UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended November 30, 2015

 

[  ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 000-52445

 

Petlife Pharmaceuticals, Inc.

(Name of registrant as specified in its charter)

 

Nevada		33-1133537
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
433 N. Camden Dr. Beverly Hills, CA		90210
(Address of principal executive offices)		(Zip Code)

 

(949) 858-5836

(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 preceding 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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. See the definitions 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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [  ] No [X]

 

The number of shares of the registrant’s common stock outstanding as of January 13, 2016 was 38,115,356 shares.

 

 

 

Petlife Pharmaceuticals, Inc.

INDEX

 

		Page Number
PART I	Financial Information
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets as of November 30, 2015 and August 31, 2015 (Unaudited)	3
	Consolidated Statements of Operations for the Three Months Ended November 30, 2015 and 2014 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Three Months Ended November 30, 2015 and 2014 (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15
Item 4.	Controls and Procedures	15
PART II	Other Information
Item 1	Legal Proceedings	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5	Other Information	16
Item 6.	Exhibits	17
SIGNATURES		18

 

 

PART I. Financial Information

 

Item 1. Financial Statements

 

PETLIFE PHARMACEUTICALS, INC.

Consolidated Balance Sheets

 (Unaudited)

 

		November 30, 2015				August 31, 2015
ASSETS
Current assets
Cash		$	-			$	-
Due from Parent			4,800				4,800
Total current assets			4,800				4,800
Website development			600				600
Total asssets		$	5,400			$	5,400
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses		$	264,593			$	235,427
Accounts payable and accrued expenses - related party			125,100				125,100
Note payable Lanham Trust			10,000				10,000
Total current liabilities			399,693				370,527
Total liabilities			399,693				370,527
Commitments
Stockholders’ equity (deficit)
Preferred stock, $0.001 par value, 50,000,000 authorized, no preferred shares issued and outstanding, respectively			-				-
Common stock, $0.001 par value, 750,000,000 authorized, 38,105,356 and 58,532,156 shares issued and outstanding, respectively			38,105				58,532
Additional paid-in capital			3,121,991				3,020,631
Accumulated deficit			(3,554,389	)			(3,444,290	)
Total stockholders’ equity (deficit)			(394,293	)			(365,127	)
Total liabilities and stockholders’ equity (deficit)		$	5,400			$	5,400

 

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

 

 

PETLIFE PHARMACEUTICALS, INC.

Consolidated Statement of Operations

(Unaudited)

 

		For the three				For the three
		months				months
		November 30, 2015				November 30, 2014
Revenue		$	-			$	-
Operating Expenses
Research and devlopment-related party			-				-
Manufacturing and production			-				97,858
General and administrative			110,099				1,358,453
			110,099				1,456,311
Operating loss			(110,099	)			(1,456,311	)
Net loss		$	(110,099	)		$	(1,456,311	)
Net loss per share - basic and diluted		$	(0.00	)		$	(0.03	)
Weighted average shares outstanding - basic and diluted			56,287,453				55,262,955

 

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

 

 

PETLIFE PHARMACEUTICALS, INC.

Consolidated Statements of Cash Flow

(Unaudited)

 

		For the				For the
		three months				three months
		ended				ended
		November 30, 2015				November 30, 2014
Net Cash from (used in) operating activities
Net loss		$	(110,099	)		$	(1,456,311	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation			80,933				1,229,838
Changes in current assets and liabilities:
Due from affiliate			-				5,782
Accounts payable and accrued expense			29,166				111,000
Accounts payable and accrued expense - related party			-				93,500
Net cash used in operating activities			-				(16,191	)
Net cash from (used in) investing activities
Capital expenditures			-				(600	)
Net cash used in investing activities			-				(600	)
Net cash provided by financing activities
Proceeds from shareholder advance			-				10,000
Net cash provided by financing activities			-				10,000
Increase (decrease) in cash			-				(6,791	)
Cash, beginning of period			-				6,852
Cash, end of period		$	-			$	61
Non-cash transaction
Common shares returned to treasury and cancelled		$	21,583			$	-

 

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

  

 

Petlife Pharmaceuticals, Inc.

Notes to the Consolidated Financial Statements

November 30, 2015

(Unaudited)

 

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Operations

 

PetLife Pharmaceuticals, Inc. (“Company”) is a registered U.S. Veterinary Pharmaceutical company whose mission is to bring its scientifically proven, potentiated bioactive medication and nutraceuticals — “Escozine for Pets™” — to the world of veterinary oncology. The Company specializes in the research, development, sales and support of advanced drugs and nutraceuticals for pet cancer and autoimmune related diseases such as arthritis.

