What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2018-06-19 compared with 2017-12-15 · 144 added, 110 removed, 178 unchanged (59% of the section changed)

23 unchanged sentences

General Overview

We are a development stage pharmaceutical company.

We are an early stage pharmaceutical company.

We were incorporated in the Province of British Columbia, Canada under the name “649186 B.C.

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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.

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

Chaturvedi resigned as Chief Executive Officer and Director.

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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

On December 19, 2017, we commenced trading on the Canadian Securities Exchange under the symbol "PVOT".

On February 28, 2018, we completed the acquisition of ERS Holdings, LLC (“ERS”) pursuant to an Exchange Agreement dated as of February 10, 2018 among Pivot Pharmaceuticals Inc.

("Pivot"), ERS and the members of ERS.

As consideration for the purchase, we paid $333,333 in cash on closing and will pay an additional $333,333 six (6) and twelve (12) months after closing for total cash payment of $1 million.

In addition, we also issued 5,000,000 shares of our common stock and will pay royalties on future net sales.

ERS has developed a patented technology called “RTIC” Ready-To-Infuse-Cannabis, relating to the transformation of cannabis oil into powder for infusion into a variety of food and beverage products such as capsules, K-Cups, stick packs, baked mixes, liquid shots, protein shakes, topicals, lotions, and bottled beverages.

On March 2, 2018, we completed the acquisition of Thrudermic, LLC (“Thrudermic”) and worldwide rights to Thrudermic’s patented Transdermal Nanotechnology for the development and commercialization of transdermal cannabinoids pursuant to an Exchange Agreement dated as of March 2, 2018 among Pivot, Dr.

Joseph Borovsky, Dr.

Leonid Lurya and Thrudermic.

As consideration for the purchase, we paid $1 in cash on closing and issued 500,000 shares of our common stock.

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

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cannabinoids) products to treat unmet medical needs.

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.

In September 2017, we in-licensed a patented topical transdermal drug delivery technology platform, BiPhasix, and an oral drug delivery technology, Solmic Micelle, for delivery of cannabinoids.

We have also acquired the Ready-To-Infuse Cannabis technology in February 2018 and the Thrudermic Transdermal Nanotechnology (transdermal) in March 2018.

Our wholly-owned subsidiaries, Pivot Green Stream Health Solutions Inc.

(“PGS”) and Pivot Naturals, LLC (“Pivot Naturals”) (formerly, ERS), focus 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.

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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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Preclinical safety studies for pharmaceutical or NHP product development will be conducted over the next 12 months to advance at least one of our product candidates.

Our Product Candidates

PGS-N005 (Female Sexual Dysfunction CBD Topical Cream)

Using our BiPhasix platform technology, we will develop and commercialize a topical cream containing CBDs (“PGS-N005”) for perimenopausal, menopausal and post-menopausal women who have noticed a decline in sexual desire and response, known as hypoactive sexual desire disorder.

Up to 63% of sexually active women in the U.S.

might be affected by female sexual dysfunction (“FSD”).

While erectile dysfunction in men has been extensively researched, very little has been completed on FSD which can involve reduced sex drive, difficulty becoming aroused, vaginal dryness, lack of orgasm and decreased sexual satisfaction.

The FSD market in the U.S.

is estimated to exceed $4 billion with over 50 million potential sufferers.

PGS-N007 (Psoriasis BiPhasix CBD Topical Cream)

Using our BiPhasix platform technology, we will develop and commercialize a topical cream containing CBDs (“PGS-N007”) for psoriasis.

Preclinical research has shown that CBD has potent anti-inflammatory properties suggesting that cannabinoids may be helpful for inflammation-related skin conditions like psoriasis and eczema.

CBD, THC and other cannabinoids are anti-psoriasis agents.

Under a psoriasis condition, skin cells are replaced every three to five days rather than the normal 30 days.

This excessive and rapid growth of the epidermal layer of the skin generates red, itchy and scaly patches, which may be localized or completely cover the body.

Psoriasis is generally considered an autoimmune and genetic disease triggered by environmental factors.

Cold, medications, infections, traumas, body and psychological stress may play a role in starting the disease.

Psoriasis is not contagious and there is no current cure for it.

However, various treatments can control the symptoms.

Psoriasis is associated with an increased risk of psoriatic arthritis, lymphomas, cardiovascular disease, Crohn’s disease and depression.

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

Our Platform Technologies

BiPhasix Transdermal Drug Delivery Technology (Topical Platform)

Pivot has acquired worldwide rights from Altum for its patented topical transdermal drug delivery technology platform, or BiPhasix, which we will use for the delivery and commercialization of cannabinoid, cannabidiol (“CBD”) and tetrahydrocannabinol (“THC”) based products.

