ITEM
1. FINANCIAL STATEMENTS
PEAK
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| |
December 31, | | |
September 30, | |
| |
2021 | | |
2021 | |
Assets | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 187,554 | | |
$ | 261,152 | |
Prepaid expenses | |
| 5,500 | | |
| - | |
Total Assets | |
$ | 193,054 | | |
$ | 261,152 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS DEFICIT | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable (including $124,896 and $133,986 due to related parties) | |
$ | 197,291 | | |
$ | 214,136 | |
Accrued liabilities | |
| 73,303 | | |
| 35,201 | |
Convertible notes payable | |
| 10,000 | | |
| 20,000 | |
Notes payable | |
| 263,000 | | |
| 283,000 | |
Notes payable – related party | |
| 35,000 | | |
| 35,000 | |
Total Liabilities | |
| 578,594 | | |
| 587,337 | |
| |
| | | |
| | |
Stockholders deficit | |
| | | |
| | |
Preferred stock, $0.0001 par value, 25,000,000 authorized, none issued or outstanding | |
| - | | |
| - | |
Common stock, $0.0001 par value, 300,000,000 shares authorized, 78,363,567 shares issued and outstanding | |
| 7,836 | | |
| 7,836 | |
Additional paid in capital | |
| 4,855,566 | | |
| 4,855,566 | |
Accumulated deficit | |
| (5,248,942 | ) | |
| (5,189,587 | ) |
Total Stockholders Deficit | |
| (385,540 | ) | |
| (326,185 | ) |
Total Liabilities and Stockholders Deficit | |
$ | 193,054 | | |
$ | 261,152 | |
The
accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
| |
|
|
|
|
|
| |
| |
For the Three Months Ended | |
| |
December 31, | |
| |
2021 | | |
2020 | |
Operating expenses: | |
| | | |
| | |
General and administrative (including fees paid to related party of $4,770 and $4,730) | |
$ | 52,063 | | |
$ | 4,972 | |
Total operating expenses | |
| 52,063 | | |
| 4,972 | |
| |
| | | |
| | |
Operating loss | |
| (52,063 | ) | |
| (4,972 | ) |
| |
| | | |
| | |
Other expenses (income): | |
| | | |
| | |
Interest expense (including related party interest of $132 and $0) | |
| 8,831 | | |
| 2,382 | |
Gain on forgiveness of debt | |
| (1,539 | ) | |
| - | |
Total other expenses (income), net | |
| 7,292 | | |
| 2,382 | |
| |
| | | |
| | |
Net loss | |
$ | (59,355 | ) | |
$ | (7,354 | ) |
| |
| | | |
| | |
Per share information: | |
| | | |
| | |
Weighted average shares outstanding - basic and diluted | |
| 78,363,567 | | |
| 78,363,567 | |
| |
| | | |
| | |
Net loss per share - basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
The
accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT |
FOR
THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020 |
(Unaudited) |
| |
|
|
|
|
|
| | |
| | |
| | |
| |
| |
Common Stock | | |
Additional Paid | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
In Capital | | |
Deficit | | |
Total | |
Balance, October 1, 2020 | |
| 78,363,567 | | |
$ | 7,836 | | |
$ | 4,855,566 | | |
$ | (5,113,498 | ) | |
$ | (250,096 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (7,354 | ) | |
| (7,354 | ) |
Balance, December 31, 2020 | |
| 78,363,567 | | |
$ | 7,836 | | |
$ | 4,855,566 | | |
$ | (5,120,852 | ) | |
$ | (257,450 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, October 1, 2021 | |
| 78,363,567 | | |
$ | 7,836 | | |
$ | 4,855,566 | | |
$ | (5,189,587 | ) | |
$ | (326,185 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (59,355 | ) | |
| (59,355 | ) |
Balance, December 31, 2021 | |
| 78,363,567 | | |
$ | 7,836 | | |
$ | 4,855,566 | | |
$ | (5,248,942 | ) | |
$ | (385,540 | ) |
The
accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR
THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020 |
(Unaudited) |
| |
2021 | | |
2020 | |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (59,355 | ) | |
$ | (7,354 | ) |
Adjustment to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Gain on forgiveness of debt | |
| (1,539 | ) | |
| - | |
Change in operating assets and liabilities: | |
| | | |
| | |
Prepaids | |
| (5,500 | ) | |
| - | |
Accounts payable | |
| (6,216 | ) | |
| 1,734 | |
Accounts payable - related parties | |
| (9,090 | ) | |
| 3,208 | |
Accrued liabilities | |
| 38,102 | | |
| 2,382 | |
Net cash used in operating activities | |
| (43,598 | ) | |
| (30 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Payments on notes payable | |
| (20,000 | ) | |
| - | |
Payment on convertible note payable | |
| (10,000 | ) | |
| - | |
