What changed in this filing

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Item 7. Management’s Discussion and Analysis

2018-05-01 compared with 2017-04-28 · 34 added, 32 removed, 138 unchanged (32% of the section changed)

3 unchanged sentences

Our actual results could differ materially from those discussed in the forward looking statements.

Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 20 of this annual report.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

9 unchanged sentences

Accretion of discounts on convertible debentures

Gain on change in fair value derivative

Loss on settlement and conversions of debentures

(Gain) loss on change in fair value derivative

Gain on disposal of asset

Gain on settlements of debentures

Interest expense

Net income (loss)

During the year ended January 31, 2018, we disposed of our shares of common stock of IndUS and IndUS net liabilities for 3,800,000 shares of common stock of Pivot, which resulted in a gain on disposal of asset of $609,311.

In addition, we recorded a gain on settlement of debentures related to conversion of debentures into our common stock, settlement of accounts payable into common stock and conversion of accrued management fees into a promissory note upon the disposal of our shares of IndUS common stock.

Our operating expenses for our years ended January 31, 2018 and 2017 are outlined in the table below:

1 unchanged sentence

Depreciation and amortization

Due diligence costs

Foreign exchange loss

4 unchanged sentences

Operating expenses for year ended January 31, 2018 decreased by $4,974,397 as compared to the comparative period in 2017.

In 2016, we issued 2,708,333 common stock for services and granted 6,200,000 options to purchase our common stock, which resulted in $6,736,994 of stock-based compensation being included in general and administrative expense.

In 2017, $1,304,738 of stock-based compensation was included in general and administrative expense as a result of 700,000 common stock issued for services and grants of 6,320,833 options to purchase our common stock.

This was offset by an increase in management fees of $1,850,934 as a result of stock-based compensation related to 5,000,000 options to purchase our common stock granted to management.

In 2018, $148,909 of stock-based compensation was included in general and administrative to recognize 350,000 shares of our common stock issued to third party service providers and 100,000 stock options granted to members of our advisory board.

Management fees decreased by $3,815,810 from the year ended January 31, 2017 to the year ended January 31, 2018.

In 2017, 5,000,000 options to purchase our common stock granted to management.

In 2018, no options were granted.

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

1 unchanged sentence

Our company has a stock option plan which was adopted and approved by our shareholders on December 30, 2015.

During our fiscal year ended January 31, 2016, 6,000,000 stock options with exercise price of $0.10 and maturity on December 14, 2020 were granted to directors and a consultant.

2,000,000 of these stock options were forfeited on May 11, 2016.

As well, 200,000 stock options with exercise price of $0.25 and maturity on November 30, 2020 were granted to members of our Scientific Advisory Board.

During our fiscal year ended January 31, 2017:

2 unchanged sentences

41,833 stock options with exercise price of $0.05 and maturity on January 23, 2022 were granted to related parties pursuant to the Agreement and Plan of Merger and Acquisition Agreement dated as of November 4, 2015 between our company and IndUS.

During our fiscal year ended January 31, 2018, 100,000 stock options with exercise price of $0.39 and maturity on November 14, 2022 were granted.

We currently do not have any other equity compensation plans or arrangements.

8 unchanged sentences

Effects of exchange rate changes on cash

Increase (Decrease) in Cash During the Period

(Decrease) Increase in Cash During the Period

We will require additional funds to fund our budgeted expenses over the next 12 months.

4 unchanged sentences

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

Research and Development Costs:

Studies and manufacture of active product ingredient

R&D headcount

Product Development

Development of BiPhasix Topical Cream (20g)

Development of Thrudermic Topical Tube (20g)

Development of Solmic Oral Dropper Bottle (30ml)

Development of Ready-to-infuse Powderized Products

Product Registration and Regulatory

Data Generation to Claim Indications

Manufacturing and Supply

Sales and Marketing Costs

Entertainment and promotion

Investor relations

Operating Expenses:

Director fees

Office and laboratory lease

Professional fees

Public company expenses

Salaries and benefits

Telephone and internet

Vehicles and transportation

Based on our planned expenditures, we will require additional funds of approximately $9.9 million to proceed with our business plan over the next 12 months.

General and Administrative

Based on our planned expenditures, we will require additional funds of approximately $24.25 million to proceed with our business plan over the next 12 months and the commencement of commercialization of our product initiatives.

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 (“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 our products at a GMP-certified, high potency drug manufacturing facility;

2) development and manufacture of formulation of our products 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.

We anticipate that we will incur substantial losses for the foreseeable future.

Even if we carry out our planned research and development activities on our products, there is no guarantee that we will be able to market them or derive any revenues from their sale.

Currently, we intend to prioritize the allocation of any financing that we may receive toward the development of PVT-005 and PVT-006.

We expect that we may obtain material net cash inflows from our projects 18 to 36 months following the start of our proposed clinical trials, which we expect will begin soon after the necessary funding is obtained.

However, there can be no assurance we will obtain such cash inflows.

We have negative cash flows from current operating activities and may continue to be unprofitable.

Even if we carry out our expanded research and development activities on our products, there is no guarantee that we will be able to market them or derive any revenues from their sale.

Although we are anticipating commercialization to commence on some of our product initiatives over the next 12 months, anticipated revenues will not be sufficient to finance our business plan.

We intend to raise capital through equity and, if necessary, debt financing.

4 unchanged sentences

If we do not continue to obtain additional financing, we may be forced to abandon our business plan.

Any modifications to our plans will be based on many factors, including the results of our clinical trials and the amount of available capital.

There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock.

Any modifications to our plans will be based on many factors, including the results of our R&D and the amount of available capital.

Further, the extent to which we carry out our development of planned products is dependent upon the amount of financing available to us.

Future Financings

We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $9.9 million over the next 12 months to pay for research and development and ongoing expenses.

We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $24.25 million over the next 12 months to pay for product development, sales and marketing and general and administrative expenses.

These cash requirements are in excess of our current cash and working capital resources.

48 unchanged sentences

As of January 31, 2018 and 2017, our company did not have any amounts recorded pertaining to uncertain tax positions.

Our company files federal and provincial income tax returns in Canada and federal and state income tax returns in the United States.

Our company files federal and provincial income tax returns in Canada.

Our company recognizes interest and penalties related to uncertain tax positions in tax expense.

14 unchanged sentences

Foreign Currency Translation

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

The functional currency of our parent entity, Pivot Pharmaceuticals Inc., and our wholly-owned subsidiary, Pivot Green Stream Health Solutions Inc., is the Canadian dollar.

Our company’s presentation currency is the US dollar.

11 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-K

Item 7. Management’s Discussion and Analysis