UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2011
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 333-133347
PEPTIDE TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Nevada 98-0479983
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
601 Union Street, Two Union Square, 42nd Floor, Seattle, Washington 98101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 388-5498
CREEnergy Corporation
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57113 -2020 Sherwood Drive, Sherwood Park, Alberta T8A 3H9
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, par value $0.001 per share OTCBB
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No|X|
Indicate by check mark if the Registrant is not required to file reports
pursuant to Rule 13 or Section 15(d) of the Exchange Act. Yes [ ] No|X|
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.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 [ ] No|X|
1
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 "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Larger accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [ ]
Indicate by check mark whether registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [X]
Number of shares issued and outstanding of the registrant's class of common
stock as of February 28, 2012: 141,043,000 shares of common stock.
The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $0.00, based on the average bid and ask as of
February 28, 2012.
The Company recognized nil revenues for its most recent fiscal year
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TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business 4
Item 1A. Risk Factors 9
Item 1B. Unresolved Staff Comments 12
Item 2. Description of Property 12
Item 3. Legal Proceedings 12
Item 4. Mine Safety Disclosure 12
PART II
Item 5. Market For Common Equity and Related Stockholder Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion And Analysis Of Financial Condition And Results Of Operation 14
Item 7A. Quantitative and Qualitative Disclosures of Market Risk 17
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 35
Item 9A. Controls and Procedures 35
Item 9B. Other Information 36
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of 36
Item 11. Executive Compensation 38
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 38
Item 13. Certain Relationships and Related Transactions and Director Independence 39
Item 14. Principal Accountant Fees and Services 40
PART IV
Item 15. Exhibits and Financial Statement Schedules 40
Signatures 41
3
FORWARD-LOOKING STATEMENTS
In addition to historical information, some of the information presented in this
Annual Report on Form 10-K contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Although Peptide Technologies, Inc. ("Peptide" or the "Company," which
may also be referred to as "we," "us" or "our") believes that its expectations
are based on reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results will not
differ materially from our expectations. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those anticipated, including but not limited to, our ability to
reach satisfactorily negotiated settlements with our outstanding creditors,
achieve a listing on the over the counter bulletin board, raise debt and/or
equity to fund negotiated settlements with our creditors and to meet our ongoing
operating expenses and merge with another entity with experienced management and
opportunities for growth in return for shares of our common stock to create
value for our shareholders. You are urged to carefully consider these factors,
as well as other information contained in this Annual Report on Form 10-K and in
our other periodic reports and documents filed with the SEC.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Business Development
We incorporated as Online Originals, Inc. on November 18, 2005 in the State of
Nevada. We changed our name to CREEnergy Corporation on July 29, 2010. Effective
on October 12, 2011, the Company filed an amendment to its Articles of
Incorporation with the Secretary of State of Nevada to change its name to
Peptide Technologies, Inc. Our principal executive offices are located at 601
Union Street, Two Union Square, 42nd Floor, Seattle, Washington 98101. Our
telephone number is (206) 388-5498. Our fiscal year end is November 30th.
On August 24, 2011, the Company's majority shareholder approved the following
corporate actions:
(a) To Amend the Articles of Incorporation to change the Company's name to
PEPTIDE TECHNOLOGIES, INC.: and,
(b) To authorize an Asset Purchase Agreement to acquire intangible assets and
intellectual property known as the Peptide Technology Platform. In exchange for
such assets, the Company issued 75,000,000 shares of its restricted common stock
to the owners of the Peptide Technology Platform.
Business of Issuer
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Since inception, the Company's business plan was to develop a membership based
website art gallery/auction house specifically focused on displaying and selling
original artwork. The Company changed its status from a development stage
company to an operating company on November 30, 2009. Management realized that
the results of operations from the sale of artwork was lack-luster, and it was
decided to change the Company's business focus and plan for other strategic
opportunities and discontinued the sale of artwork to be effective June 25,
2010.
On July 29, 2010, the Company's name changed from Online Originals, Inc. to
CREEnergy Corporation. The name change was intended to convey a sense of the
Company's new business focus as it looked to pursue other opportunities.
Specifically, the Company intended to obtain leases for the exploration and
production of oil and gas in northern Canada and the United States. The Company
was unable to identified any prospects or enter into any leases or agreements.
On August 23, 2011, the Company entered into an Asset Purchase Agreement to
acquire intangible assets and the intellectual property known as the Peptide
Technology Platform. The Peptide Technology Platform includes the technology
platforms for developing a variety of drug candidates and biological solutions
for existing problems caused by mussels in the environment. Effective October
4
12, 2011, the Company changed its name to Peptide Technologies, Inc. in order to
better convey a sense of the Company's new business focus.
An December 14, 2011, Peptide Technologies, Inc. agreed to amend the Asset
Purchase Agreement dated August 23, 2011. As a result of the amendment
30,000,000 restricted common shares of the Company were returned to treasury in
exchange for payment of half of one percent of all gross monies received by the
company from revenue produced from products derived from the use of all the
formulae listed in the Assets Purchase Agreement. In addition a monthly stipend
of CDN $15,000 per month is to be paid commencing from receipt of monies from
the first contract signed to purchase products derived from the use of the
formulae for a period of five years from the date of the amended agreement.
Business of Issuer
Peptide Technologies, Inc. is a development stage company that is engaged in the
development and manufacture of environmentally safe peptide-based products used
to combat the rapidly growing problems caused by the quagga and zebra mussel
infestation in U.S. and Canadian waters. The Company specializes in the
development of peptide formulas which may be added to a specific coating product
and applied to substrates, creating a surface which is uninhabitable by the
quagga and zebra mussels. The advantages of our peptide formulas are (1) they
are 100% safe to humans; (2) they will not kill the mussels which are now an
integral part of the food chain, the disruption of which would be an
environmental unknown; and (3) they are organic and eco-environmentally
friendly.
Background
The zebra mussel (Dreissena polymorpha) and its cousin, the quagga mussel
(Dreissena rostriformis bugensis), are small bivalve mollusks with two matching
half shells, having an average life span of 3 to 5 years. Zebra mussels are
native to the Black, Caspian, and Azov Seas, dating back to 1769. By the late
18th and early 19th centuries, zebra mussels had spread to most all major
drainages of Europe because of widespread construction of canal systems. They
first appeared in Great Britain in 1824, where they are now well established.
Since then, zebra mussels have expanded their range into Denmark, Sweden,
Finland, Ireland, Italy, and the rest of Western Europe. Zebra mussels were
first discovered in North America in 1988 in the Great Lakes. The first account
of an established population came from Canadian waters of Lake St. Clair, a
water body connecting Lake Huron and Lake Erie. By 1990, zebra mussels had been
found in all the Great Lakes. The following year, zebra mussels escaped the
Great Lakes basin and found their way into the Illinois and Hudson rivers. The
Illinois River was the key to their introduction into the Mississippi River
drainage which covers over 1.2 million square miles. Since its introduction, the
zebra mussel has spread to 23 states in America and two Canadian provinces.
The quagga mussel is indigenous to the Dneiper River drainage of Ukraine and
Ponto-Caspian Sea. It was discovered in the Bug River in 1890 by Andrusov, who
named the species in 1897. The quagga mussel was first sighted in the Great
Lakes in September 1989, when one was found near Port Colborne, Lake Erie,
though the recognition of the quagga type as a distinct species was not until
1991. In August 1991, a mussel with a different genotype was found in a random
zebra mussel sample from the Erie Canal near Palmyra, New York, and after
confirmation that this mussel was not a variety of Dreissena polymorpha, the new
species was named "quagga mussel" after the "quagga", an extinct African
relative of the zebra. The first sighting of quagga mussels outside the Great
Lakes basin was made in the Mississippi River between St. Louis, Missouri and
Alton, Illinois in 1995. In January 2007, populations of quagga mussels were
discovered in Lake Mead near Boulder City, Nevada, and in Lake Havasu and Lake
Mohave on the California/Arizona border.
The quagga mussel is a prolific breeder, possibly contributing to its spread and
abundance. Dreissena are dioecious (either male or female) with external
fertilization. A fully mature female mussel is capable of producing up to one
million eggs per year. After fertilization, pelagic microscopic larvae, or
veligers, develop within a few days and these veligers soon acquire minute
bivalve shells. Free-swimming veligers drift with the currents for three to four
weeks feeding by their hair-like cilia while trying to locate suitable substrata
to settle and secure byssal threads. Zebra and quagga mussels accumulate organic
pollutants within their tissues to levels more than 300,000 times greater than
concentrations in the environment and these pollutants are found in their
pseudofeces, which can be passed up the food chain, therefore increasing
wildlife exposure to organic pollutants (Snyder et al., 1997). Another major
threat involves the fouling of native freshwater mussels. Since quaggas were
discovered in Lake Michigan in 1998, plankton rings formed by the passage of
storms have been eaten away by the quagga mussels, threatening the local
ecosystem.
5
Numerous pipelines, filter screens, hydroelectric turbines and pumping stations,
irrigation tunnels, canals and aqueducts are becoming clogged with quagga and
zebra mussels, and this proliferation and dispersion of mussel populations
threatens to impact reclamation operations and multiple dams across North
America, resulting in the interruption of hydropower and water delivery at
significant economic costs. Of particular concern is the blockage of water lines
designed to cool the hydropower turbines at dams like Hoover.
The quagga mussels, which grow to about 1.5 inches, are clogging water lines
that are used to cool the 17 massive hydropower turbines at Hoover Dam and have
already forced dam operators to temporarily shut down turbines that supply
electricity to 1.6 million people in southern Nevada, Arizona and California.
The mussels have caused similar problems at the downstream Davis Dam in Lake
Mohave and Parker Dam in Lake Havasu, both of which provide electricity for
thousands of people in Arizona and California. The mussels have also threatened
to clog water intake lines in Lake Mead operated by the Southern Nevada Water
System that supply water to more than 2 million people in the Las Vegas area.
What took decades to unfold in the Great Lakes has played out in a matter of
months in Lake Mead. Quaggas can lay eggs six or seven times a year in the
warmer water, compared with once or twice a year in the Great Lakes.
If you drained Lake Mead above Hoover Dam, says National Park Service biologist
Bryan Moore, it would reveal that brown canyon walls that were mussel-free just
two years ago are now black with quaggas at densities of up to 55,000 per square
meter. The Bureau of Reclamation, which operates the Hoover, Davis and Parker
dams, has employed divers with high-pressure water hoses to blow mussels out of
pipelines and filter gates, and the agency retains the option of using chlorine
treatments on the mussels if necessary. But those treatments are expensive,
temporary and, in the case of chlorine, can have negative environmental effects.
