NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY
PLANS
Financial
statements prepared in conformity with GAAP contemplate a
company’s continuation as a going concern. We have incurred
net losses since inception and have an accumulated deficit of
$5,000,765 as of June 30, 2016. This condition raises substantial
doubt as to our ability to continue as a going concern. Although
the expenses of our operations have been significantly reduced due
to the termination of the license agreement as outlined in Note 3,
we need to still evaluate raising additional capital through the
sale of equity securities, through an offering of debt securities
or through borrowings from financial institutions or individuals.
There can be no assurance that such a plan will be
successful.
Accordingly,
the accompanying condensed consolidated financial statements have
been prepared in conformity with U.S. GAAP, which contemplates
continuation of the Company as a going concern and the realization
of assets and the satisfaction of liabilities in the normal course
of business. The carrying amounts of assets and liabilities
presented in the condensed consolidated financial statements do not
necessarily represent realizable or settlement values. The
condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
NOTE 3 - DISCONTINUED OPERATIONS
Based
upon recent regulatory activity related to imposition of
restrictions and limitations on the sale of hemp-based health
products for pets, we elected to terminate our license agreement
with the Licensor, effective as of October 1, 2015, and to cease
all operations relating to sale of hemp-based products for
pets.
On
October 12, 2015, we entered into an agreement for the termination
(“Termination Agreement”) of the License Agreement,
effectively selling the discontinued operations. The Termination
Agreement contained the following provisions:
●
Termination of
License: The parties agreed to terminate the License Agreement
effective as of October 1, 2015. This termination was made by
mutual agreement of the parties pursuant to and in accordance with
the provisions of the License Agreement.
●
Return of Licensed
Intellectual Property: We agreed to return all Licensed
Intellectual Property to the Licensor, and our right to use all, or
any portion, of the Licensed Intellectual Property ceased effective
as of October 1, 2015. Pursuant to the terms of the License
Agreement, the Licensed Intellectual Property included the brand
name “Canna-Pet” and certain related intellectual
property, including, but not limited, trademarks and copyrights,
formulations, recipes, production processes and systems, websites,
domain names, customer lists, supplier lists trade secrets and
know- how, and other related intellectual property.
●
Return of Other
Property: In addition to return of the Licensed Intellectual
Property, we agreed to transfer to Licensor all product inventory,
Colorado hemp with permits and authorization, all
production/fulfillment contracts, all e-commerce accounts and
processing, all non-disclosure and research agreements and any and
all other property in our possession which was used by us in the
conduct of our business related to production and sale of medical
cannabis products for pets made from hemp and low-THC cannabis
plants.
●
Office Space and
Equipment: In conjunction with the execution of the Termination
Agreement, we granted the Licensor the right to use our office
space, for the three-month period from October 1, 2015 through
December 31, 2015, on a rent-free basis.
●
Consideration: As
consideration for the cancellation of the License Agreement and the
return of other property, as described above, the Licensor agreed
to waive payment by us and to release us from liability for payment
of any and all unpaid royalties, invoices and other amounts which
were otherwise currently due and payable by us to Licensor for
sales of Canna-Pet products for all periods through and including
September 30, 2015.
●
Collections: On
October 15, 2015, we forwarded to the Licensor all payments
received by us after September 30, 2015 (net of amounts received by
us for taxes, duties, governmental charges, freight or shipping
charges, and the like) for Canna- Pet products sold on or after
October 1, 2015.
The
following is a summary of the net liabilities sold as initially
determined at Septembers 30, 2015 and updated October 15,
2015:
|
|
|
Inventory
|
$
45,436
|
$
41,705
|
Prepaid
expenses
|
8,821
|
-
|
Deposits
|
8,179
|
8,678
|
Total
assets
|
62,436
|
50,383
|
|
|
|
Accounts
payable
|
103,548
|
124,396
|
Royalties
payable
|
39,506
|
39,506
|
Accrued
liabilities
|
285
|
15,341
|
Total
liabilities
|
143,339
|
179,243
|
Net liabilities
sold
|
$
80,903
|
$
128,860
|
The
income from discontinued operations presented in the statements of
operations consists of the following for the nine-month periods
ended June 30, 2016 and 2015, respectively:
|
|
|
Revenues
|
$
-
|
$
465,517
|
Cost of goods
sold
|
-
|
(203,486
)
|
General and
administrative expenses, including
depreciation and
amortization
|
(6,197
)
|
(244,562
)
|
Gain on disposal of
discontinued operations
|
80,903
|
-
|
Income from
discontinued operations
|
$
74,706
|
$
17,469
|
NOTE 4 – INTANGIBLE ASSETS
Intangible
assets at June 30, 2016 and September 30, 2015, consist of website
costs of $35,000, less accumulated amortization of $35,000 and
$16,755, respectively. The website costs have been fully amortized.
During the three months ended June 30, 2016, we charged $Nil to
amortization expense for the impairment of our
website.
NOTE 5 – RELATED PARTY TRANSACTIONS
Parties,
which can be corporations or individuals, are considered to be
related if we have the ability, directly or indirectly, to control
the other party or exercise significant influence over the other
party in making financial and operating decisions. Companies are
also considered to be related if they are subject to common control
or common significant influence.
Accounts
payable – related parties are the amounts payable to officers
and directors of the Company for reimbursement of expenses they
incurred on behalf of the Company as well as Directors’ fees
and salaries. These amounts are due on demand, unsecured and bear
no interest.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
We have
no operating lease commitments as of June 30, 2016.
Rent
expense was $0 and $6,380 for the three and nine months ended June
30, 2016, respectively. Rent expense was $5,820 and $17,971 for the
three and nine months ended June 30, 2015,
respectively
NOTE 7 – STOCKHOLDERS’ EQUITY
We had
no preferred or common stock transactions during the three and
nine-month periods ended June 30, 2016 and 2015
NOTE 8 – OPTIONS
In
March 2014, we issued non-qualified options to purchase 2,916,000
shares of our common stock for services rendered to a director of
the Company. The options have a term of 10 years, are exercisable
at $0.0067 per share and vested when they were issued.
The
fair value of the options, estimated at the date of grant using the
Black-Scholes option pricing model was $9,078. The options have
been expensed as equity-based compensation. The following
assumptions were used in the Black-Scholes option pricing
model:
●
Expected life (in
years) – 10
●
Volatility (based
on a comparable companies) – 123%
●
Risk Free interest
rate – 2.73%
●
Dividend yield (on
common stock) – 0%
In May
2014, we issued non-qualified options to purchase 4,500,000 shares
of our common stock to certain officers of the Company. The options
are exercisable at $0.20 per share and have graded vesting over 4
years.
The
fair value of the options, estimated at the date of grant using the
Black-Scholes option pricing model was $4,415,649. The following
assumptions were used in the Black-Scholes option pricing
model:
●
Expected life (in
years) – 10
●
Volatility (based
on a comparable companies) – 123%
●
Risk Free interest
rate – 2.56%
●
Dividend yield (on
common stock) – 0%
As per
guidance in the ASC Topic 718,
Compensation - Stock Compensation
(“ASC 718”), we are amortizing the fair value of the
options on a straight-line basis over the requisite service period
for each separately vesting portion of the award as if the award
was, in-substance, multiple awards (graded vesting attribution
method).
During
the nine months ended June 30, 2016, the Company recognized stock
based compensation of $280,053. During the nine-month period ending
June 30, 2016, the officers holding the 4,500,000 options resigned
and the option were no longer exercisable. In accordance with ASC
718, previously expensed stock based compensation which requisite
service will not be provided and are forfeited and reversed. As a
result, previously recorded stock based compensation of $1,576,484
was reversed and credited to stock based compensation expense
during the nine months ended June 30, 2016.
The
following is a summary of outstanding stock options issued to
employees and directors as of June 30, 2016:
|
Number
of Options
|
|
Exercise
Price per
Share
|
|
Average
Remaining
Term
in
Years
|
|
Aggregate
Intrinsic
Value
at Date
of
Grant
|
|
|
|
|
|
|
|
|
Outstanding
October 1, 2014 and September 30, 2015
|
7,416,000
|
|
$0.0067
- $0.20
|
|
|
|
-
|
Issued
|
-
|
|
|
|
|
|
-
|
Cancelled
|
(4,500,000)
|
|
|
|
|
|
-
|
Outstanding
June 30, 2016
|
2,916,000
|
|
$0.0067
|
|
7.95
|
|
-
|
Exercisable
|
2,916,000
|
|
$0.0067
|
|
7.95
|
|
-
|
The
following is a summary of outstanding stock options issued to
non-employees, excluding directors, as of June 30,
2016:
|
Number
of Options
|
|
Exercise
Price per
Share
|
|
Average
Remaining
Term
in
Years
|
|
Aggregate
Intrinsic
Value
at Date
of
Grant
|
|
|
|
|
|
|
|
|
Outstanding
June 30, 2016 and September 30, 2015 and 2014
|
375,000
|
|
$0.0067
|
|
7.79
|
|
-
|
Exercisable
|
375,000
|
|
$0.0067
|
|
7.79
|
|
-
|
Total
equity based compensation for the three months ended June 30, 2016
and 2015 was $0 and $263,271, respectively. Total equity based
compensation for the nine months ended June 30, 2016 and 2015 was
($1,296,431) and $1,533,322, respectively.
NOTE 9 – INCOME TAX
We
account for income taxes in interim periods in accordance with ASC
Topic 740,
Income Taxes
(“ASC 740”). We have determined an estimated annual
effective tax rate. The rate will be revised, if necessary, as of
the end of each successive interim period during our fiscal year to
our best current estimate. As of June 30, 2016, the estimated
effective tax rate for the year is 0%.
There
are open statutes of limitations for taxing authorities in federal
and state jurisdictions to audit our tax returns from 2011 through
the current period. Our policy is to account for income tax related
interest and penalties in income tax expense in the statement of
operations. There have been no income tax related interest or
penalties assessed or recorded.
ASC 740
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This
pronouncement also provides guidance on derecognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition.
For the
three months ended June 30, 2016 and 2015 we did not have any
interest and penalties associated with tax positions. As of June
30, 2016 we did not have any significant unrecognized uncertain tax
positions.
NOTE 10 - SUBSEQUENT EVENTS
Management
has evaluated all activity and concluded that no subsequent events
have occurred that would require recognition in these financial
statements or disclosure in the notes to these financial
statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This
report contains forward-looking statements. The following
discussion should be read in conjunction with the financial
statements and related notes contained in our Annual Report on Form
10-K, as filed with the Securities & Exchange Commission on
January 13, 2016. Certain statements made in this discussion are
"forward-looking statements" within the meaning of The Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are projections in respect of future events or financial
performance. In some cases, you can identify forward-looking
statements by terminology such as “may”,
“should”, “expects”, “plans”,
“anticipates”, “believes”,
“estimates”, “predicts”,
“potential” or “continue” or the negative
of these terms or other comparable terminology.
These
statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the
section entitled “Risk Factors” set forth in our Annual
Report on Form 10-Q for the year ended September 30, 2015, as filed
on January 13, 2016, any of which may cause our company’s or
our industry’s actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. These
risks may cause the Company’s or its industry’s actual
results, levels of activity or performance to be materially
different from any future results, levels of activity or
performance expressed or implied by these forward-looking
statements.
Although
the Company believes that the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee
future results, levels of activity or performance. Moreover,
neither the Company nor any other person assumes responsibility for
the accuracy and completeness of these forward-looking statements.
The Company is under no duty to update any forward-looking
statements after the date of this report to conform these
statements to actual results.
As used
in this quarterly report and unless otherwise indicated, the terms
“we,” “us,” “our,”
“Peak,” or the “Company” refer to Peak
Pharmaceuticals, Inc, including our wholly-owned subsidiary Peak
BioPharma Corp (“Peak BioPharma”). Unless otherwise
specified, all dollar amounts are expressed in United States
dollars.
Corporate Overview
We were
incorporated as Surf A Movie Solutions Inc. in Nevada on December
18, 2007 to engage in the business of the development, sales and
marketing of online video stores. We were not successful in our
efforts and have ceased this line of business.
On
October 10, 2013, we entered into a joint venture agreement with
Produced Water Solutions, Inc., a Colorado corporation, that was in
the business of providing economically and environmentally sound
solutions for the treatment and recycling of wastewater resulting
principally from oil and gas exploration and production activities.
Due to our research of this business opportunity, on December 31,
2013, we determined not to move forward with this line of
business.
In
early March 2014, we entered into the business of developing,
manufacturing and marketing pharmaceutical level products
containing phytocannabinoids, an abundant and pharmaceutically
active component of industrial hemp, for the prevention and
alleviation of various conditions and diseases. In connection
therewith, on March 17, 2014 we changed our name to Cannabis
Therapy Corp. On December 23, 2014, we changed our name to Peak
Pharmaceuticals, Inc. All of our business operations are carried on
through our wholly-owned subsidiary, Peak BioPharma Corp., a
Colorado corporation.
On July
29, 2014, through Peak BioPharma, we entered into a license
agreement (the “License Agreement”) with Canna-Pet, LLC
(“Licensor”), a Washington limited liability company,
which owns the brand name “Canna-Pet” and certain
related intellectual property including, but not limited to,
trademarks and copyrights, formulations, recipes, production
processes and systems, websites, domain names, customer lists,
supplier lists, trade secrets and know-how, and other related
intellectual property (collectively, the “Licensed
Intellectual Property”), used by Licensor in the conduct of
its business related to the production and sale of medical products
made from industrial hemp which are intended exclusively for
consumption by pets. Pursuant to the License Agreement, the
Licensor granted to us a perpetual, exclusive, world-wide license
to use the Licensed Intellectual Property in conjunction with our
business and the production and sale of medical products made from
industrial hemp as well as the right to sublicense the Licensed
Intellectual Property to third parties. The License Agreement gives
us the right to produce and sell existing products utilizing the
Licensed Intellectual Property and to develop new products, jointly
with Licensor or otherwise, based upon the Licensed Intellectual
Property. The License Agreement provided us with an immediate
revenue source and access to Licensor’s customer base. During
the term of the license, all intellectual property rights in and to
the Licensed Intellectual Property remained the exclusive property
of Licensor.
In
consideration of the grant of the license, we agreed to pay
Licensor license fees in the form of royalty payments calculated on
the basis of gross proceeds received by us from sales of products
manufactured, marketed or sold by us utilizing the Licensed
Intellectual Property or any subsequently developed intellectual
property which is jointly owned by us and Licensor. We began
selling Canna-Pet products in October 2014.
Based
upon recent regulatory activity related to imposition of
restrictions and limitations on the sale of hemp-based health
products for pets, we elected to terminate our license agreement
with the Licensor, effective as of October 1, 2015, and to cease
all operations relating to sale of hemp-based products for
pets.
On
October 12, 2015, we entered into an agreement for the termination
(“Termination Agreement”) of the License Agreement,
effectively selling the discontinued operations. The Termination
Agreement contained the following provisions:
●
Termination of
License: The parties agreed to terminate the License Agreement
effective as of October 1, 2015, this termination was made by
agreement of the parties pursuant to and in accordance with the
provisions of the License Agreement.
●
Return of Licensed
Intellectual Property: We agreed to return all Licensed
Intellectual Property to the Licensor, and our right to use all, or
any portion, of the Licensed Intellectual Property ceased effective
as of October 1, 2015, pursuant to the terms of the License
Agreement, the Licensed Intellectual Property included the brand
name “Canna-Pet” and certain related intellectual
property, including, but not limited, trademarks and copyrights,
formulations, recipes, production processes and systems, websites,
domain names, customer lists, supplier lists trade secrets and
know- how, and other related intellectual property.
●
Return of Other
Property: In addition to return of the Licensed Intellectual
Property, we agreed to transfer to Licensor all product inventory,
Colorado hemp with permits and authorization, all
production/fulfillment contracts, all e-commerce accounts and
processing, all non-disclosure and research agreements and any and
all other property in our possession which was used by us in the
conduct of our business related to production and sale of medical
cannabis products for pets made from hemp and low-THC cannabis
plants.
●
Office Space,
Equipment and Employees: In conjunction with the execution of the
Termination Agreement, we granted the Licensor the right to use our
office space, for the three-month period from October 1, 2015
through December 31, 2015, on a rent-free basis.
●
Consideration: As
consideration for the cancellation of the License Agreement and the
return of other property, as described above, the Licensor agreed
to waive payment by us and to release us from liability for payment
of any and all unpaid royalties, invoices and other amounts which
were otherwise currently due and payable by us to Licensor for
sales of Canna-Pet products for all periods through and including
September 30, 2015.
●
Collections: On
October 15, 2015, we forwarded to the Licensor all payments
received by us after September 30, 2015 (net of amounts received by
us for taxes, duties, governmental charges, freight or shipping
charges, and the like) for Canna- Pet products sold on or after
October 1, 2015.
The
following is a summary of the net assets sold as initially
determined at Septembers 30, 2015 and updated October 15,
2015:
|
|
|
Inventory
|
$
45,436
|
$
41,705
|
Prepaid
Expenses
|
8,821
|
-
|
Deposits
|
8,179
|
8,678
|
Total
assets
|
$
62,436
|
$
50,383
|
|
|
|
Accounts
payable
|
103,548
|
124,396
|
Royalties
payable
|
39,506
|
39,506
|
Accrued
liabilities
|
285
|
15,341
|
Total
liabilities
|
143,339
|
179,243
|
Net assets
sold
|
$
80,903
|
$
128,860
|
Our
common stock is currently listed on the OTC Markets, QB Tier, under
the symbol “PKPH”.
Recent Corporate Developments
Since
the commencement of the year through June 30, 2016, we have not
experienced any significant corporate developments.
Results of Operations
Comparison of the Three Months Ended June 30, 2016 to the Three
Months Ended June 30, 2015
Revenue
There
were no revenues for the three months ended June 30, 2016 or
2015.
Operating Expenses
Our
expenses for the three months ended June 30, 2016 are summarized as
follows in comparison to our expenses for the three months ended
June 30, 2015:
|
Three
Months Ended June 30,
|
|
|
|
|
|
General and
administrative
|
$
9,836
|
$
230,953
|
Depreciation and
amortization
|
-
|
2,957
|
Stock based
compensation
|
-
|
263,271
|
Total operating
expenses
|
$
9,836
|
$
497,181
|
General
and administrative expense decreased by $221,117 for the three
months ended June 30, 2016 from the comparative period of 2015. The
decrease is due to the termination of the license agreement with
Canna-Pet, LLC and the overall reduction in operating expenses
related to the operation of that business. Depreciation and
amortization expense decreased by $2,957 due to the completed
impairment and write-down of our website costs. Stock based
compensation decreased by $263,271 for the three months ended June
30, 2016 from the comparative period in 2015 due to reduction in
the use of common stock to pay certain expense due to the overall
reduction in business operations.
Comparison of the Nine Months Ended June 30, 2016 to the Nine
Months Ended June 30, 2015
Revenue
There
were no revenues for the three months ended June 30, 2016 or
2015.
Operating Expenses
Our
expenses for the nine months ended June 30, 2016 are summarized as
follows in comparison to our expenses for the nine months ended
June 30, 2015:
|
Nine
Months Ended June 30,
|
|
|
|
|
|
General and
administrative
|
$
185,833
|
$
368,519
|
Depreciation and
amortization
|
18,974
|
8,912
|
Stock based
compensation
|
(1,296,431
)
|
1,533,322
|
Total operating
expenses
|
$
(1,091,624
)
|
$
1,910,753
|
General
and administrative expense decreased by $182,686 for the nine
months ended June 30, 2016 from the comparative period of 2015, due
to the termination of the license agreement with Canna-Pet, LLC and
the overall reduction in operating expenses related to the
operation of that business. Depreciation and amortization expense
increased by $10,062 due to the impairment and write-down of our
website costs of $15,264 during the nine months ended June 30,
2016. Stock based compensation decreased by $2,829,753 primarily
due to the forfeiture and reversal of stock options to officers
resulting in a credit of $1,296,431 during the nine months ended
June 30, 2016.
Discontinued Operations
Our
Canna-Pet business segment began operations in October 2014. As a
result of recent regulatory activity related to imposition of
restrictions and limitations on the sale of hemp-based health
products for pets, on October 1, 2015, we elected to terminate our
license agreement with Canna-Pet, LLC and to cease all operations
relating to sale of hemp-based products for pets.
The
income (loss) from discontinued operations presented in the
statements of operations consists of the following for the
nine-month periods ended June 30, 2016 and 2015:
|
|
|
Revenues
|
$
-
|
$
667,631
|
Cost of goods
sold
|
-
|
(217,525
)
|
General and
administrative expenses
|
-
|
(423,939
)
|
Gain on disposal of
discontinued operations
|
74,706
|
-
|
Income from
discontinued operations
|
$
74,706
|
$
26,167
|
Liquidity and Financial Condition
Working Capital Deficiency
|
|
|
Current
assets
|
$
1,575
|
$
259,289
|
Current
liabilities
|
138,938
|
288,632
|
Working capital
deficiency
|
$
(137,363
)
|
$
(29,343
)
|
The
decrease in current assets is mainly due to a decrease in cash
resulting from cash used in operation activities of $200,081 during
the nine months ended June 30, 2016. The decrease in current
liabilities is due primarily from the elimination of the
liabilities related to discontinued operations during the nine
months ended June 30, 2016.
Cash Flows
|
Nine
Months Ended June 30,
|
|
|
|
Net income
(loss)
|
$
1,166,330
|
$
(1,902,477
)
|
Net cash used in
operating activities
|
(200,081
)
|
(209,623
)
|
Net cash used in
investing activities
|
-
|
-
|
Net cash provided
by financing activities
|
-
|
(2,187
)
|
Increase (decrease)
in cash
|
$
(200,081
)
|
$
(211,810
)
|
As of
June 30, 2016, our cash balance was $1,575. 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 nine months ended June 30, 2016 was
$200,081 mainly due to payment of general and administrative
expenses during the period.
We need
to raise additional operating capital on an immediate basis.
Although the expenses of our operations have been significantly
reduced due to the termination of the license agreement as outline
in Note 3 of the financial statements, we need to still evaluate
raising additional capital through the sale of equity securities,
through an offering of debt securities or through borrowings from
individuals. There can be no assurance that such a plan will be
successful.
As of
the date of this filing, we do not have enough sufficient cash on
hand to cover our operating expenses through the next quarter. In
the absence of any ongoing commercial operations, we need enough
cash to pay certain outside professionals to maintain our
compliance under the Securities Act of 1934. Management anticipates
that it will require an additional $30,000 over the next twelve
months to cover such costs.
Going Concern
The
unaudited condensed consolidated financial statements contained in
this report have been prepared assuming that the Company will
continue as a going concern
.
The
Company has cumulative net losses through March 31, 2016
of $5,000,765.
The Company's cash and cash equivalents
balance as of June 30, 2016 is $1,575. These factors raise
substantial doubt about the Company's 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
unaudited condensed consolidated financial statements do not
include any adjustments that may be necessary should the Company be
unable to continue as a going concern. The Company’s
continuation as a going concern is dependent on its ability to
obtain additional financing as may be required and ultimately to
attain profitability. If the Company raises additional funds
through the issuance of equity, the percentage ownership of current
shareholders could be reduced, and such securities might have
rights, preferences or privileges senior to its common stock.
Additional financing may not be available upon acceptable terms, or
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.
Off-Balance Sheet Arrangements
We have
no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital
resources that is material to stockholders.
Effects of Inflation
We do
not believe that inflation has had a material impact on our
business, revenues or operating results during the periods
presented.
Critical Accounting Policies and Estimates
Our
significant accounting policies are more fully described in the
notes to our financial statements included herein for the three and
nine months ended June 30, 2016.
Newly Issued Accounting Pronouncements
See
Note 1 to our financial statements included herein for the three
and nine months ended June 30, 2016 for a discussion of Recently
Issued Accounting Pronouncements.