What changed in this filing

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Item 1. Financial Statements

2017-09-13 compared with 2016-02-18 · 834 added, 368 removed, 23 unchanged (98% of the section changed)

FINANCIAL STATEMENTS

Consolidated Condensed Balance Sheets as of December 31, 2015 (unaudited) and September 30, 2015

Consolidated Condensed Statements of Operations for the three months ended December 31, 2015 and 2014 (unaudited)

Consolidated Condensed Statements of Cash Flows for the three months ended December 31, 2015 and 2014 (unaudited)

Notes to Consolidated Condensed Financial Statements (unaudited)

Consolidated Balance Sheets as of June 30, 2017 (unaudited) and

September 30, 2016

Consolidated Statements of Operations for the Three and Nine Months

Ended June 30, 2017 and 2016 (unaudited)

Consolidated Statements of Cash Flows for the Nine Months Ended

June 30, 2017 and 2016 (unaudited)

to Condensed Consolidated Financial Statements

Management’s

Discussion and Analysis of Financial Condition and Results of

and Qualitative Disclosures about Market Risk

and Procedures

Sales of Equity Securities and Use of Proceeds

Upon Senior Securities

Safety Disclosures

PART I –

UNAUDITED FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PEAK PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

   Cash

$ 3,303  

$ 1,304  

   Prepaid

     Total

current assets

Prepaid expenses

Assets of discontinued operations held for sale

Total current assets

Fixed assets, net of depreciation

Intangible assets, net of amortization

Liabilities and stockholders' deficit

Accounts payable

Accounts payable - related parties

Accrued liabilities

Liabilities of discontinued operations held for sale

Total current liabilities

Total Liabilities

Stockholders Deficit

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

Common stock, $0.0001 par value, 325,000,000 shares authorized, 78,363,562 shares issued and outstanding, as of December 31, 2015 and September 30, 2015

Additional paid in capital

Accumulated deficit

Total Stockholders Deficit

Total Liabilities and Stockholders Deficit

See the accompanying notes to the condensed consolidated financial statements

$ 9,303  

$ 1,304  

and stockholders' deficit

   Accounts

$ 91,874  

$ 82,526  

   Accounts

payable - related parties

47,877  

   Convertible

notes payable

25,000  

   Accrued

12,995  

12,359  

     Total

current liabilities

177,746  

142,763  

177,746  

142,763  

Stockholders’

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

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

shares issued and outstanding, as of June 30, 2017 and September

paid in capital

4,855,566  

Stockholders’

Liabilities and Stockholders’

$ 9,303  

$ 1,304  

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended December 31, 2015 and 2014

Three Months Ended

Nine Months Ended

and administrative

$ 14,037  

$ 9,836  

$ 21,350  

$ 185,833  

and amortization

18,974  

based compensation

operating expenses

General and administrative

Depreciation and amortization

Total operating expenses

Operating loss

Other income (expenses)

Total other income (expenses)

14,037  

21,350  

income (loss)

1,091,624  

income expenses

   Interest

   Change

in fair value of convertible debt

other expenses

(loss) from continuing operations

Income from operations of discontinued Canna-Pet component (including gain on disposal of $80,903 in 2015)

Per share information - basic and fully diluted:

1,091,624  

from operations of discontinued Canna-Pet component (gain on

disposal of $80,903 for the nine months ended June 30,

74,706  

income (loss)

$ 1,166,330  

share information:

   Basic

weighted average shares outstanding

Net (loss) per share

See the accompanying notes to the condensed consolidated financial statements

78,363,562  

   Diluted

weighted average shares outstanding

78,363,562  

80,372,603  

   Net

income (loss) per share - basic and diluted

$ 0.00  

$ 0.01  

   Net

income (loss) per share - basic and diluted

$ 0.00  

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

Consolidated Condensed Statements of Cash Flows

For the Three Months Ended December 31, 2015 and 2014

Net cash used in operating activities

Net cash provided by financing activities

Net cash provided by investing activities

Net change in cash

Cash, beginning of period

Cash, end of period

Supplemental disclosure of cash flow information

Cash paid for interest

Cash paid for income taxes

Non-cash investing activities

Gain on disposal of Canna-Pet (See note 2)

Non-cash financing activities

Common shares issued for services

See the accompanying notes to the condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

flows from operating activities:

income (loss)

$ 1,166,330  

Adjustment to reconcile net loss to net cash used in operating

   Stock

based compensation

   Depreciation

and amortization

18,245  

   Change

in fair value of convertible debt

in operating assets and liabilities:

   Prepaids

   Accounts

payable and accrued liabilities

36,984  

   Accounts

payable - related parties

30,584  

   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

beginning of period

201,656  

end of period

$ 3,303  

$ 1,575  

disclosure of cash flow information

paid for interest

paid for income taxes

accompanying footnotes are an integral part of these condensed

consolidated financial statements.