 

A summary of the significant accounting policies applied in the presentation of the accompanying consolidated financial statements follows:

 

Basis and business presentation

 

The accompanying unaudited consolidated financial statements include the accounts of the Company, a Nevada corporation (“Company”) and its wholly-owned subsidiary, Petlife Corporation (“Petlife”), a Delaware corporation. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report for the year ended August 31, 2015 filed with the SEC on Form 10-K/A. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the most recent fiscal year ended August 31, 2015 as reported in Form 10-K/A have been omitted.

 

The Company was incorporated on April 5, 2002 under the laws of the State of Nevada as “Aztek Ventures Inc.” Effective November 13, 2007, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Aztek Ventures Inc.” to “Genesis Uranium Corp.” Effective April 21, 2008, we amended our Articles of Incorporation to change our name from “Genesis Uranium Corp.” to “Vault Technology Inc.” to reflect the change in our business focus beyond solely that of uranium exploration. Effective July 10, 2009, we filed a Certificate of Amendment to our Articles of Incorporation to change our name from “Vault Technology, Inc.” to “Modern Renewable Technologies, Inc.” (“Modern”). On May 27, 2011, Modern, merged with Eco Ventures Group, Inc., and the name of the Company was changed to Eco Ventures Group, Inc. On July 15, 2013, the Company entered into an Agreement and Plan of Merger with Clear TV Ventures, Inc. Under the terms of the merger, Clear TV became the surviving corporation. On June 26, 2014, Clear TV Ventures, Inc. entered into an Agreement and Plan of Merger with its subsidiary, PetLife Pharmaceuticals, Inc., a Nevada Corporation, with PetLife Pharmaceuticals, Inc. being the surviving entity. As part of that merger, the name of the Company was changed to PetLife Pharmaceuticals, Inc. and each 15 shares of our common stock were exchanged for one share in the surviving company. Effective August 11, 2014 we completed the closing of the Share Exchange Agreement and the acquisition of Petlife Corporation pursuant to which we acquired 100% of the equity of Petlife Corporation and it became our wholly-owned subsidiary. All references herein to the number of shares outstanding and per-share amounts have been retroactively restated to reflect the exchange ratio in the merger of Clear TV Ventures with its subsidiary PetLife Pharmaceuticals, Inc.

 

 

Petlife Pharmaceuticals, Inc.

Notes to the Consolidated Financial Statements

November 30, 2015

(Unaudited)

 

All references that refer to (the “Company” or “PetLife Pharmaceuticals, Inc.” or “Petlife” or “we” or “us” or “our”) are PetLife Pharmaceuticals, Inc., the Registrant and its wholly and or majority owned subsidiaries.

 

Merger and Corporate Restructure

 

On or about April 17, 2014, the Company entered into a Share Exchange Agreement (the “Share Exchange”) with Petlife Corporation, a Delaware corporation (“Petlife”) and the shareholders of Petlife Corporation (the “Shareholders”) for the exchange of all of the issued and outstanding shares of Petlife. Effective at the Closing on August 11, 2014, these shares of Petlife were exchanged for approximately 47,000,000 fully paid non-assessable shares of the Company reflecting approximately 80% of the issued and outstanding shares of the Company and acquisition of all assets and liabilities of the Company and was valued equated to the net assets of the Company as of the date of the acquisition of $100,000. No liabilities were assumed. In connection with the share exchange, Petlife Corporation became our wholly owned subsidiary.

 

Accordingly, the historical financial statements are those of Petlife, the accounting acquirer, immediately following the consummation of the reverse acquisition. The Company did not recognize goodwill or any intangible assets in connection with this transaction.

 

Estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers. We will adopt the standard in 2017. We will evaluate the impact, if any, that the standard will have on our financial statements.

 

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on the Consolidated Financial Statements.

 

 

Petlife Pharmaceuticals, Inc.

Notes to the Consolidated Financial Statements

November 30, 2015

(Unaudited)

 

NOTE 2 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements at November 30, 2015, the Company had an accumulated deficit of $3,554,389. As of November 30, 2015 and through the date hereof, the Company has very limited funds on which to operate.

 

The Company’s existence is currently dependent upon management’s ability to develop profitable operations and or upon obtaining additional financing to carry out its planned business. Management is devoting substantially all of its efforts to the commercialization of its planned products, as well as raising additional debt or equity financing in order to accelerate the development and commercialization of additional products. There can be no assurance that the Company’s commercialization or financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems.

