0001493152-16-015067.txt : 20161121 0001493152-16-015067.hdr.sgml : 20161121 20161115135127 ACCESSION NUMBER: 0001493152-16-015067 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 55 CONFORMED PERIOD OF REPORT: 20160930 FILED AS OF DATE: 20161114 DATE AS OF CHANGE: 20161121 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: 161999028 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 September 30, 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   (IRS Employer
incorporation or organization)   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 November 14, 2016 there were 241,128,131 shares of Common Stock outstanding.

 

 

 

   
 

 

TABLE OF CONTENTS

 

PART I FINANCIAL STATEMENTS
     
Item 1 Financial Statements 6
     
Item 2 Management’s Discussion and Analysis of Financial Conditions and Results of Operations 23
     
Item 3 Quantitative and Qualitative Disclosures About Market Risk 32
     
Item 4 Controls and Procedures 32
     
PART II OTHER INFORMATION
     
Item 1 Legal Proceedings 33
     
Item 1A Risk Factors  
     
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 33
     
Item 3 Default upon Senior Securities 33
     
Item 4 Mine Safety Disclosures 34
     
Item 5 Other Information 34
     
Item 6 Exhibits 34

 

 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 
 

 

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.

 

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, some of which is outside the United States and may therefore be subject to political, economic and other uncertainties, 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.

 

 4 
 

 

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

 

 5 
 

 

PART I FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   September 30, 2016   December 31, 2015 
   (Unaudited)   (Audited) 
ASSETS          
Current Assets:          
Cash and cash equivalents  $22,152   $23,149 
Accounts receivable   -    16,197 
Total current assets   22,152    39,346 
           
Fixed Assets:          
Computer equipment, net of accumulated depreciation of $7,611 and $6,331 respectively   402    1,682 
           
Deposits   200    200 
           
Total assets  $22,754   $41,228 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable  $1,516,812   $1,924,672 
Accrued liabilities   2,397,013    1,281,039 
Current portion of notes payable   3,573,698    2,793,701 
           
Total current liabilities   7,487,523    5,999,412 
           
Non-current liabilities:          
Notes payable, less current portion   -    - 
Total non-current liabilities   -    - 
Total liabilities   7,487,523    5,999,412 
           
Commitments and Contingencies (Note 10)          
           
Stockholders’ Deficit:          
Common stock - par value $0.0001; 500,000,000 shares authorized; 235,831,298 and 174,850,047 shares issued and outstanding respectively   23,583    17,485 
Additional paid in capital   357,436,906    343,434,786 
Stock issuances due   845,838    1,140,303 
Prepaid services   (1,252,762)   (660,417)
Accumulated deficit   (362,256,392)   (347,789,889)
           
Deficit attributable to common shareholders   (5,202,827)   (3,857,732)
Non-controlling interest   (2,261,942)   (2,100,452)
Total stockholders’ deficit   (7,464,769)   (5,958,184)
Total liabilities and stockholders’ deficit  $22,754   $41,228 

 

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

 

 6 
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three months ended   Nine months ended 
   September 30, 2016   September 30, 2015   September 30, 2016   September 30, 2015 
                 
Revenues, net  $-   $4,958   $3,463   $12,676 
                     
Operating expenses                    
Selling, general and administrative   1,031,075    865,335    2,864,333    1,689,188 
Research and development expense   247,019    111,361    295,438    703,011 
Stock issued for services G&A   1,225,353    1,393,500    4,403,951    5,005,393 
Warrant valuation   187,850    37,451    2,756,404    37,451 
Depreciation and amortization expense   299    148,696    1,280    446,148 
Total operating expenses   2,691,596    2,556,343    10,321,406    7,881,191 
                     
Loss from operations   (2,691,596)   (2,551,385)   (10,317,943)   (7,868,515)
                     
Other income (expense):                    
Interest expense   (978,275)   (79,924)   (2,331,296)   (148,681)
Loss on settlement of debt   (274,071)   (1,394,000)   (1,978,754)   (1,482,445)
Total other income (expense)   (1,252,346)   (1,473,924)   (4,310,050)   (1,631,126)
                     
Net (loss)  $(3,943,942)  $(4,025,309)  $(14,627,993)  $(9,499,641)
Net (loss) attributable to non-controlling interest   (7,441)   (165,759)   (161,490)   (428,715)
Net (loss) attributable to common shareholders  $(3,936,501)  $(3,859,550)  $(14,466,503)  $(9,070,926)
                     
Basic and diluted loss per share attributable to common shareholders  $(0.02)  $(0.02)  $(0.07)  $(0.06)
                     
Weighted average number of shares outstanding   226,843,113    156,814,094    208,399,547    147,365,571 

 

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

 

 7 
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE PERIOD ENDED SEPTEMBER 30, 2016

(Unaudited)

 

   Common Stock   Additional Paid   Stock to   Prepaid   Accumulated   Non-Controlling     
   Shares   Amount   in 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   29,283,910    2,927    5,417,833    (424,466)   (2,907,535)   -    -    2,088,759 
                                         
Amortization of prepaid services   -    -    -    -    2,315,190    -    -    2,315,190 
                                         
Issuance of common stock for interest expense   1,121,296    113    191,637    -    -    -    -    191,750 
                                         
Discount on warrants issued in connection with notes payable   -         682,665    -        -    -    682,665 
                                         
Issuance of common stock for legal fees   150,000    15    22,485    -    -    -    -    22,500 
                                         
Issuance of common stock in exchange for debt   28,488,545    2,850    4,706,289    155,001    -    -    -    4,864,140 
                                         
Issuance of common stock for cash and exercise of warrants   1,937,500    193    224,807    (25,000)   -    -    -    200,000 
                                         
Issuance and modification of stock warrants   -    -    2,756,404    -    -    -    -    2,756,404 
                                         
Net loss   -    -    -    -    -    (14,466,503)   (161,490)   (14,627,993)
                                         
Balance, September 30, 2016   235,831,298   $23,583    $357,436,906   $845,838   $(1,252,762)  $(362,256,392)  $(2,261,942)  $(7,464,769)

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)

 

   Nine months Ended 
   September 30, 2016   September 30, 2015 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(14,627,993)  $(9,499,641)
Adjustments to reconcile net loss to net cash flows used in operating activities:          
Depreciation   1,280    1,974 
Amortization   -    444,175 
Stock issued, and amortization of stock issued, for prepaid services   2,315,190    3,895,018 
Loss on settlement of debt   1,978,754    1,482,444 
Stock issued for services   2,111,259    1,029,375 
Stock issued for legal settlement   -    81,000 
Stock warrant expense   2,756,404    37,452 
Stock issued for interest   191,750    15,625 
Amortization of debt discount   727,612    - 
Accounts receivable write off   2,661      
Changes in operating assets and liabilities:          
Accounts payable   103,155    605,634 
Accounts receivable   13,536    (12,676)
Accrued liabilities   2,093,015    31,427 
Prepaid expenses and deposits   -    (15,401)
           
Net cash used in operating activities   (2,333,377)   (1,903,594)
           
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   200,000    587,500 
Proceeds from issuance of notes payable   2,132,380    1,277,975 
           
Net cash provided by financing activities   2,332,380    1,865,475 
Net increase (decrease) in cash   (997)   (38,119)
Cash and cash equivalents at beginning of period   23,149    191,987 
Cash and cash equivalents at end of period  $22,152   $153,868 

 

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

 

 9 
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine months Ended 
   September 30, 2016   September 30, 2015 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
           
Cash paid for interest  $18,667   $12,000 
           
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
           
Common stock issued for loan expense and interest  $191,750      $ 15,625 
           
Common stock issued for prepaid services  $2,088,759      $ 1,029,376 

 

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

 

 10 
 

 

Immune Therapeutics, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

September 30, 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”). Today, the Company is focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS, malaria, and opportunistic infections arising from their treatment, and commercializing affordable, non-toxic therapies in Africa, to be followed by Asia and South America, 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. 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. (“Cytocom”). Cytocom is a clinical-stage pharmaceutical company focused on the development of the first affordable non-toxic immunodulator for the treatment of inflammatory diseases, immune-related disorders, and cancer, and is responsible for the development of the Company’s patented therapies under the auspices of the FDA and EMA. In December 2014, the Company finalized the distribution of common stock of Cytocom 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 during drug development. On December 8, 2014, the number of Cytocom shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% equity interest in Cytocom on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016. At September 30, 2016, the Company’s equity interest had been further reduced to 17%, by subsequent issuances of Cytocom common stock to shareholders in settlement of notes payable.

 

 11 
 

 

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.

 

Immune Therapeutics is commercializing affordable non-toxic immunotherapies focused on the activation and rebalancing of the body’s immune system. Stimulating the body’s immune system remains one of the most promising approaches in the treatment of cancers, HIV, autoimmune diseases, inflammatory conditions and other opportunistic infections, and for treating chronic, often life-threatening, diseases in Emerging Nations through the mobilization of the body’s immune system using existing clinical data.

 

As of this date, neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a New Drug Application from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process.

 

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 $(14,627,993) and used cash and cash equivalents from operations in the amount of $2,333,377 during the nine months ended September 30, 2016, resulting in stockholders deficit of $(7,464,769) at September 30, 2016.

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2015 (including the notes thereto) set forth in Form 10-K/A.

 

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.

 

 12 
 

 

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 September 30, 2016, the Company has no uninsured cash balances.

 

Segment and Geographic Information

 

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment and does not segment the business for internal reporting or decision making.

 

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 cash equivalents, accounts receivable 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 approximates 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.

 

 13 
 

 

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 September 30, 2016 and September 30, 2015 was $299 and $638, 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. At the end of 2015, the Company determined that the unamortized carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. In 2014, the Company determined that the carrying amount recoded for the acquisition of licenses and patents related to MENK were impaired, and recorded an impairment loss of $9,908,477.

 

During the quarters ended September 30, 2016 and September 30, 2015, the Company did not capitalize any costs to acquire and/or develop the Company’s product licenses and patents. (See Note 10). Amortization expense for the quarters ended September 30, 2016 and September 30, 2015 was $0 and $444,175, 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 September 30, 2016 and September 30, 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 September 30, 2016, the Company does not have a liability for unrecognized tax uncertainties.

 

 14 
 

 

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 September 30, 2016 and September 30, 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 market 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
September 30,
   For the six months ended
September 30,
 
   2016   2015   2016   2015 
Net loss per share:                    
Numerator                    
Net loss  $(3,943,942)  $(4,025,309)  $(14,627,993)  $(9,499,641)
Net loss attributed to Common stockholders  $(3,936,501)  $(3,859,550)  $(14,466,503)  $(9,070,926)
                     
Denominator                    
Weighted-average common shares outstanding—                    
Denominator for basic and diluted net loss per share   226,843,113    156,814,094    208,399,547    147,365,571 
Basic and diluted net loss per share attributed to common stockholders  $(0.02)  $(0.02)  $(0.07)  $(0.06)

 

 15 
 

 

The Company’s potential dilutive securities which include stock, stock warrants and convertible debt 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:

 

   As of September 30, 
   2016   2015 
Warrants to purchase Common stock   32,623,908    9,355,250 
    32,623,908    9,355,250 

 

Recent Accounting Standards

 

During the quarter ended September 30, 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.

 

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 and did not have such amount as of December 31, 2015, 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.