Colonization of the Columbia River Basin (CRB)in the Pacific Northwest by zebra
and quagga mussel could affect all submerged components and conduits of the
Federal Columbia River Power System (FCRPS) including trash racks, raw water
distribution systems (headers), turbine bearing cooling systems, diffuser
plates, service and fire-water systems, and fish passage facilities.
Despite the uncertainty about zebra and quagga mussel tolerance to water
velocity, irregularities such as cracks and crevices and scaling in older pipes
and flanges can provide lower velocity refugia where zebra and quagga mussel
settlement can occur. The attached mussels, in turn, then produce additional low
flow refuges, allowing colonization in otherwise inhospitable flow environments.
Settlement can also occur when water flow is reduced during generation down-time
as conditions become more conducive to attachment.
Zebra and quagga mussel densities within the CRB could vary widely depending on
water chemistry, food availability, and breeding population. After their initial
introduction, zebra mussel populations can rapidly increase by orders of
magnitude, and then similarly decrease. Under ideal conditions in the Laurentian
Great Lakes zebra mussel densities reach 700,000 - 800,000 per square meter
(Kovalak et al, 1993). In the lower Mississippi River, where the zebra mussel
has been introduced, densities of 400,000 per square meter have been reported
(Kraft, 1995). The Mississippi has an ideal environment for zebra and quagga
mussels, in part because food resources are abundant (Kraft, 1995). While
Columbia River water quality parameters are favorable to zebra and quagga mussel
colonization (Athearn 1999), the Columbia River's lower plankton densities in
comparison to the Mississippi or Great Lakes, may limit zebra and quagga mussel
population densities.
Densities of zebra and quagga mussels in the Pacific Northwest will determine
the severity of impacts on hydropower, navigation, and fish passage facilities.
Zebra mussel densities in powerhouses will depend on the configuration of the
water systems and water conduit materials. The potential economic impacts of
zebra and quagga mussels on hydropower generation facilities in the Columbia
River will be determined by a number of factors including density, growth rate,
and maintenance costs. While density and growth are affected by environmental
factors as noted above, maintenance costs will also be driven by the difficulty
in accessing fouled areas, the methods available for removal and control, and
the amount of time available for maintenance activities. They prefer to cling to
flat, stainless steel structures where water flows less than 6 feet per second.
The muscles infestation sets in and begins to clog hydroelectric power cooling
pipes and other hardware in the dams' operations with quagga colonies. Not only
do they pose a threat to the cooling pipe system for hydroelectric turbines, but
also to the network that supplies domestic water for workers and visitors at the
dams.
6
Economic Impacts:
o Hydroelectric Dams and Nuclear Power Plants
There are more than 85,000 dams in the United States alone, of which
approximately 11% are federally owned and operated. The major concern is the
blockage of water lines designed to cool the hydropower turbines at dams like
Hoover. This problem has already caused a "significant increase in the frequency
of high temperature alarms in cooling systems, requiring shutdowns" so that the
mussels could be removed.
Quagga
The quagga mussels, which grow to about 1.5 inches, are clogging water lines
that are used to cool the 17 massive hydropower turbines at Hoover Dam and have
already forced dam operators to temporarily shut down turbines that supply
electricity to 1.6 million people in southern Nevada, Arizona and California.
The mussels have caused similar problems at the downstream Davis Dam in Lake
Mohave and Parker Dam in Lake Havasu, both of which provide electricity for
thousands of people in Arizona and California. The mussels have also threatened
to clog water intake lines in Lake Mead operated by the Southern Nevada Water
System that supply water to more than 2 million people in the Las Vegas area.
Maintenance costs will also be driven by the difficulty in accessing fouled
areas, the methods available for removal and control, and the amount of time
available for maintenance activities. It has been estimated that hundreds of
millions of dollars is spent annually to combat the mussel infestation at
hydroelectric dams alone, and it is expected that this amount will increase
exponentially once the infestation has spread to the West.
Virtually any submerged area with a moderate flow rate that draws water from an
infested water source is vulnerable to colonization. This is especially true of
areas that offer protection to small mussels, such as crevices or seams. Intake
screens, for example, are common settlement areas and are often coated with
clumps or druses of mussels. The presence of dislodged shells in the discharge
of a facility's raw well or forbay is a common first indicator of the presence
of zebra mussels in the raw water main. Facilities may also experience a
noticeable decrease in head pressure. Most facilities have numerous components
subject to severe biofouling,
o Shipping Industry
The shipping industry worldwide spends huge amounts every year combating the
effects of "fouling". Every year or two, ocean going vessels must dry-dock in
order to undergo extensive work over two or more weeks to remove barnacles that
have attached to the hull. Prior to dry-docking, ships gradually undergo rapid
increases in additional fuel costs due to increased drag from fouling. The
mechanism involved in fouling occurs in a series of three steps. Within one
week, the hull surface is coated with a slimy deposit. Following this, various
micro-organisms (bacteria) attach. Barnacles attach to this slimy/bacterial
coating and become attached to the ship's hull using a biocement generated by a
series of three proteins that undergo a conformational change, within the
organism. This cement is one of, if not the strongest cement known to date of
anything produced naturally.
The current antifouling paint applied to ship hulls contains toxic chemicals and
heavy metals. However, as the international shipping community has been issuing
legislation prohibiting the use of these environmentally hazardous substances -
the need for alternatives is pressing.
o Recreational Boating Industry
In contrast, Lake Mead Marina predicts the costs to the West's recreational
boating industry alone will be immense in the coming few years. Mussels are
smothering everything under the waterline at marinas, making simple maintenance
on boats and floating docks expensive and time consuming, not to mention
dangerous due to the razor-sharp shells being plucked from the water.
The United States Park Service, which figures the mussels have been in Lake Mead
since 2005, is trying to protect the rest of the West's waters by requiring
boats that have been docked in a slip to be decontaminated with jets of scalding
water before departing Lake Mead. A killer hot wash costs about $40 for a small
boat and up to $200 for a houseboat.
7
o Ecological Damage
The infestation of zebra and quagga mussels are wreaking havoc on the native
species indigenous to the waterways they inhabit. These mussels attach to other
mussel species and crustaceans making it almost impossible for them to eat and
survive. While the zebra and quagga do have predator enemies, there are not
enough to consume the rapidly growing infestation.
This is more than an ecological concern. The federal government plans to spend
over a billion dollars in the coming years to help these species recover, and
zebra and quagga mussels have a history of ravaging native species in the waters
they invade. In Lake Michigan, for example, prey fish numbers are less than 10%
of what they were before the invasive mussels arrived.
Zebra mussels are also believed to be the source of deadly avian botulism
poisoning that has killed tens of thousands of birds in the Great Lakes since
the late 1990s.
Zebra and quagga mussels accumulate organic pollutants within their tissues to
levels more than 300,000 times greater than concentrations in the environment
and these pollutants are found in their pseudofeces, which can be passed up the
food chain, therefore increasing wildlife exposure to organic pollutants.
Another major threat involves the fouling of native freshwater mussels. Since
quaggas were discovered in Lake Michigan in 1998, plankton rings formed by the
passage of storms have been eaten away by the quagga mussels, threatening the
local ecosystem.
Other zebra and quagga mussel infested applications include:
o Drinking water treatment facilities
o Fish hatcheries and aquaculture facilities
o Golf courses
o Impoundments and reservoirs
o Institutions (hospitals, colleges, etc.)
o National scenic river ways
o Navigation locks
o Public agencies
o farm irrigation water
Our Advantages
We believe that our proprietary technology provide advantages over potential
competitors to meet their objectives.
Proprietary Technology:
We intend to manufacture a product based on proprietary technology that took
over ten years to develop.
Our approach allows us to construct and test a targeted peptide in weeks as
opposed to the present vaccine development that can take longer than a year to
make and test. We have reconstructed the peptides in such a way that enzymes do
not recognize them and therefore will not destroy them. As a result, our
targeted peptides will have the opportunity to perform the objective they were
designed to fulfill. Additionally, peptides based on structures of the naturally
occurring barnacle cement proteins are non-toxic, and once sloughed off into
seawater, peptides would be eaten as totally non-toxic food by marine organisms.
The Company has developed proprietary innovative peptide proteomic technologies
involving the use of peptides to create a solution that would effectively
prevent zebra and quagga muscles from attaching to equipment, water intake
pipes, and even boat hulls to colonize in massive numbers. The Company uses
computer algorithms to generate peptides capable of interacting with
biologically significant protein targets. When fully developed, Peptide
Technologies' peptide solution will slow the rate of zebra and quagga mussel
fouling as well as to eliminate the harm to water users and marine life through
the use of safe, environmentally-friendly natural peptides. While the production
of an underwater adhesive that mimics the properties of mussels has been an
ongoing field of research, Peptide Technologies is focused on proteins that
comprise the glue that affixes the byssal threads of the zebra and quagga
mussels to hard surfaces.
8
We have two designs that we are launching for use by the shipping and boating
industry based upon our technology:
o The first was the design of specific peptide inhibitors of a bacteria
that attaches to a ship's hull, which could be incorporated into paint
used to coat the hull following defouling in dry-dock. The peptides
would prevent attachment of the bacteria and subsequent attachment of
the barnacles. Furthermore, any release of the peptides into the ocean
as the paint wears off, would not pose any environmental threat since
peptides are biodegradable natural proteins.
o The second approach was the design of peptide inhibitors that will
prevent folding of the proteins in barnacles that generate the
powerful cement that "glue" them to the ship's hull. Both of the above
approaches offered the shipping industry a solution to an age old
problem costing literally billions of dollars in lost time at sea
(dry-dock scraping of barnacles and painting) and significantly
reduced fuel costs by preventing any increase in drag.
Governmental Regulations
To date, the Company has not acquired any specific properties, and because of
the wide range of activities in which Peptide may participate, it is impossible
to set forth in detail the potential impact federal, state, provincial and
territorial regulations may have on the Company.
Research and Development Activities and Costs
We have not incurred any costs to date relating to research and development and
have no plans to undertake any research and development activities within the
next twelve months.
Facilities and Properties
We do not own our own facilities and are presently renting an identity office in
Seattle, Washington.
Employees
Our officers and directors are responsible for planning, developing and
operational duties and will continue to do so throughout the early stages of our
growth. We have no intentions in hiring any employees until our business has
sufficient and reliable revenue from operations and do not expect to hire any
such employees in the next twelve months.
ITEM 1A. RISK FACTORS
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company has a lack of revenue history and has had a limited history of
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operations.