Net cash used in financing activities | |
| (30,000 | ) | |
| - | |
| |
| | | |
| | |
Net change in cash | |
| (73,598 | ) | |
| (30 | ) |
Cash, beginning of period | |
| 261,152 | | |
| 408 | |
Cash, end of period | |
$ | 187,554 | | |
$ | 378 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information | |
| | | |
| | |
Cash paid for interest | |
$ | - | | |
$ | - | |
Cash paid for income taxes | |
$ | - | | |
$ | - | |
The
accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
(Unaudited) |
|
NOTE
1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
Company was incorporated in Nevada on December 18, 2007. After a number of name changes, we again, changed our name to Peak Pharmaceuticals,
Inc. on December 23, 2014. This name was consistent with our business operations and plans relating to development, manufacturing and
marketing of hemp-based nutraceutical and supplement products for the human and animal health markets. On October 1, 2015, we discontinued
certain operations of the Company.
The
Company is currently a shell company (as such term is defined in Rule 12b-2 under the Exchange Act).
Throughout
this report, the terms our, we, us, and the Company refer to Peak Pharmaceuticals,
Inc. and its wholly-owned subsidiary, Peak BioPharma Corp.
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted
accounting principles (GAAP) for interim financial statements, instructions to Form 10-Q, and Regulation S-X. Accordingly,
certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed
or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and
notes thereto included in our annual report on Form 10-K for the year ended September 30, 2021. In managements opinion, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading
have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for
the full year, or any other period.
Basis
of Consolidation
The
unaudited condensed consolidated financial statements include the financial statements of the Company and our wholly owned subsidiary
Peak BioPharma Corp. All inter-company balances and transactions among the companies have been eliminated upon consolidation.
Use
of Estimates
The
preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ
from those estimates.
Significant
estimates made in connection with the accompanying consolidated financial statements include the valuation allowances against net deferred
tax assets and accounting for convertible debt.
Loss
Per Share
We
calculate net loss per share in accordance with ASC Topic 260, Earnings per Share. Basic net loss per share is computed by dividing
net loss by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed
by including common stock equivalents outstanding for the period in the denominator. For the three months ended December 31, 2021 and
2020, any equivalents would have been anti-dilutive as we had net losses for the periods then ended.
As
of September 30, 2021, the Company had two convertible notes with principal and accrued interest balances totaling and $32,366.
During the three months ended December 31, 2021, the Company repaid one of these notes and related accrued interest totaling $15,408.
As of December 31, 2021, the Company had one convertible note remaining with principal and accrued interest totaling $17,578.
The note holders are entitled, at their option, to convert all or a part of their options at the date into shares of the of common stock
in the Company at a price equal to a 20% discount to the closing price of the common stock on the date of the lenders notice of
conversion, subject to a floor of $0.01. These common stock equivalents of approximately 271,936 and 453,644 shares as of December 31,
2021 and 2020, respectively, are not included in the calculation of diluted EPS as their effect would be anti-dilutive.
As
of December 31, 2021 and September 30, 2021, the Company had 3,291,000 in stock options outstanding which are exercisable at the holders
option, with an exercise price of $0.0067, which are not included in the calculation of diluted EPS as their effect would be anti-dilutive.
Recently
Issued Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Companys financial statements.
From
time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of
recently issued standards that are not yet effective may have an impact on our results of operations and financial position.
