UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2016

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: 000-52886

EASTGATE BIOTECH CORP

(Exact name of registrant as specified in its charter)

Nevada	87-0639378
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2203-65 Harbour Square, Toronto, Ontario, Canada M5J 2L4 

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (647) 692-0652

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.00001 par value

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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	o	Smaller reporting company	x
(Do not check if a smaller reporting company)		Emerging growth company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the SEC Exchange Act). Yes o No x

The aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing sales price, or the average bid and asked price on such stock, as of June 30, 2016, the last business day of the registrant’s most recently completed second quarter, was $5,389,088. Shares of the registrant’s common stock held by each executive officer and director and by each entity or person that, to the registrant’s knowledge, owned 10% or more of registrant’s outstanding common stock as of June 30, 2016 have been excluded in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock outstanding as of February 28^th, 2018 was 934,305,508.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EASTGATE BIOTECH CORP.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business	3
Item 1A.	Risk Factors	22
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	31
Item 3.	Legal Proceedings	31
Item 4.	Mine Safety Disclosures	31
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
Item 6.	Selected Financial Data	33
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 8.	Financial Statements and Supplementary Data	40
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	57
Item 9A.	Controls and Procedures	57
Item 9B	Other Information	58
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	59
Item 11.	Executive Compensation	60
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
Item 13.	Certain Relationships and Related Transactions and Director Independence	62
Item 14.	Principal Accounting Fees and Services	63
	PART IV
Item 15.	Exhibits, Financial Statement Schedules.	64
	Signatures	65

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PART I

Item 1. Business.

Corporate History

Eastgate Biotech Corp., a Nevada corporation, was organized on September 8, 1999 under the name of Eastgate Acquisitions Corporation for the purpose to engage in investigating prospective business opportunities with the intent to acquire or merge with one or more businesses. In March 2002, we changed our corporate name to Talavera’s Fine Furniture in anticipation of making an acquisition. However, the acquisition was not finalized and in November 2006, we changed our name back to Eastgate Acquisitions. In October 2007, the name was changed to Eastgate Acquisitions Corporation and we continued our search for business opportunities. In November 2014, we amended our Restated Articles of Incorporation to change our name to "Eastgate Biotech Corp." from "Eastgate Acquisitions Corporation".

On May 22, 2012, we finalized the Patent Acquisition Agreement (“Acquisition Agreement”) to acquire certain products, formulas, processes, proprietary technology and/or patents and patent applications related to pharmaceutical, nutraceutical, food supplements and consumer health products (collectively referred to as the “Acquired Products”).

In anticipation of the Acquisition Agreement, on March 6, 2012 we effected a forward stock split of our issued and outstanding shares of common stock on a 7.75 shares for one share basis. Prior to the forward stock split, we had 1.5 million shares of common stock issued and outstanding, which increased to 11,625,000 shares following the split. All further references herein to our common stock will be on a post-split basis.

In exchange for the Acquired Products and technology, we issued at the closing to the seller, Anna Gluskin and/or her assigns, 10 million shares of Eastgate’s authorized, but previously unissued common stock, post-split. The closing of the Acquisition Agreement was initially contingent upon realizing financing of $300,000, which was subsequently reduced to $50,000. At the closing of the Acquisition Agreement Anna Gluskin was appointed our Chief Executive Officer and to our Board of Directors.

In addition to the 10 million shares of common stock issued to the seller, the Acquisition Agreement provided for the issuance of 10 million shares of common stock to other persons in consideration for services rendered and/or monies advanced to Eastgate. Those shares were issued to TGT Investment Management Inc., an entity owned by our current President, for expenses paid prior to the Acquisition Agreement for product development and for services to the company and in connection with finalizing the Acquisition Agreement.

Upon closing the Acquisition Agreement, we have become engaged in developing, formulating and ultimately commercializing innovative pharmaceutical, nutraceutical, food supplements and consumer health products. Our goal is to apply novel technologies in order to improve the efficacy of the Acquired Products, based on natural or well-established compounds. It is our intention to complete formulation of the Acquired Products and to ultimately market commercialized products and compounds. We have also been focused on developing innovative pipeline products that address chronic diseases such as diabetes with the clear intent of partnering with global partners to meet unmet needs in emerging Markets. We are a development stage company in the early phase of research and there is no assurance that we will be able to successfully formulate and commercialize any future products.

Our principal executive offices are presently located at 2203-65 Harbour Square, Toronto, Ontario, Canada M5J 2L4 and our telephone number is (647) 692-0652.

Business Activities

We are primarily engaged in the development of novel formulations of natural compounds and pharmaceutical products. We intend to accomplish this by developing our proprietary self-emulsifying drug delivery systems, predominantly forming nanoemulsions. Although we have not finalized any pharmaceuticals products and are in the early stages of research, our goal is to be able to develop patentable and Trade Secret formulations of pharmaceutical, nutraceutical dietary supplements and consumer health products. We recently started marketing and distribution and have limited sales for some of our nutraceuticals products.

 

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Our self-emulsifying drug delivery technology includes two different approaches that we believe could ultimately improve solubility of poorly soluble compounds and provide new methods of delivery. These perceived approaches consist of (i) a self-nanoemulsifying vehicles for oral or topical use, and (ii) a technological approach intended to improve solubility of incorporated compounds. We expect that our technologies can be applied to products based on natural compounds and well-established pharmaceuticals with known biological activities.

In developing our proposed products, we intend to use modern delivery technologies. Some examples are:

· nanoemulsification and self-nanoemulsification;

· polymer-lipid mixed micelles; and

· solubility improvement of poorly soluble compounds for molecules with known biological activity and well established safety profiles.

We are presently applying our technology only to known pharmaceutical compounds that have been previously approved by the Food and Drug Administration (“FDA”). Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act permits a company to apply for FDA approval of a New Drug Application (“NDA”) without conducting the full complement of safety and efficacy trials. An applicant under Section 505(b)(2) may use the original filer’s information and rely on published studies to demonstrate the safety and effectiveness of the new drug based on a known compound. Because we intend to apply our technology only to previously approved pharmaceutical compounds, we believe that Section 505(b)(2) could possibly be available to us. If we are permitted to use Section 505(b)(2), it would likely decrease requirements for preclinical investigations and clinical testing and accelerate the overall approval time for our products, although there can be no assurance of this.

Some of our proposed products under development are based on existing natural compounds. Many of these proposed products are made of essential oils and plant extracts. Our proposed products comprise excipients listed in the FDA “Inactive Ingredients Guide” that we believe are safe and approved for human consumption. Additionally, we believe that these proposed products can be manufactured using common equipment. We anticipate that we will be able to apply self-emulsifying technologies for development of a variety of pharmaceuticals and natural products for different applications.

In October 2012, our CEO, Anna Gluskin, contributed to the company the corporate entity Eastgate Pharmaceuticals Inc., a Province of Ontario, Canada corporation, of which Ms. Gluskin was the sole shareholder, officer and director. Thus, Eastgate Pharmaceuticals became and will operate as our wholly owned subsidiary. Initially, we deposited into Eastgate Pharmaceuticals the $100,000 proceeds from a demand promissory note for use by the company. We anticipate that we may conduct many of our future operations in Canada through the subsidiary.

Glossary of Terms

To better understand the information discussed herein, we are including the following description of some of the terms used herein.

Bioavailability. A measurement of the rate and extent to which a drug is absorbed into the blood stream. An increase of bioavailability of 50% may allow for a decrease in the necessary dosage of the drug by 1.5 times, subsequently diminishing the side effects.

Bioadhesion. A property of a substance to adhere to body tissues and remain there for an extended period of time.

Chylomicrons. Chylomicrons are lipoprotein particles formed from digested food lipids, created by the absorptive cells of the small intestine. They transport required lipids to the liver, spleen, cardiac and skeletal muscle tissue, where their content is unloaded by the activity of the enzymes. Chylomicrons have a diameter of 75 to 1,200 nanometers (“nm”). They are released into lymphatic vessels in the small intestine and are then secreted into the bloodstream.

 

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Emulsion. A mixture of two liquids that are normally not miscible (unblendable). In oil-in-water emulsion, for example, liquid oil is dispersed in the water with help of surfactant.

Excipient. Generally an inert or inactive material used as a carrier for an active ingredient or drug.

Hydrophobic compounds. Compounds that are repelled by water and are usually insoluble in water. Examples of hydrophobic compounds include oils, fats, waxes and greasy substances. The word hydrophobic is constructed of two Greek words: hydro – water, and phobic– fear, which means something with a fear of water.

Homogeneous vehicle of water miscible non-irritating polar solvents and pharmaceutically acceptable surfactants. Relates to efficient vehicle for enhanced local and transdermal delivery of hydrophobic poorly soluble compounds.

In situ. Describes the process happening in the moment of combining of two different phases or components. Nanoemulsion forms “in situ” after combining of SNEDDS (defined below) and water media without use of any special equipment or application of additional force.

Micelles and polymer-lipid micelles. A micelle is an aggregate of surfactant molecules, having polar heads and non-polar tails. A typical micelle in aqueous solution forms an aggregate with the hydrophilic "head" regions in contact with while the hydrophobic tails form the micelle core. The driving force for spontaneous micelle formation is the hydrophobic interaction. Combination of some surfactants, lipidic components and polymeric molecules leads to formation of “polymer-lipid mixed micelles.” These mixed micelles demonstrate high drug loading and improved stability

Nanoemulsion. Nanoemulsion is thermodynamically stable emulsion where two immiscible liquids (water and oil phases) are mixed to form a biphasic system by means of an appropriate surfactants. Nanoemulsion droplet sizes fall typically in the narrow range of 10-200 nm and show narrow size distributions. The use of nanoemulsions as drug carriers show promise for the future of cosmetics, diagnostics, drug therapies, and biotechnology.

Nanoemulsification and self-nanoemulsifying drug delivery system (SNEDDS). Self-microemulsifying drug delivery (SMEDDS) or self-nanoemulsifying drug delivery sysstems (SNEDDS) are homogenous mixtures of natural or synthetic oils, surfactants and, sometimes, one or more biologically active compounds. During combining of self-emulsifying composition with aqueous media, such as saliva, blood, gastrointestinal (GI) fluid and other, a fine oil-in-water (o/w) emulsion with average droplets size smaller than 300 nm, usually in range 10-100 nm forms immediately (“ in situ” nanoemulsification). Fine oil droplets are absorbed rapidly transmucosally, transdermally or in the gastro-intestinal tract. In contrast to traditional submicron emulsions, SNEDDS are physically stable formulations that are easy to manufacture. Additionally, SNEDDS may improve the rate and extent of drug absorption and pharmacokinetics parameters of lipophilic drugs.

Surfactants. A surfactant is a compound that stabilizes mixtures of oil and water by reducing the surface tension at the interface between the oil and water phases. Because water and oil do not dissolve in each other, a surfactant has to be added to the mixture to keep droplets from merging and separating into layers.

Product Overview

Our goal is to work towards development of novel patentable and Trade Secret formulations of pharmaceutical and natural products. The following depicts those products we plan to develop. However, we are in the early stages of research and there is no assurance that we will be able to finalize and market any commercially viable products.

Pharmaceutical Products in development

· Lorazepam oral spray intended for treatment of acute seizures and based on our proprietary self-nanoemulsifying composition.

· Ketoconazole 2% topical ointment intended for treatment of superficial fungal infections and based on use of our proprietary solubilization platform.

· Metformin chewable/sublingual tablet based on proprietary composition and intended to allow effective taste masking of incorporated Metformin.

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Natural products and dietary supplements in development

· E-DROPS NANO – self-nanoemulsifying composition containing natural essential oils for oral administration.

· PURALEN - self-emulsifying composition of essential oils for oral administration.

· GLUCORA – soft gelatin capsules with combination of plant extract (standardized Banaba leaf extract, containing 18% of Corosolic acid) and lipoic acid in proprietary self-nanoemulsifying composition.

· URBAN POWER – soft gelatin capsules with combination of plant extracts (standardized Ursolic acid from Sage and Banaba leaf extract with 18% of Corosolic acid) in proprietary self-nanoemulsifying composition.

· VITAMIN D3 NANOEMULSION – Nanoemulsion with Cholecalciferol (vitamin D3).

· CLEANEZZE – Hand sanitizer containing essential oil.

Business Strategy

Our primary business strategy capitalizes on the growing interest in the following areas:

1. Developing innovative therapeutic products. Our goal is to discover, develop and commercialize innovative therapeutic products into novel dosage forms using our delivery technologies by incorporating existing, poorly soluble compounds having known biological activity and well established safety profiles.

2. Development of novel natural products and dietary supplements. We believe that people are increasingly interested in alternative approaches to health care. We intend to apply our technological approaches to developing natural health products and dietary supplements.

Technology and Products

Our research is focused on establishing that our technology can improve solubility of poorly soluble drugs. Our technologies are in the early stage of development. Numerous studies will have to be conducted to support our current hypothesis about our technologies. To date, we have done a limited amount of work with our proposed products and do not have sufficient knowledge as to whether any will be successful or our technologies validated. We are partially relying on the research data that was published in scientific journals. There are no assurances that third party findings will be replicated by our own research in the future. Our proposed products, based on our technology, will have to be supported by our own extensive research that will take a long time and significant resources to accomplish. Some of the relevant findings published in scientific literature used as a basis for our technology and the proposed products are presented below.

There are several scientific reviews describing the use of self-emulsifying formulations for improvement of solubility and bioavailability of poorly soluble compounds. Referencing a review by He C-X. et al, (2010), at least 40% of new pharmacologically active chemical entities identified by high-throughput screening have a problem with water solubility. Poor water solubility correlates with numerous issues such as impaired bioavailability and increased cost of drug products. Oral administration of poorly water-soluble drugs can result in low drug dissolution rate and poor absorption in the gastrointestinal tract, whereas intravenous administration of such compounds accompanied by adverse effects and toxic reactions as a result of the precipitation and aggregation of poorly soluble drugs. Therefore, efforts have been made to improve the solubility of the drug candidates. The usual formulation strategy is the conversion of a drug into a salt form by pH adjustment, if possible. If the drug is intrinsically insoluble, there are still various strategies available, such as the use of co-solvents, inclusion complexes, nanosuspensions, micelles, liposomes, polymeric nanoparticles, micro- and nanoemulsions or solid dispersions.¹

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¹ He C-X, et.al., (2010) “Microemulsions as drug delivery systems to improve the solubility and the bioavailability of poorly water-soluble drugs” Expert Opinion. Drug Delivery. 7(4) pp. 445-460.

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Kohli K. et al. (2010) describes self-emulsifying drug delivery systems as a vital tool in solving low bioavailability issues of poorly soluble drugs. Hydrophobic drugs can be dissolved in these systems, designed for oral administration. When such system is released in the lumen of the gastrointestinal tract, it disperses to form a fine micro- or nanoemulsion with the aid of gastrointestinal fluid. This leads to in situ solubilization of drug that can subsequently be absorbed dominantly via the lymphatic pathway, bypassing the hepatic first-pass effect. This article presents a scientific body of various published reports on diverse types of self-emulsifying formulations with emphasis on their formulation, characterization and in vitro analysis, with examples of currently marketed preparations.²

Chen H. et al., (2011) in the article “Nanonization strategies for poorly water-soluble drugs”, discusses the use of nanoemulsions for successful oral, topical and ophthalmic application.³

Our nanoemulsion based delivery platform, when fully developed and approved, can be applicable in several types of dosage forms:

1. Liquid formulations for oral administration. Self-nanoemulsifying delivery system applicable for lorazepam oral spray, liquid forms of vitamin D3, nanoemulsion of essential oils (E-drops Nano). We believe the technology could eliminate product loss due to adhesion to glass walls or surfaces.

2. Topical formulations containing polar solvents. This approach is intended to improve solubility of poorly soluble compounds and may prevent drug precipitation. For example, solubility of Ketoconazole in the proposed delivery system exceeds 50 mg/ml, while drug solubility in pure alcohol is only 20 mg/ml. After addition of water or saline to our Ketoconazole formulation, the microscopic examination showed no signs of precipitation or crystallization of the drug for at least 24 hours. We plan to use this technology in our proposed topical antifungal composition of Ketoconazole.

3. Oral solid dosage forms. Self-microemulsifying compositions for incorporation of poorly soluble compounds, including plant extracts and natural components along with different lipids or essential oils, into gelatin capsules. The capsule dissolves in the stomach and releases a fine emulsion with biologically active components incorporated in small oil droplets. This approach can be used for delivery of a combination of Banaba extract and alpha-Lipoic acid (Glucora™). The mean droplet size of Glucora formulation after dissolution in simulated gastric fluid was found to be about 108 nm.

Proposed Products

Pharmaceutical prescriptions

Intraoral (sublingual) insulin tablet (EGP-1214)

The proposed intraoral insulin tablet will be designed for the treatment of early stages of Type 2 diabetes as well as for pre-diabetes. EGP-1214 is a compressed tablet containing human recombinant insulin and designed for sublingual administration for transmucosal delivery of the peptide for blood glucose management.

Current research has shown that the administration of insulin at earlier stages of Type 2 diabetes mellitus has positive effects and is now beginning to be included in the standard treatment regimens. Providing additional exogenous insulin to Type 2 diabetes patients may slow down the rate of pancreas deterioration and improve glycemic control. The gland can respite and the disease progress may decelerate. While the benefits can be significant, some patients are hesitant to introduce injections into their daily routine. The addition of non-injectable insulin to the anti-diabetes treatment regimen should decrease the reluctance of diabetics to start the early insulin treatment and might have significant benefits in terms of progression of the disease.

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² Kohli K. et al., (2010) “Self-emulsifying drug delivery systems: an approach to enhance oral bioavailability”. Drug Discovery Today 15 (21/22) pp. 958-965.

³ Chen H. et al., (2011) in the article “Nanonization strategies for poorly water-soluble drugs” Drug Discovery Today 16, (7/8) pp. 354-360.

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We expect that when fully developed and tested, the intraoral insulin tablet may provide a fast and effective insulin administration for patients in need with pre-diabetes and early stages of Type 2 diabetes.

When fully developed, it may be the first intraoral insulin medicine. In addition to improved quality of life for the people with diabetes, we anticipate increased patient compliance and lower incidence of hypoglycemic events due to lower biopotency when compared to existing treatment with injectable insulin.

We are presently in the research phase of developing the formulation of EGP-1214. There is no assurance that the product will be able to reach proposed results and efficacy or be commercially viable.

Lorazepam oral spray for emergency treatment of acute seizures

Control of prolonged acute severe seizures (Cluster Seizures, Status Epilepticus) usually requires hospitalization and emergency treatment by means of intravenous anticonvulsant drugs. Lorazepam is an approved benzodiazepine drug with known anticonvulsant activity and relatively low level of side effects. Administration of anticonvulsants by routes more convenient than intravenous injection (for example buccal or nasal), has been actively studied, but to the best of our knowledge, to date no buccal or nasal medications have been approved in North America. Accordingly, we believe there is an unmet need for a convenient, fast acting treatment of the acute seizures, particularly in out-of-hospital settings, which does not require parenteral administration.

