Business Organization
Lightlake Therapeutics, Inc., (formerly known as Madrona Ventures, Inc.) (the Company) was originally incorporated in the State of Nevada on June 21, 2005. On September 16, 2009, the Company changed its’ name to Lightlake Therapeutics, Inc. The Company’s fiscal year end is July 31. The company is currently in the development stage and to date its’ activities have been limited to capital formation. The Company is currently in the development stage and has limited assets and no revenue. In accordance with the FASB ASC 915, it is considered a Development Stage Company.
Accounting Basis
These financial statements have been prepared on the accrual basis of accounting following generally accepted accounting principles of the United States of America consistently applied.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. At July 31, 2012 and 2011 respectively, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily share based compensation and loss on settlement of debt.
As of July 31, 2012 and 2011, the deferred tax asset related to the Company's net operating loss (NOL) carry-forward is fully reserved. Due to the provisions of Internal Revenue Code Section 338, the Company may have no net operating loss carry-forwards available to offset financial statement or tax return taxable income in future periods as a result of a change in control involving 50 percentage points or more of the issued and outstanding securities of the Company.
Dividends
The Company is a Development Stage Company and has not yet adopted a policy regarding the payment of dividends.
Earnings (Loss) per Share
Basic earnings (loss) per share is computed by dividing the net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the respective period presented in our accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of common stock equivalents (primarily outstanding options and warrants).
Common stock equivalents represent the dilutive effect of the assumed exercise of outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company’s net loss position at the calculation date.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
1.
Organization, Description of Business, and Basis of Accounting (Cont.)
Research and Development Costs
The Company expenses all research and development costs as incurred for which there is no alternative future use. These costs also include the expensing of employee compensation and employee stock based compensation.
Stock-Based Compensation
In December 2004, the FASB issued Accounting Standards Codification (ASC) No. 718,
Accounting for Stock Options and Other Stock Based Compensation
. Under FASB ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.
Foreign Currency Translation
The Company’s functional currency is the United States Dollars. In accordance with ASC Topic 830, “Foreign Currency Translation”, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing on the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.
Recently Issued Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
2.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has incurred significant losses and is dependent on obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain the necessary funding it could cease operations as a new enterprise. This raises substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty
3.
Related Party Transactions
The Company’s former Chief Executive Officer and now its Chief Financial Officer has advanced funds to the Company for working capital needs in the amount of $126,412 and $307,969 as of July 31, 2012 and 2011, respectively. The amounts were non-interest bearing, unsecured, with no stated terms or repayment.
The aforementioned officer has pledged his support to fund temporary cash requirements for continuing operations; however there is no written commitment to this effect. The Company is dependent upon the continued support of its officers and controlling shareholders while the Company is in its development stage.
Prior to fiscal 2009, and though the date of the Belmont Agreement (See Note 8), a former officer of the Company advanced funds to the Company for working capital needs. The amounts were non-interest bearing, unsecured, with no stated terms or repayment. Concurrent with the Belmont Agreement, the former officer forgave the advances aggregating $28,816.
4.
Income Taxes
The Company provides for income taxes asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. This method requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate to the net loss before provision for income taxes for the following reasons:
|
|
July 31, 2012
|
|
|
July 31, 2011
|
|
|
|
|
|
|
|
|
Income tax expense at statutory rate
|
|
$
|
(4,618,199
|
)
|
|
$
|
(3,597,082
|
)
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
4,618,199
|
|
|
|
3,597,082
|
|
|
|
|
|
|
|
|
|
|
Income tax expense per books
|
|
$
|
-
|
|
|
$
|
-
|
|
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
Net deferred tax assets consist of the following components as of:
|
|
July 31, 2012
|
|
|
July 31, 2011
|
|
|
|
|
|
|
|
|
Net Operating Loss Carryover
|
|
$
|
(9,106,205
|
)
|
|
$
|
(4,405,131
|
)
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
9,106,205
|
|
|
|
4,405,131
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company has a net operating loss carryover of $23,346,243 as of July 31, 2012 which begins to expire in 2026. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
The Company has net operating loss carry-forwards that were derived solely from operating losses from prior years. These amounts can be carried forward to offset future taxable income for a period of 20 years for each tax year’s loss. No provision was made for federal income taxes as the Company has significant net operating losses.
At July 31, 2012 and 2011, the Company has established a valuation allowance equal to the deferred tax assets as there is no assurance that the Company will generate future taxable income to utilize these assets.
