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EX-31.1 - OFFICER'S CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT - CTT PHARMACEUTICAL HOLDINGS, INC.mdst_ex31z1.htm
EX-32.2 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 - CTT PHARMACEUTICAL HOLDINGS, INC.mdst_ex32z2.htm
EX-31.2 - OFFICER'S CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT - CTT PHARMACEUTICAL HOLDINGS, INC.mdst_ex31z2.htm
EX-32.1 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 - CTT PHARMACEUTICAL HOLDINGS, INC.mdst_ex32z1.htm

 



 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q


þ

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

 

 

For the quarterly period ended September 30, 2015

 

 

OR

 

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from __________  to __________


Commission file number: 000-30651


CTT PHARMACEUTICAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware

11-3763974

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)


429 Kent Street unit 112, Ottawa, Ontario, Canada

K2P 2B4

(Address of principal executive offices)

(Zip Code)


Registrant's telephone number, including area code: (613) 241-9959


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 filings requirements for the past 90 days. Yes þ 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). Yes þ 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 definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act:


Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

þ


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


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


At November 15, 2015 there were 21,349,377 shares of the registrant’s common stock outstanding (the only class of voting common stock).


 

 





 



TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

1

 

 

Condensed Consolidated Interim Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014

2

 

 

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2015 and 2014 (Unaudited)

3

 

 

Condensed Consolidated Interim Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 (Unaudited)

4

 

 

Statement of Stockholders Equity for the period ended September 30, 2015

5

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

 

 

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

14

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

15

 

 

ITEM 4.

CONTROLS AND PROCEDURES

16

 

 

PART II. OTHER INFORMATION

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

17

 

 

ITEM 1B

UNRESOLVED STAFF COMMENTS

17

 

 

ITEM 1A.

RISK FACTORS

17

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

17

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

17

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

17

 

 

ITEM 5.

OTHER INFORMATION

17

 

 

ITEM 6.

EXHIBITS

18

 

 

SIGNATURES

19









 


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Generally, the words “believes”, “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or comparable terminology are intended to identify forward-looking statements which include, but are not limited to, statements concerning the our expectations regarding our working capital requirements, financing requirements, business prospects, and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider all of the material risks in connection with any forward-looking statements that may be made herein.


Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.









 


PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


The consolidated financial statements and the notes thereto for the three month period ended September 30, 2015 (the “Financial Statements”), attached hereto and incorporated by this reference. The Financial Statements have been adjusted with all adjustments which, in the opinion of management, are necessary in order to make the Financial Statements not misleading. The Financial Statements have been prepared by CTT Pharmaceutical Holdings, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. The Financial Statements include all the adjustments which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.


The consolidated financial statements include the Company’s accounts and those of the Company’s wholly-owned subsidiary, CTT Pharmaceuticals, Inc. All significant intercompany accounts and transactions have been eliminated.









1



 


CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Condensed Consolidated Interim Balance Sheets

(Expressed in United States Dollars, unless otherwise stated)


 

 

As at

 

 

As at

 

 

 

September 30,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

 

 

(note 1)

 

 

(note 1)

 

 

 

(unaudited)

 

 

 

 

 

Assets

  

                       

  

  

                       

  

Current

 

 

 

 

 

 

 

 

Cash

 

 

32,121

 

 

 

81,179

 

Prepaid expenses (note 3)

 

 

884,487

 

 

 

963,125

 

Receivables

 

 

5,430

 

 

 

5,430

 

Total current assets

 

 

922,038

 

 

 

1,049,734

 

 

 

 

 

 

 

 

 

 

Prepaid expenses (note 3)

 

 

 

 

 

612,636

 

Total assets

 

 

922,038

 

 

 

1,662,370

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

96,342

 

 

 

22,250

 

Due to related parties (note 6)

 

 

87,618

 

 

 

147,240

 

Total liabilities

 

 

183,960

 

 

 

169,490

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock 300,000,000 shares authorized, $0.0001 par value; 21,319,302 shares issued and outstanding (2014 – 19,506,802)

 

 

2,132

 

 

 

1,951

 

Additional paid-in capital

 

 

1,951,798

 

 

 

145,729

 

Common shares to be issued (note 3)

 

 

40,000

 

 

 

1,806,250

 

Contributed surplus

 

 

649,318

 

 

 

407,381

 

Accumulated other comprehensive income (loss)

 

 

3,832

 

 

 

(1,069

)

Deficit

 

 

(1,909,002

)

 

 

(867,362

)

Total stockholders' equity

 

 

738,078

 

 

 

1,492,880

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

 

922,038

 

 

 

1,662,370

 


See accompanying notes to unaudited interim condensed consolidated financial statements


On October 16, 2015, the Company effectuated a 1 for 10 reverse stock split. Shares have been retroactively restated.



