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EX-31 - Eternelle Skincare Products Inc.ex31-2.txt
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
[X]                   ANNUAL REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended November 30, 2012

                                       OR

[ ]                 TRANSITION REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from __________ to ______________

                        Commission File Number 333-133347

                           PEPTIDE TECHNOLOGIES, INC.
                -----------------------------------------------
             (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.)

    601 Union Street, Two Union Square, 42nd Floor, Seattle, Washington 98101
    -------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (206) 388-5498

           Securities registered pursuant to Section 12(b) of the Act:

          Title of each class                 Name of each exchange on which
                                                        registered
----------------------------------------      ----------------------------------
Common Stock, par value $0.001 per share                        OTCBB


        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the  Registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act.
Yes | | No |X|

Indicate  by  check  mark if the  Registrant  is not  required  to file  reports
pursuant to Rule 13 or Section 15(d) of the Exchange Act. Yes | | No |X|

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


                                       1

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 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 Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No Number of shares issued and outstanding of the registrant's class of common stock as ofJanuary 10, 2013: 149,078,000 shares of common stock. The aggregate market value of voting stock held by non-affiliates of the registrant was approximately $0.00based on the average bid and ask as ofFebruary 14, 2013. The Company recognized nil revenues for its most recent fiscal year. 2
TABLE OF CONTENTS Page PART I Item 1. Description of Business 4-9 Item 1A. Risk Factors 9-11 Item 1B. Unresolved Staff Comments 12 Item 2. Description of Property 12 Item 3. Legal Proceedings 12 Item 4. Mine Safety Disclosure 12 PART II Item 5. Market For Common Equity and Related Stockholder Matters 12-14 Item 6. Selected Financial Data 14 Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operation 14 Item 7A. Quantitative and Qualitative Disclosures of Market Risk 16 Item 8. Financial Statements and Supplementary Data 17-32 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 33 Item 9A. Controls and Procedures 33 Item 9B. Other Information 34 PART III Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of 34-36 Item 11. Executive Compensation 36 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 37 Item 13. Certain Relationships and Related Transactions and Director Independence 37-38 Item 14. Principal Accountant Fees and Services 38 PART IV Item 15. Exhibits and Financial Statement Schedules 38 Signatures 39 3
FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, which are subject to risks, uncertainties and assumptions that are difficult to predict. All statements in this Annual Report on Form 10-K, other than statements of historical fact, are forward-looking statements. These forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements, among other things, concerning our business strategy, including anticipated trends and developments in and management plans for, our business and the markets in which we operate; future financial results, operating results, revenues, gross margin, operating expenses, products, projected costs and capital expenditures; research and development programs; sales and marketing initiatives; and competition. In some cases, you can identify these statements by forward-looking words, such as "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict" and "continue," the negative or plural of these words and other comparable terminology. These statements are not guarantees of future performance and are subject to risks, uncertainties, potentially inaccurate assumptions, and other factors, some of which are beyond our control and difficult to predict. If known or unknown risks materialize, or should underlying assumptions prove inaccurate, our actual results could differ materially from past results and from those expressed in the forward-looking statements. Important factors that could cause our actual results to differ materially from those expressed in our forward-looking statements are described in "Item 1A--Risk Factors" in this Annual Report on Form 10-K. From time to time, we also provide forward-looking statements in other materials we release to the public and in oral statements made by authorized officers. The forward-looking statements are only predictions based on our current expectations and our projections about future events. All forward-looking statements included in this Annual Report on Form 10-K are based upon information available to us as of the filing date of this Annual Report on Form 10-K. You should not place undue reliance on these forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in the section entitled "Item 1A--Risk Factors" and elsewhere in this Annual Report on Form 10-K. You should carefully consider the risks and uncertainties described under this section. Investors are advised to consult any further disclosures we make on related subjects in our 10-Q and 8-K reports filed with the Securities and Exchange Commission (the "SEC"). PART I ITEM 1. DESCRIPTION OF BUSINESS Discontinued Operations and New Developments Since inception, 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 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'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 Creenergy 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. 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 Company's restricted common stock, will receive all rights and title to proprietary technologies and formulas involving the application of specialty Peptide . 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 4
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. On December 14, 2011, Peptide Technologies, Inc. agreed to amend the Asset Purchase Agreement dated August 23, 2011. As a result of the amendment 30,000,000 restricted common shares of the Company were returned to treasury in exchange for payment of half of one percent of all gross monies received by the company from revenue produced from products derived from the use of all the formulae listed in the Assets Purchase Agreement. In addition a monthly stipend of CDN $15,000 per month is to be paid commencing from receipt of monies from the first contract signed to purchase products derived from the use of the formula for a period of five years from the date of the amended agreement. Business of Issuer Peptide Technologies, Inc. is a development stage company that is engaged in the development and manufacture of environmentally safe peptide-based products used to combat the rapidly growing problems caused by the quagga and zebra mussel infestation in U.S. and Canadian waters. The Company specializes in the development of peptide formulas which may be added to a specific coating product and applied to substrates, creating a surface which is uninhabitable by the quagga and zebra mussels. The advantages of our peptide formulas are (1) they are 100% safe to humans; (2) they will not kill the mussels which are now an integral part of the food chain, the disruption of which would be an environmental unknown; and (3) they are organic and eco-environmentally friendly. Background 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 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. 5
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 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. 6
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 biofouling, 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 biocement 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 antifouling 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. 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. 7
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 o farm irrigation water Our Advantages We believe that our proprietary technology provide advantages over potential competitors to meet their objectives. Proprietary Technology: We intend to manufacture a product based on proprietary technology that took over ten years to develop. Our approach allows us to construct and test a targeted peptide in weeks as opposed to the present vaccine development that can take longer than a year to make and test. We have reconstructed the Peptide in such a way that enzymes do not recognize them and therefore will not destroy them. As a result, our targeted Peptide will have the opportunity to perform the objective they were designed to fulfill. Additionally, Peptide based on structures of the naturally occurring barnacle cement proteins are non-toxic, and once sloughed off into seawater, Peptide would be eaten as totally non-toxic food by marine organisms. The Company has developed proprietary innovative peptide proteomic technologies involving the use of Peptide to create a solution that would effectively prevent zebra and quagga muscles from attaching to equipment, water intake pipes, and even boat hulls to colonize in massive numbers. The Company uses computer algorithms to generate Peptide capable of interacting with biologically significant protein targets. When fully developed, Peptide Technologies' peptide solution will slow the rate of zebra and quagga mussel fouling as well as to eliminate the harm to water users and marine life through the use of safe, environmentally-friendly natural Peptide . While the production of an underwater adhesive that mimics the properties of mussels has been an ongoing field of research, Peptide Technologies is focused on proteins that comprise the glue that affixes the byssal threads of the zebra and quagga mussels to hard surfaces. We have two designs that we are launching for use by the shipping and boating industry based upon our technology: o The first was the design of specific peptide inhibitors of a bacteria that attaches to a ship's hull, which could be incorporated into paint used to coat the hull following defouling in dry-dock. The Peptide would prevent attachment of the bacteria and subsequent attachment of the barnacles. Furthermore, any release of the Peptide into the ocean as the paint wears off, would not pose any environmental threat since Peptide are biodegradable natural proteins. 8
