Eastgate Biotech (ETBI) 10-Q 4 Mar 19 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	9 Months Ended
	Sep. 30, 2017	Feb. 19, 2019	Jun. 30, 2018
Document and Entity Information:
Entity Registrant Name	Eastgate Biotech Corp
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Trading Symbol	etbi
Amendment Flag	false
Entity Central Index Key	1,099,574
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		2,057,545,708
Entity Public Float			$ 2,924,882
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

Consolidated Balance Sheets+A1_

Consolidated Balance Sheets+A1:C23 - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash	$ 4,911
Accounts receivable other	28,735
Prepaid Expense, Current	21,680
Inventory	112,944
Total current assets	168,270
Furniture and fixtures	9,152
Equipment	768,239
Website and presentation templates	8,849
Leasehold improvments	65,595
Accumulated depreciation and amortization	150,020
Property and equipment, net of accumulated depreciation	701,814
Other assets
Investment in subsidiaries	8,000,000
Total other assets	8,000,000
Total assets	1,670,084
Liabilities and Stockholders' Deficit
Accounts payable	706,091	$ 312,475
Accrued expenses and other liabilities	3,080,342	2,528,834
Deferred sales		92,516
Deferred rent	96,014	627
Capital lease obligation	376,564	10,368
Notes payable - related parties	2,383,798	1,633,222
Current portion of notes payable	318,192
Total current liabilities	6,961,001	4,578,042
LT Capital lease obligation		40,024
Total long-term liabilities		40,024
Total liabilities	6,961,001	4,618,066
Stockholders' deficit:
Common stock, $0.00001 par value, Authorized 450,000,000 shares,1,136,695,708 and 309,522,175 shares issued and outstanding at September 30, 2017 and December 31, 2016, repectively	11,320	3,096
Additional paid-in capital	13,218,261	9,970,127
Other comprehensive income	(121,180)	39,702
Retained earnings	(18,399,318)	(14,630,991)
Total stockholders' deficit	(5,290,917)	$ (4,618,066)
Total liabilities and stockholders' deficit	$ 1,670,084

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 21, 2016
Stockholders equity:
Preferred Stock, par value	$ 0.00001	$ 0.00001
Preferred Stock, authorized	50,000,000	50,000,000
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, authorized shares	450,000,000	450,000,000
Common stock, issued shares	1,136,695,708	309,522,175
Common stock, outstanding shares	1,136,695,708	309,522,175

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement
Revenue	$ 23,138		$ 137,638
Cost of Revenue
Cost of Services	92,349		149,275
Cost of Revenue	92,349		149,275
Gross Profit(Loss)	(69,212)		(11,638)
Operating Expenses
Professional Fees	70,176	$ 19,886	152,216	$ 24,191
Research and development	(12,046)	115,610	258,384	381,124
General and administrative	1,518,182	234,072	2,472,700	1,498,107
Marketing and selling	75,859	63,954	213,600	203,894
Loss from Impairment of assets	25,247			184,402
Gain on extinguishment of debt	(55,759)		(55,759)
Total Operating Expenses	1,621,660	433,522	3,041,142	2,291,718
(Loss)/Gain from continuing operations	(1,690,872)	(433,522)	(3,052,780)	(2,291,718)
Other (Income) Expense
Interest	57,985	(39,778)	196,547	116,516
Total Other (Income) Expense	57,985	(39,778)	196,547	116,516
Net Income (loss)	(1,632,887)	(473,300)	(3,249,327)	(2,408,234)
Comprehensive Income (Loss) - foreign currency translation	(172,021)	4,614	(160,882)	(9,527)
Comprehensive Income (Loss)	$ (1,804,907)	$ (468,686)	$ 3,410,208	$ (2,417,761)
Earnings Per Share
Earnings Per Share, Basic and Diluted	$ 0	$ (0.002)	$ (0.01)	$ (0.01)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows	3 Months Ended	9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)
Cash flows from operating activities:
Net income (loss)	$ (1,632,887)	$ (3,249,327)	$ (2,408,234)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Expenses paid by related party			3,145
Common stock issued for services		67,570	753,480
Stock based compensation		361,000
Loss from impairment of assets	25,247		184,402
Depreciation and amortization		73,695
Increases/decreases in operating assets and liabilities
Accounts receivable		45,651
Accounts receivable - other		219,508
Reserve for recoverable taxes			67,726
Deferred rent			(1,038)
Inventory	(21,635)	(21,635)
Recognition of Deferred Revenue		2,871	70,699
Prepaid expenses and other assets		8,474	14,595
Accrrued liabilites related party			1,089,378
Accrued interest		175,454	102,513
Accounts payable and accrued expenses		733,692	(92,174)
Net cash (used) in/provided by operating activities		(1,583,047)	(215,508)
Cash flows from investing activities:
Purchase of property and equipment		(51,684)
Net cash provided by (used) in investing activities		(51,684)
Cash flows from financing activities:
Proceeds from (Repayments of) Notes Payable		430,928
Payment of capital lease obligation		(85,948)	8,995
Proceeds from (Repayments of) Related Party Debt		1,214,930	198,087
Proceeds from Issuance of Common Stock		120,000
Bank overdraft	(58,923)	(58,923)
Net cash (used) in or provided by financing activities		1,620,987	189,092
Net change in cash		(13,744)	(26,416)
Effect of foreign currency translation adjustments		18,655	7,175
Cash, beginning of period			19,241
Cash, end of period	4,911	4,911
Supplemental disclosure of cash flow information:
Cash paid for interest			$ 10,429
Schedule of noncash investing and financing transactions:
Payment made by 3(a)10 firm to noteholders on Compamy's behalf		406,109
Assets and liabilities assumed from Omni acquistion	$ 1,645,000	$ 1,645,000

