SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For December 2014
PACIFIC THERAPEUTICS LTD.
(Translation of registrant’s name into English)
409 Granville Street, Suite #1500
Vancouver, BC, V6C-1T2 Canada
Tel: 604-738-1049
Fax: 604-738-1094
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F x Form 40-F o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes o No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
Pacific Therapeutics has distributed Exhibits 99.1 to 99.4 (inclusive) to the applicable Canadian securities regulators and to shareholders who requested same, to disseminate its interim financial statements and related materials for the Quarter Ended September 30, 2014
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: December 9, 2014
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PACIFIC THERAPEUTICS LTD
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|
|
|
|
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By:
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/s/ Douglas H. Unwin
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Name:
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Douglas H. Unwin
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Title:
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CEO
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SUBMITTED HEREWITH
Exhibits
EXHIBIT 99.1
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
CONDENSED INTERIM FINANCIAL STATEMENTS
Nine month period ended September 30, 2014
(Expressed in Canadian Dollars)
Unaudited – Prepared by Management
PACIFIC THERAPEUTICS LTD.
Condensed Interim Financial Statements
September 30, 2014
(Unaudited – See “Notice to Reader” below)
In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its external auditors have not reviewed the condensed interim financial statements for the period ended September 30, 2014.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
Condensed Interim Statements of Financial Position
(Expressed in Canadian Dollars)
AS AT:
|
|
30 Sep 14
|
|
|
31 Dec 13
|
|
|
|
$ |
|
|
$ |
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
8,370 |
|
|
|
180,692 |
|
Goods and Services Tax/Harmonized Sales Tax Receivable
|
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|
3,102 |
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|
7,391 |
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Prepaid expenses and deposits
|
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8,808 |
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36,605 |
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20,280 |
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224,688 |
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NON-CURRENT ASSETS
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PROPERTY AND EQUIPMENT (Note 3)
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|
1,531 |
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2,443 |
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INTANGIBLE ASSETS (Note 4)
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|
65,958 |
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59,913 |
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87,769 |
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287,044 |
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LIABILITIES
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CURRENT
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Trade payable and accrued liabilities
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231,916 |
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226,201 |
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Convertible note (Note 6)
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50,000 |
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30,900 |
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Due to related parties (Note 5)
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601,551 |
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470,087 |
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883,467 |
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727,188 |
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SHAREHOLDERS' DEFICIENCY
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|
|
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Share capital (Note 7)
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|
2,699,210 |
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2,699,210 |
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Share subscriptions recieved
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6,000 |
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|
|
- |
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Warrant and option reserve (Note 7)
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|
221,512 |
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123,704 |
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Deficit accumulated during the development stage
|
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(3,722,420 |
) |
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|
(3,263,058 |
) |
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|
|
(795,698 |
) |
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|
(440,144 |
) |
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87,769 |
|
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|
287,044 |
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Nature and Continuance of Operations (Note 1)
Subsequent Events (Note 10)
On behalf of the Board:
“Douglas H. Unwin” |
Director |
“Doug Wallis” |
Director |
Douglas H. Unwin |
|
Doug Wallis |
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The accompanying notes are an integral part of these condensed interim financial statements.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
Condensed Interim Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
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Three Months ended
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Three Months ended
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Nine Months ended
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Nine Months ended
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30 Sep 14
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30 Sep 13
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30 Sep 14
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30 Sep 13
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Expenses
|
|
|
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|
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Advertising and promotion
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$ |
38,829 |
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|
$ |
11,156 |
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$ |
53,994 |
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|
$ |
47,818 |
|
Amortization of property and equipment
|
|
|
304 |
|
|
|
245 |
|
|
|
912 |
|
|
|
1,954 |
|
Amortization of intangible assets
|
|
|
1,468 |
|
|
|
1,495 |
|
|
|
4,150 |
|
|
|
3,410 |
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Bank charges and interest
|
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3,275 |
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|
6,727 |
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|
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6,559 |
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|
16,008 |
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Donation
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- |
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- |
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|
500 |
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|
|
- |
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Insurance
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|
6,997 |
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3,164 |
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20,991 |
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12,959 |
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Investor relations
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|
- |
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|
15,000 |
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|
11,250 |
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|
61,250 |
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Office and miscellaneous
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|
717 |
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|
2,092 |
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|
3,602 |
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|
5,469 |
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Professional fees
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|
22,064 |
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|
49,863 |
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|
|
97,336 |
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|
89,131 |
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Rent and occupancy costs
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|
3,600 |
|
|
|
4,802 |
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|
|
10,800 |
|
|
|
10,805 |
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Share based payments
|
|
|
- |
|
|
|
4,986 |
|
|
|
97,808 |
|
|
|
39,833 |
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Telephone and utilities
|
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|
521 |
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|
|
684 |
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1,240 |
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|
1,396 |
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Transfer agent
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14,958 |
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1,684 |
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19,790 |
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4,941 |
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Travel
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|
2,812 |
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|
|
6,185 |
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|
10,656 |
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|
|
7,121 |
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Wages and benefits
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|
40,000 |
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|
40,000 |
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|
120,000 |
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|
|
115,560 |
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|
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|
135,545 |
|
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|
148,083 |
|
|
|
459,588 |
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|
417,655 |
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Interest expense
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Interwest loan interest
|
|
|
- |
|
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|
900 |
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|
|
- |
|
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|
2,700 |
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|
|
|
- |
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|
|
900 |
|
|
|
- |
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|
2,700 |
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Other Expenses (Income)
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Exchange loss/(gain)
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- |
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57 |
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|
