What changed in this filing

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Item 1. Financial Statements

2018-02-15 compared with 2017-09-13 · 482 added, 962 removed, 32 unchanged (98% of the section changed)

Consolidated Balance Sheets as of March 31, 2016 (unaudited) and

September 30, 2015

Consolidated Statements of Operations for the Three and Six Months

Ended March 31, 2016 and 2015 (unaudited)

Consolidated Statements of Cash Flows for the Six Months Ended

March 31, 2016 and 2015 (unaudited)

to Condensed Consolidated Financial Statements

Management’s

Discussion and Analysis of Financial Condition and Results of

and Qualitative Disclosures about Market Risk

and Procedures

Sales of Equity Securities and Use of Proceeds

Upon Senior Securities

Safety Disclosures

PART I –

UNAUDITED FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

PEAK PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

   Cash

$ 1,886  

$ 201,656  

   Prepaid

of discontinued operations held for sale

50,383  

AS AT DECEMBER 31, 2017

September 30,

Current assets:

259,289  

assets, net of depreciation

assets, net of amortization

18,245  

   Deposit

$ 1,886  

$ 281,370  

and stockholders' deficit

   Accounts

$ 77,468  

$ 43,238  

   Accounts

payable - related parties

51,584  

27,000  

   Accrued

39,151  

of discontinued operations held for sale

179,243  

current liabilities

129,412  

288,632  

129,412  

288,632  

Stockholders’

stock, $.00001 par value, 25,000,000 authorized, none issued or

stock, $0.0001 par value, 325,000,000 shares authorized, 78,363,562

shares issued and outstanding, as of March 31, 2016 and September

paid in capital

4,855,566  

6,151,997  

Stockholders’

Liabilities and Stockholders’

$ 1,886  

$ 281,370  

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

Liabilities and stockholders' deficit

Accounts payable

Accrued liabilities

Convertible notes payable

Total Liabilities

Stockholders’

Preferred stock, $0.00001 par value, 25,000,000 authorized, none issued or outstanding

Common stock, $0.0001 par value, 325,000,000 shares authorized, 78,363,562 shares issued and outstanding, as of December 31, 2017 and September 30, 2017

Additional paid in capital

Accumulated deficit

Total Stockholders’

Total Liabilities and Stockholders’

The accompanying footnotes are an integral part

of these condensed consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

expenses (income):

and administrative

74,338  

123,905  

175,997  

283,574  

and amortization

15,628  

18,974  

based compensation

474,753  

1,132,741  

operating expenses (income)

601,696  

1,422,270  

income (loss)

1,486,518  

1,101,460  

other expenses

(loss) from continuing operations

1,486,518  

1,101,460  

from operations of discontinued Canna-Pet component (including gain

(loss) on disposal of ($3,606) and $74,706, for the three and six

months ended March 31, 2016, respectively)

11,861  

74,706  

17,469  

income (loss)

$ 1,490,125  

$ 1,176,166  

$ (1,405,296 )

share information:

FOR THE THREE MONTH PERIOD ENDED

DECEMBER 31, 2017 AND 2016

For the Three Months Ended

Operating expenses:

General and administrative

Interest expense

Total expenses

Per share information:

Basic weighted average shares outstanding

78,363,562  

78,276,605  

   Diluted

weighted average shares outstanding

79,817,087  

78,363,562  

79,817,087  

78,276,605  

   Net

income (loss) per share - basic and diluted

$ 0.02  

$ 0.01  

   Net

income (loss) per share - basic and diluted

$ 0.00  

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

Diluted weighted average shares outstanding

Net loss per share - basic and diluted

The accompanying footnotes are an integral part

of these condensed consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31,

cash used in operating activities

$ 199,770  

flows from financing activities:

of fixed assets

cash provided by financing activities

cash provided by investing activities

change in cash

beginning of period

201,656  

451,431  

end of period

$ 1,886  

$ 203,883  

disclosure of cash flow information

paid for interest

paid for income taxes

investing activities

on disposal of Canna-Pet

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH

FOR THE THREE MONTH PERIOD ENDED DECEMBER

31, 2017 AND 2016

For the Three Months Ended

Cash flows from operating activities:

Change in operating assets and liabilities:

Accounts payable and accrued liabilities

Accrued liabilities

Net cash used in operating activities

Net change in cash

Cash, beginning of period

Cash, end of period

Supplemental disclosure of cash flow information

Cash paid for interest

Cash paid for income taxes

The accompanying footnotes are an integral part of these

condensed consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

NOTE 1 –

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company was incorporated in Nevada on December 18, 2007.

a number of name changes, we again changed our name to Peak

Pharmaceuticals, Inc.

on December 23, 2014.

This name was

consistent with our business operations and plans relating to

development, manufacturing and marketing of hemp-based

nutraceutical and supplement products for the human and animal

health markets.

On October 1, 2015, we discontinued certain

operations of the Company.

Throughout this report, the terms “our,”

“we,”

“us,”

and the “Company”

The Company was incorporated

in Nevada on December 18, 2007.

After a number of name changes, we again, changed our name to Peak Pharmaceuticals, Inc.

This name was consistent with our business operations and plans relating to development, manufacturing and marketing

of hemp-based nutraceutical and supplement products for the human and animal health markets.

On October 1, 2015, we discontinued

certain operations of the Company.

Throughout this report,

the terms “our,”

“we,”

“us,”

and the “Company”

refer to Peak Pharmaceuticals, Inc.

and its subsidiary, Peak

BioPharma Corp .

and its subsidiary, Peak BioPharma Corp.

Basis of Presentation

The accompanying unaudited condensed consolidated financial

statements of the Company have been prepared in accordance with

generally accepted accounting principles (“GAAP”) for

interim financial statements, instructions to Form 10-Q, and

Regulation S-X.

Accordingly, certain information and footnote

disclosures normally included in financial statements prepared in

accordance with GAAP have been condensed or omitted.

condensed consolidated financial statements should be read in

conjunction with the financial statements and notes thereto

included in our annual report on Form 10-K for the year ended

September 30, 2015.

The accompanying unaudited

condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting

principles (“GAAP”) for interim financial statements, instructions to Form 10-Q, and Regulation S-X.

Accordingly, certain

information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes

thereto included in our annual report on Form 10-K for the year ended September 30, 2017.

In management's opinion, all adjustments

(consisting only of normal recurring adjustments) considered

necessary for a fair presentation to make our financial statements

(consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements

not misleading have been included.

The results of operations for

the interim periods are not necessarily indicative of the results

The results of operations for the interim periods are not necessarily indicative of the results

to be expected for the full year, or any other period.

Basis of Consolidation

The condensed consolidated financial statements include the

financial statements of the Company and our wholly owned subsidiary

Peak BioPharma Corp.

All inter-company balances and transactions

among the companies have been eliminated upon

consolidation.