Our proposed Lorazepam oral spray for transmucosal delivery is based on the proprietary waterless self-nanoemulsifying formula, which is designed to prevent precipitation of the active ingredient after contact with saliva. Although in the early stages of research, we believe that the spray, when developed, could provide fast onset of action and enhance drug absorption through the oral mucosa. Our experiments in animals have shown fast onset (3-5 minutes) and effective anti-convulsant action of Lorazepam spray, comparable with parenterally administered Lorazepam injectable solution in the same dose.

We expect that when fully developed and tested, the oral spray formulation of Lorazepam will be capable of providing a fast and effective treatment of acute seizures in the hospital, in outpatient settings or in the home. This novel form of the anticonvulsant would be a convenient alternative to injectable Lorazepam for efficient control of epilepsy emergencies.

Lorazepam oral spray is still in the research stage and our goal is to develop it with the following features:

· Easy and fast non-invasive administration;

· Fast onset of action;

· Suitable for self-administration;

· Can be administered in a hospital or outpatient setting; and

· Easy and convenient control of delivered doses.

Commercialization potential and development

Management believes that the large number of annual incidence of epileptic seizures and acute repetitive seizures in the United States creates a potential for Lorazepam spray. Currently, patients with prolonged acute seizures must be transported to a hospital and treated with intravenous infusion of Lorazepam or Diazepam. Due to delay of transportation and late beginning of the treatment, acute seizures can last for extended period, causing brain damage, disability and possibly death. We expect that Lorazepam oral spray, if finalized and made available, could ultimately be used in out-of-hospital settings shortly after a seizure begins.

If initial investigations in animals and optimization of the formulation of transmucosal Lorazepam are successful, the spray could be manufactured for toxicological, safety and pharmacokinetics investigations. Analytical development, product optimization and stability program for the selected dosage form will be carried out in accordance with good laboratory practice (GLP) and good manufacturing practice (GMP) requirements.

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Required safety pharmacology and toxicology programs will be conducted using the final formulation in accordance with current regulations. Size and duration of toxicology and safety pharmacology program and clinical development program will be established after meeting with health regulators.

The estimated duration of product development is 24 to 36 months for pre-clinical studies, including toxicology and safety pharmacology in accordance with Canadian requirements, with an estimated cost of approximately $6.0 million. Clinical trials can start within three years after the start of the project. Because the proposed product is based on a long approved and well-known drug with good safety profile, and the proposed dosage is in the approved dosage range, we believe that a shortened clinical development could possibly be sufficient for marketing approval in Canada. We estimate the cost of the clinical trials program in Canada to be approximately $13 million. We also believe that Lorazepam oral spray in the U.S. may satisfy development program requirements outlined in Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act. However, there is no assurance that we will be able to use the shortened approval process in Canada or that Section 505(b)(2) will be available in the U.S.

We are presently in the research phase of developing formulation of Lorazepam Oral Spray. There is no assurance that the product will be able to reach proposed results and efficacy or be commercially viable.

2% Ketoconazole antifungal ointment

Ketoconazole is a synthetic drug used to treat fungal infections. Structurally, Ketoconazole belongs to an Imidazole class of antifungal compounds. Topical preparations of Ketoconazole are used to treat superficial fungal infections of the skin or nails.

We are developing what we believe to be a novel topical formulation of 2% Ketoconazole ointment. Ketoconazole is a drug with very low solubility, but it completely dissolves in a proprietary vehicle in the form of the water washable ointment. Solubility of Ketoconazole in the vehicle for proposed delivery system exceeds 50 mg/ml, while drug solubility in pure alcohol is only 20 mg/ml. After addition of water or saline to our Ketoconazole formulation the microscopic examination showed no signs of precipitation or crystallization of the drug for at least 24 hours. The novel solubilizing formulation prevents Ketoconazole from precipitation on contact with body tissues and a combination of polar solvents retain the drug in an active dissolved state.

Commercialization potential and development

2% Ketoconazole gel (Xolegel® 2%) is intended for the topical treatment of seborrheic dermatitis and has a retail price of approximately $300 for a 60 gram tube. The efficacy of this alcohol based formulation in treatment of superficial fungal infections is found to be about 25% % (XOLEGEL™ GEL, 2%, FDA prescription information). We plan to test the ability of our proposed formulation of Ketoconazole, when developed, to demonstrate antifungal activity for susceptible topical fungal strains.

Due to the well-known active pharmaceutical ingredient and inactive components used in our formulation of Ketoconazole, we believe 2% Ketoconazole ointment may satisfy development program requirements outlined in Section 505(b)(2) of Federal Food, Drug and Cosmetic Act. We estimate that product development cost in Canada will be approximately $4.5 million for pre-clinical studies, including toxicology and safety pharmacology and will take from 18 to 24 months. Clinical trials can start within 28 to 32 months after commencing the project and will cost approximately $10.0 million to $12.0 million. We have not commenced any preclinical investigations in animals or optimization of the formulation for this product.

We are presently in the research phase of developing topical formulation of 2% Ketoconazole ointment. There is no assurance that the product will be able to reach proposed results and efficacy.

Metformin Chewable Tablets (Taste Masked)

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Metformin is a widely prescribed drug for treatment of type 2 diabetes. It is available in the United States and Canada by prescription in tablets of 500, 850 and 1000 mg and recommended dose can reach 3000 mg per day. Metformin use is often associated with stomach disturbances such as diarrhea, nausea/vomiting, flatulence, asthenia, indigestion and abdominal discomfort. The big Metformin tablet is difficult to swallow and the unpleasant taste prevents patients from chewing the tablets.

Our proposed novel taste-masked composition of Metformin is intended to be chewed or administered sublingually as lozenges. We believe this method of administration may be more convenient for patients with difficulties in swallowing. Our investigation has demonstrated good taste-masking properties of tablets, prepared using our proprietary composition and process.

Our goal for this proposed product is to develop a patentable tablet formulation and process for which the tablet can be manufactured using standard pharmaceutical equipment. All ingredients are USP/NF or pharmaceutical grade and listed in FDA Inactive Ingredients Guide and Canadian List of Acceptable Non-Medicinal Ingredients.

Because Metformin is a well-known drug, we believe that Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act requirements may be applicable. We have not yet approached any agency regarding the Metformin product and estimate approximately 24 months and $2.0 million to complete formulation development of our proposed Metformin tablets. We have not commenced any preclinical investigations in animals or optimization of the formulation for this product.

We are presently in the research phase of developing a chewable Metformin tablet. There is no assurance that the product will be able to reach proposed results and efficacy.

Natural health products

E-drops Nano – nanoemulsion of essential oils combination for oral administration

An innovative combination of essential oils for maintaining urinary system in healthy conditions was discovered by Dr. Enes Hasanagic, who originated a mixture of several essential oils, given orally. E-drops developed by Dr. Hasanagic have become popular in Central and Eastern Europe.

The primary limitation for wide use of this product is a strong astringent taste and some stomach irritation resulting is consumer dissatisfaction. Using a proprietary technology, we have developed a process that can incorporate the essential oils into a self-nanoemulsifying composition, which forms nanoemulsion when added to water. We believe the resulting nanoemulsion has a more pleasing taste and reduces the loss of active components due to adhesion to walls of the cup. We have determined that droplet size of the formed emulsion is around 100 to 200 nm. The main active ingredient of the E-drops Nano is Juniper extract in form of steam distilled essential oil. According to CFR 21, Juniper essential oil is a Generally Recognized As Safe (“GRAS”) material (CFR 21 part 582.20) and mentioned as a component of digestive aid products (CFR 21, § 310.545 part (8)(ii) of FDA HHS). The properties of Juniper extract are described in scientific literature as a diuretic, carminative and digestive aid.⁴ E-drops Nano has received a Natural Product Number from Health Canada (NPN 80030783).

PURALEN^TM - essential oils combination for oral administration

PURALEN is a combination of essential oils, similar to E-drops. PURALEN forms a relatively coarse emulsion upon contact with water (5-100 micrometers as estimated by microsopical examination). PURALEN contains Juniper essential oil. According to CFR 21, Juniper essential oil is a GRAS material (CFR 21 part 582.20) and mentioned as a component of digestive aid products (CFR 21, § 310.545 part (8)(ii) of FDA HHS).

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⁴ Juniper is included in Health Canada monograph http://webprod.hc-sc.gc.ca/nhpid-bdipsn/monoReq.do?id=123&> (internet link) and other compendial sources:

US PDR for Herbal Medicines (Ed. 1, Medical Economics Company 1999, pp. 918-919)

The Complete Commission E Monographs - Therapeutic Guide to Herbal Medicines Boston 1999, pp. 218-220

British Herbal Compendium, vol. 2 British Herbal Medicine Association, Bournemouth, UK 2006 pp. 237-241

USA – Title 21 in Code of Federal Regulations revision 2000 Part 182.20

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Glucora^TM - soft gelatin capsules with Banaba extract in self-emulsifying formulation for oral administration

We believe that natural products could be a helpful additive to diet and exercise. Several medicinal plants have been studied for potential carbohydrate regulating activity including Lagerstroemia speciosa (Banaba), Eriobotrya japonica (Loquat), Ternstroemia gymnanthera (Japanese Cleyera) and others. One of the bioactive substances found in these plants is Corosolic acid, a sterol type molecule. A study reported in 2006 by Japanese researchers showed that Corosolic acid significantly affects glucose transport across cell membranes. A distinctive feature of Corosolic acid is not only the stimulation of glucose transport, but also possible suppresses the growth of the fat cells.⁵ It has been shown in animals that extracts of Lagersrtroemia speciosa activate glucose transport to adipocytes, similar to insulin.⁶

Animal and human studies as well as in vitro investigations indicate that Banaba leaf extracts demonstrate glucose regulating properties.⁷ Based on the studies conducted to date, no adverse effects have been reported in animals using either Corosolic acid or standardized Banaba extracts, nor have adverse events been observed or reported in controlled human clinical studies.⁸

We are developing the Glucora^TM capsules based on self-nanoemulsifying formulation containing Banaba leaf extract and alpha-Lipoic acid. We are presently in the research phase of developing Glucora^TM with the goal of eventually formulating a marketable capsule. There is no guarantee that the product will be able to reach proposed results and efficacy.

URBAN POWER^TM: Ursolic acid and Banaba extract combination in soft gelatin capsule – for oral administration

URBAN POWER^TM soft gelatin capsules will contain a combination of Banaba extract (18% Corosolic acid), pure Ursolic acid extracted from Sage and alpha-Lipoic acid. URBAN POWER™ will be based on a proprietary delivery system.

Ursolic acid is a natural compound, present in apple peels and many edible plants. Animal experiments have shown that ursolic acid reduced adiposity and blood glucose in non-obese mice and also reduces total body weight, white fat, glucose intolerance and hepatic steatosis in high fat-fed mice.⁹

We are presently in the research phase of developing Urban Power with the goal of eventually formulating a marketable capsule. There is no assurance that the product will be able to reach proposed results and efficacy.

Other Proposed Products

In addition to the above product candidates, we believe that our technologies can be applied to additional products that could potentially compete with similar products already on the market. Using our existing technologies, we are developing with a goal of commercializing three new products:

· Vitamin D3, our formulation of Vitamin D in nanoemulsion;

· V-Cleanzz, a vegetable wash with bactericidal components; and

· CleanEzze, a hand sanitizer containing essential oil.

None of the company’s natural health products contain any new ingredients. All ingredients used in our natural health products are on the list of approved ingredients with the regulatory bodies. The FDA does not require any notification or registration for natural health products or dietary supplements.

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⁵ M. Fukushima et al. / Diabetes Research and Clinical Practice, August 2006, 73(2), pg. 174-177.

⁶ T. Hayashi, et al., “Ellagitannins from Lagerstroemia speciosa as activators of glucose transport in fat cells”, Planta Med. 2002 v.68 pp. 173–175.

⁷ G. Klein et al. / Antidiabetes and Anti-obesity Activity of Lagerstroemia speciosa, Evidence- Based Complementary and Alternative Medicines, 2007; 4(4), pp. 401–407.

⁸ The Review of Natural Products, Wolfers Kluwer Health, Inc., 2004, “Banaba”.

⁹ Kunkel SD, et al. (2012) "Ursolic Acid Increases Skeletal Muscle and Brown Fat and Decreases Diet-Induced Obesity, Glucose Intolerance and Fatty Liver Disease". PLoS ONE 7(6): e39332. doi:10.1371/journal.pone.0039332, Pages 2-3.

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Government Regulation - Pharmaceutical products

Our research and development activities and the future manufacturing and marketing of our pharmaceutical products are subject to extensive regulation by the FDA in the United States, Health Canada in Canada and comparable designated regulatory authorities in other countries. Among other things, extensive regulations require us to satisfy numerous conditions before we can bring products to market. These regulations are not unique to us and they apply to all competitors in our industry.

The following discussion summarizes the principal features of food and drug regulation in the United States and other countries as they affect our business.

United States

All aspects of our research, development and foreseeable commercial activities relating to pharmaceutical products are subject to extensive regulation by the FDA and other regulatory authorities in the United States. United States federal and state statutes and regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of pharmaceutical products. The regulatory approval process, including clinical trials, usually takes several years and requires the expenditure of substantial resources.

The steps required before a pharmaceutical product may be marketed in the United States include:

Preclinical Development

Preclinical development includes laboratory evaluation of product chemistry and formulation, as well as animal studies to assess the efficacy and potential safety of the product. Preclinical safety tests must be conducted by laboratories that comply with government regulations regarding Good Laboratory Practice, or GLP regulations. We plan to conduct and submit the results of preclinical development to the FDA as part of our Investigational New Drug Application (“IND”) prior to commencing clinical trials. We may be required to conduct extensive toxicology studies as part of preclinical development.

The results of these evaluations and tests are then submitted to the FDA, together with manufacturing information, analytical data, and protocols for clinical studies, in an IND, to receive an approval from the FDA that the clinical studies proposed under the IND are allowed to proceed.

Clinical trials

Based on preclinical testing, an IND is filed with the FDA to begin human testing of the drug. The IND becomes effective, if not rejected by the FDA, within 30 days. The IND must indicate the results of previous experiments, how, where and by whom the new studies will be conducted, the chemical structure of the compound, the possible mechanism of action, any toxic effects of the compound found in the animal studies and how the product is manufactured. All clinical trials must be conducted in accordance with good clinical practice (“GCP”), regulations. In addition, an Institutional Review Board (“IRB”), generally comprised of physicians at the hospital or clinic where the proposed studies will be conducted, must review and approve the IND. The IRB also continues to monitor the study. We must submit progress reports detailing the results of the clinical trials to the FDA at least annually. In addition, the FDA may, at any time during the 30-day period or at any time thereafter, impose a clinical hold on proposed or ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA. In some instances, the IND application process can result in substantial delay and expense.

Clinical trials involve the administration of a new drug to humans, under the supervision of qualified investigators using the protocol approved by the FDA and IRB, to establish the safety and efficacy of the product candidate for the intended use.

Clinical trials are typically conducted in three sequential phases (Phase I, Phase II, and Phase III), but the phases may overlap. Phase I clinical trials test the drug on healthy human subjects for safety and other aspects, but usually not effectiveness. Phase II clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the drug for specific purposes, to determine dosage tolerance and optimal dosages, and to identify possible adverse effects and safety risks. When a product has shown evidence of efficacy and acceptable safety in Phase II evaluations, Phase III clinical trials are undertaken to evaluate and confirm clinical efficacy and to test for safety in an expanded patient population at several clinical trial sites in different geographical locations. Clinical trials need to be conducted in compliance with the FDA’s Good Clinical Practice requirements.

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After the completion of clinical trials, if there is substantial evidence that the drug is safe and effective, a New Drug Application (“NDA”) is filed with the FDA. The NDA must contain all of the information on the drug gathered to that date, including data from the clinical trials. NDAs are often over 100,000 pages in length.

NDA Submission

The results of pre-clinical studies, clinical studies, and adequate data on chemistry, manufacturing and control information to ensure reproducible product quality batch after batch, are submitted to FDA in an NDA to seek approval to market and commercialize the drug product for a specified use. The FDA reviews all submitted NDAs and is governed by the Prescription Drug User Fee Act (“PDUFA”) regarding response time to the application, which is generally 12 months (and shorter for a priority application). It may deny a NDA if it believes that applicable regulatory criteria are not satisfied. The FDA also may require additional clarifications on the existing application or even additional testing for safety and efficacy of the drug.

In such an event, the NDA must be resubmitted with the additional information and, again, is subject to review before filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Federal Food, Drug and Cosmetic Act, the FDA has 365 days in which to review the NDA and respond to the applicant. The review process is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. The FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and a recommendation as to whether the application should be approved.

The FDA is not bound by the recommendation of an advisory committee. If FDA evaluations of the NDA and the manufacturing facilities are favorable, the FDA may issue either an approval letter, or an approvable letter that will likely contain a number of conditions that must be met in order to secure final approval of the NDA. When and if those conditions have been met to the FDA’s satisfaction, the FDA will issue an approval letter, authorizing commercial marketing of the drug for certain indications. If the FDA’s evaluation of the NDA submission or manufacturing facilities is not favorable, the FDA may refuse to approve the NDA or issue a not approvable letter.

If the FDA approves the NDA, the drug becomes available for physicians to prescribe. Periodic reports must be submitted to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional post marketing studies, or Phase IV studies, to evaluate long-term effects of the approved drug.

Section 505(b)(2)

An application under section 505(b)(2) of Federal Food, Drug and Cosmetic Act contains full safety and effectiveness reports, but allows at least some of the information required for approval to come from studies not conducted by or for the applicant. This application can only be used for drugs that are similar or equivalent to the ones already approved by the FDA in an NDA for another company. The applicant does not need to get permission from the original filer to use their information and it allows the applicant to rely on studies published in the scientific literature to demonstrate the safety and effectiveness of new drug. The 505(b)(2) application is intended to encourage sponsors to develop innovative medicines using currently available products by significantly reducing the time and money to bring new application of an old drug to market. There is no assurance that any of our proposed products will satisfy the requirements for Section 505(b)(2) approval, or that we will be successful in completing the shortened approval process for any product. If we are unable to use the 505(b)(2) process, we will experience a significant increase in development expenses and approval time will be considerably longer. This could ultimately preclude the marketing of our proposed products, which could have a serious negative affect to our business plan and potential for future revenues.

Natural Health Products

Manufacturing of natural health products for human consumption requires compliance with current GMP regulations. Health Canada Natural Health Products Directorate encourages registration of the natural health products in accordance with current regulations and obtaining a Natural Product Number (“NPN”). We have applied for an NPN for each of our proposed nutraceuticals formulations. Currently we have NPN number for our nanoemulsion formulation for E-drops Nano (NPN 80030783), Vitamin D3 nanoemulsion (NPN 80037273), Hand sanitizer CleanEzze (NPN 80041150), essential oil combination WartsX (NPN 80041153), vitamin complex Shield-X (NPN 80041141) and Glucora (NPN 80057426).