o The second approach was the design of peptide inhibitors that will prevent folding of the proteins in barnacles that generate the powerful cement that "glue" them to the ship's hull. Both of the above approaches offered the shipping industry a solution to an age old problem costing literally billions of dollars in lost time at sea (dry-dock scraping of barnacles and painting) and significantly reduced fuel costs by preventing any increase in drag. Principal Products and Services The Company intends to develop and provide a sustainable natural solution that addresses the economic burdens caused by the zebra and quagga mussels, without harming other organisms or depleting a segment of the natural food chain. Research and Development Activities and Costs We have not incurred any costs to date relating to research and development and have no plans to undertake any research and development activities within the next twelve months. Facilities and Properties We do not own our own facilities and are presently renting an identity office in Seattle, Washington. Employees Our officers and directors are responsible for planning, developing and operational duties and will continue to do so throughout the early stages of our growth. We have no intentions in hiring any employees until our business has sufficient and reliable revenue from operations and do not expect to hire any such employees in the next twelve months. ITEM 1A.RISK FACTORS RISKS RELATED TO OUR BUSINESS AND INDUSTRY The Company has a lack of revenue history and has had a limited history of -------------------------------------------------------------------------------- operations. ---------- Peptide was formed on November 18, 2005 for the purpose of engaging in any lawful business and had adopted a plan to engage the sale of art work over the internet. The Company had minimal revenues. On July 29, 2010 the Company's name changed from Online Originals, Inc. to CREENERGY Corporation. The name change was intended to convey a sense of the Company's new business focus as it looks to pursue other opportunities. Specifically, the Company intended to obtain leases for the exploration and production of oil and gas in northern Alberta, Canada. The Company was unable to identified any prospects or enter into any leases or agreements. On August 23, 2011, the Company entered into an Asset Purchase to acquire intangible assets and intellectual property known as the Peptide Technology Platform. The Peptide Technology Platform includes the technology platforms for developing a variety of drug candidates and biological solutions for existing problems in humans, animals and the environment. Effective October 12, 2011, the Company changed its name to Peptide Technologies, Inc. in order to better convey a sense of the Company's new business focus. At the date of this Annual Report on Form 10-K, the Company is not profitable. Peptide must be regarded as a start-up venture with all of the unforeseen costs, expenses, problems, risks and difficulties to which such ventures are subject. Peptide can give no assurance of success or profitability to the Company's -------------------------------------------------------------------------------- investors. --------- There is no assurance that Peptide will ever operate profitably. There is no assurance that the Company will generate revenues or profits, or that the market price of the Company's common stock will be increased thereby. The Company will need additional financing for which Peptide has no -------------------------------------------------------------------------------- commitments, and this may jeopardize execution of the Company's business plan. ----------------------------------------------------------------------------- The Company's capital needs consist primarily of expenses related to expenses incurred with maintaining its reporting status and could exceed $50,000 in the next twelve months. Such funds are not currently committed, and Peptide's cash as of the date of this Annual Report on Form 10K of approximately $5,000. Peptide has limited funds, and such funds may not be adequate to carry out the business plan. The Company's ultimate success depends upon its ability to raise additional capital. The Company has not investigated the availability, source, or terms that might govern the acquisition of additional capital and will not do 9
so until it determines a need for additional financing. If the Company needs additional capital, it has no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to the Company. If not available, Peptide's operations will be limited to those that can be financed with its modest capital. We will incur expenses in connection with our sec filing requirements and we may -------------------------------------------------------------------------------- not be able to meet such costs, which could jeopardize our filing status with -------------------------------------------------------------------------------- the SEC. ------- As a public reporting company we are required to meet the filing requirements of the SEC. We may see an increase in our legal and accounting expenses as a result of such requirements. We estimate such costs on an annualized basis to be approximately $50,000, which includes both the annual audit and the review of the quarterly reports by our auditors. These costs can increase significantly if the Company is subject comment from the SEC on its filings and/or we are required to file supplemental filings for transactions and activities. If we are not compliant in meeting the filing requirements of the SEC, we could lose our status as a 1934 Act Company, which could compromise our ability to raise funds. Peptide is not diversified and it is dependent on only one business. ------------------------------------------------------------------- Because of the limited financial resources that the Company has, it is unlikely that the Company will be able to diversify its operations. Peptide's probable inability to diversify its activities into more than one area will subject the Company to economic fluctuations within the industry and therefore increase the risks associated with the Company's operations due to lack of diversification. The Company may in the future issue more shares which could cause a loss of -------------------------------------------------------------------------------- control by its present management and current stockholders. ---------------------------------------------------------- Peptide may issue further shares as consideration for the cash or assets or services out of its authorized but unissued common stock that would, upon issuance, represent a majority of the voting power and equity of the Company. The result of such an issuance would be those new stockholders and management would control the Company, and persons unknown could replace the Company's management at this time. Such an occurrence would result in a greatly reduced percentage of ownership of Peptide by its current shareholders, which could present significant risks to investors. Peptide will depend upon management but it will have limited participation of -------------------------------------------------------------------------------- management. ---------- The Company currently has two individuals who are serving as its officers and directors. The Company will be heavily dependent upon their skills, talents, and abilities, as well as several consultants to Peptide , to implement the Company's business plan, and may, from time to time, find that the inability of the officers, directors and consultants to devote their full-time attention to Peptide business results in a delay in progress toward implementing the Company's business plan. Peptide does not know of any reason other than outside business interests that would prevent them from devoting full-time to its Company, when the business may demand such full-time participation. The departure of our key personnel could compromise our ability to execute our -------------------------------------------------------------------------------- strategic plan and may result in additional severance costs to us. ----------------------------------------------------------------- Our success largely depends on the skills, experience and efforts of our key personnel. The loss of these persons, or our failure to retain other key personnel, would jeopardize our ability to execute our strategic plan and materially harm our business. We will need to recruit and retain additional qualified personnel to -------------------------------------------------------------------------------- successfully grow our business. ------------------------------ Our future success will depend in part on our ability to attract and retain qualified operations, marketing and sales personnel as well as engineers. Inability to attract and retain such personnel could adversely affect the growth of our business. We expect to face competition in the recruitment of qualified personnel, and we can provide no assurance that we will attract or retain such personnel. Risks Related to our Stock: The regulation of penny stocks by SEC and FINRA may discourage the tradability -------------------------------------------------------------------------------- of our securities. ----------------- The Company is a "penny stock" company. None of our securities currently trade in any market and, if ever available for trading, will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than 10