 

There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event the Company is unable to continue as a going concern, it may elect or required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.

 

The accompanying consolidated statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 3 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

Common Stock

 

On November 21, 2015 the Company entered into a Reorganization and Stock Purchase Agreement with Alexian Scientific, Inc. Closing of the agreement is conditioned on the Company obtaining funding of a minimum of $10,000,000. At closing, the Company will issue 38,777,630 shares of common stock to designees of Alexian in consideration for 100% of the equity of Alexian, the Company will appoint designees of Alexian as its officers and directors, and all of the current officers and directors of the Company will resign. As part of the agreement with Alexian, shareholders of the Company cancelled certain shares of common stock of the Company such that subsequent to closing there will be a total of 80,786,730 shares of common stock outstanding.

 

Effective November 20, 2015 in connection with the proposed Alexian transaction, principals of the Company cancelled and returned to treasury a total of 21,583,000 shares of common stock held by them.

 

Also effective November 20, 2015, the Company issued a total of 626,000 shares of common stock to investors and issued 530,200 shares of common stock to officers and employees of the Company in lieu of salary valued at a total of $80,933.

 

 

Petlife Pharmaceuticals, Inc.

Notes to the Consolidated Financial Statements

November 30, 2015

(Unaudited)

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

On December 30, 2013, the Company entered into an agreement with Medolife Corporation (“Medolife) , an affiliated company, for the performance of certain ongoing services and maintenance related to a scorpion reservation , together with the providing of other services such as product operations, research and development to support the Company’s product marketing. During the year ended August 31, 2014 Medolife invoiced the Company for services and maintenance of $165,800. During year ended August 31, 2014, Medolife received proceeds from the sale of the Company’s common stock totaling $184,500. The Company was owed $4,800 from Medolife as of November 30, 2015.

 

On August 1, 2014, the Company entered into a patent license agreement with a shareholder for a polarized scorpion venom solution and a method for making polarized scorpion venom solution for veterinary use. The licensor has provided Medolife, an affiliated company by common shareholders, with an exclusive right to the polarized scorpion venom patent with the exception of the rights for veterinary use. The Company will manufacture, use, and sell polarized scorpion venom containing such patented improvements for veterinary use.

 

NOTE 5 – OFFICER AND DIRECTOR RESIGNATION

 

Pursuant to agreement, effective November 13, 2015 Bruce Niswander and Sebastian Serrell-Watts resigned as officers and directors of the Company.

 

NOTE 6 – SUBSEQUENT EVENTS

 

In September 2014, the Company issued 10,000 shares of its $.001 par value common stock for cash of $10,000. As of November 30, 2015, the common stock has not been issued and is included in accrued expenses. Shares were issued subsequent to period end.

 

On December 15, 2015 the Company and Alexian Scientific entered into an amendment to the Reorganization and Stock Purchase Agreement to extend to proposed closing date to on or before January 15, 2016. On January 13, 2016 the Company and Alexian further extended the closing date to on or before February 28, 2016.

 

 

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

 

The following discussion provides information that management believes is relevant to an assessment and understanding of the financial condition and results of operations of Petlife Pharmaceuticals, Inc., formerly Clear TV Ventures, Inc. (the “Company”).

 

This discussion addresses matters we consider important for an understanding of our financial condition and results of operations as of November 30, 2015 and 2014. It consists of the following subsections:

 

● “Introduction and Plan of Operation” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results for the for the three month period ended November 30, 2015 and 2014, as well as a summary of our expectations for fiscal 2016;

 

● “Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations, and critical obligations;

 

● “Results of Operations and Comparison”,” which sets forth an analysis of the operating results for the quarter ended November 30, 2015 and 2014.

 

● Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our consolidated financial statements and/or because they require difficult, subjective or complex judgments by our management;

 

● “Recent Accounting Pronouncements and Developments,” which summarizes recently published authoritative accounting guidance, how it might apply to us and how it might affect our future results.

 

This item should be read in conjunction with our consolidated financial statements and the notes thereto included in this quarterly report.

 

Introduction and Plan of Operation

 

The following discussion updates our plan of operation for the 2016 Fiscal Year. The discussion also summarizes the results of our operations for the three months ended November 30, 2015 and 2014.