Use of Estimates

The preparation of financial statements in accordance with GAAP

requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and revenues and

expenses during the periods reported.

Actual results may differ

from these estimates.

Financial Instruments

Our financial instruments consist of cash, and payables.

carrying values of these instruments approximate fair value due to

the short term maturities of these instruments.

Fair Value Measurements

Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC)”

Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework

for measuring fair value and expands disclosures which are required

about fair value measurements.

Specifically, ASC 820 sets forth a

definition of fair value and establishes a hierarchy prioritizing

the inputs to valuation techniques, giving the highest priority to

quoted prices in active markets for identical assets and

liabilities and the lowest priority to unobservable value inputs.

ASC 820 defines the hierarchy as follows:

Level 1 –

Quoted prices are available in active markets for

identical assets or liabilities as of the reported date.

of assets and liabilities included in Level 1 are highly liquid and

actively traded instruments with quoted prices, such as equities

listed on the New York Stock Exchange.

Level 2 –

Pricing inputs are other than quoted prices in

active markets, but are either directly or indirectly observable as

of the reported date.

The types of assets and liabilities in Level

2 are typically either comparable to actively traded securities or

contracts, or priced with models using highly observable

Level 3 –

Significant inputs to pricing that are unobservable

as of the reporting date.

The types of assets and liabilities

included in Level 3 are those with inputs requiring significant

management judgment or estimation, such as complex and subjective

models and forecasts used to determine the fair value of financial

transmission rights.

Intangible Asset

The intangible asset is our website that was being amortized over

the expected useful life which we estimated to be three years.

Since we are no longer using our website, we expensed the remaining

balance to amortization expense.

Long-lived Assets

On a periodic basis, management assesses whether there are any

indicators that the value of our long-lived assets may be impaired.

An asset’s value may be impaired only if management’s

estimate of the aggregate future cash flows, on an undiscounted

basis, to be generated by the asset are less than the carrying

value of the asset.

Our only longed lived assets are our website and computer

If impairment has occurred, the loss is measured as the

excess of the carrying amount of the asset over its fair value.

estimates of aggregate future cash flows expected to be generated

by our long-lived asset are based on a number of assumptions that

are subject to economic and market uncertainties.

As these factors

are difficult to predict and are subject to future events that may

alter management’s assumptions, the future cash flows

estimated by management in their impairment analyses may not be

During the three months ended March 31, 2016, we charged

$15,264 to amortization expense for the impairment of our

Loss Per Share

We calculate net loss per share in accordance with ASC Topic

260, Earnings per

Basic net loss per share

is computed by dividing net loss by the weighted average number of

shares of common stock outstanding for the period, and diluted

earnings per share is computed by including common stock

equivalents outstanding for the period in the

Recent Pronouncements

From time to time, new accounting pronouncements are issued that we

adopt as of the specified effective date.

We believe that the

impact of recently issued standards that are not yet effective may

have an impact on our results of operations and financial

ASU Update 2014-09, Revenue from Contracts with

Customers (Topic 606) issued

May 28, 2014 by the FASB and the IASB converged guidance on

recognizing revenue in contracts with customers on an effective

date after December 31, 2017 will be evaluated as to impact and

implemented accordingly.

ASU Update 2014-15, Presentation of Financial

Statements-Going Concern (Sub

Topic 205-40) issued August 27, 2014 by FASB defines

management’s responsibility to evaluate whether there is a

substantial doubt about an organizations ability to continue as a

going concern.

The additional disclosure required is effective

after December 31, 2015.

We have adopted ASU 2014-15 and it has not

had a material impact on our Consolidated Financial

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of

Simplifying the Presentation of Debt Issuance

The guidance requires an

entity to present debt issuance costs in the balance sheet as a

direct reduction from the carrying amount of the debt liability,

consistent with debt discounts, rather than as an asset.

Amortization of debt issuance costs will continue to be reported as

interest expense.

Debt issuance costs related to revolving credit

arrangements, however, will continue to be presented as an asset

and amortized ratably over the term of the arrangement.

is effective for reporting periods beginning after December 15,

2015 including interim periods within those annual periods.

application is permitted, and upon adoption, ASU 2015-03 should be

applied on a retrospective basis.

We have adopted ASU 2015-03 and

it has not had a material impact on our Consolidated Financial

In July 2015, the FASB issued ASU 2015-11, Inventory , which simplifies the measurement principle of

inventories valued under the First-In, First-Out

(“FIFO”) or weighted average methods from the lower of

cost or market to the lower of cost and net realizable value.

2015-11 is effective for reporting periods beginning after December

15, 2016 including interim periods within those annual periods.

do not expect the standard to have a material impact on our

Consolidated Financial Statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification

of Deferred Taxes , which

requires that deferred tax assets and liabilities be classified as

noncurrent on the consolidated balance sheet.

ASU 2015-17 is

effective for annual periods beginning after December 15, 2016,

including interim periods within those annual periods.

adoption is permitted as of the beginning of an interim or annual

reporting period.

Upon adoption, ASU 2015-17 may be applied either

prospectively or retrospectively.

We do not expect the adoption of

this guidance to have a material impact on our Consolidated

From time to time, new

accounting pronouncements are issued that we adopt as of the specified effective date.

We believe that the impact of recently issued

standards that are not yet effective may have an impact on our results of operations and financial position.

In February 2016, the FASB

issued ASU No.

2016-02, Leases, to improve financial reporting about leasing transactions.

This ASU will require organizations

that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all

leases with terms of more than twelve months.

A lease liability is a lessee’s obligation to make lease payments arising from

a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of,

a specified asset for the lease term.

The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily

because lessees must recognize lease assets and lease liabilities.

This ASU leaves the accounting for the organizations that own

the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the

lessee accounting model and Topic 606, Revenue from Contracts with Customers.

2016-02 is effective for reporting periods

beginning after December 15, 2018.

We do not expect the adoption of this guidance to have a material impact on our Consolidated

Financial Statements.

In February 2016, the FASB issued ASU No.

Leases , to improve financial reporting about leasing

transactions.

This ASU will require organizations that lease assets

(“lessees”) to recognize a lease liability and a

right-of-use asset on its balance sheet for all leases with terms

of more than twelve months.

A lease liability is a lessee’s

obligation to make lease payments arising from a lease, measured on

a discounted basis and a right-of-use asset represents the

lessee’s right to use, or control use of, a specified asset

for the lease term.

The amendments in this ASU simplify the

accounting for sale and leaseback transactions primarily because

lessees must recognize lease assets and lease liabilities.

leaves the accounting for the organizations that own the assets

leased to the lessee (“lessor”) largely unchanged

except for targeted improvements to align it with the lessee

accounting model and Topic 606, Revenue from Contracts with

Reclassifications

Certain amounts from prior periods have been reclassified for

consistency with the presentation of the three and six month

periods ended March 31, 2016.

These reclassifications had no effect

on the reported results of operations.

