0001493152-16-009896.txt : 20160516 0001493152-16-009896.hdr.sgml : 20160516 20160516161156 ACCESSION NUMBER: 0001493152-16-009896 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 55 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160516 DATE AS OF CHANGE: 20160516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Immune Therapeutics, Inc. CENTRAL INDEX KEY: 0001559356 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 593226705 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54933 FILM NUMBER: 161653877 BUSINESS ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 BUSINESS PHONE: (888) 613-8802 MAIL ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 FORMER COMPANY: FORMER CONFORMED NAME: TNI BIOTECH, INC. DATE OF NAME CHANGE: 20121001 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended March 31, 2016

 

OR

 

[  ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

From the transition period from ___________ to ____________

 

Commission File Number __________________

 

IMMUNE THERAPEUTICS, INC.

(Exact name of small business issuer as specified in its charter)

 

Florida    59-3226705
(State or other jurisdiction of
incorporation or organization)
  (IRS Employer
Identification No.)

 

37 North Orange Ave, Suite 607, Orlando, FL 32801

(Address of principal executive offices)

 

888-613-8802

(Issuer’s telephone number)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 (§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 [X] No [  ]

 

Indicate by a 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 [  ]   Accelerated Filer [  ]
     
Non-Accelerated Filer [  ]   Smaller Reporting Company [X]

 

Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act: Yes [  ] No [X]

 

As of May 12, 2016 there were 206,913,301 shares of Common Stock outstanding.

 

 

 

   
   

 

TABLE OF CONTENTS

 

  PART I – FINANCIAL STATEMENTS    
Item 1. Financial Statements   5
       
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations   24
       
Item 3. Quantitative and Qualitative Disclosures About Market Risk   30
       
Item 4. Controls and Procedures   30
       
  PART II - OTHER INFORMATION    
Item 1. Legal Proceedings   31
       
Item 1A. Risk Factors   31
       
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   31
       
Item 3. Default upon Senior Securities   32
       
Item 4. Mine Safety Disclosures    
       
Item 5. Other Information    
       
Item 6. Exhibits   33

 

 2 
   

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained or incorporated by reference in this Quarterly Report on Form 10-Q are considered forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) concerning our business, results of operations, economic performance and/or financial condition, based on management’s current expectations, plans, estimates, assumptions and projections. Forward-looking statements are included, for example, in the discussions about:

 

strategy;
new product discovery and development;
current or pending clinical trials;
our products’ ability to demonstrate efficacy or an acceptable safety profile;
actions by the FDA and other regulatory authorities;
product manufacturing, including our arrangements with third-party suppliers;
product introduction and sales;
royalties and contract revenues;
expenses and net income;
credit and foreign exchange risk management;
liquidity;
asset and liability risk management;
the outcome of litigation and other proceedings;
intellectual property rights and protection;
economic factors;
competition; and
legal risks.

 

Any statements contained in this report that are not statements of historical fact may be deemed forward-looking statements. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “aims,” “plans,” “may,” “could,” “will,” “will continue,” “seeks,” “should,” “predict,” “potential,” “outlook,” “guidance,” “target,” “forecast,” “probable,” “possible” or the negative of such terms and similar expressions. Forward-looking statements are subject to change and may be affected by risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, except as required by law, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws and other applicable laws.

 

We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements, and therefore you should not place too much reliance on them. These factors include, among others, those described herein, under “Risk Factors” and elsewhere in this Annual Report and in our other public reports filed with the Securities and Exchange Commission. It is not possible to predict or identify all such factors, and therefore the factors that are noted are not intended to be a complete discussion of all potential risks or uncertainties that may affect forward-looking statements. If these or other risks and uncertainties materialize, or if the assumptions underlying any of the forward-looking statements prove incorrect, our actual performance and future actions may be materially different from those expressed in, or implied by, such forward-looking statements. We can offer no assurance that our estimates or expectations will prove accurate or that we will be able to achieve our strategic and operational goals.

 

 3 
   

 

Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

 

our lack of operating history;
our current and future capital requirements and our ability to satisfy our capital needs;
our inability to keep up with industry competition;
interpretations of current laws and the passages of future laws;
acceptance of our business model by investors and our ability to raise capital;
our drug discovery and development activities may not result in products that are approved by the applicable regulatory authorities. Even if our drug candidates do obtain regulatory approval they may never achieve market acceptance or commercial success;
our reliance on key personnel, including our ability to attract and retain scientists;
our reliance on third party manufacturing to supply drugs for clinical trials and sales;
our limited distribution organization with no sales and marketing staff;
our being subject to product liability claims;
our reliance on key personnel, including our ability to attract and retain scientists;
legislation or regulation that may increase the cost of our business or limit our service and product offerings;
risks related to our intellectual property, including our ability to adequately protect intellectual property rights;
risks related to government regulation, including our ability to obtain approvals for the commercialization of some or all of our drug candidates, and ongoing regulatory obligations and continued regulatory review which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements; and
our ability to obtain regulatory approvals in foreign jurisdictions to allow us to market our products internationally.

 

Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based on information available to us on the date of this Annual Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Annual Report.

 

JUMPSTART OUR BUSINESS STARTUPS ACT

 

We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2015, the last day of our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

As an emerging growth company, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

 

being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report;
not being requested to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”);
reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

We will remain an emerging growth company until the earliest to occur of: (i) our reporting $1 billion or more in annual gross revenues; (ii) the end of fiscal year 2019; (iii) our issuance, in a three year period, of more than $1 billion in non-convertible debt; and (iv) the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million on the last business day of our second fiscal quarter.

 

 4 
   

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31, 2016   December 31, 2015 
   (unaudited)   (Audited) 
ASSETS          
Current Assets:          
Cash and cash equivalents  $132,187   $23,149 
Accounts receivable   19,660    16,197 
Prepaids and other current assets   1,594    - 
Total current assets   153,441    39,346 
           
Fixed Assets:          
Computer equipment, net of accumulated depreciation of $6,878 and $6,331 respectively        1,135           1,682   
Deposits   200    200 
Total assets  $154,776   $41,228 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable  $1,860,361   $1,924,672 
Accrued liabilities   1,641,351    1,281,039 
Current portion of notes payable   2,838,200    2,793,701 
Total current liabilities   6,339,912    5,999,412 
           
Total Liabilities   6,339,912    5,999,412 
Commitments and contingencies (Note 11)
          
Stockholders’ Deficit:          
Common stock - par value $0.0001; 500,000,000 shares authorized; 205,127,530 and 174,850,047 shares issued and outstanding respectively   20,513    17,485 
Additional paid in capital   351,290,136    343,434,786 
Stock issuances due   1,173,244    1,140,303 
Prepaid services   (2,133,286)   (660,417)
Accumulated deficit   (354,391,171)   (347,789,889)
Equity attributable to common stockholders   (4,040,564)   (3,857,732)
Non-controlling interest   (2,144,572)   (2,100,452)
Total stockholders’ deficit   (6,185,136)   (5,958,184)
Total liabilities and stockholders’ deficit  $154,776   $41,228 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 5 
   

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months ended 
   March 31, 2016   March 31, 2015 
         
Revenues, net  $3,463   $2,070 
           
Operating expenses:          
Selling, general and administrative   939,341    401,988 
Research and development expense   (18,842)   177,157 
Stock issued for services G&A   1,983,837    2,161,559 
Stock issued for services R&D   -    - 
Warrant valuation expense   2,078,199    - 
Depreciation and amortization expense   547    148,727 
Total operating expenses   4,983,082    2,889,431 
           
Loss from operations   (4,979,619)   (2,887,361)
           
Other income (expense):          
Interest expense   (301,444)   (18,045)
Loss on settlement of debt   (1,364,339)   - 
Total other income (expense)   (1,665,783)   (18,045)
Net loss  $(6,645,402)  $(2,905,406)
Net loss attributable to non-controlling interest   (44,120)   (124,065)
Net loss attributable to common shareholders   (6,601,282)   (2,781,341)
Basic and diluted loss per share to common shareholders  $(0.03)  $(0.02)
Weighted average number of shares outstanding   190,923,381    138,795,044 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 6 
   

  

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE PERIOD ENDED MARCH 31, 2016

(Unaudited)

 

   Common Stock   Additional Paid-in   Stock to   Prepaid   Accumulated   Non-Controlling     
   Shares   Amount   Capital   Be Issued   Services   Deficit   Interest   Total 
                                 
Balance December 31, 2015   174,850,047   $17,485   $343,434,786   $1,140,303   $(660,417)  $(347,789,889)  $(2,100,452)  $(5,958,184)
                                         
Issuance of common stock for prepaid services   19,043,000    1,904    3,724,266    (269,466)   (2,142,535)   -    -    1,314,169 
                                         
Amortization of prepaid services   -    -    -    -    669,667    -    -    669,667 
                                         
Issuance of common stock in exchange for debt   10,921,983    1,093    2,027,915    277,407    -    -    -    2,306,415 
                                         
Issuance of common stock for cash and exercise of warrants   312,500    31    24,969    25,000    -    -    -    50,000 
                                         
Issuance of common stock warrants   -    -    2,078,199    -    -    -    -    2,078,199 
                                         
Net loss   -    -    -    -    -    (6,601,282)   (44,120)   (6,645,402)
                                         
Balance as of March 31, 2016   205,127,530    20,513    351,290,136    1,173,244    (2,133,286)   (354,391,171)   (2,144,572)   (6,185,136)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 7 
   

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended 
   March 31, 2016   March 31, 2015 
CASH FLOWS FROM OPERATING ACTIVITIES          
 Net loss  $(6,645,402)  $(2,905,406)
Adjustments to reconcile net loss to net cash flows used in operating activities:          
Depreciation   547    668 
Amortization   -    148,060 
Amortization of stock issued for prepaid services   669,667    2,161,559 
Stock issued for services   1,314,169    - 
Stock warrant expense   2,078,199    - 
Loss on settlement of debt   1,364,339    - 
Changes in operating assets and liabilities:          
Accounts receivable   (3,463)   (2,070)
Accounts payable   139,203    (192,521)
Accrued liabilities   486,373    32,600 
Prepaid expenses and other current assets   (1,594)   - 
Net cash used in operating activities   (597,962)   (757,110)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Net cash used in investing activities   -    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from sale of stock and exercise of warrants   50,000    95,000 
Proceeds from issuance of notes payable   657,000    500,975 
           
Net cash provided by financing activities   707,000    595,975 
           
Net decrease in cash and cash equivalents   109,038    (161,135)
Cash and cash equivalents at beginning of period   23,149    191,987 
Cash and cash equivalents at end of period  $132,817   $30,852 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 8 
   

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended 
   March 31, 2016   March 31, 2015 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
           
Cash paid for interest  $7,050   $4,500 
           
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
           
Issuance of common stock in exchange for debt and accrued interest  $2,306,415   $- 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 9 
   

  

Immune Therapeutics, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2016

(Unaudited)

 

1. Organization and Description of Business

 

Immune Therapeutics, Inc. (the “Company”) was initially incorporated in Florida on December 2, 1993 as Resort Clubs International, Inc. (“Resort Clubs”). It was formed to manage and market golf course properties in resort markets throughout the United States. Galliano International Ltd. (“Galliano”) was incorporated in Delaware on May 27, 1998 and began trading in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resort Clubs. Resort Clubs was the surviving corporation. On August 23, 2010, Resort Clubs changed its name to pH Environmental Inc. (“pH Environmental”).

 

On April 23, 2012, pH Environmental completed a name change to TNI BioTech, Inc., and on April 24, 2012, we executed a share exchange agreement for the acquisition of all of the outstanding shares of TNI BioTech IP, Inc. On September 4, 2014, a majority of our shareholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to change our name to Immune Therapeutics, Inc. We filed our name change amendment with the Secretary of State of Florida on October 27, 2014 changing our name to Immune Therapeutics, Inc.

 

The Company currently operates out of Orlando, Florida. In July 2012, the Company’s focus turned to acquiring patents that would protect and advance the development of new uses of opioid-related immune- therapies, such as low dose naltrexone (“LDN”) and Methionine [Met5]-enkephalin (“MENK”). The Company’s therapies are believed to stimulate and/or regulate the immune system in such a way that they provide the potential to treat a variety of diseases. We believe our therapies may be able to correct abnormalities or deficiencies in the immune system in diseases such as HIV infection, autoimmune disease, immune disorders, or cancer; all of which can lead to disease progression and life-threatening situations when the immune system is not functioning optimally.

 

In October 2012, the Company formed TNI BioTech International, Ltd., a BVI company in Tortola, British Virgin Islands, which was set up to allow the Company to market and sell LDN in those countries outside the U.S. in which we have been able to obtain approval to sell the Company’s products.

 

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005. The Company will apply to obtain EMA benefits once funding becomes available.

 

In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development. On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% equity interest in Cytocom Inc. on that date. The Company’s equity interest has since been reduced to 50.2% at March 31, 2016, by subsequent issuances of Cytocom common stock to shareholders.

 

 10 
   

  

In March 2014, the Company incorporated Airmed Biopharma Limited, an Irish corporation with an address in Dublin, Ireland, and Airmed Holdings Limited, an Irish company domiciled in Bermuda. The Irish companies were set up to benefit from incentives granted by the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies have located in Ireland), and so that the Company could take advantage of Ireland’s status as a member of the European Union and the European Economic Area. An Irish limited liability company enjoys a low corporate income tax rate of 12.5%, one of the lowest in the world. The Irish-domiciled company hopes to qualify for tax incentives for Irish holding/headquartered companies and to benefit from the network of double tax treaties that reduce withholding taxes. TNI BioTech International, Ltd. will manage our international distribution, using product that is manufactured in Ireland and elsewhere.

 

We are focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS and autoimmune diseases and immune disorders by combating these severe and fatal diseases through the stimulation and/or regulation of the body’s immune system. Our growth strategy includes the near-term commercialization of our existing immunotherapies targeting cancer, Crohn’s disease and/or HIV/AIDS.

 

Going Concern

 

The Company has incurred significant net losses since inception and has relied on its ability to fund its operations through private equity financings. Management expects operating losses and negative cash flows to continue at more significant levels in the future. As the Company continues to incur losses, transition to profitability is dependent upon the successful development, approval, and commercialization of its product candidate and the achievement of a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings, and may seek additional capital through arrangements with strategic partners or from other sources. Based on the Company’s operating plan, existing working capital at December 31, 2015 was not sufficient to meet the cash requirements to fund planned operations through December 31, 2016 without additional sources of cash. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

 

The Company experienced a net loss from operations of $6,645,402, and used cash and cash equivalents for operations in the amount of $497,962 during the quarter ended March 31, 2016, resulting in stockholder’s deficit of $6,185,136 at that date.

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S. GAAP) and include all adjustments (consisting of only normal recurring adjustments, unless otherwise indicated) necessary for the fair presentation of the Company’s financial position for the periods presented.

 

The Company qualifies as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue for the year ended December 31, 2015. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates.

 

 11 
   

 

Cash, Cash Equivalents, and Short-Term Investments

 

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2016, the Company has no uninsured cash balances.

 

Fair Value of Financial Instruments

 

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash and accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

 

Fair Value Measurements

 

The ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

 

Property and Equipment

 

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged against expense as incurred. Depreciation expense for the quarters ended March 31, 2016 and March 31, 2015 was $547 and $668, respectively.

 

Intangible Assets

 

Costs incurred to acquire and/or develop the Company’s product licenses and patents are capitalized and amortized by straight-line methods over estimated useful lives of seven to sixteen years. Intangible assets are stated at the lower of cost or estimated fair market value. During the quarters ended March 31, 2016 and March 31, 2015, the Company did not capitalize any such costs. (See Note 10). Amortization expense for the quarters ended March 31, 2016 and March 31, 2015 was $0 and $148,059, respectively.

 

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Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable as prescribed by ASC Topic 360-10-05, “Property, Plant and Equipment.” If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. No impairment losses were recognized for the quarters ended March 31, 2016 and March 31, 2015.

 

Research and Development Costs

 

Research and development costs are charged to expense as incurred and are typically comprised of salaries and benefits, pre-clinical studies, clinical trial activities, drug development and manufacturing, fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf and third-party service fees, including clinical research organizations and investigative sites. Costs for certain development activities, such as clinical trials are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as operating expenses.

 

Income Taxes

 

The Company follows FASB ASC Topic 740, “Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. 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.

 

The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2015, and 2014, the Company does not have a liability for unrecognized tax uncertainties.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. At the end of the quarters ended March 31, 2016 and March 31, 2015, the Company had not accrued any interest or penalties related to uncertain tax positions.

 

Stock-Based Compensation and Issuance of Stock for Non-Cash Consideration

 

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values equaling either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. The majority of the non-cash consideration pertains to services rendered by consultants and others and has been valued at the fair value of the Company’s common stock at the date of the agreement.

 

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete.

 

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Non-controlling Interest

 

In accordance with ASC 810, Consolidation, the Company consolidates Cytocom, Inc. The non-controlling interests in Cytocom represent the interests of outside shareholders in the equity and results of operations of Cytocom.

 

Net Loss per Share

 

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method and the if-converted method. Dilutive common stock equivalents are comprised of common stock purchase warrants and options outstanding. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

 

A calculation of basic and diluted net loss per share follows:

 

   For the three months ended
March 31,
 
   2016   2015 
Historical net loss per share:          
Numerator          
Net loss  $(6,645,402)  $(2,905,406)
Non-controlling interest   (44,120)   (124,065)
Net loss attributed to Common stockholders  $(6,601,282)  $(2,781,341)
           
Denominator          
Weighted-average common shares outstanding—Denominator for basic and diluted net loss per share   190,923,381    138,795,044 
Basic and diluted net loss per share attributed to common stockholders  $(0.03)  $(0.02)

 

The Company’s potential dilutive securities which include stock and warrants have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average Common stock outstanding used to calculate both basic and diluted net loss per share is the same.

