EASTGATE BIOTECH CORP - FORM 10-Q

EASTGATE BIOTECH CORP - FORM 10-Q - November 23, 2015

Attached files

Attached files

EASTGATE BIOTECH CORP Reports

file	filename
EX-32.1 - EX-32.1 - EASTGATE BIOTECH CORP	ex-32_1.htm
EX-31.1 - EX-31.1 - EASTGATE BIOTECH CORP	ex-31_1.htm
EX-32.2 - EX-32.2 - EASTGATE BIOTECH CORP	ex-32_2.htm
EX-31.2 - EX-31.2 - EASTGATE BIOTECH CORP	ex-31_2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2015

[ ] 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 000-52886

EASTGATE BIOTECH CORP.

(Exact name of registrant as specified in its charter)

Nevada	87-0639378
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2203-65 Harbour Square | Toronto, Ontario | Canada M5J 2L4

(Address of principal executive offices)

(647) 692-0652

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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). ¹ Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]

(Do not check if a smaller reporting company)

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

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Class	Outstanding as of November 23, 2015
Common Stock, $0.00001 par value	290,872,175

TABLE OF CONTENTS


Heading		Page

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

	Signatures	20

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited balance sheet of Eastgate Biotech Corp. at September 30, 2015, related unaudited statements of operations and cash flows for the periods ended September 30, 2015 and 2014 have been prepared by management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2014 audited financial statements. Operating results for the period ended September 30, 2015, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2015 or any other subsequent period.

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EASTGATE BIOTECH CORP
(Formerly Eastgate Acquisitions Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS

	Sept 30			December 31,
	2015			2014
	(Unaudited)
ASSETS
Current
Cash	$	-		$	286,481
Accounts Receivable		35,993			-
Deposits		55,333			-
Sales tax recoverable		75,465			53,208

Total current assets		166,791			339,689

Other assets
Property & Equipment, net		197,954			143,246
					-

Total other assets		197,954			143,246

Total assets	$	364,745		$	482,935


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Bank indebtedness	$	5,948		$	-
Accounts payable and accrued liabilities		337,359			299,099
Accrued liabilities related party		215,178			388,675
Deferred rent		2,512			4,200
Capital lease obligation - Current Portion		7,621			-
Accrued interest - related parties		261,647			182,845
Notes payable - related parties		1,278,120			1,006,391

Total current liabilities		2,108,385			1,881,210

Long term liabilities
Capital lease obligation - long term		52,650			-

Total long term liabilities		52,650			-

Total Liabilities		2,161,035			1,881,210

Stockholders' equity (deficit)
Authorized:
Preferred stock:50,000,000 shares authorized at $0.00001 par value
no shares issued at September 30, 2015 and December 31, 2014		-			-
Common stock: 450,000,000 shares authorized at $0.00001 par value
290,662,175 and 89,635,234 shares issued and outstanding at
September 30, 2015 and December 31, 2014, respectively		2,907			896
Additional paid-in capital		9,003,626			5,957,771
Accumulated other comprehensive income		25,062			15,268
Accumulated deficit		(10,827,885	)		(7,372,210	)

Total stockholders' Equity (Deficit)		(1,796,290	)		(1,398,275	)

Total liabilities and stockholders' equity (deficit)	$	364,745		$	482,935

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

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EASTGATE BIOTECH CORP.

(Formerly Eastgate Acquisitions Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014

REVENUES	$	73,179		$	-		$	131,722		$	-

Cost of goods sold		11,059			-			19,489			-

Gross profit		62,120			-			112,233			-

OPERATING EXPENSES

Professional fees		26,757			22,943		$	123,960		$	125,941
Research & development		257,380			308,044			951,358			693,535
General and administrative		464,756			575,604			1,974,458			2,904,319
Marketing and selling		119,594			23,526			439,330			58,330

Total Operating Expenses		868,487			930,117			3,489,106			3,782,125

LOSS FROM OPERATIONS		(806,367	)		(930,117	)		(3,376,873	)		(3,782,125	)

Other items
Interest expense		(29,449	)		(23,112	)		(78,802	)		(68,047	)

Total other items		(29,449	)		(23,112	)		(78,802	)		(68,047	)

LOSS BEFORE INCOME TAXES		(835,816	)		(953,229	)		(3,455,675	)		(3,850,172	)

