Retrieve Medical Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, September 30, 2021 2020 Assets Current assets: Cash $ 348 $ 408 Total Assets $ 348 $ 408 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities Accounts payable (including $122,376 and $88,020 due to related parties) $ 207,826 $ 162,532 Accrued liabilities 29,684 24,972 Convertible notes payable 20,000 20,000 Note payable 43,000 43,000 Total Liabilities 300,510 250,504 Stockholders’ deficit Preferred stock, $0.0001 par value, 25,000,000 authorized, none issued or outstanding - - Common stock, $0.0001 par value, 300,000,000 shares authorized, 78,363,567 shares issued and outstanding 7,836 7,836 Additional paid in capital 4,855,566 4,855,566 Accumulated deficit (5,163,564 ) (5,113,498 ) Total Stockholders’ Deficit (300,162 ) (250,096 ) Total Liabilities and Stockholders’ Deficit $ 348 $ 408 The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 3 PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended For the Six Months Ended March 31, March 31, 2021 2020 2021 2020 Operating expenses: General and administrative (including fees paid to related party of $22,848 and $0, and $27,578 and $0, for the three and six months ended March 31, 2021 and 2020, respectively) $ 43,243 $ 1,171 $ 48,215 $ 2,309 Total operating expenses 43,243 1,171 48,215 2,309 Operating loss (43,243 ) (1,171 ) (48,215 ) (2,309 ) Other expenses (income): Interest expense 2,498 2,356 4,880 4,738 Gain on forgiveness of debt (3,029 ) - (3,029 ) - Total other expenses, net (531 ) 2,356 1,851 4,738 Net loss $ (42,712 ) $ (3,527 ) $ (50,066 ) $ (7,047 ) Per share information: Weighted average shares outstanding - basic and diluted 78,363,567 78,363,567 78,363,567 78,363,567 Net loss per share - basic and diluted $ (0.00 ) $ 0.00 $ (0.00 ) $ (0.00 ) The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 4 PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021 AND 2020 (Unaudited) Common Stock Additional Paid Accumulated Shares Amount In Capital Deficit Total Balance, October 1, 2019 78,363,567 $ 7,836 $ 4,855,566 $ (5,098,487 ) $ (235,085 ) Net loss - - - (3,520 ) (3,520 ) Balance, December 31, 2019 78,363,567 7,836 4,855,566 (5,102,007 ) (238,605 ) Net loss - - - (3,527 ) (3,527 ) Balance, March 31, 2020 78,363,567 $ 7,836 $ 4,855,566 $ (5,105,534 ) $ (242,132 ) Balance, October 1, 2020 78,363,567 $ 7,836 $ 4,855,566 $ (5,113,498 ) $ (250,096 ) Net loss - - - (7,354 ) (7,354 ) Balance, December 31, 2020 78,363,567 7,836 4,855,566 (5,120,852 ) (257,450 ) Net loss - - - (42,712 ) (42,712 ) Balance, March 31, 2021 78,363,567 $ 7,836 $ 4,855,566 $ (5,163,564 ) $ (300,162 ) The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 5 PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020 (Unaudited) 2021 2020 Cash flows from operating activities: Net loss $ (50,066 ) $ (7,047 ) Adjustment to reconcile net loss to net cash used in operating activities: Gain on forgiveness of debt (3,029 ) - Change in operating assets and liabilities: Accounts payable 13,967 2,249 Accounts payable - related parties 34,356 - Accrued liabilities 4,712 4,739 Net cash used in operating activities (60 ) (59 ) Net change in cash (60 ) (59 ) Cash, beginning of period 408 527 Cash, end of period $ 348 $ 468 Supplemental disclosure of cash flow information Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements. 6 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. The Company is currently a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act). Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Peak Pharmaceuticals, Inc. and its wholly-owned 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 unaudited 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, 2020. 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. Basis of Consolidation The unaudited 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 unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in connection with the accompanying consolidated financial statements include the valuation allowances against net deferred tax assets and accounting for convertible debt. Loss Per Share We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share . 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 denominator. For the three and six months ended March 31, 2021 and 2020, any equivalents would have been anti-dilutive as we had net losses for the periods then ended. 7 As of March 31, 2021 and September 30, 2020, the Company had two convertible notes with principal and accrued interest balances totaling and $30,862 and $29,366, respectively. The note holders are entitled, at their option, to convert all or a part of their options 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. These common stock equivalents of approximately 275,551 and 2,470,003 shares as of March 31, 2021 and 2020, respectively, are not included in the calculation of diluted EPS as their effect would be anti-dilutive. As of March 31, 2021 and September 30, 2020, the Company had 3,291,000 in stock options outstanding which are exercisable at the holders’ option, with an exercise price of $0.0067, which are not included in the calculation of diluted EPS as their effect would be anti-dilutive. Recently Issued Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. 