NOTE 2 –

GOING CONCERN AND MANAGEMENT’S LIQUIDITY

Financial statements prepared in conformity with GAAP contemplate a

company’s continuation as a going concern.

We have incurred

net losses since inception and have an accumulated deficit of

$4,990,929 as of March 31, 2016.

This condition raises substantial

doubt as to our ability to continue as a going concern.

the expenses of our operations have been significantly reduced due

to the termination of the license agreement as outlined in Note 3,

we need to still evaluate raising additional capital through the

sale of equity securities, through an offering of debt securities

or through borrowings from financial institutions or individuals.

There can be no assurance that such a plan will be

Accordingly, the accompanying condensed consolidated financial

statements have been prepared in conformity with U.S.

contemplates continuation of the Company as a going concern and the

realization of assets and the satisfaction of liabilities in the

normal course of business.

The carrying amounts of assets and

liabilities presented in the condensed consolidated financial

statements do not necessarily represent realizable or settlement

The condensed consolidated financial statements do not

include any adjustments that might result from the outcome of this

NOTE 3 - DISCONTINUED OPERATIONS

upon recent regulatory activity related to imposition of

restrictions and limitations on the sale of hemp-based health

products for pets, we elected to terminate our license agreement

with the Licensor, effective as of October 1, 2015, and to cease

all operations relating to sale of hemp-based products for

October 12, 2015, we entered into an agreement for the termination

(“Termination Agreement”) of the License Agreement,

effectively selling the discontinued operations.

The Termination

Agreement contained the following provisions:

Termination of

The parties agreed to terminate the License Agreement

effective as of October 1, 2015.

This termination was made by

mutual agreement of the parties pursuant to and in accordance with

the provisions of the License Agreement.

Return of Licensed

Intellectual Property:

We agreed to return all Licensed

Intellectual Property to the Licensor, and our right to use all, or

any portion, of the Licensed Intellectual Property ceased effective

as of October 1, 2015.

Pursuant to the terms of the License

Agreement, the Licensed Intellectual Property included the brand

name “Canna-Pet”

and certain related intellectual

property, including, but not limited, trademarks and copyrights,

formulations, recipes, production processes and systems, websites,

domain names, customer lists, supplier lists trade secrets and

know- how, and other related intellectual property.

Return of Other

In addition to return of the Licensed Intellectual

Property, we agreed to transfer to Licensor all product inventory,

Colorado hemp with permits and authorization, all

production/fulfillment contracts, all e-commerce accounts and

processing, all non-disclosure and research agreements and any and

all other property in our possession which was used by us in the

conduct of our business related to production and sale of medical

cannabis products for pets made from hemp and low-THC cannabis

Office Space and

In conjunction with the execution of the Termination

Agreement, we granted the Licensor the right to use our office

space, for the three-month period from October 1, 2015 through

December 31, 2015, on a rent-free basis.

Consideration:

consideration for the cancellation of the License Agreement and the

return of other property, as described above, the Licensor agreed

to waive payment by us and to release us from liability for payment

of any and all unpaid royalties, invoices and other amounts which

were otherwise currently due and payable by us to Licensor for

sales of Canna-Pet products for all periods through and including

September 30, 2015.

October 15, 2015, we forwarded to the Licensor all payments

received by us after September 30, 2015 (net of amounts received by

us for taxes, duties, governmental charges, freight or shipping

charges, and the like) for Canna- Pet products sold on or after

October 1, 2015.

following is a summary of the net liabilities sold as initially

determined at Septembers 30, 2015 and updated October 15,

$ 45,436  

$ 41,705  

62,436  

50,383  

103,548  

124,396  

39,506  

15,341  

143,339  

179,243  

Net liabilities

$ 80,903  

$ 128,860  

The income from discontinued operations presented in the statements

of operations consists of the following for the six-month periods

ended March 31, 2016 and 2015, respectively:

$ 465,517  

of goods sold

and administrative expenses, including depreciation

and amortization

on disposal of discontinued operations

80,903  

from discontinued operations

$ 74,706  

$ 17,469  

NOTE 4 –

INTANGIBLE ASSETS

Intangible assets at March 31, 2016 and September 30, 2015, consist

of website costs of $35,000, less accumulated amortization of

$35,000 and $16,755, respectively.

The website costs have been

fully amortized.

During the three months ended March 31, 2016, we

charged $15,264 to amortization expense for the impairment of our

NOTE 5 –

In March 2016, the FASB

issued authoritative guidance regarding the accounting for share-based payment transactions, including income tax consequences,

classification of awards as either equity or liabilities, and classification on the statement of cash flows.

The guidance is to

be applied for annual periods beginning after December 15, 2016 and interim periods within those annual periods, and early adoption

is permitted.

The guidance requires companies to apply the requirements retrospectively, modified retrospectively, or prospectively

depending on the amendment(s) applied.

The Company is currently evaluating the impact of adopting this guidance.

In April 2016, the FASB

issued ASU 2016 –

10 “Revenue from Contract with Customers:

identifying Performance Obligations and Licensing”.

The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods and services in

exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either

a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s

intellectual property (which is satisfied over time).

The amendments in this Update are intended to reduce the degree of judgement

necessary to comply with Topic 606.

This guidance has no effective date as yet.

The Company is currently evaluating the impact

of adopting this guidance.

In August 2016, the FASB

issued ASU 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments”.

The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash

ASU 2016-15 is effective for the Company beginning in the first quarter of fiscal 2019.

Early adoption is permitted, provided

that all of the amendments are adopted in the same period.

The guidance requires application using a retrospective transition method.

The Company is currently evaluating the impact of adopting this guidance.

In November 2016, the FASB

issued ASU 2016-18, “Statement of Cash Flows (Topic 230) Restricted Cash”.

The new guidance requires that the reconciliation

of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include restricted cash and restricted

cash equivalents.

If restricted cash is presented separately from cash and cash equivalents on the balance sheet, companies will

be required to reconcile the amounts presented on the statement of cash flows to the amounts on the balance sheet.

Companies will

also need to disclose information about the nature of the restrictions.

The guidance is effective for fiscal years beginning after

December 15, 2017, and interim periods within those fiscal years.

The Company is currently evaluating the impact of adopting this

In January 2017, FASB issued

ASU 2017-01, “Business Combinations (Topic 805) Clarifying the Definition of a Business”.

The amendments in this Update

is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions

should be accounted for as acquisitions (or disposals) of assets or businesses.

The definition of a business affects many areas

of accounting including acquisitions, disposals, goodwill, and consolidation.

The guidance is effective for annual periods beginning

after December 15, 2017, including interim periods within those periods.

The Company is currently evaluating the impact of adopting

this guidance.

On May 10, 2017, the Financial

Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) 2017-09 “Compensation—Stock

Compensation (Topic 718):

Scope of Modification Accounting”, which provides guidance to clarify when to account for a change

to the terms or conditions of a share-based payment award as a modification.

