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EX-31.1 - CERTIFICATION - Eternelle Skincare Products Inc.exhibit31-1.htm
EX-31.2 - CERTIFICATION - Eternelle Skincare Products Inc.exhibit31-2.htm
EX-32.1 - CERTIFICATION - Eternelle Skincare Products Inc.exhibit32-2.htm
EX-32.1 - CERTIFICATION - Eternelle Skincare Products Inc.exhibit32-1.htm


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, 2014

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 000-53230

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) 452-3995

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  [  ]

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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 (§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.

Large accelerated filer [  ] Accelerated filer  [  ]
Non-accelerated filer [  ]  (Do not check if a smaller reporting company) Smaller reporting company [X]

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  [  ]   No  [X]

Number of shares issued and outstanding of the registrant’s class of common stock as of 30 January 2015: 156,412,660 shares of common stock.

The aggregate market value of voting stock held by non-affiliates of the registrant was approximately $0.00 based on the average bid and ask as of 30 January 2015.

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TABLE OF CONTENTS

  Page
   
   
PART I  
Item 1.  Description of Business 4
Item 1A.  Risk Factors 7
Item 1B.  Unresolved Staff Comments 9
Item 2.  Description of Property 9
Item 3.  Legal Proceedings 10
Item 4.  Mine Safety Disclosure 10
   
PART II  
Item 5.  Market For Common Equity and Related Stockholder Matters 10
Item 6.  Selected Financial Data 12
Item 7.  Management’s Discussion And Analysis Of Financial Condition And Results Of Operation 12
Item 7A.  Quantitative and Qualitative Disclosures of Market Risk 16
Item 8.  Consolidated Financial Statements and Supplementary Data 16
Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 17
Item 9A.  Controls and Procedures 17
Item 9B.  Other Information 18
   
PART III  
Item 10.  Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act 18
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 21
Item 13. Certain Relationships and Related Transactions and Director Independence 21
Item 14. Principal Accountant Fees and Services 21
   
PART IV  
Item 15. Exhibits and Consolidated Financial Statement Schedules 22
Signatures 23

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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 30 November 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 25 June 2010.  Effective 26 June 2010, the Company started to focus on a new business development.  On 29 July 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.

4


 

On 23 August 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, received all rights and title to proprietary technologies and formulas involving the application of specialty peptides.  On 21 December 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 had 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 14 December  2011, Peptide Technologies, Inc. agreed to amend the Asset Purchase Agreement dated 23 August 2011.  As a result of the amendment, the purchase price of the assets was reduced from 75,000,000 shares to 45,000,000 shares, and 30,000,000 shares were returned to treasury and cancelled in exchange for payment of half of one percent of all gross monies received by the Company in relation to revenue earned from products derived from the use of all the formulae listed in the Asset Purchase Agreement.  In addition, a monthly stipend of CAD $15,000 per month was to be paid commencing on the receipt of monies from the first contract signed to purchase products derived from the use of the formulae for a period of five years from the date of the Amended Asset Purchase Agreement.  The cancellation of 30,000,000 common shares has been recorded as a recovery of intangible assets and intellectual property.

On 1 May 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the First Amendment were deemed null and void and the platforms were returned to the original vendor.

On 26 May 2014, Peptide Technologies, Inc. entered into an exclusive global distribution agreement for its AquaNatural Marine coating with All-Sea Coatings Ltd. (a division of All-Sea Enterprises) of North Vancouver, Canada.  This agreement has been replaced with an Asset Purchase Agreement date 14 August 2014.

On 14 August  2014, Peptide Technologies, Inc. ("the Company") entered into an Asset Purchase Agreement with All-Sea Coatings Ltd.  All-Sea Coatings Ltd has acquired from Peptide Technologies Inc. the non-commercialized re-formulated assets, that were developed by the Company, in consideration of $10,000, (ten thousand dollars) and a 3% Royalty of all Gross Sales & Revenue, to be paid to Peptide Technologies Inc., derived from All-Sea Coatings Ltd, until such a time should occur that Formulas and or All-Sea Coatings Ltd (the company) is sold.  All-Sea Coatings Ltd shall cover all costs, expenses and capital, including all monies for additional research and development etc., required to commercialize all of the coatings.  All-Sea Coatings Ltd shall pay 10% of the gross sale to Peptide Technologies Inc. derived from any formula sold, out right, and or, if All-Sea Coatings (the Company) is purchased, 10% of the gross sale of All-Sea Coatings Ltd will be paid to Peptide Technologies Inc.

Business of Issuer

The Company business is to realize a 3% Royalty of all Gross Sales & Revenue, to be paid to Peptide Technologies Inc. derived from All-Sea Coatings Ltd, until such a time should occur that Formulas and or All-Sea Coatings Ltd (the company) is sold.

The Company has developed a non-commercialized, incomplete, re-formulated anti-fouling coating formula which has been sold to All-Sea Coatings Ltd.  All-Sea Coatings Ltd. shall cover all costs, expenses and capital, including all monies for additional research and development etc., required to commercialize all of the various coatings that will be produced. 

The Company has begun seeking additional business opportunities in order to diversify its interests and operations.

Facilities and Properties

We do not own our own facilities and are presently renting an identity office in Seattle, Washington.

5


 

Employees

Our officers, directors, and employees are responsible for planning, developing and operational duties and will continue to do so throughout the early stages of our growth.

6


 

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 Technologies Inc. was formed on 18 November 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 29 July 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 identify any prospects or enter into any leases or agreements.

On 23 August 2011, the Company entered into an Asset Purchase Agreement 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 12 October 2011, the Company changed its name to Peptide Technologies, Inc. in order to better convey a sense of the Company’s new business focus.

On 14 August 2014, Peptide Technologies, Inc. ("the Company") entered into an Asset Purchase Agreement with All-Sea Coatings Ltd.  The Company business is to realize a 3% Royalty of all Gross Sales & Revenue, to be paid to Peptide Technologies Inc. derived from All-Sea Coatings Ltd, until such a time should occur that Formulas and or All-Sea Coatings Ltd (the company) is sold.  At the date of this Annual Report on Form 10-K, the Company is not profitable.  Peptides 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.

Peptides can give no assurance of success or profitability to the Company’s investors.

There is no assurance that Peptides 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 Peptides 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 Peptides’ cash as of the date of this Annual Report on Form 10K of approximately $1,300.

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 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, Peptides’ 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 to 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.

Peptides 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.  Peptides’ 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.

7


 

The Company may in the future issue more shares which could cause a loss of control by its present management and current stockholders.

Peptides may issue further shares as consideration for the cash or assets or services out of its authorized but un-issued 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 Peptides by its current shareholders, which could present significant risks to investors.

Peptides 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 Peptides, 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 Peptides business results in a delay in progress toward implementing the Company’s business plan.