established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of shareholders to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions. In addition, the Securities and Exchange Commission has adopted a number of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute "penny stocks" within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions. Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. Our officers and directors collectively own a substantial portion of our -------------------------------------------------------------------------------- outstanding common stock, and as long as they do, they may be able to control -------------------------------------------------------------------------------- the outcome of stockholder voting. --------------------------------- Our officers and directors are collectively the beneficial owners of approximately 38% of the outstanding shares of our common stock. As long as our officers and directors collectively own a significant percentage of our common stock, our other shareholders may generally be unable to affect or change the management or the direction of our company without the support of our officers and directors. As a result, some investors may be unwilling to purchase our common stock. If the demand for our common stock is reduced because our officers and directors have significant influence over our company, the price of our common stock could be materially depressed. The officers and directors will be able to exert significant influence over the outcome of all corporate actions requiring stockholder approval, including the election of directors, amendments to our certificate of incorporation and approval of significant corporate transactions. We may seek to raise additional funds or develop strategic relationships by -------------------------------------------------------------------------------- issuing capital stock. --------------------- We have financed our operations, and we expect to continue to finance our operations and develop strategic relationships, by issuing equity or convertible debt securities, which could significantly reduce or dilute the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of our existing stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of stock to decline. We may also raise additional funds through the incurrence of debt, and the holders of any debt we may issue would have rights superior to your rights in the event we are not successful and are forced to seek the protection of the bankruptcy laws. The Company will pay no foreseeable dividends in the future. ----------------------------------------------------------- The Company has not paid dividends on our common stock and do not ever anticipate paying such dividends in the foreseeable future. 11
ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. DESCRIPTION OF PROPERTY We do not own our own facilities and are presently renting an identity office in Seattle, Washington. (a) Real Estate None (b) Title to properties. None (c) Oil and Gas Prospects. None (d) Patents In process ITEM 3. LEGAL PROCEEDINGS On November 22, 2010, the Company was served with a claim filed by a former director and officer of the Company. The claim alleges that the former director and officer of the Company suffered losses and damages as a result of the failure of the Company in providing him with corporate documents and implementing a change of the board of directors. The Company has retained legal counsel to address the claim. On December 8, 2010, the Company filed a Statement of Defense requesting that the claim be dismissed. In the opinion of management, this claim is without merit and the Company intends to defend this claim vigorously. Other than the above, the Company is not a party to any pending legal proceedings, nor is the Company aware of any civil proceeding or government authority contemplating any legal proceeding as of the date of this filing. ITEM 4. MINE SAFETY DISCLOSURE Not Applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market for Common Equity and Related Stockholder Matters (a) Market Information Our Common Stock is presently traded on the over-the-counter market on the OTCBB. On August 7, 2008, we began trading on the over the counter bulletin board under the symbol "OLOI." Effective on October 12, 2011, the Company filed an amendment to its Articles of Incorporation with the Secretary of State of Nevada to change its name from Creenergy, Corporation to Peptide Technologies, Inc. As a result of the change, the Company's trading symbol, on the Over The Counter Market BBboard was changed to "PEPT." During the period of August 7, 2008 through November 30, 2012, our shares have not traded. (b) Holders As of January 10, 2013, there were approximately sixty-nine (69) holders of record of our common stock. (c) Dividend Policy We have never declared or paid dividends on our common stock. We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs. 12
(d) Securities authorized for issuance under equity compensation plans None. RECENT SALES OF UNREGISTERED SECURITIES During the years ended November 30, 2012 and 2011, the Company made the following sales and issuances of its unregistered securities. On August 23, 2011, the Company issued a total of 75,000,000 shares of its restricted common stock in exchange for intangible assets and intellectual property referred to as the Peptide Technology Platforms. 15,000,000 of these shares were issued for Finders/Founders fees and services. On December 21, 2012, 30,000,000 of these shares were returned to treasury and cancelled based on further evaluation of the assets value. During the three-month period from September to November 2011, the Company raised $23,000 through the sale of 23,000 shares common stock via subscription agreements sold to six investors, based on a stock price of $1.00 per share. On January 5, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,936 (CAD $5,000). Note: during FY 2012, our stock was sold for $1.00 per share whether paid for in CAD$ or USD$, as the exchange rate did not cause any material differences in the effective price per share or number of shares received. On January 6, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,921 (CAD $5,000). On January 15, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,884 (CAD $5,000). On January 24, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,943 (CAD $5,000). On April 20, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $5,041 (CAD $5,000). On July 11, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,902 (CAD $5,000). On August 31, 2012, the Company issued 5,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a director of the Company for consulting services rendered. As a result, the Company recorded stock compensation expense of $5,000 when the stock was issued. On September 28, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $5,086 (CAD $5,000). On October 15, 2012, 20,000 shares of the Company's common stock were issued for cash proceeds of $20,402 (CAD $20,000). On November 28, 2012, the Company issued 3,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a third party for technical services rendered. As a result, the Company recorded stock compensation expense of $3,000 when the stock was issued. Exemption from Registration Claimed All of the shares described above were issued by us in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 4(2). All of the individuals and/or entities listed above that purchased or were issued the unregistered securities were all known to us and our management, through pre-existing business relationships, as long standing business associates, friends, and employees. 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 our management 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 us. 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. 13
DESCRIPTION OF SECURITIES Common Stock We are authorized to issue up to 675,000,000 shares of Common Stock, $0.001 par value. The holders of our Common Stock are entitled to one vote per share held and have the sole right and power to vote on all matters on which a vote of stockholders is taken. Voting rights are non-cumulative. Common stockholders are entitled to receive dividends when, as, and if declared by the Board of Directors, out of funds legally available therefore and to share pro rata in any distribution to stockholders. Upon liquidation, dissolution, or the winding up of our Company, common stockholders are entitled to receive the net assets of our Company in proportion to the respective number of shares held by them after payment of liabilities which may be outstanding. The holders of Common Stock do not have any preemptive right to subscribe for or purchase any shares of any class of stock of the Company. The outstanding shares of Common Stock will not be subject to further call or redemption and are fully paid and non-assessable. To the extent that additional common shares are issued, the relative interest of existing stockholders will likely be diluted. At present, we are not authorized to issue any series or shares of preferred stock. Stock Purchase Warrants None. Stock Purchase Options None. ITEM 6. SELECTED FINANCIAL DATA Contained under Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary and Forward-Looking Statements In addition to statements of historical fact, this Form 10-K contains forward-looking statements. The presentation of future aspects of Peptide Technologies, Inc. (the "Company" or "Issuer") found in these statements is subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," or "could" or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company's actual results to be materially different from any future results expressed or implied by the Company in those statements. Important facts that could prevent the Company from achieving any stated goals include, but are not limited to, the following: (a) volatility or decline of the Company's stock price; (b) potential fluctuation in quarterly results; (c) failure of the Company to earn revenues or profits; (d) inadequate capital to continue or expand its business, inability to raise additional capital or financing to implement its business plans; (e) failure to make sales on an increasing basis; (f) rapid and significant changes in markets; (g) litigation with or legal claims and allegations by outside parties; and (h) insufficient revenues to cover operating costs. There is no assurance that the Company will be profitable, the Company may not be able to successfully develop, manage or market its products and services, the Company may not be able to attract or retain qualified executives and personnel, the Company's products and services may become obsolete, government regulation may hinder the Company's business, additional dilution in outstanding stock 14
ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in the Company's businesses. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed by the Company. Plan of Operation for the Next Twelve (12) Months 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 financial statements and notes appearing elsewhere in this Form 10-K. Our registered public accounting firm's audit report on our consolidated financial statements as of and for the year ended November 30, 2012, includes a "going concern" explanatory paragraph that describes substantial doubt about our ability to continue as a going concern. Management's plans in regard to the factors prompting the explanatory paragraph are discussed below. On August 23, 2011, the Company entered into an Asset Purchase to acquire intangible assets and intellectual property known as the Peptide Technology Platform. The Peptide Technology Platform includes the technology platforms for developing a variety of drug candidates and biological solutions for existing mussel problems in the environment. Effective October 12, 2011, the Company changed its name to Peptide Technologies, Inc. in order to better convey a sense of the Company's new business focus. Peptide Technologies, Inc. is a development stage company that is engaged in the development and manufacture of safe "green" peptide-based products used to combat the rapidly growing problems caused by the quagga and zebra mussel infestation in U.S. and Canadian waters. We have no employees at the present time, other than our Chief Executive Officer, Chief Financial Officer, and Vice President of Operations and Communications. We will continue to operate with very limited administrative support as our current officers continue to be responsible for developing and operational duties. We began accruing salaries for these officers during our fourth quarter of this past fiscal year. They are entitled to receive reimbursement for all out of pocket expenses incurred for attendance at our Board of Directors meetings. Our continuing operations are dependent upon the identification and successful completion of additional long-term or permanent equity financing, the support of creditors and shareholders, and, ultimately, the achievement of profitable operations. There can be no assurances that we will be successful, which would in turn significantly affect our ability to complete our business plan. If not, we will likely be required to reduce operations or liquidate assets. We will continue to evaluate our projected expenditures relative to our available cash and to seek additional means of financing in order to satisfy our working capital and other cash requirements. We believe we do not have sufficient cash resources to satisfy our needs through the end of November 30, 2013. Our ability to satisfy cash requirements thereafter and the need for additional funding is dependent on our ability to generate revenue from our business in sufficient quantity and on a profitable basis. To the extent that we require additional funds to support our operations or the expansion of our business, we may attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Should we require additional cash in the future, there can be no assurance that we will be successful in raising additional debt or equity financing on terms acceptable to us, if at all. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition At November 30, 2012, we had a working capital deficit of $803,823 compared to working capital deficit of $197,340 at November 30, 2011. At November 30, 2012, our total assets consisted of cash of $7,780, prepaid expenses of $3,494, website of $9,167 and intangible assets and intellectual property of $45,000. This compares with our total assets at November 30, 2011, which consisted of cash of $1,656, prepaid expenses of $127, and intangible assets and intellectual property of $75,000. 15
At November 30, 2012, our total current liabilities, consisting of accounts payable of $29,217, accrued liabilities of $254,500, accrued payroll and bonus of $447,000, accrued interest on notes payable of $3,374, and notes payable of $81,006. Whereas, at November 30, 2011, our total liabilities consisted of accounts payable of $29,848, accrued liabilities of $109,062, accrued interest on notes payable of $117 and a notes payable of $60,096. Result of Operations - New Developments We recognized no revenues from discontinued operations during both fiscal years ending November 30, 2012 and 2011. We have not received any revenue since our inception of the New Developments which began June 26, 2010. Our short and long-term survival is dependent on funding from sales of securities as necessary or from shareholder loans. During the year ended November 30, 2012, we incurred operating expenses of $654,986 compared to operating expenses of $212,029 for the year ended November 30, 2011. The principal component of losses in 2012 were accrued payroll and bonus expenses of $447,000, consulting expense of $145,000, professional fees of $46,759, and office and administration of $16,226; compared with the principal component losses in 2011 which were consulting expense of $105,975, professional fees of $42,755, supplies of $59,130, and office and administration of $4,169. During the year ended November 30, 2012, expenses incurred by the Company increased significantly. These increased costs were due to restructuring the Company to developing the new focus and direction for the Company which resulted in an increase in salaries and bonus expense of $447,000, consulting fees of $39,025, and office/administration fees of $12,058. The net loss for the year ended November 30, 2012 was $650,236 compared to a net loss of $212,146 for the year ended November 30, 2011. From the point of re-entry into the development state on June 26, 2010 to November 30, 2012, we have incurred a net loss of $898,221. We believe our existing cash balance is not sufficient to carry our normal operations for the next 12 months. To the extent that we require additional funds to support our operations or the expansion of our business, we may attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. There can be no assurance that additional financing, if required, will be available to our company or on acceptable terms. Off Balance Sheet Arrangements None. Critical Accounting Policies and Estimates The preparation of the Company's financial statements in conformity with generally accepted accounting principles in the United States 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 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's financial disclosures. Foreign Currency Translations The financial statements are presented in U.S. dollars. 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. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 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. 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this Item begin on Page F-18 of this Form 10-K. 17
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) FINANCIAL STATEMENTS (Expressed in U.S. Dollars) Page Reports of Independent Registered Public Accounting Firm F-19 Financial Statements: Balance Sheets F-21 Statements of Loss and Comprehensive Loss F-22 Statements of Cash Flows F-23 Statement of Changes in Stockholders' (Deficiency) F-24 Notes to Financial Statements F-25 to F-32 F-18
JAMES STAFFORD -------------------------------------------------------------------------------- James Stafford, Inc. Chartered Accountants Suite 360 - 1111 Melville Street Vancouver, British Columbia Canada V63 3V6 Telephone +1 604 669 0711 Facsimile +1 604 669 0754 www.JamesStafford.ca Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Peptide Technologies, Inc. (A Development Stage Company) We have audited the balance sheets of Peptide Technologies, Inc.(A Development Stage Company) (the "Company") as of 30 November 2012 and 2011 and the related statements of loss and comprehensive loss, cash flows and changes in stockholders' (deficit) for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 November 2012 and 2011,and the results of its operations and its cash flows for the years then endedin conformity with accounting principles generally accepted in the United States of America. The accompanyingfinancial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, conditions exist which raise substantial doubt about the Company's ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operations. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ James Stafford Vancouver, Canada Chartered Accountants 30 January 2013, except for Note 13, as to which the date is 14 February 2013 F-19
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) Financial Statements (Expressed in U.S. Dollars) November 30, 2012 20
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) BALANCE SHEETS November 30, 2012 November 30, 2011 ----------------- --------------------- ASSETS Current assets Cash and cash equivalents $ 7,780 $ 1,656 Prepaid expense 3,494 127 ------------------------------------------------ Total current assets 11,274 1,783 Website (net of accumulated amortization of $833) (Note 3) 9,167 - Intangible assets and intellectual property (Note 7) 45,000 75,000 ------------------------------------------------ TOTAL ASSETS $ 65,441 $ 76,783 ================================================ LIABILITIES AND STOCKHOLDERS' DEFICIT LIABILITIES Current liabilities Accounts payable and accrued liabilities (Note 4) $ 730,717 $ 138,910 Notes payable and accrued interest (Note 5) 84,380 60,213 ------------------------------------------------ Total current liabilities 815,097 199,123 ------------------------------------------------ STOCKHOLDERS' (DEFICIENCY) Capital stock (Note 8) Authorized: 675,000,000 common shares, par value $0.001 Issued and outstanding: 149,078,000 and 171,023,000 at November 30, 2012 and November 30, 2011, respectively. 149,078 171,023 Additional paid-in capital 105,324 50,265 Accumulated other comprehensive income - 694 Accumulated deficit (105,837) (105,837) Accumulated deficit during development stage (898,221) (238,485) ------------------------------------------------ Total stockholders' deficit (749,656) (122,340) ------------------------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 65,441 $ 76,783 ================================================ The accompanying notes are an integral part of these statements. F-21