PEAK PHARMACEUTICALS, INC.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

Note 1 Summary of Significant Accounting Policies

Throughout this report, the terms our, we, us, and the Company refer to Peak Pharmaceuticals, Inc.

and its subsidiary.

The accompanying unaudited condensed consolidated financial statements of Peak Pharmaceuticals, Inc., at December 31, 2015 and 2014 have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial statements, instructions to Form 10-Q, and Regulation S-X.

Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended September 30, 2015.

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 periods ended December 31, 2015 and 2014 presented are not necessarily indicative of the results to be expected for the full year.

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

After a number of name changes on December 23, 2014, we again changed our name to Peak Pharmaceuticals, Inc.

This name change was made to make our name more 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.

Financial statements prepared in conformity with GAAP contemplate a companys continuation as a going concern.

We have incurred net losses since inception.

In addition, we have an accumulated deficit of $6,481,054 as of December 31, 2015.

This condition raises substantial doubt as to our ability to continue as a going concern.

In response to these conditions, we are evaluating raising additional capital through the sale of equity securities, through an offering of debt securities or through borrowings from financial institutions or individuals.

These financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Reclassification

Certain amounts from prior year have been reclassified for consistency with the presentation of the three months ended December 31, 2015.

These reclassifications had no effect on the reported results of operations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –

NATURE OF OPERATIONS, BASIS OF PRESENTATION AND

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

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.

this report, the terms “our,”

“we,”

“us,”

and the “Company”

refer to Peak

Pharmaceuticals, Inc.

and its subsidiary, Peak BioPharma

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.

Basis of Consolidation

The 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.

condensed consolidated financial statements include the financial

statements of the Company and our wholly owned subsidiary Peak

BioPharma Corp.

All inter-company balances and transactions among

the companies have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the periods reported.

Actual results may differ from these estimates.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less, at the time of purchase, to be cash equivalents.

preparation of financial statements in accordance with GAAP

requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and revenues and

expenses during the periods reported.

Actual results may differ

from these estimates.

Financial Instruments

Our financial instruments consist of cash, and payables.

The carrying values of these instruments approximate fair value because of the short term maturities of these instruments.

Inventory, which is included in assets of discontinued operations held for sale, consists of finished goods and is carried at the lower of cost or market on a first in first out basis.

financial instruments consist of cash, convertible notes payable,

derivative liability, and accounts payable.

The carrying values of

these instruments approximate fair value due to the short-term

maturities of these instruments.

Fair Value Measurements

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 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:

Peak Pharmaceuticals, Inc.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

Level 1 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.

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 inputs.

Level 3 Significant inputs to pricing that are unobservable as of the reporting date.

The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

Intangible asset

Intangible asset is our website and is being amortized over the expected useful life which we estimate to be three years.

Amortization expense charged to operations for the three months ended December 31, 2015 and 2014, were $2,981 and $2,917, respectively.

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

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

transmission rights.

Long-lived Assets

On a periodic basis, management assesses whether there are any indicators that the value of our long-lived assets may be impaired.

An assets value may be impaired only if managements estimate of the aggregate future cash flows, on an undiscounted basis, to be generated by the asset are less than the carrying value of the asset.

Our only longed lived assets are our website and computer equipment.

If impairment has occurred, the loss is measured as the excess of the carrying amount of the asset over its fair value.

Our estimates of aggregate future cash flows expected to be generated by our long-lived asset are based on a number of assumptions that are subject to economic and market uncertainties.

As these factors are difficult to predict and are subject to future events that may alter managements assumptions, the future cash flows estimated by management in their impairment analyses may not be achieved.

As of December 31, 2015, there was no asset impairment.

Revenue Recognition

We recognize revenue from products sold when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable and collection is reasonably assured.

Revenue represents the sale of products and related shipping fees.

Cost of Revenue

Cost of revenue includes the cost of products sold attributable to the revenue.

Shipping costs

Shipping costs are included in general and administrative expenses.

Research and Development

Expenditures for research activities relating to product development and improvement are charged to expense as incurred.

We incurred $532 in research and development expenses for the three months ended December 31, 2014.

There were no research and development costs in the three months ended December 31, 2015.

periodic basis, management assesses whether there are any

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

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

estimate of the aggregate future cash flows, on an undiscounted

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

value of the asset.

