0001493152-18-015908.txt : 20181114 0001493152-18-015908.hdr.sgml : 20181114 20181114103001 ACCESSION NUMBER: 0001493152-18-015908 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 64 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181114 DATE AS OF CHANGE: 20181114 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: 181181187 BUSINESS ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 BUSINESS PHONE: (888) 613-8802 MAIL ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 FORMER COMPANY: FORMER CONFORMED NAME: TNI BIOTECH, INC. DATE OF NAME CHANGE: 20121001 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended September 30, 2018

 

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 November 14, 2018 there were 434,322,060 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 27 
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 35 
     
Item 4. Controls and Procedures 36 
     
  PART II - OTHER INFORMATION  
Item 1. Legal Proceedings 37 
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37 
     
Item 3. Default upon Senior Securities 38 
     
Item 6. Exhibits 39 

 

 2 
 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained or incorporated by reference in this Annual Report on Form 10-K 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 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, 2017, 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)

 

  

September 30,

2018

  

December 31,

2017

 
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $5,859   $14,718 
Inventories   158,648    178,098 
           
Total current assets   164,507    192,816 
           
Fixed Assets:          
Computer equipment, net of accumulated depreciation of $9,798 and $8,714 respectively   3,199    2,529 
Investment in affiliate, equity method   -    - 
Deposits   200    200 
           
Total assets  $167,906   $195,545 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable  $1,532,878   $2,319,932 
Accounts payable, affiliate   22,582    - 
Accrued liabilities   3,087,841    2,489,404 
Notes payable, net of debt discount   4,795,298    4,820,063 
Derivative liability   1,448,784    1,669,532 
Total current liabilities   10,887,383    11,298,931 
           
Total liabilities   10,887,383    11,298,931 
           
Commitments and Contingencies (Note 12)          
           
Stockholders’ Deficit:          
Common stock - par value $0.0001; 500,000,000 shares authorized; 415,661,456 and 386,782,473 shares issued and outstanding respectively   41,566    38,679 
Additional paid in capital   369,427,460    366,625,144 
Stock issuances due   78,259    103,226 
Prepaid services   -    (226,667)
Accumulated deficit   (380,266,762)   (373,035,183)
           
Deficit attributable to common stockholders   (10,719,477)   (6,494,801)
Non-controlling interest   -    (4,608,585)
Total stockholders’ deficit   (10,719,477)   (11,103,386)
Total liabilities and stockholders’ deficit  $167,906   $195,545 

 

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   Nine months ended 
   September 30, 2018   September 30, 2017   September 30, 2018   September 30, 2017 
                 
Revenues, net  $-   $-   $65,013   $- 
Cost of products sold  $-   $-   $33,172   $- 
Gross profit  $-   $-   $31,841   $- 
Operating expenses                    
Selling, general and administrative   587,726    620,905    2,346,090    1,842,778 
Research and development expense   -    109,340    185,692    362,110 
Stock issued for services G&A   62,500    446,002    716,075    1,537,292 
Warrant valuation   -    272,707    -    590,605 
Depreciation and amortization expense   217    269    1,084    557 
Total operating expenses   650,443    1,449,223    3,248,941    4,333,342 
                     
Loss from operations   (650,443)   (1,449,223)   (3,217,100)   (4,333,342)
                     
Other income (expense):                    
Interest expense   (408,507)   (118,878)   (870,479)   (822,789)
Loss on deconsolidation   -    -    (2,791,172)   - 
Gain/(Loss) on derivative   (876,830)   -    (118,542)   - 
Gain/(Loss) on settlement of debt   (666,632)   (31,741)   (684,668)   998,991 
Total other income (expense)   (1,951,969)   (150,619)   (4,464,861)   176,202 
                     
Net income/(loss) before income taxes   (2,602,412)   (1,599,842)   (7,681,961)   (4,157,140)
Income taxes   -    -    -      
Net income/(loss)  $(2,602,412)  $(1,599,842)  $(7,681,961)  $(4,157,140)
Net income/(loss) attributable to non-controlling interest   -    (217,574)   (450,382)   (485,656)
Net income/(loss) attributable to common shareholders  $(2,602,412)  $(1,382,268)  $(7,231,579)  $(3,671,484)
                     
Basic and diluted loss per share attributable to common shareholders  $(0.01)  $(0.00)  $(0.02)  $(0.01)
                     
Weighted average number of shares outstanding   407,253,837    341,109,212    396,863,363    301,844,205 

 

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 September 30, 2018

(Unaudited)

 

   Common Stock   Additional
Paid-in
   Stock To   Prepaid   Accumulated  

Non-

Controlling

     
   Shares   Amount   Capital   Be Issued   Services   Deficit   Interest   Total 
                                 
Balance December 31, 2017   386,782,473   $38,679   $366,625,144   $103,226   $(226,667)  $(373,035,183)  $(4,608,585)  $(11,103,386)
                                         
Issuance of common stock for services   10,738,640    1,073    513,303    (24,967)   -    -    -    489,409 
                                         
Amortization of prepaid services                       226,667              226,667 
                                         
Issuance of common stock in exchange for debt   17,940,343    1,794    560,712                        562,506 
                                         
Issuance of common stock for interest   200,000    20    8,980    -    -    -    -    9,000 
                                         
Issuance of common stock for sale and exercise of warrants   -    -    240,500    -    -    -    -    240,500 
                                         
Issuance and modification of common stock warrants             1,478,821                        1,478.821 
                                         
Elimination of Cytocom noncontrolling interest and deconsolidation                                 5,058,967    5,058,967 
                                         
Net loss                            (7,231,579)   (450,382)   (7,681,961)
                                         
Balance as of September 30, 2018   415,661,456    41,566    369,427,460    78,259    -    (380,266,762)   -    (10,719,477)

 

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)

 

   Nine months Ended 
  

September 30,

2018

  

September 30,

2017

 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(7,681,961)  $(4,157,140)
Adjustments to reconcile net loss to net cash flows used in operating activities:          
Depreciation   1,084    557 
Stock issued, and amortization of stock issued, for prepaid services   226,667    1,270,837 
Gain/(Loss) on settlement of debt   684,668    (998,991)
Penalties related to note default   75,792    - 
Stock issued for services   665,230    266,456 
Stock warrant expense   -    590,605 
Amortization of debt discount   274,777    60,347 
Change in value of derivative   118,542    - 
Expenses paid by lender   150,505    - 
Loss on deconsolidation   2,791,172    - 
Stock issued for interest   9,000    378 
Changes in operating assets and liabilities:          
Accounts payable   737,246    678,162 
Accounts receivable        - 
Inventories   19,450    (214,327)
Accrued liabilities   979,113    887,608 
Due to Cytocom   23,771    - 
           
Net cash used in operating activities   (924,944)   (1,615,508)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Deconsolidation of subsidiary   (11,631)   - 
Purchase of computer equipment   (1,754)   (1,505)
Net cash used in investing activities   (13,385)   (1,505)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from sale of stock and exercise of warrants   240,500    706,540 
Payment of notes payable   -    (321,846)
Proceeds from issuance of notes payable   688,970    1,180,500 
           
Net cash provided by financing activities   929,470    1,565,194 
Net increase (decrease) in cash   (8,859)   (51,819)
           
Cash and cash equivalents at beginning of period   14,718    74,389 
Cash and cash equivalents at end of period  $5,859   $22,570 

 

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

 

 8 
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine months Ended 
  

September 30,

2018

  

September 30,

2017

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW

INFORMATION:

          
           
Cash paid for interest  $53,341   $29,500 
           

SUPPLEMENTAL DISCLOSURES OF NON-CASH

INVESTING AND FINANCING ACTIVITIES:

          
           
Debt discount  $243,000   $50,000 
           
Conversion of debt and accrued interest to common stock  $692,640   $3,051,969 
           
Settlement of derivative liability  $243,199   $- 
           
Deconsolidation of Cytocom, Inc.  $2,278,237   $- 
           
Shares issued for accounts payable and accrued expenses   $   $254,738 
           
Cashless exercise of warrants   $   $1,705 
           
Estimated gain/(loss) on debt conversion   $   $215,000 
           
Increase in note due to default provisions  $190,792   $- 
           
Increase in note due to new agreement  $150,000      
           
Reclassification from notes payable to accounts payable  $40,628   $- 
           
Accounts payable paid directly by lender  $150,505   $273,821 
           
Common stock issued for prepaid services  $-   $266,455 
           
Settlement paid by lender  $-   $150,000 

 

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

September 30, 2018

(Unaudited)

 

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

 

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

 

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

 

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

 

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

 

In December 2013, the Company formed a subsidiary, Cytocom Inc. (“Cytocom”), 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 to its shareholders. As part of the transaction (“Original Agreement”), the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents, patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations, renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues, reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names, brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights, database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals, continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions, and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK.

 

 10 
 

 

The Original Agreement also granted the Company rights to market Lodonal™ and Met-Enkephalin (“MENK”) in “Emerging Markets,” which included all countries excluding Canada, Italy, Japan, France, Germany, United Kingdom, European Community and the United States. Pursuant to the Original Agreement, the Company was required to pay Cytocom a 5% royalty on all sales all ongoing drug development and fees due in connection with the underlying patents until such time as Cytocom was funded.

 

On December 8, 2014, the number of Cytocom shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the above-mentioned transaction to transfer intellectual property to Cytocom, Cytocom issued an additional 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016.

 

On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom. The Restated Agreement restates the licensing arrangement between the Company and Cytocom as provided by the Original Agreement. The Restated Agreement grants the Company distribution and marketing rights for Lodonal™ and MENK for humans in Emerging Markets. In addition, the Company has been granted the rights to distribute and market Lodonal™ and MENK for animal use in the United States. The royalty due to Cytocom has been reduced from 5% to 1% of sales and the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom.

 

On June 4, 2018, the Company and Cytocom entered into a Stock Purchase Agreement (the “Stock Agreement. Pursuant to the Stock Agreement, the Company cancelled approximately $4,000,000 of debt owed to it by Cytocom in exchange for ten percent (10%) of the issued and outstanding common stock of Cytocom, as calculated on a fully diluted basis. The Restated Agreement was a condition of the Stock Agreement.

 

At September 30, 2018, the Company’s equity interest in Cytocom stood at 15.95% of Cytocom’s common stock issued and outstanding on that date. The Company’s policies with respect to accounting for its equity interest in Cytocom is described in Note 2 to the “Notes to the Condensed Consolidated Financial Statements” below (“Summary of Significant Accounting Policies: Non-Controlling Interest in Consolidated Subsidiaries”).

 

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, the Company is a clinical late-stage T-Cell Activation biopharmaceutical company focused on the development immunotherapies for the treatment of autoimmune and inflammatory conditions, cancer, HIV/AIDS and animal diseases on a global basis.

 

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.

 

 11 
 

 

Going Concern

 

The Company experienced a net loss from operations of $650,443, and used cash and cash equivalents for operations in the amount of $924,944 during the quarter ended September 30, 2018, resulting in stockholder’s deficit of $380,266,762 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 September 30, 2018 was not sufficient to meet the cash requirements to fund planned operations for the next 12 months 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, 2017 (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, 2017. 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.

 

Non-Controlling Interest in Consolidated Subsidiaries

 

Prior to May 1, 2018, the Company consolidated Cytocom. On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom, Inc., in accordance with which the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom. On June 4, 2018, the Company and Cytocom entered into a Stock Purchase Agreement (the “Stock Agreement”). Pursuant to the Stock Agreement, the Company cancelled approximately $4,000,000 of debt owed to it by Cytocom in exchange for ten percent (10%) of the issued and outstanding common stock of Cytocom, as calculated on a fully diluted basis on June 4, 2018. At September 30, 2018, the Company’s equity interest in Cytocom stood at 15.95% of Cytocom’s common stock issued and outstanding. Accordingly, the Company deconsolidated Cytocom as of May 1, 2018, and accounts for its retained interest in Cytocom under the equity method of accounting, with the Company’s share of Cytocom’s earnings recorded in “loss from equity method investment” in the consolidated statements of operations. The condensed consolidated financial statements as of September 30, 2018 exclude the assets, liabilities and operating results of Cytocom after May 1, 2018.

 

 12 
 

 

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. We believe the new standard will not have a material impact on our consolidated financial position and consolidated results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions once we commence revenue-generating activities.

 

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 September 30, 2018, the Company had 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.

 

 13 
 

 

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.

 

Inventory

 

Inventories comprise finished product, raw materials and materials used for packaging. Inventories are stated at the lower of cost or market with cost based on the first-in, first-out (FIFO) method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical trials or clinical manufacturing campaigns. Inventory used in marketing activities is charged to selling, general and administrative expense.

 

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 September 30, 2018 and September 30, 2017 was $217 and $269 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.

 

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.

 

 14 
 

 

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 September 30, 2018 and 2017, 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 September 30, 2018, and 2017, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends ASC Topic 220, Income Statement - Reporting Comprehensive Income. This ASU allows for tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act to be reclassified as retained earnings. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect this guidance may have on its financial position, results of operations, comprehensive income, cash flows and disclosures.

 

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.

 

Net Loss per Share of Common Stock

 

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.

 

 15 
 

 

A calculation of basic net loss per share follows:

 

   For the three months ended
September 30,
   For the nine months ended
September 30,
 
   2018   2017   2018   2017 
                 
Net Profit/(Loss)  $(2,602,412)  $(1,382,268)  $(7,681,961)  $(3,671,484)
Weighted-average common shares outstanding                    
Basic and diluted:   407,253,837    341,109,212    396,863,363    301,844,205 
Profit/(Loss) per share outstanding                    
Basic and diluted  $(0.01)  $(0.00)  $(0.02)  $(0.01)

 

The Company’s potential dilutive securities which include warrants (as described in Note 8 to the Financial Statements – “Capital Structure – Common Stock and Common Stock Purchase 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.

 

Recent Accounting Standards

 

During the quarter ended September 30, 2018, 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.

 

3. Fixed Assets

 

  

September 30,

2018

  

December 31,

2017

 
Fixed Assets:          
Computer equipment  $12,997   $11,243 
Less accumulated depreciation   (9,798)   (8,714)
Fixed assets, net  $3,199   $2,529 

 

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. Investments: Deconsolidation of Cytocom

 

In accordance with the May 1, 2018 “Restated Agreement” with Cytocom, the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom. Accordingly, effective May 1, 2018, the Company deconsolidated Cytocom. However, the Company exercises influence through its retained equity interest and through representation on Cytocom’s board of directors. As a result, the Company uses the equity method to account for its retained interest in Cytocom

 

On May 1, 2018, the Company recorded an equity method investment in Cytocom of $1,189, the par value of Cytocom common stock multiplied by the number of shares owned by the Company, due to the negative equity associated with Cytocom’s underlying financial position. As a result of the continuing losses in Cytocom, the balance of this investment is currently $0.

 

At September 30, 2018, Cytocom had no significant assets or income. Cytocom notes payable on that date aggregated $1,193,500.

