10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2017

or

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 333-161157

PIVOT PHARMACEUTICALS INC.

(Exact name of registrant as specified in its charter)

British Columbia	N/A
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1275 West 6th Avenue, Vancouver, British Columbia, Canada	V6H 1A6
(Address of principal executive offices)	(Zip Code)

(604) 805-7783

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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. x YES    o NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x YES    o NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. x YES    o NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

82,223,323 common shares issued and outstanding as of December 15, 2017.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION.
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosure About Market Risk.	27
Item 4.	Controls and Procedures.	27
PART II – OTHER INFORMATION.
Item 1.	Legal Proceedings.	28
Item 1A.	Risk Factors.	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	28
Item 3.	Defaults Upon Senior Securities.	28
Item 4.	Mine Safety Disclosures.	28
Item 5.	Other Information.	28
Item 6.	Exhibits.	29
SIGNATURES.		31

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited interim condensed consolidated financial statements for the period ended October 31, 2017 form part of this quarterly report. All currency references in this report are to U.S. dollars unless otherwise noted. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the three and nine month periods ended October 31, 2017 are not necessarily indicative of results to be expected for any subsequent period.

 

3

PIVOT PHARMACEUTICALS INC.

Condensed Consolidated Financial Statements

(Expressed in U.S. dollars)

Period ended October 31, 2017 (unaudited) and January 31, 2017

 

4

PIVOT PHARMACEUTICALS INC.

Condensed Consolidated Balance Sheets

(Expressed in U.S. dollars)

	October 31, 2017 $			January 31, 2017 $
	(unaudited)
Assets
Current assets
Cash		250,386			112,421
Prepaid and other current assets		45,526			17,337
Total current assets		295,912			129,758
Security deposit		–			2,900
Intangible asset (Notes 4(a) and 5)		239,247			–
Total assets		535,159			132,658
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable and accrued liabilities		145,481			996,853
Due to related parties (Note 13)		4,544			22,574
Convertible debenture, net of discount (Note 6)		–			275,011
Derivative liability (Note 7)		–			312,541
Total current liabilities		150,025			1,606,979
Promissory note (Note 8)		202,197			–
Total liabilities		352,222			1,606,979
Stockholders’ Equity (Deficit)
Common stock: Unlimited shares authorized, without par value, 79,600,925 and 75,647,114 shares issued and outstanding, respectively (Note 9)		7,896,165			7,327,588
Subscriptions payable (Note 9)		327,298			–
Additional paid-in capital		11,766,274			11,211,031
Accumulated other comprehensive income		585,533			584,813
Accumulated deficit		(20,392,333	)		(20,597,753	)
Total stockholders’ equity (deficit)		182,937			(1,474,321	)
Total liabilities and stockholders’ equity (deficit)		535,159			132,658

(The accompanying notes are an integral part of these condensed consolidated financial statements)

 

5

PIVOT PHARMACEUTICALS INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Expressed in U.S. dollars)

	Three Months Ended October 31, 2017 $			Three Months Ended October 31, 2016 $			Nine Months Ended October 31, 2017 $			Nine Months Ended October 31, 2016 $
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenue		–			–			–			–
Expenses
Amortization of intangible asset (Note 5)		8,309			–			8,309			–
Foreign exchange (gain) loss		38,762			60,658			101,324			138,017
General and administrative		50,480			71,301			179,410			1,045,722
Management fees		31,941			548,407			301,714			3,917,354
Professional fees		55,166			9,938			128,174			100,421
Total expenses		184,658			690,304			718,931			5,201,514
Loss from operations		(184,658	)		(690,304	)		(718,931	)		(5,201,514	)
Other income (expense)
Amortization of discount on convertible debenture		–			(48,672	)		(105,392	)		(48,672	)
Loss (gain) on change in fair value of derivative liabilities		33,260			(212,354	)		204,711			(212,354	)
Gain on disposal of asset (Note 3)		609,311			–			609,311			–
Gain on settlement of debts		80,144			–			240,144			–
Interest expense		(7,331	)		(3,612	)		(24,481	)		(3,612	)
Total other income (expense)		715,384			(264,638	)		924,293			(264,638	)
Net income (loss)		530,726			(954,942	)		205,362			(5,466,152	)
Other comprehensive income (loss)
Foreign currency translation adjustment		(63,201	)		(40,569	)		(728	)		109,597
Net comprehensive income (loss)		428,224			(995,511	)		204,634			(5,356,555	)
Net income (loss) per share, basic		0.01			(0.01	)		0.00			(0.07	)
Net income (loss) per share, diluted		0.01			(0.01	)		0.00			(0.07	)
Weighted average shares outstanding – basic		76,761,576			75,613,498			76,055,298			75,212,555
Weighted average shares outstanding – diluted		81,596,692			75,613,498			78,877,344			75,212,555

(The accompanying notes are an integral part of these condensed consolidated financial statements)

 

6

PIVOT PHARMACEUTICALS INC.

Condensed Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

	Nine Months Ended October 31, 2017 $			Nine Months Ended October 31, 2016 $
	(unaudited)			(unaudited)
Operating activities
Net income (loss)		205,362			(5,466,152	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization		8,309			–
Amortization of discount on convertible debenture		105,392			48,672
Fair value of stock options vested		1,057			4,300,354
(Gain) loss on change in fair value of derivative liabilities		(204,711	)		212,354
Gain on disposal of assets		(609,311	)		–
Gain on settlement of debts		(240,144	)		–
Stock issued for services		24,531			256,382
Changes in operating assets and liabilities:
Prepaids and other current assets		35,589			5,938
Due to related parties		4,510			16,500
Accounts payable and accrued liabilities		457,439			366,124
Other liabilities		12,266			–
Net cash used in operating activities		(199,711	)		(259,828	)
Financing activities
Proceeds from convertible debenture		–			381,350
Proceeds from debenture		36,500			–
Proceeds from issuance of common stock		31,799			–
Proceeds from issuance of common stock subscriptions		264,326			–
Net cash provided by financing activities		332,625			381,350
Effects of exchange rate changes on cash		5,051			13,414
Increase in cash		137,965			134,936
Cash – beginning of period		112,421			71,639
Cash – end of period		250,386			206,575

Supplemental cash flow disclosures (Note 12)

(The accompanying notes are an integral part of these condensed consolidated financial statements)

 

7

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

1. Nature of Operations and Continuance of Business

Pivot Pharmaceuticals Inc. (the “Company”) was incorporated in British Columbia under the Business Corporations Act on June 10, 2002. On April 7, 2015, the Company changed its name from Neurokine Pharmaceuticals Inc. to Pivot Pharmaceuticals Inc. The Company is in the business of developing and commercializing therapeutic pharmaceutical products, focused on the strategy of identifying new therapeutic treatments to address unmet medical needs in women’s health.

These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As of October 31, 2017, the Company has not earned any revenue, has a working capital of $145,887 and an accumulated deficit of $20,392,333. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

2. Significant Accounting Policies

(a) Basis of Presentation

The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in U.S. dollars. The Company’s fiscal year-end is January 31.

(b) Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, assumptions used to determine the fair values of stock-based compensation and derivative liabilities and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c) Interim Financial Statements

These interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s condensed consolidated financial position, results of operations and cash flows for the periods shown. The condensed consolidated results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. Certain disclosures and financial information have been condensed in accordance with generally accepted accounting principles in the United States.

 

8

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

2. Significant Accounting Policies (continued)

(d) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidating entities include:

	% of ownership			Jurisdiction
Pivot Pharmaceuticals Inc.		Parent		Canada
Pivot Green Stream Health Solutions Inc.		100	%	Canada

(e) Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for all exercisable options and warrants and the if-converted method for all outstanding convertible debentures. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at October 31, 2017, the Company had 2,822,046 (January 31, 2017 – 9,692,748) potentially dilutive shares.

(f) Financial Instruments and Fair Value Measures

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2: Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, due to related parties and promissory note. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 

9

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

2. Significant Accounting Policies (continued)

(g) Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial position or results of operations.

3. Disposal of Asset

On September 11, 2017, the Company completed an exchange agreement whereby the Company exchanged with its past Chief Executive Officer 100% of its shares of common stock of its wholly-owned subsidiary, IndUS Pharmaceuticals, Inc. (“IndUS”), for 3,800,000 shares of common stock of the Company (Note 9(a)). Pursuant to the exchange agreement, the Company has provided its former Chief Executive Officer a promissory note (Note 8(a)) in the amount of $200,000 in discharge of all obligations with respect to Dr. Chaturvedi’s accrued salary totaling $267,267 through September 11, 2017.

The disposal of IndUS resulted in a gain as follows:

3,800,000 shares of common stock acquired and cancelled	380,000
Net liabilities exchanged	229,311
Gain on disposal of asset	609,311

The disposal of IndUS did not meet the definition of discontinued operations as it did not represent a strategic shift that has a major effect on the Company’s operations and financial results.

4. Asset Acquisitions

(a) BiPhasix License

On September 12, 2017, the Company entered into a licensing agreement with Altum Pharmaceuticals Inc. (“Altum”) whereby the Company acquired worldwide rights to the BiPhasix™ transdermal drug delivery technology for the development and commercialization of Cannabinoids, Cannabidiol and Tetrahydrocannabinol products. Consideration included:

1)	Issuance of 2,500,000 shares of common stock on September 12, 2017 (Notes 5 and 9(b));
2)	Issuance of 2,500,000 shares of common stock of Pivot upon Health Canada Natural Product Number approval;
3)	Royalties on annual gross sales; and
4)	For pharmaceutical products, milestone payments payable upon first Investigative New Drug Approval, upon positive outcome of Phase II trial in first indication, and upon New Drug Application approval.

(b) Solmic Solubilization License

On September 23, 2017, the Company entered into a collaboration and license agreement with SolMic GmbH (“Solmic”) whereby the Company will acquire worldwide rights to Solmic’s Solubilization Technology for the development and commercialization of cannabinoid-containing natural extracts. Milestones include payments upon the following developments: 1) Regulatory approval of a natural health product; 2) First approval of an investigative new drug application for a pharmaceutical product; 3) Positive outcome of a Phase II clinical trial of a pharmaceutical product in the first indication; and 4) Approval of a New Drug Application for a pharmaceutical product by the US Food and Drug Administration. Other consideration include a sales milestone upon aggregate net sales of $5,000,000 and royalties on aggregate net sales.

 

10

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

5. Intangible Asset

Cost	BiPhasix License $
Balance, January 31, 2017		–
License agreement (Note 4(a))		247,556
Balance, October 31, 2017		247,556

Accumulated Amortization
Balance, January 31, 2017	–
Amortization	8,309
Balance, October 31, 2017	8,309
Net book value, October 31, 2017	239,247
Net book value, January 31, 2017	–

6. Convertible Debenture

On September 30, 2016, the Company issued a convertible debenture with a non-related party for $500,000 Canadian Dollars ($380,411 US Dollars at September 30, 2016) (“Initial Advance”). The debenture is secured under a General Security Agreement, bears interest at 8% per annum and matures on the earlier of:

· The date the lender demands repayment of principal and interest following an event of default,

· The date of a dissolution event,

· The date of a liquidity event, and

· March 30, 2017.

 

The Company may request one or more additional advances of up to an aggregate amount of $1,000,000 Canadian Dollars (“Additional Advances”) provided that the aggregate amount under the convertible debenture does not exceed $1,500,000 Canadian Dollars.

The note, including the Initial Advance and any Additional Advances, is convertible into common shares at a conversion price equal to the average closing market price of the Company’s common stock during the five day period leading up to the conversion date. The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $134,892 with a corresponding discount to the convertible debenture (Note 7).

Pursuant to the convertible loan agreement, the Company issued 434,622 share purchase warrants to which the lender may acquire an interest in the Company equal to 12% of the maximum principal amount outstanding at any time at a price of $0.10 per share, which equates to the ten day average trading price of the Company’s common stock determined as at September 30, 2016. The Company calculated the 434,622 share purchase warrants based on the maximum outstanding principal balance on the convertible loan as of September 30, 2016. The Company recorded the share purchase warrant at an estimated fair value of $20,154 with a corresponding discount to the convertible debenture (Note 11).

 

11

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

6. Convertible Debenture (continued)

On September 18, 2017, the lender converted the outstanding principal and accrued interest of the convertible debenture into 4,623,825 shares of common stock (Note 9(c)) of the Company at a conversion price of $0.10. A loss on conversion of debenture of $21,236 was recorded within gain on settlement of debts in the condensed consolidated statements of operations and comprehensive income. As of October 31, 2017, the carrying value of the convertible debenture is $nil (January 31, 2017 - $275,011) which is net of debt discounts related to conversion feature, financing costs and warrants of $nil, $nil and $nil, respectively (January 31, 2017 - $94,709, $6,126 and $6,477, respectively). As of October 31, 2017, interest accrued on the convertible debenture is $nil (January 31, 2017 - $10,307) and the fair value of the conversion option derivative liability is $nil (January 31, 2017 - $312,541).

7. Derivative Liability

Derivative liability consists of convertible debenture with variable conversion price (Note 6). On September 18, 2017, the convertible debenture was converted into shares of common stock (Note 6). The fair value of derivative liability as at October 31, 2017 and January 31, 2017 is as follows:

	October 31, 2017 $		January 31, 2017 $
September 2016 convertible debenture		–		312,541
		–		312,541

The fair value of derivative financial liability was determined using the binomial option pricing model, using the following assumptions:

	Expected Volatility			Risk-free Interest Rate			Expected Dividend Yield			Expected Life (in years)
As at issuance date:
September 2016 convertible debenture		296	%		0.45	%		0	%		0.50

8. Promissory Note

	October 31, 2017 $		January 31, 2017 $
Principal (Note 8(a))		200,000		–
Accrued interest (Note 8(a))		2,197		–
		202,197		–

(a) Promissory Note – Former Chief Executive Officer (Note 3)

Promissory note bears interest at 8% per annum. Principal and accrued interest are due on the earlier of: 1) 30 days after the completion of a financing of at least $2,000,000 and (ii) September 10, 2027.

 

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PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

8. Promissory Note (continued)

(b) Promissory Note – Third Party

On September 27, 2017, the Company issued a promissory note in the amount of $400,000, bearing interest at 12% per annum and maturing on December 31, 2018, which no proceeds have been received by the Company as at October 31, 2017. As part of the promissory note, 100,000 shares of our common stock were issued (Note 9(d)).

9. Common Stock

(a)	On September 11, 2017, 3,800,000 shares of common stock were acquired and cancelled pursuant to the share exchange agreement (Note 3).
(b)	On September 12, 2017, 2,500,000 shares of common stock were issued pursuant to the Altum licensing agreement (Note 4(a)).
(c)	On September 18, 2017, 4,623,825 shares of common stock were issued upon conversion of convertible debenture (Note 6).
(d)	On October 26, 2017, 100,000 shares of common stock were issued pursuant to a promissory note issued (Note 8(b)).
(e)	In October 2017, the Company received proceeds totaling $223,000 pursuant to private placements for the issuance of 2,230,000 shares of common stock. 330,000 shares of common stock were issued on October 30 and 1,900,000 shares of common stock were issuable as of October 31, 2017. As of October 31, 2017 200,000 shares of common stock were issuable related to share issue costs on this private placement. The 1,900,000 shares of common stock related to the private placement and the 200,000 shares of common stock related to share issue costs were issued on November 2, 2017.
(f)	In October 2017, the Company received proceeds totaling $76,000 pursuant to private placements for the issuance of 380,000 units, consisting of one common stock and one half of one share purchase warrant. Each share purchase warrant entitles the holder to purchase a common share at $0.35 for 18 months. These units were issuable as of October 31, 2017. On November 30, 2017, 380,000 shares of common stock and 190,000 share purchase warrants were issued in full satisfaction of the stock subscription payable.
(g)	On October 31, 2017, the Company settled $35,152 of accounts payable through the issuance of 92,384 shares of common stock (Note 13), which were issued on November 2, 2017.

10. Stock Options

Effective December 30, 2015, the Company adopted a stock option plan. Under this plan, the Company may grant options to its directors, officers, employees and consultants up to an amount as determined by the Company and will be no more than a percentage of its outstanding common stock as may be required by the stock exchange the Company is listed with. The exercise price of the stock options will be determined by the Company and will be no less than any minimum exercise price as may be required by the stock exchange the Company is listed with.

The following table summarizes the continuity of the Company’s stock options:

 

13

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

10. Stock Options (continued)

	Number of Options		Weighted Average Exercise Price (US$)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (US$)
Outstanding, January 31, 2017		15,520,833		0.38		4.2		68,599
Granted		–		–		–		–
Forfeited		–		–		–		–
Outstanding, October 31, 2017		15,520,833		0.38		3.47		2,285,100

The fair value of stock-based compensation expense was estimated using the Black-Scholes option pricing model and the following assumptions:

	Expected Volatility			Risk-free Interest Rate			Expected Dividend Yield			Expected Life (in years)
29,000 options expiring on May 2, 2021		377	%		1.73	%		0	%		3.5

Additional information regarding stock options as of October 31, 2017, is as follows:

Options Outstanding		Options Exercisable		Exercise Price $		Expiry Date
	200,000		200,000		0.25	November 30, 2020
	4,000,000		4,000,000		0.10	December 14, 2020
	7,250,000		7,250,000		0.70	February 22, 2021
	29,000		28,000		0.34	May 2, 2021
	4,000,000		4,000,000		0.10	December 14, 2021
	41,833		41,833		0.05	January 23, 2022
	15,520,833		15,519,833

$60 of stock-based compensation have yet to be recognized and will be recognized in future periods.

 

14

PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

11. Share Purchase Warrant

The following table summarizes the continuity of share purchase warrant:

	Number of Warrants			Weighted Average Exercise Price $
Balance, January 31, 2017		434,622			0.10
Expired		(434,622	)		(0.10	)
Balance, October 31, 2017		–			–

As at October 31, 2017, there are no share purchase warrants outstanding. On November 30, 2017, 190,000 share purchase warrants, entitling the holder to purchase a common share at $0.35 for 18 months, were issued (Note 9(f)).

12. Supplemental Cash Flow Information

	Nine Months Ended October 31, 2017		Nine Months Ended October 31, 2016
Supplemental disclosures:
Interest paid		–		–
Income tax paid		–		–
Non-cash investing and financing activities:
Capital contribution through forgiveness of debt		531,310		–
Common stock issued for settlement of accounts payable		35,152		–
Common stock issued for settlement of convertible debenture		601,097		–
Common stock issued for prepaid assets		72,924		–
Common stock issued for intangible asset		262,500		–
Common stock subscriptions issued for services		21,207		–
Debt discounts on convertible debt		–		284,184
Promissory note issued for settlement of accrued salaries		200,000		–
Treasury stock returned and retired in disposition of assets		380,000		–

13. Related Party Transactions

As at October 31, 2017, the Company owed $4,544 (January 31, 2017 - $4,154) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

During the nine months ended October 31, 2017, $552,889 of accrued management fees to the Company’s Chief Financial Officer and Chief Business Officer were forgiven. In addition, $35,152 of accounts payable due to a company controlled by the Company’s Chief Financial Officer were settled for 92,384 shares of common stock.

 

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PIVOT PHARMACEUTICALS INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Period ended October 31, 2017

(Expressed in U.S. dollars)

14. Fair Value Measurements

The Company’s financial liabilities carried at fair value measured on a recurring basis as of October 31, 2017 and January 31, 2017, consisted of the following:

	Total fair value at October 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liability (1)	$	-	$	-	$	-	$	-

	Total fair value at January 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liability (1)	$	312,541	$	-	$	312,541	$	-

____________

(1) Derivative liability amounts are due to the embedded derivatives of convertible debenture issued by the Company and are calculated using the binomial option pricing model (Note 6).

The Company has no financial assets carried at fair value.

15. Subsequent Events

(a)	On November 7, 2017, 50,000 shares of common stock were issued to a service provider for services rendered.
(b)	On November 15, 2017, the Company entered into scientific advisory board agreements whereby 100,000 options to purchase shares of common stock with the following terms were granted:

· Exercise price of $0.39;

· 25% vesting on each of the following dates: November 15, 2017, May 15, 2018, November 15, 2018 and May 15, 2019;

· Expiry on November 14, 2022.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our unaudited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in U.S. Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in U.S. Dollars (US$) and all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Pivot Pharmaceuticals Inc., unless otherwise indicated.