Under the new guidance, modification accounting is

required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as

a result of the change in terms or conditions.

The guidance is effective prospectively for all companies for annual periods beginning

on or after December 15, 2017.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting this guidance.

NOTE 2 –

GOING CONCERN AND MANAGEMENT’S

LIQUIDITY PLANS

As of September 30, 2017,

the Company had an accumulated deficit of $5,063,716 and a working capital deficiency of $200,314.

During the quarters ended December

31, 2017 and 2016, the Company used cash in operating activities of $155 and $126, respectively.

These conditions raise substantial

doubt about the Company’s ability to continue as a going concern.

The Company recognizes it will need to raise additional

capital in order to fund operations and meet its payment obligations.

There is no assurance that additional financing will be available

when needed or that management will be able to obtain financing on terms acceptable to the Company and whether the Company will

generate revenues, become profitable and generate positive operating cash flow.

If the Company is unable to raise sufficient additional

funds on favorable terms, it will have to develop and implement a plan to further extend payables and to raise capital through

the issuance of debt or equity on less favorable terms until sufficient additional capital is raised to support further operations.

There can be no assurance that such a plan will be successful.

Accordingly, the accompanying

consolidated financial statements have been prepared in conformity with U.S.

GAAP, which contemplates continuation of the Company

as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business.

amounts of assets and liabilities presented in the consolidated financial statements do not necessarily represent realizable or

settlement values.

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

NOTE 3 –

RELATED PARTY TRANSACTIONS

Parties, which can be corporations or individuals, are considered

to be related if we have the ability, directly or indirectly, to

control the other party or exercise significant influence over the

other party in making financial and operating decisions.

are also considered to be related if they are subject to common

control or common significant influence.

Accounts payable –

related parties are the amounts payable to

officers and directors of the Company for reimbursement of expenses

they incurred on behalf of the Company as well as Directors’

Parties, which can be corporations

or individuals, are considered to be related if they have the ability, directly or indirectly, to control the other party or exercise

significant influence over the other party in making financial and operating decisions.

Companies are also considered to be related

if they are subject to common control or common significant influence.

Accounts payable –

related parties are the amounts payable to officers and directors of the Company for reimbursement of expenses they incurred on

behalf of the Company as well as Directors’

fees and salaries.

These amounts are due on demand, unsecured and

bear no interest.

NOTE 6 –

COMMITMENTS AND CONTINGENCIES

We have no operating lease commitments as of March 31,

Rent expense was $2,500 and $6,380 for the three and six months

ended March 31, 2016, respectively.

Rent expense was $5,820 and

$12,151 for the three and six months ended March 31, 2015,

respectively.

NOTE 7 –

STOCKHOLDERS’

no preferred or common stock transactions during the three and six

month periods ended March 31, 2016 and 2015.

NOTE 8 –

In March 2014, we issued non-qualified options to purchase

2,916,000 shares of our common stock for services rendered to a

director of the Company.

The options have a term of 10 years, are

exercisable at $0.0067 per share and vested when they were

The fair value of the options, estimated at the date of grant using

the Black-Scholes option pricing model was $9,078.

The options have

been expensed as equity-based compensation.

The following

assumptions were used in the Black-Scholes option pricing

life (in years) –

(based on a comparable companies) –

Free interest rate –

yield (on common stock) –

In May 2014, we issued non-qualified options to purchase 4,500,000

shares of our common stock to certain officers of the Company.

options are exercisable at $0.20 per share and have graded vesting

over 4 years.

The fair value of the options, estimated at the date of grant using

the Black-Scholes option pricing model was $4,415,649.

following assumptions were used in the Black-Scholes option pricing

life (in years) –

(based on a comparable companies) –

Free interest rate –

yield (on common stock) –

As per guidance in the ASC Topic 718, Compensation - Stock

Compensation (“ASC

718”), we are amortizing the fair value of the options on a

straight line basis over the requisite service period for each

separately vesting portion of the award as if the award was,

in-substance, multiple awards (graded vesting attribution

During the six months ended March 31, 2016, the Company recognized

stock based compensation of $280,053.

During the six-month period

ending March 31, 2016, the officers holding the 4,500,000 options

resigned and the option were forfeited.

In accordance with

ASC 718, previously expensed stock

based compensation which requisite service will not be provided and

are forfeited and reversed.

As a result, previously recorded stock

based compensation of $1,576,484 was reversed and credited to stock

based compensation expense during the six months ended March 31,

The following is a summary of outstanding stock options issued to

employees and directors as of March 31, 2016:

of Options

October 1, 2014 and September 30, 2015

7,416,000  

- $0.20  

March 31, 2016

2,916,000  

$ 0.0067  

2,916,000  

$ 0.0067  

The following is a summary of outstanding stock options issued to

non-employees, excluding directors, as of March 31,

of Options

March 31, 2016

375,000  

$ 0.0067  

375,000  

$ 0.0067  

The following is a summary of outstanding stock options issued to

non-employees, excluding directors, as of March 31,

Total equity based compensation for the three months ended March

31, 2016 and 2015 was ($1,576,484) and $474,753 respectively.

equity based compensation for the six months ended March 31, 2016

and 2015 was ($1,296,431) and $1,132,741,

respectively.

NOTE 9 –

We account for income taxes in interim periods in accordance with

ASC Topic 740, Income Taxes

(“ASC 740”).

determined an estimated annual effective tax rate.

The rate will be

revised, if necessary, as of the end of each successive interim

period during our fiscal year to our best current estimate.

March 31, 2016, the estimated effective tax rate for the year is

There are open statutes of limitations for taxing authorities in

federal and state jurisdictions to audit our tax returns from 2011

through the current period.

Our policy is to account for income tax

related interest and penalties in income tax expense in the

statement of operations.

There have been no income tax related

interest or penalties assessed or recorded.

ASC 740 prescribes a recognition threshold and measurement

attribute for the financial statement recognition and measurement

of a tax position taken or expected to be taken in a tax return.

This pronouncement also provides guidance on derecognition,

classification, interest and penalties, accounting in interim

periods, disclosure, and transition.

For the six months ended March 31, 2016 and 2015 we did not have

any interest and penalties associated with tax positions.

March 31, 2016, we did not have any significant unrecognized

uncertain tax positions.

NOTE 10 - SUBSEQUENT EVENTS

Management has evaluated all activity and concluded that no

subsequent events have occurred that would require recognition in

these financial statements or disclosure in the notes to these

financial statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Included in accounts payable at December 31, 2017 are amounts

totaling $47,877 (September 30, 2016 $47,877) owed to related parties.

NOTE 4 –

CONVERTIBLE NOTES PAYABLE

Loan with Trius Holdings

On March 17, 2017,

the Company entered into an agreement with Trius Holdings Limited (“Trius”).

Pursuant to the terms of the

agreement, Trius acquired a 12% convertible note with an aggregate face value of $10,000.

