What changed in this filing

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Item 7. Management’s Discussion and Analysis

2016-06-07 compared with 2015-06-17 · 35 added, 111 removed, 132 unchanged (53% of the section changed)

11 unchanged sentences

Results of Operations

For the Year Ending January 31, 2015 and 2014

Year Ended January 31,

For the Years Ending January 31, 2016 and 2015

Operating expenses

1 unchanged sentence

Financing costs

Loss (gain) on change in fair value derivative

Gain on change in fair value derivative

Loss on settlement and conversions of debentures

1 unchanged sentence

Net income (loss)

$ ( 10,307, 065 )

$ (1,129,004 )

Our operating expenses for our years ended January 31, 2016 and 2015 are outlined in the table below:

Year Ended January 31,

Depreciation and amortization

Foreign exchange loss (gain)

Foreign exchange loss

General and administrative

2 unchanged sentences

Research and development

Operating expenses for year ended January 31, 2015 increased by 70% as compared to the comparative period in 2014 primarily as a result of increased professional fees and general and administration related to conversions and settlement of debentures.

As well, fluctuations in the US-Canadian exchange resulted in an increased foreign exchange loss.

Stock-based compensation

Operating expenses for year ended January 31, 2016 increased by $10,204,006 as compared to the comparative period in 2015 due to increased general and administrative activities such as investor relations and promotions.

Professional fees increased primarily due to our acquisition of IndUS.

Management fees and stock-based compensation increased as a result of 2,708,333 common stock issued for services and 6,200,000 options to purchase our common stock granted.

We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter.

Equity Compensation

We currently do not have any stock option or equity compensation plans or arrangements.

Our company has a stock option plan which was adopted and approved by our shareholders on December 30, 2015.

During our fiscal year ended January 31, 2016, 6,000,000 stock options with exercise price of $0.10 and maturity on December 14, 2020 were granted to directors and a consultant.

As well, 200,000 stock options with exercise price of $0.25 and maturity on November 30, 2020 were granted to members of our Scientific Advisory Board.

We currently do not have any other equity compensation plans or arrangements.

Liquidity and Financial Condition

Working Capital

At January 31, 2015

At January 31, 2014

Current Assets

1 unchanged sentence

Working Capital (Deficit)

Year Ended January 31, 2015

Year Ended January 31, 2014

Net Cash used in Operating Activities

1 unchanged sentence

Net Cash Provided by Financing Activities

Effects of exchange rate changes on cash

Increase (Decrease) in Cash During the Period

4 unchanged sentences

We need to raise additional funds in the immediate future in order to proceed with our budgeted expenses.

Specifically, we estimate our operating expenses and working capital requirements for the next 12 months to be as follows:

Specifically, we estimate our expenses and working capital requirements for the next 12 months to be as follows:

Estimated Expenses

Research and Development Costs:

Studies and manufacture of active product ingredient

R&D headcount

Sales and Marketing Costs:

Investor Relations

Conference Attendance

Entertainment and promotion

Marketing Costs

Investor relations

Operating Expenses:

Director fees

Office and laboratory lease

Professional fees

Employee Salaries and Benefits

Office Equipment

Office Supplies

Office and Lab Lease

Telephone, Fax, Cellular, Internet

Public company expenses

Salaries and benefits

Telephone and internet

Vehicles and transportation

Based on our planned expenditures, we will require additional funds of approximately $736,133 (a total of $737,200 less our cash of approximately $1,067 as of January 31, 2015) to proceed with our business plan over the next 12 months.

Based on our planned expenditures, we will require additional funds of approximately $8.9 million to proceed with our business plan over the next 12 months.

If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.

1 unchanged sentence

Even if we carry out our planned research and development activities on our products, there is no guarantee that we will be able to market them or derive any revenues from their sale.

Currently, we intend to prioritize the allocation of any financing that we may receive toward the development of P-001 and NK-001.

The final selection of P-001 and the significantly underserved market that it is targeting along with NK-001, which has reached the most advanced development stage of our product candidates we believe that prioritizing their development will afford us the greatest likelihood of generating revenues which will in turn allow us to finance the development of other product candidates.

Although we intend to conduct research and development of our other planned products, P-002, P-003 and NK-002, we do not have a formal clinical trial protocol or formal budget in place at this time.

The following table sets out the various steps we will be required to complete in order to carry out our research and development of P-001, P-002, P-003, NK-001 and NK-002.

Where estimated costs or completion times are known, they have been indicated, and where progress has been made, it has been indicated.

Where estimated completion times and cost estimates are omitted for future business steps, they are omitted because (i) we believe no reliable estimate may be made until currently planned research is completed and assessed, and/or (ii) we do not currently have sufficient resources to complete research that may be required to provide a reliable estimate.