General Overview

We are a development stage pharmaceutical company. We were incorporated in the Province of British Columbia, Canada under the name “649186 B.C. Ltd.”, on June 10, 2002. On September 9, 2003, we changed our name to “Xerxes Health Corp.” and on June 26, 2007, we changed our name to “Neurokine Pharmaceuticals Inc.”.

Effective June 4, 2014, we filed with the British Columbia Registrar of Companies a Form 11, Notice of Alteration, wherein we increased our authorized share capital from 500,000,000 common shares without par value to an unlimited number of common shares without par value. The increase of authorized capital was approved by our stockholders at the annual and special meeting held on June 3, 2014.

On September 26, 2014, our company held a special meeting of stockholders to approve the removal of our company’s Pre-Existing Company Provisions, the cancellation of our current Articles and the adoption of new Articles and to approve a reverse stock split on the basis of up to one new common stock for every 100 old common stock.

Effective October 8, 2014, we filed with the British Columbia Registrar of Companies a Form 11, Notice of Alteration, wherein we removed our Pre-Existing Company Provisions.

 

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Effective April 7, 2015, we filed with the British Columbia Registrar of Companies a Form 11, Notice of Alteration, wherein we changed our name to “Pivot Pharmaceuticals Inc.”.

Effective at the opening of trading on April 20, 2015, as approved by FINRA, our company effected a reverse stock split of our issued and outstanding common shares on the basis of 10 old common stock for 1 new common stock.

On November 20, 2015, we completed the acquisition of IndUS Pharmaceuticals, Inc. (“IndUS”), a Delaware corporation, pursuant to an Agreement and Plan of Merger and Acquisition Agreement dated as of November 4, 2015 among our company, Pivot Pharma U.S. Inc., our wholly owned subsidiary, IndUS and Sindu Research Laboratories Pvt Ltd. As consideration for the purchase, we issued 4,512,500 shares of common stock on November 23, 2015 and 237,500 shares of common stock on December 4, 2015 and granted 41,833 stock options pursuant to the Agreement and Plan of Merger. As part of the acquisition, we appointed Dr. Pravin Chaturvedi as our new Chief Executive Officer and Director. On September 11, 2017, we completed an exchange agreement whereby we exchanged with Dr. Chaturvedi 100% of its shares of common stock of IndUS for 3,800,000 shares of common stock of Pivot, upon which Dr. Chaturvedi resigned as Chief Executive Officer and Director.

On September 12, 2017, we entered into a licensing agreement with Altum Pharmaceuticals Inc. (“Altum”) whereby we were granted worldwide rights to BiPhasix Transdermal Drug Delivery Technology (“BiPhasix Technology”) for the delivery and commercialization of cannabinoids, cannabidiol (“CBD”), and tetrahydrocannabinol (“THC”) based products. Financial consideration included:

· Issuance of 2,500,000 shares of common stock on effective date of agreement

· Issuance of 2,500,000 shares of common stock of Pivot upon Health Canada Natural Product Number (“NPN”) approval;

· Royalties on annual gross sales; and

· For pharmaceutical products, milestone payments payable upon first Investigative New Drug Approval, upon positive outcome of Phase II trial in first indication, and upon New Drug Application approval.

On September 23, 2017, we entered into a collaboration and license agreement with SolMic GmbH (“Solmic”) whereby we will acquire worldwide rights to Solmic’s Solubilisation Technology for the development and commercialization of cannabinoid-containing natural extracts. Milestones include payments upon the following developments: 1) Regulatory approval of a natural health product; 2) First approval of an investigative new drug application for a pharmaceutical product; 3) Positive outcome of a Phase II clinical trial of a pharmaceutical product in the first indication; and 4) Approval of a New Drug Application for a pharmaceutical product by the US Food and Drug Administration. Other consideration include a sales milestone upon aggregate net sales of $5,000,000 and royalties on aggregate net sales.

On November 7, 2017, we signed a letter of intent to enter into a licensing agreement with Thrudermic LLC (“Thrudermic”) by January 18, 2018, whereby we will acquire worldwide rights for the development and commercialization of the Thrudermic Nano Technology (“TNT”) for all cannabinoids. Consideration will include:

· Royalties on annual gross sales upon commercialization of a product;

· For natural health products, milestone payments payable upon approval of Health Canada NPN approval and after achievement of $5 million in net sales; and

· For pharmaceutical products, milestone payments payable upon first Investigative New Drug Approval, upon positive outcome of Phase II trial in first indication, and upon New Drug Application approval

 

Our principal executive office is located at 1275 West 6th Avenue, Vancouver, B.C. Canada V6H 1A6. Our telephone number is (604) 805-7783.

 

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Our Current Business

We are an emerging biopharmaceutical company engaged in the development and commercialization of therapeutic pharmaceuticals and nutraceuticals, as well as drug delivery platform technologies.

Our company focuses on pharmaceutical development of proprietary drug delivery technologies for multiple indications using small molecules, biological and botanical (e.g. cannabinoids) products to treat unmet medical needs. We have in-licensed a patented topical transdermal drug delivery technology platform, BiPhasix, and an oral drug delivery technology, Solmic Micelle, for delivery of cannabinoids.

Our fully-owned subsidiary, Pivot Green Stream Health Solutions Inc. (“PGS”), focuses on the research, development, and commercialization of cannabinoid based nutraceuticals. PGS will generate data to support the safety and efficacy of cannabinoids as Natural Health Product (“NHPs”) as outlined in Health Canada Regulations in order to make particular health claims. Health Canada publishes the Natural Health Products Regulations (“NHPR”) which set out the requirements governing the sale, manufacture, packaging, labelling, importation, distribution and storage of NHPs.

According to Health Canada, the objective of the NHPR is to provide reasonable assurance that products offered for sale in Canada are safe, efficacious and of high quality. PGS may also follow applicable and harmonized regulations for product development and commercialization in the US, European Union and Asia Pacific regions. Alternatively, PGS will commercialize certain cannabinoid products with a Licensed Producer and/or Licensed Distributor as per the regulations concerning Access to Cannabis for Medical Purposes Regulations (“ACMPR”) since certain active ingredients in cannabinoids remain restricted until new legislation permits ease of development and distribution in 2018.

Lastly, PGS may also develop products containing cannabinoid active ingredients obtained from industrial hemp according to the Industrial Hemp Regulations (“IHR”) permitting such products provided they are sourced from industrial hemp. Otherwise stated, this means that the plants and plant parts of the genera Cannabis, the leaves and flowering heads of which do not contain more than 0.3% THC w/w, and includes the derivatives of such plants and plant parts.

PGS’s pipeline targets indications such as cancer supportive care, pain and inflammation, women’s sexual dysfunction, dermatology and eye disease.

Our overall strategy includes the following:

1.	Acquire market-ready natural health products from third-parties for rebranding and re-sale;
2.	Acquire cannabinoid-based food additives for medical consumer sales;
3.	Develop cannabinoid-based natural health products using our BiPhasix topical platform technology;
4.	Develop pharmaceutical products delivered using our BiPhasix topical platform technology;
5.	Obtain partnerships with Health Canada approved Authorized Licensed Producers and/or Licensed Distributors, which can provide restricted and non-restricted cannabinoids as per the ACMPR or the IHR;
6.	Acquire novel proprietary drug delivery technologies, for example, metered dose, intra-nasal, suppositories;
7.	Make an application at the appropriate time to acquire Health Canada’s Authorized Licensed Producers and Licensed Dealers licenses as per the ACMPR;

 

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8.	Out-license our platform technologies to Licensed Producers or Licensed Distributors and other drug developers;
9.	Secure and develop further intellectual property;
10.	Opportunistically acquire later‑stage drug candidates that provide new treatment options to address unmet medical needs in health care; and
11.	Establish partnerships with large and specialty pharmaceutical companies and/or biotechnology companies to collaboratively develop and/or commercialize our products.

 

Our Research and Development Strategy

Our management team has implemented a business minded and cost conscious approach to product research and development by focusing on development of novel therapies to address unmet needs in health care. Our research and development strategy will apply novel drug delivery options for new and/or existing drugs or NHPs.

For a drug to be successful it must be both efficacious and acceptably safe. Before a drug may be commercially marketed, it must be scrutinized and approved by applicable health authorities (such as Health Canada and the FDA in the United States) in each country or jurisdiction where it is sought to be sold. In pharmaceutical research and development, clinical trials are conducted to assess the safety and efficacy of the drug and the data to be collected for such new drugs. Health authorities then scrutinize the preclinical and clinical data and determine, based on the results, whether a drug may be sold to the public. Similarly, clinical trials can only take place once satisfactory information has been gathered on the quality of the product and its non-clinical safety, and approval to conduct clinical trials has been granted by the appropriate health authority in the country where the trial is scheduled to take place.

Clinical trials involving new drugs are commonly classified into four phases. Each phase of the drug approval process is treated as a separate clinical trial. The drug development process will normally proceed through all four phases over many years. If the drug successfully passes through Phases I, II and III, it will usually be approved by the national regulatory authority for use in the general population. Phase IV trials are ‘post approval’ studies. Due to the considerable cost that may be required to complete a full series of clinical trials, the burden of paying for all the necessary people and services is usually borne by the sponsor, who may be the pharmaceutical or biotechnology company that developed the drug that is the subject of the study. Since the diversity of roles may exceed the resources of the sponsor, clinical trials are often managed by outsourced partners such as contract research organizations. Furthermore, approval rates for new drugs at each clinical trial stage are prohibitively low, which may require the sponsor to finance additional trials or abandon the drug under development altogether.

We will also develop products regulated under Canada’s Natural Health Products Guidance and support claims with clinical based data as per current regulations.

Preclinical safety studies for pharmaceutical or NHP product development will be conducted over the next 12 months to advance at least one of our product candidates.

 

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Our Product Candidates

PGS-N005 (Female Sexual Dysfunction CBD Topical Cream)

Using our BiPhasix platform technology, we will develop and commercialize a topical cream containing CBDs (“PGS-N005”) for perimenopausal, menopausal and post-menopausal women who have noticed a decline in sexual desire and response, known as hypoactive sexual desire disorder. Up to 63% of sexually active women in the U.S. might be affected by female sexual dysfunction (“FSD”). While erectile dysfunction in men has been extensively researched, very little has been completed on FSD which can involve reduced sex drive, difficulty becoming aroused, vaginal dryness, lack of orgasm and decreased sexual satisfaction. The FSD market in the U.S. is estimated to exceed $4 billion with over 50 million potential sufferers.¹

PGS-N007 (Psoriasis BiPhasix CBD Topical Cream)

Using our BiPhasix platform technology, we will develop and commercialize a topical cream containing CBDs (“PGS-N007”) for psoriasis. Preclinical research has shown that CBD has potent anti-inflammatory properties suggesting that cannabinoids may be helpful for inflammation-related skin conditions like psoriasis and eczema. CBD, THC and other cannabinoids are anti-psoriasis agents. Under a psoriasis condition, skin cells are replaced every three to five days rather than the normal 30 days. This excessive and rapid growth of the epidermal layer of the skin generates red, itchy and scaly patches, which may be localized or completely cover the body.²

Psoriasis is generally considered an autoimmune and genetic disease triggered by environmental factors. Cold, medications, infections, traumas, body and psychological stress may play a role in starting the disease. Psoriasis is not contagious and there is no current cure for it. However, various treatments can control the symptoms. Psoriasis is associated with an increased risk of psoriatic arthritis, lymphomas, cardiovascular disease, Crohn’s disease and depression. Psoriatic arthritis affects up to 30% of individuals with psoriasis.

Results of Operations

The following summary of our results of operations should be read in conjunction with our financial statements for the period ended October 31, 2017, which are included herein.

Our operating results for the three and nine months ended October 31, 2017 and 2016 are summarized as follows:

	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2017			2016			2017			2016
Revenue	$	Nil		$	Nil		$	Nil		$	Nil
Amortization	$	(8,309	)	$	Nil		$	(8,309	)	$	Nil
Foreign exchange (gain) loss	$	(38,762	)	$	(60,658	)	$	(101,324	)	$	(138,017	)
General and administrative	$	(50,480	)	$	(71,301	)	$	(179,410	)	$	(1,045,722	)
Management fees	$	(31,941	)	$	(548,407	)	$	(301,714	)	$	(3,917,354	)
Professional fees	$	(55,166	)	$	(9,938	)	$	(128,174	)	$	(100,421	)
Total Other Income (Expenses)	$	715,384		$	(264,638	)	$	924,293		$	(264,638	)
Net Income (Loss)	$	530,726		$	(954,942	)	$	205,362		$	(5,466,152	)

For the three months ended October 31, 2017, our net income increased by $1,485,668 as compared to the three months ended October 31, 2016. During the three months ended October 31, 2016, $432,658 of share-based compensation was recognized related to vesting of stock options granted to management, directors, consultants and advisors compared to $1,605 for the three months ended October 31, 2017. During the three months ended October 31, 2017, we recognized $80,144 of gain on settlements of debts related to debts converted into shares of our common stock, as well as conversion of accrued liabilities related to our past Chief Executive Officer into a promissory note. In addition, we disposed of IndUS during the three months ended October 31, 2017, which resulted in a gain on disposal of asset of $609,311.

______________

1	https://www.researchgate.net/publication/7977139_Female_sexual_dysfunction
2	https://www.royalqueenseeds.com/blog-cbd-can-relieve-psoriasis-by-balancing-immune-systems-response-n423

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For the nine months ended October 31, 2017, our net income increased by $5,671,514 as compared to the nine months ended October 31, 2016. During the nine months ended October 31, 2016, $4,467,039 of share-based compensation was recognized related to vesting of stock options granted to management, directors, consultants and advisors compared to $2,355 for the nine months ended October 31, 2017. During the nine months ended October 31, 2017, we recognized $240,144 of gain on settlements of debts related to accrued consulting fees forgiven, debts converted into shares of our common stock, as well as conversion of accrued liabilities related to our past Chief Executive Officer into a promissory note. In addition, we disposed of IndUS during the nine months ended October 31, 2017, which resulted in a gain on disposal of asset of $609,311.

Revenue

We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter.

Liquidity and Financial Condition

Working Capital

	At		At
	October 31,		January 31,
	2017		2017
Current Assets	$	295,912	$	129,758
Current Liabilities	$	150,025	$	1,606,979
Working Capital (Deficit)	$	145,887	$	(1,477,221	)

Our total current assets as of October 31, 2017 were $295,912 as compared to total current assets of $129,758 as of January 31, 2017. The increase was primarily due to private placements of $223,000 made during the period. Our total current liabilities as of October 31, 2017 were $150,025 as compared to total current liabilities of $1,606,979 as of January 31, 2017. The decrease in current liabilities was primarily attributed to forgiveness of accrued management and consulting fees, accounts payable settled through issuance of shares of our common stock and conversion of convertible debts into shares of our common stock during the nine months ended October 31, 2017.

Cash Flows

	Nine Months Ended
	October 31,
	2017			2016
Net Cash Used In Operating Activities	$	(199,711	)	$	(259,828	)
Net Cash Provided By Financing Activities	$	332,625		$	381,350
Effects of Exchange Rate Changes on Cash	$	5,051		$	13,414
Increase (Decrease) in Cash During the Period	$	137,965		$	134,936

Operating Activities

During the nine months ended October 31, 2017, our cash used by operating activities decreased by $60,117 when compared to cash used in operating activities during the nine months ended October 31, 2016. The decrease in cash used for operating activities was a result of our company’s efforts at minimizing cash outlays.

Investing Activities

During the nine months ended October 31, 2017, we acquired a license for worldwide rights to the BiPhasix Technology for the delivery and commercialization of cannabinoids, CBD, and THC based products by issuing 2,500,000 shares of our common stock valued at $250,000. We did not have any investing activities during the nine months ended October 31, 2016.

 

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Financing Activities

During the nine months ended October 31, 2017, we received $332,625 (2016 - $381,350) in cash from financing activities.

In order for our company to expand its operations, we will require additional funds. The required additional funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we have negative cash flows from operating activities and may continue to be unprofitable. We will need to raise additional funds in the immediate future in order to proceed with our expanded operations. We have negative cash flows from operating activities. If we cannot generate sufficient revenues to operate with positive cash flows from operating activities or are unable to raise additional funds, we may suspend or cease our operations.

In order for the Company to expand its operations and pursue its business plans related to development of its product candidates, we will require additional funds. Specifically, we estimate our operating expenses and working capital requirements for the next 12 months for our expanded operations to be as follows:

Available Funds / Use of Proceeds (Description)	Estimated Expenses (C$)		Estimated Expenses (C$)		Estimated Expenses (C$)
Research and Development Costs	Months 1 to 12		Months 12 to 18		Months 18 to 24
Studies of active pharmaceutical ingredient		17,500		-		-
Stage 1 – BiPhasix cream development without active pharmaceutical ingredient		35,750		-		-
Stage 2 – BiPhasix cream development with active pharmaceutical ingredient		-		145,000		-
Scientific data		-		66,500		-
Supply of active pharmaceutical ingredient		-		40,000		40,000
Regulatory		-		-		115,000
Market commercialization		-		-		215,000
Sales and Marketing Costs
Entertainment and promotion		-		5,000		15,000
Investor relations		-		30,000		30,000
Travel		-		30,000		30,000
Operating Expenses
Insurance		10,000		15,000		15,000
Professional fees		60,000		30,000		30,000
Public company expenses		65,000		32,500		32,500
Salaries and benefits 1		-		400,000		400,000
Telephone and internet		6,000		3,000		3,000
Vehicles and transportation		6,000		3,000		3,000
Total:		200,250		800,000		928,500

_______________

1 The Company’s management team has agreed to defer salaries and benefits and prioritize the allocation of financing to the development budget until sufficient financing is obtained.

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Based on our planned expenditures, we will require approximately C$200,250 to proceed with the Stage 1 of our business plan over the next 12 months, which is the development of BiPhasix cream without active pharmaceutical ingredients.

The objectives that we expect to accomplish are as follows:

· Development of topical creams using our BiPhasix technology platform to treat women experiencing HSDD (PGS-N005) and to treat inflammation-related skin conditions, such as psoriasis and eczema (PGS-N007).

· Obtain classification of and commercialize such topical creams as natural health products.

 

The following are significant milestones we expect to accomplish:

1)	Stage 1 – Development of BiPhasix cream without active pharmaceutical ingredient: Successful completion of the base cream preparation will involve the cream, loaded with water, meeting manufacturing specifications. Stage 1 milestone will be met if, upon examination of the cream, spherical balls form under a microscope and the product has a semi-solid cream viscosity.
2)	Stage 2 – Development of BiPhasix cream with active pharmaceutical ingredient: Proceeding to the Stage 2 milestone, the semi-solid cream will be mixed with an active pharmaceutical ingredient with health benefits to humans. The Company will establish, under a microscope, that the active ingredients form spherical balls containing active ingredients suspended in the semi-solid cream. The product will then be stress-tested under light, heat and cold conditions to ensure stability. After a six month accelerated shelf condition, the product will be considered ready to be released for consumer use.
3)	Regulatory approval: In order to support health-related claims, the Company has to meet certain criteria established by Health Canada to obtain a NHP number or designation. Health Canada regulations require steps to be complied with by the Company in order for the topical creams to be sold as NHP approved products. The regulatory milestone will be considered accomplished upon the Company obtaining NHP numbers for its topical creams.

Funds raised will be used towards the recruitment of appropriate management and research and development (“R&D”) personnel, as well as towards product development expenditures. Specifically, the funds will be used to cover R&D expenses associated with 1) manufacturing scale-up of PGS-N005 and PGS-N007, funds permitting for PGS-N007, at a GMP-certified, high potency drug manufacturing facility; 2) development and manufacture of formulation of PGS-N005 and PGS-N007, funds permitting for PGS-N007, at a GMP-certified product manufacturing facility for administration of the drug candidates in animals (for safety evaluation) and subsequently to humans 3) submission to appropriate regulatory authorities for NHP registration.

 

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Inflation

The amounts presented in the consolidated financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

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 consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

The discussion and analysis of our consolidated financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our consolidated financial statements.