Due to the provisions of Internal Revenue Code Section 338, the Company may have no net operating loss carry-forwards available to offset financial statement or tax return taxable income in future periods as a result of a change in control involving 50 percentage points or more of the issued and outstanding securities of the Company. The Company had no uncertain tax positions at July 31, 2012 and 2011.
5.
Patent and Patent Applications
On August 24, 2009, the Company acquired European Patent EP1681057B1 and U.S. Patent Application 11/031,534 through the issuance of 20,333,000 of its common stock. The company recorded the patents at $20,333, which approximated the fair market value. The costs associated with these patents are being depreciated on a straight line basis over a period of 20 years.
On December 16, 2011 the Company acquired US Patent 5,587,381, entitled: ‘Method for terminating methadone maintenance through extinction of the opiate-taking responses, using an opioid antagonist as treatment’. This patent was acquired for 7,116,667 warrants to purchase the Company’s common stock at a price of $0.25 per share. The issuance date of these warrants was November 29, 2010 and expire in five years.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
6.
Convertible Notes Payable
The Company issued $100,000 in Convertible Notes Payable during October, 2011. These notes accrue interest at 12.0% and are due April 6 ($50,000), and April 12, 2012 ($50,000), respectively. On February 3, 2012, both parties agreed to a change in the conversion feature. It was agreed that the notes can only be converted into the Company’s Common Stock on or after the note maturity date. Further, it was agreed that the Company, at its’ discretion, may prepay these notes by paying the outstanding principal plus accrued interest, multiplied by 130%. These notes together with the accrued interest were converted into 3,332,843 additional shares during May , 2012.
The Company issued $25,000 in a Convertible Note Payable during February, 2012. This note accrues interest at 12.0% and is due July 30, 2012. This note together with the accrued interest may be converted into the Company’s Common Stock at a variable conversion price of 50% discount of the low traded price of the Company’s Common Stock for the previous ten trading days. If these shares were converted into the Common Stock at July 31, 2012 it would represent an additional 353,357 Shares .
The Company issued $50,000 in Convertible Notes Payable during May, 2012. These notes accrue interest at 12.0% and are due November 19 ($25,000), and November 29, 2012 ($25,000), respectively. These notes together with the accrued interest may be converted into the Company’s Common Stock at a variable conversion price of 50% discount of the average of the three lowest trading prices during the last ten trading days. If these shares were converted into the Common Stock at July 31, 2012 it would represent an additional 706,714 Shares .
The Company issued $56,000 in a Convertible Note Payable during May, 2012. This note accrues interest at 10.0% and is due December 15, 2012. This note together with the accrued interest may be converted into the Company’s Common Stock at a variable conversion price of 30% discount of the low traded price of the Company’s Common Stock for the previous twenty trading days. If these shares were converted into the Common Stock at July 31, 2012 it would represent an additional 606,061 Shares .
The Company issued $55,000 in a Convertible Note Payable during June, 2012, including $5,000 of original issue discount. This note does not accrue interest during the first 90 days. However, if the note is unpaid 90 days then a one-time interest charge of 5.0% will be applied to the loan due June 26, 2013. This note together with the accrued interest may converted into the Company’s Common Stock at a price representing 65% of the lowest trade price on the previous 25 trading days to the conversion. If these shares were converted into the Common Stock at July 31, 2012 it would represent an additional 582,751 Shares .
The Company issued $168,000 in a Convertible Note Payable during July, 2012. This note accrues interest at 8% and is due January 26, 2013. This note together with the accrued interest may be converted into the Company’s Common Stock only after 180 days at a conversion price of $0.16 per share. If these shares were converted into the Common Stock at July 31, 2012 it would represent an additional 1,050,000 shares.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
6.
Convertible Notes Payable (Cont.)
In summary, the following debt is outstanding and consists of:
Convertible note, dated February 2012, maturing August 2012, 12% interest rate, deferred financing cost of $2,500, debt discount of $25,000 fully amortized to interest, convertible at 50% discount to market
|
|
$
|
25,000
|
|
Convertible note, dated May 19, 2012, maturing November 19, 2012, 12% interest rate, debt discount of $25,000 amortized to interest, unamortized $15,082, convertible at 50% discount to market
|
|
|
25,000
|
|
Convertible note, dated May 30, 2012, maturing December 15, 2012, 12% interest rate, debt discount of $25,000 amortized to interest, unamortized $16,440, convertible at 50% discount to market
|
|
|
25,000
|
|
Convertible note, dated May 19, 2012, maturing November 19, 2012, 10% interest rate, deferred financing cost of $6,000 ratably charged to interest, unamortized $4,131, debt discount of $39,907 amortized to interest, unamortized $27,474, convertible at 30% discount to market
|
|
|
56,000
|
|
Convertible note, dated June 27, 2012, maturing June 27, 2013, 5% interest rate, deferred financing cost of $5,000 ratably charged to interest, unamortized $4,534, debt discount of $52,792 amortized to interest, unamortized $47,874, convertible at 35% discount to market
|
|
|
55,000
|
|
Convertible note, dated July 26, 2012, maturing January 26, 2013, 8% interest rate, deferred financing cost of $15,000 ratably charged to interest, unamortized $4,131, convertible at $.16 per share.