 

The following shares of potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as the effect of including such securities would be antidilutive:

 

   For the three months ended
March 31,
 
   2016   2015 
Warrants to purchase Common stock   24,731,500    9,372,750 

 

Recent Accounting Standards

 

During the quarter ended March 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

 

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3. Property and Equipment

 

   March 31, 2016   December 31, 2015 
Property and equipment:          
Computer equipment  $8,013   $8,013 
           
Less accumulated depreciation   (6,878)   (6,331)
Property and equipment, net  $1,135   $1,682 

 

The Company utilizes the straight-line method for depreciation, using three to five-year depreciable asset lives. Depreciation expense was not material for all periods presented.

 

4. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

   March 31, 2016   December 31, 2015 
   (in thousands) 
Accrued payroll to officers and others  $1,077,640   $758,342 
Accrued interest - notes payable   365,006    236,671 
Estimated legal settlement   198,312    282,136 
Other accrued liabilities   393    323 
State payroll taxes   -    3,567 
Total accrued expenses and other liabilities  $1,641,351   $1,281,039 

 

5. Notes Payable

 

Notes payable consist of the following:

   March 31, 2016   December 31, 2015 
Promissory note issued July 29, 2014 to Ira Gaines. The note matures on January 27, 2015 and earns interest at a rate of 18% per annum. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender.  $100,000   $100,000 
           
Promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt. Lenders earn interest at a rate of 10% per annum, plus a pro-rata share of two percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity. Notes will be repaid in 36 monthly installments of principal and interest commencing no later than October 15, 2015. Notes aggregating $346,000 were in default at March 31, 2016, as the Company was unable to pay installments on those notes on their due dates. No demands for repayment have been made by the lenders. In the quarter ended March 31, 2016, $365,500 of these notes and their accompanying interest were converted into 5,191,909 shares of Immune Therapeutics common stock.   346,000    711,500 
           
Promissory note issued October 17, 2014 to Roger Bozarth. The note matures on October 17, 2015 and earns interest at a rate of 2% per annum. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender. In the quarter ended March 31, 2016, this note and the accompanying interest was converted into 89,639 shares of Immune Therapeutics common stock.   -    7,000 
           
Promissory notes issued between May 1, 2015 and September 30, 2015, and maturing between June 14, 2015 and December 31, 2015. Lenders on loans aggregating $356,432 earn interest at rates between 10% and 18% per annum. On loans aggregating $223,500, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $223,500 were in default at March 31, 2016, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders. In the quarter ended March 31, 2016, $140,001 of these notes and their accompanying interest were converted into 2,420,377 shares of Immune Therapeutics common stock.   579,932    669,933 
           
Promissory note issued January 26, 2015 to Robert J. Dailey. The note is senior to, and has priority in right of payment over, all indebtedness of the Company. The note earns interest at a rate of 2% per annum and was due on July 30, 2015. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender.   200,000    200,000 
           
Promissory notes issued by Cytocom Inc. between April 29, 2015 and December 31, 2015. Lenders earn interest at rates between 5% and 10% per annum. These notes mature on September 30, 2016.   750,000    800,000 
           
Promissory notes issued in December 2015. Lenders earn interest at a rate of 10% per month. Notes are repayable on March 9, 2016. The Company was unable to repay the note at maturity and the note is in default. The Company is obligated to pay late-payment penalties totaling $6,667 per day.   130,000    130,000 
           
Promissory note issued November 24, 2015 as settlement of amounts owing to a law firm. The Lender earns interest at the rate of 10% per annum. The note is repayable in full on December 1, 2016.   175,268    175,268 
           
Promissory notes issued between January 1, 2016 and March 31, 2016. Lenders earn interest at a rate of 10% per month. Notes are repayable in one year.   312,000      
           
Promissory note issued February 3, 2016, payable in 90 days which includes an original issue discount of $40,000 and expenses of $5,000, resulting in net proceeds of $200,000.   245,000      
           
Total   2,838,200    2,793,701 
           
Less: Current Portion   (2,838,200)   (2,793,701)
           
Long-Term debt, less current portion  $-   $- 

 

As of March 31, 2016, the Company had accrued $365,006 in unpaid interest, compared to $236,671 as of December 31, 2015

 

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6. Capital Structure—Common Stock and Common Stock Purchase Warrants

 

Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each share held. No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock or any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

 

As of March 31, 2016 and 2015, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of March 31, 2016, the Company had 205,127,530 shares of common stock outstanding and 178,850,047 outstanding as of December 31, 2015.

 

Stock Warrants

 

In the quarter ended March 31, 2016, the Company issued 15,600,000 warrants.

 

There were no modifications of the terms of any warrants issued by the Company in the quarters ended March 31, 2016 and 2015.

 

Following is a summary of outstanding stock warrants at March 31, 2016 and activity during the three months then ended:

 

   Number of
Shares
   Exercise
Price
   Weighted
Average
Price
 
Warrants as of December 31, 2015   9,131,500   $0.07-15.00   $1.47 
                
Issued in 2016   15,600,000   $.020-2.00   $0.39 
                
Expired   -   $-   $- 
                
Exercised   -   $-   $- 
                
Warrants as of March 31, 2016   24,731,500   $ 0.07-15.00   $0.79 

 

Summary of outstanding warrants as of March 31, 2016:

 

Expiration Date  Number of
Shares
   Exercise
Price
   Remaining
Life (years)
 
Second Quarter 2016   37,500   $5.00    .25 
Third Quarter 2016   525,000   $1.00-5.00    .50 
Third Quarter 2017   1,500,000   $1.00    1.50 
Fourth Quarter 2017   2,941,666   $1.00-9.00    1.75 
First Quarter 2018   127,500   $15.00    2.00 
Second Quarter 2018   33,334   $15.00    2.25 
Third Quarter 2018   650,000   $1.00-1.50    2.50 
Fourth Quarter 2018   1,197,500   $1.00-1.50    2.75 
First Quarter 2019   4,024,000   $0.50-2.00    3.00 
Second Quarter 2019   135,000   $0.07–0.23    3.25 
Third Quarter 2019   260,000   $0.50    3.50 
Fourth Quarter 2019   400,000   $0.14    3.75 
Second Quarter 2020   300,000   $0.50    4.25 
First Quarter 2021   12,600,000   $0.20    5.00 

 

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7. Stock Compensation

 

Shares Issued for Services

 

During the quarters ended March 31, 2016 and 2015, the Company issued 19,043,000 and 9,272,502 shares of common stock respectively for consulting fees. The Company valued these shares at $1,314,169 and $1,712,876 respectively, based upon the fair market value of the common stock at the dates of the agreements. The consulting fees are amortized over the contract periods which are typically between 12 and 24 months. The amortization of prepaid services totaled $669,667 and $2,161,559 for the quarters ended March 31, 2016 and 2015.

 

8. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended March 31, 2016 and 2015 because the Company incurred a net loss in both quarters.

 

The Company has recognized no tax benefit for the losses generated for the periods through December 31, 2015. ASC Topic 740 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company’s ability to realize the benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize revenue, we believe that the full valuation allowance should be provided.

 

Our effective tax rate for fiscal years 2015 and 2014 was 0%. Our tax rate can be affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in jurisdictions. It may also be affected by discrete items that may occur in any given year, but are not consistent from year to year.

 

As of December 31, 2015, we have estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $66,500,000, which will expire in 2032-2035.

 

9. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

The Company entered into a share exchange agreement on April 24, 2012 to acquire all of the outstanding shares of TNI BioTech IP, Inc. (“TNI IP”), a biotechnology firm incorporated in Florida and formed to acquire patents related to the treatment of cancer and HIV/AIDS and autoimmune diseases, using Met-enkephalin (“MENK”) and Naltraxone (“LDN”). The goal of TNI IP’s management was to enable mankind and civilization to combat fatal diseases by activating and mobilizing the body’s own immune system using TNI IP’s patented use of MENK. The first patents acquired by TNI IP were acquired from Dr. Nicholas P. Plotnikoff and Professor Fengping Shan in 2012. TNI IP was acquired in exchange for 20,250,000 shares of the Company’s common stock, of which 8,000,000 shares were issued to Dr. Plotnikoff for the acquisition of patents and the remaining 12,250,000 shares were issued to the founders of TNI IP in exchange for all of their right, title and interest in their TNI IP shares. The goodwill arising on the acquisition of TNI IP was valued at $98,000,000 and license agreements arising from the acquisition of TNI IP were valued at $16,006,000.

 

In connection with the share exchange, we entered into a Sale of Technology Agreement with Dr. Nicholas P. Plotnikoff on March 4, 2012, wherein Dr. Plotnikoff agreed to transfer and assign all of his rights, title and interest in: European Patent United Kingdom, Germany, France, Ireland EP 1401471 BI Methods for inducing sustained immune response; Russian Patent Russian Federation patent number 2313364; The Patent Office of the People’s Republic of China, Application No.: 200810165784.8 China Patent CN1015113407 A The Patent Office of the People’s Republic of China ISSN: 1006-2858 CN 21-1349/R; Patent Agencies Government of India Patent, Application number 1627/KOLNP/2003 number 220265 an Enkephalin Peptide Composition; and the US Patent Pending, US Patent Application 10/146.999 e. The Company received all the production formulations and technology designs from Dr. Plotnikoff necessary for the manufacturing, formulation, production and protocols of the MENK treatment of cancer and HIV/AIDS. As consideration for entering into the Sale of Technology Agreement, Dr. Plotnikoff received 8,000,000 shares of common stock, a royalty of a single-digit percentage on all sales of MENK and was granted the position of Non-Executive Chairman of the Board of Directors.

 

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At the time of the acquisition, the valuation of goodwill and other intangible assets were determined using the fair market price for the Company’s common stock, which were exchanged for shares of TNI IP. In the fourth quarter of 2012, the Company performed an annual valuation to determine whether any goodwill or intangible assets that had been acquired by the Company were impaired. The result of this valuation was that material impairments were identified. The Company recognized an impairment of the goodwill arising on the acquisition of TNI IP of $98,000,000.

 

Patent License Agreements

 

On August 13, 2012, the Company signed an exclusive License Agreement with Ms. Jacqueline Young (the “Young Agreement”) for the intellectual property developed by Dr. Bernard Bihari relating to treatments with opioid antagonists such as naltrexone and Met-enkephalin for a variety of diseases and conditions including malignant lymphoma, chronic lymphocytic leukemia, Hodgkin’s lymphoma, and non-Hodgkin’s lymphoma, chronic herpes virus infections, chronic herpes viral infections such as chronic genital herpes caused by the herpes simplex virus Type 2 and chronic infections due to the Epstein-Barr virus and a treatment method for humans infected with HTLV-III (AIDS) virus, including patients clinically diagnosed as suffering from AIDS and those suffering from AIDS-related complex (ARC). The Bihari patents were acquired in exchange for 540,000 shares of the Company’s common stock with a fair market value of $972,000 and assumed liabilities of $400,000, which is payable to Ms. Young over a twenty-four month period in equal installments to reimburse her for the costs of a New York City office in accordance with the Young Agreement. The patent liability at December 31, 2013 totaled $118,333. The cost of the patent totaled $1,372,000. The Company will pay the licensor a royalty payment of 1% of gross MENK sales and provide the licensor a position as non-executive chairman of the Company. In addition, we are required to make a minimum royalty in the amount of $100,000 for each year after 2014 until such time as we make a first commercial sale. The Young Agreement is valid for the life of the patents and expires on a country by country basis in each country where patent rights exist, upon the expiration of the last to expire patent in each country or in the event the patent in such country is held to be invalid and/or unenforceable (by a court or government body of competent jurisdiction) or admitted to be invalid or unenforceable. Additionally, we can cancel the Young Agreement upon 120 days’ written notice and shall pay all royalties and fees that have accrued under the Young Agreement. We have the exclusive rights to the intellectual property; however, Ms. Young retains a right to practice the patents licensed under the Young Agreement solely for noncommercial, academic research purposes.

 

On December 24, 2012, the Company signed an agreement for the acquisition of patent rights (the “Smith Agreement”) for the intellectual property of Dr. Jill Smith and LDN Research Group, LLC (collectively, the “Licensor Parties”), whose members are Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky and orphan drug designation by the FDA to a novel late-stage drug, trademarked “LDN,” for the treatment of Pediatric Crohn’s disease. The patent covers methods and formulations for treatment of the inflammatory and ulcerative diseases of the bowel, using naltrexone in low doses as an opioid antagonist. These patents were acquired in exchange for 300,000 shares of our common stock with a fair market value of $2,715,000 and payment of $165,384 (consisting of a $100,000 initial license fee and payment of $65,384 of expenses), which totaled $2,880,384.

 

The Smith Agreement requires the Company to (i) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan, (ii) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable, (iii) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use, and (iv) make the first commercial sale of a licensed product by March of 2017.

 

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The Company is required to pay an annual license fee, an annual running royalty on net sales of each licensed product or a minimum royalty, whichever is greater, and a sublicense fee on payments received by the Company from sublicensees. The Company has an exclusive, worldwide license to make, have made, use, lease, import, offer for sale and sell licensed products and to use the method under the patent rights. The Smith Agreement will terminate on the expiration or abandonment of the last patent to expire or ten years after the sale of the first licensed product. The Company may terminate the Smith Agreement upon 90 days’ written notice, provided all sublicenses are terminated and all amounts due and owing are paid to the Licensor Parties. The Licensor Parties may terminate the agreement ten days’ after notice to the Company if the Company is ten days late in payment or there is a breach that remains uncured for ten days after written notice of such breach.

 

The Company is also required to pay milestone payments after substantial achievement of certain milestone events for each licensed product including payment: upon initiation of each Phase III trial; upon positive completion of each Phase III clinical trial of the therapeutic use of an LDN compound in the field of use; when a New Drug Application (“NDA”) is accepted for review by the FDA; and when FDA approval to market the NDA is approved. The Company will issue shares upon reaching certain milestones including upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount in cumulative sales for each licensed product covered by NDAs.

 

As part of the Smith Agreement, the Company has the right to apply to the FDA for the transfer of the orphan drug status for the use of naltrexone for the treatment of pediatric Crohn’s disease and ulcerative colitis, the Investigation New Drug Application (“IND”), and the right to acquire the relevant clinical data set from Dr. Jill Smith. Dr. Jill Smith made arrangements to transfer the IND to the Company as well as the relevant clinical data set, and the FDA has acknowledged that the Company is now the sponsor for this IND.

 

On September 24, 2014, the Company and the Licensor Parties jointly agreed to terminate the Smith Agreement, and in place thereof, have the Licensor Parties grant a similar license in their patent rights to Cytocom Inc. pursuant to a Patent License Agreement between the Licensor Parties, Cytocom Inc. and the Company with substantially similar terms as set forth in the Smith Agreement. Pursuant to this agreement, the Company issued 1,000,000 shares of its common stock valued at $270,000, upon execution to the Licensor Parties and the Company guaranteed the obligations of Cytocom Inc. to the Licensor Parties under the agreement.

 

On January 18, 2013, the Company signed an exclusive licensing agreement with The Penn State Research Foundation to license all of the intellectual property developed by Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Dr. Jill P. Smith for the treatment of cancer titled “Opioid Growth Factor and Cancer” and “Combination Therapy with Opioid Growth Factor and Taxanes for the Treatment of Cancer” (the “Foundation Agreement”).

 

The Foundation Agreement requires the Company to: (a) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan; (b) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable; (c) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use; and (d) make the first commercial sale of a licensed product by December 31, 2016.

 

The Foundation Agreement provides that the Company must pay to the licensor an initial license fee, a license maintenance fee on each anniversary of the effective date of the Foundation Agreement, and an annual running royalty on net sales for each licensed product or a minimum royalty, whichever is greater. In addition, the Company must pay a sublicense fee on payments received by the Company from sublicensees.

 

The Foundation Agreement also requires the Company to make payments upon the achievement of certain milestone events including: initiation of each Phase II trial; initiation of each Phase III trial; when the NDA is accepted for review by the FDA; and when FDA approval to market is approved. The Company must also issue shares upon certain milestones including upon the first dosing of the first patient in a Phase II clinical trial for each licensed product, upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount of cumulative sales for each licensed product covered by NDAs.

 

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The Foundation Agreement terminates on the expiration or abandonment of the last patent to expire or become abandoned. The Company may terminate the Foundation Agreement at any time upon 60 days’ prior written notice and ceasing to make and sell all licensed products, the termination of all sublicenses and payment of all monies owed under the Foundation Agreement. The licensor may terminate the agreement 30 days after notice to the Company if the Company is 30 days late in payment or a breach that remains uncured for 45 days after written notice of such breach.

 

In May of 2013, the Company executed a Patent License Agreement with Professor Fengping Shan (the “Shan Agreement”) pursuant to which it obtained exclusive rights to develop and commercialize the licensed technology. The licensed technology is the intellectual property developed and owned by Professor Shan (i) relating to the treatment of a variety of diseases and conditions with MENK including multiple forms of lymphoma and cancer and (ii) a treatment method for humans infected with the HLTV-III (AIDS) virus including AIDS and AIDS related complex (ARC). The licensed technology includes the methods and formulations for these treatments including all INDs, communications with regulatory agencies, patient data, and letters relating to these treatments. The licensed technology also includes certain patents developed by Professor Shan. Under the Shan Agreement, the Company must issue 500,000 shares to Professor Shan upon final transfer of the licenses, and reimburse Professor Shan for all out of pocket expenses in connection with the patents. The Company will pay Professor Shan a running royalty on gross sales subject to decreases if third party intellectual property is needed to complete such sale or product. The Shan Agreement lasts for the duration of each of the licensed patents however the Company may terminate the Shan Agreement on 120 days’ written notice to Professor Shan.