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, assumptions used to determine the fair values of stock-based compensation and derivative liabilities, and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Long-lived Assets

In accordance with ASC 360, “Property, Plant and Equipment”, our company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

 

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Stock-Based Compensation

Our company records stock-based compensation in accordance with ASC 718, Compensation – Stock-Based Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Financial Instruments and Fair Value Measures

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Our company’s financial instruments consist principally of cash, accounts payable and accrued liabilities and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets and derivative liabilities is determined based on “Level 2” inputs, as determined by observable market data. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations

Foreign Currency Translation

The functional currency of our parent entity, Pivot Pharmaceuticals Inc., is the Canadian dollar and the functional currency of our subsidiary is the US dollar. Our company’s presentation currency is the US dollar.

Monetary assets and liabilities are translated using the exchange rate prevailing at the consolidated balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Expenses are translated at average rates for the period. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

Results of operations are translated into our company’s presentation currency, US dollars, at an appropriate average rate of exchange during the year. Net assets and liabilities are translated to US dollars for presentation purposes at rates of exchange in effect at the end of the period. Gains or losses arising on translation are recognized in other comprehensive income (loss) as foreign currency translation adjustments.

 

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Recent Accounting Pronouncements

Our company has implemented all new accounting pronouncements that are in effect and that may impact our consolidated financial statements and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our consolidated financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and our chief financial officer (principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer (our principal executive officer) and our chief financial officer (principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of quarter covered by this report. Based on the evaluation of these disclosure controls and procedures our chief executive officer (our principal executive officer) and our chief financial officer (principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective.

Changes in Internal Controls

During the quarter covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Item 1A. Risk Factors

As a “small reporting company”, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

 

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Item 6. Exhibits

Exhibit Number	Description
(3)	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation 649186 B.C. Ltd. (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.2	“Company Act” Memorandum of 649186 B.C. Ltd. Certificate of Amendment (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.3	Certificate of Filing of 649186 B.C. Ltd. (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.4	Certificate of Incorporation of 649186 B.C. Ltd. (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.5	Certificate of Name Change of 649186 B.C. Ltd. to Xerxes Health Corp. (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.6	Transition Application of Xerxes Health Corp. (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.7	Certificate of Name Change of Xerxes Health Corp. to Neurokine Pharmaceuticals Inc. (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.8	Notice of Alteration to Authorized Share Structure (incorporated by reference from our Registration Statement on Form S-1 filed on August 7, 2009)
3.9	Notice of Alteration to Authorized Share Structure (incorporated by reference from our Current Report on Form 8-K filed on June 4, 2014)
3.10	Form 11 Notice of Alteration (incorporated by reference from our Current Report on Form 8-K filed on October 9, 2014)
3.11	Articles (incorporated by reference from our Current Report on Form 8-K filed on October 9, 2014)
3.12	Notice of Alteration changing name to Pivot Pharmaceuticals Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 17, 2015)
3.13	Certificate of Name Change of Neurokine Pharmaceuticals Inc. to Pivot Pharmaceuticals Inc. (filed on June 17, 2015 with our Annual Report on Form 10K/A)

(10)	Material Contracts
10.1	Non-Exclusive License Agreement with Globe Laboratories Inc. dated June 17, 2008 (incorporated by reference to our Registration Statement on Form S-1/A filed on December 3, 2009)
10.2	Clinical Trial Services Agreement with Virtus Clinical Development (Pty) Limited dated March 1, 2009 (incorporated by reference to our Registration Statement on Form S-1/A filed on March 4, 2010)
10.3	Master Service Agreement with Northern Lipids Inc. dated October 2, 2007 (incorporated by reference to our Registration Statement on Form S-1/A filed on December 3, 2009)
10.4	Assignment of Invention (NK-001) dated January 30, 2008 (incorporated by reference to our Registration Statement on Form S-1/A filed on December 3, 2009)
10.5	Assignment of Invention (NK-002) dated April 18, 2008 (incorporated by reference to our Registration Statement on Form S-1/A filed on December 3, 2009)
10.6	Subscription Agreement with Ahmad Doroudian (incorporated by reference to our Form 8-K filed on August 12, 2010)
10.7	Debt Settlement Subscription Agreement dated September 26, 2013 with Ahmad Doroudian (incorporated by reference to our Quarterly Report on Form 10-Q filed on December 16, 2013)

10.8	Director Services Agreement dated February 25, 2015 with Barbara-Jean Bormann-Kennedy (incorporated by reference to our Current Report on Form 8-K filed on March 26, 2015)
10.9	Director Services Agreement dated February 25, 2015 with Dr. Patrick Frankham (incorporated by reference to our Current Report on Form 8-K filed on March 26, 2015)
10.10	Director Services Agreement dated February 26, 2015 with Dr. Wolfgang Renz (incorporated by reference to our Current Report on Form 8-K filed on March 26, 2015)
10.11	Consulting Services Agreement dated February 25, 2015 with Dr. Giora Davidai (incorporated by reference to our Current Report on Form 8-K filed on March 26, 2015)
10.12	Director Services Agreement dated November 19, 2015 with Dr. Patrick Frankham (incorporated by reference to our Quarterly Report on Form 10 Q filed on December 15, 2015)
10.13	Director Services Agreement dated November 19, 2015 with Dr. Wolfgang Renz (incorporated by reference to our Quarterly Report on Form 10 Q filed on December 15, 2015)
10.14	Consulting Services Agreement dated November 19, 2015 with Dr. Giora Davidai (incorporated by reference to our Quarterly Report on Form 10‑Q filed on December 15, 2015)

 

29

10.15	Plan of Merger and Acquisition Agreement between our company and IndUS Pharmaceuticals, Inc., dated November 4, 2015 (incorporated by reference to our Current Report on Form 8‑K filed on November 23, 2015 and our Current Report on Form 8‑K/A filed on February 3, 2016)
10.16	Employment Agreement dated November 20, 2015 with Dr. Pravin Chaturvedi (incorporated by reference to our Quarterly Report on Form 10‑Q filed on December 15, 2015)
10.17	Employment Agreement dated February 1, 2016 with Dr. Ahmad Doroudian (filed on April 29, 2016 with our Annual Report on Form 10-K)
10.18	Employment Agreement dated February 1, 2016 with Moira Ong (filed on April 29, 2016 with our Annual Report on Form 10-K)
10.19	Consulting Services Agreement dated February 1, 2016 with Soho Capital Inc. (filed on April 29, 2016 with our Annual Report on Form 10-K)
10.20	Convertible debenture agreement dated September 29, 2016 with Avro Capital Partners Inc.
10.21	Exchange Agreement between our company, IndUS Pharmaceuticals, Inc. and Pravin Chaturvedi, dated September 11, 2017 (incorporated by reference to our Current Report on Form 8-K filed on September 12, 2017)
10.22	Licensing Agreement between our company and Altum Pharmaceuticals Inc. dated September 12, 2017 (incorporated by reference to our Current Report on Form 8-K filed on September 12, 2017)
10.23	Debt Forgiveness Agreement dated July 31, 2017 between our company and Dr. Ahmad Doroudian (filed on September 15, 2017 with our Quarterly Report on Form 10-Q)
10.24	Debt Forgiveness Agreement dated July 31, 2017 between our company and Moira Ong (filed on September 15, 2017 with our Quarterly Report on Form 10-Q)
10.25	Debt Forgiveness Agreement dated July 31, 2017 between our company and Soho Capital Inc. (filed on September 15, 2017 with our Quarterly Report on Form 10-Q)
10.26*	Debt Settlement Agreement dated September 18, 2017 between our company and Avro Capital Partners, Inc.
10.27*	Collaboration and License Agreement dated September 23, 2017 between our company and SolMic GmbH
10.28*	Letter of Intent dated November 7, 2017 between our company and Thrudermic LLC

(31)	Rule 13a-14(d)/15d-14(d) Certifications
31.1*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of Principal Executive Officer
31.2*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of Principal Financial Officer
(32)	Section 1350 Certifications
32.1*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of Principal Executive Officer
32.2*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of Principal Financial Officer
99	Additional Exhibits
99.1	Audit Committee Charter (filed on June 17, 2015 with our Annual Report on Form 10K/A)
99.2	Stock Option Plan (filed on November 25, 2015 with our Definitive Proxy Statement on Schedule 14A)
101*	Interactive Data Files
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

___________

* Filed herewith

30

SIGNATURES

Pursuant to the requirements 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.

	PIVOT PHARMACEUTICALS INC.
	(Registrant)
Dated: December 15, 2017	/s/ Patrick Frankham
	Dr. Patrick Frankham
	Chief Executive Officer and Director
	(Principal Executive Officer)
Dated: December 15, 2017	/s/ Moira Ong
	Moira Ong
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

31

EX-10.26

EXHIBIT 10.26

DEBT SETTLEMENT AGREEMENT

THIS DEBT SETTLEMENT AGREEMENT made the 18th day of September, 2017.

BETWEEN:

Pivot Pharmaceuticals Inc., a company incorporated under the laws of British Columbia and having its head office located at 1275 West 6^th Avenue, Suite 300, Vancouver, BC Canada V6H 1A6

(the “Company”)

AND:

Avro Capital Partners Inc., a company incorporated under the laws of British Columbia and having its head office located at 200 Granville Street, Suite 2820, Vancouver, BC Canada V6C 1S4

(the “Creditor”)

OF THE SECOND PART

WHEREAS:

A. The Company is indebted to the Creditor in the amount of $565,863.69 (US$462,382.49) (the “Debt”) under the Convertible Loan Agreement dated September 29, 2016;

B. The Company wishes to settle the Debt by issuing to the Creditor 4,623,825 common shares of the Company and the Creditor is prepared to accept the shares in full satisfaction of the Debt.

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises and of the covenants and agreements set out in this Agreement, the parties agree as follows:

1.	ACKNOWLEDGMENT OF DEBT
1.1	The Company acknowledges and agrees that it is indebted to the Creditor in the amount of the Debt.

 

2.	ISSUANCE OF SHARES
2.1	The Company agrees to issue to the Creditor and the Creditor agrees to accept 4,623,825 common shares of the Company (the “Shares”) at a deemed price of US$0.10 per Share as full and final payment of the Debt.

 

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2.2

Within five business days after the date of this Agreement, the Company will deliver to the direction of the Creditor one or more share certificates or a book statement from the Company’s transfer agent representing the Shares.

2.3

The Creditor agrees that the Debt will be fully satisfied and extinguished when the Company delivers the Shares to the Creditor, and subject only to the issuance of the Shares, the Creditor releases and forever discharges the Company, its subsidiaries and their respective directors, officers, employees, representatives and advisors from and against any and all claims, actions, obligations, and damages whatsoever which the Creditor may have against any of them relating to the Debt. This release will be operative from and after the date of completion of the transactions contemplated by this Agreement and shall be effective without the delivery of any further release or other documents by the Creditor to the Company.

3.	REPRESENTATIONS OF CREDITOR
3.1	The Creditor represents, warrants and acknowledges to the Company that:

 

(a)	the Debt constitutes the entire outstanding indebtedness of the Company to the Creditor including principal, interest to the date hereof and costs;
(b)	the Creditor has not conveyed, transferred or assigned any portion of the Debt to any third party, and has full right, power and authority to enter into this Agreement and to accept the Shares in full and final satisfaction of the Debt;
(c)	no third party has any right to payment of all or any portion of the Debt;
(d)	the Creditor has no claims or potential claims against the Company on account of any matter whatsoever, other than the Debt;
(e)	if the Creditor is a corporation or legal entity other than an individual, all necessary corporate or other action has been taken by the Creditor to approve this Agreement;
(f)	the Company is relying on exemptions from prospectus requirements found in National Instrument 45-106, s.2.14 and applicable securities laws in the Creditor’s jurisdiction of residence (if other than British Columbia) to issue the Shares to the Creditor;
(g)	the Creditor is not an “insider” or an “associate” of an insider of the Company as those words are defined in the Securities Act (British Columbia);
(h)	the Creditor will be the registered beneficial owner of the Shares;
(i)	the Creditor is not acquiring the Shares as a result of any material information that the Company has not generally disclosed to the public; and

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(j)	the Shares will be subject to resale restrictions as required by applicable securities law and the policies of the Company’s exchange and the certificates representing the Shares will bear appropriate legends and the Creditor will seek its own independent legal advice regarding such resale restrictions imposed on the Shares.
(k)	the release contained in section 2.3 is fully enforceable by the Company against the Creditor.

 

3.2

The Company’s obligation to complete the transactions contemplated hereby is subject to the foregoing representations and warranties being true and correct at the date of this Agreement and at the time of delivery of the Shares by the Company to the Creditor. Such representations and warranties will survive the closing of the transactions contemplated hereby and will continue in full force and effect for the benefit of the Company for a period of five years from the date of issuance of the Shares to the Creditor. The Creditor will indemnify the Company from and against any and all claims, damages, losses and costs arising from such representations and warranties being incorrect or breached.

4.

GENERAL PROVISIONS

4.1	Time will be of the essence of this Agreement.
4.2	The Company and the Creditor will sign all other documents and do all other things reasonably necessary to carry out this Agreement.
4.3	The provisions contained in this Agreement constitute the entire agreement between the parties and supersede all previous understandings, communications, representations, and agreements, whether written or verbal, between the parties regarding the subject matter of this Agreement.
4.4	This Agreement will be governed by and construed in accordance with the laws of British Columbia exclusively. Each party irrevocably attorns to the exclusive jurisdiction of the courts of British Columbia, Judicial District of Vancouver, with respect to any legal proceedings arising herefrom.
4.5	All dollar amounts referred to in this Agreement are expressed in Canadian currency, unless otherwise indicated.
4.6	This Agreement will enure to the benefit of and be binding on each of the parties and their respective heirs, executors, administrators, successors, and assigns.
4.7	This Agreement may be executed in counterparts, both of which will constitute one complete agreement.

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IN WITNESS WHEREOF the parties have signed this Agreement as of the date written on the first page of this Agreement.

PIVOT PHARMACEUTICALS INC.

Per:	/s/ Ahmad Doroudian
	Authorized Signatory

AVRO CAPITAL PARTNERS INC.

Per:	/s/ Brett Walker
	Authorized Signatory

EX-10.27

EXHIBIT 10.27

PIVOT – SOLMIC COLLABORATION AND LICENSE AGREEMENT

This COLLABORATION AND LICENSE AGREEMENT is made this 23rd day of September 2017 (hereinafter the “Effective Date”), by and between PIVOT PHARMACEUTICALS INC., a corporation organized under the laws of British Columbia with an address c/o 1275 West 6^th Street, Suite 300, Vancouver, BC V6C 1A6 (hereinafter “PIVOT”) and SolMic GmbH, a corporation organized under the laws of Germany with an address Merowingerplatz 1a, 40225 Dusseldorf, Germany, (hereinafter “SOLMIC”). PIVOT and SOLMIC herein may be referred to individually as “Party” or together as “Parties.”

WITNESSETH:

WHEREAS, PIVOT has access to unique active pharmaceutical ingredients containing cannabinoids which PIVOT seeks to be formulated by SOLMIC using SOLMIC’s Intellectual Property Rights (as defined below) such as SOLMIC’s proprietary formulation technologies;

WHEREAS, PIVOT will retain SOLMIC to perform certain development activities on its proprietary active pharmaceutical ingredient, including preclinical and clinical research activities leading to a unique product. The results of the development process could be either a nutraceutical, a cosmeceutical or pharmaceutical product.

WHEREAS, PIVOT has the required resources and know-how, and wishes to launch, import, distribute, promote, market and sell the products in the Territory (as defined below), the whole as hereinafter specified.

WHEREAS, SOLMIC owns certain proprietary formulation technologies and wishes to provide certain services to PIVOT to develop products on basis of PIVOT’s unique active pharmaceutical ingredient.

WHEREAS, SOLMIC wishes, subject to its successful development of a nutraceutical, cosmeceutical or pharmaceutical product for PIVOT, to grant to PIVOT an exclusive license under its Intellectual Property Rights to commercialize such product in the Territory for consumption by humans, pursuant to the terms and conditions set forth in this Agreement;

WHEREAS, SOLMIC has the know-how and resources to conduct the services as defined in specific Work Orders for PIVOT.

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NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED IN THIS AGREEMENT AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

1.	DEFINITIONS
	For the purposes of this Agreement, the following terms shall have the meanings set forth below:
1.1	“Affiliates.” The term “Affiliate” or “Affiliates” shall mean, with respect to a Party, any Person that directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Party, but only for so long as the relationship exists. For these purposes, “control” shall mean (a) ownership of (aa) shares of stock having at least 50% of the voting power entitled to vote for the election of directors in the case of a corporation or other entity issuing shares of stock or (bb) at least a 50% voting interest in any entity other than a corporation or other entity issuing shares of stock or (b) the power to direct the management and policies of such corporation or other entity, whether through ownership of voting securities or by contract relating to voting rights or corporate governance.
1.2	“Agreement.” The term “Agreement” shall mean this Collaboration and License Agreement and the exhibits hereto, as the same may be amended from time to time.
1.3	“Applicable Laws.” The term “Applicable Laws” shall mean all applicable laws, ordinances, rules, regulations, writs, judgments, decrees, injunctions (whether preliminary or final), orders and other requirements of any kind whatsoever of any Governmental or Regulatory Authority having jurisdiction in or in respect of a given country in the Territory.
1.4	“Background IP”. The term “Background IP” shall have the meaning set forth in Section 4.1 of the Agreement.
1.5	“Commercialize” and “Commercialization.” The terms “Commercialize” and “Commercialization” shall mean the activities undertaken to launch, market, promote, sell, offer to sell, have sold, use, import, have imported and distribute the Products in the Territory after the Effective Date, including activities to obtain Regulatory Approval.
1.6	“Commercially Reasonable Efforts.” The term “Commercially Reasonable Efforts” shall mean the carrying out of obligations in a diligent, good faith and sustained manner using such efforts and employing such resources as would normally be exerted or employed by a similarly situated (with respect to size and assets) and prudent biotechnology, pharmaceutical or, as applicable, natural health company in the normal course of the business to accomplish an important objective for a product of similar strategic importance and at a similar stage of its product life, but shall not include any efforts that could, if carried out, have a significant negative impact such company’s relevant business unit. If either Party grants a sublicense or assigns its rights or obligations under this Agreement to an Affiliate or Third Party as permitted under this Agreement, then the Commercially Reasonable Efforts decisive for such sublicensee, assignee or designee shall be either (a) the same Commercially Reasonable Efforts as applicable to the assigning or sublicensing Party pursuant to this Section 1.6 or (b) such efforts and resources as would normally be exerted or employed by such sublicensee, assignee or designee, whichever (a) or (b) results in a higher level or broader scope of Commercially Reasonable Efforts for the benefit of the other Party.

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1.7	“Confidential Information.” The term “Confidential Information” shall mean information received (whether disclosed in writing, electronically, orally or by observation) by one Party (the “Receiving Party”) from the other Party (the “Disclosing Party”) that the Receiving Party is informed is confidential or has a reasonable basis to believe is confidential to the Disclosing Party or is treated by the Disclosing Party as confidential, unless such information:
(a)	was known to the Receiving Party or its Affiliates prior to receipt from the Disclosing Party, as documented in written records or publications, that lawfully are in the possession of the Receiving Party or its Affiliates;
(b)	was lawfully available to the trade or to the public prior to receipt from the Disclosing Party;
(c)	becomes lawfully available to the trade or to the public after receipt from the Disclosing Party through no act on the part of the Receiving Party or its Affiliates;
(d)	is obtained by the Receiving Party or its Affiliates from any Third Party without an obligation of confidentiality; or
(e)	is independently developed by an employee, contractor or agent of the Receiving Party or its Affiliates, subsequent to and without access or reference to the information received from the Disclosing Party, as demonstrated by contemporaneous written records.
1.8	“Cost of Goods Sold.” For so long as SOLMIC manufactures the Products, the term “Cost of Goods Sold” shall mean, the actual direct cost of SOLMIC for the procurement, production, testing, manufacture, packaging, labeling and certification of the Products.
1.9	“Damages.” The term “Damages” shall mean all costs, losses, claims, demands for payment, threatened government enforcement actions, liabilities, fines, penalties, expenses, court costs, and reasonable fees and disbursements of counsel, consultants and expert witnesses incurred by a Party hereto or its Affiliates (including interest which may be imposed in connection therewith).
1.10	“Deliverables”. The term “Deliverables” shall mean (a) each physical product resulting from the performance of the Services and (b) each record, data and dossier relating to the performance of the Services, which, in each case (a) and (b), is specifically requested to be supplied by SOLMIC to PIVOT pursuant to the Parties’ agreement outlined in a Work Order.
1.11	“Disclosing Party”. The term “Disclosing Party” shall have the meaning set forth in Section 1.7.
1.12	“Dispute.” The term “Dispute” shall have the meaning set forth in Section 13.2
1.13	“Dispute Resolution Process.” The term “Dispute Resolution Process” shall mean the mechanism set forth in Article 13 hereof for resolving Disputes among the Parties.
1.14	“Dollars” and “$” and “USD” shall mean U.S. Dollars and any monetary figures expressed in this Agreement shall mean U.S. Dollars.
1.15	“Effective Date.” The term “Effective Date” shall have the meaning set forth in the first paragraph of this Agreement.

