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Item 8. Financial Statements and Supplementary Data

2019-05-03 compared with 2018-05-01 · 559 added, 264 removed, 208 unchanged (80% of the section changed)

3 unchanged sentences

Years ended January 31, 2019 and 2018

(Expressed in U.S.

(Expressed in Canadian dollars)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Pivot Pharmaceuticals Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Pivot Pharmaceuticals Inc.

(the Company) as of January 31, 2019, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the year ended January 31, 2019, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of January 31, 2019, and the results of its consolidated operations and its consolidated cash flows for the year ended January 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty Related to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has not earned any revenue, has a working capital deficit of $4,844,352 and has an accumulated deficit of $34,963,335 as of January 31, 2019 that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor since 2019.

Vancouver, British Columbia

Suite 2200, MNP Tower, 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3, Phone:

(604) 685‑8408, 1 (877)688‑8408

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Pivot Pharmaceuticals Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Pivot Pharmaceuticals Inc.

(“the Company”) as of January 31, 2018 and 2017, the related consolidated statements of operations and comprehensive income (loss), stockholders’ deficit, and cash flows for each of the years in the two-year period ended January 31, 2018 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended January 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency which raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have audited the accompanying consolidated balance sheet of Pivot Pharmaceuticals Inc.

(“the Company”) as of January 31, 2018, the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the year ended January 31, 2018, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2018, and the results of its operations and its cash flows for the year ended January 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Sadler, Gibb & Associates, LLC

1 unchanged sentence

Salt Lake City, UT

May 1, 2018, except for Note 17, as to which the date is May 2, 2019

PIVOT PHARMACEUTICALS INC.

Consolidated Balance Sheets

(Expressed in U.S.

(Expressed in Canadian dollars)

Current assets

Tax receivable

Prepaids and other current assets

Total current assets

Security deposit

Intangible asset, net (Note 5)

Liabilities and Stockholders’ Deficit

Equipment, net (Note 5)

Intangible assets, net (Note 6)

Liabilities and Stockholders’ Equity (Deficit)

Current liabilities

1 unchanged sentence

Due to related parties (Note 13)

Convertible debenture, net (Note 6)

Derivative liabilities (Note 7)

Convertible debentures, net (Note 7)

Promissory note (Note 8)

Acquisition obligation (Note 4(b))

Deferred revenue

Total liabilities

Stockholders’ Deficit

Common stock:

Unlimited shares authorized, without par value, 82,373,559 and 75,647,114 shares issued and outstanding, respectively (Note 9)

Stockholders’ Equity (Deficit)

Common stock Unlimited shares authorized, without par value, 96,899,678 and 82,373,559 shares issued and outstanding, respectively (Note 9)

Common stock issuable (Note 9(c))

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

Nature of operations and continuance of business (Note 1)

(34,963,335 )

(25,816,964 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Nature of operations and going concern (Note 1)

Commitment and contingencies (Note 16)

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

PIVOT PHARMACEUTICALS INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Expressed in U.S.

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in Canadian dollars)

Depreciation and amortization

Due diligence costs

Finders fee expense

Foreign exchange loss

General and administrative

Management fees

Licensing fees

Professional fees

Research and development

Sales and marketing

Wages and salaries

Write-off of inventory

Total expenses

2 unchanged sentences

Amortization of discount on convertible debentures

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

Gain on change in fair value of derivative liabilities

Gain on disposal of asset (Note 3)

Gain on repayment of promissory note

Gain on settlement of debts

Interest expense

Total other income (expenses)

Interest income

Loss on extinguishment of convertible debentures (Note 7(c))

Total other (expenses) income

Other comprehensive income (loss)

Foreign currency translation adjustment

Net comprehensive loss

Comprehensive loss

Net loss per share, basic and diluted

Weighted average shares outstanding – basic and diluted

Weighted average number of shares outstanding – basic and diluted

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

PIVOT PHARMACEUTICALS INC.

Consolidated Statements of Stockholders’ Deficit

(Expressed in U.S.

Balance – January 31, 2016

Common stock issued for services

Warrants issued with convertible debenture

Stock-based compensation

Balance – January 31, 2017

Consolidated Statements of Stockholders’ Equity (Deficit)

(Expressed in Canadian dollars)

Accumulated Other Comprehensive

Balance – February 1, 2017 (Note 17)

(25,774,610 )

Common stock issued for services

1 unchanged sentence

Capital contribution by officers in forgiveness of liabilities

Common stock issued for conversion of debenture

Common stock issued for conversion of debentures

Common stock issued for acquisition of license

3 unchanged sentences

Stock-based compensation

Net comprehensive loss

Balance – January 31, 2018 (Note 17)

(25,816,964 )

Common stock issued for services

Common stock issued for settlement of convertible debenture (Note 7(c) and Note 10)

Common stock issued for asset acquisition (Note 4(b))

Common stock issued for acquisition of asset (Note 4(a))

Common stock and warrants issued for cash

Warrants issued for finder’s fee

Beneficial conversion feature

Stock-based compensation

Net comprehensive loss

Balance – January 31, 2019

(34,963,335 )

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

1 unchanged sentence

Consolidated Statements of Cash Flows

(Expressed in U.S.