PROVISION FOR INCOME TAXES		-			-			-			-

NET LOSS	$	(835,816	)	$	(953,229	)	$	(3,455,675	)	$	(3,850,172	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.00	)	$	(0.02	)	$	(0.02	)	$	(0.09	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED		217,302,267			50,204,563			161,087,899			42,974,824

COMPREHENSIVE LOSS
A summary of the components of other comprehensive loss for the periods ended as follows:

Net Loss		(835,816	)		(953,229	)		(3,455,675	)		(3,850,172	)

Other Comprehensive Loss - foreign currency translation		15,107			(4,497	)		9,794			12,649

Comprehensive Loss	$	(820,709	)	$	(957,726	)	$	(3,445,881	)	$	(3,837,523	)

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

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	For the Nine Months Ended
	September 30			September 30
	2015			2014

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	$	(3,455,675	)	$	(3,850,172	)
Adjustments to reconcile net loss to net cash used by operating activities:
Expenses paid on the Company's behalf by a related party					4,938
Common stock issued for services		1,413,109			1,263,911
Depreciation		30,693			18,723
Stock options issued		291,427			-
Changes in operating assets and liabilities:
Accrued interest		78,802			46,920
Prepaid asset		(55,333	)		(40,242	)
Accounts payable		67,498			(92,294	)
Accounts Receivable		(38,392	)		-
Accrued liabilities related party		1,150,291			1,517,962
Sales tax recoverable		(31,283	)		(40,546	)
Deferred rent		(1,206	)		-

Cash flows used in operating activities		(550,069	)		(1,170,800	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(95,903	)


Cash flows used in investing activities		-			(95,903	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital lease obligation		(4,130	)		(24,380	)
Proceeds from notes payable related party		280,624			125,808
Payments on notes payable related party		(5,536	)		(48,166	)
Common stock issued for cash		5,000			1,206,500
Net proceeds from Bank indebtedness		6,345			-

Cash flows provided by financing activities		282,303			1,259,762

NET INCREASE (DECREASE) IN CASH		(267,766	)		(6,941	)
Effect of foreign currency translation adjustments		(18,715	)		12,649

Cash, beginning of the period		286,481			458

Cash, end of the period	$	(0	)	$	6,166

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	1,261		$	20,151

Non Cash Financing activities:
Common stock issued to convert liabilities	$	1,317,330		$	2,025,876
Common stock issued - subscription payable	$	-		$	2,000
Equipment Purchased for Capital lease obligation And Common Stock	$	85,401		$	-
Employee Advance repaid for reduction of Notes payable Related Party	$	3,359			-

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

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EASTGATE BIOTECH CORP.

Notes to Condensed Consolidated Financial Statements

September 30, 2015 and December 31, 2014

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Eastgate Biotech Corp without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2015, and for all periods presented herein have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2014 audited financial statements. The results of operations for the periods ended September 30, 2015 and 2014 are not necessarily indicative of the operating results for the full years.

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company has accumulated deficit of $10,827,885 as of September 30, 2015. The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time, raising substantial doubt about its ability to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management's efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Eastgate Biotech Corp. and its wholly-owned subsidiary Eastgate Pharmaceuticals Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Research and Development Costs

The Company expenses research and development costs to operations as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including employee-related expenses; laboratory supplies and other direct expenses; third-party contractual costs relating to nonclinical studies and related contract manufacturing expenses, development of manufacturing processes and regulatory registration.

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Foreign Currency Translation

Foreign denominated assets and liabilities of the Company are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period. Income statement accounts are translated at a weighted average of exchange rates which were in effect during the period. Translation adjustments that arise from translating the foreign subsidiary's financial statements from local currency to U.S. currency are recorded in the other comprehensive loss component of stockholders' equity.

Recent Accounting Pronouncements

In August 2014, FASB issued ASU No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements – Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU. However, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure.

In April 2015 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03 to simplify the presentation of debt issuance costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts and premiums. The ASU also requires that the amortization of debt issuance costs be reported as interest expense. For public companies, this ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 (early adoption is permitted). The adoption of this ASU will impact the presentation of the Company’s financial statements in future periods should it be successful in raising funds.

In April 2015, the FASB issued ASU 2015-05 related to customer’s accounting for fees paid in a cloud computing arrangement. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 (early adoption is permitted). The Company does not expect this ASU to have a significant impact on its consolidated financial position, results of operations or cash flows.

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company's financial position or statements.