If impairment has occurred, the loss is measured as the excess of

the carrying amount of the asset over its fair value.

Our estimates

of aggregate future cash flows expected to be generated by our

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

subject to economic and market uncertainties.

As these factors are

difficult to predict and are subject to future events that may

alter management’s assumptions, the future cash flows

estimated by management in their impairment analyses may not be

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.

At December 31, 2015 and 2014 any equivalents would have been anti-dilutive as we had losses for the periods then ended.

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 nine months ended June 30, 2017, any

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

period then ended.

Recent Pronouncements

From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date.

We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.

ASU Update 2014-15 Presentation of Financial Statements-Going Concern (Sub Topic 205-40) issued August 27, 2014 by FASB defines managements responsibility to evaluate whether there is substantial doubt about an organizations ability to continue as a going concern.

The additional disclosure requirement is effective after December 15, 2016 and will be evaluated as to impact and implemented accordingly.

Peak Pharmaceuticals, Inc.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

In addition, the FASB issued Accounting Standards Update No.

2014-09 (Revenue from Contracts with Customers), which is effective for annual reporting periods beginning after December 15, 2016.

We have not yet assessed the impact, if any, of adopting this standard.

Note 2 - Discontinued Operations

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 Canna-Pet 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 Canna-Pet License Agreement, effectively selling the discontinued operations.

The Termination Agreement contained the following provisions:

Termination of License .

The parties agreed to terminate the Canna-Pet License Agreement effective as of October 1, 2015.

This termination was made by mutual agreement of the parties pursuant to and in accordance with the provisions of the License Agreement.

Return of Licensed Intellectual Property .

We agreed to return all Licensed Intellectual Property to the Licensor, Canna-Pet, LLC, and our right to use all, or any portion, of the Licensed Intellectual Property ceased effective as of October 1, 2015.

Pursuant to the terms of the License Agreement, the Licensed Intellectual Property included the brand name Canna-Pet and certain related intellectual property, including, but not limited, trademarks and copyrights, formulations, recipes, production processes and systems, websites, domain names, customer lists, supplier lists trade secrets and know-how, and other related intellectual property.

Return of Other Property .

In addition to return of the Licensed Intellectual Property, we agreed to transfer to Licensor all product inventory, Colorado hemp with permits and authorization, all production/fulfillment contracts, all e-commerce accounts and processing, all NDA and Research Agreements and any and all other property in our possession which was used by us in the conduct of our business related to production and sale of medical cannabis products for pets made from hemp and low-THC cannabis plants.

Office Space, Equipment and Employees .

In conjunction with the execution of the Termination Agreement, we granted the Licensor the right to use our office space, for the three-month period from October 1, 2015 through December 31, 2015, on a rent-free basis.

Consideration.

As consideration for the cancellation of the Canna-Pet License Agreement and the return of other property, as described above, the Licensor agreed to waive payment by us and to release us from liability for payment of any and all unpaid royalties, invoices and other amounts which were otherwise currently due and payable by us to Licensor for sales of Canna-Pet products for all periods through and including September 30, 2015.

Collections .

On October 15, 2015, we forwarded to Licensor all payments received by us after September 30, 2015 (net of amounts received by us for taxes, duties, governmental charges, freight or shipping charges, and the like) for Canna-Pet products sold on or after October 1, 2015.

Peak Pharmaceuticals, Inc.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

The following is a summary of the net assets sold as initially determined at Septembers 30, 2015 and updated October 15, 2015:

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

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 managements 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.

Amortization of debt issuance costs will continue to be reported as

interest expense.

Debt issuance costs related to revolving credit

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

and amortized ratably over the term of the arrangement.

is effective for reporting periods beginning after December 15,

2015 including interim periods within those annual periods.

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

applied on a retrospective basis.

We have adopted ASU 2015-03 and

it has not had a material impact on our Consolidated Financial

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

NOTE 2 –

GOING CONCERN AND MANAGEMENT’S LIQUIDITY

Financial statements prepared in conformity with GAAP contemplate a

company’s continuation as a going concern.

We have incurred

net losses since inception and have an accumulated deficit of

$5,031,844 as of June 30, 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.

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

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 $634 as of June 30, 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.