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Peptide was formed on November 18, 2005 for the purpose of engaging in any
lawful business and had adopted a plan to engage the sale of art work over the
internet. The Company had minimal revenues. On July 29, 2010 the Company's name
changed from Online Originals, Inc. to CREEnergy Corporation. The name change
was intended to convey a sense of the Company's new business focus as it looks
to pursue other opportunities. Specifically, the Company intended to obtain
leases for the exploration and production of oil and gas in northern Alberta,
Canada. The Company was unable to identified any prospects or enter into any
leases or agreements.
On August 23, 2011, the Company entered into an Asset Purchase to acquire
intangible assets and intellectual property known as the Peptide Technology
Platform. The Peptide Technology Platform includes the technology platforms for
developing a variety of drug candidates and biological solutions for existing
problems in humans, animals and the environment. Effective October 12, 2011, the
Company changed its name to Peptide Technologies, Inc. in order to better convey
a sense of the Company's new business focus. At the date of this Annual Report
on Form 10-K, the Company is not profitable. Peptide must be regarded as a
start up venture with all of the unforeseen costs, expenses, problems, risks and
difficulties to which such ventures are subject.
9
Peptide can give no assurance of success or profitability to the Company's
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investors.
---------
There is no assurance that Peptide will ever operate profitably. There is no
assurance that the Company will generate revenues or profits, or that the market
price of the Company's common stock will be increased thereby.
The Company will need additional financing for which Peptide has no
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commitments, and this may jeopardize execution of the Company's business plan.
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The Company's capital needs consist primarily of expenses related to expenses
incurred with maintaining its reporting status and could exceed $50,000 in the
next twelve months. Such funds are not currently committed, and Peptide's cash
as of the date of this Annual Report on Form 10K of approximately $5,000.
Peptide has limited funds, and such funds may not be adequate to carry out the
business plan. The Company's ultimate success depends upon its ability to raise
additional capital. The Company has not investigated the availability, source,
or terms that might govern the acquisition of additional capital and will not do
so until it determines a need for additional financing. If the Company needs
additional capital, it has no assurance that funds will be available from any
source or, if available, that they can be obtained on terms acceptable to the
Company. If not available, Peptide's operations will be limited to those that
can be financed with its modest capital.
We will incur expenses in connection with our SEC filing requirements and we may
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not be able to meet such costs, which could jeopardize our filing status with
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the SEC.
As a public reporting company we are required to meet the filing requirements of
the SEC. We may see an increase in our legal and accounting expenses as a result
of such requirements. We estimate such costs on an annualized basis to be
approximately $50,000, which includes both the annual audit and the review of
the quarterly reports by our auditors. These costs can increase significantly if
the Company is subject comment from the SEC on its filings and/or we are
required to file supplemental filings for transactions and activities. If we are
not compliant in meeting the filing requirements of the SEC, we could lose our
status as a 1934 Act Company, which could compromise our ability to raise funds.
Peptide is not diversified and it is dependent on only one business.
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Because of the limited financial resources that the Company has, it is unlikely
that the Company will be able to diversify its operations. Peptide's probable
inability to diversify its activities into more than one area will subject the
Company to economic fluctuations within the industry and therefore increase the
risks associated with the Company's operations due to lack of diversification.
The Company may in the future issue more shares which could cause a loss of
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control by its present management and current stockholders.
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Peptide may issue further shares as consideration for the cash or assets or
services out of its authorized but unissued common stock that would, upon
issuance, represent a majority of the voting power and equity of the Company.
The result of such an issuance would be those new stockholders and management
would control the Company, and persons unknown could replace the Company's
management at this time. Such an occurrence would result in a greatly reduced
percentage of ownership of Peptide by its current shareholders, which could
present significant risks to investors.
Peptide will depend upon management but it will have limited participation of
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management.
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The Company currently has four individuals who are serving as its officers and
directors for up to a maximum total of ten hours per week each on a part-time
basis. The Company will be heavily dependent upon their skills, talents, and
abilities, as well as several consultants to Peptide, to implement the
Company's business plan, and may, from time to time, find that the inability of
the officers, directors and consultants to devote their full-time attention to
Peptide's business results in a delay in progress toward implementing the
Company's business plan.
10
Peptide does not know of any reason other than outside business interests that
would prevent them from devoting full-time to its Company, when the business may
demand such full-time participation.
The departure of our key personnel could compromise our ability to execute our
--------------------------------------------------------------------------------
strategic plan and may result in additional severance costs to us.
------------------------------------------------------------------
Our success largely depends on the skills, experience and efforts of our key
personnel. The loss of these persons, or our failure to retain other key
personnel, would jeopardize our ability to execute our strategic plan and
materially harm our business.
We will need to recruit and retain additional qualified personnel to
--------------------------------------------------------------------------------
successfully grow our business.
-------------------------------
Our future success will depend in part on our ability to attract and retain
qualified operations, marketing and sales personnel as well as engineers.
Inability to attract and retain such personnel could adversely affect the growth
of our business. We expect to face competition in the recruitment of qualified
personnel, and we can provide no assurance that we will attract or retain such
personnel.
Risks Related to our Stock:
The regulation of penny stocks by SEC and FINRA may discourage the tradability
--------------------------------------------------------------------------------
of our securities.
------------------
The Company is a "penny stock" company. None of our securities currently trade
in any market and, if ever available for trading, will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of the rule, the
phrase "accredited investors" means, in general terms, institutions with assets
in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Effectively, this discourages broker-dealers from executing
trades in penny stocks. Consequently, the rule will affect the ability of
shareholders to sell their securities in any market that might develop therefore
because it imposes additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
Our officers and directors collectively own a substantial portion of our
--------------------------------------------------------------------------------
outstanding common stock, and as long as they do, they may be able to control
--------------------------------------------------------------------------------
the outcome of stockholder voting.
----------------------------------
Our officers and directors are collectively the beneficial owners of
approximately 44% of the outstanding shares of our common stock. As long as our
officers and directors collectively own a significant percentage of our common
11
stock, our other shareholders may generally be unable to affect or change the
management or the direction of our company without the support of our officers
and directors. As a result, some investors may be unwilling to purchase our
common stock. If the demand for our common stock is reduced because our officers
and directors have significant influence over our company, the price of our
common stock could be materially depressed. The officers and directors will be
able to exert significant influence over the outcome of all corporate actions
requiring stockholder approval, including the election of directors, amendments
to our certificate of incorporation and approval of significant corporate
transactions.
We may seek to raise additional funds or develop strategic relationships by
--------------------------------------------------------------------------------
issuing capital stock.
----------------------
We have financed our operations, and we expect to continue to finance our
operations and develop strategic relationships, by issuing equity or convertible
debt securities, which could significantly reduce or dilute the percentage
ownership of our existing stockholders. Furthermore, any newly issued securities
could have rights, preferences and privileges senior to those of our existing
stock. Moreover, any issuances by us of equity securities may be at or below the
prevailing market price of our stock and in any event may have a dilutive impact
on your ownership interest, which could cause the market price of stock to
decline.
We may also raise additional funds through the incurrence of debt, and the
holders of any debt we may issue would have rights superior to your rights in
the event we are not successful and are forced to seek the protection of the
bankruptcy laws.
The Company will pay no foreseeable dividends in the future.
------------------------------------------------------------
The Company has not paid dividends on our common stock and do not ever
anticipate paying such dividends in the foreseeable future.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. DESCRIPTION OF PROPERTY
We do not own our own facilities and are presently renting an identity office in
Seattle, Washington.
(a) Real Estate None.
(b) Title to properties. None.
(c) Oil and Gas Prospects. None.
(d) Patents None
ITEM 3. LEGAL PROCEEDINGS
On November 22, 2010, the Company was served with a claim filed by a former
director and officer of the Company. The claim, filed in the Court of Queen's
Bench of Alberta, alleges that the former director and officer of the Company
suffered losses and damages as a result of the failure of the Company in
providing him with corporate documents and implementing a change of the board of
directors. The Company has retained legal counsel to address the claim. On
December 8, 2010, the Company filed a Statement of Defense requesting that the
claim be dismissed. In the opinion of management, this claim is without merit
and the Company intends to defend this claim vigorously.
Other than the above, preceding the Company is not a party to any other pending
legal proceedings, nor is the Company aware of any civil proceeding or
government authority contemplating any legal proceeding as of the date of this
filing.
12
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market for Common Equity and Related Stockholder Matters
(a) Market Information
Our Common Stock is presently traded on the over-the-counter market on the
OTCBB. On August 7, 2008, we began trading on the over the counter bulletin
board under the symbol "OLOI".
Effective on October 12, 2011, the Company filed an amendment to its Articles of
Incorporation with the Secretary of State of Nevada to change its name from
CREEnergy, Corporation to Peptide Technologies, Inc.
As a result of the change, the Company's trading symbol, on the Over The Counter
Market BBboard was changed to "PEPT". During the period of August 7, 2008
through November 30, 2011, our shares have not traded.
(b) Holders
As of January 31, 2012, there were approximately forty-eight (48) holders of
record of our common stock.
(c) Dividend Policy
We have never declared or paid dividends on our common stock. We intend to
retain earnings, if any, to support the development of our business and
therefore do not anticipate paying cash dividends for the foreseeable future.
Payment of future dividends, if any, will be at the discretion of our board of
directors after taking into account various factors, including current financial
condition, operating results and current and anticipated cash needs.
(d) Securities authorized for issuance under equity compensation plans
None.
RECENT SALES OF UNREGISTERED SECURITIES
During the years ended November 30, 2011 and 2010, the Company made the
following sales and issuances of its unregistered securities.
On May 21, 2010, 120,000,000 shares of the Company's restricted common stock,
valued at $16,000, were issued to a former director and officer of the Company.
On October 29, 2010, the 120,000,000 restricted common shares of the Company
previously issued to a former director and officer of the Company were returned
to treasury for no consideration. The shares were cancelled on November 2, 2010.
On August 23, 2011, the Company issued a total of 75,000,000 shares of its
restricted common stock in exchange for intangible assets and intellectual
property referred to as the Peptide Technology Platforms. 15,000,000 of these
shares were issued for Finders/Founders fees and services.
During the three-month period from September to November 2011, the Company
raised $23,000 through the sale of 23,000 shares common stock via subscription
agreements sold to six investors, based on a stock price of $1.00 per share.