Peptides 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 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.

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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 35% 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.

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 None

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ITEM 3.   LEGAL PROCEEDINGS

None.

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 7 August 2008, we were listed on the over the counter bulletin board under the symbol “OLOI”.

Effective on 12 October 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 7 August 2008, through 30 November 2014, our shares have not traded.

(b)  Holders

 As of 30 January 2015, there were approximately ninety-nine (99) 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.

(d)  Securities authorized for issuance under equity compensation plans

None.

RECENT SALES OF UNREGISTERED SECURITIES

During the years ended 30 November 2014 and 2013, the Company made the following sales and issuances of its unregistered securities.

On 10 April 2013, the Company issued 20,000 shares of the Company’s restricted common stock for cash proceeds of $20,000. The Company paid $2,000 in share issuance costs.

On 26 April 2013, the Company issued 2,000,000 shares of the Company’s restricted common stock at a par value of $0.001 per share to a third party for marketing assistance with the development of the international markets in the South Pacific quadrant for the Company.  As a result, the Company recorded consulting expense of $2,000 when the stock was issued.

On 18 July 2013, the Company issued 25,000 shares of the Company’s restricted common stock for cash proceeds of $25,000.

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On 5 December 2013, the Company issued 10,000 shares of the Company’s restricted common stock for cash proceeds of $10,000.

On 3 March 2014, the Company issued 10,000 shares of the Company’s restricted common shares for cash proceeds of $10,000.

On 11 March 2014, the Company issued 5,000 shares of the Company’s restricted common shares for cash proceeds of $5,000.

On 3 April 2014, the Company issued 10,000 shares of the Company’s restricted common stock for cash proceeds of $10,000.

On 15 July 2014, the Company issued 4,660 shares of the Company’s restricted common stock for cash proceeds of $4,660.

On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to two directors of the Company for consulting services rendered.  As a result, the Company recorded share-based payment of $5,250 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.

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.

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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 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 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 consolidated 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, 2014, 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 23 August 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 12 October 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 has contracted to realize a 3% Royalty of all Gross Sales & Revenue, to be paid to Peptide Technologies Inc. derived from All-Sea Coatings Ltd.  The Company has begun seeking additional business opportunities in order to diversify its interests and operations.

12


 

We have no employees at the present time, other than our Chief Executive Officer/Chief Financial Officer.  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 this officer during our fourth quarter of this past fiscal year.  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.

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 30 November 2015.  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 30 November 2014, the Company had a working capital deficit of $797,895 compared to working capital deficit of $1,750,965 at 30 November 2013.  At 30 November 2014, our total assets consisted of cash of $1,319 and a website of $2,500.  This compares with our total assets at 30 November 2013, which consisted of cash of $157, website of $5,833 and intangible assets and intellectual property of $45,000.

At 30 November 2014, our total current liabilities, consisting of accounts payable of $37,152, accrued liabilities of $42,000, payroll taxes payable of $29,652, salaries and benefits payable of $580,000, and notes payable of $110,410.  Whereas, at 30 November 2013, our total current liabilities, consisting of accounts payable of $574,188, accrued liabilities of $27,000, payroll taxes payable of $17,084, salaries and benefits payable of $1,044,000, and notes payable of $88,850. 

Result of Operations – New Developments

We recognized a gain of $9,239 from the sale of the non-commercialized re-formulated assets that were developed by the Company during the fiscal year ending 30 November 2014.  Prior to this, we had 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 30 November 2014, we incurred operating expenses of $467,756 compared to operating expenses of $994,706 for the year ended 30 November 2013.  The principal component of losses in 2014 were salaries and bonus of $364,568, professional fees of $68,321, and general and administration of $24,964; compared with the principal component losses in 2013 which were salaries and bonus of $623,084 consulting expense of $302,000, professional fees of $38,170, and general and administration of $30,350. 

The net income for the year ended 30 November 2014, was $859,827 compared to a net loss of $995,476 for the year ended 30 November 2013.  From the point of re-entry into the development state on 26 June 2010 to 30 November 2014, we have incurred a net loss of $1,033,870.

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.

13


 

Critical Accounting Policies and Estimates

The preparation of the Company’s consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The following is a summary of the significant accounting policies and related estimates that affect the Company’s financial disclosures:

Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Peptide Technologies Inc., a company incorporated in the province of British Columbia on August 5, 2013. All significant inter-company balances and transactions have been eliminated upon consolidation.

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”.

Development-Stage Company

During the year ended November 30, 2010, the Company abandoned its previous business of sale of original artwork and re-entered the development stage with its intended new business, which currently has no revenues.  Management expects to sustain losses from operations until such time it can generate sufficient revenues to meet its anticipated cost structure.  The Company is considered a development-stage company in accordance with the ASC 915, “Accounting 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 on record.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Website

In accordance with ASC 350-50, “Website Development Costs”, expenditures during the planning and operating stages of the Company’s website are expensed as incurred.  Expenditures incurred during the website application and infrastructure development stage are capitalized and amortized to expense over the website’s estimated useful life of 3 years.

Intangible Assets

Intangible assets include the cost of acquiring the intellectual property.  In accordance with ASC 350-30 “General Intangibles Other Than Goodwill”, an intangible asset that is acquired either individually or with a group of other assets shall be recognized.  Costs of internally developing, maintaining, or restoring intangible assets that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as whole, shall be recognized as an expense when incurred.  The intellectual property is determined to have an indefinite useful life and is not subject to amortization.

Impairment of Long-Lived Assets

Long-lived assets include the website and intangible assets and intellectual property.  Long-lived assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. There has been no impairment as of November 30, 2014.

14


 

Research and Development

Research and development expenses are charged to operations as incurred.

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 consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Basic and Diluted Income (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, 2014, the Company had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation.

Estimated fair value of financial instruments

The carrying value of the Company’s consolidated financial instruments, consisting of cash, accounts payable, and notes payable approximate their fair value due to the short-term maturity of these instruments.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or currency risks arising from these financial statements.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.  At November 30, 2014, all cash and cash equivalents were insured by agencies of the U.S. Government and/or the Canadian Government.

Foreign Currency Translation

The consolidated financial statements are presented in U.S. dollars. In accordance with ASC 830 “Foreign Currency Matters”, foreign denominated monetary assets and liabilities are translated to their U.S. dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. 

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 consolidated financial statements beginning in 1998.  Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities.

Use of Estimates

The preparation of the Company’s consolidated financial statements are in conformity with U.S. GAAP which requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

15


 

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.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements required by this Item begin on Page F-16 of this Form 10-K.