Approved by Board

 

 

 

 

 

 

(signed) Dean Hanisch

 

 

 

 

 

 

 

 

 

Director

 

 

 

 

 

 

 

 

 

 








2



 


CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

(Expressed in United States Dollars, unless otherwise stated)


 

 

3 months ended

September 30

 

 

9 months ended

September 30

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

(note 1)

 

 

(note 1)

 

 

(note 1)

 

 

(note 1)

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting fees

 

 

174,088

 

 

 

 

 

 

537,302

 

 

 

 

Investor relations

 

 

123,822

 

 

 

 

 

 

369,242

 

 

 

 

Marketing and promotion

 

 

320

 

 

 

 

 

 

716

 

 

 

 

Professional fees

 

 

28,766

 

 

 

30,250

 

 

 

80,098

 

 

 

30,575

 

General and administration

 

 

14,934

 

 

 

12,946

 

 

 

54,282

 

 

 

13,068

 

 

 

 

341,930

 

 

 

43,196

 

 

 

1,041,640

 

 

 

43,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss)

 

 

(341,930

)

 

 

(43,196

)

 

 

(1,041,640

)

 

 

(43,643

)

Other Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

2,534

 

 

 

(67

)

 

 

4,901

 

 

 

(201

)

Comprehensive income (loss)

 

 

(339,396

)

 

 

(43,263

)

 

 

(1,036,739

)

 

 

(43,844

)

Weighted average number of common shares outstanding – basic and diluted (note 4)

 

 

21,319,302

 

 

 

15,768,949

 

 

 

21,319,302

 

 

 

15,202,911

 

Net (loss) per share – basic and diluted

 

 

(0.03

)

 

 

(0.01

)

 

 

(0.03

)

 

 

(0.01

)


See accompanying notes to unaudited condensed interim financial statements


On October 16, 2015, the Company effectuated a 1 for 10 reverse stock split. Shares have been retroactively restated









3



 


CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in United States Dollars, unless otherwise stated)


 

 

9 months ended

September 30

 

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

 

 

(note 1)

 

 

(note 1)

 

 

 

(unaudited)

 

 

(unaudited)

 

Cash provided by (used in) Operating activities

 

 

 

 

 

 

 

 

Net (loss) attributable to the company

 

 

(1,041,640

)

 

 

(43,643

)

Stock based compensation

 

 

139,224

 

 

 

 

Shares issued for services

 

 

731,274

 

 

 

 

Imputed interest on amounts due to related party

 

 

12,713

 

 

 

12,680

 

Changes in non-cash operating working capital:

 

 

 

 

 

 

 

 

Prepaid expenses and deposits

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

74,092

 

 

 

5,550

 

 

 

 

(84,337

)

 

 

(25,413

)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from (payment to) related party

 

 

30,378

 

 

 

 

 

 

 

30,378

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Cash received pursuant to reverse acquisition

 

 

 

 

 

151,892

 

 

 

 

 

 

 

151,892

 

 

 

 

 

 

 

 

 

 

Foreign exchange rate effect on cash

 

 

4,901

 

 

 

(1,161

)

Net increase in cash

 

 

(49,058

)

 

 

125,318

 

Cash, beginning of period

 

 

81,179

 

 

 

 

Cash, end of period

 

 

32,121

 

 

 

125,318

 

Supplementary information

 

 

 

 

 

 

 

 

Interest paid

 

 

 

 

 

 

Income taxes paid

 

 

 

 

 

 



See accompanying notes to unaudited interim condensed consolidated financial statements











4



 


CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Statement of Stockholders’ Equity

For the Period Ended September 30, 2015

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Common

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

 

 

Paid-in

 

Contributed

 

 

shares to

 

 

Accumulated

 

 

Comprehensive

 

Stockholders'

 

 

Shares

 

 

Amount

 

Capital

 

Surplus

 

 

be issued

 

 

Deficit

 

 

Income (loss)

 

Deficit

Balance at December 31, 2012

 

 

14,918,329

 

 

 

1,492

 

 

 

82,708

 

 

 

77,665

 

 

 

 

 

 

(176,289

)

 

 

(5,576

)

 

 

(20,000

)

 

  

 

 

  

  

 

 

  

  

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Contribution of capital - interest

 

 

 

 

 

 

 

 

 

 

 

3,828

 

 

 

 

 

 

 

 

 

 

 

 

3,828

 

Contribution of capital – loan forgiveness (Note 5)

 

 

 

 

 

 

 

 

 

 

 

4,352

 

 

 

 

 

 

 

 

 

 

 

 

4,352

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,409

 

 

 

1,409

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,911

)

 

 

 

 

 

(18,911

)

Balance at December 31, 2013

 

 

14,918,329

 

 

 

1,492

 

 

 

82,708

 

 

 

85,845

 

 

 

 

 

 

(195,200

)

 

 

(4,167

)

 

 

(29,322

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued pursuant to Exchange Agreement (note 2)

 

 

4,588,474

 

 

 