On
August 5, 2020, the FASB issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entitys Own Equity (Subtopic 815-40, which simplifies the accounting
for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on
an entitys own equity. The ASUs amendments are effective for public business entities that are not smaller reporting companies
for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the amendments
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be
early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company has determined
that the adoption of this guidance has no impact on its consolidated financial statements.
In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments (ASU 2016-13). ASU 2016-13 amends the guidance on the impairment of financial instruments. This update adds
an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses.
Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. In November 2019, the FASB issued
ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).
ASU 2019-10 changes the effective date of the credit loss standard (ASU 2016-13) to fiscal years beginning after December 15, 2022, including
interim periods within those fiscal years for smaller reporting companies. Further, the ASU clarifies that operating lease receivables
are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company has determined
that the adoption of this guidance has no impact on its consolidated financial statements.
Recently
Adopted Accounting Pronouncements
In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes (Topic 740),
(ASU 2019-12), which simplifies income tax accounting in various areas including, but not limited to, the accounting for
hybrid tax regimes, tax implications related to business combinations, and interim period accounting for enacted changes in tax law,
along with some codification improvements. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020.
The Company adopted ASU 2019-12 on September 30, 2021 and has determined that the adoption of this guidance had no impact on its consolidated
financial statements.
In
August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement
(ASU 2018-13), which eliminates certain disclosure requirements for fair value measurements for all entities, requires
public entities to disclose certain new information and modifies some disclosure requirements. The guidance is effective for all entities
for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated
or modified disclosures upon issuance of ASU 2018-13. The Company adopted ASU 2018-13 on October 1, 2020 and has determined that the
adoption of this guidance had no impact on its consolidated financial statements.
NOTE
2 – GOING CONCERN AND MANAGEMENTS LIQUIDITY PLANS
As
of December 31, 2021, the Company had an accumulated deficit of $5,248,942 and a working capital deficiency of $385,540. During the three
months ended December 31, 2021, the Company incurred a net loss of $59,355 and used cash in operating activities of $43,598. As of December
31, 2021, the Company had cash of $187,554. These conditions raise substantial doubt about the Companys ability to continue as
a going concern. The Company recognizes it will need to raise additional capital in order to fund operations and meet its payment obligations.
There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on
terms acceptable to the Company and whether the Company will generate revenues, become profitable and generate positive operating cash
flow. If the Company is unable to raise sufficient additional funds on favorable terms, it will have to develop and implement a plan
to further extend payables and to raise capital through the issuance of debt or equity on less favorable terms until sufficient additional
capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Accordingly,
the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates
continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course
of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do
not necessarily represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE
3 – RELATED PARTY TRANSACTIONS
Parties,
which can be corporations or individuals, are considered to be related if they have the ability, directly or indirectly, to control the
other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered
to be related if they are subject to common control or common significant influence.
Accounts
payable – related parties are amounts payable to current and former officers and directors for services provided to the Company
totaling $124,896 and $133,986, as of December 31, 2021 and September 30, 2021, respectively. These amounts include accounts payable
to an entity controlled by our sole officer and director for financial services such entity is incurring on behalf of the Company totaling
$50,019 and $59,109 as of December 31, 2021 and September 30, 2021, respectively. Total expense incurred related to this entity was $4,770
and $4,730 for the three months ended December 31, 2021 and 2020, respectively, with no other related party expenses incurred.
NOTE
4 – CONVERTIBLE NOTES PAYABLE AND NOTES PAYABLE
Convertible
Notes Payable
Loan
with Trius Holdings Limited
On
March 17, 2017, the Company entered into an agreement with Trius Holdings Limited (Trius). Pursuant to the terms of the
agreement, Trius acquired a 12% convertible note with an aggregate face value of $10,000. The note matures in one year and is unsecured.
Trius is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of the of common stock
in the Company at a price equal to a 20% discount to the closing price of the common stock on the date of the lenders notice of
conversion, subject to a floor of $0.01. On May 11, 2018, the agreement had been amended to extend the maturing date of the note from
March 21, 2018 to March 21, 2019. As of December 31, 2021 and September 30, 2021, the total accrued interest owing under this note was
$6,567 and $6,205, respectively. As of the date of this report, that date has not been extended, and the Company is accruing interest
at the default interest rate of 15%.
