What changed in this filing

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Item 1. Financial Statements

2018-06-19 compared with 2017-12-15 · 182 added, 141 removed, 201 unchanged (62% of the section changed)

Financial Statements

Our unaudited interim condensed consolidated financial statements for the period ended October 31, 2017 form part of this quarterly report.

Our unaudited interim condensed consolidated financial statements for the period ended April 30, 2018 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, 2017 are not necessarily indicative of results to be expected for any subsequent period.

The results of operations for the three period ended April 30, 2018 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, 2017 (unaudited) and January 31, 2017

Period ended April 30, 2018 (unaudited) and January 31, 2018

PIVOT PHARMACEUTICALS INC.

4 unchanged sentences

Total current assets

Security deposit

Intangible asset (Notes 4(a) and 5)

Deposit (Note 6)

Equipment (Note 7)

Intangible assets (Notes 4(a), 4(c), 5 and 8)

Liabilities and Stockholders’ Equity (Deficit)

2 unchanged sentences

Due to related parties (Note 15)

Convertible debenture, net of discount (Note 6)

Derivative liability (Note 7)

Total current liabilities

Convertible debenture (Note 9)

Promissory note (Note 10)

Other obligation (Note 5)

Total liabilities

2 unchanged sentences

Unlimited shares authorized, without par value, 88,055,146 and 82,373,559 shares issued and outstanding, respectively (Note 11)

Subscriptions payable (Note 9)

Common stock issuable (Note 11)

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

(22,343,651 )

(20,718,935 )

Total stockholders’ equity (deficit)

4 unchanged sentences

(Expressed in U.S.

Amortization of intangible asset (Note 5)

Amortization (Notes 7 and 8)

Due diligence costs

Foreign exchange (gain) loss

General and administrative

Management fees

Professional fees

Research and development

Salaries and wages

Sales and marketing

Total expenses

2 unchanged sentences

Amortization of discount on convertible debenture

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

Gain on disposal of asset (Note 3)

Gain on settlement of debts

Gain on change in fair value of derivative liabilities

Gain on repayment of promissory note

Interest expense

Other expense

Total other income (expense)

Net income (loss)

Other comprehensive income (loss)

Foreign currency translation adjustment

Net comprehensive income (loss)

Net income (loss) per share, basic

Net income (loss) per share, diluted

Weighted average shares outstanding – basic

Weighted average shares outstanding – diluted

Net comprehensive loss

Net loss per share, basic and diluted

Weighted average shares outstanding – basic and diluted

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

3 unchanged sentences

Operating activities

Net income (loss)

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

Amortization of discount on convertible debenture

Expenses paid related to debt issuance

Fair value of stock options vested

(Gain) loss on change in fair value of derivative liabilities

Gain on disposal of assets

Gain on settlement of debts

Gain on change in fair value of derivative liabilities

Gain on repayment of promissory note

Stock issued for services

3 unchanged sentences

Accounts payable and accrued liabilities

Other liabilities

Net cash used in operating activities

Investing activities

Business acquisition

Net cash used in investing activities

Financing activities

Proceeds from convertible debenture

Proceeds from debenture

Proceeds from issuance of common stock

Proceeds from issuance of common stock subscriptions

Proceeds from convertible debenture, net

Proceeds from promissory notes

Repayment of loan payable

Repayment of promissory note

Net cash provided by financing activities

Effects of exchange rate changes on cash

Increase in cash

Increase (decrease) in cash

Cash – beginning of period

4 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

4 unchanged sentences

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.

The Company is in the business of developing and commercializing therapeutic pharmaceuticals and nutraceuticals, as well as drug delivery platform technologies.

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, 2017, the Company has not earned any revenue, has a working capital of $145,887 and an accumulated deficit of $20,392,333.

As at April 30, 2018, the Company has not earned any revenue, has a working capital deficit of $2,561,681 and an accumulated deficit of $22,343,651.

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 factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

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.

15 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

Significant Accounting Policies (continued)

These interim consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K (the "2018 Form 10-K") for the year ended January 31, 2018, which was filed with the Securities and Exchange Commission (the "SEC") on May 1, 2018.

