UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM
10-Q/A AMENDMENT #1 (Mark10-Q(Mark One)
[X][X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
May31 August 2014OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to ______________
Commission File Number
333-133347000-53230PEPTIDE TECHNOLOGIES, INC.
(Exact
(Exact name of registrant as specified in its charter)Nevada 98-0479983 ------------------------------------- --------------------------- State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.)
| Nevada | 98-0479983 | |
| State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization | Identification No.) |
601 Union Street, Two Union Square, 42nd42nd Floor, Seattle, Washington 98101
-------------------------------------------------------------------------
(Address
(Address of principal executive offices) (Zip Code)
Registrant's
Registrant’s telephone number, including area code: (206) 236-9555
452-3995
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [X] No [_]
[ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [_][ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Larger accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [_] Smaller reporting company [X]
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [_][ ] No [X]
Number of shares issued and outstanding of the registrant'sregistrant’s class of common stock as of July 3,20 October 2014: 151,158,000156,412,660 shares of common stock
stock.
The Company recognized $nil$9,239 in revenues during the quarter ended May 31 August 2014.
1
EXPLANATORY NOTE
Peptide Technologies, Inc. is filing this Amendment to its Quarterly Report on
Form 10-Q for the quarter ended May 31, 2014 filed with the Securities and
Exchange Commission on July 16, 2014 for the sole purpose of correcting errors
in the XBRL portion of the filing. No other changes have been made to the
document.
PART I – FINANCIAL INFORMATION
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PEPTIDE TECHNOLOGIES, INC.
(A
(A Development Stage Company)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
AUGUST 31, 2014
Financial Statements
| Page | |
| Interim Consolidated Balance Sheets | F-5 |
| Interim Consolidated Statements of Loss and Comprehensive Loss | F-6 |
| Interim Consolidated Statements of Cash Flows | F-7 |
| Interim Consolidated Statement of Changes in Stockholders' Deficiency | F-8 |
| Notes to Interim Consolidated Financial Statements | F-9 to |
F-3
Peptide Technologies, Inc.
PEPTIDE TECHNOLOGIES, INC.
(A Development Stage Company)
Interim Consolidated Financial Statements
(Expressed
(Expressed in U.S. dollars)
Dollars)
(Unaudited)
August 31, May 2014
F-4 PEPTIDE TECHNOLOGIES, INC. INTERIM CONSOLIDATED BALANCE SHEETS The accompanying notes are an integral part of these interim consolidated financial statements. F-5 PEPTIDE TECHNOLOGIES, INC. The accompanying notes are an integral part of these interim consolidated financial statements. F-6 PEPTIDE TECHNOLOGIES, INC. The accompanying notes are an integral part of these interim consolidated financial statements. F-7 PEPTIDE TECHNOLOGIES, INC. INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY The accompanying notes are an integral part of these interim consolidated financial statements. F-8 PEPTIDE TECHNOLOGIES, INC. F-9 PEPTIDE TECHNOLOGIES, INC. F-10 PEPTIDE TECHNOLOGIES, INC. F-11 PEPTIDE TECHNOLOGIES, INC. F-12 PEPTIDE TECHNOLOGIES, INC. F-13 PEPTIDE TECHNOLOGIES, INC. F-14 PEPTIDE TECHNOLOGIES, INC. F-15 PEPTIDE TECHNOLOGIES, INC. F-16 PEPTIDE TECHNOLOGIES, INC. F-17 PEPTIDE TECHNOLOGIES, INC. F-18 PEPTIDE TECHNOLOGIES, INC. F-19 PEPTIDE TECHNOLOGIES, INC. F-20 PEPTIDE TECHNOLOGIES, INC. F-21 PEPTIDE TECHNOLOGIES, INC. F-22 ITEM 2. The following discussion should be read in conjunction with our unaudited The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position of our Company should be read in conjunction with our most recent interim consolidated financial statements and notes appearing elsewhere in this Quarterly Report, on Form 10-Q filed April 11, 2014, on Form 10Q/A filed July 23, 2014, and our Annual Report on Form 10-K filed on February 28, 2014. The independent registered public accounting Discontinued Operations and New Developments Since inception, the On August 23, 2011, the Company entered into an Asset Purchase Agreement in which the Company, in exchange for 75,000,000 shares of the On December 14, 2011, the Company amended the Asset Purchase Agreement. As a result of the amendment, the purchase price of the assets was reduced from 75,000,000 shares to 45,000,000 shares, and 30,000,000 shares were returned to treasury and cancelled in exchange for payment of half of one percent of all gross monies received by the Company in relation to revenue earned from products derived from the use of all the formulae listed in the Asset Purchase Agreement. In addition, a monthly stipend of CAD $15,000 per month is to be paid commencing on the receipt of monies from the first contract signed to purchase products derived from the use of the formulae for a period of five years from the date of the Amended Asset Purchase Agreement. The cancellation of 30,000,000 common shares has been recorded as a recovery of intangible assets and intellectual property. 22 On May 1, 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the First Amendment were deemed null and void and the platforms were returned to the original vendor. On May 26, 2014, Peptide Technologies, Inc. entered into an exclusive global distribution agreement for its AquaNatural Marine coating with All-Sea Coatings Ltd. (a division of All-Sea Enterprises) of North Vancouver, Canada. On August 14, 2014, Peptide Technologies, Inc. ("the Company") entered into an Asset Purchase Agreement with All-Sea Coatings Business of Issuer The Company business is to realize a 3% Royalty of all Gross Sales & Revenue, to be paid to Peptide Technologies Inc. derived from All-Sea Coatings Ltd, until such a time should occur that Formulas and or All-Sea Coatings Ltd (the company) is sold. The Company has developed a non-commercialized, incomplete, re-formulated anti-fouling coating Facilities and Properties We do not own our own facilities and are presently renting an identity office in Seattle, Washington. Employees Our officers, directors, and employees are responsible for planning, developing and operational duties and will continue to do so throughout the early stages of our growth. Management's Discussion and Analysis of Financial Condition and Results of Operations Material Changes in Financial Condition At At 23 At We believe our existing cash balances will not be sufficient to carry our normal operations over the next three (3) months. Our short and long-term survival is dependent on sales of securities as necessary or from shareholder loans, and thus, to the extent that we require additional funds to support our operations or the expansion of our business, we will attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Continuing events in worldwide capital markets may make it more difficult for us to raise additional equity or capital. There can be no assurance that additional financing, if required, will be available to us or on acceptable terms. Result of Operations For The Three Months Ended We recognized During the three months ended We recognized net For The We recognized During the We recognized a net income of Off-Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements. 24 Critical Accounting Policies and Estimates The preparation of the Principles of Consolidation These interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Organizational and Start-up Costs Costs of start-up activities, including organizational costs, are expensed as incurred in accordance with Accounting Standards Codification Development-Stage Company During the year ended 30 November Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. Website In accordance with ASC 350-50, Intangible Assets Intangible assets include the cost of acquiring the intellectual property. In accordance with ASC 350-30 25 Impairment of Long-Lived Assets Long-lived assets include the website and intangible assets and intellectual property. Long-lived assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There has been no impairment as of Research and Development Research and development expenses are charged to operations as incurred. Income Taxes The Company adopted the ASC 740, Basic and Diluted Income (Loss) per Share In accordance with ASC 260, Estimated fair value of financial instruments The carrying value of the Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At Foreign Currency Translation The interim consolidated financial statements are presented in U.S. dollars. In accordance with ASC 830 26 Comprehensive Income (Loss) The Company adopted ASC 220, "Reporting Comprehensive Income." ASC 220 requires that the components and total amounts of comprehensive income be displayed in the interim consolidated financial statements beginning in 1998. Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities. Use of Estimates The preparation of the ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET We believe our market risk exposures arise primarily from exposures to fluctuations in interest rates and exchange rates. We presently only transact business in Canadian and U.S. Dollars. We believe that the exchange rate risk surrounding the future transactions of the Company will not materially or adversely affect our future earnings. We do not believe that we are subject to any seasonal trends. We do not use derivative financial instruments to manage risks or for speculative or trading purposes. ITEM 4. CONTROLS AND PROCEDURES As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control Management’s assessment of the effectiveness of the small business Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended 27 PART II ITEM 1. LEGAL PROCEEDINGS None. ITEM 1A. RISK FACTORS Not applicable. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On July 15, 2014, 4,660 shares of the Company’s common stock were issued for cash proceeds of $4,660. Exemption From Registration Claimed The above sale by the Company of its unregistered securities was made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). All of the individual and/or entity that purchased the unregistered securities was known to the Company and its management, through pre-existing business relationships, as long standing business associates . All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY Not Applicable. ITEM 5. OTHER INFORMATION All information required to be reported in a report on Form 8-K during the third quarter covered by this Form 10-Q has been reported. ITEM 6. EXHIBITS 28 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 29
Peptide Technologies, Inc.
(A Development Stage Company)
Interim Consolidated Balance Sheets
(Unaudited)
--------------------------------------------------------------------------------
(Expressed in U.S. dollars)
As at 30
As at 31 November 2013
May 2014 (Audited)
Notes $ $
-------------------------------------------------------------------- ---------- ---------------- ------------------
ASSETS
Current assets
Cash and cash equivalents 1,683 157
Intangible assets and intellectual property 7 - 45,000
Website 3 4,166 5,833
-------------------------------------------------------------------- ---------- ---------------- ------------------
Total assets 5,849 50,990
-------------------------------------------------------------------- ---------- ---------------- ------------------
STOCKHOLDERS' DEFICIENCY AND LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 4, 6 602,608 1,662,272
Notes payable 5 96,720 88,850
-------------------------------------------------------------------- ---------- ---------------- ------------------
Total liabilities 699,328 1,751,122
-------------------------------------------------------------------- ---------- ---------------- ------------------
Stockholders' deficiency
Capital stock 8
Authorized:
675,000,000 common shares, par value $0.001
Issued and outstanding:
31 May 2014 - 151,158,000 common shares
30 November 2013 - 151,123,000 common shares 151,158 151,123
Additional paid-in capital 183,244 148,279
Accumulated deficit (105,837) (105,837)
Accumulated deficit during development stage (922,044) (1,893,697)
-------------------------------------------------------------------- ---------- ---------------- ------------------
Total stockholders' deficiency (693,479) (1,700,132)
-------------------------------------------------------------------- ---------- ---------------- ------------------
Total stockholders' deficiency and liabilities 5,849 50,990
-------------------------------------------------------------------- ---------- ---------------- ------------------
F-5
(A Development Stage Company) August 31,
2014 November 30,
2013 (Unaudited) (Audited) ASSETS Current Assets Cash and cash equivalents $ 11,560 $ 157 Total Current Assets 11,560 157 Website (net of accumulated amortization of $6,667 and $4,167, respectively) (Note 3) 3,333 5,833 Intangible assets and intellectual property (Note 7) - 45,000 TOTAL ASSETS $ 14,893 $ 50,990 LIABILITIES AND STOCKHOLDERS' DEFICIENCY LIABILITIES Current Liabilities Accounts payable and accrued liabilities (Note 4) $ 651,968 $ 1,662,272 Notes payable and accrued interest (Note 5) 105,631 88,850 Total Current Liabilities 757,599 1,751,122 STOCKHOLDERS’ DEFICIENCY Capital Stock (Note 8) Authorized: 675,000,000 common shares, par value $0.001 per share Common shares issued and outstanding: 156,412,660 and 151,123,000 at August 31, 2014 and November 30, 2013, respectively 156,413 151,123 Additional paid-in capital 187,899 148,279 Accumulated deficit (105,837 ) (105,837 ) Accumulated deficit during development stage (981,181 ) (1,893,697 ) Total Stockholders’ Deficiency (742,706 ) (1,700,132 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY $ 14,893 $ 50,990
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Unaudited) For the three-month period ended August 31, 2014 For the three-month period ended August 31, 2013 For the nine-month period ended August 31, 2014 For the nine-month period ended August 31, 2013 Cumulative from re-entering of development stage on June 26, 2010 to August 31, 2014 Revenue Revenue $ 9,239 $ - $ 9,239 $ - $ 9,239 Expenses Consulting - 75,000 - 227,000 552,975 Salaries and bonus (Note 4) 49,224 159,000 364,568 477,000 1,434,652 Office and administration 4,185 5,419 15,563 13,963 68,588 Professional fees 13,494 5,412 23,255 19,117 174,998 Supplies and materials 1,909 1,101 9,903 1,101 70,135 68,812 245,932 413,289 738,181 2,301,348 Net Loss before Other Items (59,573 ) (245,932 ) (404,050 ) (738,181 ) (2,292,109 ) Other Items Write down of intangible assets (Note 7) - - (45,000 ) - (45,000 ) Forgiveness of debt (Note 6) - - 1,361,000 - 1,361,000 Foreign exchange gain (loss) 1,523 (1,274 ) 3,252 2,898 5,366 Interest expense (Note 5) (1,087 ) (1,097 ) (2,686 ) (2,909 ) (10,438 ) Net Profit (Loss) for the Period (59,137 ) (248,303 ) 912,516 (738,192 ) (981,181 ) Other Comprehensive Loss Foreign currency translation adjustment - - - - (333 ) Comprehensive Profit (Loss) for the Period $ (59,137 ) $ (248,303 ) $ 912,516 $ (738,192 ) $ (981,514 ) Profit (Loss) per share from operations – Basic and diluted $ (0.00 ) $ (0.00 ) $ 0.01 $ (0.00 ) Weighted Average Number of Shares Outstanding 153,143,767 151,107,016 152,154,135 150,022,908
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) For the three-month
period ended
August 31, 2014 For the three-month
period ended
August 31, 2013 For the nine-month
period ended
August 31, 2014 For the nine-month
period ended
August 31, 2013 Cumulative from
re-entering of development stage on June 26, 2010 to