Loan
with Individual
On
March 30, 2017, the Company entered into an agreement with an individual. Pursuant to the terms of the agreement, the individual acquired
a 12% convertible note with an aggregate face value of $10,000. The note matures in one year and is unsecured. The individual is entitled,
at its option, to convert all or a part of the principal outstanding at the date into shares of the of common stock in the Company at
a price equal to a 20% discount to the closing price of the common stock on the date of the lenders notice of conversion, subject
to a floor of $0.01. The default interest rate is 15%. On May 11, 2018, the agreement had been amended to extend the maturing date of
the note from March 30, 2018 to March 30, 2019. As of December 31, 2021 and September 30, 2021, the total accrued interest owing under
this note was $0 and $6,160, respectively. On December 3, 2021, the Company repaid this loan and accrued interest in full.
Notes
Payable
Loan
with Mediapark Investments Limited
On
January 10, 2018, the Company entered into an agreement with Mediapark Investments Limited (Mediapark.) Pursuant to the
terms of the agreement, Mediapark acquired a 12% promissory note with an aggregate face value of $23,000. The note matures in 180 days
on July 10, 2018 and is unsecured. As of July 9, 2018, the loan was extended to July 10, 2019. As of December 31, 2021 and September
30, 2021, the total accrued interest owing under this note was $12,702 and $11,813, respectively. As of the date of this report, that
date has not been extended, and the Company is accruing interest at the default interest rate of 15%.
Loan
with Individual
On
April 2, 2018, the Company entered into an agreement with an individual. Pursuant to the terms of the agreement, we received a promissory
note in the amount of $20,000. The note is unsecured, is due and payable in full on October 2, 2018, and it accrues interest at a rate
of 12% per annum. As of December 31, 2021 and September 30, 2021, the total accrued interest owing under this note was $0 and $9,883,
respectively. On December 3, 2021, the Company repaid this loan and accrued interest in full.
Loan
with Officer
On
June 14, 2021, the Company entered into an agreement with our sole officer and director. Pursuant to the terms of the agreement, we received
a promissory note in the amount of $5,000. The note is unsecured, is due and payable in full on December 31, 2021, and accrues interest
at a rate of 1.5% per annum. As of December 31, 2021 and September 30, 2021, the total accrued interest owing under this note was $41
and $22, respectively. As of the date of this report, the due date has not been extended and the note is in default.
During
the three months ended September 30, 2021, the Company entered into a note payable with our sole officer and director for $30,000.
The note is unsecured, is due and payable in full on December 31, 2021 and accrues interest at a rate of 1.5% per annum. As of
December 31, 2021 and September 30, 2021, the total accrued interest owing under this note was $116 and $2. As of the date of this
report, that date has not been extended, and the Company is accruing interest at the default interest rate of 10%.
Notes
Payable Issued During the Twelve Months Ended September 30, 2021
During
the twelve months ended September 30, 2021, the Company entered into twelve notes payable totaling $240,000. The notes are unsecured,
are due and payable in full on September 30, 2021, and accrue interest at a rate of 1.5% per annum. As of December 31, 2021 and September
30, 2021, the total accrued interest owing under these notes was $6,795 and $755. In June 2022, the Company repaid one of the notes with
a principal balance of $35,000. As of the date of this report, that date has not been extended, and the Company is accruing interest
at the default interest rate of 10%.
NOTE
5 – OPTIONS
No
stock options were granted during the three months ended December 31, 2021 and 2020.
