What changed in this filing

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Item 1. Financial Statements

2018-09-14 compared with 2018-06-19 · 75 added, 77 removed, 306 unchanged (33% of the section changed)

Financial Statements

Our unaudited interim condensed consolidated financial statements for the period ended April 30, 2018 form part of this quarterly report.

Our unaudited interim condensed consolidated financial statements for the period ended July 31, 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 period ended April 30, 2018 are not necessarily indicative of results to be expected for any subsequent period.

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

Period ended July 31, 2018 (unaudited) and January 31, 2018

PIVOT PHARMACEUTICALS INC.

44 unchanged sentences

Gain on repayment of promissory note

Gain on settlement of debts

Interest expense

17 unchanged sentences

Gain on repayment of promissory note

Gain on settlements of debts

Stock issued for services

21 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

Period ended July 31, 2018

(Expressed in U.S.

6 unchanged sentences

These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

As 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.

As at July 31, 2018, the Company has not earned any revenue, has a working capital deficit of $3,609,750 and an accumulated deficit of $23,757,776.

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

17 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

Period ended July 31, 2018

(Expressed in U.S.

5 unchanged sentences

The consolidating entities include:

% of ownership

Pivot Pharmaceuticals Inc.

1 unchanged sentence

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

Thrudermic, LLC (from date of acquisition on March 2, 2018)

(e) Loss Per Share

5 unchanged sentences

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

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

As at July 31, 2018, the Company had 14,058,371 (January 31, 2018 – 6,153,764) potentially dilutive shares.

(f) Financial Instruments and Fair Value Measures

10 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

Period ended July 31, 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.

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

20 unchanged sentences

3) Royalties on annual gross sales;

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

Period ended July 31, 2018

(Expressed in U.S.

Asset Acquisitions (continued)

(b) Solmic Solubilization License

7 unchanged sentences

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.

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, goodwill 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.

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

Business Acquisition

1 unchanged sentence

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.

On September 7, 2018, the payment due six (6) months after closing was extended to September 30, 2018 and remains unpaid.

Financial consideration include royalties on future annual net sales.

3 unchanged sentences

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 April 30, 2018

Period ended July 31, 2018

(Expressed in U.S.

Business Acquisition (continued)

Consideration paid:

Cash to be paid

Common stock issued

Total purchase price

Net assets acquired:

16 unchanged sentences

Exchange agreement (Note 5)

Balance, April 30, 2018

Accumulated Amortization

Balance, January 31, 2018

Exchange agreement (Note 5)

Balance, April 30, 2018

Balance, July 31, 2018

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

Period ended July 31, 2018

(Expressed in U.S.

Equipment (continued)

Net book value, April 30, 2018

Accumulated Amortization

Balance, January 31, 2018

Exchange agreement (Note 5)

Balance, July 31, 2018

Net book value, July 31, 2018

Net book value, January 31, 2018

3 unchanged sentences

Effect of foreign exchange rate changes

Balance, April 30, 2018

Balance, July 31, 2018

Accumulated Amortization

1 unchanged sentence

Effect of foreign exchange rate changes

Balance, April 30, 2018

Net book value, April 30, 2018

Balance, July 31, 2018

Net book value, July 31, 2018

Net book value, January 31, 2018

Weighted average life remaining on intangible asset is 9.3 years.

Future amortization for the next four years is:

Future amortization for the next five years is:

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended July 31, 2018

(Expressed in U.S.

Convertible Debenture

5 unchanged sentences

· March 30, 2017.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

(Expressed in U.S.

Convertible Debenture (continued)

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.

11 unchanged sentences

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.

As of July 31, 2018, the carrying value of the convertible debenture is $3,525,424 which is net of debt discounts related to financing costs and warrants of $197,391 and $118,184, respectively.

As of July 31, 2018, interest accrued on the convertible debenture is $32,622.

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended July 31, 2018

(Expressed in U.S.

Promissory Note

5 unchanged sentences

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 April 30, 2018

(Expressed in U.S.

Promissory Note (continued)

(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 April 30, 2018.

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

5 unchanged sentences

(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.

(c) On March 14, 2018, April 4, 2018, May 3, 2018, June 6, 2018 and July 5, 2018, 75,000, 62,500, 77,519, 72,464 and 57,870 shares of common stock, respectively, were issued to third parties for services rendered.

As at July 31, 2018, 70,922 shares of common stock were recorded as common stock issuable for a third party consulting expense related to July 2018.

These shares of common stock were issued on August 9, 2018.

(d) On March 31, 2018, May 3, 2018 and June 6, 2017, 44,087, 91,315 and 142,289 shares of common stock were issued as compensation for March, April and May 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).

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended July 31, 2018

(Expressed in U.S.

Stock Options

3 unchanged sentences

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

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended April 30, 2018

(Expressed in U.S.

Stock Options (continued)

Weighted Average

Exercise Price

Weighted Average Remaining Contractual Life (years)

Outstanding, January 31, 2018

Outstanding, April 30, 2018

Outstanding, July 31, 2018

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

Interest Rate

Dividend Yield

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life

1 unchanged sentence

200,000 options expiring on March 11, 2023

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

Additional information regarding stock options as of July 31, 2018, is as follows:

Options Outstanding

Options Exercisable

December 14, 2020

5 unchanged sentences

$30,718 of stock-based compensation have yet to be recognized and will be recognized in future periods.

Share Purchase Warrant

The following table summarizes the continuity of share purchase warrant:

Weighted Average Exercise Price

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

Period ended July 31, 2018

(Expressed in U.S.

Share Purchase Warrant (continued)

Share Purchase Warrant

The following table summarizes the continuity of share purchase warrant:

Weighted Average

Balance, January 31, 2018

Balance, July 31, 2018

As at July 31, 2018, the following share purchase warrants were outstanding:

Number of Warrants

6 unchanged sentences

Non-cash investing and financing activities

Capital contribution through forgiveness of debt

Stock issued for services

3 unchanged sentences

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

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended July 31, 2018

(Expressed in U.S.

Related Party Transactions

(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.

(a) As at July 31, 2018, the Company owed $nil (January 31, 2018 - $4,767), $3,815 (January 31, 2018 - $nil) and $749 (January 31, 2018 - $nil) to a director, a director and officer and an officer of the Company, respectively, which are 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)).

(c) During the six months ended July 31, 2018, the Company paid $644 in interest expense on a promissory note issued to Altum (Note 10(c)).

(d) During the six months ended July 31, 2018, the Company’s subsidiary, Pivot Naturals, paid $49,540 to a company owned by its President for research and development.

Subsequent Events

(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.

On August 9, 2018, 182,460 shares of common stock were issued to third party service providers for services rendered, of which 70,922 common stock were recorded as common stock issuable as at July 31, 2018 (Note 11(c)).

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