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In the United States, FDA regulates both finished dietary supplement products and dietary ingredients under a different set of regulations than those covering "conventional" foods and drug products (prescription and Over-the-Counter). Under the Dietary Supplement Health and Education Act of 1994 (“DSHEA”), the dietary supplement or dietary ingredient manufacturer is responsible for ensuring that a dietary supplement or ingredient is safe before it is marketed. FDA is responsible for taking action against any unsafe dietary supplement product after it reaches the market. Generally, manufacturers do not need to register their products with FDA nor get FDA approval before producing or selling dietary supplements.

For European Union (“EU”) countries, Natural Health Products usually can be registered as “food supplements”. Essential oils nanoemulsion (E-drops Nano) was successfully registered as food supplement in Latvia (registration No. 10352) and placed into the EU database of registered food supplements. It simplifies and accelerates registration and approval of the product in other EU countries. We have also registered E-drops in Slovenia and Czech Republic We also have received an import license in Uzbekistan to sell E-Drops Nano in that country.

Marketing and Distribution

We plan to market our completed products through collaborative arrangements with companies that have well-established pharmaceutical and nutraceutical health products marketing and distribution capabilities, including expertise in the regulatory approval processes in their respective jurisdictions.

Currently we have several NPNs in Canada and registration as food supplement in Latvia (EU) for E-Drops Nano as well as import license for E-Drops Nano in Uzbekistan.

Nutraceuticals have become an important part of mainstream health care. We believe the market for nutraceuticals is growing. Although public awareness of nutraceuticals is increasing, only a small percentage of North Americans actually use nutraceuticals on a regular basis. Thus we believe there is a potential new market for these products for the following reasons:

· Increased use of nutraceutical products for the over-50 population segment, whose numbers are increasing;

· Increased awareness that nutraceuticals is an important part of mainstream health care; and

· Price increases.

Marketing Strategies

We have formulated a strategy that we believe will differentiate us as a company by:

· focusing on science;

· developing unique nutraceuticals and related products;

· securing a proprietary position for our products;

· advertising aggressively and marketing through all appropriate distribution channels using all professional means; and

· providing information by a company website to be developed.

Following this strategy, we believe we can gain access to many revenue generating channels through classic pharmaceuticals and other health care products. We further believe there are greater consumer demands, market growth potential and both real and perceived usefulness. We can increase market share by reducing market share of competitors. This strategy will capitalize on the market development to date and capture a share of markets held by existing nutraceuticals. The key benefit is that we have carefully chosen products for the pipeline with the intent to maximize the therapeutic value of their discoveries and technology. This strategy requires extensive advertising in mainstream media, including infomercial, interactive TV, direct mail, independent sales reps and educational inserts/newsletters. Product studies will support this marketing strategy. In this context, the company will pursue preliminary inquiries from favored vendors.

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Management plans to explore new markets for products through strategic positioning. This future strategy will involve developing specialty catalogues, placement on retail shelves of health food stores, educational product inserts/newsletters, media appearances discussing product, and independent sales reps.

We also intend to engage multi-level marketing companies. This strategy would likely involve creating private labels for a large customer. A major component of this strategy is the effect of product identity. This channel of distribution usually requires more price mark-up than the product would tolerate. As of the date hereof, we have not entered into any agreement or understanding with any prospective marketing company.

We further intend to keep capital outlay at a minimum by licensing and/or franchising our products to a brand-name company. This strategy would add value to the product in the form of brand name loyalty, manufacturing strength, and a strong sales/service force already in place.

Marketing Plan

In moving from the start-up stage into the first growth stage, we must identify and match market segments with appropriate distribution channels. Our goal is to expand regionally, both in Canada and the U.S., based on existing markets and consumer profiles. Once we realize regional sales growth and product recognition, we plan to implement a national and international marketing strategy. At such time as we reach this level, management anticipates it will employ a major marketing communications agency.

Our marketing and sales outline is as follows:

· A complete review and analysis of the proposed product’s market.

· Use of groups conducted with the professional community and general consumers to identify professional and consumer preferences.

· Based on research results, create a product identity.

· Form product identity, establish professional and consumer strategic directions, which would affect product design, packaging, advertising, consumer promotion, and product publicity.

· Develop and launch a marketing plan with all elements and budget for both professional and consumer.

· Actual implementation of the plan to include product design changes, packaging, advertising, consumer promotion, display, and product publicity.

· Consider using a sales organization for retail sales and a broker for the remainder of sales.

Initially, we intend to focus on marketing our proposed natural health products and on establishing distribution networks. We intend to market products as they become ready for sale, including satisfaction of any regulatory requirements. Initially during the next twelve months, we plan to market only natural products and hope to add new natural products during the next three years. Presently, only E-drops Nano, PURALEN^TM and Glucora^TM are completed and ready for commercial marketing. Additional products that we believe may be marketable in the next twelve months include the following:

· Vitamin D3

· CleanEzze

· V-Cleanzz

· WartsX

· URBAN POWER^TM

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Our plan is to provide either a finished product or product in bulk to distributors with regulatory support in order to register the product within specific jurisdictions. In December 2012, through our wholly owned subsidiary Eastgate Pharmaceuticals Inc., we engaged Mediq Dansmark A/S to market four of our natural products, Vitamin D3, V-Cleanzz, CleanEzze and WartsX. Mediq distributes throughout Scandinavia and approximately 14 countries throughout Europe. The agreement provides that delivery of product will be made against purchase orders issued by Mediq. The company shall acknowledge Mediq’s purchase orders within ten business days after receipt, including the requested deliver date. Mediq will endeavour to place orders in minimum volume of 5,000 units per order.

In September 2014, we entered into a licensing agreement with Purine Pharma LLC. Under the licensing agreement Purine Pharma will manufacture, market and distribute our nutraceutical product line under its own private label and promote the products within the international markets within Purine Pharma already markets and distributes. The agreement also provides Eastgate the option to use Purine Pharma as a contract manufacturer for its own brand name label for its own customers. Purine Pharma pays a royalty fee to Eastgate on sales of the products.

In February 2015, through our wholly owned subsidiary Eastgate Pharmaceuticals Inc., we engaged Preferred Nutrition Inc. to distribute the company’s nutraceutical and natural consumer products across Canada. Preferred Nutrition is a Canadian premier distribution company founded in 2002 supplying to approximately 1,200 independent health food stores across Canada. Preferred Nutrition is initially distributing E-drops under its own name, and is reviewing the distribution of other Eastgate products, such as Vitamin D3 drops and Glucora.

In May 2015, we engaged PharmaCenter Ltd. to market and distribute our E-drops in Slovakia and the Czech Republic after a successful registration of the product with local health authorities. PharmaCenter Ltd. headquartered in Budapest, Hungary and has subsidiaries in Slovakia and Czech Republic. Its main focus is in the business of selling innovative oncology, urology, onco-urology, OB-GYN and orphan drugs.

In June 2015 we executed a distribution and marketing agreement with Impex Healthcare to market and distribute Glucora in Bangladesh. Impex Healthcare is based in Dhaka, Bangladesh and is engaged in the import, marketing and distribution of various innovative healthcare products.

In late 2015 we had engaged Preferred Nutrition, (www.PNO.ca) a distributor in Canada, who is marketing E-drops under their own private label, UTI drops. Preferred Nutrition had an exclusivity for the distribution of this product through healthfood stores across Canada.

We intend to continue development of our proposed pharmaceutical products and carry on our research to satisfy the more stringent requisite pre-clinical and clinical requirements of the regulatory agencies. Because of the uncertainty in regards to funding and uncertainty in regards to regulatory approval, we are unable to precisely estimate when proposed pharmaceutical products will be available for sale. We currently have the development of Lorazepam Oral spray, with the development of intraoral insulin formulations as our top priorities and Metformin tablet following shortly thereafter. Because we intend to pursue co-development partners for all our pharmaceutical products to help with funding, product development priorities may change. It is not possible to indicate at this time which pharmaceutical product will be able to be available on the market first.

We are presently in discussions with other potential distributors in the United States and Canada. We also intend to introduce products using e-commerce and through our Internet website. We intend to consider other marketing and licensing opportunities with respect to our prospective pharmaceutical products once initial development milestones have been met.

Manufacturing

We intend to use third party manufacturers for our products. Currently we have a signed agreement with Nutralab Ltd. (Markham, Ontario) to manufacture several of our products, such as E-Drops Nano, PURALEN, vitamin D3, Glucora in soft gelatin capsules and URBAN POWER soft gelatin capsules. The initial batch of 9,000 bottles of E-drops Nano was successfully manufactured, packaged and labeled at Nutralab Ltd. in full compliance with GMP requirements. The agreement was assigned to us by NanoEssential Ltd. as part of the Acquired Products.

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Raw Material Supplies

Excipients used in our formulations are available from numerous sources in sufficient quantities for manufacturing purposes. We believe raw materials will be available in sufficient quantities for commercial purposes when required.

We also believe future development and marketing partners under licensing and development agreements, if any, will provide, or assist in obtaining, pharmaceutical compounds that are used in products covered under such agreements.

Components used in the production of our consumer products are available from a number of potential suppliers. We have not secured commercial supply agreements with any supplier referenced below as the components are readily available in the commercial quantities.

We have selected Citrus and Allied Essences Ltd. of Lake Success, New York as a supplier of Natural essential oils, suitable for oral human consumption (FCC and USP/NF grades). American Lecithin will be the supplier of Lecithin.

Compendial high purity oils, acetylated glycerides and pharmaceutically acceptable surfactants are being supplied by Kerry Bio-Science by way of Nealanders International, Inc., Mississauga, Ontario.

Grain alcohol is supplied by Commercial Alcohols Inc., Toronto, Ontario.

OptiPure (Chemco International/Kenco group), Los Angeles, California and Sabinsa Corp., East Windsor, New Jersey, are suppliers of active natural ingredients.

Intellectual Property

Patents are a key determinant of market exclusivity for most branded pharmaceutical products. Protection for individual products or technologies extends for varying periods, in accordance with the expiration dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country.

We have one US patent application for nanoemulsion for oral administration of essential oils (application # 2013/0029978 A1 Medicinal Compositions And Method For Treatment Of Urinary Tract Infections). Several patent applications are in preparation and will be filed in 2016 or 2017 after obtaining of supporting animal experimental data, provided we have sufficient funding.

We recently expanded our new pharmaceutical product development to include biologically active peptides and proteins that will address diabetes, obesity and the metabolic syndrome. In order to protect our innovative approaches and know-how relating to this product development, our scientists in 2014 filed two provisional patent applications:

· US 61/947,678, Pharmaceutical Composition for Transmucosal Delivery, and

· US 61/947,698, Treatment of Diabetes and Metabolic Syndrome.

These patent applications relate specifically to intraoral insulin formulation. Our sub-micron self-emulsifying platform technology was applied for the development of alternative dosage form of known large biologically active molecules. These technological approaches have demonstrated effectiveness and resulted in the diversification of drug delivery products. As a result, the development of a sublingual insulin tablet designed for intraoral insulin absorption (not GI-tract delivery) has demonstrated substantial progress.

We will continue to file additional patent applications in order to bolster the intellectual property and know-how of the intraoral insulin tablet and platform technology.

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Our two other patent applications relate to an intraoral Lorazepam Spray for treatment of acute seizures:

· PCT/CA2014/000126, Pharmaceutical Composition for Transmucosal Administration of Benzodiazepines, and

· PCT/CA2014/000127, Pharmaceutical Composition For Enhanced Transmucosal Administration of Benzodiazepines

All four patent applications above were assigned to us pursuant to the Assignment Agreement dated October 28, 2014 for a period of five years with option to renew. The agreement also contains certain provisions for earlier termination in case of bankruptcy, nonperformance or material breach. In October of 2016 we amended the Assignment Agreement to reduce the initial term to expire on March 1, 2017. The amendment includes additional specific financial and performance milestones that, if not met, can be considered grounds for an earlier termination. To date, the Company continues to pay all maintenance fees in relation to the patents and Office Action in relation to all patents in the Assignment Agreement.

We plan to expand our patent portfolio for this indication.

We also have developed brand names and trademarks for products in all areas. We consider the overall protection of our patent, trademark and other intellectual property rights to be of material value and acts to protect these rights from infringement.

Our long-term success will substantially depend upon our ability to obtain patent protection for our technology and our ability to protect our technology from infringement, misappropriation, discovery and duplication. We cannot be sure that any future patent applications will be granted, or that any patents which we own or obtain in the future will fully protect our position.

Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. We believe that our existing technology and the patents that we hold or for which we have applied do not infringe anyone else's patent rights. We believe our patent rights will provide meaningful protection against others duplicating our proprietary technologies. We cannot be sure of this, however, because of the complexity of the legal and scientific issues that could arise in litigation over these issues.

We also rely on technological know-how, composition’s trade secrets and other unpatented proprietary information. We will seek to protect this information, in part, by confidentiality agreements with our employees, consultants, advisors and collaborators.

Competition

Our future success depends, in part, upon our ability to develop products and achieve market share at the expense of existing and more established and future products in the relevant target markets. Existing and future products, therapies, technological approaches or delivery systems will compete directly with our products that are used to treat the same medical conditions. Competing products may provide greater therapeutic benefits for a specific indication, or may offer comparable performance at a lower cost.

Management recognizes that competition in the development of novel drug delivery methods and formulations is intense. Several companies work in the field of use of colloidal delivery systems, including nano-and microemulsions. Most competitors have significantly longer operating histories, more advanced technology and greater financial resources. Additionally, most of our competitors have significantly greater experience in

· developing drugs;

· undertaking preclinical testing and human clinical trials;

· obtaining FDA and other regulatory approvals of drugs;

· formulating and manufacturing drugs; and

· launching, marketing, distributing and selling drugs.

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Companies that we are in competition with include, but are not limited to Pfizer, Wyeth, Upsher-Smith Laboratories, Stiefel Laboratories, Merck, BMS, Boston Therapeutics, Biovail and others. We believe that we could possibly compete with these companies because we have several unique methods and novel technological approaches that could potentially allow us to reach proposed targets and develop formulations with improved properties.

Our scientific product development consultants are experienced in the field of developing novel types of delivery systems. This experience includes technical transfer and products launch and manufacturing along with patents and patent applications for multiple compositions.

Developments by competitors may render our products or technologies obsolete or non-competitive. Alternatively, competitors may challenge our patents and prevail in a court of law rendering our products unmarketable, even if they are successfully developed, tested and approved.

Intraoral (sublingual) insulin tablet

We believe that currently there are no intraoral tablets containing insulin that are approved for the blood glucose management of people with pre-diabetic conditions and/or early stages of Type 2 diabetes.

However, there exist a large number of other types of products that address blood glucose management, both approved and in the development pipeline. These include a number of injectable insulins and analogs and inhalable insulin medicine as well as numerous oral anti-diabetic drugs in form of tablets, capsules injections, designed to regulate the concentration of glucose in the blood. Our intraoral tablet, when developed, will be indirectly competing with all existing treatments.

Lorazepam spray

We believe that currently there are no approved oral sprays containing lorazepam or other benzodiazepines that could treat severe epileptic seizures and be suitable for use in non-hospital settings.

Pfizer/Wyeth markets an injectable Lorazepam branded ATIVAN® that is used to treat severe repetitive seizures (status epilepticus). It is also used before surgeries or procedures to cause drowsiness, decrease anxiety, and cause forgetfulness about the procedure or surgery. This drug may also be used to cause drowsiness in patients who need a tube and machine to help with breathing (intubated), to prevent nausea and vomiting in patients on chemotherapy, and to treat a mental/mood disorder (delirium). Lorazepam is also available in tablet form and form of oral solution to relieve anxiety and promote sleep.

Several companies are developing novel, non-injectable, fast acting medicines for treatment of acute seizures. These companies include large and medium size pharmaceutical companies, as well as universities, government agencies and other private and public research organizations. Examples include Upsher-Smith Laboratories, ViroPharma, Valeant Pharmaceuticals International, Medir Pharmaceuticals (The Netherlands). In particular, Upsher-Smith Laboratories, has successfully advanced Midazolam Intranasal Spray through several Phase I and Phase II trials, demonstrating improved control of partial and generalized seizures over placebo. In 2011, Upsher-Smith initiated a global double-blind placebo-controlled Phase III study under a special protocol assessment agreement with FDA.

Currently Diazepam rectal gel 5 mg/ml (Diastat®, Valeant Pharmaceuticals International) is the only non-injectable product, approved in the United States and Canada for treatment of cluster seizures. Due to obvious limitations and inconvenience, it is highly desirable to have an alternative non-invasive anti-seizure preparation. We believe that our proposed oral spray of Lorazepam, when fully development and marketed, could satisfy the need in emergency treatment of status epilepticus and acute seizures.

2% Ketoconazole ointment

There are a number of preparations currently on the market containing Ketoconazole, including tablets (200 mg), shampoo (1% and 2%), cream (2%), gel (2%) and foam (2%). We consider our direct competition to be 2% Ketoconazole gel from Barrier Therapeutics, Inc. / Stiefel Laboratories, Inc., marketed under the brand name Xolegel™, 2% Ketoconazole cream from JSJ Pharmaceuticals marketed under the brand name Kuric™, and 2% Ketoconazole foam marketed by Stiefel Laboratories, Inc. under the brand name Extina® Foam. Ketoconazole tablets are available in generic form and are marketed by a number of generic drug manufacturers.

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Topical formulations of Ketoconazole can be used for treatment of seborrheic dermatitis. Topical Ketoconazole is used also for treating ringworm, jock itch, athlete's foot, dandruff, tinea versicolor and other skin fungal infections, susceptible to Ketoconazole. We believe that our proposed Ketoconazole formulation when fully developed and marketed, could provide efficient relief and an acceptable cure rate in the treatment of susceptible infections.

Metformin

Metformin hydrochloride oral dosage forms are manufactured by many pharmaceutical companies, such as Merck, BMS, Boston Therapeutics, Biovail, Ranbaxy, Alphapharm, Shionogi and Teva Pharmaceuticals. Recently Boston Therapeutics filed an Abbreviated New Drug Application (ANDA) with FDA for chewable dosage form of Metformin.

Existing oral dosage forms for Metformin (Glucofage®) and generics include tablets (500, 850 and 1000 mg) and oral solution 500 mg/5ml (Riomet®). We believe that there is no sublingual or chewable tablet or lozenge of Metformin available. We further believe that our proposed Metformin sublingual / chewable tablet could possibly improve patient compliance due to masking the unpleasant taste of the drug. There is no assurance that we will be able to obtain FDA approval for the proposed chewable Metformin tablet.

Research and Development

We expended $501,831 and $1,118,150 during the 2016 and 2015 fiscal years on research and development. It is our goal to conduct our research programs as necessary funds are available. The specific requirements for our various product candidates are as follows:

Pharmaceutical prescriptions

·	EGP-1214, an intraoral insulin tablet.
·	Lorazepam oral spray for acute seizures emergency treatment.
·	2% Ketoconazole ointment for treatment of susceptible skin fungal infections.
·	Metformin Chewable Tablets.
*	insulin pipeline products

Our three proposed products above are all pharmaceutical prescription products and require the FDA approval process as discussed above. The pre-clinical process could take three years or more. We anticipate that we will proceed with the research process as funds are available. We will most likely seek approval in emerging markets first followed by the U.S. and Canada.

