0001493152-17-005105.txt : 20170512 0001493152-17-005105.hdr.sgml : 20170512 20170512123029 ACCESSION NUMBER: 0001493152-17-005105 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 55 CONFORMED PERIOD OF REPORT: 20170331 FILED AS OF DATE: 20170512 DATE AS OF CHANGE: 20170512 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: 17837426 BUSINESS ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 BUSINESS PHONE: (888) 613-8802 MAIL ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 FORMER COMPANY: FORMER CONFORMED NAME: TNI BIOTECH, INC. DATE OF NAME CHANGE: 20121001 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended March 31, 2017

 

OR

 

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

 

From the transition period from ___________ to ____________

 

Commission File Number __________________

 

IMMUNE THERAPEUTICS, INC.

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

 

Florida   59-3226705

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

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

(Address of principal executive offices)

 

888-613-8802

(Issuer’s telephone number)

 

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

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer [  ]   Accelerated Filer [  ]
     
Non-Accelerated Filer [  ]   Smaller Reporting Company [X]

 

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

 

As of May 12, 2017 there were 304,140,678 shares of Common Stock outstanding.

 

 

 

   
 

 

TABLE OF CONTENTS

 

  PART I – FINANCIAL STATEMENTS  
Item 1. Financial Statements 5
     
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations 26
     
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 2. Unregistered Sales of Equity Securities and Use of Proceeds 33
     
Item 3. Default upon Senior Securities 34
     
Item 4. Mine Safety Disclosures  
     
Item 5. Other Information  
     
Item 6. Exhibits 35

 

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.

 

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;

 

3
  

 

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

 

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

 

JUMPSTART OUR BUSINESS STARTUPS ACT

 

We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2016, the last day of our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

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

 

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

 

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

 

4
  

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   March 31, 2017   December 31, 2016 
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $98,113   $74,389 
Total current assets   98,113    74,389 
           
Fixed Assets:          
Computer equipment, net of accumulated depreciation of $8,032 and $7,888 respectively   1,706    1,850 
Deposits   200    200 
           
Total assets  $100,019   $76,439 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable  $1,666,406   $1,818,605 
Accrued liabilities   3,980,417    3,156,759 
Current portion of notes payable, net of debt discount   4,742,259    4,225,419 
           
Total current liabilities   10,389,082    9,200,783 
           
Total liabilities   10,389,082    9,200,783 
           
Commitments and Contingencies (Note 10)          
           
Stockholders’ Deficit:          
Common stock - par value $0.0001; 500,000,000 shares authorized; 275,640,678 and 250,428,133 shares issued and outstanding respectively   27,564    25,043 
Additional paid in capital   361,542,431    360,420,026 
Stock issuances due   1,432,883    962,429 
Prepaid services   (876,666)   (822,500)
Accumulated deficit   (368,288,346)   (365,718,976)
           
Deficit attributable to common stockholders   (6,162,134)   (5,133,978)
Non-controlling interest   (4,126,929)   (3,990,366)
Total stockholders’ deficit   (10,289,063)   (9,124,344)
Total liabilities and stockholders’ deficit  $100,019   $76,439 

 

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

 

5
  

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months ended 
   March 31, 2017   March 31, 2016 
Revenues, net  $-   $3,463 
           
Operating expenses:          
Selling, general and administrative   666,091    939,341 
Research and development expense   118,656    (18,842)
Stock issued for services G&A   731,288    1,983,837 
Warrant valuation expense   -    2,078,199 
Depreciation and amortization expense   144    547 
Total operating expenses   1,516,179    4,983,082 
           
Loss from operations   (1,516,179)   (4,979,619)
           
Other income (expense):          
Interest expense   (575,828)   (301,444)
Loss on settlement of debt   (613,926)   (1,364,339 
Total other income (expense)   (1,189,754)   (1,665,783)
Net loss  $(2,705,933)  $(6,645,402)
Net loss attributable to non-controlling interest   (136,563)   (44,120)
Net loss attributable to common shareholders   (2,569,370)   (6,601,282)
Basic loss per share to common shareholders  $(0.01)  $(0.03)
Weighted average number of shares outstanding   259,291,541    190,923,381 

 

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

 

6
  

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE PERIOD ENDED MARCH 31, 2017

(Unaudited)

 

   Common Stock   Additional Paid-in   Stock To   Prepaid   Accumulated   Non-Controlling     
   Shares   Amount   Capital   Be Issued   Services   Deficit   Interest   Total 
                                 
Balance December 31, 2016   250,428,133   $25,043   $360,420,026   $962,429   $(822,500)  $(365,718,976)  $(3,990,366)  $(9,124,344)
                                         
Issuance of common stock for prepaid services   6,045,460    605    314,396    470,454    (420,000)   -    -    365,455 
                                         
Amortization of prepaid services   -    -    -    -    365,834    -    -    365,834 
                                         
Issuance of common stock in exchange for debt   17,510,638    1,751    808,174         -    -    -    809,925 
                                         
Issuance of common stock for exercise of warrants   1,656,447    165    (165)        -    -    -    - 
                                         
Net loss   -    -    -    -    -    (2,569,370)   (136,563)   (2,705,933)
                                         
Balance as of March 31, 2017   275,640,678    27,564    361,542,431    1,432,883    (876,666)   (368,288,346)   (4,126,929)   (10,289,063)

 

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

 

7
  

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended 
   March 31, 2017   March 31, 2016 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(2,705,933)  $(6,645,402)
Adjustments to reconcile net loss to net cash flows used in operating activities:          
Depreciation   144    547 
Amortization of debt discount   35,346    - 
Amortization of stock issued for prepaid services   365,834    669,667 
Stock issued for services   365,455    1,314,169 
Stock warrant expense        2,078,199 
Loss on settlement of debt   613,926    1,364,339 
Changes in operating assets and liabilities:          
Accounts receivable   -    (3,463)
Accounts payable   138,840    139,203)
Accrued liabilities   656,958    486,373 
Prepaid expenses and other current assets        (1,594 
Net cash used in operating activities   (529,430)   (597,962)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Net cash used in investing activities   -    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from sale of stock and exercise of warrants   -    50,000 
Payment of notes payable   (321,846)     
Proceeds from issuance of notes payable   875,000    657,000 
           
Net cash provided by financing activities   553,154    707,000 
           
Net decrease in cash and cash equivalents   23,724    109,038)
Cash and cash equivalents at beginning of period   74,389    23,149 
Cash and cash equivalents at end of period  $98,113   $132,817 

 

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

 

8
  

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

   Three Months Ended 
   March 31, 2017   March 31, 2016 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
           
Cash paid for interest  $13,000   $7,050 
           
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
           
Debt discount  $50,000   $- 
           
Shares issued for debt and accrued interest  $362,700   $2,306,415 
           
Shares issued for accounts payable and accrued expenses  $339,339   $- 
           
Cashless exercise of warrants  $165   $- 
           
Estimated loss on debt conversion  $215,000   $- 

 

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

 

9
  

 

Immune Therapeutics, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2017

(Unaudited)

 

1. Organization and Description of Business

 

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

 

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

 

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

 

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

 

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005. The Company will determine whether or not to apply to obtain EMA benefits once funding becomes available.

 

In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development. On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom Inc. 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 March 31, 2017, the Company’s equity interest had been further reduced to 13.3%, by subsequent issuances of Cytocom common stock to shareholders in settlement of notes payable.

 

10
  

 

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

 

Today, Immune Therapeutics is focused on the commercialization of 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 for chronic often life-threatening diseases through the mobilization of the body’s immune system in Emerging Nations using existing clinical data.

 

Cytocom Inc, 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 our patented therapies with the FDA and EMA.

 

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 experienced a net loss from operations of $2,705,933, and used cash and cash equivalents for operations in the amount of $529,430 during the quarter ended March 31, 2017, resulting in stockholder’s deficit of $10,289,063 at that date.

 

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 the sale of products, additional private or public debt or equity offerings, and it may also seek additional capital through arrangements with strategic partners or from other sources. Based on the Company’s operating plan, existing working capital at March 31, 2017 was not sufficient to meet the cash requirements to fund planned operations through March 31, 2018 without additional sources of cash. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated 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.

 

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, 2016 (including the notes thereto) set forth in Form 10-K.

 

11
  

 

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, 2016. 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.

 

Revenue Recognition

 

We recognize revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.

 

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.

 

12
  

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2017, the Company has no cash balances in excess of insured limits.

 

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 accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

 

Fair Value Measurements

 

The ASC Topic 820, Fair Value Measurement, 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.

 

Fixed Assets

 

Fixed assets 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 three months ended March 31, 2017 and March 31, 2016 was $144 and $547, 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 ten to sixteen years. Intangible assets are stated at the lower of cost or estimated fair value. During the years ended December 31, 2016 and December 31, 2015, the Company capitalized $nil and $nil respectively, of such costs incurred for the Company’s acquisition of licenses for the patents. (See Note 10). Amortization expense for the three months ended March 31, 2017 and March 31, 2016 was $0 and $0, respectively.

 

13
  

 

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or change 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. In 2015, the Company determined that the carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. No such impairment charges were recorded in 2016 or the first quarter of 2017.

 

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 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 March 31, 2017 and 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. As of March 31, 2017, and 2016, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

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

 

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

 

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

 

14
  

 

Non-controlling Interest

 

In accordance with ASC Topic 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 net loss per share follows:

 

   For the three months ended
March 31,
 
   2017   2016 
Historical net loss per share:          
Numerator          
Net loss  $(2,705,933)  $(6,645,402)
Non-controlling interest   (136,563)   (44,120)
Net loss attributed to Common stockholders  $(2,569,370)  $(6,601,282)
           
Denominator          
Weighted-average common shares outstanding—Denominator for basic net loss per share   259,291,541    190,923,381 
Basic net loss per share attributed to common stockholders  $(0.01)  $(0.03)

 

The Company’s potential dilutive securities, which include warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

 

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

 

   For the three months ended
March 31,
 
   2017   2016 
Warrants to purchase Common stock   52,525,237    24,731,500 

 

Recent Accounting Standards

 

During the quarter ended March 31, 2017, 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.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

 

15
  

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.