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1.16	“Governmental or Regulatory Authority.” The term “Governmental or Regulatory Authority” shall mean any federal, provincial or local governmental or regulatory authority, agency, commission, court or instrumentality located within the Territory and having jurisdiction over a given country in it, or their international equivalents.
1.17	“IND”. The term “IND” shall mean an investigational new drug application submitted to the competent Regulatory Authorities for Regulatory Approval to commence a clinical trial in a given jurisdiction.
1.18	“Initial Term”. The term “Initial Term” shall have the meaning as set forth in Section 14.1.
1.19	“Intellectual Property Rights.” The term “Intellectual Property Rights” shall mean all rights in and to ideas, inventions, discoveries, data, databases, documentation, reports, materials, writings, designs, computer software, processes, principles, methods, techniques and other information in whatever form, including Know-How, Patents, utility patents, copyrights and any rights or property similar to any of the foregoing in any part of the world, whether or not any of them are registered or not.
1.20	“Know‑How.” The term “Know-How” shall mean all tangible and intangible (a) scientific or technical information, results and data of any type whatsoever, including discoveries, inventions, trade secrets, devices, databases, practices, protocols, regulatory filings, methods, processes (including manufacturing processes, specification and techniques), techniques, concepts, ideas, specifications, formulations, formulae, data (including pharmacological, biological, chemical, toxicological, clinical and analytical information, quality control, trial and stability data), case reports forms, medical records, data analyses, reports, studies and procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), summaries and information contained in submissions to and information from ethical committees, or Governmental or Regulatory Authorities, and manufacturing process and development information, results and data, whether or not patentable; and (b) compositions of matter, assays, animal models and physical, biological or chemical material, including drug substance samples, intermediates of drug substance samples, drug product samples and intermediates of drug product samples, in each case ((a) and (b)) that is not generally known to the public.
1.21	“Material”. The term “Material” shall have the meaning set forth in Section 2.8.
1.22	“NDA”. The term “NDA” shall mean a new drug application for which Regulatory Approval by the competent Regulatory Authorities is required for the marketing and sale of a pharmaceutical product in a given jurisdiction.
1.23	“NH Product”. The term “NH Product” shall mean nutraceutical or cosmeceutical product comprising or based upon the PIVOT API, whether or not as the sole active ingredient, in any dosage form or formulation developed by SOLMIC using SOLMIC’s Intellectual Property, whereas the classification as “nutraceutical” or “cosmeceutical” shall be made in accordance with the Applicable Law of any given country or jurisdiction in which such product is Commercialized.

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1.24	“Net Sales”. The term “Net Sales” shall mean the gross amount (excluding customary freight, shipping insurance and other transportation expenses) invoiced by PIVOT or its Affiliates for the sale of Products to any Third Party, less the following amounts: (a) normal and customary trade, cash and quantity discounts actually given, rebates, and (b) credits, price adjustments or allowances for damaged products, returns or rejections of products; and (c) sales, value-added, excise taxes, tariffs and duties, and other taxes and government charges directly related to the sale or other disposition, to the extent that such items are included in the gross invoice price and actually borne by PIVOT or its Affiliates without reimbursement from any Third Party.
1.25	“Order.” The term “Order” shall mean any writ, judgment, decree, injunction, or similar order of any Governmental or Regulatory Authority (in each such case, whether preliminary or final).
1.26	“Patents.” The term “Patents” shall mean: (a) all national, regional and international patents and patent applications, including provisional patent applications; (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals and continued prosecution applications; (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention; and (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b), and (c)).
1.27	“Person.” The term “Person” shall mean any natural person, corporation, general partnership, limited partnership, proprietorship, entity, other business organization, trust, union, association or Governmental or Regulatory Authority.
1.28	“Pharma Product”. The term “Pharma Product” shall mean any pharmaceutical product comprising or based upon the PIVOT API, whether or not as the sole active ingredient, in any dosage form or formulation developed by SOLMIC using SOLMIC’s Intellectual Property, whereas the classification as “pharmaceutical” shall be made in accordance with the Applicable Law of any given country or jurisdiction in which such product is Commercialized.
1.29	“PIVOT API”. The term “PIVOT API” shall mean a certain preparation of cannabinoids as active ingredient that is proprietary to PIVOT and that is described in Exhibit 1.29.
1.30	“PIVOT Project IP”. The term “PIVOT Project IP” shall have the meaning as set forth in Section 4.3.
1.31	“Product.” The term “Product” shall mean a NH Product or a Pharma Product.
1.32	“Regulatory Approval.” The term “Regulatory Approval” shall mean the approval required to lawfully import, store, market, promote, price, sell, distribute and use the Product in a given country in the Territory from any and all applicable Governmental or Regulatory Authority having jurisdiction in such country, including approval of the Product’s labeling and packaging inserts.

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1.33	“Renewal Period.” The term “Renewal Period” shall have the meaning set forth in Section 14.1 of this Agreement.
1.34	“Representative.” The term “Representative” of a Party shall mean a Party’s or its Affiliates’ agents, contractors, employees, officers, directors, consultants, and advisors.
1.35	“Results”. The term “Results” shall have the meaning as set forth in Section 4.5.
1.36	“Royalty Report”. The term “Royalty Report” shall have the meaning as set forth in Section 7.5.
1.37	“Services”. The term “Services” shall mean such research, (pre-clinical or clinical) development, support or other services as proposed by SOLMIC and agreed to by PIVOT in a specific Work Order.
1.38	“SOLMIC Project IP”. The term “SOLMIC Project IP” shall have the meaning as set forth in Section 4.2.
1.39	“Specifications”. The term “Specifications” shall mean the documentation, protocols and other clear written instructions proposed by SOLMIC and accepted by PIVOT, either within a Work Order or as otherwise agreed by the Parties.
1.40	“Term.” The term “Term” shall have the meaning set forth in Section 14.1 of this Agreement.
1.41	“Territory.” The term “Territory” shall mean worldwide (all countries in the world).
1.42	“Third Party” or “Third Parties.” The term “Third Party” or “Third Parties” shall mean any entity or person that is neither a Party to this Agreement nor an Affiliate of a Party to this Agreement.
1.43	“Work Order.” The term “Work Order” shall mean the Parties’ agreement on specific Services and Deliverables based on a proposal of SOLMIC in accordance with the template attached as Exhibit 1.43 to this Agreement, whereas each Work Order shall define amongst other things, and only to the extent applicable, (a) the scope and nature of Services (including the applicable conditions, e.g. cGMP, research laboratory or non-cGMP conditions), (b) a description of any Deliverables, (c) the quantity and quality of Materials required for the Services, (d) a research plan or, as applicable, development plan, including methods and timelines in which the Services shall be performed, (e) Specifications, (f) budget for expenses (including costs for consumables) and (g) fees and payment schedule.
2.	RESEARCH AND DEVELOPMENT COLLABORATION
2.1	Work Order. The precise Services to be performed by SOLMIC shall be mutually agreed upon by the Parties and set forth in one or more Work Orders. Each Work Order shall be signed by an authorized representative of each Party and shall include detailed information concerning a given project, including a description of the specific Services to be provided, project milestones and target completion dates, a detailed budget, and a schedule of payments. Upon PIVOT’s acceptance of a Work Order proposed by SOLMIC, and pursuant to the terms and conditions of this Agreement, SOLMIC shall perform the Services for PIVOT.

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2.2	Performance. SOLMIC shall undertake Commercially Reasonable Efforts (i) to provide PIVOT with Services in accordance with the Specifications, timelines and conditions agreed in the Work Order and (ii) to adhere to professional applicable quality control/quality assurance and good practice standards as reflected in SOLMIC’s standard operating procedures and (iii) to comply with all German laws and regulations applicable to the relevant scope of Services. The Parties acknowledge and agree that SOLMIC may provide Services directly or through an Affiliate. Start dates and projected timelines for Deliverables and Services (as set forth in the Work Order) are dependent upon SOLMIC’s availability and timely delivery of any Material by PIVOT according to Section 2.8. Orders are scheduled on a first-come, first-served basis, however, particular project requirements may require adjustments and shall be accommodated accordingly in SOLMIC’s sole reasonable judgment.
2.3	Nature of Services. To the extent that the Services performed by SOLMIC under this Agreement are of a research and development nature, those parts of Services are strictly in the nature of a service contract (Dienstvertrag) not a product delivery contract (Werkvertrag) according to the German civil law. PIVOT acknowledges and accepts that the development activities included in the Services are dependent upon living systems and that they are experimental in nature. Accordingly, the Parties agree that the timelines and anticipated results expected by the Parties as described in a Work Order are estimated only and may be subject to further adaption and amendment. Further, provided that SOLMIC has complied with its obligations pursuant to Section 2.2, SOLMIC shall not be in breach for the failure to achieve any target results, milestones or timelines, or for not completing the Services.
2.4	Facility, Employees. SOLMIC shall maintain all permits under German law that are required for SOLMIC to provide the Services during the Term. Subject to other terms and conditions of this Agreement, SOLMIC shall maintain sufficient resources to provide the Services, but it shall not be obligated to maintain the employment of any specific employee performing the Services. To the best of its knowledge, none of SOLMIC’s employees has been debarred by the FDA under Section 306 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §335a(a) or (b), or by any comparable European authority under similar Applicable Law, and SOLMIC shall not knowingly use in any capacity in connection with this Agreement the services of any person debarred by the FDA or by any comparable European authority.
2.5	Outsourcing. SOLMIC shall be entitled to outsource all or parts of its activities under any Work Order to Third Parties, subject to the Third Parties’ obligation to comply with the provisions of this Agreement regarding the allocation of intellectual property rights and confidentiality obligations. Besides such subcontracting, if PIVOT requests that SOLMIC enters into or arranges agreements with Third Parties to perform certain parts of the Services, then such Third Parties shall be independent contractors and shall not be considered employees, agents, or subcontractors of SOLMIC. PIVOT shall pay SOLMIC for all costs incurred by SOLMIC in connection with the retention of such Third Parties.
2.6	Reporting, Records. SOLMIC shall provide PIVOT with regular updates on the progress of the Services by teleconference, email, and telephone communication. SOLMIC shall create and maintain such records as either specified in the Work Order or as necessary to comply with all applicable German laws.

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2.7	Exclusivity regarding Services.
(a)	SOLMIC shall provide its Services to PIVOT under this Agreement on a non-exclusive basis with view to services directed to the development of nutraceutical, cosmeceutical or pharmaceutical products in general, in particular with view to services related to formulation of active (if applicable, pharmaceutical) ingredients. However, SOLMIC shall provide its Services to PIVOT on an exclusive basis with view to the development of Products on basis of the PIVOT API. Accordingly, SOLMIC is entitled to assume other, even similar, tasks and may enter into other business relationships with Third Parties, including competitors of PIVOT, provided always that such other assignments shall not relate to development of Products on basis of the PIVOT API, but solely to active ingredients other than the PIVOT API (whether or not such consist of or contain cannabinoids) or other products.
(b)	PIVOT shall assign the Services directed to the development of Products on basis of the PIVOT API solely to SOLMIC on an exclusive basis. Accordingly, during the Term, PIVOT shall not assign any Third Party with the development of Products on basis of the PIVOT API in the Territory.
2.8	Material. To enable SOLMIC to start and continue the Services in accordance with the timelines of the Work Order, PIVOT shall provide to SOLMIC in due time as agreed in a Work Order (or if no timeline is agreed therein, promptly upon SOLMIC’s confirmation of a Work Order) the documents, materials and information necessary for performance of the Services in a form and quantity agreed in the Work Order (“Material”), including, for example, the PIVOT API. Material shall be provided by PIVOT free of charge or, if SOLMIC acquires Material on behalf of PIVOT pursuant to the Parties’ agreement in a Work Order, PIVOT shall reimburse SOLMIC for Material purchased by SOLMIC. PIVOT is solely responsible for the suitability and quality of any Material, independent of whether such Material was provided by it to SOLMIC or whether such Material was acquired by SOLMIC on behalf of PIVOT. All Material shall be delivered DDP (Incoterms, 2010) SOLMIC’s designated facility upon SOLMIC’s prior confirmation of the delivery date. PIVOT represents and warrants that none of the Material is of a “dangerous or hazardous nature” or contains substances of that nature and that Material shall be in conformity with the Specifications for such Material agreed in the Work Order. PIVOT shall notify SOLMIC of Material of a dangerous or hazardous nature and SOLMIC shall have the right to refuse to provide the Services associated therewith. Any additional costs resulting from the handling of dangerous or hazardous Material shall be borne by PIVOT. SOLMIC may, to a reasonable extent, request additional quantities of Material during the performance of the Services.
3.	DELIVERABLES
3.1	Time, Place. Unless otherwise specified in the Work Order, Deliverables shall be delivered EXW (Incoterms, 2010) SOLMIC’s facility to PIVOT within ten (10) business days of the due dates outlined in the Work Order. Title and risk of loss and damage of any Deliverable shall pass to PIVOT accordingly upon PIVOT’s receipt of a delivery notification of SOLMIC. All Deliverables shall be appropriately packaged by SOLMIC, at PIVOT’s expense, for safe shipment, and, if applicable for a given Deliverable and specified in the Work Order, shall be accompanied by a Certificate of Analysis.

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3.2	Delays. SOLMIC shall not be in delay, nor shall be liable to PIVOT nor shall be deemed to have breached this Agreement for errors, delays or other consequences arising from PIVOT’s failure to provide necessary Material as agreed or in a timely manner. Likewise, SOLMIC shall not be liable to PIVOT, if PIVOT fails to otherwise reasonably cooperate as required by SOLMIC to perform its obligations, and any such failure by PIVOT shall automatically extend any timelines by a time period that reasonably takes into account such failure in providing Material or cooperation. If PIVOT delays or suspends certain Services under this Agreement, SOLMIC shall make all reasonable efforts to re-allocate such personnel and mitigate costs and expenses incurred as a result of such delay or suspension; however PIVOT shall be responsible for all reasonable costs and expenses that SOLMIC is not able to mitigate.
3.3	Evaluation, Acceptance and Rejection of Deliverables.
(a)	PIVOT may reject Deliverables, if (i) a Deliverable fails to comply with one or more of the Specifications or (ii), to the extent applicable for a Deliverable pursuant to the Work Order, the Deliverable was not manufactured in compliance with cGMP. PIVOT shall promptly upon receipt of a delivery notification of SOLMIC duly evaluate the Deliverables. If PIVOT does not disapprove a Deliverable in writing and detailing the reason for disapproval within ten (10) business days after receipt of a delivery notification of SOLMIC, the Deliverable shall be deemed as approved.
(b)	If PIVOT rejects a Deliverable in due time and form, the Parties shall cooperate in good faith to determine whether a rejection of Deliverables is appropriate. If the Parties disagree, a sample of the rejected Deliverable and a sample of a duplicate retained by SOLMIC shall be submitted to an independent, qualified third-party expert that is mutually acceptable and selected by SOLMIC and PIVOT promptly in good faith. Such expert shall determine whether the rejected Deliverable met the Specifications or, if applicable, whether the rejected Deliverable was manufactured in compliance with cGMP, and such expert’s determinations shall be final and binding upon the Parties. The Party against whom the expert rules shall bear all costs of the expert’s activities.
(c)	If a Deliverable, regardless of whether it conforms to the Specifications or not, (i) was agreed to be manufactured in compliance with cGMP pursuant to the Work Order and (ii) was not manufactured according to cGMP and (iii) as a result thereof is unsuitable for its intended purpose, then SOLMIC shall, at its sole discretion, either (aa) refund the service fees and costs for Material used for the relevant Deliverable to PIVOT or (bb) rework, at SOLMIC cost and expense, the Deliverable in such a way that the Deliverable can be deemed to have been manufactured according to cGMP.
(d)	If a Deliverable fails to comply with one or more Specifications due to reasons other than a willful or gross negligent breach of SOLMIC diligence obligations, PIVOT may at its sole discretion request from SOLMIC either (i) to undertake jointly with PIVOT an investigation of the cause of such failure, or (ii) to implement an optimization or correction of the Services and to deliver a new Deliverable at the sole cost and expense of PIVOT or (iii) to rework, at PIVOTs cost and expense, the Deliverable in such a way that the Deliverable can be deemed to be in compliance with the Specifications.

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(e)	If a Deliverable fails to comply with one or more Specifications due to a willful or gross negligent breach of SOLMIC diligence obligations, PIVOT may at its sole discretion request from SOLMIC either (aa) to refund the service fees and costs for Material used for the relevant Deliverable to PIVOT or (bb) to cure its material breach and to deliver a new Deliverable at the sole cost and expense of SOLMIC or (cc) to rework, at SOLMIC cost and expense, the Deliverable in such a way that the Deliverable can be deemed to be in compliance with the Specifications.
4.	INTELLECTUAL PROPERTY, LICENSES
4.1	Background IP. Each Party shall own and retain all right, title and interest in, to and under (a) any and all Intellectual Property Rights in existence and owned or controlled by such Party as of the Effective Date and (b) any and all Intellectual Property Rights invented, conceived, reduced to practice or otherwise developed by, for or on behalf of such Party after the Effective Date outside of the scope of this Agreement (in each case, “Background IP”).
4.2	SOLMIC Project IP. All right, title and interest in, to and under any and all Intellectual Property Rights that (a) are invented, conceived, reduced to practice or otherwise developed in the course of performance of this Agreement, whether solely by or on behalf of each of the Parties or jointly by or on behalf of both Parties, and that (b) either (i) relate to the use of the production facilities or of equipment, procedures, Know-How or other proprietary information of SOLMIC or (ii) are invented, conceived, reduced to practice or otherwise developed on basis of SOLMIC’s Confidential Information or (iii) constitute improvements of SOLMIC’s Background IP (“SOLMIC Project IP”), shall be owned and controlled by SOLMIC.
4.3	PIVOT Project IP. All right, title and interest in, to and under any and all Intellectual Property Rights that (a) are invented, conceived, reduced to practice or otherwise developed in the course of performance of this Agreement, whether solely by or on behalf of each of the Parties or jointly by or on behalf of both Parties, and that (b) do not constitute SOLMIC Project IP (“PIVOT Project IP”), shall be owned and controlled by PIVOT.
4.4	Disclosure, Assignments. Each Party shall promptly and fully disclose in writing to the other Party any and all SOLMIC Project IP (if PIVOT is the disclosing Party) or PIVOT Project IP (if SOLMIC is the disclosing Party), which are conceived, reduced to practice or otherwise developed by or on behalf of such Party, independent of whether or not such SOLMIC Project IP, or, as the case may be, PIVOT Project IP is protectable under any applicable intellectual property laws. Subject to due fulfillment of PIVOT’s payment obligations under Sections 7.1 and 7.2 (with regard to development milestone payments only those that are due and payable upon completion of a given Work Order), SOLMIC agrees to assign, and to cause its employees or subcontractors to assign, and herewith assigns to PIVOT all of SOLMIC’s right, title and interest in and to all PIVOT Project IP. PIVOT agrees to assign, and to cause its employees or subcontractors to assign, and herewith assigns to SOLMIC all of PIVOT’s right, title and interest in and to all SOLMIC Project IP. Each Party further agrees to execute any and all further instruments, forms of assignment or other documents, and take such further actions, as the other Party may reasonably request, in order to transfer all of the other Party’s Intellectual Property Rights in SOLMIC Project IP, or, as the case may be, PIVOT Project IP to it in accordance with this Section 4.4.