(Expressed in Canadian dollars)

Operating activities

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

Amortization of discount on convertible debenture

Depreciation and amortization

Amortization of discount on convertible debentures

Common stock issued for services

Fair value of stock options vested

Stock-based compensation

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

Gain on disposal of assets

Gain on settlement of debts

Loss (gain) on settlement of debts

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable and accrued liabilities

Other liabilities

Net cash used in operating activities

Investing activities

Cash acquired through acquisition

Purchase of intangible assets

Net cash used in investing activities

Financing activities

Repayment on promissory note

Proceeds from promissory note

Proceeds from issuance of common stock and warrants

Proceeds from debenture

Proceeds from issuance of convertible debenture

Proceeds from debentures

Proceeds from private placement

Net cash provided by financing activities

1 unchanged sentence

Net change in cash

Cash – beginning of period

Cash – end of period

Supplemental cash flow disclosures (Note 13)

Cash – beginning of the year

Cash – end of the year

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

1 unchanged sentence

Notes to the Consolidated Financial Statements

Year ended January 31, 2017

(Expressed in U.S.

Nature of Operations and Continuance of Business

Years ended January 31, 2019 and 2018

(Expressed in Canadian dollars)

Nature of Operations and Going Concern

Pivot Pharmaceuticals Inc.

6 unchanged sentences

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 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.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

These consolidated financial statements do not include any adjustments to the amounts and classifications of assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company will continue to seek financing, in the form of equity or debt, to mitigate the substantial doubt over going concern and continue to meet its obligations.

Significant Accounting Policies

Basis of Presentation

The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in U.S.

(a) Basis of Presentation

The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars.

The Company’s fiscal year-end is January 31.

Use of Estimates

Please also refer to Note 17.

(b) Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, assumptions used to determine the fair values of stock-based compensation and derivative liabilities and deferred income tax asset valuation allowances.

The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets and assumptions used to determine the fair values of stock-based compensation, warrants and warrants issued with shares units.

Estimates and assumptions have also been made on the recoverable amount of intangible assets, fair value of debentures for the purpose of evaluating modification versus extinguishments, fair value of convertible debentures and deferred income tax asset.

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

The actual results may differ materially and adversely from the Company’s estimates.

To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Basis of Consolidation

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Years ended January 31, 2019 and 2018

(Expressed in Canadian dollars)

Significant Accounting Policies (continued)

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company.

Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Control is achieved where the Company has the power to govern the financial and operating policies of an entity to obtain benefits from its activities.

The consolidating entities include:

% of ownership

Pivot Pharmaceuticals Inc.

Pivot Green Stream Health Solutions Inc.

Pivot Naturals, LLC

Thrudermic, LLC

(d) Investments in Joint Arrangements

These consolidated financial statements incorporate the Company’s share of the results of its joint venture, Pivot-Cartagena Joint Venture Inc.

using the equity method of accounting (Note 15).

Investments in JV are recognized initially at cost and adjusted thereafter to include the Company’s share of income or loss and comprehensive income on an after-tax basis.

Dividends or distributions received or receivable from associates and joint ventures are recognized as a reduction in the carrying amount of the investments.

Investments are reviewed for impairment at each reporting period by comparing recoverable amount to carrying amount when there is an indication of impairment.

(e) Foreign Currency Translation

The Company’s reporting currency is the Canadian dollar.

The functional currency of the parent entity, Pivot Pharmaceuticals Inc., and the wholly-owned subsidiaries, Pivot Green Stream Health Solutions Inc.

and Thrudermic, LLC, is the Canadian dollar.

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

Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange in place at the balance sheet date.

Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred.

Transaction gains and losses are recognized in the consolidated statements of operations and comprehensive loss.

Assets and liabilities of the companies are translated from their respective functional currencies to the reporting currency at the exchange rates at the balance sheet dates, equity accounts are translated at historical exchange rates and revenues and expenses are translated at the average exchange rates in effect during the reporting period.

The resulting foreign currency translation adjustment are recorded in other comprehensive loss.