The note matures in one year.

is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of the of common

stock in the Company at a price equal to a 20% discount to the closing price of the common stock on the date of the

lender’s notice of conversion, subject to a floor of $0.01.

Loan with Individual

On March 30, 2017,

the Company entered into an agreement with an individual.

Pursuant to the terms of the agreement, the individual acquired a

12% convertible note with an aggregate face value of $10,000.

The note matures in one year.

The individual is entitled, at

its option, to convert all or a part of the principal outstanding at the date into shares of the of common stock in the

Company at a price equal to a 20% discount to the closing price of the common stock on the date of the lender’s notice

of conversion, subject to a floor of $0.01.

Total accrued interest

on the above notes was $1,844 as of December 31, 2017 (September 30, 2017 $1,240) and is reflected in accrued liabilities on the

accompanying balance sheet.

The Company recorded a loss on the notes of $5,000 during the quarter ended March 31, 2017 based on

the fair value of the notes.

NOTE 5 –

STOCKHOLDERS’

We had no preferred or

common stock transactions during the three-period ended December 31, 2017 and 2016

NOTE 6 –

No stock options were granted

during the quarters ended December 31, 2017 and 2016.

The following is a summary

of outstanding stock options issued to employees and directors as of December 31, 2017:

Exercise Price per

Outstanding September 30, 2017 and December 31, 2017

The following is a summary

of outstanding stock options issued to non-employees, excluding directors, as of December 31, 2017:

Exercise Price per

Outstanding September 30, 2017 and December 31, 2017

equity-based compensation for the three months ended December 31, 2017 and 2016.

NOTE 7- SUBSEQUENT EVENT

On January 11, 2018,

we received a promissory note from Media park Investments Limited in the amount of $23,000.

The note is due and payable in

full on July 9, 2018 and it accrues interest at a rate of 12% per annum.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

report contains forward-looking statements.

The following

discussion should be read in conjunction with the financial

statements and related notes contained in our Annual Report on Form

10-K, as filed with the Securities & Exchange Commission on

January 13, 2016.

Certain statements made in this discussion are

"forward-looking statements" within the meaning of The Private

Securities Litigation Reform Act of 1995.

Forward-looking

statements are projections in respect of future events or financial

In some cases, you can identify forward-looking

statements by terminology such as “may,”

“should,”

“expects,”

“plans,”

“anticipates,”

“believes,”

“estimates,”

“predicts,”

“potential”

or “continue”

or the negative

of these terms or other comparable terminology.

statements are only predictions and involve known and unknown

risks, uncertainties and other factors, including the risks in the

section entitled “Risk Factors”

set forth in our Annual

Report on Form 10-K for the year ended September 30, 2015, as filed

on January 13, 2016, any of which may cause our company’s or

our industry’s actual results, levels of activity,

performance or achievements to be materially different from any

future results, levels of activity, performance or achievements

expressed or implied by these forward-looking statements.

risks may cause the Company’s or its industry’s actual

results, levels of activity or performance to be materially

different from any future results, levels of activity or

performance expressed or implied by these forward-looking

the Company believes that the expectations reflected in the

forward-looking statements are reasonable, it cannot guarantee

future results, levels of activity or performance.

neither the Company nor any other person assumes responsibility for

the accuracy and completeness of these forward-looking statements.

The Company is under no duty to update any forward-looking

statements after the date of this report to conform these

statements to actual results.

in this quarterly report and unless otherwise indicated, the terms

“we,”

“us,”

“our,”

“Peak,”

or the “Company”

refer to Peak

Pharmaceuticals, Inc, including our wholly-owned subsidiary Peak

BioPharma Corp (“Peak BioPharma”).

Unless otherwise

specified, all dollar amounts are expressed in United States

Corporate Overview

incorporated as Surf A Movie Solutions Inc.

in Nevada on December

18, 2007 to engage in the business of the development, sales and

marketing of online video stores.

We were not successful in our

efforts and have ceased this line of business.

October 10, 2013, we entered into a joint venture agreement with

Produced Water Solutions, Inc., a Colorado corporation, that was in

the business of providing economically and environmentally sound

solutions for the treatment and recycling of wastewater resulting

principally from oil and gas exploration and production activities.

As a result of our research of this business opportunity, on

December 31, 2013, we determined not to move forward with this line

early March 2014, we entered into the business of developing,

manufacturing and marketing pharmaceutical level products

containing phytocannabinoids, an abundant and pharmaceutically

active component of industrial hemp, for the prevention and

alleviation of various conditions and diseases.

In connection

therewith, on March 17, 2014 we changed our name to Cannabis

Therapy Corp.

On December 23, 2014, we changed our name to Peak

Pharmaceuticals, Inc.

All of our business operations are carried on

through our wholly-owned subsidiary, Peak BioPharma Corp., a

Colorado corporation.

29, 2014, through Peak BioPharma, we entered into a license

agreement (the “License Agreement”) with Canna-Pet, LLC

(“Licensor”), a Washington limited liability company,

which owns the brand name “Canna-Pet”

related intellectual property including, but not limited to,

trademarks and copyrights, formulations, recipes, production

processes and systems, websites, domain names, customer lists,

supplier lists, trade secrets and know-how, and other related

intellectual property (collectively, the “Licensed

Intellectual Property”), used by Licensor in the conduct of

its business related to the production and sale of medical products

made from industrial hemp which are intended exclusively for

consumption by pets.

Pursuant to the License Agreement, the

Licensor granted to us a perpetual, exclusive, world-wide license

to use the Licensed Intellectual Property in conjunction with our

business and the production and sale of medical products made from

industrial hemp as well as the right to sublicense the Licensed

Intellectual Property to third parties.

The License Agreement gives

us the right to produce and sell existing products utilizing the

Licensed Intellectual Property and to develop new products, jointly

with Licensor or otherwise, based upon the Licensed Intellectual

The License Agreement provided us with an immediate

revenue source and access to Licensor’s customer base.

the term of the license, all intellectual property rights in and to

the Licensed Intellectual Property remained the exclusive property

consideration of the grant of the license, we agreed to pay

Licensor license fees in the form of royalty payments calculated on

the basis of gross proceeds received by us from sales of products

manufactured, marketed or sold by us utilizing the Licensed

Intellectual Property or any subsequently developed intellectual

property which is jointly owned by us and Licensor.

selling Canna-Pet products in October 2014.

upon recent regulatory activity related to imposition of

restrictions and limitations on the sale of hemp-based health

products for pets, we elected to terminate our license agreement

with the Licensor, effective as of October 1, 2015, and to cease

all operations relating to sale of hemp-based products for

October 12, 2015, we entered into an agreement for the termination

(“Termination Agreement”) of the License Agreement,

effectively selling the discontinued operations.

The Termination

Agreement contained the following provisions:

Termination of

The parties agreed to terminate the License Agreement

effective as of October 1, 2015, this termination was made by

mutual agreement of the parties pursuant to and in accordance with

the provisions of the License Agreement.