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4.5	Results. All tangible (written or electronic) results, records, reports, forms, dossiers, correspondence or other documents (including regulatory material and regulatory dossiers) resulting from the performance of the Services and specified by the Parties as Deliverable under any Work Order (“Results”) shall be owned and controlled by PIVOT. Subject to due fulfillment of PIVOT’s payment obligations under Sections 7.1 and 7.2 (with regard to development milestone payments only those that are due and payable upon completion of a given Work Order), SOLMIC agrees to assign, and to cause its employees or subcontractors to assign, and herewith assigns to PIVOT all of SOLMIC’s right, title and interest in and to all Results.
4.6	License for Services. PIVOT hereby grants to SOLMIC a worldwide, royalty-free, non-transferable, revocable, non-exclusive license, with the right to sub-license, and a right to use, to PIVOT’s Intellectual Property Rights (including PIVOT’s Background IP and PIVOT Project IP), but solely to the extent such license is necessary to enable SOLMIC or its subcontractors to perform the Services.
4.7	License for Commercialization. Subject to the condition precedent of a successful development of at least one Product by SOLMIC, and subject to due fulfillment of PIVOT’s payment obligations under Sections 7.1 and 7.2, SOLMIC shall grant to PIVOT a worldwide, royalty-bearing and milestone-bearing, non-transferrable, exclusive license with right to sub-license under SOLMIC’s Intellectual Property Rights (including SOLMIC’s Background IP and SOLMIC Project IP), but solely to the extent such license is necessary to enable PIVOT to Commercialize the Product(s) in the Territory. Except as expressly set forth therein, SOLMIC grants no other right or license under, and reserves all right, title and interest in and to SOLMIC’s Intellectual Property Rights. Nothing herein shall be construed to grant PIVOT the right to use SOLMIC’s Intellectual Property Rights (a) for any active (if applicable, pharmaceutical) ingredient, compound or product other than the Product or (b) for any use of the Product other than for Commercialization.
5.	COMMERCIALIZATION DILIGENCE, REGULATORY MATTERS
5.1	Commercialization Efforts. PIVOT shall have the sole right and responsibility for the Commercialization of Products in the Territory at its own cost and expense. Subject to the condition precedent of a successful development of a Pharma Product by SOLMIC, PIVOT shall use Commercially Reasonable Efforts to Commercialize such Pharma Product in the Territory. Subject to the condition precedent of a successful development of a NH Product by SOLMIC, PIVOT shall use Commercially Reasonable Efforts to Commercialize such NH Product in the Territory.
5.2	Pricing by PIVOT for Resale. Subject to Applicable Laws and examination by any Governmental or Regulatory Authority, the commercial selling prices of the Products and the other terms of any sale of the NH Products or Pharma Products in the Territory shall be determined by PIVOT.

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5.3	Cooperation. SOLMIC shall provide consultation and advice to PIVOT with regards to scientific and technical issues regarding the Pharma Products and NH Products. Such consultation or participation shall not exceed six (6) hours per month and be paid by PIVOT upon invoicing by SOLMIC. PIVOT shall reimburse SOLMIC for all other reasonable expenses incurred by SOLMIC or any such other personnel in relation to the foregoing. For the avoidance of doubt, SOLMIC’s obligation to support PIVOT is limited to the provision of SOLMIC’s Know-How and data, documentation, information and reports in the form, format and quality as available to SOLMIC, unless otherwise agreed between the Parties; in no event shall SOLMIC be obliged to translate, summarize, re-arrange, re-format, compile, correct, enhance, evaluate, interpret or otherwise undertake secondary review of any material or development data to be provided to PIVOT pursuant to this Agreement, unless any such task is explicitly assigned to SOLMIC under a Work Order.
5.4	Regulatory Matters.
(a)	PIVOT shall have the sole right and responsibility with respect to regulatory matters related to Commercialization of a Product in the Territory (including adverse events, pharmacovigilance, recalls). PIVOT shall undertake Commercially Reasonable Efforts to obtain and maintain all applicable Regulatory Approval(s) for Commercialization of the Products in the Territory with all applicable Governmental or Regulatory Authorities. On request and on the sole cost and expense of PIVOT, SOLMIC shall provide reasonable support to PIVOT in regulatory matters. PIVOT shall reimburse to SOLMIC all out of pocket expenses of SOLMIC related to its support of PIVOT in obtaining Regulatory Approvals. SOLMIC shall provide detailed Third Party invoices for reimbursement of these expenses.
(b)	The Parties agree that certain responsibilities with respect to regulatory matters related to development of a Pharma Product in the Territory may be allocated to SOLMIC subject to the Parties’ agreement on a respective Work Order (e.g. for regulatory matters related to clinical development of a Pharma Product).
5.5	Compliance with Laws. SOLMIC and PIVOT each will keep all records and reports required to be kept by it pursuant to Applicable Laws in accordance with any Governmental or Regulatory Authority and each will make its facilities available at reasonable times during regular business hours for inspection by representatives of governmental agencies. SOLMIC and PIVOT each will notify the other within twenty-four (24) hours of receipt of any notice or any other indication whatsoever of any Governmental or Regulatory Authority inspection, investigation or other inquiry, or other notice or communication of any type from a Governmental or Regulatory Authority, involving Commercialization in the Territory. PIVOT and SOLMIC will cooperate with each other during any such inspection, investigation or other inquiry including allowing, upon reasonable request, a Representative of the other Party to be present during any such inspection, investigation or other inquiry and providing copies of all relevant documents. PIVOT and SOLMIC will discuss any response to observations or notifications received in connection with any such inspection, investigation or other inquiry and each will give the other an opportunity to comment upon any proposed response before it is made. In the event of disagreement concerning the form or content of such response, PIVOT will be responsible for deciding the appropriate form and content of any response with respect to any of the cited activities.

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6.	MANUFACTURE AND SUPPLY
6.1	NH Products. The Parties agree and acknowledge that SOLMIC, in the event that the development of a NH Product is successful, shall be the sole and exclusive manufacturer and supplier of NH Products for PIVOT in the Territory. PIVOT acknowledges that SOLMIC may or may not be undertaking the manufacture of NH Products itself and that SOLMIC may, at its sole discretion, subcontract the manufacture of NH Products to certain Third Party service providers. Promptly upon completion of a successful development of a NH Product, the Parties shall in good faith negotiate and execute a separate manufacturing and supply agreement in which SOLMIC’s exclusive right to manufacture and supply NH Products to PIVOT and the Parties’ respective rights and obligations shall be specified in more detail.
6.2	Pharma Products. The Parties agree and acknowledge that SOLMIC shall have a right of first negotiation to become the sole and exclusive manufacturer and supplier of Pharma Products for PIVOT in the Territory, in the event that the development of a Pharma Product is successful, as follows:
(a)	If PIVOT decides to enter into negotiations on a manufacturing and supply agreement regarding Pharma Products with a Third Party, either before or upon completion of a successful development of a Pharma Product, PIVOT shall not enter into such negotiation or offer such agreement to any Third Party, but shall first deliver to SOLMIC written notice offering SOLMIC such agreement and right to negotiate (herein referred to as “Right of First Negotiation”).
(b)	SOLMIC shall respond to PIVOT within forty-five (45) days following its receipt of such notice to indicate its interest in exercising its Right of First Negotiation. For a period of up to sixty (60) days after PIVOT receives notice of SOLMIC’s intention to exercise its Right of First Negotiation, the Parties shall negotiate in good faith a reasonable agreement mutually acceptable to both Parties. In the event that SOLMIC fails to respond within forty-five (45) days, or affirmatively indicates that it is not interested in exercising its Right of First Negotiation, or if the Parties fail to reach a definitive agreement within the ninety (90) days mentioned above, PIVOT shall be free to start negotiations with a Third Party, provided, however that PIVOT shall not make any offer to a Third Party on material terms (such as financial terms, forecasts) more favorable than those previously offered to SOLMIC with respect to such opportunity without first offering such more favorable terms to SOLMIC.
(c)	In the event that PIVOT is in breach of its obligation to respect the Right of First Negotiation, SOLMIC shall have the right to increase the (yet unpaid) milestone and royalty payments payable to SOLMIC pursuant to Sections 7.2, 7.3 and 7.4 by ten percent (10%), provided however, that if PIVOT cures such breach, such reduction shall only continue until the date of such cure.
(d)	PIVOT acknowledges that SOLMIC may or may not be undertaking the manufacture of Pharma Products itself and that SOLMIC may, at its sole discretion, subcontract the manufacture of Pharma Products to certain Third Party service providers.

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7.	FINANCIALS
7.1	Service Fee. In consideration of the Services provided by SOLMIC pursuant to the Work Order, PIVOT shall pay SOLMIC the agreed service fees in accordance with the payment schedule agreed in the Work Order. Solmic will be the exclusive service provider for the formulation and clinical development.
7.2	Development Milestones. In consideration of the Services provided by SOLMIC pursuant to the Work Order, PIVOT shall pay SOLMIC the development milestone payments outlined in the table below in addition to the service fees pursuant to Section 7.1:

Milestone Event	Payment Amount
Regulatory Approval of a NH Product	USD 250,000
First approval of an IND for a Pharma Product	USD 1,000,000
Positive outcome of a Phase II clinical trial of a Pharma Product in the first indication	USD 1,000,000
Approval of a NDA for a Pharma Product	USD 2,000,000

7.3 Sales Milestone. In consideration of the Services provided by SOLMIC pursuant to the Work Order and in consideration of the license granted by SOLMIC to PIVOT pursuant to Section 4.7, PIVOT shall pay to SOLMIC the following sales milestone payment:

Milestone Event	Payment Amount
Aggregate Net Sales of one or more NH Product(s) in the Territory reach USD 5,000,000	USD 750,000

7.4	Royalties. In consideration of the Services provided by SOLMIC pursuant to the Work Order and in consideration of the license granted by SOLMIC to PIVOT pursuant to Section 4.7, PIVOT shall pay to SOLMIC royalties on aggregate Net Sales of Products in the Territory at a royalty rate of 5%. The royalty payment obligation shall commence, on a Product-by-Product and country-by-country basis, upon the first commercial sale of a given Product in a given country and shall continue to be payable, likewise on a Product-by-Product and country-by-country basis, fifteen (15) years after the first commercial sale of such Product in such country.
7.5	Reporting.
(a)	PIVOT shall inform SOLMIC about the occurrence of any development milestone event (unless such occurs under SOLMIC’s responsibility) or sales milestone event promptly.

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(b)	During the Term following the first commercial sale of a Product, PIVOT shall, within thirty (30) days after each calendar quarter, furnish to SOLMIC a detailed, written quarterly report showing: (a) the amount of Net Sales of the Products sold by PIVOT, its Affiliates and sublicensees during the reporting period; (b) the royalties due thereon; (c) the exchange rates used in determining the amount of USD; (d) the number of units and average selling price for the Products included in Net Sales for such calendar quarter, and (e) any other information reasonably requested by SOLMIC to assess the calculation of the royalty payments (“Royalty Report”). All sales in currencies other than USD shall be converted into USD calculated at the exchange rate published by European Central Bank on the last day of the calendar quarter. If no royalty is due for any royalty period hereunder, PIVOT shall so report.
7.6	Payment Terms, Taxes.
(a)	Due Dates. PIVOT shall pay any amounts due to SOLMIC under this Agreement, plus VAT thereon, if applicable, in USD by electronic transfer to the bank account identified on the invoice of SOLMIC and within thirty (30) days after PIVOT’s receipt of the invoice from SOLMIC.
(b)	Late Payments. Any amount owed by PIVOT to SOLMIC under this Agreement that is not paid on or before the date such payment is due shall bear interest from and including the respective due date to, but not including, the date of actual payment at an annual rate (but with interest accruing on a daily basis) of the respective twelve (12) month EURIBOR rate plus eight percent (8%).
(c)	Taxes. Except as provided below, each Party will pay all taxes imposed on its share of income arising directly or indirectly from the efforts of, or the receipt of any payment by, such Party under this Agreement in its relevant tax jurisdiction. PIVOT shall make all payments to be made by it under this Agreement without any tax deduction, unless a tax deduction is required by Applicable Law. If a tax deduction (e.g. withholding tax) is required by Applicable Law to be made by PIVOT, the amount of the payment due from PIVOT shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required (a tax gross-up).
7.7	Record Keeping, Audit Rights.
(a)	For the Term and at least for a term of five (5) years thereafter, PIVOT shall maintain complete and accurate books and records of account, in accordance with GAAP, of all transactions and other business activities under this Agreement, sufficient to confirm (i) the accuracy of all reports furnished by PIVOT to SOLMIC under this Agreement, in particular of the Royalty Reports; and (ii) all payments paid or payable by PIVOT to SOLMIC under this Agreement, in particular under this Article 7.
(b)	Upon reasonable prior notice, PIVOT shall permit an independent nationally recognized certified public accounting firm (subject to obligations of confidentiality to PIVOT), appointed by SOLMIC and reasonably acceptable to PIVOT, to inspect the applicable records of PIVOT to the extent relating to payments to SOLMIC (including to verify the Royalty Reports); provided however, that such inspection shall not occur more often than twice per Calendar Year (for the current and preceding Calendar Year), unless a material error is discovered as part of such inspection in which case SOLMIC shall have the right to conduct a more thorough inspection for such period. Notwithstanding anything to the contrary contained in this Agreement, neither such public accounting firm nor SOLMIC shall be entitled to review, and PIVOT shall not be required to provide, its tax returns or tax records or those of its Affiliates or sublicensees. Any inspection conducted under this Section shall be at the expense of SOLMIC, unless such inspection reveals any underpayment of the payments due hereunder for the audited period by at least five percent (5%), in which case the full costs of such inspection for such period shall be borne by PIVOT. Any underpayment shall be paid by PIVOT to SOLMIC within thirty (30) days of written notice with interest on the underpayment at the rate specified in Section 7.6(b) from the date such payment was originally due. Any overpayment shall be credited against future amounts due by PIVOT to SOLMIC.

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(c)	In the event of a dispute regarding the findings of the inspection of the applicable records of PIVOT, the Parties shall work in good faith to resolve the dispute. If the Parties are unable to resolve the dispute in good faith within thirty (30) days, the dispute shall be submitted for decision to a certified public accounting firm mutually selected by each Party’s certified public accountants or to such other Third Party as the Parties shall mutually agree. The decision of such expert shall be final and the costs of such decision as well as the initial audit shall be borne between the Parties in such manner as such expert shall determine. Not later than thirty (30) days after such decision and in accordance with such decision, PIVOT shall make any additional payments to SOLMIC. Any overpayment shall be credited against future amounts due by PIVOT to SOLMIC. For the avoidance of doubt: Any dispute subject to dispute resolution pursuant to this Section 7.7(c) shall not be subject to the terms and conditions of Section 16.7 or Article 13.
8.	CONFIDENTIALITY UNDERTAKING
8.1	Confidential Information. The Parties hereto agree that at all times during the Term of this Agreement and at all times following the termination of this Agreement, the Receiving Party will keep completely confidential, will not publish or otherwise disclose, and will not use directly or indirectly for any purpose whatsoever, other than as contemplated by this Agreement, any Confidential Information of the Disclosing Party, whether such Confidential Information was received by the Receiving Party prior to, on, or after the Effective Date. Notwithstanding anything to the contrary herein provided, neither Party will be under any non-disclosure or non-use obligation whatsoever with respect to its own Confidential Information.
8.2	Disclosure. Each Party may disclose the other Party’s Confidential Information to the extent that such disclosure is:
(a)	made in response to a valid Order or subpoena of a court of competent jurisdiction or other governmental body of a country or any political subdivision thereof of competent jurisdiction; provided, however, that the Receiving Party will first have given notice to the Disclosing Party of such Order or subpoena and have given the Disclosing Party a reasonable opportunity to quash such Order or subpoena and to obtain a protective order requiring that the Confidential Information and documents that are the subject of such Order or subpoena be held in confidence by such court or governmental body or, if disclosed, be used only for purposes for which the order or subpoena was issued; provided further, however, that if a disclosure Order or subpoena is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental Order or subpoena will be limited to that information which is legally required to be disclosed in such response to such court or governmental Order or subpoena; or

 

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(b)	otherwise permitted pursuant to Section 9.3.
8.3	Notification. The Receiving Party will notify the Disclosing Party immediately, and cooperate with the Disclosing Party, as the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any unauthorized use, disclosure, loss of the Disclosing Party’s Confidential Information or jeopardy of the confidentiality of the Disclosing Party’s Confidential Information.
8.4	Remedies. Each Party agrees that the unauthorized use or disclosure of any Confidential Information by the Receiving Party in violation of this Agreement or any other agreement forming a part of this transaction may cause severe and irreparable damage to the Disclosing Party. In the event of any violation of this Article 8, the Receiving Party agrees that the Disclosing Party will be authorized and entitled to pursue, from any court of competent jurisdiction, injunctive relief. The rights provided in the immediately preceding sentences will be cumulative and in addition to any other rights or remedies that may be available to Disclosing Party. Nothing in this Section 8.4 is intended, or should be construed, to limit a Party’s right to preliminary and permanent injunctive relief or any other remedy for a breach of any provision of this Agreement.
8.5	Ownership. Subject to the license and Commercialization rights granted hereunder, ownership of each Party’s proprietary information, including Confidential Information shall remain with the original owner.
9.	ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
9.1	Expenses. SOLMIC and PIVOT will each bear its own respective direct and indirect expenses incurred in connection with the negotiation and preparation of this Agreement and, except as set forth in this Agreement, the performance of the obligations contemplated hereby.
9.2	Reasonable Efforts. SOLMIC and PIVOT each agree to use its respective Commercially Reasonable Efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or proper to make effective the transactions contemplated by this Agreement.
9.3	Publicity. The Parties agree that PIVOT and SOLMIC will issue a publicity release or announcement related to the Agreement to be previously agreed upon by both Parties. Notwithstanding anything in this Section 9.3 to the contrary, each Party may make filings and disclosures that are required by Applicable Laws including filings and disclosures required by any applicable securities exchanges that discuss the subject matter of this Agreement or otherwise make reference to the other Party in any way whatsoever; provided, however, that such Party provides the other Party with no less than three (3) business days to review and comment on such filings pertaining to the transactions contemplated hereby, and such Party does not unreasonably reject the incorporation of such comments into such filings. Further, each Party shall be entitled to disclose this Agreement and the terms contained herein in communication with actual or potential investors, lenders, acquirers, merger partners, consultants, advisors, licensees, sublicensees and collaborators, but solely on a need to know basis and in each case solely under appropriate legally binding confidentiality provisions and prior information of the other party.

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9.4	Conflicting Rights. Neither Party will grant any right to any Third Party that would violate the terms and conditions of or conflict with the rights granted by such Party to the other Party pursuant to this Agreement.
9.5	Deemed Breach of Covenant. Neither Party will be deemed to be in breach of this Agreement to the extent such Party’s breach is the result of any fraud action or inaction on the part of the other Party.
10.	REPRESENTATIONS AND WARRANTIES OF SOLMIC
10.1	Organization and Standing. SOLMIC represents and warrants that it is a corporation duly organized and validly existing under the laws of Germany.
10.2	Power and Authority. SOLMIC represents and warrants that (i) SOLMIC has all requisite corporate power and authority to execute, deliver, and perform this Agreement and the other agreements and instruments to be executed and delivered pursuant to it and to consummate the transactions contemplated herein; and (ii) the execution, delivery and performance of this Agreement by SOLMIC does not, and the consummation of the transactions contemplated hereby will not, violate any provisions of SOLMIC’s organizational documents, bylaws, or any Applicable Law applicable to SOLMIC, or any agreement, mortgage, lease, instrument, Order, judgment, or decree to which SOLMIC is a party or by which SOLMIC is bound.
10.3	Corporate Action; Binding Effect. SOLMIC represents and warrants that (i) SOLMIC has duly and properly taken all action required by law, its organizational documents, or otherwise, to authorize the execution, delivery, and performance of this Agreement to be executed and delivered by it and the consummation of the transactions contemplated hereby; and (ii) this Agreement has been duly executed and delivered by SOLMIC and constitutes, and the other instruments contemplated hereby when duly executed and delivered by SOLMIC will constitute, legal, valid, and binding obligations of SOLMIC enforceable against it in accordance with its respective terms, except as enforcement may be affected by bankruptcy, insolvency, or other similar laws.
10.4	Governmental Approval. SOLMIC represents and warrants that no consent, approval, waiver, Order or authorization of, or registration, declaration or filing with, any Governmental or Regulatory Authority or any other Third Party is required in connection with the execution, delivery and performance of this Agreement.
11.	REPRESENTATIONS AND WARRANTIES OF PIVOT
11.1	Organization and Standing. PIVOT represents and warrants that it is a corporation duly organized, validly existing, and in good standing under the laws of British Columbia. PIVOT and its Affiliates are each duly qualified to conduct their respective businesses and are in good standing in the Territory wherein the nature of such business requires such qualification.