Natural health products

· E-drops Nano

· Vitamin D3

· CleanEzze

· V-Cleanzz

· WartsX

· Glucora^TM

· URBAN POWER^TM

· PURALEN^TM

We believe that the eight proposed products above are all natural health products and do not require FDA approval as discussed above. Generally, manufacturers do not need to register their products with FDA nor get FDA approval before producing or selling dietary supplements. E-drops Nano, PURALEN^TM and Glucora^TM are presently available to be marketed. We anticipate that all the above products will be available to be marketed in the next 12 months, subject to funding.

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Our business plan is to market only natural products in the first fiscal year and add additional new natural products each fiscal year for at least the first three years. The estimated cost of development using our self-emulsifying vehicle delivery system is approximately $200,000 to $500,000 for each product. We have completed the development of E-drops Nano, PURALEN and Glucora. Our plan is to complete the development of Vitamin D3, WartsX, CleanEzze, V-Cleanzz and Urban Power. We have not made a determination as to the next natural products that we will concentrate efforts, although future development will depend primarily on available funds.

The pharmaceutical prescription products program will commence when we are able to secure funding that is adequate to complete the more comprehensive and costly approval process required for pharmaceutical products. We currently intend to focus on developing and marketing of Lorazepam Oral spray as our top priority. Subsequently, we plan to focus on finalizing development of Metformin and Ketoconazole.

We presently do not have any firm agreement or understanding that will provide adequate funding to execute our business plan, although management continues to explore possible funding opportunities. However, we anticipate having products available for sale during 2018 that could provide some cash flow, although there is no assurance that we will realize any proceeds from sales or, that any proceeds realized will be sufficient to execute our business plan. If we are unsuccessful in raising sufficient capital, our timetable for completing development, gaining necessary regulatory approval and marketing our products would be significantly lengthened.

Employees

We currently employ 2 full time employees and 1 part time employee. Currently, our full time employees are only for administration work, until the cash flow improves, we cannot make the commitment to pay management on a regular basis. Our directors and officers are devoting their full time to the company in developing our products and business development as consultants.

Management is presently reviewing the near term possibility of engaging qualified, full-time personnel to assist in developing and marketing our products. We use non-employee consultants to assist us in formulating a research and development strategy, preparing regulatory submissions, developing protocols for clinical trials, for designing, equipping and staffing future manufacturing facilities and for business development.

Consultants and advisors usually have the right to terminate their relationships on short notice. Loss of some of these key consultants or advisors could interrupt or delay development of one or more of our products or otherwise adversely affect our business plans.

We expect to continue to need qualified scientific personnel and personnel with experience in clinical testing, government regulation and manufacturing. We may have difficulty in obtaining qualified scientific and technical personnel as there is strong competition for such personnel from other pharmaceutical and biotechnology companies, as well as universities and research institutions. Our business could be materially harmed if we are unable to recruit and retain qualified scientific, administrative and executive personnel to support our expanding activities, or if one or more members of our limited scientific and management staff were unable or unwilling to continue their association with us.

Industry Segments

We are presently a start-up company that operates in one reportable business segment: the research, development and commercialization of drug delivery systems and technologies.

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Item 1A. Risk Factors.

Our business and results of operations are subject to numerous risks, uncertainties and other factors that you should be aware of, some of which are described below. The risks, uncertainties and other factors described below are not the only ones facing our company. Additional risks, uncertainties and other factors not presently known to us or that we currently deem immaterial may also impair our business operations.

Any of the risks, uncertainties and other factors could have a materially adverse effect on our business, financial condition or results of operations and could cause the trading price of our common stock to decline substantially.

Risks Relating to Our Business

Our auditors have expressed a going concern modification to their audit report.

Our independent auditors include an explanatory paragraph in their report to our financial statements expressing that certain matters regarding the company raise substantial doubt as to our ability to continue as a going concern. Note 2 to the December 31, 2016 financial statements states that we have not established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. In order to continue as a going concern, we need, among other things, to secure additional capital resources to meet our operating expenses, which we plan to obtain from management and by seeking equity and/or debt financing. However management cannot provide any assurances that we will be successful in accomplishing any of our plans. If we are unable to obtain adequate capital, we could be forced to cease operations.

If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results, which could have a material adverse effect on our share price.

Effective internal controls are necessary for us to provide accurate financial reports. We are in the process of documenting and testing our internal control procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and related SEC rules. These regulations require, among other things, management to assess annually the effectiveness of our internal control over financial reporting. During the course of this documentation and testing, we may identify significant deficiencies or material weaknesses that we may be unable to remediate before the deadline for those reports. If our controls fail or management or our independent auditors conclude in their reports that our internal control over financial reporting was not effective, investors could lose confidence in our reported financial information and negatively affect the value of our shares. Also, we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting, and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. Please read “Summary—Emerging Growth Company Status.”

We have identified a lack of adequate segregation of duties and absence of an audit committee as a material weakness in our internal controls, which could cause stockholders and prospective investors to lose confidence in the reliability of our financial reporting.

We have also experienced complications reporting as a result of material weaknesses which resulted in the restatement of our Form 10-Q for the quarterly periods ended March 31, 2016, June 30, 2016 and September 30, 2016, which were filed with the SEC on February 27, 2017, March 9, 2017 and March 15, 2017, respectively, and amended on February 28th, 2018.

We currently have limited segregation of duties among our officers and employees with respect to the preparation and review of financial statements, which is a material weakness in internal controls. If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the company's financial reporting which could harm the trading price of our shares.

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The company and our independent public accounting firm have identified this as a material weakness in the company's internal controls. The company intends to remedy this material weakness by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this material weakness will continue to exist.

We have a limited operating history, recorded limited revenues and no operating profits since inception.

Although the company was formed in 1999, we have had only limited operations and limited revenues since inception. We are deemed a start-up company, which is considered inherently more risky than established companies. Because we have no earnings history and there is no assurance that we will realize future revenues, there is substantial doubt as to whether we will achieve profitability. If we are unsuccessful in the development and commercialization of our proposed products and technology, the negative effect on our business would be substantial and our future would be questionable.

We anticipate needing additional financing in order to accomplish our business plan.

At December 31 , 2016, we had no cash on hand. Management estimates that we will require approximately an additional $5,000,000 over the next twelve months to fully implement our current business plan. We expect to incur numerous expenses in our efforts to develop and eventually commercialize our proposed products. There is no assurance that we will be able to secure necessary financing, or that any financing available will be available on terms acceptable to us, or at all. Also, any additional offerings of our common stock will dilute the holdings of our then-current stockholders. If necessary, our directors or other stockholders may agree to loan funds to the company, although there are no formal agreements to do so. If we are unable to raise sufficient capital, we would not be able to continue our product development and we would likely have to curtail operations.

Our future success depends on our ability to develop products and technology and ultimately generate revenues from their commercialization, which may be subject to many factors.

Our operations to date have been limited to acquiring the Acquired Products and organizing and staffing our company. Our prospective products are in the early stage of development and we have not yet demonstrated the ability to successfully develop and market any products. The potential to generate future revenues and profits from our business depends on many factors, including, but not limited to the following:

· our ability to secure adequate funding to develop our proposed products and technology into commercially viable products and to obtain regulatory approval of our products;

· our ability to market those products;

· the cost and expenses associated with developing products and gaining regulatory approvals;

· the size and timing of future customer orders, product delivery and customer acceptance, if required;

· the costs of maintaining and expanding operations;

· our ability to compete with existing and new entities that offer the same or similar products; and

· our ability to attract and retain a qualified work force as business warrants.

There can be no assurance that we will be able to achieve any of the foregoing factors or realize revenues and profitability in the immediate future, or at any time.

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication and avoid infringing the proprietary rights of others. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge and, even if not challenged, may not provide us with meaningful protection from competition. Due to ongoing capital needs, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us.

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We may forfeit our rights to certain patents and patent applications, our ability to utilize qualified scientific personnel can be jeopardized.

All of our intellectual property and proprietary rights for pharmaceutical product candidates were assigned to us by the scientific teams that were working with us. The patent assignment agreement contains certain provisions that may revert the rights to the patents back to the inventors. To date, the Company has continued to pay maintenance fees and for Office Actions with respect to specific patents. We also do not have long term contracts with this scientific team and our relationship can be terminated at short notice. In such an event, we may have difficulty retaining and training new scientific team to further develop product candidates that were acquired pursuant to the Acquisition Agreement in 2012.

If our patents are determined to be unenforceable or expire, or if we are unable to obtain new patents based on current patent applications or for future inventions, we may not be able to prevent others from using our intellectual property.

Our future success will depend in part on our ability to:

· obtain and maintain patent protection with respect to our products;

· prevent third parties from infringing upon our proprietary rights;

· maintain trade secrets;

· operate without infringing upon the patents and proprietary rights of others; and

· obtain appropriate licenses to patents or proprietary rights held by third parties if infringement would otherwise occur.

We have certain pending patent applications with the United States Patent and Trademark Office, specifically on our E-drops Nano, intraoral insulin tablet and anticonvulsant oral spray. We may not be successful in securing final patents on these or other products or be able to maintain or extend the patents if necessary. There can be no assurance that any patents issued to us will not be challenged, invalidated, infringed on or circumvented, or that the rights granted thereunder will provide competitive advantages to us.

If we fail to obtain necessary regulatory approvals, we may not be allowed to commercialize our proposed products and we will not generate revenues.

Satisfaction of all regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product candidate, and requires the expenditure of substantial resources for research, development and testing. Our research and clinical approaches may not lead to products or drugs that the U.S. Food and Drug Administration (“FDA”) considers safe for humans and effective for indicated uses. The FDA may require us to conduct additional clinical testing, in which case we would have to expend additional time and resources. The approval process may also be delayed by changes in government regulation, future legislation or administrative action or changes in FDA policy that occur prior to or during our regulatory review. Delays in obtaining regulatory approvals may:

· delay commercialization of, and product revenues from, our product candidates;

· impose costly procedures on us; and

· diminish the competitive advantages that we would otherwise enjoy.

In foreign jurisdictions, we may have to receive marketing authorizations from the appropriate regulatory authorities before we can commercialize and market our proposed products. Foreign regulatory approval processes generally include all of the aforementioned requirements and risks associated with regulatory approval in the United States.

If we are unable to obtain requisite regulatory approvals, we would be unable to commercialize our products or to realize any future revenues. This would have a material adverse effect on our business and we may be forced to cease operations.

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We may not be able to maintain necessary confidentiality of our technology and proprietary information.

Patent applications in the U.S. are confidential for a period of time until they are published. Publication of discoveries in scientific or patent literature typically lags actual discoveries by several months. As a result, we cannot be certain that the inventors listed in any patent or patent application owned by us were the first to conceive of the inventions covered by such patents and patent applications, or that such inventors were the first to file patent applications for such inventions.

We also may rely on unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position, which we may seek to protect, in part, by confidentiality agreements. Presently, we do not have any such agreements. There can be no assurance, however, that future agreements will not be breached, that we will have adequate remedies for any breach, or that trade secrets will not otherwise become known or be independently discovered by competitors.

Our product development program may not be successful.

In addition to the development of the Acquired Products, we expect to pursue development of other potential products in the future. None of our potential pharmaceutical product candidates have commenced clinical trials and there are a number of FDA requirements that we must satisfy in order to commence clinical trials. These requirements will require substantial time, effort and financial resources. We may never satisfy these requirements. In addition, prior to commencing any trials of a drug candidate, we must evaluate whether a market exists for a particular candidate. This is costly and time consuming, and any market studies we rely on may not be accurate. We may expend significant capital and other resources on a candidate and find that no commercial market exists for the drug. Even if we are not required to obtain FDA pre-market approval for our potential product candidates, we will still be subject to a number of federal and state regulations, including regulation by the FDA and the Federal Trade Commission on any marketing claims we make and, we may be unable to satisfy these requirements. As a result, we may never successfully develop and obtain approval to market and sell any of our potential product candidates. Even if we do develop and obtain approval to market and sell such product candidates, we may be unable to compete against the many products and treatments currently being offered or under development by other established, well-known and well-financed cosmetic, health care and pharmaceutical companies.

If we are unable to rely upon the FDA’s accelerated approval process for certain pharmaceutical products, our plans to market some or all of our proposed pharmaceutical products may be jeopardized severely.

We intend to rely upon Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act to obtain approval for certain pharmaceutical products without conducting the full complement of safety and efficacy trials mandated by the FDA. Section 505(b)(2) is available for drugs that are similar or equivalent to ones already approved by the FDA. An applicant may use an original filer’s information and rely on published studies to demonstrate the safety and effectiveness of a new drug based on a known compound. This could possibly decrease requirements for preclinical investigations and clinical testing, accelerate the clinical approval process, shorten the time to market, and simplify the steps of the product development process. Initially, we intend to apply our technology only to known compounds previously approved by the FDA. Thus, we believe that Section 505(b)(2) could be available to us, which would likely decrease requirements for preclinical investigations and clinical testing and accelerate the overall approval process for our products. There can be no assurance that any of our proposed products will qualify for 505(b)(2) approval, or that we will be successful in completing the shortened approval process for any pharmaceutical product. Our inability to rely upon Section 505(b)(2) would significantly increase development expenses and approval time for our proposed products, which would negatively affect our business plan and our ability to ultimately market our proposed products.

Government agencies may establish and promulgate guidelines that directly apply to our products that may affect the use of our drugs.

Government agencies, professional societies, and other groups may establish guidelines that could apply to our potential future products and technologies. These guidelines could address such matters as usage and dose of our products, among other factors. Application of such guidelines could mitigate the potential use of our products.

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If ultimately approved, there is no guarantee that the marketplace will accept any of our proposed products. If we are not successful in introducing products or if the market does not accept our products, our business, financial position, results of operations and stock price would be materially and adversely affected.

Even if we ultimately obtain regulatory approvals for our proposed products, uncertainty exists as to whether the market will accept them. A number of factors may limit market acceptance, including timing of regulatory approvals and market entry relative to competitive products, availability of alternative products, pricing, availability of third party reimbursement and the extent of our marketing efforts. We cannot assure you that any of our products will receive regulatory approval or that any products will achieve market acceptance in a commercially viable period of time, if at all. We cannot be certain that any investment made in developing products will be recovered, even if we are successful in commercialization. To the extent that we expend significant resources on research and development efforts and are not able, ultimately, to introduce successful new products, our business will be materially and adversely affected and the market value of our common stock would decline.

We may not become or remain profitable even if our products are approved for sale.

Even if we obtain regulatory approval to market our pharmaceutical products or product candidates, many factors may prevent the products from ever being sold in commercial quantities. Some of these factors are beyond our control, such as:

· acceptance of the formulation or treatment by health care professionals and patients;

· the availability, effectiveness and relative cost of alternative treatments that may be developed by competitors; and

· the availability of third-party (i.e. insurer and governmental agency) reimbursements.

We must depend upon others for marketing and distribution of products. It may become necessary to enter into contracts that limit our potential benefits and control we have over our products. We intend to rely on collaborative arrangements with one or more other companies that possess strong marketing and distribution resources to perform these functions for us, although we have not finalized any such agreements to date. In addition, we will not have the same control over marketing and distribution that we would have if we conducted these functions ourselves.

We may not be able to compete with remedies now being marketed and developed, or which may be developed and marketed in the future by other companies.

Our products, upon development and commercialization will compete with existing and new therapies and treatments. Numerous pharmaceutical, biotechnology and drug delivery companies, hospitals, research organizations, individual scientists and non-profit organizations are engaged in the development of alternatives to our technologies. Most all of these companies have greater research and development capabilities, experience, manufacturing, marketing, financial and managerial resources than we do. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing drug delivery technologies could enhance our competitors’ financial, marketing and other resources. Developments by other drug delivery companies could make our products or technologies uncompetitive or obsolete. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can.

If government programs and insurance companies do not agree to pay for or reimburse patients for our pharmaceutical products following their approval, our success will be negatively impacted.

Sales of our potential pharmaceutical products in U.S. and other markets, considering such products are approved, will depend in part on the availability of reimbursement by third-party payers such as government health administration authorities, private health insurers and other organizations. Third-party payers often challenge the price and cost-effectiveness of medical products and services. Governmental approval of health care products does not guarantee that these third-party payers will pay for the products. Even if third-party payers do accept our future product, the amounts they pay may not be adequate to enable us to realize a profit. Legislation and regulations affecting the pricing of pharmaceuticals may change before our products are approved for marketing and any such changes could further limit reimbursement.

We face significant product liability risks, which may have a negative effect on our financial condition.

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The administration of drugs or treatments to humans, whether in clinical trials or commercially, can result in product liability claims whether or not the drugs or treatments are actually at fault for causing an injury. Furthermore, if ultimately approved our pharmaceutical products may cause, or may appear to have caused, serious adverse side effects (including death) or potentially dangerous drug interactions that we may not learn about or understand fully until the drug or treatment has been administered to patients for some time. Product liability claims can be expensive to defend and may result in large judgments or settlements against us, which could have a severe negative effect on our financial condition.

Developments by competitors may render our products or technologies obsolete or non-competitive.

Alternative technologies and products similar to ours are being developed by other companies. Some of these products may be in clinical trials or are awaiting approval from the FDA. In addition, companies that sell generic products represent substantial competition. Most competitors have greater capital resources, larger research and development staffs and facilities and more experience in drug development and in obtaining regulatory approvals. These organizations also compete with us to attract qualified personnel and partners for acquisitions, joint ventures or other collaborations. If we are unable to successfully compete with these other companies, our business will be negatively affected.

We are dependent upon our directors, officer and consultants, the loss of any of whom would negatively affect our business.

We are dependent upon the efforts of our directors, officers and consultants to operate our business. Should any of these persons leave or otherwise be unable to perform their duties, or should any consultant cease their activities for any reason before qualified replacements could be found, there could be material adverse effects on our business and prospects. We have not entered into employment agreements with any individuals and do not maintain key-man life insurance. Unless and until additional employees are hired, our attempt to manage our projects and meet our obligations with such a limited staff could have material adverse consequences, including without limitation, a possible failure to meet a contractual or SEC deadline or other business related obligation.

We may not be able to manage future growth effectively, which could adversely affect our operations and financial performance.

The ability to manage and operate our business as we execute our business plan will require effective planning. Significant future rapid growth could strain management and internal resources that would adversely affect financial performance. We are in the early phase of research and we may not be able to successfully formulate and commercialize any future products. If we do succeed in finalizing and marketing any of our proposed products, we anticipate that potential future growth could place a significant strain on personnel, management systems, infrastructure and other resources. Our ability to manage future growth effectively will also require attracting, training, motivating, retaining and managing new employees and continuing to update and improve operational, financial and management controls and procedures. If we do not manage growth effectively, our operations could be adversely affected resulting in slower growth and a failure to achieve or sustain profitability.

Being a public company involves increased administrative costs, which could result in lower net income and make it more difficult for us to attract and retain key personnel.

