What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2016-06-07 compared with 2015-06-17 · 239 added, 247 removed, 188 unchanged (72% of the section changed)

1 unchanged sentence

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Financial Statements

Consolidated Financial Statements

Years ended January 31, 2016 and 2015

(Expressed in Canadian dollars)

(Expressed in U.S.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

Pivot Pharmaceuticals Inc.

We have audited the accompanying balance sheets of Pivot Pharmaceuticals Inc.

(the Company) as of January 31, 2015 and 2014 and the related statements of operations, stockholders’ deficit and cash flows for the years then ended.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We have audited the accompanying consolidated balance sheets of Pivot Pharmaceuticals Inc.

(the "Company") as of January 31, 2016 and 2015 and the related consolidated statements of operations, stockholders' deficit and cash flows for each of the years in the two-year period ended January 31, 2016.

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

5 unchanged sentences

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 Pivot Pharmaceuticals Inc.

as of January 31, 2015 and 2014, and the results of their operations and cash flows for the years then ended, in conformity with U.S.

In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pivot Pharmaceuticals Inc.

as of January 31, 2016 and 2015, and the results of their operations and cash flows for each of the years in the two-year period ended January 31, 2016, in conformity with U.S.

generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company had an accumulated deficit, negative working capital, and no revenue to date as of January 31, 2015 which raises substantial doubt about its ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company had an accumulated deficit, negative working capital, and no revenue to date as of January 31, 2016 which raises substantial doubt about its ability to continue as a going concern.

Management's plans concerning these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As mentioned in Note 12, the accompanying consolidated financial statements have been restated for the correction of an error relating to the Company's understatement of stock-based compensation expenses for the year ended January 31, 2016.

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT

April 29, 2016, except for Notes 8, 10, 11 and 12, as to which the date is June 7, 2016

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Balance Sheets

(Expressed in Canadian dollars)

Consolidated Balance Sheets

(Expressed in U.S.

Current assets

Amounts receivable

Prepaids and other current assets

Total current assets

Property and equipment (Note 3)

Security deposit

Property and equipment, net (Note 4)

Liabilities and Stockholders' Deficit

1 unchanged sentence

Accounts payable and accrued liabilities

Loans payable (Note 4)

Due to related party (Note 10)

Convertible debentures, net of unamortized discount of $nil and $7,304, respectively (Note 5)

Derivative liabilities – current portion (Note 6)

Total current liabilities

Due to related parties (Note 9)

Derivative liabilities (Note 5)

2 unchanged sentences

Common stock:

Unlimited shares authorized, without par value 65,863,767 and 10,076,707 shares issued and outstanding, respectively

Unlimited shares authorized, without par value, 74,722,100 and 65,863,766 shares issued and outstanding, respectively (Note 6)

Common stock issuable (Note 6)

Additional paid-in capital (Note 10)

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

( 14,319,546 )

Total stockholders' deficit

2 unchanged sentences

Subsequent events (Note 11)

(The accompanying notes are an integral part of these financial statements)

(The accompanying notes are an integral part of these consolidated financial statements)

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Statements of Operations

(Expressed in Canadian dollars)

Consolidated Statements of Operations

(Expressed in U.S.

Depreciation and amortization

1 unchanged sentence

General and administrative

Management fees (Note 10)

Management fees

Professional fees

Stock-based compensation

Total expenses

Loss from operations

(10,321,490 )

Other (expenses) income

1 unchanged sentence

Financing costs

Gain (loss) on change in fair value of derivative liabilities

Gain on change in fair value of derivative liabilities

Loss on settlement and conversions of debentures

Interest expense

Total other (expenses) income

Total other income (expenses)

(10,307,065 )

Other comprehensive income

Foreign currency translation adjustment

Net comprehensive loss

Net loss per share, basic

2 unchanged sentences

Weighted average shares outstanding - diluted

(The accompanying notes are an integral part of these financial statements)

(The accompanying notes are an integral part of these consolidated financial statements)

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Statements of Stockholders’ Equity (Deficit)

(Expressed in Canadian dollars)

Balance – January 31, 2013

Contributed capital

Beneficial conversion feature of convertible debenture

Shares issued on default of loan debenture

Shares issued to settle due to related party

Consolidated Statements of Stockholders' Equity (Deficit)

(Expressed in U.S.