August 31, 2014 OPERATING ACTIVITIES Net profit (loss) $ (59,137 ) $ (248,303 ) $ 912,516 $ (738,192 ) $ (981,181 ) Adjustments for non-cash items: Accrued interest 1,087 1,097 2,686 2,909 10,438 Amortization 833 833 2,500 2,500 6,667 Foreign exchange gain (loss) (1,523 ) 1,275 (3,252 ) (2,898 ) (5,366 ) Forgiveness of debt (Note 6) - - (1,361,000 ) - (1,361,000 ) Non-cash consulting expense - - - - 2,000 Share-based payment 5,250 - 5,250 - 13,250 Write down of intangible assets and intellectual property (Note 7) - - 45,000 - 45,000 Changes in operating assets and liabilities Decrease in prepaid expenses - - - 3,494 2,710 Increase in accounts payable and accrued liabilities 49,360 225,000 350,696 684,678 2,012,218 Cash used in operating activities (4,130 ) (20,098 ) (45,604 ) (47,509 ) (255,264 ) INVESTING ACTIVITIES Purchase of website - - - - (10,000 ) Cash used in investing activities - - - - (10,000 ) FINANCING ACTIVITIES Proceeds from issuance of common shares, net of share issuance costs 4,660 25,000 39,660 45,000 160,774 Increase in notes payable 9,500 - 17,347 - 84,559 Contribution by related party - - - - 27,288 Cash from financing activities 14,007 25,000 57,007 45,000 272,621 Effect of foreign exchange rate changes on cash - - - - (333 ) Increase (decrease) in cash and cash equivalents 9,877 4,902 11,403 (2,509 ) 7,024 Cash and cash equivalents, beginning of period 1,683 369 157 7,780 4,536 Cash and cash equivalents, end of period $ 11,560 $ 5,271 $ 11,560 $ 5,271 $ 11,560 Supplemental Disclosure of Cash Flow Information (Note 12)
(A Development Stage Company)
For the Period from November 30, 2013 through August 31, 2014
(Unaudited) CAPITAL STOCK ACCUMULATED ADDITIONAL DEFICIT DURING PAID-IN ACCUMULATED DEVELOPMENT SHARES AMOUNT CAPITAL DEFICIT STAGE TOTAL Balances, 30 November 2012 149,078,000 $ 149,078 $ 105,324 $ (105,837 ) $ (898,221 ) $ (749,656 ) Shares issued for Cash, net of share issuance costs (Note 8) 45,000 45 42,955 - - 43,000 Contractor services (Note 8) 2,000,000 2,000 - - - 2,000 Net loss for the year - - - - (995,477 ) (995,477 ) Balance, 30 November 2013 151,123,000 151,123 148,279 (105,837 ) (1,893,698 ) (1,700,132 ) Shares issued for Cash, net of share issuance costs (Note 8) 39,660 40 39,620 - - 39,660 Related party services 5,250,000 5,250 - - - 5,250 Net profit (loss) for the period - - - - 912,516 912,516 Balances, 31 August 2014 156,412,660 $ 156,413 $ 187,899 $ (105,837 ) $ (981,182 ) $ (742,706 )
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)1. NATURE AND CONTINUANCE OF OPERATIONS 1.1 Organization Peptide Technologies, Inc. (the “Company”) was incorporated in the State of Nevada, United States of America, on 18 November 2005. On 29 July 2010, the Company’s name was changed from Online Originals, Inc. to CREEnergy Corporation. Effective 12 October 2011, the Company’s name was changed from CREEnergy Corporation to Peptide Technologies, Inc. The Company’s year-end is 30 November. The Company is currently a development stage Company. On 5 August 2013, the Company incorporated Pept Peptide Technologies Inc. (“Pept Peptide”), a wholly-owned subsidiary, under the laws of British Columbia. Pept Peptide currently does not have any transactions from the date of incorporation on 5 August 2013 to 31 August 2014. 1.2 Nature of Operations and Change in Business Upon inception on 18 November 2005, the Company’s business plan was to develop a membership-based website art gallery/auction house specifically focused on displaying and selling original artwork. The Company changed its status from a development stage company to an operating company on 30 November 2009. Management realized that the results of operations from the sale of artwork lacks luster and decided to change the Company’s business focus and plan for other strategic opportunities. Effective 26 June 2010, the Company became a development stage company focusing on a new business. On 23 August 2011, the Company entered into an agreement (the “Asset Purchase Agreement”) in which the Company, in exchange for 75,000,000 shares of the Company’s restricted common stock, received all rights and title to proprietary technologies and formulas involving the application of specialty Peptides. The Company has changed its business focus to the manufacturing and distribution of natural peptide solutions to combat the economic burden of bio-fouling. On 14 December 2011, the Company amended the Asset Purchase Agreement (the “First Amendment”). As a result of the First Amendment, the purchase price of the assets was reduced from 75,000,000 shares to 45,000,000 shares, and 30,000,000 shares were returned to treasury (Note 7). On 1 May 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the First Amendment were deemed null and void and the platforms were returned to the original vendor (Note 7). On 26 May 2014, the Company entered into an exclusive global distribution agreement for its AquaNatural Marine coating with All-Sea Coatings Ltd. (a division of All-Sea Enterprises) of North Vancouver, Canada. This agreement has been replaced with an Asset Purchase Agreement date 14 August 2014. On 14 August 2014, the Company entered into an Asset Purchase Agreement with All-Sea Coatings Ltd. All-Sea Coatings Ltd has acquired from the Company the non-commercialized re-formulated assets that were developed by the Company. The Company business is to realize a 3% Royalty of all Gross Sales & Revenue, to be paid to the Company derived from All-Sea Coatings Ltd.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)1.3 Basis of Going Concern The accompanying interim consolidated financial statements as at 31 August 2014 and for the nine month period then ended have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company has net profit of $912,516 for the nine month period ended 31 August 2014 (31 August 2013 – loss of $738,192; cumulative loss - $981,514) and has a working capital deficit of $746,039 at 31 August 2014 (30 November 2013 - $1,750,965). Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ended 30 November 2014. However, if the Company is unable to raise additional capital in the near future or met financing requirements, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern. These interim consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Although management is actively seeking to add new products and/or services in order to show profitability, and is seeking additional sources of equity or debt financing, there is no assurance that these activities will be successful. The Company has not yet been able to find products and services that would contribute to their business due to the continued economic condition. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 1.4 Unaudited Statements While the information presented in the accompanying interim consolidated financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Except as disclosed below, these interim consolidated financial statements.
Peptide Technologies, Inc.
(A Development Stage Company)
Interim Consolidated Statementsstatements follow the same accounting policies and methods of Income (Loss) and Comprehensive Income (Loss)
(Unaudited)
--------------------------------------------------------------------------------
(Expressed in U.S. dollars)
Cumulative amounts
Fortheir application as the For the For the For the from re-entering
three month three month six month six month of development
period ended period ended period ended period ended stage on 26 June
31 May 2014 31 MayCompany’s audited 30 November 2013 31 May 2014 31 May 2013 2010 to 31 May 2014
Notes $ $ $ $ $
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Expenses
Consulting - 77,000 - 152,000 552,975
Salaries and bonus 4,6 157,404 159,000 315,344 318,000 1,385,428
General and administrative 9 8,308 6,605 11,378 8,545 64,403
Professional fees 4,011 5,072 9,761 13,705 161,504
Supplies and materials 212 - 7,994 - 68,226
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Net Loss before Other Items (169,935) (247,677) (344,477) (492,250) (2,232,536)
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Other Items
Foreign exchange gain (loss) (1,982) 488 1,729 1,624 3,843
Interest expense 5 (713) (885) (1,599) (1,812) (9,351)
Forgiveness of accounts 4,6
payable 1,361,000 - 1,361,000 - 1,361,000
Write down of intangible
assets and intellectual
property 7 (45,000) - (45,000) - (45,000)
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Net Income (Loss) for the
Period 1,143,370 (248,074) 971,653 (492,438) (922,044)
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Other Comprehensive Income
(Loss)
Foreign currency - - - - (333)
translation adjustment
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Comprehensive Income (Loss) 1,143,370 (248,074) 971,653 (492,438) (922,377)
for the Period
-------------------------------- ------- ------------------ -------------- --------------- --------------- --------------------
Income (loss) per share from 0.01 (0.00) 0.01 (0.00)
operations - Basic and diluted
-------------------------------- ------- ------------------ -------------- --------------- ---------------
Weighted Average Number of 151,152,341 149,858,439 151,143,249 149,470,376
Shares Outstanding
-------------------------------- ------- ------------------ -------------- --------------- ---------------
F-6
The accompanying notes are an integral part ofannual consolidated financial statements. It is suggested that these interim consolidated financial statements.
Peptide Technologies, Inc.
(A Development Stage Company)
Interim Consolidated Statements of Cash Flows
(Unaudited)
-------------------------------------------------------------------------------------------------------------------
(Expressedstatements be read in U.S. dollars)
Cumulative amounts
from re-entering
Forconjunction with the For the of development
For the For the six month six month stage
three month three month period period on
period ended period ended ended 31 ended 31 26 June 2010
31 May 2014 31 May 2013 May 2014 May 2013 to 31 May 2014
$ $ $ $ $
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
OPERATING ACTIVITIES
Net income (loss)Company’s audited consolidated financial statements for the period 1,143,370 (248,074) 971,653 (492,438) (922,044)
Adjustmentsyear ended 30 November 2013, included in the annual report previously filed with the Securities and Exchange Commission on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to reconcile net income (loss)be expected for the full year.The information as of 30 November 2013 is taken from the audited consolidated financial statements as of that date.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)2. SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to cash used by operating activities
Accrued interest 713 885 1,599 1,812 9,351
Amortization 834 833 1,667 1,667 5,834
Foreign exchange gain (loss) 1,982 (488) (1,729) (1,624) (3,843)
Forgiveness of accounts payable (1,361,000) - (1,361,000) - (1,361,000)
Non-cash consulting expense - - - - 2,000
Share-based payment - - - - 8,000
Write down of intangible assets and 45,000 - 45,000 - 45,000
Changesassist in operating assets and liabilities
Decrease in prepaid expenses - - - 3,494 2,709
Increase in accounts payable and accrued 136,916 222,433 301,336 459,678 1,962,859
liabilities
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Cash used in operating activities (32,185) (24,411) (41,474) (27,411) (251,134)
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
INVESTING ACTIVITIES
Purchase of website - - - - (10,000)
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Cash used in investing activities - - - - (10,000)
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
FINANCING ACTIVITIES
Proceeds from issuance of common shares, net of 25,000 20,000 35,000 20,000 156,114
Increase in notes payable 8,000 - 8,000 - 75,212
Contribution by related party - - - - 27,288
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Cash from financing activities 33,000 20,000 43,000 20,000 258,614
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Effect of foreign exchange rate changes on cash - - - - (333)
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Increase (decrease) in cash and cash equivalents 815 (4,411) 1,526 (7,411) (2,853)
Cash and cash equivalents, beginning of period 868 4,780 157 7,780 4,536
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Cash and cash equivalents, end of period 1,683 369 1,683 369 1,683
-------------------------------------------------- --------------- --------------- --------------- ------------ --------------------
Supplemental cash flow information (Note 12)
F-7understanding the Company’s interim consolidated financial statements. The accompany notes are an integral part of these interim consolidated financial statements.
Peptide Technologies, Inc.
(A Development Stage Company)
Interim Consolidated Statements of Changes in Stockholders' Deficiency
(Unaudited)
-------------------------------------------------------------------------------------------------------------------
(Expressed in U.S. dollars)
Accumulated
Additional deficit during
paid-in Accumulated development
Number of Capital stock capital deficit stage Total
shares $ $ $ $ $
--------------------------------------- --------------- --------------- ------------ --------------- ----------------- -------------
Balances, 30 November 2012 149,078,000 149,078 105,324 (105,837) (898,221) (749,656)
Shares issued for
Cash, net of share issuance costs
(Note 8) 45,000 45 42,955 - - 43,000
Contractor services (Note 8) 2,000,000 2,000 - - - 2,000
Net loss for the year - - - - (995,476) (995,476)
--------------------------------------- --------------- --------------- ------------ --------------- ----------------- -------------
Balances, 30 November 2013 151,123,000 151,123 148,279 (105,837) (1,893,697) (1,700,132)
--------------------------------------- --------------- --------------- ------------ --------------- ----------------- -------------
Shares issued for cash (Note 8) 35,000 35 34,965 - - 35,000
Net Income for the period - - - - 971,653 971,653
--------------------------------------- --------------- --------------- ------------ --------------- ----------------- -------------
Balances, 31 May 2014 151,158,000 151,158 183,244 (105,837) (922,044) (693,479)
--------------------------------------- --------------- --------------- ------------ --------------- ----------------- -------------
F-8
The accompanyingstatements and notes are an integral partrepresentations of thesemanagement who is responsible for their integrity and objectivity. These accounting policies have been consistently applied in the preparation of the interim consolidated financial statements.
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
1. NATURE AND CONTINUANCE OF OPERATIONS
1.1 Organization
Peptide Technologies, Inc. (the "Company") was incorporated in the
State of Nevada, United States of America, on 18 November 2005. On 29
July 2010, the Company's name was changed from Online Originals, Inc.
to CREEnergy Corporation. Effective 12 October 2011, the Company's
name was changed from CREEnergy Corporation to Peptide Technologies,
Inc. The Company's year-end is 30 November. The Company is currently
a development stage Company.
On 5 August 2013, the Company incorporated Pept Peptide Technologies
Inc. ("Pept Peptide"), a wholly-owned subsidiary, under the laws of
British Columbia. Pept Peptide currently does not have any
transactions from the date of incorporation on 5 August 2013 to 31
May 2014.
1.2 Nature of Operations and Change in Business
Upon inception on 18 November 2005, the Company's business plan was
to develop a membership-based website art gallery/auction house
specifically focused on displaying and selling original artwork. The
Company changed its status from a development stage company to an
operating company on 30 November 2009. Management realized that the
results of operations from the sale of artwork lacks luster and
decided to change the Company's business focus and plan for other
strategic opportunities. Effective 26 June 2010, the Company became a
development stage company focusing on a new business.