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. On August 5, 2020, the FASB issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40 , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU’s amendments are effective for public business entities that are not smaller reporting companies for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, 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 December 2019, the FASB issued ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes (Topic 740), (“ASU 2019-12”), which simplifies income tax accounting in various areas including, but not limited to, the accounting for hybrid tax regimes, tax implications related to business combinations, and interim period accounting for enacted changes in tax law, along with some codification improvements. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020. The Company has determined that the adoption of this guidance has no impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the guidance on the impairment of financial instruments. This update adds an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) . ASU 2019-10 changes the effective date of the credit loss standard (ASU 2016-13) to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. Further, the ASU clarifies that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company has determined that the adoption of this guidance has no impact on its consolidated financial statements. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The guidance is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of ASU 2018-13. The Company adopted ASI 2018-13 on October 1, 2020 and has determined that the adoption of this guidance had no impact on its consolidated financial statements. 8 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. The Company adopted ASI 2016-02 on October 1, 2019 and has determined that the adoption of this guidance had no impact on its consolidated financial statements. NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS As of March 31, 2021, the Company had an accumulated deficit of $5,163,564 and a working capital deficiency of $300,162. During the six months ended March 31, 2021, the Company incurred a net loss of $50,066 and used cash in operating activities of $60. As of March 31, 2021, the Company had cash of $348. 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 unaudited condensed 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 unaudited condensed consolidated financial statements do not necessarily represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 amounts payable to current and former officers and directors for services provided to the Company totaling $122,376 and $88,020, as of March 31, 2021 and September 30, 2020, respectively. These amounts include accounts payable to an entity controlled by our sole officer and director for financial services such entity is incurring on behalf of the Company totaling $47,499 and $13,143 as of March 31, 2021 and September 30, 2020, respectively. Total expense incurred related to this entity was $22,848 and $0 for the three months ended March 31, 2021 and 2020, and $27,578 and $0 for the six months ended March 31, 2021 and 2020, respectively, with no other related party expenses incurred. 9 NOTE 4 – CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE Convertible 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 and is unsecured. 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. As of March 31, 2021 and September 30, 2020, the total accrued interest owing under this note was $5,453 and $4,705, respectively. As of the date of this report, that date has not been extended, and the Company is accruing interest at the default interest rate of 15%. 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 and is unsecured. 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. As of March 31, 2021 and September 30, 2020, the total accrued interest owing under this note was $5,408 and $4,660 respectively. Subsequent to the six months ended March 31, 2021, on December 3, 2021, the Company repaid this loan and accrued interest in full. Notes Payable 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 and is unsecured. As of July 9, 2018, the loan was extended to July 10, 2019. As of March 31, 2021 and September 30, 2020, the total accrued interest owing under this note was $10,083 and $8,363, respectively. As of the date of this report, that date has not been extended, and the Company is accruing interest at the default interest rate of 15%. 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 unsecured, is due and payable in full on October 2, 2018, and it accrues interest at a rate of 12% per annum. As of the March 31, 2021 and September 30, 2020, the total accrued interest owing under this note was $8,379 and $6,883, respectively. Subsequent to the six months ended March 31, 2021, on December 3, 2021, the Company repaid this loan and accrued interest in full. NOTE 6 – OPTIONS No stock options were granted during the six months ended March 31, 2021 and 2020. 