 

3. Fixed Assets

 

   March 31, 2017   December 31, 2016 
Fixed Assets:          
Computer equipment  $9,738   $9,738 
Less accumulated depreciation   (8,032)   (7,888)
Property and equipment, net  $1,706   $1,850 

 

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

 

4. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

   March 31, 2017   December 31, 2016 
         
Accrued payroll to officers and others  $1,272,703   $1,126,261 
Accrued interest and penalties - notes payable   2,412,535    1,902,018 
Estimated legal settlement   128,087    128,087 
Other accrued liabilities   167,092    393 
           
Total accrued expenses and other liabilities  $3,980,417   $3,156,759 

 

16
  

 

5. Notes Payable

 

Notes payable consist of the following:

 

   March 31, 2017   December 31, 2016 
Promissory note issued July 29, 2014 to Ira Gaines. In 2016, the maturity date on the note was extended to December 1, 2017. The note earns interest at a rate of 18% per annum.  $100,000   $100,000 
           
Promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt. Lenders earn interest at a rate of 10% per annum, plus a pro-rata share of two percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity. Notes will be repaid in 36 monthly installments of principal and interest commencing no later than October 15, 2015. Notes aggregating $286,000 were in default at March 31, 2017, 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    286,000 
           
Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and September 30, 2017. Lenders on loans aggregating $505,994 earn interest at rates between 2% 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 $591,494 were in default at March 31, 2017, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders.   704,494    704,494 
           
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. At March 31, 2017, the notes were in default, although no demand for repayment has been made by the lenders.   425,000    425,000 
           
Promissory note issued in December 2015. The lender earns interest at a rate of 10% per month. The note is repayable on March 9, 2016. At March 31, 2017, the note was in default, although no demand for repayment has been made by the lender. On April 3, 2017, the Company settled the obligation.   100,000    100,000 

 

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. The notes were repaid or converted into stock in the quarter ended March 31, 2017.   -    554,882 
           
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. The Company was unable to repay the note at maturity and the note is in default.   112,737    112,737 
           
Promissory note issued in July 2016. The note was repayable on October 5, 2016 but was extended to December 31, 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    50,000 
           
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. The Company was unable to repay the note at maturity and the note is in default.   180,000    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. The note was in default on March 31, 2017.   95,061    120,987 
           
Promissory notes issued between July 1, 2016 and December 31, 2016. Lenders earn interest at 2% per annum. The notes mature on September 30, 2017.   256,000    256,000 
           
Notes aggregating $1,354,000 were issued in the fourth quarter of 2016. The notes accrue interest at 2% per annum and mature between November 1, 2017 and December 31, 2017.   1,354,000    1,354,000 
           
Notes aggregating $500,000 were issued in the first quarter of 2017. The notes accrue interest at 2% per annum and mature between January 12, 2018 and March 31, 2018.   500,000    - 
           
Promissory note issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 5, 2017.   50,000    - 
           
Promissory note issued February 28, 2017, originally for $675,000, convertible into common stock of the Company in accordance with the conversion provisions of the note. In March 2017, $112,700 of the note was converted into 5 million common shares of the Company.   562,300    - 
           
Less: Original issue discounts on notes payable and warrants issued with notes.   (33,333)   (18,681)
           
Total   4,742,259    4,225,419 
           
Less: Current Portion  $(4,742,259)  $(4,225,419)
           
Long-Term debt, less current portion  $-   $- 

 

17
  

 

As of March 31, 2017, the Company had accrued $2,412,535 in unpaid interest and default penalties. During the quarter ended March 31, 2017, 17,510,638 shares with a fair value of $809,925 were issued by the Company for settlement of 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 March 31, 2017 and 2016, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of March 31, 2017, the Company had 275,640,678 shares of common stock outstanding, and 250,428,133 outstanding as of December 31, 2016.

 

Stock Warrants

 

In the quarter ended March 31, 2017, there were no new warrants issued by the Company.

 

There were no modifications of the terms of any warrants issued by the Company in the quarters ended March 31, 2017 and 2016.

 

Following is a summary of outstanding stock warrants at March 31, 2017 and activity during the three months then ended:

 

   Number of
Shares
   Exercise
Price
   Weighted
Average
Price
 
Warrants as of December 31, 2016   59,191,904   $ 0.03-15.00   $0.35 
                
Issued in 2017   -   $-   $- 
                
Expired and forfeited   5,010,220   $0.03   $0.03 
                
Exercised   1,656,447   $0.03   $0.03 
                
Warrants as of March 31, 2017   52,525,237   $  0.03-15.00   $0.39 

 

18
  

 

Summary of outstanding warrants as of March 31, 2017:

 

Expiration Date  Number of
Shares
   Exercise
Price
   Remaining
Life (years)
 
             
Fourth Quarter 2017   350,000   $1.50-9.00    0.50 
First Quarter 2018   127,500   $15.00    0.75 
Second Quarter 2018   33,334   $15.00    1.00 
Third Quarter 2018   250,000   $1.50    1.25 
Fourth Quarter 2018   6,089,166   $1.00-1.50    1.50 
First Quarter 2019   4,024,000   $0.50-2.00    1.75 
Second Quarter 2019   135,000   $0.07-0.23    2.00 
Third Quarter 2019   260,000   $0.50-1.50    2.25 
Fourth Quarter 2019   400,000   $0.14    2.50 
Second Quarter 2020   300,000   $0.50    3.00 
Fourth Quarter 2020   1,000,000   $0.20    3.50 
First Quarter 2021   12,600,000   $0.20    3.75 
Second Quarter 2021   23,806,237   $0.03-0.20    4.00 
Third Quarter 2021   3,150,000   $0.15-0.20    4.25 

 

7. Stock Compensation

 

Shares Issued for Services

 

During the quarters ended March 31, 2017 and 2016, the Company issued 6,045,460 and 19,043,000 shares of common stock respectively for consulting fees. The Company valued these shares at $365,455 and $1,314,169 respectively, based upon the fair market value of the common stock at the dates of the agreements. The consulting fees are amortized over the contract periods which are typically between 12 and 24 months. The amortization of prepaid services totaled $365,834 and $669,667 for the quarters ended March 31, 2017 and 2016.

 

8. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended March 31, 2017 and 2016 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, 2016. ASC Topic 740 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company’s ability to realize the benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize revenue, we believe that the full valuation allowance should be provided.

 

Our effective tax rate for fiscal years 2016 and 2015 was 0%. Our tax rate can be affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in jurisdictions. It may also be affected by discrete items that may occur in any given year, but are not consistent from year to year.

 

As of December 31, 2016, we have estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $79,900,000, which will expire in 2032-2035.

 

19
  

 

9. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

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

 

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

 

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

 

Patent License Agreements

 

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

 

20
  

 

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

 

The Smith Agreement requires the Company to (i) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan, (ii) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable, (iii) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use, and (iv) make the first commercial sale of a licensed product by March of 2017. As of March 31, 2017, the Company had not made a commercial sale of licensed product. Under the Smith Agreement, if the licensors determine that the Company has not fulfilled its obligations, they may furnish the Company with written notice of such determination, in which case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing of this Form 10-Q, the licensors had not provided any such notice of determination under the agreement.

 

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

 

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

 

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

 

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

 

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

 

21
  

 

The Foundation Agreement requires the Company to: (a) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan; (b) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable; (c) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use; and (d) make the first commercial sale of a licensed product by December 31, 2016. As of March 31, 2017, the Company had not made a commercial sale of licensed product. Under the Foundation Agreement, if the licensor determines that the Company has not fulfilled its obligations, it may furnish the Company with written notice of such determination, in which case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing of this Form 10-Q, the licensor had not provided any such notice of determination under the agreement.

 

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

 

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

 

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

 

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

 

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

 

10. Commitments and Contingencies

 

Malawi Treatment Facilities

 

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

 

22
  

 

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

 

a. The first protocol, submitted jointly with The Jack Brewer Foundation (“JBF Worldwide”), received PMPB approval on November 11, 2015. The protocol covers a 12-month trial for a “Single Visit Approach to Cervical Cancer Prevention.” The approach is designed to deliver a preventive and simple procedure that can be performed in a clinical setting without the use of a laboratory and to allow for immediate treatment of any precancerous lesions utilizing Wallach LL100 Cryosurgical systems. The protocol provides for 50% of the patient group to be put on Lodonal™ to determine if the drug lowers the number of opportunistic infections during the year, and if it can be shown that LDN increases CD4, CE8, NK and T cell count, which would show that the incidence rates of opportunistic infection could decrease with Lodonal™ and that Lodonal™ could be used as a prophylaxis to prevent substantial HIV-related morbidity in Malawi. The PMPB approved the trial in late 2016 and recruitment began in late 2016 and continued through first quarter of 2017, with the trial now ongoing.
   
b. The second protocol, which has not yet been approved, covers a trial using Lodonal™ for the treatment of cancer. The Company has put this trial on hold as it may not be necessary with the approval in Nigeria in addition to the pending approval in Kenya and Senegal for Lodonal™ for the treatment of cancer.

 

Distribution Agreements in Nigeria

 

Effective November 9, 2012, we signed an exclusive Distribution Agreement with G-Ex Technologies/St. Maris Pharma and GB Pharma Holdings, LLC for the Federal Republic of Nigeria.

 

The parties have been unable to perform under the agreement because a certificate of free sale was not obtained by the Company until November of 2013, and no extension has been granted.

 

In October 2013, the Company announced the signing of a Distribution Agreement with AHAR Pharma, a Nigerian company, to market Lodonal™, in Nigeria for the treatment of autoimmune diseases and cancer. AHAR intends to distribute Lodonal™ through a local distributor network, an Internet client base and directly to hospitals, pharmacists and doctors in Nigeria. The agreement expires in December 2018. The Company expects to implement the agreement in 2017, upon receipt of approvals from NAFDAC for the sale of LodonalTM in Nigeria. Under the agreement, the Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma’s first-year purchase commitment.

 

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

 

Agreements with Hubei Qianjiang Pharmaceutical Company

 

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

 

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

 

Exploratory Toxicology (nGLP)

 

  Dose range finding studies
  Different species and methods of administration
  Multiple dosing regimens
  Estimate the response vs. dose given

 

Definitive Toxicology (GLP)

 

  Performed in collaboration with Calvert Laboratories (USA) and MPI/Medicillon (China)
  General toxicology studies
  Different species and methods of administration
  Immunogenicity study with NHPs

 

Special Toxicology Studies (planned)

 

Pursuant to the Amendment, Qianjiang Pharmaceutical has made certain funds available from the co-administrative account opened by Qianjiang Pharmaceutical under the Venture Agreement, in accordance with an approved budget and timeline set forth in the Amendment. A portion of these funds are expected to be used by Cytocom to run PK and Dosing trials for MENK in the United States in 2016. The Amendment requires Cytocom and Qianjiang Pharmaceutical to meet with the China State Food and Drug Administration to determine that PK and Dosing Trials completed in the United States will be acceptable. All developments and trials run by Cytocom in the U.S. or the European Union will be used for requesting registration approval in China.

 

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

 

In December of 2016 Qianjiang Pharmaceutical completed the following documents:

 

Exploratory Toxicology (nGLP)

 

  Dose range finding studies
  Different species and methods of administration
  Multiple dosing regimens
  Estimate the response vs. dose given

 

Definitive Toxicology (GLP)

 

  Performed in collaboration with Calvert Laboratories (USA) and MPI/Medicillon (China)
  General toxicology studies
  Different species and methods of administration
  Immunogenicity study with NHPs

 

24
  

 

In addition to the pharmacology and toxicology studies, Qianjiang Pharmaceutical and China Peptide completed the formulation and CMC necessary to scale up manufacturing of MENK.

 

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.