The
following is a summary of outstanding stock options issued to employees and directors as of December 31, 2021 and September 30, 2021:
Schedule of share-based compensation, stock options, activity
| |
Number of Options | | |
Exercise Price per Share | | |
Average Remaining Term in Years | |
Outstanding December 31, 2021 and September 30, 2021 | |
| 2,916,000 | | |
$ | 0.0067 | | |
| 2.20 | |
Exercisable, December 31, 2021 and September 30, 2021 | |
| 2,916,000 | | |
$ | 0.0067 | | |
| 2.20 | |
The
following is a summary of outstanding stock options issued to non-employees, excluding directors, as of December 31, 2021 and September
30, 2021:
Schedule of share-based compensation, stock options, activity
| |
Number of Options | | |
Exercise Price per Share | | |
Average Remaining Term in Years | |
Outstanding December 31, 2021 and September 30, 2021 | |
| 375,000 | | |
$ | 0.0067 | | |
| 1.79 | |
Exercisable, December 31, 2021 and September 30, 2021 | |
| 375,000 | | |
$ | 0.0067 | | |
| 1.79 | |
There
was no equity-based compensation for the three months ended December 31, 2021 and 2020.
ITEM
2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking
Statements
This
report contains forward-looking statements. The following discussion should be read in conjunction with the financial statements and
related notes contained in our Annual Report on Form 10-K, as filed with the Securities & Exchange Commission on December 19, 2022.
Certain statements made in this discussion are forward-looking statements within the meaning of The Private Securities Litigation
Reform Act of 1995. Forward-looking statements are projections in respect of future events or financial performance. In some cases, you
can identify forward-looking statements by terminology such as may, should, expects, plans,
anticipates, believes, estimates, predicts, potential or continue
or the negative of these terms or other comparable terminology.
These
statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors set forth in our Annual Report on Form 10-K for the year ended September 30, 2021, as filed on December 19,
2022, any of which may cause our companys or our industrys 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 Companys or its industrys actual results, levels of activity or performance to be
materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Although
the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results,
levels of activity or performance. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness
of these forward-looking statements. The Company is under no duty to update any forward-looking statements after the date of this report
to conform these statements to actual results.
As
used in this quarterly report and unless otherwise indicated, the terms we, us, our, Peak,
or the Company refer to Peak Pharmaceuticals, Inc, including our wholly-owned subsidiary Peak BioPharma Corp (Peak
BioPharma). Unless otherwise specified, all dollar amounts are expressed in United States dollars.
Corporate
History and Overview
We
were first incorporated in Nevada as Surf A Movie Solutions, Inc. on December 18, 2007 to engage in the business of the development sale
and marketing of online video sales. We were not successful in our efforts and discontinued this line of business. Since that time and
until August 8, 2014, we were a shell company (as such term is defined in Rule 12b-2 under the Exchange Act).
On
August 30, 2013, we changed our name to Frac Water Systems, Inc. and, on October 10, 2013, we decided to engage in the business of providing
economically and environmentally sound solutions for the treatment and recycling of wastewater resulting principally from oil and gas
exploration and production activities. Due to our research of the business opportunities, on December 31, 2013, we determined not to
move forward with this line of business.
In
early March 2014, we decided to enter into the business of developing, manufacturing and marketing pharmaceutical level products containing
phytocannabinnoids, an abundant and pharmaceutically active component of industrial hemp, for the prevention and alleviation of various
conditions and diseases. In connection therewith, on March 17, 2014, we changed our name to Cannabis Therapy Corporation and, on March
24, 2014, changed our trading symbol on OTC Markets to CTCO. On December 23, 2014, we changed our name to Peak Pharmaceuticals,
Inc. and our trading symbol changed to PKPH on February 5, 2015.
In
March 2014 we began operating as a bio-pharmaceutical and nutraceutical company seeking to develop, manufacture, market and sell safe,
high quality, medicinal products based on extracts from hemp. Our primary initial focus was on exploitation of the exclusive license
we received from Canna-Pet, LLC, a developer of ingestible health products for pets made from hemp. We had also taken initial steps related
to development of over-the-counter, THC-free, hemp-based products for the human market for the prevention and alleviation of symptoms
associated with inflammatory and auto-immune diseases.
