Retrieve Medical Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS PEAK PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, September 30, 2022 2022 Assets Current assets: Cash $ 96,720 $ 127,599 Prepaid expenses 5,760 2,750 Total Assets $ 102,480 $ 130,349 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities Accounts payable (including $ 199,693 and $ 153,681 due to related parties) $ 307,146 $ 224,548 Accrued liabilities 125,730 123,955 Convertible notes payable 10,000 10,000 Notes payable 228,000 228,000 Notes payable - related party 35,000 35,000 Total Liabilities 705,876 621,503 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 ( 5,466,798 ) ( 5,354,556 ) Total Stockholders’ Deficit ( 603,396 ) ( 491,154 ) Total Liabilities and Stockholders’ Deficit $ 102,480 $ 130,349 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 December 31, 2022 2021 Operating expenses: General and administrative (including expenses to related party of $ 46,012 and $ 4,770 ) $ 110,412 $ 52,063 Total operating expenses 110,412 52,063 Operating loss ( 110,412 ) ( 52,063 ) Other (expense) income: Interest expense (including related party interest of $ 882 and $ 132 ) ( 1,830 ) ( 8,831 ) Gain on forgiveness of debt - 1,539 Total other expenses, net ( 1,830 ) ( 7,292 ) Net loss $ ( 112,242 ) $ ( 59,355 ) Per share information: Weighted average shares outstanding - basic and diluted 78,363,567 78,363,567 Net loss per share - basic and diluted $ ( 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 MONTHS ENDED DECEMBER 31, 2022 AND 2021 (Unaudited) Common Stock Additional Paid Accumulated Shares Amount In Capital Deficit Total Balance, October 1, 2021 78,363,567 $ 7,836 $ 4,855,566 $ ( 5,189,587 ) $ ( 326,185 ) Net loss - - - ( 59,355 ) ( 59,355 ) Balance, December 31, 2021 78,363,567 $ 7,836 $ 4,855,566 $ ( 5,248,942 ) $ ( 385,540 ) Balance, October 1, 2022 78,363,567 $ 7,836 $ 4,855,566 $ ( 5,354,556 ) $ ( 491,154 ) Net loss - - - ( 112,242 ) ( 112,242 ) Balance, December 31, 2022 78,363,567 $ 7,836 $ 4,855,566 $ ( 5,466,798 ) $ ( 603,396 ) 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 THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021 (Unaudited) 2022 2021 Cash flows from operating activities: Net loss $ ( 112,242 ) $ ( 59,355 ) Adjustment to reconcile net loss to net cash used in operating activities: Gain on debt forgiveness - ( 1,539 ) Change in operating assets and liabilities: Prepaid expenses ( 3,010 ) ( 5,500 ) Accounts payable 36,586 ( 6,216 ) Accounts payable - related parties 46,012 ( 9,090 ) Accrued liabilities 1,775 38,102 Net cash used in operating activities ( 30,879 ) ( 43,598 ) Cash flows used in financing activities: Payments on notes payable - ( 20,000 ) Payment on convertible note payable - ( 10,000 ) Net cash flows used in financing activities: - ( 30,000 ) Net change in cash ( 30,879 ) ( 73,598 ) Cash, beginning of period 127,599 261,152 Cash, end of period $ 96,720 $ 187,554 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, 2022. 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 months ended December 31, 2022 and 2021, any equivalents would have been anti-dilutive as we had net losses for the periods then ended. 7 As of December 31, 2022, the Company had one convertible note with principal and accrued interest totaling $18,067. The note holders are entitled, at their option, to convert all or a part of their principal and accrued interest 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 163,655 and 271,936 shares as of December 31, 2022 and 2021, respectively, are not included in the calculation of diluted EPS as their effect would be anti-dilutive. As of December 31, 2022 and September 30, 2022, 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 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 There were no recently adopted accounting pronouncements had a material effect on the Company’s financial statements. 8 NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS As of December 31, 2022, the Company had an accumulated deficit of $ 5,466,798 and a working capital deficiency of $ 603,396 . During the three months ended December 31, 2022, the Company incurred a net loss of $ 112,242 and used cash in operating activities of $ 30,879 . As of December 31, 2022, the Company had cash of $ 96,720 . 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 $ 199,693 and $ 153,681 , as of December 31, 2022 and September 30, 2022, 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 $ 124,816 and $ 78,804 as of December 31, 2022 and September 30, 2022, respectively. Total expense incurred related to this entity was $ 46,012 and $ 4,770 for the three months ended December 31, 2022 and 2021, respectively, with no other related party expenses incurred. See Note 4 for certain related party debt. 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 December 31, 2022 and September 30, 2022, the total accrued interest owing under this note was $ 8,067 and $ 7,689 , 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%. 