16


 

Peptide Technologies, Inc.
(A Development Stage Company)

Consolidated Financial Statements
(Expressed in U.S. dollars)
30 November 2014

  Page
Reports of Independent Registered Public Accounting Firm F-2
   
Consolidated Financial Statements:  
   
           Consolidated Balance Sheets F-4
   
           Consolidated Statements of Loss and Comprehensive Loss F-5
   
           Consolidated Statements of Cash Flows F-6
   
           Consolidated Statement of Changes in Stockholders’ (Deficiency) F-7
   
           Notes to Consolidated Financial Statements F-8 - F-20

F-1


 

REPORT OF INDEPENDENT RGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Peptide Technologies, Inc.
(A Development Stage Company)

We have audited the accompanying consolidated balance sheet of Peptide Technologies, Inc. (a Development Stage Company) as of November 30, 2014, and the related consolidated statements of operations and comprehensive income and loss, cash flows, and stockholders’ equity for the year then ended and cumulative for the period from June 26, 2010 (inception of development stage company operations) to November 30, 2014. Peptide Technologies, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The cumulative consolidated statements of operations and comprehensive income and loss, cash flows, and stockholders’ equity include amounts for the period from June 26, 2010 (inception of development stage company operations) to November 30, 2013 which were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts  included for the period June 26, 2010 (inception of development stage company operations) to November 30, 2013 is based solely on the reports of other auditors. The consolidated financial statements of Peptide Technologies, Inc. (a Development Stage Company) for the year ended November 30, 2013, were audited by other auditors whose report thereon, dated February 26, 2014, expressed an unqualified opinion.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Peptide Technologies, Inc. (a Development Stage Company) as of November 30, 2014, and the results of its consolidated operations and its cash flows for the year ended November 30, 2014, and cumulative for the period from June 26, 2010 (inception of development stage company operations) to November 30, 2014, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern. As discussed in Note 1 to the consolidated 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 regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Chartered Accountants
Surrey, British Columbia
March 2, 2015

F-2


 

Peptide Technologies, Inc.
(A Development Stage Company)

Consolidated Financial Statements
(Expressed in U.S. dollars)
30 November 2014

F-3


 
Peptide Technologies, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. dollars)

  Notes As at 30
November 2014

$
As at 30
November
2013

$
       
ASSETS      
       
Current assets      
Cash and cash equivalents   1,319 157
       
Intangible assets and intellectual property 7 - 45,000
Website 3 2,500 5,833
       
Total assets   3,819 50,990
       
STOCKHOLDERS’ DEFICIENCY AND LIABILITIES      
       
Current liabilities      
Accounts payable and accrued liabilities 4, 6 688,804 1,662,272
Notes payable – related parties 5 110,410 88,850
       
Total liabilities   799,214 1,751,122
       
Stockholders’ deficiency      
Capital stock 8    
Authorized:      
675,000,000 common shares, par value $0.001      
Issued and outstanding:        
30 November 2014 - 156,412,660 common shares      
30 November 2013 - 151,123,000 common shares   156,413 151,123
Additional paid-in capital   187,899 148,279
Accumulated deficit   (105,837) (105,837)
Accumulated deficit during development stage   (1,033,870) (1,893,697)
       
Total stockholders’ deficiency   (795,395) (1,700,132)
       
Total stockholders’ deficiency and liabilities   3,819 50,990

APPROVED BY THE BOARD:
     
“Dennis Cox”   “Baxter Koehn”
Director   Director

The accompanying notes are an integral part of these consolidated financial statements.

F-4


 
Peptide Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in U.S. dollars)

  Notes For the
year
ended 30 November
2014
$
For the
year
ended 30 November
2013
$
Cumulative from re-
entering of
development stage on

26 June 2010
to 30 November 2014
$
         
Expenses        
Consulting 6, 8 - 302,000 552,975
Salaries and bonus 4, 6 364,568 623,084 1,434,652
General and administration 9 24,964 30,350 77,989
Professional fees   68,321 38,170 220,064
Supplies and materials   9,903 1,102 70,135
         
Net loss before other items   (467,756) (994,706) (2,355,815)
         
Other items
Gain on sale of technology
7 9,239 - 9,239
Forgiveness of debt 4 1,361,000 - 1,361,000
Foreign exchange gain   5,900 3,608 8,014
Write-down of intangible asset 7 (45,000) - (45,000)
Interest expense 5 (3,556) (4,378) (11,308)
         
Net income (loss) for the period   859,827 (995,476) (1,033,870)
         
Other comprehensive income (loss)        
Foreign currency translation adjustment   - - (333)
         
Total comprehensive income (loss) for the period   859,827 (995,476) (1,034,203)
         
Basic and diluted comprehensive income (loss) per common share   0.006 (0.007)  
         
Weighted average number of shares outstanding   152,950,241 150,294,589  

The accompanying notes are an integral part of these consolidated financial statements.

F-5


 
Peptide Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)

  Notes For the
year
ended 30 November
2014
$
For the
year
ended 30 November
2013
$
Cumulative from re-
entering of
development stage

 on 26 June 2010
to 30 November 2014
$
         
OPERATING ACTIVITIES        
         
Net income (loss) for the period   859,827 (995,476) (1,033,870)
Adjustments to reconcile net income (loss) to cash used by operating activities        
     Accrued interest 5 3,556 4,378 11,308
     Amortization 3 3,333 3,334 7,500
     Foreign exchange gain   (5,900) (3,608) (8,014)
     Forgiveness of debt   (1,361,000) - (1,361,000)
     Non-cash consulting expense 8 - 2,000 2,000
     Share-based payment 8 5,250 - 13,250
     Write-down of intangible assets and intellectual property   45,000 - 45,000
     Gain on sale of technology 7 (9,239) - (9,239)
Changes in operating assets and liabilities        
     Decrease in prepaid expenses   - 3,494 2,710
     Increase in trades payable and accrued liabilities 4, 6 387,532 931,555 2,049,054
         
Cash used in operating activities   (71,641) (54,323) (281,301)
         
INVESTING ACTIVITIES        
         
Purchase of website 3 - - (10,000)
         
Cash used in investing activities   - - (10,000)
         
FINANCING ACTIVITIES        
         
Proceeds from issuance of common shares, net of share issuance costs 8 39,660 43,000 160,774
Increase in notes payable – related parties 5 23,904 3,700 91,116
Gain on sale of technology 7 9,239 - 9,239
Contribution by related party   - - 27,288
         
Cash from financing activities   72,803 46,700 288,417
         
Effect of foreign exchange rate changes on cash   - - (333)
         
Increase (decrease) in cash and cash equivalents   1,162 (7,623) (3,217)
Cash and cash equivalents, beginning of period   157 7,780 4,536
         
Cash and cash equivalents, end of period   1,319 157 1,319

Supplemental cash flow information (Note 12)

The accompanying notes are an integral part of these consolidated financial statements.