As a public company subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act,”) we incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the SEC, require changes in corporate governance practices of public companies. We expect these new rules and regulations will increase our legal and financial compliance costs and make some activities more time consuming. For example, in connection with being a public company, we may have to create new board committees, implement additional internal controls and disclose controls and procedures, adopt an insider trading policy and incur costs relating to preparing and distributing periodic public reports. These rules and regulations could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee.

 

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The recently enacted JOBS Act reduces certain disclosure requirements for “emerging growth companies,” thereby decreasing related regulatory compliance costs. We qualify as an emerging growth company as of the date of this report and may continue to qualify as an “emerging growth company” through December 31, 2018. However, we would cease to qualify as an emerging growth company if:

· we have annual gross revenues of $1.0 billion or more in a fiscal year;

· we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or

· we become a “large accelerated filer”, defined by the SEC as a company with a world-wide public float of its common equity of $700 million or more.

Upon the occurrence of any of the above, we would not be able to take advantage of the reduced regulatory requirements and any associated cost savings.

Risks Relating to the Market for Our Common Stock

Our common stock was recently cleared to trade in the over-the–counter market and there can be no assurance that an active public market will develop or that our common stock will continue to be quoted for trading, especially as we are currently delinquent in our public filings.

Our common stock was initially cleared to be quoted on the middle tier of the OTC Markets Group, Inc. (the “OTCQB”) under the trading symbol “ESAQ” in March 2014 and under the trading symbol “ETBI” in December 2014. Inclusion on the OTCQB permits price quotations for our shares to be published by that service. However, we do not anticipate a substantial public trading market in our shares in the immediate future. Only companies that report their current financial information to the SEC may have their securities included on the OTCQB. Therefore, we must keep current in our filing obligations with the SEC, including periodic and annual reports and the financial statements required thereby. We are currently delinquent in our public filings as we have not yet filed our quarterly reports for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 and there is no guarantee we will be able to do so. As a result of such delinquency, or if we otherwise lose our status as a "reporting issuer," any future quotation of our shares would be jeopardized.

A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Whether stockholders may trade their shares in a particular state is subject to various rules and regulations of that state.

The price of our common stock may be affected by a limited trading volume, may fluctuate significantly and may not reflect the actual value of our business.

There may be only a limited public market for our common stock and there can be no assurance that an active trading market will develop or continue. An absence of an active trading market could adversely affect our stockholders’ ability to sell our common stock in short time periods, or at all. Our common stock has likely to experience in the future significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors, such as our sale of securities in connection with capital raising activities, could cause the price of our common stock to fluctuate substantially. Thus, the price at which shares of our common stock may trade from time to time may not reflect the actual value of our business or the actual value of our common stock.

From time to time, we may hire companies to assist us in pursuing investor relations strategies to generate increased volumes of investment in our common stock. Such activities may result, among other things, in causing the price of our common stock to increase on a short-term basis.

Furthermore, the stock market generally and the market for stocks of companies with lower market capitalizations and small biopharmaceutical companies, like us, have from time-to-time experienced, and likely will again experience significant price and volume fluctuations that are unrelated to the operating performance of a particular company.

Our stock price is below $5.00 per share and is treated as a “penny stock”, which places restrictions on broker-dealers recommending the stock for purchase.

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Our common stock is defined as “penny stock” under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, and the rules promulgated thereunder. The SEC has adopted regulations that define “penny stock” to include common stock that has a market price of less than $5.00 per share, subject to certain exceptions. These rules include the following requirements:

· broker-dealers must deliver, prior to the transaction a disclosure schedule prepared by the SEC relating to the penny stock market;

· broker-dealers must disclose the commissions payable to the broker-dealer and its registered representative;

· broker-dealers must disclose current quotations for the securities;

· if a broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed control over the market; and

· a broker-dealer must furnish its customers with monthly statements disclosing recent price information for all penny stocks held in the customer’s account and information on the limited market in penny stocks.

Additional sales practice requirements are imposed on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to sale. If our common stock remains subject to these penny stock rules these disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. As a result, fewer broker-dealers may be willing to make a market in our stock, which could affect a shareholder’s ability to sell their shares.

The stock price of our common stock in the public market may be volatile and subject to numerous factors.

 Any trading market for our shares will most likely be very volatile and subject to numerous factors, many beyond our control. Some factors that may influence the price of our shares are:

· our ability to develop our patents and technology into commercially viable products;

· our ability to achieve and maintain profitability;

· changes in earnings estimates and recommendations by financial analysts;

· actual or anticipated variations in our quarterly and annual results of operations;

· changes in market valuations of similar companies;

· announcements by us or our competitors of significant contracts, new products or drugs, acquisitions, commercial relationships, joint ventures or capital commitments; and

· general market, political and economic conditions.

In the past, following periods of extreme volatility in the market price of a particular company's securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert management's time and attention, which would otherwise be used to benefit our business.

Any trading market could be restricted because of state securities “Blue Sky” laws that prohibit trading absent compliance with individual state laws.

Transfer of our common stock may be restricted under the securities laws promulgated by various states and foreign jurisdictions, commonly referred to as Blue Sky laws. Individual state Blue Sky laws could make it difficult or impossible to sell our common stock in those states. A number of states require that an issuer’s securities be registered in their state, or appropriately exempted from registration, before the securities can trade in that state. We have no immediate plans to register our securities in any particular state. Absent compliance with such laws, our common stock may not be traded in such jurisdictions. Whether stockholders may trade their shares in a particular state is subject to various rules and regulations of that state.

Future operating results are difficult to predict.

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We will likely experience significant quarter-to-quarter fluctuations in revenues, if any, and net income (loss) in the future. Until we are able to emerge from the development stage, we are not likely to realize any significant revenues and our quarter-to-quarter comparisons of historical operating results will not be a good indication of future performance. It is likely that in some future quarter, operating results may fall below the expectations of securities analysts and investors, which could have negative impact on the price of our common stock.

A substantial portion of our voting stock is held by our officers and directors.

Approximately 60.99% of our outstanding shares of common stock are held by our directors and officers as of February 28, 2018. In particular, as of February 28, 2018, Anna Gluskin, our CEO and director, owns 287,,406,224 shares and Rose Perri, our President, owns 283,907,424 shares, which represent 30.68% and 30.31% of our outstanding shares, respectively. These persons have the ability to exert significant control in matters requiring stockholder vote and may have interests that conflict with other stockholders. As a result, a relatively small number of stockholders acting together, have the ability to control all matters requiring stockholder approval, including the election of directors and approval of other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company. It could also deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock.

We do not expect to pay dividends in the foreseeable future, which could make our stock less attractive to potential investors.

We anticipate that we will retain any future earnings and other cash resources for operation and business development and do not intend to declare or pay any cash dividends in the foreseeable future. Any future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.

Our articles of incorporation allows for our board of directors to create new series of preferred stock without further approval by our stockholders which could adversely affect the rights of the holders of our common stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to such holders (i) the preferred right to our assets upon liquidation, (ii) the right to receive dividend payments before dividends are distributed to the holders of common stock and (iii) the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing common stockholders.

Any of the actions described in the preceding paragraph could significantly adversely affect the investment made by holders of our common stock. Holders of common stock could potentially not receive dividends that they might otherwise have received. In addition, holders of our common stock could receive less proceeds in connection with any future sale of the Company, whether in liquidation or on any other basis.

In the event we issue additional common stock in the future, current stockholders could suffer immediate and significant dilution, which could have a negative effect on the value of their shares.

We are authorized to issue 2,700,000,000 shares of common stock and 300,000,000 preferred shares, of which, as of January 31, 2018, 936,805,508 shares of common stock are issued and 1,763,194,492 shares are unissued, 600,000 shares of preferred stock are issued and 299,400,000 preferred shares are unissued. Included in this number are 43,664,901 shares reserved for issuance upon the exercise of warrants and 13,291,666 shares reserved for issuance upon the exercise of options. Our board of directors has broad discretion for future issuances of common stock, which may be issued for cash, property, services rendered or to be rendered, or for several other reasons. We also could possibly issue shares to make it more difficult or to discourage an attempt to obtain control of the company by means of a merger, tender offer, proxy contest, or otherwise. For example, if in the due exercise of its fiduciary obligations the board determines that a takeover proposal was not in the company's best interests, unissued shares could be issued by the board without stockholder approval. This might prevent, or render more difficult or costly, completion of an expected takeover transaction.

 

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We do not presently contemplate additional issuances of common stock in the immediate future, except to raise addition capital, although we presently do not have an agreement or understanding to sell additional shares. Our board of directors has authority, without action or vote of our stockholders, to issue all or part of the authorized but unissued shares. Any future issuance of shares will dilute the percentage ownership of existing stockholders and likely dilute the book value of the common stock, which could cause the price of our shares to decline and investors in the shares to lose all or a portion of their investment.

The existence of warrants, options, debentures or other convertible securities would likely dilute holdings of current stockholders and new investors.

We have 600,000 preferred shares with conversion of 10:1 to common shares, 46,164,901 warrants and 13,291,666 options outstanding as of February 27, 2018. There are no other options, warrants or other rights outstanding to purchase our common stock.  Management could decide in the future to issue additional convertible securities, such as funding instruments or incentive options to key employees. The issuance of new convertible securities and/or the exercise of outstanding options or convertible securities would further dilute the interests of all of our existing stockholders. Future resale of common shares issuable on the exercise of convertible securities may have an adverse effect on the prevailing market price of our common stock. Furthermore, holders of convertible securities may have the ability to exercise them at a time when we would otherwise be able to obtain additional equity capital on terms more favorable to us.

As an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an "emerging growth company," as defined in the JOBS Act. Accordingly, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. Additionally, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to take advantage of the benefits of this extended transition period and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

As long as we are an emerging growth company, we cannot predict if investors will find our common stock less attractive because we may rely on exemptions provided by the JOBS Act. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Item 1B. Unresolved Staff Comments.

Not applicable

Item 2. Description of Property.

We do not presently own any property. On July 1, 2012 we entered into a lease agreement with a related party for office space. The lease has a term of 60 months and expired on June 30, 2017 and the lease agreement for office space with a related party has been extended to June 30, 2022. On October 31, 2012 we entered into a lease agreement for laboratory facilities and office space. The lease had a term of 55 months and expired on May 31, 2017. After the lease of the lab ended laboratory activities are conducted at third party laboratory facilities. Our combined lease obligations were approximately $54,300 for 2017 and $79,000 for 2016.

Item 3. Legal Proceedings.

On April 11, 2017 a Statement of Claim was filed by Weslease Income Growth Fund LLP against our subsidiary EastGate Pharmaceuticals Inc., Anna Gluskin and other non-related parties with respect to a default in leasing terms. Weslease Income Growth Fund LLP facilitated the purchase of specific equipment at the Company’s laboratory facility. While this specific equipment was initially leased for the purposes of research and development the lack of funding did not allow for complete operational use of such equipment to date. On May 24, 2017 Weslease Income Growth LLP agreed to a third party buyout of the equipment in the amount of $115,000. This transaction is subject to the removal of all liens and encumbrances, on this specific equipment and the funds will be released only at such time. This will release EastGate Pharmaceuticals Inc. is a subsidiary of EastGate Biotech Corp, Anna Gluskin and other unrelated parties to all responsibilities in this related matter. This transaction is still pending.

Item 4. Mine Safety Disclosures

Not applicable.

 

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information for Common Stock

Our common stock was initially cleared to be quoted on the OTCQB under the trading symbol “ESAQ” in March 2014 and under the trading symbol “ETBI” in December 2014. Prior to March 2014, there was no public market for our common stock. There can be no assurance that a sustainable public trading market will develop for our common stock.

The following table sets forth the range of high and low closing bid quotations for our common stock for each of the periods indicated as reported by OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ending December 31, 2018
Quarter Ended	High		Low
March 31, 2018(through Februay 28, 2018	$	0.004	$	0.0009

Fiscal Year Ending December 31, 2017
Quarter Ended	High		Low
December 31, 2017	$	0.008	$	0.001
September 30, 2017	$	0.0012	$	0.001
June 30, 2017	$	0.002	$	0.002
March 31, 2017	$	0.043	$	0.037

Fiscal Year Ending December 31, 2016
Quarter Ended	High		Low
December 31, 2016	$	0.032	$	0.031
September 30, 2016	$	0.020	$	0.015
June 30, 2016	$	0.022	$	0.022
March 31, 2016	$	0.031	$	0.031

On January 31 , 2018, the closing bid quotation was $0.0033.

 

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Holders of Record

On January 31^st, 2018, there were approximately 114 stockholders of record of our common stock.

Dividend Policy

We have not declared or paid any cash dividends on our common stock during either of the two most recent fiscal years and have no current intention to pay any cash dividends. Our ability to pay cash dividends is governed by applicable provisions of Nevada law and is subject to the discretion of our Board of Directors.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Recent Sale of Unregistered Securities and Use of Proceeds

There were no unregistered securities sold by us during the year ended December 31, 2016 that were not otherwise disclosed by us during the year in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information about our equity compensation plans as of December 31, 2016:

	A		B		C
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A))
Equity compensation plans approved by security holders		10,375,000	$	0.025		6,525,000
Equity compensation plans not approved by security holders		41,164,901	$	0.071		N/A
Total		51,539,901	$	0.10703		6,525,000

Item 6. Selected Financial Data.

Not applicable.

 

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

We currently have limited assets and/or capital and limited operations. Ongoing expenses, including the costs associated with the preparation of reports and filing with the SEC, have been paid for by advances from a stockholder and limited amount of equity funds raised. The advances from stockholders are evidenced on our financial statements as payable- related party. We require only minimal capital to maintain our corporate viability, although upon the commencement of registration process of our products our financial requirements will increase significantly. In the interim, additional necessary funds will most likely be provided by officers and directors, although there is no agreement related to future funds and there is no assurance such funds will be available. However, unless we are able to complete the registration of Products or obtain significant outside financing, there is substantial doubt about our ability to continue as a going concern.

Forward Looking and Cautionary Statements

This report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will” “should," “expect," "intend," "plan," anticipate," "believe," "estimate," "predict," "potential," "continue," or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. 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.

Balance sheet

Cash

At December 31, 2016 the company had $32,787 of bank indebtedness, cash on hand a decrease of $52,028 from the December 31, 2015 balance of $19,241. The decrease is entirely the result of cash used in operations without additional equity raise in 2016.

Sales tax receivable

At December 31, 2016 the company had $108,350 of sales tax receivable an increase of $28,669 from the December 31, 2015 balance of $79,681. The Company recovers sales tax paid, for which returns are filed on annual basis. Sales tax recoverable is a result of sales tax paid on eligible expenses. The company reserve the sales tax receivable at year ended December 31, 2016.

Property and equipment net of amortization

At December 31, 2016 the company had no equipment and no accumulated depreciation on the balance sheet. The company impaired all its asset on January 1, 2016. This was a decrease of full balance from the December 31, 2015 balance of $184,402. During the year ended December 31, 2016 the company didn’t purchased any equipment. As a result of impairment of all it equipment during the year ended December 31, 2016 the company had no amortization expenses of equipment. During the year ended December 31, 2015 the company amortized equipment for $44,245 resulting in the balance of $184,402 net of amortization at December 31, 2015.

Accounts payable and accrued liabilities

At December 31, 2016 accounts payable and accrued liabilities was $388,038, an increase of $26,944 from the December 31, 2015 balance of $361,094. Due to a lack of equity raise and the limited advances from related party the company had to increase accounts payable and accrued liabilities from the previous year.

Deferred revenue

The balance at December 31, 2016 of $92,516 compared to $23,847 balance at December 31, 2015 represents a deposit from our distributor of our nutraceutical product in Canada.

Accounts payable related party

The balance at December 31, 2016 of $2,095,891 represents accrued unpaid wages to management. The balance increased by $1,363,766 from the $732,125 balance at December 31, 2015. During the current year ended December 31, 2016 management did not converted any of their unpaid wages to common stock of the company. .

Deferred rent

The balance at December 31, 2016 of $627 decreased by $1,437 from the $2,064 balance at December 31, 2015. The balance represents rent of laboratory space during the term of the lease on a straight line basis.

 

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Capital lease obligation

The balance at December 31, 2016 of $50,392 (including a current portion of $10,368) reflects the balance due on the capital lease entered in 2015 for laboratory equipment to be used for research and development. The lease had a term of 60 months starting August 29, 2015 with the final payment due on June 21, 2020 and advance payment of $21,000 in stock. The lease specified a monthly payment of $1,797. The lease required minimum lease payments of $107,822. The lease was recorded at $64,401, which is present value of minimum lease payment using the company’s incremental borrowing rate of $24.46%. During the twelve months ended December 31, 2016 the company paid principal of $8,124, leaving an amount owing at the end of the period of $50,392 and non-paid interest of $1,833.

Due to non-payment in 2017 the equipment taken by lessor.

Notes payable related party

The balance at December 31, 2016 of $1,633,222 increased by $324,637 from the $1,308,585 balance at December 31, 2015. During the year ended December 31, 2016 the company financed operations by advances from shareholders. During the year ended December 31, 2016 the CEO and the current President advanced the company cash of $329,728 and were repaid $5,091 of advances made. This accounts for the increase in notes payable related party for the year ended December 31, 2016 of $324,637.

The notes payable related parties are not secured and have no repayment terms. One loan of $100,000 is from the CEO and carries interest at the rate of 5% all other notes payable carry interest of 10%.

Accrued interest related party

The balance at December 31, 2016 of $432,943 increased by $140,174 from the $292,769 balance at December 31, 2015. The interest is not compounded. The interest for the current year of $140,174 increased from the previous year’s interest of $109,924 by $30,250. The increase in interest for the year is a result higher outstanding balances for the notes payable related party during the current year.

Preferred Stock

In November 2014 we amended our Restated Articles of Incorporation to increase our total number of shares of authorized capital stock to 500,000,000 shares consisting of (i) 450,000,000 shares of common stock and (ii) 50,000,000 shares of preferred stock par value $0.00001. At December 31, 2016 there were no preferred shares issued.

Common Stock

In November 2014 we amended our Restated Articles of Incorporation to increase our total number of shares of authorized capital stock to 500,000,000 shares consisting of (i) 450,000,000 shares of common stock and (ii) 50,000,000 shares of preferred stock

At December 31, 2016 there were 309,522,175 shares of common stock issued out of the authorized 450,000,000 common shares an increase of 26,650,000 from the December 31, 2015 balance of 282,872,175. Of this increase 26,100,000 common shares were issued to pay expenses of consultants for financing, research and development, business development and management. In addition 55,000 common shares were issued in exchange for 550,251 warrants cashless exercised and 700,000 common shares were issued to a charity organization.

At December 31, 2015 there were 282,872,175 shares of common stock issued out of the authorized 450,000,000 common shares an increase of 193,236,941 from the December 31, 2014 balance of 89,635,234. Of this increase 191,401,941 common shares were issued to pay expenses of consultants for financing, research and development, business development and management. In addition 1,500,000 common shares were issued in exchange for debt and 335,000 common shares were issued in equity raises.

