What changed in this filing

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Item 2. Management’s Discussion and Analysis

2017-12-15 compared with 2017-09-15 · 85 added, 47 removed, 203 unchanged (39% of the section changed)

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Pravin Chaturvedi as our new Chief Executive Officer and Director.

On September 11, 2017, we completed an exchange agreement whereby the Company exchanged with Dr.

On September 11, 2017, we completed an exchange agreement whereby we exchanged with Dr.

Chaturvedi 100% of its shares of common stock of IndUS for 3,800,000 shares of common stock of Pivot, upon which Dr.

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Financial consideration included:

· 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:

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

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

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

Issuance of 2,500,000 shares of common stock on effective date of agreement

Issuance of 2,500,000 shares of common stock of Pivot upon Health Canada Natural Product Number (“NPN”) approval;

Royalties on annual gross sales;

For pharmaceutical products, milestone payments payable upon first Investigative New Drug Approval, upon positive outcome of Phase II trial in first indication, and upon New Drug Application approval.

On September 23, 2017, we entered into a collaboration and license agreement with SolMic GmbH (“Solmic”) whereby we will acquire worldwide rights to Solmic’s Solubilisation Technology for the development and commercialization of cannabinoid-containing natural extracts.

Milestones include payments upon the following developments:

1) Regulatory approval of a natural health product;

2) First approval of an investigative new drug application for a pharmaceutical product;

3) Positive outcome of a Phase II clinical trial of a pharmaceutical product in the first indication;

and 4) Approval of a New Drug Application for a pharmaceutical product by the US Food and Drug Administration.

Other consideration include a sales milestone upon aggregate net sales of $5,000,000 and royalties on aggregate net sales.

On November 7, 2017, we signed a letter of intent to enter into a licensing agreement with Thrudermic LLC (“Thrudermic”) by January 18, 2018, whereby we will acquire worldwide rights for the development and commercialization of the Thrudermic Nano Technology (“TNT”) for all cannabinoids.

Consideration will include:

Royalties on annual gross sales upon commercialization of a product;

For natural health products, milestone payments payable upon approval of Health Canada NPN approval and after achievement of $5 million in net sales;

For pharmaceutical products, milestone payments payable upon first Investigative New Drug Approval, upon positive outcome of Phase II trial in first indication, and upon New Drug Application approval

Our principal executive office is located at 1275 West 6th Avenue, Vancouver, B.C.

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We are an emerging biopharmaceutical company engaged in the development and commercialization of therapeutic pharmaceuticals and nutraceuticals, as well as drug delivery platform technologies.

On the pharmaceutical side, Pivot focuses on development of proprietary drug delivery technologies for multiple indications using small molecules, biological and botanical (e.g.

Our company focuses on pharmaceutical development of proprietary drug delivery technologies for multiple indications using small molecules, biological and botanical (e.g.

cannabinoids) products to treat unmet medical needs.

Pivot has in-licensed a patented topical transdermal drug delivery technology platform, BiPhasix, for delivery of cannabinoids.

On the nutraceutical side, Pivot focuses on the research, development, and commercialization of cannabinoid based nutraceuticals.

We will generate data to support the safety and efficacy of cannabinoids as Natural Health Product (“NHPs”) as outlined in Health Canada Regulations in order to make particular health claims.

We have in-licensed a patented topical transdermal drug delivery technology platform, BiPhasix, and an oral drug delivery technology, Solmic Micelle, for delivery of cannabinoids.

Our fully-owned subsidiary, Pivot Green Stream Health Solutions Inc.

(“PGS”), focuses on the research, development, and commercialization of cannabinoid based nutraceuticals.

PGS will generate data to support the safety and efficacy of cannabinoids as Natural Health Product (“NHPs”) as outlined in Health Canada Regulations in order to make particular health claims.

Health Canada publishes the Natural Health Products Regulations (“NHPR”) which set out the requirements governing the sale, manufacture, packaging, labelling, importation, distribution and storage of NHPs.