 

On August 6, 2014, Professor Fengping Shan executed an Assignment pursuant to which he transferred to the Company his entire right, title and interest in and to the licensed patents under the Shan Agreement and CN 201210302259 Application of combination of low-dose naltrexone and methionine-enkephalin to preparation of anti-cancer drug for the consideration of 500,000 shares of common stock valued at $140,000.

 

10. Commitments and Contingencies

 

Malawi Treatment Facilities

 

On July 14, 2012, GB Oncology and Imaging Group LTD (“GBOIG”) in partnership with the Company signed a letter of intent agreement to collaborate with the Government of Malawi to assist in expanding the treatment of cancer, HIV/AIDS and other infectious diseases.

 

In December of 2014, the Government of Malawi completed an oncology clinic at the Queen Elizabeth Central Hospital in Blantyre, Malawi for the treatment of cancer and infectious diseases. In 2015, the Company submitted protocols seeking permission from the Pharmacy, Medicines and Poisons Board of Malawi (“PMPB”) to conduct two trials involving Lodonal™ in Malawi:

 

a. The first protocol, submitted jointly with The Jack Brewer Foundation (“JBF Worldwide”), received PMPB approval on November 11, 2015. The protocol covers a 12-month trial for a “Single Visit Approach to Cervical Cancer Prevention.” The approach is designed to deliver a preventive and simple procedure that can be performed in a clinical setting without the use of a laboratory and to allow for immediate treatment of any precancerous lesions utilizing Wallach LL100 Cryosurgical systems. The protocol provides for 50% of the patient group to be put on Lodonal™ to determine if the drug lowers the number of opportunistic infections during the year, and if it can be shown that LDN increases CD4, CE8, NK and T cell count, which would show that the incidence rates of opportunistic infection could decrease with Lodonal™ and that Lodonal™ could be used as a prophylaxis to prevent substantial HIV-related morbidity in Malawi. The final trial agreement with PMPB was signed in February 2016. Lodonal™ pills have been produced in Nicaragua in anticipation of the trial. Shipments will commence once the trial is approved.
   
b. The second protocol, which has not yet been approved, covers a trial using Lodonal™ for the treatment of cancer.

 

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The Company and GBOIG will work with the government of Malawi to open and operate other clinics that provide treatments for HIV/AIDS, cancer and other infectious diseases. Under the letter of intent, the Company and GBOIG intend to provide HIV/AIDS treatment to 25,000 patients and hopefully expanding to 500,000 within 24 months. The Company shall contribute $1,000 in initial capital to the venture. The Company shall be allocated 50% of the net income from the venture. Either party may terminate the venture with 180 days’ notice to the other party prior to the one-year anniversary of the Agreement. After the one-year anniversary, the agreement may only be terminated with 180 days’ notice to the other party if the other party has breached the Agreement.

 

GBOIG, a subsidiary of GB Energie LLC, is a Washington D.C. based minority woman-owned business managed by Dr. Gloria B. Herndon. Dr. Herndon is a former director of the Company. Dr. Herndon’s directorship with the Company ended September 4, 2014.

 

Open an Oncology and Infectious Disease Center in Malawi at Queen Elizabeth Central Hospital

 

On September 25, 2012, GBOIG, in partnership with the Company, signed an agreement with the Government of Malawi to open an outpatient clinic at Queen Elizabeth Central Hospital (in Malawi) for the treatment of cancer and infectious disease. The duration of the Agreement shall be for 25 years with an optional 10-year renewal to be indicated by the Government of Malawi at least three years prior to the expiration of the term. The Government of Malawi will bear the upfront costs for the agreement of $2,500,000.

 

Distribution Agreements in Nigeria

 

In October 2013, the Company announced the signing of a Distribution Agreement with AHAR Pharma, a Nigerian company, to market Lodonal™ in Nigeria for the treatment of autoimmune diseases and cancer. AHAR intends to distribute Lodonal™ through a local distributor network, an Internet client base and directly to hospitals, pharmacists and doctors in Nigeria. Under the agreement, the Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma’s first-year purchase commitment.

 

In August 2015, the Company announced the signing of a letter of intent with GB Pharma/AHAR and Fidson Healthcare Plc., in terms of which Fidson will promote LodonalTM upon execution of a definitive agreement between the companies.

 

In April 2016, the Company announced that Nigeria’s National Agency for Food and Drug Administration and Control (“NAFDAC”) had approved its LodonalTM as an over the counter, non-toxic adjunct therapy in the treatment of HIV/AIDS and immune system regulator. NAFDAC is the Nigerian agency under the Federal Ministry of Health that is responsible for regulating and controlling the manufacture, import/export, distribution, sale and use of food and drugs. Its approval clears the way for the Company and its distribution partners to complete the registration of LodonalTM for sale in Nigeria.

 

Agreements with Hubei Qianjiang Pharmaceutical Company

 

On October 18, 2012, the Company and Hubei Qianjiang Pharmaceutical Co., Ltd. (“Qianjiang Pharmaceutical”), signed a Venture Cooperation Agreement on New Drug Methionine Enkephalin (the “Venture Agreement”) pursuant to which Qianjiang Pharmaceutical acquired an exclusive license for the production of MENK in China. The Venture Agreement requires that Qianjiang Pharmaceutical conduct drug research and pilot testing for MENK, organize pre-clinical studies, and apply for clinical trials for MENK with the Chinese State Food and Drug Administration. Under the Venture Agreement, Qianjiang Pharmaceutical must open a co-administration account for the development of MENK in China. Qianjiang Pharmaceutical must pay the Company, upon the marketing of MENK products, a half-year amount equaling 6% of its gross sales from MENK of the preceding half year. The Company may cancel the Venture Agreement if Qianjiang Pharmaceutical does not pay expenses for a period exceeding six months or does not commence clinical trials within 12-months after receiving certain approvals. Qianjiang Pharmaceutical may cancel the Venture Agreement if the Company fails to perform its obligations for a period of six months or the failure to receive approval of clinical trials is due to the Company’s MENK technologies. The Venture Agreement was amended on February 24, 2013 to expand the clinical trials from pancreatic to both pancreatic and liver cancer and amended on March 6, 2014 to require Qianjiang Pharmaceutical to commence studies and clinical trials in China and place funds in the co-administration account.

 

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On August 6, 2014, the Company entered into a Supplementary Agreement on New Drug Methionine – Enkephalin Cooperation (the “Amendment”) with Qianjiang Pharmaceutical, amending the Venture Agreement, as amended. The Company and Qianjiang Pharmaceutical executed the Amendment to accelerate clinical trials in both the United States and China, and agreed to immediately initiate three month Good Laboratory Practice (“GLP”) Toxicology Studies (rat and dog) within 30 days of signing the Amendment. The Amendment requires that the GLP Toxicology Studies Trials are conducted in China in accordance with international standards and standards acceptable to the FDA and that the studies include the following:

 

Exploratory Toxicology (nGLP)

-Dose range finding studies

- Different species and methods of administration

- Multiple dosing regimens

- Estimate the response vs. dose given

 

Definitive Toxicology (GLP)

- Performed in collaboration with Calvert Laboratories (USA) and MPI/Medicillon (China)

- General toxicology studies

- Different species and methods of administration

- Immunogenicity study with NHPs

 

Special Toxicology Studies (planned)

 

Pursuant to the Amendment, Qianjiang Pharmaceutical will make certain funds available from the co-administrative account opened by Qianjiang Pharmaceutical under the Venture Agreement, in accordance with an approved budget and timeline set forth in the Amendment. A portion of these funds are expected to be used by Cytocom to run PK and Dosing trials for MENK in the United States. The Amendment requires Cytocom and Qianjiang Pharmaceutical to meet with the China State Food and Drug Administration to determine that PK and Dosing Trials completed in the United States will be acceptable. All developments and trials run by Cytocom in the U.S. or the European Union will be used for requesting registration approval in China.

 

In February 2013, the Company signed a Strategic Framework Agreement for Cooperation with Qianjiang Pharmaceutical. Under the agreement, the parties will work together to further the development of new products and conduct research and development on the Company’s licensed patented technology. Specifically, the parties aim to co-invest to develop and market products focusing on HIV, cancer and related autoimmune system therapies, develop co-ventured manufacturing facilities in China, and develop co-ventured distribution of the developed products in China and Africa. The agreement does not have a definitive term, as each new agreement resulting from the cooperation will set forth the material terms, including, but not limited to, fees, duration and termination therein.

 

Supervision and Inspection of Manufacturing in Nicaragua

 

On April 23, 2013, the Company signed a Contract with ViPharma for the Supervision and Inspection of Manufacturing Processes as part of its negotiations for a contract for the manufacturing of LDN in a tablet, capsule and/or cream. The contract sets out the terms and conditions under which ViPharma will carry out the services of inspecting and supervising the manufacturing and packaging processes of LDN and ensure compliance with the FDA’s Current Good Manufacturing Practice regulations (“cGMP”) and the Company’s specifications. ViPharma will carry out its obligations in whatever Latin American country the Company ultimately decides to manufacture LDN. Under the contract, ViPharma has the exclusive rights to supervise and inspect all manufacturing processes of LDN in Latin America. The initial term of the agreement is ten years commencing in September 2013, with automatic five-year renewal terms provided neither party is in breach. The agreement may be terminated by (i) mutual agreement, (ii) in the event of a breach after a 45 day cure period or (iii) by either party upon provision of written notice at least 90 days before the end of the agreement, provided however that if the Company terminates the contract without cause it will be required to pay ViPharma a $10 million penalty.

 

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Operating Leases

 

At March 31, 2016, the Company was a party to an agreement to lease office space in Orlando, Florida. Rent expense for the quarters ended March 31, 2016 and 2015 was $(114,794) and $18,319, respectively. The 2016 expense reflects the reversal of accruals for rent expense in prior years, including the settlement with E.J. Krause & Associates, Inc. referred to in “Legal Proceedings” below.

 

Legal Proceedings

 

In October 2014, a claim was filed for breach of contract and unjust enrichment in the United States District Court, Middle District of Florida, Orlando Division, QS Pharma, LLC v. TNI BioTech, Inc. n/k/a Immune Therapeutics, Inc., in which the named plaintiff claims that we breached various proposals between the parties. The plaintiff was seeking an amount of damages to be proven at trial and pre-judgment interest. The plaintiff filed a Motion for Order of Default, which the court entered against the Company in favor of the plaintiff on December 15, 2014. In May and October 2015, under a garnishment order the plaintiff withdrew $92,590 from the Company’s bank accounts towards settlement of the claim. In 2016, the Company agreed upon a full settlement of the balance owed for $80,000, which it paid in April 2016.

 

In February 2015, a claim was filed for breach of contract and unjust enrichment in the Circuit Court for Montgomery County, Maryland, E.J. Krause & Associates, Inc. v. TNI BioTech, Inc., in which the named plaintiff claims that the Company breached a sub-sublease. In April 2016 the parties settled the claim, agreeing that the Company would pay a total of $198,312 in 12 monthly installments commencing May 15, 2016.

 

11. Subsequent Events

 

On May 1, 2016, the Company entered into a one-year employment agreement with Robert Wilson, the son of the Company’s Chief Executive Officer, as the Company’s Senior Content and Web Developer. The terms of the agreement provide for payment to Mr. Wilson of an annual base salary of $120,000, and health insurance coverage.

 

On May 9, 2016, the Company and KRS Global Bio Technology, Inc. mutually agreed to terminate their Contract for the Compounding of Pharmaceutical Products dated December 8, 2014.

 

Between March 31, 2016 and May 16, 2016 the Company issued promissory notes aggregating $961,250 and paid off notes totaling $245,000.

 

The Company issued 1,786,285 shares of common stock between March 31, 2016 and May 16, 2016, of which, 450,000 shares are for consulting fees, 836,285 shares are for debt conversions and 500,000 shares are for loan origination fees.

 

As of May 16, 2016, the Company had outstanding 206,913,301 shares of common stock.

 

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

 

Forward-Looking Statements and Associated Risks

 

This section and other parts of this Form 10-Q contain forward-looking statements. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements also can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K/A for the year ended December 31, 2015 filed with the Securities and Exchange Commission on May 16, 2016 (the “2015 Form 10-K/A”) under the heading “Risk Factors”.

 

The following discussion should be read in conjunction with the 2015 Form 10-K/A and the consolidated financial statements and notes thereto included elsewhere in this Form 10-Q. All information presented herein is based on the Company’s fiscal calendar. Unless otherwise stated, references in this report to particular years, quarters, months or periods refer to the Company’s fiscal years ended in December and the associated quarters, months, or periods of those fiscal years. Each of the terms the “Company”, “we”, “us” or “our” as used herein refers collectively to Immune Therapeutics, Inc. and its subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

 

General

 

Immune Therapeutics, Inc. (the “Company”) was initially incorporated in Florida on December 2, 1993 as Resort Clubs International, Inc. (“Resort Clubs”). It was formed to manage and market golf course properties in resort markets throughout the United States. Galliano International Ltd. (“Galliano”) was incorporated in Delaware on May 27, 1998 and began trading in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resort Clubs. Resort Clubs was the surviving corporation. On August 23, 2010, Resort Clubs changed its name to pH Environmental Inc. (“pH Environmental”).

 

On April 23, 2012, pH Environmental completed a name change to TNI BioTech, Inc., and on April 24, 2012, we executed a share exchange agreement for the acquisition of all of the outstanding shares of TNI BioTech IP, Inc. On September 4, 2015, a majority of our shareholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to change our name to Immune Therapeutics, Inc. We filed our name change amendment with the Secretary of State of Florida on October 27, 2015 changing our name to Immune Therapeutics, Inc.

 

The Company currently operates out of Orlando, Florida. In July 2012, the Company’s focus turned to acquiring patents that would protect and advance the development of new uses of opioid-related immune- therapies, such as low dose naltrexone (“LDN”) and Methionine [Met5]-enkephalin (“MENK”). The Company’s therapies are believed to stimulate and/or regulate the immune system in such a way that they provide the potential to treat a variety of diseases. We believe our therapies may be able to correct abnormalities or deficiencies in the immune system in diseases such as HIV infection, autoimmune disease, immune disorders, or cancer; all of which can lead to disease progression and life-threatening situations when the immune system is not functioning optimally.

 

In October 2012, the Company formed TNI BioTech International, Ltd., a BVI company in Tortola, British Virgin Islands, which was set up to allow the Company to market and sell LDN in those countries outside the U.S. in which we have been able to obtain approval to sell the Company’s products.

 

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005.

 

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In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2015, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development. On December 8, 2015, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which has allowed the Company to retain a 55.3% stake in Cytocom Inc. until such time as funding for Cytocom Inc. closes. The Company’s equity interest has since been reduced to 50.2% at March 31, 2016, by subsequent issuances of Cytocom common stock to shareholders.

 

In March 2015, the Company incorporated Airmed Biopharma Limited, an Irish corporation with an address in Dublin, Ireland, and Airmed Holdings Limited, an Irish company domiciled in Bermuda. The Irish companies were set up to benefit from incentives granted by the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies have located in Ireland), and so that the Company could take advantage of Ireland’s status as a member of the European Union and the European Economic Area. An Irish limited liability company enjoys a low corporate income tax rate of 12.5%, one of the lowest in the world. The Irish-domiciled company hopes to qualify for tax incentives for Irish holding/headquartered companies and to benefit from the network of double tax treaties that reduce withholding taxes. TNI BioTech International, Ltd. will manage our international distribution, using product that is manufactured in Ireland and elsewhere.

 

We are focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS and autoimmune diseases and immune disorders by combating these severe and fatal diseases through the stimulation and/or regulation of the body’s immune system. Our growth strategy includes the near-term commercialization of our existing immunotherapies targeting cancer, Crohn’s disease and/or HIV/AIDS.

 

Research and Development

 

The Company’s research and development (“R&D”) activities commenced in the third quarter of 2012, the Company having only completed the initial acquisition of MENK-related patents required for research in the second quarter of that year. Through 2013 and the first nine months of 2015, we continued to build R&D organization and capabilities focusing primarily on new uses for opioid-related immuno-therapies, such as LDN and MENK. Those activities were suspended at the end of September 2015, due to lack of funding. We expect to be able to resume activities in the second half of 2016.

 

Our R&D priorities include development of IRT-101 or MENK, a small synthetic peptide that is naturally occurring in the body, and IRT-103 LDN, an opioid receptor antagonist. Our pipeline provides two therapies with a wide range of indications that can be pursued. We believe that both molecules have the ability to stimulate the immune system in order to treat a variety of autoimmune diseases including multiple sclerosis, immune disorders such as Crohn’s disease, cancer, and viral infections such as HIV/AIDS.

 

Our R&D is overseen and managed internally, working with individuals, universities, and contract research organizations in order to utilize patents that we have licensed or acquired since our inception. We continue to seek to expand our pipeline of patents by reviewing other compounds, technologies or capabilities. We also seek out promising compounds and innovative technologies developed by third parties to incorporate into our discovery and development processes or projects.

 

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Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

 

Revenues

 

We had revenues from operations of $3,463 for the three months ended March 31, 2016, compared to $2,070 for the three months ended March 31, 2015.