459

 

 

 

63,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,480

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

308,439

 

 

 

 

 

 

 

 

 

 

 

 

 

308,439

 

Common shares to be issued (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,806,250

 

 

 

 

 

 

 

 

 

1,806,250

 

Contribution of capital – interest

 

 

 

 

 

 

 

 

 

 

 

7,958

 

 

 

 

 

 

 

 

 

 

 

 

7,958

 

Contribution of capital – loan forgiveness (Note 5)

 

 

 

 

 

 

 

 

 

 

 

5,139

 

 

 

 

 

 

 

 

 

 

 

 

5,139

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,098

 

 

 

3,098

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(672,162

)

 

 

 

 

 

(672,162

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2014

 

 

19,506,802

 

 

 

1,951

 

 

 

145,729

 

 

 

407,381

 

 

 

1,806,250

 

 

 

(867,362

)

 

 

(1,069

)

 

 

1,492,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

139,224

 

 

 

 

 

 

 

 

 

 

 

 

139,224

 

Common shares to be issued (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,000

 

 

 

 

 

 

 

 

 

40,000

 

Shares issued for services

 

 

1,812,500

 

 

 

181

 

 

 

1,806,069

 

 

 

 

 

 

(1,806,250

)

 

 

 

 

 

 

 

 

 

Contribution of capital – interest

 

 

 

 

 

 

 

 

 

 

 

12,713

 

 

 

 

 

 

 

 

 

 

 

 

12,713

 

Contribution of capital – loan

 

 

 

 

 

 

 

 

 

 

 

90,000

 

 

 

 

 

 

 

 

 

 

 

 

90,000

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,901

 

 

 

4,901

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,041,640

)

 

 

 

 

 

(1,041,640

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2015

 

 

21,319,302

 

 

 

2,132

 

 

 

1,951,798

 

 

 

649,318

 

 

 

40,000

 

 

 

(1,909,002

)

 

 

3,832

 

 

 

738,078

 


See accompanying notes to the condensed consolidated interim financial statements


On October 16, 2015, the Company effectuated a 1 for 10 reverse stock split. Shares have been retroactively restated.





5





CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015


NOTE 1 - BASIS OF PRESENTATION


The unaudited condensed consolidated interim financial statements of CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”), (the “Company”, or “Mindesta”), for the period ended September 30, 2015 and the notes thereto (the “Financial Statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America and have been presented in US dollars. The Financial Statements include the Company’s wholly owned subsidiary CTT Pharmaceuticals Inc. (“CTT Pharma”) (Note 2b). All significant intercompany accounts and transactions are eliminated in consolidation. The unaudited interim consolidated financial statements of the Company for the nine month period ended September 30, 2015 and the notes thereto have been prepared in accordance with generally accepted accounting principles for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of only normal accruals) considered necessary for a fair presentation have been included.


The Company specializes in the development of oral drug delivery systems for pain management and treatment. These condensed consolidated interim financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated cash flow from operations and is unlikely to generate cash flows from operations in the immediate or foreseeable future. For the period ended September 30, 2015, the Company has incurred a net loss of $1,041,640 (2014 - $43,643), negative cash flows from operations of $84,337 (2014 - $25,413) and has had no sources of revenue. These factors raise substantial doubt regarding the ability of the Company to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital to pay expenses and carry out any further product development, market program, market acceptance of its products and achieving profitability. The Company will require significant financing to continue its operations and fund any further activities. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


The Company's fiscal period-end is December 31.


NOTE 2 – ORGANIZATION AND ACCOUNTING POLICIES


(a)

Organization


Mindesta, Inc. was incorporated on November 6, 1996, as Winchester Mining Corporation in the State of Delaware. Effective July 26, 2011, the Company changed its name to “Mindesta Inc.” Effective July 20, 2015 the Company changed its name to “CTT Pharmaceutical Holdings, Inc.”. The Company trades on the OTC under the symbol MDST.


(b)

Reverse Acquisition and Recapitalization


On September 9, 2014, Mindesta entered into a Share Exchange Agreement (the “Exchange Agreement”) with CTT Pharmaceuticals, Inc., f/k/a Fenwafe Inc., an entity organized under the Canadian Corporations Business Act in March 2007 and the shareholders of CTT Pharma whereby Mindesta acquired all of the issued and outstanding shares of common stock of CTT Pharma in consideration for the issuance of 14,918,329 shares of Mindesta common stock.


The 14,073,895 restricted shares of Mindesta common stock issued to former CTT Pharma stockholders and the 844,434 shares of Mindesta restricted shares issued at closing represent approximately 80% of the then issued and outstanding common stock of Mindesta.


As a result of the transactions effected by the Exchange Agreement, at closing CTT Pharma became a wholly owned subsidiary of Mindesta and Mindesta has abandoned all of its previous business operations with the business of CTT Pharma now being Mindesta’s sole business. CTT Pharma is a development stage company with limited operations to date focused on developing an oral delivery system of medication contained on a disposable film.