NOTE 4 – RELATED-PARTY TRANSACTIONS

Notes payable – related parties

The Company has recorded loans from shareholders, amounts due to shareholders for expenses paid on its behalf by shareholders as Notes payable - related parties on the balance sheet. The amounts comprising Notes payable – related parties bear interest ranging from 5 percent per annum to 10 percent per annum, are unsecured and are due and payable upon demand.

During the nine months ended September 30, 2015 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder have advanced cash to the Company of $280,624, and have had expenses paid by the Company of $3,359 on their behalf. At September 30, 2015 the Company has repaid $5,536 of related party loans. During the year ended December 2014 the CEO and companies owned by the CEO as well as a company owned by a related party shareholder have paid for expenses on behalf of the Company of $4,938 and advanced cash to the Company of $190,880. As of September 30, 2015 and December 31, 2014, the Company owed $261,646 and $182,845 of accrued interest to related parties, respectively, resulting from interest expense of $78,802 and $88,879, respectively.

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NOTE 5 – SALES TAX RECOVERABLE

Sales tax receivable

The Company recovers sales tax paid, for which returns are filed on annual basis. At September 30, 2015, $75,465 was claimed as recoverable compared to the December 31, 2014 balance of $53,208. Sales tax recoverable is a result of sales tax paid on eligible expenses.

NOTE 6 – PROPERTY & EQUIPMENT AND CAPITAL LEASE OBLIGATION

On August 21, 2015 the Company entered into a capital lease agreement to purchase equipment. The lease had a term of 60 months starting August 21, 2015 with the final payment due on June 21, 2020. The lease specified a monthly rate of $1,797. The lease required minimum lease payments of $107,822 over the term of the lease and recorded at $64,401, which is the present value of the minimum lease payments (less no executor cost) using the effective interest rate of 24.46%. During the nine month ended September 30, 2015 the Company paid principal of $4,130 against the capital lease obligation and corresponding interest of $1,261, leaving an amount owing at the end of the period of $60,271, $52,650 of which is a long-term obligation.

The equipment was purchased for $85,401, comprisied of $64,401 in lease payments and $21,000 in stock issued at $0.014 per share, or 1,500,000 common shares.

NOTE 7 – STOCKHOLDERS' EQUITY

On January 5, 2015, the Company issued 8,146,225 Units of its securities in satisfaction of accrued liabilities comprised of $325,849 of compensation owed to eight directors and members of management at the price of $0.04 per share. Each Unit consisted of one share of common stock and a five year warrant to purchase one share of common stock at an exercise price of $0.04 per share. As a result of this transaction, the Company issued 8,146,225 shares of common stock and 8,146,225 warrants to purchase our common stock.

In January 2015, the Company issued a total of 3,700,000 shares of common stock to consultants for services rendered at the price of $0.035 per share.

On February 12, 2015, the Company issued a total of 15,250,000 shares of common stock to employees and consultants for services rendered at the price of $0.0286 per share.

In March 2015, the Company issued a total of 8,683,333 shares of common stock to consultants for services rendered at the price of $0.033 per share.

During the quarter ended March 31, 2015, the Company issued a total of 977,233 shares of common stock to consultants for services rendered at the price ranging from $0.06 to $0.50 per share.

During the quarter ended March 31, 2015, the Company issued 1,770,346 shares of common stock to two officers and an employee as part of their compensation at the price of $0.055 per share.

On May 22, 2015, the Company issued 62,285,718 shares of common stock in satisfaction of accrued liabilities comprised of $436,000 of compensation owed to the eight who are directors, officers and members of management at the market price of $0.007 per share.

On June19, 2015, the Company issued 15,000,000 shares of common stock to a director and two officers in recognition of the progress made in the development platform being used in various pharmaceutical and natural products. The shares were issued at the price of $0.0149 per shares.

On August 21, 2015 the Company sold 125,000 Units at a purchase price of $0.04 per Unit in a private placement of its securities to accredited investors for total proceeds of $5,000. Each Unit consisted of one share of common stock and a five year warrant to purchase one share at an exercise price of $0.04 per share.

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On August 21, 2015 the Company issued 870,000 shares of common stock to a consultant for services at a price of $0.014 per share.

On August 25, 2015, The Company issued 1,500,000 shares at closing price of $0.014 as a partial payment for acquisition of equipment (see Note 6).

