(.01) during the comparable periods in 2006.

Operating Expenses

Salaries and consulting fees for three and nine month periods were $79,500 and $238,500 in 2007 as compared to $5,369,241 and $5,528,241 during the comparable period in 2006. Selling, general and administrative costs for the three and nine months ended September 30, 2007 were $49,732 and $498,063 as compared to $(6,252) and 192,941 in 2006. Except for the three months ended September 30, 2007, most of the operating expenses we incurred for the quarter represented stock issued for services rendered.

Liquidity and Capital Resources
 
As of September 30, 2007 we had total assets of $341,247 as compared to total assets of $29,694 as of December 31, 2006. The primary reason for this significant increase in our assets is directly attributable to our acquisition of WHE for which we have allocated $328,648 as goodwill.  At the time of the acquisition of WHE, WHE had assets of $1,352. We are obligated to issue to the shareholders of WHE a total of 55 million shares of our common stock which we have valued at $330,000. The difference between WHE’s book value and the value of our common stock has been recorded as goodwill.

We have current liabilities totaling $2,660,947 as compared to $1,799,134 as of December 31, 2006. Our accounts payable and accrued payroll taxes total $205,866 and $413,331 respectively as compared to $181,946 and $299,194 at December 31, 2006. We also recorded accrued expenses due stockholders of $1,057,370 as compared to $871,549 as of December 31, 2006. We also have accrued expenses payable in common stock totalling $119,096 at September 30, 2007 and nothing due at December 31, 2006. This liability is a result of shares of our common stock that we are obligated to issue under various contractual commitments. Since we do not have a sufficient number of shares available to issue under our articles of incorporation, we intend to increase the number of our authorized shares.

We use available finances to fund ongoing operations. Funds will be used for general and administrative expenses, We do not have sufficient funds available to meet our current liabilities. Unless we secure additional financing, it is unlikely that we will be able to continue our current operations.

 
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Going concern

As reflected in the accompanying financial statements, the Company has current liabilities of $2,660,947 and no current assets. We have a working capital deficit of $2,660,947 and an accumulated deficit of $25,102,468. There are no more shares of common stock available for issuance by the Company. The Company will have to amend its Articles of Incorporation or take such other actions as deemed in the best interest of the Company to provide for the issuance of additional shares of common stock. Management is presently seeking to raise permanent equity capital in the capital markets to eliminate negative working capital and provide working capital. Failure to raise equity capital or secure some other form of long-term debt arrangement will cause the Company to further increase its negative working capital deficit and could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
 

As of the end of the period covered by this Report, the Company's chief executive officer and its principal financial officer, (the “Certifying Officers”) evaluated the effectiveness of the Company's "disclosure controls and procedures," as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. David Lieberman, is our chief executive officer and chief financial officer. Based on that evaluation, the Certifying Officers concluded that, as of the date of their evaluation, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the Company's periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to management, including these officers, to allow timely decisions regarding required disclosure.

The Certifying Officers have also indicated that there were no significant changes in our internal controls or other factors that could significantly affect such controls subsequent to the date of their evaluation and there were no corrective actions with regard to significant deficiencies and material weaknesses.

Notwithstanding the foregoing, management has determined that stricter controls regarding the issuance of its common stock are in order. Specifically, since David Lieberman is currently the sole officer and director of the Company, all common stock issuance have been pursuant to written consent of the sole directors. All of these actions have not been communicated to the Company’s transfer agent which, had these measures been properly taken, resulted in the issuance of common stock beyond the authorized capitalization of the Company. Management has for the future undertaken to confirm with third parties regarding the validity of any stock issuance and to immediately forward all board resolutions to the Company’s transfer agent.

Our management, including the Certifying Officers, do not expect that our disclosure controls or our internal controls will prevent all errors and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 
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PART II. OTHER INFORMATION
 
Item 1. Legal Proceedings.
 
In April 2007, we were sued in the United States District Court for the District of New Jersey (Case No. 07-CV-831) for breach of contract arising from an agreement entered into in 1996. The claimant seeks damages in excess of $1.2 million. The Company believes that it has meritorious defenses to this action.
 
Item 2. Unregistered Sales of Equity Securities,
 
None.
 
Item 3. Defaults upon senior securities.
 
None.
 
Item 4. Submission of matters to a vote of security holders.
 
There were no matters submitted during the quarter ended September 30, 2007 to a vote of the Company’s securities holders.
 
 
None
 
Exhibit No.
Description
   
31.1
Section 302 Certification of the Principal Executive Officer *
   
31.2
Section 302 Certification of the Principal Financial Officer *
   
32.1
Section 906 Certification of Principal Executive Officer *
   
32.2
Section 906 Certification of Principal Financial and Accounting Officer *
 
* Filed herewith
 
 
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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.
 
     
  ADVANCED PLANT PHARMACEUTICALS, INC.
 
 		  
 		  
 
Date: November 19, 2007 By:   /s/ David Lieberman
 
David Lieberman
CEO and Director
   
 

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.
 
By:  /s/ David Lieberman Date: November 19, 2007
 
David Lieberman
CEO and Director
  
 
 

 
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