Anticipated Steps

Intellectual Property

Screening in female tissues/models, reformulation and assessment of dosage regimen ($500,000)

Follow by submission of new patent application

Screening in female tissues/models, reformulation and assessment of dosage regimen ($500,000)

Follow by submission of new patent application

Screening in female tissues/models, neurological models, reformulation and assessment of dosage regimen ($500,000)

Follow by submission of new patent application

Secure Rights to Use Re-Profiled Drugs

Not Required (generic drug)

Pre-Clinical Testing

Required to select specific drug within class ($500,000)

Secure Investigational New Drug Approval or Equivalent

Not required (Generic drug)

Phase I Clinical Trials

Phase II Clinical Trials

Phase III Clinical Trials

Submit New Drug Application or Equivalent and Obtain Marketing Approval

Finance Marketing and Manufacturing of Approved Drug or Secure Marketing and Manufacturing Partner

Anticipated Steps

Secure Intellectual Property Protection of Drug Concept

Patent Application Submitted

Secure Rights to Use Re-Profiled Drug

Not Required (Generic Drug)

Pre-Clinical Testing

Pre-Clinical Trials Delayed Until Sufficient Financing is Secured Estimated Cost:

$800,000 Estimated Completion Date:

Secure Investigational New Drug Approval or Equivalent

Not Required (Generic Drug)

Phase I Clinical Trials

Phase II Clinical Trials

Clinical Trial Protocol Complete and Approved for Implementation Clinical Trials Delayed Until Sufficient Financing is Secured Estimated Cost:

$2,355,000 Estimated Completion Date:

Phase III Clinical Trials

Submit New Drug Application or Equivalent and Obtain Marketing Approval

Finance Marketing and Manufacturing of Approved Drug or Secure Marketing and Manufacturing Partner

We did not commence clinical trials of NK001 and NK002 during 2015 and 2014 due to insufficient cash.

We are seeking to raise funds to continue testing and development.

Currently, we intend to prioritize the allocation of any financing that we may receive toward the development of PVT-005 and PVT-006.

We expect that we may obtain material net cash inflows from our projects 18 to 36 months following the start of our proposed clinical trials, which we expect will begin soon after the necessary funding is obtained.

9 unchanged sentences

Future Financings

We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $150,000 over the next 12 months to pay for our ongoing expenses.

These expenses include legal, accounting and audit fees as well as general and administrative expenses.

We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $8.9 million over the next 12 months to pay for research and development and ongoing expenses.

These cash requirements are in excess of our current cash and working capital resources.

4 unchanged sentences

There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

We presently do not have any arrangements for additional financing for the expansion of our exploration operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

We presently do not have any arrangements for additional financing for the expansion of our operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

Contractual Obligations

14 unchanged sentences

We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

Basis of Presentation

The financial statements and the related notes of our company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars.

Our company’s fiscal year-end is January 31.

Use of Estimates

4 unchanged sentences

To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

Our company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

Property and Equipment

Property and equipment is comprised of office equipment and is recorded at cost.

Our company amortizes the cost of equipment on a straight-line basis over their estimated useful lives of five years.

Long-lived Assets

14 unchanged sentences

Subsequent changes to fair value are recorded in the statement of operations.

Basic and Diluted Net Loss Per Share

Our company computes net loss per share in accordance with ASC 260, Earnings Per Share.

ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.

Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.

Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.

In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

As at January 31, 2015, our company has 4,600,000 pre-split or 460,000 post-split (2014 – 27,142,888 pre-split or 2,714,289 post-split) potentially dilutive shares.

Comprehensive Loss

ASC 220, Comprehensive Income , establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.

As at January 31, 2015 and 2014, our company had no items representing comprehensive income or loss.

Research and Development Costs

Research costs are expensed in the period that they are incurred.

Our company accounts for income taxes using the asset and liability method in accordance with ASC 740, "Income Taxes".

3 unchanged sentences

As of January 31, 2016 and 2015, our company did not have any amounts recorded pertaining to uncertain tax positions.

Our company files federal and provincial income tax returns in Canada.

Our company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year.

For Canadian tax returns, the open taxation years range from 2003 to 2014.

Tax authorities of Canada have not audited any of our company’s income tax returns for the open taxation years noted above.

Our company files federal and provincial income tax returns in Canada and federal and state income tax returns in the United States.

Our company recognizes interest and penalties related to uncertain tax positions in tax expense.

10 unchanged sentences

Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Our company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, loan payable, due to related parties and convertible debentures.

Our company's financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities and due to related parties.

Pursuant to ASC 820, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets.

1 unchanged sentence

Foreign Currency Translation

Our company’s functional currency and its reporting currency is the Canadian dollar and foreign currency transactions are primarily undertaken in United States dollars.

The functional currency of our parent entity, Pivot Pharmaceuticals Inc., is the Canadian dollar and the functional currency of our subsidiary is the US dollar.

Our company's presentation currency is the US dollar.

Monetary assets and liabilities are translated using the exchange rate prevailing at the balance sheet date.

2 unchanged sentences

Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

Results of operations are translated into our company's presentation currency, US dollars, at an appropriate average rate of exchange during the year.

Net assets and liabilities are translated to US dollars for presentation purposes at rates of exchange in effect at the end of the period.

Gains or losses arising on translation are recognized in other comprehensive income (loss) as foreign currency translation adjustments.

Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915):

Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”.

The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S.

GAAP for development or exploration stage entities, primarily presentation of inception to date financial information.

The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein.

However, early adoption is permitted.

Accordingly, our company has adopted this standard as of January 31, 2015.

Our company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K/A

Item 7. Management’s Discussion and Analysis