What changed in this filing

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Item 1. Financial Statements

2017-09-15 compared with 2017-06-13 · 79 added, 43 removed, 186 unchanged (40% of the section changed)

Financial Statements

Our unaudited interim condensed consolidated financial statements for the period ended April 30, 2017 form part of this quarterly report.

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

The results of operations for the three and six month periods ended July 31, 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 April 30, 2017 (unaudited) and January 31, 2017

Period ended July 31, 2017 (unaudited) and January 31, 2017

PIVOT PHARMACEUTICALS INC.

18 unchanged sentences

Accumulated deficit

(20,923,121 )

(20,597,753 )

Total stockholders’ deficit

2 unchanged sentences

PIVOT PHARMACEUTICALS INC.

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Operations and Comprehensive Income

(Expressed in U.S.

Foreign exchange loss

Foreign exchange (gain) loss

General and administrative

5 unchanged sentences

Amortization of discount on convertible debenture

Interest expense

Gain on change in fair value of derivative liabilities

Gain on settlement of debts

Interest expense

Total other income (expense)

2 unchanged sentences

Net comprehensive loss

Net loss per share, basic and diluted

Net income (loss) per share, basic and diluted

Weighted average shares outstanding – basic and diluted

8 unchanged sentences

Gain on change in fair value of derivative liabilities

Gain on settlement of debts

Stock issued for services

13 unchanged sentences

Income tax paid

Non-cash investing and financing activities

Capital contribution through forgiveness of debt

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

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

Period ended July 31, 2017

(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 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.

As of July 31, 2017, the Company has not earned any revenue, has a working capital deficit of $1,287,374 and an accumulated deficit of $20,923,121.

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

2 unchanged sentences

Significant Accounting Policies

Basis of Presentation

(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

(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.

3 unchanged sentences

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

Interim Financial Statements

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.

3 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

Period ended July 31, 2017

(Expressed in U.S.

Significant Accounting Policies (continued)

Basis of Consolidation

(d) 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.

Loss Per Share

(e) Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share.

4 unchanged sentences

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

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

As at July 31, 2017, the Company had 5,908,347 (January 31, 2017 – 9,692,748) potentially dilutive shares.

(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.

12 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

Period ended July 31, 2017

(Expressed in U.S.

Significant Accounting Policies (continued)

Recent Accounting Pronouncements

(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.

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

8 unchanged sentences

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.

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 per share, 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).

As of July 31, 2017, the carrying value of the convertible debenture is $394,042 (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 July 31, 2017, interest accrued on the convertible debenture is $27,748 (January 31, 2017 - $10,307) and the fair value of the conversion option derivative liability is $142,905 (January 31, 2017 - $312,541).

As of July 31, 2017, the Company has not repaid the convertible debenture, which is in default.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

Period ended July 31, 2017

(Expressed in U.S.

1 unchanged sentence

Derivative liability consists of convertible debenture with variable conversion price (Note 3).

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

The fair value of derivative liability as at July 31, 2017 and January 31, 2017 is as follows:

September 2016 convertible debenture

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

Interest Rate

Dividend Yield

Expected Life

As at issuance date:

September 2016 convertible debenture

As at April 30, 2017:

As at July 31, 2017:

September 2016 convertible debenture

4 unchanged sentences

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

Remaining Contractual

Weighted Average

Exercise Price

Weighted Average Remaining Contractual Life (years)

Outstanding, January 31, 2017

Outstanding, April 30, 2017

Outstanding, July 31, 2017

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

Period ended July 31, 2017

(Expressed in U.S.

1 unchanged sentence

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

200,000 options expiring on November 30, 2020

Interest Rate

Dividend Yield

Expected Life

29,000 options expiring on May 2, 2021

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

Additional information regarding stock options as of July 31, 2017, is as follows:

Options Outstanding

7 unchanged sentences

The following table summarizes the continuity of share purchase warrant:

Weighted Average Exercise

Balance, January 31, 2017

Balance, April 30, 2017

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

Balance, July 31, 2017

As at July 31, 2017, the following share purchase warrant was outstanding:

Upon repayment of convertible debenture (Note 3)

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2017

Period ended July 31, 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.

As at July 31, 2017, the Company owed $3,737 (January 31, 2017 - $4,154) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

As at July 31, 2017, the Company owed $43,264 (January 31, 2017 – $18,420) to the Company’s past Chief Executive Officer (Note 10).

At July 31, 2017, $552,889 of accrued management fees to the Company’s Chief Financial Officer and Chief Business Officer were forgiven.

Fair Value Measurements

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

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

Total fair value at July 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Derivative liability (1)

Significant unobservable

Total fair value at January 31,

Quoted prices in active markets

Significant other observable inputs

Significant unobservable inputs

Derivative liability (1)

4 unchanged sentences

Subsequent Events

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.

On September 11, 2017, the Company entered into an exchange agreement with its subsidiary, IndUS, and its Chief Executive Officer whereby the Company exchanged all of its outstanding common stock of IndUS for 3,800,000 common stock of the Company, upon with its Chief Executive Officer resigned.

As part of this exchange agreement, the Company provided its past Chief Executive Officer with a non-interest bearing promissory note of $200,000 payable at the earlier of 45 days after the completion of a financing of at least $2,000,000 and September 10, 2027, and in discharge of all obligations with respect to all accrued and unpaid salary through September 11, 2017.

Approximately $350,000 of liabilities belonging to IndUS will be assumed by the Company’s past Chief Executive Officer.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended July 31, 2017

(Expressed in U.S.

Subsequent Events (continued)

Concurrently, on September 11, 2017, the Company appointed Dr.

Patrick Frankham as its interim Chief Executive Officer.

On September 12, 2017, the Company entered into a licensing agreement with Altum Pharmaceuticals Inc.

(“Altum”) whereby the Company was granted worldwide rights to BiPhasix Transdermal Drug Delivery Technology (“BiPhasix Technology”) for the delivery and commercialization of cannabinoids, cannabidiol (“CBD”), and tetrahydrocannabinol-based products.

Financial consideration includes:

· Issuance of 2,500,000 shares of common stock on closing of the licensing agreement (issuable as at September 15, 2017);

· Issuance of 2,500,000 shares of common stock of the Company upon Health Canada Natural Product Number (“NPN”) approval for a CBD product developed using the BiPhasix Technology;

· Five percent (5%) royalties on annual net sales;

· For pharmaceutical products:

$1,000,000 payable upon first Investigative New Drug Application approval;

$1,000,000 payable upon positive outcome of Phase II trial in first indication;

$2,000,000 payable upon New Drug Application approval.

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