 

In January of 2017, Acromax obtained from the Ministry of Public Health and Social Assistance a Medications and Specialized Pharmaceuticals Registration Certification for LodonalTM, which allows for the manufacture and sale of LodonalTM in the Dominican Republic and for export. The Ministry also issued a Certificate of Pharmaceutical Product for Nigeria, Kenya, Senegal and Malawi, which will allow for the export of LodonalTM to those countries where we have drug and marketing approval.

 

Operating Leases

 

At March 31, 2017, the Company was a party to an agreement to lease office space in Orlando, Florida. Rent expense for the quarters ended March 31, 2017 and 2016 was $4,129 and $(114,794), respectively. The 2016 expense reflects the reversal of accruals for rent expense in prior years, including the settlement with E.J. Krause & Associates, Inc.

 

Legal Proceedings

 

None.

 

11. Subsequent Events

 

The Company issued 28,500,000 shares of common stock between March 31, 2017 and May 12, 2017, of which, 13,000,000 shares are for consulting fees, 5,500,000 shares are for debt conversions and settlements and 10,000,000 shares were sold for cash.

 

On April 4, 2017, the Company entered into a settlement agreement (the “Settlement Agreement”) with Mr. Marshall Faulk (“Faulk”). Pursuant to the Settlement Agreement, Faulk agreed to assign a promissory note issued by the Company to Faulk on December 10, 2015 in the principal amount of $100,000.00 (the “Prior Note”), under which the Company was in default, to Mr. Robert J. Dailey (“Dailey”) pursuant to a Debt Purchase and Exchange Agreement (the “Exchange Agreement”) between the parties. In addition, Faulk agreed to waive all claims against the Company relating to the Prior Note. In consideration for the foregoing, the Company agreed to issue Faulk 2,000,000 restricted common shares.

 

On May 1, 2017, the Company issued a warrant to purchase 1,500,000 shares of the Company’s common stock, at an exercise price of $0.15 per share. The warrant expires on May 1, 2022.

 

As of May 12, 2017, the Company had outstanding 304,140,678 shares of common stock.

 

25
  

 

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, 2016 filed with the Securities and Exchange Commission on March 31, 2017 (the “2016 Form 10-K”) under the heading “Risk Factors”.

 

The following discussion should be read in conjunction with the 2016 Form 10-K 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”). 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.

 

26
  

 

In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development. On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom Inc. 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 March 31, 2017, the Company’s equity interest had been further reduced to 13.3%, 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.

 

Today, Immune Therapeutics is focused on the commercialization of 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 for chronic often life-threatening diseases through the mobilization of the body’s immune system in Emerging Nations using existing clinical data.

 

Cytocom Inc, 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 our patented therapies with the FDA and EMA.

 

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.

 

Research and Development

 

The Company’s research and development (“R&D”) activities commenced in the third quarter of 2012, the Company having completed the initial acquisition of MENK-related patents required for research in the second quarter of that year. Through 2013 and the first nine months of 2014, we continued to build R&D organization and capabilities focusing primarily on new uses for opioid-related immuno-therapies, such as LDN and MENK. Those activities were suspended at the end of September 2014, due to lack of funding. We expect to be able to resume activities in 2017.

 

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

 

27
  

 

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

 

Revenues

 

We had no revenues from operations for the three months ended March 31, 2017, compared to $3,463 for the three months ended March 31, 2016.

 

Operating Expenses

 

Selling, general and administrative

 

Selling, general and administrative expenses and related percentages for the three months ended March 31, 2017 and 2016 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2017   2016 
Selling, general and administrative  $666   $939 
Increase/(decrease) from prior year  $(273)  $537 
Percent increase/(decrease) from prior year   (29)%   134%

 

For the three months ended March 31, 2017 and 2016, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2017   2016 
Stock listing and investor relations expenses  $10   $49 
Consulting and contractors   189    324 
Payroll   226    396 
Professional fees   108    85 
Travel   12    19 
Other expenses   121    66 

 

In the three months ended March 31, 2017, total cash and cash accruals for selling, general and administrative expense was $666 compared to $939 for the corresponding period in 2016, a decrease of $273 or 29%. 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 $189 in 2017, a decrease of $135 or 42% over the $324 spent in 2016. The decrease was the result primarily of the expiration of certain consulting contracts by the end of 2016 and a one-time charge of $95 in 2016 for consulting fees owed from prior periods;
     
  professional fees for legal, tax and accounting services in the amount of $108 in 2017, an increase of $23 or 27% over the $85 spent in 2016. The increase was primarily due to costs incurred for increased borrowing in the first quarter of 2017 and higher fees paid for audit and tax services in the first quarter of 2017;
     
  payroll in the amount of $226 in 2017, a decrease of $170 or 43% over the $396 spent in 2016. The decrease reflects lower headcount in 2017, and the costs of stock awards to executives and employees in the first quarter of 2016. There were no stock awards in the first quarter of 2017; and
     
  travel in the amount of $12 in 2017, a decrease of $7 or 39% over the $19 spent in 2016.

 

28
  

 

Research and development

 

R&D expenses and related percentages for the three months ended March 31, 2017 and 2016 were as follows (dollar amounts in thousands):

 

    For the three months ended March 31,  
    2017     2016  
Research and development   $ 119     $ (19 )
Increase from prior year   $ 138     $ (196 )
Percent increase/(decrease) from prior year     100 %     (111 )%

 

Expenses for research and development in the three months ended March 31, 2017 increased by 100% compared to expenses in the same period in 2016. The increase reflects a one-time reversal of accrued expenses ($55) in 2016 for the development of an application to monitor LDN treatment, and increased legal fees in 2017 to maintain patents and licenses, offset by lower travel expenses for R&D activities in Africa.

 

Significant items included:

 

  payments for contracted technical services, $25 in 2017, an increase of $44 or 100% over the $(19) spent in 2016, reflecting a one-time reversal of accrued expenses ($55) in 2016 for the development of an application to monitor LDN treatment;
     
  payments for professional fees of $39 in 2017, an increase of $17 or 79% over the $22 spent in 2016, reflecting the increased cost in maintaining patents and licenses worldwide;
     
  payroll of $0 in 2017, an increase of $5 or 100% over the $(5) credit in 2016. In 2016, the Company reversed charges it had accrued in prior periods for payroll tax liabilities.

 

Most of the R&D spending in the first quarter of 2017 was for LDN. In the same period in 2016 75% of the spending was for the development of LDN; the balance was spent on MENK.

 

Stock issued for services

 

The Company periodically receives services from consultants under long-term consulting contracts, in terms of which it issues stock to prepay for the services. In such cases, the Company initially accounts for the full cost of these services as Prepaid Services on its balance sheet, calculated by the number of shares issued multiplied by the share price on the contract date. This amount is then amortized as a cost over the period in which the services are provided to the Company. The Company reports these costs separately from Selling, general and administrative costs, and Research and development costs, to better demonstrate the true costs of Selling, general and administrative activities, and Research and development.

 

Amortization of amounts recorded as Prepaid Services for stock issued for services G&A and related percentages for the three months ended March 31, 2017 and 2016 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2017   2016 
Amortization of prepaid consulting expense G&A  $481   $670 
Percentage decrease from prior year   (28)%   (69)%

 

29
  

 

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

 

The number of shares issued for prepaid consulting services G&A in the three months ending March 31, 2017 was 6,045,460 (19,043,000 in the corresponding period in 2016).

 

Prepaid consulting services G&A in the three months ended March 31, 2017 consisted of the following:

 

Amortization of cost of stock issued prior to 2016  $5 
Amortization of cost of stock issued in 2016   261 
Amortization of cost incurred for new stock issued in the three months ended March 31, 2017 under consulting contracts entered into in 2017   215 

 

Warrant valuation expense

 

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

 

In the three months ended March 31, 2017, the Company issued no warrants to stockholders. In the three months ended March 31, 2016, the Company issued 15,600,000 warrants to stockholders at an exercise price range of $0.20 to $2.00, for which it recorded an expense of $2,078.

 

Depreciation and amortization

 

The Company amortizes the costs incurred to acquire patents and licenses over the period of the related agreements. The decrease year over year in depreciation and amortization expense reflects the fact that all of the Company’s patents and licenses had been fully amortized by December 31, 2016.

 

Depreciation and amortization expenses for the three months ended March 31, 2017 and 2016 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2017     2016 
Depreciation expense  $-     $1 
Amortization expense  $-     $- 
Decrease from prior year  $(1)    $(148)
Percentage increase/(decrease) from prior year   (100)%     (100)%

 

Interest Expense

 

Interest expense for the three months ended March 31, 2017 and 2016 were as follows (dollar amounts in thousands):

 

   For the three months ended March 31, 
   2017   2016 
Interest expense  $576   $301 
Increase from prior year  $275   $283 
Percentage increase from prior year   91%   1,571%

 

30
  

 

The increase in interest expense reflects the higher level of notes payable outstanding at March 31, 2017 ($4,742) than compared to March 31, 2016 ($2,838).

 

Loss on settlement of debt

 

In three months ended March 31, 2017, 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 $614, reflecting the fair value of the shares of common stock issued in exchange for the debt. In three months ended March 31, 2016, the Company recorded an expense of $1,364, reflecting the fair value of the shares of common stock issued in exchange for the debt.

 

Liquidity

 

Liquidity is measured by our ability to secure enough cash to meet our contractual and operating needs as they arise. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. We had cash of $98,113 at March 31, 2017, compared to $132,187 at March 31, 2016.

 

For the three months ended March 31, 2017 and 2016, net cash used in operating activities from operations was $529,430 and $497,962, respectively.

 

No cash was used in investing activities for the three months ended March 31, 2017 and 2016.

 

During the three months ended March 31, 2017 proceeds from the sale of stock and exercise of stock warrants totaled $0 compared to $50,000 for the corresponding period in 2016. We also received $875,000 from the issuance of notes payable in three months ended March 31, 2017, compared to $657,000 in 2016. There were $321,846 of loan repayments made in cash in the three months ended March 31, 2017 ($0 in 2016).

 

The Company expects to generate revenues from sales in 2017. 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 the end of 2017, the Company will be required to make a payment of $100,000 in December 2017 under its license agreements. In prior years, the Company has been able to raise funds through sales of notes payable to cover this obligation, and it expects to do the same if the payment becomes due in December 2017.

 

Off-Balance Sheet Arrangements

 

During the three months ended March 31, 2017 and 2016, 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 March 31, 2017, using the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our management concluded that, as of March 31, 2017, 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

 

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

 

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

 

In the quarter ended March 31, 2017, the Company issued a total of 25,212,545 shares of common stock (net of stock cancellations). 17,510,638 of those shares were issued to settle amounts owed under notes payable, including accrued and unpaid interest as applicable, to common stock as repayment of the notes (8,503,041 in 2016). No shares were issued to settle amounts owed to certain of the Company’s vendors and employees (2,418,942 in 2016). Between January 1, 2017 and March 31, 2017, a warrant holder exercised 1,656,447 warrants in a cashless exercise to purchase shares (0 between January 1, 2016 and March 31, 2016). The Company sold no shares of its common stock. In total, the Company received $0 as consideration for the exercise of the previously-issued warrants and $0 for the purchase of common stock, for an aggregate sum of $0 (between January 1, 2016 and March 31, 2016, it sold an aggregate 312,500 shares of its common stock at $0.08 per share. In total, the Company received $0 as consideration for the exercise of the previously-issued warrants and $25,000 for the purchase of common stock, for an aggregate sum of $25,000).