(226 |
) |
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|
103 |
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Loss/(gain) on derivative liability (Note 6)
|
|
|
- |
|
|
|
(44,144 |
) |
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|
- |
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|
|
(30,889 |
) |
Write-off of license (Note 4)
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|
|
- |
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|
|
- |
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|
|
- |
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|
|
42,510 |
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|
|
|
|
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|
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|
Net Loss and Comprehensive Loss
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|
$ |
(135,545 |
) |
|
$ |
(104,896 |
) |
|
$ |
(459,362 |
) |
|
$ |
(432,079 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share Basic and Diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
Weighted average number of common shares outstanding
|
|
|
37,456,825 |
|
|
|
25,861,550 |
|
|
|
37,456,825 |
|
|
|
25,861,550 |
|
The accompanying notes are an integral part of these condensed interim financial statements.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
Condensed Interim Statements of Changes in Shareholders’ Deficiency
(Expressed in Canadian Dollars)
|
|
Number of common shares
|
|
|
Share capital
|
|
|
Share Subscriptions received
|
|
|
Warrant and option reserve
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Balance at December 31, 2012
|
|
|
22,586,825 |
|
|
|
1,995,716 |
|
|
|
30,000 |
|
|
|
206,212 |
|
|
|
(2,662,918 |
) |
|
|
(430,990 |
) |
Common shares issued for cash @ $0.05
|
|
|
4,000,000 |
|
|
|
200,000 |
|
|
|
24,000 |
|
|
|
- |
|
|
|
- |
|
|
|
224,000 |
|
Share issue costs
|
|
|
- |
|
|
|
(26,937 |
) |
|
|
- |
|
|
|
11,936 |
|
|
|
- |
|
|
|
(15,001 |
) |
Share based payments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
39,833 |
|
|
|
- |
|
|
|
39,833 |
|
Loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(432,078 |
) |
|
|
(432,078 |
) |
Balance at September 30, 2013
|
|
|
26,586,825 |
|
|
|
2,168,779 |
|
|
|
54,000 |
|
|
|
257,981 |
|
|
|
(3,094,996 |
) |
|
|
(614,236 |
) |
Balance at December 31, 2013
|
|
|
37,456,825 |
|
|
|
2,699,210 |
|
|
|
- |
|
|
|
123,704 |
|
|
|
(3,263,058 |
) |
|
|
(440,144 |
) |
Common shares issued for cash @ $0.05
|
|
|
- |
|
|
|
- |
|
|
|
6,000 |
|
|
|
- |
|
|
|
- |
|
|
|
6,000 |
|
Share based payments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
97,808 |
|
|
|
- |
|
|
|
97,808 |
|
Loss for the period
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(459,362 |
) |
|
|
(459,362 |
) |
Balance at September 30, 2014
|
|
|
37,456,825 |
|
|
|
2,699,210 |
|
|
|
6,000 |
|
|
|
221,512 |
|
|
|
(3,722,420 |
) |
|
|
(795,698 |
) |
The accompanying notes are an integral part of these condensed interim financial statements.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
Condensed Interim Statements of Cash Flows
(Expressed in Canadian Dollars)
|
|
Nine Months ended
|
|
|
Nine Months ended
|
|
|
|
30 Sep 14
|
|
|
30 Sep 13
|
|
|
|
$ |
|
|
$ |
|
Cash flows used in operating activities
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss
|
|
|
(459,362 |
) |
|
|
(432,079 |
) |
Adjustments for items not affecting cash
|
|
|
|
|
|
|
|
|
Amortization of property and equipment
|
|
|
912 |
|
|
|
1,954 |
|
Amortization of intangible assets
|
|
|
4,150 |
|
|
|
3,410 |
|
Share based payments
|
|
|
97,808 |
|
|
|
39,833 |
|
Loss on derivative liability
|
|
|
- |
|
|
|
13,255 |
|
Changes in non-cash working capital balances
|
|
|
|
|
|
|
|
|
Advances
|
|
|
- |
|
|
|
(1,500 |
) |
Goods and Services Tax/Harmonized Sales Tax recoverable
|
|
|
4,289 |
|
|
|
(1,467 |
) |
Prepaid expenses
|
|
|
27,797 |
|
|
|
81,244 |
|
Write-off of license
|
|
|
- |
|
|
|
42,510 |
|
Accounts payable and accrued liabilities
|
|
|
137,179 |
|
|
|
39,618 |
|
|
|
|
(187,227 |
) |
|
|
(213,222 |
) |
Cash flows used in investing activities
|
|
|
|
|
|
|
|
|
Additions to intangible assets
|
|
|
(10,195 |
) |
|
|
(4,218 |
) |
|
|
|
(10,195 |
) |
|
|
(4,218 |
) |
Cash flows from/(used in) financing activities
|
|
|
|
|
|
|
|
|
Issue of common shares for cash
|
|
|
- |
|
|
|
173,063 |
|
Subscriptions received
|
|
|
6,000 |
|
|
|
(30,000 |
) |
Issuance of finders' warrants
|
|
|
- |
|
|
|
11,936 |
|
Promissory note
|
|
|
19,100 |
|
|
|
8,844 |
|
Shareholder demand loan
|
|
|
- |
|
|
|
(45,553 |
) |
Due to shareholders
|
|
|
- |
|
|
|
(6,947 |
) |
|
|
|
25,100 |
|
|
|
111,343 |
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
(172,322 |
) |
|
|
(106,097 |
) |
Cash and cash equivalents, beginning of period
|
|
|
180,692 |
|
|
|
9,854 |
|
Cash and cash equivalents, end of period
|
|
|
8,370 |
|
|
|
(96,243 |
) |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed interim financial statements.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
1.
|
NATURE AND CONTINUANCE OF OPERATIONS
|
Pacific Therapeutics Ltd. (the “Company" or "PTL") was incorporated under the laws of the Province of British Columbia, Canada on September 12, 2005. The Company is a development stage company focused on developing proprietary drugs to treat certain types of lung disease including fibrosis. On October 14, 2011, the Company became a reporting company in British Columbia and was approved by the Canadian Securities Exchange (“CSE”) and opened for trading on November 16, 2011.
PTL has financed its cash requirements primarily from share issuances and payments from research collaborators. The Company's ability to realize the carrying value of its assets is dependent on successfully bringing its technologies to market and achieving future profitable operations, the outcome of which cannot be predicted at this time. It will be necessary for the Company to raise additional funds for the continuing development of its technologies.
The condensed interim financial statements have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and settlement of liabilities in the ordinary course of business. The Company is subject to risks and uncertainties common to drug discovery companies, including technological change, potential infringement on intellectual property of and by third parties, new product development, regulatory approval and market acceptance of its products, activities of competitors and its limited operating history. 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. The condensed interim financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
STATEMENT OF COMPLIANCE AND BASIS OF PRESENTATION
|
These condensed interim financial statements were approved and authorized for issue by the Board of Directors on November 28, 2014.
(a)
|
Statement of Compliance
|
These unaudited condensed interim financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standard 34 “Interim Financial Reporting” (“IAS 34”) using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the IFRS Interpretations Committee.
These unaudited condensed interim financial statements do not include all of the information required of a full annual financial report and should be read in conjunction with the annual financial statements of the Company for the year ended December 31, 2013.
(b)
|
Basis of Presentation
|
These condensed interim financial statements were prepared on a historical cost basis and are presented in Canadian dollars which is the Company’s functional currency. All financial information has been rounded to the nearest dollar.
The preparation of condensed interim financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed interim financial statements and the reported amounts of revenues and expenditures during the reporting periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
3.
|
PROPERTY AND EQUIPMENT
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at:
|
|
Computer Equipment
|
|
|
Furniture and Fixtures
|
|
|
Leasehold Improvements
|
|
|
Lab Equipment
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
$ |
5,876 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
5,798 |
|
|
$ |
11,674 |
|
December 31, 2013
|
|
$ |
5,876 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6,200 |
|
|
$ |
12,076 |
|
September 30, 2014
|
|
$ |
5,876 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6,200 |
|
|
$ |
12,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at:
|
|
Computer Equipment
|
|
|
Furniture and Fixtures
|
|
|
Leasehold Improvements
|
|
|
Lab Equipment
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
$ |
5,662 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,550 |
|
|
$ |
7,212 |
|
Amortization for the year
|
|
|
96 |
|
|
|
- |
|
|
|
- |
|
|
|
2,325 |
|
|
|
2,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
$ |
5,758 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3,875 |
|
|
$ |
9,633 |
|
Amortization for the period
|
|
|
40 |
|
|
|
- |
|
|
|
- |
|
|
|
872 |
|
|
|
912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
|
|
$ |
5,798 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
4,747 |
|
|
$ |
10,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at:
|
|
Computer Equipment
|
|
|
Furniture and Fixtures
|
|
|
Leasehold Improvements
|
|
|
Lab Equipment
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
$ |
214 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
4,248 |
|
|
$ |
4,462 |
|
December 31, 2013
|
|
$ |
118 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2,325 |
|
|
$ |
2,443 |
|
September 30, 2014
|
|
$ |
78 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,453 |
|
|
$ |
1,531 |
|
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
Cost
|
|
|
|
|
|
|
|
|
|
|
|
Technology Licenses (i)
|
|
|
Patents (ii)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
$ |
42,510 |
|
|
$ |
64,315 |
|
|
$ |
106,825 |
|
Additions
|
|
|
- |
|
|
|
13,569 |
|
|
|
13,569 |
|
Write-off
|
|
|
(42,510 |
) |
|
|
- |
|
|
|
(42,510 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
$ |
- |
|
|
$ |
77,884 |
|
|
$ |
77,884 |
|
Additions
|
|
|
- |
|
|
|
10,195 |
|
|
|
10,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
|
|
$ |
- |
|
|
$ |
88,079 |
|
|
$ |
88,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Licenses (i)
|
|
|
Patents (ii)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
$ |
- |
|
|
$ |
13,263 |
|
|
$ |
13,263 |
|
Amortization for the year
|
|
|
- |
|
|
|
4,708 |
|
|
|
4,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
$ |
- |
|
|
$ |
17,971 |
|
|
$ |
17,971 |
|
Amortization for the period
|
|
|
- |
|
|
$ |
4,150 |
|
|
|
4,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014
|
|
$ |
- |
|
|
$ |
22,121 |
|
|
$ |
22,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Licenses (i)
|
|
|
Patents (ii)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
$ |
42,510 |
|
|
$ |
51,052 |
|
|
$ |
93,562 |
|
December 31, 2013
|
|
$ |
- |
|
|
$ |
59,913 |
|
|
$ |
59,913 |
|
September 30, 2014
|
|
$ |
- |
|
|
$ |
65,958 |
|
|
$ |
65,958 |
|
|
(i)
|
On January 9, 2013, the technology license agreement with Dalhousie University was terminated due to breach of contract for non-payment of maintenance amounts due, accordingly the technology license was written down to nil.
|
|
(ii)
|
Due to a finite life of patents which begins from the date of application; the Company amortizes all patent costs over the expected life of the patent.
|
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
5.
|
DUE TO RELATED PARTIES
|
Due to related parties as at September 30, 2014 consists of $601,551 (December 31, 2013 - $470,087, September 30, 2013 - 189,575). These amounts consist of short term loans, services rendered and expenses paid on behalf of the Company by shareholders and or officers of the Company and are unsecured, non-interest bearing and payable on demand (note 8).