(d) Basis of Consolidation

2 unchanged sentences

The consolidating entities include:

% of ownership

Pivot Pharmaceuticals Inc.

Pivot Green Stream Health Solutions Inc.

Pivot Naturals, LLC (from date of acquisition on February 28, 2018)

(e) Loss Per Share

5 unchanged sentences

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

As at October 31, 2017, the Company had 2,822,046 (January 31, 2017 – 9,692,748) potentially dilutive shares.

As at April 30, 2018, the Company had 7,384,908 (January 31, 2018 – 6,153,764) potentially dilutive shares.

(f) Financial Instruments and Fair Value Measures

8 unchanged sentences

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 promissory note.

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 (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

Significant Accounting Policies (continued)

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, due to related parties and promissory note.

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.

(g) Recent Accounting Pronouncements

2 unchanged sentences

On September 11, 2017, the Company completed an exchange agreement whereby the Company exchanged with its past Chief Executive Officer 100% of its shares of common stock of its wholly-owned subsidiary, IndUS Pharmaceuticals, Inc.

(“IndUS”), for 3,800,000 shares of common stock of the Company (Note 9(a)).

(“IndUS”), for 3,800,000 shares of common stock of the Company.

Pursuant to the exchange agreement, the Company has provided its former Chief Executive Officer a promissory note (Note 10(a)) in the amount of $200,000 in discharge of all obligations with respect to Dr.

10 unchanged sentences

Consideration included:

Issuance of 2,500,000 shares of common stock on September 12, 2017 (Notes 5 and 9(b));

1) Issuance of 2,500,000 shares of common stock on September 12, 2017;

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

1 unchanged sentence

4) 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.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

(Expressed in U.S.

Asset Acquisitions (continued)

(b) Solmic Solubilization License

6 unchanged sentences

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

On March 2, 2018, the Company entered into an exchange agreement with Thrudermic, LLC (“Thrudermic”) and the members of Thrudermic whereby the Company paid $1.00 for the issued and outstanding units of Thrudermic and issued 500,000 shares of common stock (Notes 8 and 11(b)) to the members of Thrudermic for their intellectual property portfolio, including patents, good will and know-how in connection with the Thrudermic Transdermal Nanotechnology.

The Company evaluated this acquisition in accordance with ASC 805, Business Combinations (10-55-4) to discern whether the assets and operations of IndUS met the definition of a business.

The Company concluded there were not a sufficient number of key processes obtained to develop the inputs into outputs, nor could such processes be easily obtained by the Company.

Accordingly, the Company accounted for this transaction as the acquisition of assets.

Business Acquisition

On February 28, 2018, the Company completed the acquisition of Pivot Naturals, LLC (previously ERS Holdings, LLC) (“Pivot Naturals”) pursuant to an exchange agreement dated as of February 10, 2018.

As consideration for the purchase, the Company paid $333,333 in cash on closing, issued 5,000,000 shares of common stock (Note 11(a)) and will pay an additional $333,333 six (6) and twelve (12) months after closing.

Financial consideration include royalties on future annual net sales.

The Company evaluated this acquisition in accordance with ASC 805, Business Combinations (10-55-4) to discern whether the assets and operations of Pivot Naturals met the definition of a business.

The Company concluded there were a sufficient number of key processes obtained to develop the inputs into outputs and such processes be easily obtained by the Company.

Accordingly, the Company accounted for this transaction as an acquisition of a business.

The consideration transferred, assets acquired and liabilities assumed recognized is as follows:

Consideration paid:

Cash to be paid

Common stock issued

Total purchase price

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

Intangible Asset

Business Acquisition (continued)

Net assets acquired:

Intangible asset (patents)

Accounts payable and accrued liabilities

Net value of business purchased

The Company applied the acquisition method to the business combination and valued each of the assets acquired (cash, equipment, intangible asset) and liabilities assumed (accounts payable and accrued liabilities and loan payable) at fair value as of the acquisition date.

The cash, accounts payable and accrued liabilities and loan payable were deemed to be recorded at fair value as of the acquisition date.

The Company determined the fair value of the equipment to be historical net book value.

The preliminary allocation of the purchase price was based on estimates of the fair value of the assets and liabilities assumed based on provisional amounts.

