Retrieve Medical Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2018 (Unaudited) June 30, September 30, 2018 2017 (Audited) Assets Current assets: Cash $ 17,359 $ 2,991 Total Assets $ 17,359 $ 2,991 Liabilities and stockholders' deficit Liabilities Accounts payable $ 149,742 $ 163,075 Accrued liabilities 13,727 7,601 Convertible notes payable 25,000 25,000 Note payable 43,000 Total Liabilities 231,469 195,676 Stockholders’ Deficit 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 June 30, 2018 and September 30, 2017 7,836 7,836 Additional paid in capital 4,855,566 4,855,566 Accumulated deficit (5,077,511) (5,056,087) Total Stockholders’ Deficit (214,109) (192,685) Total Liabilities and Stockholders’ Deficit $ 17,359 $ 2,991 See the accompanying notes to the condensed consolidated financial statements The accompanying footnotes are an integral part of these condensed consolidated financial statements. 3 PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2018 AND 2017 (Unaudited) For the Three Months Ended For the Nine Months Ended June 30, June 30, 2018 2017 2018 2017 Operating expenses: General and administrative $ 2,998 $ 14,037 $ 18,208 $ 21,350 Interest expense 1,286 598 3,094 634 Total expenses 4,284 14,635 21,302 21,984 Operating income (loss) (4,284) (14,635) (21,302) (21,984) Change in fair value of convertible debt - - - (5,000) Net loss $ (4,284) $ (14,635) $ (21,302) $ (26,984) Per share information: Basic weighted average shares outstanding 78,363,562 78,363,562 78,363,562 78,363,562 Diluted weighted average shares outstanding 78,363,562 78,363,562 78,363,562 78,363,562 Net loss per share - basic and diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00 See the accompanying notes to the condensed consolidated financial statements The accompanying footnotes are an integral part of these condensed consolidated financial statements. 4 PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2018 AND 2017 (Unaudited) For the Nine Months Ended June 30, 2018 2017 Cash flows from operating activities: Net loss $ (21,302) $ (26,984) Adjustment to reconcile net loss to net cash used in operating activities: Change in fair value of convertible debt - 5,000 Change in operating assets and liabilities: Prepaids - (6,000) Deposits - - Accounts payable (13,456) 36,984 Disposal of discontinued operations - (27,000) Accrued liabilities 6,126 - Net cash used in operating activities (28,632) (18,000) Cash flows from financing activities: Proceeds from issuance of notes payable 43,000 20,000 Net cash provided by financing activities 43,000 20,000 Net change in cash 14,368 2,000 Cash, beginning of period 2,991 1,304 Cash, end of period $ 17,359 $ 3,303 Supplemental disclosure of cash flow information Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - See the accompanying notes to the condensed consolidated financial statements The accompanying footnotes are an integral part of these condensed consolidated financial statements. 5 PEAK PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. 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” refer to Peak Pharmaceuticals, Inc. 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. 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 not misleading have been included. 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. 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 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. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. 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. 6 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 flows. 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 has determined that the adoption of this guidance has no impact on its consolidated financial statements. 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 has determined that the adoption of this guidance has no impact on its consolidated financial statements. 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 has determined that the adoption of this guidance has no impact on its consolidated financial statements. NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS As of June 30, 2018, the Company had an accumulated deficit of $5,077,511 and a working capital deficiency of $214,110. During the nine months ended June 30, 2018, the Company used cash in operating activities of $28,632. As of June 30, 2018, the Company had cash of $17,359. 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. The carrying 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 uncertainty. 7 NOTE 3 – RELATED PARTY TRANSACTIONS 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. Included in accounts payable at June 30, 2018 are amounts totaling $47,877 (December 31, 2017 $47,877) owed to related parties. NOTE 4 –NOTES PAYABLE Loan with Trius Holdings Limited 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. Trius 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. On May 11, 2018, the agreement had been amended to extend the maturing date of the note from March 21, 2018 to March 21, 2019. 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. On May 11, 2018, the agreement had been amended to extend the maturing date of the note from March 30, 2018 to March 30, 2019. Loan with Mediapark Investments Limited On January 10, 2018, the Company entered into an agreement with Mediapark Investments Limited (“Mediapark”.) Pursuant to the terms of the agreement, Mediapark acquired a 12% promissory note with an aggregate face value of $23,000. The note matures in 180 days on July 10, 2018. As of July 9, 2018, the loan was extended to July 10, 2019. Loan with Individual On April 2, 2018, the Company entered into an agreement with an individual. Pursuant to the terms of the agreement, we received a promissory note in the amount of $20,000. The note is due and payable in full on October 2, 2018 and it accrues interest at a rate of 12% per annum. Total accrued interest on the above notes was $4,336 as of June 30, 2018 (March 31, 2018 $3,049) and is reflected in accrued liabilities on the accompanying balance sheet. NOTE 5 – STOCKHOLDERS’ EQUITY We had no preferred or common stock transactions during the nine-month period ended June 30, 2018 and 2017. 8 NOTE 6 – OPTIONS No stock options were granted during the quarters ended June 30, 2018 and 2017. The following is a summary of outstanding stock options issued to employees and directors as of June 30, 2018: Number of Options Exercise Price per Share Average Remaining Term in Years Outstanding September 30, 2017 and June 30, 2018 2,916,000 $0.0067 5.70 Exercisable 2,916,000 $0.0067 5.70 The following is a summary of outstanding stock options issued to non-employees, excluding directors, as of June 30, 2018: Number of Options Exercise Price per Share Average Remaining Term in Years Outstanding September 30, 2017 and June 30, 2018 375,000 $0.0067 5.30 Exercisable 375,000 $0.0067 5.30 There was no equity-based compensation for the nine months ended June 30, 2018 and 2017. 9 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This 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 12, 2018. 