NOTE 5 –

STOCKHOLDERS’

no preferred or common stock transactions during the three and

nine-month periods ended June 30, 2017 and 2016

NOTE 6 –

following is a summary of outstanding stock options issued to

employees and directors as of June 30, 2017:

of Options

October 1, 2015

September 30, 2015

Prepaid expenses

Accounts payable

Royalty payable

Accrued liabilities

The income from discontinued operations presented in the statements of operations consist of the following for the three-month periods ended December 31, 2015 and 2014, respectively:

Cost of goods sold

General and administrative expenses

Gain on disposal of discontinued operations

Note 3 - Intangibles

Intangibles at December 31, 2015 and September 30, 2015, consists of a Website, $35,000, less accumulated amortization of $19,736 and $16,755, respectively.

The website is being amortized over three years.

Estimated future amortization expense related to intangible property as of December 31, 2015 is as follows:

Years ending September 30,

Note 4 Related Party Transactions

Parties, which can be corporations or individuals, are considered to be related if we have the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.

Companies are also considered to be related if they are subject to common control or common significant influence.

Accounts payable related parties are the amounts payable to officers and directors of the Company for reimbursement of expenses they incurred on behalf of the Company as well as Director fees and salaries.

Note 5 Commitments and Contingencies

Operating Lease

We leased office and lab space under an operating lease, which originally expires August 31, 2016.

The lease may be cancelled upon

Peak Pharmaceuticals, Inc.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

a 30-day notice.

During November, 2015 we exercised our right to cancel and notified the landlord that we would vacate the premises.

Rent expense was $3,880 and $6,331 for the three months ended December 31, 2015 and 2014, respectively.

Note 6 Stockholders Equity

On December 22, 2014, pursuant to a Placement Agent Agreement, we issued 200,000 restricted shares of our common stock.

The shares were valued at $36,000, $0.18 per share, the trading value, and charged to equity based compensation for the three months ended December 31, 2014.

Note 7 Options

In March 2014, we issued non-qualified options to purchase 2,916,000 shares of our common stock for services rendered to a director of the Company.

The options have a term of 10 years, are exercisable at $0.0067 per share and vested when they were issued.

The fair value of the options, estimated at the date of grant using the Black-Scholes option pricing model was $9,078.

The options have been expensed as equity based compensation.

The following assumptions were used in the Black-Scholes option pricing model:

Expected life (in years)

Volatility (based on a comparable companies)

Risk Free interest rate

Dividend yield (on common stock)

In May 2014, we issued non-qualified options to purchase 4,500,000 shares of our common stock to certain officers of the Company.

The options are exercisable at $0.20 per share and have graded vesting over 4 years.

The fair value of the options, estimated at the date of grant using the Black-Scholes option pricing model was $4,415,649.

The following assumptions were used in the Black-Scholes option pricing model:

Expected life (in years)

Volatility (based on a comparable companies)

Risk Free interest rate

Dividend yield (on common stock)

As per guidance in the ASC Topic 718, Compensation - Stock Compensation (ASC 718), we are amortizing the fair value of the options on a straight line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards (graded vesting attribution method).

The estimated future expense related to existing stock options is a follows:

Years ending September 30,

Peak Pharmaceuticals, Inc.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

The following is a summary of outstanding stock options issued to employees and directors as of December 31, 2015:

Number of Options

Exercise price per share

Average remaining term in years

Aggregate intrinsic value at date of grant

Outstanding October 1, 2014

$0.0067 - $0.20

Outstanding September 30, 2015

$0.0067 - $0.20

Outstanding December 31, 2015

$0.0067 - $0.20

The following is a summary of outstanding stock options issued to non-employees, excluding directors, as of December 31, 2015:

Number of Options

Exercise price per share

Average remaining term in years

Aggregate intrinsic value at date of grant

Outstanding October 1, 2014

Outstanding September 30, 2015

Outstanding December 31, 2015

Total equity based compensation for the three months ended December 31, 2015 and 2014 was $280,053 and $657,988, respectively.

Note 8 Income Tax

We account for income taxes in interim periods in accordance with ASC Topic 740, Income Taxes (ASC 740).

We have determined an estimated annual effective tax rate.

The rate will be revised, if necessary, as of the end of each successive interim period during our fiscal year to our best current estimate.

As of December 31, 2015 the estimated effective tax rate for the year will be zero.

There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2011 through the current period.

Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations.

There have been no income tax related interest or penalties assessed or recorded.

ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

For the three months ended December 31, 2015 and 2014 we did not have any interest and penalties associated with tax positions.

Peak Pharmaceuticals, Inc.

Notes to Consolidated Condensed Financial Statements

December 31, 2015 and 2014

of December 31, 2015 we did not have any significant unrecognized uncertain tax positions.

7,416,000 

June 30, 2017 and September 30, 2016

2,916,000 

following is a summary of outstanding stock options issued to

non-employees, excluding directors, as of June 30,

of Options

June 30, 2017, September 30, 2016 and October 1, 2015

375,000 

equity based compensation for the three months ended June 30, 2017

and 2016 was $0 and $0 respectively.