 

The following table lists all securities issued during in the three months ended March 31, 2017 without registering the securities under the Securities Act of 1933, as amended (the “Securities Act”):

 

Date  Description   Number   Purchaser   Proceeds   Consideration   Exemption 
1/10/2017   Common Stock Purchase    500,000     Consultant    $ Nil     Advisory Services      Sec. 4(a)(2)  
                               
1/25/17   Common Stock Purchase    5,000,000     Consultant    $Nil     Advisory Services      Sec. 4(a)(2)  
                               
2/24/17   Common Stock Purchase    272,730     Consultant    $Nil     Advisory Services      Sec. 4(a)(2)  
                               
2/24/2017   Common Stock Purchase    272,730     Consultant    $Nil     Advisory Services      Sec. 4(a)(2)  
                               
2/15/2017   Common Stock Purchase    1,656,447     Lender    $Nil     Debt Settlement      Sec. 4(a)(2)  
                               
1/31/2017   Common Stock Purchase    950,000     Lender    $Nil     Debt Settlement      Sec. 4(a)(2)  
                               
2/10/2017   Common Stock Purchase    2,500,000     Lender    $Nil     Debt Settlement      Sec. 4(a)(2)  
                               
3/2/2017   Common Stock Purchase    1,500,000     Lender    $Nil     Debt Settlement      Sec. 4(a)(2)  
                               
3/13/2017   Common Stock Purchase    1,500,000     Lender    $Nil     Debt Settlement      Sec. 4(a)(2)  
                               
3/21/2017   Common Stock Purchase    1,500,000     Lender    $ Nil      Debt Settlement     Sec. 4(a)(2)  
                               
3/28/2017   Common Stock Purchase    2,500,000     Lender    $ Nil      Debt Settlement     Sec. 4(a)(2)  
                               
3/28/2017   Common Stock Purchase    2,060,638     Lender    $ Nil      Debt Settlement     Sec. 4(a)(2)  
                               
3/10/2017   Common Stock Purchase    3,000,000     Lender    $ Nil      Debt Settlement     Sec. 4(a)(2)  
                               
3/31/2017   Common Stock Purchase    2,000,000     Lender    $ Nil      Debt Settlement     Sec. 4(a)(2)  

 

 

33
  

 

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

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The current portion of notes payable on the Company’s Condensed Consolidated Balance Sheets above contains, at March 31, 2017, certain promissory notes on which the Company was in arrears on payments of principal as follows:

 

1. Repayment of a promissory note for $50,000 issued in July 2016. The lender earns interest at a rate of 6% per month. The note is repayable on December 31, 2016. At March 31, 2017, the note was in default, although no demand for repayment has been made by the lender.
   
2. Payment of principal aggregating $286,000 on certain promissory notes issued between November 26, 2014 and September 30, 2016, 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 $591,494 on certain promissory notes issued between May 1, 2016 and September 30, 2016, and maturing between June 14, 2016 and December 31, 2016. Interest is payable in a fixed amount not tied to a specific interest rate.
   
4.  Repayment of promissory notes for $112,737 issued in November 2016. The lender earns interest at a rate of 10% per annum. The note is repayable on November 3, 2016. At March 31, 2017, the note was in default, although no demand for repayment has been made by the lender.
   
5. Repayment of a promissory note for $100,000 issued in December 2015. The lender earns interest at a rate of 10% per month. The Company is obligated to pay late-payment penalties totaling $5,000 per day. The note is repayable on March 9, 2016. At March 31, 2017, the note was in default, although no demand for repayment has been made by the lender. On April 3, 2017, the Company settled the obligation.
   
6. Repayment of promissory notes for $95,061 issued in August 2016. The lender earns interest at a rate of 5% per annum. The notes are payable in 18 equal monthly installments of $8,641. The notes are in default, although no demand for repayment has been made by the lender.
   
7. Payment of principal aggregating $425,000 on certain 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 matured on September 30, 2016. At March 31, 2017, the notes were in default, although no demand for repayment has been made by the lenders.

 

At March 31, 2017, the Company had insufficient cash on hand to repay these notes.

 

34
  

 

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.
     
10.43  

Securities Purchase Agreement with Ira Gaines.

     
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

 

35
  

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Immune Therapeutics, Inc.
     
Date: May 12, 2017 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
     
  Immune Therapeutics, Inc.
     
Date: May 12, 2017 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer

 

36
  

 

 

 

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-15I 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: May 12, 2017 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
    (Principal Executive Officer)

 

   
 

 

I, Peter Aronstam, certify that:

 

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

 

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

 

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

 

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

 

Date: May 12, 2017 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

   
 

 

EX-32.1 3 ex32-1.htm

CERTIFICATION

 

  (2) In connection with the periodic report of Immune Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2017 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: May 12, 2017 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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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2017
May 12, 2017
Document And Entity Information    
Entity Registrant Name Immune Therapeutics, Inc.  
Entity Central Index Key 0001559356  
Document Type 10-Q  
Document Period End Date Mar. 31, 2017  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   304,140,678
Trading Symbol IMUN  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2017  
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Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Current Assets:    
Cash and cash equivalents $ 98,113 $ 74,389
Total current assets 98,113 74,389
Fixed Assets:    
Computer equipment, net of accumulated depreciation of $8,032 and $7,888 respectively 1,706 1,850
Deposits 200 200
Total assets 100,019 76,439
Current Liabilities:    
Accounts payable 1,666,406 1,818,605
Accrued liabilities 3,980,417 3,156,759
Current portion of notes payable, net of debt discount 4,742,259 4,225,419
Total current liabilities 10,389,082 9,200,783
Total liabilities 10,389,082 9,200,783
Stockholders' Deficit:    
Common stock - par value $0.0001; 500,000,000 shares authorized; 275,640,678 and 250,428,133 shares issued and outstanding respectively 27,564 25,043
Additional paid in capital 361,542,431 360,420,026
Stock issuances due 1,432,883 962,429
Prepaid services (876,666) (822,500)
Accumulated deficit (368,288,346) (365,718,976)
Deficit attributable to common stockholders (6,162,134) (5,133,978)
Non-controlling interest (4,126,929) (3,990,366)
Total stockholders' deficit (10,289,063) (9,124,344)
Total liabilities and stockholders' deficit $ 100,019 $ 76,439
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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Statement of Financial Position [Abstract]      
Accumulated depreciation $ 8,032 $ 7,888 $ 7,888
Common stock, par value $ 0.0001 $ 0.0001  
Common stock, shares authorized 500,000,000 500,000,000  
Common stock, shares issued 275,640,678 250,428,133  
Common stock, shares outstanding 275,640,678 250,428,133  
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Income Statement [Abstract]    
Revenues, net $ 3,463
Operating expenses:    
Selling, general and administrative 666,091 939,341
Research and development expense 118,656 (18,842)
Stock issued for services G&A 731,288 1,983,837
Warrant valuation expense 2,078,199
Depreciation and amortization expense 144 547
Total operating expenses 1,516,179 4,983,082
Loss from operations (1,516,179) (4,979,619)
Other income (expense):    
Interest expense (575,828) (301,444)
Loss on settlement of debt (613,926) (1,364,339)
Total other income (expense) (1,189,754) (1,665,783)
Net loss (2,705,933) (6,645,402)
Net loss attributable to non-controlling interest (136,563) (44,120)
Net loss attributable to common shareholders $ (2,569,370) $ (6,601,282)
Basic loss per share to common shareholders $ (0.01) $ (0.03)
Weighted average number of shares outstanding 259,291,541 190,923,381
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Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($)
Common Stock [Member]
Additional Paid-In Capital [Member]
Stock to Be Issued [Member]
Prepaid Services [Member]
Accumulated Deficit [Member]
Non-Controlling Interest [Member]
Total
Balance at Dec. 31, 2016 $ 25,043 $ 360,420,026 $ 962,429 $ (822,500) $ (365,718,976) $ (3,990,366) $ (9,124,344)
Balance, shares at Dec. 31, 2016 250,428,133            
Issuance of common stock for prepaid services $ 605 314,396 470,454 (420,000) $ 365,455
Issuance of common stock for prepaid services, shares 6,045,460           6,045,460
Amortization of prepaid services 365,834 $ 365,834
Issuance of common stock in exchange for debt $ 1,751 808,174 809,925
Issuance of common stock in exchange for debt, shares 17,510,638            
Issuance of common stock for exercise of warrants $ 165 (165)
Issuance of common stock for exercise of warrants, shares 1,656,447            
Net loss (2,569,370) (136,563) (2,705,933)
Balance at Mar. 31, 2017 $ 27,564 $ 361,542,431 $ 1,432,883 $ (876,666) $ (368,288,346) $ (4,126,929) $ (10,289,063)
Balance, shares at Mar. 31, 2017 275,640,678            
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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (2,705,933) $ (6,645,402)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation 144 547
Amortization of debt discount 35,346
Amortization of stock issued for prepaid services 365,834 669,667
Stock issued for services 365,455 1,314,169
Stock warrant expense 2,078,199
Loss on settlement of debt 613,926 1,364,339
Changes in operating assets and liabilities:    
Accounts receivable   (3,463)
Accounts payable 138,840 139,203
Accrued liabilities 656,958 486,373
Prepaid expenses and other current assets   (1,594)
Net cash used in operating activities (529,430) (597,962)
CASH FLOWS FROM INVESTING ACTIVITIES    
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from sale of stock and exercise of warrants 50,000
Payment of notes payable (321,846)
Proceeds from issuance of notes payable 875,000 657,000
Net cash provided by financing activities 553,154 707,000
Net decrease in cash and cash equivalents 23,724 109,038
Cash and cash equivalents at beginning of period 74,389 23,149
Cash and cash equivalents at end of period 98,113 132,817
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 13,000 7,050
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Debt discount 50,000
Shares issued for debt and accrued interest 362,700 2,306,415
Shares issued for accounts payable and accrued expenses 339,339
Cashless exercise of warrants 165
Estimated loss on debt conversion $ 215,000
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Organization and Description of Business
3 Months Ended
Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business

1. Organization and Description of Business

 

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

 

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

 

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

 

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

 

In August 2013, the Company formed its United Kingdom subsidiary, TNI BioTech, LTD (the “UK Subsidiary”). The UK Subsidiary received approval to be considered a micro, small or medium-sized enterprise (“SME”) with the European Medicines Agency (“EMA”) on August 21, 2013. The designation provides the UK Subsidiary with significant discounts when holding meetings or submitting filings to the EMA. On September 19, 2013, the UK Subsidiary submitted a pre-submission package to the EMA regarding Crohn’s Disease. The EMA granted the UK Subsidiary a meeting that took place on September 27, 2013. The UK Subsidiary is eligible to benefit from the provisions for administrative and financial assistance for SMEs set out in Regulation (EC) No 2049/2005. The Company will determine whether or not to apply to obtain EMA benefits once funding becomes available.