F-6


 
Peptide Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders’ Deficiency
(Expressed in U.S. dollars)

  Number of shares Capital stock
$
Additional paid-in capital
$
Accumulated deficit
$
Accumulated deficit during development stage
$
Total
$
             
Balances, 30 November 2012 149,078,000 149,078 105,324 (105,837) (898,221) (749,656)
Shares issued for            
Cash, net of share issuance costs 45,000 45 42,955 - - 43,000
Contractor services 2,000,000 2,000 - - - 2,000
Net loss for the year - - - - (995,476) (995,476)
             
Balances, 30 November 2013 151,123,000 151,123 148,279 (105,837) (1,893,697) (1,700,132)
             
Shares issued for            
Cash, net of share issuance costs 39,660 40 39,620 - - 39,660
Related party services 5,250,000 5,250 - - - 5,250
Net income for the year - - - - 859,827 859,827
             
Balances, 30 November 2014 156,412,660 156,413 187,899 (105,837) (1,033,870) (795,395)

The accompanying notes are an integral part of these consolidated financial statements.

F-7


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

1. NATURE AND CONTINUENCE OF OPERATIONS

  1.1 Organization

  Peptide Technologies, Inc. (the “Company”) was incorporated in the State of Nevada, United States of America, on 18 November 2005. On 29 July 2010, the Company’s name was changed from Online Originals, Inc. to CREEnergy Corporation. Effective 12 October 2011, the Company’s name was changed from CREEnergy Corporation to Peptide Technologies, Inc. The Company’s year-end is 30 November.

  On 5 August 2013, the Company incorporated Pept Peptide Technologies Inc. (“Pept Peptide”), a wholly-owned subsidiary, under the laws of British Columbia, Canada. Pept Peptide currently does not have any transactions from the date of incorporation on 5 August 2013 to 30 November 2014.

  1.2 Nature of Operations and Change in Business

  Upon inception on 18 November 2005, the Company’s business plan was to develop a membership-based website art gallery and auction house specifically focused on displaying and selling original artwork. The Company changed its status from a development stage company to an operating company on 30 November 2009. Management realized that the results of operations from the sale of artwork lacked luster and decided to change the Company’s business focus and plan for other strategic opportunities. Effective 26 June 2010, the Company became a development stage company focusing on a new business.

  On 23 August 2011, the Company entered into an agreement (the “Asset Purchase Agreement”) in which the Company, in exchange for 75,000,000 shares of the Company’s restricted common stock, received all rights and title to proprietary technologies and formulas involving the application of specialty Peptides. The Company has changed its business focus to the manufacturing and distribution of natural peptide solutions to combat the economic burden of bio-fouling. On 14 December 2011, the Company amended the Asset Purchase Agreement. As a result of the amendment, the purchase price of the assets was reduced from 75,000,000 shares to 45,000,000 shares, and 30,000,000 shares were returned to treasury.

  On 1 May 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the Amended Asset Purchase Agreement were deemed null and void and the platforms were returned to the original vendor (Note 7).

  The Company’s business activities are to focus on the development of all-natural, sustainable solutions to the increasing problem of bio-fouling and the development of safe “green” organic-based anti-fouling products used to combat the rapidly growing problems caused by the attachment of hard fouling agents in marine and freshwater environments. This approach emphasizes minimizing the attachment of hard fouling agents (mussels, barnacles, etc.) and preventing the build-up of any bio-film layer as well.

  The Company has developed a non-commercialized, incomplete, re-formulated anti-fouling coating formula which has been sold. The Company business is to realize a 3% royalty of all gross sales and revenue derived from the formula (Note 7).

F-8


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  1.3 Basis of Going Concern

  The accompanying consolidated financial statements as at 30 November 2014 and for the year then ended have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company has had a net income of $859,827 for the year ended 30 November 2014 (30 November 2013 – net loss of $995,476; cumulative – net loss of $1,033,870) and has a working capital deficit of $797,895 at 30 November 2014 (30 November 2013 - $1,750,965).

  Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ended 30 November 2015. However, if the Company is unable to raise additional capital in the near future or meet financing requirements, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

  Although management is actively seeking to add new products and/or services in order to show profitability, and is seeking additional sources of equity or debt financing, there is no assurance that these activities will be successful. The Company has not yet been able to find products and services that would contribute to their business due to the continued economic condition. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

  1.4 Basis of Presentation

  These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable for a development stage company for financial information and are expressed in U.S. dollars.

2. SIGNIFICANT ACCOUNTING POLICIES

  This summary of significant accounting policies is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of management who is responsible for their integrity and objectivity. These accounting policies have been consistently applied in the preparation of the consolidated financial statements.

  2.1 Principles of Consolidation

  These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Pept Peptide, a company incorporated in the province of British Columbia on 5 August 2013. All significant inter-company balances and transactions have been eliminated upon consolidation.

  2.2 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-9


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  2.3 Development-Stage Company

  During the year ended 30 November 2010, the Company abandoned its previous business of sale of original artwork and re-entered the development stage with its intended new business, which currently has no revenues. Management expects to sustain losses from operations until such time it can generate sufficient revenues to meet its anticipated cost structure. The Company is considered a development-stage company in accordance with the ASC 915, “Accounting and Reporting by Development-Stage Enterprises”. A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.

  2.4 Cash and Cash Equivalents

  Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

  2.5 Website

  In accordance with ASC 350-50, “Website Development Costs”, expenditures during the planning and operating stages of the Company’s website are expensed as incurred. Expenditures incurred during the website application and infrastructure development stage are capitalized and amortized to expense over the website’s estimated useful life of 3 years.

  2.6 Intangible Assets

  Intangible assets include the cost of acquiring the intellectual property. In accordance with ASC 350-30 “General Intangibles Other Than Goodwill”, an intangible asset that is acquired either individually or with a group of other assets shall be recognized. Costs of internally developing, maintaining, or restoring intangible assets that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as whole, shall be recognized as an expense when incurred. The intellectual property is determined to have an indefinite useful life and is not subject to amortization. The useful life of the intangible asset is reassessed at each reporting period.

  2.7 Impairment of Long-Lived Assets

  Long-lived assets include the website and intangible assets and intellectual property. Long-lived assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. On 1 May 2014, an impairment loss was recorded on the intangible assets and intellectual property (Note 7).

  2.8 Research and Development

  Research and development expenses are charged to operations as incurred.

F-10


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  2.9 Income Taxes

  The Company has 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 consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

  2.10 Basic and Diluted Income (Loss) per Share

  In accordance with ASC 260, “Earnings per Share”, the basic income (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed similar to basic income (loss) per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings per share are not shown for periods in which the Company incurs a loss because it would be anti-dilutive. At 30 November 2014, the Company had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation.