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF LOSS AND COMPREHENSIVE LOSS Cumulative from re-entering of Year Ended Year Ended development stage on November 30, November 30, June 26, 2010 2012 2011 to November 30, 2012 ----------------- ------------------ ------------------------------ Revenue $ - $ - $ - Expenses Consulting 145,000 105,975 250,975 Salaries and bonus (Note 4) 447,000 - 447,000 Office and administration 16,226 4,169 22,675 Professional fees 46,759 42,755 113,573 Supplies and materials - 59,130 59,130 -------------------------------------------------------------------------- 654,985 212,029 893,353 -------------------------------------------------------------------------- Net loss before other items (654,985) (212,029) (893,353) -------------------------------------------------------------------------- Other items Foreign exchange loss (1,494) - (1,494) Interest expense (Note 5) (3,257) (117) (3,374) -------------------------------------------------------------------------- (4,751) (117) (4,868) -------------------------------------------------------------------------- Net loss for the period $ (659,736) $ (212,146) $ (898,221) ========================================================================== Other comprehensive income (loss) Foreign currency translation adjustment (694) 361 (333) -------------------------------------------------------------------------- ========================================================================== Comprehensive loss for the period $ (660,430) $ (211,785) $ (898,554) ========================================================================== Loss per share - basic and diluted $ (0.00) $ (0.00) ========================================================================== Weighted average number of shares outstanding 143,453,042 116,344,800 ========================================================================== The accompanying notes are an integral part of these statements. F-22
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS Cumulative from re-entering of Year ended Year ended development stage on November November June 26, 2010 to 30, 2012 30, 2011 November 30, 2012 -------------------------------------------------------------------- Cash Flows from Operating Activities Net loss $ (659,736) $ (212,146) $ (898,221) Adjustments for non-cash items: Accrued interest 3,257 117 3,374 Depreciation and amortization 833 - 833 Stock compensation for services 8,000 - 8,000 Changes in operating assets and liabilities: Prepaid expenses (3,367) 73 (784) Accounts payable and accrued liabilities 591,807 125,777 729,967 -------------------------------------------------------------------- Net Cash Used in Operating Activities (59,206) (86,296) (156,831) -------------------------------------------------------------------- Cash Flows Used in Investing Activities Purchase of website (10,000) - (10,000) -------------------------------------------------------------------- Net Cash Used in Investing Activities (10,000) - (10,000) -------------------------------------------------------------------- Cash Flows From Financing Activities Issuance of common shares for cash 55,114 23,000 78,114 Increase in notes payable 20,910 44,096 65,006 Contribution by related party - 14,288 27,288 -------------------------------------------------------------------- Net Cash Provided by Financing Activities 76,024 81,384 170,408 -------------------------------------------------------------------- Increase (Decrease) in Cash during the Period 6,818 (4,795) 3,577 Effect of Exchange Rate Changes on Cash (694) 361 (333) Cash, Beginning Of Period 1,656 6,090 4,536 -------------------------------------------------------------------- Cash, End Of Period $ 7,780 $ 1,656 $ 7,780 ==================================================================== Supplemental Disclosure Of Cash Flow Information: Cash paid for: Interest $ - $ - $ - Income taxes $ - $ - $ - ==================================================================== The accompanying notes are an integral part of these statements. F-23
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS'(DEFICIT) For the Period from November 30, 2010 through November 30, 2012 CAPITAL STOCK ACCUMULATED ----------------------------------------------- DEFICIT ADDITIONAL DURING DEVELOPMENT ACCUMULATED PAID-IN COMPREHENSIVE ACCUMULATED SHARES AMOUNT CAPITAL DEFICIT STAGE INCOME (LOSS) TOTAL November 30, 2010 Balance 96,000,000 $ 96,000 $ 13,000 $ (105,837) $ (26,339) $ 333 $ (22,843) ----------------------------------------------------------------------------------------------------------------- Common shares issued for property (Note 8) 75,000,000 75,000 - - - 75,000 Common shares issued for cash (Note 8) 23,000 23 22,977 - - - 23,000 Contribution by related party (Note 6) - - 14,288 - - - 14,288 Foreign currency translation adjustment - - - - - 361 361 Net loss for the year ended November 30, 2011 - - - - (212,146) - (212,146) ----------------------------------------------------------------------------------------------------------------- November 30, 2011 Balance 171,023,000 $ 171,023 $ 50,265 $ (105,837) $ (238,485) $ 694 $ (122,340) ----------------------------------------------------------------------------------------------------------------- Common shares issued for cash (Note 8) 55,000 55 55,059 - - - 55,114 Common shares cancelled (30,000,000) (30,000) - - - - (30,000) Common shares issued for related party services ( Notes 6 and 8) 5,000,000 5,000 - - - - 5,000 Common shares issued for contractor services (note 8) 3,000,000 3,000 - - - - 3,000 Foreign currency translation - - - - - (694) (694) Net loss for the year - - - - (659,736) - (659,736) ----------------------------------------------------------------------------------------------------------------- November 30, 2012 Balance 149,078,000 $ 149,078 $ 105,324 $ (105,837) $ (898,221) $ - $ (749,656) ================================================================================================================= The accompanying notes are an integral part of these statements. F-24
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS 1. NATURE AND CONTINUENCE OF OPERATIONS a) Organization PEPTIDE TECHNOLOGIES, INC. (the "Company") was incorporated in the State of Nevada, United States of America, on November 18, 2005. On July 29, 2010, the Company's name was changed from Online Originals, Inc. to CREEnergy Corporation. Effective October 12, 2011, the Company's name was changed from CREEnergy Corporation to Peptide Technologies, Inc. The Company's year-end is November 30. b) Nature of Operations and Change in Business Since the date of inception on November 18, 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 November 30, 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 and discontinued the sale of artwork with effect from June 25, 2010. Effective June 26, 2010, the Company became a development stage company focusing on a new business. 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 Company's restricted common stock, will receive all rights and title to proprietary technologies and formulas involving the application of specialty Peptide. The Company has changed its business focus 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. c) Basis of Presentation and Going Concern The accompanying interim financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates the continuation of the Company as a going concern. However, the Company has negative working capital at August 31, 2012 and has total losses to date of approximately $1,004,058. The Company requires additional funding to meet its ongoing obligations and anticipated ongoing operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initia l business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from shareholders as may be required. 2. SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the U.S. and have been consistently applied in the preparation of the financial statements. The financial statements are stated in U.S. dollars. a) 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-25
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS b) Development-Stage Company On or around June 25, 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. c) 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 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. d) Basic and Diluted Earnings (Loss) per Share In accordance with ASC 260, "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 November 30, 2012, the Company had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation. e) Estimated Fair Value of Financial Instruments The carrying value of the Company's 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 statements. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At November 30, 2012, approximately $938 of cash or cash equivalents was not insured by agencies of the U.S. Government. f) Foreign Currency Translations The 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. F-26