6



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 2 – ORGANIZATION AND ACCOUNTING POLICIES (continued)


The Exchange Agreement was accounted for as a reverse acquisition and recapitalization of the Company and as a result, the consolidated financial statements of the Company (the legal acquirer) are, in substance, those of CTT Pharma (the accounting acquirer), with the assets and liabilities, and expenses of the Company being included effective from the date of the Exchange Agreement. As the Exchange Agreement was accounted for as a reverse acquisition and recapitalization, there was no gain or loss recognized on the transaction. The transaction is in substance a capital transaction, rather than a business combination, thus no goodwill or other intangible assets have been recorded. The significant components of the transaction are as follows:


Assets acquired

 

$

1,867

 

Liabilities assumed

 

 

(31,767

)

Net

 

$

(29,900

)


The historical financial statements for periods prior to the Exchange Agreement are those of CTT Pharma, except that the equity section and earnings per share have been retroactively restated to reflect the Exchange Agreement. As a result of the Exchange Agreement, the Company has ceased mineral exploration and focuses on oral drug delivery systems (note 1).


(c)

Significant Accounting Policies


i)  Cash and Cash Equivalents


The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash equivalents include balances with banks and operating line of credit.


ii)  Revenue Recognition


Revenue is recognized when persuasive evidence of an arrangement exists, title passes to the customer, typically upon delivery, and when collection of the fixed or determinable selling price is reasonably assured.


iii)  Functional and Presentation Currency


The functional currency of CTT Pharma is the Canadian Dollar and the functional currency of Mindesta is the United States Dollar. The reporting currency is the United States Dollar. The financial statements of the CTT Pharma are translated to United States dollars in accordance with ASC 830 using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.


iv)  Comprehensive Income


Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to stockholders’ equity. Comprehensive income relates to the effects of translation from CTT Pharma’s functional currency of the Canadian Dollar to the presentation currency of the United States Dollar.


v)  Share Capital


Proceeds from share issuance net of share issuance costs are recorded at the amount paid. Share capital issued for non-monetary consideration is recorded at the fair market value of the shares on the date the shares are issued.




7



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 2 – ORGANIZATION AND ACCOUNTING POLICIES (continued)


vi)  Earnings Per Share


Basic earnings per share is computed using the weighted average number of common shares outstanding during the period, and diluted earnings per share is computed using the weighted average number of common shares outstanding during the period adjusted for all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalents would be antidilutive. There were no potentially dilutive common stock equivalents outstanding at September 30, 2015 or 2014.


vii)  Financial Instruments


The fair market value of the Company’s financial instruments comprising cash, accounts payable and accrued liabilities and due to shareholder were estimated to approximate their carrying values due to immediate or short-term maturity of these financial instruments. The Company maintains cash balances at financial institutions which do not exceed federally insured amounts. The Company has not experienced any material losses in such accounts.


The Company is not exposed to any foreign exchange or interest rate risk.


viii)  Fair Value of Financial Instruments


We measure and disclose certain financial assets and liabilities at fair value. ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:


Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.


We utilize the active market approach to measure fair value for our financial assets and liabilities. We report separately each class of assets and liabilities measured at fair value on a recurring basis and include assets and liabilities that are disclosed but not recorded at fair value in the fair value hierarchy.


The fair values of cash, accounts payable and accrued liabilities, and due to shareholder for all periods presented approximate their respective carrying amounts due to the short term nature of these financial instruments.


ix)  Income Taxes


Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance so that the assets are recognized only to the extent that when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized.




8



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 2 – ORGANIZATION AND ACCOUNTING POLICIES (continued)


ix)  Income Taxes (continued)


Per FASB ASC 740 “Income taxes” under the liability method, it is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At September 30, 2015, the Company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Company’s tax positions are recorded as Interest Expense.


x)  Research Costs


Research costs are expensed in the period incurred. The Company expenses development costs in the period incurred, except when it is determined that the costs meet United States GAAP criteria for deferral and amortization. Deferred development costs, if any, will be amortized on straight-line basis over the expected useful life of the underlying product.


xi)  Use of Estimates


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


Significant estimates made by management in the accompanying financial statements include the valuation of deferred tax assets, and estimation of market rates of interest imputed on non-interest bearing shareholder loans.


(d)

Recently Adopted and Future Accounting Pronouncements


i)  ASU 2014-05


In March 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-05, “Foreign Currency Matters (Topic 830); Parents Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.” This guidance applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of substance real estate or conveyance of oil and gas, mineral rights) within a foreign entity. ASU No. 2014-05 is effective prospectively for fiscal periods (and interim reporting periods with those periods) beginning after December 15, 2014. The adoption of ASU 2014-05 did not have a material impact on our financial position or results of operations.