Total equity based

compensation for the nine months ended June 30, 2017 and 2016 was

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

NOTE 7 - SUBSEQUENT EVENTS

Management has evaluated all activity and concluded that no subsequent events have occurred that would require recognition in these financial statements or disclosure in the notes to these financial statements.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.

All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including without limitation, statements in this Managements Discussion and Analysis of Financial Condition and Results of Operations regarding our financial position, estimated working capital, business strategy, the plans and objectives of our management for future operations and those statements preceded by, followed by or that otherwise include the words believe, expects, anticipates, intends, estimates, projects, target, goal, plans, objective, should, or similar expressions or variations on such expressions are forward-looking statements.

We can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct.

Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements.

There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements, including, but not limited to, the availability and pricing of additional capital to finance operations.

Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this Quarterly Report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The following discussion should be read in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this Annual Report.

The following discussion contains forward-looking statements that involve risks and uncertainties.

We were incorporated as Surf A Movie Solutions, Inc.

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

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

On October 10, 2013, we entered into a Joint Venture Agreement with Produced Water Solutions, Inc., a Colorado corporation, in the business of providing economically and environmentally sound solutions for the treatment and recycling of wastewater resulting principally from oil and gas exploration and production activities.

As a result of our research of the business opportunities, on December 31, 2013 we determined not to move forward with this line of business.

In early March 2014 we entered into the business of developing, manufacturing and marketing pharmaceutical level products containing phytocannabinoids, an abundant and pharmaceutically active component of industrial hemp, for the prevention and alleviation of various conditions and diseases.

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

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

All of our business operations are carried on through our wholly-owned subsidiary, Peak BioPharma Corp., a Colorado corporation.

On July 29, 2014, through 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 company, which owns the brand name Canna-Pet and certain related intellectual property including, but not limited to, trademarks and copyrights, formulations, recipes, production processes and systems, websites, domain names, customer lists, supplier lists, trade secrets and know-how, and other related intellectual property (collectively, the Licensed Intellectual Property), used by Licensor in the conduct of its business related to the production and sale of medical products made from industrial hemp which are intended exclusively for consumption by pets.

Pursuant to the License Agreement, Licensor granted to us a perpetual, exclusive, world-wide license to use the Licensed Intellectual Property in conjunction with our business and the production and sale of medical products made from industrial hemp as well as the right to sublicense the Licensed Intellectual Property to third parties.

The License Agreement gives us the right to produce and sell existing products utilizing the Licensed Intellectual Property and to develop new products, jointly with Licensor or otherwise, based upon the Licensed Intellectual Property.

The License Agreement provided us with an immediate revenue source and access to Licensors customer base.

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 have agreed to pay Licensor license fees in the form of royalty payments calculated on the basis of gross proceeds received by us from sales of products manufactured, marketed or sold by us utilizing the Licensed Intellectual Property or any subsequently developed intellectual property which is jointly owned by us and Licensor.

We began selling Canna-Pet products in October 2014.

On October 12, 2015, we entered into an agreement for the termination (Termination Agreement) of the Canna-Pet License Agreement, effectively selling the discontinued operations.

The Termination Agreement contained the following provisions:

Termination of License .

The parties agreed to terminate the Canna-Pet License Agreement effective as of October 1, 2015.

This termination was made by mutual agreement of the parties pursuant to and in accordance with the provisions of the License Agreement.

Return of Licensed Intellectual Property .

Return of Other Property .

Office Space, Equipment and Employees .

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

Forward-Looking Statements

report contains forward-looking statements.

The following

discussion should be read in conjunction with the financial

statements and related notes contained in our Annual Report on Form

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

September 12, 2017.

Certain statements made in this discussion are

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

Securities Litigation Reform Act of 1995.

Forward-looking

statements are projections in respect of future events or financial

In some cases, you can identify forward-looking

statements by terminology such as “may,”

“should,”

“expects,”

“plans,”

“anticipates,”

“believes,”

“estimates,”

“predicts,”

“potential”

or “continue”

or the negative

of these terms or other comparable terminology.

statements are only predictions and involve known and unknown

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

section entitled “Risk Factors”

set forth in our Annual

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

the Company believes that the expectations reflected in the

forward-looking statements are reasonable, it cannot guarantee

future results, levels of activity or performance.

neither the Company nor any other person assumes responsibility for

the accuracy and completeness of these forward-looking statements.