Foreign Currency Translation

Balance – January 31, 2014

Contributed capital

Shares issued for termination fees

Shares issued on default of loans

Shares issued on settlement and conversion of debentures

Shares issued to settle amounts due to related party

Common stock issued for termination fees

Common stock issued on default of loans

Common stock issued on settlement and conversion of debentures

Common stock issued to settle amounts due to related party

Balance – January 31, 2015

(The accompanying notes are an integral part of these financial statements)

Common stock issued for services

Common stock issued in asset acquisition (Note 2)

Common stock issued for cash

Stock-based compensation (Restated)

Net loss (Restated)

(10,307,065 )

Balance – January 31, 2016 (Restated)

(14,319,546 )

(The accompanying notes are an integral part of these consolidated financial statements)

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Statements of Cash Flows

(Expressed in Canadian dollars)

Consolidated Statements of Cash Flows

(Expressed in U.S.

Operating activities

Net income (loss)

( 10,307,065 )

Adjustments to reconcile net loss to net cash used in operating activities:

Accretion of discount on convertible debentures

Common stock issued for services

Common stock issued for loan defaults

Compensation expense recognized in asset acquisition

Depreciation and amortization

(Gain) loss on change in fair value of derivative liabilities

Fair value of stock options vested

Gain on change in fair value of derivative liabilities

Loss on settlement and conversions of debentures

Shares issued for loan defaults

Services contributed by related party

Changes in operating assets and liabilities:

Other receivable

Prepaids and other current assets

Accounts payable and accrued liabilities

2 unchanged sentences

Financing activities

Proceeds from issuance of common stock

Proceeds from issuance of convertible debentures

1 unchanged sentence

Net cash provided by financing activities

Increase in cash

Effects of exchange rate changes on cash

Increase (decrease) in cash

Cash – beginning of period

4 unchanged sentences

Non-cash activities:

Contributed services

Debt discount on beneficial conversion feature

Shares issued for settlement and conversions of debentures

Shares issued for settlement of amounts due to related party

(The accompanying notes are an integral part of these financial statements)

Common stock issued for settlement and conversions of debentures

Common stock issued for settlement of amounts due to related party

Common stock issued in asset acquisition

(The accompanying notes are an integral part of these consolidated financial statements)

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

(Expressed in U.S.

Nature of Operations and Continuance of Business

Pivot Pharmaceuticals Inc.

(formerly Neurokine Pharmaceuticals Inc.) (the “Company”) was incorporated in British Columbia under the Business Corporations Act on June 10, 2002.

(the "Company") was incorporated in British Columbia under the Business Corporations Act on June 10, 2002.

On April 7, 2015, the Company changed its name from Neurokine Pharmaceuticals Inc.

1 unchanged sentence

The Company is in the business of developing and commercializing new uses for existing prescription drugs as well as developing proprietary encapsulation technology in the treatment of neurodegenerative diseases.

These financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

As at January 31, 2016, the Company has not earned any revenue, has a working capital deficit of $331,899 and an accumulated deficit of $14,319,546.

1 unchanged sentence

These factors raise substantial doubt about the Company's ability to continue as a going concern.

These financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

Asset Acquisition

On November 20, 2015, the Company completed the acquisition of IndUS Pharmaceuticals, Inc.

("IndUS") pursuant to an Agreement and Plan of Merger and Acquisition Agreement dated as of November 4, 2015.

As consideration for the purchase, the Company issued 4,750,000 shares of common stock, of which 4,512,500 shares of common stock were issued on November 23, 2015 and 237,500 shares of common stock were issued on December 4, 2015 which shares were being held as a contingency pertaining to the liabilities of IndUS which were assumed by Pivot.