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS g) 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 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. h) Use of Estimates The preparation of the Company's financial statements are in conformity with generally accepted accounting principles which requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. i) Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. j) Recent Accounting Pronouncements In July 2012, he Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2012-02, "Intangibles - Goodwill and Other."This update presents an entity with the option to first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, "Intangibles - Goodwill and Other - General Intangibles Other than Goodwill." The more-likely-than-not threshold is defined as having a likelihood of more than fifty percent. ASU No. 2012-02 will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this update will not have a material effect on the Company's financial statements. In December 2011, FASB issued ASUNo. 2011-12, "Comprehensive Income." This update amends certain pending paragraphs in ASU No. 2011-05 "Presentation of Comprehensive Income," to effectively defer only those changes that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income for annual and interim financial statements for public, private, and non-profit entities. ASU No. 2011-12 will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As ASU No. 2011-12 relates only to the presentation of comprehensive income, adoption of this update will not have a material effect on the Company's financial statements. In September 2011, the FASB issued ASU No. 2011-08, "Intangibles - Goodwill and Other" which allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. ASU No. 2011-08 will be effective for annual and interim impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this update will not have a material effect on the Company's financial statements. F-27
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income." This update presents an entity with the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As ASU No. 2011-05 relates only to the presentation of Comprehensive Income, adoption of this update will not have a material effect on the Company's financial statements. k) Reclassifications Certain comparative figures have been reclassified in order to conform to the current year's financial statement presentation with no effect on earnings. l) Other The Company consists of one reportable business segment. The Company paid no dividends during the periods presented. 3. WEBSITE The Company purchased a website during October 2012 for $10,000. This website has a useful life of three(3) years, and the cost is being amortized over the life of the asset. As of November 30, 2012, accumulated amortization was $833. 4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES As of November 30, As of November 30, 2012 2011 ---------------------- ---------------------- Accounts Payable $ 29,217 $ 29,847 Accrued Liabilities 254,500 109,063 Accrued Payroll and Payroll Taxes 147,000 - Accrued Bonus 300,000 - ---------------------- ---------------------- Total Accounts Payable and Accrued Liabilities $ 730,717 $ 138,910 ====================== ====================== Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year. During the year ended November 30, 2012, the Board approved salaries for the Company's three (3) employees. Effective September 1, 2012, monthly salaries of $25,000 and $20,000 started to be accrued for the CEO and CFO, respectively. Effective November 1, 2012, a monthly salary of $6,000 started to be accrued for the Vice President of Operations & Communication. Total wages as of November 30, 2012 was $141,000. Total accrued payroll taxes as of November 30, 2012 are $6,000. Effective October 1, 2012, the Board approved a $300,000 bonus for the CEO to recognize the CEO's contributions toward the Company's successful start-up. This bonus was earned in-full and accrued for as of November 30, 2012. F-28
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS 5. NOTES PAYABLE AND ACCRUED INTEREST November 30, November 30, 2012 2011 ------------------ ----------------- During the year ended November 30, 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 September 21, 2011, PSI Services ("PSI") issued a loan of $500 to the 500 500 Company. The loan is unsecured, bears no interest, and has not fixed terms of repayment. On November 13, 2011, PSI issued a loan of CAD$45,000 to the 47,465 43,713 Company. The loan is unsecured and bears interest at a rate of 6% per annum. Principal and accrued interest is due November 13, 2013. The loan payable to PSI as at November 30, 2012 consists of pricipal and accrued interest of USD$44,650 (2011 - $USD$43,596) and USD$2,815 (2011 - USD$117), respectively. On June 1, 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 May 31, 2013. The loan payable to PSI as at November 30, 2012 consists of principal and accrued interest of USD$19,856 (2011 - $Nil) and USD$559 (2011 - $Nil), respectively. 20,415 - ------------------------------------------ Balance as of November 30, 2012 $ 84,380 $ 60,213 ========================================== 6. RELATED PARTY TRANSACTIONS During the year ended November 30, 2012, a director and shareholder of the Company made cash contribution in the amount of $Nil (2011 -$14,288, Cumulative - $27,288). During the year ended November 30, 2012, the Company issued 5,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a director of the Company for consulting services rendered (Notes 8 and 11). During the year ended November 30, 2012, the Company accrued salaries and benefits of $441,000 to officers of the Company (2011 - $Nil) (Note 4). 7. INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY On August 23, 2011, the Company entered into an agreement (the "Asset Purchase Agreement") with unrelated parties that subsequently became directors of the Company to acquire intangible assets and intellectual property known as the Peptide Technology Platforms (the "Platforms") in exchange for 75,000,000 common shares of the Company (issued on August 23, 2011) (Notes8 and 11). F-29
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS On December 14, 2011 the Company entered into an amended agreement amending the Asset Purchase Agreement dated August 23, 2011 (the "Amended Asset Purchase Agreement") and, as a result, a total of 30,000,000 common shares were returned to treasury and cancelled (Notes8 and 11) in exchange for payment of half of one percent of all gross monies received by the Company from revenue produced from products derived from the use of all the formulae listed in the Assets Purchase Agreement. In addition, a monthly stipend of CAD $15,000 per month is to be paid commencing from 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 (Note 10). This transaction has been recorded as a reduction of intangible assets and intellectual property and a reduction in share capital equal to $30,000. The Platforms includes but are not limited to the following: i. Proteomic research platforms which include proprietary solid phase media side-chain protected peptide array synthesis; ii. Peptide libraries; iii. Combination design techniques; iv. Peptide molecule modifications; v. A proprietary genetic algorithm that designs Peptides for goodness to fit to a target; and vi. Proprietary and patented application platforms, including a viral vector gene therapy and epitode-mapping based vaccine development. 8. CAPITAL STOCK Authorized 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 August 10, 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. Issued and outstanding On June 2, 2010, and effective August 10, 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 May 20, 2010 (the date of issuance of 120,000,000 shares) and $15,501 to the beginning balance. The interim financial statements contained herein reflect the appropriate values for capital stock and accumulated deficit. Unless otherwise noted, all references in the accompanying interim 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 149,078,000 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 August 23, 2011, the Company issued 75,000,000 shares of its restricted common stock in exchange for intangible assets and intellectual property. On December 21, 2011 a total of 30,000,000 common shares were returned to treasury and cancelled (Notes7 and 11). o During October and November 2011, 23,000 shares of the Company's common stock were issued for cash proceeds of $23,000. o On January 5, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,936 (CAD $5,000). o On January 6, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,921 (CAD $5,000). o On January 15, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,884 (CAD $5,000). F-30
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS o On January 24, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,943 (CAD $5,000). o On April 20, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $5,041 (CAD $5,000). o On July 11, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $4,902 (CAD $5,000). o On August 31, 2012, the Company issued 5,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a director of the Company for consulting services rendered (Notes 6and 11). As a result, the Company recorded stock compensation expense of $5,000 when the stock was issued. o On September 28, 2012, 5,000 shares of the Company's common stock were issued for cash proceeds of $5,086 (CAD $5,000). o On October 15, 2012, 20,000 shares of the Company's common stock were issued for cash proceeds of $20,402 (CAD $20,000). o On November 28, 2012, the Company issued 3,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a third party for technical services rendered. As a result, the Company recorded stock compensation expense of $3,000 when the stock was issued (Note 11). 9. INCOME TAXES The Company is subject to foreign and domestic income taxes. The Company has had no income, and therefore has paid no income tax. Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company's deferred tax assets consist entirely of the benefit from net operating loss (NOL) carry-forwards. The NOL carry forwards expire in various years through 2032. The Company's deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the NOL carry-forwards. NOL carry-forwards may be further limited by a change in company ownership and other provisions of the tax laws. The Company's deferred tax assets, valuation allowance, and change in valuation allowance are as follows: Period Ending Estimated Estimated NOL NOL Tax Benefit Valuation Carry-forward Expires from NOL Allowance Net Tax Benefit ----------------------------------------------------------------------------------------------------- November 30, 2010 116,675 2030 40,836 (40,836) - November 30, 2011 328,821 2031 115,087 (115,087) - November 30, 2012 980,558 2032 343,195 (343,195) - Income taxes at the statutory rate are reconciled to the Company's actual income taxes as follows: 2012 2011 Income tax benefit at statutory rate resulting from net operating loss carry forward (35%) (35%) Deferred income tax valuation allowance 35% 35% ------------ --------- Actual tax rate 0% 0% ============ ========= As at November 30, 2012, the Company is in arrears on filing its statutory corporate income tax returns and the amounts presented above are based on estimates. The actual losses available could differ from these estimates. F-31