On 23 August 2011, the Company entered into an agreement (the "Asset
Purchase Agreement") in which the Company, in exchange for 75,000,000
shares of the Company's restricted common stock, received all rights
and title to proprietary technologies and formulas involving the
application of specialty Peptides. The Company has changed its
business focus to the manufacturing and distribution of natural
peptide solutions to combat the economic burden of bio-fouling. On 14
December 2011, the Company amended the Asset Purchase Agreement (the
"First Amendment"). As a result of the First Amendment, the purchase
price of the assets was reduced from 75,000,000 shares to 45,000,000
shares, and 30,000,000 shares were returned to treasury (Note 7).
On 1 May 2014, the Company entered into an agreement whereby the
Asset Purchase Agreement and the First Amendment were deemed null and
void and the platforms were returned to the original vendor (Note 7).
F-9
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
The Company's business activities focus is on the development of
all-natural, sustainable solutions to the increasing problem of
bio-fouling and the development of safe "green" organic-based
fouling prevention products used to combat the rapidly growing
problems caused by the attachment of hard fouling agents in marine
and freshwater environments. This approach emphasizes minimizing the
attachment of hard fouling agents (mussels, barnacles, etc.) and
preventing the build-up of any bio-film layer as well.
1.3 Basis of Going Concern
The accompanying interim consolidated financial statements as at 31
May 2014 and for the six month period then ended have been prepared
on a going concern basis, which contemplates the realization of
assets and settlement of liabilities and commitments in the normal
course of business. The Company has net income of $971,653 for the
six month period ended 31 May 2014 (31 May 2013 - loss of $492,438;
cumulative loss - $922,044) and has a working capital deficit of
$697,645 at 31 May 2014 (30 November 2013 - $1,750,965).
Management cannot provide assurance that the Company will ultimately
achieve profitable operations or become cash flow positive, or raise
additional debt and/or equity capital. Management believes that the
Company's capital resources should be adequate to continue operating
and maintaining its business strategy during the fiscal year ended 30
November 2014. However, if the Company is unable to raise additional
capital in the near future or met financing requirements, due to the
Company's liquidity problems, management expects that the Company
will need to curtail operations, liquidate assets, seek additional
capital on less favorable terms and/or pursue other remedial
measures. Management is aware, in making its assessment, of material
uncertainties related to events or conditions that may cast
significant doubt upon the Company's ability to continue as a going
concern. These interim consolidated financial statements do not
include any adjustments related to the recoverability and
classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
Although management is actively seeking to add new products and/or
services in order to show profitability, and is seeking additional
sources of equity or debt financing, there is no assurance that these
activities will be successful. The Company has not yet been able to
find products and services that would contribute to their business
due to the continued economic condition. These factors raise
substantial doubt about the ability of the Company to continue as a
going concern. The interim consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
F-10
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
1.4 Unaudited Statements
While the information presented in the accompanying interim
consolidated financial statements is unaudited, it includes all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and cash
flows for the interim periods presented. Except as disclosed below,
these interim consolidated financial statements follow the same
accounting policies and methods of their application as the Company's
audited 30 November 2013 annual consolidated financial statements. It
is suggested that these interim consolidated financial statements be
read in conjunction with the Company's audited consolidated financial
statements for the year ended 30 November 2013, included in the
annual report previously filed with the Securities and Exchange
Commission on Form 10-K. The results of operations for the interim
periods presented are not necessarily indicative of the results to be
expected for the full year.
The information as of 30 November 2013, is taken from the audited
consolidated financial statements as of that date.
2. SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in understanding the Company's interim consolidated financial
statements. The interim consolidated financial statements and notes
are representations of management who is responsible for their
integrity and objectivity. These accounting policies have been
consistently applied in the preparation of the interim consolidated
financial statements.
2.1 Basis of Presentation
These interim consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP"2.1 Basis of Presentation These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable for a development stage company for financial information and are expressed in U.S. dollars.
2.2 Principles of Consolidation
These interim consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary Pept Peptide, a company
incorporated in the province of British Columbia on 5 August 2013. All
significant inter-company balances and transactions have been
eliminated upon consolidation.
2.3 Organizational and Start-up Costs
Costs of start-up activities, including organizational costs, are
expensed as incurred in accordance with Accounting Standards
Codification ("ASC") 720-15, "Start-Up Costs."
F-11
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
2.4 Development-Stage Company
During the year ended 30 November 2010, the Company abandoned its
previous business of sale of original artwork and re-entered the
development stage with its intended new business, which currently has
no revenues. Management expects to sustain losses from operations
until such time it can generate sufficient revenues to meet its
anticipated cost structure. The Company is considered a
development-stage company in accordance with the ASC 915, "Accounting
and Reporting by Development-Stage Enterprises." A development-stage
enterprise is one in which planned principal operations have not
commenced or if its operations have commenced, there has been no
significant revenues there from.
2.5 Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less.
2.6 Website
In accordance with ASC 350-50, "Website Development Costs,"
expenditures during the planning and operating stages of the
Company's website are expensed as incurred. Expenditures incurred
during the website application and infrastructure development stage
are capitalized and amortized to expense over the website's estimated
useful life of 3 years.
2.7 Intangible Assets
Intangible assets include the cost of acquiring the intellectual
property. In accordance with ASC 350-30 "General Intangibles Other
Than Goodwill," an intangible asset that is acquired either
individually or with a group of other assets shall be recognized.
Costs of internally developing, maintaining, or restoring intangible
assets that are not specifically identifiable, that have
indeterminate lives, or that are inherent in a continuing business
and related to an entity as whole, shall be recognized as an expense
when incurred. The intellectual property is determined to have an
indefinite useful life and is not subject to amortization. The useful
life of the intangible asset is reassessed at each reporting period.
2.8 Impairment of Long-Lived Assets
Long-lived assets include the website and intangible assets and
intellectual property. Long-lived assets subject to amortization are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets not subject to amortization are tested for
impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the estimated
undiscounted future cash flows expected to be generated by the asset.
If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized as the amount by which the
carrying amount of the asset exceeds the fair value of the asset.
There has been no impairment as of 31 May 2014.
F-12
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
2.9 Research and Development
Research and development expenses are charged to operations as
incurred.
2.10 Income Taxes
The Company adopted the ASC 740, "Accounting for Income Taxes." ASC
740 requires the use of the asset and liability method of accounting
of income taxes. Under the asset and liability method of ASC 740,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
interim consolidated financial statements carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A
valuation allowance is established when necessary to reduce deferred
tax assets to the amount expected to be realized.
2.11 Basic and Diluted Income (Loss) per Share
In accordance with ASC 260, "Earnings per Share," the basic income
(loss) per common share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of
common shares outstanding. Diluted income (loss) per common share is
computed similar to basic income (loss) per common share except that
the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares
were dilutive. Diluted earnings per share are not shown for periods
in which the Company incurs a loss because it would be anti-dilutive.
At 31 May 2014, the Company had no stock equivalents that were
anti-dilutive and excluded in the earnings (loss) per share
computation.
2.12 Estimated Fair Value of Financial Instruments
The carrying value of the Company's interim consolidated financial
instruments, consisting of cash, accounts payable and notes payable
approximate their fair value due to the short-term maturity of these
instruments. Unless otherwise noted, it is management's opinion that
the Company is not exposed to significant interest or currency risks
arising from these financial instruments.
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents. At 31 May 2014, all cash and cash equivalents were
insured by agencies of the U.S. Government.
F-13
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
2.13 Foreign Currency Translation
The interim consolidated financial statements are presented in U.S.
dollars. In accordance with ASC 830 "Foreign Currency Matters,"
foreign denominated monetary assets and liabilities are translated to
their U.S. 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 period. Related
translation adjustments are reported as a separate component of
stockholders' equity, whereas gains or losses resulting from foreign
currency transactions are included in results of operations.
2.14 Comprehensive Income (Loss)
The Company adopted ASC 220, "Reporting Comprehensive Income." ASC
220 requires that the components and total amounts of comprehensive
income (loss) be displayed in the interim consolidated financial
statements beginning in 1998. Comprehensive income (loss) includes
net income (loss) and all changes in equity during a period that
arises from non-owner sources, such as foreign currency items and
unrealized gains and losses on certain investments in equity
securities.
2.15 Use of Estimates
The preparation of the Company's interim consolidated financial
statements are in conformity with U.S. GAAP which requires management
to make estimates and assumptions that affect the amounts reported in
these interim consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.
2.16 Changes in Accounting Policy
Effective 1 December 2013, the Company adopted Financial Accounting
Standards Board ("FASB") Accounting Standards Update ("ASU") No.
2013-02, "Comprehensive Income." This update requires an entity to
present information about amounts reclassified out of accumulated
other comprehensive income and their corresponding effect on the
respective line items in net income in one place, and in some cases,
cross-references to related footnote disclosures. The update applies
to public companies for all reporting periods presented, including
interim periods, and to nonpublic entities for annual reporting
periods. ASU No. 2013-02 will be effective for fiscal years, and
interim periods within those years, beginning after 15 December 2012
for public companies, with early adoption permitted. The adoption of
this update did not have a material effect on the Company's interim
consolidated financial statements.
F-14
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
2.17 Recent Accounting Pronouncements
In July 2013, the FASB issued ASU No. 2013-11, "Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a
Similar Tax Loss, or a Tax Credit Carryforward Exists," which is
intended to eliminate the diversity that is in practice with regard
to the financial statement presentation of unrecognized tax benefits
when a net operating loss carryforward, a similar tax loss, or a tax
credit carryforward exists. ASU No. 2013-11 is effective for fiscal
years and interim periods within those years, beginning after 15
December 2014, with early adoption permissible. The adoption of this
update is not expected to have a material impact on the Company's
interim consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts
with Customers," which provides a five-step approach to be applied to
all contracts with customers. ASU No. 2014-09 also requires expanded
disclosures about revenue recognition. ASU No. 2014-09 is effective
for annual reporting periods beginning after 15 December 2016,
including interim periods. Early adoption is not permitted. The
adoption of this update is not expected to have a material impact on
the Company's interim consolidated financial statements.
In June 2014, the FASB issued ASU No. 2014-10, "Development Stage
Entities," which intends to remove the definition of a development
stage entity from the Master Glossary of the Accounting Standards
Codification, thereby removing the financial reporting distinction
between development stage entities and other reporting entities from
U.S. GAAP. In addition, the update eliminate the requirements for
development stage entities to (1) present inception-to-date
information in the statements of income, cash flows, and shareholder
equity, (2) label the financial statements as those of a development
stage entity, (3) disclose a description of the development stage
activities in which the entity is engaged, and (4) disclose in the
first year in which the entity is no longer a development stage
entity that in prior years it had been in the development stage. ASU
No. 2014-10 is effective for fiscal years and interim periods
beginning after 15 December 2014, with early adoption permissible.
The adoption of this update is not expected to have a material impact
on the Company's interim consolidated financial statements.
2.18 Reclassifications
Certain amounts reported in previous periods have been reclassified
to conform to the current presentation.
2.19 Other
The Company consists of one reportable business segment.
The Company paid no dividends during the periods presented.
F-15
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
3. WEBSITE
As at: 30 November 2013
31 May 2014 (Audited)
--------------------- -------------------------------------------- --------------------------------------------
Accumulated Net book Accumulated
Cost amortization value Cost amortization Net book value
$ $ $ $ $ $
--------------------- ----------- ----------------- -------------- ----------- ---------------- ---------------
Website 10,000 5,834 4,166 10,000 4,167 5,833
--------------------- ----------- ----------------- -------------- ----------- ---------------- ---------------
Total 10,000 5,834 4,166 10,000 4,167 5,833
--------------------- ----------- ----------------- -------------- ----------- ---------------- ---------------
The Company purchased a website during October 2012 for $10,000. This
website has a useful life of three years, and the cost is being amortized
over the life of the asset. During the six month period ended 31 May 2014,
the Company recognized amortization expense of $1,667 (31 May 2013 -
$1,667; cumulative - $5,834) (Note 9).
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at: 31 May 30 November 2013
2014 (Audited)
$ $
-------------------------------------------------- ----------- ---------------------
Accounts payable 28,180 574,188
Accrued liabilities 14,000 27,000
Payroll taxes payable 26,428 17,084
Salaries and benefits payable (Note 6) 534,000 1,044,000
-------------------------------------------------- ----------- ---------------------
Totalare expressed in U.S. dollars.2.2 Principles of Consolidation These interim consolidated financial statements include the accounts payableof the Company and accrued liabilities 602,608 1,662,272
-------------------------------------------------- ----------- ---------------------
its wholly-owned subsidiary Pept Peptide, a company incorporated in the province of British Columbia on 5 August 2013. All significant inter-company balances and transactions have been eliminated upon consolidation.
Trades payable and accrued liabilities are non-interest bearing, unsecured
and have settlement dates within one year.
On 27 May 2014, the Chief Executive Officer ("CEO") requested that his
salary be suspended until further notice. Additionally, he forgave the
entire balance of his accrued salary in the amount of $516,000 and accrued
bonus in the amount of $300,000 as at 31 May 2014 (Notes 6 and 12).
On 27 May 2014, a consultant forgave all outstanding fees payable in
relation to consulting services rendered in the amount of $545,000 (Notes 6
and 12).
The Company is in the process of completing and resolving issues related to
its income tax filings and has accrued $10,000 during the year ended 30
November 2013 related to potential penalties associated with these filings.
However, there is no assurance that additional interest and penalties will
not be assessed (Notes 10 and 11).