 

3. Property and Equipment

 

   September 30, 2016   December 31, 2015 
Property and equipment:          
Computer equipment  $8,013   $8,013 
           
Less accumulated depreciation   (7,611)   (6,331)
           
Property and equipment, net  $402   $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:

 

   September 30, 2016   December 31, 2015 
   (in thousands) 
Accrued payroll to officers and others  $934   $758 
Accrued interest and penalties - notes payable   1,319    237 
Accrued legal settlements   143    282 
Other accrued liabilities   1    4 
Total accrued expenses and other liabilities  $2,397   $1,281 

 

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5. Notes Payable

 

Notes payable consist of the following:

 

    September 30, 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. Principal of $425,500 and accrued interest of $37,427 were converted to 5,309,092 shares of common stock in the nine months ended September 30, 2016, Notes aggregating $286,000 were in default at September 30, 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.   286,000    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 lender converted this note and $2,139 in accrued interest to 114,237 shares of common stock in January 2016.   -    7,000 
           
Promissory notes issued between May 1, 2015 and September 30, 2016, and maturing between June 14, 2015 and June 30, 2017. Lenders on loans aggregating $535,994 earn interest at rates between 10% and 18% per annum. On loans aggregating $198,500, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $198,500 were in default at September 30, 2016, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders.   734,494    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. Principal of $200,000 and accrued interest of $4,778 was converted to 3,722,015 shares of common stock in the nine months ending September 30, 2016.   -    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. $375,000 of principal and $12,036 in accrued interest was converted to 4,837,960 shares of common stock in the nine months ending September 30, 2016. The Company was unable to repay the remaining notes at maturity and the notes are in default, although no demand for repayment has been made by the lenders.   425,000    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. . $30,000 of principal and $49,000 of interest and penalties were converted to 987,500 shares of common stock in the nine months ended September 30, 2016. The Company was unable to repay the remaining note at maturity and the note is in default The Company is obligated to pay late-payment penalties totaling $5,000 per day on the remaining obligation.   100,000    130,000 

 

 17 
 

 

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 and $10,036 in interest was converted to 1,235,536 shares of common stock in July 2016.   -    175,268 
           
Promissory notes issued between May 5, 2016 and June 2, 2016 that mature between October 1, 2016 and January 31, 2017, and include stock conversion features, warrants and original issue debt discounts. Notes aggregating $305,000 were in default at November 14, 2016. No demand for repayment has been made by the lenders.   555,000    - 
           
Promissory notes issued to an officer of the Company effective November 3, 2015 and maturing November 3, 2016 for settlement of accrued payroll, bearing interest at 10% per annum and including a stock conversion feature.   112,737    - 
           
Promissory note issued in July 2016. The note is repayable on October 5, 2016. The note earns interest at 6% per month. The Company was unable to repay the note at maturity and the note is in default.   50,000    - 
           
Promissory note dated April 2016, issued to JM Financial (“JMJ”), pursuant to which JMJ loaned the Company $525,000 and was issued the promissory note, 500,000 shares of common stock, and a warrant exercisable for 3,515,621 additional common shares at a rate of $0.14 per share. The note matures on January 6, 2017. The note was repaid on November 4, 2016.   656,250    - 
           
Promissory note issued in July 2016 with an original issuance discount of $30,000. Net proceeds were $150,000. The note is repayable on April 7, 2017.   180,000    - 
           
Promissory notes issued in August 2016 for $149,854 as a settlement of amounts owed to a law firm. The notes accrue interest at 5% per annum and are payable in 18 equal monthly installments of $8,641.88.   146,912    - 
           
Promissory notes issued between July 1, 2016 and September 30, 2016. Lenders earn interest at 12% per annum. The notes mature between January 1, 2017 and March 31, 2017.   495,000    - 
           
Less: Original issue discounts on notes payable and warrants issued with notes.   (267,695)   - 
           
Total   3,573,698    2,793,701 
           
Less: Current Portion  $(3,573,698)  $(2,793,701)
           
Long-Term debt, less current portion  $-   $- 

 

 18 
 

 

As of September 30, 2016, the Company had accrued $278,089 in unpaid interest and $1,041,502 in unpaid default penalties, compared to $217,717 and 18,954, respectively, as of December 31, 2015. During the three months ended September 30, 2016, 225,000 shares with a fair value of $42,750 were issued by the Company for interest expense under promissory notes.

 

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 September 30, 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 September 30, 2016, the Company had 235,831,298 shares of common stock outstanding, and 174,850,047 outstanding as of December 31, 2015.

 

Stock Warrants

 

In the quarter ended September 30, 2016, the Company issued 2,000,000 warrants.

 

There were no modifications of the terms of any warrants issued by the Company in the quarter ended September 30, 2015.

 

Following is a summary of outstanding stock warrants at September 30, 2016 and activity during the nine 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   25,654,908   $  0.14-2.00    $0.31 
                
Expired   (162,500)  $5.00   $5.00 
                
Exercised   (0)  $0   $0 
                
Warrants as of September 30, 2016   34,623,908   $    0.07-15.00    $0..50 

 

Summary of outstanding warrants as of September 30, 2016:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Fourth Quarter 2017     350,000     $ 1.50-9.00       1.25  
First Quarter 2018     127,500     $ 15.00       1.50  
Second Quarter 2018     33,334     $ 15.00       1.75  
Third Quarter 2018     250,000     $ 1.50       2.00  
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       2.25  
First Quarter 2019     4,024,000     $ 0.50-2.00       2.50  
Second Quarter 2019     135,000     $ 0.07–0.23       2.75  
Third Quarter 2019     260,000     $ 0.50-1.50       3.00  
Fourth Quarter 2019     400,000     $ 0.14       3.25  
Second Quarter 2020     300,000     $ 0.50       3.75  
Fourth Quarter 2020     1,000,000     $ 0.20       4.00  
First Quarter 2021     12,650,000     $ 0.20       4.25  
Second Quarter 2021     6,004,908     $ 0.10-0.20       4.50  
Third Quarter 2021     3,000,000     $ 0.20       4.75  

 

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7. Stock Compensation

 

Shares Issued for Services

 

During the nine months ended September 30, 2016 and 2015, the Company issued 29,283,910 and 16,922,504 shares of common stock respectively for consulting fees. The Company valued these shares at $5,420,760 and $1,029,375 respectively, based upon the fair 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 $2,315,190 and $3,895,018 for the nine months ended September 30, 2016 and 2015. In the nine months ended September 30, 2016, the company also issued and expensed $2,088,759 of stock for services.

 

8. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended September 30, 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.

 

The Company’s effective tax rate for fiscal years 2015 and 2013 was 0%. The Company’s 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, the Company has 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 has not entered into any new licenses or supply agreements during quarter ending September 30, 2016. All prior licenses, supply agreements, and patents remain unchanged from the prior quarter.

 

10. Commitments and Contingencies

 

Except as described below, the Company has not created any new commitments or contingency obligations during quarter ending September 30, 2016. All other prior commitments and contingent obligations remain unchanged from the prior quarter.

 

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Distribution of LodonalTM in Nigeria

 

Through its wholly-owned subsidiary, TNI BioTech International, Ltd., in December 2015 the Company completed a 90-day bridging trial for the treatment of patients with HIV/AIDS. The trial consisted of a total of 150 patients of both genders between the ages of 18-60, each of whom was infected HIV/AIDS. The primary objective of this bridging trial was to confirm that LodonalTM has a beneficial effect on the immune system of immune deficient patients and that it is safe. The trial separated patients into a Control (placebo) Group and a Treatment Group (which was administered LodonalTM). The efficacy of increasing CD4 count [cell/mm3] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating beneficial effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were not adversely affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal.

 

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. The NAFDAC approval clears the way for the Company and its distribution partners to complete the registration of LodonalTM for sale in Nigeria. The Company is currently completing the registration process to allow it to import the drug into Nigeria.

 

Other Distribution Agreements

 

Contract Manufacturing Agreements

 

On May 16, 2016, the Company entered into an agreement with Complete Pharmacy and Medical Solutions, LLC (“CPMS”) to compound, package and distribute the LDN tablets, capsules and/or creams in the United States. The initial term of the agreement is three years, with the option to renew for an additional year. The agreement may be terminated by (i) mutual agreement, (ii) in the event of a breach, provided however that if the Company terminates the agreement, the Company will be required to reimburse CPMS for all unused packaging materials for the LDN, which unused packaging materials CPMS will provide to IMUN. If CPMS does not receive and ship at least 1,000 orders (prescriptions) during the term of the agreement, the Company will be required to reimburse CPMS for 100% of the “ramp up costs” (defined as all costs and expenses of labor and materials related to the testing, and required FDA and other governmental documentation/approvals of test data) of providing and producing the LDN, even where the Company cancels/terminates the agreement, which provision shall survive the cancellation/termination of the agreement.

 

On October 25, 2016, the Company and Acromax Dominicana, SA ("Acromax") entered into a contract for manufacturing of LDN tablets, capsules and/or creams ("Agreement"). Subject to the terms and conditions of the Agreement, Acromax will obtain all necessary licenses and permits to carry out the manufacturing and packaging of LDN in exchange for a fixed fee per tablet plus an additional fee for packaging, shipping and customs clearance. The Agreement has an initial term of five years unless terminated by either party in accordance with the terms.

 

Operating Leases

 

At September 30, 2016, the Company was a party to an agreement to lease office space in Orlando, Florida. Rent expense for the quarters ended September 30, 2016 and 2015 was $4,009 and $4,988, respectively.

 

Legal Proceedings

 

None.

 

 21 
 

 

11. Subsequent Events

 

In October 2016, the Company and its wholly owned subsidiary, TNI BioTech International, Ltd., and GB Pharma Holdings, LLC (“GBPH”), entered into an exclusive agency agreement (“Agency Agreement”) that replaced the agency agreement originally entered into in June 2014 between GBPH and Airmed Biopharma Limited. Subject to the terms and conditions of the Agency Agreement, the Company appointed GBPH as its exclusive agent to (i) assist the Company in obtaining governmental approvals for the sale of LDN and MENK (“Products”) in countries specified in the agreement, (ii) facilitate the registration of the Products in those countries, (iii) identify and present to the Company distributors for the Products in those countries, and (iv) subject to GBPH meeting certain requirements, enter into distribution agreements with the specified organizations to distribute the Products in the countries. The Company has agreed pay GBPH a commission of 12.5% of funds received by the Company from such sales. The Agency Agreement has an initial term of five years, and will automatically renew for additional one year terms unless terminated by either party in accordance with its terms. If the Company sells or disposes of all or substantially all of its assets, whether by purchase, merger or otherwise, the Company shall have the right to terminate the Agency Agreement immediately, whereupon the Company will be obligated to pay Agent a royalty in perpetuity in an amount equal to one percent of funds actually received by the Company from the sale of the Products in the specified countries, after the deduction of certain costs of sale.

 

In October 2016, the Company amended a promissory note dated July 6, 2015, and settled a portion of the principal owed under the note and accrued and unpaid interest to the date of the amendment. In accordance with the amendment, the Company repaid $50,000 of the $100,000 principal owed, issued 2,000,000 shares of the Company’s common stock to the note holder in full satisfaction of the accrued and unpaid interest to the date of the amendment, and caused Cytocom to issue 250,000 shares of its common stock in return for the note holder’s agreement to reduce the annual interest rate on the note from 18% to 10% and to extend the maturity date of the note from September 6, 2016 to December 31, 2016.

 

In October 2016, the company borrowed an additional $165,000.

 

In October 2016, the Company issued 1,300,000 shares of common stock for consulting services.

 

In October 2016, the company issued 300,000 shares of common stock for lending fees.

 

On or around October 25, 2016, the Company issued a promissory note in the principal amount of $25,000.00 to Noreen Griffin in consideration for past payroll due Ms. Griffin. Ms. Griffin sold the note to a minority shareholder for $25,000.00 on October 25, 2016. This note was subsequently converted to 500,000 shares of common stock.

 

On November 1, 2016, the Company issued promissory notes for $750,000, paying interest at 2% per month, and maturing on November 1, 2017. $656,250 of the proceeds were used to pay off the JMJ Financial note, with the remainder to be used for general obligations.

 

As of November 14, 2016, the Company had outstanding 241,128,131 shares of common stock.