6.
|
CONVERTIBLE NOTE AND DERIVATIVE LIABILITY
|
On September 24, 2012 the Company issued a convertible note (the “Note”) with a face value of $30,000, issued 200,000 warrants (“Bonus Warrants”) and received $30,000 in cash. The Bonus Warrants with an exercise price of $0.22 expire on September 24, 2014. The Note had a term of one year and was repaid in full in January 2014.
The holder of the Note may convert the whole Note or any portion into units at any time. Each unit will consist of 1 common share (the “Share Option”) and 1 warrant (the “Warrant Option”), with each Warrant Option exercisable to acquire an additional common share for a period of 2 years from the date the Warrant Option was issued. Subject to regulatory approval the conversion price per unit will be at a 25% discount to the ten day weighted average price of the Company’s shares at the date of conversion. Subject to regulatory approval the exercise price per Warrant Option will be at a 25% premium to the ten day weighted average price of the issuer’s shares at the date of conversion. Each Bonus Warrant is exercisable to acquire an additional common share for a period of 2 years from the closing date at a price of $0.22. The Note accrues interest at the rate of 1% per month, payable in quarterly installments.
The fair value of the Bonus Warrants and Share Options were determined using the Black-Scholes Pricing Model. The Black-Scholes Pricing Model is based on several subjective assumptions including the expected life of the option and expected future stock price volatility. Changes in these assumptions can materially affect the estimated fair value of the Company’s stock options. The estimated fair value of the Bonus Warrants was calculated on the grant date as $13,238. The estimated fair value of the share options was calculated on the grant date as $18,232.
The fair value of the Warrant Options was determined using the Geske Price Model. The Geske Price Model is based on several subjective assumptions including the expected life of the option and expected future stock price volatility. Changes in these assumptions can materially affect the estimated fair value of the Company’s stock options. The estimated value of the Warrant Option was calculated on the grant date as $11,600.
Upon initial recognition, the Company bifurcated the $30,000 proceeds between the component parts of the convertible note using the relative fair value method as follows:
|
|
|
Estimated Value
|
|
|
|
|
|
Allocation of Proceeds
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
Convertible Loan
|
Face value of note
|
|
$ |
30,000 |
|
|
|
41 |
% |
|
$ |
12,317 |
|
Derivative Liability
|
Share option
|
|
|
18,232 |
|
|
|
25 |
% |
|
|
7,485 |
|
Derivative Liability
|
Warrant option
|
|
|
11,600 |
|
|
|
16 |
% |
|
|
4,763 |
|
Warrant and option reserve
|
Bonus warrants
|
|
|
13,238 |
|
|
|
18 |
% |
|
|
5,435 |
|
|
|
|
$ |
73,070 |
|
|
|
100 |
% |
|
$ |
30,000 |
|
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
The discount on the component parts of the convertible note are accredited as interest expense over the one year term of the note. As at December 31, 2013 the derivative liability was re-measured to fair value. This resulted in a gain on derivative liability being recognized on the face of the condensed interim financial statements of $30,900.
Authorized
|
Unlimited
|
Class A common shares without par value
|
|
1,500,000
|
Class B Series I preferred shares without par value
|
|
1,000,000
|
Class B Series II preferred shares without par value
|
Issued
|
37,456,825
|
Class A common shares without par value
|
|
NIL
|
Class B Series I preferred shares without par value
|
|
NIL
|
Class B Series II preferred shares without par value
|
Class A Common Shares
On February 13, 2013 the Company closed the first tranche of a non-brokered private placement and issued 1,800,000 units at $0.05 per unit for gross proceeds of $90,000, of which $30,000 was recorded during the year ended December 31, 2012. Each unit is comprised of one common share and one-half a purchase warrant, each whole warrant being exercisable for one common share at an exercise price of $0.22 until February 12, 2015. The Company paid finder’s fees of $5,000 and issued 100,000 finders warrants to finders in the first tranche. The finders’ warrants have the same terms as the warrants that are part of the above Units. The fair value of the 100,000 finders’ warrants was $2,742 as estimated at the date of issue using the Black-Scholes pricing model.
On May 1, 2013, the Company closed the second tranche of a non-brokered private placement and issued an additional 2,200,000 units at $0.05 per unit for gross proceeds of $110,000. Each unit is comprised of one common share and one-half a purchase warrant, each whole warrant being exercisable for one common share at an exercise price of $0.22 until May 1, 2015. The Company paid finder’s fees of $10,000 and issued 200,000 finders warrants to finders in the second tranche. The finders’ warrants have the same terms as the warrants that are part of the above Units. The fair value of the 200,000 finders’ warrants was $5,413 as estimated at the date of issue using the Black-Scholes pricing model.
On October 8, 2013 the Company closed the first tranche and issued 2,160,000 units for gross proceeds of $108,000. 2,160,000 warrants were issued with an expiration date of October 8, 2016. Each unit is comprised of one common share and one share purchase warrant, each warrant being exercisable for one common share at an exercise price of $0.10 for three years from the closing date of the placement. Finders’ fees were paid in the amount of $4,500 cash and issued 90,000 finders warrants having the same terms as the warrants issued as part of the units. The fair value of the 100,000 finders’ warrants was $2,646 as estimated at the date of issue using the Black-Scholes pricing model.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
On October 18, 2013 the Company closed the second tranche and issued 1,980,000 units for gross proceeds of $99,000. 1,980,000 warrants were issued with an expiration date of October 18, 2016. Each unit is comprised of one common share and one share purchase warrant, each warrant being exercisable for one common share at an exercise price of $0.10 for three years from the closing date of the placement Finders fees were paid in the amount of $2,000 cash and issued 40,000 finders warrants having the same terms as the warrants issued as part of the units. The fair value of the 40,000 finders’ warrants was $3,306 as estimated at the date of issue using the Black-Scholes pricing model.
On November 5, 2013 the Company closed the third tranche and issued 6,730,000 units for gross proceeds of $336,500. 6,730,000 warrants were issued with an expiration date of November 5, 2016. Each unit is comprised of one common share and one share purchase warrant, each warrant being exercisable for one common share at an exercise price of $0.10 for three years from the closing date of the placement Finders’ fees were paid in the amount of $2,500 cash and issued 50,000 finders warrants having the same terms as the warrants issued as part of the units. The fair value of the 50,000 finders’ warrants was $1,899 as estimated at the date of issue using the Black-Scholes pricing model.
Share subscriptions received:
At September 30, 2014 the Company had received $6,000 (December 31, 2013 - $Nil) from an investor for 120,000 shares at $0.05 per share. The shares were issued by the Company on October 3, 2014.
