What changed in this filing

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Item 1. Financial Statements

2016-12-12 compared with 2016-09-12 · 129 added, 53 removed, 131 unchanged (58% of the section changed)

Financial Statements

Our unaudited interim consolidated financial statements for the period ended July 31, 2016 form part of this quarterly report.

Our unaudited interim condensed consolidated financial statements for the period ended October 31, 2016 form part of this quarterly report.

All currency references in this report are to U.S.

1 unchanged sentence

This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data.

The results of operations for the three and six month periods ended July 31, 2016 are not necessarily indicative of results to be expected for any subsequent period.

The results of operations for the three and nine month periods ended October 31, 2016 are not necessarily indicative of results to be expected for any subsequent period.

PIVOT PHARMACEUTICALS INC.

Consolidated Financial Statements

Condensed Consolidated Financial Statements

(Expressed in U.S.

Period ended July 31, 2016 (unaudited) and January 31, 2016

Period ended October 31, 2016 (unaudited) and January 31, 2016

PIVOT PHARMACEUTICALS INC.

Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

(Expressed in U.S.

7 unchanged sentences

Due to related parties (Note 9)

Convertible debenture, net of discount (Note 4)

Derivative liability (Note 5)

Total liabilities

10 unchanged sentences

Total liabilities and stockholders’

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

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

PIVOT PHARMACEUTICALS INC.

Consolidated Statements of Operations

Condensed Consolidated Statements of Operations

(Expressed in U.S.

6 unchanged sentences

Loss from operations

Other (expenses) income

Gain on change in fair value of derivative liabilities

Total other income

Other comprehensive income

Other income (expense)

Amortization of discount on convertible debenture

Interest expense

(Loss) gain on change in fair value of derivative liabilities

Total other income (expense)

Other comprehensive income (loss)

Foreign currency translation adjustment

Net comprehensive loss

Net comprehensive income (loss)

Net loss per share, basic and diluted

Weighted average shares outstanding – basic and diluted

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

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

PIVOT PHARMACEUTICALS INC.

Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

(Expressed in U.S.

1 unchanged sentence

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

Amortization of discount on convertible debenture

Fair value of stock options vested

Loss on change in fair value of derivative liabilities

Loss (gain) on change in fair value of derivative liabilities

Stock issued for services

2 unchanged sentences

Accounts payable and accrued liabilities

Due to related parties

Net cash used in operating activities

Financing activities

Proceeds from convertible debenture

Proceeds from stock to be issued

2 unchanged sentences

Effects of exchange rate changes on cash

(Decrease) increase in cash

Increase in cash

Cash – beginning of period

Cash – end of period

Non-cash investing and financing activities

Debt discounts on convertible debt

Supplemental disclosures:

1 unchanged sentence

Income tax paid

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

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

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Period ended July 31, 2016 (unaudited)

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

6 unchanged sentences

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 of July 31, 2016, the Company has not earned any revenue, has a working capital deficit of $707,340 and an accumulated deficit of $18,830,758.

As of October 31, 2016, the Company has not earned any revenue, has a working capital deficit of $1,164,614 and an accumulated deficit of $19,785,698.

The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing.

12 unchanged sentences

These interim unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for the periods shown.

The consolidated results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

These interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s condensed consolidated financial position, results of operations and cash flows for the periods shown.

The condensed consolidated results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

Certain disclosures and financial information have been condensed in accordance with generally accepted accounting principles in the United States.

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Period ended July 31, 2016 (unaudited)

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

11 unchanged sentences

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.

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

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.

At July 31, 2016 and 2015, the Company had 3,970,000 and zero potentially dilutive shares, respectively.

(f) Recent Accounting Pronouncements

At October 31, 2016 and 2015, the Company had 8,705,847 and zero potentially dilutive shares, respectively.

(f) 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.

ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets;

quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets);

or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

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, due to related parties and convertible debenture.

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.

The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

Significant Accounting Policies (continued)

(g) 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.

1 unchanged sentence

Accumulated amortization

Net carrying value

Office furniture and equipment

Depreciation expense included as a charge to income was $nil and $183 for the six months ended July 31, 2016 and 2015, respectively.

Depreciation expense included as a charge to income was $nil and $268 for the nine months ended October 31, 2016 and 2015, respectively.

Convertible Debenture

On September 30, 2016, the Company issued a convertible debenture with a non-related party for $500,000 Canadian Dollars ($380,411 US Dollars at September 30, 2016) (“Initial Advance”).

The debenture is secured under a General Security Agreement, bears interest at 8% per annum and matures on the earlier of:

· The date the lender demands repayment of principal and interest following an event of default,

· The date of a dissolution event,

· The date of a liquidity event, and

· March 30, 2017.

The Company may request one or more additional advances of up to an aggregate amount of $1,000,000 Canadian Dollars (“Additional Advances”) provided that the aggregate amount under the convertible debenture does not exceed $1,500,000 Canadian Dollars.

The note, including the Initial Advance and any Additional Advances, is convertible into common shares at a conversion price equal to the average closing market price of the Company’s common stock during the five day period leading up to the conversion date.

The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $221,158 with a corresponding discount to the convertible debenture (Note 5).

Pursuant to the convertible loan agreement, the Company issued 434,622 share purchase warrants to which the lender may acquire an interest in the Company equal to 12% of the maximum principal amount outstanding at any time at a price of $0.10, which equates to the ten day average trading price of the Company’s common stock determined as at September 30, 2016.

