UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal year ended August 31, 2018 | |
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| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from _________ to ________ | |
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| Commission file number: 000-55022 |
| Blake Insomnia Therapeutics, Inc. | |
| (Exact name of registrant as specified in its charter) |
| Nevada |
| 46-0780380 |
| (State or other jurisdiction of incorporation or organization)
|
| (I.R.S. Employer Identification No.) |
| 244, 5th Avenue, Suite A-154 New York, NY |
| 10001 |
| (Address of principal executive offices) |
| (Zip Code) |
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| Registrant’s telephone number: (646) 453-4912 | ||
| Securities registered under Section 12(b) of the Exchange Act: |
| Title of each class |
| Name of each exchange on which registered |
| none |
| not applicable |
|
Securities registered under Section 12(g) of the Exchange Act:
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| Title of each class | ||
| Common Stock, par value of $0.001 | ||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x
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 (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 232.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ¨ No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| Non-accelerated filer | ¨ | Smaller reporting company | x |
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| Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 32,517 common share as of February 11, 2019
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Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Overview
We are a New York-based pharmaceutical company devoted to improving nighttime and daytime quality of life for people with insomnia. We have developed Zleepax, which is the first sleep aid with beta blockers as the major active agent.
First generation beta blockers inhibited natural melatonin secretion and had a negative impact on sleep. Recent publications have shown that certain third-generation beta blockers actually improve quality of sleep for patients with mild hypertension. These third-generation beta blockers has been widely used to treat hypertension since the early 1990s, is well tolerated in chronic use, has an attractive side-effect profile, and should thus perform excellently applied as a sleep enhancer. Our patent application covers the use of beta blockers—alone or in combination with other anti-insomnia drugs—for the treatment of stress-related insomnia.
We have assembled a team to conduct clinical trials of our Zleepax formula. We have entered into a joint venture with Sajo Consulting LLC for development and commercialization efforts associated with our drug. Canadian clinical trials were originally planned for Q3 2017 pending approval of a New Drug Submission by the Health Products and Food Branch of Health Canada. However, we have been unable to raise funds necessary to commence the trials.
We estimate that we will need $700,000 in financing to conduct our first clinical trial and $300,000 in operating costs. We estimate that we will need $2,500,000 in financing to conduct our clinical trial phase 2. The process is expected take one year to complete. We do not anticipate generating any revenues until our Zleepax formula is approved by relevant Regulatory authority (such as FDA for USA) and we have successfully brought the drug to market. If we are unable to generate financing to cover our clinical trials, overhead and costs to commercialize our products, we may not continue as a going concern.
Since our inception, we have been attempting to raise money to implement our business plan, but have not been able to secure the funds necessary to do so. The lack of funds have prevented us from growing the business as we had hoped. As we have been unable to raise the capital necessary to develop and market our services, we have recently been engaged in a search for other business opportunities which may benefit our shareholders and allow us to raise capital and operate. Recent negotiations with what we believe is a more viable business opportunity leads us to believe that we will be revising our business plan and focus over the next quarter. If this opportunity does not develop, however, we will continue to both seek new opportunities and look for capital to further our existing business plan.
Our fiscal year end is August 31. Our principal offices are located at 244, 5th Avenue, Suite A-154 New York, N.Y. 10001. Our phone number is +1 (646) 453-4912.
| 3 |
| Table of Contents |
Zleepax
Zleepax is the first sleep aid with beta blockers as the major active agent. First generation beta blockers inhibited natural melatonin secretion and had a negative impact on sleep. Recent publications have shown that certain third-generation beta blockers actually improve quality of sleep for patients with mild hypertension.
These third-generation beta blockers has been widely used to treat hypertension since the early 1990s, is well tolerated in chronic use, has an attractive side-effect profile, and should thus perform excellently applied as a sleep enhancer. Our patent application cover the use of beta blockers—alone or in combination with other anti-insomnia drugs—for the treatment of stress-related insomnia.
Stress is one of the most common causes of insomnia1. However, the relationship between insomnia and stress is complex—with the one often causing or exacerbating the other. A divorce or financial troubles, for example, can cause stress that leads to transient insomnia. This, in turn, can make the person less able to cope during the day, creating further stress. In a vicious circle, the further stress can eventually lead to intermittent or even chronic insomnia, where many patients name stress symptoms such as a pounding heart as what keep them awake at night.