 

ii)  ASU 2014-11


In July 2014, FASB issued ASU 2014-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or Tax Credit Carryforward Exits.” The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. ASU No. 2014-11 is effective for public entities for fiscal periods beginning after December 15, 2014, and interim periods within those periods. Early adoption is permitted. The amendments should be applied to all unrecognized tax benefits that exist as of the effective date. Entities may choose to apply the amendments retrospectively to each prior reporting period presented. The adoption of ASU 2014-05 did not have a material impact on our financial position or results of operations.



9



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 2 – ORGANIZATION AND ACCOUNTING POLICIES (continued)


iii)  ASU 2015-08


In April 2015, FASB issued ASU 2015-08, “Discontinued Operations”. ASC guidance was issued related to discontinued operations which changed the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. The updated guidance requires an entity to only classify discontinued operations due to a major strategic shift or a major effect on an entity’s operations in the financial statements. The updated guidance will also require additional disclosures relating to discontinued operations. The update is effective prospectively for the Company’s fiscal period beginning January 1, 2015. Early application is permitted. Adoption of ASU 2015-08 did not have an impact on our financial position or results of operations.


iv)  ASU 2015-12


In September 2015, FASB issued ASU 2015-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. ASC guidance was issued to update the guidance on performance stock awards. The guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period is treated as a performance condition. This standard is effective for the Company’s fiscal period beginning January 1, 2016. Early application is permitted. The Company does not expect the updated guidance to have a material impact on the consolidated financial position, results of operations or cash flows.


iv)  ASU 2015-15


In August 2015, FASB issued ASU 2015-15, “Presentation of Financial Statements – Going Concern”. ASC guidance was issued that explicitly requires management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. This standard is effective for the Company’s fiscal period ending December 31, 2017, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the updated guidance to have a material impact on the consolidated financial position, results of operations or cash flows.


NOTE 3 – PREPAID EXPENSES


During the year ended December 31, 2014 the Company entered into various consulting agreements for services to be rendered over 1 to 2 periods. In consideration for the consultants’ services the Company issued 1,812,500 common shares valued at $1,806,250 based on the closing stock price of the Company on the date of the agreements, and recorded this as prepaid expense. As at September 30, 2015, $691,274 had been expensed.


As at September 30, 2015 the Company was obligated to issue a further 100,000 common shares pursuant to a consulting agreement for services to be rendered over a period of one year. The Company has recorded this as a prepaid expense of $40,000 as at the date of the agreement calculated with reference to the number of common shares to be issued multiplied by the quoted stock price at September 30, 2015. Refer to Note 4D.




10



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 4 – STOCKHOLDER’S EQUITY


A.

COMMON STOCK


Effective as of January 1, 2015 each share of common stock of the Corporation issues and outstanding will be subject to a 1:10 reverse stock split, with all fractional shares being rounded up to the nearest whole share. All stockholders’ data has been retro-actively adjusted to reflect this stock split in both current period and comparative figures. The number of common shares outstanding at September 30, 2015 and December 31, 2014 were as follows:


 

 

Number

 

 

Par Value

 

 

Additional

Paid-in

Capital

 

 

 

 

 

 

$

 

 

$

 

Outstanding at December 31, 2014

 

 

19,506,802

 

 

 

1,951

 

 

 

145,729

 

Shares issued for services (note 3)

 

 

1,812,500

 

 

 

181

 

 

 

1,806,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at September 30, 2015

 

 

21,319,302

 

 

 

2,132

 

 

 

1,951,798

 


On October 1, 2014 the board of directors approved a resolution to increase the authorized capital of the Company from 200,000,000 common shares to 300,000,000 common shares.


B.

STOCK OPTIONS


On October 17, 2014, the Company granted stock options to purchase 1,350,000 common shares at a price of $0.15 per share until December 31, 2017. Half of the options vested immediately with the remaining options vesting over a one period or two period term. The fair value of the option grant was estimated using the Black-Scholes option-pricing model with the following assumptions: expected volatility of 390% - 396%; risk-free interest rate of 1.10% - 1.44%; and an expected term of 3.21 periods.


There were 1,415,000 options outstanding and 965,000 exercisable at September 30, 2015 (2014 – 1,415,000 outstanding and 740,000 exercisable).


The weighted average remaining contractual term of options outstanding as at September 30, 2015 was 2.21 years (December 31, 2014 – 2.92 years).


The Company recognized $139,224 of stock compensation expense for the period ending September 30, 2015 (Nine Months Ended September 30, 2014 - $nil).


C. EARNINGS PER SHARE


The basic and fully-diluted weighted average number of common shares outstanding was as follows:


For the nine months ended:

 

 

 

September 30, 2015

 

 

21,319,302

 

September 30, 2014

 

 

15,202,911

 


For the periods ended September 30, 2015 and 2014, the inclusion of common stock equivalents in the calculation of the weighted average number of shares is anti-dilutive.