On
July 29, 2014, through our wholly-owned subsidiary, Peak BioPharma Corp., we entered into a License Agreement (the License Agreement)
with Canna-Pet, LLC, (Licensor) a Washington limited liability corporation. They own the brand name Canna-Pet
and certain related intellectual property including, but not limited to, trademarks and copyrights, formulations, recipes, production
processes and systems, websites, domain names, customer lists, supplier lists, trade secrets and know-how, and other related intellectual
property (collectively, the Licensed Intellectual Property). This is used by the Licensor in the conduct of its business
related to the production and sale of medical products made from industrial hemp, which are intended exclusively for consumption by pets.
Pursuant to the License Agreement, the Licensor granted to us a perpetual, exclusive, world-wide license to use the Licensed Intellectual
Property in conjunction with our business and the production and sale of medical products made from industrial hemp, as well as the right
to sublicense the Licensed Intellectual Property to third parties. The License Agreement gave us the right to produce and sell existing
products utilizing the Licensed Intellectual Property and to develop new products, jointly with Licensor or otherwise, based upon the
Licensed Intellectual Property. The License Agreement provided us with an immediate revenue source and access to Licensors customer
base. The License Agreement specified that during the term of the license, all intellectual property rights in and to the Licensed Intellectual
Property remain the exclusive property of Licensor.
In
consideration of the grant of the license, we agreed to pay Licensor license fees in the form of royalty payments calculated based on
gross proceeds received by us from sales of products manufactured, marketed or sold by us utilizing the Licensed Intellectual Property
or any subsequently developed intellectual property which is jointly owned by us and Licensor. We began selling Canna-Pet products in
October 2014.
Based
upon recent regulatory activity related to imposition of restrictions and limitations on the sale of hemp-based health products for pets,
we elected to terminate our license agreement with the Licensor, effective as of October 1, 2015, and to cease all operations relating
to sale of hemp-based products for pets.
On
October 12, 2015, we entered into an agreement for the termination (Termination Agreement) of the License Agreement, effectively
selling the discontinued operations. Furthermore, based on advice from the Food and Drug Administration, as well as our regulatory counsel,
we decided to revise our strategy and discontinue all efforts to develop and market hemp-based health products. We currently are pursuing
to acquire or merge with an entity with significant operations in order to create a viable business model and value for our shareholders.
Since October 2015 we have been a shell company (as such term is defined in Rule 12b-2 under the Exchange Act).
All
of our business operations are carried out through our wholly owned subsidiary, Peak BioPharma Corp., a Colorado corporation. Throughout
this Report, unless otherwise noted or required by the context, references to the Company, us, we,
our, and similar terms refer to Peak Pharmaceuticals, Inc. and our wholly owned subsidiary, Peak BioPharma Corp.
We
currently have authorized 325,000,000 shares of capital stock, consisting of (i) 300,000,000 shares of common stock, and (ii) 25,000,000
shares of blank check Preferred Stock.
On
August 15, 2012, our board of directors and stockholders owning a majority of our outstanding common shares, authorized a 50 for 1 forward
stock split of our issued and outstanding common stock. The forward split became effective on September 27, 2012. Due to the forward
split, each outstanding share was split into 50 shares. On March 11, 2014, our board of directors authorized a 1.5 for 1 forward stock
split of our common stock in the form of a dividend. In connection therewith, our shareholders of record as of the close of business
on March 28, 2014, received an additional 0.5 share of our common stock for each share of our issued and outstanding common stock held
by them on such date. The forward stock split became effective on April 1, 2014.
Results
of Operations
Comparison
of the Three Months Ended December 31, 2021 to the Three Months Ended December 31, 2020
Revenue
No
revenue or cost of sales were generated for the three months ended December 31, 2021 or December 31, 2020.
Operating
Expenses
The
Companys expenses for the three months ended December 31, 2021 and 2020, are summarized as follows:
| |
Three Months Ended December 31, | |
| |
2021 | | |
2020 | |
General and administrative (including $4,770 and $4,730 of fees paid to related party) | |
$ | 52,063 | | |
$ | 4,972 | |
Total operating expenses | |
$ | 52,063 | | |
$ | 4,972 | |
The
increase in general and administrative expenses for the three months ended December 31, 2021 compared to the three months ended December
31, 2020 of $47,091, is due primarily to an increase in legal fees related to the Companys financing activities and
general corporate matters.