 

 16 
 

 

5. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

  

September 30,

2018

  

December 31,

2017

 
Accrued payroll to officers and others   2,212,393    1,539,777 
Accrued interest and penalties - notes payable   738,878    703,141 
Estimated legal settlements   136,057    136,057 
Other accrued liabilities   23,095    393 
Estimated loss on note conversions   -    110,036 
Derivative Liability   1,448,784    1,669,532 
           
Total accrued expenses and other liabilities  $4,559,207   $4,158,936 

 

6. Notes Payable

 

Notes payable consist of the following:

 

  

September 30,

2018

  

December 31,

2017

 
Promissory note issued July 29, 2014 to Ira Gaines. In 2016, the maturity date on the note was extended to December 1, 2017. As of September 30, 2018, the note is in default. The note earns interest at a rate of 18% per annum.  $100,000   $100,000 
           
Promissory notes issued between November 26, 2014 and December 31, 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. These notes were in default at September 30, 2018, as the Company was unable to pay installments on their due dates.   286,000    286,000 
           
Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and December 1, 2017. Lenders on loans aggregating $375,994 earn interest at rates between 2% and 18% per annum. On loans aggregating $100,000, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $475,994 were in default at September 30, 2018, as the Company was unable to repay those notes on their due dates. $130,000 of the notes were deconsolidated on May 1, 2018 and $100,000 of the notes along with $150,000 of interest were extinguished in July 2018.   475,994    705,994 
           
Promissory notes issued by Cytocom between April 29, 2015 and December 31, 2015. Lenders earn interest at rates between 5% and 10% per annum. These notes mature on December 31, 2016. At September 30, 2018, the notes were in default. These notes were deconsolidated on May 1, 2018.   -    425,000 
           
Promissory notes issued to an officer of the Company effective November 3, 2015 and maturing November 3, 2016 for settlement of accrued payroll, bearing interest at 10% per annum and including a stock conversion feature. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default.   97,737    97,737 

 

 17 
 

 

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 at September 30, 2018 the note was in default.
This note was extinguished on July 1, 2018.
        50,000 
           
Promissory note for $180,000 was issued in July 2016 with an original issue discount of $30,000. The note is repayable on April 7, 2017. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default. Under the terms of the note, the principal amount was increased in 2017 to $243,000, and interest accrued at 25% per annum. $161,976 of principal and $20,025 of accrued interest were converted into 7,447,448 shares, of which 5,500,000 shares were issued at the end of 2017. The Company has accrued a $243,199 derivative liability for the $81,024 principal balance attributable to the conversion feature contained in this note. The note was settled in the quarter ended March 31, 2018.   -    81,024 
           
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 $8,642. The note was in default on September 30, 2018. The balance due was reclassified as accounts payable.   -    17,284 
           
Promissory notes issued between July 1, 2016 and December 31, 2016. Lenders earn interest at 2% per annum. The notes mature on December 31, 2017, and at September 30, 2018 the notes were in default.   206,000    206,000 
           
Notes aggregating $1,354,000 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. As of September 30, 2018 the notes were in default.   1,354,000    1,354,000 
           
Notes aggregating $500,000 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. At September 30, 2018, the notes were in default.   500,000    500,000 
           
Promissory note issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 5, 2017 and at September 30, 2018 the note was in default.   50,000    50,000 
           
Notes aggregating $300,000 issued in the second quarter of 2017. The notes accrue interest at 2% per annum and mature between April 3, 2018 and May 31, 2018. At September 30, 2018, the notes were in default.   300,000    300,000 
           
Notes aggregating $191,800 issued in the third quarter of 2017. The notes accrue interest at 2% per annum and mature between June 16, 2018 and December 31, 2018. At September 30, 2018, $50,000 of the notes were in default.   191,800    191,800 
           
Promissory note for $425,000 was issued in October 2017 with an original issue discount of $70,000. The note is in default, giving the holder an option to convert the note to stock. In 2018, The defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at September 30, 2018 had increased to $500,792. $115,000 of accrued interest owed on the note has been converted to stock. The Company has accrued a $1,448,784 derivative liability for the remaining conversion right.   500,792    425,000 

 

 18 
 

 

Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum and mature on December 31, 2018.   105,500    105,500 
           
Notes aggregating $47,975 issued in the first quarter of 2018. The notes accrue interest at 2% per annum and mature between May 2018 and January 2019. At September 30, 2018, $10,000 of the notes were in default.   47,975    - 
           
Notes aggregating $125,000 issued in the first quarter of 2018. The notes accrue interest between 2% and 12% per annum and mature between April 2018 and June 2018. These notes include warrants between 5,000,000 and 20,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.   125,000    - 
           
Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest of 2% per annum and mature between July 2018 and October 2018. These notes include warrants between 1,000,000 and 5,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.   65,000    - 
           
Notes aggregating $193,000 issued in the third quarter of 2018. The notes accrue interest at 2% per annum and mature between November 2018 and January 2019. These notes include warrants between 600,000 and 5,000,000 shares with an exercise price of $0.005.   193,000    - 
           
In July 2017, a note for $250,000 was issued. The note earns interest at 5% per annum and matures on November 1, 2018.   250,000    - 
           
Less: Original issue discounts on notes payable and warrants issued with notes.   (53,500)   (75,277)
           
Total  $4,795,298   $4,820,062 

 

As of September 30, 2018, the Company had accrued $738,878 in unpaid interest and default penalties. During the quarter ended September 30, 2018, 9,333,143 shares with a fair value of $111,091 were issued by the Company for settlement of promissory notes totaling $60,000.

 

As of September 30, 2017, the Company had accrued $594,875 in unpaid interest and default penalties. During the quarter ended September 30, 2017, 4,694,017 shares with a fair value of $138,843 were issued or reserved for issuance by the Company for settlement of promissory notes.

 

7. Derivative Liabilities

 

During the quarter ended September 30, 2018, no notes payable were issued as convertible debt or became convertible and qualified as a derivative liability under FASB ASC 815. In the quarter, notes payable with a derivative liability of $60,000 were converted, and the derivative liability on other notes payable was revalued from $623,045 to $1,448,784.

 

 19 
 

 

 

 

As of September 30, 2018, and December 31, 2017, the aggregate fair value of the outstanding derivative liability was $1,448,784 and $1,669,532 respectively. The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumptions during the quarter ended September 30, 2018:

 

  

Three months

ended 

September 30,  
2018

 
Volatility   248%
Risk-free interest rate   1.81%
Expected dividends   -%
Expected term   1 year 

 

The Company determines the fair market values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs may be used to measure fair value:

 

Level 1 Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
   
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
   
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company uses Level 3 inputs to estimate the fair value of its derivative liabilities.

 

The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of September 30, 2018:

 

  

Fair Value Measurements as of

September 30, 2018

 
   Level 1   Level 2   Level 3 
Assets               
None  $-   $-   $- 
Total assets   -    -    - 
Liabilities               
Conversion option derivative liability   -    -    1,448,784 
Total liabilities  $-   $-   $1,448,784 

 

The following table sets forth a reconciliation of changes in the fair value of derivative liabilities classified as Level 3 in the fair value hierarchy:

 

  

Significant

Unobservable

Inputs (Level 3)

 
Beginning balance  $1,669,532 
Settlement of liability   (243,199)
Partial settlement of liability   (96,091)
Change in fair value   (118,542)
Ending balance  $1,448,784 

 

 20 
 

 

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

 

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

 

As of September 30, 2018 and 2017, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of September 30, 2018, the Company had 415,661,456 shares of common stock outstanding, and 386,782,473 outstanding as of December 31, 2017.

 

Stock Warrants

 

In the quarter ended September 30, 2018, there were 80,550,000 new warrants issued by the Company.

 

There were no modifications of the terms of any warrants issued by the Company in the quarters ended September 30, 2018 and 2017.

 

Following is a summary of outstanding stock warrants at September 30, 2018 and activity during the three months then ended:

 

  

Number of

Shares

   Exercise Price  

Weighted

Average

Price

 
Warrants as of December 31, 2017   84,287,402   $0.01-15.00   $0.33 
                
Issued in 2018   141,620,636   $ 0.005-0.20   $0.16 
                
Expired and forfeited   410,834   $ 1.50-15.00   $6.79 
                
Exercised   -   $-    - 
                
Warrants as of September 30, 2018   225,497,204   $ 0.01-15.00   $0.14 

 

Summary of outstanding warrants as of September 30, 2018:

 

Expiration Date 

Number of

Shares

  

Exercise

Price

  

Remaining

Life (years)

 
             
Fourth Quarter 2018   6,089,166   $ 1.00-1.50    .25 
First Quarter 2019   4,024,000   $ 0.50-2.00    .50 
Second Quarter 2019   135,000   $ 0.07-0.23    .75 
Third Quarter 2019   260,000   $ 0.50-1.50    1.00 
Fourth Quarter 2019   22,690,908   $ 0.05-3.74    1.25 
Second Quarter 2020   300,000   $0.50    1.75 
Fourth Quarter 2020   1,000,000   $0.20    2.25 
First Quarter 2021   12,600,000   $0.20    2.50 
Second Quarter 2021   5,812,252   $ 0.01-0.20    2.75 
Third Quarter 2021   5,116,667   $ 0.03-0.20    3.00 
Fourth Quarter 2021   300,000   $0.10    3.25 
Second Quarter 2022   1,750,000   $0.15    3.75 
Third Quarter 2022   2,650,000   $ 0.05-0.10    4.00 
Fourth Quarter 2022   9,811,422   $ 0.08-0.29    4.25 
First Quarter 2023   700,000   $ 0.01-0.03    4.50 
Second Quarter 2023   15,000,000   $ 0.01-0.20    4.75 
Third Quarter 2023   76,100,000   $ 0.01-0.10    5.00 
First Quarter 2024   30,000,000   $0.01    5.50 
Third Quarter 2028   3,000,000   $0.07    10.00 
Second Quarter 2032   21,807,789   $ 0.01-0.07    13.75 
    225,497,204   $ 0.01-15.00      

 

 21 
 

 

9. Stock Compensation

 

Shares Issued for Services

 

During the quarters ended September 30, 2018 and 2017, the Company issued 7,500,000 and 1,700,000 shares of common stock respectively for consulting fees. The Company valued these shares at $190,000 and $61,000 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 $0 and $446,002 for the quarters ended September 30, 2018 and 2017.

 

10. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended September 30, 2018 and 2017 because the Company incurred a net loss in both quarters.

 

On December 22, 2017, the President of the United States signed the Tax Cuts and Jobs Act (“U.S. Tax Reform”), which enacts a wide range of changes to the U.S. corporate income tax system. The impact of U.S. Tax Reform primarily represents the Company’s estimates of revaluing the Company’s U.S. deferred tax assets and liabilities based on the rates at which they are expected to be recognized in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for the 2018 tax year. Based on the Company’s historical financial performance, at December 31, 2017, the net deferred tax asset position was re-measured at the lower corporate rate of 21% and a tax expense was recognized to adjust net deferred tax assets to the reduced value.

 

Deferred tax assets:

 

  

September 30,

2018

  

December 31,

2017

 
         
Net operating losses  $21,319,000   $18,102,000 
Stock based compensation   39,568,000    39,054,000 
Amortization, depreciation, and impairment   4,179,300    4,178,000 
Capitalization of start-up costs for tax purposes   1,145,000    1,145,000 
Loss on debt conversion of debt   569,000    569,000 
Total deferred tax assets   66,780,300    63,048,000 
           
Valuation allowance   (66,780,300)   (63,048,000)
           
Total deferred tax assets, net  $-   $- 

 

The Company has recognized no tax benefit for the losses generated for the periods through September 30, 2018. 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 2018 and 2017 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.

 

 22 
 

 

At December 31, 2017, we had estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $86,000,000, which will expire in 2032-2037.

 

   2018   2017 
   Amount   Percent   Amount   Percent 
Benefits for income tax at federal statutory rate  $212,000    21%  $874,000    34%
Permanent differences   173,000    17%   137,000    - 
Change in estimates   (385,000)   -    (1,011,000)   - 
   $-    -%  $-    -%

 

11. 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. All of these balances were subsequently impaired during prior periods.

 

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. In 2014, the Company recognized an impairment of the goodwill arising on the acquisition of TNI IP of $98,000,000.

 

 23 
 

 

Patent License Agreements

 

In December 2014, the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents, patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations, renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues, reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names, brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights, database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals, continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions, and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK.

 

The Original Agreement also granted the Company rights to market Lodonal™ and Met-Enkephalin (“MENK”) in “Emerging Markets,” which included all countries excluding Canada, Italy, Japan, France, Germany, United Kingdom, European Community and the United States. Pursuant to the Original Agreement, the Company was required to pay Cytocom a 5% royalty on all sales all ongoing drug development and fees due in connection with the underlying patents until such time as Cytocom was funded.

 

On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom. The Restated Agreement restates the licensing arrangement between the Company and Cytocom as provided by the Original Agreement. The Restated Agreement grants the Company distribution and marketing rights for Lodonal™ and MENK for humans in Emerging Markets. In addition, the Company has been granted the rights to distribute and market Lodonal™ and MENK for animal use in the United States. The royalty due to Cytocom has been reduced from 5% to 1% of sales and the Company no longer has any ongoing obligations to pay for the cost in connection with the assets of Cytocom.

 

12. 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 a trial 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, recruitment began in late 2016 and the trial is now ongoing. The trial has had problems with recruitment and continues today.
   
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.

 

 24 
 

 

Distribution Agreements in Nigeria

 

In October 2013, the Company announced the signing of a Distribution Agreement with AHAR Pharma, a Nigerian company, to market Lodonal™, in Nigeria for the treatment of autoimmune diseases and cancer. AHAR intends to distribute Lodonal™ through a local distributor network, an Internet client base and directly to hospitals, pharmacists and doctors in Nigeria. The first deliveries under the agreement took place in February 2018. Under the original 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. Due to the fact that AHAR Pharma failed to meet its contractual purchase obligations, the Company formally issued notice of default under the agreement.

 

On April 18, 2018, AHAR Pharma transferred its rights under the Distribution Agreement to Fidson Healthcare Plc (“Fidson”), and Fidson signed an exclusive distribution agreement with the Company to distribute Lodonal™. In October 2018, the Company shipped 250,000 pills to Fidson to support the product launch in the coming months.

 

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. 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.

 

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 delivered various documents under the agreements related to its studies of Exploratory Toxicology (nGLP) and Definitive Toxicology (GLP). 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.

 

There has been no progress under the agreements in the past 12 months, since a change of ownership of Qianjiang Pharmaceutical in 2017. The Company continues to hold discussions with new management about the future of the agreements.

 

 25 
 

 

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”), which is based in the Dominican Republic, entered into a contract for manufacturing of LDN tablets, capsules and/or creams (“Agreement”). Subject to the terms and conditions of the Agreement, Acromax will obtain all necessary licenses and permits to carry out the manufacturing and packaging of LDN in exchange for a fixed fee per tablet plus an additional fee for packaging, shipping and customs clearance. The Agreement has an initial term of five years unless terminated by either party in accordance with the terms.

 

Operating Leases

 

At September 30, 2018, the Company was a party to an agreement to lease office space in Orlando, Florida. Rental expense for the three months ended September 30, 2018 and 2017 was $2,238 and $12,632 respectively.

 

Legal Proceedings

 

None.

 

13. Subsequent Events

 

The Company issued 18,661,118 shares of common stock between September 30, 2018 and November 14, 2018. 12,411,118 shares were for debt conversions and 6,250,000 were for consulting fees.

 

As of November 14, 2018, the Company had outstanding 434,322,060 shares of common stock.

 

Between September 30, 2018 and November 14, 2018 the company raised $15,500 in debt and equity financing.

 

On August 7, 2018, the Company announced that Dr. Roscoe Moore Jr., DVM, MPH, Ph.D., DSc joined the Company as Chairman of the Board, and will also maintain a position on the Company’s Scientific Advisory Board.

 

On September 6, 2018, the Company announced that Mr. Jack Brewer, MBA, joined the Company as a member of the Board of Directors.

 

 26 
 

 

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 for the year ended December 31, 2017 filed with the Securities and Exchange Commission on April 2, 2018 (the “2017 Form 10-K”) under the heading “Risk Factors”.

 

The following discussion should be read in conjunction with the 2017 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.

 

 27 
 

 

In December 2013, the Company formed a subsidiary, Cytocom, 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 to its shareholders. As part of the transaction (“Original Agreement”), the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents, patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations, renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues, reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names, brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights, database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals, continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions, and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK. The parties have informally agreed that until such time as Cytocom was funded, the Company would be responsible for all payments to employees, ongoing general and administrative expenses, licensing fees, patent fees, and drug development costs. When Cytocom becomes self-sustaining and fully funded, it expects to reimburse the Company for all funds spent by the Company since the spin-out.