The BiPhasix technology has the potential to deliver drugs less invasively than by injections.

It also has the potential to topically deliver therapeutic amounts of drugs with better absorption rates, where creams, ointments or conventional liposomes have not been effective.

Thrudermic Transdermal Nanotechnology (Topical Platform)

Pivot has acquired the worldwide rights to Thrudermic’s patented Transdermal Nanotechnology for the development and commercialization of transdermal cannabinoids.

Developed in Israel, the Thrudermic lipid-based nano dispersion technology for topical cannabinoids uses FDA approved materials.

The technology has the ability to specifically formulate individual drugs to control and prolong drug release while maintaining steady therapeutic concentrations, The technology can handle water soluble and water insoluble drugs with no change to the skin morphology, no sensitivity to the digestive system, no pain from injections and no observed adverse reactions.

Solmic Solubilization Drug Delivery Technology (Oral Platform)

Pivot has acquired the worldwide rights to Solmic’s Solubilisation Technology for the development and commercialization of cannabinoid-containing natural extracts.

Solmic’s technology allows active ingredients to become water soluble without changing their composition and nature.

Solubilized substances that are packed in micelles are protected from degradation from light, stomach acid, and from enzymes released in the intestinal tract.

The micellisation process results in a stable, homogenous and transparent mixture, which significantly increases uptake of fat soluble ingredients from the gut into the blood system of fat soluble ingredients, resulting in greater bioavailability.

Ready-To-Infuse Cannabis Technology

Pivot’s patented Ready-To-Infuse-Cannabis (“RTIC”) process technology creates precise and repeatable dosing of cannabis by transforming concentrated cannabis oil into a stable, emulsifiable, odorless and flavorless powder form.

The derived powder may then be encapsulated and infused for use in beverages, edibles, lotions and additional health and personal care products.

The RTIC process is conducive for manufacturing of a wide array of products, including:

Capsules/Tablets:

One of our patents is issued for use in capsules and tablets.

Another of our patents has numerous claims for adding other active ingredients to tablets and capsules, such as Melatonin or Gingko Biloba, allowing for specific treatment for targeted effects.

Efficient mass production of capsules, conforming to GMP standards is part of our core competencies and manufacturing capabilities.

Production of capsules is scheduled for the third quarter of the calendar year 2018.

Beverage/Additive Stick Packs:

Single-serve stick packs are convenient and functional when used in hot beverages.

Stick packs are also highly functional.

Production of stick packs is scheduled for the third quarter of the calendar year 2018.

Pet Products:

Our patented cannabis powder will also be mass produced and packaged in bulk for both consumer pet health needs.

Production of pet powders is scheduled for the third quarter of calendar year 2018.

Lotions and Topical Creams:

Our patented lotion and topical technology will be mass produced and packaged for consumer health needs.

Production of lotions and topical creams is scheduled for the first quarter of calendar 2019.

Our Product Development Initiatives

Our product development initiatives will address unmet medical needs in health care.

DELIVERY TECHNOLOGY

GLOBAL MARKET SIZE (1)

ESTIMATED PRODUCT LAUNCH

Solmic Solubilisate / Oral

Cancer supportive care (CINV) (chemo-induced nausea and vomiting)

Solmic Solubilisate / Oral

Restless leg syndrome

Solmic Solubilisate / Oral

Pain and inflammation (for opioid withdrawal)

Solmic Solubilisate / Oral

Cancer supportive care (mucositis relief)

BiPhasix / Topical

Female sexual dysfunction (HSDD) (hypoactive sexual desire disorder)

BiPhasix / Topical

Pain and inflammation (joints/opioid withdrawal)

BiPhasix / Topical

Dermatology (skin irritation/redness/ itching)

BiPhasix / Topical

Eye disease (glaucoma, intra-ocular pressure)

Thrudermic / Topical

Pain and inflammation (opioid withdrawal)

Solmic Solubilisate / Oral

Migraine (nausea, vomiting, dizziness, sensitivity to light, sounds and smells)

(1) Derived from IMS data

Results of Operations

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:

The following summary of our results of operations should be read in conjunction with our financial statements for the period ended April 30, 2018, which are included herein.

Our operating results for the three months ended April 30, 2018 and 2017 are summarized as follows:

Three Months Ended

Nine Months Ended

Due diligence costs

Foreign exchange gain (loss)

General and administrative

Management fees

Professional fees

Research and development

Salaries and wages

Sales and marketing

Total Other Income (Expenses)

Net Income (Loss)

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.