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11.2	Power and Authority. PIVOT represents and warrants that (i) PIVOT has all requisite corporate power and authority to execute, deliver, and perform this Agreement and the other agreements and instruments to be executed and delivered by it and to consummate the transactions contemplated herein; (ii) the execution, delivery, and performance of this Agreement by PIVOT does not, and the consummation of the transactions contemplated hereby will not, violate any provisions of PIVOT’s organizational documents, bylaws, any Applicable Law applicable to PIVOT, or any agreement, mortgage, lease, instrument, order, judgment, or decree to which PIVOT is a party or by which PIVOT is bound.
11.3	Corporate Action; Binding Effect. PIVOT represents and warrants that (i) PIVOT has duly and properly taken all action required by law, its organizational documents, or otherwise, to authorize the execution, delivery, and performance of this Agreement to be executed and delivered by it and the consummation of the transactions contemplated hereby; and (ii) this Agreement has been duly executed and delivered by PIVOT and constitutes legal, valid, and binding obligations of PIVOT enforceable against it in accordance with its respective terms, except as enforcement may be affected by bankruptcy, insolvency, or other similar laws.
11.4	Governmental Approval. PIVOT represents and warrants that no consent, approval, waiver, Order or authorization of, or registration, declaration or filing with, any Governmental or Regulatory Authority or any other Third Party is required in connection with the execution, delivery and performance of this Agreement.
11.5	Litigation. PIVOT represents and warrants that there are no pending or, to PIVOT’s knowledge as of the Effective Date, threatened judicial, administrative or arbitral actions or proceedings pending as of the date hereof against PIVOT or its Affiliates which, either individually or together with any other actions or proceedings, will have a material adverse effect on the ability of PIVOT to perform its obligations under this Agreement or any agreement or instrument contemplated hereby.
11.6	Regulatory Clearance. PIVOT represents and warrants that PIVOT and its Affiliates have not received or been subject to (i) any Governmental or Regulatory Authority notices of adverse findings indirectly or directly relating to any of its activities, including the commercialization of any product or the storage thereof; or (ii) any warning letters or other written correspondence from any Governmental or Regulatory Authority indirectly or directly relating to any of its activities, including the commercialization of any product or the storage thereof, in which such Governmental or Regulatory Authority asserted that the operations of PIVOT were not in compliance with Applicable Laws with respect to any products, facilities, labeling requirements or such other requirements applicable to it.
11.7	Title to API. PIVOT represents and warrants that PIVOT owns or controls the PIVOT API, free and clear of any encumbrances other than such established in the ordinary course of business, and will have the legal right and ability to (a) make the PIVOT API available to SOLMIC to enable SOLMIC to perform its obligations under this Agreement and (b) to Commercialize the Products in the Territory.
11.8	Know-How, Resources. PIVOT represents and warrants that it has the sufficient resources and the Know-How required to Commercialize the Product in the Territory.

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12.	INDEMNIFICATION
12.1	General Indemnification by SOLMIC. SOLMIC agrees to defend, indemnify and hold PIVOT its Affiliates, Representatives, and permitted assigns harmless from any and all Damages incurred by or rendered against PIVOT as a result of any Third Party claim or suit brought to the extent resulting from a breach by SOLMIC of a material representation, warranty or covenant as set forth in this Agreement, or SOLMIC’s negligence or willful misconduct, except for claims that are caused or aggravated in material part by PIVOT’s negligence, willful misconduct, or a breach of a material representation, warranty or covenant provided herein by PIVOT. PIVOT shall give prompt written notice of any such claim or suit, and SOLMIC shall undertake the defense thereof, at SOLMIC’s expense; provided, however, SOLMIC shall not settle, offer to settle, or admit liability for Damages without the prior written consent of PIVOT, which consent shall not be unreasonably withheld. PIVOT shall cooperate in such defense, to the extent requested by SOLMIC, at SOLMIC’s expense. PIVOT shall have the right to participate in such defense, at its own expense. In any claim made or suit brought for which PIVOT seeks indemnification under this Section 12.1, PIVOT shall not settle, offer to settle, or admit liability for Damages without the prior written consent of SOLMIC.
12.2	General Indemnification by PIVOT. PIVOT agrees to defend, indemnify and hold SOLMIC its Affiliates, Representatives, and permitted assigns harmless from any and all Damages incurred by or rendered against SOLMIC as a result of any Third Party claim or suit brought to the extent resulting from a breach by PIVOT of a material representation, warranty or covenant as set forth in this Agreement, or PIVOT’s negligence or willful misconduct, except for claims that are caused or aggravated in substantial part by SOLMIC’s negligence, willful misconduct, or a breach of a material representation, warranty or covenant provided herein by SOLMIC. SOLMIC shall give prompt written notice of any such claim or suit, and PIVOT shall undertake the defense thereof, at PIVOT’s expense; provided, however, PIVOT shall not settle, offer to settle, or admit liability for Damages without the prior written consent of SOLMIC. SOLMIC shall cooperate in such defense, to the extent reasonably requested by PIVOT, at PIVOT’s expense. SOLMIC shall have the right to participate in such defense, at its own expense. In any claim made or suit brought for which SOLMIC seeks indemnification under this Section 12.2, SOLMIC shall not settle, offer to settle, or admit liability for Damages without the prior written consent of PIVOT.
12.3	Mitigation. In the event of any occurrence which may result in either Party becoming liable under Sections 12.1or 12.2, the other Party shall use Commercially Reasonable Efforts to take such actions as may be reasonably necessary to mitigate the Damages payable by the indemnifying Party under such Sections, respectively, as the case may be.
12.4	Limited Liability. Neither Party to this Agreement shall be responsible to the other Party for any punitive, exemplary, consequential, incidental, indirect nor like Damages (including lost profits), nor for Damages resulting from the loss of goodwill or any other alleged loss. The intention of the Parties is that the indemnifying Party under Sections 12.1, 12.2, 12.3 shall only be responsible to the other Party for actual compensatory Damages sustained or incurred as a result of or with respect to the act giving rise to the indemnification.

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13.	DISPUTE RESOLUTION
13.1	The Parties agree to implement the steps as set forth in Article 13 (“Dispute Resolution Process”) prior to proceeding with the termination of this Agreement on basis of material breach pursuant to Section 14.2 (a) or, as applicable, Section 14.2 (b) unless both Parties, in writing, agree to waive their right to proceed with the Dispute Resolution Process in which case the Parties will be free to terminate under the conditions therein, it being understood that any dispute about the existence or cure of a breach shall be resolved in accordance with Section 16.7. It is not the intent of the Parties to utilize the Dispute Resolution Process for events other than the termination scenarios pursuant to Section 14.2(a) or, as applicable, Section 14.2 (b).
13.2	All disputes about the existence or cure of a breach that would entitle a Party to terminate the Agreement pursuant to Section 12.2 (a) or, as applicable, Section 12.2 (b) (each, a “Dispute”) will be referred in writing by the Party raising the Dispute to the person designated in Section 16.2 for attempted resolution by good faith negotiations. If the Dispute remains unresolved for more than thirty (30) business days after the notice of such Dispute, the Parties will submit the Dispute to the next step in the Dispute Resolution Process as set forth in Section 13.3.
13.3	If any Dispute is not resolved in accordance with Section 13.2, the Dispute will be referred in writing to SOLMIC’s Chief Executive Officer and PIVOT’s President and Chief Executive Officer for attempted resolution by good faith negotiations with the assistance of a neutral person appointed by the International Chamber of Commerce in Berlin administered under its ICC Rules of Arbitration. If they are unable to resolve any Dispute within fifteen (15) business days after the referral of such Dispute to them, the Parties will submit the Dispute to the next step in the Dispute Resolution Process as set forth in Section 13.4.
13.4	If any Dispute is not resolved in accordance with either Section 13.2 or 13.3, either of the Parties may submit the Dispute to arbitration by the International Chamber of Commerce in Berlin pursuant to its rules. If the Parties are unable to resolve such Dispute within ninety (90) days after the referral of the Dispute to arbitration, the Parties will no longer be bound by the Dispute Resolution Process (except with respect to the confidentiality of the mediation) with respect to such Dispute.
13.5	No Dispute under this Agreement will be the subject of formal judicial proceedings between SOLMIC and PIVOT before completion of the entire Dispute Resolution Process, unless waived by each of the Parties in writing, except for an action to seek injunctive relief to protect Confidential Information pursuant to this Agreement.
14.	TERM AND TERMINATION
14.1	Term. This Agreement shall become effective upon the Effective Date and shall remain in full force and effect for a term of three (3) years (the “Initial Term”). In addition, after the expiration of the Initial Term, this Agreement shall automatically be renewed annually for consecutive terms of one (1) year each (“Renewal Period”) unless otherwise terminated in accordance with this Agreement (“Initial Tem” and “Renewal Term” also referred to as “Term”). Each Work Order becomes effective after it has been fully executed by both Parties and returned to SOLMIC. Each Work Order expires upon completion of both Parties’ obligations thereunder. In the event that at the time of expiration of this Agreement there is an ongoing unfulfilled Work Order, this Agreement shall remain in full force as it relates to said Work Order and shall terminate immediately with the completion or termination of said Work Order.

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14.2	Termination. This Agreement and any Work Order may be terminated as follows:
(a)	Material Breach by PIVOT. In the event of a material breach by PIVOT of any provision in this Agreement, SOLMIC will provide written notice to PIVOT of such material breach. PIVOT shall have sixty (60) days from the date of the aforementioned notice to rectify the breach, or shall have commenced reasonable action to cure such breach to the satisfaction of SOLMIC, in its absolute discretion, in which event the Agreement shall continue as if the breach had not occurred. If the Parties dispute the existence of a breach or dispute whether such breach has been cured to the reasonable satisfaction of SOLMIC, the Parties shall commence the Dispute Resolution Process as set forth in Article 13.
(b)	Material Breach by SOLMIC. In the event of a material breach by SOLMIC of any provision in this Agreement, PIVOT will provide written notice to SOLMIC of such material breach. SOLMIC shall have sixty (60) days to rectify the breach, or shall have commenced reasonable action to cure such breach to the reasonable satisfaction of PIVOT, in which event the Agreement shall continue as if the breach had not occurred. If the Parties dispute the existence of a breach or dispute whether such breach has been cured to the reasonable satisfaction of PIVOT, the Parties shall commence the Dispute Resolution Process as set forth in Article13.
(c)	Mutual Consent. This Agreement and any Work Order may be terminated at any time by the mutual consent of the Parties in writing.
(d)	Completion of Term. Either Party may terminate this Agreement without cause with effect as of the end of the Initial Term of this Agreement or, as applicable, the end of any Renewal Period, upon providing at least ninety (90) days prior written notice prior to the end of the Initial Term or, as applicable, Renewal Period to the other Party.
(e)	Termination for Force Majeure. If the occurrence of an event of force majeure causes a Party to fail or delay the performance of its contractual obligations for a period of three (3) consecutive months or longer, the other Party may terminate this Agreement or any Work Order by written notice to the Party failing or delaying performance with immediate effect.
15.	RIGHTS AND OBLIGATIONS UPON TERMINATION
15.1	Effect of Termination. Upon termination of this Agreement the licenses granted by SOLMIC to PIVOT and by PIVOT to SOLMIC shall terminate. Each of the Parties shall be solely responsible for its own respective expenses and all the Disclosing Party’s Confidential Information shall be returned to the Disclosing Party or destroyed upon termination of this Agreement.
15.2	Accrued Rights. Termination of this Agreement shall be without prejudice to the rights and liabilities of the Parties accrued prior to termination under this Agreement.

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15.3	Services and Payments under Work Orders. Upon a termination of this Agreement or a Work Order, SOLMIC shall cease to perform its Services, unless continued Services are for the orderly close-out of Services or to comply with legal requirements. PIVOT shall pay SOLMIC for all Services performed in accordance with this Agreement and shall reimburse SOLMIC for all costs and expenses incurred as contemplated by this Agreement or as otherwise agreed to in writing by the Parties, including non-cancelable costs incurred before termination of this Agreement or the Work Order, if such are payable after the effective termination date. If payments due to SOLMIC under any Work Order are based on the reaching of certain milestones, then SOLMIC shall inform PIVOT of the percentage of completion of the milestone and PIVOT shall pay SOLMIC pro rata portion of such milestone payment based on such percentage. In addition, PIVOT shall pay SOLMIC for reasonable expenses incurred to complete activities related to termination and close-out of the Services, including fulfillment of any regulatory requirements.
15.4	Survival Provisions. The Parties agree that the following provisions will survive the Agreement; the definitions of Article 1 (to the extent such Definitions pertain to terms in surviving provisions), Sections 4.1 to 4.5, Article 6, Section 7.7, Articles 8, 12, 15 and 16.
16.	MISCELLANEOUS
16.1	Assignment. Neither Party may assign its rights, interests or obligations under this Agreement without having obtained the prior written consent of the other Party; provided, however, that either Party may assign its rights and obligations under this Agreement, without the prior written consent of the other Party, to an Affiliate or in connection with a merger, transfer, sale of all or substantially all of its assets. Such consent shall not be unreasonably withheld or delayed. Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve either Party of its responsibility for the performance of any obligation.
16.2	Notices. Unless otherwise stated in this Agreement as to the method of delivery, all notices or other communications required or permitted to be given hereunder will be in writing and will be deemed to have been duly given if delivered by hand, courier, email, facsimile or if mailed first class, postage prepaid, by registered or certified mail, return receipt requested (such notices will be deemed to have been given on the date delivered in the case of hand delivery or delivery by courier, on the date set forth in the confirmation sheet in the case of facsimile delivery, and on the fifth (5th) business day following the date of post mark in the case of delivery by mail) as follows:

If to SOLMIC:

SOLMIC GmbH

Merowingerplatz 1a

D-40225 Dusseldorf

Attn: Wolfgang Schoenfeld

Email: wolfgang.schoenfeld@solmic-research.de

Fax: +49211 3020 1377

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with a copy to:

Dechert LLP

Friedrich-Ebert-Anlage 35-37

60327 Frankfurt am Main

Germany

Attn: Dr. Rüdiger Herrmann

Email: ruediger.herrmann@dechert.com

Fax: +49 69 77061919

If to PIVOT:

Pivot Pharmaceuticals Inc.

#300 – 1275 West 6^th Avenue

Vancouver, BC V6H 1A6

Attn: Patrick Frankham, Chief Executive Officer

Email: pfrankahm@pivotpharma.com

	or in any case to such other address or addresses as hereafter will be furnished in a written notice as provided in this Section 16.2 by any Party hereto to the other Party.
16.3	Waiver. Any term or provision of this Agreement may be waived at any time by the Party entitled to the benefit thereof only by a written instrument executed by such Party. No delay on the part of SOLMIC or PIVOT in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of either SOLMIC or PIVOT of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor will any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.
16.4	Entire Agreement. This Agreement, each of its, exhibits, schedules and certificates, as each are executed by the Parties whether or not they have the same Effective Date, and all documents and certificates delivered in connection herewith and therewith constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements or understandings of the Parties relating thereto.
16.5	Amendment. This Agreement may be modified or amended only by written agreement of the Parties hereto signed by authorized representatives of the Parties. The same applies to an amendment or waiver of this written form requirement.
16.6	Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute a single instrument.
16.7	Governing Law, Jurisdictions. This Agreement will be governed and construed in accordance with the laws of Germany, excluding any choice of law rules that may direct the application of any other laws. The Parties hereby agree to the exclusive jurisdiction of the provincial and federal courts located in the city of Dusseldorf in relation to all disputes arising from the Agreement.

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16.8	Captions. All sections, titles or captions contained in this Agreement and in any exhibit, schedule or certificate referred to herein or annexed to this Agreement are for convenience only, will not be deemed a part of this Agreement and will not affect the meaning or interpretation of this Agreement.
16.9	No Third-Party Rights. No provision of this Agreement will be deemed or construed in any way to result in the creation of any rights or obligation in any Person not a Party to this Agreement except for the indemnified Persons indemnified pursuant to Section 12 which shall be entitled to enforce their rights against the respective indemnitor.
16.10	Construction. This Agreement will be deemed to have been drafted by both SOLMIC and PIVOT and will not be construed against either Party as the draftsperson hereof. Each of the Parties hereto confirms that it has respectively retained the services of independent legal counsels for the drafting and negotiation of this Agreement. Unless the context of this Agreement otherwise requires: (a) any definition of or reference to any agreement, instrument or other document refers to such agreement, instrument other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any Applicable Laws refers to such Applicable Laws as from time to time enacted, repealed or amended, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, refer to this Agreement in its entirety and not to any particular provision hereof, (d) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “but not limited to”, “without limitation” or words of similar import, (e) the word “or” is used in the inclusive sense (and/or), unless the phrase “either…or” implies the exclusive sense, and (f) the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders. Any reference in this Agreement to “royalty” or “royalties” (whether used in capitalized letters or not) shall include royalties and other recurring or deferred payments payable by a Party to the other Party for compensation or consideration of rights granted hereunder.
16.11	Exhibits and Schedules. Each exhibit and schedule attached to this Agreement hereto is incorporated herein by reference and made a part of this Agreement.
16.12	No Other Relationship. Nothing contained herein will be deemed to create any joint venture or partnership between the Parties hereto, and, except as is expressly set forth herein, neither Party will have any right by virtue of this Agreement to bind the other Party in any manner whatsoever.
16.13	Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective while this Agreement remains in effect, the legality, validity and enforceability of the remaining provisions will not be affected thereby and the invalid, illegal or unenforceable provision(s) shall be replaced by provision(s) that are acceptable to both parties, are valid, legal and enforceable, and come as close as possible to reflect accurately the intentions of the parties underlying the invalid, illegal or unenforceable provision(s).

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16.14

Force Majeure. Neither Party shall be responsible or liable to the other hereunder for the failure or delay in the performance of this Agreement due to any civil unrest, war, governmental action, fire, earthquake, hurricane, accident or other casualty, strike or labor disturbance, act of God or the public enemy, or any other contingency beyond the Party’s reasonable control. In the event of the applicability of this Section 16.14, the Party failing or delaying performance shall use Commercially Reasonable Efforts to eliminate, cure and overcome as promptly as possible any of such causes and resume the performance of its obligations. Upon the occurrence of an event of force majeure, the Party failing or delaying performance shall promptly notify the other Party in writing pursuant to the provisions of Section 16.2 herein, setting forth the nature of the occurrence, its expected duration, and how such Party’s performance is affected. The failing or delaying Party shall resume performance of its obligations hereunder as soon as practicable after the force majeure event ceases.

16.15

Language. The Parties hereto have requested that this Agreement be prepared in the English language.

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS OF THE DATE FIRST ABOVE WRITTEN.

SOLMIC GMBH
Per:	/s/ Wolfgang Schoenfeld
PIVOT PHARMACEUTICALS INC.
Per:	/s/ Patrick Frankham

EX-10.28

EXHIBIT 10.28

BINDING LETTER OF INTENT – TECHNOLOGY LICENSING AGREEMENT

DATE	November 7, 2017
PARTIES	Pivot Pharmaceuticals Inc. (“Pivot”) and Thrudermic LLC (“TDL”)
TECHNOLOGY	Thrudermic Nanotechnology Platform (“TNP”)
TERRITORY	Worldwide
FIELD	Pivot wishes to acquire worldwide rights for the development and commercialization of Thrudermic Nano Technology for all cannabinoids.
SCOPE	Exclusive license for research, development and commercialization of all cannabinoids or cannabinoid containing extracts.
TERM	Perpetual

ROYALTIES ON NET SALES	Five percent (5%) Royalties on Annual Net Sales. Net Sales will be the gross invoiced amounts received by Pivot (including its affiliates) and its licensees or distributors from the sales of the Products to third parties in any given period. Definition of “Net Sales” to be discussed in Definitive Agreement but will be be to GAAP standards.
FEES FOR R&D	Pivot will pay all costs of the R&D efforts performed for new product development as defined in the Licence Agreement and individual work orders.
MILESTONE PAYMENTS	NHP Products:

· US $250,000 upon approval of a Natural Health Product (NHP)

· US $500,000 payable after Pivot achieves USD $5M in Net Sales.