 

Operating Expenses

 

Selling, general and administrative

 

Selling, general and administrative expenses and related percentages for the three months ended March 31, 2016 and 2015 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2016   2015 
Selling, general and administrative  $939   $402 
Increase/(decrease) from prior year  $537   $(325)
Percent decrease from prior year   134%   (45)%

 

For the three months ended March 31, 2016 and 2015, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2016   2015 
Stock listing and investor relations expenses  $49   $25 
Consulting and contractors   324    22 
Payroll   396    223 
Professional fees   85    73 
Travel   19    104 
Insurance   -    (126)
Other expenses   66    81 

 

In the three months ended March 31, 2016, total cash and cash accruals for selling, general and administrative expense was $939 compared to $402 for the corresponding period in 2015, an increase of $537 or 134%. Significant cash items included:

 

consulting and contractor services obtained to assist the Company in raising capital, manage investor relations, and develop business in new markets, in the amount of $324 in 2016, an increase of $302 or 1373% over the $22 spent in 2015. The increase was the result primarily of the conversion in 2015 of $150 owed from prior periods to equity, which resulted in a large credit to this expense category in 2015. There was also an increase in 2016 in fees paid to contractors to support marketing activities in Africa and the USA;
   
professional fees for legal, tax and accounting services in the amount of $85 in 2016, an increase of $12 or 16% over the $73 spent in 2015. The increase was primarily due to the cost of settling lawsuits in the first quarter of 2016;
   
payroll in the amount of $396 in 2016, an increase of $173 or 78% over the $223 spent in 2015. The increase reflects the costs of stock awards to executives and employees in the first quarter of 2016; and
   
travel in the amount of $19 in 2016, a decrease of $85 or 82% over the $104 spent in 2015.

 

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Research and development

 

R&D expenses and related percentages for the three months ended March 31, 2016 and 2015 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2016   2015 
Research and development  $(19)  $177 
Decrease from prior year  $(196)  $(334)
Percent decrease from prior year   (111)%   (65)%

 

Expenses for research and development in the three months ended March 31, 2016 decreased by 111% compared to expenses in the same period in 2015. The decrease occurred mainly as a result a reduction in the settlement of amounts owed for R&D expenses accrued in prior periods, cost of stock payments for licenses, and purchases of materials for R&D, offset by higher travel expenses and legal fees paid to maintain patents and licenses.

 

In the three months ended March 31, 2016, total cash spent on R&D was $65, a decrease of $112 or 63% over the $177 spent in the same period in 2015. Significant cash items included:

 

payments for contracted technical services, $(19) in 2016, a decrease of $(104) or 100% over the $85 spent in 2015, reflecting the settlement of amounts owed for R&D expenses accrued in prior periods and the decreased use of contractors to perform some of our research activities;
   
payments for professional fees $22 in 2016, an increase of $16 or 267% over the $6 spent in 2015, reflecting the increased cost in maintaining patents and licenses worldwide;
   
payroll of $(5) in 2016, a decrease of $7 or 350% over the $2 spent in 2015, reflecting the reversal of amounts accrued in prior periods for payroll tax liabilities.

 

Most of the R&D spending in the first quarter of 2016 was for LDN. In the same period in 2015 75% of the spending was for the development of LDN; the balance was spent on MENK.

 

Stock issued for services

 

The Company periodically issues stock to consultants who provide services to the Company under consulting contracts. The Company accrues a liability for these services calculated by the number of shares issued for the services multiplied by the price of the Company’s stock on the effective date of the consulting contract. The accrued liability is amortized over the period in which the services are provided to the Company. The Company reports these costs separately from Selling, general and administrative costs, and Research and development costs, to better demonstrate the true costs of Selling, general and administrative activities, and Research and development.

 

Amortization of accrued liabilities for stock issued for services G&A and related percentages for the three months ended March 31, 2016 and 2015 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2016   2015 
Amortization of prepaid consulting expense G&A  $670   $2,162 
Percentage decrease from prior year   (69)%   (78)%

 

The decline in expense reflects the decrease in the price of the Company’s stock year over year and the fact that the cost of shares issued for services had been fully amortized prior to the third quarter of 2014.

 

The number of shares issued for prepaid consulting services G&A in the three months ending March 31, 2016 was 19,043,000 (9,272,502 in the corresponding period in 2015).

 

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Prepaid consulting services G&A in the three months ended March 31, 2016 consisted of the following:

 

Amortization of cost of stock issued prior to 2015  $90 
Amortization of cost of stock issued in 2015   294 
Amortization of cost incurred for new stock issued in the three months ended March 31, 2016 under consulting contracts entered into in 2016   286 

 

Warrant valuation expense

 

When the Company sells its stock to stockholders for cash, it periodically issues warrants to those stockholders to acquire additional stock at prices agreed at the date of the original sale. The Company incurs a cost for the rights attached to the warrants, which is calculated using the Black-Scholes Model (see above 6. Capital Structure—Common Stock and Common Stock Purchase Warrants.) This expense is reported in the Condensed Consolidated Statements of Operations above as the Warrant valuation expense.

 

In the three months ended March 31, 2016, the Company issued 15,600,000 warrants to stockholders at an exercise price range of $0.20 to $ 2.00, for which it recorded an expense of $2,078. In the three months ended March 31, 2015, the Company issued 0 warrants to stockholders.

 

Depreciation and amortization

 

The Company amortizes the costs incurred to acquire patents and licenses over the period of the related agreements. The decrease year over year in depreciation and amortization expense reflects the fact that all of the Company’s patents and licenses had been fully amortized by December 31, 2015.

 

Depreciation and amortization expenses for the three months ended March 31, 2016 and 2015 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2016   2015 
Depreciation expense  $1   $1 
Amortization expense  $-   $148 
Decrease from prior year  $(148)  $(571)
Percentage increase/(decrease) from prior year   (100)   (79)%

 

Interest Expense

 

Interest expense for the three months ended March 31, 2016 and 2015 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2016   2015 
Interest expense  $301   $18 
Increase/(decrease) from prior year  $283   $(143)
Percentage decrease from prior year   1,571%   (89)%

 

The increase in interest expense reflects the higher level of notes payable outstanding at March 31, 2016 ($2,838) than compared to March 31, 2015 ($1,015).

 

Loss on settlement of debt

 

In three months ended March 31, 2016, certain lenders to the Company settled all or a portion of their notes or accounts payable by converting them to equity. The Company recorded an expense of $1,364, reflecting the fair value of the shares of common stock issued in exchange for the debt. In three months ended March 31, 2015, there was no expense to settle all or a portion of notes or accounts payable.

 

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Liquidity

 

Liquidity is measured by our ability to secure enough cash to meet our contractual and operating needs as they arise. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. We had cash of $132,187 at March 31, 2016, compared to $30,852 at March 31, 2015.

 

We do not expect that our cash reserves will be sufficient to meet our operational needs and we will need to raise additional capital to pay for our operational expenses and provide for capital expenditures. In addition to the Company’s operational expenses, which are estimated at $450,000 per month, we estimate that we need approximately $7-15 million in the next twelve months to fully develop our products and for Phase III clinical trials for Crohn’s disease. If we are not able to raise additional working capital, we may have to cease operations altogether.

 

For the three months ended March 31, 2016 and 2015, net cash used in operating activities from operations was $497,962 and $757,110, respectively.

 

No cash was used in investing activities for the three months ended March 31, 2016 and 2015.

 

During the three months ended March 31, 2016 proceeds from the sale of stock and exercise of stock warrants totaled $50,000 compared to $95,000 for the corresponding period in 2015. We also received $657,000 from the issuance of notes payable in three months ended March 31, 2016, compared to $500,975 in 2015. There were no loan repayments in the three months ended March 31, 2016 ($0 in 2015). No payments were made for patent liabilities in the three months ended March 31, 2016 ($0 in 2015).

 

Our ability to continue as a going concern is dependent entirely on raising funds through the sale of equity or debt. We anticipate that we will continue our attempt to raise capital through private equity and debt transactions, develop a credit facility with a lender, or the exercise of options and warrants; however, such additional capital may not be available to us at acceptable terms or available at all. In the event that we are unable to obtain additional capital, we would be forced to cease operations altogether.

 

Off-Balance Sheet Arrangements

 

During the three months ended March 31, 2016 and 2015, we did not engage in any off balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

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 on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure controls and procedures as defined in Rules 13(a)-15(e) under the Exchange Act. Based on this evaluation, the principal executive officer and principal financial officer concluded that, because of the weakness in internal controls over financial reporting described below, our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

 

Management assessed the effectiveness of the internal controls over financial reporting as of March 31, 2016, using the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our management concluded that, as of March 31, 2016, the internal controls over financial reporting were not effective. The reportable conditions and material weakness relate to a limited segregation of duties and lack of an audit committee. The limited segregation of duties within our company and the lack of an audit committee are due to the small number of employees. Management has determined that this control deficiency constitutes a material weakness. This material weakness could result in material misstatements of significant accounts and disclosures that would result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. In addition, due to limited staffing, we are not always able to detect minor errors or omissions in reporting.

 

Going forward, management anticipates that additional staff will be necessary to mitigate these weaknesses, as well as to implement other planned improvements. Additional staff will enable us to document and apply transactional and periodic controls procedures, permit a better review and approval process and improve quality of financial reporting. However, the potential addition of new staff is contingent on obtaining additional financing, and there is no assurance that we will be able to do so.

 

Limitations on the Effectiveness of Internal Controls

 

Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The legal proceedings described in Note 11 of the “Notes to the Condensed Consolidated Financial Statements” are incorporated in this “Item 1: Legal Proceedings” by reference.

 

ITEM 1A. RISK FACTORS

 

The following constitutes a material addition to the risk factors previously disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2015 filed with the Securities and Exchange Commission on May 16, 2016:

 

Because our some of our manufacturing activities occur in Nicaragua, which is subject to political, economic and other uncertainties, situations may arise that could have a material adverse effect on our business.

 

The status of Nicaragua as a developing country may make it difficult for us to obtain additional financing for our projects. Notwithstanding the progress achieved in recent years in political institutions and revitalizing the Nicaraguan economy, the present administration, or any successor government, may not be able to sustain the progress achieved. While the Nicaraguan economy has experienced growth in recent years, such growth may not continue in the future at similar rates or at all. If the economy of Nicaragua fails to continue its growth or suffers a recession, our manufacturing efforts may be affected.

 

Further, Nicaragua has in the past experienced a difficult security environment as well as political instability. In particular, various illegal groups that may be active in and around regions in which we are present may pose a credible threat of terrorism, extortion and kidnapping, which could have an adverse effect on our operations in such regions. In the event that continued operations in these regions compromise our security or business principles, we may withdraw from these regions on a temporary or permanent basis, which in turn, could have an adverse impact on our results of operations and financial condition. Any changes in regulations or shifts in political attitudes are beyond our control and may adversely affect our business. 

 

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

 

In the quarter ended March 31, 2016, the Company issued a total of 30,277,483 shares of common stock (net of stock cancellations). 8,503,041 of those shares were issued to settle amounts owed under notes payable, including accrued and unpaid interest as applicable, to common stock as repayment of the notes (0 in 2015). 2,418,942 of the shares were issued to settle amounts owed to certain of the Company’s vendors and employees (0 in 2015). Between January 1, 2016 and March 31, 2016, warrant holders exercised no warrants to purchase shares. The Company sold an aggregate 312,500 shares of its common stock at $0.08 per share. In total, the Company received $0 as consideration for the exercise of the previously-issued warrants and $25,000 for the purchase of common stock, for an aggregate sum of $25,000.

 

The following table lists all securities issued during in the three months ended March 31, 2016 without registering the securities under the Securities Act of 1933, as amended (the “Securities Act”):

 

Date   Description  Number   Purchaser   Proceeds   Consideration  Exemption 
 1/8/2016   Common Stock Purchase   5,000,000     Ex-officer    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/11/2016   Common Stock Purchase   967,900     Consultant    $Nil   Settlement of Accounts Payable   Sec. 4(a)(2) 
 1/21/2016   Common Stock Purchase   1,453,313     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/26/2016   Common Stock Purchase   172,656     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/26/2016   Common Stock Purchase   999,392     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/26/2016   Common Stock Purchase   208,114     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/26/2016   Common Stock Purchase   269,097     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/26/2016   Common Stock Purchase   160,829     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/26/2016   Common Stock Purchase   160,829     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/28/2016   Common Stock Purchase   312,500     Shareholder    $25,000   Purchase   Sec. 4(a)(2) 
 1/29/2016   Common Stock Purchase   497,387     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 1/29/2016   Common Stock Purchase   706,250     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 2/11/2016   Common Stock Purchase   7,000,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   300,000     Consultant    $Nil   Settlement of Accounts Payable   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   1,000,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   1,000,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   500,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   100,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   100,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   143,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 2/23/2016   Common Stock Purchase   600,000     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 3/1/2016   Common Stock Purchase   1,000,000     Consultant    $Nil   Settlement of Accounts Payable   Sec. 4(a)(2) 
 3/1/2016   Common Stock Purchase   1,000,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 3/1/2016   Common Stock Purchase   197,500     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 3/1/2016   Common Stock Purchase   500,000     Officer    $Nil   Employment services   Sec. 4(a)(2) 
 3/3/2016   Common Stock Purchase   651,042     Consultant    $Nil   Settlement of Accounts Payable   Sec. 4(a)(2) 
 3/3/2016   Common Stock Purchase   1,250,000     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 3/10/2016   Common Stock Purchase   100,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 3/10/2016   Common Stock Purchase   250,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 3/10/2016   Common Stock Cancellation   (1,000,000)    Officer    $Nil   Employment services, forfeited   Sec. 4(a)(2) 
 3/16/2016   Common Stock Purchase   1,337,431     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 3/18/2016   Common Stock Purchase   500,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 3/21/2016   Common Stock Purchase   100,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 3/23/2016   Common Stock Purchase   2,000,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 
 3/29/2016   Common Stock Purchase   490,243     Lender    $Nil   Debt Settlement   Sec. 4(a)(2) 
 3/31/2016   Common Stock Purchase   250,000     Consultant    $Nil   Advisory services   Sec. 4(a)(2) 

 

 31 
   

  

The issuances of the Company’s securities were completed in private transactions by the Company not involving any public offering pursuant to Section 4(a)(2) and Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The shares purchased pursuant to the warrant exercises and the shares purchased were issued bearing restrictive legend and may not be resold by the purchasers unless such securities are registered or an exemption from registration is available. The Company determined, based on representations of the investors, that the investors were “accredited investors” as defined under Rule 501(a) of the Securities Act.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The Current portion of notes payable on the Company’s Condensed Consolidated Balance Sheets above contains, at March 31, 2016, certain promissory notes on which the Company was in arrears on payments of principal as follows:

 

1. Repayment of a promissory note for $100,000 issued July 29, 2014 to Ira Gaines. The note matured on January 27, 2015. The note earns interest at a rate of 18% per annum. The Company has continued to pay monthly interest on the note since the maturity date.
   
2. Payment of principal aggregating $346,000 on certain promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt, on which lenders earn interest at a rate of 10% per annum, plus a pro-rata share of 2 percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity.
   
3. Payment of principal aggregating $223,500 on certain promissory notes issued between May 1, 2015 and September 30, 2015, and maturing between June 14, 2015 and December 31, 2015. Interest is payable in a fixed amount not tied to a specific interest rate.
   
4. Repayment of a promissory note for $200,000 issued January 26, 2015 to R J Dailey. The note matured on June 30, 2015. The note earns interest at a rate of 2% per annum.
   
5. Repayment of a promissory notes aggregating $130,000 issued in December 2015. Lenders earn interest at a rate of 10% per month. Notes are repayable on March 9, 2016. The Company was unable to repay the note at maturity and the note is in default. The Company is obligated to pay late-payment penalties totaling $6,667 per day.

 

At March 31, 2016, the Company had insufficient cash on hand to repay these notes.

 

 32 
   

 

ITEM 6. EXHIBITS

 

Exhibit Number   Name of Exhibit
     
 31.1   Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
     
 32.1   Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase
     
101.LAB   XBRL Taxonomy Extension Label Linkbase
     
101.PRE    XBRL Taxonomy Extension Presentation Linkbase

 

 33 
   

 

SIGNATURES

 

In accordance with the requirements 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.

 

  Immune Therapeutics, Inc.
     
Date: May 16, 2016 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
     
  Immune Therapeutics, Inc.
     
Date: May 16, 2016 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer

  

 34 
   

 

EX-31.1 2 ex31-1.htm

 

CERTIFICATION

 

I, Noreen Griffin, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Immune Therapeutics, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting..