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 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-K for 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,” 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 dollars. Corporate Overview We were 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. 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” and 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 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 Property. The License Agreement provided us with an immediate revenue source and access to Licensor’s customer base. During the term of the license, all intellectual property rights in and to the Licensed Intellectual Property remained the exclusive property of Licensor. 10 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 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 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: 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. 11 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 September 30, 2015 Inventory $ 45,436 $ 41,705 Prepaid Expenses 8,821 - Deposits 8,179 8,678 Total assets $ 62,436 $ 50,383 Accounts payable 103,548 124,396 Royalties payable 39,506 39,506 Accrued liabilities 285 15,341 Total liabilities 143,339 179,243 Net assets sold $ 80,903 $ 128,860 Our common stock is currently listed on the OTC Markets, QB Tier, under the symbol “PKPH”. Recent Corporate Developments Since the commencement of the year through June 30, 2018, we received two promissory notes. One promissory note was for $23,000 on January 10, 2018 and the other was for $20,000 on April 2, 2018. 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 $0.01. Loan with Mediapark Investments Limited On January 10, 2018, we entered into an agreement with Mediapark Investments Limited. Pursuant to the terms of the agreement, the investor acquired a 12% promissory note with an aggregate face value of $23,000. The note matures in 180 days, on July 10, 2018. Loan with Individual On April 2, 2018, the Company entered into an agreement with an individual. Pursuant to the terms of the agreement, we received a promissory note in the amount of $20,000. The note is due and payable in full on October 2, 2018 and it accrues interest at a rate of 12% per annum. Total accrued interest on the above notes was $4,336 as of June 30, 2018 (March 31, 2018 $3,049) and is reflected in accrued liabilities on the accompanying balance sheet. 12 Results of Operations Comparison of the Three Months Ended June 30, 2018 to the Three Months Ended June 30, 2017 Revenue No revenue or cost of sales were generated for the three months ended June 30, 2018 or June 30, 2017 due to the overall reduction in operations of the business. Operating Expenses Our expenses for the three months ended June 30, 2018 are summarized as follows in comparison to our expenses for the three months ended June 30, 2017: Three Months Ended June 30, 2018 2017 General and administrative $ 2,998 $ 14,037 Depreciation and amortization - - Stock based compensation - - Total operating expenses $ 2,998 $ 14,037 General and administrative expense decreased by $11,039 for the three months ended June 30, 2018 from the comparative period of 2017 due to the scaling down of business. Depreciation and amortization expense, as well as stock-based compensation were $0 for the three months ended June 30, 2018 and June 30, 2017. Comparison of the Nine Months Ended June 30, 2018 to the Nine Months Ended June 30, 2017 Revenue No revenue or cost of sales were generated for the nine months ended June 30, 2018 or for the nine months ended June 30, 2017. Operating Expenses Our expenses for the nine months ended June 30, 2018 are summarized as follows in comparison to our expenses for the nine months ended June 30, 2017: Nine Months Ended June 30, 2018 2017 General and administrative $ 18,208 $ 21,350 Depreciation and amortization - - Stock based compensation - - Total operating expenses $ 18,208 $ 21,350 General and administrative expense decreased by $3,142 for the nine months ended June 30, 2018 from the comparative period of 2017, due to an overall decrease in business operations. Depreciation and amortization expense as well as stock-based compensation were $0. 13 Other Expenses Nine Months ended June 30, 2018 2017 Interest Expense $ 3,094 $ 634 Change in Fair Value of Convertible Debt - 5,000 Total other expenses $ 3,094 $ 5,634 Interest expense increased from $634 to $3,094 for the nine months ended June 30, 2018 from the comparative period of 2017 due to additional accrued interest on the notes. Liquidity and Financial Condition Working Capital Deficiency June 30, 2018 June 30, 2017 Current assets $ 17,359 $ 2,991 Current liabilities 231,469 195,676 Working capital deficiency $ (214,110) $ (192,685) The increase in current assets is mainly due to the receipt of a promissory note during the nine months ended June 30, 2018. The increase in current liabilities is due to transfer agent, filing and accounting fees incurred for the nine-month period ending June 30, 2018. Cash Flows Nine Months Ended June 30, 2018 2017 Net income (loss) $ (21,302) $ (26,984) Net cash provided (used) in operating activities (28,632) (18,000) Net cash used in investing activities - - Net cash provided by financing activities 43,000 20,000 Increase (decrease) in cash $ 17,359 $ 3,303 As of June 30, 2018, our cash balance was $17,359. 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 operations for the nine months ended June 30, 2018 was $28,632 mainly due a decrease in accounts payable. 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 outlined 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. There can 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 such costs. 14 Going Concern The condensed consolidated financial statements contained in this report have been prepared assuming that the Company will continue as a going concern. The Company has cumulative net losses through June 30, 2018 of $5,077,511, as well as negative cash flows of $28,632 from operating activities. The Company's cash and cash equivalents balance as of June 30, 2018 is $17,359. 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 concern. 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. 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 its business and achieving commercial revenues. If the Company is unable to obtain the necessary capital, the Company may have to cease operations. Off-Balance Sheet Arrangements 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 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 Our significant accounting policies are more fully described in the notes to our financial statements included herein for the nine months ended June 30, 2018. Newly Issued Accounting Pronouncements See Note 1 to our financial statements included herein for the nine months ended June 30, 2018 for a discussion of Recently Issued Accounting Pronouncements. Item 3. Quantitative and Qualitative Disclosures about Market Risk Not applicable.