On September 18, 2015, the Company awarded the issue 5,000,000 shares of common stock to a director and officer for services valued at $50,000 in the natural product division. The shares were issued at the price of $0.01 per shares.

On September 18, 2015, the Company issued 17,000,000 shares of common stock to two officers and one employee as part of their annual compensation at the price of $0.01 per shares.

On September 18, 2015, the Company issued 55,466,665 shares of common stock in satisfaction of accrued liabilities comprised of $554,667 of compensation owed to the eight who are directors, officers and members of management at the market price of $0.01 per share.

On September 21, 2015 the Company issued 8,000,000 shares of common stock to consultants for services at a price of $0.013 per share.

As of December 31, 2014, the Company had 17,272,300 warrants to purchase common stock. During the period ended September 30, 2015 the Company issued an additional 8,271,225 warrants. All outstanding warrants have a weighted average price of $0.11 per share and have a weighted average remaining life of 4.25 years.

The following table summarizes warrants that are issued, outstanding and exercisable

			Warrants Issued & Outstanding
Exercise		Expiration	September 30		December 31
Price		Date	2015		2014
$	0.25	March 14, 2019		3,495,000		3,495,000
$	0.25	March 21, 2019		3,480,000		3,480,000
$	0.25	June 6, 2019		2,022,300		2,022,300
$	0.05	October 16, 2019		150,000		150,000
$	0.04	December 31, 2019		8,125,000		8,125,000
$	0.04	January 5 , 2020		8,146,225		-
$	0.04	August 17, 2020		125,000		-

				25,543,525		17,272,300

Stock Options

On February 12, 2015 the Company issued a total of 10,375,000 options to purchase shares of common stock to employees and consultants as compensation at an exercise price of $0.0286 per share. The fair value was estimated using the Black-Scholes option pricing model, taking into account the grant date exercise price of $0.0286, an expected life of the option of 2.5 years, an expected volatility of 211.1%, expected dividends on the stock of 0 and the risk-free interest rate for the term of the option of 1.02%. The total fair value of the options at the date of the grant was $291,427. The options vested immediately and compensation expense of $291,427 was recorded on the grant date.

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The following table summarizes the stock options that are issued, outstanding and exercisable

				Stock Options Issued & Outstanding
Exercise			Expiration	June 30		December 31
Price			Date	2015		2014
	$	0.286	February 12, 2020		10,375,000		0

NOTE 8 – SUBSEQUENT EVENTS

In accordance with ASC 855 Company management reviewed all material events through the date of this report and determined that there are no material subsequent events to report except as described below:

On October 5, 2015 the Company sold 200,000 common shares at a price of $0.10 per share in a private placement of its securities to accredited investors for total proceeds of $20,000. Associated with this transaction is another 10,000 common shares in finders fees.

On October 7, 2015 the Company signed an agreement with Andrew Garrett Inc. as financial advisor and placement agent in connection with a private placement of unregistered securities of up to $20 million. Upon signing this agreement the Company issued Andrew Garrett Inc. a fee of 16,171,627 warrants to purchase common stock of the corporation at $0.00001 per common share. The warrants expire in 5 years.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following selected comparative financial information has been derived from and should be read in conjunction with the company's financial statements for the three months ended September 30, 2015 and 2014.

	For the Three Months ended						For the Nine Months ended
	September 30						September 30
	2015			2014			2015			2014
Revenues	$	73,179		$	-		$	131,722			-
Cost of sales		11,059			-			19,489			-
Gross profit		62,120			-			112,233			-

Operating Expenses
Professional fees		26,757			22,943			123,960			125,941
Research & development		257,380			308,044			951,358			693,535
General & administrative		464,756			575,604			1,974,458			2,904,319
Marketing and selling		119,594			23,526			439,330			58,330

Total operating expenses		868,487			930,117			3,489,106			3,782,125

Loss from operations		(806,367	)		(930,117	)		(3,376,873	)		(3,782,125	)

Interest income		(29,449	)		(23,112	)		(78,802	)		(68,047	)

Net loss	$	(835,816	)	$	(953,229	)	$	(3,455,675	)	$	(3,850,172

							September 30			December 31
								2015			2014

Total assets							$	364,745		$	482,935
Working Capital							$	(1,941,594	)	$	(1,541,521	)

Results of Operations

We recorded revenue for the second consecutive quarter. Sales recorded were in our natural products division. During the three months ended September 30, 2015, our net loss was $835,816 compared to a net loss of $953,229 for the three months ended September 30, 2014. The decreased loss for 2015 of $117,413 was primarily due to the fact the company had reduced G&A expenses of 110,848. The professional fees and marketing & selling expenses increased respectively by $3,814 and $96,068, whereas research and development expenses decreased by $50,664. These changes in expenditures combined with a gross profit on sales of $62,120 resulted in the decreased loss of $117,413 for the quarter.