Where traditional hypnotics “force” people to sleep by depressing the central nervous system, Zleepax (ZLX-1) acts by diminishing the physical symptoms of stress that keep people awake at night.
According to patients, the number one problem with traditional sleeping pills is residual daytime sedation. The potential for tolerance build-up and addiction are also major perceived disadvantages. Based on beta blockers, Zleepax dramatically reduces these and many other unwanted side effects. This means that, in stark contrast to existing hypnotics, Zleepax should be able to give many patients a better night’s sleep with fewer of the side effects they do not want.
Government Regulation
Government authorities in the U.S., at the federal, state and local level, as well as foreign countries and local foreign governments, regulate the research, development, testing, manufacture, labeling, promotion, advertising, distribution, sampling, marketing, import and export of our products. Our products will require regulatory approval by government agencies prior to commercialization. In particular, human pharmaceutical products are subject to rigorous pre-clinical and clinical trials and other approval procedures of the FDA and similar regulatory authorities in foreign countries. The process of obtaining these approvals and the subsequent compliance with appropriate domestic and foreign laws, rules and regulations require the expenditure of significant time and human and financial resources.
Employees
As of August 31, 2018, we had one full-time employee.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 1B. Unresolved Staff Comments
None.
We currently maintain an office at 244, 5th Avenue, Suite A-154, New York, N.Y. 10001. We have no monthly rent, nor do we accrue any expense for monthly rent. Mr. Birger Olsen, our prior officer and director, provides us a facility in which we conduct business on our behalf. Mr. Olsen does not receive any remuneration for the use of this facility or time spent on behalf of us. We do not believe that we will need to obtain additional office space at any time in the foreseeable future, approximately 12 months, until our business plan is more fully implemented.
We have no current legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
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| Table of Contents |
Market Information
Our common stock is quoted under the symbol “BKIT” on the OTCPink operated by OTC Markets Group, Inc. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.
The following tables set forth the range of high and low bid information for our common stock for the each of the periods indicated as reported by the OTCPink. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
| Fiscal Year Ending August 31, 2017 | ||||||||
| Quarter Ended |
| High $ |
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| Low $ |
| ||
| November 31, 2016 |
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| 1.55 |
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| 0.7 |
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| February 28, 2017 |
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| 1.6 |
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| 0.3511 |
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| May 31, 2017 |
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| 0.85 |
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| 0.33 |
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| August 31, 2017 |
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| 0.5225 |
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| 0.0041 |
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| Fiscal Year Ending August 31, 2018 | ||||||||
| Quarter Ended |
| High $ |
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| Low $ |
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| November 31, 2017 |
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| 0.1750 |
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| 0.0500 |
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| February 28, 2018 |
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| 0.1050 |
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| 0.0400 |
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| May 31, 2018 |
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| 0.0700 |
|
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| 0.0300 |
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| August 31, 2018 |
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| 0.0600 |
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| 0.0100 |
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On February 11, 2019 the last sales price per share of our common stock was $0.15.
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| Table of Contents |
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.
Holders of Our Common Stock
As of February 11, 2019 we had 32,517 shares of our common stock issued and outstanding, held by approximately 5 shareholders of record at our transfer agent, with other shareholders holding our shares in street name.
Dividends
We currently intend to retain future earnings for the operation of our business. We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.
In the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that may be declared from time to time on the common stock by our board of directors from funds legally available.
There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
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| 1. | We would not be able to pay our debts as they become due in the usual course of business; or |
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| 2. | Our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
Securities Authorized for Issuance under Equity Compensation Plans
We do not have an equity compensation plan.
Recent Sales of Unregistered Securities
On October 26, 2018, the Company underwent a reverse stock split at a ratio of 1,000 to 1 share, reducing the issued and outstanding shares from 31,597,572 to 32,517 shares issued and outstanding as of the date of the reverse split.
Item 6. Selected Financial Data
Not required under Regulation S-K for “smaller reporting companies.”
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| Table of Contents |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations for the Years Ended August 31, 2018 and 2017
Revenues
We have not earned any revenues since our inception. We can provide no assurance that we will generate revenues from our sleep insomnia drug business to sustain a viable business operation.
