What changed in this filing

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Item 1. Financial Statements

2017-06-13 compared with 2016-12-12 · 75 added, 106 removed, 154 unchanged (54% of the section changed)

Financial Statements

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

Our unaudited interim condensed consolidated financial statements for the period ended April 30, 2017 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 nine month periods ended October 31, 2016 are not necessarily indicative of results to be expected for any subsequent period.

The results of operations for the three month period ended April 30, 2017 are not necessarily indicative of results to be expected for any subsequent period.

PIVOT PHARMACEUTICALS INC.

1 unchanged sentence

(Expressed in U.S.

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

Period ended April 30, 2017 (unaudited) and January 31, 2017

PIVOT PHARMACEUTICALS INC.

5 unchanged sentences

Security deposit

Liabilities and Stockholders’

Liabilities and Stockholders’ Deficit

Current liabilities

4 unchanged sentences

Total liabilities

Stockholders’

Stockholders’ Deficit

Common stock:

Unlimited shares authorized, without par value, 75,647,114 and 75,647,114 shares issued and outstanding, respectively

Common stock issuable (Note 6)

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

(19,785,698 )

(14,319,546 )

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

2 unchanged sentences

(Expressed in U.S.

Depreciation and amortization

Foreign exchange loss

General and administrative

Management fees (Note 9)

Management fees

Professional fees

4 unchanged sentences

Interest expense

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

Gain on change in fair value of derivative liabilities

Total other income (expense)

1 unchanged sentence

Foreign currency translation adjustment

Net comprehensive income (loss)

Net comprehensive loss

Net loss per share, basic and diluted

8 unchanged sentences

Fair value of stock options vested

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

Gain on change in fair value of derivative liabilities

Stock issued for services

4 unchanged sentences

Financing activities

Proceeds from convertible debenture

Proceeds from stock to be issued

Proceeds from related party advances

1 unchanged sentence

Effects of exchange rate changes on cash

Increase in cash

Decrease in cash

Cash – beginning of period

Cash – end of period

Non-cash investing and financing activities

Debt discounts on convertible debt

Supplemental disclosures:

3 unchanged sentences

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

(Expressed in U.S.

1 unchanged sentence

Pivot Pharmaceuticals Inc.

(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.

to Pivot Pharmaceuticals Inc.

The Company is in the business of developing and commercializing therapeutic pharmaceutical products, focused on the strategy of identifying new therapeutic treatments to address unmet medical needs in women’s health.

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 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.

As of April 30, 2017, the Company has not earned any revenue, has a working capital deficit of $1,735,893 and an accumulated deficit of $20,917,570.

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

These factors raise substantial doubt about the Company’s ability 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.

Significant Accounting Policies

(a) Basis of Presentation

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.

(b) Use of Estimates

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

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.

1 unchanged sentence

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.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

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

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.

Interim Financial Statements

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.

1 unchanged sentence

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

(Expressed in U.S.

Significant Accounting Policies (continued)

(d) Basis of Consolidation

Basis of Consolidation

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

4 unchanged sentences

IndUS Pharmaceuticals, Inc.

(e) Loss Per Share

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 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.

2 unchanged sentences

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

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

As at April 30, 2017, the Company had 4,115,304 (January 31, 2017 – 9,692,748) potentially dilutive shares.

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:

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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 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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

(Expressed in U.S.

Significant Accounting Policies (continued)

(g) Recent Accounting Pronouncements

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

Office furniture and equipment

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

Reclassification

Results for the three months ended April 30, 2016 have been reclassified to allocate previously reported stock-based compensation of $3,030,288 as follows:

$817,409 to general and administrative, $77,505 to professional fees and $2,135,374 to management fees.

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:

3 unchanged sentences

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 $134,892 with a corresponding discount to the convertible debenture (Note 4).

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 6).

As of April 30, 2017, the carrying value of the convertible debenture is $365,978 (January 31, 2017 - $275,011) which is net of debt discounts related to conversion feature, financing costs and warrants of $nil, $nil and $nil, respectively (January 31, 2017 - $94,709, $6,126 and $6,477, respectively).

As of April 30, 2017, interest accrued on the convertible debenture is $17,998 (January 31, 2017 - $10,307) and the fair value of the conversion option derivative liability is $221,317 (January 31, 2017 - $312,541).

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements

Period ended October 31, 2016

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

(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:

The fair value of derivative liability as at April 30, 2017 and January 31, 2017 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

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

Dividend Yield

Expected Life

As at issuance date:

September 2016 convertible debenture

As at October 31, 2016:

As at April 30, 2017:

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, 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.

(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.

(d) On July 31, 2016, 25,000 shares of common stock, valued at $3,750, previously held in escrow were released to a member of the Company’s Scientific Advisory Board (“SAB member”).

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

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

2 unchanged sentences

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:

Exercise Price

Weighted Average

Outstanding, January 31, 2015

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

Remaining Contractual

Outstanding, January 31, 2017

Outstanding, October 31, 2016

Outstanding, April 30, 2017

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

(Expressed in U.S.

Stock Options (continued)

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

Interest Rate

Dividend Yield

Expected Life

200,000 options expiring on November 30, 2020

7,250,000 options expiring on February 22, 2021

29,000 options expiring on May 2, 2021

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

Additional information regarding stock options as of April 30, 2017, is as follows:

Options Outstanding

November 30, 2020

1 unchanged sentence

February 22, 2021

December 14, 2021

January 23, 2022

$417 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

1 unchanged sentence

Balance, January 31, 2017

Balance, October 31, 2016

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

March 30, 2017

Balance, April 30, 2017

As at April 30, 2017, the following share purchase warrant was outstanding:

Upon repayment of convertible debenture (Note 3)

Pursuant to the convertible debenture (Note 3), 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 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

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

(Expressed in U.S.

Related Party Transactions

As at April 30, 2017, the Company owed $3,471 (January 31, 2017 - $4,154) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

As at April 30, 2017, the Company owed $21,416 (January 31, 2017 - $18,420) to the Company’s Chief Executive Officer.

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

The Company’s financial liabilities carried at fair value measured on a recurring basis as of April 30, 2017 and January 31, 2017, consisted of the following:

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).

_____________

Derivative liability amounts are due to the embedded derivatives of convertible debenture issued by the Company and are calculated using the binomial option pricing model (Note 4).

The Company has no financial assets carried at fair value.

The Company’s minimum future lease commitments are:

Subsequent Events

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-Q

Item 1. Financial Statements