 

The Original Agreement also granted the Company rights to market Lodonal™ and Met-Enkephalin (“MENK”) in “Emerging Markets,” which included all countries excluding Canada, Italy, Japan, France, Germany, United Kingdom, European Community and the United States. Pursuant to the Original Agreement, the Company was required to pay Cytocom a 5% royalty on all sales all ongoing drug development and fees due in connection with the underlying patents until such time as Cytocom was funded.

 

On December 8, 2014, the number of Cytocom shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the above-mentioned transaction to transfer intellectual property to Cytocom, Cytocom issued an additional 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016.

 

On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom. The Restated Agreement restates the licensing arrangement between the Company and Cytocom as provided by the Original Agreement.

 

The Restated Agreement grants the Company distribution and marketing rights for Lodonal™ and MENK for humans in Emerging Markets. In addition, the Company has been granted the rights to distribute and market Lodonal™ and MENK for animal use in the United States. The royalty due to Cytocom has been reduced from 5% to 1% of sales and the Company no longer has any ongoing obligations to pay for the cost in connection with the assets of Cytocom.

 

On June 4, 2018, the Company and Cytocom entered into a Stock Purchase Agreement (the “Stock Agreement. Pursuant to the Stock Agreement, the Company cancelled approximately $4,000,000 of debt owed to it by Cytocom in exchange for ten percent (10%) of the issued and outstanding common stock of Cytocom, as calculated on a fully diluted basis. The Restated Agreement was a condition of the Stock Agreement.

 

At September 30, 2018, the Company’s equity interest in Cytocom stood at 15.95% of Cytocom’s common stock issued and outstanding on that date.

 

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.

 

 28 
 

 

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.

 

Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017

 

Revenues

 

We had no revenues from operations for the three months ended September 30, 2018 and 2017.

 

Operating Expenses

 

Selling, general and administrative

 

Selling, general and administrative expenses and related percentages for the three months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

   For the three months ended
September 30,
 
   2018   2017 
Selling, general and administrative  $588   $621 
Increase/(decrease) from prior year  $(33)  $(410)
Percent increase/(decrease) from prior year   (5)%   (40)%

 

 29 
 

 

For the three months ended September 30, 2018 and 2017, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

  

For the three months ended

September 30,

 
   2018   2017 
Stock listing and investor relations expenses  $11   $6 
Consulting and contractors   127    119 
Payroll   165    333 
Professional fees   19    38 
Travel   8    33 
Other expenses   258    92 
   $588   $621 

 

In the three months ended September 30, 2018, total cash and cash accruals for selling, general and administrative expense was $588 compared to $621 for the corresponding period in 2017, a decrease of $33 or 5%. 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 $127 in 2018, an increase of $8 or 7% over the $119 spent in 2017. The increase reflects higher amounts spent in 2018 on marketing in Africa, to re-establishing dialog with the FDA and other government agencies to re-open clinical trials, and on the manufacture of products in the USA;
     
  professional fees for legal, tax and accounting services in the amount of $19 in 2018, a decrease of $19 or 50% over the $38 spent in 2017. The decrease is primarily attributable to the deconsolidation of Cytocom in the second quarter of 2018;
     
  payroll in the amount of $165 in 2018, a decrease of $168 or 50 % over the $333 spent in 2017. The decrease is primarily attributable to the deconsolidation of Cytocom in the second quarter of 2018; and
     
  travel in the amount of $8 in 2018, a decrease of $25 or 76% over the $33 spent in 2017, reflecting reduced travel to Africa in 2018.

 

Research and development

 

R&D expenses and related percentages for the three months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

    For the three months ended
September 30,
 
    2018     2017  
Research and development   $ -     $ 109  
Decrease from prior year   $ (109 )   $ (138 )
Percent increase/(decrease) from prior year     (100 )%     (56 )%

 

Expenses for research and development in the three months ended September 30, 2018 decreased by 100% or $109 compared to expenses in the same period in 2017. The decrease is primarily attributable to the deconsolidation of Cytocom in the second quarter of 2018. All of the research and development in the quarter ended September 30, 2018 was incurred by Cytocom only.

 

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.

 

 30 
 

 

Amortization of amounts recorded as Prepaid Services for stock issued for services G&A and related percentages for the three months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the three months ended

September 30,

 
   2018   2017 
Amortization of prepaid consulting expense G&A  $63   $446 
Percentage decrease from prior year   (86)%   (64)%

 

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 September 30, 2018 was 7,500,000 (1,700,000 in the corresponding period in 2017).

 

Prepaid consulting services G&A in the three months ended September 30, 2018 consisted of the following:

 

Amortization of cost of stock issued prior to 2018  $0 
Amortization of cost of stock issued in 2018  $63 

 

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 September 30, 2018, the Company issued 80,550,000 warrants to stockholders at an exercise price range of $0.005 to $0.20, for which it recorded an expense of $1,313,821. In the three months ended September 30, 2017, the Company issued 2,500,000 warrants to stockholders at an exercise price range of $0.05 to $0.20, for which it recorded an expense of $273.

 

   

For the three months ended

September 30,

 
    2018     2017  
Warrant valuation expense   $ 1,313     $ 273  
Percentage increase/(decrease) from prior year     381 %     (45 )%

 

Depreciation and amortization

 

The Company amortizes the costs incurred to acquire patents and licenses over the period of the related agreements. All of the Company’s patents and licenses had been fully amortized by December 31, 2017.

 

Depreciation and amortization expenses for the three months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the three months ended

September 30,

 
   2018   2017 
Depreciation expense  $-   $- 
Amortization expense  $-   $- 
Increase/ (Decrease) from prior year  $-   $1 
Percentage increase/(decrease) from prior year   -%   (100)%

 

 31 
 

 

Interest Expense

 

Interest expense for the three months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the three months ended

September 30,

 
   2018   2017 
Interest expense  $409   $119 
Increase/ (Decrease) from prior year  $290   $(8,59)
Percentage Increase (Decrease) from prior year   243%   (88)%

 

The increase in interest expense is primarily due to penalties incurred as a result of default on debt outstanding in the three months ended September 30, 2018.

 

Gain or loss on settlement of debt

 

In three months ended September 30, 2018, a lender to the Company settled $60,000 of its note by converting it to equity.

 

In three months ended September 30, 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 $32, reflecting the fair value of the shares of common stock issued in exchange for the debt.

 

Nine months Ended September 30, 2018 Compared to Nine months Ended September 30, 2017 (dollar amounts in thousands)

 

Revenues

 

We had revenues of $65 from operations for the nine months ended September 30, 2018, compared to $0 for the nine months ended September 30, 2017. In February 2018, the Company reported the first shipments of LodonalTM to Nigeria.

 

Operating Expenses

 

Selling, general and administrative

 

Selling, general and administrative expenses and related percentages for the nine months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the nine months ended

September 30,

 
   2018   2017 
Selling, general and administrative  $2,346   $1,843 
Increase/(decrease) from prior year  $503   $(1,021)
Percent increase/(decrease) from prior year   27%   (36)%

 

 32 
 

 

For the nine months ended September 30, 2018 and 2017, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

  

For the nine months ended

September 30,

 
   2018   2017 
Stock listing and investor relations expenses  $37   $94 
Consulting and contractors   634    519 
Payroll   1,100    667 
Professional fees   121    157 
Travel   52    102 
Other expenses   402    304 
   $2,346   $1,843 

 

In the nine months ended September 30, 2018, total cash and cash accruals for selling, general and administrative expense was $2,346 compared to $1,843 for the corresponding period in 2017, an increase of $503 or 27%. 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 $634 in 2018, an increase of $115 or 22% over the $519 spent in 2017. The increase was primarily attributable to an increase in fees charged by a contractor that provides international regulatory and clinical contract research, and higher fees incurred for marketing activities in Africa;
     
  professional fees for legal, tax and accounting services in the amount of $121 in 2018, a decrease of $36 or 23% over the $157 spent in 2017. The decrease was primarily due to lower fees paid for legal services in the first nine months of 2018, and the deconsolidation of Cytocom in the second quarter of 2018;
     
  payroll in the amount of $1,100 in 2018, an increase of $433 or 65% over the $667 spent in 2017. The increase reflects accruals in 2018 for the settlement for of the chairman. In 2017, the Company also reversed $155 of accruals related to payment of payroll taxes; and
     
  travel in the amount of $52 in 2018, a decrease of $50 or 49% over the $102 spent in 2017, reflecting reduced travel in both Africa and the USA, and the deconsolidation of Cytocom in the second quarter of 2018.

 

Research and development

 

R&D expenses and related percentages for the nine months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the nine months ended

September 30,

 
   2018   2017 
Research and development  $186   $362 
Increase/ (decrease) from prior year  $(176)  $67 
Percent increase/(decrease) from prior year   (49)%   23%

 

Expenses for research and development in the nine months ended September 30, 2018 decreased by $176 or 49% compared to expenses in the same period in 2017. The decrease reflects the deconsolidation of Cytocom in the second quarter of 2018.

 

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.

 

 33 
 

 

Amortization of amounts recorded as Prepaid Services for stock issued for services G&A and related percentages for the nine months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the nine months ended

September 30,

 
   2018   2017 
Amortization of prepaid consulting expense G&A  $716   $1,537 
Percentage decrease from prior year   (53)%   (65)%

 

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 nine months ending September 30, 2018 was 10,738,640 (27,245,460 in the corresponding period in 2017).

 

Prepaid consulting services G&A in the nine months ended September 30, 2018 consisted of the following:

 

Amortization of cost of stock issued prior to 2018  $- 
Amortization of cost of stock issued in 2018   716 

 

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 nine months ended September 30, 2018, the Company issued 141,620,636 warrants to stockholders at an exercise price range of $0.005 to $0.20, for which it recorded an expense of $1,478,821. In the nine months ended September 30, 2017, the Company issued 17,750,000 warrants to stockholders at an exercise price range of $0.05 to $0.20, for which it recorded an expense of $318.

 

  

For the nine months ended

September 30,

 
   2018   2017 
Warrant valuation expense  $1,478   $591 
Percentage increase/(decrease) from prior year   150%   (79)%

 

Depreciation and amortization

 

The Company amortizes the costs incurred to acquire patents and licenses over the period of the related agreements. All of the Company’s patents and licenses had been fully amortized by December 31, 2017.

 

Depreciation and amortization expenses for the nine months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

   For the nine months ended
September 30,
 
   2018   2017 
Depreciation expense  $1   $1 
Amortization expense  $-   $- 
Increase/ (decrease) from prior year  $-   $- 
Percentage increase/(decrease) from prior year   -%   -%

 

 34 
 

 

Interest Expense

 

Interest expense for the nine months ended September 30, 2018 and 2017 were as follows (dollar amounts in thousands):

 

  

For the nine months ended

September 30,

 
   2018   2017 
Interest expense  $870   $823 
Increase/(decrease) from prior year  $47   $(1,508)
Percentage increase/(decrease) from prior year   6%   (65)%

 

The increase in interest expense reflects higher penalties incurred as a result of loan defaults, offset by the deconsolidation of Cytocom in the second quarter of 2018.

 

Gain or loss on settlement of debt

 

In nine months ended September 30, 2018, certain lenders to the Company settled all or a portion of their notes or accounts payable by converting them to equity. The Company recorded a loss of $685, reflecting the fair value of the shares of common stock issued in exchange for the debt. In nine months ended September 30, 2017, certain lenders to the Company settled all or a portion of their notes or accounts payable by converting them to equity.

 

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 $5,859 at September 30, 2018, compared to $22,570 at September 30, 2017.

 

For the nine months ended September 30, 2018 and 2017, net cash used in operating activities from operations was $924,944 and $1,615,508, respectively.

 

$13,385 of cash was used in investing activities for the nine months ended September 30, 2018 ($1,505 in 2017).

 

During the nine months ended September 30, 2018 proceeds from the sale of stock and exercise of stock warrants totaled $240,500 compared to $706,540 for the corresponding period in 2017. We also received $668,970 from the issuance of notes payable in nine months ended September 30, 2018, compared to $1,180,500 in 2017. There were $0 of loan repayments made in cash in the nine months ended September 30, 2018 ($321,846 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.

 

Off-Balance Sheet Arrangements

 

During the three months ended September 30, 2018 and 2017, we did not engage in any off balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable.

 

 35 
 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Changes in Internal Controls over Financial Reporting

 

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Evaluation of Disclosure Controls and Procedures

 

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

 

Management assessed the effectiveness of the internal controls over financial reporting as of September 30, 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 September 30, 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.

 

 36 
 

 

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 September 30, 2018, the Company issued a total of 16,833,143 shares of common stock (net of stock cancellations). 9,333,143 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. 7,500,000 shares were issued for services provided.

 

Between January 1, 2018 and September 30, 2018, there were 141,620,636 warrants exercised to purchase common shares. The Company had no sales of shares of its common stock. $0 proceeds were received by the Company in 2018 for exercises of stock warrants or sales of common stock.

 

In the quarter ended September 30, 2017, the Company issued a total of 24,450,890 shares of common stock (net of stock cancellations). 2,287,570 of those shares were issued to settle amounts owed under notes payable, including accrued and unpaid interest as applicable. 1,700,000 shares were issued for services provided. 20,463,320 shares were issued for cash and the exercise of warrants.

 

The following table lists all securities issued during in the three months ended September 30, 2018 without registering the securities under the Securities Act of 1933, as amended (the “Securities Act”):

 

Date   Description  Number   Purchaser   Proceeds   Consideration  Exemption 
                        
 7/6/2018   Common Stock Purchase   500.000    Consultant   $ Nil   Advisory Services   Sec. 4(a)(2) 
                             
 7/30/2018   Common Stock Purchase   500,000    Consultant   $Nil   Advisory Services   Sec. 4(a)(2) 
                             
 8/6/2018   Common Stock Purchase   3,000,000    Consultant   $Nil   Advisory Services   Sec. 4(a)(2) 
                             
 7/18/2018   Common Stock Purchase   3,134,796    Lender   $Nil   Debt Settlement   Sec. 4(a)(2) 
                             
 9/14/2018   Common Stock Purchase   6,198,347    Lender   $Nil   Debt Settlement   Sec. 4(a)(2) 
                             
 9/13/2018   Common Stock Purchase   500,000    Consultant   $Nil   Advisory Services   Sec. 4(a)(2) 
                             
 8/8/2018   Common Stock Purchase   3,000,000    Consultant   $Nil   Advisory Services   Sec. 4(a)(2) 

 

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.

 

 37 
 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The current portion of notes payable on the Company’s Condensed Consolidated Balance Sheets above contains, at September 30, 2018, certain promissory notes on which the Company was in arrears on payments of principal as follows:

 

1. Promissory note issued July 29, 2014 for $100,000. As of September 30, 2018, the note is in default. The note earns interest at a rate of 18% per annum.
   
2. Promissory notes issued between November 26, 2014 and December 31, 2015. 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 September 30, 2018, as the Company was unable to pay installments on those notes on their due dates.
   
3. Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and December 1, 2017. Lenders on loans aggregating $375,994 earn interest at rates between 2% and 18% per annum. On loans aggregating $100,000, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $475,994 were in default at September 30, 2018, as the Company was unable to repay those notes on their due dates.
   
4. Promissory notes totaling $97,737 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 at September 30, 2018 the notes were in default.
   
5. Promissory note issued in July 2016 for $50,000. 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 at September 30, 2018 the note was in default.
   
6. Promissory notes totaling $1,354,000 issued in the fourth quarter of 2016. The lenders earn interest at 2% per annum and mature between November 1, 2017 and December 31, 2017. The Company was unable to repay the note at maturity and at September 30, 2018 the notes were in default.
   
7. Notes aggregating $500,000 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. At September 30, 2018, the notes were in default
   
8. Promissory note for $50,000 issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 15, 2017. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default.
   