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During the Nine months ended September 30, 2015, our net loss was $3,455,675 compared to a net loss of $3,850,172 for the nine months ended September 30, 2014. The decreased loss for 2015 of $394,497 was primarily due to the fact the company had reduced G&A expenses of 929,861 plus a decrease in professional fees expense of $1,981.The marketing & selling expenses and research & development expenses increased respectively by $381,000 and $257,823. These changes in expenditures combined with a gross profit on sales of $112,233 resulted in the decreased loss for the nine month period of $394,497.

Sales

This quarter we recorded revenue of $73,179 in our natural products division including for very first time $1,800 of royalty income from a licensed manufacturer who manufacturers and sells some of our natural products under a private label. Cost of sales was $11,059 for a gross profit of $62,120. These sales represent new customers who should be reordering to maintain the start of a continuous sales stream.

For the nine month period we recorded revenue of $131,722 in our natural products division and for very first time we received $1,800 of royalty income from a licensed manufacturer who manufacturers and sells some of our natural products under a private label. Cost of sales was $19,489 for a gross profit of $112,233. These sales represent new customers who should be reordering to maintain the start of a continuous sales stream.

Operating Expenses

Professional fees

During the third quarter ended September 30, 2015, professional fees expenses were $26,757, an increase of $3,814 from the third quarter of 2014 professional fees expense of $22,943. The increase can be attributed to increase in legal expenses for the quarter.

During the first nine months ended September 30, 2015, professional fees expenses were $123,960, a decrease of $1,981 from the first nine months of 2014 professional fees expense of $125,941. The first quarter of 2014 included the costs of an equity raise; the company did not have these expenses in the nine months ended September 30 2015.

Research and development

Research and development costs consist of fees paid to consultants for laboratory evaluation of product chemistry and formulation as well as tests and studies to assess the efficacy and potential safety of our products. Also included in research and development are laboratory consumables.

During the third quarter ended September 30, 2015, research and development expenses of $257,380 decreased by $50,664 from $308,044 for the third quarter of 2014. The decrease was a result of the company's lack of cash available in 2015.

During the nine months ended September 30, 2015, research and development expenses of $951,358 increased by $257,823 from $693,535 for the first nine months of 2014. The increase was a result of the company’s increased focus on development work, which dropped off in the third quarter due to a lack of cash.

General and administrative

During the third quarter of 2015, we incurred general and administrative expenses of $464,756 a decrease of $110,848 from $575,604 for the third quarter of 2014. The decrease in expense for the third quarter of 2015 is the result of the decrease in shares issued for consulting services in lieu of cash. In addition the market price of the companies common shares were much higher in 2014, which also increased the expense to general and administrative expenses in 2014.

During the first nine months of 2015, we incurred general and administrative expenses of $1,974,458, a decrease of $929,861 from $2,904,319 for the first nine months of 2014. The decrease in expense for the first nine months 2015 is the result of the decrease in shares issued for consulting services in lieu of cash. In addition the market price of the companies common shares were much higher in 2014, which also increased the expense to general and administrative expenses in 2014.

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Marketing and selling

During the third quarter ended September 30, 2015, marketing and selling expenses of $119,594 increased by $96,068 from $23,526 for the third quarter of 2014. The increase is a result of the company preparation for the commencement of sales.

During the nine months ended September 30, 2015, marketing and selling expenses of $439,330 increased by $381,000 from $58,330 for the nine months ended September 30, 2014. The increase is a result of the company preparation for the commencement of sales. The company has also started negotiations in various parts of the world for the sale of distribution licenses for the sale of the company’s pharmaceuticals.

Interest expense

Interest expense of $29,449 for the second quarter ended September 30, 2015 an increase of $6,337 from $23,112 for the third quarter of 2014. The increase is attributed to the larger balance in loans from stockholders during the period.