Other
Expenses
| |
Three Months Ended December 31, | |
| |
2021 | | |
2020 | |
Interest Expense (including related party interest of $132 and $0) | |
$ | 8,831 | | |
$ | 2,382 | |
Gain on forgiveness of debt | |
| (1,539 | ) | |
| - | |
Total other expenses | |
$ | 7,292 | | |
$ | 2,382 | |
Interest
expense increased $6,449 for the three months ended December 31, 2021 from the comparative period of 2020 due primarily to
an increase in the Companys notes payable. The gain on forgiveness of debt of $1,539 was a result of a decrease of
accounts payable as a result of vendor adjustments.
Liquidity
and Capital Resources
Working
Capital
The
following table sets forth a summary of changes in working capital as of ended December 31, 2021 and September 30, 2021:
| |
As of | |
| |
December 31, 2021 | | |
September 30, 2021 | |
Current Assets | |
$ | 193,054 | | |
$ | 261,152 | |
Current Liabilities | |
| 578,594 | | |
| 587,337 | |
Working capital | |
$ | (385,540 | ) | |
$ | (326,185 | ) |
The
decrease in current assets of $68,098 is mainly due to a decrease in cash from the payment of outstanding bills and payment of a note
payable of $30,000 during the three months ended December 31, 2021. The decrease in current liabilities of $8,743 is primarily due to
a decrease in accounts payable and payments on notes payable during the three months ended December 31, 2021.
Cash
Flows
The
following table sets forth a summary of changes in cash flows for the three months ended December 31, 2021 and 2020:
| |
Three Months Ended December 31, | |
| |
2021 | | |
2020 | |
Net cash used in operating activities | |
$ | (43,598 | ) | |
$ | (30 | ) |
Net cash used in financing activities | |
| (30,000 | ) | |
| - | |
Change in cash | |
$ | (73,598 | ) | |
$ | (30 | ) |
| |
| | | |
| | |
As
of December 31, 2021, our cash balance was $187,544. The Company does not expect its current cash and operating income to be sufficient
to meet its financial needs for continuing operations over the next twelve months.
Net
cash used in operations for the three months ended December 31, 2021 of $43,598 was mainly due to the net loss that was incurred during
the period.
Net
cash used in financing activities for the three months ended December 31, 2021 of $30,000 was due to payment on notes payable during
the period.
We
may need to evaluate raising additional capital through the sale of equity securities, through an offering of debt securities or through
borrowing from individuals. There can be no assurance that such a plan will be successful.
Cash
Requirements
As
of the date of this filing, we do not have sufficient cash on hand to cover our operating expenses through the next fiscal year. As of
December 16, 2022, we had cash and cash equivalents of approximately $97,000. Our liquidity needs have been satisfied primarily
from the issuance of notes payable. The notes payable are unsecured, matured on September 30, 2021, have not been extended, and are currently
in default. There can be no assurance, however, that additional financing will be available or, if it is available, that
we will be able to structure such financing on terms acceptable to us and that it will be sufficient to fund our cash requirements until
we can reach a level of profitable operations and positive cash flows. Even if we are able to raise the funds required, it is possible
that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek additional financing.
If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that
is material to stockholders.
Effects
of Inflation
We
do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.
Critical
Accounting Policies and Estimates
Our
unaudited condensed financial statements and accompanying notes have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis. The preparation of unaudited condensed financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and
the reported amounts of revenues and expenses during the reporting periods.
We
regularly evaluate the accounting policies and estimates that we use to prepare our unaudited condensed financial statements. A complete
summary of these policies is included in the notes to our unaudited condensed financial statements, along with the related notes contained
in our Annual Report on Form 10-K as filed with the Securities & Exchange Commission. In general, 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.
New
accounting standards
For
discussion of Recently Issued Accounting Pronouncements,
see Note 1 to the unaudited condensed financial statements, Nature of Operations, Basis of Presentation and Summary of
Significant Accounting Policies in Part I, Item 1, of this Quarterly Report on Form 10-Q.