PEPTIDE TECHNOLOGIES, INC. (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS 10. COMMITMENTS The Company is committed to paying half of one half percent of all gross monies received by the Company from revenue produced from products derived from the use of all the formula listed in the Assets Purchase Agreement. In addition a monthly stipend of CAD $15,000 per month is to be paid commencing from 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 (Note 7). 11. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS On August 23, 2011, 75,000,000 shares of the Company's restricted common stock, valued at $75,000, were issued in exchange for intangible assets and intellectual property. On December 21, 2011, 30,000,000 shares of the Company's restricted common stock were returned to treasury and cancelled (Notes 7 and 8). On August 31, 2012, the Company issued 5,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a director of the Company for consulting services rendered (Notes 6 and 8). As a result, the Company recorded stock compensation expense of $5,000 when the stock was issued. On November 28, 2012, the Company issued 3,000,000 fully vested shares of the Company's restricted common stock at a par value of $0.001 per share to a third party for technical services rendered. As a result, the Company recorded stock compensation expense of $3,000 when the stock was issued (Note 8). 12. CONTINGENCIES On November 22, 2010, the Company was served with a claim filed by a former director and officer of the Company. The claim alleges that the former director and officer of the Company suffered losses and damages as a result of the failure of the Company in providing him with corporate documents and implementing a change of the board of directors. The Company has retained legal counsel to address the claim. On December 8, 2010, the Company filed a Statement of Defense requesting that the claim be dismissed. In the opinion of management, this claim is without merit and the Company intends to defend this claim vigorously. As a loss is not deemed probable, no accruals have been made as of November 30, 2012. 13. SUBSEQUENT EVENTS The following reportable events occurred during the year ended November 30, 2012 to the date the financial statements were available to be issued on February 14, 2013: On December 11, 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 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 agreement. 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 F-32
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A.CONTROLS AND PROCEDURES Disclosure Controls and Procedures The Company maintains a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in the Company's SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure. Management, after evaluating the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rules 13a-14(c) as of January 2, 2013 (the "Evaluation Date") concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were effective to ensure that information relating to the Company would be made known to them by individuals within those entities, particularly during the period in which this annual report was being prepared and that information required to be disclosed in the Company's SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls. Our management, with the participation of the President and Chief Financial Officer, evaluated the effectiveness of the Company's internal control over financial reporting as of November 30, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control -- Integrated Framework. Based on that evaluation, our management concluded that, as of November 30, 2012, our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. Specifically, management identified the following control deficiency: - The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps. This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report. Changes in Internal Control over Financial Reporting ---------------------------------------------------- There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to affect, the Company's internal control over financial reporting. 33
ITEM 9B.Other Information None. PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Directors and Executive Officers The following table sets forth the names, ages and positions of the current directors and executive officers of the Company, as of the date of this filing: Name Age Offices Held --------------------------------------------------------------------- Scott McKinley 58 Chairman of the Board, CEO Erik Odeen 46 Secretary/Treasurer, CFO During the year ended November 30,2012, we had the following changes in management: o Effective August 31, 2012, letters of resignation tendered by Deborah Fortescue-Merrin as President of the Company and Richard Fortescue as Secretary/Treasurer and Chief Financial Officer were accepted. o Effective July 16, 2012, Scott McKinley was appointed Chief Executive Officer. Dr. McKinley will continue to serve as Chairman of the Board. o Effective August 31, 2012, Mr. Erik Odeen was appointed to the Board of Directors of the Company to serve as Secretary/Treasurer until he resign or his successors be elected by the shareholders of the Company or appointed by the Board of Directors. Erik Odeen was also appointed to serve as Chief Financial Officer of the Company o Effective November 1, 2012, Mr. Bruce Sellars was hired to fill the position of Vice President of Operations & Communications. Dr. Scott McKinley, B.Sc., M.Sc., Ph.D. Chairman, Chief Executive Officer Dr. McKinley received his Ph.D. from the University of Waterloo. He has mentored and supervised the research of dozens of graduate students and postdoctoral fellows. He has also been the recipient of two prestigious Research Chairs: a) Natural Sciences and Engineering Research Council ("NSERC") /Industrial Research Chair and b) Canada Research Chair (Tier 1). Dr. McKinley holds a number of directorships including the Vancouver Aquarium, Centre for Aquaculture and Environmental Research (a partnership between UBC and Department of Fisheries and Oceans ["DFO"]), and Pacific Ocean Shelf Tracking ("POST"). Dr. McKinley was recently appointed to be a member of the High Level Expert Forum on how to feed the world population in 2050, sponsored by the Food and Agriculture Organization of the United Nations. Dr. McKinley is currently a Professor of Animal Science at University of British Columbia. He has over 30 years of experience in the field of ecology, animal physiology and biochemistry. He has conducted his research across Canada and Europe in fresh and marine waters. He has held a senior Canada Research Chair and an Industrial and Natural Sciences and Engineering Chair and has author two patents. He has served as Chair of the Technical Board of Experts for the Great Lakes Fishery Commission, Research committee for the Pacific Ocean Shelf Tracking (POST) study, and a member of the Board of Directors for POST and the Vancouver Aquarium. He is presently Director of the West Vancouver Marine Laboratory. Dr. McKinley Professor McKinley has authored more than 150 scientific publications as well asseveral book chapters. Erik Odeen, CPA CFE, Secretary/Treasurer, Chief Financial Officer Erik Odeen, CPA, CFE, is a seasoned executive with over 25 years' experience in corporate management, financial leadership, international manufacturing & distribution operations, and public accounting. He manages a consulting practice which provides financial management and strategic-planning advisory services to 34
both public and privately-held company clients. More recently, Erik has provided CFO and CEO services where his focus has been corporate restructuring and reorganization, SEC and BCSC reporting, resolving complex accounting issues, and corporate fraud prevention. Mr. Odeen spent eight years in public accounting with Deloitte & Touch and PCAOB-registered McKennon, Wilson & Morgan (Irvine, CA) where he specialized in managing external audits, complex accounting issues, SEC Reporting and Sarbanes-Oxley compliance. Mr. Odeen's public company experience ranges from start-up and development stage to Fortune 100 companies, including turn-around and M&A engagements. During his 13 year career with International Paper, Erik worked in Corporate Audit, was instrumental in the planning and implementation of financial and operating systems, and served in senior-level management positions with a division of XPEDX, IP's distribution arm. Erik earned a Bachelor of Business Administration in accounting and economics; holds an active CPA license in the state of California; and is an active member of the American Institute of Certified Public Accountants (AICPA), the California Society of CPAs (CalCPA), and the global Association of Certified Fraud Examiners (ACFE). Bruce M. Sellars, PEng., MBA Vice President, Operations & Communications Bruce Sellars, a registered Professional Engineer, has over 35 years of business experience in a variety of technical and managerial positions, utilizing his engineering, sales, marketing and finance skills. He has founded several companies and has been a director of two publicly-traded companies. Mr. Sellars has held management level positions in business development and marketing for firms in the renewable energy, oil and gas, electric utility, and water and wastewater utility industries. These companies include Texaco Canada, Nexen, North Canadian Oils, EPCOR, TransAlta, Hydroxyl, Hill Murray & Associates, Highwater Power and Cedar Road LFG. He has created and executed strategic and tactical marketing and sales plans, and led business development and sales teams. In British Columbia, Mr. Sellars operates a successful consulting company, Gas Power Technologies Inc., which