The Company will also be granting 41,833 stock options pursuant to the Agreement and Plan of Merger.

IndUS is a United States-India cross-border pharmaceutical company conducting research and development activities for advancing novel therapeutics in the areas of oncology, infectious diseases and diabetes whose assets consisted of a portfolio of patented and proprietary, novel anticancer drug candidates from multiple chemical classes of molecules referred to as pyrrolobenzodiazepine dimers.

The Company evaluated this acquisition in accordance with ASC 805, Business Combinations (10-55-4) to discern whether the assets and operations of IndUS met the definition of a business.

The Company concluded there were not a sufficient number of key processes obtained to develop the inputs into outputs, nor could such processes be easily obtained by the Company.

Accordingly, the Company accounted for this transaction as the acquisition of assets and a key employee (compensation arrangement).

The transaction was accounted for in accordance with asset acquisition guidance found in ASC 805 and share based payment guidance found in ASC 718, Compensation – Stock Compensation.

The consideration transferred, assets acquired, liabilities assumed and compensation expense recognized is as follows:

Consideration paid:

Liabilities assumed

Stock options granted

Common stock issued

Total purchase price

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in U.S.

Asset Acquisition (continued)

Consideration received:

Other current assets

Compensation expense

Net value of assets purchased

Significant Accounting Policies

Basis of Presentation

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

(a) Basis of Presentation

The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in U.S.

The Company's fiscal year-end is January 31.

Use of Estimates

The preparation of these 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 reporting period.

The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, valuation of convertible debentures, assumptions used to determine the fair values of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances.

(b) Use of Estimates

The preparation of these consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, assumptions used to determine the fair values of stock-based compensation and derivative liabilities and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

1 unchanged sentence

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

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company.

Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The consolidating entities include:

% of ownership

Pivot Pharmaceuticals Inc.

IndUS Pharmaceuticals, Inc.

(d) Cash and Cash Equivalents

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

As at January 31, 2016 and 2015, the Company had no cash equivalents.

Property and Equipment

(e) Property and Equipment

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

1 unchanged sentence

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

(Expressed in U.S.

Significant Accounting Policies (continued)

Long-lived Assets

(f) Long-lived Assets

In accordance with ASC 360, "Property, Plant and Equipment", the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.

7 unchanged sentences

An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Stock-Based Compensation

(g) Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock-Based Compensation, using the fair value method.

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Derivative Financial Instruments

(h) Derivative Financial Instruments

Derivative financial instruments that are not classified as equity and are not used in hedging relationships are measured at fair value.

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

Loss Per Share

(i) Loss Per Share

The 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.

ASC 260 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the consolidated statement of operations.

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.

3 unchanged sentences

As at January 31, 2016, the Company has 1,700,750 (2015 – 460,000) 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, the Company had no items representing comprehensive income or loss.

Research and Development Costs

(j) Comprehensive Income (Loss)

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

As at January 31, 2016 and 2015, the Company's comprehensive income included foreign currency translation adjustments.

(k) Research and Development Costs

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

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

(Expressed in U.S.

Significant Accounting Policies (continued)

(l) Income Taxes

The 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, the Company did not have any amounts recorded pertaining to uncertain tax positions.

The Company files federal and provincial income tax returns in Canada.

The 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 the Company’s income tax returns for the open taxation years noted above.

The Company files federal and provincial income tax returns in Canada and federal and state income tax returns in the United States.

The Company recognizes interest and penalties related to uncertain tax positions in tax expense.

During the years ended January 31, 2016 and 2015, there were no charges for interest or penalties.

Financial Instruments and Fair Value Measures

(m) Financial Instruments and Fair Value Measures

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

7 unchanged sentences

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.

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

The 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

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

(Expressed in U.S.

Significant Accounting Policies (continued)

Foreign Currency Translation

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

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

(n) Foreign Currency Translation

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

The Company's presentation currency is the US dollar.

