What changed in this filing

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Item 1. Financial Statements

2017-09-13 compared with 2017-09-13 · 278 added, 400 removed, 459 unchanged (60% of the section changed)

Consolidated Balance Sheets as of March 31, 2017 (unaudited) and

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

September 30, 2016

Consolidated Statements of Operations for the Three and Six Months

Ended March 31, 2017 and 2016 (unaudited)

Consolidated Statements of Cash Flows for the Six Months Ended

March 31, 2017 and 2016 (unaudited)

Consolidated Statements of Operations for the Three Months Ended

December 31, 2016 and 2015 (unaudited)

Consolidated Statements of Cash Flows for the Three Months Ended

December 31, 2016 and 2015 (unaudited)

to Condensed Consolidated Financial Statements

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$ 1,304  

     Total

current assets

1 unchanged sentence

$ 1,304  

and stockholders' deficit

6 unchanged sentences

47,877  

   Convertible

notes payable

25,000  

   Accrued

1 unchanged sentence

12,360  

     Total

current liabilities

6 unchanged sentences

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

shares issued and outstanding, as of March 31, 2017 and September

shares issued and outstanding, as of December 31, 2016 and

September 30, 2015

paid in capital

10 unchanged sentences

Three Months Ended

Six Months Ended

December 31,  

expenses (income):

and administrative

1 unchanged sentence

$ 101,659  

$ 7,313  

$ 175,996  

and amortization

15,628  

18,974  

based compensation

operating expenses

income (loss)

280,053  

1,101,461  

in fair value of convertible debt

other expenses

(loss) from continuing operations

1,486,519  

operating expenses

385,058  

from continuing operations

from operations of discontinued Canna-Pet component

71,099  

income (loss)

$ 1,490,125  

$ 1,176,167  

share information:

   Weighted

average shares outstanding

78,363,562  

   Basic

weighted average shares outstanding

78,363,562  

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78,363,562  

81,261,519  

   Net

income (loss) per share - basic and diluted

$ 0.02  

$ 0.01  

loss per share - basic and diluted

   Net

income (loss) per share - basic and diluted

$ 0.00  

loss per share - basic and diluted

$ 0.00  

The accompanying

footnotes are an integral part of these condensed consolidated

financial statements.

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

2 unchanged sentences

income (loss)

$ 1,176,166  

Adjustment to reconcile net loss to net cash used in operating

1 unchanged sentence

based compensation

280,053  

   Other

general and administration

50,132  

   Depreciation

and amortization

18,245  

   Change

in fair value of convertible debt

in operating assets and liabilities:

   Prepaids

   Accounts

payable and accrued liabilities

35,116  

   Accounts

payable - related parties

24,584  

   Disposal

of discontinued operations

cash used in operating activities

flows from financing activities:

from issuance of convertible notes payable

20,000  

cash provided by financing activities

20,000  

change in cash

19,791  

beginning of period

13 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company was incorporated in Nevada on December 18, 2007.

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

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

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

Pharmaceuticals, Inc.

7 unchanged sentences

operations of the Company.

this report, the terms “our,”

Throughout this report, the terms “our,”

“we,”

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and the “Company”

refer to Peak

Pharmaceuticals, Inc.

and its subsidiary, Peak BioPharma

refer to Peak Pharmaceuticals, Inc.

and its subsidiary, Peak

BioPharma Corp .

Basis of Presentation

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

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, 2016.

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.

The accompanying unaudited condensed consolidated financial

statements of the Company have been prepared in accordance with

generally accepted accounting principles (“GAAP”) for

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

Regulation S-X.

Accordingly, certain information and footnote

disclosures normally included in financial statements prepared in

accordance with GAAP have been condensed or omitted.

condensed consolidated financial statements should be read in

conjunction with the financial statements and notes thereto

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

September 30, 2016.

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

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.

The condensed consolidated financial statements include the

financial statements of the Company and our wholly owned subsidiary

Peak BioPharma Corp.

All inter-company balances and transactions

among the companies have been eliminated upon

consolidation.

Use of Estimates

preparation of financial statements in accordance with GAAP

The preparation of financial statements in accordance with GAAP

requires management to make estimates and assumptions that affect

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Financial Instruments

financial instruments consist of cash, convertible notes payable,

and accounts payable.

The carrying values of these instruments

approximate fair value due to the short-term maturities of these

Our financial instruments consist of cash, and accounts payable.

The carrying values of these instruments approximate fair value due

to the short-term maturities of these instruments.

Fair Value Measurements

Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC)”

Topic 820, Fair Value Measurements and Disclosures

("ASC 820"), provides a comprehensive framework for measuring fair

value and expands disclosures which are required about fair value

measurements.