Interest expense of $78,802 for the nine months ended September 30, 2015 an increase of $10,755 from $68,047 for the nine months ended September 30, 2014. The increase is attributed to the larger balance in loans from stockholders during the period.

Liquidity and Capital Resources

At September 30, 2015 we had a working capital deficit of $1,941,594, which is an increase of $400,073 from the December 31, 2014 deficit balance of $1,541,521. The increase in the deficit is largely a result of the loss for the nine months of $3,376,873 netted by common stock issued for services and common stock issued to convert liabilities of $1,434,923 and $1,316,516 respectively, as well as $280,624 of additional advances from the CEO. The reaming difference of $344,810 is made up of balance asset and liability fluctuations.

Expenses incurred during 2015 have been paid for by related parties including our current CEO and President as well as through the gross profit on sales in the second and third quarter. Because we have no cash reserves or revenue source, we expect to continue to rely on the stockholders and equity raises to pay expenses until such time as we can generate sufficient cash flows to pay our ongoing operational costs. There is no assurance that the company will continue to obtain equity raises before the company develops revenue sources with sufficient cash flow to pay expense.

During the nine months ended September 30, 2015 the stockholders contributed a net amount of $271,729, made up of $280,624 advanced in cash less $3,359 of expenses paid by the company on behalf of the related party and $5,536 of cash paid back to the related party. At September 30, 2015 and December 31, 2014, we had bank indebtedness and cash on hand of ($5,948) and $286,481, respectively. At September 30, 2015 we had notes payable - related party of $1,278,120, compared to $1,006,391 at December 31, 2014. The increase represents additional contributions from stockholders during the nine months ended September 30, 2015. Accrued interest – related party at September 30, 2015 was $261,647 compared to $182,845 at December 31, 2014, which increase reflects the added interest of $78,802 in the related party payable. Accounts payable and accrued liabilities increased by $38,260 from $299,099 at December 31, 2014, to $337,359 at September 30, 2015, capital lease payable increased by $60,271 due to the financing of lab equipment purchased in the third quarter of 2015.

In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation related to our business and operations.

At September 30, 2015, we had a stockholders' deficit of $1,796,290 compared to a stockholders' deficit of $1,398,275 at December 31, 2014. The increase in stockholders' deficit is primarily attributed to the operating loss in the nine month period ended September 30, 2015.

As of November 4, 2015, we had a bank balance of $37,645. We believe that our available cash combined with continued advances from related parties will be sufficient to carry on general corporate functions for the next three months, although we will need to limit cash outlays for research and product development until we can secure additional funds. We are presently investigating possible funding opportunities to arrange for additional funds, although we do not have any definitive agreement or arrangement for such funds. We expect that additional funding to proceed with development of the intellectual property acquired in 2015 will most likely be from the sale of securities or from stockholder loans. We may not be successful in our efforts to obtain equity financing to carry out our business plan and there is doubt regarding our ability to complete our planned development program. We estimate that cash requirements for the next twelve months will be approximately $5,000,000. In the past year, we have relied on advances from related parties and the gross profit from sales for financing our operations. We continue to explore potential funding opportunities, which may be in the form of debt or the sale of equity securities. In the event we are unsuccessful in arranging for outside funding, we will most likely continue to rely on related parties as well as the gross profit on sales to provide funding, although there are no firm commitments or agreements with any related party to provide funds in the future.

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Net Operating Loss

We have accumulated a net operating loss carryforward of approximately $2,875,099 as of December 31, 2014. This loss carry forward may be offset against future taxable income through the year 2033. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards that can be used. No tax benefit has been reported in the financial statements for the year ended December 31, 2014 or the nine month period ended September 30, 2015 because it has been fully offset by a valuation reserve. The use of future tax benefit is undeterminable because we presently have no operations.

Recent Accounting Pronouncements

The company has evaluated other recent accounting pronouncements and their adoption has not had nor is expected to have a material impact on the company's financial position or statements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Plan of Operation

Following the closing of a patent acquisition agreement (the "Acquisition Agreement") in 2012, we have become engaged in the development and ultimate formulation of other novel formulations of natural compounds and pharmaceutical products that have limitations in effective use for human consumption. We believe our self-emulsifying drug delivery technology can improve the efficacy of existing products and formulations based on natural or well-established compounds and known biologically active compounds. We intend to conduct our research and development through collaborative programs. We anticipate relying on arrangements with third party drug developers such as contract research organizations and clinical research sites for a significant portion of our product development efforts.

The Acquisition Agreement enabled us to acquire certain products, formulas, processes, proprietary technology and/or patents and patent applications related to pharmaceutical, nutraceutical, food supplements and consumer health products. We have not formulated any final products or receive approvals from any regulatory agencies or generated any revenues from product sales. We have not been profitable since our inception through the current date.

We expect to incur significant operating losses for the next several years and until we are able to formulate a commercially viable product. We also expect to continue to incur significant operating and capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we:

Continue to undertake formulation of novel products and subsequent preclinical and clinical trials for our product candidates;

Seek regulatory approvals for our product candidates;

Develop, formulate, manufacture and commercialize our products;

Implement additional internal systems and develop new infrastructure;

Acquire or in-license additional products or technologies, or expand the use of our technology;

Maintain, defend and expand the scope of our intellectual property; and

Hire qualified personnel.

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Future product revenue will depend on our ability to develops, receive regulatory approvals for, and successfully market, our product candidates. In the event that our development efforts result in regulatory approval and successful commercialization of our product candidates, we will generate revenue from direct sales of our products and/or, if we license our products to future collaborators, from the receipt of license fees and royalties from licensed products.

Management estimates that our research and development expenses for the next 12 months will be approximately $3.0 million, primarily for research and pilot studies. We also estimate that other expenses, including personnel, general and administrative and miscellaneous expenses could be as much as $2.0 million during the same time period. Because we currently have no revenues, most likely the only source of funding these expenses will be through the private sale of our securities, either equity or debt. We are currently exploring possible funding sources, but we have not entered into any arrangements or agreements for funding as of this time. If we are unable to raise the necessary funding, our research and development plans will be delayed indefinitely. There can be no assurance that we will be able to raise the funds necessary to carry out our business plan on terms favorable to the company, or at all.

Forward-Looking and Cautionary Statements

Statements contained in this report which are not historical facts, may be considered "forward-looking statements," which term is defined by the Private Securities Litigation Reform Act of 1995. Any "safe harbor under this Act does not apply to a "penny stock" issuer, which definition would include the company. Forward-looking statements are based on current expectations and the current economic environment. We caution readers that such forward-looking statements are not guarantees of future performance. Unknown risks and uncertainties as well as other uncontrollable or unknown factors could cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

This item is not required for a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our management, including our chief executive officer and chief financial officer, concluded that, as of September 30, 2015, our disclosure controls and procedures were not effective due to a lack of adequate segregation of duties and the absence of an audit committee.

Changes in Internal Control Over Financial Reporting. Management has evaluated whether any change in our internal control over financial reporting occurred during the quarter ended September 30, 2015. Based on its evaluation, management, including the chief executive officer and chief financial officer, has concluded that there has been no change in our internal control over financial reporting during the quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

Item 1A. Risk Factors

This item is not required for a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

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On August 21, 2015, we issued 870,000 shares of common stock to a consultant for services rendered at the price of $0.014 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On August 25, 2015, the Company issued 1,500,000 shares at closing price of $0.014 as a partial payment for acquisition of equipment. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On September 18, 2015, the Company awarded the issue 5,000,000 shares of common stock to a director and officer in recognition of the progress made in the natural product division. The shares were issued at the price of $0.01 per shares. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On September 18, 2015, the Company issued 17,000,000 shares of common stock to two officers and one employee as part of their compensation at the price of $0.01 per shares. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On September 18, 2015, we issued 55,466,665 shares to management and directors in satisfaction of accrued liabilities at the price of $0.01 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

On September 21, 2015, we issued 8,000,000 shares of common stock to consultants for services rendered at the price of $0.013 per share. The issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended by virtue of Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

Item 3. Defaults Upon Senior Securities

This Item is not applicable.

Item 4. Mine Safety Disclosures

This Item is not applicable.

Item 5. Other Information

This Item is not applicable.

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Item 6. Exhibits

	Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	Exhibit 101	Interactive Data File.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EASTGATE BIOTECH CORP.

Date: November 23, 2015	By: /S/ Anna Gluskin
	Anna Gluskin
	Chief Executive Officer
	(Principal Executive Officer)

Date: November 23, 2015	By: /S/ Brian Lukian
	Brian Lukian
	Chief Financial Officer
	(Principal Accounting Officer)

EASTGATE BIOTECH CORP.

(Formerly Eastgate Acquisitions Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)