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

statements after the date of this report to conform these

statements to actual results.

in this quarterly report and unless otherwise indicated, the terms

“we,”

“us,”

“our,”

“Peak,”

or the “Company”

refer to Peak

Pharmaceuticals, Inc, including our wholly-owned subsidiary Peak

BioPharma Corp (“Peak BioPharma”).

Unless otherwise

specified, all dollar amounts are expressed in United States

Corporate Overview

incorporated as Surf A Movie Solutions Inc.

in Nevada on December

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

marketing of online video stores.

We were not successful in our

efforts and have ceased this line of business.

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

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

the business of providing economically and environmentally sound

solutions for the treatment and recycling of wastewater resulting

principally from oil and gas exploration and production activities.

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

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

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

manufacturing and marketing pharmaceutical level products

containing phytocannabinoids, an abundant and pharmaceutically

active component of industrial hemp, for the prevention and

alleviation of various conditions and diseases.

In connection

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

Therapy Corp.

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

Pharmaceuticals, Inc.

All of our business operations are carried on

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

Colorado corporation.

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

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

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

which owns the brand name “Canna-Pet”

related intellectual property including, but not limited to,

trademarks and copyrights, formulations, recipes, production

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

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

intellectual property (collectively, the “Licensed

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

its business related to the production and sale of medical products

made from industrial hemp which are intended exclusively for

consumption by pets.

Pursuant to the License Agreement, the

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

to use the Licensed Intellectual Property in conjunction with our

business and the production and sale of medical products made from

industrial hemp as well as the right to sublicense the Licensed

Intellectual Property to third parties.

The License Agreement gives

us the right to produce and sell existing products utilizing the

Licensed Intellectual Property and to develop new products, jointly

with Licensor or otherwise, based upon the Licensed Intellectual

The License Agreement provided us with an immediate

revenue source and access to Licensor’s customer base.

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

the Licensed Intellectual Property remained the exclusive property

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

Licensor license fees in the form of royalty payments calculated on

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

manufactured, marketed or sold by us utilizing the Licensed

Intellectual Property or any subsequently developed intellectual

property which is jointly owned by us and Licensor.

selling Canna-Pet products in October 2014.

upon recent regulatory activity related to imposition of

restrictions and limitations on the sale of hemp-based health

products for pets, we elected to terminate our license agreement

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

all operations relating to sale of hemp-based products for

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

(“Termination Agreement”) of the License Agreement,

effectively selling the discontinued operations.

The Termination

Agreement contained the following provisions:

Termination of

The parties agreed to terminate the License Agreement

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

mutual agreement of the parties pursuant to and in accordance with

the provisions of the License Agreement.

Return of Licensed

Intellectual Property:

We agreed to return all Licensed

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

any portion, of the Licensed Intellectual Property ceased effective

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

Agreement, the Licensed Intellectual Property included the brand

name “Canna-Pet”

and certain related intellectual

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

formulations, recipes, production processes and systems, websites,

domain names, customer lists, supplier lists trade secrets and

know- how, and other related intellectual property.

Return of Other

In addition to return of the Licensed Intellectual

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

Colorado hemp with permits and authorization, all

production/fulfillment contracts, all e-commerce accounts and

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

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

conduct of our business related to production and sale of medical

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

Office Space,

Equipment and Employees:

In conjunction with the execution of the

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

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

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

Consideration:

Collections .

The following is a summary of the net assets sold as initially determined at Septembers 30, 2015 and updated October 15, 2015:

October 15, 2015

consideration for the cancellation of the License Agreement and the

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

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

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

were otherwise currently due and payable by us to Licensor for

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

September 30, 2015.

Prepaid expenses

Accounts payable

Royalty payable

Accrued liabilities

Critical Accounting Policies and Estimates

Our 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 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 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 financial statements.

A complete summary of these policies is included in the notes to our financial statements.

In general, managements 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.

Recent Pronouncements

From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date.

We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.

The additional disclosure requirement is effective after December 15, 2016 and will be evaluated as to impact and implemented accordingly.

In addition, the FASB issued Accounting Standards Update No.

2014-09 (Revenue from Contracts with Customers), which is effective for annual reporting periods beginning after December 15, 2016.

We have not yet assessed the impact, if any, of adopting this standard.

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

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

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

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

October 1, 2015.

following is a summary of the net assets sold as initially

determined at Septembers 30, 2015 and updated October 15,

$ 45,436  

$ 41,705  

$ 62,436  

$ 50,383  

103,548  

124,396  

39,506  

15,341  

143,339  

179,243  

$ 80,903  

$ 128,860  

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

the symbol “PKPH”.