Additional paid-in Capital

At December 31, 2016 the balance of additional paid in capital was $9,970,127 and increase of $832,363 from the December 31, 2015 of $9,137,764. Of this increase $832,363 resulted from the 26,100,000 common shares issued to pay expenses of consultants for financing, research and development, business development and management. In addition negative $6 resulted from the 550,000 common shares issued in exchange for cashless warrants exercised and $26,943 resulted from the 700,000 common shares issued to Charity.

 

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At December 31, 2015 the balance of additional paid in capital was $9,137,764 and increase of $3,179,993 from the December 31, 2014 of $5,957,771. Of this increase $2,645,660 resulted from the 191,401,941 common shares issued to pay expenses of consultants for financing, research and development, business development and management. In addition $20,985 resulted from the 1,500,000 common shares issued in exchange for debt and $24,997 resulted from the 335,000 common shares issued in equity raises. Stock options and warrants issued during the year contributed $488,352 to the increase in additional paid-in capital.

Accumulated other comprehensive income

The company has a 100% owned subsidiary in Canada. In the consolidation of the Canadian subsidiary a translation adjustment was incurred which is not reflected in the statement of operations. This translation adjustment is maintained in the consolidated statement of stockholders’ equity. The balance at December 31, 2016 was $39,702, which is an increase of $7,856 from the December 31, 2015 balance of $31,846.

Results of Operations

During the year ended December 31, 2016, our net loss was $2,793,069, compared to a net loss of $4,281,310 for the year ended December 31, 2015. The decrease for 2016 of $1,488,241 was due to the decrease in operating expenses due to availability of funds as explained below.

Revenue

During the year ended 2016 we have recorded no revenue compared to revenue of $132,025 in 2015, cost of Goods sold were 19,195 in 2015, gross profit in 2015 from the sales was $112,830 . The company expects to increase sales in 2018 after completing equity financing.

Operating Expenses

Professional fees

During the year ended 2016, professional fees were $51,500 a decrease of $85,566 from $137,066 for the year ended December 31, 2015. The professional fees included the cost of patent applications from our research and development program and audit fees. Higher professional fees in the previous year reflect the cost of equity raise in 2015.

Research and development

The Company has continued to be committed to moving forward with research and development. During the year ended December 31, 2016 research and development expenses decreased by $616,319 to $501,831 from the December 31, 2015 expense of $1,118,150. The decrease was a result of the company’s lack of funding. The company is now in discussions with several countries regulatory agencies regarding the registration process for our products. The company is all in discussions with several pharmaceutical companies regarding licensing our products in different territories.

General and administrative

The company incurred $1,808,270 of general and administrative expenses for the year ended December 31, 2016. This is a decrease of $733,316 from the $2,541,586 recorded in the year ended December 31, 2015. This decrease was a result of the reduction or elimination of all non-essential expenses due to lack of funding.

Marketing and Selling

The company incurred $271,913 of marketing and selling expenses for the year ended December 31, 2016. This is a decrease of $215,501 from the $487,414 of expenses recorded in the year ended December 31, 2015. The decrease is attributed to the activities associated with the sales of our nutraceutical product, decreased promotional activities, associated travel, trade show participation and decreased use of the marketing consultants and resignation of our president who was directly involve on marketing and selling.

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Interest expense

Interest expense of $159,555 for 2016 increased by $49,631 from $109,924 for 2015. Interest expense is primarily attributed to an increase in loans from stockholders. The increase in interest expense is attributed to the increase in loans from stockholders during the period. Since May of 2012 the operations of the company has been partially financed by loans from shareholders. During this period these loans have increased from $1,308,585 at December 31, 2015 to $1,633,222 at December 31, 2016.

Loss from Impairment of Assets,

During the year ended 2016 company recognized losses from impairment of lab equipment of $184,402, previously company never recorded such losses. The equipment cost value were $271,040, accumulated amortization were $86,638.

Liquidity and Capital Resources

At December 31, 2016 the Company had a working capital deficit of $4,578,042 which is an increase of $1,962,945 from the December 31, 2015 deficit balance of $2,615,097. The increase is the result of a decrease in cash available for operations, and the absence of an equity raise which was present in late 2014.

Expenses incurred during 2016 and 2015 have been paid for by related parties including our current CEO and current President as well as through several small equity raises. Because we have no cash reserves and limited revenue source, we expect to continue to rely on the stockholders and equity raise to pay expenses until such time as we can generate sufficient cash flows to pay our ongoing operational costs. There is no assurance that the company will continue to obtain equity raises before the company develops revenue sources with sufficient cash flow to pay expense.

In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation related to our business and operations following a successful acquisition or merger.

At December 31, 2016, we had a stockholders’ deficit of $4,618,066 compared to a stockholders' deficit of $2,481,081 at December 31, 2015. The increase of $2,136,985 in stockholders' deficit is primarily attributed to the fact that a great deal of the companies expense in the year ended 2016 have been paid for with the issue of common stock as reflected by the small increase in additional paid in capital.

We believe we have insufficient funds to carry on general operations for the next three months. We expect that we will need to raise additional funds, most likely from the sale of securities or from stockholder loans, to be able to proceed with our development of the Acquired Products. We may not be successful in our efforts to obtain equity financing to carry out our business plan and there is doubt regarding our ability to complete our planned exploration program. We estimate that cash requirements for the next twelve months will be approximately $5,000,000.

Plan of Operation

Following the closing of the Acquisition Agreement we have become engaged in the development and ultimate formulation of other novel formulations of natural compounds and pharmaceutical products that have limitations in effective use for human consumption. We believe our self-emulsifying drug delivery technology can improve the efficacy of existing products and formulations based on natural or well-established compounds and known biologically active compounds. We intend to conduct our research and development through collaborative programs. We anticipate relying on arrangements with third party drug developers such as contract research organizations and clinical research sites for a significant portion of our product development efforts.

The Acquisition Agreement enabled us to acquire certain products, formulas, processes, proprietary technology and/or patents and patent applications related to pharmaceutical, nutraceutical, food supplements and consumer health products. We have not formulated any final products or receive approvals from any regulatory agencies or generated any revenues from product sales. We have not been profitable since our inception through the current date.

 

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We expect to incur significant operating losses for the next several years and until we are able to formulate a commercially viable product. We also expect to continue to incur significant operating and capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we:

· Continue to undertake formulation of novel products and subsequent preclinical and clinical trials for our product candidates;

· Seek regulatory approvals for our product candidates;

· Develop, formulate, manufacture and commercialize our products;

· Implement additional internal systems and develop new infrastructure;

· Acquire or in-license additional products or technologies, or expand the use of our technology;

· Maintain, defend and expand the scope of our intellectual property; and

· Hire qualified personnel.

Future product revenue will depend on our ability to develops, receive regulatory approvals for, and successfully market, our product candidates. In the event that our development efforts result in regulatory approval and successful commercialization of our product candidates, we will generate revenue from direct sales of our products and/or, if we license our products to future collaborators, from the receipt of license fees and royalties from licensed products.

Management estimates that our research and development expenses for the next 12 months will be approximately $3.0 million, primarily for research and pilot studies. We also estimate that other expenses, including personnel, general and administrative and miscellaneous expenses could be as much as $2.0 million during the same time period. Because we currently have limited revenues, most likely the only source of funding these expenses will be through the private sale of our securities, either equity or debt. We are currently exploring possible funding sources, but we have not entered into any arrangements or agreements for funding as of this time. If we are unable to raise the necessary funding, our research and development plans will be delayed indefinitely. There can be no assurance that we will be able to raise the funds necessary to carry out our business plan on terms favorable to the company, or at all.

Net Operating Loss

We have accumulated a net operating loss carryforward of approximately $5,705,374 as of December 31, 2016. This loss carry forward may be offset against future taxable income through the year 2034. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards that can be used. No tax benefit has been reported in the financial statements for the year ended December 31, 2016 because it has been fully offset by a valuation reserve. The use of future tax benefit is undeterminable because we presently have no operations.

Accounting Policies

Revenue Recognition

Company recognize revenue as goods is shipped to customer for sale, no revenue recognize on consignment of goods

Nature of Business

Eastgate Biotech Corp. was organized on September 8, 1999, under the laws of the State of Nevada. The company is a development stage company which has limited history of operations is engaged in the research and development of drug delivery innovations for developing of improved novel formulations and alternative dosage forms of existing biologically active molecules. During the year ended December 31, 2012 the company formed Eastgate Pharmaceuticals, Inc. as a wholly-owned subsidiary of the company.

Principles of Consolidation

The consolidated financial statements include the accounts of Eastgate Biotech Corp. and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Property and Equipment

Property and equipment are recorded at cost and are depreciated when placed into service using the straight-line method based on their estimated useful lives of five year. Equipment under capital leases are stated at the lower of fair market value or net present value of the minimum lease payments at the inception of the leases.

Research and Development Costs

The company expenses research and development costs to operations as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including employee-related expenses; laboratory supplies and other direct expenses; third-party contractual costs relating to nonclinical studies and related contract manufacturing expenses, development of manufacturing processes and regulatory registration.

Impairment of Long-Lived Assets

The company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Income Taxes

The company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The company’s predecessor operated as entity exempt from Federal and State income taxes.

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Earnings (Loss) per Share

The company has adopted ASC 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

There were no potential deluted securities as of December 31 2016 from options and warrants issued or outstading .

 

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Comprehensive Loss

Other comprehensive loss, which includes only foreign currency translation adjustments, is shown in the Statement of Changes in Stockholder’s Equity.

Foreign Currency Translation

Foreign denominated assets and liabilities of the company are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period. Income statement accounts are translated at a weighted average of exchange rates which were in effect during the period. Translation adjustments that arise from translating the foreign subsidiary’s financial statements from local currency to U.S. currency are recorded in the other comprehensive loss component of stockholders’ equity.

Recent Accounting Pronouncements

The company has evaluated recent accounting pronouncements and their adoption has not had nor is not expected to have a material impact on the company’s financial position or statements.

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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks associated with changes in the exchange rates between U.S. and Canadian currencies. We do not believe that any of these risks will have a material impact on our financial condition, results of operations and cash flows.

Item 8. Financial Statements and Supplementary Data.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Eastgate Biotech Corp.

We have audited the accompanying consolidated balance sheet of Eastgate Biotech Corp. (“the Company”) as of December 31, 2016 and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eastgate Biotech Corp. as of December 31, 2016 and the results of its operations and its cash flows for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered net losses since inception and has accumulated a significant deficit. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Newport Beach, California

February 7, 2018

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Eastgate Biotech Corp.

We have audited the accompanying consolidated balance sheet of Eastgate Biotech Corp. (“the Company”) as of December 31, 2015, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the year ended December 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Eastgate Biotech Corp. as of December 31, 2015 and the results of its operations and its cash flows for the year ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT

November 18, 2016

 

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EASTGATE BIOTECH CORP.
CONSOLIDATED BALANCE SHEETS
	December 31			December 31,
	2016			2015
ASSETS
Current
Cash	$	-		$	19,241
Deposits					14,595
Sales tax recoverable		-			79,681
Total current assets		-			113,517
Other assets
Property & Equipment, net		-			184,402
Total other assets		-			184,402
Total assets	$	-		$	297,919
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank indebtedness		32,787			-
Accounts payable and accrued liabilities	$	279,688		$	361,094
Deferred revenue		92,516			23,847
Accrued liabilities related party		2,095,891			732,125
Deferred rent		627			2,064
Capital lease obligation		10,368			8,130
Accrued interest - related parties		432,943			292,769
Notes payable - related parties		1,633,222			1,308,585
Total current liabilities		4,578,042			2,728,614
Long term liabilities
Capital lease obligation long term		40,024			50,386
Total Liabilities		4,618,066			2,779,000
Commitments and Contingencies		-			-
Stockholders' deficit
Authorized:
Preferred stock:50,000,000 shares authorized at $0.00001 par value
no shares issued at December 31, 2016 and December 31, 2015		-			-
Common stock: 450,000,000 shares authorized at $0.00001 par value
309,522,175 and 282,872,175 shares issued and outstanding at
December 31, 2016 and December 31, 2015 respectively		3,096			2,829
Additional paid-in capital		9,970,127			9,137,764
Accumulated other comprehensive income		39,702			31,846
Accumulated deficit		(14,630,991	)		(11,653,520	)
Total stockholders' deficit		(4,618,066	)		(2,481,081	)
Total liabilities and stockholders' deficit	$	(0	)	$	297,919

The accompanying notes are an integral part of these consolidated financial statements.

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EASTGATE BIOTECH CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
	For the Twelve Months Ended
	December 31,
	2016			2015
REVENUES	$	-		$	132,025
Cost of goods sold		-			19,195
Gross profit		-			112,830
OPERATING EXPENSES
Professional fees	$	51,500		$	137,066
Research & development		501,831			1,118,150
General and administrative		1,808,270			2,541,586
Marketing and selling		271,913			487,414
Total operating expenses		2,633,514			4,284,216
LOSS FROM OPERATIONS		(2,633,514	)		(4,171,386	)
Other expense
Interest expense		(159,555	)		(109,924	)
Losses from Impairment of Assets		(184,402	)		-
Total other expense		(343,957	)		(109,924	)
LOSS BEFORE INCOME TAXES		(2,977,471	)		(4,281,310	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(2,977,471	)	$	(4,281,310	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.01	)	$	(0.02	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		304,795,536			191,504,169
COMPREHENSIVE LOSS
A summary of the components of other comprehensive loss for the periods ended is as follows:
Net Loss		(2,977,471	)		(4,281,310	)
Other Comprehensive Loss - foreign currency translation		7,856			16,578
Comprehensive Loss	$	(2,969,615	)	$	(4,264,732	)

The accompanying notes are an integral part of these consolidated financial statements.

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EASTGATE BIOTECH CORP.

Statements of Stockholders' Deficit

										Deficit
								Accumulated		Accumulated
					Additional			other		During the			Total
	Common Stock				Paid-In			comprehensive		Development			Stockholders'
	Shares		Amount		Capital			income		Stage			Deficit
Balance, December 31, 2014		89,635,234		896		5,957,771			15,268		(7,372,210	)		(1,398,275	)
Shares issued in conversion of accrued compensation		117,898,608		1,179		1,236,151								1,237,330
Shares issued for services		24,253,333		243		560,351								560,594
Stock options and warrants issued		-		-		488,351								488,351
Shares issued for Acquisition of Assets/Lease		1,500,000		15		20,985								21,000
Private placement shares and warrants issued for cash		335,000		3		24,997								25,000
Shares issued for bonus		49,250,000		493		849,158								849,651
Foreign Currency Transaltion adjustments									16,578					16,578
Net loss for the Year ended December 31, 2015											(4,281,310	)		(4,281,310	)
														-
Balance, December 31, 2015		282,872,175		2,829		9,137,764			31,846		(11,653,520	)		(2,481,081	)
Shares issued for services		26,100,000		261		832,369								832,630
Stock options and Warrants issued		550,000		6		(6	)							-
Foreign Currency Transaltion adjustments									7,856					7,856
Net loss for the Year ended December 31, 2016											(2,977,471	)		(2,977,471	)
Balance, December 31, 2016		309,522,175		3,096		9,970,127			39,702		(14,630,991	)		(4,618,066	)

The accompanying notes are an integral part of these financial statements.

45

EASTGATE BIOTECH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Twelve Months Ended
	December 31,			December 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	$	(2,977,471	)	$	(4,281,310	)
Adjustments to reconcile net loss to net cash used by operating activities:
Expenses paid on the Company's behalf by a related party		(5,090	)		(5,431	)
Common stock issued for services		832,636			560,594
Depreciation		-			44,245
Losses from Impairment of Assets		184,402			-
Stock options and Warrants issued		(6	)		488,351
Changes in operating assets and liabilities:
Accrued interest		140,174			109,924
Prepaid asset		14,595			(14,595	)
Accounts payable		18,886			99,963
Accrued liabilities related party		1,361,558			2,443,595
Reserve for recoverable tax		(26,520	)		(38,108	)
Deferred rent		(1,526	)		(1,583	)
Deferred revenue		68,883			25,911
Cash flows used in operating activities		(389,478	)		(568,444	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital lease obligation		(8,124	)		(5,885	)
Proceeds from notes payable related party		329,729			310,825
Payments on notes payable related party		-			(3,199	)
Common stock issued for cash		-			25,000
Cash flows provided by financing activities		321,605			326,741
NET DECREASE IN CASH		(67,873	)		(241,703	)
Effect of foreign currency translation adjustments		48,632			(25,537	)
Cash, beginning of the period		19,241			286,481
Cash, end of the period	$	0		$	19,241
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	13,440		$	4,898
Non Cash Financing activities:
Common stock issued to convert liabilities	$	-		$	2,086,981
Common stock issued for placement fees	$	-			85,401

The accompanying notes are an integral part of these consolidated financial statements.     

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Eastgate Biotech Corp. (The Company) was organized on September 8, 1999, under the laws of the State of Nevada. The Company is a start-up company which has limited history of operations is engaged in the research and development of drug delivery innovations for developing of improved novel formulations and alternative dosage forms of existing biologically active molecules. During the year ended December 31, 2012 the Company formed Eastgate Pharmaceuticals, Inc. as a wholly-owned subsidiary of the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of Eastgate Biotech Corp. and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Property and Equipment

Property and equipment are recorded at cost and are depreciated when placed into service using the straight-line method based on their estimated useful lives of five year. Equipment under capital leases are stated at the lower of fair market value or net present value of the minimum lease payments at the inception of the leases.

Research and Development Costs

The Company expenses research and development costs to operations as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including employee-related expenses; laboratory supplies and other direct expenses; third-party contractual costs relating to nonclinical studies and related contract manufacturing expenses, development of manufacturing processes and regulatory registration.

 

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Impairment of Long-Lived Assets

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Fair Value of Financial Instruments

The Company uses fair value measurements to record fair value adjustments to certain financial and non-financial assets and liabilities to determine fair value disclosures. The accounting standards define fair value, establish a framework for measuring fair value, and require disclosures about fair value measurements. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the principal or most advantageous market in which the Company would transact are considered along with assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The accounting standard for fair value establishes a fair value hierarchy based on three levels of inputs, the first two of which are considered observable and the last unobservable, that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The three levels of inputs that may be used to measure fair value are as follows:

Level 1	—	Observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2	—	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	—	Valuations based on unobservable inputs to the valuation methodology and including data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.

Revenue Recognition

We recognize revenue when the following criteria are met: persuasive evidence of a sales arrangement exists; delivery has occurred; the price is fixed or determinable; and collectability is reasonably assured. During the year ended December 31, 2016, we received revenue through various sources, such as product sales and royalty agreements.

We recognize royalty revenue and revenue from product sales only when all revenue recognition criteria have been satisfied.

Stock Based Compensation

The Company has equity incentive plans under which various types of equity-based awards including, but not limited to, incentive stock options, non-qualified stock options, and warrants, may be granted to employees, non-employee directors, and non-employee consultants.