9. Promissory note for $425,000 was issued in October 2017 with an original issue discount of $70,000. The note is in default, giving the holder an option to convert the note to stock. In 2018, the defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at September 30, 2018 had increased to $500,792. $115,000 of accrued interest owed on the note has been converted to stock. The Company has accrued a $1,448,784 derivative liability for the remaining conversion right.
   
10. Notes aggregating $300,000 issued in the second quarter of 2017. The notes accrue interest at 2% per annum and mature between April 3, 2018 and May 31, 2018. At September 30, 2018, the notes were in default.
   
11. Notes aggregating $191,800 issued in the third quarter of 2017. The notes accrue interest at 2% per annum and mature between June 16, 2018 and December 31, 2018. At September 30, 2018, $50,000 of the notes were in default
   
12. Notes aggregating $47,975 issued in the first quarter of 2018. The notes accrue interest at 2% per annum and mature between May 2018 and January 2019. At September 30, 2018, $10,000 of the notes were in default.
   
13. Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest of 2% per annum and mature between July 2018 and October 2018. These notes include warrants between 1,000,000 and 5,000,000 shares with an exercise price of $0.005. At September 30, 2018, $55,000 of the notes were in default.
   
14. Notes aggregating $125,000 issued in the first quarter of 2018. The notes accrue interest between 2% and 12% per annum and mature between April 2018 and June 2018. These notes include warrants between 5,000,000 and 20,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.

 

At September 30, 2018, the Company had insufficient cash on hand to repay these notes.

 

 38 
 

 

ITEM 6. EXHIBITS

 

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

 

 39 
 

 

SIGNATURES

 

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

 

  Immune Therapeutics, Inc.
     
Date: November 14, 2018 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
     
  Immune Therapeutics, Inc.
     
Date: November 14, 2018 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer

 

 40 
 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

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: November 14, 2018 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: November 14, 2018 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

   
 

 

EX-32.1 3 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION

 

  (1) In connection with the periodic report of Immune Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2018 as filed with the Securities and Exchange Commission (the “Report”), we, Noreen Griffin, Chief Executive Officer (Principal Executive Officer) and Peter Aronstam, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of our knowledge:1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

 

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

 

Date: November 14, 2018 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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Shares issued for accounts payable and accrued expenses Cashless exercise of warrants Estimated gain/(loss) on debt conversion Increase in note due to default provisions Increase in note due to new agreement Reclassification from notes payable to accounts payable Accounts payable paid directly by lender Common stock issued for prepaid services Settlement paid by lender Organization, Consolidation and Presentation of Financial Statements [Abstract] Organization and Description of Business Accounting Policies [Abstract] Summary of Significant Accounting Policies Property, Plant and Equipment [Abstract] Fixed Assets Investments Deconsolidation Of Cytocom Investments: Deconsolidation of Cytocom Payables and Accruals [Abstract] Accrued Liabilities Debt Disclosure [Abstract] Notes Payable Derivative Instruments and Hedging Activities Disclosure [Abstract] Derivative Liabilities Equity [Abstract] Capital Structure - Common Stock and Common Stock Purchase Warrants Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Stock Compensation Income Tax Disclosure [Abstract] Income Taxes - 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notes payable Estimated legal settlements Other accrued liabilities Estimated loss on note conversions Derivative Liability Total accrued expenses and other liabilities Accrued unpaid interest and default penalties Issuance of common stock for settlement of promissory notes, shares Issuance of common stock for settlement of promissory notes Settlement of promissory notes Total Less: Original issue discounts on notes payable and warrants issued with notes Note matures date Percentage of interest rate per annum Maximum amount raise in debt Number of installments, months Debt instrument maturity date description Aggregating loan Accrued interest Notes aggregating default amount Debt, current Extinguishment of debt, amount Note extended date Original issuance discount Debt conversion converted instrument, shares issued Number of shares issued Derivative liability Principal balance attributable to the conversion feature Debt instrument, periodic payment, principal Number of shares converted into common stock Number of warrants Warrant exercise price per share Converted derivative liability Derivative liabilities Revalue of derivative liabilities Fair value assumptions, measurement input, percentages Fair value assumptions, measurement input, term Fair Value Hierarchy and NAV [Axis] Total assets Conversion option derivative liability Total liabilities Derivative liabilities beginning balance Settlement of liability Partial settlement of liability Change in fair value Derivative liabilities ending balance Number of warrants issued during period Number of Shares Warrants, Beginning balance Number of Shares Warrants, Issued Number of Shares Warrants, Expired and forfeited Number of Shares Warrants, Exercised Number of Shares Warrants, Ending balance Exercise Price, Beginning balance Exercise Price, Issued Exercise Price, Expired and forfeited Exercise Price, Exercised Exercise Price, Ending balance Weighted average exercise price, Beginning balance Weighted average exercise price, Issued Weighted average exercise price, Expired and forfeited Weighted average exercise price, Exercised Weighted average exercise price, Ending balance Number of Shares Exercise Price Lower Limit Exercise Price Upper Limit Remaining Life (years) Scenario [Axis] Number of common stock issued for consulting fees Number of common stock issued for consulting fees, value Consulting fees amortized period Amortization of prepaid services Income tax examination, description Percentage of statutory income tax rate Lower corporate tax rate Effective tax rate Operating loss carryforwards Operating loss carryforwards expire term Net operating losses Stock based compensation Amortization, depreciation, and impairment Capitalization of start-up costs for tax purposes Loss on debt conversion of debt Total deferred tax assets Valuation allowance Total deferred tax assets, net Benefits for income tax at federal statutory rate Permanent differences Change in estimates Net operating loss Benefits for income tax at federal statutory rate, percent Permanent differences, percent Change in estimates, percent Effective income tax rate reconciliation, percent Number of shares acquired in exchange for common stock Acquisition value Royalty percentage Distribution agreement, description Ramp up costs, percentage Cash rental expense Number of common stock shares issued Consulting fees Increased in debt and equity finance Accrued unpaid interest and default penalties. 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Issuance of common stock for interest. Issuance of Cytocom common stock for sale and exercise of warrants. Lenders [Member] Licenses and Supply Agreements Disclosure [Text Block] Lower corporate tax rate. Maximum of annual gross revenue. Non-controlling Interest [Policy Text Block] Note extended date. Notes Payable [Member] Notes Payable Eighteen [Member] Notes Payable Eleven [Member] Notes Payable Fifteen [Member] Notes Payable [Member] Notes Payable [Member] Notes Payable Fourteen [Member] Notes Payable [Member] Notes Payable Nine [Member] Notes Payable Nineteen [Member] Notes Payable [Member] Notes Payable [Member] Notes Payable Seventeen [Member] Notes Payable [Member] Notes Payable Sixteen [Member] Notes Payable Ten [Member] Notes Payable Thirteen [Member] Notes Payable [Member] Notes Payable Twelve [Member] Notes Payable [Member] Number of installments. Operating Loss Carryforwards expire term Percentage of low corporate income tax rate. Prepaid services. Prepaid Services [Member] Proceeds from sale of stock and exercise of warrants. Property And Equipment [Member]. Ramp up costs, percentage. Reclassification from debt to accounts payable. Revalue of derivative liabilities. Schedule of Reconciliation of Changes in the Fair Value of Derivative Liabilities [Table Text Block] Second Quarter 2019 [Member] Second Quarter 2020 [Member] Second Quarter 2021 [Member] Second Quarter 2022 [Member] Second Quarter 2023 [Member] Second Quarter 2032 [Member] Exercise Price, Exercised Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Exercise In Period Weighted Average Exercise Price. The number of exercised shares made during the period on other than stock (or unit) option plans (for example, phantom stock or unit plan, stock or unit appreciation rights plan, performance target plan). Exercise Price, Issued Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period weighted Average Exercise Price. Exercise Price Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options In Period Weighted Average Exercise Price. Shares issued for accounts payable and accrued expenses. Stock issuances due. Stock issued for services general and administrative. Stock To Be Issued [Member] Summary of Outstanding Warrants [Table Text Block] TNI BioTech IP, Inc. [Member] TNI IP's Management [Member] Third Quarter 2018 [Member] Third Quarter 2019 [Member] Third Quarter 2021 [Member] Third Quarter 2022 [Member] Weighted average exercise price, Expired and forfeited. Black-Scholes Option Pricing Model [Member] Fair value assumptions, measurement input, percentages Fair value assumptions, measurement input, term. Shareholders [Member] Warrant valuation. Conversion of debt and accrued interest to common stock. Estimated gain/(loss) on debt conversion. Accounts payable paid directly by lender. Settlement paid by lend. Investments Deconsolidation of Cytocom [Text Block] Percentage of sales revenue payable as royalty. Debt Conversion Converted Instrument Percentage. Notes Payable Twenty [Member] Notes Payable Twenty One [Member] Royalty percentage, Increased in debt and equity finance. Settlement of derivative liability. Deconsolidation of entity. Increase in note due to default provisions. Increase in note due to new agreement. Stock warrant expense. Common stock issued for prepaid services. Settlement of promissory notes. Other Notes Payable [Member] Fourth Quarter 2021 [Member] Third Quarter 2023 [Member] Third Quarter 2028 [Member] Penalties related to note default. Settlement of liability. Assets, Current Liabilities, Current Stockholders' Equity Attributable to Parent Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Liabilities and Equity Gross Profit Operating Expenses Operating Income (Loss) Interest Expense, Other Derivative, Gain on Derivative Nonoperating Income (Expense) Net Income (Loss) Available to Common Stockholders, Basic Shares, Outstanding Adjustments to Additional Paid in Capital, Other Derivative, Gain (Loss) on Derivative, Net Summary of outstanding warrants Increase (Decrease) in Accounts Payable Increase (Decrease) in Inventories Increase (Decrease) in Accrued Liabilities Net Cash Provided by (Used in) Operating Activities Payments for Restructuring Payments to Acquire Property, Plant, and Equipment Net Cash Provided by (Used in) Investing Activities Repayments of Notes Payable Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Property, Plant and Equipment, Impairment [Policy Text Block] Accrued Liabilities and Other Liabilities Restructuring Reserve, Settled without Cash Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsInPeriodExercisePrice ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsInPeriodWeightedAverageExercisePrice Deferred Tax Assets, Gross Deferred Tax Assets, Valuation Allowance Deferred Tax Assets, Net of Valuation Allowance Effective Income Tax Rate Reconciliation, Nondeductible Expense, Impairment Losses, Amount EX-101.PRE 9 imun-20180930_pre.xml XBRL PRESENTATION FILE XML 10 R1.htm IDEA: XBRL DOCUMENT v3.10.0.1
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2018
Nov. 14, 2018
Document And Entity Information    
Entity Registrant Name Immune Therapeutics, Inc.  
Entity Central Index Key 0001559356  
Document Type 10-Q  
Document Period End Date Sep. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Common Stock, Shares Outstanding   434,322,060
Trading Symbol IMUN  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2018  
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Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Current Assets:    
Cash and cash equivalents $ 5,859 $ 14,718
Inventories 158,648 178,098
Total current assets 164,507 192,816
Fixed Assets:    
Computer equipment, net of accumulated depreciation of $9,798 and $8,714 respectively 3,199 2,529
Investment in affiliate, equity method
Deposits 200 200
Total assets 167,906 195,545
Current Liabilities:    
Accounts payable 1,532,878 2,319,932
Accounts payable, affiliate 22,582
Accrued liabilities 3,087,841 2,489,404
Notes payable, net of debt discount 4,795,298 4,820,063
Derivative liability 1,448,784 1,669,532
Total current liabilities 10,887,383 11,298,931
Total liabilities 10,887,383 11,298,931
Commitments and Contingencies (Note 12)
Stockholders' Deficit:    
Common stock - par value $0.0001; 500,000,000 shares authorized; 415,661,456 and 386,782,473 shares issued and outstanding respectively 41,566 38,679
Additional paid in capital 369,427,460 366,625,144
Stock issuances due 78,259 103,226
Prepaid services (226,667)
Accumulated deficit (380,266,762) (373,035,183)
Deficit attributable to common stockholders (10,719,477) (6,494,801)
Non-controlling interest (4,608,585)
Total stockholders' deficit (10,719,477) (11,103,386)
Total liabilities and stockholders' deficit $ 167,906 $ 195,545
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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Accumulated depreciation $ 9,798 $ 8,714
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 500,000,000 500,000,000
Common stock, shares issued 415,661,456 386,782,473
Common stock, shares outstanding 415,661,456 386,782,473
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]        
Revenues, net $ 65,013
Cost of products sold 33,172
Gross profit 31,841
Operating expenses        
Selling, general and administrative 587,726 620,905 2,346,090 1,842,778
Research and development expense 109,340 185,692 362,110
Stock issued for services G&A 62,500 446,002 716,075 1,537,292
Warrant valuation 272,707 590,605
Depreciation and amortization expense 217 269 1,084 557
Total operating expenses 650,443 1,449,223 3,248,941 4,333,342
Loss from operations (650,443) (1,449,223) (3,217,100) (4,333,342)
Other income (expense):        
Interest expense (408,507) (118,878) (870,479) (822,789)
Loss on deconsolidation (2,791,172)
Gain/(Loss) on derivative (876,830) (118,542)
Gain/(Loss) on settlement of debt (666,632) (31,741) (684,668) 998,991
Total other income (expense) (1,951,969) (150,619) (4,464,861) 176,202
Net income/(loss) before income taxes (2,602,412) (1,599,842) (7,681,961) (4,157,140)
Income taxes
Net income/(loss) (2,602,412) (1,599,842) (7,681,961) (4,157,140)
Net income/(loss) attributable to non-controlling interest (217,574) (450,382) (485,656)
Net income/(loss) attributable to common shareholders $ (2,602,412) $ (1,382,268) $ (7,231,579) $ (3,671,484)
Basic and diluted loss per share attributable to common shareholders $ (0.01) $ (0.00) $ (0.02) $ (0.01)
Weighted average number of shares outstanding 407,253,837 341,109,212 396,863,363 301,844,205
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Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2018 - 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, 2017 $ 38,679 $ 366,625,144 $ 103,226 $ (226,667) $ (373,035,183) $ (4,608,585) $ (11,103,386)
Balance, shares at Dec. 31, 2017 386,782,473            
Issuance of common stock for services $ 1,073 513,303 (24,967)  
Issuance of common stock for services, shares 10,738,640            
Amortization of prepaid services 226,667 226,667
Issuance of common stock in exchange for debt $ 1,794 560,712 562,506
Issuance of common stock in exchange for debt, shares 17,940,343            
Issuance of common stock for interest $ 20 8,980 9,000
Issuance of common stock for interest, shares 200,000            
Issuance of common stock for sale and exercise of warrants 240,500 240,500
Issuance and modification of common stock warrants 1,478,821 1,478,821
Elimination of Cytocom noncontrolling interest and deconsolidation 5,058,967 5,058,967
Net loss (7,231,579) (450,382) (7,681,961)
Balance at Sep. 30, 2018 $ 41,566 $ 369,427,460 $ 78,259 $ (380,266,762) $ (10,719,477)
Balance, shares at Sep. 30, 2018 415,661,456            
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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (7,681,961) $ (4,157,140)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation 1,084 557
Stock issued, and amortization of stock issued, for prepaid services 226,667 1,270,837
Gain/(Loss) on settlement of debt 684,668 (998,991)
Penalties related to note default 75,792
Stock issued for services 665,230 266,456
Stock warrant expense 590,605
Amortization of debt discount 274,777 60,347
Change in value of derivative 118,542
Expenses paid by lender 150,505
Loss on deconsolidation 2,791,172
Stock issued for interest 9,000 378
Changes in operating assets and liabilities:    
Accounts payable 737,246 678,162
Accounts receivable  
Inventories 19,450 (214,327)
Accrued liabilities 979,113 887,608
Due to Cytocom 23,771
Net cash used in operating activities (924,944) (1,615,508)
CASH FLOWS FROM INVESTING ACTIVITIES    
Deconsolidation of subsidiary (11,631)
Purchase of computer equipment (1,754) (1,505)
Net cash used in investing activities (13,385) (1,505)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from sale of stock and exercise of warrants 240,500 706,540
Payment of notes payable (321,846)
Proceeds from issuance of notes payable 688,970 1,180,500
Net cash provided by financing activities 929,470 1,565,194
Net increase (decrease) in cash (8,859) (51,819)
Cash and cash equivalents at beginning of period 14,718 74,389
Cash and cash equivalents at end of period 5,859 22,570
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 53,341 29,500
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Debt discount 243,000 50,000
Conversion of debt and accrued interest to common stock 692,640 3,051,969
Settlement of derivative liability 243,199
Deconsolidation of Cytocom, Inc. 2,278,237
Shares issued for accounts payable and accrued expenses 254,738
Cashless exercise of warrants 1,705
Estimated gain/(loss) on debt conversion 215,000
Increase in note due to default provisions 190,792
Increase in note due to new agreement 150,000
Reclassification from notes payable to accounts payable 40,628
Accounts payable paid directly by lender 150,505 273,821
Common stock issued for prepaid services 266,455
Settlement paid by lender $ 150,000
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Organization and Description of Business
9 Months Ended
Sep. 30, 2018
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 apply to obtain EMA benefits once funding becomes available.