Expenses
We incurred operating expenses in the amount of $31,251 for the year ended August 31, 2018, as compared with $98,409 for the same period ended 2017. Our operating expenses for the year ended August 31, 2018 consisted of administrative expenses of $28,329 and patent costs of $2,707 as compared with administrative expenses of $95,833 and patent costs of $2,576 or the year ended August 31, 2017.
We will likely have increased operating expenses in 2019 if we are able to obtain financing and implement our business plan.
We incurred interest expense of $13,950 for the year ended August 31, 2018, as compared with $11,914 for the year ended August 31, 2017.
We may have increased interest expenses in future years as we seek out new financing opportunities.
Net Loss
We incurred a net loss in the amount of $45,201 for the year ended August 31, 2018, as compared with a net loss of $110,323 for the same period ended 2017. Our losses for each period are attributable to operating expenses together with a lack of any revenues.
Liquidity and Capital Resources
On October 26, 2018, the Company underwent a reverse stock split at a ratio of 1,000 to 1 share, reducing the issued and outstanding shares from 31,597,572 to 32,517 shares issued and outstanding as of the date of the reverse split. All share amounts in these financial statements and footnotes reflect the reverse stock split.
As of August 31, 2018, we had total current assets of $nil Our total current liabilities as of August 31, 2018 were $236,450. As a result, we had a working capital deficit of $236,450 as of August 31, 2018.
Operating activities used $84 in cash for the year ended August 31, 2018, as compared with $76,699 in cash for the same period ended 2017. Our net loss was the main reason for our negative operating cash flow in both periods.
Financing activities provided $nil for the year ended August 31, 2018, as compared with $72,000 for the same period ended 2017. Our positive cash flow from financing activities for 2017 was a result of proceeds from notes payable. There we no positive cash flow in 2018.
On September 19, 2016, we issued a promissory note payable in the amount of $42,000. The note is due on demand and bears interest at 10% per annum.
On March 17, 2017, we issued a promissory note payable in the amount of $10,000. The note is due on demand and bears interest at 10% per annum.
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| Table of Contents |
On April 19, 2017, we issued a promissory note payable in the amount of $20,000. The note is due on demand and bears interest at 10% per annum.
Despite the short term loans, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate our continuation as a going concern. However, we have no revenues as of August 31, 2018. We currently have negative working capital, and have not completed our efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time.
Management anticipates that we will be dependent, for the near future, on additional investment capital to fund operating expenses. We intend to position the company so that we may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that we will be successful in this or any of our endeavors or become financially viable and continue as a going concern.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Our critical accounting policies are set forth in Note 2 to the financial statements.
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.
Off Balance Sheet Arrangements
As of August 31, 2018, there were no off balance sheet arrangements.
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| Table of Contents |
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements Required by Article 8 of Regulation S-X:
| Audited Financial Statements: | |
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| F-1 | |
| F-2 | |
| F-3 | Statements of Operations for the years ended August 31, 2018 and 2017; |
| F-4 | Statement of Stockholders’ Equity from inception to December 31, 2017; |
| F-5 | Statements of Cash Flows for the years ended August 31, 2018 and 2017; and |
| F-6 | |
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| 19720 Jetton Road, 3rd Floor Cornelius, NC 28031 Tel: 704-897-8336 Fax: 704-919-5089 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Blake Insomnia Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Blake Insomnia Therapeutics, Inc. (the Company) as of August 31, 2018 and 2017, and the related statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended August 31, 2018, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended August 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight 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.
The Company's Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has insufficient working capital, a stockholders’ deficit and recurring net losses, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L&L CPAS, PA
L&L CPAS, PA
We have served as the Company’s auditor since March 2014.