Stock options and share based compensation:
As at September 30, 2014 and December 31, 2013, the following stock options were outstanding:
|
|
|
|
|
Nine months ending
|
|
|
Twelve months ending
|
|
Expiry Date
|
|
Exercise Price $
|
|
|
30 Sep 14
|
|
|
31 Dec 13
|
|
4-Nov-14
|
|
0.27 |
|
|
|
150,000 |
|
|
|
150,000 |
|
5-Mar-15
|
|
0.27 |
|
|
|
375,000 |
|
|
|
375,000 |
|
11-Jun-15
|
|
0.06 |
|
|
|
500,000 |
|
|
|
- |
|
10-Jan-17
|
|
0.10 |
|
|
|
400,000 |
|
|
|
- |
|
3-Jul-17
|
|
0.10 |
|
|
|
475,000 |
|
|
|
475,000 |
|
21-Dec-17
|
|
0.10 |
|
|
|
450,000 |
|
|
|
450,000 |
|
4-Apr-18
|
|
0.10 |
|
|
|
350,000 |
|
|
|
350,000 |
|
16-Sep-18
|
|
0.10 |
|
|
|
100,000 |
|
|
|
100,000 |
|
7-Mar-19
|
|
0.10 |
|
|
|
525,000 |
|
|
|
- |
|
Balance
|
|
0.12 |
|
|
|
3,325,000 |
|
|
|
1,900,000 |
|
The options outstanding and exercisable at September 30, 2014, have a weighted average remaining contractual life of 3 years (December 31, 2014 – 3.1 years). Stock option activity was as follows:
|
|
Nine months ending
|
|
|
Twelve months ending
|
|
|
|
30 Sep 14
|
|
|
31 Dec 13
|
|
|
|
Options Outstanding
|
|
|
Exercise Price $
|
|
|
Options Outstanding
|
|
|
Exercise Price $
|
|
Balance at January 1
|
|
|
1,900,000 |
|
|
$ |
0.15 |
|
|
|
1,675,000 |
|
|
$ |
0.18 |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Expired/Cancelled
|
|
|
- |
|
|
|
- |
|
|
|
(225,000 |
) |
|
|
0.27 |
|
Issued
|
|
|
1,425,000 |
|
|
|
0.09 |
|
|
|
450,000 |
|
|
|
0.10 |
|
Balance at period end
|
|
|
3,325,000 |
|
|
$ |
0.12 |
|
|
|
1,900,000 |
|
|
$ |
0.15 |
|
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
The fair value of share based awards is determined using the Black-Scholes Option Pricing model. The model utilizes certain subjective assumptions including the expected life of the option and expected future stock price volatility. Changes in these assumptions can materially affect the estimated fair value of the Company’s stock options. The Company used the Black-Scholes Option Pricing Model for the grants on January 10, 2014, March 3, 2014 and June 11, 2014 and for multiple stock option grants occurring 2013. The assumptions used in the Black-Scholes Option Pricing Model for employees, directors and consultants were:
|
Six months ended June 30, 2014
|
Twelve months ended December 31, 2013
|
Dividend yield
|
0%
|
0%
|
Expected volatility
|
299% - 308%
|
164% - 166%
|
Risk free interest rate
|
0.78% - 1.63%
|
1.23% - 1.87%
|
Expected life in years
|
1 - 5
|
5
|
Grant date fair value per share
|
$0.05 - $0.08
|
$0.08 - $0.09
|
Forfeiture rate
|
4%
|
4%
|
As at September 30, 2014 and December 31, 2013, the following share purchase warrants were issued and outstanding:
|
|
|
|
|
Nine months ending
|
|
|
|
|
Twelve months ending
|
|
Expiry Date
|
|
Exercise Price $
|
|
|
September 30, 2014
|
|
|
|
|
December 31, 2013
|
|
19-Jun-14
|
|
$0.22 |
|
|
|
- |
|
|
|
|
|
56,666 |
|
20-Jun-14
|
|
$0.22 |
|
|
|
- |
|
|
|
|
|
732,670 |
|
31-Jul-14
|
|
$0.15 |
|
|
|
- |
|
(1 |
) |
|
|
2,473,334 |
|
28-Aug-14
|
|
$0.25 |
|
|
|
- |
|
(2 |
) |
|
|
60,000 |
|
21-Sep-14
|
|
$0.22 |
|
|
|
- |
|
|
|
|
|
747,166 |
|
24-Sep-14
|
|
$0.22 |
|
|
|
- |
|
|
|
|
|
200,000 |
|
16-Nov-14
|
|
$0.15 |
|
|
|
600,000 |
|
(3 |
) |
|
|
600,000 |
|
12-Feb-15
|
|
$0.22 |
|
|
|
1,000,000 |
|
|
|
|
|
1,000,000 |
|
1-May-15
|
|
$0.22 |
|
|
|
1,300,000 |
|
|
|
|
|
1,300,000 |
|
1-Oct-16
|
|
$0.22 |
|
|
|
2,160,000 |
|
|
|
|
|
2,160,000 |
|
8-Oct-16
|
|
$0.10 |
|
|
|
90,000 |
|
|
|
|
|
90,000 |
|
18-Oct-16
|
|
$0.10 |
|
|
|
1,980,000 |
|
|
|
|
|
1,980,000 |
|
18-Oct-16
|
|
$0.10 |
|
|
|
40,000 |
|
|
|
|
|
40,000 |
|
5-Nov-16
|
|
$0.10 |
|
|
|
6,730,000 |
|
|
|
|
|
6,730,000 |
|
5-Nov-16
|
|
$0.10 |
|
|
|
50,000 |
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
13,950,000 |
|
|
|
|
|
18,219,836 |
|
(1)
|
On January 6, 2014 the Company extended the expiry date of 2,473,334 warrants from January 31, 2014, to July 31, 2014.
|
(2)
|
On January 6, 2014 the Company extended the expiry date of 60,000 warrants from February 28, 2014, to August 28, 2014.
|
(3)
|
On January 18, 2013 the Company extended the expiry date of 600,000 warrants from May 16, 2014, to November 16, 2014.
|
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
The warrants outstanding and exercisable at September 30, 2014, have a weighted average remaining contractual life of 1.7 years (2013 – 0.8 years). Warrant activity was as follows:
|
|
Nine months ending
|
|
Twelve months ending
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
|
|
|
Warrants Outstanding
|
|
|
Exercise Price $
|
|
Warrants Outstanding
|
|
|
Exercise Price $
|
|
Opening balance
|
|
|
18,219,836 |
|
|
|
0.15 |
|
|
5,272,059 |
|
|
|
0.17 |
|
Expired
|
|
|
(4,269,836 |
) |
|
|
0.15 |
|
|
(602,223 |
) |
|
|
0.15 |
|
Exercised
|
|
|
- |
|
|
|
0.15 |
|
|
- |
|
|
|
0.15 |
|
Issued
|
|
|
- |
|
|
|
0.22 |
|
|
13,550,000 |
|
|
|
0.14 |
|
Closing balance
|
|
|
13,950,000 |
|
|
|
0.15 |
|
|
18,219,836 |
|
|
|
0.15 |
|
8.
|
RELATED PARTY TRANSACTIONS AND BALANCES
|
All transactions with related parties are in the normal course of operations.