 

In December 2013, the Company formed a subsidiary, Cytocom Inc. (“Cytocom”), 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 to its shareholders. As part of the transaction (“Original Agreement”), the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents, patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations, renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues, reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names, brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights, database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals, continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions, and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK.

  

The Original Agreement also granted the Company rights to market Lodonal™ and Met-Enkephalin (“MENK”) in “Emerging Markets,” which included all countries excluding Canada, Italy, Japan, France, Germany, United Kingdom, European Community and the United States. Pursuant to the Original Agreement, the Company was required to pay Cytocom a 5% royalty on all sales all ongoing drug development and fees due in connection with the underlying patents until such time as Cytocom was funded.

 

On December 8, 2014, the number of Cytocom shares of common stock that were issued to our shareholders totaled 113,242,522 shares. In connection with the above-mentioned transaction to transfer intellectual property to Cytocom, Cytocom issued an additional 140,100,000 shares of its common stock to the Company, which gave the Company a 55.3% stake in Cytocom on that date. In April 2016, the Board of Directors and a majority of shareholders of Cytocom approved a reverse stock split of Cytocom’s outstanding common stock with one new share of stock for each twenty old shares of common stock. Cytocom effectuated and finalized the reverse split in June 2016.

 

On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom. The Restated Agreement restates the licensing arrangement between the Company and Cytocom as provided by the Original Agreement. The Restated Agreement grants the Company distribution and marketing rights for Lodonal™ and MENK for humans in Emerging Markets. In addition, the Company has been granted the rights to distribute and market Lodonal™ and MENK for animal use in the United States. The royalty due to Cytocom has been reduced from 5% to 1% of sales and the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom.

 

On June 4, 2018, the Company and Cytocom entered into a Stock Purchase Agreement (the “Stock Agreement. Pursuant to the Stock Agreement, the Company cancelled approximately $4,000,000 of debt owed to it by Cytocom in exchange for ten percent (10%) of the issued and outstanding common stock of Cytocom, as calculated on a fully diluted basis. The Restated Agreement was a condition of the Stock Agreement.

 

At September 30, 2018, the Company’s equity interest in Cytocom stood at 15.95% of Cytocom’s common stock issued and outstanding on that date. The Company’s policies with respect to accounting for its equity interest in Cytocom is described in Note 2 to the “Notes to the Condensed Consolidated Financial Statements” below (“Summary of Significant Accounting Policies: Non-Controlling Interest in Consolidated Subsidiaries”).

 

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, the Company is a clinical late-stage T-Cell Activation biopharmaceutical company focused on the development immunotherapies for the treatment of autoimmune and inflammatory conditions, cancer, HIV/AIDS and animal diseases on a global basis.

 

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 $650,443, and used cash and cash equivalents for operations in the amount of $924,944 during the quarter ended September 30, 2018, resulting in stockholder’s deficit of $380,266,762 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 September 30, 2018 was not sufficient to meet the cash requirements to fund planned operations for the next 12 months 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.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2018
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, 2017 (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, 2017. 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.

 

Non-Controlling Interest in Consolidated Subsidiaries

 

Prior to May 1, 2018, the Company consolidated Cytocom. On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom, Inc., in accordance with which the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom. On June 4, 2018, the Company and Cytocom entered into a Stock Purchase Agreement (the “Stock Agreement”). Pursuant to the Stock Agreement, the Company cancelled approximately $4,000,000 of debt owed to it by Cytocom in exchange for ten percent (10%) of the issued and outstanding common stock of Cytocom, as calculated on a fully diluted basis on June 4, 2018. At September 30, 2018, the Company’s equity interest in Cytocom stood at 15.95% of Cytocom’s common stock issued and outstanding. Accordingly, the Company deconsolidated Cytocom as of May 1, 2018, and accounts for its retained interest in Cytocom under the equity method of accounting, with the Company’s share of Cytocom’s earnings recorded in “loss from equity method investment” in the consolidated statements of operations. The condensed consolidated financial statements as of September 30, 2018 exclude the assets, liabilities and operating results of Cytocom after May 1, 2018.

 

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. We believe the new standard will not have a material impact on our consolidated financial position and consolidated results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions once we commence revenue-generating activities.

 

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 September 30, 2018, the Company had 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.

 

Inventory

 

Inventories comprise finished product, raw materials and materials used for packaging. Inventories are stated at the lower of cost or market with cost based on the first-in, first-out (FIFO) method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical trials or clinical manufacturing campaigns. Inventory used in marketing activities is charged to selling, general and administrative expense.

 

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 September 30, 2018 and September 30, 2017 was $217 and $269 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.

 

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 September 30, 2018 and 2017, 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 September 30, 2018, and 2017, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends ASC Topic 220, Income Statement - Reporting Comprehensive Income. This ASU allows for tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act to be reclassified as retained earnings. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect this guidance may have on its financial position, results of operations, comprehensive income, cash flows and disclosures.

 

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.

 

Net Loss per Share of Common Stock

 

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
September 30,
    For the nine months ended
September 30,
 
    2018     2017     2018     2017  
                         
Net Profit/(Loss)   $ (2,602,412 )   $ (1,382,268 )   $ (7,681,961 )   $ (3,671,484 )
Weighted-average common shares outstanding                                
Basic and diluted:     407,253,837       341,109,212       396,863,363       301,844,205  
Profit/(Loss) per share outstanding                                
Basic and diluted   $ (0.01 )   $ (0.00 )   $ (0.02 )   $ (0.01 )

 

The Company’s potential dilutive securities which include warrants (as described in Note 8 to the Financial Statements – “Capital Structure – Common Stock and Common Stock Purchase 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.

 

Recent Accounting Standards

 

During the quarter ended September 30, 2018, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

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Fixed Assets
9 Months Ended
Sep. 30, 2018
Fixed Assets:  
Fixed Assets

3. Fixed Assets

 

   

September 30,

2018

   

December 31,

2017

 
Fixed Assets:                
Computer equipment   $ 12,997     $ 11,243  
Less accumulated depreciation     (9,798 )     (8,714 )
Fixed assets, net   $ 3,199     $ 2,529  

 

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.

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Investments: Deconsolidation of Cytocom
9 Months Ended
Sep. 30, 2018
Investments Deconsolidation Of Cytocom  
Investments: Deconsolidation of Cytocom

4. Investments: Deconsolidation of Cytocom

 

In accordance with the May 1, 2018 “Restated Agreement” with Cytocom, the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom. Accordingly, effective May 1, 2018, the Company deconsolidated Cytocom. However, the Company exercises influence through its retained equity interest and through representation on Cytocom’s board of directors. As a result, the Company uses the equity method to account for its retained interest in Cytocom

 

On May 1, 2018, the Company recorded an equity method investment in Cytocom of $1,189, the par value of Cytocom common stock multiplied by the number of shares owned by the Company, due to the negative equity associated with Cytocom’s underlying financial position. As a result of the continuing losses in Cytocom, the balance of this investment is currently $0.

 

At September 30, 2018, Cytocom had no significant assets or income. Cytocom notes payable on that date aggregated $1,193,500.

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Accrued Liabilities
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Accrued Liabilities

5. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

   

September 30,

2018

   

December 31,

2017

 
Accrued payroll to officers and others     2,212,393       1,539,777  
Accrued interest and penalties - notes payable     738,878       703,141  
Estimated legal settlements     136,057       136,057  
Other accrued liabilities     23,095       393  
Estimated loss on note conversions     -       110,036  
Derivative Liability     1,448,784       1,669,532  
                 
Total accrued expenses and other liabilities   $ 4,559,207     $ 4,158,936  

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Notes Payable
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Notes Payable

6. Notes Payable

 

Notes payable consist of the following:

 

   

September 30,

2018

   

December 31,

2017

 
Promissory note issued July 29, 2014 to Ira Gaines. In 2016, the maturity date on the note was extended to December 1, 2017. As of September 30, 2018, the note is in default. The note earns interest at a rate of 18% per annum.   $ 100,000     $ 100,000  
                 
Promissory notes issued between November 26, 2014 and December 31, 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. These notes were in default at September 30, 2018, as the Company was unable to pay installments on their due dates.     286,000       286,000  
                 
Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and December 1, 2017. Lenders on loans aggregating $375,994 earn interest at rates between 2% and 18% per annum. On loans aggregating $100,000, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $475,994 were in default at September 30, 2018, as the Company was unable to repay those notes on their due dates. $130,000 of the notes were deconsolidated on May 1, 2018 and $100,000 of the notes along with $150,000 of interest were extinguished in July 2018.     475,994       705,994  
                 
Promissory notes issued by Cytocom between April 29, 2015 and December 31, 2015. Lenders earn interest at rates between 5% and 10% per annum. These notes mature on December 31, 2016. At September 30, 2018, the notes were in default. These notes were deconsolidated on May 1, 2018.     -       425,000  
                 
Promissory notes issued to an officer of the Company effective November 3, 2015 and maturing November 3, 2016 for settlement of accrued payroll, bearing interest at 10% per annum and including a stock conversion feature. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default.     97,737       97,737  

 

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 at September 30, 2018 the note was in default.
This note was extinguished on July 1, 2018.
            50,000  
                 
Promissory note for $180,000 was issued in July 2016 with an original issue discount of $30,000. The note is repayable on April 7, 2017. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default. Under the terms of the note, the principal amount was increased in 2017 to $243,000, and interest accrued at 25% per annum. $161,976 of principal and $20,025 of accrued interest were converted into 7,447,448 shares, of which 5,500,000 shares were issued at the end of 2017. The Company has accrued a $243,199 derivative liability for the $81,024 principal balance attributable to the conversion feature contained in this note. The note was settled in the quarter ended March 31, 2018.     -       81,024  
                 
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 $8,642. The note was in default on September 30, 2018. The balance due was reclassified as accounts payable.     -       17,284  
                 
Promissory notes issued between July 1, 2016 and December 31, 2016. Lenders earn interest at 2% per annum. The notes mature on December 31, 2017, and at September 30, 2018 the notes were in default.     206,000       206,000  
                 
Notes aggregating $1,354,000 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. As of September 30, 2018 the notes were in default.     1,354,000       1,354,000  
                 
Notes aggregating $500,000 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. At September 30, 2018, the notes were in default.     500,000       500,000  
                 
Promissory note issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 5, 2017 and at September 30, 2018 the note was in default.     50,000       50,000  
                 
Notes aggregating $300,000 issued in the second quarter of 2017. The notes accrue interest at 2% per annum and mature between April 3, 2018 and May 31, 2018. At September 30, 2018, the notes were in default.     300,000       300,000  
                 
Notes aggregating $191,800 issued in the third quarter of 2017. The notes accrue interest at 2% per annum and mature between June 16, 2018 and December 31, 2018. At September 30, 2018, $50,000 of the notes were in default.     191,800       191,800  
                 
Promissory note for $425,000 was issued in October 2017 with an original issue discount of $70,000. The note is in default, giving the holder an option to convert the note to stock. In 2018, The defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at September 30, 2018 had increased to $500,792. $115,000 of accrued interest owed on the note has been converted to stock. The Company has accrued a $1,448,784 derivative liability for the remaining conversion right.     500,792       425,000  

 

Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum and mature on December 31, 2018.     105,500       105,500  
                 
Notes aggregating $47,975 issued in the first quarter of 2018. The notes accrue interest at 2% per annum and mature between May 2018 and January 2019. At September 30, 2018, $10,000 of the notes were in default.     47,975       -  
                 
Notes aggregating $125,000 issued in the first quarter of 2018. The notes accrue interest between 2% and 12% per annum and mature between April 2018 and June 2018. These notes include warrants between 5,000,000 and 20,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.     125,000       -  
                 
Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest of 2% per annum and mature between July 2018 and October 2018. These notes include warrants between 1,000,000 and 5,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.     65,000       -  
                 
Notes aggregating $193,000 issued in the third quarter of 2018. The notes accrue interest at 2% per annum and mature between November 2018 and January 2019. These notes include warrants between 600,000 and 5,000,000 shares with an exercise price of $0.005.     193,000       -  
                 
In July 2017, a note for $250,000 was issued. The note earns interest at 5% per annum and matures on November 1, 2018.     250,000       -  
                 
Less: Original issue discounts on notes payable and warrants issued with notes.     (53,500 )     (75,277 )
                 
Total   $ 4,795,298     $ 4,820,062  

 

As of September 30, 2018, the Company had accrued $738,878 in unpaid interest and default penalties. During the quarter ended September 30, 2018, 9,333,143 shares with a fair value of $111,091 were issued by the Company for settlement of promissory notes totaling $60,000.

 

As of September 30, 2017, the Company had accrued $594,875 in unpaid interest and default penalties. During the quarter ended September 30, 2017, 4,694,017 shares with a fair value of $138,843 were issued or reserved for issuance by the Company for settlement of promissory notes.

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liabilities
9 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liabilities

7. Derivative Liabilities

 

During the quarter ended September 30, 2018, no notes payable were issued as convertible debt or became convertible and qualified as a derivative liability under FASB ASC 815. In the quarter, notes payable with a derivative liability of $60,000 were converted, and the derivative liability on other notes payable was revalued from $623,045 to $1,448,784.

 

As of September 30, 2018, and December 31, 2017, the aggregate fair value of the outstanding derivative liability was $1,448,784 and $1,669,532 respectively. The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumptions during the quarter ended September 30, 2018:

 

   

Three months

ended 

September 30,  
2018

 
Volatility     248 %
Risk-free interest rate     1.81 %
Expected dividends     - %
Expected term     1 year  

 

The Company determines the fair market values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs may be used to measure fair value:

 

Level 1 Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
   
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
   
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company uses Level 3 inputs to estimate the fair value of its derivative liabilities.

 

The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of September 30, 2018:

 

   

Fair Value Measurements as of

September 30, 2018

 
    Level 1     Level 2     Level 3  
Assets                        
None   $ -     $ -     $ -  
Total assets     -       -       -  
Liabilities                        
Conversion option derivative liability     -       -       1,448,784  
Total liabilities   $ -     $ -     $ 1,448,784  

 

The following table sets forth a reconciliation of changes in the fair value of derivative liabilities classified as Level 3 in the fair value hierarchy:

 

   

Significant

Unobservable

Inputs (Level 3)

 
Beginning balance   $ 1,669,532  
Settlement of liability     (243,199 )
Partial settlement of liability     (96,091 )
Change in fair value     (118,542 )
Ending balance   $ 1,448,784  

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Capital Structure - Common Stock and Common Stock Purchase Warrants

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

 

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

 

As of September 30, 2018 and 2017, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of September 30, 2018, the Company had 415,661,456 shares of common stock outstanding, and 386,782,473 outstanding as of December 31, 2017.

 

Stock Warrants

 

In the quarter ended September 30, 2018, there were 80,550,000 new warrants issued by the Company.