  2.11 Estimated fair value of financial instruments

  The Company’s consolidated financial instruments, consist of cash and cash equivalents, accounts payable and accrued liabilities, and notes payable – related parties.

  The carrying values of cash and cash equivalents, and accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of these instruments.

  Notes payable – related parties are recorded at their carrying value.

  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or currency risks arising from these financial instruments.

  Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At 30 November 2014, all cash and cash equivalents were insured by agencies of the U.S. Government.

  2.12 Foreign Currency Translation

  The consolidated financial statements are presented in U.S. dollars. In accordance with ASC 830 “Foreign Currency Matters”, foreign denominated monetary assets and liabilities are translated to their U.S. dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

  2.13 Comprehensive Income (Loss)

  The Company adopted ASC 220, "Reporting Comprehensive Income". ASC 220 requires that the components and total amounts of comprehensive income (loss) be displayed in the consolidated financial statements beginning in 1998. Comprehensive income (loss) 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.

F-11


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  2.14 Use of Estimates

  The preparation of the Company’s consolidated financial statements are in conformity with U.S. GAAP which requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

  2.15 Changes in Accounting Policies

  Effective 1 December 2013, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2013-02, “Comprehensive Income." This update requires an entity to present information about amounts reclassified out of accumulated other comprehensive income and their corresponding effect on the respective line items in net income in one place, and in some cases, cross-references to related footnote disclosures. The update applies to public companies for all reporting periods presented, including interim periods, and to nonpublic entities for annual reporting periods. ASU No. 2013-02 will be effective for fiscal years, and interim periods within those years, beginning after 15 December 2012 for public companies, with early adoption permitted. The adoption of this update did not have a material effect on the Company’s interim consolidated financial statements.

  2.16 Recent Accounting Pronouncements

  In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers," which provides a five-step approach to be applied to all contracts with customers. ASU No. 2014-09 also requires expanded disclosures about revenue recognition. ASU No. 2014-09 is effective for annual reporting periods beginning after 15 December 2016, including interim periods. Early adoption is not permitted. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

  In June 2014, the FASB issued ASU No. 2014-10, “Development Stage Entities," which intends to remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the update eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. ASU No. 2014-10 is effective for fiscal years and interim periods beginning after 15 December 2014, with early adoption permissible. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

  In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements-Going Concern,” which requires management of an entity to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date the financial statements are available to be issued when applicable). ASU No. 2014-15 is effective for fiscal years and interim periods ending after 15 December 2016, with early adoption permissible. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

F-12


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  2.17 Reclassifications

  Certain amounts reported in previous periods have been reclassified to conform to the current year’s presentation.

  2.18 Other

  The Company consists of one reportable business segment.

  The Company paid no dividends during the periods presented.

3. WEBSITE

  As at 30 November 2014 2013
    Cost
$
Accumulated amortization
$
Net book value
$
Cost
$
Accumulated amortization
$
Net book value
$
               
  Website 10,000 7,500 2,500 10,000 4,167 5,833
               
  Total 10,000 7,500 2,500 10,000 4,167 5,833

  The Company purchased a website during October 2012 for $10,000. This website has a useful life of three years, and the cost is being amortized over the life of the asset. During the year ended 30 November 2014, the Company recognized amortization expense of $3,333 (2013 - $3,334; cumulative - $7,500) (Note 9).

4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

  As at 30 November 2014
$
2013
$
       
  Accounts payable 37,152 574,188
  Accrued liabilities (Note 6) 42,000 27,000
  Payroll taxes payable 29,652 17,084
  Salaries and benefits payable (Note 6) 580,000 1,044,000
       
  Total trades payable and accrued liabilities 688,804 1,662,272

  Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

  4.1 Accrued liabilities

  Included in accrued liabilities is $32,000 (30 November 2013 - $Nil) of management fees payable to the Chief Executive Officer (“CEO”) of the Company (Note 6).

  4.2 Salaries and benefits payable

  On 29 May 2014, the former CEO requested that his salary be suspended until further notice. Additionally, he forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 31 August 2014 (Notes 6 and 12).

F-13


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  On 29 May 2014, a consultant forgave all outstanding fees payable in relation to consulting services rendered in the amount of $545,000 (Notes 6 and 12). This resulted in an aggregate forgiveness of debt of $1,361,000 on 29 May 2014.

5. NOTES PAYABLE – RELATED PARTY

    2014
$
2013
$
  During the year ended 30 November 2010, Fotoview Inc. (“Fotoview”), a company owned and operated by the CEO of the Company, issued a loan of $16,000 to a former director of the Company to purchase 4,000,000 restricted common shares of the Company.  Upon the director’s resignation, the 4,000,000 common shares were cancelled and the Company assumed the loan payable to Fotoview.  The loan is unsecured, bears no interest, and has no fixed terms of repayment. 16,000 16,000
       
  On 21 September 2011, PSI Services (“PSI”), a business owned and operated by the CEO of the Company, issued a loan of $500 to the Company. The loan is unsecured, bears no interest and has no fixed terms of repayment. 500 500
       
  On 13 November 2011, PSI issued a loan of CAD$45,000 to the Company.  The loan is unsecured and bears interest at a rate of 6% per annum. Principal and accrued interest is due on 30 November 2014.  During the year ended 30 November 2014, the Company accrued interest expense of $2,462 (2013 - $3,031) (Note 12).  The loan payable to PSI as at 30 November 2014 consists of principal and accrued interest of $39,380 (30 November 2013 – $42,710) and $7,204 (30 November 2013 – $5,251), respectively. 46,584 47,961
       
  On 1 June 2012, PSI issued a loan of CAD$20,000 to the Company.  The loan is unsecured and bears interest at a rate of 6% per annum.  Principal and accrued interest is due on 30 November 2014. During the year ended 30 November 2014, the Company accrued interest expense of $1,094 (2013 - $1,347) (Note 12). The loan payable to PSI as at 30 November 2014 consists of principal and accrued interest of $17,502 (30 November 2013 – $18,982) and $2,624 (30 November 2013 – $1,707), respectively. 20,126 20,689
       
  On 22 October 2013, PSI issued a loan of USD$3,700 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 3,700 3,700
    86,910 88,850

F-14


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

    2014
$
2013
$
       
  Balance carried forward 86,910 88,850
  On 21 April 2014, PSI issued a loan of USD$8,000 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 8,000 -
       
  On 14 August 2014, PSI issued a loan of USD$9,500 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 9,500 -
       
  On 3 November 2014, PSI issued a loan of USD$6,000 to the Company. The loan is unsecured, bears no interest, and has no fixed terms of repayment. 6,000 -
  Total related party - notes payable and accrued interest 110,410 88,850

6. RELATED PARTY TRANSACTIONS

  As at 30 November 2014, the amount due to related parties includes $580,000 (30 November 2013 - $1,044,000) payable to past directors and employees of the Company in relation to salaries and benefits earned, and $32,000 (30 November 2013 - $Nil) payable to the CEO of the Company in relation to management fees earned. Of the amount due to related parties, $Nil relates to bonuses payable to the former CEO of the Company (30 November 2013 - $300,000) (Note 4).