 

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For stock options and warrants granted, the Company recognizes compensation expense based on the estimated grant-date fair values, net of an estimated forfeiture rate. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service period. The fair value of stock options and warrants is determined using the Black-Scholes option pricing model. The Company estimates its forfeiture rate based on an analysis of its actual forfeitures and will continue to evaluate the adequacy of the forfeiture rate assumption based on actual forfeitures, analysis of employee turnover, and other related factors.

Income Taxes

The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to net the loss before provision for income taxes for the following reasons:

	December 31,			December 31,
	2016			2015
Income tax expense at statutory rate	$	(1,161,214	)	$	(1,669,711	)
Contributed services
Stock issued for services		-			218,584
Depreciation and amortization		-			17,256
Change in valuation allowance		1,161,214			1,433,871
Income tax expense per books	$	-0-		$	-0-

Net deferred tax assets consist of the following components as of:

	December 31,			December 31,
	2016			2015
NOL carryover	$	5,706,023		$	4,544,810
Common stock issued for services		(794,957			(794,957	)
Depreciation		(33,789	)		(33,789	)
Valuation allowance		4,877,277			(3,716,064	)
Net deferred tax asset	$	-0-		$	-0-

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $5,589,413 for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.

Earnings (Loss) per Share

The Company has adopted ASC 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

The Company has potentially dilutive securities, comprised of 41,164,901 warrants and 10,375,000 options issued as of December 31, 2016. Only 41,715,152 warrants and 10,375,000 options were outstanding on December 31, 2015.

Comprehensive Loss

Other comprehensive loss, which includes only foreign currency translation adjustments, is shown in the Statement of Changes in Stockholder’s Deficit.

 

49

Foreign Currency Translation

Foreign denominated assets and liabilities of the Company are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period. Income statement accounts are translated at a weighted average of exchange rates which were in effect during the period. Translation adjustments that arise from translating the foreign subsidiary’s financial statements from local currency to U.S. currency are recorded in the other comprehensive loss component of stockholders’ equity.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had nor is not expected to have a material impact on the Company’s financial position or statements.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has accumulated deficit of $14,630,991as of December 31, 2016, compared to $11,653,520 in 2015. The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time, raising substantial doubt about its ability to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

 NOTE 3 - RELATED-PARTY TRANSACTIONS

Notes payable – related parties

The Company has recorded loans from shareholders, amounts due to shareholders for expenses paid on its behalf by shareholders as Notes payable - related parties on the balance sheet. The amounts comprising Notes payable – related parties bear interest ranging from 5 percent per annum to 10 percent per annum, are unsecured and are due and payable upon demand.

During the year ended December 31, 2016 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder were reimbursed for expenses of $5,091, advanced cash to the Company of $329,729. As of December 31, 2016 and 2015, the Company owed $732,942 and $292,769 of accrued interest to related parties, respectively, resulting from interest expense of $108,256 and $109,954, respectively.

During the year ended December 31, 2015 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder have paid for expenses on behalf of the Company of $2,337, were reimbursed for expenses of $5,432, advanced cash to the Company of $310,825 and the Company made payments on the notes payable of $3,199.

Officer Compensation

In the year ended December 31, 2016 the Company recorded executive compensation expense to the CEO of $300,000 compared to $424,550 in 2015 which was recorded in accrued liabilities-related party. In addition, services provided by other officers and management of the Company amounting to an expense of $690,167 was recorded in accrued liabilities related party.

Lease payable – related parties

The Company has entered into a lease agreement on July 1, 2012 for the use of operating space owned by our President, which expires on June 30, 2017. The lease agreement is for the use of the office space at a monthly rate of approximately $2,742 per month. (See Note 6.)

 

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NOTE 4 – PROPERTY & EQUIPMENT AND CAPITAL LEASE OBLIGATION

On August 25, 2015 the Company entered into a capital lease agreement to purchase equipment. The lease had a term of 60 months starting August 25, 2015 with the final payment due on June 25, 2020 and advance payment of $21,000 in stock. The lease specified a monthly payment of $1,797. The lease required minimum lease payments of $107,822. The lease was recorded at $64,401, which is present value of minimum lease payment using the company’s incremental borrowing rate of $24.46%. During the twelve months ended December 31, 2016 the company paid principal of $8,124 compared to $5,885 in 2015, leaving an amount owing at the end of the period of $50,392 and company accrued the non-payment interest of $1,832 as of December 31, 2016. There are not under the item 3. Legal Proceedings regarding the equipment lease in 2015.

There are no equipment added in 2016 but the company recorded impairment losses on the equipment. During the twelve months ending December 31, 2015, the Company purchased no additional equipment except the capital lease agreement above. The estimated useful life of equipment purchased during the year ended December 31, 2015 is 5 years. Depreciation expense of $0and $44,245 was recorded during the year ended December 31, 2016 and December 31, 2015, leaving a net balance in Property & Equipment of $0 and $184,402 at December 31, 2016 and December 31, 2015, respectively.

The costs and accumulated depreciation of property and equipment are summarized as follows:

	December 31,		December 31,
	2016		2015
Lab Equipment	$	0	$	271,040
Less: Accumulated Depreciation		0		(86,638	)
Property and Equipment, Net	$	00	$	184,402

NOTE 5 –SALES TAX RECOVERABLE

Sales tax receivable

The Company recovers sales tax paid, for which returns are filed on annual basis but company was able to file the return only in 2017. This is reserved as of December 31, 2016; the balance of $108,350 was claimed as recoverable compared to the December 31, 2015 balance of $79,681. Sales tax recoverable is a result of sales tax paid on eligible expenses.

NOTE 6 – COMMITMENTS AND CONTINGENT LIABILITIES

Operating Lease

The Company has assumed a lease agreement from a company controlled by the CEO on October 31, 2012 for the use of operating space owned by a third party, which expires on May 16, 2017.

The Company has entered into a lease agreement on July 1, 2012 for the use of operating space owned by President, which expires on June 30, 2017.

Aggregate minimum annual lease commitments of the Company under non-cancelable operating leases as of December 31, 2016 are as follows:

Year	Amount
2017	$	35,690
Thereafter		0
Total Minimum Lease Payments	$	35,690

Lease expense amounted to $81,848 and $84,904 for the years ended December 31, 2016 and 2015, respectively.

The preceding data reflects existing leases and does not include replacements upon their expiration. In the normal course of business, operating leases are generally renewed or replaced by other leases.

 

51

Patent Assignment Agreement

In 2014, the Company entered into a Patent Assignment Agreement with two affiliated shareholders (“the Affiliates”) related to four patent applications that are an integral part of the Company’s R&D activities. On October 14, 2016, the Company amended the Patent Assignment Agreement (“the Amendment”) to expire on March 1, 2017 and to include additional specific financial and performance milestones that, if not met, can be considered grounds for an earlier termination and loss of the rights to the patents. In addition, as of October 14, 2016 the Company owed $376,400 to the Affiliates (approximately $170,000 of which was owed as of December 31, 2015 and has been recorded in Accrued liabilities related party on the balance sheet). The Amendment altered the terms of repayment of the $376,400 to bear 10% annual interest and to be paid monthly over 48 months starting January 1, 2017.

NOTE 7 – STOCKHOLDERS’ DEFICIT

On September 15, 2014, the board of directors and the shareholders holding a majority of our common stock approved amending our Restated Articles of Incorporation to 1) change our name to "Eastgate Biotech Corp." from "Eastgate Acquisitions Corporation" and 2) increase our total number of shares of authorized capital stock to 500,000,000 shares consisting of (i) 450,000,000 shares of common stock and (ii) 50,000,000 shares of preferred stock. Also on September 15, 2014 shareholders holding a majority of our common stock approved the Company's 2014 Equity Incentive Plan, which was previously approved by the board of directors on May 20, 2014. The name change and increase in authorized shares will become effective when we amended the Restated Articles of Incorporation by filing a Certificate of Amendment with the Secretary of State of Nevada on November 20, 2014.

Common Stock Issuances

On February 1, 2016, we issued 23,400,000 shares of common stock to consultants for services rendered at the price of $0.0322 per share which was the closing price on February 1^st 2016. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. 

On July 16, 2016, 550, 250 warrants were exercised by their holders using cashless exercise provision at the price of $0.00001 per share. This resulted in 550,000 common shares being issued to these holders.

On November 22 2016, we issued 700,000 shares to charity, on that day share were traded at price $0.0385, the company recorded this transaction as advertising and promotion expenses.

During the quarter ended March 31, 2015, the Company issued 8,146,225 units of its securities in satisfaction of accrued liabilities comprised of $325,849 of compensation owed to eight directors and members of management at the price of $0.04 per share. Each unit consisted of one share of common stock and a five year warrant to purchase one share of common stock at an exercise price of $0.04 per share. As a result of this transaction, the Company issued 8,146,225 shares of common stock and 8,146,225 warrants to purchase our common stock.

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Also during the quarter ended March 31, 2015, the Company issued a total of 3,700,000 shares of common stock to consultants for services rendered at the price of $0.035 per share.

Also during the quarter ended March 31, 2015, the Company issued a total of 15,250,000 shares of common stock to employees and consultants for services rendered at the price of $0.0286 per share.

In March 2015, the Company issued a total of 8,683,333 shares of common stock to consultants for services rendered at the price of $0.033 per share.

During the quarter ended June 30, 2015 the Company issued 62,285,718 shares of common stock in satisfaction of accrued liabilities comprised of $436,000 of compensation owed to the eight who are directors, officers and members of management at the market price of $0.007 per share.

During the quarter ended June 30, 2015 the Company issued 15,000,000 shares of common stock to a director and two officers in recognition of the progress made in the development platform being used in various pharmaceutical and natural products. The shares were issued at the price of $0.0149 per shares.

During the quarter ended September 30, 2015 the Company sold 125,000 units at a purchase price of $0.04 per unit in a private placement of its securities to accredited investors for total proceeds of $5,000. Each unit consisted of one share of common stock and a five year warrant to purchase one share at an exercise price of $0.04 per share

During the quarter ended September 30, 2015 the Company issued 870,000 shares of common stock to a consultant for services at a price of $0.014 per share.

During the quarter ended September 30, 2015 the Company issued 1,500,000 shares at closing price of $0.014 as a partial payment for acquisition of equipment.

During the quarter ended September 30, 2015 the Company awarded the issue 5,000,000 shares of common stock to a director and officer in recognition of the progress made in the natural product division. The shares were issued at the price of $0.01 per shares.

During the quarter ended September 30, 2015, the Company issued 17,000,000 shares of common stock to two officers and one employee as part of their annual compensation at the price of $0.01 per shares.

During the quarter ended September 30, 2015 the Company issued 41,666,666 shares of common stock in satisfaction of accrued liabilities comprised of $416,667 of compensation owed to directors, officers and members of management at the market price of $0.01 per share.

During the quarter ended September 30, 2015 the Company issued 8,000,000 shares of common stock to consultants for services at a price of $0.013 per share.

During the quarter ended December 31, 2015 the Company sold 200,000 shares at a purchase price of $0.10 per share in a private placement of its securities to accredited investors for total proceeds of $20,000. The company issued 10,000 shares as finder’s fee in connection with this transaction.

Warrants

As of December 31, 2016 and 2015, the Company had 41,164,901 warrants to purchase common stock compared to 41,715,152 warrants outstanding at the end of 2015.  During the 2016 there were cash less exercised of 55,251 warrants into Company’s common stock. During the 2015, the Company issued 8,146,225 warrants in conjunction with conversion of accounts payable and accrued liabilities to common stock units in 2015. The Company also issued 125,000 warrants in connection with private placement and 16,171,627 warrants in conjunction to a consulting agreement entered into in October 2015.

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The following table summarizes warrants that are issued, outstanding and exercisable

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Expiration Date  (years)		Value if Exercised
Balance Dec 31, 2015		41,715,152	$	0.070	$	0.051		4.14	$	2,,912,836
Granted
Exercised		55,251		-				-		-6-
Cancelled/Expired		-		-		-		-		-
Outstanding as of Dec 31, 2016		41,164,901	$	0.071	$	0.051		2.55	$	2,,912,830

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Expiration Date  (years)		Value if Exercised
Balance Dec 31, 2014		17,272,300	$	0.0149	$	0.101		4.38	$	2,581,825
Granted		24,442,852		0.014		0.016		4.25	$	381,011
Exercised				-				-
Cancelled/Expired		-		-		-		-		-
Outstanding as of Dec 31, 2015		41,715,152		0.070	$	0.051		4.14	$	2,,912,836

The details of the warrants outstanding are as follows:

			Warrants Issued & Outstanding
Exercise		Expiration	December 31,		December 31,
Price		Date	2016		2015
$	0.25	March 14, 2019		3,495,000		3,495,000
$	0.25	March 21, 2019		3,480,000		3,480,000
$	0.25	June 6, 2019		2,022,300		2,022,300
$	0.05	October 16, 2019		150,000		150,000
$	0.04	December 29, 2019		8,125,000		8,125,000
$	0.04	January 05, 2020		8,146,225	8,146,225-
$	0.04	August 19, 2020		125,000		125,000
$	0.00001	October 6, 2020		15,621,376		16,171,627
				41,164,901		41,715,152

 

Options

During February 2015, the Company issued a total of 10,375,000 options to purchase shares of common stock to employees and consultants as compensation at the exercise price of $0.0286 per share. The total fair value of the options at the date of the grant was $291,427. The options vested immediately and a charge of $291,427 was recorded as of grant date. The fair value was estimated using the Black-Scholes option pricing model, taking into account the grant date exercise price of $0.0286, an expected life of the option of 2.5 years, an expected volatility of 211.1%, expected dividends on the stock of 0 and the risk-free interest rate for the term of the option of 1.02%.

As of December 31, 2016, all options remain outstanding and have a remaining life of 3.08 years.

NOTE 8 - SUBSEQUENT EVENTS

In accordance with ASC 855 Company management reviewed all material events through the date of this report.

On January 1^st 2017, the Company issued 1,000,000 shares of common stock to two lawyers as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On February 1^st 2017, the Company issued 8,100,000 shares of common stock to various consultant as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On March 1^st 2017, the Company issued 7,000,000 shares of common stock to three consultants as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

 

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On March 9, 2017 EastGate entered into a Purchase and Sale Agreement to acquire OMNI Surgery and Anti-Aging Centre located in Regina, Saskatchewan, Canada. According to the Purchase and Sale Agreement a shares swap between EastGate and the Principal owner of OMNI transpired. The shares will be exchanged for cash as per an agreed upon schedule mutually agreed upon by both parties.

On March 16, 2017 EastGate entered into a Convertible Promissory Note with PowerUp Lending Group in the amount of $45,000 USD. The loan was paid in full on December 13, 2017

On March 30^st 2017, the Company issued 500,000 shares of common stock to one consultant as part of his compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On March 30^th, 2017 Company issued 2,916,666 stock options price at $0.0001 to one of the consultant

On April 1^st 2017, the Company issued 100,000 shares of common stock to one consultant as part of his compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On April 11, 2017, a Statement of Claim was filed by Weslease Income Growth Fund LLP against EastGate Pharmaceuticals Inc. a subsidiary of EastGate Biotech Corp., Anna Gluskin and other non-related parties with respect to a default in leasing terms. Weslease Income Growth Fund LLP facilitated the purchase of specific equipment at the Company’s laboratory facility. While this specific equipment was initially leased for the purposes of research and development the lack of funding did not allow for complete operational use of such equipment to date. On May 24, 2017 Weslease Income Growth LLP agreed to a third party buyout of the equipment in the amount of $115,000. This transaction is subject to the removal of all liens and encumbrances, including PPSA on this specific equipment and the funds will be released only at such time. This will release EastGate Pharmaceuticals Inc., Anna Gluskin and other unrelated parties to all responsibilities in this related matter. This transaction is still pending.

On April 25, 2017 EastGate Biotech Corp., and Gunpowder Capital Corp. entered in to a Loan Agreement. As part of the Loan Agreement Company has issued 1,00,000 Common Stock Purchase Warrants to Gunpowder. The warrants shall have a life of 3 years and allow for the purchase of 1,000,000 Company’s common shares at a price of $0.05 purchase. The loan was paid back in full in December, 2017. Gunpowder Capital Corp. as per the consulting agreement with EastGate Biotech corp. will assist EastGate with obtaining reporting issuer status in Canada. Once successfully becoming a reporting issuer in Canada, Gunpowder will then assist EastGate to listing its common shares onto a Canadian Stock Exchange.

On May 1^st, 2017, the Company issued 1,000,000 warrant shares at exercise price of $0.05 per share to two consultants.

On May 5^th 2017, the Company issued 5,000,000 shares of common stock to one consultant as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On May 6^th, 2017, the Company issued 500,000 warrants at exercise price of $0.01 per share to one consultant

 

55

On May 9, 2017, EastGate Biotech Corp. entered into a Settlement Agreement with Northbridge Financial, Inc., whereby Northbridge acquired liabilities of the Company in the amount of $724,108.50, which was owed by the Company to third parties related to debts related to the Company’s outstanding liabilities. The Company and Northbridge then entered into an Order Granting Approval of the Settlement Agreement, and Northbridge converted the Debt pursuant to a 3(a)(10) exemption.

On May 10^th, 2017, the Company issued 1,000,000 warrants at exercise price of $0.01 per share to one consultant.

On May 18^th 2017, the Company issued 250,,000 shares of common stock to two consultant as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering

On June 21^st, 2017, the Company issued 500,000,000 shares of common stock to President and CFO as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On June 21^st 2017, the Company issued 83, 33,333 shares of common stock to various consultants as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering

On July 7^th 2017, the Company issued 4,000,000 shares of common stock to one consultant as part of his compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On July 24^th, 2017, the Company issued 600,000 Preferred shares with conversion of 10-1 to common shares, The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On October 5^th 2017, the Company issued 8,000,000 shares of common stock to one consultant as part of his compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On October 11^th 2017, the Company issued 5,000,000 shares of common stock to one consultant as part of his compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On December 7^th , 2017 the Company entered into a Convertible Promissory Note with Marc Liechtung in the amount of $75,000.00 USD. The Promissory Note is convertible into the Company's Preferred Stock at a price of $0.01 and is due after 6 months after issuance and redeemable after 60 days. Also, under the terms of the Promissory Note the investor will receive 2.5 million warrants at conversion price of $0.02 with a warrant expiry date of December 7^th 2018

On January 8^th 2018, the Company issued 5,000,000 shares of common stock to two consultant as part of their compensation. The issuance of these securities was deemed to be exempt from the registration requirements for the securities act for 1933, as amended by virtue of sections 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

56

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On or about May 3, 2017, the Board of Directors, upon the recommendation of the Company’s management and after discussions with the Company’s then current independent registered public accounting firm, Sadler, Gibb & Associates, LLC (“Sadler”), concluded the quarterly financial statements for the periods ended March 31, 2016, June 30, 2016 and September 30, 2016 (collectively, the “Non-Reliance Periods”) as previously issued should no longer be relied upon and will be restated (the “Non-Reliance Determination”).

The Company made the Non-Reliance Determination because the quarterly financial statements had been filed without review by Sadler.