F-16
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
5. NOTES PAYABLE
As at: 30 November 2013
31 May 2014 (Audited)
$ $
2.3 Organizational and Start-up Costs Costs of start-up activities, including organizational costs, are expensed as incurred in accordance with Accounting Standards Codification (“ASC”) 720-15, “Start-Up Costs." 2.4 Development-Stage Company During the year ended 30 November 2010, Fotoview Inc. ("Fotoview"the Company abandoned its previous business of sale of original artwork and re-entered the development stage with its intended new business, which currently has no significant revenues. Management expects to sustain losses from operations until such time it can generate sufficient revenues to meet its anticipated cost structure. The Company is considered a development-stage company in accordance with the ASC 915, “Accounting and Reporting by Development-Stage Enterprises." A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.2.5 Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. 2.6 Website In accordance with ASC 350-50, “Website Development Costs," expenditures during the planning and operating stages of the Company’s website are expensed as incurred. Expenditures incurred during the website application and infrastructure development stage are capitalized and amortized to expense over the website’s estimated useful life of 3 years.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)2.7 Intangible Assets Intangible assets include the cost of acquiring the intellectual property. In accordance with ASC 350-30 “General Intangibles Other Than Goodwill," an intangible asset that is acquired either individually or with a group of other assets shall be recognized. Costs of internally developing, maintaining, or restoring intangible assets that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as whole, shall be recognized as an expense when incurred. The intellectual property is determined to have an indefinite useful life and is not subject to amortization. The useful life of the intangible asset is reassessed at each reporting period. During the nine month period ended 31 August 2014, the Company recorded a write down of $45,000 related to its intangible assets and intellectual property (Notes 7 and 12). 2.8 Impairment of Long-Lived Assets Long-lived assets include the website and intangible assets and intellectual property. Long-lived assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There has been no impairment as of 31 August 2014. 2.9 Research and Development Research and development expenses are charged to operations as incurred. 2.10 Income Taxes The Company adopted the ASC 740, “Accounting for Income Taxes." ASC 740 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the interim consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. 2.11 Basic and Diluted Income (Loss) per Share In accordance with ASC 260, “Earnings per Share," the basic income (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed similar to basic income (loss) per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings per share are not shown for periods in which the Company incurs a loss because it would be anti-dilutive. At 31 August 2014, the Company had no stock equivalents that were anti-dilutive and excluded in the earnings (loss) per share computation.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)2.12 Estimated Fair Value of Financial Instruments The carrying value of the Company’s interim consolidated financial instruments, consisting of cash, accounts payable and notes payable approximate their fair value due to the short-term maturity of these instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or currency risks arising from these financial instruments. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At 31 August 2014, cash and cash equivalents of $310 were insured by agencies of the U.S. Government. 2.13 Foreign Currency Translation The interim consolidated financial statements are presented in U.S. dollars. In accordance with ASC 830 “Foreign Currency Matters," foreign denominated monetary assets and liabilities are translated to their U.S. 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 period. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. 2.14 Comprehensive Income (Loss) The Company adopted ASC 220, "Reporting Comprehensive Income." ASC 220 requires that the components and total amounts of comprehensive income (loss) be displayed in the interim consolidated financial statements beginning in 1998. Comprehensive income (loss) includes net income (loss) and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities. 2.15 Use of Estimates The preparation of the Company’s interim consolidated financial statements are in conformity with U.S. GAAP which requires management to make estimates and assumptions that affect the amounts reported in these interim consolidated financial statements and accompanying notes. Actual results could differ from those estimates. 2.16 Changes in Accounting Policy Effective 1 December 2013, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)No. 2013-02, “Comprehensive Income." This update requires an entity to present information about amounts reclassified out of accumulated other comprehensive income and their corresponding effect on the respective line items in net income in one place, and in some cases, cross-references to related footnote disclosures. The update applies to public companies for all reporting periods presented, including interim periods, and to nonpublic entities for annual reporting periods. ASU No. 2013-02 will be effective for fiscal years, and interim periods within those years, beginning after 15 December 2012 for public companies, with early adoption permitted. The adoption of this update did not have a material effect on the Company’s interim consolidated financial statements.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)2.17 Recent Accounting Pronouncements In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a loanNet Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists," which is intended to eliminate the diversity that is in practice with regard to the financial statement presentation of $16,000unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU No. 2013-11 is effective for fiscal years and interim periods within those years, beginning after 15 December 2014, with early adoption permissible. The adoption of this update is not expected to have a former directormaterial impact on the Company’s interim consolidated financial statements.In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers," which provides a five-step approach to be applied to all contracts with customers. ASU No. 2014-09 also requires expanded disclosures about revenue recognition. ASU No. 2014-09 is effective for annual reporting periods beginning after 15 December 2016, including interim periods. Early adoption is not permitted. The adoption of this update is not expected to have a material impact on the Company’s interim consolidated financial statements. In June 2014, the FASB issued ASU No. 2014-10, “Development Stage Entities," which intends to remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the update eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. ASU No. 2014-10 is effective for fiscal years and interim periods beginning after 15 December 2014, with early adoption permissible. The adoption of this update is not expected to have a material impact on the Company’s interim consolidated financial statements. 2.18 Reclassifications Certain amounts reported in previous periods have been reclassified to conform to the current presentation. 2.19 Other The Company consists of one reportable business segment. The Company paid no dividends during the periods presented.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)3. WEBSITE As at: 31 August 2014 30 November 2013
(Audited) Cost
$Accumulated amortization
$Net book value
$Cost
$Accumulated amortization
$Net book value
$ Website 10,000 6,667 3,333 10,000 4,167 5,833 Total 10,000 6,667 3,333 10,000 4,167 5,833 The Company purchased a website during October 2012 for $10,000. This website has a useful life of three years, and the cost is being amortized over the life of the asset. During the nine month period ended 31 August 2014, the Company recognized amortization expense of $2,500 (31 August 2013 - $2,500; cumulative - $6,667) (Note 9). 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES As at: 31 August 2014
$30 November 2013
(Audited)
$ Accounts payable 38,317 574,188 Accrued liabilities 4,000 27,000 Payroll taxes payable 29,652 17,084 Salaries and benefits payable (Note 6) 580,000 1,044,000 Total accounts payable and accrued liabilities 651,969 1,662,272 Trades payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year. On 27 May 2014, the Chief Executive Officer (“CEO”) requested that his salary be suspended until further notice. Additionally, he forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 31 August 2014 (Notes 6 and 12). On 27 May 2014, a consultant forgave all outstanding fees payable in relation to consulting services rendered in the amount of $545,000 (Notes 6 and 12).
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)5. NOTES PAYABLE As at: 31 August 2014
$30 November 2013
(Audited)
$During the year ended 30 November 2010, Fotoview Inc. (“Fotoview”) issued a loan of $16,000 to a former director of the Company to purchase 4,000,000 restricted common shares of the Company. Upon the director’s resignation, the 4,000,000 common shares were cancelled and the Company assumed the loan payable to Fotoview. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 16,000 16,000 On 21 September 2011, PSI Services (“PSI”) issued a loan of $500 to the Company. The loan is unsecured, bears no interest and has no fixed terms of repayment. 500 500 On 13 November 2011, PSI issued a loan of CAD$45,000 to the Company. The loan is unsecured and bears interest at a rate of 6% per annum. Principal and accrued interest are due on 30 November 2014. The loan payable to PSI as at 31 August 2014 consists of principal and accrued interest of $41,445 (30 November 2013 – $42,710) and $6,963 (30 November 2013 – $5,251), respectively (Note 12). 48,408 47,961 On 1 June 2012, PSI issued a loan of CAD$20,000 to the Company. The loan is unsecured and bears interest at a rate of 6% per annum. Principal and accrued interest is due on 30 November 2014.. The loan payable to PSI as at 31 August 2014 consists of principal and accrued interest of $18,420 (30 November 2013 – $18,982) and $2,486 (30 November 2013 – $1,707), respectively (Note 12). 20,906 20,689 On 22 October 2013, PSI issued a loan of USD $3,700 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 3,700 3,700 On 21 April 2014, PSI Issued a loan of CAD $8,000 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 7,368 - On 14 August 2014, PSI issued a loan of CAD $9,500 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 8,749 - Total notes payable 105,631 88,850 6. RELATED PARTY TRANSACTIONS As at 31 August 2014, the amount due to related parties includes $580,000 (30 November 2013 - $1,044,000) payable to past directors and employees of the Company in relation to purchase 4,000,000salaries and benefits earned, and $Nil (30 November 2013 - $730) payable to the Chief Financial Officer (“CFO”) of the Company in relation to expense reimbursements. Of the amount due to related parties, $Nil relates to bonuses payable to the CEO of the Company (30 November 2013 - $300,000) (Note 4).During the nine month period ended 31 August 2014, the Company accrued salaries and benefits of $364,568 to officers and employees of the Company (31 August 2013 - $477,000; cumulative - $1,434,562).
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)On 27 May 2014, the CEO requested that his salary be suspended until further notice. Additionally, he forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 31 May 2014. As at 31 August 2014, included in salaries and benefits are bonuses of $Nil accrued to the CEO of the Company during the nine month period ended 31 August 2014 (31 August 2013 - $Nil; cumulative - $Nil) (Notes 4 and 12). Effective 1 December 2013, the Company and a former related party consultant mutually terminated an Advisory Agreement entered into on 1 November 2012. The Company accrued $Nil of consulting fees to the consultant (31 August 2013 - $227,000; cumulative - $Nil) during the nine month period ended 31 August 2014. On 27 May 2014, a formerly related party consultant forgave all outstanding fees payable in relation to consulting services rendered in the amount of $545,000. As at 31 August 2014 there is $Nil (30 November 2013 - $545,000) outstanding and payable to the consultant for consulting services received (Notes 4 and 12). During the year ended 30 November 2013, the Board approved a commission payment program (the “Program”) equal to 30% of gross sales of fouling prevention coatings. Under this Program, the CEO will receive compensation equal to 20% of gross sales of anti-fouling paint, as recognition of his work in developing the formulas; and an external consultant will receive 10% of gross sales of anti-fouling paint as compensation for sales development. On 28 February 2014, the Board amended the Program to reduce the CEO’s compensation from 20% to 10% of gross sales of anti-fouling paint. On 27 May 2014, the Program was eliminated by mutual agreement from both parties affected. As a result, no commissions will be earned by either the CEO or the applicable consultant on gross sales of fouling prevention coatings. As at 31 August 2014, there were $Nil commissions earned (Note 7). During the nine month period ended 31 August 2014, directors and shareholders of the Company made cash contributions in the amount of $Nil (31 August 2013 - $Nil, cumulative – $27,288). On 15 July 2014, the Company issued 4,660 shares of the Company’s restricted common stock for cash proceeds of $5,660 (Note 8). On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to two directors of the Company for consulting services rendered. As a result, the Company recorded professional fees of $5,250 when the stock was issued (Note 8). 7. INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY On 23 August 2011, the Company entered into an Asset Purchase Agreement to acquire intangible assets and intellectual property known as the Platforms in exchange for 75,000,000 restricted common shares of the Company. UponCompany (issued on 23 August 2011) (Note 1).On 14 December 2011, the director's resignation,Company entered into an amended the 4,000,000First Amendment and, as a result, a total of 30,000,000 restricted common shares of the Company were returned to treasury and cancelled in exchange for payment of half of one percent of all gross monies received by the Company in relation to revenue earned from products derived from the use of all the formulae listed in the Asset Purchase Agreement. In addition, a monthly stipend of CAD $15,000 per month is to be paid commencing on the receipt of monies from the first contract signed to purchase products derived from the use of the formulae for a period of five years from the date of the First Amendment. The cancellation of 30,000,000 common shares has been recorded as a recovery of intangible assets and intellectual property (Note 1).
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)On 1 May 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the Company assumedFirst Amendment were deemed null and void and the loan
payable to Fotoview. The loan is unsecured, bears no interest, and has no
fixed terms of repayment. 16,000 16,000
On 21 September 2011, PSI Services ("PSI") issued a loan of $500platforms were returned to the Company. The loan is unsecured, bears no interest and has no fixed terms of
repayment. 500 500
On 13 November 2011, PSI issued a loan of CAD$45,000 to the Company. The
loan is unsecured and bears interest at a rate of 6% per annum. Principal
and accrued interest are due on 30 November 2014. original vendor (Note 1).During the sixnine month period ended 31 August 2014, the Company recorded a write down of $45,000 (31 August 2013 - $Nil; cumulative - $45,000) related to its intangible assets and intellectual property (Note 12).On 20 January 2013, the Board approved the Program equal to 30% of gross sales of fouling prevention coatings. Under this Program, the CEO will receive compensation equal to 20% of gross sales of anti-fouling paint, as recognition of his work in developing the formulas; and an external consultant will receive 10% of gross sales of anti-fouling paint as compensation for sales development. On 28 February 2014, the Board amended the Program to reduce the CEO’s compensation from 20% to 10% of gross sales of anti-fouling paint. On 27 May 2014, the Program was eliminated by mutual agreement from both parties affected. As a result, no commissions will be earned by either the CEO or the applicable consultant on gross sales of fouling prevention coatings. As of 31 August 2014, there were $Nil commissions earned (Note 6). 8. CAPITAL STOCK 8.1 Authorized common stock The Company’s authorized common stock consists of 675,000,000 shares of common stock with a par value of $0.001 per share. On 10 August 2010, the Company accrued interestincreased the number of authorized share capital from 75,000,000 shares of common stock to 675,000,000 shares of common stock with the same par value of $0.001 per share.8.2 Issued and outstanding On 2 June 2010, and effective 10 August 2010, the directors of the Company approved a forward split of the common stock of the Company on a basis of 30 new common shares for 1 old common share. As a result of the forward stock split, 208,800,000 additional shares were issued. Capital and additional paid-in capital have been adjusted accordingly. When adjusted retroactively, there was an $119,501 shortage of additional paid-in capital; thus an adjustment to accumulated deficit of $104,000 was recorded on 20 May 2010 (the date of issuance of 120,000,000 shares) and $15,501 to the beginning balance. The interim consolidated financial statements contained herein reflect the appropriate values for capital stock and accumulated deficit. Unless otherwise noted, all references in the accompanying interim consolidated financial statements to the number of common shares and per share amounts have been retroactively restated to reflect the forward stock split. The total issued and outstanding capital stock is 156,412,660 common shares with a par value of $0.001 per common share. The Company’s common stock issuances to date are as follows: o On 10 April 2013, the Company issued 20,000 shares of the Company’s restricted common stock for cash proceeds of $20,000. The Company paid $2,000 in share issuance costs. o On 26 April 2013, the Company issued 2,000,000 shares of the Company’s restricted common stock at a par value of $0.001 per share to a third party for marketing assistance with the development of the international markets of the South Pacific quadrant for the Company. As a result, the Company recorded consulting expense of $1,107 (31
May 2013 - $1,254)$2,000 when the stock was issued (Note 12). The loan payable to PSI as at 31 May 2014
consistso On 18 July 2013, the Company issued 25,000 shares of principal and accred interestthe Company’s restricted common stock for cash proceeds of $41,512 (30 November$25,000.o On 3 December 2013, -
$42,710) and $6,347 (30 November 2013 - $5,251), respectively. 47,859 47,961
the Company issued 10,000 shares of the Company’s restricted common stock for cash proceeds of $10,000.