 

Date: March 16, 2016 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
    (Principal Executive Officer)

 

   
   

 

I, Peter Aronstam, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Immune Therapeutics, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: March 16, 2016 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

   
   

EX-32.1 3 ex32-1.htm

 

CERTIFICATION

 

In connection with the periodic report of Immune Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), we, Noreen Griffin, Chief Executive Officer (Principal Executive Officer) and Peter Aronstam, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of our knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

  

Date: March 16, 2016 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
    (Principal Executive Officer)
     
  By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

 
 

 

 

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Dailey [Member] Roger Bozarth [Member] Second Quarter 2016 [Member] Second Quarter 2018 [Member] Second Quarter 2019 [Member] Second Quarter 2020 [Member] Shan Agreement [Member] Exercise Price, Expired Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Cancelled In Period Weighted Average Exercise Price. Exercise Price, Exercised Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Exercise In Period Weighted Average Exercise Price. Exercise Price, Issued Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period weighted Average Exercise Price. Exercise Price Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options In Period Weighted Average Exercise Price. Smith Agreement [Member] custom:StockIssuancesDue Stock issued for services. Stock issued for services general and administrative. Stock issued for services research and development. Stock To Be Issued [Member] Stock warrant expense. Custom Element. TNI BioTech IP, Inc. [Member] TNI IP&#8217;s Management [Member] Third Quarter 2016 [Member] Third Quarter 2017 [Member] Third Quarter 2018 [Member] Third Quarter 2019 [Member] Upfornt costs. Warrant valuation. Webfoot, Inc [Member] Withdrew from bank account towards settlement of claim. Young Agreement [Member] Number Of Shares Issued For Consulting Fees. Number Of Shares Issued For Loan Orignation Fees. 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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
May. 12, 2016
Document And Entity Information    
Entity Registrant Name Immune Therapeutics, Inc.  
Entity Central Index Key 0001559356  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   206,913,301
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2016  
XML 11 R2.htm IDEA: XBRL DOCUMENT v3.4.0.3
Condensed Consolidated Balance Sheets - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Current Assets:    
Cash and cash equivalents $ 132,817 $ 23,149
Accounts receivable 19,660 $ 16,197
Prepaids and other current assets 1,594
Total current assets 153,441 $ 39,346
Fixed Assets:    
Computer equipment, net of accumulated depreciation of $6,878 and $6,331 respectively 1,135 1,682
Deposits 200 200
Total assets 154,776 41,228
Current Liabilities:    
Accounts payable 1,860,361 1,924,672
Accrued liabilities 1,641,351 1,281,039
Current portion of notes payable 2,838,200 2,793,701
Total current liabilities 6,339,912 5,999,412
Total liabilities 6,339,912 5,999,412
Stockholders’ Deficit:    
Common stock - par value $0.0001; 500,000,000 shares authorized; 205,127,530 and 174,850,047 shares issued and outstanding respectively 20,513 17,485
Additional paid in capital 351,290,136 343,434,786
Stock issuances due 1,173,244 1,140,303
Prepaid services (2,133,286) (660,417)
Accumulated deficit (354,391,171) (347,789,889)
Equity attributable to common stockholders (4,040,564) (3,857,732)
Non-controlling interest (2,144,572) (2,100,452)
Total stockholders’ deficit (6,185,136) (5,958,184)
Total liabilities and stockholders’ deficit $ 154,776 $ 41,228
XML 12 R3.htm IDEA: XBRL DOCUMENT v3.4.0.3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]    
Accumulated depreciation $ 6,878 $ 6,331
Common Stock, Par Value $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 500,000,000 500,000,000
Common Stock, Shares Issued 205,127,530 174,850,047
Common Stock, Shares Outstanding 205,127,530 174,850,047
XML 13 R4.htm IDEA: XBRL DOCUMENT v3.4.0.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Revenues, net $ 3,463 $ 2,070
Operating expenses:    
Selling, general and administrative 939,341 401,988
Research and development expense (18,842) 177,157
Stock issued for services G&A $ 1,983,837 $ 2,161,559
Stock issued for services R&D
Warrant valuation expense $ 2,078,199
Depreciation and amortization expense 547 $ 148,727
Total operating expenses 4,983,082 2,889,431
Loss from operations (4,979,619) (2,887,361)
Other income (expense):    
Interest expense (301,444) $ (18,045)
Loss on settlement of debt (1,364,339)
Total other income (expense) (1,665,783) $ (18,045)
Net loss (6,645,402) (2,905,406)
Net loss attributable to non-controlling interest (44,120) (124,065)
Net loss attributable to common shareholders $ (6,601,282) $ (2,781,341)
Basic and diluted loss per share to common shareholders $ (0.03) $ (0.02)
Weighted average number of shares outstanding 190,923,381 138,795,044
XML 14 R5.htm IDEA: XBRL DOCUMENT v3.4.0.3
Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
Common Stock [Member]
Additional Paid-In Capital [Member]
Stock To Be Issued [Member]
Prepaid Service [Member]
Accumulated Deficit [Member]
Non-controlling Interest [Member]
Total
Balance at Dec. 31, 2015 $ 17,485 $ 343,434,786 $ 1,140,303 $ (660,417) $ (347,789,889) $ (2,100,452) $ (5,958,184)
Balance, shares at Dec. 31, 2015 174,850,047            
Issuance of common stock for prepaid services $ 1,904 $ 3,724,266 $ (269,466) (2,142,535) 1,314,169
Issuance of common stock for prepaid services, shares 19,043,000            
Amortization of prepaid services $ 669,667 669,667
Issuance of common stock in exchange for debt $ 1,093 $ 2,027,915 $ 277,407 2,306,415
Issuance of common stock in exchange for debt, shares 10,921,983            
Issuance of common stock for cash and exercise of warrants $ 31 24,969 $ 25,000 50,000
Issuance of common stock for cash and exercise of warrants, shares 312,500            
Issuance of common stock warrants $ 2,078,199 2,078,199
Net loss $ (6,601,282) $ (44,120) (6,645,402)
Balance at Mar. 31, 2016 $ 20,513 $ 351,290,136 $ 1,173,244 $ (2,133,286) $ (354,391,171) $ (2,144,572) $ (6,185,136)
Balance, shares at Mar. 31, 2016 205,127,530            
XML 15 R6.htm IDEA: XBRL DOCUMENT v3.4.0.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (6,645,402) $ (2,905,406)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation $ 547 668
Amortization 148,060
Amortization of stock issued for prepaid services $ 669,667 $ 2,161,559
Stock issued for services 1,314,169
Stock warrant expense 2,078,199
Loss on settlement of debt 1,364,339
Changes in operating assets and liabilities:    
Accounts receivable (3,463) $ (2,070)
Accounts payable 139,203 (192,521)
Accrued liabilities 486,373 $ 32,600
Prepaid expenses and other current assets (1,594)
Net cash used in operating activities $ (597,962) $ (757,110)
CASH FLOWS FROM INVESTING ACTIVITIES    
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from sale of stock and exercise of warrants $ 50,000 $ 95,000
Proceeds from issuance of notes payable 657,000 500,975
Net cash provided by financing activities 707,000 595,975
Net decrease in cash and cash equivalents 109,038 (161,135)
Cash and cash equivalents at beginning of period 23,149 191,987
Cash and cash equivalents at end of period 132,817 30,852
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 7,050 $ 4,500
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Issuance of common stock in exchange for debt and accrued interest $ 2,306,415
XML 16 R7.htm IDEA: XBRL DOCUMENT v3.4.0.3
Organization and Description of Business
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Organization and Description of Business

1. Organization and Description of Business

 

Immune Therapeutics, Inc. (the “Company”) was initially incorporated in Florida on December 2, 1993 as Resort Clubs International, Inc. (“Resort Clubs”). It was formed to manage and market golf course properties in resort markets throughout the United States. Galliano International Ltd. (“Galliano”) was incorporated in Delaware on May 27, 1998 and began trading in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resort Clubs. Resort Clubs was the surviving corporation. On August 23, 2010, Resort Clubs changed its name to pH Environmental Inc. (“pH Environmental”).

 

On April 23, 2012, pH Environmental completed a name change to TNI BioTech, Inc., and on April 24, 2012, we executed a share exchange agreement for the acquisition of all of the outstanding shares of TNI BioTech IP, Inc. On September 4, 2014, a majority of our shareholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to change our name to Immune Therapeutics, Inc. We filed our name change amendment with the Secretary of State of Florida on October 27, 2014 changing our name to Immune Therapeutics, Inc.

 

The Company currently operates out of Orlando, Florida. In July 2012, the Company’s focus turned to acquiring patents that would protect and advance the development of new uses of opioid-related immune- therapies, such as low dose naltrexone (“LDN”) and Methionine [Met5]-enkephalin (“MENK”). The Company’s therapies are believed to stimulate and/or regulate the immune system in such a way that they provide the potential to treat a variety of diseases. We believe our therapies may be able to correct abnormalities or deficiencies in the immune system in diseases such as HIV infection, autoimmune disease, immune disorders, or cancer; all of which can lead to disease progression and life-threatening situations when the immune system is not functioning optimally.

 

In October 2012, the Company formed TNI BioTech International, Ltd., a BVI company in Tortola, British Virgin Islands, which was set up to allow the Company to market and sell LDN in those countries outside the U.S. in which we have been able to obtain approval to sell the Company’s products.

 

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005. The Company will apply to obtain EMA benefits once funding becomes available.

 

In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development. On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% equity interest in Cytocom Inc. on that date. The Company’s equity interest has since been reduced to 50.2% at March 31, 2016, by subsequent issuances of Cytocom common stock to shareholders.

 

In March 2014, the Company incorporated Airmed Biopharma Limited, an Irish corporation with an address in Dublin, Ireland, and Airmed Holdings Limited, an Irish company domiciled in Bermuda. The Irish companies were set up to benefit from incentives granted by the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies have located in Ireland), and so that the Company could take advantage of Ireland’s status as a member of the European Union and the European Economic Area. An Irish limited liability company enjoys a low corporate income tax rate of 12.5%, one of the lowest in the world. The Irish-domiciled company hopes to qualify for tax incentives for Irish holding/headquartered companies and to benefit from the network of double tax treaties that reduce withholding taxes. TNI BioTech International, Ltd. will manage our international distribution, using product that is manufactured in Ireland and elsewhere.

 

We are focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS and autoimmune diseases and immune disorders by combating these severe and fatal diseases through the stimulation and/or regulation of the body’s immune system. Our growth strategy includes the near-term commercialization of our existing immunotherapies targeting cancer, Crohn’s disease and/or HIV/AIDS.

 

Going Concern

 

The Company has incurred significant net losses since inception and has relied on its ability to fund its operations through private equity financings. Management expects operating losses and negative cash flows to continue at more significant levels in the future. As the Company continues to incur losses, transition to profitability is dependent upon the successful development, approval, and commercialization of its product candidate and the achievement of a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings, and may seek additional capital through arrangements with strategic partners or from other sources. Based on the Company’s operating plan, existing working capital at December 31, 2015 was not sufficient to meet the cash requirements to fund planned operations through December 31, 2016 without additional sources of cash. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

 

The Company experienced a net loss from operations of $6,645,402, and used cash and cash equivalents for operations in the amount of $497,962 during the quarter ended March 31, 2016, resulting in stockholder’s deficit of $6,185,136 at that date.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.4.0.3
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S. GAAP) and include all adjustments (consisting of only normal recurring adjustments, unless otherwise indicated) necessary for the fair presentation of the Company’s financial position for the periods presented.

 

The Company qualifies as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue for the year ended December 31, 2015. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates.

 

Cash, Cash Equivalents, and Short-Term Investments

 

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2016, the Company has no uninsured cash balances.

 

Fair Value of Financial Instruments

 

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash and accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

 

Fair Value Measurements

 

The ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

 

Property and Equipment

 

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged against expense as incurred. Depreciation expense for the quarters ended March 31, 2016 and March 31, 2015 was $547 and $668, respectively.

 

Intangible Assets

 

Costs incurred to acquire and/or develop the Company’s product licenses and patents are capitalized and amortized by straight-line methods over estimated useful lives of seven to sixteen years. Intangible assets are stated at the lower of cost or estimated fair market value. During the quarters ended March 31, 2016 and March 31, 2015, the Company did not capitalize any such costs. (See Note 10). Amortization expense for the quarters ended March 31, 2016 and March 31, 2015 was $0 and $148,059, respectively.

 

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable as prescribed by ASC Topic 360-10-05, “Property, Plant and Equipment.” If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. No impairment losses were recognized for the quarters ended March 31, 2016 and March 31, 2015.

 

Research and Development Costs

 

Research and development costs are charged to expense as incurred and are typically comprised of salaries and benefits, pre-clinical studies, clinical trial activities, drug development and manufacturing, fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf and third-party service fees, including clinical research organizations and investigative sites. Costs for certain development activities, such as clinical trials are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as operating expenses.

 

Income Taxes

 

The Company follows FASB ASC Topic 740, “Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. 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.

 

The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2015, and 2014, the Company does not have a liability for unrecognized tax uncertainties.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. At the end of the quarters ended March 31, 2016 and March 31, 2015, the Company had not accrued any interest or penalties related to uncertain tax positions.

 

Stock-Based Compensation and Issuance of Stock for Non-Cash Consideration

 

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values equaling either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. The majority of the non-cash consideration pertains to services rendered by consultants and others and has been valued at the fair value of the Company’s common stock at the date of the agreement.

 

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete.

 

Non-controlling Interest

 

In accordance with ASC 810, Consolidation, the Company consolidates Cytocom, Inc. The non-controlling interests in Cytocom represent the interests of outside shareholders in the equity and results of operations of Cytocom.

 

Net Loss per Share

 

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method and the if-converted method. Dilutive common stock equivalents are comprised of common stock purchase warrants and options outstanding. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

 

A calculation of basic and diluted net loss per share follows:

 

    For the three months ended
March 31,
 
    2016     2015  
Historical net loss per share:                
Numerator                
Net loss   $ (6,645,402 )   $ (2,905,406 )
Non-controlling interest     (44,120 )     (124,065 )
Net loss attributed to Common stockholders   $ (6,601,282 )   $ (2,781,341 )
                 
Denominator                
Weighted-average common shares outstanding—Denominator for basic and diluted net loss per share     190,923,381       138,795,044  
Basic and diluted net loss per share attributed to common stockholders   $ (0.03 )   $ (0.02 )

 

The Company’s potential dilutive securities which include stock and warrants have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average Common stock outstanding used to calculate both basic and diluted net loss per share is the same.

 

The following shares of potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as the effect of including such securities would be antidilutive:

 

    For the three months ended
March 31,
 
    2016     2015  
Warrants to purchase Common stock     24,731,500       9,372,750  
                 

 

Recent Accounting Standards

 

During the quarter ended March 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

 

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.4.0.3
Property and Equipment
3 Months Ended
Mar. 31, 2016
Fixed Assets:  
Property and Equipment

3. Property and Equipment

 

    March 31, 2016     December 31, 2015  
Property and equipment:                
Computer equipment   $ 8,013     $ 8,013  
                 
Less accumulated depreciation     (6,878 )     (6,331 )
Property and equipment, net   $ 1,135     $ 1,682  

 

The Company utilizes the straight-line method for depreciation, using three to five-year depreciable asset lives. Depreciation expense was not material for all periods presented.

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
Accrued Liabilities
3 Months Ended
Mar. 31, 2016
Payables and Accruals [Abstract]  
Accrued Liabilities

4. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

    March 31, 2016     December 31, 2015  
    (in thousands)  
Accrued payroll to officers and others   $ 1,077,640     $ 758,342  
Accrued interest - notes payable     365,006       236,671  
Estimated legal settlement     198,312       282,136  
Other accrued liabilities     393       323  
State payroll taxes     -       3,567  
Total accrued expenses and other liabilities   $ 1,641,351     $ 1,281,039  

 

XML 20 R11.htm IDEA: XBRL DOCUMENT v3.4.0.3
Notes Payable
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Notes Payable

5. Notes Payable

 

Notes payable consist of the following:

    March 31, 2016     December 31, 2015  
Promissory note issued July 29, 2014 to Ira Gaines. The note matures on January 27, 2015 and earns interest at a rate of 18% per annum. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender.   $ 100,000     $ 100,000  
                 
Promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt. Lenders earn interest at a rate of 10% per annum, plus a pro-rata share of two percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity. Notes will be repaid in 36 monthly installments of principal and interest commencing no later than October 15, 2015. Notes aggregating $346,000 were in default at March 31, 2016, as the Company was unable to pay installments on those notes on their due dates. No demands for repayment have been made by the lenders. In the quarter ended March 31, 2016, $365,500 of these notes and their accompanying interest were converted into 5,191,909 shares of Immune Therapeutics common stock.     346,000       711,500  
                 
Promissory note issued October 17, 2014 to Roger Bozarth. The note matures on October 17, 2015 and earns interest at a rate of 2% per annum. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender. In the quarter ended March 31, 2016, this note and the accompanying interest was converted into 89,639 shares of Immune Therapeutics common stock.     -       7,000  
                 
Promissory notes issued between May 1, 2015 and September 30, 2015, and maturing between June 14, 2015 and December 31, 2015. Lenders on loans aggregating $356,432 earn interest at rates between 10% and 18% per annum. On loans aggregating $223,500, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $223,500 were in default at March 31, 2016, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders. In the quarter ended March 31, 2016, $140,001 of these notes and their accompanying interest were converted into 2,420,377 shares of Immune Therapeutics common stock.     579,932       669,933  
                 
Promissory note issued January 26, 2015 to Robert J. Dailey. The note is senior to, and has priority in right of payment over, all indebtedness of the Company. The note earns interest at a rate of 2% per annum and was due on July 30, 2015. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender.     200,000       200,000  
                 
Promissory notes issued by Cytocom Inc. between April 29, 2015 and December 31, 2015. Lenders earn interest at rates between 5% and 10% per annum. These notes mature on September 30, 2016.     750,000       800,000  
                 
Promissory notes issued in December 2015. Lenders earn interest at a rate of 10% per month. Notes are repayable on March 9, 2016. The Company was unable to repay the note at maturity and the note is in default. The Company is obligated to pay late-payment penalties totaling $6,667 per day.     130,000       130,000  
                 
Promissory note issued November 24, 2015 as settlement of amounts owing to a law firm. The Lender earns interest at the rate of 10% per annum. The note is repayable in full on December 1, 2016.     175,268       175,268  
                 
Promissory notes issued between January 1, 2016 and March 31, 2016. Lenders earn interest at a rate of 10% per month. Notes are repayable in one year.     312,000          
                 
Promissory note issued February 3, 2016, payable in 90 days which includes an original issue discount of $40,000 and expenses of $5,000, resulting in net proceeds of $200,000.     245,000          
                 
Total     2,838,200       2,793,701  
                 
Less: Current Portion     (2,838,200 )     (2,793,701 )
                 
Long-Term debt, less current portion   $ -     $ -  

 

As of March 31, 2016, the Company had accrued $365,006 in unpaid interest, compared to $236,671 as of December 31, 2015

XML 21 R12.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Structure - Common Stock and Common Stock Purchase Warrants
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Capital Structure - Common Stock and Common Stock Purchase Warrants

6. Capital Structure—Common Stock and Common Stock Purchase Warrants

 

Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each share held. No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock or any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

 

As of March 31, 2016 and 2015, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of March 31, 2016, the Company had 205,127,530 shares of common stock outstanding and 178,850,047 outstanding as of December 31, 2015.