Recent Corporate Developments

nine months ended June 30, 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

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.

Results of Operations

Results of Operation for Three Months Ended December 31, 2015 as Compared to the Three Months Ended December 31, 2014

(References to 2015 and 2014 are to the three months ended December 31, 2015 and 2014 respectively, unless otherwise specified.)

Our Canna-Pet business segment began operations in October 2014.

As a 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 and to cease all operations relating to sale of hemp-based products for pets.

The income from discontinued operations presented in the statements of operations consist of the following for the three-month periods ended December 31, 2015 and 2014:

Cost of goods sold

General and administrative expenses

Gain on disposal of discontinued operations

There were no operations of our discontinued business in 2015.

General and administrative expenses from continuing corporate operations for the three month periods ended December 31, 2015 and 2014 were as follows:

Stock based compensation

Personnel cost

Legal and professional fees

Other general and administrative costs

The equity based compensation was from the amortization of previously issued stock option to officers and directors.

Seven million four hundred sixteen thousand (7,416,000) options are outstanding, and vest over varying periods.

The options are exercisable

through 2024 at prices ranging from $0.0067 to $0.20.

Four million six hundred sixty-six thousand (4,666,000) of the outstanding options are currently exercisable.

In addition, during the three months ended December 31, 2014, we issued 200,000 restricted shares of our common stock to an investment banking firm.

The shares were valued at $36,000, or $0.18 per share, the trading value as of the date of issuance.

During 2015 we had two full time employees as compared to one full time employ in 2014.

We currently have one part time employee and do not anticipate hiring in the near future.

Legal and professional fees were incurred in connection with the changes in our business and the costs of being a public company.

We anticipate that legal and professional fees will continue to decrease during the immediate future.

Insurance increase as a result of extending one of our policies for three months.

Other general and administrative costs include costs such as IT costs, travel, communications, and office expenses.

These costs decreased as a result of decreased activity due to discontinuing Canna-Pet operations.

We had a loss from continuing operations of $385,058 for 2015 as compared to $843,498 for 2014.

For 2015 we had a net loss of $313,959 as compared to $815,226 for 2014.

Liquidity and Capital Resources

Financial statements prepared in conformity with GAAP contemplate a companys continuation as a going concern.

We have incurred net losses since inception.

In addition, we have an accumulated deficit of $6,481,054 as of December 31, 2015.

This condition raises substantial doubt as to our ability to continue as a going concern.

These financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We discontinued our Canna-Pet operation which was our source of continuing cash flow.

We are exploring business opportunities using hemp based products.

We expect that we will need to raise funds in order to effectuate our business plan.

We may seek additional investors to purchase our stock to provide us with working capital to fund our operations.

There can be no assurance that additional capital will be available to us at all or on acceptable terms.

We may seek to raise the required capital by other means.

We may have to issue debt or equity or enter into a strategic arrangement with a third party.

We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

Since we have no such arrangements or plans currently in effect, our inability to raise funds will have a severe negative impact on our ability to remain a viable company.

At December 31, 2015, cash was $62,108.

Net cash used in operating activities was $139,548 for the three months ended December 31, 2015, as compared to net cash used of $169,447 for the three months ended December 31, 2014.

The decrease in net cash used in operations was primarily due to our change in operating plans and the revenue generated from the sale of our products.

There were no cash investing activities during the three-month periods ended December 31, 2015 and 2014.

There were no cash financing activities during the three-month ended December 31, 2015 and 2014.

There is no assurance that we will be able to obtain any financing or enter into any form of credit arrangement.

Although we may be offered such financing, the terms may not be acceptable to us.

If we are not able to secure financing, or if it is offered to us on unacceptable terms, our business plan may have to be modified or curtailed or certain aspects of it may need to be terminated.

There is no assurance that even with financing we will be able to achieve our goals.

Comparison of the Three Months Ended June 30, 2017 to the Three

Months Ended June 30, 2016

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

June 30, 2017 or June 30, 2016 due to the overall reduction in

operations of the business.

Operating Expenses

expenses for the three months ended June 30, 2017 are summarized as

follows in comparison to our expenses for the three months ended

June 30, 2016:

Months Ended June 30,

administrative

$ 14,037  

Depreciation and

Total operating

$ 14,037  

and administrative expense increased by $4,201 for the three months

ended June 30, 2017 from the comparative period of 2016.

increase is due primarily to increased accounting fees incurred to

bring our filings current with the SEC.

Depreciation and

amortization expense as well as stock based compensation was $0 for

the three months ended June 30, 2017 and 2016.