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)o On 1 June 2012, PSI issued a loan of CAD$20,000 to the Company. The loan is
unsecured and bears interest at a rate of 6% per annum. Principal and
accrued interest is due on 30 November 2014. During the six months ended 31
May3 March 2014, the Company accrued interest expenseissued 10,000 shares of $492 (31 May 2013 - $558)
(Note 12). The loan payable to PSI as at 31 Maythe Company’s restricted common shares for cash proceeds of $10,000.o On 11 March 2014, consiststhe Company issued 5,000 shares of principal
and accrued interestthe Company’s restricted common shares for cash proceeds of $18,450 (30 November 2013 - $18,982) and $2,211 (30
November 2013 - $1,707), respectively. 20,661 20,689
$5,000.o On 22 October 2013, PSI issued a loan of USD$3,700 to the Company. The loan
is unsecured, bears no interest, and has no fixed terms of repayment. 3,700 3,700
On 213 April 2014, PSIthe Company issued 10,000 shares of the Company’s restricted common stock for cash proceeds of $10,000.o On 15 July 2014, the Company issued 4,660 shares of the Company’s restricted common stock for cash proceeds of $4,660 (Note 6). o On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a loanpar value of USD$8,000$0.001 per share to two directors of the Company. The loan is
unsecured, bears no interest, and has no fixed termsCompany for consulting services rendered. As a result, the Company recorded professional fees of repayment. 8,000 -
-----------------------------
Total notes payable 96,720 88,850
-----------------------------
$5,250 when the stock was issued (Note 6).
F-17
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
6. RELATED PARTY TRANSACTIONS
As at 31 May 2014, the amount due to related parties includes $534,000 (30
November 2013 - $1,044,000) payable to directors and employees of the
Company in relation to salaries and benefits earned, and $240 (30 November
2013 - $730) payable to the Chief Financial Officer ("CFO") of the Company
in relation to expense reimbursements. Of the amount due to related
parties, $Nil relates to bonuses payable to the CEO of the Company (30
November 2013 - $300,000) (Note 4).
During the six month period ended 31 May 2014, the Company accrued salaries
and benefits of $306,000 to officers and employees of the Company (31 May
2013 - $306,000; cumulative - $1,359,000).
On 27 May 2014, the CEO requested that his salary be suspended until
further notice. Additionally, he forgave the entire balance of his accrued
salary in the amount of $516,000 and accrued bonus in the amount of
$300,000 as at 31 May 2014. As at 31 May 2014, included in salaries and
benefits are bonuses of $Nil accrued to the CEO of the Company during the
six month period ended 31 May 2014 (31 May 2013 - $Nil; cumulative -
$300,000) (Notes 4 and 12).
Effective 1 December 2013, the Company and a former related party
consultant mutually terminated an Advisory Agreement entered into on 1
November 2012. The Company accrued $Nil of consulting fees to the
consultant (31 May 2013 - $150,000; cumulative - $545,000) during the six
month period ended 31 May 2014.
On 27 May 2014, a consultant forgave all outstanding fees payable in
relation to consulting services rendered in the amount of $545,000. As at
31 May 2014 there is $Nil (30 November 2013 - $545,000) outstanding and
payable to the consultant for consulting services received (Notes 4 and
12).
During the year ended 30 November 2013, the Board approved a commission
payment program (the "Program") equal to 30% of gross sales of fouling
prevention coatings. Under this Program, the CEO will receive compensation
equal to 20% of gross sales of anti-fouling paint, as recognition of his
work in developing the formulas; and an external consultant will receive
10% of gross sales of anti-fouling paint as compensation for sales
development. On 28 February 2014, the Board amended the Program to reduce
the CEO's compensation from 20% to 10% of gross sales of anti-fouling
paint. On 27 May 2014, the Program was eliminated by mutual agreement from
both parties affected. As a result, no commissions will be earned by either
the CEO or the applicable consultant on gross sales of fouling prevention
coatings. As at 31 May 2014, there were $Nil commissions earned (Note 7).
During the six month period ended 31 May 2014, directors and shareholders
of the Company made cash contributions in the amount of $Nil (31 May 2013 -
$Nil, cumulative - $27,288).
F-18
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
7. INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY
On 23 August 2011, the Company entered into an Asset Purchase Agreement to
acquire intangible assets and intellectual property known as the Platforms
in exchange for 75,000,000 restricted common shares of the Company (issued
on 23 August 2011) (Note 1).
On 14 December 2011, the Company entered into an amended the First
Amendment and, as a result, a total of 30,000,000 restricted common shares
of the Company were returned to treasury and cancelled in exchange for
payment of half of one percent of all gross monies received by the Company
in relation to revenue earned from products derived from the use of all the
formulae listed in the Asset Purchase Agreement. In addition, a monthly
stipend of CAD $15,000 per month is to be paid commencing on the receipt of
monies from the first contract signed to purchase products derived from the
use of the formulae for a period of five years from the date of the First
Amendment. The cancellation of 30,000,000 common shares has been recorded
as a recovery of intangible assets and intellectual property (Note 1).
On 1 May 2014, the Company entered into an agreement whereby the Asset
Purchase Agreement and the First Amendment were deemed null and void and
the platforms were returned to the original vendor (Note 1).
During the six month period ended 31 May 2014, the Company recorded a write
down of $45,000 (31 May 2013 - $Nil; cumulative - $45,000) related to its
intangible assets and intellectual property (Note 12).
On 20 January 2013, the Board approved the Program equal to 30% of gross
sales of fouling prevention coatings. Under this Program, the CEO will
receive compensation equal to 20% of gross sales of anti-fouling paint, as
recognition of his work in developing the formulas; and an external
consultant will receive 10% of gross sales of anti-fouling paint as
compensation for sales development. On 28 February 2014, the Board amended
the Program to reduce the CEO's compensation from 20% to 10% of gross sales
of anti-fouling paint. On 27 May 2014, the Program was eliminated by mutual
agreement from both parties affected. As a result, no commissions will be
earned by either the CEO or the applicable consultant on gross sales of
fouling prevention coatings. As of 31 May 2014, there were $Nil commissions
earned (Note 6).
8. CAPITAL STOCK
8.1 Authorized common stock
The Company's authorized common stock consists of 675,000,000 shares
of common stock with a par value of $0.001 per share. On 10 August
2010, the Company increased the number of authorized share capital
from 75,000,000 shares of common stock to 675,000,000 shares of
common stock with the same par value of $0.001 per share.
F-19
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
8.2 Issued and outstanding
On 2 June 2010, and effective 10 August 2010, the directors of the
Company approved a forward split of the common stock of the Company
on a basis of 30 new common shares for 1 old common share. As a
result of the forward stock split, 208,800,000 additional shares were
issued. Capital and additional paid-in capital have been adjusted
accordingly. When adjusted retroactively, there was a $119,501
shortage of additional paid-in capital; thus an adjustment to
accumulated deficit of $104,000 was recorded on 20 May 2010 (the date
of issuance of 120,000,000 shares) and $15,501 to the beginning
balance. The interim consolidated financial statements contained
herein reflect the appropriate values for capital stock and
accumulated deficit. Unless otherwise noted, all references in the
accompanying interim consolidated financial statements to the number
of common shares and per share amounts have been retroactively
restated to reflect the forward stock split.
The total issued and outstanding capital stock is 151,158,000 common
shares with a par value of $0.001 per common share. The Company's
common stock issuances to date are as follows:
a) On 10 April 2013, the Company issued 20,000 shares of the
Company's restricted common stock for cash proceeds of $20,000.
The Company paid $2,000 in share issuance costs.
b) On 26 April 2013, the Company issued 2,000,000 shares of the
Company's restricted common stock at a par value of $0.001 per
share to a third party for marketing assistance with the
development of the international markets in the South Pacific
quadrant for the Company. As a result, the Company recorded
consulting expense of $2,000 when the stock was issued (Note 12).
c) On 18 July 2013, the Company issued 25,000 shares of the
Company's restricted common stock for cash proceeds of $25,000.
d) On 3 December 2013, the Company issued 10,000 shares of the
Company's restricted common stock for cash proceeds of $10,000.
e) On 3 March 2014, the Company issued 10,000 shares of the
Company's restricted common shares for cash proceeds of $10,000.
f) On 11 March 2014, the Company issued 5,000 shares of the
Company's restricted common shares for cash proceeds of $5,000.
g) On 3 April 2014, the Company issued 10,000 shares of the
Company's restricted common stock for cash proceeds of $10,000.
20
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
9. GENERAL AND ADMINISTRATIVE EXPENSES
Cumulative from
re-entering of
Six month Six month development stage
Three month period Three month period on
period ended ended 31 period ended ended 31 26 June 2010
31 May 2014 May 2014 31 May 2013 May 2013 to 31 May 2014
$ $ $ $ $
------------------------------- --------------- -------------- ---------------- ------------- --------------------
Administration - - - - 20
Amortization (Note 3) 834 1,667 833 1,667 5,834
Bank charges 51 134 84 156 1,418
Dues and subscription - - - - 575
Filing fees 5,257 5,978 3,203 3,228 17,448
Meals and entertainment - - - - 254
Office 431 500 132 329 7,223
Penalties - - - - 10,000
Transfer agent 255 550 90 240 4,051
Rent 223 492 545 738 1,725
Share-based payment - - - - 8,000
Telecommunication 1,257 2,057 621 682 5,050
Travel - - 1,097 1,505 2,656
Website - - - - 149
------------------------------- --------------- -------------- ---------------- ------------- --------------------
Total general and
administration expenses 8,308 11,378 6,605 8,545 64,403
------------------------------- --------------- -------------- ---------------- ------------- --------------------
F-21
Peptide Technologies, Inc.
(A Three month period ended 31 August 2014
$Nine month period ended 31 August 2014
$Three month period ended 31 August 2013
$Nine month period ended 31 August 2013
$Cumulative from re-entering of development stage on 26 June 2010
to 31 August 2014
$ Administration - - - - 20 Amortization (Note 3) 833 2,500 834 2,500 6,667 Bank charges 64 198 16 170 1,482 Dues and subscription - - - - 575 Filing fees 1,419 7,397 100 3,328 18,867 Meals and entertainment - - 254 254 254 Office 825 1,325 1,755 2,084 8,048 Penalties - - - - 10,000 Transfer agent 100 650 160 400 4,151 Rent 147 638 363 1,101 1,871 Share-based payment - - - - 8,000 Telecommunication 726 2,783 786 1,469 5,777 Travel - - 1,151 2,657 2,656 Website 72 72 - - 221 Total general and administration expenses 4,185 15,563 5,419 13,963 68,588
(A Development Stagestage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 MayAugust, 2014
--------------------------------------------------------------------------------
10. INCOME TAXES
(Unaudited)
10.1 10. INCOME TAXES 10.1.1 Provision for income taxes Income tax expense differs from the amount that would result from applying the federal income tax rate to earnings before income taxes. During the sixnine month periods ended 31 MayAugust 2014 and 2013, these differences result from the following items:
For the six month For the six month
period ended 31 May period ended 31 May
2014 2013
$ $
----------------------------------------------------------------- ----------------------- -----------------------
Income (loss) before income taxes 971,653 (492,438)
Federal income tax rates 35.00% 35.00%
----------------------------------------------------------------- ----------------------- -----------------------
Income tax expense (recovery) based on the above rates 340,079 (172,353)
Non-deductible items 15,750 -
Change in valuation allowance (355,829) 172,353
----------------------------------------------------------------- ----------------------- -----------------------
Income tax expense - -
----------------------------------------------------------------- ----------------------- -----------------------
For the nine month period ended 31 August 2014
$For the nine month period ended 31 August 2013
$ Income (loss) before income taxes 912,516 (738,192) Federal income tax rates 35.00% 35.00% Income tax expense (recovery) based on the above rates 319,381 (258,367) Non–deductible items 15,750 - Change in valuation allowance (335,131) (258,367) Income tax expense - - 10.2 Deferred tax balances The composition of the Company'sCompany’s deferred tax assets as at 31 MayAugust 2014 and 30 November 2013 are as follows:As at: 31 August
2014
$30 November 2013
(Audited)
$ Net income tax operating loss carry-forward 1,018,391 1,975,908 Deferred tax assets 356,437 691,568 Valuation allowance (356,437) (691,568) Deferred tax assets (liabilities) - - As at:at 31 MayAugust 2014, the Company has a total non-capital loss carry forward balance of $1,018,391 (30 November 2013 - 1,975,908), which has expiry dates between the years of 2025 to 2034.The Company’s recognized and unrecognized deferred tax assets related to the unused tax losses. A full valuation allowance has been recorded against the potential deferred tax assets associated with all the loss carry-forwards as their utilization is not considered more likely than not at this time. The Company is in the process of completing and resolving issues related to its income tax filings and has accrued $10,000 during the year ended 30 November 2013 related to potential penalties associated with these filings. However, there is no assurance that additional interest and penalties will not be assessed (Note 11).