Details of the transactions between the Company and its related parties are disclosed below:
(a) Related Party Transactions and Key Management and Personnel Compensation
Payment or accruals for related parties in the nine months ended September 30, 2014 were $219,781 (2013 $126,347) were for services provided to the company were:
Nine months ended September 30,
|
|
2014
|
|
|
2013
|
|
Salary paid or accrued for Doug Unwin CEO
|
|
$ |
120,000 |
|
|
$ |
75,000 |
|
Consulting fees paid or accrued to Derick Sinclair CFO
|
|
|
27,000 |
|
|
|
16,500 |
|
Accounting fees paid or accrued to a company controlled by Derick Sinclair CFO
|
|
|
4,500 |
|
|
|
- |
|
Legal fees for services from Greg Beniston a consultant and director of the Company
|
|
|
446 |
|
|
|
- |
|
Share-based payments for options issued to Doug Unwin, Derick Sinclair and Doug Wallis
|
|
|
67,835 |
|
|
|
34,847 |
|
|
|
|
|
|
|
|
|
|
Total key management personnel compensation
|
|
$ |
219,781 |
|
|
$ |
126,347 |
|
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
(b) Related Party Balances
Due to related parties as at September 30, 2014 was $564,051 (2013 - $189,575). These amounts consist of short term loans, services rendered and expenses paid on behalf of the Company by shareholders and or officers of the Company and are unsecured, non-interest bearing and payable on demand as follows:
|
|
September 30, 2014
|
|
|
December 31, 2013
|
|
|
|
|
|
|
|
|
Amounts owing to derick Sinclair CFO of the Company for loans and consulting, accounting fees and interest on ISA.
|
|
$ |
114,224 |
|
|
$ |
86,760 |
|
Amounts owing to Greg Beniston a director of the Company for legal fees
|
|
|
17,117 |
|
|
|
17,117 |
|
Amounts owing to Wendy Chan a director of the Company for consulting fees
|
|
|
10,500 |
|
|
|
|
|
Amounts owing to Doug Wallis a director of the Company for interest on ISA
|
|
|
2,964 |
|
|
|
|
|
Amount owing to Doug Unwin the CEO and director of the Company for loans, salary, expenses and interest on ISA.
|
|
|
456,746 |
|
|
|
366,210 |
|
|
|
$ |
601,551 |
|
|
$ |
470,087 |
|
During the nine months ended September 30, 2014 the Company granted 500,000, 5 year $0.10 incentive stock options that vested at date of grant to officers and directors and 500,000, 1 year $0.06 incentive options that vested at date of grant to and officer and director (During the twelve months ended December 31, 2013, the Company granted 450,000, 5 year $0.10 incentive stock options that vested at date of grant to officers and directors (Note 7).
9.
|
FINANCIAL INSTRUMENTS AND RISK
|
As at September 30, 2014, the Company’s financial instruments consist of cash and cash equivalents, trade payables, and due to related parties.
The carrying value of cash and cash equivalents, trade payables, and due to related parties approximate their fair values because of the short term nature of these instruments.
Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash and cash equivalents. To minimize the credit risk the Company places these instruments with a high credit quality financial institution.
Liquidity Risk
The Company’s financial liabilities consist of $564,051 due to related parties (Note 8), $231,916 due to third parties and $50,000 in convertible notes (Note 6). The amounts due to third parties consist of $40,107 due in 30 - 90 days, and $181,809 over 90 days.
Foreign Exchange Risk
The Company is not exposed to foreign exchange risk on its financial instruments.
PACIFIC THERAPEUTICS LTD.
(A Development Stage Company)
Interest Rate Risk
At September 30, 2014, the Company is not exposed to interest rate risk as its interest bearing debt is at fixed rates.
On October 5, 2014, the Company issued 1,520,000 units for gross proceeds of $76,000. Each unit consists of one common share and one share purchase warrant, each warrant being exercisable for one common share at an exercise price of $0.15 and with an expiration date of October 3, 2015.
On October 5, 2014, the Company entered into a convertible Debenture for $50,000 convertible into shares at a 15% discount to the market at the time of conversion.
On October 28, 2014, the company issued 500,000 options with an exercise price of $0.10. the options expire as follows: 200,000 on October 28, 2014; 100,000 on October 28,2017; and 200,000 on October 28, 2019.
EXHIBIT 99.2
PACIFIC THERAPEUTICS LTD.
MANAGMENTS’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Nine-Month Ended September 30, 2014
Overview
This MD&A has been prepared as of November 28, 2014 and the following information should be read in conjunction with Pacific Therapeutics Ltd. (the “Company”, the “Issuer’) un-audited financial statements for the quarter ended September 30, 2014 together with the notes thereto. The Issuer’s financial statements for the period have been prepared in accordance with International Financial Reporting Standards (IFRS). This discussion contains forward-looking statements that involve certain risks and uncertainties. Statements regarding future events, expectations and beliefs of management and other statements that do not express historical facts are forward-looking statements. In this discussion, the words “believe”, “may”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “potential” and similar expressions, as they relate to the Issuer, its business and management, are intended to identify forward looking statements. The Issuer has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the financial condition of the business. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Except as may be required by applicable law or stock exchange regulation, the Issuer undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements. If the Issuer updates one or more forward-looking statements, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements. Additional information relating to the Issuer, is available by accessing the SEDAR website at www.sedar.com.
Business Overview and Strategy
The Issuer is a development stage specialty pharmaceutical company. The Issuer is focused on developing late stage clinical therapies and in-licensed novel compounds for Fibrosis, Erectile Dysfunction (ED) and other indications. The Issuer’s lead compound for Fibrosis, PTL-202 is a combination of already approved drugs with a well established safety profile. PTL-202 has completed a phase 1 clinical trial. The Issuer’s lead product for Erectile Dysfunction PTL-2015 is an oral dissolving version of a top selling therapy for ED. PTL-2015 has completed a pilot bioavailability study in humans.
The Issuer will continue to operate virtually, outsourcing all non-core activities such as pre-clinical research and clinical trials and manufacturing. The Issuer will continue to build core skills in managing clinical development of therapies, licensing and commercialization. The Issuer will use its skills, taking in-licensed approved and late stage drug candidates through Phase 2 proof of concept human clinical trials. The Issuer currently is focused on therapies for rare fibrosis indications including Idiopathic Pulmonary Fibrosis (IPF), Liver Cirrhosis, Scleroderma Associated Pulmonary Fibrosis, Lung Transplant Rejection as well as ED. The Issuer’s strategy is to sell or out-license its product candidates and technologies after completing Phase 2 clinical trial proof of principal studies. At the completion of the phase 2 proof of concept trial the value of product candidates has been maximized in relation to the capital spent to develop them. In the case of PTL-2015 the strategy is to complete the required clinical trials and register the product for marketing approval in Europe prior to entering a commercialization and distribution agreement.
Overall Performance
The Issuer will continue to operate virtually, outsourcing all non-core activities such as pre-clinical research and clinical trials and manufacturing.
Corporate Highlights
During the first nine months of 2014 the Issuer accomplished the following:
|
·
|
On January 6, 2014, the Company extended the expiry date of 2,473,334 share purchase warrants exercisable to purchase one common share of the Company at an exercise price of $ $0.15 per share from the original expiry date of January 31, 2014 to July 31, 2014. The warrants were issued in connection with the Company’s ISA financing in 2011.
|
|
·
|
On January 6, 2014, the Company extended the expiry date 600,000 share purchase warrants exercisable to purchase one common share of the Company at an exercise price of $0.15 per share for the original expiry date of May 16, 2014 to November 16, 2014. The warrants were issued in connection with the Company’s ISA financing in 2011.
|
|
·
|
On January 6, 2014, the Company extended the expiry date 60,000 share purchase warrants exercisable to purchase one common share of the Company at an exercise price of $0.25 per share from the original expiry date of February 28, 2014 to August 28, 2014. The warrants were issued in connection with the private placement in February 28, 2011.
|
|
·
|
On January 10, 2014, the Company engaged Gale Capital Corp. for investor relation services. The term of the contract is for one year for fees of $10,000 lump sum up-front payment and $2,500 per month thereafter and may be terminated by either party after three months.
|
|
·
|
On January 10, 2014, the Company granted 400,000 stock options to advisors and consultants of the Company to purchase common shares of the Company for proceeds of $0.10 per common share expiring January 10, 2017.
|
|
·
|
On March 7, 2014 the Company issued 525,000 stock options to directors, officers, advisors and consultants of the Company to purchase common shares of the Company for proceeds of $0.10 per common share expiring March 7, 2019.