According to Health Canada, the objective of the NHPR is to provide reasonable assurance that products offered for sale in Canada are safe, efficacious and of high quality.

Pivot may also follow applicable and harmonized regulations for product development and commercialization in the US, European Union and Asia Pacific regions.

Alternatively, we will commercialize certain cannabinoid products with a Licensed Producer and/or Licensed Distributor as per the regulations concerning Access to Cannabis for Medical Purposes Regulations (“ACMPR”) since certain active ingredients in cannabinoids remain restricted until new legislation permits ease of development and distribution in 2018.

Lastly, Pivot may also develop products containing cannabinoid active ingredients obtained from industrial hemp according to the Industrial Hemp Regulations (“IHR”) permitting such products provided they are sourced from industrial hemp.

PGS may also follow applicable and harmonized regulations for product development and commercialization in the US, European Union and Asia Pacific regions.

Alternatively, PGS will commercialize certain cannabinoid products with a Licensed Producer and/or Licensed Distributor as per the regulations concerning Access to Cannabis for Medical Purposes Regulations (“ACMPR”) since certain active ingredients in cannabinoids remain restricted until new legislation permits ease of development and distribution in 2018.

Lastly, PGS may also develop products containing cannabinoid active ingredients obtained from industrial hemp according to the Industrial Hemp Regulations (“IHR”) permitting such products provided they are sourced from industrial hemp.

Otherwise stated, this means that the plants and plant parts of the genera Cannabis, the leaves and flowering heads of which do not contain more than 0.3% THC w/w, and includes the derivatives of such plants and plant parts.

Our pipeline targets indications such as cancer supportive care, pain and inflammation, women’s sexual dysfunction, dermatology and eye disease.

PGS’s pipeline targets indications such as cancer supportive care, pain and inflammation, women’s sexual dysfunction, dermatology and eye disease.

Our overall strategy includes the following:

Acquire market-ready natural health products from third-parties for rebranding and re-sale;

Acquire cannabinoid-based food additives for consumer sales;

Acquire cannabinoid-based food additives for medical consumer sales;

Develop cannabinoid-based natural health products using our BiPhasix topical platform technology;

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Out-license our platform technologies to Licensed Producers or Licensed Distributors and other drug developers;

Secure and develop further intellectual property;

Opportunistically acquire later‑stage drug candidates that provide new treatment options to address unmet medical needs in health care;

Establish partnerships with large and specialty pharmaceutical companies and/or biotechnology companies to collaboratively develop and/or commercialize our products.

Our Research and Development Strategy

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Psoriatic arthritis affects up to 30% of individuals with psoriasis.

1 https://www.researchgate.net/publication/7977139_Female_sexual_dysfunction

2 https://www.royalqueenseeds.com/blog-cbd-can-relieve-psoriasis-by-balancing-immune-systems-response-n423

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements for the period ended July 31, 2017, which are included herein.

Our operating results for the three and six months ended July 31, 2017 and 2016 are summarized as follows:

The following summary of our results of operations should be read in conjunction with our financial statements for the period ended October 31, 2017, which are included herein.

Our operating results for the three and nine months ended October 31, 2017 and 2016 are summarized as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

Foreign exchange (gain) loss

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Net Income (Loss)

$ (1,179,398 )

For the three months ended October 31, 2017, our net income increased by $1,485,668 as compared to the three months ended October 31, 2016.

During the three months ended October 31, 2016, $432,658 of share-based compensation was recognized related to vesting of stock options granted to management, directors, consultants and advisors compared to $1,605 for the three months ended October 31, 2017.

During the three months ended October 31, 2017, we recognized $80,144 of gain on settlements of debts related to debts converted into shares of our common stock, as well as conversion of accrued liabilities related to our past Chief Executive Officer into a promissory note.

In addition, we disposed of IndUS during the three months ended October 31, 2017, which resulted in a gain on disposal of asset of $609,311.