 

There were no modifications of the terms of any warrants issued by the Company in the quarters ended September 30, 2018 and 2017.

 

Following is a summary of outstanding stock warrants at September 30, 2018 and activity during the three months then ended:

 

   

Number of

Shares

    Exercise Price    

Weighted

Average

Price

 
Warrants as of December 31, 2017     84,287,402     $ 0.01-15.00     $ 0.33  
                         
Issued in 2018     141,620,636     $ 0.005-0.20     $ 0.16  
                         
Expired and forfeited     410,834     $ 1.50-15.00     $ 6.79  
                         
Exercised     -     $ -       -  
                         
Warrants as of September 30, 2018     225,497,204     $ 0.01-15.00     $ 0.14  

 

Summary of outstanding warrants as of September 30, 2018:

 

Expiration Date  

Number of

Shares

   

Exercise

Price

   

Remaining

Life (years)

 
                   
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       .25  
First Quarter 2019     4,024,000     $ 0.50-2.00       .50  
Second Quarter 2019     135,000     $ 0.07-0.23       .75  
Third Quarter 2019     260,000     $ 0.50-1.50       1.00  
Fourth Quarter 2019     22,690,908     $ 0.05-3.74       1.25  
Second Quarter 2020     300,000     $ 0.50       1.75  
Fourth Quarter 2020     1,000,000     $ 0.20       2.25  
First Quarter 2021     12,600,000     $ 0.20       2.50  
Second Quarter 2021     5,812,252     $ 0.01-0.20       2.75  
Third Quarter 2021     5,116,667     $ 0.03-0.20       3.00  
Fourth Quarter 2021     300,000     $ 0.10       3.25  
Second Quarter 2022     1,750,000     $ 0.15       3.75  
Third Quarter 2022     2,650,000     $ 0.05-0.10       4.00  
Fourth Quarter 2022     9,811,422     $ 0.08-0.29       4.25  
First Quarter 2023     700,000     $ 0.01-0.03       4.50  
Second Quarter 2023     15,000,000     $ 0.01-0.20       4.75  
Third Quarter 2023     76,100,000     $ 0.01-0.10       5.00  
First Quarter 2024     30,000,000     $ 0.01       5.50  
Third Quarter 2028     3,000,000     $ 0.07       10.00  
Second Quarter 2032     21,807,789     $ 0.01-0.07       13.75  
      225,497,204     $ 0.01-15.00          

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Compensation
9 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Compensation

9. Stock Compensation

 

Shares Issued for Services

 

During the quarters ended September 30, 2018 and 2017, the Company issued 7,500,000 and 1,700,000 shares of common stock respectively for consulting fees. The Company valued these shares at $190,000 and $61,000 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 $0 and $446,002 for the quarters ended September 30, 2018 and 2017.

XML 25 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes - Results of Operations
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes - Results of Operations

10. Income Taxes - Results of Operations

 

There was no income tax expense reflected in the results of operations for the quarters ended September 30, 2018 and 2017 because the Company incurred a net loss in both quarters.

 

On December 22, 2017, the President of the United States signed the Tax Cuts and Jobs Act (“U.S. Tax Reform”), which enacts a wide range of changes to the U.S. corporate income tax system. The impact of U.S. Tax Reform primarily represents the Company’s estimates of revaluing the Company’s U.S. deferred tax assets and liabilities based on the rates at which they are expected to be recognized in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for the 2018 tax year. Based on the Company’s historical financial performance, at December 31, 2017, the net deferred tax asset position was re-measured at the lower corporate rate of 21% and a tax expense was recognized to adjust net deferred tax assets to the reduced value.

 

Deferred tax assets:

 

   

September 30,

2018

   

December 31,

2017

 
             
Net operating losses   $ 21,319,000     $ 18,102,000  
Stock based compensation     39,568,000       39,054,000  
Amortization, depreciation, and impairment     4,179,300       4,178,000  
Capitalization of start-up costs for tax purposes     1,145,000       1,145,000  
Loss on debt conversion of debt     569,000       569,000  
Total deferred tax assets     66,780,300       63,048,000  
                 
Valuation allowance     (66,780,300 )     (63,048,000 )
                 
Total deferred tax assets, net   $ -     $ -  

 

The Company has recognized no tax benefit for the losses generated for the periods through September 30, 2018. 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 2018 and 2017 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.

 

At December 31, 2017, we had estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $86,000,000, which will expire in 2032-2037.

 

    2018     2017  
    Amount     Percent     Amount     Percent  
Benefits for income tax at federal statutory rate   $ 212,000       21 %   $ 874,000       34 %
Permanent differences     173,000       17 %     137,000       -  
Change in estimates     (385,000 )     -       (1,011,000 )     -  
    $ -       - %   $ -       - %

XML 26 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
Licenses and Supply Agreements
9 Months Ended
Sep. 30, 2018
Licenses And Supply Agreements  
Licenses and Supply Agreements

11. 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. All of these balances were subsequently impaired during prior periods.

 

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. In 2014, the Company recognized an impairment of the goodwill arising on the acquisition of TNI IP of $98,000,000.

 

Patent License Agreements

 

In December 2014, the Company transferred to Cytocom certain of its rights, title and interest in or relating to intellectual property (i) patents, patent applications, and all divisional, continuations and continuations-in-part thereof, together with all reissues, reexaminations, renewals and extensions thereof and all rights to obtain such divisionals, continuations and continuations-in-part, reissues, reexaminations, renewals and extensions, and all utility models and statutory invention registrations and any other such analogous rights, (ii) trademarks, service marks, Internet domain names, trade dress, trade styles, logos, trade names, services names, brand names, corporate names, assumed business names and general intangibles and other source identifiers of a like nature, together with the goodwill associated with any of the foregoing, and all registrations and applications for registrations thereof, together with all renewals and extensions thereof and all rights to obtain such renewals and extensions, (iii) copyrights, mask work rights, database and design rights, moral rights and rights in Internet websites, whether registered or unregistered and whether published or unpublished, all registrations and recordings thereof and all applications in connection therewith, together with all renewals, continuations, reversions and extensions thereof and all rights to obtain such renewals, continuations, reversions and extensions, and (iv) confidential and proprietary information, including, trade secrets and know-how. Cytocom licensed back to the Company a perpetual, non-exclusive, royalty-free right and license to use the assigned intellectual property for veterinary indications and for the marketing rights to emerging markets, access to all clinical data, use of the formulation for LDN and MENK.

 

The Original Agreement also granted the Company rights to market Lodonal™ and Met-Enkephalin (“MENK”) in “Emerging Markets,” which included all countries excluding Canada, Italy, Japan, France, Germany, United Kingdom, European Community and the United States. Pursuant to the Original Agreement, the Company was required to pay Cytocom a 5% royalty on all sales all ongoing drug development and fees due in connection with the underlying patents until such time as Cytocom was funded.

 

On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom. The Restated Agreement restates the licensing arrangement between the Company and Cytocom as provided by the Original Agreement. The Restated Agreement grants the Company distribution and marketing rights for Lodonal™ and MENK for humans in Emerging Markets. In addition, the Company has been granted the rights to distribute and market Lodonal™ and MENK for animal use in the United States. The royalty due to Cytocom has been reduced from 5% to 1% of sales and the Company no longer has any ongoing obligations to pay for the cost in connection with the assets of Cytocom.

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

12. 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 a trial 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, recruitment began in late 2016 and the trial is now ongoing. The trial has had problems with recruitment and continues today.
   
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

 

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 first deliveries under the agreement took place in February 2018. Under the original 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. Due to the fact that AHAR Pharma failed to meet its contractual purchase obligations, the Company formally issued notice of default under the agreement.

 

On April 18, 2018, AHAR Pharma transferred its rights under the Distribution Agreement to Fidson Healthcare Plc (“Fidson”), and Fidson signed an exclusive distribution agreement with the Company to distribute Lodonal™. In October 2018, the Company shipped 250,000 pills to Fidson to support the product launch in the coming months.

 

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. 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.

 

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 delivered various documents under the agreements related to its studies of Exploratory Toxicology (nGLP) and Definitive Toxicology (GLP). 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.

 

There has been no progress under the agreements in the past 12 months, since a change of ownership of Qianjiang Pharmaceutical in 2017. The Company continues to hold discussions with new management about the future of the agreements.

 

Contract Manufacturing Agreements

 

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

 

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

 

Operating Leases

 

At September 30, 2018, the Company was a party to an agreement to lease office space in Orlando, Florida. Rental expense for the three months ended September 30, 2018 and 2017 was $2,238 and $12,632 respectively.

 

Legal Proceedings

 

None.

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Events
9 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
Subsequent Events

13. Subsequent Events

 

The Company issued 18,661,118 shares of common stock between September 30, 2018 and November 14, 2018. 12,411,118 shares were for debt conversions and 6,250,000 were for consulting fees.

 

As of November 14, 2018, the Company had outstanding 434,322,060 shares of common stock.

 

Between September 30, 2018 and November 14, 2018 the company raised $15,500 in debt and equity financing.

 

On August 7, 2018, the Company announced that Dr. Roscoe Moore Jr., DVM, MPH, Ph.D., DSc joined the Company as Chairman of the Board, and will also maintain a position on the Company’s Scientific Advisory Board.

 

On September 6, 2018, the Company announced that Mr. Jack Brewer, MBA, joined the Company as a member of the Board of Directors.

XML 29 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2018
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, 2017 (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, 2017. 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.

Non-Controlling Interest in Consolidated Subsidiaries

Non-Controlling Interest in Consolidated Subsidiaries

 

Prior to May 1, 2018, the Company consolidated Cytocom. On May 1, 2018, the Company entered into an amended and restated licensing agreement (the “Restated Agreement”) with Cytocom, Inc., in accordance with which the Company no longer has any ongoing obligations to pay for costs in connection with the assets of Cytocom. On June 4, 2018, the Company and Cytocom entered into a Stock Purchase Agreement (the “Stock Agreement”). Pursuant to the Stock Agreement, the Company cancelled approximately $4,000,000 of debt owed to it by Cytocom in exchange for ten percent (10%) of the issued and outstanding common stock of Cytocom, as calculated on a fully diluted basis on June 4, 2018. At September 30, 2018, the Company’s equity interest in Cytocom stood at 15.95% of Cytocom’s common stock issued and outstanding. Accordingly, the Company deconsolidated Cytocom as of May 1, 2018, and accounts for its retained interest in Cytocom under the equity method of accounting, with the Company’s share of Cytocom’s earnings recorded in “loss from equity method investment” in the consolidated statements of operations. The condensed consolidated financial statements as of September 30, 2018 exclude the assets, liabilities and operating results of Cytocom after May 1, 2018.

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. We believe the new standard will not have a material impact on our consolidated financial position and consolidated results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions once we commence revenue-generating activities.

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 September 30, 2018, the Company had 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.

Inventory

Inventory

 

Inventories comprise finished product, raw materials and materials used for packaging. Inventories are stated at the lower of cost or market with cost based on the first-in, first-out (FIFO) method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical trials or clinical manufacturing campaigns. Inventory used in marketing activities is charged to selling, general and administrative expense.

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 September 30, 2018 and September 30, 2017 was $217 and $269 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.

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 September 30, 2018 and 2017, 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 September 30, 2018, and 2017, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends ASC Topic 220, Income Statement - Reporting Comprehensive Income. This ASU allows for tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act to be reclassified as retained earnings. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect this guidance may have on its financial position, results of operations, comprehensive income, cash flows and disclosures.

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.

Net Loss Per Share of Common Stock

Net Loss per Share of Common Stock

 

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
September 30,
    For the nine months ended
September 30,
 
    2018     2017     2018     2017  
                         
Net Profit/(Loss)   $ (2,602,412 )   $ (1,382,268 )   $ (7,681,961 )   $ (3,671,484 )
Weighted-average common shares outstanding                                
Basic and diluted:     407,253,837       341,109,212       396,863,363       301,844,205  
Profit/(Loss) per share outstanding                                
Basic and diluted   $ (0.01 )   $ (0.00 )   $ (0.02 )   $ (0.01 )

 

The Company’s potential dilutive securities which include warrants (as described in Note 8 to the Financial Statements – “Capital Structure – Common Stock and Common Stock Purchase 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.

Recent Accounting Standards

Recent Accounting Standards

 

During the quarter ended September 30, 2018, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

XML 30 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Schedule of Basic Net Loss Per Share

A calculation of basic net loss per share follows:

 

    For the three months ended
September 30,
    For the nine months ended
September 30,
 
    2018     2017     2018     2017  
                         
Net Profit/(Loss)   $ (2,602,412 )   $ (1,382,268 )   $ (7,681,961 )   $ (3,671,484 )
Weighted-average common shares outstanding                                
Basic and diluted:     407,253,837       341,109,212       396,863,363       301,844,205  
Profit/(Loss) per share outstanding                                
Basic and diluted   $ (0.01 )   $ (0.00 )   $ (0.02 )   $ (0.01 )

XML 31 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Fixed Assets (Tables)
9 Months Ended
Sep. 30, 2018
Fixed Assets:  
Schedule of Fixed Assets

   

September 30,

2018

   

December 31,

2017

 
Fixed Assets:                
Computer equipment   $ 12,997     $ 11,243  
Less accumulated depreciation     (9,798 )     (8,714 )
Fixed assets, net   $ 3,199     $ 2,529  

XML 32 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Liabilities (Tables)
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities

Accrued expenses and other liabilities consist of the following:

 

   

September 30,

2018

   

December 31,

2017

 
Accrued payroll to officers and others     2,212,393       1,539,777  
Accrued interest and penalties - notes payable     738,878       703,141  
Estimated legal settlements     136,057       136,057  
Other accrued liabilities     23,095       393  
Estimated loss on note conversions     -       110,036  
Derivative Liability     1,448,784       1,669,532  
                 
Total accrued expenses and other liabilities   $ 4,559,207     $ 4,158,936  

XML 33 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Notes Payable (Tables)
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Schedule of Notes Payable

Notes payable consist of the following:

 

   

September 30,

2018

   

December 31,

2017

 
Promissory note issued July 29, 2014 to Ira Gaines. In 2016, the maturity date on the note was extended to December 1, 2017. As of September 30, 2018, the note is in default. The note earns interest at a rate of 18% per annum.   $ 100,000     $ 100,000  
                 
Promissory notes issued between November 26, 2014 and December 31, 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. These notes were in default at September 30, 2018, as the Company was unable to pay installments on their due dates.     286,000       286,000  
                 
Promissory notes issued between May 1, 2015 and December 31, 2016, and maturing between June 14, 2015 and December 1, 2017. Lenders on loans aggregating $375,994 earn interest at rates between 2% and 18% per annum. On loans aggregating $100,000, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $475,994 were in default at September 30, 2018, as the Company was unable to repay those notes on their due dates. $130,000 of the notes were deconsolidated on May 1, 2018 and $100,000 of the notes along with $150,000 of interest were extinguished in July 2018.     475,994       705,994  
                 
Promissory notes issued by Cytocom between April 29, 2015 and December 31, 2015. Lenders earn interest at rates between 5% and 10% per annum. These notes mature on December 31, 2016. At September 30, 2018, the notes were in default. These notes were deconsolidated on May 1, 2018.     -       425,000  
                 
Promissory notes issued to an officer of the Company effective November 3, 2015 and maturing November 3, 2016 for settlement of accrued payroll, bearing interest at 10% per annum and including a stock conversion feature. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default.     97,737       97,737  

 

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 at September 30, 2018 the note was in default.
This note was extinguished on July 1, 2018.
            50,000  
                 
Promissory note for $180,000 was issued in July 2016 with an original issue discount of $30,000. The note is repayable on April 7, 2017. The Company was unable to repay the note at maturity and at September 30, 2018 the note was in default. Under the terms of the note, the principal amount was increased in 2017 to $243,000, and interest accrued at 25% per annum. $161,976 of principal and $20,025 of accrued interest were converted into 7,447,448 shares, of which 5,500,000 shares were issued at the end of 2017. The Company has accrued a $243,199 derivative liability for the $81,024 principal balance attributable to the conversion feature contained in this note. The note was settled in the quarter ended March 31, 2018.     -       81,024  
                 
