UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
| x | ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Fiscal Year Ended September 30, 2019
or
| o | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Transition Period from _________ to _________
Commission
file number: 005-87668
PEAK
PHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
26-1973257 |
(State
or other jurisdiction of incorporation or organization) |
|
(I.R.S.
Employer Identification No.) |
14201
N. Hayden Road, Suite A-1, Scottsdale, AZ 85260
(Address
of principal executive offices)
(480)
659-6404
(Registrants
telephone number, including area code)
N/A
(Former
address of principal executive offices)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
symbol(s) |
|
Name
of exchange on
which
registered |
None |
|
None |
|
None |
Securities
registered pursuant to section 12(g) of the Act:
None
(Title
of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o
No x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o
No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes o
No x
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes o No
x
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company
and emerging growth company in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o |
Accelerated
filer o |
|
|
Non-accelerated
filer x |
Smaller
reporting company x |
|
|
|
Emerging
growth company o |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x
No o
The aggregate market value of the common equity held by non-affiliates
was $5,944,892 computed by reference to the closing price of the registrants common stock as quoted on the OTC Markets, Pink Tier
maintained by OTC Markets, Inc. on March 31, 2019 (which was $0.93 per share). For purposes of the above statement only, the registrants
sole director and executive officer and 10% shareholders are assumed to be affiliates. This determination of affiliate status is not necessarily
a conclusive determination for any other purpose.
The
number of shares outstanding of the registrants common stock as of December 16, 2022 was 78,363,567.
PEAK
PHARMACEUTICALS, INC.
FORM
10-K
FOR THE YEARS ENDED SEPTEMBER 30, 2019 and 2018
TABLE
OF CONTENTS
FORWARD-LOOKING
STATEMENTS
The
information contained in this report should be read in conjunction with the financial statements and related notes contained elsewhere
in this Annual Report on Form 10-K. Certain statements made in this report are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange
Act of 1934, as amended (the Exchange Act). These statements are based upon beliefs of, and information currently available
to, us as of the date hereof, as well as estimates and assumptions made by us. Readers are cautioned not to place undue reliance on these
forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words anticipate,
believe, estimate, expect, forecast, future, intend, plan,
predict, project, target, potential, will, would, could,
should, continue or the negative of these terms and similar expressions identify forward-looking statements.
Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other
factors, including the risks relating to our business, industry, and our operations and results of operations. Should one or more of
these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ materially
from those anticipated, believed, estimated, expected, intended, or planned.
Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels
of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our
financial statements are prepared in accordance with accounting principles generally accepted in the United States. These accounting
principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions
upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions
are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the
financial statements as well as the reported amounts of revenue and expenses during the periods presented. Our financial statements would
be affected to the extent there are material differences between these estimates and actual results. The following discussion should
be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
Forward-looking
statements contained in this Form 10-K include, but are not limited to, statements about:
| ● | the
plans and objectives of management for future operations, including plans or objectives relating
to the development of our business plan to merge or acquire another operating business; |
| | |
| ● | a
projection of income (including income/loss), earnings (including earnings/loss) per share,
capital expenditures, dividends, capital structure or other financial items; |
| | |
| ● | our
future financial performance, including any such statement contained in a discussion and
analysis of financial condition by management or in the results of operations included pursuant
to the rules and regulations of the Securities and Exchange Commission (SEC);
and |
| | |
| ● | the
assumptions underlying or relating to any statement described in points above. |
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 this Annual Report on Form 10-K for the year ended September 30, 2019, 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.
Readers
are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the
Securities and Exchange Commission. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that
our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that
actual results of operations or the results of our future activities will not differ materially from our assumptions.
As
used in this Annual Report on Form 10-K and unless otherwise indicated, the terms Peak, we, us, our,
or the Company refer to Peak Pharmaceuticals, Inc. and its Subsidiary, Peak BioPharma Corp. Unless otherwise specified, all
dollar amounts are expressed in United States dollars. Our common stock is currently listed on the OTC Markets, Pink Tier, under the
symbol PKPH.
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 this Annual Report on Form 10-K for the fiscal year ended September 30, 2019, any of which
may cause our 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 our or our 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
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels
of activity, or performance. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these
forward-looking statements. Except as required by law, we undertake no obligation to update any forward-looking statements after the
date of this report to conform these statements to actual results.
PART
I
ITEM
1. BUSINESS
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. 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. |
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 attempting 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.
Strategy
and Outlook
If
we can raise sufficient capital, of which there can be no assurance, our business strategy is to actively pursue additional opportunities
and operating companies to merge with or acquire in furtherance of a profitable business and to build value for our shareholders.
Employees
As
of the date of this report we have no employees. Neil Reithinger, our sole and principal executive officer has no employment agreement
with Company and receives no compensation in his capacity.
Subsidiaries
All
of our business operations historically had been carried on through our wholly-owned subsidiary, Peak BioPharma Corp., a Colorado corporation.
Intellectual
Property
We
do not presently own any intellectual property.
Government
Regulation
Based
upon the regulatory activity related to imposition of restrictions and limitations on the sale and marketing of hemp-based health products
for the veterinary market, on October 1, 2015, we elected to terminate our license agreement with Canna-Pet and cease all operations relating
to sale of hemp-based products for animals. 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. As a result,
we are currently not subject to any government regulation.
ITEM
1A. RISK FACTORS
An
investment in the Companys common stock involves a number of very significant risks. You should carefully consider the risk factors
included in the Risk Factors section below, in addition to other information contained in this report in evaluating the Company
and its business before purchasing shares of its common stock. The Companys business, operating results and financial condition
could be adversely affected due to any of those risks.
Summary
Risk Factors
The
principal factors and uncertainties that make investing in our ordinary shares risky, include, among others:
Risks
Related to Our Company
| ○ | We
have a limited operating history upon which investors can evaluate our future prospects.
We may never attain profitability. |
| ○ | We
have a history of losses, and we may not achieve or sustain profitability in the future. |
| ○ | We
will require additional working capital in order to continue operations and we may not be
able to secure the necessary additional financing. |
| ○ | Our
independent registered public accounting firm has expressed substantial doubt about our ability
to continue as a going concern. |
Risks
Related to Investment
| ○ | You
may experience dilution of your ownership interests because of the future issuance of additional
shares of our common or preferred stock or other securities that are convertible into or
exercisable for our common or preferred stock. |
| ○ | We
may be unable to raise enough capital through sales of our equity and debt securities to
implement our business plan. |
| ○ | The
ability of our Board to issue additional stock may prevent or make more difficult certain
transactions, including a sale or merger of the Company. |
| ○ | Restrictions
on the use of Rule 144 by Shell Companies or Former Shell Companies could affect your ability
to resale our shares. |
| ○ | Our
common stock is subject to the penny stock rules of the SEC and the trading market
in the securities is limited, which makes transactions in the stock cumbersome and may reduce
the value of an investment in the stock. |
| ○ | We
do not anticipate paying dividends on our common stock, and investors may lose the entire
amount of their investment. |
| ○ | If
we fail to maintain an effective system of internal control over financial reporting, we
may not be able to accurately report our financial results or prevent fraud. As a result,
stockholders could lose confidence in our financial and other public reporting, which would
harm our business and the trading price of our Common Stock. |
| ○ | We
may be subject to proposed SEC rules and amendments. |
Risks
Related to Our Company
We
have a limited operating history upon which investors can evaluate our future prospects. We may never attain profitability.
Given
our limited operating history, management has little basis on which to forecast future demand for our products and out anticipated revenues.
Our anticipated and future expense levels are based largely on estimates of planned operations and future revenues rather than experience.
We
have a history of losses, and we may not achieve or sustain profitability in the future.
We
have incurred losses in each fiscal year since our incorporation in 2007. We anticipate that our operating expenses will increase in
the foreseeable future as we continue to explore operating companies to merge with or acquire. These efforts may prove more expensive
than we currently anticipate, and we may not succeed in generating sufficient revenues to offset these higher expenses. If we are unable
to do so, we and our business, financial condition and operating results could be materially and adversely affected.