Comparison of the Nine Months Ended June 30, 2017 to the Nine

Months Ended June 30, 2016

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

June 30, 2017 or for the nine months ended June 30, 2016 due to the

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

overall reduction in operations of the business.

Operating Expenses

expenses for the nine months ended June 30, 2017 are summarized as

follows in comparison to our expenses for the nine months ended

June 30, 2016:

Months Ended June 30,

administrative

$ 21,350  

$ 185,833  

Depreciation and

18,974  

Total operating

$ 21,350  

$ (1,091,624 )

and administrative expense decreased by $164,483 for the nine

months ended June 30, 2017 from the comparative period of 2016, due

to the overall reduction in operating expenses related to the

scaling down of operation of the business.

Depreciation and

amortization expense decreased by $18,974 due to the impairment and

the write-down of website costs during the nine months ended June

Stock 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 nine months

ended June 30, 2016.

Discontinued Operations

Canna-Pet business segment began operations in October 2014.

recent regulatory activity related to imposition of restrictions

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

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

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

hemp-based products for pets.

income (loss) from discontinued operations presented in the

statements of operations consists of the following for the

nine-month periods ended June 30, 2017 and 2016:

Cost of goods

administrative expenses

Gain on disposal of

discontinued operations

74,706  

$ 74,706  

Liquidity and Financial Condition

Working Capital Deficiency

$ 9,303  

$ 1,304  

177,746  

142,762  

Working capital

increase in current assets is mainly due to the increase in prepaid

expenses during the nine months ended June 30, 2017.

in current liabilities is due primarily from the increase in

accounting fees recorded in accounts payable to bring the

Company’s SEC filings current for the nine-month period

ending June 30, 2017.

Months Ended June 30,

$ 1,174,208  

Net cash provided

(used) in operating activities

Net cash used in

investing activities

Net cash provided

by financing activities

20,000  

Increase (decrease)

$ 2,000  

June 30, 2017, our cash balance was $3,303.

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 nine months ended June 30, 2017 was

$18,000 mainly due to the net loss incurred for the

cash provided by financing for the nine months ended June 30, 2017

was $20,000 from the issuance of two promissory notes during the

to raise additional operating capital on an immediate basis.

Although the expenses of our operations have been significantly

reduced due to the termination of the license agreement as outline

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

raising additional capital through the sale of equity securities,

through an offering of debt securities or through borrowings from

There can be no assurance that such a plan will be

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

hand to cover our operating expenses through the next quarter.

the absence of any ongoing commercial operations, we need enough

cash to pay certain outside professionals to maintain our

compliance under the Securities Act of 1934.

Management anticipates

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

months to cover such costs.

Going Concern

unaudited condensed consolidated financial statements contained in

this report have been prepared assuming that the Company will

continue as a going concern.

The Company has cumulative net losses

through June 30, 2017 of approximately $5 million, as well as

negative cash flows from operating activities.

The Company's cash

and cash equivalents balance as of June 30, 2017, is $3,303.

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

no assurances that such additional sources of liquidity can be

obtained on terms acceptable to us on a commercially reasonable

basis, or at all.

These factors raise substantial doubt about our

ability to continue as a going concern.

Furthermore, our

“going concern”

and lack of commercial operations may

make it more difficult for us to raise funds.

unaudited condensed consolidated financial statements do not

include any adjustments that may be necessary should the Company be

unable to continue as a going concern.

The Company’s

continuation as a going concern is dependent on its ability to

obtain additional financing as may be required and ultimately to

attain profitability.

If the Company raises additional funds

through the issuance of equity, the percentage ownership of current

shareholders could be reduced, and such securities might have

rights, preferences or privileges senior to its common stock.

Additional financing may not be available upon acceptable terms, or

If adequate funds are not available or are not available on

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

prospective business endeavors or opportunities, which could

significantly and materially restrict its future plans for

developing its business and achieving commercial revenues.

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

have to cease operations.

Off-Balance Sheet Arrangements

Contractual Obligations

Not applicable.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

no off-balance sheet arrangements that have or are reasonably

likely to have a current or future effect on our financial

condition, changes in financial condition, revenues or expenses,

results of operations, liquidity, capital expenditures or capital

resources that is material to stockholders.

Effects of Inflation

not believe that inflation has had a material impact on our

business, revenues or operating results during the periods

Critical Accounting Policies and Estimates

significant accounting policies are more fully described in the

notes to our financial statements included herein for the three and

nine months ended June 30, 2017.

Newly Issued Accounting Pronouncements

Note 1 to our financial statements included herein for the three

and nine months ended June 30, 2017 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