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 $8,642. The note was in default on September 30, 2018. The balance due was reclassified as accounts payable.     -       17,284  
                 
Promissory notes issued between July 1, 2016 and December 31, 2016. Lenders earn interest at 2% per annum. The notes mature on December 31, 2017, and at September 30, 2018 the notes were in default.     206,000       206,000  
                 
Notes aggregating $1,354,000 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. As of September 30, 2018 the notes were in default.     1,354,000       1,354,000  
                 
Notes aggregating $500,000 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. At September 30, 2018, the notes were in default.     500,000       500,000  
                 
Promissory note issued January 25, 2017. The lenders earn interest at 7% per month. The note matures on July 5, 2017 and at September 30, 2018 the note was in default.     50,000       50,000  
                 
Notes aggregating $300,000 issued in the second quarter of 2017. The notes accrue interest at 2% per annum and mature between April 3, 2018 and May 31, 2018. At September 30, 2018, the notes were in default.     300,000       300,000  
                 
Notes aggregating $191,800 issued in the third quarter of 2017. The notes accrue interest at 2% per annum and mature between June 16, 2018 and December 31, 2018. At September 30, 2018, $50,000 of the notes were in default.     191,800       191,800  
                 
Promissory note for $425,000 was issued in October 2017 with an original issue discount of $70,000. The note is in default, giving the holder an option to convert the note to stock. In 2018, The defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at September 30, 2018 had increased to $500,792. $115,000 of accrued interest owed on the note has been converted to stock. The Company has accrued a $1,448,784 derivative liability for the remaining conversion right.     500,792       425,000  

 

Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum and mature on December 31, 2018.     105,500       105,500  
                 
Notes aggregating $47,975 issued in the first quarter of 2018. The notes accrue interest at 2% per annum and mature between May 2018 and January 2019. At September 30, 2018, $10,000 of the notes were in default.     47,975       -  
                 
Notes aggregating $125,000 issued in the first quarter of 2018. The notes accrue interest between 2% and 12% per annum and mature between April 2018 and June 2018. These notes include warrants between 5,000,000 and 20,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.     125,000       -  
                 
Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest of 2% per annum and mature between July 2018 and October 2018. These notes include warrants between 1,000,000 and 5,000,000 shares with an exercise price of $0.005. At September 30, 2018, the notes were in default.     65,000       -  
                 
Notes aggregating $193,000 issued in the third quarter of 2018. The notes accrue interest at 2% per annum and mature between November 2018 and January 2019. These notes include warrants between 600,000 and 5,000,000 shares with an exercise price of $0.005.     193,000       -  
                 
In July 2017, a note for $250,000 was issued. The note earns interest at 5% per annum and matures on November 1, 2018.     250,000       -  
                 
Less: Original issue discounts on notes payable and warrants issued with notes.     (53,500 )     (75,277 )
                 
Total   $ 4,795,298     $ 4,820,062  

XML 34 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liabilities (Tables)
9 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Estimated Fair Value of the Derivative Liability

The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumptions during the quarter ended September 30, 2018:

 

   

Three months

ended 

September 30,  
2018

 
Volatility     248 %
Risk-free interest rate     1.81 %
Expected dividends     - %
Expected term     1 year  

Schedule of Valuation of Financial Instruments

The following schedule summarizes the valuation of financial instruments at fair value in the balance sheets as of September 30, 2018:

 

   

Fair Value Measurements as of

September 30, 2018

 
    Level 1     Level 2     Level 3  
Assets                        
None   $ -     $ -     $ -  
Total assets     -       -       -  
Liabilities                        
Conversion option derivative liability     -       -       1,448,784  
Total liabilities   $ -     $ -     $ 1,448,784  

Schedule of Reconciliation of Changes in the Fair Value of Derivative Liabilities

The following table sets forth a reconciliation of changes in the fair value of derivative liabilities classified as Level 3 in the fair value hierarchy:

 

   

Significant

Unobservable

Inputs (Level 3)

 
Beginning balance   $ 1,669,532  
Settlement of liability     (243,199 )
Partial settlement of liability     (96,091 )
Change in fair value     (118,542 )
Ending balance   $ 1,448,784  

XML 35 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants (Tables)
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Schedule of Outstanding Stock Warrants

Following is a summary of outstanding stock warrants at September 30, 2018 and activity during the three months then ended:

 

   

Number of

Shares

    Exercise Price    

Weighted

Average

Price

 
Warrants as of December 31, 2017     84,287,402     $ 0.01-15.00     $ 0.33  
                         
Issued in 2018     141,620,636     $ 0.005-0.20     $ 0.16  
                         
Expired and forfeited     410,834     $ 1.50-15.00     $ 6.79  
                         
Exercised     -     $ -       -  
                         
Warrants as of September 30, 2018     225,497,204     $ 0.01-15.00     $ 0.14  

Summary of Outstanding Warrants

Summary of outstanding warrants as of September 30, 2018:

 

Expiration Date  

Number of

Shares

   

Exercise

Price

   

Remaining

Life (years)

 
                   
Fourth Quarter 2018     6,089,166     $ 1.00-1.50       .25  
First Quarter 2019     4,024,000     $ 0.50-2.00       .50  
Second Quarter 2019     135,000     $ 0.07-0.23       .75  
Third Quarter 2019     260,000     $ 0.50-1.50       1.00  
Fourth Quarter 2019     22,690,908     $ 0.05-3.74       1.25  
Second Quarter 2020     300,000     $ 0.50       1.75  
Fourth Quarter 2020     1,000,000     $ 0.20       2.25  
First Quarter 2021     12,600,000     $ 0.20       2.50  
Second Quarter 2021     5,812,252     $ 0.01-0.20       2.75  
Third Quarter 2021     5,116,667     $ 0.03-0.20       3.00  
Fourth Quarter 2021     300,000     $ 0.10       3.25  
Second Quarter 2022     1,750,000     $ 0.15       3.75  
Third Quarter 2022     2,650,000     $ 0.05-0.10       4.00  
Fourth Quarter 2022     9,811,422     $ 0.08-0.29       4.25  
First Quarter 2023     700,000     $ 0.01-0.03       4.50  
Second Quarter 2023     15,000,000     $ 0.01-0.20       4.75  
Third Quarter 2023     76,100,000     $ 0.01-0.10       5.00  
First Quarter 2024     30,000,000     $ 0.01       5.50  
Third Quarter 2028     3,000,000     $ 0.07       10.00  
Second Quarter 2032     21,807,789     $ 0.01-0.07       13.75  
      225,497,204     $ 0.01-15.00          

XML 36 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes - Results of Operations (Tables)
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Schedule of Deferred Tax Assets

Deferred tax assets:

 

   

September 30,

2018

   

December 31,

2017

 
             
Net operating losses   $ 21,319,000     $ 18,102,000  
Stock based compensation     39,568,000       39,054,000  
Amortization, depreciation, and impairment     4,179,300       4,178,000  
Capitalization of start-up costs for tax purposes     1,145,000       1,145,000  
Loss on debt conversion of debt     569,000       569,000  
Total deferred tax assets     66,780,300       63,048,000  
                 
Valuation allowance     (66,780,300 )     (63,048,000 )
                 
Total deferred tax assets, net   $ -     $ -  

Schedule of Income Taxes NOL

At December 31, 2017, we had estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $86,000,000, which will expire in 2032-2037.

 

    2018     2017  
    Amount     Percent     Amount     Percent  
Benefits for income tax at federal statutory rate   $ 212,000       21 %   $ 874,000       34 %
Permanent differences     173,000       17 %     137,000       -  
Change in estimates     (385,000 )     -       (1,011,000 )     -  
    $ -       - %   $ -       - %