 

 22 
 

 

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, 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”). Today, the Company is focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS, malaria, and opportunistic infections arising from their treatment, and commercializing affordable, non-toxic therapies in Africa, to be followed by Asia and South America, 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. 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. (“Cytocom”). Cytocom is a clinical-stage pharmaceutical company focused on the development of the first affordable non-toxic immunodulator for the treatment of inflammatory diseases, immune-related disorders, and cancer, and is responsible for the development of the Company’s patented therapies under the auspices of the FDA and EMA. In December 2014, the Company finalized the distribution of common stock of Cytocom 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 during drug development. On December 8, 2014, the number of Cytocom shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% equity interest in Cytocom on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016. At September 30, 2016, the Company’s equity interest had been further reduced to 17%, by subsequent issuances of Cytocom common stock to shareholders in settlement of notes payable.

 

 23 
 

 

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.

 

Immune Therapeutics is commercializing affordable non-toxic immunotherapies focused on the activation and rebalancing of the body’s immune system. Stimulating the body’s immune system remains one of the most promising approaches in the treatment of cancers, HIV, autoimmune diseases, inflammatory conditions and other opportunistic infections, and for treating chronic, often life-threatening, diseases in Emerging Nations through the mobilization of the body’s immune system using existing clinical data.

 

As of this date, neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a New Drug Application from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process.

 

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015 (all dollar amounts and numbers in $000s, except percentages or where otherwise indicated)

 

Revenues

 

We had revenues from operations of $0 for the three months ended September 30, 2016, compared to revenues of $4,958 for three months ended September 30, 2015. The decrease in revenues was the result of the Company’s termination of its manufacturing agreement with KRS Global Bio Technology, Inc. (“KRS”), which was cancelled by mutual agreement of the parties in May 2016. Shipments under the agreement with Complete Pharmacy and Medical Solutions, LLC, which will replace KRS as the Company’s manufacturer and distributor of LDN tablets, have not yet commenced.

 

Operating Expenses

 

Selling, general and administrative

 

Selling, general and administrative expenses and related percentages for the three months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the three months

ended September 30,

 
   2016   2015 
Selling, general and administrative  $1,031   $865 
Increase/(decrease) from prior year  $166   $(37)
Percent increase/(decrease) from prior year   19%   (4)%

 

For the three months ended September 30, 2016 and 2015, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

  

For the three months

ended September 30,

 
   2016   2015 
Consulting and contractors  $161   $388 
Payroll   583    262 
Professional fees   37    75 
Travel   107    9 
Other expenses   143    131 
           
   $1,031   $865 

 

 24 
 

 

In the three months ended September 30, 2016, total cash and accruals for selling, general and administrative expense was $1,031 compared to $865 for the corresponding period in 2015, an increase of $166 or 19%. Significant cash items included:

 

  consulting and contactor services obtained to assist the Company in raising capital, manage investor relations, manage financial reporting and compliance, and develop business in new markets, in the amount of $161 in 2016, a decrease of $227 or 58 % over the $388 spent in 2015. The decrease was the result primarily of the conversion in 2015 of amounts owed from prior periods into equity, which resulted in a $200 charge to this expense category;
     
  professional fees for legal, tax and accounting services in the amount of $37 in 2016, a decrease of $38 or 51% over the $75 spent in 2015. The decrease was the primarily the result of $40 in legal fees incurred in 2015 related to Cytocom, which were not repeated in 2016;
     
  payroll in the amount of $583 in 2016, an increase of $321 or 123% over the $262 reported in 2015. The increase reflects higher headcount in 2016, together with the accrual of payroll for Cytocom employees, which was only instituted in July, 2016; and
     
  travel in the amount of $107 in 2016, an increase of $98 or 1,075% over the $9 spent in 2015. 2016 travel was related mostly to sales and marketing activities in Africa.

 

Research and development

 

R&D expenses and related percentages for the three months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the three months

ended September 30,

 
   2016   2015 
Research and development  $247   $111 
Increase/ (decrease) from prior year  $136   $(290)
Percent decrease from prior year   122%   (72)%

 

Expenses for research and development in the three months ended September 30, 2016 increased by 122% compared to the same period in 2015. The increase occurred mainly as a result of (i) the commencement of new trials in Malawi and Senegal ($124), which were offset by a $24 decrease in the cost trials in Nigeria, and (ii) an increase of $36 in legal fees paid to maintain patents and licenses.

 

In the three months ended September 30, 2016, significant items included:

 

  payments for contracted technical services, $26 in 2016, a decrease of $3 or 10% over the $29 spent in 2015, reflecting the decreased use of contractors to perform research activities;
     
  payments for professional fees $45 in 2016, an increase of $36 or 400% over the $9 spent in 2015;
     
  patent expenses of $39 in 2016, an increase of $3 or 9% over the $36 spent in 2015, reflecting payments for certain rights to use LDN.

 

 25 
 

 

All of the R&D spending in 2016 was on LDN. In 2015, 75% of R&D spending was on 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 records an expense for the cost of 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. If the period over which services are to be provided extends beyond the date of the Company’s financial report, the portion of the cost applicable to the future services is accrued as a liability, which is then 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.

 

Cost of stock issued for services G&A and related percentages for the three months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the three months

ended September 30,

 
   2016   2015 
Stock for services and Prepaid consulting services expense G&A  $1225   $1,394 
Percentage increase/(decrease) from prior year   12%   (72)%

 

The decrease reflects the decrease in amount of stock that was issued for services.

 

The number of shares issued for prepaid consulting services G&A in the three months ending September 30, 2016 was 5,790,910 (6,683,334 in the corresponding period in 2015).

 

Amortization of prepaid consulting services G&A in the three months ended September 30, 2016 consisted of the following:

 

Amortization of cost of stock issued prior to 2016  $110 
Amortization of cost of stock issued in the first half of 2016   620 
Amortization of cost incurred for new stock issued third quarter of 2016 under consulting contracts entered into in 2016   45 
      
Total third quarter amortization of prepaid consulting  $775 

 

There was no expense for amortization of stock issued for services R&D for the three months ended September 30, 2016 and 2015, due to the fact that the cost of shares issued for R&D services had been fully amortized prior to the third quarter of 2014.

 

There were no new shares issued for prepaid consulting services R&D in the three months ending September 30, 2016 or 2015.

 

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 4. 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 September 30, 2016, the Company issued 2,000,000 warrants. In the three months ended September 30, 2015, the Company issued 390,000 warrants to stockholders.

 

 26 
 

 

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, at the end of 2015, the Company determined that the unamortized carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. In 2014, the Company determined that the carrying amount recoded for the acquisition of licenses and patents related to MENK were impaired, and recorded an impairment loss of $9,908,477.

 

Depreciation and amortization expenses for the three months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the three months

ended September 30,

 
   2016   2015 
Depreciation expense  $1   $1 
Amortization expense  $-   $148 
Decrease from prior year  $(148)  $(571)
Percentage decrease from prior year   (99)%   (79)%

 

The decrease reflects the fact that all patents were fully amortized by the end of 2015.

 

Interest Expense

 

Interest expense for the three months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the three months

ended September 30,

 
   2016   2015 
Interest expense  $978   $80 
Increase/(decrease) from prior year  $898   $(14)
Percentage increase/(decrease) from prior year   1,124%   (16)%

 

The increase reflects the higher levels of interest-bearing debt in the third quarter of 2016. Interest expense for the quarter ended September 30, 2016 included $460 of penalties for late interest and principal payments ($0 for the quarter ended September 30, 2015).

 

Loss on settlement of debt (dollar amounts in thousands)

 

In three months ended September 30, 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 $274, reflecting the fair value of the shares of common stock issued in exchange for the debt.

 

In three months ended September 30, 2015, certain lenders to the Company settled all or a portion of their notes payable or accounts payable by converting them to equity, for which the Company recorded an expense of $1,394, reflecting the fair value of the shares of common stock issued in exchange for the debt less the carrying value of the debt.

 

 27 
 

 

Nine months ended September 30, 2016 compared to nine months ended September 30, 2015 (all dollar amounts and numbers in $000s, except percentages or where otherwise indicated)

 

Revenues

 

We had revenues from operations of $3 for the nine months ended September 30, 2016, compared to $13 for the nine months ended September 30, 2015. The decrease in revenues was the result of the Company’s termination of its manufacturing agreement with KRS Global Bio Technology, Inc. (“KRS”), which was cancelled by mutual agreement of the parties in May 2016. Shipments under the agreement with Complete Pharmacy and Medical Solutions, LLC, which will replace KRS as the Company’s manufacturer and distributor of LDN tablets, have not yet commenced.

 

Operating Expenses

 

Selling, general and administrative

 

Selling, general and administrative expenses and related percentages for the nine months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the nine months

ended September 30,

 
   2016   2015 
Selling, general and administrative  $2,864   $1,689 
Increase/(decrease) from prior year  $1,175   $(1,575)
Percent increase/(decrease) from prior year   70%   (48)%

 

For the nine months ended September 30, 2016 and 2015, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

  

For the nine months

ended September 30,

 
   2016   2015 
         
Stock listing and investor relations expenses  $210   $73 
Consulting and contractors   645    722 
Payroll   1,350    441 
Professional fees   173    179 
Travel   152    131 
Insurance   -    (107)
Other expenses   334    250 
           
   $2,864   $1,689 

 

In the nine months ended September 30, 2016, total cash and cash accruals for selling, general and administrative expense was $2,864 compared to $1,689 for the corresponding period in 2015, an increase of $1,175 or 70%. 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 $645 in 2016, a decrease of 77 or 11% over the $722 spent in 2015. The decrease was the result of the conversion to equity of amounts owed to contractors from prior periods, and lower fees paid to advisors who are assisting the Company with manufacturing and marketing activities in the United States and Africa;
     
  professional fees for legal, tax and accounting services in the amount of $173 in 2016, a decrease of $6 or 4% over the $179 spent in 2015. The decrease was primarily the result of lower spending on accounting fees for non-US subsidiaries;
     
  payroll in the amount of $1,350 in 2016, an increase of $909 or 206% over the $441 spent in 2015. The increase is primarily attributable to $345 in accruals for Cytocom payrolls, an increase in headcount, contractually-mandated payroll increases for officers, and the conversion in 2015 of $282 of deferred payroll owed to a Company officer into an agreement to pay the officer a royalty on future product sales; and
     
  travel in the amount of $152 in 2016, an increase of $21 or 16% over the $131 spent in 2015, reflecting increased travel to Africa in 2016.

 

 28 
 

 

Research and development

 

R&D expenses and related percentages for the nine months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the nine months

ended September 30,

 
   2016   2015 
Research and development  $295   $703 
Decrease from prior year  $(408)  $(769)
Percent decrease from prior year   (58)%   (52)%

 

In the nine months ended September 30, 2016, total spending on R&D was $295, a decrease of $408 or 58% over the $703 spent in the same period in 2015. Expenses for research and development in the nine months ended September 30, 2016 decreased by 58% compared to expenses in the same period in 2015. The decrease occurred mainly as a result a lower spending on R&D-related technical services, the completion of most trial activity in Nigeria at the end of 2015, the settlement of a rent dispute related to premises that were to be used to conduct R&D, and the reduction in expenses recorded to settle payables related to amounts owing for R&D contracted technical services in 2016, offset by higher legal fees to maintain patents and licenses, and higher travel fees for trials in Africa.

 

Significant cash items included:

 

expenses for contracted technical services, ($22) in 2016, a decrease of $190 or 113% over the $168 spent in 2015, reflecting the settlement of payables related to R&D contracted technical services;
   
payments for contracted services of $37 in 2016, an increase of $37 or 100% over the $0 spent in 2015, related to meetings with the FDA for resumption of trials by Cytocom;
   
expenses recorded for patent and license payments totaling $140, an increase of $29 or 27% over the $111 recorded in 2015, reflecting timing of accruals under license agreements;
   
rent expense of $(83) in 2016, a decrease of 102 or 546% over the $19 spent in 2015, reflecting (i) the closure of all R&D offices by the end of 2015 and (ii) the settlement of a rent dispute with a landlord in Maryland;
   
payments for professional fees of $72 in 2016, an increase of $47 or 189% over the $25 spent in 2015, reflecting the higher fees incurred to protect patent and intellectual property rights worldwide in 2016; and
   
Spending on trials of $145 in 2016, a decrease of $228 or 61% over the $373 spent in 2015, reflecting the fact that the Nigerian trial activity had mostly concluded in 2015.