Specifically, ASC 820 sets forth a definition of fair

value and establishes a hierarchy prioritizing the inputs to

valuation techniques, giving the highest priority to quoted prices

in active markets for identical assets and liabilities and the

lowest priority to unobservable value inputs.

ASC 820 defines the

hierarchy as follows:

Quoted prices are available in active markets for identical

assets or liabilities as of the reported date.

The types of assets

and liabilities included in Level 1 are highly liquid and actively

traded instruments with quoted prices, such as equities listed on

the New York Stock Exchange.

Pricing inputs are other than quoted prices in active

markets, but are either directly or indirectly observable as of the

reported date.

The types of assets and liabilities in Level 2 are

typically either comparable to actively traded securities or

Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC)”

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

for measuring fair value and expands disclosures which are required

about fair value measurements.

Specifically, ASC 820 sets forth a

definition of fair value and establishes a hierarchy prioritizing

the inputs to valuation techniques, giving the highest priority to

quoted prices in active markets for identical assets and

liabilities and the lowest priority to unobservable value inputs.

ASC 820 defines the hierarchy as follows:

Level 1 –

Quoted prices are available in active markets for

identical assets or liabilities as of the reported date.

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

actively traded instruments with quoted prices, such as equities

listed on the New York Stock Exchange.

Level 2 –

Pricing inputs are other than quoted prices in

active markets, but are either directly or indirectly observable as

of the reported date.

The types of assets and liabilities in Level

2 are typically either comparable to actively traded securities or

contracts, or priced with models using highly observable

Significant inputs to pricing that are unobservable as of

the reporting date.

The types of assets and liabilities included in

Level 3 are those with inputs requiring significant management

judgment or estimation, such as complex and subjective models and

forecasts used to determine the fair value of financial

Level 3 –

Significant inputs to pricing that are unobservable

as of the reporting date.

The types of assets and liabilities

included in Level 3 are those with inputs requiring significant

management judgment or estimation, such as complex and subjective

models and forecasts used to determine the fair value of financial

transmission rights.

Long-lived Assets

periodic basis, management assesses whether there are any

On a periodic basis, management assesses whether there are any

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

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Loss Per Share

calculate net loss per share in accordance with ASC Topic 260,

Earnings per Share .

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

For the three and six months ended March 31, 2016, any

equivalents would have been anti-dilutive as we had losses for the

periods then ended.

We calculate net loss per share in accordance with ASC Topic

260, Earnings per

Basic net loss per share

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

shares of common stock outstanding for the period, and diluted

earnings per share is computed by including common stock

equivalents outstanding for the period in the denominator.

December 31, 2016 and 2015, any equivalents would have been

anti-dilutive as we had losses for the periods then

Recent Pronouncements

time to time, new accounting pronouncements are issued that we

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

adopt as of the specified effective date.

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have an impact on our results of operations and financial

Update 2014-09, Revenue from

Contracts with Customers (Topic 606) issued May 28, 2014 by

the FASB and the IASB converged guidance on recognizing revenue in

contracts with customers on an effective date after December 31,

2017 will be evaluated as to impact and implemented

Update 2014-15, Presentation of

Financial Statements-Going Concern (Sub Topic 205-40) issued

August 27, 2014 by FASB defines management's responsibility to

evaluate whether there is a substantial doubt about an

organizations ability to continue as a going concern.

additional disclosure required is effective after December 31, 2015

and will be evaluated as to impact and implemented

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

the Presentation of Debt Issuance Cost .

requires an entity to present debt issuance costs in the balance

sheet as a direct reduction from the carrying amount of the debt

liability, consistent with debt discounts, rather than as an asset.

ASU Update 2014-09, Revenue from Contracts with

Customers (Topic 606) issued

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

recognizing revenue in contracts with customers on an effective

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

implemented accordingly.

ASU Update 2014-15, Presentation of Financial

Statements-Going Concern (Sub

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

management’s responsibility to evaluate whether there is a

substantial doubt about an organizations ability to continue as a

going concern.

The additional disclosure required is effective

after December 31, 2015 and will be evaluated as to impact and

implemented accordingly.

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

Simplifying the Presentation of Debt Issuance

The guidance requires an

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

direct reduction from the carrying amount of the debt liability,

consistent with debt discounts, rather than as an asset.

Amortization of debt issuance costs will continue to be reported as

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it has not had a material impact on our Consolidated Financial

2015, the FASB issued ASU 2015-11, Inventory , which simplifies the

measurement principle of inventories valued under the First-In,

First-Out (“FIFO”) or weighted average methods from the

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

ASU 2015-11 is effective for reporting periods beginning

after December 15, 2016 including interim periods within those

annual periods.