  During the year ended 30 November 2014, the Company accrued salaries and benefits of $352,000 to officers and employees of the Company (30 November 2013 - $612,000).

  On 29 May 2014, the former CEO requested that his salary be suspended until further notice. Additionally, he forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 31 May 2014. As at 30 November 2014, included in salaries and benefits are bonuses of $Nil accrued to the former CEO of the Company during the year ended 30 November 2014 (30 November 2013- $Nil; cumulative - $Nil) (Notes 4 and 12).

  Effective 1 December 2013, the Company and a former related party consultant mutually terminated an Advisory Agreement entered into on 1 November 2012. The Company accrued $Nil of consulting fees to the consultant (30 November 2013 - $300,000; cumulative - $545,000).

  On 29 May 2014, a former related party consultant forgave all outstanding fees payable in relation to consulting services rendered in the amount of $545,000. As at 30 November 2014 there is $Nil (30 November 2013 - $545,000) outstanding and payable to the consultant for consulting services received (Notes 4 and 12).

F-15


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  During the year ended 30 November 2013, the Board approved a commission payment program (the “Program”) equal to 30% of gross sales of fouling prevention coatings. Under this Program, the former CEO will receive compensation equal to 20% of gross sales of anti-fouling paint, as recognition of his work in developing the formulas; and an external consultant will receive 10% of gross sales of anti-fouling paint as compensation for sales development. On 28 February 2014, the Board amended the Program to reduce the former CEO’s compensation from 20% to 10% of gross sales of anti-fouling paint. On 29 May 2014, the Program was eliminated by mutual agreement from both parties affected. As a result, no commissions will be earned by either the former CEO or the applicable consultant on gross sales of fouling prevention coatings. As at 30 November 2014, there were $Nil commissions earned (Note 7).

  During the year ended 30 November 2014, directors and shareholders of the Company made cash contributions in the amount of $Nil (30 November 2013 - $Nil; cumulative – $27,288).

  On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to two directors of the Company for consulting services rendered. As a result, the Company recorded professional fees of $5,250 when the stock was issued (Note 8).

7. INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY

  On 23 August 2011, the Company entered into the Asset Purchase Agreement 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 23 August 2011) (Note 1).

  On 14 December 2011, the Company entered into an amended agreement amending the Asset Purchase Agreement (the “Amended Asset Purchase Agreement”) and, as a result, a total of 30,000,000 common shares were returned to treasury and cancelled (Note 1) in exchange for payment of half of one percent of all gross monies received by the Company in relation to revenue earned from products derived from the use of all the formulae listed in the Assets Purchase Agreement. In addition, a monthly stipend of CAD $15,000 per month is to be paid commencing on the receipt of monies from the first contract signed to purchase products derived from the use of the formulae for a period of five years from the date of the Amended Asset Purchase Agreement. The cancellation of 30,000,000 common shares has been recorded as a recovery of intangible assets and intellectual property.

  On 1 May 2014, the Company entered into an agreement whereby the Asset Purchase Agreement and the Amended Asset Purchase Agreement were deemed null and void and the platforms were returned to the original vendor (Note 1).

  During the year ended 30 November 2014, the Company recorded a write down of $45,000 (30 November 2013 - $Nil; cumulative - $45,000) related to its intangible assets and intellectual property (Note 12).

  On 20 January 2013, the Board approved the Program equal to 30% of gross sales of fouling prevention coatings. Under this Program, the former CEO will receive compensation equal to 20% of gross sales of anti-fouling paint, as recognition of his work in developing the formulas; and an external consultant will receive 10% of gross sales of anti-fouling paint as compensation for sales development. On 28 February 2014, the Board amended the Program to reduce the former CEO’s compensation from 20% to 10% of gross sales of anti-fouling paint. On 29 May 2014, the Program was eliminated by mutual agreement from both parties affected. As a result, no commissions will be earned by either the former CEO or the applicable consultant on gross sales of fouling prevention coatings. As of 30 November 2014, there were $Nil commissions earned (Note 6).

F-16


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  On 26 May 2014, the Company entered into an exclusive global distribution agreement with All-Sea Coatings Ltd. (a division of All-Sea Enterprises) of North Vancouver, Canada. This agreement has been replaced with an Asset Purchase Agreement dated 14 August 2014. All-Sea Coatings Ltd. has acquired from Peptide Technologies Inc. the non-commercialized re-formulated assets that were developed by the Company. The Asset Purchase Agreement was settled with an initial CDN$10,000 payment for the non-commercialized re-formulated assets with a further 3% royalty to be paid on all gross sales and revenue derived from the use of the non-commercialized re-formulated assets. If the non-commercialized, or subsequently commercialized, re-formulated assets are subsequently sold by All-Sea Coatings Ltd. 10% of the gross sale price will be payable to the Company.

8. CAPITAL STOCK

  8.1 Authorized common stock

  The Company’s authorized common stock consists of 675,000,000 shares of common stock with a par value of $0.001 per share. On 10 August 2010, the Company increased the number of authorized share capital from 75,000,000 shares of common stock to 675,000,000 shares of common stock with the same par value of $0.001 per share.

  8.2 Issued and outstanding

  On 2 June 2010, and effective 10 August 2010, the directors of the Company approved a forward split of the common stock of the Company on a basis of 30 new common shares for 1 old common share. As a result of the forward stock split, 208,800,000 additional shares were issued. Capital and additional paid-in capital have been adjusted accordingly. When adjusted retroactively, there was a $119,501 shortage of additional paid-in capital; thus an adjustment to accumulated deficit of $104,000 was recorded on 20 May 2010 (the date of issuance of 120,000,000 shares) and $15,501 to the beginning balance. The consolidated financial statements contained herein reflect the appropriate values for capital stock and accumulated deficit. Unless otherwise noted, all references in the accompanying consolidated financial statements to the number of common shares and per share amounts have been retroactively restated to reflect the forward stock split.