provides business development services. Assignments have included implementing and constructing a land fill gas recovery project, permitting several small hydroelectric projects in BC, and the installation of wastewater treatment plants. The Company has represented two European turbine manufacturing companies in North America. Annual sales exceeded $6 Million, on average. Mr. Sellars has a Bachelor of Applied Science in Chemical Engineering from the University of Toronto, and an MBA from the University of Alberta. He is a registered Professional Engineer in Alberta and British Columbia, Canada. Additionally, Mr. Sellars has been a speaker at several small hydro and renewable energy conferences. Family Relationships None as of November 30, 2012. Audit Committee and Audit Committee Financial Expert Disclosure The Company does not currently have a formal audit committee; audit committee functions are performed by our Directors. Our Directors are not deemed independent; as they also hold positions as officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. The Company's CFO, Erik Odeen, CPA, CFE, is the financial expert serving on the Board of Directors. Code of Conduct and Code of Ethics for Senior Management The Company has implemented a Code of Conduct and A Code of Ethics for Senior Management, which are both located on our website www.peptidetechnologiesinc.com. The Company's management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC and BCSC, and compliance with applicable governmental laws and regulations. We believe our codes are reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the codes. 35
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities and Exchange Act of 1934 requires any person who is a director or executive officer or who beneficially holds more than ten percent (10%) of any class of our securities which have been registered with the Securities and Exchange Commission, to file reports of initial ownership and changes in ownership with the Securities and Exchange Commission. These persons are also required under the regulations of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on our review of the copies of the Section 16(a) reports furnished to us and a review of our shareholders of record for the fiscal year ended November 30, 2012, there were no filing delinquencies. ITEM 11.EXECUTIVE COMPENSATION The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid (or accrued) by us during the year ended November 30, 2012 and 2011, in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO). Fiscal Salary Stock Option Non-Equity Non-Qualified All Other Year Earned Awards Awards Incentive Plan Deferred Compensation* Name and or ($) ($) Compensation Compensation ($) Principal Paid Bonus ($) Earnings Totals Position ($) ($) ($) ($) DeborahFortescue-Merrin 2012 $ - - - - - - - $ - President 2011 - - - - - - - $ - RichardFortescue 2012 $ - - - - - - - $ - Chief Financial Officer, Secretary, Treasurer 2011 - - - - - - - - Scott McKinley Chief Executive Officer, Chairman 2012 $75,000 300,000 - - - - - $ 375,000 2011 - - - - - - - $ - William Campbell Chief Scientific Officer 2012 $ - - - - - - - $ - 2011 - - - - - - - $ - Erik Odeen Chief Financial Officer, Secretary, Treasurer 2012 $60,000 - 5,000 - - - - $ 65,000 (effective August 31, 2011 - - - - - - - $ - 2012) Compensation of Directors We do not compensate our directors for their time spent on behalf of our Company, but they are entitled to receive reimbursement for all out of pocket expenses incurred for attendance at our Board of Directors meetings. Pension and Retirement Plans Currently, we do not offer any annuity, pension or retirement benefits to be paid to any of our officers, directors or employees, in the event of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or will result from the resignation, retirement or any other termination of employment with our company, or from a change in the control of our Company. Employment Agreements We do not have written employment agreements with any of our key employees. Audit Committee Presently the Board of Directors is performing the duties that would normally be performed by an audit committee. We intend to form a separate audit committee, and are seeking potential independent directors. We are seeking experienced business people and plan to appoint an individual qualified as an audit committee financial expert. 36
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information, as of November 30, 2012 with respect to any person (including any "group," as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) who is known to the Company to be the beneficial owner of more than five percent of any class of the Company's voting securities, and as to those shares of the Company's equity securities beneficially owned by each its director, the executive officers of the company and all of its directors and executive officers of the Company and all of its directors and executive officers as a group. Unless otherwise specified in the table below, such information, other than information with respect to the directors and officers of the Company, is based on a review of statements filed, with the Securities and Exchange commission (the "Commission") pursuant to Sections 13 (d), 13 (f), and 13 (g) of the Exchange Act with respect to the Company's common stock. As of November 30, 2012, there were 149,078,000 shares of common stock outstanding. The number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. The table also shows the number of shares beneficially owned as of November 30, 2012 by each of the individual directors and executive officers and by all directors and executive officers as a group. Position Amount and Nature Percent Nameof Beneficial Owner of Beneficial Owner Of Common Stock ------------------------------------------------------------------------------------------------------------------------ Chief Executive Officer, Chief Operating Scott McKinley Officer, Chairman 50,000,000 33.5% Erik Odeen Chief Financial Officer, Secretary, 6,300,000 4.2% Treasurers Total Officer and Directors 56,300,000 37.8% ==================== (1) Percent of Ownership is calculated in accordance with the Securities and Exchange Commission's Rule 13(d) - 13(d) (1). Based on 149,078,000 shares of common stock issued and outstanding. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. Ms. Deborah Fortescue-Merrin, the prior President of the Company and Mr. Richard Fortescue, the prior Secretary/Treasurer and Chief Financial Officer for the Company are brother and sister. Both resigned from the Company effective August 31, 2012. In accordance with the Asset Purchase Agreement dated August 23, 2011, the Company issued a total of 75,000,000 shares of its restricted common stock in exchange for intangible assets and intellectual property referred to as the Peptide Technology Platforms. 60,000,000 of these restricted shares were issued equally; 30,000,000 shares to William Campbell and 30,000,000 shares to Scott McKinley. The balance of 15,000,000 restricted shares were issued equally; 7,500,000 shares to Deborah Fortescue-Merrin and 7,500,000 shares to Richard Fortescu. Upon their resignations, Deborah Fortescue-Merrin and Richard Fortescue each relinquished 6,500,000 shares of common stock to Scott McKinley upon his acceptance of Chief Executive Officer for the Company. On December 14, 2011, Peptide Technologies, Inc. agreed to amend the Asset Purchase Agreement dated August 23, 2011. As a result of the amendment 30,000,000 restricted common shares of the Company issued to William Campbell were returned to treasury in exchange for payment of half of one percent of all gross monies received by the company from revenue produced from products derived from the use of all the formulae listed in the Assets Purchase Agreement. In addition a monthly stipend of CDN $15,000 per month is to be paid commencing from 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 agreement. 37
Director Independence For our description of director independence, see "Director Independence" under the section entitled "Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act" above. ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees The aggregate fees billed by our auditors James Stafford Inc. for professional services rendered for the audit of our annual financial statements and for the reviews of the financial statements included in our Quarterly Reports on Form 10Q during the fiscal year ended November 30, 2012 and 2011 were $14,385 and $12,652, respectively. The aggregate fees billed by our auditors, Schumacher & Associates, for professional services rendered for the audit of our annual financial statements, and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q during the fiscal years ended November 30, 2012 and 2011, were $0 and $1,000 respectively. Audit Related Fees We incurred no fees to auditors for audit related fees during the fiscal years ended November 30, 2012 and 2011. Tax Fees We incurred no fees to auditors for tax compliance, tax advice or tax compliance services during the fiscal years ended November 30, 2012 and 2011. All Other Fees We did not incur any other fees billed by auditors for services rendered to our Company, other than the services covered in "Audit Fees" for the fiscal years ended November 30, 2012 and 2011. The Board of Directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant's independence. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. The following is a complete list of exhibits filed as part of this Form 10K. Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of Regulation S-K. Exhibit Index 10.1 Asset Purchase Agreement, dated August 23, 2011(2) 10.2 Amendment to the Asset Purchase Agreement, dated December 14, 2011 (3) 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.* 38

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 14thday of February, 2013. PEPTIDE TECHNOLOGIES, INC. Date: February 28,2013 By: /s/ Scott McKinley ------------------------------------- Name: Scott McKinley Title: Chairman& Principal Executive Officer Date: February 28, 2013 By: /s/ Erik Odeen -------------------------------------- Name: Erik Odeen Title: Chief Financial Officer & Principal Accounting Officer 3