 

Stock Warrants

 

In the quarter ended March 31, 2016, the Company issued 15,600,000 warrants.

 

There were no modifications of the terms of any warrants issued by the Company in the quarters ended March 31, 2016 and 2015.

 

Following is a summary of outstanding stock warrants at March 31, 2016 and activity during the three months then ended:

 

    Number of
Shares
    Exercise
Price
    Weighted
Average
Price
 
Warrants as of December 31, 2015     9,131,500     $ 0.07-15.00     $ 1.47  
                         
Issued in 2016     15,600,000     $ .020-2.00     $ 0.39  
                         
Expired     -     $ -     $ -  
                         
Exercised     -     $ -     $ -  
                         
Warrants as of March 31, 2016     24,731,500     $  0.07-15.00     $ 0.79  

 

Summary of outstanding warrants as of March 31, 2016:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
Second Quarter 2016     37,500     $ 5.00       .25  
Third Quarter 2016     525,000     $ 1.00-5.00       .50  
Third Quarter 2017     1,500,000     $ 1.00       1.50  
Fourth Quarter 2017     2,941,666     $ 1.00-9.00       1.75  
First Quarter 2018     127,500     $ 15.00       2.00  
Second Quarter 2018     33,334     $ 15.00       2.25  
Third Quarter 2018     650,000     $ 1.00-1.50       2.50  
Fourth Quarter 2018     1,197,500     $ 1.00-1.50       2.75  
First Quarter 2019     4,024,000     $ 0.50-2.00       3.00  
Second Quarter 2019     135,000     $ 0.07–0.23       3.25  
Third Quarter 2019     260,000     $ 0.50       3.50  
Fourth Quarter 2019     400,000     $ 0.14       3.75  
Second Quarter 2020     300,000     $ 0.50       4.25  
First Quarter 2021     12,600,000     $ 0.20       5.00  

 

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.4.0.3
Stock Compensation
3 Months Ended
Mar. 31, 2016
Equity [Abstract]  
Stock Compensation

7. Stock Compensation

 

Shares Issued for Services

 

During the quarters ended March 31, 2016 and 2015, the Company issued 19,043,000 and 9,272,502 shares of common stock respectively for consulting fees. The Company valued these shares at $1,314,169 and $1,712,876 respectively, based upon the fair market value of the common stock at the dates of the agreements. The consulting fees are amortized over the contract periods which are typically between 12 and 24 months. The amortization of prepaid services totaled $669,667 and $2,161,559 for the quarters ended March 31, 2016 and 2015.

 

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
Income Taxes - Results of Operations
3 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes - Results of Operations

8. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended March 31, 2016 and 2015 because the Company incurred a net loss in both quarters.

 

The Company has recognized no tax benefit for the losses generated for the periods through December 31, 2015. ASC Topic 740 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company’s ability to realize the benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize revenue, we believe that the full valuation allowance should be provided.

 

Our effective tax rate for fiscal years 2015 and 2014 was 0%. Our tax rate can be affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in jurisdictions. It may also be affected by discrete items that may occur in any given year, but are not consistent from year to year.

 

As of December 31, 2015, we have estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $66,500,000, which will expire in 2032-2035.

 

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
Licenses and Supply Agreements
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Licenses and Supply Agreements

9. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

The Company entered into a share exchange agreement on April 24, 2012 to acquire all of the outstanding shares of TNI BioTech IP, Inc. (“TNI IP”), a biotechnology firm incorporated in Florida and formed to acquire patents related to the treatment of cancer and HIV/AIDS and autoimmune diseases, using Met-enkephalin (“MENK”) and Naltraxone (“LDN”). The goal of TNI IP’s management was to enable mankind and civilization to combat fatal diseases by activating and mobilizing the body’s own immune system using TNI IP’s patented use of MENK. The first patents acquired by TNI IP were acquired from Dr. Nicholas P. Plotnikoff and Professor Fengping Shan in 2012. TNI IP was acquired in exchange for 20,250,000 shares of the Company’s common stock, of which 8,000,000 shares were issued to Dr. Plotnikoff for the acquisition of patents and the remaining 12,250,000 shares were issued to the founders of TNI IP in exchange for all of their right, title and interest in their TNI IP shares. The goodwill arising on the acquisition of TNI IP was valued at $98,000,000 and license agreements arising from the acquisition of TNI IP were valued at $16,006,000.

 

In connection with the share exchange, we entered into a Sale of Technology Agreement with Dr. Nicholas P. Plotnikoff on March 4, 2012, wherein Dr. Plotnikoff agreed to transfer and assign all of his rights, title and interest in: European Patent United Kingdom, Germany, France, Ireland EP 1401471 BI Methods for inducing sustained immune response; Russian Patent Russian Federation patent number 2313364; The Patent Office of the People’s Republic of China, Application No.: 200810165784.8 China Patent CN1015113407 A The Patent Office of the People’s Republic of China ISSN: 1006-2858 CN 21-1349/R; Patent Agencies Government of India Patent, Application number 1627/KOLNP/2003 number 220265 an Enkephalin Peptide Composition; and the US Patent Pending, US Patent Application 10/146.999 e. The Company received all the production formulations and technology designs from Dr. Plotnikoff necessary for the manufacturing, formulation, production and protocols of the MENK treatment of cancer and HIV/AIDS. As consideration for entering into the Sale of Technology Agreement, Dr. Plotnikoff received 8,000,000 shares of common stock, a royalty of a single-digit percentage on all sales of MENK and was granted the position of Non-Executive Chairman of the Board of Directors.

 

At the time of the acquisition, the valuation of goodwill and other intangible assets were determined using the fair market price for the Company’s common stock, which were exchanged for shares of TNI IP. In the fourth quarter of 2012, the Company performed an annual valuation to determine whether any goodwill or intangible assets that had been acquired by the Company were impaired. The result of this valuation was that material impairments were identified. The Company recognized an impairment of the goodwill arising on the acquisition of TNI IP of $98,000,000.

 

Patent License Agreements

 

On August 13, 2012, the Company signed an exclusive License Agreement with Ms. Jacqueline Young (the “Young Agreement”) for the intellectual property developed by Dr. Bernard Bihari relating to treatments with opioid antagonists such as naltrexone and Met-enkephalin for a variety of diseases and conditions including malignant lymphoma, chronic lymphocytic leukemia, Hodgkin’s lymphoma, and non-Hodgkin’s lymphoma, chronic herpes virus infections, chronic herpes viral infections such as chronic genital herpes caused by the herpes simplex virus Type 2 and chronic infections due to the Epstein-Barr virus and a treatment method for humans infected with HTLV-III (AIDS) virus, including patients clinically diagnosed as suffering from AIDS and those suffering from AIDS-related complex (ARC). The Bihari patents were acquired in exchange for 540,000 shares of the Company’s common stock with a fair market value of $972,000 and assumed liabilities of $400,000, which is payable to Ms. Young over a twenty-four month period in equal installments to reimburse her for the costs of a New York City office in accordance with the Young Agreement. The patent liability at December 31, 2013 totaled $118,333. The cost of the patent totaled $1,372,000. The Company will pay the licensor a royalty payment of 1% of gross MENK sales and provide the licensor a position as non-executive chairman of the Company. In addition, we are required to make a minimum royalty in the amount of $100,000 for each year after 2014 until such time as we make a first commercial sale. The Young Agreement is valid for the life of the patents and expires on a country by country basis in each country where patent rights exist, upon the expiration of the last to expire patent in each country or in the event the patent in such country is held to be invalid and/or unenforceable (by a court or government body of competent jurisdiction) or admitted to be invalid or unenforceable. Additionally, we can cancel the Young Agreement upon 120 days’ written notice and shall pay all royalties and fees that have accrued under the Young Agreement. We have the exclusive rights to the intellectual property; however, Ms. Young retains a right to practice the patents licensed under the Young Agreement solely for noncommercial, academic research purposes.

 

On December 24, 2012, the Company signed an agreement for the acquisition of patent rights (the “Smith Agreement”) for the intellectual property of Dr. Jill Smith and LDN Research Group, LLC (collectively, the “Licensor Parties”), whose members are Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky and orphan drug designation by the FDA to a novel late-stage drug, trademarked “LDN,” for the treatment of Pediatric Crohn’s disease. The patent covers methods and formulations for treatment of the inflammatory and ulcerative diseases of the bowel, using naltrexone in low doses as an opioid antagonist. These patents were acquired in exchange for 300,000 shares of our common stock with a fair market value of $2,715,000 and payment of $165,384 (consisting of a $100,000 initial license fee and payment of $65,384 of expenses), which totaled $2,880,384.

 

The Smith Agreement requires the Company to (i) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan, (ii) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable, (iii) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use, and (iv) make the first commercial sale of a licensed product by March of 2017.

 

The Company is required to pay an annual license fee, an annual running royalty on net sales of each licensed product or a minimum royalty, whichever is greater, and a sublicense fee on payments received by the Company from sublicensees. The Company has an exclusive, worldwide license to make, have made, use, lease, import, offer for sale and sell licensed products and to use the method under the patent rights. The Smith Agreement will terminate on the expiration or abandonment of the last patent to expire or ten years after the sale of the first licensed product. The Company may terminate the Smith Agreement upon 90 days’ written notice, provided all sublicenses are terminated and all amounts due and owing are paid to the Licensor Parties. The Licensor Parties may terminate the agreement ten days’ after notice to the Company if the Company is ten days late in payment or there is a breach that remains uncured for ten days after written notice of such breach.

 

The Company is also required to pay milestone payments after substantial achievement of certain milestone events for each licensed product including payment: upon initiation of each Phase III trial; upon positive completion of each Phase III clinical trial of the therapeutic use of an LDN compound in the field of use; when a New Drug Application (“NDA”) is accepted for review by the FDA; and when FDA approval to market the NDA is approved. The Company will issue shares upon reaching certain milestones including upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount in cumulative sales for each licensed product covered by NDAs.

 

As part of the Smith Agreement, the Company has the right to apply to the FDA for the transfer of the orphan drug status for the use of naltrexone for the treatment of pediatric Crohn’s disease and ulcerative colitis, the Investigation New Drug Application (“IND”), and the right to acquire the relevant clinical data set from Dr. Jill Smith. Dr. Jill Smith made arrangements to transfer the IND to the Company as well as the relevant clinical data set, and the FDA has acknowledged that the Company is now the sponsor for this IND.

 

On September 24, 2014, the Company and the Licensor Parties jointly agreed to terminate the Smith Agreement, and in place thereof, have the Licensor Parties grant a similar license in their patent rights to Cytocom Inc. pursuant to a Patent License Agreement between the Licensor Parties, Cytocom Inc. and the Company with substantially similar terms as set forth in the Smith Agreement. Pursuant to this agreement, the Company issued 1,000,000 shares of its common stock valued at $270,000, upon execution to the Licensor Parties and the Company guaranteed the obligations of Cytocom Inc. to the Licensor Parties under the agreement.

 

On January 18, 2013, the Company signed an exclusive licensing agreement with The Penn State Research Foundation to license all of the intellectual property developed by Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Dr. Jill P. Smith for the treatment of cancer titled “Opioid Growth Factor and Cancer” and “Combination Therapy with Opioid Growth Factor and Taxanes for the Treatment of Cancer” (the “Foundation Agreement”).

 

The Foundation Agreement requires the Company to: (a) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan; (b) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable; (c) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use; and (d) make the first commercial sale of a licensed product by December 31, 2016.

 

The Foundation Agreement provides that the Company must pay to the licensor an initial license fee, a license maintenance fee on each anniversary of the effective date of the Foundation Agreement, and an annual running royalty on net sales for each licensed product or a minimum royalty, whichever is greater. In addition, the Company must pay a sublicense fee on payments received by the Company from sublicensees.

 

The Foundation Agreement also requires the Company to make payments upon the achievement of certain milestone events including: initiation of each Phase II trial; initiation of each Phase III trial; when the NDA is accepted for review by the FDA; and when FDA approval to market is approved. The Company must also issue shares upon certain milestones including upon the first dosing of the first patient in a Phase II clinical trial for each licensed product, upon the first dosing of the first patient in a Phase III clinical trial for each licensed product, upon the first sale of each licensed product, and upon the achievement of a set dollar amount of cumulative sales for each licensed product covered by NDAs.

 

The Foundation Agreement terminates on the expiration or abandonment of the last patent to expire or become abandoned. The Company may terminate the Foundation Agreement at any time upon 60 days’ prior written notice and ceasing to make and sell all licensed products, the termination of all sublicenses and payment of all monies owed under the Foundation Agreement. The licensor may terminate the agreement 30 days after notice to the Company if the Company is 30 days late in payment or a breach that remains uncured for 45 days after written notice of such breach.

 

In May of 2013, the Company executed a Patent License Agreement with Professor Fengping Shan (the “Shan Agreement”) pursuant to which it obtained exclusive rights to develop and commercialize the licensed technology. The licensed technology is the intellectual property developed and owned by Professor Shan (i) relating to the treatment of a variety of diseases and conditions with MENK including multiple forms of lymphoma and cancer and (ii) a treatment method for humans infected with the HLTV-III (AIDS) virus including AIDS and AIDS related complex (ARC). The licensed technology includes the methods and formulations for these treatments including all INDs, communications with regulatory agencies, patient data, and letters relating to these treatments. The licensed technology also includes certain patents developed by Professor Shan. Under the Shan Agreement, the Company must issue 500,000 shares to Professor Shan upon final transfer of the licenses, and reimburse Professor Shan for all out of pocket expenses in connection with the patents. The Company will pay Professor Shan a running royalty on gross sales subject to decreases if third party intellectual property is needed to complete such sale or product. The Shan Agreement lasts for the duration of each of the licensed patents however the Company may terminate the Shan Agreement on 120 days’ written notice to Professor Shan.

 

On August 6, 2014, Professor Fengping Shan executed an Assignment pursuant to which he transferred to the Company his entire right, title and interest in and to the licensed patents under the Shan Agreement and CN 201210302259 Application of combination of low-dose naltrexone and methionine-enkephalin to preparation of anti-cancer drug for the consideration of 500,000 shares of common stock valued at $140,000.

 

XML 25 R16.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. Commitments and Contingencies

 

Malawi Treatment Facilities

 

On July 14, 2012, GB Oncology and Imaging Group LTD (“GBOIG”) in partnership with the Company signed a letter of intent agreement to collaborate with the Government of Malawi to assist in expanding the treatment of cancer, HIV/AIDS and other infectious diseases.

 

In December of 2014, the Government of Malawi completed an oncology clinic at the Queen Elizabeth Central Hospital in Blantyre, Malawi for the treatment of cancer and infectious diseases. In 2015, the Company submitted protocols seeking permission from the Pharmacy, Medicines and Poisons Board of Malawi (“PMPB”) to conduct two trials involving Lodonal™ in Malawi:

 

a. The first protocol, submitted jointly with The Jack Brewer Foundation (“JBF Worldwide”), received PMPB approval on November 11, 2015. The protocol covers a 12-month trial for a “Single Visit Approach to Cervical Cancer Prevention.” The approach is designed to deliver a preventive and simple procedure that can be performed in a clinical setting without the use of a laboratory and to allow for immediate treatment of any precancerous lesions utilizing Wallach LL100 Cryosurgical systems. The protocol provides for 50% of the patient group to be put on Lodonal™ to determine if the drug lowers the number of opportunistic infections during the year, and if it can be shown that LDN increases CD4, CE8, NK and T cell count, which would show that the incidence rates of opportunistic infection could decrease with Lodonal™ and that Lodonal™ could be used as a prophylaxis to prevent substantial HIV-related morbidity in Malawi. The final trial agreement with PMPB was signed in February 2016. Lodonal™ pills have been produced in Nicaragua in anticipation of the trial. Shipments will commence once the trial is approved.
   
b. The second protocol, which has not yet been approved, covers a trial using Lodonal™ for the treatment of cancer.

 

The Company and GBOIG will work with the government of Malawi to open and operate other clinics that provide treatments for HIV/AIDS, cancer and other infectious diseases. Under the letter of intent, the Company and GBOIG intend to provide HIV/AIDS treatment to 25,000 patients and hopefully expanding to 500,000 within 24 months. The Company shall contribute $1,000 in initial capital to the venture. The Company shall be allocated 50% of the net income from the venture. Either party may terminate the venture with 180 days’ notice to the other party prior to the one-year anniversary of the Agreement. After the one-year anniversary, the agreement may only be terminated with 180 days’ notice to the other party if the other party has breached the Agreement.

 

GBOIG, a subsidiary of GB Energie LLC, is a Washington D.C. based minority woman-owned business managed by Dr. Gloria B. Herndon. Dr. Herndon is a former director of the Company. Dr. Herndon’s directorship with the Company ended September 4, 2014.

 

Open an Oncology and Infectious Disease Center in Malawi at Queen Elizabeth Central Hospital

 

On September 25, 2012, GBOIG, in partnership with the Company, signed an agreement with the Government of Malawi to open an outpatient clinic at Queen Elizabeth Central Hospital (in Malawi) for the treatment of cancer and infectious disease. The duration of the Agreement shall be for 25 years with an optional 10-year renewal to be indicated by the Government of Malawi at least three years prior to the expiration of the term. The Government of Malawi will bear the upfront costs for the agreement of $2,500,000.