We
will require additional working capital in order to continue operations and we may not be able to secure the necessary additional financing.
We
will require additional working capital in order to continue to remain compliant under the Exchange Act and to continue to explore future
business opportunities. We cannot be sure that this additional financing, if needed, will be available on acceptable terms or at all.
Furthermore, any debt financing, if available, may involve restrictive covenants, which may limit our operating flexibility with respect
to business matters. If additional funds are raised through the issuance of equity securities, the percentage ownership of our existing
shareholders will be reduced, our shareholders may experience additional dilution in net book value, and such equity securities may have
rights, preferences, or privileges senior to those of our existing shareholders. If adequate funds are not available on acceptable terms,
or at all, we will be unable to develop or enhance our products and services, take advantage of future opportunities, repay debt obligations
as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects,
financial condition, and results of operations.
Our
independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
Our
historical financial statements have been prepared under the assumption that we will continue as a going concern. Our independent registered
public accounting firm has issued a report that included an explanatory paragraph referring to our recurring net losses and accumulated
deficit and expressing substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is
dependent upon our ability to merge or acquire an operating business and obtain additional equity or debt financing or other capital
and, ultimately, to generate revenue. Our financial statements do not include any adjustments that might result from the outcome of this
uncertainty. However, if adequate funds are not available to us when we need it, and we are unable to find an operating company to merge
with or acquire, we will be required to curtail our operations which would, in turn, further raise substantial doubt about our ability
to continue as a going concern.
Risks
Related to Investment
You
may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock
or other securities that are convertible into or exercisable for our common or preferred stock.
Any
future issuance of our equity or equity-backed securities may dilute then current stockholders ownership percentages and could
also result in a decrease in the fair market value of our equity securities, because our assets would be owned by a larger pool of outstanding
equity. As described above, we may need to raise additional capital through public or private offerings of our common or preferred stock
or other securities that are convertible into or exercisable for our common or preferred stock. We may also issue such securities related
to hiring or retaining employees and consultants as payment to providers of goods and services, in connection with future acquisitions
or for other business purposes. Our Board may at any time authorize the issuance of additional common or preferred stock without common
stockholder approval, subject only to the total number of authorized common and preferred shares set forth in our articles of incorporation.
The terms of equity securities issued by us in future transactions may be more favorable to new investors, and may include dividend and/or
liquidation preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further
dilutive effect. Also, the future issuance of any such additional shares of common or preferred stock or other securities may create
downward pressure on the trading price of our common stock. There can be no assurance that any such future issuances will not be at a
price (or exercise prices) below the price at which shares of our common stock are then traded.
We
may be unable to raise enough capital through sales of our equity and debt securities to implement our business plan.
We
will be largely dependent on capital raised through sales of our equity and debt securities. Currently, we have not made any arrangements
to raise additional cash, and we cannot assure you that we will be able to raise the working capital as needed on terms acceptable to
us, if at all. If we are unable to raise capital as needed, we will be unable to continue operations or to implement our business plan
and will be required to cease our operations entirely.
The
ability of our Board to issue additional stock may prevent or make more difficult certain transactions, including a sale or merger of
the Company.
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. As a result, our Board is authorized to issue up to 25,000,000 shares of preferred
stock with powers, rights and preferences designated by it. See Preferred Stock in the section of this Report titled Description
of Securities. Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued,
to create voting impediments or to frustrate persons seeking to affect a takeover or otherwise gain control of the Company. The ability
of the Board to issue such additional shares of Preferred Stock, with rights and preferences it deems advisable, could discourage an
attempt by a party to acquire control of the Company by tender offer or other means. Such issuances could therefore deprive stockholders
of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a
tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares
of preferred stock to persons friendly to the Board could make it more difficult to remove incumbent managers and directors from office
even if such change were to be favorable to stockholders generally.
Restrictions
on the use of Rule 144 by Shell Companies or Former Shell Companies could affect your ability to resale our shares.
Historically,
the SEC has taken the position that Rule 144 under the Securities Act, as amended, is not available for the resale of securities initially
issued by companies that are, or previously were, shell companies like us, to their promoters or affiliates despite technical compliance
with the requirements of Rule 144. The SEC has codified and expanded this position in its amendments to Rule 144 which became effective
on February 15, 2008, the amendments apply to securities acquired both before and after that date, by prohibiting the use of Rule 144
for resale of securities issued by shell companies (other than business transaction related shell companies) or issuers that have been
at any time previously a shell company unless all of the following conditions are met:
| ● | the
issuer of the securities that was formerly a shell company has ceased to be a shell company; |
| ● | the
issuer of the securities is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act; |
| ● | the
issuer of the securities has filed all Exchange Act reports and material required to be filed,
as applicable, during the preceding 12 months (or such shorter period that the issuer was
required to file such reports and materials), other than Form 8-K reports; and |
| ● | at
least one year has elapsed from the time that the issuer filed current Form 10 type information
with the SEC reflecting its status as an entity that is not a shell company. |
Should
we fail to satisfy the initial listing standards of the national exchanges, or our common stock is otherwise rejected for listing and
remains listed on the OTC Markets or suspended from the OTC Markets, the trading price of our common stock could suffer and the trading
market for our common stock may be less liquid, and our common stock price may be subject to increased volatility.
Our
common stock is subject to the penny stock rules of the SEC and the trading market in the securities is limited, which makes
transactions in the stock cumbersome and may reduce the value of an investment in the stock.
The
SEC has adopted Rule 15g-9 which establishes the definition of a penny stock, for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
| ● | that
a broker or dealer approve a persons account for transactions in penny stocks;
and |
| ● | the
broker or dealer receives from the investor a written agreement to the transaction, setting
forth the identity and quantity of the penny stock to be purchased. |
In
order to approve a persons account for transactions in penny stocks, the broker or dealer must:
| ● | obtain
financial information and investment experience objectives of the person; and |
| ● | make
a reasonable determination that the transactions in penny stocks are suitable for that person
and the person has sufficient knowledge and experience in financial matters to be capable
of evaluating the risks of transactions in penny stocks. |
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to
the penny stock market, which, in highlight form sets forth:
| ● | the
basis on which the broker or dealer made the suitability determination; and |
| ● | that
the broker or dealer received a signed, written agreement from the investor prior to the
transaction. |
Generally,
brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more
difficult for investors to dispose of common stock and cause a decline in the market value of stock.
Disclosure
also must be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions
payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the limited market in penny stocks. If we remain subject to the
penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities
are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.
We
do not anticipate paying dividends on our common stock, and investors may lose the entire amount of their investment.
To
date, cash dividends have not been declared or paid on our common stock, and we do not anticipate such a declaration or payment for the
foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds
absent a sale of their shares of common stock, subject to the limitation outlined herein. If we do not pay dividends, our common stock
may be less valuable because a return on your investment will only occur if our stock price appreciates. We cannot assure stockholders
of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount
of their investment.
We
do not have an effective system of internal control over financial reporting, and may not be able to accurately report our financial
results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm
our business and the trading price of our Common Stock.
Effective
internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered
in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection
with Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by our independent registered public accounting firm, may reveal
deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective
or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls
could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading
price of our securities.
We
are required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is required to
assess the effectiveness of these controls annually. However, for as long as we are a shell company, our independent registered public
accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section
404 of the Sarbanes-Oxley Act. An independent assessment of the effectiveness of our internal controls over financial reporting could
detect problems that our managements assessment might not. Undetected material weaknesses in our internal controls over financial
reporting could lead to restatements of our financial statements and require us to incur the expense of remediation.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None.
ITEM
2. PROPERTIES
Our
principal executive offices are located at 14201 N. Hayden Road, Suite A-1, Scottsdale, AZ 85260. Our registered agent is Nevada Agency
and Transfer Company, 50 West Liberty Street, Suite 880 Reno, NV 89501.