The allocation of the excess purchase price is not final and the amounts allocated to intangible assets are subject to change pending the completion of final valuations of certain assets and liabilities.

Pursuant to the acquisition, the Company expensed $120,000 of acquisition-related costs.

Patents acquired will be amortized over an estimated useful life of ten (10) years.

Pursuant to a letter of intent signed with Agro-Biotech Inc.

(“ABI”) on February 19, 2018 for exclusive negotiations related to the acquisition of ABI by April 15, 2018, the Company paid a deposit of $250,000 Canadian Dollars ($196,340 US Dollars).

The deposit is non-refundable, except upon wrongful refusal of ABI to conclude the acquisition.

The acquisition of ABI was not concluded by April 15, 2018.

On April 24, 2018, the Company submitted an originating application to the Superior Court in the province of Quebec, Canada seeking to recover losses arising from the lack of cooperation by ABI, including the deposit made, in concluding the transaction.

Balance, January 31, 2018

License agreement (Note 4(a))

Balance, October 31, 2017

Exchange agreement (Note 5)

Balance, April 30, 2018

Accumulated Amortization

Balance, January 31, 2018

Balance, October 31, 2017

Net book value, October 31, 2017

Exchange agreement (Note 5)

Balance, April 30, 2018

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

(Expressed in U.S.

Equipment (continued)

Net book value, April 30, 2018

Net book value, January 31, 2018

Intangible Assets

Balance, January 31, 2018

Addition and exchange agreement (Notes 4(c) and 5)

Effect of foreign exchange rate changes

Balance, April 30, 2018

Accumulated Amortization

Balance, January 31, 2018

Effect of foreign exchange rate changes

Balance, April 30, 2018

Net book value, April 30, 2018

Net book value, January 31, 2018

Weighted average life remaining on intangible asset is 9.5 years.

Future amortization for the next four years is:

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”).

(a) 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 7).

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 11).

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

Convertible Debenture (continued)

On September 18, 2017, the lender converted the outstanding principal and accrued interest of the convertible debenture into 4,623,825 shares of common stock (Note 9(c)) of the Company at a conversion price of $0.10.

A loss on conversion of debenture of $21,236 was recorded within gain on settlement of debts in the condensed consolidated statements of operations and comprehensive income.

As of October 31, 2017, the carrying value of the convertible debenture is $nil (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 October 31, 2017, interest accrued on the convertible debenture is $nil (January 31, 2017 - $10,307) and the fair value of the conversion option derivative liability is $nil (January 31, 2017 - $312,541).

Derivative Liability

Derivative liability consists of convertible debenture with variable conversion price (Note 6).

On September 18, 2017, the convertible debenture was converted into shares of common stock (Note 6).

The fair value of derivative liability as at October 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:

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life

As at issuance date:

September 2016 convertible debenture

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.

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.

On September 18, 2017, the lender converted the outstanding principal and accrued interest of the convertible debenture into 4,623,825 shares of common stock of the Company at a conversion price of $0.10.

(b) On March 2, 2018, the Company issued convertible debentures with two non-related parties totaling $5,000,000 Canadian Dollars ($3,878,675 US Dollars).

The debentures are secured under a General Security Agreement, bear interest at 10% per annum payable quarterly and mature on March 2, 2019.

The notes are convertible into common shares at a conversion price equal to C$1.74 per common share.

The Company evaluated the conversion feature for whether it was beneficial as described in ASC 470-30, Debt.

In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the shares of common stock at the commitment date to be received upon conversion.

The beneficial conversion feature of these convertible debentures have been measured at $262,400.

As of April 30, 2018, the carrying value of the convertible debenture is $3,464,979 which is net of debt discounts related to financing costs and warrants of $289,057 and $172,768, respectively.

As of April 30, 2018, interest accrued on the convertible debenture is $32,275.

Promissory Note

Principal (Note 8(a))

Accrued interest (Note 8(a))

(a) Promissory Note – Former Chief Executive Officer (Note 3)

1 unchanged sentence

Principal and accrued interest are due on the earlier of:

1) 30 days after the completion of a financing of at least $2,000,000 and (ii) September 10, 2027.