 

Pharmaceutical Products:

 

· US $500,000 payable upon first IND approval

· US $1,000,000 payable upon positive outcome of Phase II trial in first indication

· US $2,000,000 payable upon NDA approval

1

 

RIGHT OF FIRST REFUSAL	Pivot will have Right of First Refusal to purchase a 100% interest in this technology from Thrudermic for $1M USD within the first 12 months of this agreement being executed, payable in cash and/or in shares of Pivot Pharmaceuticals. Pivot will appoint either one of Joseph Borovsky or Leonid Lurya to the Company’s Scientific Advisory Board. Pivot and Thrudermic will jointly file a patent application for the use of Thrudermic dermal nanotechnology for the delivery of cannabinoids.
GOVERNING LAW	This letter of intent shall be governed by and construed in accordance with the laws of the Province of British Columbia, without regard to the conflict of law principles thereof. The Parties agree that any action arising out of this term sheet shall be settled by arbitration pursuant to the rules of the American Arbitration Association.
CONFIDENTIALITY	This letter of intent and the due diligence information exchanged hereunder shall be subject to the existing confidentiality agreement dated September 27, 2017 between the Parties hereof, and neither this letter of intent, nor the fact that either Party is the counterparty to this letter of intent, or the name of either Party or any of its Affiliates, may be disclosed to potential investors, the public or regulatory authorities, by either Party without the other Party’s prior written consent.
ANNOUNCEMENT	Except to the extent required by law and following reasonable notice to the other party, neither party shall make any press release or any other public announcement in respect of the subject matter of this letter of intent without the prior written approval from the other.
BINDING EFFECT	This letter of intent shall be binding upon the execution of this agreement.
CLOSING DATE:	January 18, 2018

2

PIVOT PHARMACEUTICALS INC.	Thrudermic, LLC
/s/ Patrick Frankham	/s/ Joseph Borovsky
Patrick Frankham, PhD, MBA	Dr. Joseph Borovsky
CEO	CEO

   

3

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Patrick Frankham, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Pivot Pharmaceuticals Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 15, 2017

/s/ Patrick Frankham

Patrick Frankham

Chief Executive Officer and Director
(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Moira Ong, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Pivot Pharmaceuticals Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 15, 2017

/s/ Moira Ong

Moira Ong

Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Patrick Frankham, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Quarterly Report on Form 10-Q of Pivot Pharmaceuticals Inc. for the period ended October 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Pivot Pharmaceuticals Inc.

Dated: December 15, 2017	/s/ Patrick Frankham
	Patrick Frankham
	Chief Executive Officer and Director (Principal Executive Officer)
	Pivot Pharmaceuticals Inc.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Pivot Pharmaceuticals Inc. and will be retained by Pivot Pharmaceuticals Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Moira Ong, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Quarterly Report on Form 10-Q of Pivot Pharmaceuticals Inc. for the period ended October 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Pivot Pharmaceuticals Inc.

Dated: December 15, 2017	/s/ Moira Ong
	Moira Ong
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
	Pivot Pharmaceuticals Inc.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Pivot Pharmaceuticals Inc. and will be retained by Pivot Pharmaceuticals Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	9 Months Ended
	Oct. 31, 2017	Dec. 15, 2017
Document And Entity Information
Entity Registrant Name	Pivot Pharmaceuticals Inc.
Entity Central Index Key	0001464165
Document Type	10-Q
Document Period End Date	Oct. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--01-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		82,223,323
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

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Condensed Consolidated Balance Sheets - USD ($)	Oct. 31, 2017	Jan. 31, 2017
Current assets
Cash	$ 250,386	$ 112,421
Prepaid and other current assets	45,526	17,337
Total current assets	295,912	129,758
Security deposit		2,900
Intangible asset (Notes 4(a) and 5)	239,247
Total assets	535,159	132,658
Current liabilities
Accounts payable and accrued liabilities	145,481	996,853
Due to related parties (Note 13)	4,544	22,574
Convertible debenture, net of discount (Note 6)		275,011
Derivative liability (Note 7)		312,541
Total current liabilities	150,025	1,606,979
Promissory note (Note 8)	202,197
Total liabilities	352,222	1,606,979
Stockholders’ Equity (Deficit)
Common stock: Unlimited shares authorized, without par value, 79,600,925 and 75,647,114 shares issued and outstanding, respectively (Note 9)	7,896,165	7,327,588
Subscriptions payable (Note 9)	327,298
Additional paid-in capital	11,766,274	11,211,031
Accumulated other comprehensive income	585,533	584,813
Accumulated deficit	(20,392,333)	(20,597,753)
Total stockholders’ equity (deficit)	182,937	(1,474,321)
Total liabilities and stockholders’ equity (deficit)	$ 535,159	$ 132,658

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Condensed Consolidated Balance Sheets (Parenthetical) - shares	Oct. 31, 2017	Jan. 31, 2017
Condensed Consolidated Balance Sheets Parenthetical
Common stock, Shares issued	79,600,925	75,647,114
Common stock, Shares outstanding	79,600,925	75,647,114

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Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Condensed Consolidated Statements Of Operations And Comprehensive Income
Revenue
Expenses
Amortization of intangible asset (Note 5)	8,309		8,309
Foreign exchange (gain) loss	38,762	60,658	101,324	138,017
General and administrative	50,480	71,301	179,410	1,045,722
Management fees	31,941	548,407	301,714	3,917,354
Professional fees	55,166	9,938	128,174	100,421
Total expenses	184,658	690,304	718,931	5,201,514
Loss from operations	(184,658)	(690,304)	(718,931)	(5,201,514)
Other income (expense)
Amortization of discount on convertible debenture		(48,672)	(105,392)	(48,672)
Gain on change in fair value of derivative liabilities	33,260	(212,354)	204,711	(212,354)
Gain on disposal of asset (Note 3)	609,311		609,311
Gain on settlement of debts	80,144		240,144
Interest expense	(7,331)	(3,612)	(24,481)	(3,612)
Total other income (expense)	715,384	(264,638)	924,293	(264,638)
Net income (loss)	530,726	(954,942)	205,362	(5,466,152)
Other comprehensive income (loss)
Foreign currency translation adjustment	(63,201)	(40,569)	(728)	109,597
Net comprehensive income (loss)	$ 428,224	$ (995,511)	$ 204,634	$ (5,356,555)
Net income (loss) per share, basic	$ 0.01	$ (0.01)	$ 0.00	$ (0.07)
Net income (loss) per share, diluted	$ 0.01	$ (0.01)	$ 0.00	$ (0.07)
Weighted average shares outstanding – basic	76,761,576	75,613,498	76,055,298	75,212,555
Weighted average shares outstanding – diluted	81,596,692	75,613,498	78,877,344	75,212,555

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Operating activities
Net income (loss)	$ 530,726	$ (954,942)	$ 205,362	$ (5,466,152)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization	8,309		8,309
Amortization of discount on convertible debenture		48,672	105,392	48,672
Fair value of stock options vested			1,057	4,300,354
(Gain) loss on change in fair value of derivative liabilities	(33,260)	212,354	(204,711)	212,354
Gain on disposal of asset (Note 3)	(609,311)		(609,311)
Gain on settlement of debts	(80,144)		(240,144)
Stock issued for services			24,531	256,382
Changes in operating assets and liabilities:
Prepaids and other current assets			35,589	5,938
Due to related parties			4,510	16,500
Accounts payable and accrued liabilities			457,439	366,124
Other liabilities			12,266
Net cash used in operating activities			(199,711)	(259,828)
Financing activities
Proceeds from convertible debenture				381,350
Proceeds from debenture			36,500
Proceeds from issuance of common stock			31,799
Proceeds from issuance of common stock subscriptions			264,326
Net cash provided by financing activities			332,625	381,350
Effects of exchange rate changes on cash			5,051	13,414
Increase in cash			137,965	134,936
Cash – beginning of period			112,421	71,639
Cash – end of period	$ 250,386	$ 206,575	$ 250,386	$ 206,575

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Nature of Operations and Continuance of Business

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 1. Nature of Operations and Continuance of Business

Pivot Pharmaceuticals Inc. (the “Company”) was incorporated in British Columbia under the Business Corporations Act on June 10, 2002. On April 7, 2015, the Company changed its name from Neurokine Pharmaceuticals Inc. to Pivot Pharmaceuticals Inc. The Company is in the business of developing and commercializing therapeutic pharmaceutical products, focused on the strategy of identifying new therapeutic treatments to address unmet medical needs in women’s health.

These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As of October 31, 2017, the Company has not earned any revenue, has a working capital of $145,887 and an accumulated deficit of $20,392,333. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.

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Significant Accounting Policies

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 2. Significant Accounting Policies

(a) Basis of Presentation

The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in U.S. dollars. The Company’s fiscal year-end is January 31.

(b) Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, assumptions used to determine the fair values of stock-based compensation and derivative liabilities and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

(c) Interim Financial Statements

These interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s condensed consolidated financial position, results of operations and cash flows for the periods shown. The condensed consolidated results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. Certain disclosures and financial information have been condensed in accordance with generally accepted accounting principles in the United States.

(d) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidating entities include:

	% of ownership			Jurisdiction
Pivot Pharmaceuticals Inc.		Parent		Canada
Pivot Green Stream Health Solutions Inc.		100	%	Canada

(e) Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for all exercisable options and warrants and the if-converted method for all outstanding convertible debentures. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at October 31, 2017, the Company had 2,822,046 (January 31, 2017 – 9,692,748) potentially dilutive shares.

(f) Financial Instruments and Fair Value Measures

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2: Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, due to related parties and promissory note. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

(g) Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial position or results of operations.

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Disposal of Asset

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 3. Disposal of Asset

On September 11, 2017, the Company completed an exchange agreement whereby the Company exchanged with its past Chief Executive Officer 100% of its shares of common stock of its wholly-owned subsidiary, IndUS Pharmaceuticals, Inc. (“IndUS”), for 3,800,000 shares of common stock of the Company (Note 9(a)). Pursuant to the exchange agreement, the Company has provided its former Chief Executive Officer a promissory note (Note 8(a)) in the amount of $200,000 in discharge of all obligations with respect to Dr. Chaturvedi’s accrued salary totaling $267,267 through September 11, 2017.

The disposal of IndUS resulted in a gain as follows:

3,800,000 shares of common stock acquired and cancelled	380,000
Net liabilities exchanged	229,311
Gain on disposal of asset	609,311

The disposal of IndUS did not meet the definition of discontinued operations as it did not represent a strategic shift that has a major effect on the Company’s operations and financial results.

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Asset Acquisitions

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 4. Asset Acquisitions

(a) BiPhasix License

On September 12, 2017, the Company entered into a licensing agreement with Altum Pharmaceuticals Inc. (“Altum”) whereby the Company acquired worldwide rights to the BiPhasix™ transdermal drug delivery technology for the development and commercialization of Cannabinoids, Cannabidiol and Tetrahydrocannabinol products. Consideration included:

1)	Issuance of 2,500,000 shares of common stock on September 12, 2017 (Notes 5 and 9(b));
2)	Issuance of 2,500,000 shares of common stock of Pivot upon Health Canada Natural Product Number approval;
3)	Royalties on annual gross sales; and
4)	For pharmaceutical products, milestone payments payable upon first Investigative New Drug Approval, upon positive outcome of Phase II trial in first indication, and upon New Drug Application approval.

(b) Solmic Solubilization License

On September 23, 2017, the Company entered into a collaboration and license agreement with SolMic GmbH (“Solmic”) whereby the Company will acquire worldwide rights to Solmic’s Solubilization Technology for the development and commercialization of cannabinoid-containing natural extracts. Milestones include payments upon the following developments: 1) Regulatory approval of a natural health product; 2) First approval of an investigative new drug application for a pharmaceutical product; 3) Positive outcome of a Phase II clinical trial of a pharmaceutical product in the first indication; and 4) Approval of a New Drug Application for a pharmaceutical product by the US Food and Drug Administration. Other consideration include a sales milestone upon aggregate net sales of $5,000,000 and royalties on aggregate net sales.

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Intangible Asset

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 5. Intangible Asset

Cost	BiPhasix License $
Balance, January 31, 2017		–
License agreement (Note 4(a))		247,556
Balance, October 31, 2017		247,556

Accumulated Amortization
Balance, January 31, 2017	–
Amortization	8,309
Balance, October 31, 2017	8,309
Net book value, October 31, 2017	239,247
Net book value, January 31, 2017	–

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Convertible Debenture

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 6. Convertible Debenture

On September 30, 2016, the Company issued a convertible debenture with a non-related party for $500,000 Canadian Dollars ($380,411 US Dollars at September 30, 2016) (“Initial Advance”). The debenture is secured under a General Security Agreement, bears interest at 8% per annum and matures on the earlier of:

· The date the lender demands repayment of principal and interest following an event of default,

· The date of a dissolution event,

· The date of a liquidity event, and

· March 30, 2017.

The Company may request one or more additional advances of up to an aggregate amount of $1,000,000 Canadian Dollars (“Additional Advances”) provided that the aggregate amount under the convertible debenture does not exceed $1,500,000 Canadian Dollars.

The note, including the Initial Advance and any Additional Advances, is convertible into common shares at a conversion price equal to the average closing market price of the Company’s common stock during the five day period leading up to the conversion date. The Company recorded the conversion feature of the convertible debenture as a derivative liability at an estimated fair value of $134,892 with a corresponding discount to the convertible debenture (Note 7).

Pursuant to the convertible loan agreement, the Company issued 434,622 share purchase warrants to which the lender may acquire an interest in the Company equal to 12% of the maximum principal amount outstanding at any time at a price of $0.10 per share, which equates to the ten day average trading price of the Company’s common stock determined as at September 30, 2016. The Company calculated the 434,622 share purchase warrants based on the maximum outstanding principal balance on the convertible loan as of September 30, 2016. The Company recorded the share purchase warrant at an estimated fair value of $20,154 with a corresponding discount to the convertible debenture (Note 11).

On September 18, 2017, the lender converted the outstanding principal and accrued interest of the convertible debenture into 4,623,825 shares of common stock (Note 9(c)) of the Company at a conversion price of $0.10. A loss on conversion of debenture of $21,236 was recorded within gain on settlement of debts in the condensed consolidated statements of operations and comprehensive income. As of October 31, 2017, the carrying value of the convertible debenture is $nil (January 31, 2017 - $275,011) which is net of debt discounts related to conversion feature, financing costs and warrants of $nil, $nil and $nil, respectively (January 31, 2017 - $94,709, $6,126 and $6,477, respectively). As of October 31, 2017, interest accrued on the convertible debenture is $nil (January 31, 2017 - $10,307) and the fair value of the conversion option derivative liability is $nil (January 31, 2017 - $312,541).

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Derivative Liability

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 7. Derivative Liability

Derivative liability consists of convertible debenture with variable conversion price (Note 6). On September 18, 2017, the convertible debenture was converted into shares of common stock (Note 6). The fair value of derivative liability as at October 31, 2017 and January 31, 2017 is as follows:

	October 31, 2017 $		January 31, 2017 $
September 2016 convertible debenture		–		312,541
		–		312,541

The fair value of derivative financial liability was determined using the binomial option pricing model, using the following assumptions:

	Expected Volatility			Risk-free Interest Rate			Expected Dividend Yield			Expected Life (in years)
As at issuance date:
September 2016 convertible debenture		296	%		0.45	%		0	%		0.50

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Promissory Note

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 8. Promissory Note

	October 31, 2017 $		January 31, 2017 $
Principal (Note 8(a))		200,000		–
Accrued interest (Note 8(a))		2,197		–
		202,197		–

(a) Promissory Note – Former Chief Executive Officer (Note 3)

Promissory note bears interest at 8% per annum. Principal and accrued interest are due on the earlier of: 1) 30 days after the completion of a financing of at least $2,000,000 and (ii) September 10, 2027.

(b) Promissory Note – Third Party

On September 27, 2017, the Company issued a promissory note in the amount of $400,000, bearing interest at 12% per annum and maturing on December 31, 2018, which no proceeds have been received by the Company as at October 31, 2017. As part of the promissory note, 100,000 shares of our common stock were issued (Note 9(d)).

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Common Stock

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 9. Common Stock

(a)	On September 11, 2017, 3,800,000 shares of common stock were acquired and cancelled pursuant to the share exchange agreement (Note 3).
(b)	On September 12, 2017, 2,500,000 shares of common stock were issued pursuant to the Altum licensing agreement (Note 4(a)).
(c)	On September 18, 2017, 4,623,825 shares of common stock were issued upon conversion of convertible debenture (Note 6).
(d)	On October 26, 2017, 100,000 shares of common stock were issued pursuant to a promissory note issued (Note 8(b)).
(e)	In October 2017, the Company received proceeds totaling $223,000 pursuant to private placements for the issuance of 2,230,000 shares of common stock. 330,000 shares of common stock were issued on October 30 and 1,900,000 shares of common stock were issuable as of October 31, 2017. As of October 31, 2017 200,000 shares of common stock were issuable related to share issue costs on this private placement. The 1,900,000 shares of common stock related to the private placement and the 200,000 shares of common stock related to share issue costs were issued on November 2, 2017.
(f)	In October 2017, the Company received proceeds totaling $76,000 pursuant to private placements for the issuance of 380,000 units, consisting of one common stock and one half of one share purchase warrant. Each share purchase warrant entitles the holder to purchase a common share at $0.35 for 18 months. These units were issuable as of October 31, 2017. On November 30, 2017, 380,000 shares of common stock and 190,000 share purchase warrants were issued in full satisfaction of the stock subscription payable.
(g)	On October 31, 2017, the Company settled $35,152 of accounts payable through the issuance of 92,384 shares of common stock (Note 13), which were issued on November 2, 2017.

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Stock Options

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 10. Stock Options

Effective December 30, 2015, the Company adopted a stock option plan. Under this plan, the Company may grant options to its directors, officers, employees and consultants up to an amount as determined by the Company and will be no more than a percentage of its outstanding common stock as may be required by the stock exchange the Company is listed with. The exercise price of the stock options will be determined by the Company and will be no less than any minimum exercise price as may be required by the stock exchange the Company is listed with.

The following table summarizes the continuity of the Company’s stock options:

	Number of Options		Weighted Average Exercise Price (US$)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (US$)
Outstanding, January 31, 2017		15,520,833		0.38		4.2		68,599
Granted		–		–		–		–
Forfeited		–		–		–		–
Outstanding, October 31, 2017		15,520,833		0.38		3.47		2,285,100

The fair value of stock-based compensation expense was estimated using the Black-Scholes option pricing model and the following assumptions:

	Expected Volatility			Risk-free Interest Rate			Expected Dividend Yield			Expected Life (in years)
29,000 options expiring on May 2, 2021		377	%		1.73	%		0	%		3.5

Additional information regarding stock options as of October 31, 2017, is as follows:

Options Outstanding		Options Exercisable		Exercise Price $		Expiry Date
	200,000		200,000		0.25	November 30, 2020
	4,000,000		4,000,000		0.10	December 14, 2020
	7,250,000		7,250,000		0.70	February 22, 2021
	29,000		28,000		0.34	May 2, 2021
	4,000,000		4,000,000		0.10	December 14, 2021
	41,833		41,833		0.05	January 23, 2022
	15,520,833		15,519,833

$60 of stock-based compensation have yet to be recognized and will be recognized in future periods.

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Share Purchase Warrant

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 11. Share Purchase Warrant

The following table summarizes the continuity of share purchase warrant:

	Number of Warrants			Weighted Average Exercise Price $
Balance, January 31, 2017		434,622			0.10
Expired		(434,622	)		(0.10	)
Balance, October 31, 2017		–			–

As at October 31, 2017, there are no share purchase warrants outstanding. On November 30, 2017, 190,000 share purchase warrants, entitling the holder to purchase a common share at $0.35 for 18 months, were issued (Note 9(f)).