We
believe that our facilities are generally in good condition and suitable to carry on our business. We also believe that, if required,
suitable alternative or additional space will be available to us on commercially reasonable terms.
ITEM
3. LEGAL PROCEEDINGS
From
time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may
harm business. We are currently not aware of any pending legal proceedings to which we are a party or of which any of our property is
the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
PART
II
ITEM
5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market
Information
Our
shares of common stock are quoted on the OTC Markets, Pink Tier, under the symbol PKPH. On December 16, 2022, the closing price
of our common stock reported by the OTC Markets was $0.044 per share.
Transfer
Agent
The
transfer agent and registrar for our common stock is Securities Transfer Corporation, 2901 North Dallas Parkway, Suite 380, Plano, Texas
75093. Their phone number is (469) 633-0101 and their website is www.stctransfer.com.
Holders
of Common Stock
As
of the date of this report, we have 78,363,567 shares of common stock issued and outstanding held by approximately 19 stockholders of
record.
Registration
Rights
There
were no registration rights as of September 30, 2019.
Dividends
We
have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable
future. We intend to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay
cash dividends will be at the discretion of our Board and will be dependent upon financial condition, results of operations, capital
requirements and such other factors as the Board deems relevant.
Securities
Authorized for Issuance Under Equity Compensation Plans
There
were no equity compensation plans formally approved by the shareholders of the Company as of September 30, 2019.
Recent
Sales of Unregistered Securities
During
the fiscal year ended September 30, 2019, we undertook no sales of unregistered securities.
Issuer
Purchases of Equity Securities
During
the fiscal year ended September 30, 2019, we did not repurchase any of our equity securities.
ITEM
6. [RESERVED]
ITEM
7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary
Notice Regarding Forward Looking Statements
The
information contained in Item 7 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected
in the forward-looking statements because of certain risks and uncertainties set forth in this report. Although management believes that
the assumptions made, and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying
assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.
We
desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This filing
contains a number of forward-looking statements that reflect managements current views and expectations with respect to our business,
strategies, products, future results and events, and financial performance. All statements made in this filing other than statements
of historical fact, including statements addressing operating performance, clinical developments which management expects or anticipates
will or may occur in the future, including statements related to our technology, market expectations, future revenues, financing alternatives,
statements expressing general optimism about future operating results, and non-historical information, are forward looking statements.
In particular, the words believe, expect, intend, anticipate, estimate, may,
variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying
such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject
to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially
from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake
any obligation to revise these forward-looking statements to reflect any future events or circumstances.
Readers
should not place undue reliance on these forward-looking statements, which are based on managements current expectations and projections
about future events. They are not guarantees of future performance, they are subject to risks, uncertainties and assumptions (including
those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially
from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences
include, but are not limited to, the risks to be discussed in this Annual Report on Form 10-K, information in press releases, and other
communications to shareholders issued by us from time to time. We undertake no obligation to publicly update or revise any forward-looking
statements, whether because of new information, future events, or otherwise.
Use
of Generally Accepted Accounting Principles (GAAP) Financial Measures
We
use United States GAAP financial measures in the section of this report captioned Managements Discussion and Analysis or
Plan of Operation (MD&A), unless otherwise noted. All the GAAP financial measures used by us in this report relate to the inclusion
of financial information. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto
included elsewhere in this annual report. All references to dollar amounts in this section are in United States dollars, unless expressly
stated otherwise. Please see our Risk Factors for a list of our risk factors.
Overview
This
subsection of MD&A provides an overview of the important factors that management focuses on in evaluating our businesses, financial
condition and operating performance, our overall business strategy and our financial results for the periods covered.
Going
Concern
The consolidated financial statements contained in this report have been prepared assuming that the Company will continue as a going concern. The Company had cumulative net losses through September 30, 2019 of $5,098,487, as well as negative cash flows of $1,743 from operating activities. The Companys cash and cash equivalents balance as of September 30, 2019 was $527. These factors raise substantial doubt about the Companys ability to continue as a going concern.
While
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.
The
consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a
going concern. The Companys 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 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 its business and achieving commercial revenues. If the Company is unable to obtain
the necessary capital, the Company may have to cease operations.
Results
of Operations
Comparison
of the Fiscal Years Ended September 30, 2019 to the Fiscal Years Ended September 30, 2018
Revenue
No
revenue or cost of sales were generated for the years ended September 30, 2019 or September 30, 2018
Operating
Expenses
The
Companys expenses for the years ended September 30, 2019 and 2018, are summarized as follows:
| |
Years ended September 30, | |
| |
2019 | | |
2018 | |
General and administrative (including $1,252 and $12,930 of fees paid to related party) | |
$ | 5,684 | | |
$ | 27,823 | |
| |
| | | |
| | |
Total operating expenses | |
$ | 5,684 | | |
$ | 27,823 | |
The
decrease in general and administrative expenses for the year ended September 30, 2019, compared to the year ended September 30, 2018
of $22,139 is due to a decrease in accounting fees as well as filing fees.
Other
Expenses
| |
Years ended September 30, | |
| |
2019 | | |
2018 | |
Interest Expense | |
$ | 8,309 | | |
$ | 5,584 | |
Change in fair value of convertible debt | |
| - | | |
| (5,000 | ) |
Total other expenses | |
$ | 8,309 | | |
$ | 584 | |
Interest
expense increased from $5,584 to $8,309 for the year ended September 30, 2019 from the comparative period of 2018 due to additional accrued
interest on the notes. The change in fair value of convertible debt of $(5,000) during the year ended September 30, 2018 was the result
of remeasurement of the companys convertible notes payable.
Liquidity
and Capital Resources
Working
Capital
The
following table sets forth a summary of changes in working capital for the years ended September 30, 2019 and 2018:
| |
Years ended September 30, | |
| |
2019 | | |
2018 | |
Current Assets | |
$ | 527 | | |
$ | 2,270 | |
Current Liabilities | |
| 235,612 | | |
| 223,362 | |
Working capital | |
$ | (235,085 | ) | |
$ | (221,092 | ) |
The
decrease in current assets of $1,743 is mainly due to a decrease in cash from the payment of outstanding bills during the year ended
September 30, 2019. The increase in current liabilities of $12,250 is primarily due to accrued interest on two promissory notes issued
during the year ended September 30, 2018.
Cash
Flows
The
following table sets forth a summary of changes in cash flows for the years ended September 30, 2019 and 2018:
| |
Years Ended September 30, | |
| |
2019 | | |
2018 | |
Net cash used in operating activities | |
$ | (1,743 | ) | |
$ | (43,721 | ) |
Net cash provided by financing activities | |
| - | | |
| 43,000 | |
Change in cash | |
$ | (1,743 | ) | |
$ | (721 | ) |
As
of September 30, 2019, our cash balance was $527. 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 year ended September 30, 2019 was $1,743 mainly due to the net loss that was incurred during the year.
Net
cash provided by financing for the year ended September 30, 2018 was $43,000 from two promissory notes received during the year.
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. During the year ended September 30, 2021,
the Company received an aggregate of $275,000 related to the issuance of 14 notes payable to various noteholders, including an aggregate
of $35,000 as a result of two notes payable issued to the Companys Chief Executive Officer, a related party. The notes are unsecured,
bear interest at 1.5% per annum, and mature on September 30, 2021. 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
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.
Income
Taxes
The
provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (ASC
740). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets
and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements,
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For
the years ended September 30, 2019 and 2018 we did not have any interest and penalties or any significant unrecognized uncertain tax
positions.
Convertible
Notes Payable
We
review convertible notes payable and the related subscription agreements to determine the appropriate reporting within the financial
statements. We report convertible notes payable as liabilities at their carrying value less unamortized discounts in accordance with
the applicable accounting guidance. We bifurcate conversion options and report them as liabilities at fair value at each reporting period
when required in accordance with the applicable accounting guidance. No gain or loss is reported when the notes are converted into shares
of our common stock in accordance with the notes terms.