 

All of the R&D spending in 2016 was for the development of LDN, compared to 75% of spending on LDN in 2015.

 

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.

 

Cost of stock issued for services G&A and related percentages for the nine months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

 29 
 

 

  

For the nine months

ended September 30,

 
   2016   2015 
Stock for services and Prepaid consulting services expense G&A  $4,404   $5,005 
Percentage decrease from prior year   (12)%   (71)%

 

The decrease reflects the decrease in amount of stock that was issued for services.

 

The number of shares issued for prepaid consulting services G&A in the nine months ending September 30, 2016 was 29,283,910 (16,922,504 in the corresponding period in 2015).

 

Amortization of prepaid consulting services G&A in the nine months ended September 30, 2016 consisted of the following:

 

Amortization of cost of stock issued prior to 2016  $649 
      
Amortization of cost incurred for new stock issued in the nine months ended September 30, 2016 under consulting contracts entered into in 2016   1,666 
      
   $2,315 

 

There was no expense for amortization of stock issued for services R&D and related percentages for the nine months ended September 30, 2016 and 2015, due to the fact that he cost of shares issued for R&D services had been fully amortized prior to the third quarter of 2014.

 

There were no new shares issued for prepaid consulting services R&D in the nine months ending September 30, 2016 or 2015.

 

Warrant valuation expense (dollar amounts in thousands)

 

In the nine months ended September 30, 2016, the Company issued 25,654,908 warrants to stockholders at an exercise price range of $0.14 to $2.00, for which it recorded an expense of $2,756. In the nine months ended September 30, 2015, the Company issued 390,000 warrants to stockholders at an exercise price range of $0.07 to $0.50, for which it recorded an expense of $37.

 

  

For the nine months

ended September 30,

 
   2016   2015 
Warrant valuation expense  $2,756   $37 
Percentage increase/(decrease) from prior year   7,349%   1,682%

 

Depreciation and amortization

 

The Company amortizes the costs incurred to acquire patents and licenses over the period of the related agreements.

 

Depreciation and amortization expenses for the nine months ended September 30, 2016 and 2015 were as follows (dollar amounts in thousands):

 

  

For the nine months

ended September 30,

 
   2016   2015 
Depreciation expense  $1   $1 
Amortization expense  $-   $445 
Increase/ (decrease) from prior year  $(445)  $(1,713)
Percentage increase/(decrease) from prior year   (99)%   (79)%

 

 30 
 

 

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. At the end of 2015, the Company determined that the unamortized carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. In 2014, the Company determined that the carrying amount recoded for the acquisition of licenses and patents related to MENK were impaired, and recorded an impairment loss of $9,908,477.

 

Interest Expense

 

Interest expense for the nine months ended September 30, 2016 and 2015 was as follows (dollar amounts in thousands):

 

  

For the nine months

ended September 30,

 
   2016   2015 
Interest expense  $2,331   $149 
Increase from prior year  $2,182   $(227)
Percentage decrease from prior year   1,464%   (60)%

 

The increase reflects the increased levels of interest-bearing debt in the first nine months of 2016. Interest expense for the nine months ended September 30, 2016 included $1,042 of penalties for late interest and principal payments ($0 for the nine months ended September 30, 2015).

 

Loss on settlement of debt (dollar amounts in thousands)

 

In nine months ended September 30, 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 $1,979, reflecting the fair value of the shares of common stock issued in exchange for the debt. In nine months ended September 30, 2015, the Company recorded an expense of $1,482 to settle all or a portion of notes or accounts payable.

 

Liquidity

 

Liquidity is measured by the Company’s ability to secure enough cash to meet its contractual and operating needs as they arise. The Company had cash of $22,152 at September 30, 2016, compared to $23,149 at December 31, 2015. For the nine months ended September 30, 2016 and 2015, net cash used in operating activities was $2,333,377 and $1,903,594, respectively. $0 cash was used in investing activities for the nine months ended September 30, 2016 ($0 was used in 2015).

 

In May 2016, the Company announced that it had received approval for sale of LodonalTM in Nigeria. The Company expects to commence sales to Nigeria by the end of 2016. The Company believes that those sales will generate sufficient cash flows for the next 12 months to pay for operating expenses and to pay off current and past-due obligations. Until such sales commence, the Company expects to fund operations through sales of equity and notes payable, and conversions of exiting obligations into equity. The Company believes it will require between $300,000 and $350,000 monthly to meet its ongoing expenses and obligations.

 

If the Company is unable to generate sufficient cash flows from sales, or if it does not raise additional working capital to meet all of its operating obligations and expenditures, the Company may have to modify its business plan.

 

In addition to the cost of its ongoing operations, the Company expects it will incur future research and development expenditures in the next 12 months through Cytocom. Cytocom plans to conduct Phase II and Phase IIB trials for the treatment of Crohn’s disease, at an estimated cost of $3,900,000 and $7,500,000 respectively for each phase. If the trials do not commence before 2017, the Company will be required to make a payment of $100,000 in December 2016 under its license agreements. In prior years, the Company has been able to raise funds through sales of notes payable, and it expects to do the same for the payment due in 2016.

 

During the nine months ended September 30, 2016 proceeds from the sale of stock and exercise of stock warrants totaled $200,000, compared to $587,500 for the corresponding period in 2015. We also received $2,132,380 from the issuance of notes payable in nine months ended September 30, 2016, compared to $1,277,975 in 2015. There were $0 loan repayments made in cash in the nine months ended September 30, 2016 ($0 in 2015).

 

Off-Balance Sheet Arrangements

 

During the three months ended September 30, 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.

 

 31 
 

 

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 September 30, 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 September 30, 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.

 

 32 
 

 

PART II OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On November 11, 2016, the Company received a fax containing a copy of a lawsuit supposedly filed against the Company on November 10, 2016. The Company has not been served and has not been provided a case number or evidence that the suit has been filed and is relying on the information in the facsimile received as the basis for this disclosure. Apparently, Kacem Enterprise, Inc. is suing the Company and certain of its consultants and their related entities for $21,777 plus interest, costs and attorneys’ fees for fees Kacem Enterprise claims it is owed for travel related expenses incurred by certain consultants of the Company. The suit was supposedly filed in the Circuit Court of Arlington, Virginia.

 

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

 

In the quarter ended September 30, 2016, the Company issued a total of 21,383,687 shares of common stock (net of stock cancellations), compared to 26,321,828 in the corresponding period in 2015. 14,055,277 of the shares in 2016 were issued to settle amounts owed under notes payable, including accrued and unpaid interest as applicable, to common stock as repayment of the notes (13,475,480 in 2015). 5,790,910 of the shares were issued to as payment for prepaid services to Company’s vendors (6,683,334 in 2015).

 

Between July 1, 2016 and September 30, 2016, warrant holders exercised 0 warrants to purchase shares (0 in 2015). The Company sold an aggregate 1,312,500 shares of its common stock at an average of $0.15 per share. In total, the Company received $0 as consideration for the exercise of the previously-issued warrants and $175,000 for the purchase of common stock, for an aggregate sum of $175,000.

 

The following table lists all securities issued during in the three months ended September 30, 2016 without registering the securities under the Securities Act of 1933, as amended (the “Securities Act”): get details from Rich

 

Date   Description  Number   Purchaser   Proceeds   Consideration   Exemption 
 7/7/2016   Common Stock Purchase   2,000,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 7/7/2016   Common Stock Purchase   312,500    Investor   $25,000    Share Purchase Agreement    Sec. 4(a)(2) 
 7/14/2016   Common Stock Purchase   1,500,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 7/19/2016   Common Stock Purchase   200,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 7/19/2016   Common Stock Purchase   1,069,589    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 7/22/2016   Common Stock Purchase   1,235,356    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 7/21/2016   Common Stock Purchase   225,000    Lender    Nil    Origination Fees    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   3,531,738    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   200,000    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   250,000    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   300,000    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   852,292    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   4,516,302    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/12/2016   Common Stock Purchase   2,000,000    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 8/30/2016   Common Stock Purchase   50,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 8/30/2016   Common Stock Purchase   50,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 8/30/2016   Common Stock Purchase   1,000,000    Investor   $150,000    Share Purchase Agreement    Sec. 4(a)(2) 
 9/2/2016   Common Stock Purchase   500,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 9/22/2016   Common Stock Purchase   545,455    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 9/22/2016   Common Stock Purchase   100,000    Lender    Nil    Debt Settlement    Sec. 4(a)(2) 
 9/22/2016   Common Stock Purchase   545,455    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 
 9/22/2016   Common Stock Purchase   400,000    Consultant    Nil    Advisory Services    Sec. 4(a)(2) 

 

The issuances of the Company’s securities in connection with the above issuances 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 were issued bearing a restrictive legend and may not be resold by the holders 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.

 

 33 
 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The Current portion of notes payable on the Company’s Condensed Consolidated Balance Sheets above contains, at September 30, 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 $286,000 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 $198,500 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 $400,000 issued September 30, 2015 to Richard Gostanian. The note matured on September 30, 2016. The note earns an interest rate of 8% per annum.
     
  5.

Repayment of a promissory note for $100,000 issued in December 2015. Lenders earn interest at a rate of 10% per month. Notes were 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 $5,000 per day.

     
  6. Repayment of promissory note for $77,500 issued on July 1, 2015. The note matured on July 1, 2016. The note earns interest at 5% per annum.
     
  7. Repayment of a promissory note for $656,500 to JMJ Financial. This note was repaid on November 4, 2016.

 

At September 30, 2016, the Company had insufficient cash on hand to repay these notes.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None

 

ITEM 5. OTHER INFORMATION

 

None.

 

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.
     
10.1   Employment Agreement between Immune Therapeutics, Inc. and Robert Wilson dated May 1, 2016.
       
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

 

 34 
 

 

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: November 14, 2016 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
     
  Immune Therapeutics, Inc.
     