______________

For the three months ended July 31, 2017, our net loss decreased by $1,173,842 as compared to the three months ended July 31, 2016.

During the three months ended July 31, 2016, $795,248 of share-based compensation was recognized related to vesting of stock options granted to management, directors, consultants and advisors compared to $4 for the three months ended July 31, 2017.

In addition, during the three months ended July 31, 2017, we recognized $160,000 of gain on settlement of debts related to accrued consulting fees forgiven.

For the six months ended July 31, 2017, our net loss decreased by $4,185,842 as compared to the six months ended July 31, 2016 due to $3,858,395 of share-based compensation recognized during the six months ended July 31, 2016 related to vesting of stock options as compared to $773 recognized during the six months ended July 31, 2017.

In addition, during the six months ended July 31, 2017, we recognized $160,000 of gain on settlement of debts related to accrued consulting fees forgiven.

https://www.researchgate.net/publication/7977139_Female_sexual_dysfunction

https://www.royalqueenseeds.com/blog-cbd-can-relieve-psoriasis-by-balancing-immune-systems-response-n423

For the nine months ended October 31, 2017, our net income increased by $5,671,514 as compared to the nine months ended October 31, 2016.

During the nine months ended October 31, 2016, $4,467,039 of share-based compensation was recognized related to vesting of stock options granted to management, directors, consultants and advisors compared to $2,355 for the nine months ended October 31, 2017.

During the nine months ended October 31, 2017, we recognized $240,144 of gain on settlements of debts related to accrued consulting fees forgiven, debts converted into shares of our common stock, as well as conversion of accrued liabilities related to our past Chief Executive Officer into a promissory note.

In addition, we disposed of IndUS during the nine months ended October 31, 2017, which resulted in a gain on disposal of asset of $609,311.

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

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Working Capital (Deficit)

$ (1,287,374 )

$ (1,477,221 )

Our total current assets as of July 31, 2017 were $33,138 as compared to total current assets of $129,758 as of January 31, 2017.

The decrease was primarily due to operating expenditures paid during the period.

Our total current liabilities as of July 31, 2017 were $1,320,512 as compared to total current liabilities of $1,606,979 as of January 31, 2017.

The decrease in current liabilities was primarily attributed to forgiveness of accrued management and consulting fees during the three months ended July 31, 2017.

Six Months Ended

Our total current assets as of October 31, 2017 were $295,912 as compared to total current assets of $129,758 as of January 31, 2017.

The increase was primarily due to private placements of $223,000 made during the period.

Our total current liabilities as of October 31, 2017 were $150,025 as compared to total current liabilities of $1,606,979 as of January 31, 2017.

The decrease in current liabilities was primarily attributed to forgiveness of accrued management and consulting fees, accounts payable settled through issuance of shares of our common stock and conversion of convertible debts into shares of our common stock during the nine months ended October 31, 2017.

Nine Months Ended

Net Cash Used In Operating Activities

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Operating Activities

During the six months ended July 31, 2017, our cash used by operating activities increased by $14,444 when compared to cash used in operating activities during the six months ended July 31, 2016.

The increase in cash used for operating activities was a result of payments made related to professional fees.

During the nine months ended October 31, 2017, our cash used by operating activities decreased by $60,117 when compared to cash used in operating activities during the nine months ended October 31, 2016.

The decrease in cash used for operating activities was a result of our company’s efforts at minimizing cash outlays.

Investing Activities

We did not have any investing activities during the six months ended July 31, 2017 and 2016.

During the nine months ended October 31, 2017, we acquired a license for worldwide rights to the BiPhasix Technology for the delivery and commercialization of cannabinoids, CBD, and THC based products by issuing 2,500,000 shares of our common stock valued at $250,000.

We did not have any investing activities during the nine months ended October 31, 2016.

Financing Activities

During the six months ended July 31, 2017, we received $25,500 (2016 - $33,000) in cash from financing activities.

During the nine months ended October 31, 2017, we received $332,625 (2016 - $381,350) in cash from financing activities.