Recently
Issued 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 has determined that the adoption of this guidance has no impact on its consolidated financial statements.
Recently
Adopted Accounting Pronouncements
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.
In
May 2014, the FASB issued ASU, 2014-09—Revenue from Contracts with Customers (Topic 606), or ASU 2014-09, and further updated
through ASU 2016-12, or ASU 2016-12, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on
principles that govern the recognition of revenue at an amount to which an entity expects to be entitled to when products are transferred
to customers. This guidance is effective for annual reporting periods, and interim periods within those years, beginning after December
15, 2017 for public entities, and after December 15, 2018 for non-public entities. The new revenue standard may be applied retrospectively
to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted
ASU 2014-09 on October 1, 2018 and has determined that the adoption of this guidance had no impact on its consolidated
financial statements.
In
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 lessees obligation to make lease payments arising
from a lease, measured on a discounted basis and a right-of-use asset represents the lessees right to use, or control use of,
a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily
because lessees must recognize lease assets and lease liabilities. 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. ASU No. 2016-02 is effective for reporting periods beginning after December
15, 2018. The Company adopted ASU 2016-02 on October 1, 2019 and has determined that the adoption of this guidance had
no impact on its consolidated financial statements.
In
April 2016, the FASB issued ASU 2016 – 10 Revenue from Contracts with Customers: identifying Performance Obligations
and Licensing. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods
and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer
with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the
entitys intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree
of judgement necessary to comply with Topic 606. Public business entities will adopt the standard for annual reporting periods beginning
after December 15, 2017, including interim periods within that year. The Company adopted ASU 2016-10 on October 1, 2018
and has determined that the adoption of this guidance had no impact on its consolidated financial statements.
In
August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash
Payments. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement
of cash flows. ASU 2016-15 is effective for the Company beginning in the first quarter of fiscal 2019. Early adoption is permitted, provided
that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method.
The Company adopted ASU 2016-15 on October 1, 2018 and has determined that the adoption of this guidance had no impact on its consolidated
financial statements.
In
January 2017, FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business.
The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with
evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business
affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual
periods beginning after December 15, 2017, including interim periods within those periods. The Company adopted ASU 2017-01 on
October 1, 2018 and has determined that the adoption of this guidance had no impact on its consolidated financial statements.
On
May 10, 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU)
2017-09 Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance
to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance,
modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or
liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for all companies for annual
periods beginning on or after December 15, 2017. Early adoption is permitted. The Company adopted ASU 2017-09 on October 1, 2018
and has determined that the adoption of this guidance had no impact on its consolidated financial statements.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The
information called for by Item 8 is included following the Index to Financial Statements on page F-1 contained in this annual
report on Form 10-K.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On
March 17, 2017, we engaged Dale Matheson Carr-Hilton Labonte LLP (DMCL) as our independent registered public accounting
firm. Effective February 21, 2021, we dismissed DMCL as our independent registered public accounting firm engaged to audit our consolidated
financial statements and engaged Friedman LLP (Friedman) as the Companys independent registered public accounting
firm.
Through
the reporting periods ended September 30, 2017, there have been no disagreements with DMCL on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of
DMCL would have caused them to make reference thereto in their report on the financial statements.
ITEM
9A. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our senior management, including our Chief Executive Officer and our Chief Financial Officer,
we performed an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, as of the end of the period covered by this annual report (the Evaluation Date). Based on this
evaluation, our Chief Executive Officer who is also our Chief Financial Officer concluded that, as of September 30, 2019, our disclosure
controls and procedures were not effective to provide reasonable assurance that material information required to be disclosed by us in
the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms and (ii) accumulated and communicated to the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding disclosure.
We
do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an audit
committee financial expert, as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however,
it is managements view that such a committee is an important internal control over financial reporting, the lack of which may
result in ineffective oversight in the establishment and monitoring of internal controls and procedures.
Based
on this evaluation, we determined that as of September 30, 2019, our disclosure controls and procedures were not effective due to the
following:
| ● | We
do not have a majority of independent directors on our board of directors, which may result
in ineffective oversight in the establishment and monitoring of required internal controls
and procedures. |
| ● | We
have an inadequate number of personnel to properly implement control procedures. |
| ● | Due
to the size and lack of resources of our Company, we have not fully developed formal accounting
policies and procedures. |
| ● | We
have not properly complied with all aspects of the Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
2013. |
Managements
Report on Internal Control over Financial Reporting
As
of September 30, 2019, management assessed the effectiveness of our internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments. Based on that evaluation,
they concluded that during the period covered by this report, such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or
operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered
to be material weaknesses.
The
matters involving internal controls and procedures that our management considered to be material weaknesses were:
| (i) | lack
of a functioning audit committee; |
| (ii) | inadequate
segregation of duties consistent with control objectives; and |
| (iii) | ineffective
controls over period-end financial disclosure and reporting processes. |
The
aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our
financial statements as of September 30, 2019.
Management
believes the weaknesses identified above have not had any material effect on our financial statements. However, we are currently reviewing
our disclosure controls and procedures related to these material weaknesses and expect to implement changes as soon as practicable and
as resources allow, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate
resources to remediate these material weaknesses.
Changes
in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting during the year ended September 30, 2019 that have materially affected
or are reasonably likely to materially affect our internal control over financial reporting.
Managements
Remediation Plan
Subject
to raising additional working capital, we plan to take
steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report
on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement
the following changes in the next fiscal year once we have identified a suitable business to acquire and as our capital resources allow:
| (i) | appoint
additional qualified personnel to address inadequate segregation of duties and ineffective
risk management and implement modifications to our financial controls to address such inadequacies; |
| (ii) | adopt
sufficient written policies and procedures for accounting and financial reporting; and |
| (iii) | appoint
independent board members and a functioning audit committee. |
The
remediation efforts set out in (i) is largely dependent upon our company identifying and acquiring a suitable operating business and
securing additional financing to cover the costs of hiring the requisite personnel and implementing the changes required. If we are unsuccessful
in such endeavors, remediation efforts may be delayed. Because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Management
believes that despite our material weaknesses set forth above, our financial statements for the year ended September 30, 2019 are fairly
stated, in all material respects, in accordance with US GAAP.
ITEM
9B. OTHER INFORMATION
None.
ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not
applicable.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
and Executive Officers, Promoters and Control Persons
Set
forth below is the present director and executive officer of the Company. Except as set forth below, there are no other persons who have
been nominated or chosen to become directors nor are there any other persons who have been chosen to become executive officers. Other
than as set forth below, there are no arrangements or understandings between any of the directors, officers and other persons pursuant
to which such person was selected as a director or an officer.
Name | |
Position Held with Company | |
Age | |
Date First Elected or Appointed |
Neil Reithinger (1) | |
Chief Executive Officer, Chief Financial Officer and Director | |
52 | |
April 6, 2016 |
| |
| |
| |
|
Notes
(1) |
On
April 6, 2016, the Board of Directors of the Company accepted the resignation of Arnold Tinter as Chief Executive Officer and Chief
Financial Officer, effective as of March 31, 2016, and in accordance with the provisions of Section 4.4 of the Companys Bylaws,
appointed Neil Reithinger as Chief Executive Officer and Chief Financial Officer, to fill the vacancies created by the resignation
of Mr. Tinter. Furthermore, in accordance with the provisions of Section 3.6 of the Companys Bylaws, Neil Reithinger was appointed
as a member of the Companys Board of Directors to fill the vacancy created by the resignation of Vered Caplan, to serve for
the remainder of her unexpired term as a director, and thereafter until his successor has been duly elected and qualified. |
|
|
Business
Experience
The
following is a brief account of the education and business experience of Neil Reithinger, our sole officer and director, during the past
five years, indicating his principal occupation during the period, and the name and principal business of the organization by which he
was employed.