Cornelius, NC
February 19, 2019
www.llcpas.net
| F-1 |
| Table of Contents |
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| Balance Sheets | ||||||||
| (Audtited) | ||||||||
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| As of August 31, |
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| As of August 31, |
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| 2018 |
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| 2017 |
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| ASSETS | ||||||||
| Current Assets |
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| Cash |
| $ | - |
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| $ | 84 |
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| Total Current Assets |
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| - |
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| 84 |
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| TOTAL ASSETS |
| $ | - |
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| $ | 84 |
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| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities |
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| Notes payable |
| $ | 139,500 |
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| $ | 139,500 |
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| Accounts payable |
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| 31,318 |
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| 21,406 |
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| Accounts payable-related pary |
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| 21,040 |
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|
| - |
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| Due to related party |
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| 11,637 |
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| 11,637 |
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| Accrued interest |
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| 32,955 |
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| 19,005 |
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| Total Current Liabilities |
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| 236,450 |
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| 191,548 |
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| Total Liabilities |
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| 236,450 |
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| 191,548 |
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| Stockholders' Equity (Deficit) |
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| Preferred stock ($0.0001 par value; 10,000,000 authorized; no shares issued and outstanding) |
|
| - |
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| - |
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| Common stock ($0.0001 par value, 100,000,000 shares authorized; 32,517 shares issued and outstanding) |
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| 3 |
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| 3 |
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| Additional paid-in capital |
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| 220,932 |
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| 220,932 |
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| Deficit accumulated during the development stage |
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| (457,385 | ) |
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| (412,399 | ) |
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| Total Stockholders' Equity (Deficit) |
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| (236,450 | ) |
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| (191,464 | ) |
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| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) |
| $ | - |
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| $ | 84 |
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The accompanying notes are an integral part of these audited financial statements.
| F-2 |
| Table of Contents |
| Statements of Operations | ||||||||
| (Audited) | ||||||||
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| For the year |
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| For the year |
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| ended |
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| ended |
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| August 31, 2018 |
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| August 31, 2017 |
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| Revenues |
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| Revenues |
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| - |
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| - |
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| Total Revenues |
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| Operating Costs |
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| Administrative Expenses |
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| 28,329 |
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| 95,833 |
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| Patent Costs |
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| 2,707 |
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| 2,576 |
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| Total Operating Costs |
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| 31,036 |
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| 98,409 |
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| Other (Expense) |
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| Interest Expense |
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| (13,950 | ) |
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| (11,914 | ) |
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| Total Other (Expense) |
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| (13,950 | ) |
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| (11,914 | ) |
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| Net Loss |
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| (44,986 | ) |
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| (110,323 | ) |
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| Basic loss per share |
| $ | (1.38 | ) |
| $ | (3.39 | ) |
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| Weighted average number of common shares outstanding |
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| 32,517 |
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| 32,517 |
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The accompanying notes are an integral part of these audited financial statements.
| F-3 |
| Table of Contents |
| Statement of Changes in Stockholders' Equity | ||||||||||||
| (Audited) |
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|
|
|
|
| Deficit |
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||
|
|
|
|
|
| Common |
|
| Additional |
|
| During |
|
|
|
| |||||
|
|
| Common |
|
| Stock |
|
| Paid-in |
|
| Development |
|
|
|
| |||||
|
|
| Stock |
|
| Amount |
|
| Capital |
|
| Stage |
|
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Balances, August 31, 2016 |
|
| 32,517 |
|
| $ | 3 |
|
| $ | 220,932 |
|
| $ | (302,076 | ) |
| $ | (81,141 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for year ended August 31, 2017 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (110,323 | ) |
|
| (110,323 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances, August 31, 2017 |
|
| 32,517 |
|
| $ | 3 |
|
| $ | 220,932 |
|
| $ | (412,399 | ) |
| $ | (191,464 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for year ended August 31, 2018 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (44,986 | ) |
|
| (44,986 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances, August 31, 2018 |
|
| 32,517 |
|
| $ | 3 |
|
| $ | 220,932 |
|
| $ | (457,385 | ) |
| $ | (236,450 | ) |
The accompanying notes are an integral part of these audited financial statements.