10 The following is a summary of outstanding stock options issued to employees and directors as of March 31, 2021 and September 30, 2020: Number of Options Exercise Price per Share Average Remaining Term in Years Outstanding March 31, 2021 and September 30, 2020 2,916,000 $ 0.0067 2.95 Exercisable, March 31, 2021 and September 30, 2020 2,916,000 $ 0.0067 2.95 The following is a summary of outstanding stock options issued to non-employees, excluding directors, as of March 31, 2021 and September 30, 2020: Number of Options Exercise Price per Share Average Remaining Term in Years Outstanding March 31, 2021 and September 30, 2020 375,000 $ 0.0067 2.54 Exercisable, March 31, 2021 and September 30, 2020 375,000 $ 0.0067 2.54 There was no equity-based compensation for the six months ended March 31, 2021 and 2020. NOTE 7 – SUBSEQUENT EVENTS Issuance of Loans Payable Subsequent to March 31, 2021, the Company received an aggregate of $275,000 related to the issuance of 14 notes payable to various noteholders, including an aggregate of $35,000 as a result of two notes payable issued to the Company’s Chief Executive Officer, a related party. The notes are unsecured, bear interest at 1.5% per annum, and mature on September 30, 2021. To date, the Company has made principal and accrued interest payment of $65,000 and $14,191, respectively. As of the date of this report, the original due date of such notes has not been extended and are in default. 11 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 December 19, 2022. 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, 2020, as filed on December 19, 2022, 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 History and Overview We were first incorporated in Nevada as Surf A Movie Solutions, Inc. on December 18, 2007 to engage in the business of the development sale and marketing of online video sales. We were not successful in our efforts and discontinued this line of business. Since that time and until August 8, 2014, we were a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act). On August 30, 2013, we changed our name to Frac Water Systems, Inc. and, on October 10, 2013, we decided to engage 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. Due to our research of the business opportunities, on December 31, 2013, we determined not to move forward with this line of business. In early March 2014, we decided to enter into the business of developing, manufacturing and marketing pharmaceutical level products containing phytocannabinnoids, 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 Corporation and, on March 24, 2014, changed our trading symbol on OTC Markets to “CTCO”. On December 23, 2014, we changed our name to Peak Pharmaceuticals, Inc. and our trading symbol changed to “PKPH” on February 5, 2015. In March 2014 we began operating as a bio-pharmaceutical and nutraceutical company seeking to develop, manufacture, market and sell safe, high quality, medicinal products based on extracts from hemp. Our primary initial focus was on exploitation of the exclusive license we received from Canna-Pet, LLC, a developer of ingestible health products for pets made from hemp. We had also taken initial steps related to development of over-the-counter, THC-free, hemp-based products for the human market for the prevention and alleviation of symptoms associated with inflammatory and auto-immune diseases. 12 On July 29, 2014, through our wholly-owned subsidiary, Peak BioPharma Corp., we entered into a License Agreement (the “License Agreement”) with Canna-Pet, LLC, (“Licensor”) a Washington limited liability corporation. They own 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”). This is used by the 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 gave 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. The License Agreement specified that during the term of the license, all intellectual property rights in and to the Licensed Intellectual Property remain 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 based on 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. Furthermore, based on advice from the Food and Drug Administration, as well as our regulatory counsel, we decided to revise our strategy and discontinue all efforts to develop and market hemp-based health products. We currently are pursuing to acquire or merge with an entity with significant operations in order to create a viable business model and value for our shareholders. Since October 2015 we have been a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act). All of our business operations are carried out through our wholly owned subsidiary, Peak BioPharma Corp., a Colorado corporation. Throughout this Report, unless otherwise noted or required by the context, references to “the Company,” “us,” “we,” “our,” and similar terms refer to Peak Pharmaceuticals, Inc. and our wholly owned subsidiary, Peak BioPharma Corp. We currently have authorized 325,000,000 shares of capital stock, consisting of (i) 300,000,000 shares of common stock, and (ii) 25,000,000 shares of “blank check” Preferred Stock. On August 15, 2012, our board of directors and stockholders owning a majority of our outstanding common shares, authorized a 50 for 1 forward stock split of our issued and outstanding common stock. The forward split became effective on September 27, 2012. Due to the forward split, each outstanding share was split into 50 shares. On March 11, 2014, our board of directors authorized a 1.5 for 1 forward stock split of our common stock in the form of a dividend. In connection therewith, our shareholders of record as of the close of business on March 28, 2014, received an additional 0.5 share of our common stock for each share of our issued and outstanding common stock held by them on such date. The forward stock split became effective on April 1, 2014. 