The Company calculated the 434,622 share purchase warrants based on the maximum outstanding principal balance on the convertible loan as of September 30, 2016.

The Company recorded the share purchase warrant at an estimated fair value of $20,154 with a corresponding discount to the convertible debenture (Note 8).

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Period ended July 31, 2016 (unaudited)

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

Convertible Debenture (continued)

As of October 31, 2016, the carrying value of the convertible debenture is $191,215 Canadian Dollars ($142,588 US Dollars at October 31, 2016) (January 31, 2016 - $nil) with accrued interest $2,533 (January 31, 2016 - $nil).

As of October 31, 2016, the fair value of the conversion option derivative liability is $447,115 (January 31, 2016 - $nil).

Derivative Liability

Derivative liability consists of convertible debenture with variable conversion price (Note 4).

The fair value of derivative liability as at October 31, 2016 and January 31, 2016 is as follows:

September 2016 convertible debenture

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

Interest Rate

Dividend Yield

Expected Life

As at issuance date:

September 2016 convertible debenture

As at October 31, 2016:

September 2016 convertible debenture

(a) On February 10, 2016, the Company issued 100,000 shares of common stock to service providers for services provided valued at $68,000.

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

(b) On February 29, 2016, March 31, 2016, May 2, 2016, May 31, 2016 and June 28, 2016, the Company issued 25,000 shares of common stock on each of these dates to the Company’s CEO as monthly compensation valued at $15,000, $13,750, $7,500, $6,000, and $4,875, respectively.

(b) On February 29, 2016, March 31, 2016, May 2, 2016, May 31, 2016, June 28, 2016, August 2, 2016 and August 30, 2016, the Company issued 25,000 shares of common stock on each of these dates to the Company’s CEO as monthly compensation valued at $15,000, $13,750, $7,500, $6,000, $4,875, $3,757 and $3,250, respectively.

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

On July 31, 2016, 25,000 shares of common stock were issuable to the Company’s CEO as compensation and valued at $3,750.

(c) In June 2016, 600,000 shares of common stock were issued to service providers and valued at $144,500 based on the market price of the stock on the dates of issuances.

1 unchanged sentence

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

On July 31, 2016, common stock with a fair value of $628 remains issuable to this SAB member.

On October 31, 2016, common stock with a fair value of $1,697 remains issuable to this SAB member.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

Stock Options

4 unchanged sentences

Exercise Price

Weighted Average Remaining Contractual Life (years)

Weighted Average

Outstanding, January 31, 2015

Outstanding, January 31, 2016

Outstanding, July 31, 2016

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Period ended July 31, 2016 (unaudited)

(Expressed in U.S.

Stock Options (continued)

Outstanding, October 31, 2016

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

Risk-free Interest Rate

Expected Dividend Yield

Expected Life (in years)

Interest Rate

Dividend Yield

Expected Life

200,000 options expiring on November 30, 2020

1 unchanged sentence

29,000 options expiring on May 2, 2021

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

Options Outstanding

Options Exercisable

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

November 30, 2020

2 unchanged sentences

$83,068 of stock-based compensation have yet to be recognized and will be recognized in future periods.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

Share Purchase Warrant

The following table summarizes the continuity of share purchase warrant:

Balance, January 31, 2016

Balance, October 31, 2016

As at October 31, 2016, the following share purchase warrant was outstanding:

March 30, 2017

Pursuant to the convertible debenture (Note 4), the Company will be required to issue additional share purchase warrants on any Additional Advances to which the lender may acquire an interest in the Company equal to 12% of the maximum principal amount outstanding.

Related Party Transactions

As at July 31, 2016, the Company owed $857 (January 31, 2016 - $800) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

As at July 31, 2016, the Company owed $33,297 (January 31, 2016 – Receivable of $866) to the Company’s Chief Executive Officer.

As at July 31, 2016, the Company owed $6,274 (January 31, 2016 - $37,622) 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).

As at October 31, 2016, the Company owed $4,694 (January 31, 2016 - $800) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

As at October 31, 2016, the Company owed $16,721 (January 31, 2016 – Receivable of $866) to the Company’s Chief Executive Officer.

As at October 31, 2016, the Company owed $4,557 (January 31, 2016 - $37,622) 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).

On April 15, 2015, the Company issued 2,000,000 shares of common stock to an officer for services provided.

This $191,356 of compensation expense has been included in professional fees.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

(Expressed in U.S.

Fair Value Measurements

The Company’s financial liabilities carried at fair value measured on a recurring basis as of October 31, 2016 and January 31, 2016, consisted of the following:

active markets

Significant unobservable

Derivative liability (1)

prices in active markets

other observable inputs

Significant unobservable

Derivative liability (1)

(1) Derivative liability amounts are due to the embedded derivatives of convertible debenture issued by the Company and are calculated using the Black Scholes pricing model (Note 5).

The Company has no financial assets carried at fair value.

Subsequent Events

On August 2, 2016, the Company issued 25,000 shares of common stock to its CEO as compensation, which shares were issuable as at July 31, 2016 (Note 4(b)).

On August 30, 2016, the Company issued 25,000 shares of common stock to its CEO as compensation.

Management has evaluated subsequent events through the date these financial statements were available to be issued.

Based on such evaluation, no events occurred that required disclosure.

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-Q

Item 1. Financial Statements