| F-4 |
| Table of Contents |
| Statements of Cash Flows | ||||||||
| (Audited) | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| For the year |
|
| For the year |
| ||
|
|
| ended |
|
| ended |
| ||
|
|
| August 31, 2018 |
|
| August 31, 2017 |
| ||
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
| Net (loss) |
| $ | (44,986 | ) |
| $ | (110,323 | ) |
| Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Increase (decrease) in accounts payable |
|
| 9,912 |
|
|
| 10,609 |
|
| Increase (decrease) in accounts payable related party |
|
| 21,040 |
|
|
| 11,101 |
|
| Increase (decrease) in accrued interest |
|
| 13,950 |
|
|
| 11,914 |
|
|
|
|
|
|
|
|
|
|
|
| Net cash (used in) operating activities |
|
| (84 | ) |
|
| (76,699 | ) |
|
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from notes paybable |
|
| - |
|
|
| 72,000 |
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by financing activities |
|
| - |
|
|
| 72,000 |
|
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in cash |
|
| (84 | ) |
|
| (4,699 | ) |
|
|
|
|
|
|
|
|
|
|
| Cash at beginning of period |
|
| 84 |
|
|
| 4,783 |
|
|
|
|
|
|
|
|
|
|
|
| Cash at end of period |
| $ | - |
|
| $ | 84 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
|
|
| Cash Paid For: |
|
|
|
|
|
|
|
|
| Interest |
| $ | - |
|
| $ | - |
|
| Income Taxes |
| $ | - |
|
| $ | - |
|
The accompanying notes are an integral part of these audited financial statements.
| F-5 |
| Table of Contents |
| Blake Insomnia Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS (A Development Stage Company) August 31, 2018 |
| 1. NATURE OF OPERATIONS |
Blake Insomnia Therapeutics, Inc. (“The Company”) was incorporated in the State of Nevada on August 11, 2012 as Book It Local, Inc. to develop its online booking system to help consumers find and hire live entertainment for weddings, corporate events, private parties, night clubs, grand openings, and other events. On September 1, 2015, the Company changed its name to Blake Insomnia Therapeutics, Inc. The Company is in the development stage with no revenues and a limited operating history.
| 2. GOING CONCERN CONSIDERATION |
These financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a cumulative net loss of $457,385 since its inception and requires capital for its contemplated operation and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern.
Future issuances of the Company's equity or debt securities will be required in order for the Company to continue to finance its operations and continue as a going concern. The Company's present revenues are insufficient to meet operating expenses. The financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
| 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company’s year-end is August 31.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires that management makes 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 period. Actual results could differ from those estimates.
| F-6 |
| Table of Contents |
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met:
|
| (i) | persuasive evidence of an arrangement exists, |
|
| (ii) | the services have been rendered and all required milestones achieved, |
|
| (iii) | the sales price is fixed or determinable, and |
|
| (iv) | collectability is reasonably assured. |
On January 1, 2017, the Company adopted the new accounting standard ASC 606, “Revenue from Contracts with Customers” and all the related amendments (“new revenue standard”) to all contracts using the modified retrospective method, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting standards under Topic 605. The adoption has had an immaterial impact to the Company’s comparative net income and as such comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the adoption of the new standard to be immaterial to the Company’s net income on an ongoing basis.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC 830, “Foreign Currency Matters”, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.
Stock-Based Compensation
The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
Development Stage Company
The Company complies with Financial Accounting Standards Codification (“ASC”) 915 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as development stage enterprise.
Fair Value for Financial Assets and Financial Liabilities
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
| F-7 |
| Table of Contents |
The carrying amounts of the Company’s financial assets and liabilities, such as cash, approximate their fair values because of the short maturity of these instruments.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at August 31, 2018, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the period ended August 31, 2018.
Income Taxes
The Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At August 31, 2018 a full deferred tax asset valuation allowance has been provided and no deferred tax asset has been recorded.
Basic and Diluted Net Income (Loss) per Share
The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. 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 common shares if their effect is anti-dilutive.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption.
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance. The new standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB approved a one-year deferral of the effective date of this standard to annual reporting periods, and interim reporting periods within those years, beginning after December 15, 2017. The Company adopted this standard effective January 1, 2018 using the modified retrospective method. The adoption of this guidance did not have a significant impact on the Company’s financial statements.
