NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY
PLANS
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
$4,990,929 as of March 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 due
to the termination of the license agreement as outlined in Note 3,
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
successful.
Accordingly, 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 of business. The carrying amounts of assets and
liabilities presented in the condensed consolidated financial
statements do not necessarily represent realizable or settlement
values. The condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
NOTE 3 - 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 the Licensor, effective as of October 1, 2015, and to cease
all operations relating to sale of hemp-based products for
pets.
On
October 12, 2015, we entered into an agreement for the termination
(“Termination Agreement”) of the License Agreement,
effectively selling the discontinued operations. The Termination
Agreement contained the following provisions:
●
Termination of
License: The parties agreed to terminate the License Agreement
effective as of October 1, 2015. This termination was made by
mutual agreement of the parties pursuant to and in accordance with
the provisions of the License Agreement.
●
Return of Licensed
Intellectual Property: We agreed to return all Licensed
Intellectual Property to the Licensor, and our right to use all, or
any portion, of the Licensed Intellectual Property ceased effective
as of October 1, 2015. Pursuant to the terms of the License
Agreement, the Licensed Intellectual Property included the brand
name “Canna-Pet” and certain related intellectual
property, including, but not limited, trademarks and copyrights,
formulations, recipes, production processes and systems, websites,
domain names, customer lists, supplier lists trade secrets and
know- how, and other related intellectual property.
●
Return of Other
Property: In addition to return of the Licensed Intellectual
Property, we agreed to transfer to Licensor all product inventory,
Colorado hemp with permits and authorization, all
production/fulfillment contracts, all e-commerce accounts and
processing, all non-disclosure and research agreements and any and
all other property in our possession which was used by us in the
conduct of our business related to production and sale of medical
cannabis products for pets made from hemp and low-THC cannabis
plants.
●
Office Space and
Equipment: In conjunction with the execution of the Termination
Agreement, we granted the Licensor the right to use our office
space, for the three-month period from October 1, 2015 through
December 31, 2015, on a rent-free basis.
●
Consideration: As
consideration for the cancellation of the License Agreement and the
return of other property, as described above, the Licensor agreed
to waive payment by us and to release us from liability for payment
of any and all unpaid royalties, invoices and other amounts which
were otherwise currently due and payable by us to Licensor for
sales of Canna-Pet products for all periods through and including
September 30, 2015.
●
Collections: On
October 15, 2015, we forwarded to the Licensor all payments
received by us after September 30, 2015 (net of amounts received by
us for taxes, duties, governmental charges, freight or shipping
charges, and the like) for Canna- Pet products sold on or after
October 1, 2015.
The
following is a summary of the net liabilities sold as initially
determined at Septembers 30, 2015 and updated October 15,
2015:
|
|
|
Inventory
|
$
45,436
|
$
41,705
|
Prepaid
expenses
|
8,821
|
-
|
Deposits
|
8,179
|
8,678
|
Total
assets
|
62,436
|
50,383
|
|
|
|
Accounts
payable
|
103,548
|
124,396
|
Royalties
payable
|
39,506
|
39,506
|
Accrued
liabilities
|
285
|
15,341
|
Total
liabilities
|
143,339
|
179,243
|
Net liabilities
sold
|
$
80,903
|
$
128,860
|
The income from discontinued operations presented in the statements
of operations consists of the following for the six-month periods
ended March 31, 2016 and 2015, respectively:
|
|
|
Revenues
|
$
-
|
$
465,517
|
Cost
of goods sold
|
-
|
(203,486
)
|
General
and administrative expenses, including
depreciation
and amortization
|
(6,197
)
|
(244,562
)
|
Gain
on disposal of discontinued operations
|
80,903
|
-
|
Income
from discontinued operations
|
$
74,706
|
$
17,469
|
NOTE 4 – INTANGIBLE ASSETS
Intangible assets at March 31, 2016 and September 30, 2015, consist
of website costs of $35,000, less accumulated amortization of
$35,000 and $16,755, respectively. The website costs have been
fully amortized. During the three months ended March 31, 2016, we
charged $15,264 to amortization expense for the impairment of our
website.
NOTE 5 – 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 Directors’
fees and salaries. These amounts are due on demand, unsecured and
bear no interest.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
We have no operating lease commitments as of March 31,
2016.