$ (1,624,394 )

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.

For the three months ended April 30, 2018, our net loss increased by $1,304,582 as compared to the three months ended April 30, 2017.

Our company secured convertible debentures totaling $3,926,804 ($5,000,000 Canadian Dollars), which allowed our company to pursue development of our platform technologies and to secure and develop further intellectual property.

During the three months ended April 30, 2018, we completed the acquisitions of the Thrudermic Transdermal Nanotechnology and Pivot Naturals, LLC (formerly ERS Holdings, LLC) and its RTIC patents, which resulted in increases to amortization, due diligence costs, consulting fees within general and administrative costs, professional fees and research and development.

Pursuant to these acquisition, we entered into employment contracts which increased our salaries and wages expense.

Should our company be successful in securing continued financing for the development of our platform technologies, we expect our future expenses to be consistent with our expenses for the three months ended April 30, 2018.

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)

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

$ (2,561,681 )

Our total current assets as of April 30, 2018 were $1,659,719 as compared to total current assets of $149,253 as of January 31, 2018.

The increase was primarily due to convertible debentures of $3,926,804 ($5,000,000 Canadian Dollars) issued during the period, offset with cash used to settle past and current obligations.

Our total current liabilities as of April 30, 2018 were $4,221,400 as compared to total current liabilities of $429,200 as of January 31, 2018.

The increase in current liabilities was primarily attributed to convertible debentures of $3,926,804 ($5,000,000 Canadian Dollars) issued during the period.

Three Months Ended

Net Cash Used In Operating Activities

$ (1,871,680 )

Net Cash Used In Investing Activities

Net Cash Provided By Financing Activities

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Operating Activities

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.

During the three months ended April 30, 2018, our cash used by operating activities increased by $1,803,698 when compared to cash used in operating activities during the three months ended April 30, 2017.

During the period, we acquired Pivot Naturals and the Thrudermic Transdermal Nanotechnology, which resulted in increase in consulting and professional fees.

In addition, proceeds from convertible debentures issued during the period allowed our company to pursue our business strategy, including development of our oral and transdermal drug delivery platforms, which resulted in increased operating costs.

Investing Activities

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.

During the three months ended April 30, 2018, we acquired Pivot Naturals through the issuance of 5,000,000 shares of our common stock and a payment of $333,333.

We did not have any investing activities during the three months ended April 30, 2017.

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.

The required additional funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.

During the three months ended April 30, 2018, we received net proceeds of $3,879,663 from convertible debentures and $394,616 from promissory note.

We repaid loan payable and promissory notes of $15,925 and $588,839, respectively.

We did not have any financing activities during the three months ended April 30, 2017.

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

These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.

There is still 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.

Further, we have negative cash flows from operating activities and may continue to be unprofitable.

We will need to raise additional funds in the immediate future in order to proceed with our expanded operations.

We have negative cash flows from operating activities.

If we cannot generate sufficient revenues to operate with positive cash flows from operating activities or are unable to raise additional funds, we may suspend or cease our operations.

In order for the Company to expand its operations and pursue its business plans related to development of its product candidates, we will require additional funds.

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 cream development with active pharmaceutical ingredient

Scientific data

Supply of active pharmaceutical ingredient

Market commercialization

Further, we may continue to be unprofitable.

We need to raise additional funds in the immediate future in order to proceed with our budgeted expenses.

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

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

Professional fees

Public company expenses

Salaries and benefits 1

Telephone and internet

Vehicles and transportation

_______________

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.

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 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.

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.

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.

We anticipate that the bulk of any additional funding we receive will be in the form of equity financing from the sale of our common stock.

However, we do not have any financing arranged and we cannot provide any assurance that we will be able to raise sufficient funds from the sale of our common stock to fund our operations or planned research and development activities.

In the absence of such financing, we will not be able to carry out our planned research and development activities.

Even if we are successful in obtaining equity financing to fund our operations and research and development activities, there is no assurance that we will obtain the funding necessary to pursue any advanced research and development following the completion of our planned clinical trials.

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

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 $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.

Accordingly, we will require additional financing in order to continue operations and to repay our liabilities.

There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations.

Issuances of additional shares will result in dilution to our existing stockholders.

There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

We presently do not have any arrangements for additional financing for the expansion of our operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

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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Foreign Currency Translation

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

The functional currency of our wholly-owned subsidiary, Pivot Naturals, LLC, is the US dollar.

Our company’s presentation currency is the US dollar.

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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