Return of Licensed

Intellectual Property:

We agreed to return all Licensed

Intellectual Property to the Licensor, and our right to use all, or

any portion, of the Licensed Intellectual Property ceased effective

as of October 1, 2015, Pursuant to the terms of the License

Agreement, the Licensed Intellectual Property included the brand

name “Canna-Pet”

and certain related intellectual

property, including, but not limited, trademarks and copyrights,

formulations, recipes, production processes and systems, websites,

domain names, customer lists, supplier lists trade secrets and

know- how, and other related intellectual property.

Return of Other

In addition to return of the Licensed Intellectual

Property, we agreed to transfer to Licensor all product inventory,

Colorado hemp with permits and authorization, all

production/fulfillment contracts, all e-commerce accounts and

processing, all non-disclosure and research agreements and any and

all other property in our possession which was used by us in the

conduct of our business related to production and sale of medical

cannabis products for pets made from hemp and low-THC cannabis

Office Space,

Equipment and Employees:

In conjunction with the execution of the

Termination Agreement, we granted the Licensor the right to use our

office space, for the three-month period from October 1, 2015

through December 31, 2015, on a rent-free basis.

This report contains forward-looking

The following discussion should be read in conjunction with the financial statements and related notes contained in

our Annual Report on Form 10-K, as filed with the Securities & Exchange Commission on January 12, 2018.

Certain statements

made in this discussion are "forward-looking statements"

within the meaning of The Private Securities Litigation Reform

Forward-looking statements are projections in respect of future events or financial performance.

In some cases, you

can identify forward-looking statements by terminology such as “may,”

“should,”

“expects,”

“plans,”

“anticipates,”

“believes,”

“estimates,”

“predicts,”

“potential”

or “continue”

or the negative of these terms or other comparable terminology.

These statements are only

predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk

Factors”

set forth in our Annual Report on Form 10-Kfor the year ended September 30, 2017, as filed on January 12, 2018,

any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements

to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these

forward-looking statements.

These risks may cause the Company’s or its industry’s actual results, levels of activity

or performance to be materially different from any future results, levels of activity or performance expressed or implied by these

forward-looking statements.

Although the Company believes

that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of

activity or performance.

Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness

of these forward-looking statements.

The Company is under no duty to update any forward-looking statements after the date of this

report to conform these statements to actual results.

As used in this quarterly

report and unless otherwise indicated, the terms “we,”

“us,”

“our,”

“Peak,”

the “Company”

refer to Peak Pharmaceuticals, Inc, including our wholly-owned subsidiary Peak BioPharma Corp (“Peak

BioPharma”).

Unless otherwise specified, all dollar amounts are expressed in United States dollars.

We were incorporated as

Surf A Movie Solutions Inc.

in Nevada on December 18, 2007to engage in the business of the development, sales and marketing of

online video stores.

We were not successful in our efforts and have ceased this line of business.

On October 10, 2013, we

entered into a joint venture agreement with Produced Water Solutions, Inc., a Colorado corporation, that was in the business of

providing economically and environmentally sound solutions for the treatment and recycling of wastewater resulting principally

from oil and gas exploration and production activities.

As a result of our research of this business opportunity, on December 31,

2013, we determined not to move forward with this line of business.

In early March 2014,

we entered into the business of developing, manufacturing and marketing pharmaceutical level products containing

phytocannabinoids, an abundant and pharmaceutically active component of industrial hemp, for the prevention and alleviation

of various conditions and diseases.

In connection therewith, on March 17, 2014 we changed our name to Cannabis Therapy Corp.

On December 23, 2014, we changed our name to Peak Pharmaceuticals, Inc.

All of our business operations are carried on through

our wholly-owned subsidiary, Peak BioPharma Corp., a Colorado corporation.

On July 29, 2014,

through Peak BioPharma, we entered into a license agreement (the “License Agreement”) with Canna-Pet, LLC

(“Licensor”), a Washington limited liability company, which owns the brand name “Canna-Pet”

certain related intellectual property including, but not limited to, trademarks and copyrights, formulations, recipes,

production processes and systems, websites, domain names, customer lists, supplier lists, trade secrets and know-how, and

other related intellectual property (collectively, the “Licensed Intellectual Property”), used by Licensor in the

conduct of its business related to the production and sale of medical products made from industrial hemp which are intended

exclusively for consumption by pets.

Pursuant to the License Agreement, the Licensor granted to us a perpetual, exclusive,

world-wide license to use the Licensed Intellectual Property in conjunction with our business and the production and sale of

medical products made from industrial hemp as well as the right to sublicense the Licensed Intellectual Property to third

The License Agreement gives us the right to produce and sell existing products utilizing the Licensed Intellectual

Property and to develop new products, jointly with Licensor or otherwise, based upon the Licensed Intellectual Property.

License Agreement provided us with an immediate revenue source and access to Licensor’s customer base.

term of the license, all intellectual property rights in and to the Licensed Intellectual Property remained the exclusive

property of Licensor.

In consideration of

the grant of the license, we agreed to pay Licensor license fees in the form of royalty payments calculated on the basis of

gross proceeds received by us from sales of products manufactured, marketed or sold by us utilizing the Licensed Intellectual

Property or any subsequently developed intellectual property which is jointly owned by us and Licensor.

We began selling

Canna-Pet products in October 2014.

Based upon recent regulatory

activity related to imposition of restrictions and limitations on the sale of hemp-based health products for pets, we elected to

terminate our license agreement with the Licensor, effective as of October 1, 2015, and to cease all operations relating to sale

of hemp-based products for pets.

On October 12, 2015, we

entered into an agreement for the termination (“Termination Agreement”) of the License Agreement, effectively selling

the discontinued operations.

The Termination Agreement contained the following provisions:

· Termination of License:

The parties agreed to terminate the License Agreement effective as of October

1, 2015,this termination was made by mutual agreement of the parties pursuant to and in accordance with the provisions of the License

· Return of Licensed Intellectual Property:

We agreed to return all Licensed Intellectual Property

to the Licensor, and our right to use all, or any portion, of the Licensed Intellectual Property ceased effective as of October

1, 2015,Pursuant to the terms of the License Agreement, the Licensed Intellectual Property included the brand name “Canna-Pet”

and certain related intellectual property, including, but not limited, trademarks and copyrights, formulations, recipes, production

processes and systems, websites, domain names, customer lists, supplier lists trade secrets and know- how, and other related intellectual

· Return of Other Property:

In addition to return of the Licensed Intellectual Property, we agreed

to transfer to Licensor all product inventory, Colorado hemp with permits and authorization, all production/fulfillment contracts,

all e-commerce accounts and processing, all non-disclosure and research agreements and any and all other property in our possession

which was used by us in the conduct of our business related to production and sale of medical cannabis products for pets made from

hemp and low-THC cannabis plants.