|
|
|
168,000
|
|
|
|
$
|
354,000
|
|
Deferred loan costs
|
|
|
(23,257
|
)
|
Debt discounts
|
|
|
(106,870
|
)
|
Total Debt
|
|
$
|
223,873
|
|
Less: long-term portion
|
|
|
-
|
|
Current portion of debt
|
|
$
|
223,873
|
|
The Company evaluated the terms of these notes in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the
conversion feature met the definition of a liability and therefore, bifurcated the conversion feature and account for it as a separate derivative liability. The Company has recognized a derivative liability in the amount of $181,094, of which $167,699 was recognized as a beneficial conversion debt discount, which is being amortized over the life of the loan to interest expense. A charge to the statement of operations was made to provide for the remaining portion of the recognized derivative liability at origination. The Company has re-measured the derivative at year end, resulting in a liability of $191,792 as of July 31, 2012. The corresponding change in derivatives, from origination to period end resulted in a change and recognition of expenses in the amount of $24,093 for the year ended July 31, 2012.
The derivative valuation was calculated using the Black-Scholes Model for the conversion feature. Assumptions to the calculation were as follows:
Weighted Average:
|
|
|
|
Dividend rate
|
|
|
0.00
|
%
|
Risk-free interest rate
|
|
|
.08
|
%
|
Expected lives (years)
|
|
|
0.592
|
|
Expected price volatility
|
|
|
160.34
|
%
|
Forfeiture Rate
|
|
|
0.00
|
%
|
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
Common Stock
The Company has 200,000,000 common shares authorized at a par value of $0.001. At July 31, 2012 and July 31, 2011 there were 126,083,416 and 76,976,333 shares issued and outstanding, respectively. The Company has no other classes of shares authorized for issuance.
During the year ended July 31, 2010, the Company effectuated a 20 for 1 forward stock split. Subsequently, the Company’s chief executive officer cancelled 100,000,000 common shares beneficially owned by him through his ownership in Pelikin Group.
During the year ended July 31, 2010, the Company issued 4,150,000 common shares to various individuals and entities for services rendered to the Company. The aggregate value of the shares issued was $1,358,800 based on the closing price of the Company’s common stock at the date of issuance, which approximates the fair market value of the services rendered.
On October 6, 2010, the Company issued 200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $30,000.
On October 13, 2010, the Company issued 80,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $12,000.
On November 17, 2010, the Company sold 1,020,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $71,400. The shares issued in this transaction were valued at $326,400.
On December 1, 2010, the Company issued 1,000,000 shares to one its’ key officers as share based compensation. The shares issued in this transaction were valued at market and amounted to $320,000.
On December 15, 2010, the Company sold 800,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $40,000. The shares issued in this transaction were valued at $240,000.
On December 22, 2010, the Company issued 400,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $128,000.
On January 4, 2011, the Company sold 80,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $5,600. The shares issued in this transaction were valued at $25,600.
On January 26, 2011, the Company issued 310,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $93,000.
On February 14, 2011, the Company issued 90,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $45,450.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
7.
Stockholders’ Equity (Cont.)
On February 25, 2011, the Company issued 200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $144,000.
On March 9, 2011, the Company issued 80,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $48,000.
On March 9, 2011, the Company sold 920,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $322,000. The shares issued in this transaction were valued at $552,000.
On March 17, 2011, the Company sold 620,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $303,800. The shares issued in this transaction were valued at $458,800.
On March 25, 2011, the Company issued 250,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $197,500.
On March 25, 2011, the Company sold 140,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $75,600. The shares issued in this transaction were valued at $110,600.
On March 29, 2011, the Company issued 400,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $260,000.
On April 5, 2011, the Company issued 800,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $544,000.
On April 7, 2011, the Company issued 200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $122,000.
On April 7, 2011, the Company sold 340,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $85,000. The shares issued in this transaction were valued at $207,400.