Rent expense was $2,500 and $6,380 for the three and six months
ended March 31, 2016, respectively. Rent expense was $5,820 and
$12,151 for the three and six months ended March 31, 2015,
respectively.
NOTE 7 – STOCKHOLDERS’ EQUITY
We had
no preferred or common stock transactions during the three and six
month periods ended March 31, 2016 and 2015.
NOTE 8 – 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) – 10
●
Volatility
(based on a comparable companies) – 123%
●
Risk
Free interest rate – 2.73%
●
Dividend
yield (on common stock) – 0%
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) – 10
●
Volatility
(based on a comparable companies) – 123%
●
Risk
Free interest rate – 2.56%
●
Dividend
yield (on common stock) – 0%
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).
During the six months ended March 31, 2016, the Company recognized
stock based compensation of $280,053. During the six-month period
ending March 31, 2016, the officers holding the 4,500,000 options
resigned and the option were forfeited. In accordance with
ASC 718, previously expensed stock
based compensation which requisite service will not be provided and
are forfeited and reversed. As a result, previously recorded stock
based compensation of $1,576,484 was reversed and credited to stock
based compensation expense during the six months ended March 31,
2016.
The following is a summary of outstanding stock options issued to
employees and directors as of March 31, 2016:
|
Number
of Options
|
|
Exercise
Price per
Share
|
|
Average
Remaining
Term
in
Years
|
|
Aggregate
Intrinsic
Value
at Date
of
Grant
|
|
|
|
|
|
|
|
|
Outstanding
October 1, 2014 and September 30, 2015
|
7,416,000
|
|
$
0.0067
- $0.20
|
|
|
|
-
|
Issued
|
-
|
|
|
|
|
|
-
|
Cancelled
|
(4,500,000
)
|
|
|
|
|
|
-
|
Outstanding
March 31, 2016
|
2,916,000
|
|
$
0.0067
|
|
7.95
|
|
-
|
Exercisable
|
2,916,000
|
|
$
0.0067
|
|
7.95
|
|
-
|
The following is a summary of outstanding stock options issued to
non-employees, excluding directors, as of March 31,
2016:
|
Number
of Options
|
|
Exercise
Price per
Share
|
|
Average
Remaining
Term
in
Years
|
|
Aggregate
Intrinsic
Value
at Date
of
Grant
|
|
|
|
|
|
|
|
|
Outstanding
March 31, 2016
|
375,000
|
|
$
0.0067
|
|
7.79
|
|
-
|
Exercisable
|
375,000
|
|
$
0.0067
|
|
7.79
|
|
-
|
The following is a summary of outstanding stock options issued to
non-employees, excluding directors, as of March 31,
2016:
Total equity based compensation for the three months ended March
31, 2016 and 2015 was ($1,576,484) and $474,753 respectively. Total
equity based compensation for the six months ended March 31, 2016
and 2015 was ($1,296,431) and $1,132,741,
respectively.
NOTE 9 – 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
March 31, 2016, the estimated effective tax rate for the year is
0%.
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 six months ended March 31, 2016 and 2015 we did not have
any interest and penalties associated with tax positions. As of
March 31, 2016, we did not have any significant unrecognized
uncertain tax positions.
NOTE 10 - 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.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This
report contains forward-looking statements. The following
discussion should be read in conjunction with the financial
statements and related notes contained in our Annual Report on Form
10-K, as filed with the Securities & Exchange Commission on
January 13, 2016. Certain statements made in this discussion are
"forward-looking statements" within the meaning of The Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are projections in respect of future events or financial
performance. In some cases, you can identify forward-looking
statements by terminology such as “may,”
“should,” “expects,” “plans,”
“anticipates,” “believes,”
“estimates,” “predicts,”
“potential” or “continue” or the negative
of these terms or other comparable terminology.
These
statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the
section entitled “Risk Factors” set forth in our Annual
Report on Form 10-K for the year ended September 30, 2015, as filed
on January 13, 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.
Although
the Company believes that the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee
future results, levels of activity or performance. Moreover,
neither the Company nor any other person assumes responsibility for
the accuracy and completeness of these forward-looking statements.
The Company is under no duty to update any forward-looking
statements after the date of this report to conform these
statements to actual results.