 

Merger Agreements

 

On or about April 17, 2014, the Company entered into a Share Exchange Agreement (the “Share Exchange”) with Petlife Corporation, a Delaware corporation (“Petlife”) and the shareholders of Petlife Corporation (the “Shareholders”) for the exchange of all of the issued and outstanding shares of Petlife. Effective at the Closing on August 11, 2014, these shares of Petlife were exchanged for approximately 47,000,000 fully paid non-assessable shares of the Company reflecting approximately 80% of the issued and outstanding shares of the Company and acquisition of all assets and liabilities of Petlife Corporation and was valued equated to the net assets of Petlife Corporation as of the date of the acquisition. For accounting purposes, Petlife was the accounting acquirer and or the surviving entity. Accordingly, the historical financial statements are those of Petlife, the accounting acquirer, immediately following the consummation of the reverse merger.

 

On June 26, 2014, Clear TV Ventures, Inc. entered into an Agreement and Plan of Merger with its wholly-owned subsidiary, Petlife Pharmaceuticals, Inc., a Nevada Corporation. As part of that merger, the name of the Company was changed to Petlife Pharmaceuticals, Inc. and the Company exchanged one share for every 15 shares of Clear TV Ventures. Effective August 11, 2014 we completed the closing of the Share Exchange Agreement and the acquisition of Petlife Corporation.

 

 

Plan of Operations

 

For the three months ended November 30, 2015 and 2014, we experienced the negative effects of the financial markets upheaval, which made capital acquisition extremely difficult.

 

We will be developing neutraceuticals and FDA approved prescription drugs for veterinary use for retail sales and distribution throughout the world.

 

About Petlife Pharmaceuticals, Inc.

 

PetLife Pharmaceuticals, Inc. (PetLife) has developed and is launching a new generation of potentiated veterinary cancer medications and nutraceuticals, based on the same patented formula “Escozine” and production processes that have been scientifically proven as an effective treatment for cancer in humans for years. Escozine (for humans) is currently sold as either a nutraceutical or prescription drug in 40 countries including the United States.

 

Petlife’s primary goal is to bring its scientifically proven, potentiated bioactive medication and Nutraceuticals to the world of veterinary oncology, with the ultimate goal of extending the life of pets with cancer and improving their quality of life. In the process of achieving these objectives, Petlife will transition into a world renowned, professionally respected veterinary pharmaceutical company that will create new industry standards as well as being profitable and innovative.

 

Results of Operations

 

Three months ended November 30, 2015 compared to three months ended November 30, 2014

 

Net loss

 

We incurred a net loss of $110,099 for the three months ended November 30, 2015 as compared to the net loss we incurred for the three month period ended November 30, 2014 of $1,456,311.

 

Operating expenses

 

For the three month period ended November 30, 2015 we incurred $110,099 in operating expenses as compared to $1,456,311 in operating expenses we incurred for the prior period. Operating expenses for the three months ended November 30, 2015 decreased due to the decrease in stock-based compensation.

 

Loss from Operations

 

For the three month period ended November 30, 2015 we incurred a loss from operations of $110,099 as compared to the operating loss we incurred for the three month period ended November 30, 2014 of $1,456,311 decreased due to the decrease in stock-based compensation.

 

Liquidity and Capital Resources

 

The Company has received no revenue from business operations from for the three months ended November 30, 2015 and 2014. We have consequently relied on funds received in connection with our equity and debt offerings to finance our ongoing operations. We have experienced net losses since inception, and we expect we will continue to incur losses for the next year. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.

 

Our consolidated financial statements have been prepared assuming that we will continue as a going concern. Since our inception on December 12, 2012, we have not generated revenue and have incurred net loss. Accordingly, we have not generated cash flow from operations and have primarily relied upon loans from officers, promissory notes and advances from related parties, and equity financing to fund our operations. The report of our Independent Registered Public Accounting Firm include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern.

 

 

We do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for goods and services. Considering the foregoing, we are dependent on additional financing to continue our operations. Our significant capital requirements for the foreseeable future include development and operational costs, and our corporate overhead expenses.

 

We are actively seeking additional equity or debt financing. However, there can be no assurance that funds required during the next twelve months or thereafter will be available from external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on our existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities was $0 for the three month period ended November 30, 2015, as compared to net cash used of $16,191 in prior year’s operating activities.

 

Net Cash Used in Investing Activities

 

The Company had no cash used for investing activities for the three months ended November 30, 2015, and web site development costs of $600 for the three months ended November 30, 2014.

 

Net Cash Provided by Financing Activities

 

During the three months ended November 30, 2015 the Company had no cash provided by financing activities. During the three months ended November 30, 2014, the Company received a $10,000 advance from a shareholder.