 

In December 2013, the Company formed a new subsidiary, Cytocom Inc., to focus on conducting LDN and MENK clinical trials in the United States. In December 2014, the Company finalized the distribution of common stock of Cytocom Inc. to its shareholders. As part of the transaction, the Company retained exclusive rights to all international patents, in-country approvals, formulations, trademarks, manufacturing, marketing, sales, and distributions rights in emerging nations, including Africa, Central America, South America, Russia, India, China, Far East, and The Commonwealth of Independent States (former Soviet Union). The Company will continue to have access to existing clinical data as well as any new data generated by Cytocom Inc. during drug development. On December 8, 2014, the number of Cytocom Inc. shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the transaction, Cytocom Inc. issued 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom Inc. 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 March 31, 2017, the Company’s equity interest had been further reduced to 13.3%, 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.

 

Today, Immune Therapeutics is focused on the commercialization of 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 for chronic often life-threatening diseases through the mobilization of the body’s immune system in Emerging Nations using existing clinical data.

 

Cytocom Inc, 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 our patented therapies with the FDA and EMA.

 

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 experienced a net loss from operations of $2,705,933, and used cash and cash equivalents for operations in the amount of $529,430 during the quarter ended March 31, 2017, resulting in stockholder’s deficit of $10,289,063 at that date.

 

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 the sale of products, additional private or public debt or equity offerings, and it may also seek additional capital through arrangements with strategic partners or from other sources. Based on the Company’s operating plan, existing working capital at March 31, 2017 was not sufficient to meet the cash requirements to fund planned operations through March 31, 2018 without additional sources of cash. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated 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.

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Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2017
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, 2016 (including the notes thereto) set forth in Form 10-K.

  

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, 2016. 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.

 

Revenue Recognition

 

We recognize revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.

 

Use of Estimates

 

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

 

Cash, Cash Equivalents, and Short-Term Investments

 

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

  

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2017, the Company has no cash balances in excess of insured limits.

 

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 accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

 

Fair Value Measurements

 

The ASC Topic 820, Fair Value Measurement, 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.

 

Fixed Assets

 

Fixed assets 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 three months ended March 31, 2017 and March 31, 2016 was $144 and $547, 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 ten to sixteen years. Intangible assets are stated at the lower of cost or estimated fair value. During the years ended December 31, 2016 and December 31, 2015, the Company capitalized $nil and $nil respectively, of such costs incurred for the Company’s acquisition of licenses for the patents. (See Note 10). Amortization expense for the three months ended March 31, 2017 and March 31, 2016 was $0 and $0, respectively.

  

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or change 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. In 2015, the Company determined that the carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. No such impairment charges were recorded in 2016 or the first quarter of 2017.

 

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 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 March 31, 2017 and 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. As of March 31, 2017, and 2016, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

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

 

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

 

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

  

Non-controlling Interest

 

In accordance with ASC Topic 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 net loss per share follows:

 

    For the three months ended
March 31,
 
    2017     2016  
Historical net loss per share:                
Numerator                
Net loss   $ (2,705,933 )   $ (6,645,402 )
Non-controlling interest     (136,563 )     (44,120 )
Net loss attributed to Common stockholders   $ (2,569,370 )   $ (6,601,282 )
                 
Denominator                
Weighted-average common shares outstanding—Denominator for basic net loss per share     259,291,541       190,923,381  
Basic net loss per share attributed to common stockholders   $ (0.01 )   $ (0.03 )

 

The Company’s potential dilutive securities, which include warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

 

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

 

    For the three months ended
March 31,
 
    2017     2016  
Warrants to purchase Common stock     52,525,237       24,731,500  
                 

 

Recent Accounting Standards

 

During the quarter ended March 31, 2017, 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.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

  

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fixed Assets
3 Months Ended
Mar. 31, 2017
Fixed Assets:  
Fixed Assets

3. Fixed Assets

 

    March 31, 2017     December 31, 2016  
Fixed Assets:                
Computer equipment   $ 9,738     $ 9,738  
Less accumulated depreciation     (8,032 )     (7,888 )
Property and equipment, net   $ 1,706     $ 1,850  

 

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

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.7.0.1
Accrued Liabilities
3 Months Ended
Mar. 31, 2017
Payables and Accruals [Abstract]  
Accrued Liabilities

4. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

    March 31, 2017     December 31, 2016  
             
Accrued payroll to officers and others   $ 1,272,703     $ 1,126,261  
Accrued interest and penalties - notes payable     2,412,535       1,902,018  
Estimated legal settlement     128,087       128,087  
Other accrued liabilities     167,092       393  
                 
Total accrued expenses and other liabilities   $ 3,980,417     $ 3,156,759  
XML 20 R11.htm IDEA: XBRL DOCUMENT v3.7.0.1
Notes Payable
3 Months Ended
Mar. 31, 2017
Debt Disclosure [Abstract]  
Notes Payable

5. Notes Payable

 

Notes payable consist of the following:

 

    March 31, 2017     December 31, 2016  
Promissory note issued July 29, 2014 to Ira Gaines. In 2016, the maturity date on the note was extended to December 1, 2017. The note earns interest at a rate of 18% per annum.   $ 100,000     $ 100,000  
                 
Promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt. Lenders earn interest at a rate of 10% per annum, plus a pro-rata share of two percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity. Notes will be repaid in 36 monthly installments of principal and interest commencing no later than October 15, 2015. Notes aggregating $286,000 were in default at March 31, 2017, 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       286,000  
                 
Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and September 30, 2017. Lenders on loans aggregating $505,994 earn interest at rates between 2% 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 $591,494 were in default at March 31, 2017, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders.     704,494       704,494  
                 
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. At March 31, 2017, the notes were in default, although no demand for repayment has been made by the lenders.     425,000       425,000  
                 
Promissory note issued in December 2015. The lender earns interest at a rate of 10% per month. The note is repayable on March 9, 2016. At March 31, 2017, the note was in default, although no demand for repayment has been made by the lender. On April 3, 2017, the Company settled the obligation.     100,000       100,000  

 

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. The notes were repaid or converted into stock in the quarter ended March 31, 2017.     -       554,882  
                 
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. The Company was unable to repay the note at maturity and the note is in default.     112,737       112,737  
                 
Promissory note issued in July 2016. The note was repayable on October 5, 2016 but was extended to December 31, 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       50,000  
                 
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. The Company was unable to repay the note at maturity and the note is in default.     180,000       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. The note was in default on March 31, 2017.     95,061       120,987  
                 
Promissory notes issued between July 1, 2016 and December 31, 2016. Lenders earn interest at 2% per annum. The notes mature on September 30, 2017.     256,000       256,000  
                 
Notes aggregating $1,354,000 were issued in the fourth quarter of 2016. The notes accrue interest at 2% per annum and mature between November 1, 2017 and December 31, 2017.     1,354,000       1,354,000  
                 
Notes aggregating $500,000 were issued in the first quarter of 2017. The notes accrue interest at 2% per annum and mature between January 12, 2018 and March 31, 2018.     500,000       -  
                 
Promissory note issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 5, 2017.     50,000       -  
                 
Promissory note issued February 28, 2017, originally for $675,000, convertible into common stock of the Company in accordance with the conversion provisions of the note. In March 2017, $112,700 of the note was converted into 5 million common shares of the Company.     562,300       -  
                 
Less: Original issue discounts on notes payable and warrants issued with notes.     (33,333 )     (18,681 )
                 
Total     4,742,259       4,225,419  
                 
Less: Current Portion   $ (4,742,259 )   $ (4,225,419 )
                 
Long-Term debt, less current portion   $ -     $ -  

  

As of March 31, 2017, the Company had accrued $2,412,535 in unpaid interest and default penalties. During the quarter ended March 31, 2017, 17,510,638 shares with a fair value of $809,925 were issued by the Company for settlement of promissory notes.

XML 21 R12.htm IDEA: XBRL DOCUMENT v3.7.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants
3 Months Ended
Mar. 31, 2017
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 March 31, 2017 and 2016, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of March 31, 2017, the Company had 275,640,678 shares of common stock outstanding, and 250,428,133 outstanding as of December 31, 2016.

 

Stock Warrants

 

In the quarter ended March 31, 2017, there were no new warrants issued by the Company.

 

There were no modifications of the terms of any warrants issued by the Company in the quarters ended March 31, 2017 and 2016.

 

Following is a summary of outstanding stock warrants at March 31, 2017 and activity during the three months then ended:

 

    Number of
Shares
    Exercise
Price
    Weighted
Average
Price
 
Warrants as of December 31, 2016     59,191,904     0.03-15.00     $ 0.35  
                         
Issued in 2017     -     $ -     $ -  
                         
Expired and forfeited     5,010,220     $ 0.03     $ 0.03  
                         
Exercised     1,656,447     $ 0.03     $ 0.03  
                         
Warrants as of March 31, 2017     52,525,237      0.03-15.00     $ 0.39  

 

Summary of outstanding warrants as of March 31, 2017:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Fourth Quarter 2017     350,000     $ 1.50-9.00       0.50  
First Quarter 2018     127,500     $ 15.00       0.75  
Second Quarter 2018     33,334     $ 15.00       1.00  
Third Quarter 2018     250,000     $ 1.50       1.25  
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       1.50  
First Quarter 2019     4,024,000     $ 0.50-2.00       1.75  
Second Quarter 2019     135,000     $ 0.07-0.23       2.00  
Third Quarter 2019     260,000     $ 0.50-1.50       2.25  
Fourth Quarter 2019     400,000     $ 0.14       2.50  
Second Quarter 2020     300,000     $ 0.50       3.00  
Fourth Quarter 2020     1,000,000     $ 0.20       3.50  
First Quarter 2021     12,600,000     $ 0.20       3.75  
Second Quarter 2021     23,806,237     $ 0.03-0.20       4.00  
Third Quarter 2021     3,150,000     $ 0.15-0.20       4.25  
XML 22 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stock Compensation
3 Months Ended
Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Compensation

7. Stock Compensation

 

Shares Issued for Services

 

During the quarters ended March 31, 2017 and 2016, the Company issued 6,045,460 and 19,043,000 shares of common stock respectively for consulting fees. The Company valued these shares at $365,455 and $1,314,169 respectively, based upon the fair market value of the common stock at the dates of the agreements. The consulting fees are amortized over the contract periods which are typically between 12 and 24 months. The amortization of prepaid services totaled $365,834 and $669,667 for the quarters ended March 31, 2017 and 2016.

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Taxes - Results of Operations
3 Months Ended
Mar. 31, 2017
Income Tax Disclosure [Abstract]  
Income Taxes - Results of Operations

8. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended March 31, 2017 and 2016 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, 2016. ASC Topic 740 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company’s ability to realize the benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize revenue, we believe that the full valuation allowance should be provided.