11



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 4 – STOCKHOLDER’S EQUITY (continued)


D.

COMMON SHARES TO BE ISSUED


As at September 30, 2015 the Company was obligated to issue a further 100,000 common shares pursuant to a consulting agreement for services to be rendered over a period of one year. The Company has recorded this as a prepaid expense of $40,000 as at the date of the agreement calculated with reference to the number of common shares to be issued multiplied by the quoted stock price at September 30, 2015.


The Company has not yet issued the common shares and as such has reflected this commitment to issue fully vested non-forfeitable common shares as common shares to be issued.


NOTE 5 – RELATED PARTY TRANSACTIONS


 

 

As at

September 30,

2015

 

 

As at

December 31,

2014

 

 

 

$

 

 

$

 

Due to shareholders

 

 

87,618

 

 

 

87,240

 

Due to related party

 

 

 

 

 

60,000

 

 

 

 

87,618

 

 

 

147,240

 


The Company has recorded obligations to its shareholders that are non-interest bearing or bear interest rates below equivalent market rates. During the nine months ended September 30, 2015, the Company has recorded additional interest expense of $12,713 (nine months ended September 30, 2014 - $12,680) to reflect the benefit received from the shareholder for these non-interest bearing or low interest loans, using an estimated market rate of interest of 20%.


Included in due to related parties is a balance of $Nil related to management fees payable to the Company’s President (December 31, 2014 - $60,000). During the nine months ended September 30, 2015, the President forgave the balance of management fees payable to him of $90,000. This forgiveness of debt was recorded as a contribution to capital.


NOTE 6 - COMMITMENTS AND CONTINGENCIES


The Company has been named in a lawsuit filed by Windale Properties in the amount of CDN$19,781. The claim is the result of termination of leased premises in Oakville, Ontario prior to expiry of the lease. In 2009 a judgment of CDN$24,908 with annual interest of 3% was issued against the Company. No amount has been accrued as no action has been undertaken since 2009 to enforce the judgment.




12



CTT Pharmaceutical Holdings, Inc. (Formerly, “Mindesta Inc.”)

Notes to Condensed Consolidated Interim Financial Statements

(unaudited)

September 30, 2015



NOTE 7 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS


The Company determined that there had been an error in its accounting for common shares to be issued for services contained in its consolidated financial statements for the year ended December 31, 2014 filed with the Securities Exchange Commission on April 10, 2015. The Company determined that the common shares to be issued for services should have been presented in stockholders’ equity instead as a liability, as the contracts granted a fully vested, non-forfeitable right to common shares as at the date of the contracts. A restatement adjustment was made to correct the error by increasing Common shares to be issued by $1,806,250, decreasing Liability to issue common shares by $906,250, and decreasing Gain on contracts settled through shares by $900,000.


As noted above there was a stock split announced which requires a retro-active adjustment. This has also been reflected in the restated consolidated financial statements for both current period as well as the comparative figures.


The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet as at June 30, 2015.


 

 

Previously

Reported

 

 

Increase

(Decrease)

 

 

Restated

 

 

 

$

 

 

$

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Liability to issue common shares

 

 

40,000

 

 

 

(40,000

)

 

 

 

Total liabilities

 

 

196,373

 

 

 

(40,000

)

 

 

156,373

 

Stockholders’ equity (deficiency)

 

 

 

 

 

 

 

 

 

 

 

 

Par Value

 

 

21,320

 

 

 

(19,188

)

 

 

2,132

 

Additional paid in capital

 

 

1,032,610

 

 

 

919,188

 

 

 

1,951,798

 

Common shares to be issued

 

 

 

 

 

40,000

 

 

 

40,000

 

Deficit

 

 

(667,071

)

 

 

(900,000

)

 

 

(1,567,071

)

Total stockholders’ equity (deficiency)

 

 

986,887

 

 

 

40,000

 

 

 

1,026,887

 


The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Stockholders’ Equity as at June 30, 2015.


 

 

Previously

Reported

 

 

Increase

(Decrease)

 

 

Restated

 

 

 

$

 

 

$

 

 

$

 

Common shares to be issued

 

 

 

 

 

40,000

 

 

 

40,000

 

Par Value

 

 

21,320

 

 

 

(19,188

)

 

 

2,132

 

Additional paid in capital

 

 

1,032,610

 

 

 

919,188

 

 

 

1,951,798

 

Accumulated deficit

 

 

(667,071

)

 

 

(900,000

)

 

 

(1,567,071

)

Total stockholders’ equity (deficit)

 

 

986,887

 

 

 

40,000

 

 

 

1,026,887

 





13



 


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview


Our wholly owned subsidiary CTT Pharmaceutical Holdings (“CTT”) specializes in drug delivery systems technology within the pharmaceutical industry. CTT Pharma’s focus is fast dissolving drug delivery systems. The company’s revolutionary technology platform includes the development of advanced oral delivery thin wafers infused with both natural and/or synthetic cannabis extracts (THC, annabinoids, Terpenes) to deliver treatment as an alternate to smoking and ingestion.