We do not expect the standard to have a material

impact on our Consolidated Financial Statements.

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

Taxes , which requires that deferred tax assets and

liabilities be classified as noncurrent on the consolidated balance

ASU 2015-17 is effective for annual periods beginning after

December 15, 2016, including interim periods within those annual

Early adoption is permitted as of the beginning of an

interim or annual reporting period.

Upon adoption, ASU 2015-17 may

be applied either prospectively or retrospectively.

expect the adoption of this guidance to have a material impact on

our Consolidated Financial Statements.

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

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.

We do not expect the adoption of this guidance to

have a material impact on our Consolidated Financial

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

inventories valued under the First-In, First-Out

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

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

2015-11 is effective for reporting periods beginning after December

15, 2016 including interim periods within those annual periods.

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

Consolidated Financial Statements.

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

of Deferred Taxes , which

requires that deferred tax assets and liabilities be classified as

noncurrent on the consolidated balance sheet.

ASU 2015-17 is

effective for annual periods beginning after December 15, 2016,

including interim periods within those annual periods.

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

reporting period.

Upon adoption, ASU 2015-17 may be applied either

prospectively or retrospectively.

We do not expect the adoption of

this guidance to have a material impact on our Consolidated

Financial Statements.

In February 2016, the FASB issued ASU No.

Leases , to improve financial reporting about leasing

transactions.

This ASU will require organizations that lease assets

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

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

of more than twelve months.

A lease liability is a lessee’s

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

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

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

for the lease term.

The amendments in this ASU simplify the

accounting for sale and leaseback transactions primarily because

lessees must recognize lease assets and lease liabilities.

leaves the accounting for the organizations that own the assets

leased to the lessee (“lessor”) largely unchanged

except for targeted improvements to align it with the lessee

accounting model and Topic 606, Revenue from Contracts with

We do not expect the adoption of this guidance to have a

material impact on our Consolidated Financial

Reclassifications

Certain amounts from prior periods have been reclassified for

consistency with the presentation of the three-month period ended

December 31, 2016.

These reclassifications had no effect on the

reported results of operations.

NOTE 2 –

GOING CONCERN AND MANAGEMENT’S LIQUIDITY

Financial statements prepared in conformity with GAAP contemplate a

statements prepared in conformity with GAAP contemplate a

company’s continuation as a going concern.

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net losses since inception and have an accumulated deficit of

$5,017,210 as of March 31, 2017 This condition raises substantial

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

the expenses of our operations have been significantly reduced, we

need to still evaluate raising additional capital through the sale

of equity securities, through an offering of debt securities or

through borrowings from financial institutions or individuals.

$5,006,743 as of December 31, 2016.

This condition raises

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

Although the expenses of our operations have been significantly

reduced, we need to still evaluate raising additional capital

through the sale of equity securities, through an offering of debt

securities or through borrowings from financial institutions or

There can be no assurance that such a plan will be

the accompanying 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

The carrying amounts of assets and liabilities

presented in the condensed consolidated financial statements do not

necessarily represent realizable or settlement values.

condensed consolidated financial statements do not include any

adjustments that might result from the outcome of this

Accordingly, the accompanying condensed consolidated financial

statements have been prepared in conformity with U.S.

contemplates continuation of the Company as a going concern and the

realization of assets and the satisfaction of liabilities in the

normal course of business.

The carrying amounts of assets and

liabilities presented in the condensed consolidated financial

statements do not necessarily represent realizable or settlement

The condensed consolidated financial statements do not

include any adjustments that might result from the outcome of this

NOTE 3 –

RELATED PARTY TRANSACTIONS

which can be corporations or individuals, are considered to be

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

the other party or exercise significant influence over the other

party in making financial and operating decisions.

Companies are

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

or common significant influence.

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’

and salaries.

NOTE 4 –

CONVERTIBLE NOTES PAYABLE

Loan with Trius Holdings Limited

March 17, 2017, we entered into an agreement with Trius Holdings

Pursuant to the terms of the agreement, the investor

acquired a 12% convertible note with an aggregate face value of

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

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.

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.

accrued interest on the above notes was $36 as of March 31, 2017

and is reflected in accrued expenses on the accompanying balance

The Company recorded a loss on the notes of $5,000 based on

the fair value of the notes on the dates of issuance.

Parties, which can be corporations or individuals, are considered

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

control the other party or exercise significant influence over the

other party in making financial and operating decisions.

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

control or common significant influence.