1) 30 days after the completion of a financing of at least $2,000,000 and (ii) September 10, 2027, provided that if repayment occurs prior to the second anniversary date, all interest will be waived.

On March 2, 2018, the Company issued senior secured convertible debentures for gross proceeds of $5,000,000 Canadian dollars (Note 9(b)).

Accordingly, accrued interest being waived, principal was due and repaid on March 30, 2018 and a gain on repayment of promissory note of $6,969 was recorded.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

1 unchanged sentence

(b) Promissory Note – Third Party

On September 27, 2017, the Company issued a promissory note in the amount of $400,000, bearing interest at 12% per annum and maturing on December 31, 2018, which no proceeds have been received by the Company as at October 31, 2017.

As part of the promissory note, 100,000 shares of our common stock were issued (Note 9(d)).

On September 11, 2017, 3,800,000 shares of common stock were acquired and cancelled pursuant to the share exchange agreement (Note 3).

On September 12, 2017, 2,500,000 shares of common stock were issued pursuant to the Altum licensing agreement (Note 4(a)).

On September 18, 2017, 4,623,825 shares of common stock were issued upon conversion of convertible debenture (Note 6).

On October 26, 2017, 100,000 shares of common stock were issued pursuant to a promissory note issued (Note 8(b)).

In October 2017, the Company received proceeds totaling $223,000 pursuant to private placements for the issuance of 2,230,000 shares of common stock.

330,000 shares of common stock were issued on October 30 and 1,900,000 shares of common stock were issuable as of October 31, 2017.

As of October 31, 2017 200,000 shares of common stock were issuable related to share issue costs on this private placement.

The 1,900,000 shares of common stock related to the private placement and the 200,000 shares of common stock related to share issue costs were issued on November 2, 2017.

In October 2017, the Company received proceeds totaling $76,000 pursuant to private placements for the issuance of 380,000 units, consisting of one common stock and one half of one share purchase warrant.

Each share purchase warrant entitles the holder to purchase a common share at $0.35 for 18 months.

These units were issuable as of October 31, 2017.

On November 30, 2017, 380,000 shares of common stock and 190,000 share purchase warrants were issued in full satisfaction of the stock subscription payable.

On October 31, 2017, the Company settled $35,152 of accounts payable through the issuance of 92,384 shares of common stock (Note 13), which were issued on November 2, 2017.

As part of the promissory note, 100,000 shares of our common stock were issued on October 26, 2017.

On February 16, 2018, the Company issued a promissory note of up to $560,000 Canadian Dollars, bearing interest at 10% per annum to Altum and maturing on May 15, 2018.

On February 19 and March 1, 2018, $250,000 Canadian Dollars and $252,464 Canadian Dollars were advanced to the Company.

On March 2, 2018, the Company repaid the principal amount and accrued interest on the note totaling $503,285 Canadian Dollars.

(a) On February 28, 2018, 5,000,000 shares of common stock were issued pursuant to the exchange agreement with Pivot Naturals (Note 5).

(b) On March 2, 2018, 500,000 shares of common stock were issued pursuant to the exchange agreement with Thrudermic and the members of Thrudermic (Note 4(c)).

(c) On March 14, 2018 and April 4, 2018, 75,000 and 62,500 shares of common stock, respectively, were issued to third parties for services rendered.

As at April 30, 2018, 77,519 shares of common stock were recorded as common stock issuable for a third party consulting expense related to April 2018.

These shares of common stock were issued on May 3, 2018.

(d) On March 29, 2018, 44,087 shares of common stock were issued as compensation for March 2018 pursuant to employment agreements entered into as part of the acquisitions of the Thrudermic Transdermal Nanotechnology (Note 4(c)) and Pivot Naturals (Note 5).

As at April 30, 2018, 91,315 shares of common stock were recorded as common stock issuable for compensation related to April 2018.

These shares of common stock were issued on May 3, 2018.

Stock Options

5 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

Period ended April 30, 2018

(Expressed in U.S.