The wafer is an orally administrable paper-thin polymer films used as a carrier for pharmaceutical agents. The wafer rapidly dissolves to release the pharmaceutical agent as soon as it comes in contact with saliva, thus obviating the need for water during administration. This attribute makes the wafer highly attractive for pediatric and geriatric patients due to the difficulty in swallowing conventional tablets and capsules.


It is anticipated that CTT Pharma will develop a cannabis based wafer formulated for pain relief and the side effects of cancer treatment. While management has broad discretion as to the Wafer’s formulation, we believe that delivery of cannabis extract represents a unique opportunity in a niche market. The Wafer is a safer, faster delivery system which eliminates the unpleasant effect of rolling and smoking marijuana cigarettes. However, regulatory compliance and testing for a new product delivery system as well as issues surrounding the use of cannabis creates a significant financial burden.


OUR PLAN OF OPERATIONS


We will need a significant infusion of capital, whether in the form of debt or equity financing to implement our business plan. We have no commitment for additional funding. We have budgeted $600,000 in operating costs for the next year and $1,880,000 for the second year. Without this capital infusion, it is highly unlikely that we will be able to fully implement our business plan.


RESULTS OF OPERATIONS


For the three and nine months ended September 30, 2015 and 2014


We did not generate any revenues during these periods.


For the three months and nine months ended September 30, 2015, we incurred a Net Loss of $(290,864) and $(990,572). This compares with a Net Loss of $(43,196) and $(11,424) for the comparable periods in 2014. The primary reason for the significant increase in our operating losses from 2014 to $2015 is directly attributable to expenses incurred for consulting fees, investor relations and marketing fees in 2015 while no such expenses were incurred in 2014. Consulting fees for the three and nine months ended September 30, 2015 totaled $127,680 and $490,894 while investor relation expenses totaled $123,822 and $245,958 respectively. Marketing costs for the nine months ended September 30, 2015 totaled $123,284. There were no marketing expenses for the three months ended September 30, 2015. The only other expenses that we incurred for the nine months ended September 30, 2015 and 2014 were professional fees totaling $80,098 and $30,575, and general and administrative expenses totaling $50,338 and $2,960 respectively.


Foreign currency translations for all periods covered by this report were nominal.


Our Net Loss per share for the three and nine months ended September 30, 2015 was $(0.00) as compared to $(0.01) in 2014


Except for our officers and directors, as of September 30, 2015 we had no full time employees. We do have two part time employees. We anticipate adding additional employees, when adequate funds are available, and will continue using independent contractors, consultants, attorneys and accountants as necessary, to complement services rendered by our employees.


LIQUIDITY AND CAPITAL RESOURCES


At September 30, 2015 and December 31, 2014.


Current assets at September 30, 2015 were $922,038 as compared to $1,049,734 at December 31, 2014, a decline of approximately 12%. The primary reason for this decline is attributable to a decline in cash from $81,179 to $32,121 and a decline in our prepaid expenses from $963,125 to $884,487. 662,370 at December 31, 2014.




14



 


Total assets at September 30, 2015 were $922,038 as compared to $1,662,370, a decline of approximately 45%.


At September 30, 2015 our current liabilities totaled $183,954 as compared to $169,490 at December 31, 2014, representing an increase of approximately 8.5%. Accounts payable at September 30, 2015 totaled $96,336 and related party obligations totaled $87,618 as compared to $22,250 and $147,240 at December 31, 2014.


We have a working capital surplus at September 30, 2015 of $738,084 as compared to a working capital surplus of $880,244 at December 31, 2014.


Going Concern Consideration


The Company specializes in the development of oral drug delivery systems for pain management and treatment. At September 30, 2015 the Company has a retained deficit of $(1,918,408) and total stockholders’ equity of $730,084. This compares with a retained deficit of $(867,362) and total Stockholders’ equity of $1,492,880 at December 31, 2014. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital to pay expenses and carry out any further product development, market program, market acceptance of its products and achieving profitability. The Company will require significant financing to continue its operations and fund any further activities.


Our continuation as a going concern is dependent upon, amongst other things, continued financial support from our shareholders, attaining a satisfactory revenue level, attainment of profitable operations and the generation of cash from operations and the ability to secure new financing arrangements and new capital to carry out our business plan. These matters are dependent on a number of items outside of our control and there exists material uncertainties that may cast significant doubt about our ability to continue as a going concern. There are no assurances that we will achieve profitability or be capable of sustaining profitable operations. Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of the carrying amounts of assets or the amount and classification of liabilities that might result if we are unable to continue as a going concern. These factors raise substantial doubt regarding our ability to continue as a going concern.