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Year ended January 31, 2017

(Expressed in U.S.

Years ended January 31, 2019 and 2018

(Expressed in Canadian dollars)

Significant Accounting Policies (continued)

Cash and Cash Equivalents

(f) Financial Instruments and Fair Value Measures

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets;

quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets);

or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

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, accounts payable and accrued liabilities, due to related parties, convertible debentures, promissory note and acquisition obligation.

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.

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

As at January 31, 2018 and 2017, the Company had no cash equivalents.

Intangible Asset

Intangible assets consists of costs incurred to acquire a license.

Equipment is recorded at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is recorded using the straight-line method to depreciate the cost of equipment over its estimated useful life of six years.

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Years ended January 31, 2019 and 2018

(Expressed in Canadian dollars)

Significant Accounting Policies (continued)

In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.

Circumstances which could trigger a review include, but are not limited to:

significant decreases in the market price of the asset;

significant adverse changes in the business climate or legal factors;

accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset;

current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset;

and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset.

In certain instances, specific appraisal may be used to determine recoverability amount.

An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

(i) Intangible Assets

Intangible assets consists of costs incurred to acquire license, patents and unpatented technology.

Intangible assets are considered finite live assets and recorded at cost less accumulated amortization and accumulated impairment.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the asset.

Amortization is recorded using the straight-line method and is intended to amortize the license over its estimated useful life of four years.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock-Based Compensation, using the fair value method.

Amortization is recorded using the straight-line method and is intended to amortize the intangible assets over their estimated useful lives:

Unpatented technology

(j) Impairment of Intangible Assets

When facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales and the resulting profit and cash flows expected to result from the use of the asset or asset group and its eventual disposition.

If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss.

The impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value.

We use a variety of valuation methodologies to determine the fair value of these assets, including discounted cash flow models.

(k) Contingencies

An estimated loss from a loss contingency is recognized if the available information indicates that it is probable that an asset has been impaired or a liability has been incurred at the reporting date and the amount of the loss can be reasonably estimated.

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Years ended January 31, 2019 and 2018

(Expressed in Canadian dollars)

Significant Accounting Policies (continued)

(l) Share Capital

Financial instruments issued by the Company are classified as equity to the extent that they do not meet the definition of a financial liability.

The Company’s shares of common stock are classified as equity instruments.

Incremental costs directly attributed to the issuance of new common stock or units are shown in share capital as a reduction, net of tax, of the proceeds received on issuance.

(m) Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock-Based Compensation to determine the fair value of share options and account for stock-based compensation expenses using an estimated forfeiture rate at the time of grant and revising the rate, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.

Stock-based compensation expenses are recorded net of estimated forfeitures such that expenses are recorded only for those share-based awards that are expected to vest.

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Derivative Financial Instruments

Derivative financial instruments that are not classified as equity and are not used in hedging relationships are measured at fair value.

Subsequent changes to fair value are recorded in the statement of operations and comprehensive income.

Loss Per Share

(n) Comprehensive Income or Loss

ASC 220, Comprehensive Income , establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements.

For the years ended January 31, 2019 and 2018, the Company’s comprehensive income included foreign currency translation adjustments.

(o) Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share.

ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations.

ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations and comprehensive loss.

Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.

3 unchanged sentences

As at January 31, 2019, the Company has excluded 3,249,700 (2018 – 6,153,764) potential dilutive shares.

Comprehensive Income (Loss)

ASC 220, Comprehensive Income , establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements.

As at January 31, 2018 and 2017, the Company’s comprehensive income included foreign currency translation adjustments.

Research and Development Costs

Research costs are expensed in the period that they are incurred.

For the years ended January 31, 2019 and January 31, 2018, diluted loss per share is equivalent to basic loss per share because the potential exercise of the equity-based financial instruments was anti-dilutive.

PIVOT PHARMACEUTICALS INC.

Notes to the Consolidated Financial Statements

Year ended January 31, 2017

(Expressed in U.S.

Years ended January 31, 2019 and 2018

(Expressed in Canadian dollars)

Significant Accounting Policies (continued)

(p) Research and Development Costs

Research costs are expensed in the period that they are incurred.

Development costs are capitalized, to the extent they increase the future economic benefit embodied in the specific asset, to intangible assets.

(q) Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”.

2 unchanged sentences

The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

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

As of January 31, 2019 and 2018, the Company did not have any amounts recorded pertaining to deferred tax assets or uncertain tax positions.

The Company files federal and provincial income tax returns in Canada.

1 unchanged sentence

During the years ended January 31, 2019 and 2018, there were no charges for interest or penalties.

Financial Instruments and Fair Value Measures