Accounts payable –

related parties are the amounts payable to

officers and directors of the Company for reimbursement of expenses

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

fees and salaries.

NOTE 4 –

STOCKHOLDERS’

no preferred or common stock transactions during the three and

six-month periods ended March 31, 2017 and 2016

no preferred or common stock transactions during the three-month

period ended December 31, 2016 and 2015

NOTE 5 –

following is a summary of outstanding stock options issued to

employees and directors as of March 31, 2017:

The following is a summary of outstanding stock options issued to

employees and directors as of December 31, 2016:

of Options

October 1, 2015

Exercise Price per

Value at Date

Outstanding October 1, 2015

7,416,000 

$0.0067 - $0.20

March 31, 2017 and September 30, 2016

Outstanding December 31, 2016 and September 30, 2016

2,916,000 

$0.0067 - $0.20

2,916,000 

   $0.0067

following is a summary of outstanding stock options issued to

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

The following is a summary of outstanding stock options issued to

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

of Options

March 31, 2017, September 30, 2016 and October 1, 2015

Exercise Price per

Value at Date

Outstanding December 31, 2016, September 30, 2016 and October 1,

375,000 

2 unchanged sentences

equity based compensation for the three months ended March 31, 2017

Total equity based compensation for the three months ended December

31, 2016 and 2015 was $0 and $280,053, respectively.

Total equity based

compensation for the six months ended March 31, 2016 and 2015 was

$0 and ($1,296,431), respectively.

NOTE 6 - SUBSEQUENT EVENTS

has evaluated all activity and concluded that no subsequent events

have occurred that would require recognition in these financial

statements or disclosure in the notes to these financial

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Management has evaluated all activity and

concluded that no subsequent events have occurred that would

require recognition in these financial statements or disclosure in

the notes to these financial statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

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set forth in our Annual

Report on Form 10-K for the year ended September 30, 2016, as filed

on September 12, 2017, any of which may cause our company’s

or our industry’s actual results, levels of activity,

performance or achievements to be materially different from any

future results, levels of activity, performance or achievements

expressed or implied by these forward-looking statements.

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

results, levels of activity or performance to be materially

different from any future results, levels of activity or

performance expressed or implied by these forward-looking

Report on Form 10-K for the year ended September 30, 2016, any of

which may cause our company’s or our industry’s actual

results, levels of activity, performance or achievements to be

materially different from any future results, levels of activity,

performance or achievements expressed or implied by these

forward-looking statements.

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.

the Company believes that the expectations reflected in the

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The parties agreed to terminate the License Agreement

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

effective as of October 1, 2015.

This termination was made by

mutual agreement of the parties pursuant to and in accordance with

5 unchanged sentences

any portion, of the Licensed Intellectual Property ceased effective

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

as of October 1, 2015.

Pursuant to the terms of the License

Agreement, the Licensed Intellectual Property included the brand

51 unchanged sentences

Recent Corporate Developments

six months ended March 31, 2017, our company has received two

convertible promissory notes from unrelated third parties.

loans are convertible into shares of our company pursuant to the

terms of the loan agreements.

In the descriptions below of the

loans, the issuance of common shares pursuant to the conversion of

debt pursuant to convertible promissory notes, and the issuance of

common shares pursuant to the exercise of warrants, transactions

are a on a post reverse stock split basis.

All the loans,

convertible promissory notes, and warrants include terms that make

them subject to the share splits.

Loan Agreements

Loan with Trius Holdings Limited

On March 17, 2017, we entered into an agreement with Trius Holdings

Pursuant to the terms of the agreement, the investor

acquired a 12% convertible note with an aggregate face value of

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 closing price of the

common stock on the date of the lender’s notice of

conversion, subject ot 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.

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 closing price of the common stock

on the date of the lender’s notice of conversion, subject to

a floor of $0.01.

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

experienced any corporate developments.

Results of Operations

Comparison of the Three Months Ended March 31, 2017 to the Three

Months Ended March 31, 2016

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

March 31, 2017 or March 31, 2016 due to the overall reduction in

operations of the business.

Comparison of the Three Months Ended December 31, 2016

were no revenues for the three months ended December 31, 2016 or

Operating Expenses

expenses for the three months ended March 31, 2017 are summarized

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

March 31, 2016:

Months Ended March 31,

expenses for the three months ended December 31, 2016 are

summarized as follows in comparison to our expenses for the three

months ended December 31, 2015:

Months Ended December 31,

administrative

5 unchanged sentences

$ 1,883  

$ (1,486,519 )

$ 385,058  

and administrative expense decreased by $99,776 for the three

months ended March 31, 2017 from the comparative period of 2016.