 

Our effective tax rate for fiscal years 2016 and 2015 was 0%. Our tax rate can be affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in jurisdictions. It may also be affected by discrete items that may occur in any given year, but are not consistent from year to year.

 

As of December 31, 2016, we have estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $79,900,000, which will expire in 2032-2035.

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.7.0.1
Licenses and Supply Agreements
3 Months Ended
Mar. 31, 2017
Licenses And Supply Agreements  
Licenses and Supply Agreements

9. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

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

 

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

 

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

 

Patent License Agreements

 

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

  

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

 

The Smith Agreement requires the Company to (i) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan, (ii) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable, (iii) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use, and (iv) make the first commercial sale of a licensed product by March of 2017. As of March 31, 2017, the Company had not made a commercial sale of licensed product. Under the Smith Agreement, if the licensors determine that the Company has not fulfilled its obligations, they may furnish the Company with written notice of such determination, in which case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing of this Form 10-Q, the licensors had not provided any such notice of determination under the agreement.

 

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

 

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

 

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

 

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

 

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

  

The Foundation Agreement requires the Company to: (a) use commercially reasonable efforts to develop, commercialize, market and sell licensed products in a manner consistent with a business plan; (b) expend a minimum amount of funds per annum to develop and commercialize licensed products as soon as practicable; (c) obtain all requisite regulatory approvals needed to use or sell licensed products in the field of use; and (d) make the first commercial sale of a licensed product by December 31, 2016. As of March 31, 2017, the Company had not made a commercial sale of licensed product. Under the Foundation Agreement, if the licensor determines that the Company has not fulfilled its obligations, it may furnish the Company with written notice of such determination, in which case the Company must either fulfill the obligation or negotiate a mutually acceptable revised commitment. As of the date of the filing of this Form 10-Q, the licensor had not provided any such notice of determination under the agreement.

 

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

 

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

 

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

 

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

 

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

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Commitments and Contingencies
3 Months Ended
Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

10. Commitments and Contingencies

 

Malawi Treatment Facilities

 

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

  

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

 

a. The first protocol, submitted jointly with The Jack Brewer Foundation (“JBF Worldwide”), received PMPB approval on November 11, 2015. The protocol covers a 12-month trial for a “Single Visit Approach to Cervical Cancer Prevention.” The approach is designed to deliver a preventive and simple procedure that can be performed in a clinical setting without the use of a laboratory and to allow for immediate treatment of any precancerous lesions utilizing Wallach LL100 Cryosurgical systems. The protocol provides for 50% of the patient group to be put on Lodonal™ to determine if the drug lowers the number of opportunistic infections during the year, and if it can be shown that LDN increases CD4, CE8, NK and T cell count, which would show that the incidence rates of opportunistic infection could decrease with Lodonal™ and that Lodonal™ could be used as a prophylaxis to prevent substantial HIV-related morbidity in Malawi. The PMPB approved the trial in late 2016 and recruitment began in late 2016 and continued through first quarter of 2017, with the trial now ongoing.
   
b. The second protocol, which has not yet been approved, covers a trial using Lodonal™ for the treatment of cancer. The Company has put this trial on hold as it may not be necessary with the approval in Nigeria in addition to the pending approval in Kenya and Senegal for Lodonal™ for the treatment of cancer.

 

Distribution Agreements in Nigeria

 

Effective November 9, 2012, we signed an exclusive Distribution Agreement with G-Ex Technologies/St. Maris Pharma and GB Pharma Holdings, LLC for the Federal Republic of Nigeria.

 

The parties have been unable to perform under the agreement because a certificate of free sale was not obtained by the Company until November of 2013, and no extension has been granted.

 

In October 2013, the Company announced the signing of a Distribution Agreement with AHAR Pharma, a Nigerian company, to market Lodonal™, in Nigeria for the treatment of autoimmune diseases and cancer. AHAR intends to distribute Lodonal™ through a local distributor network, an Internet client base and directly to hospitals, pharmacists and doctors in Nigeria. The agreement expires in December 2018. The Company expects to implement the agreement in 2017, upon receipt of approvals from NAFDAC for the sale of LodonalTM in Nigeria. Under the agreement, the Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma’s first-year purchase commitment.

 

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

 

Agreements with Hubei Qianjiang Pharmaceutical Company

 

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

 

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

 

Exploratory Toxicology (nGLP)

 

  Dose range finding studies
  Different species and methods of administration
  Multiple dosing regimens
  Estimate the response vs. dose given

 

Definitive Toxicology (GLP)

 

  Performed in collaboration with Calvert Laboratories (USA) and MPI/Medicillon (China)
  General toxicology studies
  Different species and methods of administration
  Immunogenicity study with NHPs

 

Special Toxicology Studies (planned)

 

Pursuant to the Amendment, Qianjiang Pharmaceutical has made certain funds available from the co-administrative account opened by Qianjiang Pharmaceutical under the Venture Agreement, in accordance with an approved budget and timeline set forth in the Amendment. A portion of these funds are expected to be used by Cytocom to run PK and Dosing trials for MENK in the United States in 2016. The Amendment requires Cytocom and Qianjiang Pharmaceutical to meet with the China State Food and Drug Administration to determine that PK and Dosing Trials completed in the United States will be acceptable. All developments and trials run by Cytocom in the U.S. or the European Union will be used for requesting registration approval in China.

 

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

 

In December of 2016 Qianjiang Pharmaceutical completed the following documents:

 

Exploratory Toxicology (nGLP)

 

  Dose range finding studies
  Different species and methods of administration
  Multiple dosing regimens
  Estimate the response vs. dose given

 

Definitive Toxicology (GLP)

 

  Performed in collaboration with Calvert Laboratories (USA) and MPI/Medicillon (China)
  General toxicology studies
  Different species and methods of administration
  Immunogenicity study with NHPs

 

In addition to the pharmacology and toxicology studies, Qianjiang Pharmaceutical and China Peptide completed the formulation and CMC necessary to scale up manufacturing of MENK.

 

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.

 

In January of 2017, Acromax obtained from the Ministry of Public Health and Social Assistance a Medications and Specialized Pharmaceuticals Registration Certification for LodonalTM, which allows for the manufacture and sale of LodonalTM in the Dominican Republic and for export. The Ministry also issued a Certificate of Pharmaceutical Product for Nigeria, Kenya, Senegal and Malawi, which will allow for the export of LodonalTM to those countries where we have drug and marketing approval.

 

Operating Leases

 

At March 31, 2017, the Company was a party to an agreement to lease office space in Orlando, Florida. Rent expense for the quarters ended March 31, 2017 and 2016 was $4,129 and $(114,794), respectively. The 2016 expense reflects the reversal of accruals for rent expense in prior years, including the settlement with E.J. Krause & Associates, Inc.

 

Legal Proceedings

 

None.

XML 26 R17.htm IDEA: XBRL DOCUMENT v3.7.0.1
Subsequent Events
3 Months Ended
Mar. 31, 2017
Subsequent Events [Abstract]  
Subsequent Events

11. Subsequent Events

 

The Company issued 28,500,000 shares of common stock between March 31, 2017 and May 12, 2017, of which, 13,000,000 shares are for consulting fees, 5,500,000 shares are for debt conversions and settlements and 10,000,000 shares were sold for cash.

 

On April 4, 2017, the Company entered into a settlement agreement (the “Settlement Agreement”) with Mr. Marshall Faulk (“Faulk”). Pursuant to the Settlement Agreement, Faulk agreed to assign a promissory note issued by the Company to Faulk on December 10, 2015 in the principal amount of $100,000.00 (the “Prior Note”), under which the Company was in default, to Mr. Robert J. Dailey (“Dailey”) pursuant to a Debt Purchase and Exchange Agreement (the “Exchange Agreement”) between the parties. In addition, Faulk agreed to waive all claims against the Company relating to the Prior Note. In consideration for the foregoing, the Company agreed to issue Faulk 2,000,000 restricted common shares.

 

On May 1, 2017, the Company issued a warrant to purchase 1,500,000 shares of the Company’s common stock, at an exercise price of $0.15 per share. The warrant expires on May 1, 2022.

 

As of May 12, 2017, the Company had outstanding 304,140,678 shares of common stock.

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2017
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, 2016 (including the notes thereto) set forth in Form 10-K.

  

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, 2016. 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.

Revenue Recognition

Revenue Recognition

 

We recognize revenue on sales to customers and distributors upon satisfaction of our performance obligations when the goods are shipped. For consignment sales, we recognize revenue when the goods are pulled from consignment inventory.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

Leases

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.

Use of Estimates

Use of Estimates

 

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

Cash, Cash Equivalents, and Short-term Investments

Cash, Cash Equivalents, and Short-Term Investments

 

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

Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company is exposed to credit risk, subject to federal deposit insurance, in the event of a default by the financial institutions holding its cash and cash equivalents to the extent of amounts recorded on the balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2017, the Company has no cash balances in excess of insured limits.

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 accounts payable are accounted for at cost which approximates fair value due to the relatively short maturity of these instruments. The carrying value of notes payable also approximate fair value since they bear market rates of interest and other terms. None of these instruments are held for trading purposes.

Fair Value Measurements

Fair Value Measurements

 

The ASC Topic 820, Fair Value Measurement, 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.

Fixed Assets

Fixed Assets

 

Fixed assets 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 three months ended March 31, 2017 and March 31, 2016 was $144 and $547, 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 ten to sixteen years. Intangible assets are stated at the lower of cost or estimated fair value. During the years ended December 31, 2016 and December 31, 2015, the Company capitalized $nil and $nil respectively, of such costs incurred for the Company’s acquisition of licenses for the patents. (See Note 10). Amortization expense for the three months ended March 31, 2017 and March 31, 2016 was $0 and $0, respectively.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or change 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. In 2015, the Company determined that the carrying amount recorded for the acquisition of licenses and patents related to LDN were impaired, and recorded an impairment loss of $5,226,352. No such impairment charges were recorded in 2016 or the first quarter of 2017.

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 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 March 31, 2017 and 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. As of March 31, 2017, and 2016, the Company has not accrued any interest or penalties related to uncertain tax positions.