 

Distribution Agreements in Nigeria

 

In October 2013, the Company announced the signing of a Distribution Agreement with AHAR Pharma, a Nigerian company, to market Lodonal™ in Nigeria for the treatment of autoimmune diseases and cancer. AHAR intends to distribute Lodonal™ through a local distributor network, an Internet client base and directly to hospitals, pharmacists and doctors in Nigeria. Under the agreement, the Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma’s first-year purchase commitment.

 

In August 2015, the Company announced the signing of a letter of intent with GB Pharma/AHAR and Fidson Healthcare Plc., in terms of which Fidson will promote LodonalTM upon execution of a definitive agreement between the companies.

 

In April 2016, the Company announced that Nigeria’s National Agency for Food and Drug Administration and Control (“NAFDAC”) had approved its LodonalTM as an over the counter, non-toxic adjunct therapy in the treatment of HIV/AIDS and immune system regulator. NAFDAC is the Nigerian agency under the Federal Ministry of Health that is responsible for regulating and controlling the manufacture, import/export, distribution, sale and use of food and drugs. Its approval clears the way for the Company and its distribution partners to complete the registration of LodonalTM for sale in Nigeria.

 

Agreements with Hubei Qianjiang Pharmaceutical Company

 

On October 18, 2012, the Company and Hubei Qianjiang Pharmaceutical Co., Ltd. (“Qianjiang Pharmaceutical”), signed a Venture Cooperation Agreement on New Drug Methionine Enkephalin (the “Venture Agreement”) pursuant to which Qianjiang Pharmaceutical acquired an exclusive license for the production of MENK in China. The Venture Agreement requires that Qianjiang Pharmaceutical conduct drug research and pilot testing for MENK, organize pre-clinical studies, and apply for clinical trials for MENK with the Chinese State Food and Drug Administration. Under the Venture Agreement, Qianjiang Pharmaceutical must open a co-administration account for the development of MENK in China. Qianjiang Pharmaceutical must pay the Company, upon the marketing of MENK products, a half-year amount equaling 6% of its gross sales from MENK of the preceding half year. The Company may cancel the Venture Agreement if Qianjiang Pharmaceutical does not pay expenses for a period exceeding six months or does not commence clinical trials within 12-months after receiving certain approvals. Qianjiang Pharmaceutical may cancel the Venture Agreement if the Company fails to perform its obligations for a period of six months or the failure to receive approval of clinical trials is due to the Company’s MENK technologies. The Venture Agreement was amended on February 24, 2013 to expand the clinical trials from pancreatic to both pancreatic and liver cancer and amended on March 6, 2014 to require Qianjiang Pharmaceutical to commence studies and clinical trials in China and place funds in the co-administration account.

 

On August 6, 2014, the Company entered into a Supplementary Agreement on New Drug Methionine – Enkephalin Cooperation (the “Amendment”) with Qianjiang Pharmaceutical, amending the Venture Agreement, as amended. The Company and Qianjiang Pharmaceutical executed the Amendment to accelerate clinical trials in both the United States and China, and agreed to immediately initiate three month Good Laboratory Practice (“GLP”) Toxicology Studies (rat and dog) within 30 days of signing the Amendment. The Amendment requires that the GLP Toxicology Studies Trials are conducted in China in accordance with international standards and standards acceptable to the FDA and that the studies include the following:

 

Exploratory Toxicology (nGLP)

-Dose range finding studies

- Different species and methods of administration

- Multiple dosing regimens

- Estimate the response vs. dose given

 

Definitive Toxicology (GLP)

- Performed in collaboration with Calvert Laboratories (USA) and MPI/Medicillon (China)

- General toxicology studies

- Different species and methods of administration

- Immunogenicity study with NHPs

 

Special Toxicology Studies (planned)

 

Pursuant to the Amendment, Qianjiang Pharmaceutical will make certain funds available from the co-administrative account opened by Qianjiang Pharmaceutical under the Venture Agreement, in accordance with an approved budget and timeline set forth in the Amendment. A portion of these funds are expected to be used by Cytocom to run PK and Dosing trials for MENK in the United States. The Amendment requires Cytocom and Qianjiang Pharmaceutical to meet with the China State Food and Drug Administration to determine that PK and Dosing Trials completed in the United States will be acceptable. All developments and trials run by Cytocom in the U.S. or the European Union will be used for requesting registration approval in China.

 

In February 2013, the Company signed a Strategic Framework Agreement for Cooperation with Qianjiang Pharmaceutical. Under the agreement, the parties will work together to further the development of new products and conduct research and development on the Company’s licensed patented technology. Specifically, the parties aim to co-invest to develop and market products focusing on HIV, cancer and related autoimmune system therapies, develop co-ventured manufacturing facilities in China, and develop co-ventured distribution of the developed products in China and Africa. The agreement does not have a definitive term, as each new agreement resulting from the cooperation will set forth the material terms, including, but not limited to, fees, duration and termination therein.

 

Supervision and Inspection of Manufacturing in Nicaragua

 

On April 23, 2013, the Company signed a Contract with ViPharma for the Supervision and Inspection of Manufacturing Processes as part of its negotiations for a contract for the manufacturing of LDN in a tablet, capsule and/or cream. The contract sets out the terms and conditions under which ViPharma will carry out the services of inspecting and supervising the manufacturing and packaging processes of LDN and ensure compliance with the FDA’s Current Good Manufacturing Practice regulations (“cGMP”) and the Company’s specifications. ViPharma will carry out its obligations in whatever Latin American country the Company ultimately decides to manufacture LDN. Under the contract, ViPharma has the exclusive rights to supervise and inspect all manufacturing processes of LDN in Latin America. The initial term of the agreement is ten years commencing in September 2013, with automatic five-year renewal terms provided neither party is in breach. The agreement may be terminated by (i) mutual agreement, (ii) in the event of a breach after a 45 day cure period or (iii) by either party upon provision of written notice at least 90 days before the end of the agreement, provided however that if the Company terminates the contract without cause it will be required to pay ViPharma a $10 million penalty.

 

Operating Leases

 

At March 31, 2016, the Company was a party to an agreement to lease office space in Orlando, Florida. Rent expense for the quarters ended March 31, 2016 and 2015 was $(114,794) and $18,319, respectively. The 2016 expense reflects the reversal of accruals for rent expense in prior years, including the settlement with E.J. Krause & Associates, Inc. referred to in “Legal Proceedings” below.

 

Legal Proceedings

 

In October 2014, a claim was filed for breach of contract and unjust enrichment in the United States District Court, Middle District of Florida, Orlando Division, QS Pharma, LLC v. TNI BioTech, Inc. n/k/a Immune Therapeutics, Inc., in which the named plaintiff claims that we breached various proposals between the parties. The plaintiff was seeking an amount of damages to be proven at trial and pre-judgment interest. The plaintiff filed a Motion for Order of Default, which the court entered against the Company in favor of the plaintiff on December 15, 2014. In May and October 2015, under a garnishment order the plaintiff withdrew $92,590 from the Company’s bank accounts towards settlement of the claim. In 2016, the Company agreed upon a full settlement of the balance owed for $80,000, which it paid in April 2016.

 

In February 2015, a claim was filed for breach of contract and unjust enrichment in the Circuit Court for Montgomery County, Maryland, E.J. Krause & Associates, Inc. v. TNI BioTech, Inc., in which the named plaintiff claims that the Company breached a sub-sublease. In April 2016 the parties settled the claim, agreeing that the Company would pay a total of $198,312 in 12 monthly installments commencing May 15, 2016.

 

XML 26 R17.htm IDEA: XBRL DOCUMENT v3.4.0.3
Subsequent Events
3 Months Ended
Mar. 31, 2016
Subsequent Events [Abstract]  
Subsequent Events

11. Subsequent Events

 

On May 1, 2016, the Company entered into a one-year employment agreement with Robert Wilson, the son of the Company’s Chief Executive Officer, as the Company’s Senior Content and Web Developer. The terms of the agreement provide for payment to Mr. Wilson of an annual base salary of $120,000, and health insurance coverage.

 

On May 9, 2016, the Company and KRS Global Bio Technology, Inc. mutually agreed to terminate their Contract for the Compounding of Pharmaceutical Products dated December 8, 2014.

 

Between March 31, 2016 and May 16, 2016 the Company issued promissory notes aggregating $961,250 and paid off notes totaling $245,000.

 

The Company issued 1,786,285 shares of common stock between March 31, 2016 and May 16, 2016, of which, 450,000 shares are for consulting fees, 836,285 shares are for debt conversions and 500,000 shares are for loan origination fees.

 

As of May 16, 2016, the Company had outstanding 206,913,301 shares of common stock.

 

 

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.4.0.3
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2016
Summary Of Significant Accounting Policies Policies  
Basis of Presentation

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S. GAAP) and include all adjustments (consisting of only normal recurring adjustments, unless otherwise indicated) necessary for the fair presentation of the Company’s financial position for the periods presented.

 

The Company qualifies as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue for the year ended December 31, 2015. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

Use of Estimates

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates.

 

Cash, Cash Equivalents, and Short-term Investments

Cash, Cash Equivalents, and Short-Term Investments

 

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposits, commercial paper and U.S. government and U.S. government agency obligations. Cash equivalents are reported at fair value.

Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2016, the Company has no uninsured cash balances.

 

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash and accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

 

Fair Value Measurements

Fair Value Measurements

 

The ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

 

Property and Equipment

Property and Equipment

 

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the assets, which generally range from three to five years. Maintenance and repairs are charged against expense as incurred. Depreciation expense for the quarters ended March 31, 2016 and March 31, 2015 was $547 and $668, respectively.

 

Intangible Assets

Intangible Assets

 

Costs incurred to acquire and/or develop the Company’s product licenses and patents are capitalized and amortized by straight-line methods over estimated useful lives of seven to sixteen years. Intangible assets are stated at the lower of cost or estimated fair market value. During the quarters ended March 31, 2016 and March 31, 2015, the Company did not capitalize any such costs. (See Note 10). Amortization expense for the quarters ended March 31, 2016 and March 31, 2015 was $0 and $148,059, respectively.

Impairment of Long-lived Assets

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable as prescribed by ASC Topic 360-10-05, “Property, Plant and Equipment.” If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. No impairment losses were recognized for the quarters ended March 31, 2016 and March 31, 2015.

 

Research and Development Costs

Research and Development Costs

 

Research and development costs are charged to expense as incurred and are typically comprised of salaries and benefits, pre-clinical studies, clinical trial activities, drug development and manufacturing, fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf and third-party service fees, including clinical research organizations and investigative sites. Costs for certain development activities, such as clinical trials are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as operating expenses.

Income Taxes

Income Taxes

 

The Company follows FASB ASC Topic 740, “Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. 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.

 

The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2015, and 2014, the Company does not have a liability for unrecognized tax uncertainties.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. At the end of the quarters ended March 31, 2016 and March 31, 2015, the Company had not accrued any interest or penalties related to uncertain tax positions.

 

Stock-Based Compensation and Issuance of Stock for Non-Cash Consideration

Stock-Based Compensation and Issuance of Stock for Non-Cash Consideration

 

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values equaling either the market value of the shares issued or the value of consideration received, whichever is more readily determinable. The majority of the non-cash consideration pertains to services rendered by consultants and others and has been valued at the fair value of the Company’s common stock at the date of the agreement.

 

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete.

Non-controlling Interest

Non-controlling Interest

 

In accordance with ASC 810, Consolidation, the Company consolidates Cytocom, Inc. The non-controlling interests in Cytocom represent the interests of outside shareholders in the equity and results of operations of Cytocom.

 

Net Loss Per Share

Net Loss per Share

 

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method and the if-converted method. Dilutive common stock equivalents are comprised of common stock purchase warrants and options outstanding. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

 

A calculation of basic and diluted net loss per share follows:

 

    For the three months ended
March 31,
 
    2016     2015  
Historical net loss per share:                
Numerator                
Net loss   $ (6,645,402 )   $ (2,905,406 )
Non-controlling interest     (44,120 )     (124,065 )
Net loss attributed to Common stockholders   $ (6,601,282 )   $ (2,781,341 )
                 
Denominator                
Weighted-average common shares outstanding—Denominator for basic and diluted net loss per share     190,923,381       138,795,044  
Basic and diluted net loss per share attributed to common stockholders   $ (0.03 )   $ (0.02 )

 

The Company’s potential dilutive securities which include stock and warrants have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average Common stock outstanding used to calculate both basic and diluted net loss per share is the same.

 

The following shares of potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as the effect of including such securities would be antidilutive:

 

    For the three months ended
March 31,
 
    2016     2015  
Warrants to purchase Common stock     24,731,500       9,372,750  
                 

 

Recent Accounting Standards

Recent Accounting Standards

 

During the quarter ended March 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

 

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.4.0.3
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2016
Summary Of Significant Accounting Policies Tables  
Schedule of Basic and Diluted Net Loss Per Share

A calculation of basic and diluted net loss per share follows:

 

    For the three months ended
March 31,
 
    2016     2015  
Historical net loss per share:                
Numerator                
Net loss   $ (6,645,402 )   $ (2,905,406 )
Non-controlling interest     (44,120 )     (124,065 )
Net loss attributed to Common stockholders   $ (6,601,282 )   $ (2,781,341 )
                 
Denominator                
Weighted-average common shares outstanding—Denominator for basic and diluted net loss per share     190,923,381       138,795,044  
Basic and diluted net loss per share attributed to common stockholders   $ (0.03 )   $ (0.02 )

Schedule of Antidilutive Securities

The following shares of potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as the effect of including such securities would be antidilutive:

 

    For the three months ended
March 31,
 
    2016     2015  
Warrants to purchase Common stock     24,731,500       9,372,750  

XML 29 R20.htm IDEA: XBRL DOCUMENT v3.4.0.3
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2016
Property And Equipment Tables  
Schedule of Property and Equipment

    March 31, 2016     December 31, 2015  
Property and equipment:                
Computer equipment   $ 8,013     $ 8,013  
                 
Less accumulated depreciation     (6,878 )     (6,331 )
Property and equipment, net   $ 1,135     $ 1,682  

XML 30 R21.htm IDEA: XBRL DOCUMENT v3.4.0.3
Accrued Liabilities (Tables)
3 Months Ended
Mar. 31, 2016
Accrued Liabilities Tables  
Schedule of Accrued Liabilities

Accrued expenses and other liabilities consist of the following:

 

    March 31, 2016     December 31, 2015  
    (in thousands)  
Accrued payroll to officers and others   $ 1,077,640     $ 758,342  
Accrued interest - notes payable     365,006       236,671  
Estimated legal settlement     198,312       282,136  
Other accrued liabilities     393       323  
State payroll taxes     -       3,567  
Total accrued expenses and other liabilities   $ 1,641,351     $ 1,281,039  

 

XML 31 R22.htm IDEA: XBRL DOCUMENT v3.4.0.3
Notes Payable (Tables)
3 Months Ended
Mar. 31, 2016
Notes Payable Tables  
Schedule of Notes Payable

Notes payable consist of the following:

    March 31, 2016     December 31, 2015  
Promissory note issued July 29, 2014 to Ira Gaines. The note matures on January 27, 2015 and earns interest at a rate of 18% per annum. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender.   $ 100,000     $ 100,000  
                 
Promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt. Lenders earn interest at a rate of 10% per annum, plus a pro-rata share of two percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity. Notes will be repaid in 36 monthly installments of principal and interest commencing no later than October 15, 2015. Notes aggregating $346,000 were in default at March 31, 2016, as the Company was unable to pay installments on those notes on their due dates. No demands for repayment have been made by the lenders. In the quarter ended March 31, 2016, $365,500 of these notes and their accompanying interest were converted into 5,191,909 shares of Immune Therapeutics common stock.     346,000       711,500  
                 
Promissory note issued October 17, 2014 to Roger Bozarth. The note matures on October 17, 2015 and earns interest at a rate of 2% per annum. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender. In the quarter ended March 31, 2016, this note and the accompanying interest was converted into 89,639 shares of Immune Therapeutics common stock.     -       7,000  
                 
Promissory notes issued between May 1, 2015 and September 30, 2015, and maturing between June 14, 2015 and December 31, 2015. Lenders on loans aggregating $356,432 earn interest at rates between 10% and 18% per annum. On loans aggregating $223,500, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $223,500 were in default at March 31, 2016, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders. In the quarter ended March 31, 2016, $140,001 of these notes and their accompanying interest were converted into 2,420,377 shares of Immune Therapeutics common stock.     579,932       669,933  
                 
Promissory note issued January 26, 2015 to Robert J. Dailey. The note is senior to, and has priority in right of payment over, all indebtedness of the Company. The note earns interest at a rate of 2% per annum and was due on July 30, 2015. The Company was unable to repay the note at maturity and the note is in default, although no demand for repayment has been made by the lender.     200,000       200,000  
                 
Promissory notes issued by Cytocom Inc. between April 29, 2015 and December 31, 2015. Lenders earn interest at rates between 5% and 10% per annum. These notes mature on September 30, 2016.     750,000       800,000  
                 
Promissory notes issued in December 2015. Lenders earn interest at a rate of 10% per month. Notes are repayable on March 9, 2016. The Company was unable to repay the note at maturity and the note is in default. The Company is obligated to pay late-payment penalties totaling $6,667 per day.     130,000       130,000  
                 
Promissory note issued November 24, 2015 as settlement of amounts owing to a law firm. The Lender earns interest at the rate of 10% per annum. The note is repayable in full on December 1, 2016.     175,268       175,268  
                 
Promissory notes issued between January 1, 2016 and March 31, 2016. Lenders earn interest at a rate of 10% per month. Notes are repayable in one year.     312,000          
                 