As used
in this quarterly report and unless otherwise indicated, the terms
“we,” “us,” “our,”
“Peak,” or the “Company” refer to Peak
Pharmaceuticals, Inc, including our wholly-owned subsidiary Peak
BioPharma Corp (“Peak BioPharma”). Unless otherwise
specified, all dollar amounts are expressed in United States
dollars.
Corporate Overview
We were
incorporated as Surf A Movie Solutions Inc. in Nevada on December
18, 2007 to engage in the business of the development, sales and
marketing of online video stores. We were not successful in our
efforts and have ceased this line of business.
On
October 10, 2013, we entered into a joint venture agreement with
Produced Water Solutions, Inc., a Colorado corporation, that was in
the business of providing economically and environmentally sound
solutions for the treatment and recycling of wastewater resulting
principally from oil and gas exploration and production activities.
As a result of our research of this business opportunity, on
December 31, 2013, we determined not to move forward with this line
of business.
In
early March 2014, we entered into the business of developing,
manufacturing and marketing pharmaceutical level products
containing phytocannabinoids, an abundant and pharmaceutically
active component of industrial hemp, for the prevention and
alleviation of various conditions and diseases. In connection
therewith, on March 17, 2014 we changed our name to Cannabis
Therapy Corp. On December 23, 2014, we changed our name to Peak
Pharmaceuticals, Inc. All of our business operations are carried on
through our wholly-owned subsidiary, Peak BioPharma Corp., a
Colorado corporation.
On July
29, 2014, through Peak BioPharma, we entered into a license
agreement (the “License Agreement”) with Canna-Pet, LLC
(“Licensor”), a Washington limited liability company,
which owns the brand name “Canna-Pet” and certain
related intellectual property including, but not limited to,
trademarks and copyrights, formulations, recipes, production
processes and systems, websites, domain names, customer lists,
supplier lists, trade secrets and know-how, and other related
intellectual property (collectively, the “Licensed
Intellectual Property”), used by Licensor in the conduct of
its business related to the production and sale of medical products
made from industrial hemp which are intended exclusively for
consumption by pets. Pursuant to the License Agreement, the
Licensor granted to us a perpetual, exclusive, world-wide license
to use the Licensed Intellectual Property in conjunction with our
business and the production and sale of medical products made from
industrial hemp as well as the right to sublicense the Licensed
Intellectual Property to third parties. The License Agreement gives
us the right to produce and sell existing products utilizing the
Licensed Intellectual Property and to develop new products, jointly
with Licensor or otherwise, based upon the Licensed Intellectual
Property. The License Agreement provided us with an immediate
revenue source and access to Licensor’s customer base. During
the term of the license, all intellectual property rights in and to
the Licensed Intellectual Property remained the exclusive property
of Licensor.
In
consideration of the grant of the license, we agreed to pay
Licensor license fees in the form of royalty payments calculated on
the basis of gross proceeds received by us from sales of products
manufactured, marketed or sold by us utilizing the Licensed
Intellectual Property or any subsequently developed intellectual
property which is jointly owned by us and Licensor. We began
selling Canna-Pet products in October 2014.
Based
upon recent regulatory activity related to imposition of
restrictions and limitations on the sale of hemp-based health
products for pets, we elected to terminate our license agreement
with the Licensor, effective as of October 1, 2015, and to cease
all operations relating to sale of hemp-based products for
pets.
On
October 12, 2015, we entered into an agreement for the termination
(“Termination Agreement”) of the License Agreement,
effectively selling the discontinued operations. The Termination
Agreement contained the following provisions:
●
Termination of
License: The parties agreed to terminate the License Agreement
effective as of October 1, 2015, this termination was made by
mutual agreement of the parties pursuant to and in accordance with
the provisions of the License Agreement.
●
Return of Licensed
Intellectual Property: We agreed to return all Licensed
Intellectual Property to the Licensor, and our right to use all, or
any portion, of the Licensed Intellectual Property ceased effective
as of October 1, 2015, Pursuant to the terms of the License
Agreement, the Licensed Intellectual Property included the brand
name “Canna-Pet” and certain related intellectual
property, including, but not limited, trademarks and copyrights,
formulations, recipes, production processes and systems, websites,
domain names, customer lists, supplier lists trade secrets and
know- how, and other related intellectual property.