Consolidated Statements of Ca_2

Consolidated Statements of Cash Flows+C32A5A1:C41	3 Months Ended	9 Months Ended
	Sep. 30, 2017USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2016USD ($)
Cash flows from operating activities:
Net income (loss)	$ (1,632,887)	$ (3,249,327)	$ (2,408,234)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Expenses paid by related party			3,145
Common stock issued for services		67,570	753,480
Stock based compensation		361,000
Loss from impairment of assets	25,247		184,402
Depreciation and amortization		73,695
Increases/decreases in operating assets and liabilities
Accounts receivable		45,651
Accounts receivable - other		219,508
Reserve for recoverable taxes			67,726
Deferred rent			(1,038)
Inventory	(21,635)	(21,635)
Recognition of Deferred Revenue		2,871	70,699
Prepaid expenses and other assets		8,474	14,595
Accrrued liabilites related party			1,089,378
Accrued interest		175,454	102,513
Accounts payable and accrued expenses		733,692	(92,174)
Net cash (used) in/provided by operating activities		(1,583,047)	(215,508)
Cash flows from investing activities:
Purchase of property and equipment		(51,684)
Net cash provided by (used) in investing activities		(51,684)
Cash flows from financing activities:
Proceeds from (Repayments of) Notes Payable		430,928
Payment of capital lease obligation		(85,948)	8,995
Proceeds from (Repayments of) Related Party Debt		1,214,930	198,087
Proceeds from Issuance of Common Stock		120,000
Bank overdraft	(58,923)	(58,923)
Net cash (used) in or provided by financing activities		1,620,987	189,092
Net change in cash		(13,744)	(26,416)
Effect of foreign currency translation adjustments		18,655	7,175
Cash, beginning of period			19,241
Cash, end of period	4,911	4,911
Supplemental disclosure of cash flow information:
Cash paid for interest			$ 10,429
Schedule of noncash investing and financing transactions:
Common stock issued for services		285,170
Payment made by 3(a)10 firm to noteholders on Compamy's behalf		406,109
Assets and liabilities assumed from Omni acquistion	$ 1,645,000	$ 1,645,000

Nature of Business and History

Nature of Business and History of The Company	9 Months Ended
	Sep. 30, 2017
Notes
Nature of Business and History of The Company	1. Organization and Nature of Operations Organization Eastgate Biotech Corp. (The Company) was organized on September 8, 1999, under the laws of the State of Nevada. During the year ended December 31, 2012 the Company acquired Eastgate Pharmaceuticals Inc. (“EPI”), as a wholly-owned subsidiary of the Company, from our CEO, Anna Gluskin, its sole shareholder, officer, and director. EPI is a Province of Ontario, Canada corporation. On March 31, 2017, the Company acquired Omni Age Management and Surgery Center (“Omni”) as a wholly-owned subsidiary of the Company. The Company acquired the corporation, name and operating assets of Omni from a creditor who had foreclosed on Omni in a bankruptcy proceeding. Nature of Business The Company is engaged in the research and development of drug delivery innovations, development of improved and novel formulations, and forms of alternative dosage delivery of existing biologically active molecules. We are primarily engaged in the development of novel formulations of natural compounds and pharmaceutical products. We intend to accomplish this by developing our proprietary self-emulsifying drug delivery systems, predominantly forming Nano-emulsions. Although we have not finalized any pharmaceuticals products and are in the early stages of research, our goal is to be able to develop patentable and Trade Secret formulations of pharmaceutical, nutraceutical dietary supplements and consumer health products. We recently started marketing and distribution and have limited sales for some of our nutraceutical’s products. Some of our proposed products under development are based on existing natural compounds. Many of these proposed products are made of essential oils and plant extracts. Our proposed products comprise excipients listed in the FDA “Inactive Ingredients Guide” that we believe are safe and approved for human consumption. Additionally, we believe that these proposed products can be manufactured using common equipment. We anticipate that we will be able to apply self-emulsifying technologies for development of a variety of pharmaceuticals and natural products for different applications.