Off-Balance Sheet Arrangements


We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Foreign Currency Exchange Rate Risk


We hold cash balances in both U.S. and Canadian dollars. We transact most of our financing in U.S. dollars and operational business in Canadian dollars. Some of our operational expenses denominated in Canadian dollars include building costs, labor costs and materials and supplies.  As a result, currency exchange fluctuations may impact our operating costs. We do not manage our foreign currency exchange rate risk through the use of financial or derivative instruments, forward contracts or hedging activities.


In general, we do not believe that any weakening or strengthening of the U.S. dollar as compared to the Canadian dollar will have a positive or adverse material effect on our results of operations.


Interest Rate Risk


Our investment policy for our cash and cash equivalents is focused on the preservation of capital and supporting our liquidity requirements. We do not use interest rate derivative instruments to manage exposure to interest rate changes.  We do not believe that interest rate fluctuations will have any effect on our results of operations.


Cyber-security Risk


We do not believe that we are subject to any undue cyber-security risk that may have an adverse material effect on our results of operations.




15



 


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures   


Our management, with the participation of our President & Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and determined that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. The evaluation considered the procedures designed to ensure that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure.


(a)

Changes in Internal Control over Financial Reporting


During the period covered by this Quarterly Report on Form 10-Q, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(d) and 13d-15(d) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


(b)

Inherent Limitations of Disclosure Controls and Internal Controls over Financial Reporting


Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation or effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





16



 


PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


The Company has been named in a lawsuit filed by Windale Properties in the amount of CDN$19,781. The claim is the result of termination of leased premises in Oakville, Ontario prior to the expiry of the lease. In 2009 a judgment of CDN$24,908 with annual interest of 3% was issued against the Company. No amount has been accrued as no action has been undertaken since 2009 to enforce the judgment.


ITEM 1A. RISK FACTORS


There has been no material changes in our risk factors since those reported in our Form 10-K for the year end December 31, 2014 as filed with the Securities and Exchange Commission on June 9, 2015.


ITEM 1B UNRESOLVED STAFF COMMENTS


We have responded to all Staff Comments and amended our annual report for the year ended December 31, 2014.  We have also filed amended quarterly reports for the periods ended March 31, 2015 and June 30, 2015.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


On May 20, 2014, the Company completed a non brokered private placement consisting of the sale of 15,783,332* units at a price of US$0.015 per unit for total proceeds of US$236,750. Each unit consists of one common share and one half of a share purchase warrant. Each whole warrant entitles the holder to purchase one common share at a price of $0.0175 until December 31, 2016. We used the net proceeds of this offering for general working capital purposes.


*Represents shares issued prior to a 1:10 reverse stock split


On September 9, 2014, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with CTT Pharmaceuticals, Inc., f/k/a Fenwafe Inc., an entity organized under the Canadian Corporations Business Act in March 2007 (“CTT” or “CTT Pharma”), and the shareholders of CTT Pharma whereby the Company acquired all of the issued and outstanding shares of common stock of CTT Pharma in consideration for the issuance of 149,183,285 pre-split shares of our common stock. We also issued an additional 8,444,337 pre- split shares in connection with the same transaction.


During the nine months ended September 30, 2015 we issued 1,812,500 shares (post split) for services rendered.


With respect to the sale of the securities identified above, we relied on the exemption provisions of Section 4(2), of the Securities Act, as amended.


At all relevant times, the securities were offered subject to the following terms and conditions:


·

The sale was made to a sophisticated or accredited investor, as defined in Rule 502 or were issued pursuant to a specific exemption;

·

We gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished;

·

At a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale in the manner contained in Rule 502(d)2; and


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable.


ITEM 5. OTHER INFORMATION


None.



17



 


ITEM 6. EXHIBITS


Exhibit No.

 

Description 

 

 

 

31.1

 

Rule 13a-14(a)/15d14(a) Certifications of Pankaj Modi Chief Executive Officer

 

 

 

31.2

 

Rule 13a-14(a)/15d14(a) Certifications of Lucie Letellier, CFO

 

 

 

32.1

 

Section 1350 Certifications of Pankaj Modi, Chief Executive Officer

 

 

 

32.2

 

Section 1350 Certifications Lucie Letellier, CFO

 

 

 

101.INS

 

XBRL INSTANCE DOCUMENT

 

 

 

101.SCH

 

XBRL TAXONOMY EXTENSION SCHEMA

 

 

 

101.CAL

 

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

 

 

 

101.DEF

 

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

 

 

 

101.LAB

 

XBRL TAXONOMY EXTENSION LABEL LINKBASE

 

 

 

101.PRE

 

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE








18



 


SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

 

CTT PHARMACEUTICAL HOLDINGS, INC.

 

 

 

 

 

 

Date:  November 20, 2015

 

By:

/s/ Pankaj Modi

 

 

 

 

Pankaj Modi

 

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Date:  November 20, 2015

 

By:

/s/ Lucie Letellier

 

 

 

 

Lucie Letellier

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 











19