In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015- 11”). ASU 2015-11, which simplifies the measurement of inventories valued under most methods, including the Company’s inventories valued under FIFO — the first-in, first-out cost method. Inventories valued under LIFO — the last-in, first-out method — are excluded. Under this new guidance, inventories valued under these methods would be valued at the lower of cost and net realizable value, with net realizable value defined as the estimated selling price less reasonable costs to sell the inventory. This guidance is effective for annual reporting beginning after December 15, 2016, including interim periods within the year of adoption, with early application permitted. The Company adopted this standard on January 1, 2017. The adoption of this guidance did not have a significant impact on the Company’s financial statements.
| F-8 |
| Table of Contents |
In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses the recognition, measurement, presentation and disclosure of financial assets and liabilities. This ASU primarily affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, this ASU clarifies the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. This standard became effective on January 1, 2018. This standard did not have a material impact on our consolidated financial statements and related disclosures for the year ended |August 31, 2018.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), or ASU 2016-02. ASU 2016-02 requires that lessees recognize in the statement of financial position for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset representing the lessee’s right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The adoption of this guidance is not expected to have a significant impact on our financial statements.
In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 will simplify the income tax consequences, accounting for forfeitures and classification on the statements of consolidated cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. As a result of adopting ASU No. 2016-09 during the year ended The adoption of this standard had no significant impact on our financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), or ASU 2016-15. The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under FASB Accounting Standards Codification 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. We have evaluated the impact of ASU No. 2016-15 and noted it had no impact on our financial statements for the year ended August 31, 2018.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issue Task Force), or ASU 2016-18. This new standard addresses the diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within the year of adoption, with early adoption permitted. Our financial statements reflect this standard for the year ended August 31, 2018.
In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (ASC 260) Distinguishing Liabilities from Equity (ASC 480) Derivatives and Hedging (ASC 815),” which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of ASU 2017-11 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has concluded that the retroactive provisions of ASU 2017-11 should have no impact on the accounting for the Company.
| F-9 |
| Table of Contents |
4. MATERIAL AGREEMENTS
On February 6, 2017, the Company and Sajo Consulting LLC announced entry into a Letter of Intent to provide joint development and commercialization of Zleepax™, in combination with formulations to produce a series of oral drug products to aid in the treatment of insomnia. This venture looks to develop a product to treat transient insomnia through the mechanism of Blake’s proprietary formula.
On February 1, 2018, the Company entered into a consulting agreement with a former director. In consideration, the company agreed to compensate him with a 5% royalty for a period of 5 years for any revenue generated by us from sales of Zleepax and any new product or services derived from Zleepax.
5. NOTES PAYABLE
On August 31, 2014 the Company issued a promissory note payable in the amount of $5,000. The note is due on August 31, 2015 and bears interest at 10% per annum.
On November 20, 2014 the Company issued a promissory note payable in the amount of $10,000. The note is due on demand and bears interest at 10% per annum
On January 18, 2015 the Company issued a promissory note payable in the amount of $10,000. The note is due on demand and bears interest at 10% per annum.
On June 24, 2015 the Company issued a promissory note payable in the amount of $12,500. The note is due on demand and bears interest at 10% per annum.
On December 10, 2015 the Company issued a promissory note payable in the amount of $15,000. The note is due on demand and bears interest at 10% per annum.
On July 29, 2016 the Company issued a promissory note payable in the amount of $15,000. The note is due on demand and bears interest at 10% per annum.
On September 19, 2016 the Company issued a promissory note payable in the amount of $42,000. The note is due on demand and bears interest at 10% per annum.
On March 17, 2017 the Company issued a promissory note payable in the amount of $10,000. The note is due on demand and bears interest at 10% per annum.
On April 19, 2017 the Company issued a promissory note payable in the amount of $20,000. The note is due on demand and bears interest at 10% per annum.
The interest expense for the periods ended August 31, 2018 and August 31, 2017 is $13,950 and $11,914, respectively.
| F-10 |
| Table of Contents |
| 6. RELATED PARTY TRANSACTIONS |
The President of the Company provides management and office premises to the Company for no compensation. The effects of this is immaterial to the financial statements taken as a whole.
A shareholder of the company paid expenses on behalf of the company in the amount of $3,058 during the year ended August 31, 2016. During the year ended August 31, 2016, $2,522 was repaid. During the year ended August 31, 2017, a shareholder of the company paid expenses of $31,101 of expenses on behalf of the company. In June 2017, the company repaid $20,000 of expenses to the shareholder. As at August 31, 2018, there is a balance owing to the shareholder of $11,637. This balance is non-interest bearing and has no specified terms of repayment.
| 7. STOCKHOLDERS’ EQUITY |
In August, 2012, the Company authorized the issue of 100,000,000 common shares of the Company at par value of $.0001 and authorized the issue of 10,000,000 preferred shares at par value of $.0001.