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2017
Notes
Basis of Presentation	1. Basis of Presentation Interim Unaudited Consolidated Financial Statements The unaudited interim consolidated financial statements of Eastgate Biotech Corporation (the “Company,” “Eastgate,” “we,” “our” or “us”) as of September 30, 2017 and for the nine-month periods ended September 30, 2017 and 2016 contained in this Quarterly Report (collectively, the “Unaudited Interim Consolidated Financial Statements”) were prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for all periods presented. The results of operations for the nine-month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the entire fiscal year. The accompanying Unaudited Interim Consolidated Financial Statements have been prepared in accordance with the regulations for interim financial information of the Securities and Exchange Commission (the “SEC”). Accordingly, they may not include all of the disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited accompanying statements of financial condition and related interim statements of operations, cash flows, and stockholders’ deficit include all adjustments (which consist only of normal and recurring adjustments) considered necessary for a fair presentation in conformity with U.S. GAAP. These Unaudited Interim Consolidated Financial Statements should be read in conjunction with our consolidated financial statements as of and for the year ended December 31, 2016. The financial statements of the Company have been prepared in accordance with US GAAP and are expressed in U.S. dollars. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year end is December 31.

Basis of Consolidation

Basis of Consolidation	9 Months Ended
	Sep. 30, 2017
Notes
Basis of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Eastgate Pharmaceuticals, Inc. All significant inter-company transactions are eliminated.

Cash and Cash Equivalents

Cash and Cash Equivalents	9 Months Ended
	Sep. 30, 2017
Notes
Cash and Cash Equivalents	Cash and Cash Equivalents For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.

Accounts Receivable and Allowan

Accounts Receivable and Allowance For Doubtful Accounts	9 Months Ended
	Sep. 30, 2017
Notes
Accounts Receivable and Allowance For Doubtful Accounts	Accounts receivable and concentration of credit risk The Company carries no accounts receivable for the periods reported herein. This has currently eliminated the risk of default in the collection of accounts receivable. In addition, our concentration risk, which is evaluated on a quarterly basis is currently, virtually nil. A llowance for doubtful accounts The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts and the aging of the accounts receivable. The Company regularly reviews the adequacy of the Company’s allowance for doubtful accounts through identification of specific receivables where it is expected that payments will not be received. The Company also establishes an unallocated reserve that is applied to all amounts that are not specifically identified. In determining specific receivables where collections may not have been received, the Company reviews past due receivables and gives consideration to prior collection history and changes in the customer’s overall business condition. The allowance for doubtful accounts reflects the Company’s best estimate as of the reporting dates. At September 30, 2017 and December 31, 2016, the Company had an allowance for bad debts in the amount of $0 and $0, respectively.

Revenue Recognition

Revenue Recognition	9 Months Ended
	Sep. 30, 2017
Notes
Revenue Recognition	Revenue Recognition The Company recognizes revenue in accordance with ASC-605, “Revenue Recognition,” which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or title has passed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Revenues are recognized (a) for larger construction type projects based on the percentage of completion method; or (b) for direct sales of products, upon shipment, provided that a signed purchase order has been received, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, and there are no remaining significant obligations. Reserves for sales returns and allowances, based on historical levels of returns and discounts, current economic trends and changes in customer demand. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

Use of Estimates

Use of Estimates	9 Months Ended
	Sep. 30, 2017
Notes
Use of Estimates	Use of Estimates The preparation of unaudited consolidated financial statements in conformity with US GAAP 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. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Earnings (loss) Per Common Shar