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

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

 

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

 

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

Non-controlling Interest

Non-controlling Interest

 

In accordance with ASC Topic 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 net loss per share follows:

 

    For the three months ended
March 31,
 
    2017     2016  
Historical net loss per share:                
Numerator                
Net loss   $ (2,705,933 )   $ (6,645,402 )
Non-controlling interest     (136,563 )     (44,120 )
Net loss attributed to Common stockholders   $ (2,569,370 )   $ (6,601,282 )
                 
Denominator                
Weighted-average common shares outstanding—Denominator for basic net loss per share     259,291,541       190,923,381  
Basic net loss per share attributed to common stockholders   $ (0.01 )   $ (0.03 )

 

The Company’s potential dilutive securities, which include warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

 

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

 

    For the three months ended
March 31,
 
    2017     2016  
Warrants to purchase Common stock     52,525,237       24,731,500  
Recent Accounting Standards

Recent Accounting Standards

 

During the quarter ended March 31, 2017, 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.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

  

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2017
Accounting Policies [Abstract]  
Schedule of Basic and Diluted Net Loss Per Share

A calculation of basic net loss per share follows:

 

    For the three months ended
March 31,
 
    2017     2016  
Historical net loss per share:                
Numerator                
Net loss   $ (2,705,933 )   $ (6,645,402 )
Non-controlling interest     (136,563 )     (44,120 )
Net loss attributed to Common stockholders   $ (2,569,370 )   $ (6,601,282 )
                 
Denominator                
Weighted-average common shares outstanding—Denominator for basic net loss per share     259,291,541       190,923,381  
Basic net loss per share attributed to common stockholders   $ (0.01 )   $ (0.03 )

Schedule of Antidilutive Securities

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

 

    For the three months ended
March 31,
 
    2017     2016  
Warrants to purchase Common stock     52,525,237       24,731,500  
XML 29 R20.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fixed Assets (Tables)
3 Months Ended
Mar. 31, 2017
Fixed Assets:  
Schedule of Fixed Assets
    March 31, 2017     December 31, 2016  
Fixed Assets:                
Computer equipment   $ 9,738     $ 9,738  
Less accumulated depreciation     (8,032 )     (7,888 )
Property and equipment, net   $ 1,706     $ 1,850  
XML 30 R21.htm IDEA: XBRL DOCUMENT v3.7.0.1
Accrued Liabilities (Tables)
3 Months Ended
Mar. 31, 2017
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities

Accrued expenses and other liabilities consist of the following:

 

    March 31, 2017     December 31, 2016  
             
Accrued payroll to officers and others   $ 1,272,703     $ 1,126,261  
Accrued interest and penalties - notes payable     2,412,535       1,902,018  
Estimated legal settlement     128,087       128,087  
Other accrued liabilities     167,092       393  
                 
Total accrued expenses and other liabilities   $ 3,980,417     $ 3,156,759  
XML 31 R22.htm IDEA: XBRL DOCUMENT v3.7.0.1
Notes Payable (Tables)
3 Months Ended
Mar. 31, 2017
Debt Disclosure [Abstract]  
Schedule of Notes Payable

Notes payable consist of the following:

 

    March 31, 2017     December 31, 2016  
Promissory note issued July 29, 2014 to Ira Gaines. In 2016, the maturity date on the note was extended to December 1, 2017. The note earns interest at a rate of 18% per annum.   $ 100,000     $ 100,000  
                 
Promissory notes issued between November 26, 2014 and September 30, 2015, to raise up to $2,000,000 in debt. Lenders earn interest at a rate of 10% per annum, plus a pro-rata share of two percent of the Company’s gross receipts for sales of IRT-103-LDN in perpetuity. Notes will be repaid in 36 monthly installments of principal and interest commencing no later than October 15, 2015. Notes aggregating $286,000 were in default at March 31, 2017, 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       286,000  
                 
Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and September 30, 2017. Lenders on loans aggregating $505,994 earn interest at rates between 2% 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 $591,494 were in default at March 31, 2017, as the Company was unable to repay those notes on their due dates. No demands for repayment have been made by the lenders.     704,494       704,494  
                 
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. At March 31, 2017, the notes were in default, although no demand for repayment has been made by the lenders.     425,000       425,000  
                 
Promissory note issued in December 2015. The lender earns interest at a rate of 10% per month. The note is repayable on March 9, 2016. At March 31, 2017, the note was in default, although no demand for repayment has been made by the lender. On April 3, 2017, the Company settled the obligation.     100,000       100,000  

 

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. The notes were repaid or converted into stock in the quarter ended March 31, 2017.     -       554,882  
                 
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. The Company was unable to repay the note at maturity and the note is in default.     112,737       112,737  
                 
Promissory note issued in July 2016. The note was repayable on October 5, 2016 but was extended to December 31, 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       50,000  
                 
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. The Company was unable to repay the note at maturity and the note is in default.     180,000       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. The note was in default on March 31, 2017.     95,061       120,987  
                 
Promissory notes issued between July 1, 2016 and December 31, 2016. Lenders earn interest at 2% per annum. The notes mature on September 30, 2017.     256,000       256,000  
                 
Notes aggregating $1,354,000 were issued in the fourth quarter of 2016. The notes accrue interest at 2% per annum and mature between November 1, 2017 and December 31, 2017.     1,354,000       1,354,000  
                 
Notes aggregating $500,000 were issued in the first quarter of 2017. The notes accrue interest at 2% per annum and mature between January 12, 2018 and March 31, 2018.     500,000       -  
                 
Promissory note issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 5, 2017.     50,000       -  
                 
Promissory note issued February 28, 2017, originally for $675,000, convertible into common stock of the Company in accordance with the conversion provisions of the note. In March 2017, $112,700 of the note was converted into 5 million common shares of the Company.     562,300       -  
                 
Less: Original issue discounts on notes payable and warrants issued with notes.     (33,333 )     (18,681 )
                 
Total     4,742,259       4,225,419  
                 
Less: Current Portion   $ (4,742,259 )   $ (4,225,419 )
                 
Long-Term debt, less current portion   $ -     $ -  
XML 32 R23.htm IDEA: XBRL DOCUMENT v3.7.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants (Tables)
3 Months Ended
Mar. 31, 2017
Equity [Abstract]  
Schedule of Outstanding Stock Warrants

Following is a summary of outstanding stock warrants at March 31, 2017 and activity during the three months then ended:

 

    Number of
Shares
    Exercise
Price
    Weighted
Average
Price
 
Warrants as of December 31, 2016     59,191,904     0.03-15.00     $ 0.35  
                         
Issued in 2017     -     $ -     $ -  
                         
Expired and forfeited     5,010,220     $ 0.03     $ 0.03  
                         
Exercised     1,656,447     $ 0.03     $ 0.03  
                         
Warrants as of March 31, 2017     52,525,237      0.03-15.00     $ 0.39  
Summary of Outstanding Warrants