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)11. COMMITMENTS AND CONTINGENCY o On 11 December 2012, the Company formerly engaged BB&T Capital Markets ("BB&TCM") to act as the Company's exclusive financial advisor and agent in connection with developing strategic alternatives for the Company regarding debt financings, licensing of intellectual properties developed by the Company, equity raises, sale of intellectual properties, or other capital markets transactions that may develop over the course of a 24-month agreement (the “Agreement”). The Company is to pay BB&TCM an advisory fee of three percent of the face amount of the financial transactions advised upon during the course of the engagement, due and payable at closing of any contemplated transactions under the engagement. Additionally, the Company is to defend, indemnify and hold BB&TCM, its parent company, subsidiaries and affiliates and its and their directors, officers, employees, agents and successors and assigns harmless from and against any losses, suits, actions, claims, damages, costs and or other liabilities which any indemnified person may incur as a result of acting on behalf of the Company in connection with this engagement. On 19 May 2014, (Audited)
$ $
------------------------------------------------------------------- ---------------- --------------------
Netthe Company renewed/extended the Agreement with BB&TCM. The extension runs from 1 May 2014 through 1 May 2016 (24 months). All other provisions of the Agreement remain unchanged.o On 1 May 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the First Amendment were deemed null and void and the platforms were returned to the original vendor. o On 26 May 2014, the Company entered into an exclusive global distribution agreement with All-Sea Coatings Ltd. (a division of All-Sea Enterprises) of North Vancouver, Canada. This agreement has been replaced with an Asset Purchase Agreement date August 14, 2014. o On 14 August 2014, Peptide Technologies, Inc. ("the Company") entered into an Asset Purchase Agreement with All-Sea Coatings Ltd. All-Sea Coatings Ltd has acquired from Peptide Technologies Inc. the non-commercialized re-formulated assets that were developed by the Company. o The Company is in the process of completing certain of its income tax operating loss carry-forward 959,254 1,975,908
------------------------------------------------------------------- ---------------- --------------------
Deferred tax assets 335,739 691,568
Valuation allowance (335,739) (691,568)
------------------------------------------------------------------- ---------------- --------------------
Deferred tax assets (liabilities) - -
------------------------------------------------------------------- ---------------- --------------------
filings and has accrued $10,000 during the year ended 30 November 2013 related to potential penalties associated with these filings. However, there is no assurance that additional interest and penalties will be assessed (Notes 4 and 10).
As at 31 May 2014, the Company has a total non-capital loss carry
forward balance of $959,254 (30 November 2013 - 1,975,908), which has
expiry dates between the years of 2025 to 2034.
F-22
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
The Company's recognized and unrecognized deferred tax assets related
to the unused tax losses. A full valuation allowance has been
recorded against the potential deferred tax assets associated with
all the loss carry-forwards as their utilization is not considered
more likely than not at this time.
The Company is in the process of completing and resolving issues
related to its income tax filings and has accrued $10,000 during the
year ended 30 November 2013 related to potential penalties associated
with these filings. However, there is no assurance that additional
interest and penalties will not be assessed (Notes 4 and 11).
11. COMMITMENTS AND CONTINGENCY
a) On 11 December 2012, the Company formerly engaged BB&T Capital Markets
("BB&TCM") to act as the Company's exclusive financial advisor and
agent in connection with developing strategic alternatives for the
Company regarding debt financings, licensing of intellectual
properties developed by the Company, equity raises, sale of
intellectual properties, or other capital markets transactions that
may develop over the course of a 24-month agreement (the "Agreement")
The Company is to pay BB&TCM an advisory fee of three percent of the
face amount of the financial transactions advised upon during the
course of the engagement, due and payable at closing of any
contemplated transactions under the engagement.
Additionally, the Company is to defend, indemnify and hold BB&TCM, its
parent company, subsidiaries and affiliates and its and their
directors, officers, employees, agents and successors and assigns
harmless from and against any losses, suits, actions, claims, damages,
costs and or other liabilities which any indemnified person may incur
as a result of acting on behalf of the Company in connection with this
engagement.
On 19 May 2014, the Company renewed/extended the Agreement with BB&T
Capital Markets. The extension runs from 1 May 2014 through 1 May 2016
(24 months). All other provisions of the Agreement remain unchanged.
b) On 26 May 2014, the Company entered into an exclusive global
distribution agreement with All-Sea Coatings Ltd. (a division of
All-Sea Enterprises) of North Vancouver, Canada. The agreement grants
to All-Sea Coatings Ltd. the exclusive rights to establish all aspects
of the commercialization of the Company's intangible assets and
intellectual property related to all-natural and sustainable
organic-based fouling prevention coatings and any related sales.
c) The Company is in the process of completing certain of its income tax
filings and has accrued $10,000 during the year ended 30 November 2013
related to potential penalties associated with these filings. However,
there is no assurance that additional interest and penalties will be
assessed (Notes 4 and 10).
d) The Company is committed to making payments related to its notes
payable (Note 5).
F-23
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Interim Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
31 May 2014
--------------------------------------------------------------------------------
o The Company is committed to making payments related to its notes payable (Note 5). 12. SUPPLEMENTAL CASH FLOW INFORMATION The Company made the following cash payments for interest and income taxes: Three month Six month Three month period ended 31 August 2014
$Six month period ended 31 August 2014
$Three month period ended
31 August 2013
$Six month period ended
31 August 2013
$Interest paid - - - - Taxes paid - - - - Total cash payments - - - -
(A Development stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
31 August, 2014
(Unaudited)On 26 April 2013, the Company issued 2,000,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to a third party for marketing assistance with the development of the international markets in the South Pacific quadrant for the Company. As a result, the Company recorded consulting expense of $2,000 when the stock was issued (Note 8). During the nine month period ended 31 August 2014, the Company accrued interest expense of $1,743 (31 August 2013 - $2,014) in relation to a loan of CAD$45,000 issued by PSI on 13 November 2011. The loan is unsecured and bears interest at a rate of 6% per annum (Note 5). During the nine month period ended 31 August 2014, the Company accrued interest expense of $774 (31 August 2013 - $895) in relation to a loan of CAD$20,000 issued by PSI on 1 June 2012. The loan is unsecured and bears interest at a rate of 6% per annum (Note 5). During the nine month period ended 31August 2014, the Company recorded a write down of $45,000 (31 August 2013 - $Nil; cumulative - $45,000) related to its intangible assets and intellectual property (Note 7). On 27 May 2014, the CEO requested that his salary be suspended until further notice. Additionally, he forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 31 May 2014 (Notes 4 and 6). On 27 May 2014, a former related party consultant forgave all outstanding fees payable in relation to consulting services rendered in the amount of $545,000 (Notes 4 and 6). On 15 July 2014, the Company issued 4,660 shares of the Company’s restricted common stock for cash proceeds of $5,660 (Notes 6 and 8). On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a par value of $0,001 per share to two directors of the Company for consulting services rendered. As a result, the Company recorded professional fees of $5,250 when the stock was issued (Notes 6 and 8). 13. SUBSEQUENT EVENTS There have been no reportable events which have occurred during the period from the nine month period ended 31 May 2013 31 May 2013
$ $ $ $
------------------------------------ ------------------- ----------------- ----------------- -----------------
Interest paid - - - -
Taxes paid - - - -
------------------------------------ ------------------- ----------------- ----------------- -----------------
Total cash payments - - - -
------------------------------------ ------------------- ----------------- ----------------- -----------------
August 2014 to the date the interim consolidated financial statements were available to be issued on 20 October 2014.
On 26 April 2013, the Company issued 2,000,000 fully vested shares of the
Company's restricted common stock at a par value of $0.001 per share to a
third party for marketing assistance with the development of the
international markets in the South Pacific quadrant for the Company. As a
result, the Company recorded consulting expense of $2,000 when the stock
was issued (Note 8).
During the six month period ended 31 May 2014, the Company accrued interest
expense of $1,107 (31 May 2013 - $1,254) in relation to a loan of
CAD$45,000 issued by PSI on 13 November 2011. The loan is unsecured and
bears interest at a rate of 6% per annum (Note 5).
During the six month period ended 31 May 2014, the Company accrued interest
expense of $492 (31 May 2013 - $558) in relation to a loan of CAD$20,000
issued by PSI on 1 June 2012. The loan is unsecured and bears interest at a
rate of 6% per annum (Note 5).
During the six month period ended 31 May 2014, the Company recorded a write
down of $45,000 (31 May 2013 - $Nil; cumulative - $45,000) related to its
intangible assets and intellectual property (Note 7).
On 27 May 2014, the CEO requested that his salary be suspended until
further notice. Additionally, he forgave the entire balance of his accrued
salary in the amount of $516,000 and accrued bonus in the amount of
$300,000 as at 31 May 2014 (Notes 4 and 6).
On 27 May 2014, a consultant forgave all outstanding fees payable in
relation to consulting services rendered in the amount of $545,000 (Notes 4
and 6).
13. SUBSEQUENT EVENTS
There have been no reportable events which have occurred during the period
from the six month period ended 31 May 2014 to the date the interim
consolidated financial statements were available to be issued on 5 July
2014.
F-24
ItemMANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
interim consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive, uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by or on our behalf. We disclaim any obligation to update forward-looking statements.firms'firms’ reports on the Company's
consolidated financial statements as of November 30, 2013, and for the year then ended, include a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 1 to the unaudited quarterly interim
consolidated financial statements.Company'sCompany’s business plan was to develop a membership based website art gallery/auction house specifically focused on displaying and selling original artwork. The Company changed its status from a development stage company to an operating company on November 30, 2009. Management realized that the results of operations from the sale of artwork was lack-luster, and it was decided to change the Company'sCompany’s business focus and plan for other strategic opportunities and discontinued the sale of artwork to be effective June 25, 2010. Effective June 26, 2010, the Company started to focus on a new business development. On July 29, 2010, the Company's name changed from Online Originals, Inc. to CreenergyCREEnergy Corporation. The name change was intended to convey a sense of the Company's new business focus as it looked to pursue other opportunities. Specifically, the Company intended to obtain leases for the exploration and production of oil and gas in northern Canada and the United States. These objectives have not been realized and the Company has abandoned its efforts in this area.Company'sCompany’s restricted common stock, will receive all rights and title to proprietary technologies and formulas involving the application of specialty peptides. On December 21, 2011 the Asset Purchase Agreement was amended and 30,000,000 of the 75,000,000 shares issued were returned to treasury and cancelled. Having done this, the Company has changed its business focus from obtaining leases for the exploration and production of oil and gas in areas of northern Alberta, Canada, to the manufacturing and distribution of natural peptide solutions to combat the economic burden caused by the zebra and quagga mussels to the hydropower electricity industry.
25
TheThis agreement has been replaced with an Asset Purhcase Agreement date August 14, 2014.provides a sales conduit and exclusive rights
for our AquaNatural Marine coating to establish all aspects of the
commercialization of the first all-natural and sustainable organic-based fouling
prevention coatings product line to address the economic and environmental
burden of aquatic bio-fouling.Ltd. All-Sea Coatings will be responsible for
deployment and commercialization of the AquaNatural Marine coating in both the
commercial and leisure marine marketplace. The AquaNatural Marine Coating is a
customizable friction-reduction paint formula for stationary or mobile marine
assets for 5 years, resulting in a potential fuel cost savings greater than 5%.
The product offers an industry-first successful "30 MINUTE" curing phase
permitting significantly lower maintenance dry-dock downtime, and is designed to
prevent the attachment of fouling organisms to a wide variety of substrates.
This was filed with the SEC on Form 8-K on or about 26 May 2014.
Business of IssuerLtd has acquired from Peptide Technologies Inc. hasthe non-commercialized re-formulated assets, that were developed the first all-natural sustainable
solution for the economic and environmental burden of bio-fouling to prevent the
attachment of organic matter on ship hulls and marine assets to improve vessel
fuel efficiency, decrease maintenance costs, reduce emissions and prevent toxic
materials in our oceans, lakes and valuable water sources.
Our product line offers safe organic-based fouling prevention coatings used to
combat the rapidly growing problems caused by the attachmentCompany, in consideration of hard fouling
agents in the marine$10,000, (ten thousand dollars) and freshwater environments. Peptide Technologies' patent
protected approach not only significantly minimizes the attachmenta 3% Royalty of hard
fouling agents such as mussels, barnacles, etc. but is also highly effective in
preventing the build-up of any bio-film layer as well. Our products offer an
industry first "30 MINUTE" curing phaseall Gross Sales & Revenue, to significantly lower maintenance dry
dock downtime.
Our organic-based solutions are highly effective in both marine and freshwaters
and are the first non-dangerous, non-hazardous and therefore environmentally
friendly products availablebe paid to the aquatic and industrial market. Our fouling
prevention coatings adhere to both stationary and flexible substrates (i.e.
netting) and are available in a variety of colors. There are many benefits to
applying our fouling prevention coatings in enclosed systems as well as open
surfaces such as ship hulls, fish nets, intake screens, canal gates where the
application of paint containing biocides, bio-pesticides or copper products
and/or chemical based is not appropriate.
Targeted applications for our products are:
o Hydro-electric facilities and dams (i.e., water in-take pipes,
valves);
o Ship hulls (i.e., barnacle covered hulls can increase fuel usage by
more than 40%);
o Commercial fish nets;
o Pearling and Aquaculture industry;
o Drinking water treatment facilities;
o Farm irrigation water;
o Navigation locks;
o Oil rigs (FPSO);
o Other cement and/or steel substrates; and
o Concrete residential and commercial buildings
26
Unlike any other anti-fouling paint in the world, Peptide Technologies' fouling
prevention coatings are the only ones in the world to receive a non-hazardous
and non-dangerous rating by Risk Management Technology firm ChemAlert of
Australia with a documented Government sanctioned certification. More
information can be found here:
http://peptidetechnologiesinc.com/about-us/certifications/
----------------------------------------------------------
OUR PRODUCT LINE Peptide Technologies Inc., derived from All-Sea Coatings Ltd, until such a time should occur that Formulas and or All-Sea Coatings Ltd (the company) is pleasedsold. All-Sea Coatings Ltd shall cover all costs, expenses and capital, including all monies for additional research and development etc., required to introduce four products designed to prevent
the attachment of fouling organisms to a variety of substrates:
>> AquaNatural Industrial Coating- customized formulation to provide
effective protection from fouling organisms onto fixed assets for 10
years.