The decrease is due to the overall reduction in operating expenses

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

The decrease is due to the termination of the license agreement

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

related to the operation of that business.

Depreciation and

amortization expense decreased by $15,628 due to the write-down of

our website costs during the three months ended March 31, 2016.

Stock based compensation increased by $1,576,484 due to the

forfeiture and reversal of stock options to officers resulting in a

credit of $1,576,484 during the three months ended March 31,

Comparison of the Six Months Ended March 31, 2017 to the Six Months

Ended March 31, 2016

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

March 31, 2017 or for the three months ended March 31, 2016.

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

the overall reduction in operations of the business.

Operating Expenses

expenses for the six months ended March 31, 2017 are summarized as

follows in comparison to our expenses for the six months ended

March 31, 2016:

Months Ended March 31,

administrative

$ 7,313  

$ 175,996  

Depreciation and

18,974  

Total operating

$ 7,313  

$ (1,101,461 )

and administrative expense decreased by $168,683 for the six months

ended March 31, 2017 from the comparative period of 2016, due to

the overall reduction in operating expenses related to the

operation of that business.

Depreciation and amortization expense

decreased by $18,974 due to the impairment and the write-down of

website costs during the six months ended March 31, 2016.

based compensation increased by $1,296,431 primarily due to the

forfeiture and reversal of stock options to officers resulting in a

credit of $1,296,431 during the six months ended March 31,

amortization expense decreased by $3,346 and stock based

compensation decreased by $280,053 due to the reduction in

operations of the business.

Discontinued Operations

Canna-Pet business segment began operations in October 2014.

recent regulatory activity related to imposition of restrictions

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

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

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

hemp-based products for pets.

income from discontinued operations presented in the statements of

operations consists of the following for the six-month periods

ended March 31, 2017 and 2016:

result of recent regulatory activity related to imposition of

restrictions and limitations on the sale of hemp-based health

products for pets, on October 1, 2015, we elected to terminate our

license agreement with Canna-Pet, LLC and to cease all operations

relating to sale of hemp-based products for pets.

income (loss) from discontinued operations presented in the

statements of operations consists of the following for the

three-month period ended December 31, 2016 and 2015:

Cost of goods

3 unchanged sentences

80,903  

discontinued operations 

$ 71,099  

$ 74,706  

Liquidity and Financial Condition

5 unchanged sentences

Working capital

increase in current assets is mainly due to two convertible notes

for $10,000 received during the six months ended March 31, 2017.

The increase in current liabilities is due primarily from the

increase in accounting fees recorded in accounts payable to

complete and bring current the Company’s SEC

Months Ended March 31,

$ 1,176,167  

Net cash provided

(used) in operating activities

decrease in current assets is due to bank fees of $126 during the

The increase in current liabilities is due primarily to

late fees being incurred on the open accounts payable during the

three months ended December 31, 2016.

Months Ended December 31,

Net cash used in

operating activities

Net cash used in

investing activities

1 unchanged sentence

by financing activities

20,000  

Increase (decrease)

$ 19,791  

March 31, 2017, our cash balance was $21,095.

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

December 31, 2016, our cash balance was $1,179.

The Company does

not expect its current cash and operating income to be sufficient

to meet its financial needs for continuing operations over the next

twelve months.

cash used in operations for the six months ended March 31, 2017 was

$209 mainly due to the limited business activity during the

cash provided by financing for the six months ended March 31, 2017

was $20,000 due to two promissory notes received.

cash used in operations for the three months ended December 31,

2016 was $126 mainly due to bank fees on our checking

to raise additional operating capital on an immediate basis.

18 unchanged sentences

The Company has cumulative net losses

through March 31, 2017 of approximately $5 million, as well as

negative cash flows from operating activities.

The Company's cash

and cash equivalents balance as of March 31, 2017, is $21,095.

These factors raise substantial doubt about the Company's ability

to continue as a going concern.

through December 31, 2016 of approximately $5 million.

Company's cash and cash equivalents balance as of December 31, 2016

These factors raise substantial doubt about the

Company's ability to continue as a going concern.

we will actively seek to identify sources of liquidity, there are

38 unchanged sentences

significant accounting policies are more fully described in the

notes to our financial statements included herein for the three and

six months ended March 31, 2017.

notes to our financial statements included herein for the three

months ended December 31, 2016.

Newly Issued Accounting Pronouncements

Note 1 to our financial statements included herein for the three

and six months ended March 31, 2017 for a discussion of Recently

Issued Accounting Pronouncements.

months ended December 31, 2016 for a discussion of Recently Issued

Accounting Pronouncements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements