Retrieve Medical Holdings, Inc 10-K for FY2019
Retrieve Medical Holdings, Inc. (RMHI)
About this 10-K
Retrieve Medical Holdings, Inc filed this 10-K on December 19, 2022, covering the fiscal year ended September 30, 2019 (FY2019).
Headline figures
Fiscal year ended September 30, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $13.99K
- compared with a net loss of $28.41K a year earlier
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
(Registrant’s 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 management’s 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 registrant’s 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 registrant’s 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 registrant’s common stock as of December 16, 2022 was 78,363,567.
1
PEAK PHARMACEUTICALS, INC.
FORM 10-K
FOR THE YEARS ENDED SEPTEMBER 30, 2019 and 2018
TABLE OF CONTENTS
2
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 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.
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.
3
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 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 our or our 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 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.
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.
4
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 Licensor’s 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. |
5
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.
An investment in the Company’s 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 Company’s business, operating results and financial condition could be adversely affected due to any of those risks.
6
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.
7
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.
8
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.
9
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 person’s 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 person’s 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.
10
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 management’s 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.
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.
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.
ITEM 5. MARKET FOR REGISTRANT’S 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.
11
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 7. MANAGEMENT’S 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 management’s 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.
12
Readers should not place undue reliance on these forward-looking statements, which are based on management’s 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 “Management’s 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 Company’s cash and cash equivalents balance as of September 30, 2019 was $527. 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 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.
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
13
Operating Expenses
The Company’s 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 company’s 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 | ) | ||
14
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 Company’s 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, management’s 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.
15
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 note’s 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.
16
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 lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s 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 entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s 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.
17
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 Company’s 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 SEC’s 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 management’s 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. |
Management’s 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. |
18
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.
Management’s 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.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
19
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 Company’s 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 Company’s Bylaws, Neil Reithinger was appointed as a member of the Company’s 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.
20
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 $12,930, respectively. |
21
Outstanding Equity Awards at Fiscal Year End
The following table summarizes the outstanding equity awards held by each named executive officer of our company as of September 30, 2019.
| Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 officer’s responsibility following a change in control.
22
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% |
23
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 Company’s 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.”
24
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 Company’s 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.
25
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| * | 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. |
Not applicable.
26
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 | |||
27
PEAK
PHARMACEUTICALS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
28
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 Company’s 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 Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s 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 Company’s management. Our responsibility is to express an opinion on the Company’s 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 Company’s 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 Company’s auditor since 2021. | |
| Marlton, New Jersey | |
| December 19, 2022 | |
F-1
| 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.
F-2
| 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.
F-3
| 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.
F-4
| 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.
F-5
| 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.
F-6
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 lender’s 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 note’s 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.
F-7
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 Company’s 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 lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s 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.
F-8
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 entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s 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 MANAGEMENT’S 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 Company’s 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.
F-9
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 lender’s 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 lender’s 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.
F-10
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 | % | ||||
| - | - | |||||||
F-11
Significant components of the Company’s 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 Company’s valuation allowance of approximately $133,000 for the year ended September 30, 2018 as a result of the Company’s 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 Company’s 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.
F-12
Exhibit 31.1
PEAK PHARMACEUTICALS, INC.
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Neil Reithinger, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Peak Pharmaceuticals, Inc. Incorporated; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: | |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| By: | /s/ Neil Reithinger | |
| Neil Reithinger | ||
| Chief
Executive Officer (Principal Executive Officer) | ||
| Date: December 19, 2022 | ||
Exhibit 31.2
PEAK PHARMACEUTICALS, INC.
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Neil Reithinger, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Peak Pharmaceuticals, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
| |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| By: | /s/ Neil Reithinger | |
| Neil Reithinger | ||
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: December 19, 2022 | ||
Exhibit 32.1
PEAK PHARMACEUTICALS, INC.
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report on Form 10-K of Peak Pharmaceuticals, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
| By: | /s/ Neil Reithinger | |
| Neil Reithinger | ||
| Chief
Executive Officer (Principal Executive Officer) | ||
| Date: December 19, 2022 | ||
Exhibit 32.2
PEAK PHARMACEUTICALS, INC.
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report on Form 10-K of Peak Pharmaceuticals, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
| By: | /s/ Neil Reithinger | |
| Neil Reithinger | ||
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: December 19, 2022 | ||