|
|
·
|
On March 12, 2014 the Company announced that the European Patent Office has issued an official letter stating that it intends to allow the application for the Company’s patent COMPOSITIONS AND METHODS FOR TREATING FIBROPROLIFERATIVE DISORDERS. This patent covers the composition and use of the combination of drugs used in the Company’s lead product for treatment of IPF and includes claims for the use of the combination to treat liver fibrosis, kidney fibrosis, uterine fibrosis and peripheral arterial disease.
|
|
·
|
On May 7, 2014 the Company announced that it had entered into an advisory agreement with TriPoint Global Equities LLC (“TriPoint”), a FINRA member firm. TriPoint is a global investment bank focused on assisting fast growing companies. The company issued to TriPoint warrants to purchase 700,000 shares at a price of $0.10 per share. The warrants expire on May 6, 2016
|
|
·
|
On June 14, 2014 the Company issued 500,000 options to purchase common shares to a director and officer under the 2013 stock option plan as approved at the Company’s previous annual general meeting. The options may be exercised at a price of $0.06 per share for a period of one (1) year.
|
|
·
|
On July 7, 2014 the Company announced that the European Patent Office has granted the Company’s patent COMPOSITIONS AND METHODS FOR TREATING FIBROPROLIFERATIVE DISORDERS. This patent covers the composition and use of the combination of drugs used in the Company’s lead product for treatment of IPF and includes claims for the use of the combination to treat liver fibrosis, kidney fibrosis, uterine fibrosis and peripheral arterial disease.
|
|
·
|
On July 9, 2014 the Company released the results of its pre-clinical studies of PTL-202. PTL-202 and its separate constituents were tested in 5 experiments in a recognized mouse model of pulmonary fibrosis. These studies provided the data required for the recently granted European patent covering the proprietary technology utilized in PTL-202.
|
|
·
|
On July 16, 2014 the Company signed a term sheet with Vodis Innovative Pharmaceuticals (“Vodis”) agreeing to work with Vodis on the development of therapies based on extracts from cannabis plants.
|
Selected Financial Information
The financial information reported here has been prepared in accordance with IFRS. The Issuer uses the Canadian dollar (CDN) as its reporting currency. Selected un-audited financial data for interim operations of the Issuer for the three and nine months ended September 30, 2014 and September 30, 2013 is presented below:
Selected Statement of Operations Data
Period ended
|
|
Three Months Ended September 30, 2014
|
|
|
Three Months Ended September 30, 2013
|
|
|
Nine Months Ended September 30, 2014
|
|
|
Nine Months Ended September 30, 2013
|
|
Total revenues
|
|
$ |
Nil |
|
|
$ |
Nil |
|
|
$ |
Nil |
|
|
$ |
Nil |
|
Net and Comprehensive loss
|
|
|
(135,545 |
) |
|
$ |
(104,895 |
) |
|
|
(459,362 |
) |
|
$ |
(432,079 |
) |
Basic loss per share
|
|
|
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
(0.01 |
) |
|
$ |
(0.02 |
) |
Diluted loss per share (Unaudited)
|
|
|
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
(0.01 |
) |
|
$ |
(0.02 |
) |
Weighted average shares
|
|
|
37,456,825 |
|
|
|
25,861,550 |
|
|
|
37,456,825 |
|
|
|
25,861,550 |
|
(1) Financial data for the quarter prepared using IFRS
The net loss and comprehensive loss from operations of $459,362 for the nine months ended September 30, 2014 increased when compared to the loss and comprehensive loss from operations of $432,079 for the nine months ended September 30, 2013. The increased loss is primarily due to an increase in advertising and promotion, insurance, share based payments and transfer agent fees in the nine month period ended September 30, 2014 as compared to the nine month period ended September 30, 2013. These increased expenses were offset by a decrease in bank charges and interest and investor relations expenses in the nine months ended September 30, 2014.
Selected Balance Sheet Data
Period ended
|
|
September 30, 2014
|
|
|
September 30, 2013
|
|
Cash & Equivalents
|
|
$ |
8,370 |
|
|
$ |
7,523 |
|
Current assets
|
|
$ |
20,280 |
|
|
$ |
80,959 |
|
Property and equipment (net of depreciation)
|
|
$ |
1,531 |
|
|
$ |
2,910 |
|
Patents & Licenses (net of amortization)
|
|
$ |
65,958 |
|
|
$ |
53,031 |
|
Total Assets
|
|
$ |
87,769 |
|
|
$ |
136,900 |
|
Current liabilities
|
|
$ |
883,467 |
|
|
$ |
751,136 |
|
Non-Current liabilities
|
|
$ |
Nil |
|
|
$ |
Nil |
|
Total liabilities
|
|
|
883,467 |
|
|
|
751,136 |
|
Working Capital
|
|
|
(863,187 |
) |
|
$ |
(670,177 |
) |
(1) Financial data prepared using IFRS
Cash and equivalents decreased in the first nine months by $172,322 from $180,692 on December 31, 2013 to $8,370 as of September 30, 2014.
Comparison of the Quarters ending September 30, 2014, September 30, 2013 and September 30, 2012
Revenues
As the focus of management during the first nine months of 2014 was on preparing for further clinical trials of PTL-202 and PTL-2015 no revenues were realized.
The Issuer has no drug therapies approved or for sale and has not generated any revenue from the sale of drug therapies. The Issuer has not recognized any revenue since inception through September 30, 2014. The Issuer does not expect to receive any revenues until after the completion of the Phase 2 trial of PTL-202 or the approval for marketing of PTL-2015.
The Issuer’s revenues will be earned through upfront payments from licenses, milestone payments included in-licenses and royalty income from licenses. The Issuer’s revenues will depend on out licensing the Issuer’s drug candidates to suitable development and commercialization partners and its partners’ abilities to successfully complete clinical trials and commercialize the Issuer’s drug candidates worldwide.
Expenses
The net loss and comprehensive loss from operations for the nine months ended September 30, 2014 was $459,362 (September 30, 2013 - $432,079) a negative variance of $27,283. The increased loss is primarily due to an increase in advertising and promotion of $6,176, insurance of $8,032, share based payments of $57,975 as the Company issued 925,000 options to directors, officers, advisors and consultants of the Company to purchase common shares of the Company for proceeds of $0.10 per common share, 400,000 options expire January 10, 2017 and 525,000 options expire march 2, 2019, in addition the Company issued 500,000 options to purchase common shares for up to 1 year at an exercise price of $0.06 per common share to certain officers, directors, employees and consultants and transfer agent fees of $14,849 in the nine month period ended September 30, 2013. These increases were offset by decreases in bank charges and interest of $9,449 and investor relations of $50,000 in the nine months ended September 30, 2014.
The net loss and comprehensive loss from operations for the three months ended September 30, 2014 was $135,545 (September 30, 2013 - $104,869) an unfavourable variance of $30,676. The increased loss was primarily due to an increase in advertising and promotion of $27,673, transfer agent fees of $13,274. The increases were partially offset by a decrease in bank charges and interest of $3,452 and professional fees of $27,799 and a decrease of the loss on derivative liability of $44,144 to $Nil.
Research & Development Expense
Research and development expense consists primarily of salaries for management of research contracts and research contracts for pre-clinical studies, clinical studies and assay development as well as the development of clinical trial protocols and application to government agencies to conduct clinical trials, including consulting services fees related to regulatory issues and business development expenses related to the identification and evaluation of new drug candidates. Research and development costs are expensed as they are incurred.
|
Three Months ended September 30, 2014
|
Three Months ended September 30, 2013
|
Nine Months Ended September 30, 2014
|
Nine Months Ended September 30, 2013
|
Research and Development Expenses
|
|
|
|
|
Personnel, Consulting, and Stock-based Compensation
|
$Nil
|
$Nil
|
$Nil
|
$Nil
|
|
|
|
|
|
License Fees and Subcontract research
|
$Nil
|
$Nil
|
$Nil
|
Nil
|
|
|
|
|
|
Facilities and Operations
|
$Nil
|
$Nil
|
$Nil
|
Nil
|
Less: Government contributions
|
$Nil
|
$Nil
|
$Nil
|
Nil
|
|
|
|
|
|
Total
|
$Nil
|
$Nil
|
$Nil
|
$Nil
|
For the nine months ended September 30, 2014 research and development costs were $Nil (September 30, 2013 - $Nil) and for the nine months ended September 30, 2012 research and development costs were $3,807. The decrease in research expense in 2014 and 2013 as compared to 2012 is due to a lack of funds to conduct clinical trials on PTL-202. The research and development costs for the nine months ended September 30, 2012 were composed of $10,315 that was paid to IntelGenx under the development and commercialization agreement. This expense was offset by a $6,508 government grant..