>> AquaCrete Natural Coating- customized solution to provide effective
protection to concrete surfaces from fouling organisms for 10 years.
>> AquaCulture Natural Coating- designed for flexible substrates such as
netting to allow for expansion and contraction without compromising
integrity of the coating for 2 years.
>> AquaNatural Marine Coating- customizable friction reduction formula
for assets while stationary or mobile for 5 years resulting in a
potential 5-6% fuel cost savings.
Together, these coatings will prevent attachment of fouling organisms to bare
wood, carbon steel, galvanized steel, stainless steel, concrete, gel coats,
underwater cable coverings and polypropylene netting. Coatings are non-hazardous
and do not kill fouling agents. Coatings are designed to simply prevent
organisms such as algae and other hard organisms (i.e. barnacles, mussels) from
attaching to the substrate. In addition, coatings can be formulated to provide
protection from fouling organisms onto fixed assets for 10 years (AquaNatural
Industrial and AquaCrete Natural Coatings).
Furthermore, the incorporation of silicone into our coatings has been carefully
tuned to not interfere with the slow release of the active ingredients. Indeed,
the silicone provides a hydrophobic environment at the coated substrate/water
interface. Empirical data obtained from a laboratory designed flume suggests a
reduction in drag of >5%. As a result, our coating will contribute to an overall
savings in fuel costs for mobile assets for a period of 5 years (AquaNatural
Marine Coating).
AquaCulture Natural Coating has been designed to expand and contract without
compromising the integrity of the coating. Open net-pens, anchor ropes and other
substrates influenced by the action of water currents can be coated and
protected from fouling by the flexible nature of this coating. The coating is
designed to provide effective substrate coating protection for 2 years.
OUR PROVEN RESULTS
Peptide Technologies products are the world's first coating to be classified as
a non-hazardous and non-dangerous good (Chem Alert - Australia) ofcommercialize all of the registered fouling prevention paints for both fresh and marine environments. The
effectivenesscoatings. All-Sea Coatings Ltd shall pay 10% of the gross sale to Peptide Technologies Inc. derived from any formula sold, out right, and or, if All-Sea Coatings (the Company) is purchased, 10% of the gross sale of All-Sea Coatings Ltd will be paid to Peptide Technologies Inc.at preventing the attachment of fouling organismsformula which has been examinedsold to All-Sea Coatings Ltd. All-Sea Coatings Ltd. shall cover all costs, expenses and independently monitored at locations around the globe
including: Darwin, Australia, Niagara Falls, Canada, Colorado River, USA,
Trondheim, Norwaycapital, including all monies for additional research and Vancouver, Canada. Results fromdevelopment etc., required to commercialize all these locations showed
the coatings significantly prevented fouling attachment for periods up to 8
months.
Our coatings contain no biocides, are non-dangerous, non-hazardous and free of
any regulated active ingredients (DSL and TSCA). The absence of copper from any
of our coatings allows for application of our products to include spraying
without contamination to neighboring waters.
http://www.environment.nsw.gov.au/resources/sustainbus/ 2007108_mbs_sheet4.pdf.
Our products can be produced in multiple colors including clear and white.
Furthermore the 30 minute quick curing time will reduce down time for mobile
assets representing significant cost savings to owners.
27
Peptide Technologies has developed proven products that have successfully
integrated fouling prevention with environmental safety with fouling prevention
in the aquatic ecosystem. All of the various coatings simply prevent the attachment of
fouling organisms and does not affect the welfare of other aquatic life. Indeed,
our coatings have been applied to oyster shells to prevent fouling and
subsequently shown not to affect the well-being of the animal. One of our
products, AquaCrete Natural coating has also been shown to be also effective
outside the aquatic environment in preventing algal attachment on concrete and
thereby prevent algal fouling of walk ways or buildings located in humid or
moist environments.
Peptide Technologies coatings offer a unique solution to environmental fouling
for a variety of substrates. The coatings effectiveness, ease and speed of
application and its non-hazardous nature will ensure the protections of
industrial assets and as well be compliant with environmental legislation.
Our patent-protected fouling prevention coatings (AquaNatural Industrial,
AquaCrete Natural, AquaCulture Natural, AquaNatural Marine) are based on
proprietary organic formulations developed over the past 18 years. After the
past two years of conclusive product testing and formula improvements, we have
launched a perfected product line offering the industry safe and sustainable
fouling prevention coatings used to combat the rapidly growing problems caused
by the attachment of hard fouling agents in the marine and fresh water
environments. Our paint is unique globally and represents the ultimate in a
green approach to fouling of mobile and fixed assets.
OUR ADVANTAGES
(a) The products are an Earth friendly organic solution and non-hazardous
to aquatic life;
(b) They can be applied to both stationary and moving substrates;
(c) All of our coatings have a Quick 30 minute cure time;
(d) Our products have been proven to be effective in both fresh and marine
waters;
(e) Our coatings can be applied as a paint or spray;
(f) We offer several COLOR options to suit the end-users application; as
well as a completely CLEAR coating, and,
(g) Our non-dangerous and non-hazardous coatings work by simply preventing
attachment by hard fouling agents and bio-film without harming aquatic
life
OUR OUTLOOK
The International Marine coatings market currently generates revenues of $5
Billion annually and is projected to reach $10 Billion within 4 years according
to Frost & Sullivan. Several factors will lead to the doubling of the global
market in such a short time frame. Such factors include the introduction of an
eco-friendly solution such as Peptide Technologies' products. The availability
of these products will facilitate painting of the ships and marine assets
globally and not just in traditional unregulated shipping zones. Peptide
Technologies is positioned to provide the entire marine coatings industry with
several solutions to meet the change in environmental regulations, reduction in
fuel consumption and lowering dry dock costs with its innovative product line.
Our commitment to the Earth and Oceanic sustainability will drive our growth to
enable a new generation of fouling prevention coatings.
Background
Bio-Fouling
Bio-fouling is the development of organic layers, created by the settlement of
organisms and their metabolic products (primarily caused by a variety of
organisms including: bacteria, algae and hard agents (mussels, barnacles etc.).
Fouling produces several problems for equipment and aquatic structures,
deteriorating their performance and limiting their useful life.
Typically fouling begins with the formation of bio-films which develop and
affect the interaction between the substrate surface and the environment. In
most instances, bio-film developments compromise the substrate's integrity and
facilitate the subsequent production of algal growth and the attachment of other
hard agents.
28
Bio-films are predominately aggregates of bacterial cells, which attach to and
grow on a substrate, which are often resistant to disinfection. Bacterial
bio-films cause serious problems for industrial fluid processing operations
including: mechanical blockage interference in heat transfer process and
microbial-induced corrosion. In engineered systems such as cooling water
systems, food processing and other industrial applications, bio-film is a risk
to public health. Product spoilage and souring are consequences of
bio-film-mediated contamination.
Overall, bio-fouling represents a significant economic cost to a variety of
man-made structures and facilities including: desalination plants, piers, and
pylons, buoys, boilers, steam generators, cooling towers, evaporators,
distillation units, heat exchangers, engine jackets and valves. In addition,
bio-fouling generally increases fuel consumption, reduces efficiency, and
greatly increases corrosion rates.
AquaNatural Industrial, AquaCrete Natural, AquaCulture Natural and AquaNatural
Marine products are the only non-hazardous, non-toxic, safe, user-friendly,
fouling prevention coatings. These four products prevent bio-film adherence and
subsequent attachment by other hard fouling agents. Our Fouling Prevention
coatings are the only four environmentally-safe paints for preventing the
attachment of bio-films and hard fouling agents.
Other key attributes of our four fouling prevention, products include:
o Our protective coating paints are available in several colors
including white and clear;
o Our products do not kill fouling agents, simply prevent them from
attaching to our coated surfaces;
o Our products can be applied to netting material, rope, fiberglass,
cement and a variety of metal substrates; and,
o Of all the registered anti-fouling paints, Peptide Technologies,
Inc.'s fouling prevention coatings are the only coatings registered
non-hazardous, non-toxic paint coatings, and therefore rated as
non-dangerous goods.
Zebra and Quagga Mussels
The zebra mussel (Dreissena polymorpha) and its cousin, the quagga mussel
(Dreissena rostriformis bugensis), are small bivalve mollusks with two matching
half shells, having an average life span of 3 to 5 years. Zebra mussels are
native to the Black, Caspian, and Azov Seas, dating back to 1769. By the late
18th and early 19th centuries, zebra mussels had spread to most all major
drainages of Europe because of widespread construction of canal systems. They
first appeared in Great Britain in 1824, where they are now well established.
Since then, zebra mussels have expanded their range into Denmark, Sweden,
Finland, Ireland, Italy, and the rest of Western Europe. Zebra mussels were
first discovered in North America in 1988 in the Great Lakes. The first account
of an established population came from Canadian waters of Lake St. Clair, a
water body connecting Lake Huron and Lake Erie. By 1990, zebra mussels had been
found in all the Great Lakes. The following year, zebra mussels escaped the
Great Lakes basin and found their way into the Illinois and Hudson rivers. The
Illinois River was the key to their introduction into the Mississippi River
drainage which covers over 1.2 million square miles. Since its introduction, the
zebra mussel has spread to 23 states in America and two Canadian provinces.
The quagga mussel is indigenous to the Dneiper River drainage of Ukraine and
Ponto-Caspian Sea. It was discovered in the Bug River in 1890 by Andrusov, who
named the species in 1897. The quagga mussel was first sighted in the Great
Lakes in September 1989, when one was found near Port Colborne, Lake Erie,
though the recognition of the quagga type as a distinct species was not until
1991. In August 1991, a mussel with a different genotype was found in a random
zebra mussel sample from the Erie Canal near Palmyra, New York, and after
confirmation that this mussel was not a variety of Dreissena polymorpha, the new
species was named "quagga mussel" after the "quagga," an extinct African
relative of the zebra. The first sighting of quagga mussels outside the Great
Lakes basin was made in the Mississippi River between St. Louis, Missouri and
Alton, Illinois in 1995. In January 2007, populations of quagga mussels were
discovered in Lake Mead near Boulder City, Nevada, and in Lake Havasu and Lake
Mohave on the California/Arizona border.
The quagga mussel is a prolific breeder, possibly contributing to its spread and
abundance. Dreissena are dioecious (either male or female) with external
fertilization. A fully mature female mussel is capable of producing up to one
million eggs per year. After fertilization, pelagic microscopic larvae, or
veligers, develop within a few days and these veligers soon acquire minute
bivalve shells. Free-swimming veligers drift with the currents for three to four
29
weeks feeding by their hair-like cilia while trying to locate suitable substrata
to settle and secure byssal threads. Zebra and quagga mussels accumulate organic
pollutants within their tissues to levels more than 300,000 times greater than
concentrations in the environment and these pollutants are found in their
pseudofeces, which can be passed up the food chain, therefore increasing
wildlife exposure to organic pollutants (Snyder et al., 1997). Another major
threat involves the fouling of native freshwater mussels. Since quaggas were
discovered in Lake Michigan in 1998, plankton rings formed by the passage of
storms have been eaten away by the quagga mussels, threatening the local
ecosystem.
Numerous pipelines, filter screens, hydroelectric turbines and pumping stations,
irrigation tunnels, canals and aqueducts are becoming clogged with quagga and
zebra mussels, and this proliferation and dispersion of mussel populations
threatens to impact reclamation operations and multiple dams across North
America, resulting in the interruption of hydropower and water delivery at
significant economic costs. Of particular concern is the blockage of water lines
designed to cool the hydropower turbines at dams like Hoover.
The quagga mussels, which grow to about 1.5 inches, are clogging water lines
that are used to cool the 17 massive hydropower turbines at Hoover Dam and have
already forced dam operators to temporarily shut down turbines that supply
electricity to 1.6 million people in southern Nevada, Arizona and California.
The mussels have caused similar problems at the downstream Davis Dam in Lake
Mohave and Parker Dam in Lake Havasu, both of which provide electricity for
thousands of people in Arizona and California. The mussels have also threatened
to clog water intake lines in Lake Mead operated by the Southern Nevada Water
System that supply water to more than 2 million people in the Las Vegas area.
What took decades to unfold in the Great Lakes has played out in a matter of
months in Lake Mead. Quaggas can lay eggs six or seven times a year in the
warmer water, compared with once or twice a year in the Great Lakes.
If you drained Lake Mead above Hoover Dam, says National Park Service biologist
Bryan Moore, it would reveal that brown canyon walls that were mussel-free just
two years ago are now black with quaggas at densities of up to 55,000 per square
meter. The Bureau of Reclamation, which operates the Hoover, Davis and Parker
dams, has employed divers with high-pressure water hoses to blow mussels out of
pipelines and filter gates, and the agency retains the option of using chlorine
treatments on the mussels if necessary. But those treatments are expensive,
temporary and, in the case of chlorine, can have negative environmental effects.
Colonization of the Columbia River Basin (CRB)in the Pacific Northwest by zebra
and quagga mussel could affect all submerged components and conduits of the
Federal Columbia River Power System (FCRPS) including trash racks, raw water
distribution systems (headers), turbine bearing cooling systems, diffuser
plates, service and fire-water systems, and fish passage facilities.
Despite the uncertainty about zebra and quagga mussel tolerance to water
velocity, irregularities such as cracks and crevices and scaling in older pipes
and flanges can provide lower velocity refugia where zebra and quagga mussel
settlement can occur. The attached mussels, in turn, then produce additional low
flow refuges, allowing colonization in otherwise inhospitable flow environments.
Settlement can also occur when water flow is reduced during generation down-time
as conditions become more conducive to attachment.
Zebra and quagga mussel densities within the CRB could vary widely depending on
water chemistry, food availability, and breeding population. After their initial
introduction, zebra mussel populations can rapidly increase by orders of
magnitude, and then similarly decrease. Under ideal conditions in the Laurentian
Great Lakes zebra mussel densities reach 700,000 - 800,000 per square meter
(Kovalak et al, 1993). In the lower Mississippi River, where the zebra mussel
has been introduced, densities of 400,000 per square meter have been reported
(Kraft, 1995). The Mississippi has an ideal environment for zebra and quagga
mussels, in part because food resources are abundant (Kraft, 1995). While
Columbia River water quality parameters are favorable to zebra and quagga mussel
colonization (Athearn 1999), the Columbia River's lower plankton densities in
comparison to the Mississippi or Great Lakes, may limit zebra and quagga mussel
population densities.
Densities of zebra and quagga mussels in the Pacific Northwest will determine
the severity of impacts on hydropower, navigation, and fish passage facilities.
Zebra mussel densities in powerhouses will depend on the configuration of the
water systems and water conduit materials. The potential economic impacts of
zebra and quagga mussels on hydropower generation facilities in the Columbia
River will be determined by a number of factors including density, growth rate,
and maintenance costs. While density and growth are affected by environmental
factors as noted above, maintenance costs will also be driven by the difficulty
30
in accessing fouled areas, the methods available for removal and control, and
the amount of time available for maintenance activities. They prefer to cling to
flat, stainless steel structures where water flows less than 6 feet per second.
The muscles infestation sets in and begins to clog hydroelectric power cooling
pipes and other hardware in the dams' operations with quagga colonies. Not only
do they pose a threat to the cooling pipe system for hydroelectric turbines, but
also to the network that supplies domestic water for workers and visitors at the
dams.
Economic Impacts
o Hydroelectric Dams and Nuclear Power Plants
There are more than 85,000 dams in the United States alone, of which
approximately 11% are federally owned and operated. The major concern is the
blockage of water lines designed to cool the hydropower turbines at dams like
Hoover. This problem has already caused a "significant increase in the frequency
of high temperature alarms in cooling systems, requiring shutdowns" so that the
mussels could be removed.
Quagga
The quagga mussels, which grow to about 1.5 inches, are clogging water lines
that are used to cool the 17 massive hydropower turbines at Hoover Dam and have
already forced dam operators to temporarily shut down turbines that supply
electricity to 1.6 million people in southern Nevada, Arizona and California.
The mussels have caused similar problems at the downstream Davis Dam in Lake
Mohave and Parker Dam in Lake Havasu, both of which provide electricity for
thousands of people in Arizona and California. The mussels have also threatened
to clog water intake lines in Lake Mead operated by the Southern Nevada Water
System that supply water to more than 2 million people in the Las Vegas area.
Maintenance costs will also be driven by the difficulty in accessing fouled
areas, the methods available for removal and control, and the amount of time
available for maintenance activities. It has been estimated that hundreds of
millions of dollars is spent annually to combat the mussel infestation at
hydroelectric dams alone, and it is expected that this amount will increase
exponentially once the infestation has spread to the West.
Virtually any submerged area with a moderate flow rate that draws water from an
infested water source is vulnerable to colonization. This is especially true of
areas that offer protection to small mussels, such as crevices or seams. Intake
screens, for example, are common settlement areas and are often coated with
clumps or druses of mussels. The presence of dislodged shells in the discharge
of a facility's raw well or forbay is a common first indicator of the presence
of zebra mussels in the raw water main. Facilities may also experience a
noticeable decrease in head pressure. Most facilities have numerous components
subject to severe bio-fouling,
o Shipping Industry
The shipping industry worldwide spends huge amounts every year combating the
effects of "fouling." Every year or two, ocean going vessels must dry-dock in
order to undergo extensive work over two or more weeks to remove barnacles that
have attached to the hull. Prior to dry-docking, ships gradually undergo rapid
increases in additional fuel costs due to increased drag from fouling. The
mechanism involved in fouling occurs in a series of three steps. Within one
week, the hull surface is coated with a slimy deposit. Following this, various
micro-organisms (bacteria) attach. Barnacles attach to this slimy/bacterial
coating and become attached to the ship's hull using a bio-cement generated by a
series of three proteins that undergo a conformational change, within the
organism. This cement is one of, if not the strongest cement known to date of
anything produced naturally.
The current anti-fouling paint applied to ship hulls contains toxic chemicals
and heavy metals. However, as the international shipping community has been
issuing legislation prohibiting the use of these environmentally hazardous
substances - the need for alternatives is pressing.
o Recreational Boating Industry
In contrast, Lake Mead Marina predicts the costs to the West's recreational
boating industry alone will be immense in the coming few years. Mussels are
smothering everything under the waterline at marinas, making simple maintenance
on boats and floating docks expensive and time consuming, not to mention
dangerous due to the razor-sharp shells being plucked from the water.
31
The United States Park Service, which figures the mussels have been in Lake Mead
since 2005, is trying to protect the rest of the West's waters by requiring
boats that have been docked in a slip to be decontaminated with jets of scalding
water before departing Lake Mead. A killer hot wash costs about $40 for a small
boat and up to $200 for a houseboat.
o Ecological Damage
The infestation of zebra and quagga mussels are wreaking havoc on the native
species indigenous to the waterways they inhabit. These mussels attach to other
mussel species and crustaceans making it almost impossible for them to eat and
survive. While the zebra and quagga do have predator enemies, there are not
enough to consume the rapidly growing infestation.
This is more than an ecological concern. The federal government plans to spend
over a billion dollars in the coming years to help these species recover, and
zebra and quagga mussels have a history of ravaging native species in the waters
they invade. In Lake Michigan, for example, prey fish numbers are less than 10%
of what they were before the invasive mussels arrived.
Zebra mussels are also believed to be the source of deadly avian botulism
poisoning that has killed tens of thousands of birds in the Great Lakes since
the late 1990s.
Zebra and quagga mussels accumulate organic pollutants within their tissues to
levels more than 300,000 times greater than concentrations in the environment
and these pollutants are found in their pseudofeces, which can be passed up the
food chain, therefore increasing wildlife exposure to organic pollutants.
Another major threat involves the fouling of native freshwater mussels. Since
quaggas were discovered in Lake Michigan in 1998, plankton rings formed by the
passage of storms have been eaten away by the quagga mussels, threatening the
local ecosystem.
Other zebra and quagga mussel infested applications include:
o Drinking water treatment facilities;
o Fish hatcheries and aquaculture facilities;
o Golf courses;
o Impoundments and reservoirs;
o Institutions (hospitals, colleges, etc.);
o National scenic river ways;
o Navigation locks;
o Public agencies; and
o Farm irrigation water.
produced.
32
May 31 August 2014, our cash balance was $1,683.$11,560. Cash on hand is currently our only source of liquidity. We do not have any lending arrangements in place with banking or financial institutions and we do not anticipate that we will be able to secure these funding arrangements in the near future.May 31 August 2014, we had a working capital deficit of $697,645$746,039 compared to a working capital deficit of $1,750,965 at 30 November 30, 2013. The reduction of our working capital deficit was caused by a $1.36 million dollar adjustment resulting from the forgiveness of wages and fees due to the CEO and an external consultant, and a $45,000 write down of intangible assets. (See Notes 4, 6 and 7 within the financial statement section of this report for additional detail). At May 31 August 2014, our total assets consisted of cash of $1,683$11,560 and a website with a net carrying value of $4,166.$3,333. This compares with total assets at November 30, 2013, which consisted of cash of $157, a website with a net carrying value of $5,833 and intangible assets and intellectual property of $45,000.May 31 August 2014, our total liabilities decreased to $699,328$757,599 from $1,751,122 at November 30, 2013. During the sixnine months ended May 31 August 2014, accounts payable and accrued li abilitiesliabilities decreased by $1,059,664.$993,523. The decrease was primarily caused by the forgiveness of accrued wages, bonus, and consulting fees by our CEO and an external consultant.May 31 August 2014 Compared To The Three Months Ended May
31 August 2013.$nil$9,239 revenues from operational sales during the three months ending MayAugust 31, 2014.May 31 August 2014, operating expenses were $169,935$68,812 compared to $247,677$245,932 for the three months ended May 31 August 2013. The decrease of $77,742$177,120 was due to a decrease in consulting fees of $75,000 due to the mutual termination of that contract on 30 November 30, 2013.2013, and a decrease in salaries of $110,000. Operating expenses during the three months ended MayAugust 31, 2014, consisted of salaries expense of $157,404,$49,224, professional fees of $4,011,$13,494, general and administrative expenses of $8,308,$4,185, and supplies expense of $212,$1,909, compared to salaries expense of $159,000, consulting fees of $77,000,$75,000, professional fees of $5,072, and$5,412, general and administration
feesadministrative expenses of $6,605$5,419, and supplies expense of $1,101 incurred for the three months ended May 31 August 2013.incomeloss of $1,143,370$59,137 for the three months ended May 31 August 2014, compared to a net loss of $248,074$248,303 for the three months ended May 31 August 2013. The difference of $1,391,444$189,166 was a result of the write-off adjustment of $1,361,000
ofa reduction in accrued wages and consulting fees, and a decrease in consulting expenses of $75,000 due to the cancellation of that agreement on 30 November 30, 2013 offset
with the write-down of $45,000 for intangible assets.
33
SixNine Months Ended May 31 August 2014 Compared To The SixNine Months Ended May 31 August 2013.nil9,239 revenues from operational sales during the sixnine months ending May 31 August 2014.sixnine months ended May 31 August 2014, operating expenses were $344,477$413,289 compared to $492,250$738,181 for the sixnine months ended MayAugust 31, 2013. The decrease of $147,773$324,892 was due primarily to a decrease in consulting fees of $150,000$227,000 due to the mutual termination of that contract on November 30, 2013.2013 and a reduction in accrued salaries of 112,432. Operating expenses during the sixnine months ended May 31 August 2014, consisted of salaries expense of $315,344,$364,568, professional fees of $9,761,$23,265, general and administrative expenses of $11,378,$15,563, and supplies and materials expense of $7,994,$9,903, compared to salaries expense of $318,000, consulting fees of $152,000,$477,000, professional fees of $13,705,
and$19,117, general and administration feesadministrative expenses of $8,545$13,963, and supplies and materials expense of $1,101, incurred for the sixnine months ended May 31 August 2013.$971,653$912,516 for the sixnine months ended May 31 August 2014, compared to a net loss of $492,438$738,192 for the sixnine months ended May 31 August 2013. The difference of $1,464,091$1,650,708 was a result a result of the write-off adjustment of $1,361,000 of accrued wages and consulting fees, and the decrease in consulting expenses of $150,000 due to the cancellation of that agreement on 30 November 30, 2013 offset with the write-down of $45,000 for intangible assets.Company'sCompany’s interim consolidated financial statements in conformity with generally accepted accounting principles in the United States ("U.S. GAAP") requires management to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The following is a summary of the significant accounting policies and related estimates that affect the Company'sCompany’s financial disclosures:PeptPEPT Peptide Technologies Inc., a company incorporated in the province of British Columbia on 5 August 5, 2013. All significant inter-company balances and transactions have been eliminated upon consolidation.("ASC"(“ASC”) 720-15, "Start-Up Costs."
“Start-Up Costs”. 30, 2010, the Company abandoned its previous business of sale of original artwork and re-entered the development stage with its intended new business, which currently has no revenues. Management expects to sustain losses from operations until such time it can generate sufficient revenues to meet its anticipated cost structure. The Company is considered a development-stage company in accordance with the ASC 915, "Accounting“Accounting and Reporting by Development-Stage Enterprises."” A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
34
"Website“Website Development Costs,"” expenditures during the planning and operating stages of the Company'sCompany’s website are expensed as incurred. Expenditures incurred during the website application and infrastructure development stage are capitalized and amortized to expense over the website'swebsite’s estimated useful life of 3 years."General“General Intangibles Other Than Goodwill," an intangible asset that is acquired either individually or with a group of other assets shall be recognized. Costs of internally developing, maintaining, or restoring intangible assets that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as whole, shall be recognized as an expense when incurred. The intellectual property is determined to have an indefinite useful life and is not subject to amortization. The useful lives of intangible assets are reassessed at each reporting period. During the sixnine month period ended May 31 August 2014, the Company recorded a write down of $45,000 related to its intangible asset and intellectual property.May 31 August 2014."Accounting“Accounting for Income Taxes." ASC 740 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the interim consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized."Earnings“Earnings per Share," the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings per share are not shown for periods in which the Company incurs a loss because it would be anti-dilutive. At MayAugust 31, 2014, the Company had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation.
35
Company'sCompany’s interim consolidated financial instruments, consisting of cash, accounts payable, and notes payable approximate their fair value due to the short-term maturity of these instruments. Unless otherwise noted, it is management'smanagement’s opinion that the Company is not exposed to significant interest or currency risks arising from these financial instruments.May 31 August 2014, all cash and cash equivalents were insured by agencies of the U.S. Government."Foreign“Foreign Currency Matters,"” foreign denominated monetary assets and liabilities are translated to their U.S. 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 period. Related translation adjustments are reported as a separate component of stockholders'stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. Company'sCompany’s interim consolidated financial statements are in conformity with U.S. GAAP which requires management to make estimates and assumptions that affect the amounts reported in these interim consolidated financial statements and accompanying notes. Actual results could differ from those estimates.RISK
RISK.36
Management'sissuer'sissuer’s internal control over financial reporting is as of the quarter ended May 31 August 2014.MayAugust 31, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.-– OTHER INFORMATION
None.
DISCLOSURE
DISCLOSURE.
None
Exhibit
Number Description
31.1 Section 302 Certification - Chief Executive Officer.
31.2 Section 302 Certification - Chief Financial Officer.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- Chief Executive Officer.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- Chief Financial Officer.
37
3rd20th day of July,October, 2014.
PEPTIDE TECHNOLOGIES, INC.
Date: July 23, 2014 By: /s/ Scott McKinley
------------------
Name: Scott McKinley
Title: Chief Executive Officer
Date: July 23, 2014 By: /s/ Erik Odeen
--------------
Name: Erik Odeen
Title: Chief Financial Officer
38PEPTIDE TECHNOLOGIES, INC. Date: 20 October 2014 By: /s/ Dennis Cox Name: Dennis Cox Title: President Date: 20 October 2014 By: /s/ Baxter Koehn Name: Baxter Koehn Title: Chief Financial Officer