On April 20, 2011, the Company issued 680,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $462,400.
On April 20, 2011, the Company sold 1,680,000 shares of its’ common stock at $0.25 per share which represented discount to market in the amount of $420,000. The shares issued in this transaction were valued at $1,142,4000.
On April 27, 2011, the Company issued 1,000,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $670,000.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
7.
Stockholders’ Equity (Cont.)
On April 28, 2011, the Company issued 600,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $402,000.
On April 29, 2011, the Company issued 200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $180,000.
On May 25, 2011, the Company issued 500,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $400,000.
On June 3, 2011, the Company issued 940,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $704,800.
On June 10, 2011, the Company issued 200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $130,000.
On July 5, 2011, the Company issued 928,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $658,880.
On July 14, 2011, the Company issued 598,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $442,520.
On July 21, 2011, the Company issued 100,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $72,300.
On August 5, 2011, the Company issued 700,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $434,000.
On September 13, 2011, the Company issued 8,900,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $3,560,000.
On October 6, 2011, the Company issued 80,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $38,400.
On October 25, 2011, the Company issued 50,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $17,000.
On November 17, 2011, the Company issued 5,5200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $2,346,000.
On November 23, 2011, the Company issued 225,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $94,500.
On December 6, 2011, the Company issued 3,100,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $1,069,500.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
7.
Stockholders’ Equity (Cont.)
On December 15, 2011 the Company issued 2,500,000 shares as compensation to an officer, valued at market, in the amount of $700,000.
On March 28, 2012, the Company issued 75,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $7,125.
On March 28, 2012, the Company issued 3,500,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $332,500.
On April 5, 2012, the Company issued 6,520,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $652,000.
On April 13, 2012, the Company issued 170,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $15,980.
On April 17, 2012, the Company issued 1,234,568 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $49,383.
On May 5, 2012, the Company issued 728,863 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $102,469.
On June 28, 2012, the Company issued 945,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $111,699.
On July 24, 2012, the Company issued 1,200,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $186,000.
On July 30, 2012, the Company issued 2,107,237 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $316,086.
Stock Based Compensation
As required by the Stock Compensation Topic, ASC 718, the Company measures and recognizes compensation expense for all share based payment awards made to the officers based on estimated fair values. Stock based compensation expense recognized in the Statement of Operations for the years, July 31, 2012 and 2011 was $822,499 and $531,250, respectively.
On December 15, 2010, the Company granted two of its’ officers options to purchase 7,500,000 shares of its’ common stock at $0.60 per share. Also, on December 15, 2010, the Company granted its’ Chief Executive Officer options to purchase 1,000,000 shares at a price of $1.20 per share. These options expire December 15, 2013. The Company’s stock price closed at $0.30 on the date these options were granted. The Company is recognizing the expense over the vesting period. The total fair value of the compensation was computed to be $2,550,000, of which $920,834 has been recognized as compensation expense for the year ended July 31,2012.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
7.
Stockholders’ Equity (Cont.)
At July 31, 2012, the total stock-based compensation cost which has not been recognized is $1,441,667. These remaining costs are expected to be recognized over the next 16 1/2 months.
On July 21, 2011, the Company issued 100,000 shares in exchange for services rendered. The shares issued in this transaction were valued at market and amounted to $72,300.
On July 5, 2011, the Company issued 72,000 shares to its’ Chief Executive Officer. The shares issued in this transaction were valued at market and amounted to $51,120.
On December 15, 2011, the Company issued 2,500,000 shares to its’ Chief Executive Officer. The shares issued in this transaction were valued at market and amounted to $700,000.
On January 30, 2012, the Company granted all of its’ executive officers options to purchase 8,000,000 shares of its’ common stock at $0.08 per share. These options expire in three years on January 29, 2015. The Company’s stock price closed at $0.057 on the date these options were granted. The Company has valued these options using appropriate valuation methods which resulted in a fair market value of $640,000, of which $106,667 has been recognized for the year ended July 31, 2012.
Warrants
On December 16, 2011 the Company acquired US Patent No. 5,587,381, for 7,116,667 warrants to purchase the Company’s common stock at a price of $0.25 per share. The issuance date of these
warrants was November 29, 2010 and they expire in five years.
On December 15, 2010, the Company issued 1,900,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on December 15, 2015.
On March 15, 2011, the Company issued 920,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on March 1, 2016.
On March 15, 2011, the Company issued 1,760,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on March 15, 2016.
On April 25, 2011, the Company issued 280,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on April 25, 2016.
On May 6, 2011, the Company issued 200,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on May 6, 2016.