9 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 December 31, 2022 and September 30, 2022, the total accrued interest owing under this note was $ 16,152 and $ 15,282 , 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%. Loans with Officer On June 14, 2021, the Company entered into an agreement with our sole officer and director. Pursuant to the terms of the agreement, we received a promissory note in the amount of $ 5,000 . The note is unsecured, is due and payable in full on December 31, 2021, and accrues interest at a rate of 1.5% per annum. As of December 31, 2022 and September 30, 2022, the total accrued interest owing under this note was $ 541 and $ 415 , respectively. As of the date of this report, the due date has not been extended and the Company is accruing interest at the default interest rate of 10%. On September 28, 2021, the Company entered into a note payable with our sole officer and director for $30,000. The note is unsecured, is due and payable in full on December 31, 2021 and accrues interest at a rate of 1.5% per annum. As of the December 31, 2022 and September 30, 2022, the total accrued interest owing under this note was $ 3,116 and $ 2,360 , 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 10%. Other Notes Payable During the twelve months ended September 30, 2021, the Company entered into twelve notes payable totaling $ 240,000 . The notes are unsecured, are due and payable in full on September 30, 2021, and accrue interest at a rate of 1.5% per annum. As of the December 31, 2022 and September 30, 2022, the total accrued interest owing under these notes was $ 25,911 and $ 23,250 . In June 2022, the Company repaid one of the notes with a principal balance of $35,000. As of the date of this report, the due dates have not been extended, and the Company is accruing interest at the default interest rate of 10%. NOTE 5 – OPTIONS No stock options were granted during the three months ended December 31, 2022 and 2021. The following is a summary of outstanding stock options issued to employees and directors as of December 31, 2022 and September 30, 2022: Schedule of share-based compensation, stock options, activity Number of Options Exercise Price per Share Average Remaining Term in Years Outstanding December 31, 2022 and September 30, 2022 2,916,000 $ 0.0067 1.20 Exercisable, December 31, 2022 and September 30, 2022 2,916,000 $ 0.0067 1.20 10 The following is a summary of outstanding stock options issued to non-employees, excluding directors, as of December 31, 2022 and September 30, 2022: Schedule of share-based compensation, stock options, activity Number of Options Exercise Price per Share Average Remaining Term in Years Outstanding December 31, 2022 and September 30, 2022 375,000 $ 0.0067 0.79 Exercisable, December 31, 2022 and September 30, 2022 375,000 $ 0.0067 0.79 There was no equity-based compensation for the three months ended December 31, 2022 and 2021. NOTE 6 – SUBSEQUENT EVENTS On January 23, 2023, the Company executed a Settlement Agreement and Mutual Release with four parties for outstanding accounts payable, resulting in a gain on forgiveness of debt of approximately $45,490, including $24,340 from related parties. 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, 2022, 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. 12 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. 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 December 31, 2022 to the Three Months Ended December 31, 2021 Revenue No revenue or cost of sales were generated for the three months ended December 31, 2022 and 2021. Operating Expenses The Company’s expenses for the three months ended December 31, 2022 and 2021, are summarized as follows: Three Months Ended December 31, 2022 2021 General and administrative (including $46,012 and $4,770 of fees paid to related party) $ 110,412 $ 52,063 Total operating expenses $ 110,412 $ 52,063 The increase in general and administrative expenses for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 of $58,349 is due primarily to an increase in accounting fees. Other Expenses Three Months Ended December 31, 2022 2021 Interest Expense (including related party interest of $882 and $132) $ 1,830 $ 8,831 Gain on forgiveness of debt - (1,539 ) Total other expenses $ 1,830 $ 7,292 Interest expense decreased $7,001 for the three months ended December 31, 2022 from the comparative period of 2021 primarily from accrued interest on the Company’s notes payable which decreased as a result of principal payments of $35,000 in June 2022. The gain on forgiveness of debt of $1,539 for the three months ended December 31, 2021 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 December 31, 2022 and September 30, 2022: As of December 31, 2022 September 30, 2022 Current Assets $ 102,480 $ 130,349 Current Liabilities 705,876 621,503 Working capital $ (603,396 ) $ (491,154 ) The decrease in current assets of $27,869 is mainly due to a decrease in cash from the payment of outstanding vendor bills during the three months ended December 31, 2022. The increase in current liabilities of $84,373 is primarily due to an increase in accounts payable during the three months ended December 31, 2022, for additional professional fees. 14 Cash Flows The following table sets forth a summary of changes in cash flows for the three months ended December 31, 2022 and 2021: Three Months Ended December 31, 2022 2021 Net cash used in operating activities $ (30,879 ) $ (43,598 ) Net cash used in financing activities - (30,000 ) Change in cash $ (30,879 ) $ (73,598 ) As of December 31, 2022, our cash balance was $96,720. 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 three months ended December 31, 2022 and 2021 of $30,879 and $43,598, respectively, was mainly due to the net losses incurred during the period. Net cash used in financing activities for the three months ended December 31, 2021 of $30,000 was due to payment on notes payable 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 31, 2022, we had cash and cash equivalents of approximately $97,000. Our liquidity needs have been satisfied primarily from the issuance of notes payable. The notes payable are unsecured, matured on September 30, 2021, have not been extended, and are currently in default. 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. 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. 15 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.