Stock Options (continued)

Number of Options

Weighted Average

Exercise Price

1 unchanged sentence

Outstanding, January 31, 2018

Outstanding, October 31, 2017

Outstanding, April 30, 2018

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

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Interest Rate

Dividend Yield

Expected Life

29,000 options expiring on May 2, 2021

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

November 30, 2020

100,000 options expiring on November 14, 2022

200,000 options expiring on March 11, 2023

Additional information regarding stock options as of April 30, 2018, is as follows:

Options Outstanding

December 14, 2020

2 unchanged sentences

January 23, 2022

November 14, 2022

March 11, 2023

$48,920 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 (Unaudited)

Period ended October 31, 2017

(Expressed in U.S.

Share Purchase Warrant

1 unchanged sentence

Weighted Average Exercise Price

Balance, January 31, 2017

Balance, October 31, 2017

As at October 31, 2017, there are no share purchase warrants outstanding.

On November 30, 2017, 190,000 share purchase warrants, entitling the holder to purchase a common share at $0.35 for 18 months, were issued (Note 9(f)).

Balance, January 31, 2018 and April 30, 2018

Balance, April 30, 2018

As at April 30, 2018, the following share purchase warrants were outstanding:

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

(Expressed in U.S.

Share Purchase Warrant (continued)

Number of Warrants

June 14, 2019

March 1, 2021

Supplemental Cash Flow Information

3 unchanged sentences

Non-cash investing and financing activities

Capital contribution through forgiveness of debt

Common stock issued for settlement of accounts payable

Common stock issued for settlement of convertible debenture

Common stock issued for prepaid assets

Common stock issued for intangible asset

Common stock subscriptions issued for services

Debt discounts on convertible debt

Promissory note issued for settlement of accrued salaries

Treasury stock returned and retired in disposition of assets

Stock issued for services

Stock issuable for services

Stock issued for intangible assets (Note 4(c))

Stock issued for acquisition of business (Note 5)

Warrants granted for finder’s fee (Note 8(b))

Related Party Transactions

As at October 31, 2017, the Company owed $4,544 (January 31, 2017 - $4,154) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

During the nine months ended October 31, 2017, $552,889 of accrued management fees to the Company’s Chief Financial Officer and Chief Business Officer were forgiven.

In addition, $35,152 of accounts payable due to a company controlled by the Company’s Chief Financial Officer were settled for 92,384 shares of common stock.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(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, 2017 and January 31, 2017, consisted of the following:

prices in active markets

other observable inputs

Derivative liability (1)

active markets

other observable inputs

Derivative liability (1)

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 6).

The Company has no financial assets carried at fair value.

(a) As at April 30, 2018, the Company owed $310 (January 31, 2018 - $4,767) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

(b) On September 12, 2017, the Company entered into a licensing agreement with Altum, a party related by way of common director and officers, whereby the Company acquired worldwide rights to the BiPhasix™ transdermal drug delivery technology for the development and commercialization of Cannabinoids, Cannabidiol and Tetrahydrocannabinol products (Note 4(a)).

(c) During the three months ended April 30, 2018, the Company paid $644 in interest expense on a promissory note issued to Altum (Note 10(c)).

Subsequent Events

On November 7, 2017, 50,000 shares of common stock were issued to a service provider for services rendered.

On November 15, 2017, the Company entered into scientific advisory board agreements whereby 100,000 options to purchase shares of common stock with the following terms were granted:

Exercise price of $0.39;

25% vesting on each of the following dates:

November 15, 2017, May 15, 2018, November 15, 2018 and May 15, 2019;

Expiry on November 14, 2022.

(a) On May 3, 2018, 168,834 shares of common stock, recorded as common stock issuable as at April 30, 2018, were issued (Notes 11(c) and 11(d)).

On June 6, 2018, 214,753 shares of common stock, related to management compensation and third party consulting expense for May 2018, were issued.

(b) On May 23, 2018, the Company’s wholly-owned subsidiary, Pivot Naturals, entered into a lease agreement for a manufacturing facility in Costa Mesa, California at a base rent of $16,100 per month, commencing on July 15, 2018 and expiring on July 14, 2023.

Subsequent Events (continued)

(“IP Med”) for an option to license exclusively IP Med’s TriVair device for the delivery of powder formulations of cannabis-based products.

Upon signing of the agreement, the Company paid IP Med a non-refundable option fee of $50,000, which will be credited against payments owed by the Company to IP Med under the licence agreement, if and when signed.

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