· Office Space, Equipment and Employees:

In conjunction with the execution of the Termination Agreement,

we granted the Licensor the right to use our office space, for the three-month period from October 1, 2015 through December 31,

2015, on a rent-free basis.

· Consideration:

consideration for the cancellation of the License Agreement and the

return of other property, as described above, the Licensor agreed

to waive payment by us and to release us from liability for payment

of any and all unpaid royalties, invoices and other amounts which

were otherwise currently due and payable by us to Licensor for

sales of Canna-Pet products for all periods through and including

September 30, 2015.

October 15, 2015, we forwarded to the Licensor all payments

received by us after September 30, 2015 (net of amounts received by

us for taxes, duties, governmental charges, freight or shipping

charges, and the like) for Canna- Pet products sold on or after

As consideration for the cancellation of the License Agreement and the return of

other property, as described above, the Licensor agreed to waive payment by us and to release us from liability for payment of

any and all unpaid royalties, invoices and other amounts which were otherwise currently due and payable by us to Licensor for sales

of Canna-Pet products for all periods through and including September 30, 2015.

· Collections:On October 15, 2015, we forwarded to the Licensor all payments received by us after

September 30, 2015 (net of amounts received by us for taxes, duties, governmental charges, freight or shipping charges, and the

like) for Canna- Pet products sold on or after October 1, 2015.

The following is a summary

of the net assets sold as initially determined at Septembers 30, 2015 and updated October 15, 2015:

October 15, 2015

following is a summary of the net assets sold as initially

determined at Septembers 30, 2015 and updated October 15,

$ 45,436  

$ 41,705  

$ 62,436  

$ 50,383  

103,548  

124,396  

39,506  

15,341  

143,339  

179,243  

$ 80,903  

$ 128,860  

common stock is currently listed on the OTC Markets, QB Tier, under

the symbol “PKPH”.

September 30, 2015

Prepaid Expenses

Accounts payable

Royalties payable

Accrued liabilities

Total liabilities

Net assets sold

Our common stock is currently

listed on the OTC Markets, QB Tier, under the symbol “PKPH”.

Recent Corporate Developments

the commencement of the year through March 31, 2016, we have not

experienced any significant corporate developments.

Results of Operations

Comparison of the Three Months Ended March 31, 2016 to the Three

Months Ended March 31, 2015

revenue or cost of sales were generated for the three months ended

March 31, 2016 or 2015 due to the termination of the license

agreement with Canna-Pet, LLC and the overall reduction in

operations of the business.

Operating Expenses

expenses for the three months ended March 31, 2016 are summarized

as follows in comparison to our expenses for the three months ended

March 31, 2015:

Months Ended March 31,

administrative

$ 74,338  

$ 123,905  

Depreciation and

15,628  

474,753  

Total operating

$ (1,486,518 )

$ 601,696  

and administrative expense decreased by $49,567 for the three

months ended March 31, 2016 from the comparative period of 2015.

The decrease is due to the termination of the license agreement

with Canna-Pet, LLC and the overall reduction in operating expenses

related to the operation of that business.

Depreciation and

amortization expense increased by $12,590 due to the impairment and

write-down of our website costs of $15,264 during the three months

ended March 31, 2016.

Stock based compensation decreased by

$2,051,237 due to the forfeiture and reversal of stock options to

officers resulting in a credit of $1,576,484 during the three

months ended March 31, 2016 from the comparative period of

Comparison of the Six Months Ended March 31, 2016 to the Six Months

Ended March 31, 2015

revenue or cost of sales were generated for the six months ended

March 31, 2016 for 2015 due to the termination of the license

agreement with Canna-Pet, LLC and the overall reduction in

operations of the business.

Operating Expenses

expenses for the six months ended March 31, 2016 are summarized as

follows in comparison to our expenses for the six months ended

March 31, 2015:

Months Ended March 31,

administrative

$ 175,997  

$ 283,574  

commencement of the year through December 31, 2017, we have not experienced any corporate developments.

We have received a

promissory note for $23,000 after the quarter end of December 31, 2017.

Loan Agreements

Loan with Trius Holdings Limited

On March 17, 2017, we entered

into an agreement with Trius Holdings Limited.

Pursuant to the terms of the agreement, the investor acquired a 12% convertible

note with an aggregate face value of $10,000.

The note matures in one year.

The holder of this note is entitled, at its option,

to convert all or a part of the principal outstanding at the date into shares of the of common stock in the Company at a price

equal to a 20% discount to the closing price of the common stock on the date of the lender’s notice of conversion, subject

to a floor of $0.01.

Loan with Individual

On March 30, 2017, we entered

into an agreement with an individual.

Pursuant to the terms of the agreement, the investor acquired a 12% convertible note with

an aggregate face value of $10,000.

The note matures in one year.

The holder of this note is entitled, at its option, to convert

all or a part of the principal outstanding at the date into shares of the of common stock in the Company at a price equal to a

20% discount to the closing price of the common stock on the date of the lender’s notice of conversion, subject to a floor

of Operations

of the Three Months Ended December 31, 2017 to the Three Months Ended December 31, 2016

No revenue or cost of sales were generated for

the three months ended December 31, 2017 or December 31, 2016 due to the overall reduction in operations of the business.

Our expenses for the three

months ended December 31, 2017 are summarized as follows in comparison to our expenses for the three months ended December 31,

Three Months Ended December 31,

General and administrative

Depreciation and amortization

Stock based compensation

Total operating expenses

and administrative expense increased by $5,142 for the three months ended December 31, 2017 from the comparative period of

2016 due primarily to increased accounting fees incurred to bring our filings current with the SEC.

Depreciation and

18,974  

1,132,741  

Total operating

$ (1,101,460 )

$ 1,422,270  

and administrative expense decreased by $107,577 for the six months

ended March 31, 2016 from the comparative period of 2015, due to

the termination of the license agreement with Canna-Pet, LLC and

the overall reduction in operating expenses related to the

operation of that business.

Depreciation and amortization expense

increased by $13,019 due to the impairment and write-down of our

website costs of $15,264 during the six months ended March 31,

Stock based compensation decreased by $2,429,172 primarily

due to the forfeiture and reversal of stock options to officers

resulting in a credit of $1,296,431 during the six months ended

March 31, 2016.

Discontinued Operations

Canna-Pet business segment began operations in October 2014.

recent regulatory activity related to imposition of restrictions

and limitations on the sale of hemp-based health products for pets,

on October 1, 2015, we elected to terminate our license agreement

with Canna-Pet, LLC and to cease all operations relating to sale of

hemp-based products for pets.

income (loss) from discontinued operations presented in the

statements of operations consists of the following for the

six-month periods ended March 31, 2016 and 2015:

$ 382,292  

Cost of goods

administrative expenses

Gain on disposal of

discontinued operations

74,706  

$ 74,706  

$ 17,469  

Liquidity and Financial Condition

amortization expense as well as stock-based compensation was$0 for the three months ended December 31, 2017 and 2016.

Interest expense increased

from $0 to $604 for the three months ended December 31, 2017 from the comparative period of 2016 due to the issuance of two notes

payable in March 2017.

Liquidity and Financial

Working Capital Deficiency

$ 1,886  

$ 261,789  

129,412  

288,632  

Working capital

decrease in current assets is mainly due to a decrease in cash

resulting from cash used in operation activities of $199,770 during

the six months ended March 31, 2016.

The decrease in current

liabilities is due primarily from the elimination of the

liabilities related to discontinued operations during the six

months ended March 31, 2016.

Months Ended March 31,

$ (1,405,296 )

Net cash used in

operating activities

September 30,

Current assets

Current liabilities

Working capital deficiency

The decrease in

current assets is mainly due to the payment of vendor bills during the three months ended December 31, 2017.

The increase in

current liabilities is due to transfer agent and accounting fees incurred for the three-month period ending December 31,

Three Months Ended December

Net income (loss)

Net cash provided (used) in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Increase (decrease) in cash

As of December 31, 2017,

our cash balance was $2,836.

The Company does not expect its current cash and operating income to be sufficient to meet its financial

needs for continuing operations over the next twelve months.

Net cash used in

investing activities

Net cash provided

by financing activities

Increase (decrease)

March 31, 2016, our cash balance was $1,886.

The Company does not

expect its current cash and operating income to be sufficient to

meet its financial needs for continuing operations over the next

twelve months.

cash used in operations for the six months ended March 31, 2016 was

$199,770 mainly due to payment of general and administrative

expenses during the period.

to raise additional operating capital on an immediate basis.

Although the expenses of our operations have been significantly

reduced due to the termination of the license agreement as outline

in Note 3 of the financial statements, we need to still evaluate

raising additional capital through the sale of equity securities,

through an offering of debt securities or through borrowings from

There can be no assurance that such a plan will be

the date of this filing, we do not have enough sufficient cash on

hand to cover our operating expenses through the next quarter.

the absence of any ongoing commercial operations, we need enough

cash to pay certain outside professionals to maintain our

compliance under the Securities Act of 1934.

Management anticipates

that it will require an additional $30,000 over the next twelve

months to cover such costs.

Going Concern

unaudited condensed consolidated financial statements contained in

this report have been prepared assuming that the Company will

continue as a going concern.

Company has cumulative net losses through March 31, 2016 of

approximately $5 million" to "The Company has cumulative net losses

through March 31, 2016 of $4,990,929.

The Company's cash and

cash equivalents balance as of March 31, 2016, is $1,886.

addition, due to the termination of the license agreement with

Canna-Pet, LLC, there is currently are no revenue-producing

These factors raise substantial doubt about the

Company's ability to continue as a going concern.

such time that we may be able to merge with or acquire an operating

business, we will need to actively seek to identify sources of

There are no assurances that such additional sources of

liquidity can be obtained on terms acceptable to us on a

commercially reasonable basis, or at all.

These factors raise

substantial doubt about our ability to continue as a going concern.

Furthermore, our “going concern”

and lack of commercial

operations may make it more difficult for us to raise

unaudited condensed consolidated financial statements do not

include any adjustments that may be necessary should the Company be

unable to continue as a going concern.

The Company’s

continuation as a going concern is dependent on its ability to

obtain additional financing.

If the Company raises additional funds

through the issuance of equity, the percentage ownership of current

shareholders could be reduced, and such securities might have

rights, preferences or privileges senior to its common stock.

Additional financing may not be available upon acceptable terms, or

If adequate funds are not available or are not available on

acceptable terms, the Company may not be able to take advantage of

prospective business endeavors or opportunities, which could

significantly and materially restrict its future plans for

developing any future business and achieving commercial revenues.

operations for the three months ended December 31, 2017 was $155 mainly due to the net loss incurred for the period.

We need to raise additional

operating capital on an immediate basis.

Although the expenses of our operations have been significantly reduced due to the termination

of the license agreement as outline in Note 3 of the financial statements, we need to still evaluate raising additional capital

through the sale of equity securities, through an offering of debt securities or through borrowings from individuals.

be no assurance that such a plan will be successful.

As of the date of this

filing, we do not have enough sufficient cash on hand to cover our operating expenses through the next quarter.

In the absence

of any ongoing commercial operations, we need enough cash to pay certain outside professionals to maintain our compliance under

the Securities Act of 1934.

Management anticipates that it will require an additional $30,000 over the next twelve months to cover

The condensed consolidated

financial statements contained in this report have been prepared assuming that the Company will continue as a going concern.

Company has cumulative net losses through December 31, 2017 of $5,063,716, as well as negative cash flows of $155 from operating

The Company's cash and cash equivalents balance as of December 31, 2017 is $2,836.

These factors raise substantial

doubt about the Company's ability to continue as a going concern.

While we will actively

seek to identify sources of liquidity, there are no assurances that such additional sources of liquidity can be obtained on terms

acceptable to us on a commercially reasonable basis, or at all.

These factors raise substantial doubt about our ability to continue

as a going concern.

Furthermore, our “going concern”

and lack of commercial operations may make it more difficult for

us to raise funds.

The consolidated

financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going

The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as

may be required and ultimately to attain profitability.

If the Company raises additional funds through the issuance of

equity, the percentage ownership of current shareholders could be reduced, and such securities might have rights, preferences

or privileges senior to its common stock.

Additional financing may not be available upon acceptable terms, or at all.

adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of

prospective business endeavors or opportunities, which could significantly and materially restrict its future plans for

developing its business and achieving commercial revenues.

If the Company is unable to obtain the necessary capital, the

1 unchanged sentence

Off-Balance Sheet Arrangements

no off-balance sheet arrangements that have or are reasonably

likely to have a current or future effect on our financial

condition, changes in financial condition, revenues or expenses,

results of operations, liquidity, capital expenditures or capital

resources that is material to stockholders.

We have no off-balance

sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in

financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is

material to stockholders.

Effects of Inflation

not believe that inflation has had a material impact on our

business, revenues or operating results during the periods

We do not believe that

inflation has had a material impact on our business, revenues or operating results during the periods presented.

Critical Accounting Policies and Estimates

significant accounting policies are more fully described in the

notes to our financial statements included herein for the three and

six months ended March 31, 2016.

Our significant accounting

policies are more fully described in the notes to our financial statements included herein for the three months ended December

Newly Issued Accounting Pronouncements

Note 1 to our financial statements included herein for the three

and six months ended March 31, 2016 for a discussion of Recently

Issued Accounting Pronouncements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

See Note 1 to our

financial statements included herein for the three months ended December 31, 2017 for a discussion of Recently Issued

Accounting Pronouncements.

and Qualitative Disclosures about Market Risk

Not applicable.

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