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

Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction.

1 unchanged sentence

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

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, the Company has adopted this standard as of January 31, 2015.

The 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.

Comparative Figures

During the period, the Company determined that certain transactions affecting stockholders’ equity had inadvertently been recorded using a par value of $0.01 in the fiscal year ended January 31, 2014.

The Company has determined that its previously filed Form 10-K included a misclassification of $523,000 related to equity.

After taking the reclassification into account, the balances of common shares and additional paid-in capital as of January 31, 2014, are $1,674,148 and $264,586, respectively.

Results of operations are translated into the 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.

(o) Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated 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 consolidated financial position or results of operations.

Property and Equipment

Accumulated amortization

January 31, 2015 Net carrying value

January 31, 2014 Net carrying value

Net carrying value

Office furniture and equipment

1 unchanged sentence

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Year ended January 31, 2015

(Expressed in Canadian dollars)

Loans Payable

On March 30, 2012, the Company issued a promissory note to a non-related party for $30,000.

The loan was secured by 3,000,000 shares of common stock of the Company, to be delivered to the lender if principal and interest are not repaid on maturity, due interest at 24% per annum, and matured on March 30, 2013.

On September 19, 2013, the Company issued a promissory note to a non-related party for US$10,000.

The loan was secured by 1,000,000 shares of common stock of the Company, to be delivered to the lender if principal and interest are not repaid on maturity, due interest at 24% per annum, and matured on September 19, 2014.

On January 31, 2015, these promissory notes, together with accrued interest, were settled through the issuance of 5,604,285 shares of common stock of the Company (Note 7(e)).

Convertible Debentures

On December 17, 2010, the Company issued a convertible debenture with a non-related party for $65,079 (US$65,000).

The debenture was unsecured, due interest at 8% per annum, and matured on September 17, 2011.

The note is convertible into common shares at a conversion price equal to 55% of the average closing market price of the lowest three trading prices of the Company’s common stock during the preceding ten days prior to conversion.

The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $65,079 with a corresponding discount to the convertible debenture.

On June 23, 2011, the Company issued 14,546 shares of common stock to convert $11,674 (US$12,000).

On June 29, 2011, the Company issued 16,970 shares of common stock to convert $13,792 (US$14,000).

In January 2015, this convertible debenture, including accrued interest and accrued default penalty, was converted to 6,353,287 shares of common stock of the Company (Note 7(d)).

As of January 31, 2015, the carrying value of the convertible debenture is $nil (2014 - $22,276 (US$20,000)), plus the accrued default penalty of $nil (2014 - $11,138 (US$10,000)).

As of January 31, 2015, the fair value of the conversion option derivative liability was $nil (2014 - $126,868).

On February 23, 2011, the Company issued a convertible debenture with a non-related party for $37,944 (US$40,000).

The debenture was unsecured, due interest at 8% per annum, and matured on December 23, 2011.

The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $37,944 with a corresponding discount to the convertible debenture.

On July 11, 2011, the Company issued 23,030 shares of common stock to convert $18,270 (US$19,000).

In January 2015, this convertible debenture, including accrued interest and accrued default penalty, was converted to 3,176,633 shares of common stock of the Company (Note 7(d)).

As of January 31, 2015, the carrying value of the convertible debenture is $nil (2014 - $44,552 (US$40,000)), plus the accrued default penalty of $nil (2014 – $22,276 (US$20,000)).

As of January 31, 2015, the fair value of the conversion option derivative liability was $nil (2014 - $73,133).

On July 4, 2011, the Company issued a note payable with a non-related party for $85,000.

The note was unsecured, due interest at 24% per annum and matured on October 4, 2011.

On October 4, 2011, the note was extended to January 4, 2012 under the same terms of the original agreement.

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Year ended January 31, 2015

(Expressed in Canadian dollars)

Convertible Debentures (continued)

On December 4, 2011, the Company agreed to modify the principal balance owing of $85,000 and accrued interest of $8,551 into a new $101,855 (US$100,000) note payable, which was unsecured, due interest at 24% per annum, and matured on December 3, 2012.