13 Results of Operations Comparison of the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020 Revenue No revenue or cost of sales were generated for the three months ended March 31, 2021 or March 31, 2020. Operating Expenses The Company’s expenses for the three months ended March 31, 2021 and 2020, are summarized as follows: Three Months Ended March 31, 2021 2020 General and administrative (including $22,848 and $0 of fees paid to related party) $ 43,243 $ 1,171 Total operating expenses $ 43,243 $ 1,171 The increase in general and administrative expenses for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 of $42,072 is due primarily to an increase in accounting and audit fees. Other Expenses (Income) Three Months Ended March 31, 2021 2020 Interest Expense $ 2,498 $ 2,356 Gain on forgiveness of debt (3,029 ) - Total other expenses, net $ (531 ) $ 2,356 Interest expense increased for the six months ended March 31, 2021 from the comparative period of 2020 of $142 is due to accrued interest on the four notes payable issued during the years ended September 30, 2018 and 2017. The gain on forgiveness of debt of $3,029 was a result of a decrease of accounts payable as a result of vendor adjustments. Comparison of the Six Months Ended March 31, 2021 to the Six Months Ended March 31, 2020 Revenue No revenue or cost of sales were generated for the six months ended March 31, 2021 or March 31, 2020. Operating Expenses The Company’s expenses for the six months ended March 31, 2021 and 2020, are summarized as follows: Six Months Ended March 31, 2021 2020 General and administrative (including $27,578 and $0 of fees paid to related party) $ 48,215 $ 2,309 Total operating expenses $ 48,215 $ 2,309 The increase in general and administrative expenses for the six months ended March 31, 2021 compared to the six months ended March 31, 2020 of $45,906 is due primarily to an increase in accounting and audit fees. Other Expenses Six Months Ended March 31, 2021 2020 Interest Expense $ 4,880 $ 4,738 Gain on forgiveness of debt (3,029 ) - Total other expenses $ 1,851 $ 4,738 14 Interest expense increased for the six months ended March 31, 2021 from the comparative period of 2020 of $142 is due to accrued interest due to the increase in interest rate to 15% on the Company’s notes payable due to the default rate provisions. The gain on forgiveness of debt of $3,029 was a result of a decrease of accounts payable as a result of vendor adjustments. Liquidity and Capital Resources Working Capital The following table sets forth a summary of changes in working capital as of ended March 31, 2021 and September 30, 2020: As of March 31, 2021 September 30, 2020 Current Assets $ 348 $ 408 Current Liabilities 300,510 250,504 Working capital $ (300,162 ) $ (250,096 ) The decrease in current assets of $60 is mainly due to a decrease in cash from the payment of outstanding bills during the six months ended March 31, 2021. The increase in current liabilities of $50,006 is primarily due to an increase in accounts payable and accrued liabilities during the six months ended March 31, 2021. Cash Flows The following table sets forth a summary of changes in cash flows for the six months ended March 31, 2021 and 2020: Six months Ended March 31, 2021 2020 Net cash used in operating activities $ (60 ) $ (59 ) Change in cash $ (60 ) $ (59 ) As of March 31, 2021, our cash balance was $348. 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 six months ended March 31, 2021 of $60 was mainly due to the net loss that was incurred during the period. We may need to evaluate raising additional capital through the sale of equity securities, through an offering of debt securities or through borrowing from individuals. There can be no assurance that such a plan will be successful. Cash Requirements As of the date of this filing, we do not have sufficient cash on hand to cover our operating expenses through the next fiscal year. As of December 16, 2022, we had cash of approximately $97,000. During the year ended September 30, 2021, the Company received an aggregate of $275,000 related to the issuance of 14 notes payable to various noteholders, including an aggregate of $35,000 as a result of two notes payable issued to the Company’s Chief Executive Officer, a related party. The notes are unsecured, bear interest at 1.5% per annum, and mature on September 30, 2021. There can be no assurance, however, that additional financing will be available or, if it is available, that we will be able to structure such financing on terms acceptable to us and that it will be sufficient to fund our cash requirements until we can reach a level of profitable operations and positive cash flows. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek additional financing. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations. 15 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 unaudited condensed financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of unaudited condensed financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting periods. We regularly evaluate the accounting policies and estimates that we use to prepare our unaudited condensed financial statements. A complete summary of these policies is included in the notes to our unaudited condensed financial statements, along with the related notes contained in our Annual Report on Form 10-K as filed with the Securities & Exchange Commission. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. New accounting standards For discussion of Recently Issued Accounting Pronouncements , see Note 1 to the unaudited condensed financial statements, “ Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies ” in Part I, Item 1, of this Quarterly Report on Form 10-Q. Item 3. Quantitative and Qualitative Disclosures about Market Risk Not applicable.