On October 26, 2018, 2018 the Company undertook a 1,000 to 1 reverse stock split of the common shares. The stock split has been recorded in these financial statements retroactively.
At August 31, 2018, there are total of 32,517 common shares of the Company issued and outstanding.
8. INCOME TAXES
As of August 31, 2018, the Company had net operating loss carry forwards of approximately $457,000 that may be available to reduce future years' taxable income through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The difference between the Company's tax rate and the statutory rate is due to significant non-deductible expenses.
The provision for Federal income tax consists of the following:
|
|
| August 31 |
|
| August 31 |
| ||
|
|
| 2018 |
|
| 2017 |
| ||
| Federal income tax benefit attributable to: |
|
|
|
|
|
| ||
| Current operations |
| $ | 15,370 |
|
| $ | 37,510 |
|
| Less: valuation allowance |
|
| (15,370 | ) |
|
| (37,510 | ) |
| Net provision of income taxes |
| $ | - |
|
| $ | - |
|
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
|
|
| August 31, |
|
| August 31, |
| ||
|
|
| 2018 |
|
| 2017 |
| ||
| Deferred tax asset attributable to: |
|
|
|
|
|
| ||
| Net operating loss carryforward |
| $ | 155,380 |
|
| $ | 140,080 |
|
| Less: valuation allowance |
|
| (155,380 | ) |
|
| (140,080 | ) |
| Net deferred tax asset |
| $ | - |
|
| $ | - |
|
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
9. SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to August 31, 2018 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose, except as noted below.
| F-11 |
| Table of Contents |
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being August 31, 2017. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.
Management’s Annual Report on Internal Control over Financing Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of August 31, 2017 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of August 31, 2017, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending August 31, 2018: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
On January 31, 2018, Birger Jan Olsen agreed to transfer his 18,000,000 shares of common stock in the Company to FJ Investments, Inc., a Utah corporation pursuant to a Stock Purchase Agreement. Mr. Olsen received proceeds of $5,000. The source of the consideration paid to Mr. Olsen was the existing funds of the purchaser. The Form 10 information required by Item 5.01 of Form 8-K is contained in this annual report on Form 10-K.
As a result of this transaction, there has been a change in control of the company. There are no arrangements known to the company, the operation of which may, at a subsequent date, result in a change in control of the registrant.
| 10 |
| Table of Contents |
Item 10. Directors, Executive Officers and Corporate Governance
The following information sets forth the name, age, and position of our current director and executive officer.
| Name |
| Age |
| Positions and Offices Held |
| Daniel Cattlin |
| 29 |
| President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary, Treasurer and Director |
Set forth below is a brief description of the background and business experience of our current executive officer and director.
Daniel Cattlin
From June 2012 to October 2013, Mr. Cattlin worked for Cycad Enterprises as Operations Manager where he created budget schedules for tournaments, coordinated all logistics for teams, arranged and liaised with media and broadcasters, and aided with the negotiations of potential sponsors. From October 2013 to February 2014, Mr. Cattlin worked for News Corp UK as Online Sub-Editor where he developed and implemented new processes for online access, created and edited articles for online users, oversaw all online articles to ensure configuration with website and app services. From March 2014 to present, Mr. Cattlin works for Cyberfort Software, Inc. as CEO where he structures, negotiates and secures equity financing, oversees development for company IP, and develops, executes and monitors strategies for company’s assets and investments.
Term of Office
Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board, subject to their respective employment agreements.
Significant Employees
We have no significant employees other than our officers and directors.
Family Relationships
There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including:
1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity;
5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Committees of the Board
Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors.
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Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our CEO and director, Daniel Cattlin, at the address appearing on the first page of this annual report.
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended August 31, 2017, other than Mr. Olsen, who failed to file a Form 3 within 10 days as required.
Code of Ethics
Our Code of Ethics is included in the Current Report on Form 8-K filed on April 18, 2017.
Item 11. Executive Compensation
The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended August 31, 2018 and 2017.
| Name and principal position |
| Year |
| Salary ($) |
| Bonus ($) |
|
Stock Awards ($) |
| Option Awards ($) |
| All Other Compensation ($) (1)(2) |
| Total ($) |
|
| Birger Jan Olsen Former President, CEO, Director |
| 2018 2017 |
| 0 0 |
| 0 0 |
| 0 0 |
| 0 0 |
| 0 0 |
| 0 0 |
|
Narrative Disclosure to the Summary Compensation Table
We have not entered into any employment agreement or consulting agreement with our executive officers. There are no arrangements or plans in which we provide pension, retirement or similar benefits for executive officers.
Our decision to compensate officers depends on the availability of our cash resources with respect to the need for cash to further our business purposes.
Outstanding Equity Awards at Fiscal Year-End
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as of August 31, 2018.
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| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||
| OPTION AWARDS |
|
| STOCK AWARDS |
| ||||||||||||||||||||||||||||||||
| Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
|
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of Shares or Units of Stock That Have Not Vested (#) |
|
| Market Value of Shares or Units of Stock That Have Not Vested ($) |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
|
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| |||||||||
| Birger Jan Olsen |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
The following table sets forth, as of November 12, 2018, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.
Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address at: 244, 5th Avenue, Suite A-154 New York, NY 10001.
The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner.
|
|
| Common Stock |
| |||||
| Name and Address of Beneficial Owner |
| Number of Shares Owned (1) |
|
| Percent of Class (2) |
| ||
| FJ Investments International, Inc |
|
| 18,000,000 |
|
|
| 60 | % |
| All Directors and Executive Officers as a Group (1 person) |
|
| 0 |
|
|
| 0 | % |
| 5% Holders |
|
|
|
|
|
|
|
|
| NONE |
|
|
|
|
|
|
|
|
___________
| (1) | Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity. |
|
|
|
| (2) | Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 31,597,572 voting shares as of August 31, 2018. |
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Item 13. Certain Relationships and Related Transactions, and Director Independence
Other than described below or the transactions described under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
Birger Jan Olsen paid expenses on behalf of the company in the amount of $3,058 during the year ended August 31, 2016. During the year ended August 31, 2016, $2,522 was repaid. During the period ended August 31, 2017, he paid expenses of $31,101 of expenses on behalf of the company. As at August 31, 2018, there is a balance owing to the shareholder of $11,637. This balance is non-interest bearing and has no specified terms of repayment. In June 2017, the company repaid $20,000 of expenses to the shareholder.
Item 14. Principal Accounting Fees and Services
Below are tables of Audit Fees (amounts in US$) billed by our auditors in connection with the audit of the Company’s annual financial statements and review of the quarterly financial statements for the years ended:
| Financial Statements for the Year Ended August 31 |
| Audit Services |
|
| Audit Related Fees |
|
| Tax Fees |
|
| Other Fees |
| ||||
| 2018 |
| $ | 7,500 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| 2017 |
| $ | 7,500 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
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Item 15. Exhibits, Financial Statements Schedules
| (a) | Financial Statements and Schedules |
The following financial statements and schedules listed below are included in this Form 10-K.
Financial Statements (See Item 8)
| (b) | Exhibits |
| Exhibit Number |
| Description |
|
| Articles of Incorporation of Blake Insomnia Therapeutics, Inc. (the “Company”)1 | |
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| ||
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| ||
|
| ||
| 101** |
| The following materials from the Company’s Annual Report on Form 10-K for the year ended August 31, 2018 formatted in Extensible Business Reporting Language (XBRL). |
_________
1 Incorporated by reference to the Form S-1, filed by the Company with the Securities and Exchange Commission on September 19, 2012.
2 Incorporated by reference to the Form 8-K, filed by the Company with the Securities and Exchange Commission on September 15, 2015.
3 Incorporated by reference to the Form 8-K, filed by the Company with the Securities and Exchange Commission on April 18, 2017.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Blake Insomnia Therapeutics, Inc. |
| |
|
|
| |
| By: | /s/ Daniel Cattlin |
|
| Daniel Cattlin President, Chief Executive Officer, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary, Treasurer and Director. |
| |
| February 19, 2019 |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Daniel Cattlin |
|
| Daniel Cattlin President, Chief Executive Officer, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary, Treasurer and Director. |
| |
| February 19, 2019 |
|
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