●
Return of Other
Property: In addition to return of the Licensed Intellectual
Property, we agreed to transfer to Licensor all product inventory,
Colorado hemp with permits and authorization, all
production/fulfillment contracts, all e-commerce accounts and
processing, all non-disclosure and research agreements and any and
all other property in our possession which was used by us in the
conduct of our business related to production and sale of medical
cannabis products for pets made from hemp and low-THC cannabis
plants.
●
Office Space,
Equipment and Employees: In conjunction with the execution of the
Termination Agreement, we granted the Licensor the right to use our
office space, for the three-month period from October 1, 2015
through December 31, 2015, on a rent-free basis.
●
Consideration: As
consideration for the cancellation of the License Agreement and the
return of other property, as described above, the Licensor agreed
to waive payment by us and to release us from liability for payment
of any and all unpaid royalties, invoices and other amounts which
were otherwise currently due and payable by us to Licensor for
sales of Canna-Pet products for all periods through and including
September 30, 2015.
●
Collections: On
October 15, 2015, we forwarded to the Licensor all payments
received by us after September 30, 2015 (net of amounts received by
us for taxes, duties, governmental charges, freight or shipping
charges, and the like) for Canna- Pet products sold on or after
October 1, 2015.
The
following is a summary of the net assets sold as initially
determined at Septembers 30, 2015 and updated October 15,
2015:
|
|
|
Inventory
|
$
45,436
|
$
41,705
|
Prepaid
Expenses
|
8,821
|
-
|
Deposits
|
8,179
|
8,678
|
Total
assets
|
$
62,436
|
$
50,383
|
|
|
|
Accounts
payable
|
103,548
|
124,396
|
Royalties
payable
|
39,506
|
39,506
|
Accrued
liabilities
|
285
|
15,341
|
Total
liabilities
|
143,339
|
179,243
|
Net assets
sold
|
$
80,903
|
$
128,860
|
Our
common stock is currently listed on the OTC Markets, QB Tier, under
the symbol “PKPH”.
Recent Corporate Developments
Since
the commencement of the year through March 31, 2016, we have not
experienced any significant corporate developments.
Results of Operations
Comparison of the Three Months Ended March 31, 2016 to the Three
Months Ended March 31, 2015
Revenue
No
revenue or cost of sales were generated for the three months ended
March 31, 2016 or 2015 due to the termination of the license
agreement with Canna-Pet, LLC and the overall reduction in
operations of the business.
Operating Expenses
Our
expenses for the three months ended March 31, 2016 are summarized
as follows in comparison to our expenses for the three months ended
March 31, 2015:
|
Three
Months Ended March 31,
|
|
|
|
|
|
General and
administrative
|
$
74,338
|
$
123,905
|
Depreciation and
amortization
|
15,628
|
3,038
|
Stock based
compensation
|
(1,576,484
)
|
474,753
|
Total operating
expenses
|
$
(1,486,518
)
|
$
601,696
|
General
and administrative expense decreased by $49,567 for the three
months ended March 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 increased by $12,590 due to the impairment and
write-down of our website costs of $15,264 during the three months
ended March 31, 2016. Stock based compensation decreased by
$2,051,237 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, 2016 from the comparative period of
2015.
Comparison of the Six Months Ended March 31, 2016 to the Six Months
Ended March 31, 2015
Revenue
No
revenue or cost of sales were generated for the six months ended
March 31, 2016 for 2015 due to the termination of the license
agreement with Canna-Pet, LLC and the overall reduction in
operations of the business.
Operating Expenses
Our
expenses for the six months ended March 31, 2016 are summarized as
follows in comparison to our expenses for the six months ended
March 31, 2015:
|
Six
Months Ended March 31,
|
|
|
|
|
|
General and
administrative
|
$
175,997
|
$
283,574
|
Depreciation and
amortization
|
18,974
|
5,955
|
Stock based
compensation
|
(1,296,431
)
|
1,132,741
|
Total operating
expenses
|
$
(1,101,460
)
|
$
1,422,270
|
General
and administrative expense decreased by $107,577 for the six months
ended March 31, 2016 from the comparative period of 2015, 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
increased by $13,019 due to the impairment and write-down of our
website costs of $15,264 during the six months ended March 31,
2016. Stock based compensation decreased by $2,429,172 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, 2016.
Discontinued Operations
Our
Canna-Pet business segment began operations in October 2014. Due to
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.
