UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment no. 1)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 16, 2018
PIVOT PHARMACEUTICALS INC. |
(Exact name of registrant as specified in its charter) |
British Columbia |
| 333-161157 |
| n/a |
(State or other jurisdiction |
| (Commission |
| (IRS Employer Identification No.) |
1275 West 6th Avenue, Vancouver, British Columbia, Canada |
| V6H 1A6 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code (604) 805-7783
n/a
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Explanatory Note
We previously filed a Form 8-K on March 12, 2018, reporting our acquisition of Pivot Naturals, LLC (formerly ERS Holdings, LLC (“ERS”), a California limited liability company. We are filing this Form 8-K/A, Amendment No. 1, to provide the financial information required by Item 9.01.
Item 2.01 Completion of Acquisition or Disposition of Assets
On February 28, 2018, we completed the acquisition of ERS Holdings, LLC (“ERS”) pursuant to an Exchange Agreement dated as of February 10, 2018 among Pivot Pharmaceuticals Inc. (“Pivot”), ERS and the members of ERS. As consideration for the purchase, we paid $333,333 in cash on closing and will pay an additional $333,333 six and twelve (12) months after closing. In addition, we also issued 5,000,000 shares of our common stock. ERS has developed a patented technology called “RTIC” Ready-To-Infuse-Cannabis, relating to the transformation of cannabis oil into powder for infusion into a variety of food and beverage products such as capsules, K-Cups, stick packs, baked mixes, liquid shots, protein shakes, topicals, lotions, and bottled beverages.
Item 3.02 Unregistered Sales of Equity Securities
Effective February 28, 2018, we issued 5,000,000 shares of common stock to the members of ERS as consideration for the shares of ERS acquired from such members of ERS. We relied on Regulation D and/or Section 4(2) of the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits
(a) | Audited financial statements of business acquired for the years ended December 31, 2017 and 2016 |
(b) | Combined pro-forma financial information (unaudited) for the year ended January 31, 2018 reflecting amounts as if the acquisition had occurred previously. |
2 |
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 hereunto duly authorized.
PIVOT PHARMACEUTICALS INC. | |
/s/ Patrick Frankham | |
Patrick Frankham | |
Chief Executive Officer | |
|
|
Date: May 16, 2018 |
3 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Report of Independent Registered Public Accounting Firm and
Financial Statements
Years ended December 31, 2017 and 2016
4 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Pivot Naturals, LLC (formerly ERS Holdings, LLC):
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Pivot Naturals, LLC (formerly ERS Holdings, LLC) (“the Company”) as of December 31, 2017 and 2016, the related statements of operations, members’ capital (deficit), and cash flows for each of the years in the two-year period ended December 31, 2017 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Sadler, Gibb & Associates, LLC
We have served as the Company’s auditor since 2018 (as this is the date we were engaged to audit ERS)
Salt Lake City, UT
May 16, 2018
5 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Balance Sheets
|
| December 31, |
|
| December 31, |
| ||
|
| 2017 |
|
| 2016 |
| ||
|
| $ |
|
| $ |
| ||
Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Current assets |
|
|
|
|
|
| ||
Cash |
|
| 2,306 |
|
|
| 1,347 |
|
Amounts receivable |
|
| - |
|
|
| 650 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
| 2,306 |
|
|
| 1,997 |
|
|
|
|
|
|
|
|
|
|
Equipment (Note 3) |
|
| 4,196 |
|
|
| 8,716 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
| 6,502 |
|
|
| 10,713 |
|
|
|
|
|
|
|
|
|
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Liabilities and Members' Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| 52,233 |
|
|
| 3,445 |
|
Loan payable - related party (Note 4) |
|
| 15,925 |
|
|
| 6,000 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 68,158 |
|
|
| 9,445 |
|
|
|
|
|
|
|
|
|
|
Total members' (deficit) capital |
|
| (61,656 | ) |
|
| 1,268 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and members' capital |
|
| 6,502 |
|
|
| 10,713 |
|
Nature of operations and continuance of business (Note 1)
Subsequent event (Note 6)
(The accompanying notes are an integral part of these financial statements)