XML 37 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Organization and Description of Business (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Jun. 04, 2018
May 01, 2018
Dec. 08, 2014
Apr. 30, 2016
Dec. 31, 2014
Mar. 31, 2014
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Net loss from operations             $ 650,443 $ 1,449,223 $ 3,217,100 $ 4,333,342  
Cash and cash equivalents used in operating activities             924,944   924,944 $ 1,615,508  
Stockholder's deficit             $ 10,719,477   $ 10,719,477   $ 11,103,386
Cytocom Inc., [Member]                      
Percentage of sales revenue payable as royalty         5.00%            
Issuance of common stock share     140,100,000                
Percentage of equity ownership     55.30%       15.95%   15.95%    
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. Cytocom effectuated and finalized the reverse split in June 2016.              
Amount of debt converted into common stock $ 4,000,000                    
Percentage of common stock issued in exchange of debt 10.00%                    
Cytocom Inc., [Member] | Shareholders [Member]                      
Issuance of common stock share     113,242,522                
Cytocom Inc., [Member] | Maximum [Member]                      
Percentage of sales revenue payable as royalty   5.00%                  
Cytocom Inc., [Member] | Minimum [Member]                      
Percentage of sales revenue payable as royalty   1.00%                  
Irish Limited Liability [Member]                      
Percentage of low corporate income tax rate           12.50%          
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details Narrative)
3 Months Ended 9 Months Ended 12 Months Ended
Jun. 04, 2018
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2017
USD ($)
Sep. 30, 2018
USD ($)
Segment
Sep. 30, 2017
USD ($)
Dec. 31, 2017
USD ($)
Dec. 08, 2014
Maximum of annual gross revenue           $ 1,000,000,000  
Federal deposit insurance corporation value   $ 250,000   $ 250,000      
Number of operating segment | Segment       1      
Depreciation expense   217 $ 269 $ 1,084 $ 557    
Accrued interest or penalties related to uncertain tax positions      
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      
Cytocom Inc., [Member]              
Amount of debt converted into common stock $ 4,000,000            
Percentage of common stock issued in exchange of debt 10.00%            
Percentage of equity ownership   15.95%   15.95%     55.30%
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies - Schedule of Basic Net Loss Per Share (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Accounting Policies [Abstract]        
Net Profit/(Loss) $ (2,602,412) $ (1,599,842) $ (7,681,961) $ (4,157,140)
Weighted-average common shares outstanding, Basic and diluted 407,253,837 341,109,212 396,863,363 301,844,205
Profit/(Loss) per share outstanding, Basic and diluted $ (0.01) $ (0.00) $ (0.02) $ (0.01)
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Fixed Assets:    
Computer equipment $ 12,997 $ 11,243
Less accumulated depreciation (9,798) (8,714)
Fixed assets, net $ 3,199 $ 2,529
XML 41 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Investments: Deconsolidation of Cytocom (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2018
May 01, 2018
Dec. 31, 2017
Equity method investments  
Notes payable 0    
Cytocom Inc., [Member]      
Equity method investments   $ 1,189  
Loss on investment 0    
Notes payable $ 1,193,500    
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Payables and Accruals [Abstract]    
Accrued payroll to officers and others $ 2,212,393 $ 1,539,777
Accrued interest and penalties - notes payable 738,878 703,141
Estimated legal settlements 136,057 136,057
Other accrued liabilities 23,095 393
Estimated loss on note conversions 110,036
Derivative Liability 1,448,784 1,669,532
Total accrued expenses and other liabilities $ 4,559,207 $ 4,158,936
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Notes Payable (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Debt Disclosure [Abstract]        
Accrued unpaid interest and default penalties     $ 738,878 $ 594,875
Issuance of common stock for settlement of promissory notes, shares 9,333,143 4,694,017    
Issuance of common stock for settlement of promissory notes $ 111,091 $ 138,843 562,506  
Settlement of promissory notes $ 60,000   $ 60,000  
XML 44 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Notes Payable - Schedule of Notes Payable (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Oct. 31, 2017
Jul. 31, 2016
Total $ 4,795,298 $ 4,820,063    
Less: Original issue discounts on notes payable and warrants issued with notes (53,500) (75,277)    
Notes Payable One [Member]        
Total 100,000 100,000    
Notes Payable Two [Member]        
Total 286,000 286,000    
Notes Payable Three [Member]        
Total 475,994 705,994    
Notes Payable Four [Member]        
Total 425,000    
Notes Payable Five [Member]        
Total 97,737 97,737    
Notes Payable Six [Member]        
Total 50,000    
Notes Payable Seven [Member]        
Total 81,024    
Less: Original issue discounts on notes payable and warrants issued with notes       $ (30,000)
Notes Payable Eight [Member]        
Total 17,284    
Notes Payable Nine [Member]        
Total 206,000 206,000    
Notes Payable Ten [Member]        
Total 1,354,000 1,354,000    
Notes Payable Eleven [Member]        
Total 500,000 500,000    
Notes Payable Twelve [Member]        
Total 50,000 50,000    
Notes Payable Thirteen [Member]        
Total 300,000 300,000    
Notes Payable Fourteen [Member]        
Total 191,800 191,800    
Notes Payable Fifteen [Member]        
Total 500,792 425,000    
Less: Original issue discounts on notes payable and warrants issued with notes     $ (70,000)  
Notes Payable Sixteen [Member]        
Total 105,500 105,500    
Notes Payable Seventeen [Member]        
Total 47,975    
Notes Payable Eighteen [Member]        
Total 125,000    
Notes Payable Nineteen [Member]        
Total 65,000    
Notes Payable Twenty [Member]        
Total 193,000    
Notes Payable Twenty One [Member]        
Total $ 250,000    
XML 45 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical)
1 Months Ended 3 Months Ended 6 Months Ended 8 Months Ended 9 Months Ended 12 Months Ended 13 Months Ended 20 Months Ended
Jan. 25, 2017
Aug. 31, 2016
USD ($)
Installments
Jul. 31, 2016
USD ($)
Nov. 03, 2015
Dec. 08, 2014
shares
Jul. 29, 2014
Jul. 31, 2018
USD ($)
Jul. 31, 2017
USD ($)
Jul. 31, 2016
USD ($)
Sep. 30, 2018
USD ($)
$ / shares
shares
Mar. 31, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
shares
Dec. 31, 2016
USD ($)
Jun. 30, 2018
USD ($)
$ / shares
shares
Dec. 31, 2015
USD ($)
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Dec. 31, 2017
USD ($)
shares
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Doses
Dec. 31, 2016
USD ($)
Oct. 31, 2017
USD ($)
Accrued interest                   $ 738,878           $ 738,878   $ 703,141        
Original issuance discount                   $ 53,500           53,500   $ 75,277        
Debt conversion converted instrument, shares issued | shares                   9,333,143   4,694,017                    
Number of shares converted into common stock                   $ 111,091   $ 138,843       562,506            
Cytocom Inc., [Member]                                            
Number of shares issued | shares         140,100,000                                  
Notes Payable Two [Member]                                            
Percentage of interest rate per annum                             10.00%         10.00%    
Number of installments, months | Doses                                       36    
Notes Payable Two [Member] | Maximum [Member]                                            
Maximum amount raise in debt                             $ 2,000,000         $ 2,000,000    
Notes Payable Four [Member] | Cytocom Inc., [Member]                                            
Note matures date                             Dec. 31, 2016              
Notes Payable Four [Member] | Maximum [Member] | Cytocom Inc., [Member]                                            
Percentage of interest rate per annum                             10.00%         10.00%    
Notes Payable Four [Member] | Minimum [Member] | Cytocom Inc., [Member]                                            
Percentage of interest rate per annum                             5.00%         5.00%    
Notes Payable Five [Member]                                            
Note matures date       Nov. 03, 2016                                    
Percentage of interest rate per annum       10.00%                                    
Notes Payable Six [Member]                                            
Note matures date                 Oct. 05, 2016                          
Percentage of interest rate per annum     6.00%           6.00%                          
Note extended date                 Dec. 31, 2016                          
Notes Payable Seven [Member]                                            
Note matures date     Apr. 07, 2017                                      
Percentage of interest rate per annum                                   25.00%        
Accrued interest                                   $ 20,025        
Notes aggregating default amount     $ 180,000           $ 180,000                 $ 161,976        
Original issuance discount     $ 30,000           $ 30,000                          
Debt conversion converted instrument, shares issued | shares                                   7,447,448        
Number of shares issued | shares                                   5,500,000        
Derivative liability                                   $ 243,199        
Principal balance attributable to the conversion feature                                   81,024        
Notes Payable Seven [Member] | Maximum [Member]                                            
Notes aggregating default amount                                   $ 243,000        
Notes Payable Eight [Member]                                            
Percentage of interest rate per annum   5.00%                                        
Number of installments, months | Installments   18                                        
Notes aggregating default amount   $ 149,854                                        
Debt instrument, periodic payment, principal   $ 8,642                                        
Notes Payable Nine [Member] | Lenders [Member]                                            
Note matures date                                     Dec. 31, 2017      
Percentage of interest rate per annum                         2.00%           2.00%   2.00%  
Notes Payable Ten [Member]                                            
Percentage of interest rate per annum                         2.00%           2.00%   2.00%  
Debt instrument maturity date description                         November 1, 2017 and December 31, 2017                  
Notes aggregating default amount                         $ 1,354,000           $ 1,354,000   $ 1,354,000  
Notes Payable Eleven [Member]                                            
Percentage of interest rate per annum                       2.00%         2.00%          
Debt instrument maturity date description                                 January 12, 2018 and March 31, 2018          
Notes aggregating default amount                       $ 500,000         $ 500,000          
Notes Payable Thirteen [Member]                                            
Percentage of interest rate per annum                       2.00%         2.00%          
Debt instrument maturity date description                       April 3, 2018 and May 31, 2018                    
Notes aggregating default amount                       $ 300,000         $ 300,000          
Notes Payable Fourteen [Member]                                            
Percentage of interest rate per annum                       2.00%         2.00%          
Debt instrument maturity date description                       June 16, 2018 and December 31, 2018                    
Notes aggregating default amount                   50,000   $ 191,800       50,000 $ 191,800          
Notes Payable Fifteen [Member]                                            
Accrued interest                   500,792           500,792            
Notes aggregating default amount                                           $ 425,000
Original issuance discount                                           $ 70,000
Derivative liability                   1,448,784           1,448,784            
Number of shares converted into common stock                               115,000            
Notes Payable Sixteen [Member]                                            
Percentage of interest rate per annum                       2.00%         2.00%          
Debt instrument maturity date description                       December 31, 2018                    
Notes aggregating default amount                       $ 105,500         $ 105,500          
Notes Payable Seventeen [Member]                                            
Percentage of interest rate per annum                     2.00%                      
Maximum amount raise in debt                   $ 10,000           $ 10,000            
Debt instrument maturity date description                     May 2018 and January 2019                      
Notes aggregating default amount                     $ 47,975                      
Notes Payable Eighteen [Member]                                            
Debt instrument maturity date description                     April 2018 and June 2018                      
Notes aggregating default amount                     $ 125,000                      
Warrant exercise price per share | $ / shares                     $ 0.005                      
Notes Payable Eighteen [Member] | Maximum [Member]                                            
Percentage of interest rate per annum                     12.00%                      
Number of warrants | shares                     20,000,000                      
Notes Payable Eighteen [Member] | Minimum [Member]                                            
Percentage of interest rate per annum                     2.00%                      
Number of warrants | shares                     5,000,000                      
Notes Payable Nineteen [Member]                                            
Percentage of interest rate per annum                           2.00%                
Debt instrument maturity date description                           July 2018 and October 2018                
Notes aggregating default amount                           $ 65,000                
Warrant exercise price per share | $ / shares                           $ 0.005                
Notes Payable Nineteen [Member] | Maximum [Member]                                            
Number of warrants | shares                           5,000,000                
Notes Payable Nineteen [Member] | Minimum [Member]                                            
Number of warrants | shares                           1,000,000                
Notes Payable Twenty [Member]                                            
Percentage of interest rate per annum                   2.00%           2.00%            
Debt instrument maturity date description                   November 2018 and January 2019                        
Notes aggregating default amount                   $ 193,000           $ 193,000            
Warrant exercise price per share | $ / shares                   $ 0.005           $ 0.005            
Notes Payable Twenty [Member] | Maximum [Member]                                            
Number of warrants | shares                   5,000,000           5,000,000            
Notes Payable Twenty [Member] | Minimum [Member]                                            
Number of warrants | shares                   600,000           600,000            
Notes Payable Twenty One [Member]                                            
Note matures date               Nov. 01, 2018                            
Percentage of interest rate per annum               5.00%                            
Notes aggregating default amount               $ 250,000                            
Ira Gaines [Member] | Notes Payable One [Member]                                            
Note matures date           Dec. 01, 2017                                
Percentage of interest rate per annum           18.00%                                
Lenders [Member] | Notes Payable Three [Member]                                            
Maximum amount raise in debt                   $ 130,000           $ 130,000            
Debt instrument maturity date description                                         June 14, 2015 and December 1, 2017  
Aggregating loan                         375,994           375,994   $ 375,994  
Accrued interest                         $ 100,000           $ 100,000   $ 100,000  
Notes aggregating default amount                   $ 475,994           $ 475,994            
Debt, current             $ 100,000                              
Extinguishment of debt, amount             $ 150,000                              
Lenders [Member] | Notes Payable Three [Member] | Maximum [Member]                                            
Percentage of interest rate per annum                         18.00%           18.00%   18.00%  
Lenders [Member] | Notes Payable Three [Member] | Minimum [Member]                                            
Percentage of interest rate per annum                         2.00%           2.00%   2.00%  
Lenders [Member] | Notes Payable Twelve [Member]                                            
Note matures date Jul. 05, 2017                                          
Percentage of interest rate per annum 7.00%                                          
XML 46 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liabilities (Details Narrative) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Notes payable $ 0  
Derivative liabilities 1,448,784 $ 1,669,532
Other Notes Payable [Member]    
Converted derivative liability 60,000  
Derivative liabilities 623,045  
Revalue of derivative liabilities $ 1,448,784  
XML 47 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liabilities - Schedule of Estimated Fair Value of the Derivative Liability (Details) - Black-Scholes Option Pricing Model [Member]
3 Months Ended
Sep. 30, 2018
Volatility [Member]  
Fair value assumptions, measurement input, percentages 248.00%
Risk-Free Interest Rate [Member]  
Fair value assumptions, measurement input, percentages 1.81%
Expected Dividends [Member]  
Fair value assumptions, measurement input, percentages 0.00%
Expected Term [Member]  
Fair value assumptions, measurement input, term 1 year
XML 48 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liabilities - Schedule of Valuation of Financial Instruments (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Total assets $ 167,906 $ 195,545
Total liabilities 10,887,383 $ 11,298,931
Level 1 [Member]    
Total assets  
Conversion option derivative liability  
Total liabilities  
Level 2 [Member]    
Total assets  
Conversion option derivative liability  
Total liabilities  
Level 3 [Member]    
Total assets  
Conversion option derivative liability 1,448,784  
Total liabilities $ 1,448,784  
XML 49 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Liabilities - Schedule of Reconciliation of Changes in the Fair Value of Derivative Liabilities (Details)
9 Months Ended
Sep. 30, 2018
USD ($)
Derivative liabilities beginning balance $ 1,669,532
Derivative liabilities ending balance 1,448,784
Level 3 [Member]  
Derivative liabilities beginning balance 1,669,532
Settlement of liability (243,199)
Partial settlement of liability (96,091)
Change in fair value (118,542)
Derivative liabilities ending balance $ 1,448,784
XML 50 R41.htm IDEA: XBRL DOCUMENT v3.10.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants (Details Narrative) - $ / shares
Sep. 30, 2018
Dec. 31, 2017
Sep. 30, 2017
Equity [Abstract]      
Common stock, shares authorized 500,000,000 500,000,000 500,000,000
Common stock, par value $ 0.0001 $ 0.0001 $ 0.0001
Common stock, shares outstanding 415,661,456 386,782,473  
Number of warrants issued during period 80,550,000    
XML 51 R42.htm IDEA: XBRL DOCUMENT v3.10.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants - Schedule of Outstanding Stock Warrants (Details) - Warrant [Member]
9 Months Ended
Sep. 30, 2018
$ / shares
shares
Number of Shares Warrants, Beginning balance | shares 84,287,402
Number of Shares Warrants, Issued | shares 141,620,636
Number of Shares Warrants, Expired and forfeited | shares 410,834
Number of Shares Warrants, Exercised | shares
Number of Shares Warrants, Ending balance | shares 225,497,204
Exercise Price, Exercised
Weighted average exercise price, Beginning balance 0.33
Weighted average exercise price, Issued 0.16
Weighted average exercise price, Expired and forfeited 6.79
Weighted average exercise price, Exercised
Weighted average exercise price, Ending balance 0.14
Minimum [Member]  
Exercise Price, Beginning balance 0.01
Exercise Price, Issued 0.005
Exercise Price, Expired and forfeited 1.50
Exercise Price, Ending balance 0.01
Maximum [Member]  
Exercise Price, Beginning balance 15.00
Exercise Price, Issued 0.20
Exercise Price, Expired and forfeited 15.00
Exercise Price, Ending balance $ 15.00
XML 52 R43.htm IDEA: XBRL DOCUMENT v3.10.0.1
Capital Structure - Common Stock and Common Stock Purchase Warrants - Summary of Outstanding Warrants (Details)
9 Months Ended
Sep. 30, 2018
$ / shares
shares
Number of Shares | shares 225,497,204
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ 15.00
Fourth Quarter 2018 [Member]  
Number of Shares | shares 6,089,166
Exercise Price Lower Limit $ 1.00
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 2 months 30 days
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) 6 months
Second Quarter 2019 [Member]  
Number of Shares | shares 135,000
Exercise Price Lower Limit $ 0.07
Exercise Price Upper Limit $ 0.23
Remaining Life (years) 9 months
Third Quarter 2019 [Member]  
Number of Shares | shares 260,000
Exercise Price Lower Limit $ 0.50
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 1 year
Fourth Quarter 2019 [Member]  
Number of Shares | shares 22,690,908
Exercise Price Lower Limit $ 0.05
Exercise Price Upper Limit $ 3.74
Remaining Life (years) 1 year 2 months 30 days
Second Quarter 2020 [Member]  
Number of Shares | shares 300,000
Exercise Price Upper Limit $ 0.50
Remaining Life (years) 1 year 9 months
Fourth Quarter 2020 [Member]  
Number of Shares | shares 1,000,000
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 2 years 2 months 30 days
First Quarter 2021 [Member]  
Number of Shares | shares 12,600,000
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 2 years 6 months
Second Quarter 2021 [Member]  
Number of Shares | shares 5,812,252
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 2 years 9 months
Third Quarter 2021 [Member]  
Number of Shares | shares 5,116,667
Exercise Price Lower Limit $ 0.03
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 3 years
Fourth Quarter 2021 [Member]  
Number of Shares | shares 300,000
Exercise Price Upper Limit $ 0.10
Remaining Life (years) 3 years 2 months 30 days
Second Quarter 2022 [Member]  
Number of Shares | shares 1,750,000
Exercise Price Upper Limit $ 0.15
Remaining Life (years) 3 years 9 months
Third Quarter 2022 [Member]  
Number of Shares | shares 2,650,000
Exercise Price Lower Limit $ 0.05
Exercise Price Upper Limit $ 0.10
Remaining Life (years) 4 years
Fourth Quarter 2022 [Member]  
Number of Shares | shares 9,811,422
Exercise Price Lower Limit $ 0.08
Exercise Price Upper Limit $ 0.29
Remaining Life (years) 4 years 2 months 30 days
First Quarter 2023 [Member]  
Number of Shares | shares 700,000
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ 0.03
Remaining Life (years) 4 years 6 months
Second Quarter 2023 [Member]  
Number of Shares | shares 15,000,000
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 4 years 9 months
Third Quarter 2023 [Member]  
Number of Shares | shares 76,100,000
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ 0.10
Remaining Life (years) 5 years
First Quarter 2024 [Member]  
Number of Shares | shares 30,000,000
Exercise Price Upper Limit $ 0.01
Remaining Life (years) 5 years 6 months
Third Quarter 2028 [Member]  
Number of Shares | shares 3,000,000
Exercise Price Upper Limit $ 0.07
Remaining Life (years) 10 years
Second Quarter 2032 [Member]  
Number of Shares | shares 21,807,789
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ 0.07
Remaining Life (years) 13 years 9 months
XML 53 R44.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock Compensation (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Number of common stock issued for consulting fees 7,500,000 1,700,000  
Number of common stock issued for consulting fees, value $ 190,000 $ 61,000  
Amortization of prepaid services $ 0 $ 446,002  
Minimum [Member]      
Consulting fees amortized period     12 months
Maximum [Member]      
Consulting fees amortized period     24 months
XML 54 R45.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes - Results of Operations (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
Income tax examination, description The impact of U.S. Tax Reform primarily represents the Company's estimates of revaluing the Company's U.S. deferred tax assets and liabilities based on the rates at which they are expected to be recognized in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%    
Percentage of statutory income tax rate 21.00% 34.00%  
Lower corporate tax rate 21.00%    
Effective tax rate 0.00% 0.00%  
Operating loss carryforwards     $ 86,000,000
Operating loss carryforwards expire term expire in 2032-2037    
XML 55 R46.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes - Results of Operations - Schedule of Deferred Tax Assets (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]    
Net operating losses $ 21,319,000 $ 18,102,000
Stock based compensation 39,568,000 39,054,000
Amortization, depreciation, and impairment 4,179,300 4,178,000
Capitalization of start-up costs for tax purposes 1,145,000 1,145,000
Loss on debt conversion of debt 569,000 569,000
Total deferred tax assets 66,780,300 63,048,000
Valuation allowance (66,780,300) (63,048,000)
Total deferred tax assets, net
XML 56 R47.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes - Results of Operations - Schedule of Income Taxes NOL (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Tax Disclosure [Abstract]        
Benefits for income tax at federal statutory rate     $ 212,000 $ 874,000
Permanent differences     173,000 137,000
Change in estimates     (385,000) (1,011,000)
Net operating loss
Benefits for income tax at federal statutory rate, percent     21.00% 34.00%
Permanent differences, percent     17.00% 0.00%
Change in estimates, percent     0.00% 0.00%
Effective income tax rate reconciliation, percent     0.00% 0.00%
XML 57 R48.htm IDEA: XBRL DOCUMENT v3.10.0.1
Licenses and Supply Agreements (Details Narrative) - USD ($)
May 01, 2018
Apr. 24, 2012
Cytocom Inc., [Member] | Maximum [Member]    
Royalty percentage 5.00%  
Cytocom Inc., [Member] | Minimum [Member]    
Royalty percentage 1.00%  
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
XML 58 R49.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Apr. 18, 2018
May 16, 2016
Oct. 31, 2013
Sep. 30, 2018
Sep. 30, 2017
Cash rental expense       $ 2,238 $ 12,632
Complete Pharmacy and Medical Solutions, LLC [Member]          
Ramp up costs, percentage   100.00%      
AHAR Pharma [Member]          
Distribution agreement, description In October 2018, the Company shipped 250,000 pills to Fidson to support the product launch in the coming months.   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.    
XML 59 R50.htm IDEA: XBRL DOCUMENT v3.10.0.1
Subsequent Events (Details Narrative) - USD ($)
2 Months Ended 3 Months Ended
Nov. 14, 2018
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Debt conversion converted instrument, shares issued   9,333,143 4,694,017  
Common stock, shares outstanding   415,661,456   386,782,473
Subsequent Event [Member]        
Number of common stock shares issued 18,661,118      
Debt conversion converted instrument, shares issued 12,411,118      
Consulting fees $ 6,250,000      
Common stock, shares outstanding 434,322,060      
Increased in debt and equity finance $ 15,500      
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