Date: November 14, 2016 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer

 

 35 
 

 

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: November 14, 2016 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
    (Principal Executive Officer)

 

   
 

EX-31.2 3 ex31-2.htm

 

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: November 14, 2016 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

   
 

EX-32.1 4 ex32-1.htm

 

CERTIFICATION

 

In connection with the periodic report of Immune Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2016 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: November 14, 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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Notes Payable Eleven [Member] Fourth Quarter 2020 [Member] Third Quarter 2020 [Member] First Quarter 2021 [Member] Complete Pharmacy and Medical Solutions, LLC [Member] Discount on warrants issued in connection with notes payable. Common stock issued for loan expense and interest. Common stock issued for prepaid services. Notes Payable Twelve [Member] Notes Payable Thirteen [Member] Notes Payable Fourteen [Member] Notes Payable Fifteen [Member] May 1, 2015 [Member] December Thirty First Two Thousand Fifteen [Member] Second Quarter 2021 [Member] Third Quarter 2021 [Member] GB Pharma Holdings, LLC [Member] Stock Issued During Period Shares Issued For Lending Fess. Note Holder[Member] Cytocom[Member] Property And Equipment [Member]. Warrants To Purchase Common Stock [Member]. 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Document and Entity Information - shares
9 Months Ended
Sep. 30, 2016
Nov. 14, 2016
Document And Entity Information    
Entity Registrant Name Immune Therapeutics, Inc.  
Entity Central Index Key 0001559356  
Document Type 10-Q  
Document Period End Date Sep. 30, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   241,128,131
Trading Symbol IMUN  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2016  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Current Assets:    
Cash and cash equivalents $ 22,152 $ 23,149
Accounts receivable 16,197
Total current assets 22,152 39,346
Fixed Assets:    
Computer equipment, net of accumulated depreciation of $7,611 and $6,331 respectively 402 1,682
Deposits 200 200
Total assets 22,754 41,228
Current Liabilities:    
Accounts payable 1,516,812 1,924,672
Accrued liabilities 2,397,013 1,281,039
Current portion of notes payable 3,573,698 2,793,701
Total current liabilities 7,487,523 5,999,412
Non-current liabilities:    
Notes payable, less current portion
Total non-current liabilities
Total liabilities 7,487,523 5,999,412
Commitments and Contingencies (Note 10)
Stockholders' Deficit:    
Common stock - par value $0.0001; 500,000,000 shares authorized; 235,831,298 and 174,850,047 shares issued and outstanding respectively 23,583 17,485
Additional paid in capital 357,436,906 343,434,786
Stock issuances due 845,838 1,140,303
Prepaid services (1,252,762) (660,417)
Accumulated deficit (362,256,392) (347,789,889)
Deficit attributable to common shareholders (5,202,827) (3,857,732)
Non-controlling interest (2,261,942) (2,100,452)
Total stockholders' deficit (7,464,769) (5,958,184)
Total liabilities and stockholders' deficit $ 22,754 $ 41,228
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]    
Accumulated depreciation $ 7,611 $ 6,331
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 500,000,000 500,000,000
Common stock, shares issued 235,831,298 174,850,047
Common stock, shares outstanding 235,831,298 174,850,047
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Statement [Abstract]        
Revenues, net $ 4,958 $ 3,463 $ 12,676
Operating expenses        
Selling, general and administrative 1,031,075 865,335 2,864,333 1,689,188
Research and development expense 247,019 111,361 295,438 703,011
Stock issued for services G&A 1,225,353 1,393,500 4,403,951 5,005,393
Warrant valuation 187,850 37,451 2,756,404 37,451
Depreciation and amortization expense 299 148,696 1,280 446,148
Total operating expenses 2,691,596 2,556,343 10,321,406 7,881,191
Loss from operations (2,691,596) (2,551,385) (10,317,943) (7,868,515)
Other income (expense):        
Interest expense (978,275) (79,924) (2,331,296) (148,681)
Loss on settlement of debt (274,071) (1,394,000) (1,978,754) (1,482,445)
Total other income (expense) (1,252,346) (1,473,924) (4,310,050) (1,631,126)
Net (loss) (3,943,942) (4,025,309) (14,627,993) (9,499,641)
Net (loss) attributable to non-controlling interest (7,441) (165,759) (161,490) (428,715)
Net (loss) attributable to common shareholders $ (3,936,501) $ (3,859,550) $ (14,466,503) $ (9,070,926)
Basic and diluted loss per share attributable to common shareholders $ (0.02) $ (0.02) $ (0.07) $ (0.06)
Weighted average number of shares outstanding 226,843,113 156,814,094 208,399,547 147,365,571
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 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 $ 2,927 5,417,833 (424,466) (2,907,535) 2,088,759
Issuance of common stock for prepaid services, shares 29,283,910            
Amortization of prepaid services 2,315,190 2,315,190
Issuance of common stock for interest expense $ 113 191,637 $ 191,750
Issuance of common stock for interest expense, shares 1,121,296           225,000
Discount on warrants issued in connection with notes payable 682,665 $ 682,665
Issuance of common stock for legal fees $ 15 22,485         22,500
Issuance of common stock for legal fees, shares 150,000            
Issuance of common stock in exchange for debt $ 2,850 4,706,289 155,001 4,864,140
Issuance of common stock in exchange for debt, shares 28,488,545            
Issuance of common stock for cash and exercise of warrants $ 193 224,807 (25,000) 200,000
Issuance of common stock for cash and exercise of warrants, shares 1,937,500            
Issuance and modification of stock warrants 2,756,404 2,756,404
Net loss (14,466,503) (161,490) (14,627,993)
Balance at Sep. 30, 2016 $ 23,583 $ 357,436,906 $ 845,838 $ (1,252,762) $ (362,256,392) $ (2,261,942) $ (7,464,769)
Balance, shares at Sep. 30, 2016 235,831,298            
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (14,627,993) $ (9,499,641)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation 1,280 1,974
Amortization 444,175
Stock issued, and amortization of stock issued, for prepaid services 2,315,190 3,895,018
Loss on settlement of debt 1,978,754 1,482,444
Stock issued for services 2,111,259 1,029,375
Stock issued for legal settlement 81,000
Stock warrant expense 2,756,404 37,452
Stock issued for interest 191,750 15,625
Amortization of debt discount 727,612
Accounts receivable write off 2,661  
Changes in operating assets and liabilities:    
Accounts payable 103,155 605,634
Accounts receivable 13,536 (12,676)
Accrued liabilities 2,093,015 31,427
Prepaid expenses and deposits (15,401)
Net cash used in operating activities (2,333,377) (1,903,594)
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 200,000 587,500
Proceeds from issuance of notes payable 2,132,380 1,277,975
Net cash provided by financing activities 2,332,380 1,865,475
Net increase (decrease) in cash (997) (38,119)
Cash and cash equivalents at beginning of period 23,149 191,987
Cash and cash equivalents at end of period 22,152 153,868
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 18,667 12,000
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Common stock issued for loan expense and interest 191,750 15,625
Common stock issued for prepaid services $ 2,088,759 $ 1,029,376
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and Description of Business
9 Months Ended
Sep. 30, 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”). Today, the Company is focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS, malaria, and opportunistic infections arising from their treatment, and commercializing affordable, non-toxic therapies in Africa, to be followed by Asia and South America, 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. 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. (“Cytocom”). Cytocom is a clinical-stage pharmaceutical company focused on the development of the first affordable non-toxic immunodulator for the treatment of inflammatory diseases, immune-related disorders, and cancer, and is responsible for the development of the Company’s patented therapies under the auspices of the FDA and EMA. In December 2014, the Company finalized the distribution of common stock of Cytocom 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 during drug development. On December 8, 2014, the number of Cytocom shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% equity interest in Cytocom on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016. At September 30, 2016, the Company’s equity interest had been further reduced to 17%, by subsequent issuances of Cytocom common stock to shareholders in settlement of notes payable.

 

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.

 

Immune Therapeutics is commercializing affordable non-toxic immunotherapies focused on the activation and rebalancing of the body’s immune system. Stimulating the body’s immune system remains one of the most promising approaches in the treatment of cancers, HIV, autoimmune diseases, inflammatory conditions and other opportunistic infections, and for treating chronic, often life-threatening, diseases in Emerging Nations through the mobilization of the body’s immune system using existing clinical data.

 

As of this date, neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a New Drug Application from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process.

 

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 $(14,627,993) and used cash and cash equivalents from operations in the amount of $2,333,377 during the nine months ended September 30, 2016, resulting in stockholders deficit of $(7,464,769) at September 30, 2016.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2015 (including the notes thereto) set forth in Form 10-K/A.

 

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 September 30, 2016, the Company has no uninsured cash balances.

 

Segment and Geographic Information

 

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment and does not segment the business for internal reporting or decision making.

 

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 cash equivalents, accounts receivable 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 approximates 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 September 30, 2016 and September 30, 2015 was $299 and $638, 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. At the end of 2015, the Company determined that the unamortized carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. In 2014, the Company determined that the carrying amount recoded for the acquisition of licenses and patents related to MENK were impaired, and recorded an impairment loss of $9,908,477.

 

During the quarters ended September 30, 2016 and September 30, 2015, the Company did not capitalize any costs to acquire and/or develop the Company’s product licenses and patents. (See Note 10). Amortization expense for the quarters ended September 30, 2016 and September 30, 2015 was $0 and $444,175, 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 September 30, 2016 and September 30, 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 September 30, 2016, 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 September 30, 2016 and September 30, 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 market 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
September 30,
    For the six months ended
September 30,
 
    2016     2015     2016     2015  
Net loss per share:                                
Numerator                                
Net loss   $ (3,943,942 )   $ (4,025,309 )   $ (14,627,993 )   $ (9,499,641 )
Net loss attributed to Common stockholders   $ (3,936,501 )   $ (3,859,550 )   $ (14,466,503 )   $ (9,070,926 )
                                 
Denominator                                
Weighted-average common shares outstanding—                                
Denominator for basic and diluted net loss per share     226,843,113       156,814,094       208,399,547       147,365,571  
Basic and diluted net loss per share attributed to common stockholders   $ (0.02 )   $ (0.02 )   $ (0.07 )   $ (0.06 )

  

The Company’s potential dilutive securities which include stock, stock warrants and convertible debt 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:

 

    As of September 30,  
    2016     2015  
Warrants to purchase Common stock     32,623,908       9,355,250  
      32,623,908       9,355,250  

 

Recent Accounting Standards

 

During the quarter ended September 30, 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.

 

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 and did not have such amount as of December 31, 2015, 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.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Property and Equipment
9 Months Ended
Sep. 30, 2016
Fixed Assets:  
Property and Equipment

3. Property and Equipment

 

    September 30, 2016     December 31, 2015  
Property and equipment:                
Computer equipment   $ 8,013     $ 8,013  
                 
Less accumulated depreciation     (7,611 )     (6,331 )
                 
Property and equipment, net   $ 402     $ 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 20 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Accrued Liabilities
9 Months Ended
Sep. 30, 2016
Payables and Accruals [Abstract]  
Accrued Liabilities

4. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

    September 30, 2016     December 31, 2015  
    (in thousands)  
Accrued payroll to officers and others   $ 934     $ 758  
Accrued interest and penalties - notes payable     1,319       237  
Accrued legal settlements     143       282  
Other accrued liabilities     1       4  
Total accrued expenses and other liabilities   $ 2,397     $ 1,281  

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
Notes Payable
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Notes Payable

5. Notes Payable

 

Notes payable consist of the following:

 

     September 30, 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. Principal of $425,500 and accrued interest of $37,427 were converted to 5,309,092 shares of common stock in the nine months ended September 30, 2016, Notes aggregating $286,000 were in default at September 30, 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.     286,000       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 lender converted this note and $2,139 in accrued interest to 114,237 shares of common stock in January 2016.     -       7,000  
                 
Promissory notes issued between May 1, 2015 and September 30, 2016, and maturing between June 14, 2015 and June 30, 2017. Lenders on loans aggregating $535,994 earn interest at rates between 10% and 18% per annum. On loans aggregating $198,500, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $198,500 were in default at September 30, 2016, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders.     734,494       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. Principal of $200,000 and accrued interest of $4,778 was converted to 3,722,015 shares of common stock in the nine months ending September 30, 2016.     -       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. $375,000 of principal and $12,036 in accrued interest was converted to 4,837,960 shares of common stock in the nine months ending September 30, 2016. The Company was unable to repay the remaining notes at maturity and the notes are in default, although no demand for repayment has been made by the lenders.     425,000       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. . $30,000 of principal and $49,000 of interest and penalties were converted to 987,500 shares of common stock in the nine months ended September 30, 2016. The Company was unable to repay the remaining note at maturity and the note is in default The Company is obligated to pay late-payment penalties totaling $5,000 per day on the remaining obligation.     100,000       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 and $10,036 in interest was converted to 1,235,536 shares of common stock in July 2016.     -       175,268  
                 
Promissory notes issued between May 5, 2016 and June 2, 2016 that mature between October 1, 2016 and January 31, 2017, and include stock conversion features, warrants and original issue debt discounts. Notes aggregating $305,000 were in default at November 14, 2016. No demand for repayment has been made by the lenders.     555,000       -  
                 
Promissory notes issued to an officer of the Company effective November 3, 2015 and maturing November 3, 2016 for settlement of accrued payroll, bearing interest at 10% per annum and including a stock conversion feature.     112,737       -  
                 