During the next twelve months, subject to available funding the Issuer intends to test the bioequivalence of PTL-2015, a treatment for erectile dysfunction. Also, during the next twelve months, subject to funding the Issuer intends to complete a dose escalating study of a once a day formulation of PTL-202 as well as develop data for chemistry, manufacturing and control for a regulatory submission.
Research and development expenses of approximately $250,000 are required for the pivotal trial scale-up and process development of PTL-202 and an additional $240,000 will be required for the pivotal clinical trial of the formulated product. The results of this work may provide the information required for a regulatory submission to move PTL-202 into a phase 2 study. The cost of the regulatory submission is budgeted at $280,000.
Additional financing will be required to complete the development and commercialize PTL-202. There is no assurance that such financing will be available or that the Issuer will have the capital to complete this proposed development and commercialization.
The Issuer has completed preclinical proof of concept studies, product formulation and a phase 1 drug/drug interaction study of PTL-202. The Issuer’s clinical development studies and regulatory considerations relating to PTL-202 are subject to risks and uncertainties that may significantly impact its expense estimates and development schedules, including:
|
·
|
the scope, rate of progress and cost of the development of PTL-202;
|
|
·
|
uncertainties as to future results of clinical studies of PTL-202;
|
|
·
|
uncertainties as to future results of the dose ranging study of PTL-202;
|
|
·
|
the issuers ability to enroll subjects in clinical trials for current and future studies;
|
|
·
|
the Issuer’s ability to raise additional capital; and
|
|
·
|
the expense and timing of the receipt of regulatory approvals.
|
In addition to the formulation and clinical development plans for PTL-202 the Issuer may begin development of PTL-303 for the treatment of Liver Cirrhosis. The Issuer will only be able to begin development of PTL-303 if additional funds are available. There is no guarantee that these funds will be available to the Issuer and, if they are available, they may not be available on acceptable terms. Development of PTL-303 may significantly impact the Issuer’s expense projections and development timelines.
Also the Issuer has plans to initiate a bioequivalence study of PTL-2015 for ED and make application to a regulatory for marketing approval. The budget for the development of PTL-2015 is $500,000.
General and Administrative Expenses
General and administrative costs consist primarily of personnel related costs, non-intellectual property related legal costs, accounting costs and other professional and administrative costs associated with general corporate activities.
During the nine months ended September 30, 2014 total general and administrative costs were $459,588 (September 30, 2013 - $ 417,655) an increase of $41,933. The increased loss is primarily due to an increase in advertising and promotion of $6,176, insurance of $8,032, share based payments of $57,975 as the Company issued 925,000 options to directors, officers, advisors and consultants of the Company to purchase common shares of the Company for proceeds of $0.10 per common share, 400,000 options expire January 10, 2017 and 525,000 options expire march 2, 2019 and transfer agent fees of $14,849 in the nine month period ended September 30, 2013. These increases were offset by decreases in bank charges and interest of $9,449 and investor relations of $50,000 in the nine months ended September 30, 2014.
During the three months ended September 30, 2014 total general and administrative costs were $135,545 (2013 - $148,083) a decrease of $12,538. The decreased loss was primarily due to a reduction by a decrease in bank charges and interest of $3,452 and professional fees of $27,799. This decrease was offset by an increase in advertising and promotion of $27,673, transfer agent fees of $13,274.
During 2014 and beyond, as PTL-202 and PTL-2015 begin clinical development and as operations are developed to move PTL-202, PTL-2015 and other drug candidates through the clinical trial process, general and administrative expenses will increase. Increases in personnel costs, professional fees and expenses related to additional equipment will make up a significant portion of these planned expenditures.
Intellectual Property and Intangible Assets
All license and option fees paid to licensors for intellectual property licenses are accrued to intangible assets on the Issuer’s financial statements. In addition, any expenses for intellectual property protection including patent lawyers services fees and any filing fees with government agencies or the WIPO are accrued to intangible assets. There was an increase in intangible assets in the first nine months ended September 30, 2014 of $6,045as compared to the year ended December 31, 2014, due to amortization for the period of $4,150 partly offset by patent fees of $10,195.
Interest Expense/(Income)
The interest expense in the nine months ended September 30, 2014 was $Nil (September 30, 2013 –$2,700). The interest expense decrease was due to payment of the Interwest loan during the nine months ended September 30, 2014.
Profits
At this time, the Issuer is not anticipating profit from operations. Until such time as the Issuer is able to realize profits from the out licensing of products under development, the Issuer will report an annual deficit and quarterly deficit and will rely on its ability to obtain equity/or debt financing to fund on-going operations. For information concerning the business of the Issuer, please see “Business Overview and Strategy”.
Stock Based Compensation
For the nine months ended September 30, 2014 stock based compensation was $97,808 (September 30, 2013 - $39,833, September 30, 2012 - $31,764). The Company issued 925,000 options, to purchase a corresponding number of common shares at $0.10 for a period of 5 years, valued at $71,940 using the Black-Scholes option pricing model and 500,000 options, to purchase a corresponding number of common shares at $0.06 for a period of 1 year, valued at $25,868 using the Black-Scholes option pricing model.
Selected Quarterly Information
|
|
September 30, 2014
$
|
|
|
June 30, 2014
$
|
|
|
March 31, 2014
$
|
|
|
December 31, 2013
$
|
|
|
September 30, 2013
$
|
|
|
June 30, 2013
$
|
|
|
March 31, 2013
$
|
|
|
December 31, 2012
$
|
|
Total Revenues
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
Net Loss
|
|
|
(135,545 |
) |
|
|
(149,592 |
) |
|
|
(174,225 |
) |
|
|
(308,767 |
) |
|
|
(104,895 |
) |
|
|
(152,648 |
) |
|
|
(174,535 |
) |
|
|
(205,919 |
) |
Loss per Share basic and diluted
|
|
|
(0.00 |
) |
|
|
(0.00 |
) |
|
|
(0.00 |
) |
|
|
(0.01 |
) |
|
|
(0.00 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Cash
|
|
|
8,370 |
|
|
|
1,905 |
|
|
|
10,220 |
|
|
|
180,692 |
|
|
|
7,523 |
|
|
|
1,927 |
|
|
|
7,220 |
|
|
|
9,854 |
|
Total Assets
|
|
|
87,769 |
|
|
|
81,660 |
|
|
|
122,296 |
|
|
|
287,043 |
|
|
|
136,900 |
|
|
|
78,413 |
|
|
|
121,075 |
|
|
|
206,533 |
|
Non-Current Liabilities
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
|
|
Nil |
|
Liquidity and Capital Resources
At September 30, 2014, the Issuer had cash and cash equivalents of $8,370 (December 31, 2013 - $180,692) and a working capital deficit of $863,187 (December 31, 2013 – deficit $502,500). Working capital is defined as current assets less current liabilities.
The Issuer’s Cash flows from financing activities during the nine months ended September 30, 2014 consisted of increase of a promissory note and interest of $19,100. In the nine months ended September 30, 2013 the Company received $173,063 from issuance of common shares and repaid a demand loan of $ 45,553 with receipts from a promissory note and warrants generating $ 20,780. In the three months ended September 30, 2012 the Company received $118,401from issuance of common shares.