Neil
Reithinger – Chief Executive Officer, Chief Financial Officer and Director
Mr.
Reithinger is the Founder and President of Eventus Advisory Group, LLC (Eventus), a private, CFO-services firm incorporated
in Arizona that specializes in capital advisory and SEC compliance for publicly-traded and emerging growth companies, a firm he founded
in 2009. He has also been Chief Financial Officer, Secretary and Treasurer of Orgenesis Inc. since August 2014. Mr. Reithinger earned
a B.S. in Accounting from the University of Arizona and is a Certified Public Accountant. He is a Member of the American Institute of
Certified Public Accountants and the Arizona Society of Certified Public Accountants.
Family
Relationships
Being
our sole officer and director, there are no family relationships that are relevant.
Significant
Employees
We
do not have other significant employees.
Committees
of Board of Directors
There
are currently no committees of the Board of Directors.
Term
of Office
Our
directors cease to hold office immediately before their election at an annual general meeting or their appointment by the unanimous resolution
of our shareholders but are eligible for reelection or reappointment. Notwithstanding the foregoing, our directors hold office until
their successors are elected or appointed, or until their deaths, resignations or removals. Our officers hold office at the discretion
of our board of directors, or until their deaths, resignations or removals.
Potential
Conflicts of Interest
We
are not aware of any conflicts of interest with our directors and officers.
Director
Independence
We
are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements
that a majority of the Board be independent and, as a result, we are not at this time required to have our Board comprised
of a majority of Independent Directors. Currently, we have one director, Neil Reithinger, who is not independent
within the definition of independence provided in the Marketplace Rules of The NASDAQ Stock Market.
Section
16(a) Beneficial Ownership Compliance
Section
16(a) of the Securities Exchange Act, as amended, requires our executive officers and directors, and persons who own more than 10% of
our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission
and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations
from certain reporting persons, during the year ended September 30, 2019, the filing requirements applicable to its officers, directors
and greater than 10% beneficial owners were complied.
Code
of Ethics
In
December 2013, we adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting
officer or controller, persons performing similar functions as well as to our directors and employees. A copy of our Code of Ethics was
filed as Exhibit 14.1 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2013, as filed with the Securities and
Exchange Commission on December 27, 2013.
ITEM
11. EXECUTIVE COMPENSATION
Summary
Compensation
The
following table sets forth information concerning the total compensation paid or accrued by us during the two fiscal years ended September
30, 2019 and 2018 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any
time during the fiscal year ended September 30, 2019; (ii) all individuals that were serving as executive officers of ours at the
end of the fiscal year ended September 30, 2019 that received annual compensation during the fiscal year ended September 30, 2019 in
excess of $100,000; and (iii) all individuals not serving as executive officers of ours at the end of the fiscal year ended September
30, 2019 that received annual compensation during the fiscal year ended September 30, 2019 in excess of $100,000.
Name and Principal Position | |
Year | |
Salary ($) | |
Bonus ($) | |
Stock Awards ($) | |
Option Awards ($) | |
Nonequity Incentive Plan Compensa- tion ($) | |
Change in Pension Value and Non Qualified Deferred Compensation Earnings ($) | |
All Other Compensa tion ($) | |
Total ($) |
Neil Reithinger CEO & CFO 1 | |
2019 2018 | |
- - | |
- - | |
- - | |
- - | |
- - | |
- - | |
- - | |
-
- |
Notes
| (1) | Neil
Reithinger was appointed as Chief Executive and Chief Financial Officer on April 6, 2016. Mr. Reithinger is the Founder and President
of Eventus. Eventus provides accounting services to the Company in connection with audit coordination, financial statement preparation
and SEC filings. Eventus is owned by Mr. Reithinger, our sole officer and director. The Company pays customary fees for these services.
During the year ended September 30, 2019 and 2018, we incurred fees to Eventus of $1,252 and $12,930, respectively. |
Outstanding
Equity Awards at Fiscal Year End
The
following table summarizes the outstanding equity awards held by each named executive officer of our company as of September 30, 2019.
| |
Number of Securities Underlying Unexercised Options (#) Exercisable | |
Number of Securities Underlying Unexercised Options Unexercisable (#) | |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | |
Option Exercise Price ($) | |
Option Expir- ation Date | |
Number of Shares or Units of Stock that have not Vested (#) | |
Market Value of Shares or Units of Stock that have not Vested (#) | |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#) | |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have not Vested ($) |
Neil Reithinger | |
- | |
- | |
- | |
- | |
- | |
- | |
- | |
- | |
- |
Retirement
or Similar Benefit Plans
There
are no arrangements or plans in which we provide retirement or similar benefits for our directors or executive officers.
Resignation,
Retirement, Other Termination, or Change in Control Arrangements
We
have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to our directors or executive
officers at, following, or in connection with the resignation, retirement or other termination of our directors or executive officers,
or a change in control of our company or a change in our directors or executive officers responsibilities following a change
in control.
Director
Compensation
The
following table sets forth for each director, certain information concerning their compensation for the year ended September 30, 2019
and 2018.
| |
Date | |
Fees Earned or Paid in Cash ($) | |
Stock Awards ($) | |
Option Awards ($) | |
Non-Equity Incentive Plan Compensation ($) | |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | |
All other Compensation ($) | |
Total ($) |
Neil Reithinger | |
2019 | |
- | |
- | |
- | |
- | |
- | |
- | |
- |
| |
2018 | |
- | |
- | |
- | |
- | |
- | |
- | |
- |
We
have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will
be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement
plans, tax qualified deferred contribution plans and nonqualified deferred contribution plans. Similarly, we have no contracts, agreements,
plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers or any other persons following,
or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of us or
a change in a named executive officers responsibility following a change in control.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following tables set forth, as of December 16, 2022, certain information with respect to the beneficial ownership of
our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current
directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except
as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
In
the following tables, we have determined the number and percentage of shares beneficially owned in accordance with Rule 13d3 of the Securities
Exchange Act of 1934 based on information provided to us by our controlling stockholder, executive officers and directors, and this information
does not necessarily indicate beneficial ownership for any other purpose. In determining the number of shares of our common stock beneficially
owned by a person and the percentage ownership of that person, we include any shares as to which the person has sole or shared voting
power or investment power, as well as any shares subject to warrants or options held by that person that are currently exercisable or
exercisable within 60 days.
Security
Ownership of Certain Beneficial Holders
Title
of Class |
Name
and Address of
Beneficial Owner |
Amount
and Nature of
Beneficial Ownership |
Percent
of
Class(1)(2) |
Common
Stock |
Neil
Reithinger
14201 N Hayden Road, Suite A-1
Scottsdale, AZ 85260 |
14,439,999
Direct |
18.4% |
Common
Stock |
Sukh
Athwal
2103-1383 Marinaside Crescent
West Vancouver, BC, Canada
V6Z 2W9 |
17,139,999
Direct |
21.9% |
Common
Stock |
Talal
Yassin
3040 Rosebery Ave
West Vancouver, BC, Canada
V7V 349 |
4,871,319
Direct |
6.2% |
|
Total
Beneficial Holders as a
Group |
33,751,317
Direct |
46.5% |
Security
Ownership of Management
Title
of Class |
Name
and Address of
Beneficial Owner |
Amount
and Nature of
Beneficial Ownership |
Percent
of
Class (1)(2) |
Common
Stock |
Neil
Reithinger
14201 N Hayden Road, Suite A-1
Scottsdale, AZ 85260 |
14,439,999
Direct |
18.4% |
Common
Stock |
Directors
& Executive Officers
as a group (1 person) |
14,439,999
Direct |
18.4% |
Notes
(1) |
Percentages
are based upon 78,363,567 shares of our common stock issued and outstanding as of December 16, 2022. |
|
|
(2) |
Beneficial
ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to
securities. Shares of common stock underlying options, warrants or notes currently exercisable or convertible or exercisable within
60 days of December 16, 2022 are deemed outstanding for the purpose of computing the percentage of the person holding
such option, warrant or note but are not deemed outstanding for computing the percentage of any other person. |
|
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions
with Related Persons
Except
as set out below, as of September 30, 2019, there have been no transactions, or currently proposed transactions, in which we were or
are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end
for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest:
| ● | any
director or executive officer of our company; |
| ● | any
person who beneficially owns, directly or indirectly, shares carrying more than 5% of the
voting rights attached to our outstanding shares of common stock; |
| ● | any
promoters and control persons; and |
| ● | any
member of the immediate family (including spouse, parents, children, siblings and in laws)
of any of the foregoing persons. |
Effective
June 15, 2015, Neil Reithinger was appointed as President, Treasurer, Secretary and a director, and is now the Companys sole director
and officer. Mr. Reithinger is the Founder and President of Eventus Advisory Group, LLC, a private, CFO-services firm (Eventus).
Eventus provides accounting and advisory services to the Company in connection with audit coordination, financial statement preparation
and SEC filings. The Company pays customary fees for these services. During the years ended September 30, 2019 and 2018, the Company
incurred fees to Eventus of $1,252 and $12,930 respectively, and owed Eventus $12,360 and $10,185, respectively, as of September 30,
2019 and 2018. The office space used by the Company is provided by Eventus at no charge.
Named
Executive Officers and Current Directors
For
information regarding compensation for our named executive officers and current directors, see Executive Compensation.
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit
and Accounting Fees
On
March 17, 2017, we engaged Dale Matheson Carr-Hilton Labonte LLP (DMCL) as our independent registered public accounting
firm. Effective as of February 2021, we dismissed DMCL as our independent registered public accounting firm engaged to audit our consolidated
financial statements and engaged Friedman LLP (Friedman) on February 21, 2021 as the Companys independent registered
public accounting firm for the fiscal year ended September 30, 2018. The following table sets forth the fees billed to the Company for
professional services rendered by DMCL and for Friedman for each of the years ended September 30, 2019 and 2018, respectively:
| |
DMCL | |
Services | |
2019 | | |
2018 | |
Audit fees | |
$ | - | | |
$ | 11,866 | |
Audit related fees | |
| - | | |
| - | |
Tax fees | |
| - | | |
| - | |
All other fees | |
| - | | |
| - | |
Total fees | |
$ | - | | |
$ | 11,866 | |
| |
Friedman | |
Services | |
2019 | | |
2018 | |
Audit fees | |
$ | 15,000 | | |
$ | 15,000 | |
Audit related fees | |
| - | | |
| - | |
Tax fees | |
| - | | |
| - | |
All other fees | |
| - | | |
| - | |
Total fees | |
$ | 15,000 | | |
$ | 15,000 | |
Audit
Fees
The
audit fees were paid for the audit services of our annual and quarterly reports.
Pre-Approval
Policies and Procedures
Our
sole director preapproves all services provided by our independent registered public accounting firm. All of the above services and fees
were reviewed and approved by our sole director before the respective services were rendered. Our sole director has considered the nature
and amount of fees billed and believes that the provision of services for activities unrelated to the audit is compatible with maintaining
their respective independence.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit |
|
Number |
Description |
(2) |
Plan
of acquisition, reorganization, arrangement, liquidation or succession |
2.1 |
Articles
of Merger (incorporated by reference to our Registration Statement on Form 8-K filed on September 5, 2013) |
2.2 |
Agreement
and Plan of Merger (incorporated by reference to our Registration Statement on Form 8-K filed on September 5, 2013) |
2.1 |
Articles
of Merger (incorporated by reference to our Registration Statement on Form 8-K filed on March 20, 2014) |
2.2 |
Agreement
and Plan of Merger (incorporated by reference to our Registration Statement on Form 8-K filed on March 20, 2014) |
2.1 |
Articles
of Merger (incorporated by reference to our Registration Statement on Form 8-K filed on December 30, 2014) |
2.2 |
Agreement
and Plan of Merger (incorporated by reference to our Registration Statement on Form 8-K filed on December 30, 2014) |
(3) |
(i)
Articles of Incorporation; and (ii) Bylaws |
3.1 |
Articles
of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on December 29, 2008) |
3.1.2 |
Certificate
of Amendment to Articles of Incorporation (incorporated by reference to our Registration Statement on Form 10-K filed on December
26, 2012) |
3.1.3 |
Certificate
of Change (incorporated by reference to our Registration Statement on Form 10-K filed on December 26, 2012) |
3.2 |
Bylaws
(incorporated by reference to our Registration Statement on Form S-1 filed on December 29, 2008) |
(4) |
Instruments
Defining the Rights of Security Holders, Including Indentures |
4.1 |
Specimen
Common Stock Certificate (incorporated by reference to our Registration Statement on Form S-1 filed on December 29, 2008) |
4.1 |
Form
of Registrant’s 10% Senior Convertible Promissory Note (incorporated by reference to our Registration Statement on Form 8-K
filed on October 17, 2013) |
(10) |
Material
Contracts |
10.1 |
Convertible
Promissory Note dated March 21, 2017 with Trius Holdings Limited (incorporated by reference to our Registrant’s Quarterly Report
on Form 10-Q filed on March 31, 2016.) |
10.2 |
Convertible
Promissory Note dated March 30, 2017 with Sukh Athwal (incorporated by reference to our Registrant’s Quarterly Report on Form
10-Q filed on March 31, 2016.) |
10.3 |
Convertible
Promissory Note dated January 10, 2018 with Mediapark Investments Limited (incorporated by reference to our Registrant’s Quarterly
Report on Form 10-Q filed on May 14, 2018) |
10.4 |
Convertible
Promissory Note dated April 2, 2018 with Sukh Athwal (incorporated by reference to our Registrant’s Quarterly Report on Form
10-Q filed on May 14, 2018) |
10.5 |
First
Amendment to Convertible Promissory Note dated May 7, 2018 with Sukh Athwal (incorporated by reference to our Registrant’s
Quarterly Report on Form 10-Q filed on May 14, 2018) |
10.6 |
First
Amendment to Convertible Promissory Note dated May 7, 2018 with Trius Holdings Limited (incorporated by reference to our Registrant’s
Quarterly Report on Form 10-Q filed on May 14, 2018) |
(31) |
Rule
13a-14(a)/15d-14(a) Certification |
31.1* |
Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer |
31.2* |
Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer |
(32) |
Section
1350 Certification |
32.1* |
Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer |
32.2* |
Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer |
(101)* |
Interactive
Data Files |
101.INS |
XBRL
Instance Document |
101.SCH |
XBRL
Taxonomy Extension Schema Document |
101.CAL |
XBRL
Taxonomy Extension Calculation Linkbase Document |
101.DEF |
XBRL
Taxonomy Extension Definition Linkbase Document |
101.LAB |
XBRL
Taxonomy Extension Label Linkbase Document |
101.PRE |
XBRL
Taxonomy Extension Presentation Linkbase Document |
* |
Filed
herewith. |
|
|
** |
Furnished
herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part
of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed
for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. |
ITEM
16. FORM 10-K SUMMARY
Not
applicable.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PEAK
PHARMACEUTICALS
|
By: |
/s/
Neil Reithinger |
|
|
Neil Reithinger |
|
Chief Executive Officer & Chief Financial Officer |
|
Date: December 19, 2022 |
|
PEAK
PHARMACEUTICALS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
TABLE
OF CONTENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders of Peak Pharmaceuticals, Inc.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Peak Pharmaceuticals, Inc. (the Company) as of September 30,
2019 and 2018, and the related consolidated statements of operations, statements of stockholders deficit, and
cash flows for each of the years in the two-year period ended September 30, 2019 and 2018, and the related notes (collectively referred
to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of September 30, 2019 and 2018, and the results of its operations and its cash flows for the each
of the years in the two-year period ended September 30, 2019, in conformity with accounting principles generally accepted
in the United States of America.