Promissory note issued February 3, 2016, payable in 90 days which includes an original issue discount of $40,000 and expenses of $5,000, resulting in net proceeds of $200,000.     245,000          
                 
Total     2,838,200       2,793,701  
                 
Less: Current Portion     (2,838,200 )     (2,793,701 )
                 
Long-Term debt, less current portion   $ -     $ -  

XML 32 R23.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Structure - Common Stock and Common Stock Purchase Warrants (Tables)
3 Months Ended
Mar. 31, 2016
Capital Structure - Common Stock And Common Stock Purchase Warrants Tables  
Schedule of Outstanding Stock Warrants

Following is a summary of outstanding stock warrants at March 31, 2016 and activity during the three months then ended:

 

    Number of
Shares
    Exercise
Price
    Weighted
Average
Price
 
Warrants as of December 31, 2015     9,131,500     $ 0.07-15.00     $ 1.47  
                         
Issued in 2016     15,600,000     $ .020-2.00     $ 0.39  
                         
Expired     -     $ -     $ -  
                         
Exercised     -     $ -     $ -  
                         
Warrants as of March 31, 2016     24,731,500     $  0.07-15.00     $ 0.79  

Summary of Outstanding Warrants

Summary of outstanding warrants as of March 31, 2016:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
Second Quarter 2016     37,500     $ 5.00       .25  
Third Quarter 2016     525,000     $ 1.00-5.00       .50  
Third Quarter 2017     1,500,000     $ 1.00       1.50  
Fourth Quarter 2017     2,941,666     $ 1.00-9.00       1.75  
First Quarter 2018     127,500     $ 15.00       2.00  
Second Quarter 2018     33,334     $ 15.00       2.25  
Third Quarter 2018     650,000     $ 1.00-1.50       2.50  
Fourth Quarter 2018     1,197,500     $ 1.00-1.50       2.75  
First Quarter 2019     4,024,000     $ 0.50-2.00       3.00  
Second Quarter 2019     135,000     $ 0.07–0.23       3.25  
Third Quarter 2019     260,000     $ 0.50       3.50  
Fourth Quarter 2019     400,000     $ 0.14       3.75  
Second Quarter 2020     300,000     $ 0.50       4.25  
First Quarter 2021     12,600,000     $ 0.20       5.00  

 

XML 33 R24.htm IDEA: XBRL DOCUMENT v3.4.0.3
Organization and Description of Business (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 08, 2014
Mar. 31, 2014
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Net loss     $ 6,645,402 $ 2,905,406  
Cash equivalents     497,962    
Stockholders equity     $ 6,185,136   $ 5,958,184
Cytocom Inc., [Member]          
Number of shares issued druing period 113,242,522       140,100,000
Percentage of stake issued during period 55.30%       50.20%
Irish Limited Liability [Member]          
Percentage of low corporate income tax rate   12.50%      
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.4.0.3
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Summary Of Significant Accounting Policies Details Narrative      
Maximum of annual gross revenue     $ 1,000,000,000
Federal deposit insurance corporation value $ 250,000    
Depreciation expense 547 $ 668  
Amortization expense $ 0 $ 148,059  
Impairment loss  
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.4.0.3
Summary of Significant Accounting Policies - Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Summary Of Significant Accounting Policies - Schedule Of Basic And Diluted Net Loss Per Share Details    
Numerator, Net loss $ (6,645,402) $ (2,905,406)
Numerator, Non-controlling interest (44,120) (124,065)
Numerator, Net loss attributed to Common stockholders $ (6,601,282) $ (2,781,341)
Denominator, Weighted-average common shares outstanding-Denominator for basic and diluted net loss per share 190,923,381 138,795,044
Denominator, Basic and diluted net loss per share attributed to common stockholders $ (0.03) $ (0.02)
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.4.0.3
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Summary Of Significant Accounting Policies - Schedule Of Basic And Diluted Net Loss Per Share Details    
Warrants to purchase Common stock 24,731,500 9,372,750
XML 37 R28.htm IDEA: XBRL DOCUMENT v3.4.0.3
Property and Equipment (Details Narrative)
3 Months Ended
Mar. 31, 2016
Property And Equipment Details Narrative  
Depreciable asset lives 5 years
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.4.0.3
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Property And Equipment - Schedule Of Property And Equipment Details    
Computer equipment $ 8,013 $ 8,013
Less accumulated depreciation (6,878) (6,331)
Property and equipment, net $ 1,135 $ 1,682
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.4.0.3
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Accrued Liabilities - Schedule Of Accrued Liabilities Details    
Accrued payroll to officers and others $ 1,077,640,000 $ 758,342,000
Accrued interest - notes payable 365,006,000 236,671,000
Estimated legal settlement 198,312,000 282,136,000
Other accrued liabilities $ 393,000 323,000
State payroll taxes 3,567,000
Total accrued expenses and other liabilities $ 1,641,351,000 $ 1,281,039,000
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.4.0.3
Notes Payable (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Notes Payable Details Narrative    
Accrued unpaid interest $ 365,006 $ 236,671
XML 41 R32.htm IDEA: XBRL DOCUMENT v3.4.0.3
Notes Payable - Schedule of Notes Payable (Details) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Total $ 2,838,200 $ 2,793,701
Less: Current portion (2,838,200) (2,793,701)
Notes Payable One [Member]    
Total 100,000 100,000
Notes Payable Two [Member]    
Total $ 346,000 711,500
Notes Payable Three [Member]    
Total 7,000
Notes Payable Four [Member]    
Total $ 579,932 669,933
Notes Payable Five [Member]    
Total 200,000 200,000
Notes Payable Six [Member]    
Total 750,000 800,000
Notes Payable Seven [Member]    
Total 130,000 130,000
Notes Payable Eight [Member]    
Total 175,268 $ 175,268
Notes Payable Nine [Member]    
Total 312,000
Notes Payable Ten [Member]    
Total $ 245,000
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.4.0.3
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical)
1 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended
Feb. 03, 2016
USD ($)
Nov. 24, 2015
Jan. 26, 2015
Oct. 17, 2014
Jul. 29, 2014
Dec. 31, 2015
USD ($)
Mar. 31, 2016
USD ($)
shares
Mar. 31, 2015
Sep. 30, 2015
USD ($)
Installments
Dec. 31, 2015
USD ($)
shares
Percentage of interest rate per annum             10.00%   10.00%  
Maximum amount raise in debt                 $ 2,000,000  
Number of installments, months | Installments                 36  
Original issue discount $ 40,000                  
Debt issuance cost 5,000                  
Net proceeds from notes payable $ 200,000                  
Cytocom Inc., [Member]                    
Note matures date               Sep. 30, 2016    
Minimum [Member] | Cytocom Inc., [Member]                    
Percentage of interest rate per annum             5.00%      
Maximum [Member] | Cytocom Inc., [Member]                    
Percentage of interest rate per annum             10.00%      
Ira Gaines [Member]                    
Note matures date         Jan. 27, 2015          
Percentage of interest rate per annum         18.00%          
Lenders [Member]                    
Notes aggregating default amount             $ 346,000      
Value of notes that converted into shares             $ 365,500      
Notes and interest converted into shares | shares             5,191,909      
Aggregating loan                 $ 356,432  
Interest payable                 $ 223,500  
Lenders [Member] | Minimum [Member]                    
Percentage of interest rate per annum                 10.00%  
Lenders [Member] | Maximum [Member]                    
Percentage of interest rate per annum                 18.00%  
Roger Bozarth [Member]                    
Note matures date       Oct. 17, 2015            
Percentage of interest rate per annum       2.00%            
Notes and interest converted into shares | shares             89,639      
Lenders [Member]                    
Maximum amount raise in debt             $ 140,001      
Notes aggregating default amount             $ 223,500      
Notes and interest converted into shares | shares                   2,420,377
Robert J. Dailey [Member]                    
Note matures date     Jul. 30, 2015              
Percentage of interest rate per annum     2.00%              
Lender [Member]                    
Note matures date           Mar. 09, 2016        
Percentage of interest rate per annum           10.00%       10.00%
Pay late-payment penalties per day           $ 6,667       $ 6,667
Lender [Member]                    
Note matures date   Dec. 01, 2016                
Percentage of interest rate per annum   10.00%                
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Structure - Common Stock and Common Stock Purchase Warrants (Details Narrative) - $ / shares
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Capital Structure - Common Stock And Common Stock Purchase Warrants Details Narrative      
Common Stock, Par Value $ 0.0001 $ 0.0001 $ 0.0001
Common Stock, Shares Authorized 500,000,000 500,000,000 500,000,000
Common Stock, Shares Issued 205,127,530 174,850,047  
Common Stock, Shares Outstanding 205,127,530 174,850,047  
Number of warrants issued during period 15,600,000    
XML 44 R35.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Structure - Common Stock and Common Stock Purchase Warrants - Schedule of Outstanding Stock Warrants (Details) - Warrant [Member]
3 Months Ended
Mar. 31, 2016
$ / shares
shares
Warrants, Number of shares Beginning balance | shares 9,131,500
Warrants, Number of shares Issued | shares 15,600,000
Warrants, Number of shares Expired | shares
Warrants, Number of shares Exercised | shares
Warrants, Number of shares Ending balance | shares 24,731,500
Exercise Price, Expired $ 1.50
Exercise Price, Exercised .50
Weighted average exercise price, Beginning balance 1.47
Weighted average exercise price, Issued $ 0.39
Weighted average exercise price, Expired
Weighted average exercise price, Exercised
Weighted average exercise price, Ending balance $ 0.79
Minimum [Member]  
Exercise Price, Beginning balance 0.07
Exercise Price, Issued 0.20
Exercise Price, Ending balance 0.07
Maximum [Member]  
Exercise Price, Beginning balance 15.00
Exercise Price, Issued .50
Exercise Price, Ending balance $ 15.00
XML 45 R36.htm IDEA: XBRL DOCUMENT v3.4.0.3
Capital Structure - Common Stock and Common Stock Purchase Warrants - Summary of Outstanding Warrants (Details)
3 Months Ended
Mar. 31, 2016
$ / shares
shares
Second Quarter 2016 [Member]  
Number of Shares | shares 37,500
Exercise Price Lower Limit $ 5.00
Remaining Life (years) 6 months
Third Quarter 2016 [Member]  
Number of Shares | shares 525,000
Exercise Price Lower Limit $ 1.00
Exercise Price Upper Limit $ 5.00
Remaining Life (years) 6 months
Third Quarter 2017 [Member]  
Number of Shares | shares 1,500,000
Exercise Price Lower Limit $ 1.00
Remaining Life (years) 1 year 6 months
Fourth Quarter 2017 [Member]  
Number of Shares | shares 2,941,666
Exercise Price Lower Limit $ 1.00
Exercise Price Upper Limit $ 9.00
Remaining Life (years) 1 year 9 months
First Quarter 2018 [Member]  
Number of Shares | shares 127,500
Exercise Price Lower Limit $ 15.00
Remaining Life (years) 2 years
Second Quarter 2018 [Member]  
Number of Shares | shares 33,334
Exercise Price Lower Limit $ 15.00
Remaining Life (years) 2 years 3 months
Third Quarter 2018 [Member]  
Number of Shares | shares 650,000
Exercise Price Lower Limit $ 1.00
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 2 years 6 months
Fourth Quarter 2018 [Member]  
Number of Shares | shares 1,197,500
Exercise Price Lower Limit $ 1.00
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 2 years 9 months
First Quarter 2019 [Member]  
Number of Shares | shares 4,024,000
Exercise Price Lower Limit $ 1.50
Exercise Price Upper Limit $ 2.00
Remaining Life (years) 3 years
Second Quarter 2019 [Member]  
Number of Shares | shares 135,000
Exercise Price Lower Limit $ 0.07
Exercise Price Upper Limit $ 0.23
Remaining Life (years) 3 years 3 months
Third Quarter 2019 [Member]  
Number of Shares | shares 260,000
Exercise Price Lower Limit $ .50
Remaining Life (years) 3 years 6 months
Fourth Quarter 2019 [Member]  
Number of Shares | shares 400,000
Exercise Price Lower Limit $ .14
Remaining Life (years) 3 years 9 months
Second Quarter 2020 [Member]  
Number of Shares | shares 300,000
Exercise Price Lower Limit $ .50
Remaining Life (years) 4 years 3 months
Second Quarter 2021 [Member]  
Number of Shares | shares 12,600,000
Exercise Price Lower Limit $ 0.20
Remaining Life (years) 5 years
XML 46 R37.htm IDEA: XBRL DOCUMENT v3.4.0.3
Stock Compensation (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Number of common stock issued for consulting fees 19,043,000 9,272,502
Fair value of common stock $ 1,314,169 $ 1,712,876
Amortization of prepaid services $ 669,667 $ 2,161,559
Minimum [Member]    
Consulting fees amortized period 12 months  
Maximum [Member]    
Consulting fees amortized period 24 months  
XML 47 R38.htm IDEA: XBRL DOCUMENT v3.4.0.3
Income Taxes - Results of Operations (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Income Taxes - Results Of Operations Details Narrative    
Effective tax rate 0.00% 0.00%
Deferred tax assets  
Operating loss carryforwards $ 66,500,000  
Operating loss carryforwards expire term expire in 2032-2035.  
XML 48 R39.htm IDEA: XBRL DOCUMENT v3.4.0.3
Licenses and Supply Agreements (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Sep. 24, 2014
Aug. 06, 2014
Dec. 24, 2012
Aug. 13, 2012
Apr. 24, 2012
May. 31, 2013
Mar. 31, 2016
Dec. 31, 2014
Dec. 31, 2013
Minimum royalty amount               $ 100,000  
Issued common stock value             $ 1,314,169    
Young Agreement [Member]                  
Patent liability                 $ 118,333
Cost of the patent                 $ 1,372,000
Smith Agreement [Member]                  
Number of shares acquired in exchange for common stock     300,000            
Acquisition value     $ 2,880,384            
Fair market value acquired     2,715,000            
Payments for expenses     165,384            
Number of common stock shares issued during period 1,000,000                
Issued common stock value $ 270,000                
Smith Agreement [Member] | Initial License Fee [Member]                  
Payments for expenses     100,000            
Smith Agreement [Member] | Expenses [Member]                  
Payments for expenses     $ 65,384            
Shan Agreement [Member]                  
Number of common stock shares issued during period   500,000              
Issued common stock value   $ 140,000              
Number of shares issue upon final transfer of licenses           500,000      
Dr. Plotnikoff [Member]                  
Number of shares acquired in exchange for common stock         8,000,000        
TNI IP’s Management [Member]                  
Number of shares acquired in exchange for common stock         12,250,000        
Acquisition value         $ 16,006,000        
Dr. Bernard Bihari [Member] | Young Agreement [Member]                  
Number of shares acquired in exchange for common stock       540,000          
Acquisition value       $ 972,000          
Assumed liabilities       $ 400,000          
TNI BioTech IP, Inc. [Member]                  
Number of shares acquired in exchange for common stock         20,250,000        
Acquisition value         $ 98,000,000        
XML 49 R40.htm IDEA: XBRL DOCUMENT v3.4.0.3
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Apr. 23, 2013
Oct. 18, 2012
Sep. 25, 2012
Jul. 14, 2012
Oct. 31, 2014
Feb. 28, 2014
Oct. 31, 2013
Mar. 31, 2016
Mar. 31, 2015
Oct. 31, 2015
Dec. 31, 2015
Letter of intent, description       the letter of intent, the Company and GBOIG intend to provide HIV/AIDS treatment to 25,000 patients and hopefully expanding to 500,000 within 24 months.              
Initial capital to venture       $ 1,000              
Percentage of allocated income from venture       50.00%              
Cash rental expense               $ 53,205 $ 147,236    
May 15, 2016 [Member]                      
Debt instruments installment               198,312      
Orlando, Florida [Member]                      
Cash rental expense               $ (114,794) $ 18,319    
Plaintiff Claims [Member]                      
Seeking damages in excess           $ 75,000          
Default judgment entered in favor of legal party amount                   $ 80,000  
Accrued for claim         $ 210,452            
Withdrew from bank account towards settlement of claim                   $ 92,590  
Plaintiff EK Krause & Associates [Member]                      
Default judgment entered in favor of legal party amount           259,894          
Accrued for claim           $ 279,000        
GBOIG [Member]                      
Upfornt costs     $ 2,500,000                
Distribution Agreements In Nigeria [Member]                      
Initial supply, description             Under the agreement, the Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma’s first-year purchase commitment.        
Agreements With Hubei Qianjiang Pharmaceutical Company [Member]                      
Percentage of gross sales   6.00%                  
Agreements With Hubei Qianjiang Pharmaceutical Company [Member]                      
Initial supply, description By either party upon provision of written notice at least 90 days before the end of the agreement, provided however that if the Company terminates the contract without cause it will be required to pay ViPharma a $10 million penalty.                    
XML 50 R41.htm IDEA: XBRL DOCUMENT v3.4.0.3
Subsequent Events (Details Narrative) - USD ($)
May. 01, 2016
Feb. 03, 2016
May. 16, 2016
Mar. 31, 2016
Dec. 31, 2015
Proceeds fom notes payable   $ 200,000      
Common stock outstanding       205,127,530 174,850,047
Subsequent Event [Member]          
Proceeds fom notes payable $ 961,250        
Repayments of notes payable $ 245,000        
Number of stock issued for debt conversion 1,786,285        
Number of shares issued for consulting fees 450,000        
Number of shares issued for debt conversion 836,285        
Number of shares issued for loan orignation fees 500,000        
Common stock outstanding     206,913,301    
Mr. Wilson [Member] | Subsequent Event [Member]          
Annual base salary $ 120,000        
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