Cash utilized in operating activities during the nine months ended September 30, 2014 was $187,227 (September 30, 2013 - $ 213,222, September 30, 2012 - $ 160,009). This difference between September 30, 2014 and September 30, 2013 was primarily due to a decrease in prepaid expenses of $58,559 and a decrease in license write offs of $42,510 and an increase in share based payments of $62,916.
At September 30, 2014, share capital was $2,699,210 comprising 37,456,825 issued and outstanding Common Shares (December 31, 2013 – $2,669,210 comprising 37,456,825 issued and outstanding Common Shares) as no shares were issued in the nine months ended September 30, 2014.
Warrant and Option Reserves at September 30, 2014, is $221,512 (December 31, 2013 – $123,704) the increase is the result of the Company issuing 925,000, $0.10 options valued at $71,940 using the Black-Scholes option pricing model and 500,000 options, to purchase a corresponding number of common shares at $0.06 for a period of 1 year, valued at $25,868 using the Black-Scholes option pricing model.
As a result of the net loss for the period ending September 30, 2014 of $459,362 (September 30, 2013 - $432,079, September 30, 2012 - $236,193), the deficit at September 30, 2014 increased to $3,722,420 from $3,263,058 as at December 31, 2013.
At present, the Issuer’s operations do not generate cash inflows and its financial success after September 30, 2014 is dependent on management’s ability to continue to obtain sufficient funding to sustain operations through the development stage and successfully bring the Issuer’s technologies to the point that they may be out licensed so that the Issuer achieves profitable operations. The research and development process can take many years and is subject to factors that are beyond the Issuer’s control.
In order to finance the Issuer’s future research and development and to cover administrative and overhead expenses in the coming years the Issuer may raise money through equity sales. Many factors influence the Issuer’s ability to raise funds, including the Issuer’s track record, and the experience and calibre of its management. Actual funding requirements may vary from those planned due to a number of factors, including the progress of research activities. Management believes it will be able to raise equity capital as required in the long term, but recognizes there will be risks involved that may be beyond their control. Should those risks fully materialize, it may not be able to raise adequate funds to continue its operations.
Off Balance Sheet Arrangements
There are currently no off balance sheet arrangements which could have an effect on current or future results or operations or the financial condition of the Company.
Transactions with Related Parties
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Consulting and accounting fees were paid or accrued to Derick Sinclair the Company’s Chief Financial Officer and a shareholder of $27,000 during the nine months ended September 30, 2014.
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Legal fees of $446 were paid to a director of the Company.
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Salary was paid or accrued to Doug Unwin the Company’s Chief Executive Officer and a shareholder of $40,000 during the 3 months ended September 30, 2014.
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500,000 options, to purchase a corresponding number of common shares at $0.06 for a period of 1 year were grant to an officer and director of the Company. The options were assigned a fair value of $25,868 using the Black-Scholes option pricing model and vest immediately.
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500,000 stock options that may be exercised for up to 5 years at an exercise price of $0.10 per share were grant to officers and directors of the Company. The options were assigned a fair value of $$71,940 using the Black-Scholes Pricing Model and vest immediately.
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Subsequent Events
On October 5, 2014 the Company issued 1,520,000 units for gross proceeds of $76,000. 1,520,000 warrants were issued with an expiration date of October 3, 2015. Each unit is comprised of one common share and one share purchase warrant, each warrant being exercisable for one common share at an exercise price of $0.15.
On October 24, 2013 the Company entered into a consulting agreement with Mr. Christopher Kuzminisky Cowley to provide Investor Relations services.
On October 28, 2014 the Company issued to consultants a total of 500,000 options to purchase common shares with an exercise price of $0.10, 200,000 of the options will expire on October 28, 2014; 100,000 of the options will expire on October 28, 2017; and 200,000 will expire October 28, 2019.
Proposed Transactions
As at the date of this Management Discussion and Analysis there are no transactions currently contemplated by the Issuer, other than the joint venture between the company and Vodis Innovative Pharmaceuticals for the development of cannabinoid based therapies.
Financial Instruments and Other Instruments
The Issuer’s financial instruments consist of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities and amounts due to shareholders. Unless otherwise noted, it is management’s opinion that the Issuer is not exposed to significant interest, currency or credit risks arising from financial instruments. Amounts due to shareholders, irrevocable subscriptions and Class B Series I Preferred Shares are classified as financial liabilities and are carried at amortized cost. The fair value of cash and cash equivalents, amounts receivable and accounts payable and accrued liabilities approximates their carrying value due to their short-term maturity or capacity for prompt liquidation.
Disclosure of Outstanding Share Data
As at September 30, 2014, the Issuer had an unlimited number of authorized common shares with 37,456,825 common shares issued and outstanding.
As at September 30, 2014 the issuer had 3,325,000 (December 31, 2013 - 1,900,000) options outstanding. During the three months ended September 30, 2014 the Company issued 500,000 options to purchase common shares for up to 1 year at an exercise price of $0.06 per common share to certain officers, directors, employees and consultants. The 3,325,000 options entitles the holder to purchase corresponding common shares at exercise prices ranging from $0.06 to $0.27 and expiry dates range from November 4, 2014 to September 11, 2020.
As at September 30, 2014 the Issuer had 18,219,836 warrants and 3,325,000 options outstanding. The following table shows the details for the outstanding warrants and options.
Description of Security
(include conversion /
exercise terms, including
conversion / exercise price)
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Number of convertible /
exchangeable securities
outstanding
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Number of listed securities
issuable upon conversion /
exercise
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2011 bonus warrants issued as an inducement for the Irrevocable Subscription Agreements, 1 whole warrant per unit exercisable at $0.15 up until November 16, 2014
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600,000
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600,000
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2013 Unit Warrants 1 whole warrant per unit exercisable at $0.22 up until February 12, 2015
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1,000,000
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1,000,000
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2013 Unit Warrants 1 whole warrant per unit exercisable at $0.22 up until May 1, 2015
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1,300,000
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1,300,000
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2013 Unit Warrants 1 whole warrant per unit exercisable at $0.10 up until October 8, 2016
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2,250,000
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2,250,000
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2013 Unit Warrants 1 whole warrant per unit exercisable at $0.10 up until October 18, 2016
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2,020,000
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2,020,000
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2013 Unit Warrants 1 whole warrant per unit exercisable at $0.10 up until November 5, 2016
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6,780,000
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6,780,000
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Options expiring November 4, 2014 with an exercise price of $0.27
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150,000
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150,000
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Options expiring March 5, 2015 with an exercise price of $0.27
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375,000
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375,000
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Options expiring July 3, 2017, with an exercise price of $0.10
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475,000
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475,000
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Options expiring December 21, 2017 with an exercise price of $0.10
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450,000
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450,000
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Options expiring April 4, 2018 with an exercise price of $0.10
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350,000
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350,000
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Options expiring September 16, 2018 with an exercise price of $0.10
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100,000
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100,000
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Options expiring January 10, 2017 with an exercise price of $0.10
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400,000
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400,000
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Options expiring March 2, 2019 with an exercise price of $0.10
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525,000
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525,000
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Options expiring June 11, 2015 with an exercise price of $0.06
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500,000
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500,000
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EXHIBIT 99.3
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Doug Unwin, Chief Executive Officer, for Pacific Therapeutics Ltd. certify the following:
1.
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Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Pacific Therapeutics Ltd (the “issuer”) for the interim period ended September 30, 2014.
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2.
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No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
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3.
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Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
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Date: December 9, 2014
"Doug Unwin"
Chief Executive Officer
NOTE TO READER |
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In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
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i) |
controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
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ii) |
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
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The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
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EXHIBIT 99.4
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Derick Sinclair, Chief Financial Officer, for Pacific Therapeutics Ltd certify the following:
1.
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Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Pacific Therapeutics Ltd. (the “issuer”) for the interim period ended September 30, 2014
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2.
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No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
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3.
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Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
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Date: December 9, 2014
Derick Sinclair
Chief Financial Officer
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NOTE TO READER |
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In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
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i) |
controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
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ii) |
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
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The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
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