Substantial
Doubt about the Companys Ability to Continue as a Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company had an accumulated deficit of $5,098,487 and a working capital deficiency of $235,085 as of
September 30, 2019. During the year ended September 30, 2019, the Company incurred a net loss of $13,993 and used cash in operating activities
of $1,743. As of September 30, 2019, the Company had cash of $527. These conditions raise substantial doubt about the Companys
ability to continue as a going concern. Managements evaluation of the events and conditions and managements plans regarding
those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty. Our opinion is not modified with respect to that matter.
Basis
for Opinion
These
financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over
financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/
Friedman LLP |
|
|
We
have served as the Companys auditor since 2021. |
|
|
Marlton,
New Jersey |
|
|
December
19, 2022 |
|
PEAK
PHARMACEUTICALS, INC. |
CONSOLIDATED
BALANCE SHEETS |
| |
September 30, | |
| |
2019 | | |
2018 | |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 527 | | |
$ | 2,270 | |
Total Assets | |
$ | 527 | | |
$ | 2,270 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS DEFICIT | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable (including $87,237 and $85,062) | |
$ | 157,117 | | |
$ | 153,176 | |
Accrued liabilities | |
| 15,495 | | |
| 7,186 | |
Convertible notes payable | |
| 20,000 | | |
| 20,000 | |
Notes payable | |
| 43,000 | | |
| 43,000 | |
Total Liabilities | |
| 235,612 | | |
| 223,362 | |
| |
| | | |
| | |
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 as of September 30, 2019 and 2018 | |
| 7,836 | | |
| 7,836 | |
Additional paid in capital | |
| 4,855,566 | | |
| 4,855,566 | |
Accumulated deficit | |
| (5,098,487 | ) | |
| (5,084,494 | ) |
Total Stockholders Deficit | |
| (235,085 | ) | |
| (221,092 | ) |
Total Liabilities and Stockholders Deficit | |
$ | 527 | | |
$ | 2,270 | |
The
accompanying footnotes are an integral part of these consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
CONSOLIDATED
STATEMENTS OF OPERATIONS |
| |
For the Twelve Months Ended | |
| |
September 30, | |
| |
2019 | | |
2018 | |
Operating expenses: | |
| | | |
| | |
General and administrative (including $1,252 and $12,930 of fees paid to related party) | |
$ | 5,684 | | |
$ | 27,823 | |
Total operating expenses | |
| 5,684 | | |
| 27,823 | |
| |
| | | |
| | |
Operating loss | |
| (5,684 | ) | |
| (27,823 | ) |
| |
| | | |
| | |
Other expenses: | |
| | | |
| | |
Interest expense | |
| 8,309 | | |
| 5,584 | |
Change in fair value of convertible debt | |
| - | | |
| (5,000 | ) |
Total other expenses | |
| 8,309 | | |
| 584 | |
| |
| | | |
| | |
Net loss | |
$ | (13,993 | ) | |
$ | (28,407 | ) |
| |
| | | |
| | |
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 consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
CONSOLIDATED
STATEMENT OF STOCKHOLDERS DEFICIT |
FOR
THE TWELVE MONTHS ENDED SEPTEMBER 30, 2019 and 2018 |
| |
Common Stock | | |
Additional Paid | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
In Capital | | |
Deficit | | |
Total | |
Balance, September 30, 2017 | |
| 78,363,567 | | |
$ | 7,836 | | |
$ | 4,855,566 | | |
$ | (5,056,087 | ) | |
$ | (192,685 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (28,407 | ) | |
| (28,407 | ) |
Balance, September 30, 2018 | |
| 78,363,567 | | |
| 7,836 | | |
| 4,855,566 | | |
| (5,084,494 | ) | |
| (221,092 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (13,993 | ) | |
| (13,993 | ) |
Balance, September 30, 2019 | |
| 78,363,567 | | |
$ | 7,836 | | |
$ | 4,855,566 | | |
$ | (5,098,487 | ) | |
$ | (235,085 | ) |
The
accompanying footnotes are an integral part of these consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
FOR
THE TWELVE MONTHS ENDED SEPTEMBER 30, 2019 and 2018 |
| |
2019 | | |
2018 | |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (13,993 | ) | |
$ | (28,407 | ) |
Adjustment to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Change in fair value of convertible debt | |
| - | | |
| (5,000 | ) |
Change in operating assets and liabilities: | |
| | | |
| | |
Accounts payable | |
| 1,766 | | |
| 4,448 | |
Accounts payable - related parties | |
| 2,175 | | |
| (14,347 | ) |
Accrued liabilities | |
| 8,309 | | |
| (415 | ) |
Net cash used in operating activities | |
| (1,743 | ) | |
| (43,721 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from issuance of notes payable | |
| - | | |
| 43,000 | |
Net cash provided by financing activities | |
| - | | |
| 43,000 | |
| |
| | | |
| | |
Net change in cash | |
| (1,743 | ) | |
| (721 | ) |
Cash, beginning of year | |
| 2,270 | | |
| 2,991 | |
Cash, end of year | |
$ | 527 | | |
$ | 2,270 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information | |
| | | |
| | |
Cash paid for interest | |
$ | - | | |
$ | - | |
Cash paid for income taxes | |
$ | - | | |
$ | - | |
The
accompanying footnotes are an integral part of these consolidated financial statements.
PEAK
PHARMACEUTICALS, INC. |
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS |
YEAR
ENDED SEPTEMBER 30, 2019 |
|
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 consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America (U.S. GAAP).
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.
Use
of Estimates
The
preparation of 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.
Financial
Instruments
Our
financial instruments consist of cash, accounts payable, notes payable and convertible notes. 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) 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:
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.
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.
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
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 years ended September 30, 2019 and 2018,
any equivalents would have been anti-dilutive as we had net losses for the periods then ended.
As
of September 30, 2019 and 2018, the Company had two convertible notes with principal and accrued interest balances totaling $26,357 and
$23,648, respectively. 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 2,745,572 and 236,476
shares for the years ended September 30, 2019 and 2018, respectively, are not included in the calculation of diluted EPS as their effect
would be anti-dilutive.
As
of September 30, 2019 and 2018, 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.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
As of September 30, 2019, the Company does not have any cash equivalents.
Convertible
Notes Payable
We
review convertible notes payable and the related subscription agreements to determine the appropriate reporting within the financial
statements. We report convertible notes payable as liabilities at their carrying value less unamortized discounts in accordance with
the applicable accounting guidance. We bifurcate conversion options and report them as liabilities at fair value at each reporting period
when required in accordance with the applicable accounting guidance. We had no such liabilities as of September 30, 2019 and 2018. No
gain or loss is reported when the notes are converted into shares of our common stock in accordance with the notes terms.
Income
Taxes
The
Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on
the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, and attributable to operating loss carryforwards. The carrying amounts of deferred tax
assets are reduced by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be
realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the more-likely-than-not
recognition threshold. This assessment considers, among other matters, the nature, frequency, and severity of current and cumulative
losses, the duration of statutory carryforward periods, and tax planning alternatives. The Company assesses the likelihood that uncertain
tax positions will be accepted by the applicable taxing authority based on the technical merits of the position. Tax positions meeting
the more-likely-than-not recognition threshold are measured and recognized in the consolidated financial statements at the largest amount
of benefit that has a greater than 50% likelihood of being realized upon measurement of a tax position taken in a prior annual period,
including interest and penalties, and are recognized during the period in which the change occurs. This evaluation is required to be
performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. For the years ended
September 30, 2019 and 2018, we did not have any interest and penalties or any significant unrecognized uncertain tax positions. The
Company recognizes accrued interest and penalties related to the unrecognized tax benefits in operating expenses.
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.
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 has determined that the adoption of this guidance has no impact on its consolidated financial statements.
Recently
Adopted Accounting Pronouncements
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.