On July 8, 2011, the Company issued 40,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on July 8, 2016.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
7.
Stockholders’ Equity (Cont.)
On July 21, 2011, the Company issued 100,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on July 21, 2016.
On August 5, 2011, the Company issued 300,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on August 5, 2016.
On August 22, 2011, the Company issued 50,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on August 22, 2016.
On September 6, 2011, the Company issued 60,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on September 6, 2016.
On September 21, 2011, the Company issued 200,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on September 21, 2016.
On September 27, 2011, the Company issued 200,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on September 27, 2016.
On October 6, 2011, the Company issued 200,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on October 6, 2016.
On November 1, 2011, The Company issued 5,300,000 warrants to purchase its’ common stock at $0.50 per share pursuant to an exclusive marketing agreement with AMF Group. This Company guaranteed sales in Central and South America and India in the amount of $23.4 to $27 Million upon approval. These warrants expire in five years, on October 31, 2016. Warrants were valued using the Black Scholes model, resulting in valuation of $1,071,000, of which $142,800 has been recognized in the current year.
On March 14, 2012, the Company issued 8,400,000 warrants with an exercise price of $0.50 to AMF Group pursuant to an exclusive marketing agreement for Central and South America and India dated November 1, 2011. These warrants expire March 14, 2017. . Warrants were valued using the Black Scholes model, resulting in valuation of $378,000, of which $18,900 has been recognized in the current year.
On March 28, 2012, the Company issued 1,500,000 warrants to purchase its’ common stock at $0.20 per share. These warrants expire on March 28, 2017.
On April 5, 2012, the Company issued 20,000 warrants to purchase its’ common stock at $0.50 per share. These warrants expire on April 5, 2017.
On May 3, 2012, the Company issued 428,572 warrants to purchase its’ common stock at $0.14 per share. These warrants expire on May 3, 2017.
Lightlake Therapeutics, Inc.
(a Development Stage Enterprise)
Notes to Financial Statements
For the years ended, July 31, 2012 and 2011
and from inception (June 21, 2005 ) to July 31, 2012
7.
Stockholders’ Equity (Cont.)
The following is a summary of outstanding warrants and options:
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Options and Warrants
|
|
|
Intrinsic
|
|
|
Exercise
|
|
Remaining
|
|
|
Outstanding
|
|
|
Vested
|
|
|
Value
|
|
|
Price
|
|
Term
|
Options, July 31, 2010
|
|
|
16,936,667
|
|
|
|
16,936,667
|
|
|
$
|
(0.452
|
)
|
|
$
|
0.600
|
|
1.5 years
|
Granted
|
|
|
19,496,667
|
|
|
|
19,496,667
|
|
|
$
|
0.004
|
|
|
$
|
0.144
|
|
3.1 years
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Forfeited / expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Options, July 31, 2011
|
|
|
36,433,334
|
|
|
|
36,433,334
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
24,658,572
|
|
|
|
24,658,572
|
|
|
$
|
0.060
|
|
|
$
|
0.088
|
|
4.3 years
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Forfeited / expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Options, July 31, 2012
|
|
|
61,091,906
|
|
|
|
61,091,906
|
|
|
|
|
|
|
|
|
|
|
8.
Common Stock Purchase Agreement
On June 26, 2009, the Company completed a common stock purchase agreement (the Belmont Agreement) whereby Belmont Partners, LLC acquired 5,000,000 common shares of the Company’s common stock. Following the transaction, Belmont Partners, LLC controlled approximately 76.6% of the Company’s outstanding capital stock. Concurrent with the agreement, Mr. Joseph Meuse, managing member of Belmont Partners, LLC, was named to the Board of Directors as well as President and Secretary of the Company, and the Company’s former officers resigned from all positions held in the Company.
In connection with the Belmont Agreement, the Company’s former officers forgave amounts advanced to the Company aggregating $28,816 as well as either paid or assumed the remaining other liabilities of the Company aggregating $14,347. Accordingly, the Company recorded a gain on debt extinguishment of $43,163.
On October 31, 2009, the Company completed a common stock purchase agreement (the Pelikin Agreement) whereby Pelikin Group acquired 5,000,000 common shares of the Company’s common stock from Belmont Partners. Following the transaction, Pelikin Group controls approximately 76.6% of the Company’s outstanding capital stock. Concurrent with the agreement, Mr. Sei Ki was named to the Board of Directors as well as President and Secretary of the Company, and Mr. Joseph Muese resigned from all positions held in the Company.
9.
Subsequent Events
None.