In addition, the note became convertible into common shares of the Company at a conversion rate of US$0.01 per share.

As part of the conversion to extend the note, the Company issued 1,000,000 common shares with a fair value of $225,000 as a termination fee of the original note agreement.

As the modified debt terms include a beneficial conversion feature, the Company accounted for the modified debt terms in accordance with ASC 470, Debt – Debt with Conversions and Other Options.

The conversion feature resulted in a discount on the convertible note of US$100,000.

On January 31, 2015, this convertible debenture and accrued interest was converted to 17,384,110 shares of common stock of the Company (Note 7(d)).

As of January 31, 2015, the carrying value of the convertible debenture is $nil (2014 - $111,380 (US$100,000)), plus accrued interest of $nil (2014 - $57,783 (US$51,879)).

The Company also issued 1,000,000 shares of common stock pursuant to termination fee for the July 4, 2011 note payable.

On April 26, 2013, the Company issued a convertible debenture with a non-related party for $15,254 (US$15,000).

The debenture was secured by 1,500,000 shares of common stock of the Company, to be delivered to the lender if principal and interest are not repaid on maturity, due interest at 24% per annum, and matured on April 27, 2014.

The note, plus accrued interest, is convertible into common shares at a conversion price of US$0.01 per share at the discretion of the lender and at any time during the term of this debenture.

As the convertible debt terms include a beneficial conversion feature, the Company accounted for the debt terms in accordance with ASC 470, Debt – Debt with Conversions and Other Options.

The conversion feature resulted in a discount on the convertible note of US$15,000.

On January 31, 2015, this convertible debenture and accrued interest was converted to 2,105,589 shares of common stock of the Company (Note 7(d)).

During the year ended January 31, 2015, the Company recorded accretion expense of $7,304 (2014 - $7,696).

As of January 31, 2015, the carrying value of the convertible debenture is $nil (2014 - $8,572 (US$7,696)), plus accrued interest of $nil (2014 - $2,974 (US$2,670)).

On June 27, 2014, the Company issued a convertible debenture with a non-related party for $7,500.

The debenture is unsecured, due interest at 24% per annum and due on June 27, 2015.

The note, plus accrued interest, is convertible into common shares at a conversion price of US$0.01 per share at the discretion of the lender and at any time during the term of this debenture.

As the convertible debt terms include a beneficial conversion feature, the Company accounted for the debt terms in accordance with ASC 470, Debt – Debt with Conversions and Other Options.

The conversion feature resulted in a discount on the convertible note of $7,500.

On January 31, 2015, this convertible debenture and accrued interest was converted to 725,988 shares of common stock of the Company (Note 7(d)).

During the year ended January 31, 2015, the Company recorded accretion expense of $2,275 (2014 - $nil).

As of January 31, 2015 and 2014, the carrying value and accrued interest of the convertible debenture is $nil.

On December 11, 2014, the Company issued a convertible debenture with a non-related party for $2,000.

The debenture is unsecured, due interest at 24% per annum and due on December 11, 2015.

The note, plus accrued interest, is convertible into common shares at a conversion price of US$0.01 per share at the discretion of the lender and at any time during the term of this debenture.

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

Convertible Debentures (continued)

As the convertible debt terms include a beneficial conversion feature, the Company accounted for the debt terms in accordance with ASC 470, Debt – Debt with Conversions and Other Options.

The conversion feature resulted in a discount on the convertible note of $1,200.

On January 31, 2015, this convertible debenture was converted to 174,666 shares of common stock of the Company (Note 7(d)).

During the year ended January 31, 2015, the Company recorded accretion expense of $133 (2014 - $nil).

As of January 31, 2015 and 2014, the carrying value and accrued interest of the convertible debenture is $nil.