Promissory note issued in July 2016. The note is repayable on October 5, 2016. The note earns interest at 6% per month. The Company was unable to repay the note at maturity and the note is in default.     50,000       -  
                 
Promissory note dated April 2016, issued to JM Financial (“JMJ”), pursuant to which JMJ loaned the Company $525,000 and was issued the promissory note, 500,000 shares of common stock, and a warrant exercisable for 3,515,621 additional common shares at a rate of $0.14 per share. The note matures on January 6, 2017. The note was repaid on November 4, 2016.     656,250       -  
                 
Promissory note issued in July 2016 with an original issuance discount of $30,000. Net proceeds were $150,000. The note is repayable on April 7, 2017.     180,000       -  
                 
Promissory notes issued in August 2016 for $149,854 as a settlement of amounts owed to a law firm. The notes accrue interest at 5% per annum and are payable in 18 equal monthly installments of $8,641.88.     146,912       -  
                 
Promissory notes issued between July 1, 2016 and September 30, 2016. Lenders earn interest at 12% per annum. The notes mature between January 1, 2017 and March 31, 2017.     495,000       -  
                 
Less: Original issue discounts on notes payable and warrants issued with notes.     (267,695 )     -  
                 
Total     3,573,698       2,793,701  
                 
Less: Current Portion   $ (3,573,698 )   $ (2,793,701 )
                 
Long-Term debt, less current portion   $ -     $ -  

 

As of September 30, 2016, the Company had accrued $278,089 in unpaid interest and $1,041,502 in unpaid default penalties, compared to $217,717 and 18,954, respectively, as of December 31, 2015. During the three months ended September 30, 2016, 225,000 shares with a fair value of $42,750 were issued by the Company for interest expense under promissory notes.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Capital Structure - Common Stock and Common Stock Purchase Warrants
9 Months Ended
Sep. 30, 2016
Equity [Abstract]  
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 September 30, 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 September 30, 2016, the Company had 235,831,298 shares of common stock outstanding, and 174,850,047 outstanding as of December 31, 2015.

 

Stock Warrants

 

In the quarter ended September 30, 2016, the Company issued 2,000,000 warrants.

 

There were no modifications of the terms of any warrants issued by the Company in the quarter ended September 30, 2015.

 

Following is a summary of outstanding stock warrants at September 30, 2016 and activity during the nine 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     25,654,908     $   0.14-2.00     $ 0.31  
                         
Expired     (162,500 )   $ 5.00     $ 5.00  
                         
Exercised     (0 )   $ 0     $ 0  
                         
Warrants as of September 30, 2016     34,623,908     $     0.07-15.00     $ 0..50  

 

Summary of outstanding warrants as of September 30, 2016:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Fourth Quarter 2017     350,000     $ 1.50-9.00       1.25  
First Quarter 2018     127,500     $ 15.00       1.50  
Second Quarter 2018     33,334     $ 15.00       1.75  
Third Quarter 2018     250,000     $ 1.50       2.00  
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       2.25  
First Quarter 2019     4,024,000     $ 0.50-2.00       2.50  
Second Quarter 2019     135,000     $ 0.07–0.23       2.75  
Third Quarter 2019     260,000     $ 0.50-1.50       3.00  
Fourth Quarter 2019     400,000     $ 0.14       3.25  
Second Quarter 2020     300,000     $ 0.50       3.75  
Fourth Quarter 2020     1,000,000     $ 0.20       4.00  
First Quarter 2021     12,650,000     $ 0.20       4.25  
Second Quarter 2021     6,004,908     $ 0.10-0.20       4.50  
Third Quarter 2021     3,000,000     $ 0.20       4.75  

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Compensation
9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Compensation

7. Stock Compensation

 

Shares Issued for Services

 

During the nine months ended September 30, 2016 and 2015, the Company issued 29,283,910 and 16,922,504 shares of common stock respectively for consulting fees. The Company valued these shares at $5,420,760 and $1,029,375 respectively, based upon the fair 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 $2,315,190 and $3,895,018 for the nine months ended September 30, 2016 and 2015. In the nine months ended September 30, 2016, the company also issued and expensed $2,088,759 of stock for services.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Taxes - Results of Operations
9 Months Ended
Sep. 30, 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 September 30, 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.

 

The Company’s effective tax rate for fiscal years 2015 and 2013 was 0%. The Company’s 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, the Company has estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $66,500,000, which will expire in 2032-2035.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Licenses and Supply Agreements
9 Months Ended
Sep. 30, 2016
Licenses And Supply Agreements  
Licenses and Supply Agreements

9. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

The Company has not entered into any new licenses or supply agreements during quarter ending September 30, 2016. All prior licenses, supply agreements, and patents remain unchanged from the prior quarter.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies
9 Months Ended
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. Commitments and Contingencies

 

Except as described below, the Company has not created any new commitments or contingency obligations during quarter ending September 30, 2016. All other prior commitments and contingent obligations remain unchanged from the prior quarter.

 

Distribution of LodonalTM in Nigeria

 

Through its wholly-owned subsidiary, TNI BioTech International, Ltd., in December 2015 the Company completed a 90-day bridging trial for the treatment of patients with HIV/AIDS. The trial consisted of a total of 150 patients of both genders between the ages of 18-60, each of whom was infected HIV/AIDS. The primary objective of this bridging trial was to confirm that LodonalTM has a beneficial effect on the immune system of immune deficient patients and that it is safe. The trial separated patients into a Control (placebo) Group and a Treatment Group (which was administered LodonalTM). The efficacy of increasing CD4 count [cell/mm3] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating beneficial effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were not adversely affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal.

 

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. The NAFDAC approval clears the way for the Company and its distribution partners to complete the registration of LodonalTM for sale in Nigeria. The Company is currently completing the registration process to allow it to import the drug into Nigeria.

 

Other Distribution Agreements

 

Contract Manufacturing Agreements

 

On May 16, 2016, the Company entered into an agreement with Complete Pharmacy and Medical Solutions, LLC (“CPMS”) to compound, package and distribute the LDN tablets, capsules and/or creams in the United States. The initial term of the agreement is three years, with the option to renew for an additional year. The agreement may be terminated by (i) mutual agreement, (ii) in the event of a breach, provided however that if the Company terminates the agreement, the Company will be required to reimburse CPMS for all unused packaging materials for the LDN, which unused packaging materials CPMS will provide to IMUN. If CPMS does not receive and ship at least 1,000 orders (prescriptions) during the term of the agreement, the Company will be required to reimburse CPMS for 100% of the “ramp up costs” (defined as all costs and expenses of labor and materials related to the testing, and required FDA and other governmental documentation/approvals of test data) of providing and producing the LDN, even where the Company cancels/terminates the agreement, which provision shall survive the cancellation/termination of the agreement.

 

On October 25, 2016, the Company and Acromax Dominicana, SA ("Acromax") entered into a contract for manufacturing of LDN tablets, capsules and/or creams ("Agreement"). Subject to the terms and conditions of the Agreement, Acromax will obtain all necessary licenses and permits to carry out the manufacturing and packaging of LDN in exchange for a fixed fee per tablet plus an additional fee for packaging, shipping and customs clearance. The Agreement has an initial term of five years unless terminated by either party in accordance with the terms.

 

Operating Leases

 

At September 30, 2016, the Company was a party to an agreement to lease office space in Orlando, Florida. Rent expense for the quarters ended September 30, 2016 and 2015 was $4,009 and $4,988, respectively.

 

Legal Proceedings

 

None.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events
9 Months Ended
Sep. 30, 2016
Subsequent Events [Abstract]  
Subsequent Events

11. Subsequent Events

 

In October 2016, the Company and its wholly owned subsidiary, TNI BioTech International, Ltd., and GB Pharma Holdings, LLC (“GBPH”), entered into an exclusive agency agreement (“Agency Agreement”) that replaced the agency agreement originally entered into in June 2014 between GBPH and Airmed Biopharma Limited. Subject to the terms and conditions of the Agency Agreement, the Company appointed GBPH as its exclusive agent to (i) assist the Company in obtaining governmental approvals for the sale of LDN and MENK (“Products”) in countries specified in the agreement, (ii) facilitate the registration of the Products in those countries, (iii) identify and present to the Company distributors for the Products in those countries, and (iv) subject to GBPH meeting certain requirements, enter into distribution agreements with the specified organizations to distribute the Products in the countries. The Company has agreed pay GBPH a commission of 12.5% of funds received by the Company from such sales. The Agency Agreement has an initial term of five years, and will automatically renew for additional one year terms unless terminated by either party in accordance with its terms. If the Company sells or disposes of all or substantially all of its assets, whether by purchase, merger or otherwise, the Company shall have the right to terminate the Agency Agreement immediately, whereupon the Company will be obligated to pay Agent a royalty in perpetuity in an amount equal to one percent of funds actually received by the Company from the sale of the Products in the specified countries, after the deduction of certain costs of sale.

 

In October 2016, the Company amended a promissory note dated July 6, 2015, and settled a portion of the principal owed under the note and accrued and unpaid interest to the date of the amendment. In accordance with the amendment, the Company repaid $50,000 of the $100,000 principal owed, issued 2,000,000 shares of the Company’s common stock to the note holder in full satisfaction of the accrued and unpaid interest to the date of the amendment, and caused Cytocom to issue 250,000 shares of its common stock in return for the note holder’s agreement to reduce the annual interest rate on the note from 18% to 10% and to extend the maturity date of the note from September 6, 2016 to December 31, 2016.

 

In October 2016, the company borrowed an additional $165,000.

 

In October 2016, the Company issued 1,300,000 shares of common stock for consulting services.

 

In October 2016, the company issued 300,000 shares of common stock for lending fees.

 

On or around October 25, 2016, the Company issued a promissory note in the principal amount of $25,000.00 to Noreen Griffin in consideration for past payroll due Ms. Griffin. Ms. Griffin sold the note to a minority shareholder for $25,000.00 on October 25, 2016. This note was subsequently converted to 500,000 shares of common stock.

 

On November 1, 2016, the Company issued promissory notes for $750,000, paying interest at 2% per month, and maturing on November 1, 2017. $656,250 of the proceeds were used to pay off the JMJ Financial note, with the remainder to be used for general obligations.

 

As of November 14, 2016, the Company had outstanding 241,128,131 shares of common stock.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2015 (including the notes thereto) set forth in Form 10-K/A.

 

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 September 30, 2016, the Company has no uninsured cash balances.

Segment and Geographic Information

Segment and Geographic Information

 

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment and does not segment the business for internal reporting or decision making.

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 cash equivalents, accounts receivable 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 approximates 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 September 30, 2016 and September 30, 2015 was $299 and $638, 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. At the end of 2015, the Company determined that the unamortized carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. In 2014, the Company determined that the carrying amount recoded for the acquisition of licenses and patents related to MENK were impaired, and recorded an impairment loss of $9,908,477.

 

During the quarters ended September 30, 2016 and September 30, 2015, the Company did not capitalize any costs to acquire and/or develop the Company’s product licenses and patents. (See Note 10). Amortization expense for the quarters ended September 30, 2016 and September 30, 2015 was $0 and $444,175, 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 September 30, 2016 and September 30, 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 September 30, 2016, 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 September 30, 2016 and September 30, 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 market 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
September 30,
    For the six months ended
September 30,
 
    2016     2015     2016     2015  
Net loss per share:                                
Numerator                                
Net loss   $ (3,943,942 )   $ (4,025,309 )   $ (14,627,993 )   $ (9,499,641 )
Net loss attributed to Common stockholders   $ (3,936,501 )   $ (3,859,550 )   $ (14,466,503 )   $ (9,070,926 )
                                 
Denominator                                
Weighted-average common shares outstanding—                                
Denominator for basic and diluted net loss per share     226,843,113       156,814,094       208,399,547       147,365,571  
Basic and diluted net loss per share attributed to common stockholders   $ (0.02 )   $ (0.02 )   $ (0.07 )   $ (0.06 )

  

The Company’s potential dilutive securities which include stock, stock warrants and convertible debt 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:

 

    As of September 30,  
    2016     2015  
Warrants to purchase Common stock     32,623,908       9,355,250  
      32,623,908       9,355,250  

Recent Accounting Standards

Recent Accounting Standards

 

During the quarter ended September 30, 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.