Summary of outstanding warrants as of March 31, 2017:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Fourth Quarter 2017     350,000     $ 1.50-9.00       0.50  
First Quarter 2018     127,500     $ 15.00       0.75  
Second Quarter 2018     33,334     $ 15.00       1.00  
Third Quarter 2018     250,000     $ 1.50       1.25  
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       1.50  
First Quarter 2019     4,024,000     $ 0.50-2.00       1.75  
Second Quarter 2019     135,000     $ 0.07-0.23       2.00  
Third Quarter 2019     260,000     $ 0.50-1.50       2.25  
Fourth Quarter 2019     400,000     $ 0.14       2.50  
Second Quarter 2020     300,000     $ 0.50       3.00  
Fourth Quarter 2020     1,000,000     $ 0.20       3.50  
First Quarter 2021     12,600,000     $ 0.20       3.75  
Second Quarter 2021     23,806,237     $ 0.03-0.20       4.00  
Third Quarter 2021     3,150,000     $ 0.15-0.20       4.25  
XML 33 R24.htm IDEA: XBRL DOCUMENT v3.7.0.1
Organization and Description of Business (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 08, 2014
Apr. 30, 2016
Mar. 31, 2014
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2013
Dec. 31, 2016
Net loss       $ 2,705,933 $ 6,645,402    
Cash equivalents       529,430      
Stockholders equity       $ 10,289,063     $ 9,124,344
Cytocom Inc., [Member]              
Number of shares issued during period 113,242,522         140,100,000  
Percentage of stake issued during period       13.30%   55.30%  
Reserve stock split description   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.          
Irish Limited Liability [Member]              
Percentage of low corporate income tax rate     12.50%        
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies (Details Narrative)
3 Months Ended 12 Months Ended
Mar. 31, 2017
USD ($)
Segment
Mar. 31, 2016
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Maximum of annual gross revenue     $ 1,000,000,000  
Federal deposit insurance corporation value $ 250,000      
Number of operating segment | Segment 1      
Depreciation expense $ 144 $ 547    
Intangible assets cost capitalized and amortized    
Amortization expense 0 $ 0    
Impairment loss     $ 5,226,352
Accrued interest or penalties related to uncertain tax positions      
Minimum [Member]        
Property and equipment useful lives 3 years      
Minimum [Member] | Intangible Assets [Member]        
Intangible assets useful lives 10 years      
Maximum [Member]        
Property and equipment useful lives 5 years      
Maximum [Member] | Intangible Assets [Member]        
Intangible assets useful lives 16 years      
Property and Equipment [Member] | Minimum [Member]        
Property and equipment useful lives 3 years      
Property and Equipment [Member] | Maximum [Member]        
Property and equipment useful lives 5 years      
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies - Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Accounting Policies [Abstract]    
Numerator, Net loss $ (2,705,933) $ (6,645,402)
Numerator, Non-controlling interest (136,563) (44,120)
Numerator, Net loss attributed to Common stockholders $ (2,569,370) $ (6,601,282)
Denominator, Weighted-average common shares outstanding-Denominator for basic net loss per share 259,291,541 190,923,381
Denominator, Basic net loss per share attributed to common stockholders $ (0.01) $ (0.03)
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.7.0.1
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Accounting Policies [Abstract]    
Potentially dilutive securities 52,525,237 24,731,500
XML 37 R28.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fixed Assets (Details Narrative)
3 Months Ended
Mar. 31, 2017
Minimum [Member]  
Depreciable asset lives 3 years
Maximum [Member]  
Depreciable asset lives 5 years
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Mar. 31, 2016
Fixed Assets:      
Computer equipment $ 9,738   $ 9,738
Less accumulated depreciation (8,032) $ (7,888) (7,888)
Property and equipment, net $ 1,706 $ 1,850 $ 1,850
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.7.0.1
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Payables and Accruals [Abstract]    
Accrued payroll to officers and others $ 1,272,703 $ 1,126,261
Accrued interest and penalties - notes payable 2,412,535 1,902,018
Estimated legal settlement 128,087 128,087
Other accrued liabilities 167,092 393
Total accrued expenses and other liabilities $ 3,980,417 $ 3,156,759
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.7.0.1
Notes Payable (Details Narrative)
3 Months Ended
Mar. 31, 2017
USD ($)
shares
Debt Disclosure [Abstract]  
Accrued unpaid interest $ 2,412,535
Issuance of common stock for interest expense, shares | shares 17,510,638
Issuance of common stock for interest expense $ 809,925
XML 41 R32.htm IDEA: XBRL DOCUMENT v3.7.0.1
Notes Payable - Schedule of Notes Payable (Details) - USD ($)
Mar. 31, 2017
Dec. 31, 2016
Jul. 31, 2016
Total $ 4,742,259 $ 4,225,419  
Less: Original issue discounts on notes payable and warrants issued with notes (33,333) (18,681) $ 30,000
Less: Current portion (4,742,259) (4,225,419)  
Long-Term debt, less current portion  
Notes Payable One [Member]      
Total 100,000 100,000  
Notes Payable Two [Member]      
Total 286,000 286,000  
Notes Payable Three [Member]      
Total 704,494 704,494  
Notes Payable Four [Member]      
Total 425,000 425,000  
Notes Payable Five [Member]      
Total 100,000 100,000  
Notes Payable Six [Member]      
Total 554,882  
Notes Payable Seven [Member]      
Total 112,737 112,737  
Notes Payable Eight [Member]      
Total 50,000 50,000  
Notes Payable Nine [Member]      
Total 180,000 180,000  
Notes Payable Ten [Member]      
Total 95,061 120,987  
Notes Payable Eleven [Member]      
Total 256,000 256,000  
Notes Payable Twelve [Member]      
Total 1,354,000 1,354,000  
Notes Payable Thirteen [Member]      
Total 500,000  
Notes Payable Fourteen [Member]      
Total 50,000  
Notes Payable Fifteen [Member]      
Total $ 562,300  
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.7.0.1
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical)
3 Months Ended 12 Months Ended
Feb. 28, 2017
USD ($)
Jan. 25, 2017
Aug. 31, 2016
USD ($)
Installments
Jul. 31, 2016
USD ($)
Jun. 02, 2016
Nov. 03, 2015
Jul. 29, 2014
Mar. 31, 2017
USD ($)
Doses
shares
Mar. 31, 2016
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
Sep. 30, 2015
USD ($)
Note matures date       Apr. 07, 2017   Nov. 03, 2016            
Percentage of interest rate per annum     5.00% 6.00%   10.00%           10.00%
Maximum amount raise in debt     $ 149,854                 $ 2,000,000
Number of installments, months     18         36        
Debt instrument maturity date description         October 1, 2016 and January 31, 2017              
Original issuance discount       $ 30,000       $ (33,333)   $ (18,681)    
Proceeds from issuance of debt       $ 150,000       875,000 $ 657,000      
Debt instrument, periodic payment, principal     $ 8,642                  
Number of shares converted amount $ 675,000             $ 112,700        
Number of shares converted | shares               5,000,000        
December 31, 2017 [Member]                        
Percentage of interest rate per annum                   2.00%    
Notes aggregating default amount                   $ 1,354,000    
Debt instrument maturity date description                   November 1, 2017 and December 31, 2017    
March 31, 2018 [Member]                        
Percentage of interest rate per annum               2.00%        
Notes aggregating default amount               $ 500,000        
Debt instrument maturity date description               January 12, 2018 and March 31, 2018        
Lenders [Member]                        
Note matures date                   Sep. 30, 2017    
Percentage of interest rate per annum                   2.00%    
Debt instrument maturity date description                   between July 1, 2016 and December 31, 2016    
April 29, 2015 [Member] | Cytocom Inc., [Member]                        
Note matures date                     Sep. 30, 2016  
April 29, 2015 [Member] | Minimum [Member] | Cytocom Inc., [Member]                        
Percentage of interest rate per annum                     5.00%  
April 29, 2015 [Member] | Maximum [Member] | Cytocom Inc., [Member]                        
Percentage of interest rate per annum                     10.00%  
Ira Gaines [Member]                        
Note matures date             Dec. 01, 2017          
Percentage of interest rate per annum             18.00%          
Lenders [Member]                        
Note matures date   Jul. 05, 2017                    
Percentage of interest rate per annum   7.00%                    
Notes aggregating default amount               $ 286,000        
Lenders [Member] | Minimum [Member]                        
Percentage of interest rate per annum                   2.00%    
Lenders [Member] | Maximum [Member]                        
Percentage of interest rate per annum                   18.00%    
Lenders [Member] | May 1, 2015 [Member]                        
Note matures date                   Sep. 30, 2017    
Notes aggregating default amount                   $ 591,494    
Aggregating loan                   505,994    
Accrued interest                   $ 198,500    
Lenders [Member]                        
Notes aggregating default amount               $ 100,000        
Lender [Member]                        
Percentage of interest rate per annum                     10.00%  
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.7.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants (Details Narrative) - $ / shares
3 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Equity [Abstract]    
Common stock, shares authorized 500,000,000 500,000,000
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares issued 275,640,678 250,428,133
Common stock, shares outstanding 275,640,678 250,428,133
Number of warrants issued during period  
XML 44 R35.htm IDEA: XBRL DOCUMENT v3.7.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants - Schedule of Outstanding Stock Warrants (Details) - Warrant [Member]
3 Months Ended
Mar. 31, 2017
$ / shares
shares
Warrants, Number of shares Beginning balance | shares 59,191,904
Warrants, Number of shares Issued | shares
Warrants, Number of shares Expired and forfeited | shares 5,010,220
Warrants, Number of shares Exercised | shares 1,656,447
Warrants, Number of shares Ending balance | shares 52,525,237
Exercise Price, Issued
Exercise Price, Expired and forfeited 0.03
Exercise Price, Exercised 0.03
Weighted average exercise price, Beginning balance 0.35
Weighted average exercise price, Issued
Weighted average exercise price, Expired and forfeited 0.03
Weighted average exercise price, Exercised 0.03
Weighted average exercise price, Ending balance 0.39
Minimum [Member]  
Exercise Price, Beginning balance 0.03
Exercise Price, Issued
Exercise Price, Ending balance 0.03
Maximum [Member]  
Exercise Price, Beginning balance 15.00
Exercise Price, Issued
Exercise Price, Ending balance $ 15.00
XML 45 R36.htm IDEA: XBRL DOCUMENT v3.7.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants - Summary of Outstanding Warrants (Details)
3 Months Ended
Mar. 31, 2017
$ / 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) 6 months
First Quarter 2018 [Member]  
Number of Shares | shares 127,500
Exercise Price Upper Limit $ 15.00
Remaining Life (years) 9 months
Second Quarter 2018 [Member]  
Number of Shares | shares 33,334
Exercise Price Upper Limit $ 15.00
Remaining Life (years) 1 year
Third Quarter 2018 [Member]  
Number of Shares | shares 250,000
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 1 year 3 months
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) 1 year 6 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) 1 year 9 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
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) 2 years 3 months
Fourth Quarter 2019 [Member]  
Number of Shares | shares 400,000
Exercise Price Upper Limit $ 0.14
Remaining Life (years) 2 years 6 months
Second Quarter 2020 [Member]  
Number of Shares | shares 300,000
Exercise Price Upper Limit $ 0.50
Remaining Life (years) 3 years
Fourth Quarter 2020 [Member]  
Number of Shares | shares 1,000,000
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 3 years 6 months
First Quarter 2021 [Member]  
Number of Shares | shares 12,600,000
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 3 years 9 months
Second Quarter 2021 [Member]  
Number of Shares | shares 23,806,237
Exercise Price Lower Limit $ 0.03
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 4 years
Third Quarter 2021 [Member]  
Number of Shares | shares 3,150,000
Exercise Price Lower Limit $ 0.15
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 4 years 3 months
XML 46 R37.htm IDEA: XBRL DOCUMENT v3.7.0.1
Stock Compensation (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Number of common stock issued for consulting fees 6,045,460 19,043,000
Number of common stock issued for consulting fees, value $ 365,455 $ 1,314,169
Amortization of prepaid services $ 365,834 $ 669,667
Minimum [Member]    
Consulting fees amortized period 12 months  
Maximum [Member]    
Consulting fees amortized period 24 months  
XML 47 R38.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Taxes - Results of Operations (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]    
Effective tax rate 0.00% 0.00%
Operating loss carryforwards $ 79,900,000  
Operating loss carryforwards expire term expire in 2032-2035.  
XML 48 R39.htm IDEA: XBRL DOCUMENT v3.7.0.1
Licenses and Supply Agreements (Details Narrative) - USD ($)
1 Months Ended 12 Months Ended
Sep. 24, 2014
Aug. 06, 2014
Dec. 24, 2012
Aug. 13, 2012
Apr. 24, 2012
May 31, 2013
Dec. 31, 2013
Young Agreement [Member]              
Patent liability             $ 118,333
Cost of patent             $ 1,372,000
Percentage of royalty payment             1.00%
Smith Agreement [Member]              
Number of shares acquired in exchange for common stock 1,000,000   300,000        
Acquisition value $ 270,000   $ 2,880,384        
Fair market value acquired     2,715,000        
Payments to acquire patents     165,384        
Smith Agreement [Member] | Initial License Fee [Member]              
Payments to acquire patents     100,000        
Smith Agreement [Member] | Expenses [Member]              
Payments to acquire patents     $ 65,384        
Shan Agreement [Member]              
Number of shares issue upon final transfer of licenses           500,000  
Number of common stock shares issued during period   500,000          
TNI BioTech IP, Inc. [Member]              
Number of shares acquired in exchange for common stock         20,250,000    
Acquisition value         $ 98,000,000    
Dr. Plotnikoff [Member]              
Number of shares acquired in exchange for common stock         8,000,000    
TNI IP's Management [Member]              
Number of shares acquired in exchange for common stock         12,250,000    
Acquisition value         $ 16,006,000    
Dr. Bernard Bihari [Member] | Young Agreement [Member]              
Number of shares acquired in exchange for common stock       540,000      
Acquisition value       $ 972,000      
Assumed liabilities       $ 400,000      
XML 49 R40.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Oct. 18, 2012
Oct. 31, 2013
Mar. 31, 2017
Mar. 31, 2016
Cash rental expense       $ (114,794)
AHAR Pharma [Member]        
Distribution agreement, description   the Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma’s first-year purchase commitment.    
Agreements With Hubei Qianjiang Pharmaceutical Company [Member]        
Percentage of gross sales 6.00%      
Complete Pharmacy and Medical Solutions, LLC [Member]        
Ramp up costs, percentage     100.00%  
XML 50 R41.htm IDEA: XBRL DOCUMENT v3.7.0.1
Subsequent Events (Details Narrative) - USD ($)
3 Months Ended
May 12, 2017
May 12, 2017
May 01, 2017
Apr. 04, 2017
Mar. 31, 2017
Dec. 31, 2016
Aug. 31, 2016
Sep. 30, 2015
Number of shares for debt conversion and settlements         17,510,638      
Debt principal amount             $ 149,854 $ 2,000,000
Common stock, shares outstanding         275,640,678 250,428,133    
Subsequent Event [Member]                
Number of common stock issued 28,500,000              
Number of shares sold for cash 10,000,000              
Warrant to purchase of common stock     1,500,000          
Warrant exercise price     $ 0.15          
Warrant expire term     expires on May 1, 2022          
Common stock, shares outstanding 304,140,678 304,140,678            
Subsequent Event [Member] | Settlement Agreement [Member] | Mr. Marshall Faulk [Member]                
Debt principal amount       $ 100,000        
Number of restricted common stock       2,000,000        
Subsequent Event [Member] | Debt Conversion [Member]                
Number of shares for debt conversion and settlements   5,500,000            
Subsequent Event [Member] | Consulting Fees [Member]                
Number of common stock issued 13,000,000              
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