 

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not established any sources of revenue to cover its operating expenses the three months ended November 30, 2015 and 2014. In addition, the Company has incurred deficit accumulated of $3,554,389 at November 30, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue existence is dependent upon commencing its planned operations, management’s ability to develop and achieve profitable operations and/or upon obtaining additional financing to carry out its planned business. The Company intends to fund its business development, acquisition endeavors and operations through equity and debt financing arrangements.

 

There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. In the event the Company is unable to continue as a going concern, it may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.

 

The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

Critical Accounting Policies and Estimates

 

Estimates

 

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

Revenue Recognition

 

The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments will be provided for in the same period the related sales will be recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arrangements (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect on implementing ASC 605-25 on the Company’s financial position and results of operations, since the Company has not started generating revenue.

 

Cash

 

The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.

 

Property and Equipment

 

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings.

 

Income Taxes

 

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences such as deferred officers’ compensation and stock based compensation accounting.

 

Net Loss per Common Share, basic and diluted

 

The Company has adopted Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”) specifying the computation, presentation and disclosure requirements of earnings per share information. Basic loss per share has been calculated based upon the weighted average number of common shares outstanding.

 

 

Stock based compensation

 

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

 

As of November 30, 2015, the Company did not have any issued or outstanding stock options.

 

Concentrations of Credit Risk

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

 

Research and Development

 

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred costs of $165,800 for research and development expenses from December 12, 2012 (date of inception) through November 30, 2015.

 

Reliance on Key Personnel and Consultants

 

The Company has eleven full-time employees, three of which are executive officers. Additionally, the Company has consultants performing various specialized services. The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.

 

Fair Value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying amount reported in the unaudited condensed consolidated balance sheet for accounts payable and accrued expenses, advances and notes payable approximates fair value because of the immediate or short-term maturity of these financial instruments.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers. We will adopt the standard in 2017. We will evaluate the impact, if any, that the standard will have on our financial statements.

 

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on the Consolidated Financial Statements.

 

 

Off-Balance sheet Arrangements

 

We do not maintain off-balance sheet arrangements nor do we participate in any non-exchange traded contracts requiring fair value accounting treatment.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of November 30, 2015, under the supervision and with the participation of our Chief Executive Officer (Principal Executive Officer), and Chief Financial Officer (Principal Financial Officer), management has evaluated the effectiveness of the design and operations of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of November 30, 2015, as a result of the material weakness in internal control over financial reporting discussed below.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”).

 

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of November 30, 2015. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of November 30, 2015. Our Chief Executive Officer and Chief Financial Officer concluded we have a material weakness due to lack of segregation of duties and a limited corporate governance structure.

 

Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. Therefore while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting and financial reporting duties. Management reported a material weakness resulting from the combination of the following significant deficiencies:

 

●	Lack of segregation of duties in certain accounting and financial reporting processes including the approval and execution of disbursements;
●	The Company’s corporate governance responsibilities are performed by the Board of Directors; we do not have independent Board of Directors, we do not have an audit committee or compensation committee. Because our Board of Directors only meets periodically throughout the year, several of our corporate governance functions are not performed concurrent (or timely) with the underlying transaction, evaluation, or recordation of the transaction.

 

While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in most exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.

 

 

In light of the above material weakness, we performed additional analyses and procedures in order to conclude that our unaudited condensed consolidated financial statements for the three month period ended November 30, 2014 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our unaudited condensed consolidated financial statements for the three months ended November 30, 2015 are fairly stated, in all material respects, in accordance with US GAAP.

 

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 materially affect, the Company’s internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors.

 

Not required by smaller reporting companies.

 

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

 

Effective November 20, 2015, the Company issued a total of 626,000 shares of common stock to accredited investors and issued 530,200 shares of common stock to officers and employees of the Company in lieu of salary valued at a total of $80,933.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

None.

 

Item 5. Other Information.

 

None.

 

 

Item 6. Exhibits

 

The following exhibits are filed as part of this quarterly report on Form 10-Q:

 

Exhibit Number		Description
31.1		Certification by the Chief Executive Officer of Competitive Technologies, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2		Certification by the Chief Financial Officer of Competitive Technologies, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1		Certification by the Chief Executive Officer of Competitive Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2		Certification by the Chief Financial Officer of Competitive Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

 

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.

 

Dated: January 14, 2016	Petlife Pharmaceuticals, INC.
	(the registrant)

 

	By:	/s/ Arthur Mikaelian
		Arthur Mikaelian
		Chief Executive Officer, Chief Financial Officer