In
May 2014, the FASB issued ASU, 2014-09—Revenue from Contracts with Customers (Topic 606), or ASU 2014-09, and further updated
through ASU 2016-12, or ASU 2016-12, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on
principles that govern the recognition of revenue at an amount to which an entity expects to be entitled to when products are transferred
to customers. This guidance is effective for annual reporting periods, and interim periods within those years, beginning after December
15, 2017 for public entities, and after December 15, 2018 for non-public entities. The new revenue standard may be applied retrospectively
to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted
ASU 2014-09 on October 1, 2018 and has determined that the adoption of this guidance had no impact on its consolidated
financial statements.
In
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 lessees obligation to make lease payments arising
from a lease, measured on a discounted basis and a right-of-use asset represents the lessees right to use, or control use of,
a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily
because lessees must recognize lease assets and lease liabilities. 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. ASU No. 2016-02 is effective for reporting periods beginning after December
15, 2018. The Company adopted ASI 2016-02 on October 1, 2019 and has determined that the adoption of this guidance
had no impact on its consolidated financial statements.
In
April 2016, the FASB issued ASU 2016 – 10 Revenue from Contracts with Customers: identifying Performance Obligations
and Licensing. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods
and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer
with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the
entitys intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree
of judgement necessary to comply with Topic 606. Public business entities will adopt the standard for annual reporting periods beginning
after December 15, 2017, including interim periods within that year. The Company adopted ASU 2016-10 on October 1, 2018
and has determined that the adoption of this guidance had no impact on its consolidated financial statements.
In
August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash
Payments. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement
of cash flows. ASU 2016-15 is effective for the Company beginning in the first quarter of fiscal 2019. Early adoption is permitted, provided
that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method.
The Company adopted ASU 2016-15 on October 1, 2018 and has determined that the adoption of this guidance had no impact on its consolidated
financial statements.
In
January 2017, FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business.
The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with
evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business
affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual
periods beginning after December 15, 2017, including interim periods within those periods. The Company adopted ASU 2017-01 on
October 1, 2018 and has determined that the adoption of this guidance had no impact on its consolidated financial statements.
On
May 10, 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU)
2017-09 Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance
to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance,
modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or
liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for all companies for annual
periods beginning on or after December 15, 2017. Early adoption is permitted. The Company adopted ASU 2017-09 on October 1, 2018
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 September 30, 2019, the Company had an accumulated deficit of $5,098,487 and a working capital deficiency of $235,085. During
year ended September 30, 2019, the Company used cash in operating activities of $1,743. As of September 30, 2019, the Company had
cash of $527. 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 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 consolidated financial statements do not necessarily represent realizable
or settlement values. The 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 $87,237 and $85,062, as of September 30, 2019 and 2018, 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 $12,360 and $10,185,
as of September 30, 2019 and 2018, respectively, Total expense incurred related to this entity was $1,252 and $12,930 for the years ended
September 30, 2019 and 2018, 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 September 30, 2019, the total balance and accrued interest owing under this note was $10,000
and $3,201, 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 September 30, 2019, the total balance and accrued interest owing under this note
was $10,000 and $3,156, respectively. Subsequent to the year ended September 30, 2019, 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 September 30, 2019, the total balance
and accrued interest owing under this note was $23,000 and $4,904, 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 accrues interest at a rate of
12% per annum. The default interest rate is 15%. As of the September 30, 2019, the total balance and accrued interest owing under this
note was $20,000 and $3,875, respectively. Subsequent to the year ended September 30, 2019, on December 3, 2021, the Company repaid this
loan and accrued interest in full.
NOTE
5 – STOCK OPTIONS
No
stock options were granted during the years ended September 30, 2019 and 2018.
The
following is a summary of outstanding stock options issued to employees and directors as of September 30, 2019 and 2018:
| |
Number of Options | | |
Exercise Price per Share | | |
Average Remaining Term in Years | |
| |
| | |
| | |
| |
Outstanding September 30, 2019 and 2018 | |
| 2,916,000 | | |
$ | 0.0067 | | |
| 4.45 | |
Exercisable | |
| 2,916,000 | | |
$ | 0.0067 | | |
| 4.45 | |
The
following is a summary of outstanding stock options issued to non-employees, excluding directors, as of September 30, 2019 and 2018:
| |
Number of Options | | |
Exercise Price per Share | | |
Average Remaining Term in Years | |
Outstanding September 30, 2019 and 2018 | |
| 375,000 | | |
$ | 0.0067 | | |
| 4.04 | |
Exercisable | |
| 375,000 | | |
$ | 0.0067 | | |
| 4.04 | |
There
was no equity-based compensation for the years ended September 30, 2019 and 2018.
NOTE
6 – INCOME TAXES
Deferred
income tax provisions for the years ended September 30, 2019 and 2018 are summarized below:
| |
2019 | | |
2018 | |
Federal | |
$ | (2,900 | ) | |
$ | (6,000 | ) |
State | |
| (500 | ) | |
| (1,100 | ) |
Total deferred | |
| (3,400 | ) | |
| (7,100 | ) |
Change in valuation allowance | |
| 3,400 | | |
| 7,100 | |
Income tax provision | |
$ | - | | |
$ | - | |
The
provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision for income
taxes. The sources and tax effect of the differences are as follows:
| |
2019 | | |
2018 | |
Income tax provision – federal rate | |
| 21.0 | % | |
| 21.0 | % |
State income taxes, net of federal benefit | |
| 3.9 | % | |
| 3.9 | % |
Change in valuation allowance | |
| (24.9 | )% | |
| (8.2 | )% |
Remeasurement of valuation allowance due to change in federal rate | |
| - | % | |
| 33.1 | % |
| |
| - | | |
| - | |
Significant
components of the Companys deferred tax assets and liabilities as September 30, 2019 and 2018 is as follows:
| |
2019 | | |
2018 | |
Deferred tax assets: | |
| | | |
| | |
Net operating losses | |
$ | 279,000 | | |
$ | 276,000 | |
| |
| | | |
| | |
Total deferred tax asset | |
| 279,000 | | |
| 276,000 | |
Valuation allowance | |
| (279,000 | ) | |
| (276,000 | ) |
Deferred tax asset, net of allowance | |
$ | - | | |
$ | - | |
ASC
740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely
than not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both positive
and negative, management has determined that a full valuation allowance at September 30, 2019 and 2018, respectively, is necessary to
reduce the deferred tax assets to the amount that is more likely than not to be realized. The change in valuation allowance was an increase
of approximately $3,000 and a decrease of approximately $126,000, for the years ended September 30, 2019 and 2018, respectively.
As
of September 30, 2019, we have a net operating loss carry forwards of approximately $1,124,000 (2018: $1,110,000). The loss will be available
to offset future taxable income. If not used, these carry forwards will expire in varying amounts through 2038.
There
are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2015 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.
For
the years ended September 30, 2019 and 2018 we did not have any interest and penalties associated with tax positions. As of September
30, 2019, we did not have any significant unrecognized uncertain tax positions.
The
Tax Cuts and Jobs Act (the Act) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21% and
requires the Company to re-measure certain deferred tax assets and liabilities based on the rates at which they are anticipated to reverse
in the future, which is generally 21%. The Company adopted the new rate as it relates to the calculations of deferred tax amounts as
of January 1, 2018, which caused a decrease in the Companys valuation allowance of approximately $133,000 for the year ended September
30, 2018 as a result of the Companys re-measurement.
NOTE
7 – SUBSEQUENT EVENTS
Issuance
of Loans Payable
During
the year ended September 30, 2021, the Company received an aggregate of $275,000 related to the issuance of 14 notes payable to various
noteholders, including an aggregate of $35,000 as a result of two notes payable issued to the Companys Chief Executive Officer,
a related party. The notes are unsecured, bear interest at 1.5% per annum, and mature on September 30, 2021. To date, the Company has
made principal and accrued interest payment of $65,000 and $14,191, respectively. As of the date of this report, the original due date
of such notes has not been extended and are in default.
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