 

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 and did not have such amount as of December 31, 2015, 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.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
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
September 30,
    For the six months ended
September 30,
 
    2016     2015     2016     2015  
Net loss per share:                                
Numerator                                
Net loss   $ (3,943,942 )   $ (4,025,309 )   $ (14,627,993 )   $ (9,499,641 )
Net loss attributed to Common stockholders   $ (3,936,501 )   $ (3,859,550 )   $ (14,466,503 )   $ (9,070,926 )
                                 
Denominator                                
Weighted-average common shares outstanding—                                
Denominator for basic and diluted net loss per share     226,843,113       156,814,094       208,399,547       147,365,571  
Basic and diluted net loss per share attributed to common stockholders   $ (0.02 )   $ (0.02 )   $ (0.07 )   $ (0.06 )

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:

 

    As of September 30,  
    2016     2015  
Warrants to purchase Common stock     32,623,908       9,355,250  
      32,623,908       9,355,250  

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
Property and Equipment (Tables)
9 Months Ended
Sep. 30, 2016
Fixed Assets:  
Schedule of Property and Equipment

    September 30, 2016     December 31, 2015  
Property and equipment:                
Computer equipment   $ 8,013     $ 8,013  
                 
Less accumulated depreciation     (7,611 )     (6,331 )
                 
Property and equipment, net   $ 402     $ 1,682  

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Accrued Liabilities (Tables)
9 Months Ended
Sep. 30, 2016
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities

Accrued expenses and other liabilities consist of the following:

 

    September 30, 2016     December 31, 2015  
    (in thousands)  
Accrued payroll to officers and others   $ 934     $ 758  
Accrued interest and penalties - notes payable     1,319       237  
Accrued legal settlements     143       282  
Other accrued liabilities     1       4  
Total accrued expenses and other liabilities   $ 2,397     $ 1,281  

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
Notes Payable (Tables)
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Schedule of Notes Payable

Notes payable consist of the following:

 

     September 30, 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. Principal of $425,500 and accrued interest of $37,427 were converted to 5,309,092 shares of common stock in the nine months ended September 30, 2016, Notes aggregating $286,000 were in default at September 30, 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.     286,000       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 lender converted this note and $2,139 in accrued interest to 114,237 shares of common stock in January 2016.     -       7,000  
                 
Promissory notes issued between May 1, 2015 and September 30, 2016, and maturing between June 14, 2015 and June 30, 2017. Lenders on loans aggregating $535,994 earn interest at rates between 10% and 18% per annum. On loans aggregating $198,500, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $198,500 were in default at September 30, 2016, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders.     734,494       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. Principal of $200,000 and accrued interest of $4,778 was converted to 3,722,015 shares of common stock in the nine months ending September 30, 2016.     -       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. $375,000 of principal and $12,036 in accrued interest was converted to 4,837,960 shares of common stock in the nine months ending September 30, 2016. The Company was unable to repay the remaining notes at maturity and the notes are in default, although no demand for repayment has been made by the lenders.     425,000       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. . $30,000 of principal and $49,000 of interest and penalties were converted to 987,500 shares of common stock in the nine months ended September 30, 2016. The Company was unable to repay the remaining note at maturity and the note is in default The Company is obligated to pay late-payment penalties totaling $5,000 per day on the remaining obligation.     100,000       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 and $10,036 in interest was converted to 1,235,536 shares of common stock in July 2016.     -       175,268  
                 
Promissory notes issued between May 5, 2016 and June 2, 2016 that mature between October 1, 2016 and January 31, 2017, and include stock conversion features, warrants and original issue debt discounts. Notes aggregating $305,000 were in default at November 14, 2016. No demand for repayment has been made by the lenders.     555,000       -  
                 
Promissory notes issued to an officer of the Company effective November 3, 2015 and maturing November 3, 2016 for settlement of accrued payroll, bearing interest at 10% per annum and including a stock conversion feature.     112,737       -  
                 
Promissory note issued in July 2016. The note is repayable on October 5, 2016. The note earns interest at 6% per month. The Company was unable to repay the note at maturity and the note is in default.     50,000       -  
                 
Promissory note dated April 2016, issued to JM Financial (“JMJ”), pursuant to which JMJ loaned the Company $525,000 and was issued the promissory note, 500,000 shares of common stock, and a warrant exercisable for 3,515,621 additional common shares at a rate of $0.14 per share. The note matures on January 6, 2017. The note was repaid on November 4, 2016.     656,250       -  
                 
Promissory note issued in July 2016 with an original issuance discount of $30,000. Net proceeds were $150,000. The note is repayable on April 7, 2017.     180,000       -  
                 
Promissory notes issued in August 2016 for $149,854 as a settlement of amounts owed to a law firm. The notes accrue interest at 5% per annum and are payable in 18 equal monthly installments of $8,641.88.     146,912       -  
                 
Promissory notes issued between July 1, 2016 and September 30, 2016. Lenders earn interest at 12% per annum. The notes mature between January 1, 2017 and March 31, 2017.     495,000       -  
                 
Less: Original issue discounts on notes payable and warrants issued with notes.     (267,695 )     -  
                 
Total     3,573,698       2,793,701  
                 
Less: Current Portion   $ (3,573,698 )   $ (2,793,701 )
                 
Long-Term debt, less current portion   $ -     $ -  

 

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Capital Structure - Common Stock and Common Stock Purchase Warrants (Tables)
9 Months Ended
Sep. 30, 2016
Accounting Policies [Abstract]  
Schedule of Outstanding Stock Warrants

Following is a summary of outstanding stock warrants at September 30, 2016 and activity during the nine 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     25,654,908     $   0.14-2.00     $ 0.31  
                         
Expired     (162,500 )   $ 5.00     $ 5.00  
                         
Exercised     (0 )   $ 0     $ 0  
                         
Warrants as of September 30, 2016     34,623,908     $     0.07-15.00     $ 0..50  

Summary of Outstanding Warrants

Summary of outstanding warrants as of September 30, 2016:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Fourth Quarter 2017     350,000     $ 1.50-9.00       1.25  
First Quarter 2018     127,500     $ 15.00       1.50  
Second Quarter 2018     33,334     $ 15.00       1.75  
Third Quarter 2018     250,000     $ 1.50       2.00  
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       2.25  
First Quarter 2019     4,024,000     $ 0.50-2.00       2.50  
Second Quarter 2019     135,000     $ 0.07–0.23       2.75  
Third Quarter 2019     260,000     $ 0.50-1.50       3.00  
Fourth Quarter 2019     400,000     $ 0.14       3.25  
Second Quarter 2020     300,000     $ 0.50       3.75  
Fourth Quarter 2020     1,000,000     $ 0.20       4.00  
First Quarter 2021     12,650,000     $ 0.20       4.25  
Second Quarter 2021     6,004,908     $ 0.10-0.20       4.50  
Third Quarter 2021     3,000,000     $ 0.20       4.75  