Derivative Liabilities

Derivative liabilities consist of convertible debentures with variable conversion prices and share purchase warrants originally issued in private placements with conversion/exercise prices denominated in United States dollars, which differs from the Company’s functional currency.

In January 2015, the December 2010 and February 2011 convertible debentures were converted into shares of common stock of the Company (Notes 5(a) and 5(b)).

The fair values of these derivative liabilities as at January 31, 2015 and 2014 are as follows:

December 2010 convertible debenture

February 2011 convertible debenture

Default penalty on convertible debenture

(Expressed in U.S.

Derivative Liability

Derivative liability consists of share purchase warrants originally issued in private placements with conversion/exercise prices denominated in United States dollars, which differs from the parent entity's functional currency.

The fair values of derivative liability as at January 31, 2016 and 2015 are as follows:

380,000 warrants expiring on July 30, 2015

The fair values of derivative financial liabilities were determined using the Black-Scholes option pricing model, using the following assumptions:

The fair value of derivative financial liability was determined using the Black-Scholes option pricing model, using the following assumptions:

Expected Volatility

3 unchanged sentences

As at issuance date:

December 2010 convertible debenture

February 2011 convertible debenture

Default penalty on convertible debenture

380,000 warrants expiring on July 30, 2015

As at January 31, 2015:

December 2010 convertible debenture

February 2011 convertible debenture

Default penalty on convertible debenture

380,000 warrants expiring on July 30, 2015

During the year ended January 31, 2016:

(a) On March 6, 2015, 10,000,000 shares of common stock were issued to directors, an officer and a consultant (the "shareholders") and valued at $894,656 using the market price of the stock on the date of issuance.

An additional 30,000,000 shares of common stock were held in escrow and to be released as follows:

10,000,000 shares of common stock on each of August 25, 2015, February 25, 2016 and February 25, 2017.

On August 25, 2015, 10,000,000 shares of common stock were released to the shareholders.

In October 2015, the shareholders returned 20,000,000 shares of common stock issued and received to the Company for cancellation.

On the same date, the remaining 20,000,000 shares of common stock held in escrow were returned to the Company for cancellation.

(b) On April 15, 2015, the Company issued 2,500,000 shares of common stock to a service provider and an officer for services provided valued at $239,195.

The value of the common stock was based on the market price of the stock on the date of issuance.

In April 2015, 400,000 shares of common stock were issued for cash proceeds of $40,148 or $0.10 per share.

(d) On August 1, 2015, 25,000 shares of common stock were issued to a member of the Company's Scientific Advisory Board ("SAB member") and valued at $9,125 using the market price of the stock on the date of issuance.

An additional 75,000 shares of common stock are held in escrow and will be released as follows:

25,000 shares of common stock on each of January 31, 2016, July 31, 2016 and January 31, 2017.

On January 31, 2016, 25,000 shares of common stock were released to the SAB member.

For the year ended January 31, 2016, an additional $16,206 was recognized for services provided, which was valued using the market price of the stock on January 31, 2016.

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

Common Shares

During the year ended January 31, 2015:

1,500,000 shares of common stock were issuable pursuant to a default penalty on a convertible debenture on April 27, 2014 (Note 5(d)).

1,000,000 shares of common stock were issuable pursuant to a default penalty on a loan payable on September 19, 2014 (Note 4).

16,512,521 shares of common stock were issuable in January 2015 to settle $191,977 of amounts due to a related party.

250,000 shares of common stock were issued during the year pursuant to default penalties on convertible debentures (Notes 5(a) and 5(b)) and 29,920,253 shares of common stock were issuable in January 2015 on conversion of convertible debentures (Notes 5(a), 5(b), 5(c), 5(d), 5(e) and 5(f)).

1,000,000 shares of common stock were issued during the year pursuant to termination fee on a convertible debenture (Note 5(c)).

5,604,285 shares of common stock were issuable in January 2015 to settle loans payable (Note 4).

(Expressed in U.S.