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Supplemental Cash Flow Information

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 12 . Supplemental Cash Flow Information

	Nine Months Ended October 31, 2017		Nine Months Ended October 31, 2016
Supplemental disclosures:
Interest paid		–		–
Income tax paid		–		–
Non-cash investing and financing activities:
Capital contribution through forgiveness of debt		531,310		–
Common stock issued for settlement of accounts payable		35,152		–
Common stock issued for settlement of convertible debenture		601,097		–
Common stock issued for prepaid assets		72,924		–
Common stock issued for intangible asset		262,500		–
Common stock subscriptions issued for services		21,207		–
Debt discounts on convertible debt		–		284,184
Promissory note issued for settlement of accrued salaries		200,000		–
Treasury stock returned and retired in disposition of assets		380,000		–

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Related Party Transactions

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 13. Related Party Transactions

As at October 31, 2017, the Company owed $4,544 (January 31, 2017 - $4,154) to a director of the Company, which is unsecured, non-interest bearing, and due on demand.

During the nine months ended October 31, 2017, $552,889 of accrued management fees to the Company’s Chief Financial Officer and Chief Business Officer were forgiven. In addition, $35,152 of accounts payable due to a company controlled by the Company’s Chief Financial Officer were settled for 92,384 shares of common stock.

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Fair Value Measurements

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 14. Fair Value Measurements

The Company’s financial liabilities carried at fair value measured on a recurring basis as of October 31, 2017 and January 31, 2017, consisted of the following:

	Total fair value at October 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liability (1)	$	-	$	-	$	-	$	-

	Total fair value at January 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liability (1)	$	312,541	$	-	$	312,541	$	-

____________

(1) Derivative liability amounts are due to the embedded derivatives of convertible debenture issued by the Company and are calculated using the binomial option pricing model (Note 6).

The Company has no financial assets carried at fair value.

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Subsequent Events

9 Months Ended

Oct. 31, 2017

Notes to Financial Statements

Note 15. Subsequent Events

(a)	On November 7, 2017, 50,000 shares of common stock were issued to a service provider for services rendered.
(b)	On November 15, 2017, the Company entered into scientific advisory board agreements whereby 100,000 options to purchase shares of common stock with the following terms were granted:

· Exercise price of $0.39;

· 25% vesting on each of the following dates: November 15, 2017, May 15, 2018, November 15, 2018 and May 15, 2019;

· Expiry on November 14, 2022.

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Significant Accounting Policies (Policies)

9 Months Ended

Oct. 31, 2017

Significant Accounting Policies Policies

Basis of Presentation

The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in U.S. dollars. The Company’s fiscal year-end is January 31.

Use of Estimates

The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, assumptions used to determine the fair values of stock-based compensation and derivative liabilities and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Interim Financial Statements

These interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s condensed consolidated financial position, results of operations and cash flows for the periods shown. The condensed consolidated results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. Certain disclosures and financial information have been condensed in accordance with generally accepted accounting principles in the United States.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidating entities include:

	% of ownership			Jurisdiction
Pivot Pharmaceuticals Inc.		Parent		Canada
Pivot Green Stream Health Solutions Inc.		100	%	Canada

Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings Per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for all exercisable options and warrants and the if-converted method for all outstanding convertible debentures. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at October 31, 2017, the Company had 2,822,046 (January 31, 2017 – 9,692,748) potentially dilutive shares.

Financial Instruments and Fair Value Measures

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure 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. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2: Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3: Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable and accrued liabilities, due to related parties and promissory note. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial position or results of operations.

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Significant Accounting Policies (Tables)

9 Months Ended

Oct. 31, 2017

Significant Accounting Policies Tables

Basis of Consolidation

	% of ownership			Jurisdiction
Pivot Pharmaceuticals Inc.		Parent		Canada
Pivot Green Stream Health Solutions Inc.		100	%	Canada

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Disposal of Asset (Tables)

9 Months Ended

Oct. 31, 2017

Disposal Of Asset Tables

Disposal of discounted opertions

3,800,000 shares of common stock acquired and cancelled	380,000
Net liabilities exchanged	229,311
Gain on disposal of asset	609,311

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Intangible Asset (Tables)

9 Months Ended

Oct. 31, 2017

Intangible Asset Tables

Intangible asset

Cost	BiPhasix License $
Balance, January 31, 2017		–
License agreement (Note 4(a))		247,556
Balance, October 31, 2017		247,556

Accumulated Amortization
Balance, January 31, 2017	–
Amortization	8,309
Balance, October 31, 2017	8,309
Net book value, October 31, 2017	239,247
Net book value, January 31, 2017	–

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Derivative Liability (Tables)

9 Months Ended

Oct. 31, 2017

Derivative Liability Tables

Schedule of Fair value of derivative liability

	October 31, 2017 $		January 31, 2017 $
September 2016 convertible debenture		–		312,541
		–		312,541

Schedule of Interest Rate Derivatives

	Expected Volatility			Risk-free Interest Rate			Expected Dividend Yield			Expected Life (in years)
As at issuance date:
September 2016 convertible debenture		296	%		0.45	%		0	%		0.50

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Promissory Note (Tables)

9 Months Ended

Oct. 31, 2017

Promissory Note Tables

Promissory Note

	October 31, 2017 $		January 31, 2017 $
Principal (Note 8(a))		200,000		–
Accrued interest (Note 8(a))		2,197		–
		202,197		–

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Stock Options (Tables)

9 Months Ended

Oct. 31, 2017

Stock Options Tables

Schedule of Stock Options

	Number of Options		Weighted Average Exercise Price (US$)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (US$)
Outstanding, January 31, 2017		15,520,833		0.38		4.2		68,599
Granted		–		–		–		–
Forfeited		–		–		–		–
Outstanding, October 31, 2017		15,520,833		0.38		3.47		2,285,100

Fair value of stock-based compensation expense

	Expected Volatility			Risk-free Interest Rate			Expected Dividend Yield			Expected Life (in years)
29,000 options expiring on May 2, 2021		377	%		1.73	%		0	%		3.5

Additional information of stock options

Options Outstanding		Options Exercisable		Exercise Price $		Expiry Date
	200,000		200,000		0.25	November 30, 2020
	4,000,000		4,000,000		0.10	December 14, 2020
	7,250,000		7,250,000		0.70	February 22, 2021
	29,000		28,000		0.34	May 2, 2021
	4,000,000		4,000,000		0.10	December 14, 2021
	41,833		41,833		0.05	January 23, 2022
	15,520,833		15,519,833

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Share Purchase Warrants (Tables)

9 Months Ended

Oct. 31, 2017

Share Purchase Warrants Tables

Schedule of continuity of share purchase warrants

	Number of Warrants			Weighted Average Exercise Price $
Balance, January 31, 2017		434,622			0.10
Expired		(434,622	)		(0.10	)
Balance, October 31, 2017		–			–

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Oct. 31, 2017

Supplemental Cash Flow Information Tables

Supplemental Cash Flow Information

	Nine Months Ended October 31, 2017		Nine Months Ended October 31, 2016
Supplemental disclosures:
Interest paid		–		–
Income tax paid		–		–
Non-cash investing and financing activities:
Capital contribution through forgiveness of debt		531,310		–
Common stock issued for settlement of accounts payable		35,152		–
Common stock issued for settlement of convertible debenture		601,097		–
Common stock issued for prepaid assets		72,924		–
Common stock issued for intangible asset		262,500		–
Common stock subscriptions issued for services		21,207		–
Debt discounts on convertible debt		–		284,184
Promissory note issued for settlement of accrued salaries		200,000		–
Treasury stock returned and retired in disposition of assets		380,000		–

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 31, 2017

Fair Value Measurements Tables

Fair Value Measurement

	Total fair value at October 31, 2017		Quoted prices in activemarkets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liability (1)	$	-	$	-	$	-	$	-
	Total fair value at January 31, 2017		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative liability (1)	$	312,541	$	-	$	312,541	$	-

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Nature of Operations and Continuance of Business (Details Narrative) - USD ($)	9 Months Ended
	Oct. 31, 2017	Jan. 31, 2017
Nature Of Operations And Continuance Of Business Details Narrative
Working capital	$ 145,887
Accumulated deficit	$ (20,392,333)	$ (20,597,753)
State or Country of incorporation	British Columbia
Date of incorporation	Jun. 10, 2002

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Significant Accounting Policies (Details)	9 Months Ended
	Oct. 31, 2017
Pivot Pharmaceuticals Inc. [Member]
Percentege of ownership	Parent
Jurisdiction	Canada
Pivot Green Stream Health Solutions Inc [Member]
% of ownership	100.00%
Jurisdiction	Canada

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Significant Accounting Policies (Details Narrative) - shares	9 Months Ended	12 Months Ended
	Oct. 31, 2017	Jan. 31, 2017
Significant Accounting Policies Details Narrative
Potentially dilutive shares	2,822,046	9,692,748

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Disposal of Asset (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Disposal Of Asset Details
3,800,000 shares of common stock acquired and cancelled			$ 380,000
Net liabilities exchanged			229,311
Gain on disposal of asset	$ 609,311		$ 609,311

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Disposal of Asset (Details Narratives) - IndUS and CEO [Member]	Sep. 11, 2017 USD ($) shares
Equity ownership percentage	100.00%
Share exchange agreement [Member]
Common stock shares issuable upon future issuance | shares	3,800,000
Promissory note	$ 200,000
Accrued salary	$ 267,267

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Asset Acquisitions (Details Narratives) - USD ($)		1 Months Ended
	Sep. 12, 2017	Sep. 23, 2017
Net sales		$ 5,000,000
Licensing agreement [Member] | Altum Pharmaceuticals Inc. [Member]
Common stock, share issuable	2,500,000
Common stock shares issuable upon NPN approval	2,500,000

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Intangible Asset (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Accumulated Amortization
Amortization	$ 8,309		$ 8,309
Balance, ending	239,247		239,247
BiPhasix License [Member]
Cost
License agreement, beginning
License agreement (Note 4(a))			247,556
License agreement, ending	247,556		247,556
Accumulated Amortization
Accumulated Amortization, beginning
Amortization			8,309
Accumulated Amortization, ending	8,309		8,309
Balance, beginning
Balance, ending	$ 239,247		$ 239,247

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Convertible Debenture (Details Narrative)

1 Months Ended

9 Months Ended

Sep. 18, 2017

USD ($)

$ / shares

shares

Sep. 30, 2016

USD ($)

$ / shares

shares

Oct. 31, 2017

USD ($)

Jan. 31, 2017

USD ($)

Sep. 30, 2016

CAD

shares

Convertible debenture | CAD

CAD 500,000

Interest rate

8.00%

8.00%

Additional advances description

Provided that the aggregate amount under the convertible debenture does not exceed $1,500,000 Canadian Dollars.

Fair value of derivative liability

$ 134,892

Debt discount, conversion

$ 94,709

Debt discount, financing costs

6,126

Debt discount, warrants

6,477

Accrued interest

10,307

Derivative liabilities

312,541

Convertible debenture, net of discount

$ 275,011

Maximum [Member]

Additional advances receivable | CAD

CAD 1,000,000

Non-related party [Member]

Convertible debenture

$ 380,411

Convertible Loan Agreement [Member]

Shares issued to purchase warrants | shares

434,622

434,622

Acquired an interest on principal amount

12.00%

12.00%

Price per share | $ / shares

$ 0.10

Fair Value of warrant

$ 20,154

Convertible Notes Payable [Member]

Debt conversion, converted instrument, shares issued | shares

4,623,825

Convertible conversion price | $ / shares

$ 0.10

Gain on settlement of debts

$ 21,236

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Derivative Liability (Details) - USD ($)	Oct. 31, 2017	Jan. 31, 2017
Derivative liabilities		$ 312,541
September 2016 Convertible Debenture [Member]
Derivative liabilities		$ 312,541

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Derivative Liability (Details 1) - September 2016 Convertible Debenture [Member]	9 Months Ended
	Oct. 31, 2017
Expected volatility	296.00%
Risk-free interest rate	0.45%
Expected dividend yield	0.00%
Expected life (in years)	6 months

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Promissory Note (Details) - USD ($)	Oct. 31, 2017		Jan. 31, 2017
Promissory Note Details
Principal (Note 8(a))	$ 200,000	[1]
Accrued interest (Note 8(a))	2,197	[1]
Total Promissory note	$ 202,197

[1] Promissory note bears interest at 8% per annum. Principal and accrued interest are due on the earlier of: 1) 30 days after the completion of a financing of at least $2,000,000 and (ii) September 10, 2027.

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Promissory Note (Details Narrative) - USD ($)	1 Months Ended
	Sep. 27, 2017	Oct. 31, 2017		Oct. 26, 2017	Jan. 31, 2017
Principal amount		$ 200,000	[1]
Common stock, shares issued		79,600,925			75,647,114
Promissory Note [Member] | Past Chief Executive Officer [Member]
Interest rate		8.00%
Principal amount		$ 2,000,000
Promissory Note [Member] | Third Party [Member]
Interest rate	12.00%
Principal amount	$ 400,000
Maturity date	Dec. 31, 2018
Common stock, shares issued				100,000

[1] Promissory note bears interest at 8% per annum. Principal and accrued interest are due on the earlier of: 1) 30 days after the completion of a financing of at least $2,000,000 and (ii) September 10, 2027.

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Common Stock (Details Narrative) - USD ($)			1 Months Ended	9 Months Ended
	Sep. 12, 2017	Sep. 11, 2017	Sep. 18, 2017	Oct. 31, 2017	Oct. 31, 2016	Nov. 30, 2017	Nov. 02, 2017	Oct. 30, 2017	Oct. 26, 2017	Jan. 31, 2017
Common stock, shares issued				79,600,925						75,647,114
Proceeds from common stock				$ 31,799
Accounts Payable [Member]
Extinguishment of Debt				$ 35,152
Common stock shares issued upon extinguishment of debt				92,384
Warrant [Member]
Common stock shares						380,000
Purchase Price per common share				$ 0.35
Shares issued to purchase warrants				190,000		190,000
Private Placements [Member]
Common stock, share issuable				1,900,000
Common stock, shares issued				2,230,000			200,000	330,000
Proceeds from common stock				$ 223,000
Common stock shares							1,900,000
Private Placements [Member] | Warrant [Member]
Common stock, shares issued				380,000
Proceeds from common stock				$ 76,000
Purchase Price per common share				$ 0.35
Private Placements One [Member]
Common stock, share issuable				200,000
Convertible Notes Payable [Member]
Debt conversion, converted instrument, shares issued			4,623,825
Promissory Note [Member] | Third Party [Member]
Common stock, shares issued									100,000
IndUS and CEO [Member] | Share exchange agreement [Member]
Common stock, shares acquisition		3,800,000
Altum Pharmaceuticals Inc. [Member] | Licensing agreement [Member]
Common stock, share issuable	2,500,000

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Stock Options (Details)	9 Months Ended
	Oct. 31, 2017 USD ($) $ / shares shares
Number of Options
Balance, beginning | shares	15,520,833
Granted | shares
Forfeited | shares
Balance, ending | shares	15,520,833
Weighted Average Exercise Price
Balance, beginning | $ / shares	$ 0.38
Granted | $ / shares
Forfeited | $ / shares
Balance, ending | $ / shares	$ 0.38
Weighted Average Remaining Contractual Life (years)
Balance, beginning	4 years 2 months 12 days
Balance, ending	3 years 5 months 20 days
Aggregate Intrinsic Value
Balance, beginning | $	$ 68,599
Granted | $
Forfeited | $
Balance, ending | $	$ 2,285,100

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Stock Options (Details 1) - 29,000 options expiring on May 2, 2021 [Member]	9 Months Ended
	Oct. 31, 2017
Expected Volatility	377.00%
Risk-free Interest Rate	1.73%
Expected Dividend Yield	0.00%
Expected Life (in years)	3 years 6 months

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Stock Options (Details 2) - $ / shares	9 Months Ended
	Oct. 31, 2017	Jan. 31, 2017
Options Outstanding	15,520,833	15,520,833
Options Exercisable	15,519,833
Exercise Price 0.25 [Member]
Options Outstanding	200,000
Options Exercisable	200,000
Exercise Price	$ 0.25
Expiry Date	Nov. 30, 2020
Exercise Price 0.10 [Member]
Options Outstanding	4,000,000
Options Exercisable	4,000,000
Exercise Price	$ 0.10
Expiry Date	Dec. 14, 2020
Exercise Price 0.70 [Member]
Options Outstanding	7,250,000
Options Exercisable	7,250,000
Exercise Price	$ 0.70
Expiry Date	Feb. 22, 2021
Exercise Price 0.34 [Member]
Options Outstanding	29,000
Options Exercisable	28,000
Exercise Price	$ 0.34
Expiry Date	May 02, 2021
Exercise Price 0.10 [Member]
Options Outstanding	4,000,000
Options Exercisable	4,000,000
Exercise Price	$ 0.10
Expiry Date	Dec. 14, 2021
Exercise Price 0.05 [Member]
Options Outstanding	41,833
Options Exercisable	41,833
Exercise Price	$ 0.05
Expiry Date	Jan. 23, 2022

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Stock Options (Details Narrative)	9 Months Ended
	Oct. 31, 2017 USD ($)
Stock Options [Member]
Stock-based compensation	$ 60

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Share Purchase Warrant (Details)	9 Months Ended
	Oct. 31, 2017 $ / shares shares
Number of Warrants
Balance, beginning | shares	15,520,833
Balance, ending | shares	15,520,833
Weighted Average Exercise Price
Balance, beginning | $ / shares	$ 0.38
Balance, ending | $ / shares	$ 0.38
Warrant [Member]
Number of Warrants
Balance, beginning | shares	434,622
Expired | shares	(434,622)
Balance, ending | shares
Weighted Average Exercise Price
Balance, beginning | $ / shares	$ 0.10
Expired | $ / shares	(0.10)
Balance, ending | $ / shares

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Share Purchase Warrant (Details Narrative) - Warrant [Member] - $ / shares	Nov. 30, 2017	Oct. 31, 2017
Shares issued to purchase warrants	190,000	190,000
Purchase Price per common share		$ 0.35

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Supplemental Cash Flow Information (Details) - USD ($)	9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016
Supplemental disclosures:
Interest paid
Income tax paid
Non-cash investing and financing activities:
Capital contribution through forgiveness of debt	531,310
Common stock issued for settlement of accounts payable	35,152
Common stock issued for settlement of convertible debenture	601,097
Common stock issued for prepaid assets	72,924
Common stock issued for intangible asset	262,500
Common stock subscriptions issued for services	21,207
Debt discounts on convertible debt		284,184
Promissory note issued for settlement of accrued salaries	200,000
Treasury stock returned and retired in disposition of assets	$ 380,000

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Related Party Transactions (Details Narrative) - USD ($)	9 Months Ended
	Oct. 31, 2017	Jan. 31, 2017
Due to related parties	$ 4,544	$ 22,574
Accounts Payable [Member]
Extinguishment of Debt	$ 35,152
Common stock shares issued upon extinguishment of debt	92,384
Director [Member]
Due to related parties	$ 4,544	$ 4,154
Chief Financial Officer And Chief Business Officer [Member]
Accrued management fee forgiven	$ 552,889

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Fair Value Measurements (Details) - USD ($)		Oct. 31, 2017	Jan. 31, 2017
Derivative liability	[1]		$ 312,541
Quoted prices in active markets (Level 1) [Member]
Derivative liability	[1]
Significant other observable inputs (Level 2) [Member]
Derivative liability	[1]		312,541
Significant unobservable inputs (Level 3) [Member]
Derivative liability	[1]

[1] Derivative liability amounts are due to the embedded derivatives of convertible debenture issued by the Company and are calculated using the binomial option pricing model (Note 6).

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Subsequent Events (Details Narrative) - $ / shares	1 Months Ended
	Nov. 15, 2017	May 15, 2019	Nov. 15, 2018	May 15, 2018	Nov. 07, 2017	Oct. 31, 2017	Jan. 31, 2017
Common stock, Shares Issued						79,600,925	75,647,114
Subsequent Event [Member]
Exercise price	$ 0.39
Vesting rate	25.00%	25.00%	25.00%	25.00%
Expiry period	Nov. 14, 2022
Subsequent Event [Member] | Service Provider [Member]
Common stock, Shares Issued					50,000
Subsequent Event [Member] | Scientific Advisory Board Agreements [Member]
Options to purchase common stock shares	100,000