  The total issued and outstanding capital stock is 156,412,660 common shares with a par value of $0.001 per common share. During the years ended 30 November 2014 and 2013, the Company issued common shares as follows:

  a) On 10 April 2013, the Company issued 20,000 shares of the Company’s restricted common stock for cash proceeds of $20,000. The Company paid $2,000 in share issuance costs.

  b) On 26 April 2013, the Company issued 2,000,000 shares of the Company’s restricted common stock at a par value of $0.001 per share to a third party for marketing assistance with the development of the international markets in the South Pacific quadrant for the Company. As a result, the Company recorded consulting expense of $2,000 when the stock was issued (Note 12).

  c) On 18 July 2013, the Company issued 25,000 shares of the Company’s restricted common stock for cash proceeds of $25,000.

  d) On 5 December 2013, the Company issued 10,000 shares of the Company’s restricted common stock for cash proceeds of $10,000.

  e) On 3 March 2014, the Company issued 10,000 shares of the Company’s restricted common shares for cash proceeds of $10,000.

  f) On 11 March 2014, the Company issued 5,000 shares of the Company’s restricted common shares for cash proceeds of $5,000.

F-17


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  g) On 3 April 2014, the Company issued 10,000 shares of the Company’s restricted common stock for cash proceeds of $10,000.

  h) On 15 July 2014, the Company issued 4,660 shares of the Company’s restricted common stock for cash proceeds of $4,660.

  i) On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to two directors of the Company for consulting services rendered. As a result, the Company recorded professional fees of $5,250 when the stock was issued (Note 6).

9. GENERAL AND ADMINISTRATION EXPENSES

    Year ended  30 November 2014
$
Year ended  30 November
2013
$
Cumulative from re-entering of development stage on 26 June 2010 to 30 November 2014
$
         
  Amortization (Note 3) 3,333 3,334 7,500
  Bank charges 226 202 1,510
  Dues and subscription - 575 575
  Filing fees 9,304 6,428 20,774
  Meals and entertainment - 254 254
  Office 1,494 2,447 8,237
  Penalties (Notes 4, 10 and 11) 25 10,000 10,025
  Transfer agent 810 655 4,311
  Rent 939 1,233 2,172
  Share-based payment (Notes 8 and 12) 5,250 - 13,250
  Telecommunication 2,846 2,566 5,839
  Travel - 2,656 2,656
  Website 737 - 886
  Total general and administration expenses 24,964 30,350 77,989

10. INCOME TAXES

  10.1 Provision for income taxes

  Income tax expense differs from the amount that would result from applying the federal income tax rate to earnings before income taxes. During the years ended 30 November 2014 and 2013, these differences result from the following items:

    2014
$
2013
$
       
  Income (loss) before income taxes 859,827 (995,476)
  Federal income tax rates 35.00% 35.00%
       
  Income tax (recovery) based on the above rates 300,940 (348,417)
  Non–deductible items 15,750 44
  Change in valuation allowance (316,690) 348,373
       
  Income tax expense - -

F-18


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

  10.2 Deferred tax balances

  The composition of the Company’s deferred tax assets as at 30 November 2014 and 2013 are as follows:

    2014
$
2013
$
       
  Net income tax operating loss carry-forward 1,071,079 1,975,908
       
  Deferred tax assets 374,878 691,568
  Valuation allowance (374,878) (691,568)
       
  Deferred tax assets (liabilities) - -

  As at 30 November 2014, the Company has a total non-capital loss carryforward balance of $1,071,079 (30 November 2013 - $1,975,908), which has expiry dates between the years of 2025 to 2034.

  The Company’s recognized and unrecognized deferred tax assets related to the unused tax losses. A full valuation allowance has been recorded against the potential deferred tax assets associated with all the loss carry-forwards as their utilization is not considered more likely than not at this time.

11. COMMITMENTS AND CONTINGENCY

  a) On 11 December 2012, the Company formerly engaged BB&T Capital Markets ("BB&TCM") to act as the Company's exclusive financial advisor and agent in connection with developing strategic alternatives for the Company regarding debt financings, licensing of intellectual properties developed by the Company, equity raises, sale of intellectual properties, or other capital markets transactions that may develop over the course of a 24 month agreement.

  The Company is to pay BB&TCM an advisory fee of three percent of the face amount of the financial transactions advised upon during the course of the engagement, due and payable at closing of any contemplated transactions under the engagement.

  Additionally, the Company is to defend, indemnify and hold BB&TCM, its parent company, subsidiaries and affiliates and its and their directors, officers, employees, agents and successors and assigns harmless from and against any losses, suits, actions, claims, damages, costs and or other liabilities which any indemnified person may incur as a result of acting on behalf of the Company in connection with this engagement.

  On 19 May 2014, the Company renewed/extended the Agreement with BB&TCM. The extension runs from 1 May 2014 through 1 May 2016 (24 months). All other provisions of the engagement remain unchanged.

  b) The Company is in the process of completing its income tax filings. During the year ended 30 November 2013 the Company accrued $10,000 related to potential penalties associated with certain of its income tax filings. However, there is no assurance that additional interest and penalties will not be assessed (Notes 4 and 10).

  c) The Company is committed to making payments related to its notes payable – related parties (Note 5).

F-19


 
Peptide Technologies, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in U.S. dollars)

12. SUPPLEMENTAL CASH FLOW INFORMATION

  The Company made the following cash payments for interest and income taxes:

  Year ended 30 November 2014
$
2013
$
       
  Interest paid - -
  Taxes paid - -
       
  Total cash payments - -

  On 26 April 2013, the Company issued 2,000,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to a third party for marketing assistance with the development of the international markets in the South Pacific quadrant for the Company. As a result, the Company recorded consulting expense of $2,000 when the stock was issued (Note 8).

  During the year ended 30 November 2014, the Company accrued interest expense of $2,462 (2013 - $3,031) in relation to a loan of CAD$45,000 issued by PSI on 13 November 2011. The loan is unsecured and bears interest at a rate of 6% per annum (Note 5).

  During the year ended 30 November 2014, the Company accrued interest expense of $1,094 (2013 - $1,347) in relation to a loan of CAD$20,000 issued by PSI on 1 June 2012. The loan is unsecured and bears interest at a rate of 6% per annum (Note 5).

  During the year ended 30 November 2014, the Company recorded a write down of $45,000 (30 November 2013 - $Nil; cumulative - $45,000) related to its intangible assets and intellectual property (Note 7).

  On 29 May 2014, the former CEO requested that his salary be suspended until further notice. Additionally, he forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 30 November 2014 (Notes 4 and 6).

  On 29 May 2014, a consultant forgave all outstanding fees payable in relation to consulting services rendered in the amount of $545,000 (Notes 4 and 6).

  On 28 July 2014, the Company issued 5,250,000 fully vested shares of the Company’s restricted common stock at a par value of $0.001 per share to two directors of the Company for consulting services rendered. As a result, the Company recorded professional fees of $5,250 when the stock was issued (Notes 6 and 8).

13. SUBSEQUENT EVENTS

  There have been no reportable events which have occurred during the period from the year ended 30 November 2014 to the date the consolidated financial statements were available to be issued on 2 March 2015.

F-20


 

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 19 January 2015 (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 30 November 2014. 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 30 November 2014, 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.