Common Stock (continued)

(e) On August 24, 2015, 100,000 shares of common stock were issued to a service provider and valued at $53,500 using the market price of the stock on the date of issuance.

(f) On November 23, 2015, 4,512,500 shares of common stock were issued pursuant to the asset acquisition (Note 2).

On December 4, 2015, a further 237,500 shares of common stock were issued pursuant to this acquisition.

The shares issued were valued at $46,723, which is the net value of assets purchased.

(g) On November 30, 2015, 8,333 shares of common stock were issued to the Company's Chief Executive Officer ("CEO") pursuant to an employment agreement and valued at $8,750 using the market price of the stock on the date of issuance.

On December 31, 2015 and January 29, 2016, 25,000 shares of common stock were issued to the Company's CEO pursuant to the same employment agreement and valued, using market prices of the stock on these dates, at $25,000 and $22,500, respectively.

During the year ended January 31, 2015:

3,000,000 shares of common stock were issuable pursuant to a default penalty on a loan payable on March 24, 2013 (Note 4).

The Company issued 3,500,000 shares of common stock to settle $35,000 of amounts due to related party on September 24, 2013.

(a) 1,500,000 shares of common stock were issuable pursuant to a default penalty on a convertible debenture on April 27, 2014.

(b) 1,000,000 shares of common stock were issuable pursuant to a default penalty on a loan payable on September 19, 2014.

(c) 16,512,521 shares of common stock were issuable in January 2015 to settle $150,740 of amounts due to a related party.

(d) 250,000 shares of common stock were issued during the year pursuant to default penalties on convertible debentures and 29,920,253 shares of common stock were issuable in January 2015 on conversion of convertible debentures.

1,000,000 shares of common stock were issued during the year pursuant to termination fee on a convertible debenture.

(e) 5,604,285 shares of common stock were issuable in January 2015 to settle loans payable.

Share Purchase Warrants

The following table summarizes the continuity of share purchase warrants:

Number of Warrants

Weighted Average Exercise Price

Balance, January 31, 2013

Balance, January 31, 2015 and 2014

As at January 31, 2015, the following share purchase warrants were outstanding:

Number of Warrants

Exercise Price $

July 30, 2015

Balance, January 31, 2016

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in Canadian dollars)

(Expressed in U.S.

Stock Options

Effective December 30, 2015, the Company adopted a stock option plan.

Under this plan, the Company may grant options to its directors, officers, employees and consultants up to an amount as determined by the Company and will be no more than a percentage of its outstanding common stock as may be required by the stock exchange the Company is listed with.

The exercise price of the stock options will be determined by the Company and will be no less than any minimum exercise price as may be required by the stock exchange the Company is listed with.

The following table summarizes the continuity of the Company's stock options:

1 unchanged sentence

Weighted Average Remaining Contractual Life (years)

Aggregate Intrinsic Value

Outstanding and exercisable, January 31, 2013

Outstanding and exercisable, January 31, 2014

Outstanding and exercisable, January 31, 2015

Outstanding, January 31, 2015 and 2014

Outstanding, January 31, 2016

The fair value of stock-based compensation expense was estimated using the Black-Scholes option pricing model and the following assumptions:

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life (in years)

200,000 options expiring on November 30, 2020

6,000,000 options expiring on December 14, 2020

Additional information regarding stock options as of January 31, 2016, is as follows:

Number of Options

Exercise Price $

Options Outstanding

November 30, 2020

December 14, 2020

$125 ,319 of stock-based compensation have yet to be recognized and will be recognized in future periods.

Related Party Transactions

As at January 31, 2015, the Company owed $nil (2014 - $151,384) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

16,512,521 shares of common stock were issuable in January 2015 to settle $191,977 of amounts due to this director.

During the year ended January 31, 2015, the Company’s director performed services valued at $3,000 (2014 - $nil) which have been recorded as a contribution to capital.

During the year ended January 31, 2015, a director of the Company forgave amounts owing of $nil (2014 - $75,000), for which $nil (2014 - $52,500) was treated as contributed capital and recorded as additional paid-in capital.

