ITEM 1. FINANCIAL STATEMENTS
The un-audited quarterly financial statements for the period ended September 30, 2017, prepared by the Company, immediately follow
Notes to Financial Statements
September 30, 2017
(Unaudited)
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
Extract Pharmaceuticals, Inc. ("the Company" or "the Issuer") was organized under the laws of the State of Delaware on March 6, 2014 under the name Pacific Media Group Enterprises, Inc.
Extract Pharmaceuticals Inc (
“
the Company
”
) is a US-based development stage company that is in the process of acquiring certain Intellectual Property (
“
IP
”
) for chewing gum as a medicinal delivery system for several ailments.
The Company intends to identify and acquire patents and IPs that further its aim to provide medical solutions to a great number of everyday ailments using medicated (functional) chewing gum instead of pills as a drug delivery method.
Management is currently working on obtaining IP that furthers the use of chewing gum as a medicinal delivery system. At this preliminary stage, we foresee economic applicability for use of chewing gum for antihistamines, vitamins, painkillers, and any other kind of common ailments.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"), and include all the notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements were been included.
b. USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
c. BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share is calculated in accordance with Accounting Standards Codification (
“
ASC
”
) topic 260,
“
Earnings Per Share
”
for the periods presented. Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share was not presented because there are no dilutive items. Diluted earnings (loss) per share is based on the assumption that all dilutive stock options, warrants, and convertible debt are converted or exercised by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during periods of net
profit, only when the average market price of the common stock during the period exceeds the exercise or conversion price of the items.
d. CASH and CASH EQUIVALENTS
For the Balance Sheets and Statements of Cash Flows, all highly liquid investments with initiated maturity of three months or less are considered cash equivalents. The Company had no cash equivalents as of September 30, 2017.
e. REVENUE RECOGNITION
The Company recognizes revenue in accordance with ASC topic 605
“
Revenue Recognition, and other applicable revenue recognition guidance under US GAAP. Sales revenue is recognized for our retail and wholesale customers when: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured
—
generally when products are shipped to the customer and services are rendered, except in situations in which title passes upon receipt of the products by the customer. In this case, revenues are recognized upon services rendered.
f. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company
’
s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer account, and the financial condition of the Company
’
s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At September 30, 2017 and June 30, 2017 an allowance for doubtful accounts was not considered necessary as there were no accounts receivable.
g. SHARE-BASED COMPENSATION
ASC topic 718
“
Stock Compensation
”
requires the cost resulting from all share-based transactions be recorded in the financial statements and establishes fair value as the measurement objective for share-based payment transactions with employees and acquired goods or services from non-employees. The codification also provides guidance on valuing and expensing these awards, as well as disclosure requirements of these equity arrangements. The Company adopted the codification upon its creation and will expense share based costs in the period incurred.
h. INCOME TAXES
Income taxes are provided in accordance with Section 740-10-30 of the FASB Accounting Standards Classification. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
i. IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
NOTE 3. GOING CONCERN
The Company's financial statements are prepared in accordance with US GAAP applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of September 30, 2017 the Company did not have significant cash or other material assets, nor did it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The Company
’
s officers and directors have committed to advancing certain operating costs of the Company.
While the Company believes it will be able to generate sufficient revenues and/or raise additional funds, there can be no assurances that it will accomplish either. The Company
’
s ability to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4. STOCKHOLDERS' EQUITY
As of September 30, 2017, the authorized share capital of the Company consists of 300,000,000 shares of common stock and 20,000,000 shares of preferred stock with $0.0001 par value.
COMMON STOCK: The Company's first issuance of common stock, totaling 580,000 shares, took place on March 6, 2014 pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S. Bankruptcy Court in the matter of Pacific Shores Development, Inc. (
“
PSD
”
). The Court ordered the distribution of shares in the Company to all general unsecured creditors of PSD, with these creditors to receive their PRO RATA share (according to amount of debt held) of a pool of 80,000 shares in the Company. The Court also ordered the distribution of shares in the Company to all administrative creditors of PSD, with these creditors to receive one share of common stock
in the Company for each $0.10 of PSD's administrative debt which they held. A total of 500,000 shares were issued to PSD
’
s administrative creditors.
The Court also ordered the distribution of 2,500,000 warrants in the Company to all administrative creditors of PSD, with these creditors to receive five warrants in the Company for each $0.10 of PSD's administrative debt which they held. These creditors received 2,500,000 warrants consisting of 500,000 "A Warrants" each convertible into one share of common stock at $4.00; 500,000 "B Warrants" each convertible into one share of common stock at an exercise price of $5.00; 500,000 "C Warrants" each convertible into one share of common stock at $6.00; 500,000 "D Warrants" each convertible into one share of common stock at $7.00; and 500,000 "E Warrants" each convertible into one share of common stock at $8.00. All warrants are exercisable at any time prior to August 30, 2019. As of the date of this report, no warrants have been exercised.
On June 1, 2014 the Company issued 1,520,000 common shares for services at par value, $0.0001 per share for $152. On April 1, 2016 the Company issued 9,000 common shares for services related to mobile app programming and development valued at $1.00 per share for $9,000.
As a result of these issuances there were 2,109,000 common shares issued and outstanding, and a total of 2,500,000 warrants to acquire common shares issued and outstanding, at September 30, 2017.
Stock Split
–
On April 5, 2017, the Company
’
s Board of Directors declared a 54:1 forward stock split of all outstanding shares of common stock. The stock split was approved by FINRA on July 25, 2017. The effect of the stock split increased the number of shares of common stock outstanding from 2,109,000 to 113,886,000. All common share and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account for the effect of the stock split for all periods presented prior to July 25, 2017. The total number of authorized common shares and the par value thereof was not changed by the split.
On August 14
th
, 2017, the Company issued 1,080,000 restricted shares to SCI INC., a Consulting Firm, based upon a Consulting Agreement between the parties. SCI Inc. is actively engaged with prospective similar private companies who are looking to work with public companies in the nutraceutical sphere.
On August 14th, 2017, the Company issued 1,000,000 restricted affiliate shares to its Director Peter Maddocks per the terms of his employment agreement with the company as compensation for his services.
PREFERRED STOCK: As of September 30, 2017 no shares of preferred stock had been issued and no shares of preferred stock were outstanding.
NOTE 5. INCOME TAXES
The Company has had no revenues and made no U.S. federal income tax provision since its inception on March 6, 2014.
NOTE 6. RELATED PARTY TRANSACTIONS
On June 1, 2014, the Company issued 1,520,000 shares of common stock in a private placement for services valued at par value of $0.0001 per share. Of these shares, 20,000 were issued to the former CEO and director of the Company and 1,500,000 were issued to the current CEO and director of the Company. At various dates between April 1, 2016 and March 30, 2017 the Company issued various Notes totaling $23,492 to a former officer. On April 5, 2017 all of these Notes were cancelled. On June 29, 2017 a Note for $5,375 was issued to a Shareholder. This Note is non-interest bearing and has no fixed term but is callable by the lender at any time. The company issued a further note for $15, 032 to the shareholder for continued operational expenses support
The Company utilizes an office space of approximately 100 square feet in the residence of the Company
’
s CEO, which is provided at no cost by the CEO. The value of the space is immaterial. The space is believed to be adequate for the Company
’
s needs at this time.
NOTE 7. SUBSEQUENT EVENTS
None.
ITEM 2.