17


 

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
Dennis Cox 69 President
Baxter Koehn 66 Secretary/Treasurer, CEO, CFO

During the 2 years ended November 30, 2014, we had the following changes in management:

  • Effective July 22, 2014 a letter of resignation tendered by Mr. Bruce Sellars as Vice President of Operations & Communications was accepted.
  • Effective July 28, 2014 a letter of resignation tendered by Mr. Erik Odeen as Chief Financial Officer for the Company and all its subsidiaries, and Secretary/Treasurer and from the Board of Directors of the Company was accepted.
  • Effective July 28, 2014, Mr. Selwyn Dennis Cox has been appointed to the Board of  Directors of the  Company to serve until he resign or his successors be elected by the shareholders of the Company or appointed by the Board of Directors.
  • Effective July 28, 2014, Mr. Brian (Baxter) Koehn has been 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.  Baxter Koehn was also appointed to serve as Chief Financial Officer of the Company
  • Effective August 8, 2014, a letter of resignation tendered by Scott McKinley as Director of the Company and as Chief Executive Officer and Chief Operating Officer was accepted.
  • Effective August 8, 2014, Baxter Koehn has been appointed Chief Executive Officer of the Company until he resigns or his successor be elected by the shareholders of the Company or appointed by the Board of Directors.  Baxter Koehn is also presently a member of the Board of Directors serving as Chief Financial Officer and Secretary/Treasurer of the Company.
  • Effective August 8, 2014, Mr. Selwyn Dennis Cox has been appointed President of the  Company  to serve  until he resign or his successors be elected  by the shareholders of the Company or appointed by the Board of Directors.  Dennis Cox is also presently a member of the Board of Directors of the Company.

Dr. Dennis Cox, President

Mr. Dennis Cox is a retired business consultant who has served in various management positions.  He has over 35 years experience working in various manufacturing and service oriented companies.  Early in his career, Mr. Cox joined Canadian Forest Products Ltd. (CFP) a large building products company producing plywood and hard board paneling, in New Westminster, British Columbia.  Mr. Cox has held a wide variety of positions with CFP: including Buyer, Senior Buyer, Mill Stores and Maintenance Coordinator and Shipper. 

Prior to retiring, Mr. Cox was a consultant for Industrial Equipment Company Ltd. (IECO) located in Delta, British Columbia, a large bearing distributor and carrying a full range of power transmission, material handling, fluid power and other related products. 

18


 

Mr. Baxter Koehn, BA, AMA, EA,

Mr. Baxter Koehn, BA, AMA, EA, is a seasoned executive with over 30 years experience in corporate management, financial leadership, international manufacturing & distribution operations.  He manages a consulting practice which provides financial management and strategic-planning advisory services to both individuals and privately-held  company clients.  Duties with the company have included international marketing, the buying and selling of businesses and business interests as well as developing strategies for acquiring financing and market share.

Family Relationships

None as of November 30, 2014.

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, Baxter Koehn, 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.

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, 2014, there were no filing delinquencies.

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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, 2014 and 2013, in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO).

Name and
Principal
Position
  Fiscal
Year
  Salary
Earned or
Paid 
($)
  Bonus 
($)
  Stock
Awards 
($)
  Option
Awards 
($)
  Non-Equity
Incentive Plan
Compensation 
($)
  Non-Qualified
Deferred
Compensation
Earnings 
($)
  All Other
Compensation* 
($)
  Totals 
($)
 
                                       
Scott McKinley
Chief Executive Officer, Chief Operating Officer, Chairman
  2014
2013
2012
  $
$
$
150,000 (1)
300,000 (1)
75,000 (1)
    -
-
$300,000 (1)
    -
-
-
    -
-
-
    -
-
-
    -
-
-
    -
-
-
  $
$
$
150,000
300,000
375,000
 
                                                       
Erik Odeen
Chief Financial Officer, Secretary, Treasurer
(effective August 31, 2012 thru July 28, 2014 )
  2014
2013
2012
  $
$
$
160,000
240,000
60,000
    -
-
-
    -
-
$5,000
    -
-
-
    -
-
-
    -
-
-
    -
-
-
  $
$
$
160,000
240,000
65,000
 
                                                       
Bruce Sellars
Vice President of Operations & Communication (effective November 1, 2012 thru July 22, 2014 )
  2014
2013
2012
  $
$
$
42,000
72,000
6,000
    -
-
-
    -
-
-
    -
-
-
    -
-
-
    -
-
-
    -
-
-
  $
$
$
42,000
72,000
6,000
 
                                                       
Baxter Koehn
Chief Executive Officer, Chief Financial Officer,
  2014   $ 32,000     -     $5,000     -     -     -     -   $ 37,000  

(1) On May 29, 2014, the former CEO forgave the entire balance of his accrued salary in the amount of $516,000 and accrued bonus in the amount of $300,000 as at 31 May 2014.

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.

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ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information, as of 30 November 2014, 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 30 November 2014, there were 156,412,660 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, 2014 by each of the individual directors and executive officers and by all directors and executive officers as a group.

Name of Beneficial Owner   Position   Amount and Nature
of Beneficial Owner
    Percent
Of Common Stock
 
                 
Dennis Cox   President     5,250,900       03.36 %
Baxter Koehn   Chief Financial Officer, Secretary, Treasurer     50,000,000       31.96 %
    Total Officer and Directors     55,250,000       35.32 %

(1) Percent of Ownership is calculated in accordance with the Securities and Exchange Commission’s Rule 13(d) – 13(d) (1).  Based on 156,412,660 shares of common stock issued and outstanding.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

We have not entered into any transaction nor are there any proposed transactions in which any director, executive officer, shareholder of our company or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.

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 former auditors James Stafford Inc. for professional services rendered for the audit of our annual consolidated financial statements and for the reviews of the consolidated financial statements included in our Quarterly Reports on Form 10Q during the fiscal year ended 30 November 2014 and 2013 were $24,887 and $20,829, respectively. 

Audit Related Fees

We incurred no fees to auditors for audit related fees during the fiscal years ended 30 November 2014 and 2013.

21


 

Tax Fees

We incurred approximately $8,816 and $0 in fees to auditors for tax compliance, tax advice or tax compliance services during the fiscal years ended 30 November 2014 and 2013, respectively.

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" and “Tax Fees” for the fiscal years ended 30 November 2014 and 2013.

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

31.1 Section 302 Certification – President.
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 – President.
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.

22


 

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 27th day of February, 2015.


  PEPTIDE TECHNOLOGIES, INC.
   
Date:                27 February 2015 By: /s/ Dennis Cox
  Name: Dennis Cox
  Title: President

Date:                27 February 2015 By: /s/ Baxter Koehn
  Name: Baxter Koehn
  Title: Chief Financial Officer