The
income (loss) from discontinued operations presented in the
statements of operations consists of the following for the
six-month periods ended March 31, 2016 and 2015:
|
|
|
Revenues
|
$
-
|
$
382,292
|
Cost of goods
sold
|
-
|
(115,268
)
|
General and
administrative expenses
|
-
|
(249,555
)
|
Gain on disposal of
discontinued operations
|
74,706
|
-
|
|
$
74,706
|
$
17,469
|
Liquidity and Financial Condition
Working Capital Deficiency
|
|
|
Current
assets
|
$
1,886
|
$
261,789
|
Current
liabilities
|
129,412
|
288,632
|
Working capital
deficiency
|
$
(127,526
)
|
$
(26,843
)
|
The
decrease in current assets is mainly due to a decrease in cash
resulting from cash used in operation activities of $199,770 during
the six months ended March 31, 2016. The decrease in current
liabilities is due primarily from the elimination of the
liabilities related to discontinued operations during the six
months ended March 31, 2016.
Cash Flows
|
Six
Months Ended March 31,
|
|
|
|
Net income
(loss)
|
$
1,176,166
|
$
(1,405,296
)
|
Net cash used in
operating activities
|
(199,770
)
|
(245,362
)
|
Net cash used in
investing activities
|
-
|
(2,186
)
|
Net cash provided
by financing activities
|
-
|
-
|
Increase (decrease)
in cash
|
$
(199,770
)
|
$
(247,548
)
|
As of
March 31, 2016, our cash balance was $1,886. The Company does not
expect its current cash and operating income to be sufficient to
meet its financial needs for continuing operations over the next
twelve months.
Net
cash used in operations for the six months ended March 31, 2016 was
$199,770 mainly due to payment of general and administrative
expenses during the period.
We need
to raise additional operating capital on an immediate basis.
Although the expenses of our operations have been significantly
reduced due to the termination of the license agreement as 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
individuals. There can be no assurance that such a plan will be
successful.
As of
the date of this filing, we do not have enough sufficient cash on
hand to cover our operating expenses through the next quarter. In
the absence of any ongoing commercial operations, we need enough
cash to pay certain outside professionals to maintain our
compliance under the Securities Act of 1934. Management anticipates
that it will require an additional $30,000 over the next twelve
months to cover such costs.
Going Concern
The
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 March 31, 2016 of
approximately $5 million" to "The Company has cumulative net losses
through March 31, 2016 of $4,990,929.
The Company's cash and
cash equivalents balance as of March 31, 2016, is $1,886. In
addition, due to the termination of the license agreement with
Canna-Pet, LLC, there is currently are no revenue-producing
activities. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Until
such time that we may be able to merge with or acquire an operating
business, we will need to actively seek to identify sources of
liquidity. There are no assurances that such additional sources of
liquidity can be obtained on terms acceptable to us on a
commercially reasonable basis, or at all. These factors raise
substantial doubt about our ability to continue as a going concern.
Furthermore, our “going concern” and lack of commercial
operations may make it more difficult for us to raise
funds.
The
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. If the Company raises additional funds
through the issuance of equity, the percentage ownership of current
shareholders could be reduced, and such securities might have
rights, preferences or privileges senior to its common stock.
Additional financing may not be available upon acceptable terms, or
at all. If adequate funds are not available or are not available on
acceptable terms, the Company may not be able to take advantage of
prospective business endeavors or opportunities, which could
significantly and materially restrict its future plans for
developing any future business and achieving commercial revenues.
If the Company is unable to obtain the necessary capital, the
Company may have to cease operations.
Off-Balance Sheet Arrangements
We have
no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources that is material to stockholders.
Effects of Inflation
We do
not believe that inflation has had a material impact on our
business, revenues or operating results during the periods
presented.
Critical Accounting Policies and Estimates
Our
significant accounting policies are more fully described in the
notes to our financial statements included herein for the three and
six months ended March 31, 2016.
Newly Issued Accounting Pronouncements
See
Note 1 to our financial statements included herein for the three
and six months ended March 31, 2016 for a discussion of Recently
Issued Accounting Pronouncements.