Item 9A. Controls and Procedures.

Evaluation of Disclosures and Procedures

The Company filed its financial statements for the quarters ended March 31^st, June 30^th and September 30^th, 2016 without auditor review. As of the end of the period covered by this annual report, our chief executive officer, also acting as principal financial officer, carried out an evaluation of the effectiveness of “disclosure controls and procedures,” as defined in the Securities Exchange Act of 1934, Rules 13a-15(e) and 15-d-15(e). Based upon that evaluation, it was concluded that as of December 31, 2016, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit 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 management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Inherent Limitations on Disclosure Controls and Procedures

The effectiveness of our disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures, no matter how well conceived, will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

 

57

Changes in Internal Controls

There was no change in internal controls over financial reporting (as defined in Rule 13a−15(f) promulgated under the Exchange Act) that occurred during our fourth fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Our control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets;

· provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are being made only with proper authorizations of management and directors; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of company assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Over Financial Reporting – Guidance for Smaller Public Companies. Based on our assessment and those criteria, our management concluded that our internal control over financial reporting was not effective as of December 31, 2016.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Item 9B. Other Information.

Not applicable.

 

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Our executive officers and directors are as follows:

Name	Age	Position
Anna Gluskin	62	Director, Chief Executive Officer
Rose Perri	49	Director, President, Secretary and Treasurer

All directors serve for a one-year term until their successors are elected or they are re-elected at an annual stockholders' meeting. Officers hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated.

There is no arrangement, agreement or understanding between any of the directors or officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Also, there is no arrangement, agreement or understanding between management and non-management stockholders under which non-management stockholders may directly or indirectly participate in or influence the management of our affairs.

There are no agreements or understandings for any officer or director to resign at the request of another person and none of the current officers or directors of are acting on behalf of, or will act at the direction of any other person. However, two former directors, Geoff Williams and Nancy Ah Chong, agreed to tender their resignations as directors and officers at such time as the balance of $50,000 due to Williams Investment Company under the Acquisition Agreement was paid. Accordingly, on March 14, 2014 the board of directors accepted their resignations. Effective March 14, 2014, Brian Lukian was appointed as Secretary to replace Ms. Ah Chong. Ms. Hasanagic resigned as our President on January 15, 2016 and remained a director until March 17^th, 2017. Ms. Perri was appointed President on January 15, 2015. Mr. Lukian resigned as our CFO, Secretary, Treasurer and director on April 12, 2016. Ms. Perri was appointed Secretary and Treasurer on July 7, 2016.

The business experience of each of the persons listed above during the past five years is as follows:

Anna Gluskin has served as a director and Chief Executive Officer since May 22, 2012. Ms. Gluskin has over 30 years’ experience in discovering and developing opportunities in the area of biotechnology pharmaceutical and consumer health products. She is currently managing her own investments related to consumer health products and drug delivery. From October 1997 to September 2010, Ms. Gluskin served as director, Chief Executive Officer and President of Generex Biotechnology Corporation, a company that has developed a proprietary alternative (non-invasive; non-injectable) drug delivery system. Ms. Gluskin was a Founder of Generex and was instrumental in raising capital for the company. Generex has developed an oral (buccal delivery insulin spray, Oral-lyn) and a platform from which a number of applications have been tested and others identified. An over-the-counter spray product pipeline was also developed and was marketed in a number of markets around the globe. From September 2010 to May 2012, Ms. Gluskin was exploring new business opportunities, which included examining new products and technologies and preliminarily organizing a scientific team. These efforts eventually led to the assignment of the products and technology representing the Acquired Products that Eastgate acquired from her in May 2012.

Prior to her position at Generex Biotechnology, Ms. Gluskin served as a director of Interlock Consolidated Corporation, a Canadian public company, engaged in the sale and fabrication of pharmaceutical manufacturing facilities. Ms. Gluskin successfully participated in the set-up of pharmaceutical facilities in Russia and other countries in Eastern Europe. Ms. Gluskin has a number of patents for innovative pharmaceutical drugs in her name. She holds a Master’s Degree in Microbiology and Genetics from Moscow State University. She holds an equivalent degree from the University of Toronto. Ms. Gluskin also serves as CEO of our wholly owned subsidiary, Eastgate Pharmaceuticals Inc. We believe that Ms. Gluskin’s education, expertise and extensive experience in the pharmaceutical industry and with public companies qualify her as a member of our board of directors.

Rose Perri has served as our President since January 15, 2015 and our Secretary and Treasurer since July 2016 and has held 5% or greater of our outstanding common stock since May 22, 2012. Ms. Perri, 47, has held management positions and overseen operations for private and public companies for the past 20 years. She served as Chief Operating Officer and Chief Financial Officer of Generex Biotechnology Corporation from 1996 to her appointment as Global Business Development and Licensing for the Company in May of 2012. She has also served as a manager of a family-owned property investment/property management company with responsibilities of overseeing the property portfolio. She has also served in a number of start-up biotech companies as a senior executive and board member. Along with her late brother, Mark Perri, she founded Biomin Therapeutics Corporation, a start-up biotech company, in 1990. Biomin was publically traded on the Toronto Stock Exchange and the former Vancouver Stock Exchange.

 

59

In 1995, Ms. Perri co-founded Generex Biotechnology Corporation, a start-up drug delivery company whose main research product was a buccal delivery of insulin. The company currently trades on the OTCQB and traded on the NASDAQ Capital Market from 2003 to October 2010 and the NASDAQ National Market from 2000 to 2003. Ms. Perri's positions during her 16 years at Generex included Chief Operating Officer and Chief Financial Officer. She holds a Bachelor of Arts Degree from the University of Toronto and a Bachelor of Business Administration from York University.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16 of the Exchange Act of 1934, as amended (the “Exchange Act”) requires our executive officers, directors and persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC and to furnish us with copies of such reports. Based solely on our review of the copies of such forms furnished to us and written representations by our officers and directors regarding their compliance with applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that all Section 16(a) filing requirements for our executive officers, directors and 10% stockholders were met during the year ended December 31, 2016.

Board Leadership Structure and Risk Oversight

Currently the Company does not have any Audit or compensation committees. The leadership of the executive officers is structured so that it is led by an executive Chairman, Anna Gluskin. The executive officers believes that at this point in the Company’s development, it is in the best interest of the Company for Ms. Gluskin to serve as Chairman of the Board and as Chief Executive Officer.

The entire executive officers are responsible for oversight of our Company’s risk management process. The executive officers reviews the compensation programs of the Company to make sure economic incentives are tied to the long-term interests of the stockholders. The Company believes that innovation and the building of long-term stockholder value are impossible without taking risks. We recognize that imprudent acceptance of risk and the failure to identify risks could be a detriment to stockholder value. The executive officers of the Company are responsible for assessing these risks on a day-to-day basis and for how to best identify, manage and mitigate significant risks that the Company may face.

Family Relationships

There are no family relationships between any of our directors, executive officers or directors.

Committees of the Board of Directors

No director is deemed to be an independent director. The board does not have a financial expert. Currently we do not have any standing committees of the board of directors. Until formal committees are established, our board of directors will perform some of the functions associated with a nominating committee and a compensation committee, including reviewing all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation. The board will also perform the functions of an audit committee until we establish a formal committee. We believe that at this stage of our development standing committees of our board of directors is not necessary.

Code of Ethics

We have not adopted a code of ethics that applies to our officers, directors and employees but plan to do so during the fiscal year ending December 31, 2018.

Item 11. Executive Compensation.

We have not had a bonus, profit sharing, or deferred compensation plan for the benefit of employees, officers or directors. We have not entered into an employment agreement with any of our officers, directors or any other persons and no such agreements are anticipated in the immediate future. We expect that directors will defer any compensation until such time as the company is in a better financial position and will strive to have the business opportunity provide their remuneration. As of December 31, 2016 and 2015, we recorded compensation expense as follows:

 

60

	2016		2015
Name and Title	Amount		Amount
Anna Gluskin, CEO	$	300,000	$	424,550
Rose Perri, President	$	250,000	$	285,750
Mirjana Hasanagic, former President (1) (3)	$	7,250	$	259,750
Brian Lukian, former CFO(2)	$	72,917	$	285,750

_____________ 

⁽¹⁾ Resigned January 15, 2016. 

⁽²⁾ Resigned April 12, 2016.  

⁽³⁾ Resigned from Directorship March 17, 2017

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of, with respect to the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Eastgate Biotech Corp., 2203-65 Harbour Square, Toronto, Ontario, Canada M5J 2L4, unless otherwise indicated. As of January 31, 2018, there were 936,805,508 shares of our common stock outstanding.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership(1)		Percent of Class(1)
5% Stockholders
Anna Gluskin (2)		287,406,224		30.68	%
Rose Perri (3)		283,904,424		30.31	%
Directors and Officers
Anna Gluskin (2)		287,406,224		30.68	%
Rose Perri (3)		283,904,424		30.31	%
All Directors and Officers as a group (3 persons)		561,313,648		60.99	%

_____________ 

(1)	Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of January 31, 2018. Shares issuable pursuant to the exercise of stock options and warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person.
(2)	Includes 2,251,750 shares of common stock issuable upon the exercise of warrants and 1,250,000 options that are currently exercisable or exercisable within 60 days.
(3)	Includes 10,000 share issued to TGT Investment group corp owned by Rose Perri. and 1,896,875 shares of common stock issuable upon the exercise of warrants and 1,250,000 options that are currently exercisable or exercisable within 60 days.

 

61

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Except as set forth below, we have not entered into any other material transactions with any officer, director, nominee for election as director, or any stockholder owning greater than five percent (5%) of our outstanding shares, nor any member of the above referenced individuals' immediate family.

On October 23, 2012, our CEO Ms. Gluskin loaned $100,000 to the company pursuant to the terms of a demand promissory note agreement. The note is unsecured, carries interest at the rate of 5% per annum and is payable on demand. The company will use the proceeds from the loan to conduct its general business operations until additional funding can be arranged, of which there can be no assurance. The largest principal amount outstanding since inception during the period ended December 31, 2016 was $100,000 and no payment of principal or interest has been made on the note. As of December 31, 2016, accrued interest on the note was $21,274.

From the year ended December 31, 2010 through December 31, 2016, the company recorded loans from shareholders, amounts due to shareholders for expenses paid on its behalf by shareholders, as notes payable - related parties on its balance sheet. The notes bear interest of 10% per annum, are unsecured and due and payable upon demand. As of December 31, 2016 the notes payable - related parties was $1,633,222, including the $100,000 note to Ms. Gluskin and the following:

· $9,590, plus $22,967 of accrued interest, payable to TGT Investment Management Inc., a private corporation controlled by Rose Perri, our President and a principal stockholder.(originally payable to William Investment Company);

· $4,600, plus $2,214 of accrued interest, payable to Anna Gluskin, our CEO and a principal stockholder;

· $1,060,927, plus $235,169 of accrued interest, payable to Angara Enterprises – a private corporation controlled by Anna Gluskin, our CEO and a principal stockholder;

· $268,747, plus $11,096 of accrued interest, payable to NanoEssential, Inc., a private corporation deemed to be controlled by our Vice President Mirjana Hasanagic and Ms. Gluskin; and

· $189,358 plus $40,222 of accrued interest, payable to TGT Investment Management Inc., a private corporation controlled by Rose Perri, our President and a principal stockholder.

The amounts shown above represent the largest principal amount outstanding during fiscal 2016 and no payment of principal or interest was made during the period. It should be noted that the accrued interest currently payable to TGT Investment Management Inc is greater that the principal amount. This is due to the $50,000 repayment to Williams Investment in May 2012 being applied to the principal amount only, which would decrease future interest expense incurred on the payable.

As of December 31, 2015 the notes payable - related parties was $1,006,391, with accrued interest of $182,845 and as set forth below:

· $100,000, plus $16,260 of accrued interest, payable to Anna Gluskin per the October 23, 2012 note;

· $9,590, plus $22,005 of accrued interest, payable to William Investment Company;

· $4,600, plus $1,752 of accrued interest, payable to Anna Gluskin;

· $854,153, plus $140,089 of accrued interest, payable to Angara Enterprises;

· $268,747, plus $84,148 of accrued interest, payable to NanoEssential, Inc; and

· $71,495 plus $28,544 of accrued interest, payable to TGT Investment Management Inc.

On July 1, 2012, the company entered into a lease agreement for office space owned by Rose Perri. The lease has a term of 60 months, with an expiration date of June 30, 2017, and specifies a monthly rate of approximately $3,200. The lease requires minimum lease payments of approximately $210,000 over the term of the lease. During fiscal year ended December 31, 2016 the company recorded an expense of $31,719 in connection with this lease.

On October 1, 2012, the company entered into a lease agreement for laboratory and office space through the assignment of an existing lease by NanoEssential, Inc. The lease has a term of 57 months, with an expiration date of May 31, 2017, and specifies a monthly rate of approximately $4,988 for 2012, $5,344 for 2013, and $5,700 for 2014 through 2017. The lease requires minimum lease payments of approximately $175,988 over the term of the lease. During fiscal years ended December 31, 2016 and December 31, 2015, the company paid $50,131 and $52,001, respectively, in connection with this lease. Mirjana Hasanagic, former President and a current director of the Company, previously served as President of NanoEssential, Inc. from 2009 to 2012 and Ms. Gluskin our CEO is deemed in control of NanoEssential.

 

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In 2014, the Company entered into a Patent Assignment Agreement with two affiliated shareholders (“the Affiliates”) related to four patent applications that are part of some of the Company’s R&D activities. On October 14, 2016, the Company amended the Patent Assignment Agreement (“the Amendment”) to expire on March 1, 2017 and to include additional specific financial and performance milestones that both the Company and Affiliates have to follow. To date, the company had continued to pay for patent maintenance fees and patent action files. In addition, as of October 14, 2016 the Company owed $376,400 to the Affiliates (approximately $170,000 of which was owed as of December 31, 2015 and has been recorded in Accrued liabilities related party on the balance sheet). The Amendment altered the terms of repayment of the $376,400 to bear 10% annual interest and to be paid monthly over 48 months starting January 1, 2017.

Item 14. Principal Accounting Fees and Services.

We do not have an audit committee and as a result our entire board of directors performs the duties of an audit committee. Our board of directors will approve in advance the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. As a result, we do not rely on pre-approval policies and procedures.

Audit Fees

Our auditors, Anthon and Chia LLP, billed us $67,775 for professional services rendered in connection with the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings for the fiscal year ending December 31, 2016. Our previous auditors, Sadler, Gibb & Associates, billed us $23,000 for professional services rendered in connection with the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings for the fiscal year ending December 31, 2015.

Audit Related Fees

For the years ended December 31, 2016 and 2015, there were no fees billed for assurance and related services by our Auditors Anton and Chia LLP and former auditors Sadler, Gibb & Associates relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above.

Tax Fees

For the years ended December 31, 2016 and 2015, no fees were billed by our Auditors Anton and Chia,LLP and former auditors Sadler, Gibb & Associates for tax compliance, tax advice and tax planning.

All Other Fees

There were no other aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant beside the services reported.

 

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) Exhibits

Exhibit No.	Exhibit Name
2.1	Patent Acquisition Agreement (1)
2.2	First Addendum to Patent Acquisition Agreement (1)
3.1	Articles of Incorporation and Certificates of Amendments (4)
3.3	Bylaws (9)
3.4	Certificates of Amendment filed March 8, 2002 (6)
3.5	Certificates of Amendment filed November 14, 2006 (6)
3.6	Certificates of Amendment filed October 24, 2007 (6)
3.7	Certificates of Amendment filed August 3, 2009 (6)
3.8	Certificates of Amendment filed November 10, 2011(6)
3.9	Restated Articles of Incorporation filed August 15, 2013 (7)
3.10	Certificate of Amendment to Restated Articles of Incorporation filed November 20, 2014 (10)
3.11	Certificate of Amendment to Restated Articles of Incorporation filed February 22, 2018 (14)
10.1	Agreement for Private Label & Custom Manufacturing (3)
10.3	Demand Promissory Note Issued to Anna Gluskin (4)
10.4	Securities Purchase Agreement with Anna Gluskin (4)
10.5	Agreement for distribution of products with Mediq Denmark A/S (6)
10.6	Lease Agreement between Nano Essentials, Inc. and Ogen Investments, Inc.(7)
10.7	Assignment of Lease Agreement between Nano Essentials and Eastagate Pharmaceuticals, Inc. (5)
10.8	Description of Verbal Agreement Concerning Related Party Debt to Anna Gluskin (6)
10.9	Description of Verbal Agreement Concerning Related Party Debt to Williams Investment Company (6)
10.10	2014 Equity Incentive Plan (8)
10.11	Finder’s Fee/Non-Disclosure/Non-Circumvention Agreement with Chardan Capital Markets LLC (9)
10.12	Form of Warrant issued to investors and officers, directors, employees and consultants (9)
10.13	Form of Subscription Agreement used in March and June 2014 Private Placements (9)
10.14	License Agreement with Purine Pharma LLC (11)
10.15	Lease Agreement with Rose Perri(12)
10.16	Assignment Agreement dated October 28, , 2014*
10.17	Reorganization Settlement Agreement dated October 14, 2016*
21.1	Subsidiaries (4)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of Treasurer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Treasurer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

________________

(1) Previously filed as an exhibit to Form 8-K on May 29, 2012.

(2) Previously filed as an exhibit to Form 10-SB on November 2, 2007.

(3) Previously filed as an exhibit to Form S-1 on November 20, 2012.

(4) Previously filed as an exhibit to Amendment No. 1 to Form S-1 on January 29, 2013.

(5) Previously filed as an exhibit to Amendment No. 3 to Form S-1 on June 27, 2013.

(6) Previously filed as an exhibit to Amendment No. 4 to Form S-1 on July 29, 2013.

(7) Previously filed as an exhibit to Amendment No. 5 to Form S-1 on September 5, 2013.

(8) Previously filed as an exhibit to Form S-8 on June 13, 2014.

(9) Previously filed as an exhibit to Form S-1 on July 1, 2014.

(10) Previously filed as an exhibit to Form 8-K on November 26, 2014.

(11) Previously filed as an exhibit to Form 10-Q on November 14, 2014.

(12) Previously filed as an exhibit to Form 10-K on March 31, 2015.

(13) Previously filed as an exhibit to Form 8-K on December 12, 2015.

(14) Previously filed as an exhibit to form 8-K on February 22, 2018

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Eastgate Biotech Corp.
By:	/S/ ANNA GLUSKIN
	Anna Gluskin
	Chief Executive Officer (Principal Executive Officer)
	Dated: February 28, 2018
By:	/S/ ROSE PERRI
	Rose Perri
	President and Treasurer (Principal Financial Officer and Principal Accounting Officer)
	Dated: February 28, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/ ANNA GLUSKIN	Chief Executive Officer and Chairman	February 28, 2018
Anna Gluskin	(Principal Executive Officer)
/S/ ROSE PERRI	President and Treasurer	February 28, 2018
Rose Perri	(Principal Financial Officer and
	Principal Accounting Officer)

65