13
Exemption from Registration Claimed
All of the shares described above were issued by us in reliance upon an
exemption from the registration requirements of the Securities Act of 1933, as
amended, provided by Section 4(2). All of the individuals and/or entities listed
above that purchased or were issued the unregistered securities were all known
to us and our management, through pre-existing business relationships, as long
standing business associates, friends, and employees. All purchasers were
provided access to all material information, which they requested, and all
information necessary to verify such information and were afforded access to our
management in connection with their purchases. All purchasers of the
unregistered securities acquired such securities for investment and not with a
view toward distribution, acknowledging such intent to us. All certificates or
agreements representing such securities that were issued contained restrictive
legends, prohibiting further transfer of the certificates or agreements
representing such securities, without such securities either being first
registered or otherwise exempt from registration in any further resale or
disposition.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue up to 675,000,000 shares of Common Stock, $0.001 par
value. The holders of our Common Stock are entitled to one vote per share held
and have the sole right and power to vote on all matters on which a vote of
stockholders is taken Voting rights are non-cumulative. Common stockholders are
entitled to receive dividends when, as, and if declared by the Board of
Directors, out of funds legally available therefore and to share pro rata in any
distribution to stockholders. Upon liquidation, dissolution, or the winding up
of our Company, common stockholders are entitled to receive the net assets of
our Company in proportion to the respective number of shares held by them after
payment of liabilities which may be outstanding. The holders of Common Stock do
not have any preemptive right to subscribe for or purchase any shares of any
class of stock of the Company. The outstanding shares of Common Stock will not
be subject to further call or redemption and are fully paid and non-assessable.
To the extent that additional common shares are issued, the relative interest of
existing stockholders will likely be diluted.
At present, we are not authorized to issue any series or shares of preferred
stock.
Stock Purchase Warrants
None.
Stock Purchase Options
None.
ITEM 6. SELECTED FINANCIAL DATA
None.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
Cautionary and Forward-Looking Statements
-----------------------------------------
In addition to statements of historical fact, this Form 10-K contains
forward-looking statements. The presentation of future aspects of Peptide
Technologies, Inc. (the "Company" or "Issuer") found in these statements is
subject to a number of risks and uncertainties that could cause actual results
to differ materially from those reflected in such statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date hereof. Without limiting the
generality of the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," or "could" or the negative variations thereof or
comparable terminology are intended to identify forward-looking statements.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause the Company actual results to be materially
14
different from any future results expressed or implied by the Company in those
statements. Important facts that could prevent the Company from achieving any
stated goals include, but are not limited to, the following:
(a) volatility or decline of the Company's stock price;
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its business, inability to raise
additional capital or financing to implement its business plans;
(e) failure to make sales on an increasing basis;
(f) rapid and significant changes in markets;
(g) litigation with or legal claims and allegations by outside parties;
(h) insufficient revenues to cover operating costs.
There is no assurance that the Company will be profitable, the Company may not
be able to successfully develop, manage or market its products and services, the
Company may not be able to attract or retain qualified executives and personnel,
the Company's products and services may become obsolete, government regulation
may hinder the Company's business, additional dilution in outstanding stock
ownership may be incurred due to the issuance of more shares, warrants and stock
options, or the exercise of warrants and stock options, and other risks inherent
in the Company's businesses.
The Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
Readers should carefully review the factors described in other documents the
Company files from time to time with the Securities and Exchange Commission,
including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K
filed by the Company.
Plan of Operation for the Next Twelve (12) Months
The following discussion of the plan of operation, financial condition, results
of operations, cash flows and changes in financial position of our Company
should be read in conjunction with our most recent financial statements and
notes appearing elsewhere in this Form 10-K.
Our registered public accounting firm's audit report on our consolidated
financial statements as of November 30, 2011, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph
that describes substantial doubt about our ability to continue as a going
concern. Management's plans in regard to the factors prompting the explanatory
paragraph are discussed below.
Since inception, the Company's business plan was to develop a membership based
website art gallery/auction house specifically focused on displaying and selling
original artwork. The Company changed its status from a development stage
company to an operating company on November 30, 2009. Management realized that
the results of operations from the sale of artwork was lack-luster, and it was
decided to change the Company's business focus and plan for other strategic
opportunities and discontinued the sale of artwork to be effective June 25,
2010.
On July 29, 2010 the Company's name changed from Online Originals, Inc. to
CREEnergy Corporation. The name change was intended to convey a sense of the
Company's new business focus as it looks to pursue other opportunities.
Specifically, the Company intended to obtain leases for the exploration and
production of oil and gas in northern Alberta, Canada and the United States. The
Company was unable to identified any prospects or enter into any leases or
agreements. On August 23, 2011, the Company entered into an Asset Purchase to
acquire intangible assets and intellectual property known as the Peptide
Technology Platform. The Peptide Technology Platform includes the technology
platforms for developing a variety of drug candidates and biological solutions
for existing mussel problems in the environment. Effective October 12, 2011, the
Company changed its name to Peptide Technologies, Inc. in order to better convey
a sense of the Company's new business focus.
15
Peptide Technologies, Inc. is a development stage company that is engaged in the
development and manufacture of safe "green" peptide-based products used to
combat the rapidly growing problems caused by the quagga and zebra mussel
infestation in U.S. and Canadian waters.
We have no employees at the present time. We will continue to operate with very
limited administrative support as our current officers continue to be
responsible for developing and operational duties, without compensation, for at
least the next 12 months. We do not compensate our directors for their time
spent on behalf of our Company, but they are entitled to receive reimbursement
for all out of pocket expenses incurred for attendance at our Board of Directors
meetings.
Our continuing operations are dependent upon the identification and successful
completion of additional long-term or permanent equity financing, the support of
creditors and shareholders, and, ultimately, the achievement of profitable
operations. There can be no assurances that we will be successful, which would
in turn significantly affect our ability to complete our business plan. If not,
we will likely be required to reduce operations or liquidate assets. We will
continue to evaluate our projected expenditures relative to our available cash
and to seek additional means of financing in order to satisfy our working
capital and other cash requirements.
We believe we do not have sufficient cash resources to satisfy our needs through
the end of February 2012. Our ability to satisfy cash requirements thereafter
and the need for additional funding is dependent on our ability to generate
revenue from our business in sufficient quantity and on a profitable basis. To
the extent that we require additional funds to support our operations or the
expansion of our business, we may attempt to sell additional equity shares or
issue debt. Any sale of additional equity securities will result in dilution to
our stockholders. Should we require additional cash in the future, there can be
no assurance that we will be successful in raising additional debt or equity
financing on terms acceptable to us, if at all.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Financial Condition
At November 30, 2011, we had a working capital deficit of $122,340 compared to
working capital deficit of $22,843 at November 30, 2010. At November 30, 2011,
our total assets consisted of cash of $1,656 prepaid expenses of $127, and
intangible assets and intellectual property of $75,000. This compares with our
total assets at November 30, 2010, which consisted of cash of $6,090 and prepaid
expenses of $200.
At November 30, 2011, our total current liabilities, consisting of accounts
payable of $129,848, accrued liabilities of $9,062, and note payable of $60,213,
increased to $199,123 from $29,133 consisting of accounts payable of $6,241,
accrued liabilities of $6,892 and note payable of $16,000 at November 30, 2010.
Result of Operations - New Developments
We recognized $nil revenues from discontinued operations during the fiscal year
ending November 30, 2011 compared to $6,042 in revenues from discontinued
operations during the fiscal year ending November 30, 2010. We have not received
any revenue since our inception of the New Developments which began June 26,
2010. Our short and long-term survival is dependent on funding from sales of
securities as necessary or from shareholder loans.
During the year ended November 30, 2011, we incurred expenses of $212,029
compared to expenses of $31,460 for the year ended November 30, 2010. During the
year ended November 30, 2010, $1,972 of the $31,460 in expenses were applicable
to the discontinued operations. The principal component of losses in 2011 were
consulting expense of $105,975, professional fees of $42,755 and supplies of
$59,130 as well as office and administration of $4,169 compared with the
principal component losses in 2010 being professional fees of $28,562, office
and administration expenses of $2,898. During the year ended November 30, 2011,
expenses incurred by the Company increased significantly. These increased costs
were due to restructuring the Company to developing the new focus and direction
for the Company which resulted in an increase in professional fees of $14,193,
consulting expenses of $105,975 and the cost to purchase supplies for testing of
the peptide proteomic technologies.
16
During the year ended November 30, 2011 and the year ended November 30, 2010,
the Company had $nil and $6,042 in revenue, respectively, related to its
discontinued operations. During the year ended November 30, 2011 and the year
ended November 30, 2010, the Company had $nil and $1,972 in expenses,
respectively, related to its discontinued operations. This resulted in profits
from discontinued operations of $nil for the year ended November 30, 2011
compared to profits of $4,070 for the year ended November 30, 2010.
The net loss for the year ended November 30, 2011 was $212,146 compared to a net
loss of $27,390 for the year ended November 30, 2010. From inception to November
30, 2011, we have incurred a net loss of $344,322.
As of February 15, 2012, our net cash balance is approximately $5,000. In
addition, we have prepaid expenses of $1,425. Cash on hand is currently our only
source of liquidity. We do not have any lending arrangements in place with
banking or financial institutions and we do not anticipate that we will be able
to secure these funding arrangements in the near future.
We believe our existing cash balance is not sufficient to carry our normal
operations for the next 12 months. To the extent that we require additional
funds to support our operations or the expansion of our business, we may attempt
to sell additional equity shares or issue debt. Any sale of additional equity
securities will result in dilution to our stockholders. There can be no
assurance that additional financing, if required, will be available to our
company or on acceptable terms.
Off Balance Sheet Arrangements.
None.
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles in the United States requires
management to make assumptions and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses as well as the 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
following is a summary of the significant accounting policies and related
estimates that affect the Company's financial disclosures.
Revenue Recognition
Revenues are recognized when persuasive evidence of an arrangement exists,
delivery has occurred (or service has been performed), the sales price is fixed
and determinable and collectability is reasonably assured. Revenue recognition
from consignment inventory consists of commission income.
Foreign Currency Translations
The functional currency is the Canadian dollar and the reporting currency is the
U.S. dollar. At each balance sheet date, assets and liabilities that are
denominated in a currency other than U.S. dollars are adjusted to reflect the
current exchange rate which may give rise to a foreign currency translation
adjustment accounted for as a separate component of shareholders' equity and
included in other comprehensive loss.
Revenues and expenses are translated at the average daily rate for the period
covering the financial statement year to approximate the rate of exchange on the
transaction date. Exchange gains and losses are included in the determination of
net income (loss) for the year.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We believe our market risk exposures arise primarily from exposures to
fluctuations in interest rates and exchange rates. We presently only transact
business in Canadian and U.S. Dollars. We believe that the exchange rate risk
surrounding the future transactions of the Company will not materially or
17
adversely affect our future earnings. We do not believe that we are subject to
any seasonal trends. We do not use derivative financial instruments to manage
risks or for speculative or trading purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required by this Item begin on Page F-19 of this Form
10-K.
18
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Stage Company)
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
November 30, 2011
Page
Reports of Independent Registered Public Accounting Firm F-20
Financial Statements:
Balance Sheets F-22
Statements of Loss and Comprehensive Loss F-23
Statements of Cash Flows F-24
Statement of Changes in Stockholders' (Deficiency) F-25
Notes to Financial Statements F-26 to F-34
F-19
JAMES STAFFORD
James Stafford, Inc.
Chartered Accountants
Suite 350 - 1111 Melville Street
Vancouver, British Columbia
Canada V6E 3V6
Telephone +1 604 669 0711
Facsimile +1 604 669 0754
www.JamesStafford.ca
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Peptide Technologies, Inc. (formerly CREENERGY Corporation)
(A Development Stage Company)
We have audited the balance sheets of Peptide Technologies, Inc. (formerly
CREENERGY Corporation) (A Development Stage Company) (the "Company") as of 30
November 2011 and 2010 and the related statements of loss and comprehensive
loss, cash flows and changes in stockholders' equity for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit. The financial statements of the Company for the year ended 30
November 2009 were audited by other auditors whose report dated 4 March 2010,
expressed an unqualified opinion on those statements.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of 30 November
2011 and 2010, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern unless it is able to generate
sufficient cash flows to meet its obligations and sustain its operations.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ James Stafford
Vancouver, Canada Chartered Accountants
13 February 2012, except for Note 11, as to which the date is 28 February 2012
F-20
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Stage Company)
Financial Statements
(Expressed in U.S. Dollars)
November 30, 2011
21
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Stage Company)
BALANCE SHEETS
--------------
November 30, November 30,
2011 2010
ASSETS
------
Current Assets
--------------
Cash $ 1,656 $ 6,090
Prepaid expense 127 200
------------------------------------------
Total Current Assets 1,783 6,290
Intangible Assets and Intellectual Property (Note 3) 75,000 -
------------------------------------------
TOTAL ASSETS $ 76,783 $ 6,290
------------
==========================================
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
LIABILITIES
Current Liabilities
-------------------
Accounts payable and accrued liabilities (Note 4) $ 138,910 $ 13,133
Notes payable (Note 5) 60,213 16,000
------------------------------------------
Total Current Liabilities 199,123 29,133
------------------------------------------
STOCKHOLDERS' (DEFICIENCY)
--------------------------
Capital Stock (Note 7)
--------------
Authorized:
675,000,000 common shares, par value $0.001 per share
Common shares issued and outstanding:
November 30, 2011 - 171,023,000
November 30, 2010 - 96,000,000 171,023 96,000
Additional paid-in capital 50,265 13,000
Accumulated other comprehensive income 694 333
Accumulated deficit (105,837) (105,837)
Accumulated deficit during development stage (238,485) (26,339)
------------------------------------------
(122,340) (22,843)
------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEICIENCY) $ 76,783 $ 6,290
-----------------------------------------------
==========================================
The accompanying notes are an integral part of these statements
F-22
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Stage Company)
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
-----------------------------------------
Cumulative from
re-entering of
development
stage on
Year Ended Year Ended Year Ended June 26, 2010
November November November to November 30,
30, 2011 30, 2010 30, 2009 2011
--------------------------------------------------------------------------------
Revenue $ - $ - $ - $ -
--------------------------------------------------------------------------------
Expenses
Consulting 105,975 - 105,975
Office and administration 4,169 2,898 602 6,449
Professional fees 42,755 28,562 15,733 66,814
Supplies and materials 59,130 - - 59,130
--------------------------------------------------------------------------------
212,029 31,460 16,335 238,368
--------------------------------------------------------------------------------
Net Loss before Other Items (212,029) (31,460) (16,335) (238,368)
--------------------------------------------------------------------------------
Other Item
Interest expense (Note 5) (117) - - (117)
--------------------------------------------------------------------------------
(117) - - (117)
--------------------------------------------------------------------------------
Net Loss from Continuing Operations (212,146) (31,460) (16,335) (238,485)
--------------------------------------------------------------------------------
Discontinued Operations (Note 9)
Net profit from discontinued
operations - 4,070 9,946 -
--------------------------------------------------------------------------------
Net Operating Loss $ (212,146) $ (27,390) $ (6,389) $ (238,485)
================================================================================
Other Comprehensive Income
Foreign currency translation
adjustment 361 21 441 361
--------------------------------------------------------------------------------
================================================================================
Comprehensive Loss for The Period $ (211,785) $ (27,369) $ (5,948) (238,124)
================================================================================
Loss per share from continuing
operations - Basic and diluted $ (0.00) $ (0.00) (0.00)
Earnings per share from discontinued
operations - Basic and diluted $ 0.00 $ 0.00 $ 0.00
================================================================================
Weighted Average Number Of Shares
Outstanding 116,344,800 150,246,576 96,000,000
================================================================================
The accompanying notes are an integral part of these statements
F-23
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
------------------------
Cumulative from
re-entering of
development stage
Year ended Year ended Year ended on June 26, 2010
November November November 30, to November 30,
30, 2011 30, 2010 2009 2011
-------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net loss $ (212,146) $ (27,390) $ (6,389) $ (238,485)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
Depreciation and amortization - 476 3,066 -
Prepaid expenses 73 (91) (16) 2,583
Accounts payable and accrued liabilities 125,777 1,233 835 138,160
-------------------------------------------------------------------------------
Cash Used in Operating Activities (86,296) (25,772) (2,504) (97,742)
===============================================================================
Cash Flows From Financing Activities
Issuance of common shares 23,000 - - 23,000
Increase in notes payable 44,213 16,000 - 44,213
Contribution by related party 14,288 13,000 - 27,288
-------------------------------------------------------------------------------
Net Cash Provided by Financing Activities
81,501 29,000 - 94,501
===============================================================================
Increase (Decrease) in Cash during the Period
(4,795) 3,228 (2,504) (3,241)
Effect of Exchange Rate Changes on Cash 361 21 441 361
Cash, Beginning Of Period 6,090 2,841 4,904 4,536
-------------------------------------------------------------------------------
Cash, End Of Period $ 1,656 $ 6,090 $ 2,841 $ 1,656
===============================================================================
Supplemental Disclosure Of Cash Flow
Information
Cash paid for:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
===============================================================================
The accompanying notes are an integral part of these statements.
F-24
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS'(DEFICIENCY)
-------------------------------------------------
For the Period from November 30, 2009 through November 30, 2011
CAPITAL STOCK
----------------------------------------
ADDITIONAL ACCUMULATED
PAID-IN DURING ACCUMULATED
ACCUMULATED DEVELOPMENT COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT STAGE INCOME (LOSS) TOTAL
---------------------------------------------------------------------------------------------------------
Balance, 30
November 2009 96,000,000 $ 96,000 $ - $ (104,786) $ - $ 312 $ (8,474)
---------------------------------------------------------------------------------------------------------
Common shares issued
for cash (Note 7) 120,000,000 120,000 - (104,000) - - 16,000
Common shares
cancelled (120,000,000) (120,000) - 104,000 - - (16,000)
Contribution by related
party (Note 6) - - 13,000 - - - 13,000
Foreign currency
translation
adjustment - - - - - 21 21
Net loss for the year - - - (1,051) (26,339) - (27,390)
---------------------------------------------------------------------------------------------------------
Balance, 30 November 2010 96,000,000 96,000 13,000 (105,837) (26,339) 333 (22,843)
---------------------------------------------------------------------------------------------------------
Common shares issued for
property (Note 3 and 7) 75,000,000 75,000 - - - 75,000
Common shares issued for
cash (Note 7) 23,000 23 22,977 - - - 23,000
Contribution by related
party (Note 6) - - 14,288 - - - 14,288
Foreign currency transla-
tion adjustment - - - - - 361 361
Net loss for the year
ended November 30, 2011 - - - - (212,146) - (212,146)
---------------------------------------------------------------------------------------------------------
Balance, 30 November 2011 171,023,000 $ 171,023 $ 350,265 $ (105,837) $ (238,485) $ 694 $ (122,340)
=========================================================================================================
The accompanying notes are an integral part of these statements
F-25
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
1. NATURE AND CONTINUENCE OF OPERATIONS
a) Organization
PEPTIDE TECHNOLOGIES, INC. (formerly CREEnergy Corporation) (the
"Company") was incorporated in the State of Nevada, United States
of America, on November 18, 2005. On July 29, 2010, the Company's
name was changed from Online Originals, Inc. to CREENERGY
Corporation. Effective October 12, 2011, the Company's name was
changed from CREEnergy Corporation to Peptide Technologies, Inc.
The Company's year-end is November 30.
b) Nature of Operations and Change in Business
Since the date of inception on November 18, 2005, the Company's
business plan was to develop a membership-based website art
gallery/auction house specifically focused on displaying and
selling original artwork.
The Company changed its status from a development stage company to
an operating company on November 30, 2009. Management realized
that the results of operations from the sale of artwork lacks
luster and decided to change the Company's business focus and plan
for other strategic opportunities and discontinued the sale of
artwork with effect from June 25, 2010. Accordingly, the Company
has disclosed these activities as discontinued operations in the
accompanying financial statements. Effective June 26, 2010 the
Company became a development stage company focusing on new
business.
c) Basis of Presentation
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles in the
United States of America ("U.S."), which contemplates continuation
of the Company as a going concern. However, the Company has
negative working capital at November 30, 2011 and has losses to
date of approximately $344,000. These matters raise substantial
doubt about its ability to continue as a going concern. In view of
these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon its ability to meet
its financing requirements, raise additional capital, and the
success of its future operations. There is no assurance that
future capital raising plans will be successful in obtaining
sufficient funds to assure its eventual profitability. Management
is actively seeking to add new products and/or services in order
to show profitability. To date, due to the continued economic
conditions, they have not yet been able to find products and
services that would contribute to their business. We believe that
actions planned and presently being taken to revise its operating
and financial requirements will provide the opportunity for the
Company to continue as a going concern. The financial statements
do not include any adjustments that might result from these
uncertainties.
2. SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in understanding the Company's financial statements. The financial
F-26
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
statements and notes are representations of management who is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles in the
U.S. and have been consistently applied in the preparation of the
financial statements. The financial statements are stated in U.S.
dollars.
a) Organizational and Start-up Costs
Costs of start-up activities, including organizational costs, are
expensed as incurred in accordance with Accounting Standards
Codification ("ASC") 720-15, "Start-Up Costs".
b) Discontinued Operations
When specific operations of a business are sold, abandoned, or
otherwise disposed of, the business must account for these related
revenues and expenses (including any gains or losses on related
assets disposed of) as gain (loss) from discontinued operations.
Continuing operations must be reported separately in the income
statement from discontinued operations, and any gain or loss from
the disposal of a segment be reported along with the operating
results of the discontinued segment.
c) Development-Stage Company
On or around June 25, 2010, the Company abandoned its previous
business of sale of original artwork and re-entered the
development stage with its intended new business, which currently
has no revenues. Management expects to sustain losses from
operations until such time it can generate sufficient revenues to
meet its anticipated cost structure. The Company is considered a
development-stage company in accordance with the ASC 915,
"Accounting and Reporting by Development-Stage Enterprises". A
development-stage enterprise is one in which planned principal
operations have not commenced or if its operations have commenced,
there has been no significant revenues there from.
d) Income Taxes
The Company adopted the ASC 740, "Accounting for Income Taxes".
ASC 740 requires the use of the asset and liability method of
accounting of income taxes. Under the asset and liability method
of ASC 740, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to temporary differences
between the financial statements carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A
valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.
e) Basic and Diluted Earnings (Loss) per Share
In accordance with ASC 260, "Earnings per Share", the basic loss
per common share is computed by dividing net loss available to
common stockholders by the weighted average number of common
shares outstanding. Diluted loss per common share is computed
similar to basic loss per common share except that the denominator
is increased to include the number of additional common shares
that would have been outstanding if the potential common shares
F-27
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
had been issued and if the additional common shares were dilutive.
Diluted earnings per share is not shown for periods in which the
Company incurs a loss because it would be anti-dilutive. At
November 30, 2011, the Company had no stock equivalents that were
anti-dilutive and excluded in the earnings per share computation.
f) Estimated Fair Value of Financial Instruments
The carrying value of the Company's financial instruments,
consisting of cash, accounts payable, and notes payable
approximate their fair value due to the short-term maturity of
these instruments. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest or
currency risks arising from these financial statements.
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents. At November 30, 2011, approximately $1,656 of cash or
cash equivalents was not insured by agencies of the U.S.
Government.
g) Revenue Recognition
Revenues are recognized when persuasive evidence of an arrangement
exists, delivery has occurred (or service has been performed), the
sales price is fixed and determinable and collectability is
reasonably assured. Revenue recognition from consignment inventory
consists of commission income.
h) Foreign Currency Translations
The functional currency is the Canadian dollar and the reporting
currency is the U.S. dollar. At each balance sheet date, assets
and liabilities that are denominated in a currency other than U.S.
dollars are adjusted to reflect the current exchange rate which
may give rise to a foreign currency translation adjustment
accounted for as a separate component of shareholders' equity and
included in other comprehensive loss.
Monetary assets and liabilities are translated at the rate of
exchange in effect at the balance sheet date. Revenues and
expenses are translated at the average daily rate prevailing
during the period. Exchange gains and losses are included in the
determination of net income (loss) for the year.
Translation adjustments resulting from translation of balances
from functional to reporting currency are accumulated as a
separate component of shareholders' equity as a component of
comprehensive income or loss.
i) Comprehensive Income (Loss)
The Company adopted ASC 220, "Reporting Comprehensive Income". ASC
220 requires that the components and total amounts of
comprehensive income be displayed in the financial statements
beginning in 1998. Comprehensive income includes net income and
all changes in equity during a period that arises from non-owner
sources, such as foreign currency items and unrealized gains and
losses on certain investments in equity securities.
F-28
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
j) Use of Estimates
The preparation of the Company's financial statements are in
conformity with generally accepted accounting principles which
requires management to make estimates and assumptions that affect
the amounts reported in these financial statements and
accompanying notes. Actual results could differ from those
estimates.
k) Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less.
l) Recent Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board
("FASB") issued Accounting Standards Update ("ASU") 2011-12,
"Comprehensive Income". This update amends certain pending
paragraphs in ASU No. 2011-05 "Presentation of Comprehensive
Income", to effectively defer only those changes that relate to
the presentation of reclassification adjustments out of
accumulated other comprehensive income for annual and interim
financial statements for public, private, and non-profit entities.
In September 2011, the FASB issued ASU 2011-08, "Intangibles -
Goodwill and Other" which allows an entity to first assess
qualitative factors to determine whether it is necessary to
perform the two-step quantitative goodwill impairment test. Under
these amendments, an entity would not be required to calculate the
fair value of a reporting unit unless the entity determines, based
on a qualitative assessment, that it is more likely than not that
its fair value is less than its carrying amount. ASU 2011-08 will
be effective for the Company in fiscal 2013, with early adoption
permitted. The Company does not expect the adoption of this update
will have a material effect on its financial statements.
In June 2011, the FASB issued ASU 2011-05, "Presentation of
Comprehensive Income". This update presents an entity with the
option to present the total of comprehensive income, the
components of net income, and the components of other
comprehensive income either in a single continuous statement of
comprehensive income or in two separate but consecutive
statements. In both choices, an entity is required to present each
component of net income along with total net income, each
component of other comprehensive income along with a total for
other comprehensive income, and a total amount for comprehensive
income. This update eliminates the option to present the
components of other comprehensive income as part of the statement
of changes in stockholders' equity. The amendments in this update
do not change the items that must be reported in other
comprehensive income or when an item of other comprehensive income
must be reclassified to net income. As ASU 2011-05 relates only to
the presentation of Comprehensive Income, the Company does not
expect that the adoption of this update will have a material
effect on its financial statements.
In May 2011, the FASB issued ASU No. 2011-04, "Fair Value
Measurement" to amend the accounting and disclosure requirements
on fair value measurements. This ASU limits the
highest-and-best-use measure to nonfinancial assets, permits
F-29
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
certain financial assets and liabilities with offsetting positions
in market or counterparty credit risks to be measured at a net
basis, and provides guidance on the applicability of premiums and
discounts. Additionally, this update expands the disclosure on
Level 3 inputs by requiring quantitative disclosure of the
unobservable inputs and assumptions, as well as description of the
valuation processes and the sensitivity of the fair value to
changes in unobservable inputs. ASU No. 2011-04 is to be applied
prospectively and is effective during interim and annual periods
beginning after 15 December 2011. The Company does not expect the
adoption of this update will have a material effect on its
financial statements.
In January 2010, the FASB issued ASU 2010-06, "Improving
Disclosures about Fair Value Measurements". This update requires
additional disclosure within the roll forward of activity for
assets and liabilities measured at fair value on a recurring
basis, including transfers of assets and liabilities between Level
1 and Level 2 of the fair value hierarchy and the separate
presentation of purchases, sales, issuances and settlements of
assets and liabilities within Level 3 of the fair value hierarchy.
In addition, the update requires enhanced disclosures of the
valuation techniques and inputs used in the fair value
measurements within Levels 2 and 3. The new disclosure
requirements are effective for interim and annual periods
beginning after 15 December 2009, except for the disclosure of
purchases, sales, issuances and settlements of Level 3
measurements. Those disclosures are effective for fiscal years
beginning after 15 December 2010. As ASU 2010-06 only requires
enhanced disclosures, the Company does not expect that the
adoption of this update will have a material effect on its
financial statements.
m) Other
The Company consists of one reportable business segment. The
Company paid no dividends during the periods presented.
3. INTANGIBLE ASSETS AND INTELLECTUAL PROPERTY
On August 23, 2011, the Company entered into an agreement (the "Asset
Purchase Agreement") with unrelated parties that subsequently became
directors of the Company to acquire intangible assets and intellectual
property known as the Peptide Technology Platforms (the "Platforms") in
exchange for 75,000,000 common shares of the Company (issued on August
23, 2011) (Notes 7 and 11).
The Platforms includes but are not limited to the following:
i. Proteomic research platforms which include proprietary solid
phase media side-chain protected peptide array synthesis;
ii. Peptide libraries;
iii. Combination design techniques;
iv. Peptide molecule modifications;
v. A proprietary genetic algorithm that designs peptides for
goodness to fit to a target; and
vi. Proprietary and patented application platforms, including a viral
vector gene therapy and epitode-mapping based vaccine
development.
F-30
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are non-interest bearing,
unsecured and have settlement dates within one year.
5. NOTES PAYABLE
November 30, November 30,
2011 2010
During the year ended 30 November 2010, Fotoview Inc.
("Fotoview") issued a loan of $16,000 to a former director of the
Company to purchase 4,000,000 restricted common shares of the
Company. Upon the director's resignation, the 4,000,000 common
shares were cancelled and the Company assumed the loan payable
to Fotoview. The loan is unsecured, bears no interest, and has
no fixed terms of repayment. $ 16,000 $ 16,000
On 21 September 2011, PSI Services ("PSI") issued a loan of $500
to the Company. The loan is unsecured, bears no interest, and has
no fixed terms of reparment. 500 -
On 13 November 2011, PSI Services ("PSI") issued a loan of $43,596
to the Company. The loan is unsecured and bears interest at a rate
of 6% per annum. The loan payable to PSI as at 30 November 2011
consists of principal and accrued interest of $43,596 (2010 - $Nil)
and $117 (2010 - $Nil), respectively. 43,713 -
------------------ -----------------
$ 60,213 $ 16,000
------------------ -----------------
6. RELATED PARTY TRANSACTIONS
During the year ended November 30, 2011, a director and shareholder of
the Company made cash contribution in the amount of $14,288, (2010 -
$13,000).
7. CAPITAL STOCK
Authorized
The Company's authorized common stock consists of 675,000,000 shares of
common stock with a par value of $0.001 per share. On August 10, 2010,
the Company increased the number of authorized share capital from
75,000,000 shares of common stock to 675,000,000 shares of common stock
with the same par value of $0.001 per share.
Issued and outstanding
On June 2, 2010, and effective August 10, 2010, the directors of the
Company approved a forward split of the common stock of the Company on
a basis of 30 new common shares for 1 old common share. As a result of
the forward stock split, 208,800,000 additional shares were issued.
Capital and additional paid-in capital have been adjusted accordingly.
When adjusted retroactively, there was an $119,501 shortage of
F-31
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
additional paid-in capital; thus an adjustment to accumulated deficit
of $104,000 was recorded at May 20, 2010 (the date of issuance of
120,000,000 shares) and $15,501 to the beginning balance. The financial
statements contained herein reflect the appropriate values for capital
stock and accumulated deficit. Unless otherwise noted, all references
in the accompanying financial statements to the number of common shares
and per share amounts have been retroactively restated to reflect the
forward stock split.
The total issued and outstanding capital stock is 171,023,000 common
shares with a par value of $0.001 per common share. The Company's
common stock issuances to date are as follows:
i) On Nov 18, 2005, 54,000,000 shares of the Company's common stock
were issued to a former director and officer of the Company for
cash proceeds of $18,000.
ii) On November 28, 2005, 21,000,000 shares of the Company's common
stock were issued to a former director and officer of the company
for cash proceeds of $7,000.
iii) On July 21, 2006, the Company completed a public offering and
issued 21,000,000 shares of the Company's common stock for cash
totalling $70,000. The Company incurred offering costs of $14,501
related to this offering, resulting in net proceeds of $55,499.
iv) On May 21, 2010, 120,000,000 shares of the Company's restricted
common stock, valued at $16,000, were issued to a former director
and officer of the Company. On October 29, 2010, the 120,000,000
restricted common shares of the Company previously issued to a
former director and officer of the Company were returned to
treasury for no consideration. The shares were cancelled on
November 2, 2010.
v) On August 23, 2011, 75,000,000 shares of its restricted common
stock, valued at $75,000, were issued in exchange for intangible
assets and intellectual property (Note 3).
vi) During October and November 2011, 23,000 shares of the Company's
common stock were issued for cash proceeds of $23,000.
8. INCOME TAXES
The Company is subject to foreign and domestic income taxes. The
Company has had no income, and therefore has paid no income tax.
Deferred income taxes arise from temporary timing differences in the
recognition of income and expenses for financial reporting and tax
purposes. The Company's deferred tax assets consist entirely of the
benefit from net operating loss (NOL) carry-forwards. The NOL carry
forwards expire in various years through 2031. The Company's deferred
tax assets are offset by a valuation allowance due to the uncertainty
of the realization of the NOL carry-forwards. NOL carry-forwards may be
further limited by a change in company ownership and other provisions
of the tax laws.
F-32
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
The Company's deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
Period Ending Estimated Estimated Change in Effect of
NOL NOL Tax Benefit Valuation Valuation change in Net Tax
Carry-forward Expires from NOL Allowance Allowance tax rate Benefit
November 30, 2010 116,675 2030 40,836 (40,836) (18,515) (8,929) -
November 30, 2011 238,821 2031 115,087 (115,087) (74,251) - -
Income taxes at the statutory rate are reconciled to the Company's
actual income taxes as follows:
2011 2010
Income tax benefit at statutory rate resulting from
net operating loss carry forward (35%) (35%)
Deferred income tax valuation allowance 35% 35%
---------------------- ---------------
Actual tax rate 0% 0%
====================== ===============
9. DISCONTINUED OPERATIONS AND NEW DEVELOPMENTS
The Company's attempts over the past years to build a business that
provides a website where members and customers are able to bid on and
purchase pieces of art had not come to fruition so management decided
to change the business focus and look for other opportunities.
Therefore, management decided to discontinue selling art pieces and
reflect such discontinuance in its operating statement and cash flow
statements effective June 25, 2010.
During the years ended November 30, 2011 and 2010, the Company had
revenue related to its discontinued operations in the amount of $Nil,
and $6,042 respectively.
Year ended Year ended
November 30, 2011 November 30, 2010
Revenue $ - $ 6,042
Expenses
Depreciation and amortization - 477
Office and administration - 1,495
------------------- ------------------------
- 1,972
------------------- ------------------------
Net Profit from Discontinued Operations
$ - $ 4,070
===========================================
10. CONTINGENCY
On November 22, 2010, the Company was served with a claim filed by a
former director and officer of the Company. The claim alleges that the
former director and officer of the Company suffered losses and damages
as a result of the failure of the Company in providing him with
corporate documents and implementing a change of the board of
F-33
PEPTIDE TECHNOLOGIES, INC.
(formerly CREEnergy Corporation)
(A Development Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
November 30, 2011
directors. The Company has retained legal counsel to address the claim.
On December 8, 2010, the Company filed a Statement of Defense
requesting that the claim be dismissed. In the opinion of management,
this claim is without merit and the Company intends to defend this
claim vigorously. As a loss is not deemed probable, no accruals have
been made as of November 30, 2011.
11. SUBSEQUENT EVENTS
The following reportable events occurred during the year ended 30
November 2011 to the date the financial statements were available to be
issued on February 28, 2012.
On December 14, 2011, Peptide Technologies, Inc. agreed to amend the
Asset Purchase Agreement dated August 23, 2011 (Note 3). As a result of
the amendment 30,000,000 restricted common shares of the Company were
returned to treasury in exchange for payment of half of one percent of
all gross monies received by the company from revenue produced from
products derived from the use of all the formulae listed in the Assets
Purchase Agreement. In addition a monthly stipend of CDN $15,000 per
month is to be paid commencing from receipt of monies from the first
contract signed to purchase products derived from the use of the
formulae for a period of five years from the date of the amended
agreement.
During January 2012, 20,000 shares of the Company's common stock were
issued for cash proceeds of $20,000.
F-34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company maintains a system of disclosure controls and procedures that are
designed for the purposes of ensuring that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC rules and forms, and that such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure.
Management, after evaluating the effectiveness of the Company's disclosure
controls and procedures as defined in Exchange Act Rules 13a-14(c) as of
December 9, 2011 (the "Evaluation Date") concluded that as of the Evaluation
Date, the Company's disclosure controls and procedures were effective to ensure
that information relating to the Company would be made known to them by
individuals within those entities, particularly during the period in which this
annual report was being prepared and that information required to be disclosed
in the Company's SEC reports is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms.
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act). Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal controls over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance of achieving
their control objectives. Furthermore, smaller reporting companies face
additional limitations. Smaller reporting companies employ fewer individuals and
find it difficult to properly segregate duties. Smaller reporting companies tend
to utilize general accounting software packages that lack a rigorous set of
software controls.
Our management, with the participation of the President and Chief Financial
Officer, evaluated the effectiveness of the Company's internal control over
financial reporting as of November 30, 2011. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control --
Integrated Framework. Based on that evaluation, our management concluded that,
as of November 30 2011, our internal control over financial reporting was not
effective due to material weaknesses in the system of internal control.
Specifically, management identified the following control deficiency:
- The Company has installed accounting software that does not
prevent erroneous or unauthorized changes to previous reporting
periods and does not provide an adequate audit trail of entries
made in the accounting software.
Accordingly, while the Company has identified certain material weaknesses in its
system of internal control over financial reporting, it believes that it has
taken reasonable steps to ascertain that the financial information contained in
this report is in accordance with generally accepted accounting principles.
Management has determined that current resources would be appropriately applied
elsewhere and when resources permit, they will alleviate material weaknesses
through various steps.
This Annual Report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this Annual Report.
35
Changes in Internal Control over Financial Reporting
----------------------------------------------------
There were no changes in internal control over financial reporting that occurred
during the last fiscal quarter covered by this report that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.
ITEM 9B. Other Information
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and Executive Officers
The following table sets forth the names, ages and positions of the current
directors and executive officers of the Company, as of the date of this filing:
Name Age Offices Held
Scott McKinley 57 Director, Chairman of the Board, COO
William Campbell 70 Chief Scientific Officer
Deborah Fortescue-Merrin 55 President
Richard Fortescue 58 Secretary, Treasurer, CFO
During the year ended November 30,2011, we had the following changes in
management:
o Effective October 3, 2011, Dr. Scott McKinley, Ph.D. was appointed as
Chairman of the Board of Directors and Chief Operating Officer of the
Company.
o Effective October 3, 2011, Dr. William Campbell, Ph.D. was appointed
as Chief Scientific Officer and a Director of the Company. On December
14, 2011, Dr. Campbell resigned as a director of the Company.
o Effective October 3, 2011, Ms. Deborah Fortescue-Merrin, was appointed
as the President of the Company and Mr. Richard Fortescue, brother of
Ms. Deborah Fortescue-Merrin, was appointed as Secretary/Treasurer and
Chief Financial Officer for the Company.
o September 12, 2008, Ruth Saunders was appointed a Director of the
Company and resigned August 24, 2011.
o October 29, 2010, Shari Sookarookoff was re-appointed President and
Chief Executive Officer of the Company. On October 3, 2011, Shari
Sookarookoff resigned as President Secretary, Treasurer, Chief
Executive Officer and Chief Financial Officer of the Company. On
November 8, 2011, Shari Sookarookoff resigned as a director of the
Company.
Deborah Fortescue-Merrin, 55, President
Ms. Deborah Fortescue-Merrin, B.Sc. (Biology/Human Genetics) from the University
of British Columbia, 1977, has been a director and officer of numerous publicly
traded companies over the past 15 years. She completed the IDA Registered
Representative Securities Course in 1981, and was an investment advisor for
twelve years, ultimately working in the area of corporate finance, specializing
36
in special situations concerning medical issues. Ms. Fortescue-Merrin also
delivered the daily C.M. Oliver market reports on CHQM radio in Vancouver from
1982-1984. She has lectured at a number of international anti-aging medicine
congresses on the topic of Mandelic Acid in Dermatology. She has been the
President, C.E.O., and director of North American Medical Services Inc., (NMI.V
- TSX-V), NuCelle Inc. (wholly owned subsidiary of NMI), since 2001, and Creator
Capital Limited (CTORF-OTCBB) since 1999.
Richard Fortescue, 58, Chief Financial Officer
Mr. Richard Fortescue, B.Comm. graduated from the University of British Columbia
in 1976. He has been the C.F.O. of North American Medical Services Inc. (NMI.V -
TSX-V), NuCelle Inc. (wholly owned subsidiary of NMI), since 2009, and Director
of Administrative Affairs for Creator Capital Limited (CTORF-OTCBB) since 2001.
Dr. Scott McKinley, B.Sc., M.Sc., Ph.D., 57, Chairman of the Board of Directors,
Chief Operating Officer
Dr. McKinley received his Ph.D. from the University of Waterloo, 1993. He has
mentored and supervised the research of graduate students and postdoctoral
fellows. He has also been the recipient of two Research Chairs: a) Natural
Sciences and Engineering Research Council ("NSERC") /Industrial Research Chair
and b) Canada Research Chair (Tier 1). Dr. McKinley holds a number of
directorships including the Vancouver Aquarium, Centre for Aquaculture and
Environmental Research (a partnership between UBC and Department of Fisheries
and Oceans ["DFO"]), and Pacific Ocean Shelf Tracking ("POST"). Dr. McKinley was
recently appointed to be a member of the High Level Expert Forum on how to feed
the world population in 2050, sponsored by the Food and Agriculture Organization
of the United Nations.
Since 2001 Dr. McKinley is been Professor of Animal Science at University of
British Columbia. He has over 30 years of experience in the field of ecology,
animal physiology and biochemistry. He has conducted his research across Canada
and Europe in fresh and marine waters. He has held a senior Canada Research
Chair and an Industrial and Natural Sciences and Engineering Chair and has
author two patents. He has served as Chair of the Technical Board of Experts for
the Great Lakes Fishery Commission, Research committee for the Pacific Ocean
Shelf Tracking (POST) study, and a member of the Board of Directors for POST and
the Vancouver Aquarium. He is presently Director of the West Vancouver Marine
Laboratory.
Dr. William Campbell, Ph.D., B.Sc., M.Sc., Ph.D., 70, Chief Scientific Officer
Dr. Campbell served as a director of the Company from October 3, 2011, through
December 14, 2011.
Dr. Campbell completed his B.Sc. in Chemistry at Concordia University (1962) and
obtained his PhD in Microbiology and Immunology from the University of Montreal
(1971). Dr. Campbell has over 35 year of experience in the field of protein
chemistry in Canada and Japan. He was senior researcher at the Choju Institute
in Toyohashi, Japan, and Associate Professor at Nagoya City University in Japan
from 1987 through 2002. He was scientific editor of the journal of Microbiology
and Immunology. Dr. Campbell has also been the visiting scientist at the Kinsmen
Laboratory of Neurological Research at the University of British Columbia. Since
2007 he has run Biomime Solutions, a consulting company based in Richmond, BC,
and does contract work with University of British Columbia and several biotech
companies. He is Chairman of the Board of Directors at Kinexus Bioinformatics in
Vancouver, since 2007.
Family Relationships
Ms. Deborah Fortescue-Merrin, the President of the Company and Mr. Richard
Fortescue, Secretary/Treasurer and Chief Financial Officer for the Company are
brother and sister.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires any person who
is a director or executive officer or who beneficially holds more than ten
percent (10%) of any class of our securities which have been registered with the
Securities and Exchange Commission, to file reports of initial ownership and
changes in ownership with the Securities and Exchange Commission. These persons
are also required under the regulations of the Securities and Exchange
Commission to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on our review of the copies of the Section 16(a)
reports furnished to us and a review of our shareholders of record for the
fiscal year ended November 30, 2010, there were no filing delinquencies.
37
Code of Ethics
We have not yet prepared a written code of ethics and employment standards. We
expect to implement a Code of Ethics during the current fiscal year.
Corporate Governance; Audit Committee Financial Expert
We currently do not have an audit committee financial expert or an independent
audit committee expert due to the fact that our Board of Directors currently
does not have an independent audit committee. Our Board of Directors currently
has only two (2) independent members, and thus, does not have the ability to
create a proper independent audit committee.
ITEM 11. EXECUTIVE COMPENSATION
The Executive Officers have not received any compensation since the date of
incorporation of our Company, and we did not accrue any compensation. There are
no securities authorized for issuance under any equity compensation plan, or any
options, warrants, or rights to purchase our common stock.
Compensation of Directors
We do not compensate our directors for their time spent on behalf of our
Company, but they are entitled to receive reimbursement for all out of pocket
expenses incurred for attendance at our Board of Directors meetings.
Pension and Retirement Plans
Currently, we do not offer any annuity, pension or retirement benefits to be
paid to any of our officers, directors or employees, in the event of retirement.
There are also no compensatory plans or arrangements with respect to any
individual named above which results or will result from the resignation,
retirement or any other termination of employment with our company, or from a
change in the control of our Company.
Employment Agreements
We do not have written employment agreements with any of our key employees.
Audit Committee
Presently the Board of Directors is performing the duties that would normally be
performed by an audit committee. We intend to form a separate audit committee,
and are seeking potential independent directors. We are seeking experienced
business people and plan to appoint an individual qualified as an audit
committee financial expert.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information, as of November 30, 2011 with
respect to any person (including any "group", as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) who is known to the Company to be the beneficial owner of more than five
percent of any class of the Company's voting securities, and as to those shares
of the Company's equity securities beneficially owned by each its director, the
executive officers of the company and all of its directors and executive
officers of the Company and all of its directors and executive officers as a
group. Unless otherwise specified in the table below, such information, other
than information with respect to the directors and officers of the Company, is
based on a review of statements filed, with the Securities and Exchange
38
commission (the "Commission") pursuant to Sections 13 (d), 13 (f), and 13 (g) of
the Exchange Act with respect to the Company's Common Stock. As of November 30,
2011, there were 171,023,000 shares of Common Stock outstanding.
The number of shares of Common Stock beneficially owned by each person is
determined under the rules of the Commission and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which such person has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after the date hereof,
through the exercise of any stock option, warrant or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares
such power with his or her spouse) with respect to the shares set forth in the
following table. The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
The table also shows the number of shares beneficially owned as of November 30,
2011 by each of the individual directors and executive officers and by all
directors and executive officers as a group.
==========================================================================================================
Title of Amount and Nature of Percent of
Class Name and Address of Beneficial Owner Beneficial Ownership Class1
----------------------------------------------------------------------------------------------------------
Common Scott McKinley - Director 30,000,000 17.54%
4160 Marine Drive
West Vancouver, British Columbia
V7V 1N6
----------------------------------------------------------------------------------------------------------
Common William Campbell 30,000,000 17.54%
Suite 108, 4600 Westwater Drive
Richmond, British Columbia
V73 6S2
----------------------------------------------------------------------------------------------------------
Common Deborah E. Fortescue-Merrin - President 7,500,000 4.385%
PO Box Box 280, 584 Willies Way,
Bowen Island, BC
Canada, V0N 1G0
----------------------------------------------------------------------------------------------------------
Common Richard E. Fortescue - Secretary / Treasurer 7,500,000 4.385%
Suite 401, 2890 Point Grey Road
Vancouver, British Columbia
V6K 1A9
----------------------------------------------------------------------------------------------------------
Common Shari Sookarookoff 75,000,000 43.85%
328 Twin Brooks Dr NW
Edmonton AB, Canada, T6J 6S5
----------------------------------------------------------------------------------------------------------
Common Directors and officers as a group (4 individuals) 75,000,000 43.85%
==========================================================================================================
(1) Percent of Ownership is calculated in accordance with the Securities and
Exchange Commission's Rule 13(d) - 13(d) (1). Based on 171,023,000 shares of
common stock issued and outstanding.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Ms. Deborah Fortescue-Merrin, the President of the Company and Mr. Richard
Fortescue, Secretary/Treasurer and Chief Financial Officer for the Company are
brother and sister.
In accordance with the Asset Purchase Agreement dated August 23, 2011, the
Company issued a total of 75,000,000 shares of its restricted common stock in
exchange for intangible assets and intellectual property referred to as the
Peptide Technology Platforms. 60,000,000 of these restricted shares were issued
equally; 30,000,000 shares to William Campbell and 30,000,000 shares to Scott
McKinley. The balance of 15,000,000 restricted shares were issued equally;
7,500,000 shares to Deborah Fortescue-Merrin and 7,500,000 shares to Richard
Fortescu.
Also, on December 14, 2011, Peptide Technologies, Inc. agreed to amend the Asset
Purchase Agreement dated August 23, 2011. As a result of the amendment
30,000,000 restricted common shares of the Company issued to William Campbell
were returned to treasury in exchange for payment of half of one percent of all
gross monies received by the company from revenue produced from products derived
from the use of all the formulae listed in the Assets Purchase Agreement. In
addition a monthly stipend of CDN $15,000 per month is to be paid commencing
from receipt of monies from the first contract signed to purchase products
derived from the use of the formulae for a period of five years from the date of
the amended agreement.
39
Director Independence
For our description of director independence, see "Director Independence" under
the section entitled "Directors, Executive Officers, Promoters, Control Persons
and Corporate Governance; Compliance with Section 16(a) of the Exchange Act"
above.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees.
The aggregate fees billed by our auditors James Stafford Inc. for professional
services rendered for the audit of our annual financial statements and for the
reviews of the financial statements included in our Quarterly Reports on Form
10Q during the fiscal year ended November 30, 2011 and 2010 were $12,652 and
$nil, respectively. The aggregate fees billed by our auditors, Schumacher &
Associates, for professional services rendered for the audit of our annual
financial statements, and for the reviews of the financial statements included
in our Quarterly Reports on Form 10-Q during the fiscal years ended November 30,
2011 and 2010, were $1,000 and $11,000 respectively.
Audit Related Fees.
We incurred nil fees to auditors for audit related fees during the fiscal year
ended November 30, 2011 and 2010.
Tax Fees.
We incurred nil fees to auditors for tax compliance, tax advice or tax
compliance services during the fiscal year ended November 30, 2011 and 2010.
All Other Fees.
We did not incur any other fees billed by auditors for services rendered to our
Company, other than the services covered in "Audit Fees" for the fiscal year
ended November 30, 2011 and 2010.
The Board of Directors has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
Since there is no audit committee, there are no audit committee pre-approval
policies and procedures.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following is a complete list of exhibits filed as part of this Form 10K.
Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of
Regulation S-K.
Exhibit Index
3.1 Articles of Incorporation (1)
3.2 Amendment to the Articles of Incorporation*
3.3 Bylaws (1)
10.1 Asset Purchase Agreement, dated August 23, 2011(2)
10.2 Amendment to the Asset Purchase Agreement, dated December 14,
2011 (3)
31.1 Section 302 Certification - President *
31.2 Section 302 Certification - Chief Financial Officer. *
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -
President. *
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -
Chief Financial Officer.*
* Filed herewith.
(1) Incorporated by reference to our SB-2 Registration Statement, file number
333-133347, filed on April 18, 2006.
(2) Incorporated by reference from our Current Report on Form 8-K, filed on
September 28, 2011.
(3) Incorporated by reference from our Current Report on Form 8-K, filed on
December 23, 2011.
40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 28th day of
February, 2012.
PEPTIDE TECHNOLOGIES, INC.
Date: February 28, 2012 By: /s/ Deborah Fortescue-Merrin
-------------------------------------
Name: Deborah Fortescue-Merrin
Title: President & Principal Executive Officer
Date: February 28, 2012 By: /s/ Richard Fortescue
-------------------------------------
Name: Richard Fortescue
Title: Chief Financial Officer & Principal
Accounting Officer
Date: February 28, 2012 By: /s/ Scott McKinely
--------------------------------------
Name: Scott McKinely
Title: Director, Chairman of the Board
41