6 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Statements of Operations
|
| Year Ended |
|
| Year Ended |
| ||
|
| December 31, |
|
| December 31, |
| ||
|
| 2017 |
|
| 2016 |
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
| ||
Revenues |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
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Depreciation |
|
| 950 |
|
|
| 1,270 |
|
General and administrative |
|
| 3,757 |
|
|
| 10,908 |
|
Professional fees |
|
| 47,566 |
|
|
| 74,862 |
|
Research and development |
|
| 7,081 |
|
|
| 27,106 |
|
Salary and wages |
|
| - |
|
|
| 61,598 |
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
| 59,354 |
|
|
| 175,744 |
|
|
|
|
|
|
|
|
|
|
Net loss before other items |
|
| (59,354 | ) |
|
| (175,744 | ) |
|
|
|
|
|
|
|
|
|
Other expense |
|
|
|
|
|
|
|
|
Impairment of equipment |
|
| (3,571 | ) |
|
| - |
|
Write-off of due from related party (Note 5) |
|
| - |
|
|
| (25,728 | ) |
|
|
|
|
|
|
|
|
|
Total other expense |
|
| (3,571 | ) |
|
| (25,728 | ) |
|
|
|
|
|
|
|
|
|
Net loss |
|
| (62,925 | ) |
|
| (201,472 | ) |
(The accompanying notes are an integral part of these financial statements)
7 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Statement of Members’ (Deficit) Capital
|
| Members' |
|
| Accumulated |
|
|
| ||||
|
| Capital |
|
| Deficit |
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| Total |
| |||
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| $ |
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| $ |
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| $ |
| |||
|
|
|
|
|
|
|
|
|
| |||
Balance - December 31, 2015 |
|
| 150,000 |
|
|
| (151,713 | ) |
|
| (1,713 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Member interests issued for cash |
|
| 174,453 |
|
|
| - |
|
|
| 174,453 |
|
Member interests issued for services |
|
| 30,000 |
|
|
| - |
|
|
| 30,000 |
|
Net loss |
|
| - |
|
|
| (201,472 | ) |
|
| (201,472 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2016 |
|
| 354,453 |
|
|
| (353,185 | ) |
|
| 1,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
| (62,925 | ) |
|
| (62,925 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2017 |
|
| 354,453 |
|
|
| (416,110 | ) |
|
| (61,656 | ) |
(The accompanying notes are an integral part of these financial statements)
8 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Statements of Cash Flows
|
| Year Ended |
|
| Year Ended |
| ||
|
| December 31, |
|
| December 31, |
| ||
|
| 2017 |
|
| 2016 |
| ||
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
| ||
Net loss |
|
| (62,925 | ) |
|
| (201,472 | ) |
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| 950 |
|
|
| 1,270 |
|
Impairment of equipment |
|
| 3,571 |
|
|
| - |
|
Member interest issued for services |
|
| - |
|
|
| 30,000 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Amounts receivable |
|
| 650 |
|
|
| (650 | ) |
Accounts payable and accrued liabilities |
|
| 48,788 |
|
|
| 3,445 |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
| (8,966 | ) |
|
| (167,407 | ) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from loan payable - related party |
|
| 9,925 |
|
|
| - |
|
Member interests issued for cash |
|
| - |
|
|
| 174,453 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
| 9,925 |
|
|
| 174,453 |
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Purchase of equipment |
|
| - |
|
|
| (5,700 | ) |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
| - |
|
|
| (5,700 | ) |
|
|
|
|
|
|
|
|
|
Increase in cash |
|
| 959 |
|
|
| 1,347 |
|
|
|
|
|
|
|
|
|
|
Cash - beginning of year |
|
| 1,347 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Cash - end of year |
|
| 2,306 |
|
|
| 1,347 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures: |
|
|
|
|
|
|
|
|
Interest paid |
|
| - |
|
|
| - |
|
Income tax paid |
|
| - |
|
|
| - |
|
(The accompanying notes are an integral part of these financial statements)
9 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Notes to the Financial Statements
Years Ended December 31, 2017 and 2016
1. Nature of Operations and Continuance of Business
Pivot Naturals, LLC (formerly ERS Holdings, LLC) (the “Company”) was established as a California limited liability company on May 21, 2015. The Company is a development stage biopharmaceutical company engaged in the development and commercialization of therapeutic pharmaceutical products.
These 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 at December 31, 2017, the Company has a working capital deficit of $65,852 and an accumulated deficit of $416,110. 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 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.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from members sufficient to meet its minimal operating expenses However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
2. Significant Accounting Policies
(a) Basis of Presentation
The 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 December 31.
(b) Use of Estimates
The preparation of these 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 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. 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) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at December 31, 2017 and 2016, the Company had no cash equivalents.
(d) Equipment
Equipment is comprised of laboratory equipment and is recorded at cost. The Company amortizes the cost of equipment on a declining basis over its estimated useful life of six years.
10 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Notes to the Financial Statements
Years Ended December 31, 2017 and 2016
2. Significant Accounting Policies (continued)
(e) Long-lived Assets
In accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, the 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.
(f) Stock-based Compensation
The 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.
(g) Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2017 and 2016, the Company had no items representing comprehensive income or loss.
(h) Revenue Recognition
Revenue is recognized when significant risks and rewards of ownership of goods have been transferred to the buyer, the amount of revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. As at December 31, 2017, deferred revenues included in accounts payable and accrued liabilities were $21,100 (2016 - $1,250).
(i) Research and Development Costs
Research costs are expensed in the period that they are incurred.
(j) Income Taxes
The Company is recognized as an S-Corporation by the Internal Revenue Service; therefore, the Company’s members are liable for federal and state income taxes on the Company’s taxable income. The Company files federal and state income tax returns in the United States. During the years ended December 31, 2017 and 2016, there were no charges for interest or penalties.
(k) 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:
11 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Notes to the Financial StatementsYears Ended December 31, 2017 and 2016
2. Significant Accounting Policies (continued)
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, accounts payable and accrued liabilities and 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. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(l) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its 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 financial position or results of operations.
3. Equipment
|
| Laboratory |
| |
|
| Equipment |
| |
COST |
| $ |
| |
|
|
|
| |
Balance - December 31, 2015 |
|
| 4,287 |
|
Additions |
|
| 5,700 |
|
|
|
|
|
|
Balance - December 31, 2016 |
|
| 9,987 |
|
Impairment |
|
| (4,287 | ) |
|
|
|
|
|
Balance - December 31, 2017 |
|
| 5,700 |
|
12 |
PIVOT NATURALS, LLC (FORMERLY ERS HOLDINGS, LLC)
Notes to the Financial Statements
Years Ended December 31, 2017 and 2016
3. Equipment (continued)
Laboratory Equipment ACCUMULATED DEPRECIATION $
Balance - December 31, 2015 - Additions (1,271 ) Balance - December 31, 2016 (1,271 ) Additions (950 ) Impairment 717 Balance - December 31, 2017 (1,504 ) Net book value, December 31, 2016 8,716 Net book value, December 31, 2017 4,196
Depreciation expense included as a charge to income was $950 and $1,270 for the years ended December 31, 2017 and 2016, respectively.
4. Loan Payable
As at December 31, 2017, the Company owed $16,285 (2016 - $6,360) to a member of the Company in the form of loan payable and accrued interest. $6,000 of the loan payable bears interest at 6% per annum and the remainder is non-interest bearing. The loan payable is unsecured and is due upon sale of the Company or when the Company has sufficient operating capital for repayment.
5. Related Party Transactions
During the year ended December 31, 2016, the Company wrote off advances made to the Fenix Group, a non-profit organization incepted to conduct all cannabis related activity of the Company as required by California Proposition 215, also known as the Compassionate Use Act of 1996, and California Senate Bill 420.
6. Subsequent Event
On February 28, 2018, the Company was acquired by Pivot Pharmaceuticals Inc. (“Pivot”), a British Columbia corporation, pursuant to an Exchange Agreement dated as of February 10, 2018 among Pivot, the Company and the members of the Company. As consideration for the purchase, Pivot paid $333,333 in cash on closing, issued 5,000,000 shares of its common stock and will pay an additional $333,333 six and twelve (12) months after closing for total cash consideration of $1 million.
13 |
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Balance Sheet as at January 31, 2018
Statement of Operations for the Year Ended January 31, 2018
Notes to the Unaudited Pro Forma Combined Financial Statements
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On February 28, 2018, Pivot Pharmaceuticals Inc. (“Pivot”) completed the acquisition of Pivot Naturals, LLC (formerly ERS Holdings, LLC) (“ERS”), California limited liability company, pursuant to an Exchange Agreement dated as of February 10, 2018 among Pivot, the Company and the members of the Company. As consideration for the purchase, Pivot paid $333,333 in cash on closing, issued 5,000,000 shares of its common stock and will pay an additional $333,333 six and twelve (12) months after closing for total cash consideration of $1 million.
The following Unaudited Pro Forma Combined Financial Statements give effect to the aforementioned acquisition based on the assumptions and adjustments set forth in the accompanying notes to the Unaudited Pro Forma Combined Financial Statements, which management believes are reasonable. The Unaudited Pro Forma Combined Balance Sheet and Combined Statement of Operations, represents the combined financial position and operations of Pivot and ERS as of January 31, 2018 as if the acquisition occurred on February 1, 2017. These Unaudited Pro Forma Combined Financial Statements and accompanying notes should be read in conjunction with the audited historical financial statements and related notes of ERS, which are included in this document.
The Unaudited Pro Forma Combined financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if the acquisition of ERS by Pivot had been consummated as of the beginning of the period indicated, nor is it necessarily indicative of the results of future operations.
14 |
PIVOT PHARMACEUTICALS INC.
Combined Pro Forma Balance Sheet
As of January 31, 2018
|
| Pivot Pharmaceuticals Inc. $ |
|
| Pivot Naturals, LLC (formerly ERS Holdings, LLC) $ |
|
| Adjustments $ |
|
| Notes |
|
| Total $ | |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash |
|
| 64,511 |
|
|
| 2,229 |
|
|
| 1,000,000 |
|
| (i) |
|
| 733,407 |
| |
|
|
|
|
|
|
|
|
|
|
| (333,333 | ) |
| (ii) |
|
|
|
| |
Prepaid expense and other |
|
| 84,742 |
|
|
| – |
|
|
| – |
|
|
|
|
|
| 84,742 |
|
Total current assets |
|
| 149,253 |
|
|
| 2,229 |
|
|
| 666,667 |
|
|
|
|
|
| 818,149 |
|
Equipment |
|
| – |
|
|
| 4,117 |
|
|
| – |
|
|
|
|
|
| 4,117 |
|
Intangible assets |
|
| 234,564 |
|
|
| – |
|
|
| 6,149,999 |
|
| (i) |
|
| 6,384,563 |
| |
Total assets |
|
| 383,817 |
|
|
| 6,346 |
|
|
| 6,816,666 |
|
|
|
|
|
| 7,206,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
| 217,921 |
|
|
| 52,233 |
|
|
| – |
|
|
|
|
|
| 270,154 |
|
Due to related party |
|
| 10,104 |
|
|
| 15,925 |
|
|
| – |
|
|
|
|
|
| 26,029 |
|
Asset acquisition obligation |
|
| – |
|
|
| – |
|
|
| 666,666 |
|
| (ii) |
|
| 666,666 |
| |
Promissory note |
|
| 201,175 |
|
|
| – |
|
|
| – |
|
|
|
|
|
| 201,175 |
|
Convertible debenture |
|
| – |
|
|
| – |
|
|
| 1,000,000 |
|
| (i) |
|
| 1,000,000 |
| |
Total liabilities |
|
| 429,200 |
|
|
| 68,158 |
|
|
| 1,666,666 |
|
|
|
|
|
| 2,164,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
| 8,263,767 |
|
|
| 354,453 |
|
|
| 5,150,000 |
|
| (ii) |
|
| 13,413,767 |
| |
|
|
|
|
|
|
|
|
|
|
| (354,453 | ) |
| (iii) |
|
|
|
| |
Additional paid-in capital |
|
| 11,816,057 |
|
|
| – |
|
|
| – |
|
|
|
|
|
| 11,816,057 |
|
Accumulated other comprehensive income |
|
| 593,728 |
|
|
| – |
|
|
| – |
|
|
|
|
|
| 593,728 |
|
Accumulated deficit |
|
| (20,718,935 | ) |
|
| (416,266 | ) |
|
| 354,453 |
|
| (iii) |
|
| (20,780,747 | ) | |
Total stockholders’ equity (deficit) |
|
| (45,383 | ) |
|
| (61,813 | ) |
|
| 5,150,000 |
|
|
|
|
|
| 5,042,805 |
|
Total liabilities and stockholders’ equity (deficit) |
|
| 383,817 |
|
|
| 6,346 |
|
|
| 6,816,666 |
|
|
|
|
|
| 7,206,829 |
|
15 |
PIVOT PHARMACEUTICALS INC.
Combined Pro Forma Statement of Operations
For the Year Ended January 31, 2018
|
| Pivot Pharmaceuticals Inc. $ |
|
| Pivot Naturals, LLC (formerly ERS Holdings, LLC) $ |
|
| Adjustments $ |
|
| Notes |
| Total $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
| – |
|
|
| – |
|
|
| – |
|
|
|
|
| – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
| 25,075 |
|
|
| 1,029 |
|
|
| – |
|
|
|
|
| 26,104 |
|
Due diligence costs |
|
| 8,750 |
|
|
| – |
|
|
| – |
|
|
|
|
| 8,750 |
|
Foreign exchange loss |
|
| 101,466 |
|
|
| – |
|
|
| – |
|
|
|
|
| 101,466 |
|
General and administrative |
|
| 344,868 |
|
|
| 3,939 |
|
|
| – |
|
|
|
|
| 348,807 |
|
Management fees |
|
| 303,421 |
|
|
| – |
|
|
| – |
|
|
|
|
| 303,421 |
|
Professional fees |
|
| 195,371 |
|
|
| 47,566 |
|
|
| – |
|
|
|
|
| 242,937 |
|
Research and development |
|
| 70,304 |
|
|
| 6,916 |
|
|
| – |
|
|
|
|
| 77,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
| 1,049,255 |
|
|
| 59,450 |
|
|
| – |
|
|
|
|
| 1,108,705 |
|
Loss from operations |
|
| (1,049,255 | ) |
|
| (59,450 | ) |
|
| – |
|
|
|
|
| (1,108,705 | ) |
Other (expense) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of discount on convertible debentures |
|
| (105,392 | ) |
|
| – |
|
|
| – |
|
|
|
|
| (105,392 | ) |
Gain on change in fair value of derivative liabilities |
|
| 204,711 |
|
|
| – |
|
|
| – |
|
|
|
|
| 204,711 |
|
Gain on disposal of asset |
|
| 609,311 |
|
|
| – |
|
|
| – |
|
|
|
|
| 609,311 |
|
Gain on settlement of debentures |
|
| 246,828 |
|
|
| – |
|
|
| – |
|
|
|
|
| 246,828 |
|
Interest expense |
|
| (27,385 | ) |
|
| – |
|
|
| – |
|
|
|
|
| (27,385 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (expense) income |
|
| 928,073 |
|
|
| – |
|
|
| – |
|
|
|
|
| 928,073 |
|
Net loss |
|
| (121,182 | ) |
|
| (59,450 | ) |
|
| – |
|
|
|
|
| (180,632 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| 8,915 |
|
|
| – |
|
|
| – |
|
|
|
|
| 8,915 |
|
Net comprehensive loss |
|
| (112,267 | ) |
|
| (59,450 | ) |
|
| – |
|
|
|
|
| (171,717 | ) |
16 |
PIVOT PHARMACEUTICALS INC.
Notes to the Unaudited Pro Forma Combined Financial Statements
1. BASIS OF PREPARATION
The Unaudited Pro Forma Combined Balance Sheet represents the combined financial position of Pivot and ERS as of January 31, 2018 as if the acquisition occurred on February 1, 2017.
The Unaudited Pro Forma Combined Statement of Operations represent the combined financial results of Pivot and ERS assuming that the acquisition took place on February 1, 2017.
2. PRO FORMA ADJUSTMENTS
(i) | Adjustment to record convertible debenture issued for the acquisition of ERS. | |
| (ii) | Adjustment to record consideration for the acquisition of ERS, which includes 5,000,000 shares of common stock issued, $333,333 cash paid on closing date and a further $333,333 to be paid six (6) and twelve (12) months from closing date. |
| (iii) | Adjustment to eliminate members’ capital of ERS as of January 31, 2018 |
17 |