In January 2015, the Company issued 16,512,521 shares of common stock pursuant to settlement of amounts due to a related party.

(a) As at January 31, 2016, the Company owed $800 (2015 - $nil) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

(b) As at January 31, 2016, the Company has a receivable of $866 (2015 - $nil) from the Company's Chief Executive Officer, which has been received subsequent to year end.

(c) As at January 31, 2016, the Company owed $37,622 (2015 - $nil) to related parties related to stock options to be granted pursuant to the Agreement and Plan of Merger and Acquisition Agreement dated as of November 4, 2015 between the Company and IndUS (Note 2).

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in U.S.

Related Party Transactions (continued)

(d) During the year ended January 31, 2016, the Company's director performed services valued at $nil (2015 - $2,694) which have been recorded as a contribution to capital.

The Company has approximately $6,400,000 of non-capital losses carried forward to offset taxable income in future years which expire beginning in fiscal 2029.

3 unchanged sentences

Expected tax recovery

Lower effective tax rate on losses in U.S.

Permanent differences and other

2 unchanged sentences

Income tax provision

PIVOT PHARMACEUTICALS INC.

(formerly Neurokine Pharmaceuticals Inc.)

Notes to the Financial Statements

Year ended January 31, 2015

(Expressed in Canadian dollars)

Income Taxes (continued)

The significant components of deferred income tax assets and liabilities as at January 31, 2016 and 2015, after applying enacted corporate income tax rates, are as follows:

2 unchanged sentences

Net deferred tax asset

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Year ended January 31, 2016

(Expressed in U.S.

The following table lists the fiscal year in which the loss was incurred and the expiration date of the operating loss:

Subsequent Events

In March 2015, the Company issued 40,000,000 shares of common stock to directors and an officer.

75% of these shares of common stock are held in escrow to be released one third in 6 months, one third in 12 months and one third in 24 months.

In April 2015, the Company effected a reverse stock split of its issued and outstanding shares of common stock on a 10 for 1 basis and changed its name from Neurokine Pharmaceuticals Inc.

to Pivot Pharmaceuticals Inc.

In April 2015, the Company issued 2,500,000 shares of common stock to a service provider and an officer for services provided.

(a) In February 2016, the Company issued 100,000 shares of common stock to consultants.

(b) On February 23, 2016, the Company granted 7,250,000 options to purchase the Company's common stock to officers, directors and consultants at an exercise price of $0.70 per share with a maturity date of February 22, 2021.

The stock options vest as follows:

1,812,500 immediately, 1,812,500 on May 23, 2016, 1,812,500 on August 23, 2016 and 1,812,500 on November 23, 2016.

(c) On each of February 29, 2016 , March 31, 2016, May 2, 2016 and May 31, 2016, 25,000 shares of common stock were issued to the Company's CEO as compensation.

(d) On May 3, 2016, the Company granted 29,000 options to purchase the Company's common stock to a consultant at an exercise price of $0.34 per share with a maturity date of May 2, 2021.

The stock options vest as follows:

26,000 immediately, 1,000 on November 2, 2016, 1,000 on May 2, 2017 and 1,000 on November 2, 2017.

The Company has restated the 2016 financial statements as originally presented in its 10K filed on April 29, 2016.

The changes and explanation of such are as follows:

Consolidated balance sheet as of January 31, 2016:

Originally Reported

Restatement Adjustment

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

(12,590,912 )

(14,319,546 )

Consolidated statement of operations for the year ended January 31, 2016:

Originally Reported

Restatement Adjustment

Stock-based compensation

Total expenses

(10,307,065 )

Foreign currency translation adjustment

Net comprehensive loss

The adjustments above reflect restatement due to additional stock-based compensation of $1,728,634 being recognized on the 6,200,000 stock options granted during the year, together with the effects of translating the additional expense into the Company's presentation currency.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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 8. Financial Statements and Supplementary Data