In order for our company to expand its operations, we will require additional funds.

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

Available Funds / Use of Proceeds (Description)

Estimated Expenses

Research and Development Costs

Months 1 to 12

Months 12 to 18

Months 18 to 24

Studies of active pharmaceutical ingredient

Stage 1 – BiPhasix cream development without active pharmaceutical ingredient

Stage 2 – BiPhasix creadm development with active pharmaceutical ingredient

Stage 2 – BiPhasix cream development with active pharmaceutical ingredient

Scientific data

Supply of active pharmaceutical ingredient

Sales and Marketing Costs:

Market commercialization

Sales and Marketing Costs

Entertainment and promotion

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Vehicles and transportation

Based on our expanded planned expenditures, we will require additional funds of approximately C$1.9 million to proceed with our expanded business plan over the next 12 months.

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

Funds raised will be used towards the recruitment of appropriate management and research and development personnel, as well as towards product development expenditures.

Specifically, the funds will be used to cover research and development expenses associated with 1) manufacturing scale-up of both PGS-N005 and PGS-N007 at a Good Manufacturing Practices (“GMP”) certified, high potency drug manufacturing facility;

2) development and manufacture of formulation of PGS-N005 and PGS-N007 at a GMP-certified product manufacturing facility for administration of the drug candidates in animals (for safety evaluation) and subsequently to humans;

and 3) submission to appropriate regulatory authorities for NHP registration.

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The Company’s management team has agreed to defer salaries and benefits and prioritize the allocation of financing to the development budget until sufficient financing is obtained.

Based on our planned expenditures, we will require approximately C$200,250 to proceed with the Stage 1 of our business plan over the next 12 months, which is the development of BiPhasix cream without active pharmaceutical ingredients.

The objectives that we expect to accomplish are as follows:

Development of topical creams using our BiPhasix technology platform to treat women experiencing HSDD (PGS-N005) and to treat inflammation-related skin conditions, such as psoriasis and eczema (PGS-N007).

Obtain classification of and commercialize such topical creams as natural health products.

The following are significant milestones we expect to accomplish:

Stage 1 – Development of BiPhasix cream without active pharmaceutical ingredient:

Successful completion of the base cream preparation will involve the cream, loaded with water, meeting manufacturing specifications.

Stage 1 milestone will be met if, upon examination of the cream, spherical balls form under a microscope and the product has a semi-solid cream viscosity.

Stage 2 – Development of BiPhasix cream with active pharmaceutical ingredient:

Proceeding to the Stage 2 milestone, the semi-solid cream will be mixed with an active pharmaceutical ingredient with health benefits to humans.

The Company will establish, under a microscope, that the active ingredients form spherical balls containing active ingredients suspended in the semi-solid cream.

The product will then be stress-tested under light, heat and cold conditions to ensure stability.

After a six month accelerated shelf condition, the product will be considered ready to be released for consumer use.

Regulatory approval:

In order to support health-related claims, the Company has to meet certain criteria established by Health Canada to obtain a NHP number or designation.

Health Canada regulations require steps to be complied with by the Company in order for the topical creams to be sold as NHP approved products.

The regulatory milestone will be considered accomplished upon the Company obtaining NHP numbers for its topical creams.

Funds raised will be used towards the recruitment of appropriate management and research and development (“R&D”) personnel, as well as towards product development expenditures.

Specifically, the funds will be used to cover R&D expenses associated with 1) manufacturing scale-up of PGS-N005 and PGS-N007, funds permitting for PGS-N007, at a GMP-certified, high potency drug manufacturing facility;

2) development and manufacture of formulation of PGS-N005 and PGS-N007, funds permitting for PGS-N007, at a GMP-certified product manufacturing facility for administration of the drug candidates in animals (for safety evaluation) and subsequently to humans 3) submission to appropriate regulatory authorities for NHP registration.

The amounts presented in the consolidated financial statements do not provide for the effect of inflation on our operations or financial position.

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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 2. Management’s Discussion and Analysis