Earnings (loss) Per Common Share	9 Months Ended
	Sep. 30, 2017
Notes
Earnings (loss) Per Common Share	Basic and Diluted Net Loss per Share The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Fair Value of Financial Instrum

Fair Value of Financial Instruments	9 Months Ended
	Sep. 30, 2017
Notes
Fair Value of Financial Instruments	Financial Instruments Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company did not have any Level 2 or Level 3 assets or liabilities as of September 30, 2017, with the exception of its notes payable. The carrying amounts of these liabilities at September 30, 2017 approximate their respective fair value based on the Company’s incremental borrowing rate. Cash is considered to be highly liquid and easily tradable as of September 30, 2017 and therefore classified as Level 1 within our fair value hierarchy. In addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Business Combinations

Business Combinations	9 Months Ended
	Sep. 30, 2017
Notes
Business Combinations	1. Acquisition of Assets of ‘Omni Surgery and Skin Rejuvenation’ On March 31, 2017, Eastgate Biotech entered into a series of transactions to acquire the assets of Omni Surgery and Skin Rejuvenation (“Omni”) a Saskatchewan corporation. Omni was in default on various notes to banks and lenders, one of which William Abajian (“Abajian”) had a security interest in the equipment of the company in support of a loan in the amount of $845,000. Abajian foreclosed on the Company. Subsequently, Eastgate acquired a ninety-nine percent (99%) equity interest in Omni from Abajian and a second shareholder in exchange for the acquisition of the $845,000 note, and issuance of 20,000,000 common shares of Eastgate Biotech Corp. simultaneously, Abajian can redeem the shares back to the Company in amounts not to exceed 2.0 million shares per year. In addition, Abajian holds a security interest to the 99% equity interest Eastgate holds in Omni until such time as his Eastgate shares are fully redeemed. As of the date of this filing, the balance due to Abajian is $547,000.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2017
Notes
Subsequent Events	1. Subsequent Events We have evaluated subsequent events through the date of issuance of the unaudited consolidated financial statements, and below are the material recognizable subsequent events. · · · · · · · · · · ·

Legal Matters

Legal Matters	9 Months Ended
	Sep. 30, 2017
Notes
Legal Matters	1. Commitments and Contingencies Litigation The Company may, from time to time, become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is currently not aware of any such legal proceedings that it believes will have, individually or in the aggregate, a material adverse effect on its earnings.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2017
Notes
Income Taxes	Income Taxes Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Equity

Equity	9 Months Ended
	Sep. 30, 2017
Equity:
Stockholders' Equity Note Disclosure	1. Stockholders’ Equity a) Authorized Authorized capital stock consists of: · 10, · b) Share Issuances During the period ended September 30, 2017, the Company issued the following common shares: · · · · · · · · · · · · · · · ·

Related Party Disclosures

Related Party Disclosures	9 Months Ended
	Sep. 30, 2017
Related Party Disclosures:
Related Party Transactions Disclosure	1. Related Party Transactions The Company owes accrued compensation totaling $2,524,253 and $2,095,891 to two officers at September 30, 2017 and December 31, 2016, respectively. During the nine months ended September 30, 2017 and 2016, the Company made repayments of accrued compensation of $361,000 and $0, respectively. As of December 31, 2016, $107,069 of the Company’s accounts payable are owed to two formerly related parties.

Notes Payable

Notes Payable	9 Months Ended
	Sep. 30, 2017
Notes
Notes Payable	1. Notes Payable Notes Payable to Related Parties : The Company owed $2,939,887 and $2,066,165 in notes and accrued interest to an officer and director at September 30, 2017 and December 31, 2016, respectively. During the nine months ended September 30, 2017 and 2016, the Company made no repayments of related party notes or accrued interest. Notes Payable, others: The Company has notes due to unrelated parties totaling $318,192 and $0 at September 30, 2017 and December 31, 2016, respectively. As part of the acquisition of Omni, the Company acquired a note due to a former shareholder of Omni in the amount of $845,000. As of September 30, 2017, the Company had converted approximately $298,000 of the note into common stock. At September 30, 2017 and December 31, 2016, the Company has accrued interest of $52,308 and $0, respectively.

Accounting Principles

Accounting Principles	9 Months Ended
	Sep. 30, 2017
Notes
Accounting Principles	Going Concern These accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of September 30, 2017, the Company had an accumulated deficit of $18,399,319 and negative working capital of $6,792,731. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities, obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. However, there can be no assurance that these arrangements will be sufficient to fund its ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These accompanying unaudited consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Reclassification Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss.