Q BioMed Inc. - Quarter Report: 2015 August (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended: August 31, 2015
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Or
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to _____________
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Commission File Number: 333-193328
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Q BIOMED INC.
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(Exact name of registrant as specified in its charter)
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Nevada
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46-4013793
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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c/o Sanders Ortoli Vaughn-Flam Rosenstadt LLP
501 Madison Ave. 14th Floor
New York, NY10022
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(Address of principal executive offices)
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(212) 588-0022
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last report)
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Indicate by check mark whether the issuer (1) has 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 Noo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx Noo
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yesx Noo
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Common Stock, $0.001 par value
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8,375,000 shares
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(Class)
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(Outstanding as at October 15, 2015)
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Q BIOMED INC.
Quarterly Report
Table of Contents
Page
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PART I – FINANCIAL INFORMATION
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Item 1. Financial Statements
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F-1 |
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operation
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F-9 |
Item 3. Quantitative and Qualitative Disclosure About Market Risks
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F-10 |
Item 4. Controls and Procedures
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F-11 |
PART II – OTHER INFORMATION
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Item 1. Legal Proceedings
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1 |
Item 1A. Risk Factors
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1 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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1 |
Item 3. Defaults Upon Senior Securities
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1 |
Item 4. Mine Safety Disclosures
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1 |
Item 5. Other Information
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1 |
Item 6. Exhibits and Reports on Form 8-K
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2 |
SIGNATURES
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3 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's Form 10-K, most recently filed with the Commission on February 27, 2015.
F-1
Q BIOMED, INC.
(formerly ISMO Tech Solutions, Inc.)
Condensed Balance Sheets
(unaudited)
August 31,
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November 30,
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2015
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2014
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 100 | $ | 12,649 | ||||
Total current assets
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100 | 12,649 | ||||||
Total assets
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$ | 100 | $ | 12,649 | ||||
Liabilities and Stockholders’ Equity (Deficit)
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Current liabilities:
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Accounts payable
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$ | 1,683 | $ | 1,199 | ||||
Total current liabilities
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1,683 | 1,199 | ||||||
Total liabilities
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1,683 | 1,199 | ||||||
Stockholders’ equity (deficit):
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Preferred stock, $0.001 par value, 100,000,000 shares
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authorized, no shares issued and outstanding
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as of August 31, 2015 and November 30, 2014, respectively
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- | - | ||||||
Common stock, $0.001 par value, 100,000,000 shares
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authorized, 8,375,000 and 8,125,000 shares issued and outstanding as of
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August 31, 2015 and November 30, 2014, respectively
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8,375 | 8,125 | ||||||
Additional paid-in capital
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78,801 | 46,750 | ||||||
Accumulated deficit
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(88,759 | ) | (43,425 | ) | ||||
Total stockholders’ equity (deficit)
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(1,583 | ) | 11,450 | |||||
Total liabilities and stockholders’ equity (deficit)
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$ | 100 | $ | 12,649 | ||||
See Accompanying Notes to Financial Statements.
F-2
Q BIOMED, INC.
(formerly ISMO Tech Solutions, Inc.)
Condensed Statements of Operations
(unaudited)
For the three months ended
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For the nine months ended
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August 31,
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August 31,
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2015
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2014
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2015
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2014
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Revenue
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$ | - | $ | - | $ | - | $ | - | ||||||||
Expenses:
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General and administrative expenses
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5,285 | 3,118 | 8,684 | 6,057 | ||||||||||||
Professional fees
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27,917 | 3,000 | 36,500 | 12,500 | ||||||||||||
Total expenses
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33,202 | 6,118 | 45,184 | 18,557 | ||||||||||||
Operating loss
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(33,202 | ) | (6,118 | ) | (45,184 | ) | (18,557 | ) | ||||||||
Net loss
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$ | (33,202 | ) | $ | (6,118 | ) | $ | (45,184 | ) | $ | (18,557 | ) | ||||
Net loss per share-basic
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average number of
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common shares outstanding - basic
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9,801,630 | 7,547,554 | 9,062,044 | 5,855,383 | ||||||||||||
See Accompanying Notes to Financial Statements.
F-3
Q BIOMED INC.
(formerly ISMO Tech Solutions, Inc.)
Statement of Stockholders’ Equity (Deficit)
(unaudited)
Additional | Total | |||||||||||||||||||
Common Stock | Paid-in |
Accumulated
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Stockholders’
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Shares
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Amount
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Capital
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Deficit
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Equity (Deficit)
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Balance, December 1, 2014
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8,125,000 | $ | 8,125 | $ | 46,750 | $ | (43,425 | ) | $ | 11,450 | ||||||||||
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Issued for services
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4,000,000 | 4,000 | 30,400 | (2,400 | ) | 32,000 | ||||||||||||||
Cancelled
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(3,750,000 | ) | (3,750 | ) | 1,500 | 2,250 | - | |||||||||||||
Donated Capital
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- | - | 151 | - | 151 | |||||||||||||||
Net loss
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- | - | - | (45,184 | ) | (45,184 | ) | |||||||||||||
Balance, August 31, 2015
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8,375,000 | $ | 8,375 | $ | 78,801 | $ | (88,759 | ) | $ | (1,583 | ) |
See Accompanying Notes to Financial Statements
F-4
Q BIOMED, INC.
(formerly ISMO Tech Solutions, Inc.)
Condensed Statements of Cash Flows
(unaudited)
For the nine months ended
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August 31,
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2015
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2014
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Operating Activities
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Net loss
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$ | (45,184 | ) | $ | (18,557 | ) | ||
Adjustments to reconcile net loss to
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net cash used by operating activities:
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Shares issued for services – related parties
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32,000 | - | ||||||
Changes in operating assets and liabilities:
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Decrease in accounts payable
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484 | - | ||||||
Net cash used in operating activities
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(12,700 | ) | (18,557 | ) | ||||
Financing Activities
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Donated capital
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151 | - | ||||||
Issuances of common stock
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- | 25,000 | ||||||
Net cash provided by financing activities
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- | 25,000 | ||||||
Net (decrease)/increase in cash
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(12,549 | ) | 6,443 | |||||
Cash – beginning
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12,649 | 25,000 | ||||||
Cash – ending
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$ | 100 | $ | 31,443 | ||||
SUPPLEMENTAL INFORMATION:
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Interest paid
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$ | - | $ | - | ||||
Income taxes paid
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$ | - | $ | - | ||||
See Accompanying Notes to Financial Statements.
F-5
Q BIO MED, INC.
(formerly ISMO Tech Solutions, Inc.)
Notes to Condensed Financial Statements
(Unaudited)
Note 1 – Description of Business
Q BioMed Inc. is a biomedical acceleration and development company focused on licensing, acquiring and providing strategic resources to life sciences and healthcare companies. Q BioMed intends to mitigate risk by acquiring multiple assets over time and across a broad spectrum of healthcare related products, companies and sectors. These assets will be developed to provide returns via organic growth, out-licensing, sale or be spun out into new public companies.
Note 2 – Significant accounting policies and procedures
Stock Dividend
On August 5, 2015, the Company recorded a stock split effectuated in the form a stock dividend. The stock dividend was paid at a rate of 1.5 “new” shares for every one issued and outstanding share held. All references to share and per share amounts in the condensed financial statements and accompanying notes have been retroactively restated to reflect the stock dividend paid as a stock split.
Basis of Presentation:
The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements of the Company for the year ended November 30, 2014 and notes thereto included in the Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim period are not indicative of annual results.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Going Concern
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company had an accumulated deficit of $88,759 as of August 31, 2015. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is contemplating conducting an offering of its debt or equity securities to obtain additional operating capital. The Company is dependent upon its ability, and will continue to attempt, to secure equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.
F-6
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Significant accounting policies
There have been no significant changes to the Company’s significant accounting policies as described in the Company’s 10-K issued February 27, 2015
Note 3 – Commitments
On April 21, 2015, the Company entered into an Advisory Agreement, with a related party individual. In connection with this Advisory Agreement, the Company will be obligated to pay a monthly retainer of $10,000 per month following the completion of a minimum aggregate capital raise of $1,000,000. The Advisory Agreement has a term of two years, is automatically renewable without notice for additional two-year periods and may be terminated by either party with 90 days’ notice, provided that if the Company terminates the Advisory Agreement without cause prior to the end of the first two-year period, the Company will be liable for all compensation due in that two year period.
On June 1, 2015, the Company entered into a retainer agreement with a law firm, at which a director of the Company is a partner, pursuant to which the Company will be obligated to pay a monthly retainer of $5,000 per month following the completion of a minimum aggregate capital raise of $1,000,000. The Retainer Agreement has a term of one year.
On June 1, 2015, the Company entered into an Advisory Agreement, pursuant to which the Company will be obligated to pay a monthly retainer of $5,000 per month following the completion of a minimum aggregate capital raise of $1,000,000. The Advisory Agreement has a term of one year, is automatically renewable without notice for additional one-year periods and may be terminated by either party with 90 days’ notice, provided that if the Company terminates the Advisory Agreement without cause prior to the end of the first one-year period, the Company will be liable for all compensation due in that one year period.
Note 4 – Stockholders’ equity
The Company is authorized to issue up to 100,000,000 shares of its $0.001 par value common stock and up to 100,000,000 shares of its $0.001 par value preferred stock.
2.5 for 1 Stock Split effected as stock dividend
On August 5, 2015, the Company recorded a stock split effectuated in the form a stock dividend. The stock dividend was paid at a rate of 1.5 “new” shares for every one issued and outstanding share held. All references to share and per share amounts in the condensed financial statements and accompanying notes have been retroactively restated to reflect the stock dividend paid as a stock split.
Share based compensation
In connection with the aforementioned agreements in note 3, on April 21, 2015, the Company issued 2,500,000 shares of its common stock for services estimated to be valued at $20,000.
On June 1, 2015, the Company issued 500,000 shares of its common stock for services estimated to be valued at $4,000.
On June 1, 2015, the Company issued 625,000 shares of its common stock for services estimated to be valued at $5,000.
In addition, on June 1, 2015, the Company entered into a separate board of director’s agreement, pursuant to which the Company issued 375,000 shares of its common stock for services estimated to be valued at $3,000.
F-7
The aggregate value of $32,000 was recorded as share based compensation in the statement of operations.
Cancellation of Shares
On July 6, 2015, the founder and former officer and director of the Company returned 3,750,000 shares of common stock to the Company for cancellation.
Note 5 – Subsequent Events
On September 21, 2015, the Company announced it has entered into a Letter-Of-Intent to exclusively in-license and ultimately acquire the assets of Mannin Research Inc. Definitive agreements are expected to be completed by the end of October 2015.
On September 17, 2015, the Company entered into an advisory agreement with Wombat Capital Ltd. (“Wombat”) whereby Wombat will: (a) advise and assist the Company in seeking corporate development opportunities; (b) advise and assist the Company in the identification and evaluation of potential assets to be acquired; (c) advise and assist the Company in the negotiation to acquire and/or license potential assets; and (d) advise and assist the Company on the development of specific assets of the Company (collectively, the “Wombat Services”). In exchange for the Wombat Services, the Company issued 100,000 cashless warrants to purchase 100,000 shares of Company common stock for five years at a price of $2.18 per share. The aforementioned warrants vest in 25,000 warrant increments for each consecutive 90-day period.
F-8
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about our business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.
The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.
There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, "believes,""expects," "intends,""plans,""anticipates,""estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
Overview
Q BioMed Inc. ''Q” is a biomedical acceleration and development company. We are focused on acquiring companies and biomedical assets. Q is dedicated to providing these target companies and assets, strategic resources, developmental support, and expansion capital to ensure they meet their developmental potential enabling them to provide products to patients in need.
Q BioMed Inc. formerly ISMO Tech Solutions, Inc. was incorporated in the State of Nevada on November 22, 2013. On April 21, 2015, we appointed Denis Corin to our Board of Directors.
On July 17, 2015 we changed our name from “ISMO Tech Solutions, Inc.” to “Q BioMed Inc.” Although we were founded with the intent of establishing a base of operation in the Information Technology sector and providing IT hardware, software and support solutions to businesses and households, we never began operations in this area. We now intend to establish a base of operations in the biomedical industry. We believe that the name change better reflects our proposed new business direction.
On August 5, 2015, the Company paid a dividend in the form of shares of the Company’s common stock on a pro rata basis at a rate of 1.5 “new” shares for every one issued and outstanding share. All references to share and per share amounts in the condensed financial statements and accompanying notes have been retroactively restated to reflect the stock dividend paid as a stock split.
Results of Operation
Revenues
Since our incorporation to August 31, 2015, we did not generate any revenues. Our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors’ report to the financial statements included in our most recent annual report.
Operating expenses
We incur various costs and expenses in the execution of our business. During the three month period ended August 31, 2015 total expenses were $33,202. In comparison, total expenses were $6,118 during the quarter ended August 31, 2014. The significant increase in operating expenses is primarily attributable to the issuance of shares of our common stock in lieu of cash for certain service agreements.
In the nine month period ended August 31, 2015, our total expenses were $45,184 compared with $18,557 in the comparable period ended August 31, 2014.
F-9
Net loss
In the quarters ended August 31, 2015 and 2014, we incurred net losses of $33,202 and $6,118, respectively.
Our net losses during the nine month periods ended August 31, 2015 and 2014 were $45,184 and $18,557, respectively.
Liquidity and capital resources
As of August 31, 2015, we had $100 of cash on hand. Since inception, we have financed all of our cash flow requirements with sales of common stock, including $25,000 to an officer and director and a public registered offering for $25,000 in cash.
In the future, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. There are no formal or informal agreements to attain such financing. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms.
Although we established our web presence, we have not generated revenues as of August 31, 2015. Thus, our management expects that we will experience net cash out-flows for at least the next 12 months, given the developmental nature of our business. Our limited operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving business model, advancement of technology and the management of growth. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations. As such, our principal accountants have expressed substantial doubt about our ability to continue as a going concern because we have limited operations and have not fully commenced planned principal operations. If our business fails, our investors may face a complete loss of their investment.
No development related expenses have been or will be paid to our affiliates.
We currently do not own any significant plant or equipment that we would seek to sell in the near future.
Our management does not expect to incur research and development costs.
We have not paid for expenses on behalf of our directors. Additionally, we believe that this fact shall not materially change.
We currently do not have any material contracts and or affiliations with third parties.
Off-Balance Sheet Arrangements
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We do not have any off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosure About Market Risks
This item is not applicable as we are currently considered a smaller reporting company.
F-10
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Principal Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the period covered by this Report. Based on that evaluation, the company identified material weaknesses in the design and operation of our internal controls in that it does not yet have an adequate segregation of duties and effective risk assessment such that our disclosure controls and procedures are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure
However, we do not have an Audit Committee; our board of directors currently acts as our Audit Committee. We do not have an independent director and neither of our directors are considered a “Financial Expert,” within the meaning of Section 407 of the Sarbanes-Oxley Act.
Changes in internal controls over financial reporting
There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
F-11
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material legal proceedings.
Item 1A. Risk Factors
Our significant business risks are described in our annual report on Form 10-K filed on February 27, 2015, to which reference is made herein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On August 5, 2015, we paid a dividend in the form of unregistered shares of the Company’s common stock on a pro rata basis at a rate of 1.5 “new” shares for every one issued and outstanding share. As a result of the stock dividend, we issued a total of 5,025,000 shares to existing stockholders.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
1
Item 6. Exhibits and Reports on Form 8-K
Exhibit Number
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Name and/or Identification of Exhibit
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3
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Articles of Incorporation & By-Laws
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(a) Articles of Incorporation (1)
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(b) By-Laws (1)
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31
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Rule 13a-14(a)/15d-14(a) Certifications
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32
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Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
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101
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Interactive Data File
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(INS) XBRL Instance Document
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(SCH) XBRL Taxonomy Extension Schema Document
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(CAL) XBRL Taxonomy Extension Calculation Linkbase Document
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(DEF) XBRL Taxonomy Extension Definition Linkbase Document
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(LAB) XBRL Taxonomy Extension Label Linkbase Document
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(PRE) XBRL Taxonomy Extension Presentation Linkbase Document
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(1)
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Incorporated by reference to the Registration Statement on Form S-1/A, previously filed with the SEC on January 13, 2014.
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8-K Filed Date
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Item Number
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August 8, 2015
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
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Item 9.01 Financial Statements and Exhibits
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2
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Q BIOMED INC.
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(Registrant)
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Signature
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Title
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Date
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/s/ Denis Corin
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Chief Executive Officer
and President
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October 15, 2015
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Denis Corin
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/s/ Denis Corin
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Principal Accounting Officer
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October 15, 2015
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Denis Corin
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Principal Financial Officer
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3