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and Description of Business (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Dec. 08, 2014
Sep. 30, 2014
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2013
Dec. 31, 2015
Net loss     $ (3,943,942) $ (4,025,309) $ (14,627,993) $ (9,499,641)    
Cash equivalents     2,333,377   2,333,377      
Stockholders equity     $ (7,464,769)   $ (7,464,769)     $ (5,958,184)
Cytocom Inc., [Member]                
Number of shares issued during period 113,242,522           140,100,000  
Percentage of stake issued during period 55.30%       17.00%      
Irish Limited Liability [Member]                
Percentage of low corporate income tax rate   12.50%            
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Maximum of annual gross revenue     $ 1,000,000,000  
Federal deposit insurance corporation value $ 250,000      
Depreciation expense 1,280 $ 1,974    
Impairment loss    
Amortization expense $ 0 $ 444,175    
LDN [Member]        
Impairment loss     $ 5,226,352  
MENK [Member]        
Impairment loss       $ 9,908,477
Minimum [Member]        
Property and equipment useful lives 1 year      
Minimum [Member] | Property and Equipment [Member]        
Property and equipment useful lives 3 years      
Maximum [Member]        
Property and equipment useful lives 5 years      
Maximum [Member] | Property and Equipment [Member]        
Property and equipment useful lives 5 years      
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies - Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Accounting Policies [Abstract]        
Numerator, Net loss $ (3,943,942) $ (4,025,309) $ (14,627,993) $ (9,499,641)
Numerator, Net loss attributed to Common stockholders $ (3,936,501) $ (3,859,550) $ (14,466,503) $ (9,070,926)
Denominator, Weighted-average common shares outstanding-Denominator for basic and diluted net loss per share 226,843,113 156,814,094 208,399,547 147,365,571
Denominator, Basic and diluted net loss per share attributed to common stockholders $ (0.02) $ (0.02) $ (0.07) $ (0.06)
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Potentially dilutive securities 32,623,908 9,355,250
Warrants To Purchase Common Stock [Member]    
Potentially dilutive securities 32,623,908 9,355,250
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
Property and Equipment (Details Narrative)
9 Months Ended
Sep. 30, 2016
Minimum [Member]  
Depreciable asset lives 1 year
Maximum [Member]  
Depreciable asset lives 5 years
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Fixed Assets:    
Computer equipment $ 8,013 $ 8,013
Less accumulated depreciation (7,611) (6,331)
Property and equipment, net $ 402 $ 1,682
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
Sep. 30, 2016
Dec. 31, 2015
Payables and Accruals [Abstract]    
Accrued payroll to officers and others $ 934,000 $ 758,000
Accrued interest and penalties - notes payable 1,319,000 237,000
Accrued legal settlements 143,000 282,000
Other accrued liabilities 1,000 4,000
Total accrued expenses and other liabilities $ 2,397,000 $ 1,281,000
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
Notes Payable (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Dec. 31, 2015
Debt Disclosure [Abstract]      
Accrued unpaid interest   $ 278,089 $ 217,717
Penalties   $ 1,041,502 $ 18,954
Issuance of common stock for interest expense, shares 225,000    
Issuance of common stock for interest expense $ 42,750    
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
Notes Payable - Schedule of Notes Payable (Details) - USD ($)
Sep. 30, 2016
Jul. 31, 2016
Dec. 31, 2015
Total $ (267,695)   $ 2,793,701
Less: Original issue discounts on notes payable and warrants issued with notes 3,573,698 $ 30,000
Less: Current portion (3,573,698)   (2,793,701)
Long-Term debt, less current portion  
Notes Payable One [Member]      
Total 100,000   100,000
Notes Payable Two [Member]      
Total 286,000   711,500
Notes Payable Three [Member]      
Total   7,000
Notes Payable Four [Member]      
Total 734,494   669,933
Notes Payable Five [Member]      
Total   200,000
Notes Payable Six [Member]      
Total 425,000   800,000
Notes Payable Seven [Member]      
Total 100,000   130,000
Notes Payable Eight [Member]      
Total   175,268
Notes Payable Nine [Member]      
Total 555,000  
Notes Payable Ten [Member]      
Total 112,737  
Notes Payable Eleven [Member]      
Total 50,000  
Notes Payable Twelve [Member]      
Total 656,250  
Notes Payable Thirteen [Member]      
Total 180,000  
Notes Payable Fourteen [Member]      
Total 146,912  
Notes Payable Fifteen [Member]      
Total $ 495,000  
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical)
1 Months Ended 3 Months Ended 9 Months Ended 10 Months Ended
Aug. 31, 2016
USD ($)
Installments
Jul. 31, 2016
USD ($)
Jun. 02, 2016
May 05, 2016
USD ($)
Apr. 30, 2016
USD ($)
$ / shares
shares
Jan. 31, 2016
USD ($)
shares
Nov. 24, 2015
USD ($)
shares
Nov. 03, 2015
Jan. 26, 2015
USD ($)
shares
Oct. 17, 2014
Jul. 29, 2014
Dec. 31, 2015
USD ($)
Sep. 30, 2016
USD ($)
shares
Sep. 30, 2016
USD ($)
shares
Sep. 30, 2015
USD ($)
Sep. 30, 2015
USD ($)
Installments
Note matures date   Apr. 07, 2017           Nov. 03, 2016                
Percentage of interest rate per annum 5.00% 6.00%           10.00%             10.00% 10.00%
Maximum amount raise in debt $ 149,854     $ 305,000                     $ 2,000,000 $ 2,000,000
Number of installments, months | Installments 18                             36
Debt instrument, periodic payment, principal $ 8,642                              
Notes aggregating default amount                         $ 0 $ 0    
Debt instrument maturity date description     October 1, 2016 and January 31, 2017 October 1, 2016 and January 31, 2017                        
Value of notes that converted into shares                         $ 42,750      
Notes and interest converted into shares | shares                         225,000      
Original issuance discount   $ 30,000                   $ 3,573,698 3,573,698    
Proceeds from issuance of debt   $ 150,000                       $ 2,132,380 $ 1,277,975  
Lender [Member]                                
Percentage of interest rate per annum                         12.00% 12.00%    
Debt instrument maturity date description                         mature between January 1, 2017 and March 31, 2017      
JM Financial [Member]                                
Note matures date         Jan. 06, 2017                      
Notes and interest converted into shares | shares         500,000                      
Aggregating loan         $ 525,000                      
Warrant exercisable | shares         3,515,621                      
Price per share | $ / shares         $ 0.14                      
Minimum [Member] | Cytocom Inc., [Member]                                
Percentage of interest rate per annum                         5.00% 5.00%    
Maximum [Member] | Cytocom Inc., [Member]                                
Percentage of interest rate per annum                         10.00% 10.00%    
December Thirty First Two Thousand Fifteen [Member] | Cytocom Inc., [Member]                                
Note matures date                           Sep. 30, 2016    
Debt instrument, periodic payment, principal                           $ 375,000    
Value of notes that converted into shares                           $ 12,036    
Notes and interest converted into shares | shares                           4,837,960    
Ira Gaines [Member]                                
Note matures date                     Jan. 27, 2015          
Percentage of interest rate per annum                     18.00%          
Lender [Member]                                
Debt instrument, periodic payment, principal                           $ 425,500    
Notes aggregating default amount                         $ 286,000 286,000    
Accrued interest           $ 2,139             $ 37,427 $ 37,427    
Notes and interest converted into shares | shares           114,237               5,309,092    
Lender [Member] | Minimum [Member]                                
Percentage of interest rate per annum                         10.00% 10.00%    
Lender [Member] | Maximum [Member]                                
Percentage of interest rate per annum                         18.00% 18.00%    
Lender [Member] | May 1, 2015 [Member]                                
Note matures date                           Jun. 30, 2017    
Aggregating loan                         $ 535,994 $ 535,994    
Interest payable                         198,500 198,500    
Roger Bozarth [Member]                                
Note matures date                   Oct. 17, 2015            
Percentage of interest rate per annum                   2.00%            
Lenders [Member]                                
Notes aggregating default amount                         198,500 198,500    
Robert J. Dailey [Member]                                
Note matures date                 Jul. 30, 2015              
Percentage of interest rate per annum                 2.00%              
Debt instrument, periodic payment, principal                 $ 200,000              
Accrued interest                 $ 4,778              
Notes and interest converted into shares | shares                 3,722,015              
Lender [Member]                                
Note matures date                       Mar. 09, 2016        
Percentage of interest rate per annum                       10.00%        
Debt instrument, periodic payment, principal                           30,000    
Accrued interest                         49,000 $ 49,000    
Notes and interest converted into shares | shares                           987,500    
Pay late-payment penalties per day                         $ 5,000 $ 5,000    
Lender [Member]                                
Percentage of interest rate per annum             10.00%                  
Value of notes that converted into shares             $ 10,536                  
Notes and interest converted into shares | shares             1,235,356                  
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
Capital Structure - Common Stock and Common Stock Purchase Warrants (Details Narrative) - $ / shares
9 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2015
Equity [Abstract]      
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 235,831,298 174,850,047  
Common Stock, Shares Outstanding 235,831,298 174,850,047  
Number of warrants issued during period 2,000,000    
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
Capital Structure - Common Stock and Common Stock Purchase Warrants - Schedule of Outstanding Stock Warrants (Details) - Warrant [Member]
9 Months Ended
Sep. 30, 2016
$ / shares
shares
Warrants, Number of shares Beginning balance | shares 9,131,500
Warrants, Number of shares Issued | shares 25,654,908
Warrants, Number of shares Expired | shares (162,500)
Warrants, Number of shares Exercised | shares 0
Warrants, Number of shares Ending balance | shares 34,623,908
Exercise Price, Expired $ 5.00
Exercise Price, Exercised 0
Weighted average exercise price, Beginning balance 1.47
Weighted average exercise price, Issued 0.31
Weighted average exercise price, Expired 5.00
Weighted average exercise price, Exercised 0
Weighted average exercise price, Ending balance 0.50
Minimum [Member]  
Exercise Price, Beginning balance 0.07
Exercise Price, Issued 0.14
Exercise Price, Ending balance 0.07
Maximum [Member]  
Exercise Price, Beginning balance 15.00
Exercise Price, Issued 2.00
Exercise Price, Ending balance $ 15.00
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
Capital Structure - Common Stock and Common Stock Purchase Warrants - Summary of Outstanding Warrants (Details)
9 Months Ended
Sep. 30, 2016
$ / shares
shares
Fourth Quarter 2017 [Member]  
Number of Shares | shares 350,000
Exercise Price Lower Limit $ 1.50
Exercise Price Upper Limit $ 9.00
Remaining Life (years) 1 year 3 months
First Quarter 2018 [Member]  
Number of Shares | shares 127,500
Exercise Price Lower Limit $ 15.00
Remaining Life (years) 1 year 6 months
Second Quarter 2018 [Member]  
Number of Shares | shares 33,334
Exercise Price Lower Limit $ 15.00
Remaining Life (years) 1 year 9 months
Third Quarter 2018 [Member]  
Number of Shares | shares 250,000
Exercise Price Lower Limit $ 1.50
Remaining Life (years) 2 years
Fourth Quarter 2018 [Member]  
Number of Shares | shares 6,089,166
Exercise Price Lower Limit $ 1.00
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 2 years 3 months
First Quarter 2019 [Member]  
Number of Shares | shares 4,024,000
Exercise Price Lower Limit $ 0.50
Exercise Price Upper Limit $ 2.00
Remaining Life (years) 2 years 6 months
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) 2 years 9 months
Third Quarter 2019 [Member]  
Number of Shares | shares 260,000
Exercise Price Lower Limit $ 0.50
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 3 years
Fourth Quarter 2019 [Member]  
Number of Shares | shares 400,000
Exercise Price Lower Limit $ 0.14
Remaining Life (years) 3 years 3 months
Second Quarter 2020 [Member]  
Number of Shares | shares 300,000
Exercise Price Lower Limit $ 0.50
Remaining Life (years) 3 years 9 months
Fourth Quarter 2020 [Member]  
Number of Shares | shares 1,000,000
Exercise Price Lower Limit $ 0.20
Remaining Life (years) 4 years
First Quarter 2021 [Member]  
Number of Shares | shares 12,650,000
Exercise Price Lower Limit $ 0.20
Remaining Life (years) 4 years 3 months
Second Quarter 2021 [Member]  
Number of Shares | shares 6,004,908
Exercise Price Lower Limit $ 0.10
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 4 years 6 months
Third Quarter 2021 [Member]  
Number of Shares | shares 3,000,000
Exercise Price Lower Limit $ 0.20
Remaining Life (years) 4 years 9 months
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Compensation (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Number of common stock issued for consulting fees 29,283,910 16,922,504
Fair value of common stock $ 5,420,760 $ 1,029,375
Amortization of prepaid services 2,315,190 $ 3,895,018
Stock issued during period, value, issued for services $ 2,088,759  
Minimum [Member]    
Consulting fees amortized period 12 months  
Maximum [Member]    
Consulting fees amortized period 24 months  
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Taxes - Results of Operations (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2013
Income Tax Disclosure [Abstract]    
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 49 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Initial supply, description Through its wholly-owned subsidiary, TNI BioTech International, Ltd., in December 2015 the Company completed a 90-day bridging trial for the treatment of patients with HIV/AIDS. The trial consisted of a total of 150 patients of both genders between the ages of 18-60, each of whom was infected HIV/AIDS. The primary objective of this bridging trial was to confirm that LodonalTM has a beneficial effect on the immune system of immune deficient patients and that it is safe. The trial separated patients into a Control (placebo) Group and a Treatment Group (which was administered LodonalTM). The efficacy of increasing CD4 count [cell/mm3] between Day-1 and Day-90 by at least 25% was set as the criteria for demonstrating beneficial effect on the immune system. Safety was demonstrated through quality of life assessment and vitals both of which were not adversely affected. Treatment Group patients were given a daily dose of 4.5-mg/kg of Lodonal.  
Initial capital to venture $ 1,000  
Percentage of allocated income from venture 25.00%  
Orlando, Florida [Member]    
Cash rental expense $ 4,009 $ 4,988
Complete Pharmacy and Medical Solutions, LLC [Member]    
Percentage of allocated income from venture 100.00%  
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events (Details Narrative) - USD ($)
9 Months Ended
Nov. 02, 2016
Oct. 31, 2016
Oct. 25, 2016
Jul. 31, 2016
Nov. 03, 2015
Sep. 30, 2016
Sep. 30, 2015
Nov. 14, 2016
Aug. 31, 2016
May 05, 2016
Dec. 31, 2015
Debt instrument, face amount             $ 2,000,000   $ 149,854 $ 305,000  
Maturity date       Apr. 07, 2017 Nov. 03, 2016            
Consulting services           29,283,910 16,922,504        
Proceeds from issuance of debt       $ 150,000   $ 2,132,380 $ 1,277,975        
Common stock, shares outstanding           235,831,298         174,850,047
Subsequent Event [Member]                      
Repayments of debt   $ 50,000                  
Debt instrument, face amount $ 750,000 100,000                  
Common stock, shares issued     500,000                
Interest rate 2.00%                    
Maturity date Nov. 01, 2017                    
Borrowings   $ 165,000                  
Consulting services   1,300,000                  
Lending fees   300,000                  
Proceeds from issuance of debt $ 656,250                    
Common stock, shares outstanding               241,128,131      
Subsequent Event [Member] | Noreen Griffin [Member]                      
Debt instrument, face amount     $ 25,000                
Subsequent Event [Member] | Ms. Griffin [Member]                      
Debt instrument, face amount     $ 25,000                
Subsequent Event [Member] | Note Holder[Member]                      
Common stock, shares issued   2,000,000                  
Subsequent Event [Member] | Note Holder[Member] | Minimum [Member]                      
Interest rate   18.00%                  
Maturity date   Sep. 06, 2016                  
Subsequent Event [Member] | Note Holder[Member] | Maximum [Member]                      
Interest rate   10.00%                  
Maturity date   Dec. 31, 2016                  
Subsequent Event [Member] | GB Pharma Holdings, LLC [Member]                      
Concentration risk, percentage   12.50%                  
Subsequent Event [Member] | Cytocom[Member] | Note Holder[Member]                      
Common stock in return   250,000                  
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