0001493152-19-007850.txt : 20190520 0001493152-19-007850.hdr.sgml : 20190520 20190520151423 ACCESSION NUMBER: 0001493152-19-007850 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 63 CONFORMED PERIOD OF REPORT: 20190331 FILED AS OF DATE: 20190520 DATE AS OF CHANGE: 20190520 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: 19838505 BUSINESS ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 BUSINESS PHONE: (888) 613-8802 MAIL ADDRESS: STREET 1: 37 NORTH ORANGE AVENUE STREET 2: SUITE 607 CITY: ORLANDO STATE: FL ZIP: 32801 FORMER COMPANY: FORMER CONFORMED NAME: TNI BIOTECH, INC. DATE OF NAME CHANGE: 20121001 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended March 31, 2019

 

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 800M, Orlando, FL 32801

(Address of principal executive offices)

 

888-613-8802

(Issuer’s telephone number)

 

 

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

 

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

 

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

 

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

 

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

 

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

 

As of May 20, 2019 there were 445,577,799 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 21
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
     
Item 4.

Controls and Procedures

24

     
  PART II – OTHER INFORMATION  
     
Item 1. Legal Proceedings 24
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
     
Item 3. Default upon Senior Securities 25
     
Item 6. Exhibits 27

 

2
 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

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

 

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

 

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

 

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

 

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

 

  our lack of operating history;
  our inability to keep up with industry competition;
  interpretations of current laws and the passages of future laws;
  acceptance of our business model by investors and our ability to raise capital;
  acceptance of our business model by investors and our ability to raise capital;
  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.

 

3
 

 

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, 2018, 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 1 – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   March 31, 2019   December 31, 2018 
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $5,688   $5,859 
Inventories   82,801    82,801 
Total current assets   88,489    88,660 
           
Fixed Assets:          
Computer equipment, net of accumulated depreciation of $10,865 and $10,477 respectively   2,378    2,766 
Deposits   200    200 
           
Total assets  $91,067   $91,626 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable  $2,021,931   $2,065,476 
Accrued liabilities   3,605,755    3,302,355 
Notes payable, net of debt discount   5,479,385    5,187,727 
Derivative liability   738,609    786,706 
Total current liabilities   11,845,680    11,342,264 
           
Total liabilities   11,845,680    11,342,264 
           
Commitments and Contingencies (Note 11)          
           
Stockholders’ Deficit:          
Common stock - par value $0.0001; 500,000,000 shares authorized; 445,577,799 and 434,322,574 shares issued and outstanding respectively   45,558    43,433 
Additional paid in capital   370,084,346    369,881,037 
Stock issuances due   35,303    35,303 
Accumulated deficit   (389,919,820)   (381,210,411)
           
Deficit attributable to common stockholders   (11,754,613)   (11,250,638)
Total stockholders’ deficit   (11,754,613)   (11,250,638)
Total liabilities and stockholders’ deficit  $91,067   $91,626 

 

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

 

5
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months ended 
   March 31, 2019   March 31, 2018 
Revenues, net  $-   $65,013 
Cost of products sold   -    33,172 
Gross profit   -    31,841 
Operating expenses:          
Selling, general and administrative   486,585    638,228 
Research and development expense   -    129,191 
Stock issued for services G&A   120,000    252,244 
Depreciation and amortization expense   387    433 
Total operating expenses   606,972    1,020,096 
           
Loss from operations   (606,972)   (988,255)
           
Other income (expense):          
Interest expense   (115,209)   (220,461)
Gain on Derivative Liability Revaluation   12,772    494,814 
Loss on settlement of debt   -    (18,036 
Total other income (expense)   (102,437)   256,317 
Net loss  $(709,409)  $(731,938)
Net loss attributable to non-controlling interest   -    (121,285)
Net loss attributable to common shareholders   (709,409)   (610,653)
Basic loss per share to common shareholders  $(0.00)  $(0.00)
Weighted average number of shares outstanding   447,626,057    387,621,835 

 

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

 

6
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY/ (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

 

   Common Stock   Additional
Paid-in
   Stock To Be   Prepaid   Accumulated   Non-Controlling     
   Shares   Amount   Capital   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 prepaid services   16,988,640    1,698    612,053    (67,923)   -    -    -    545,828 
                                         
Amortization of prepaid services   -    -    -    -    226,667    -    -    226,667 
                                         
Issuance of common stock for interest expense   200,000    121    8,980    -    -    -    -    9,101 
                                         
Issuance of common stock in exchange for debt   30,351,461    3,035    668,652    -    -    -    -    671,597 
                                         
Issuance of Cytocom common stock for cash and exercise of warrants   -    -    240,500    -    -    -    -    240,500 
                                         
Issuance and modification of common stock warrants   -    -    1,725,798    -    -    -    -    1,725,798 
                                         
Deconsolidation of Cytocom   -    -    -    -    -    -    5,058,967    5,058,967 
                                         
Net loss   -    -    -    -    -    (8,175,228)   (450,382)   (8,625,610)
                                         
Balance December 31, 2018   434,322,574   $43,433   $369,881,037   $35,303   $-   $(381,210,411)  $-   $(11,250,638)
                                         
Issuance of common stock for prepaid services   3,000,000    300    119,700    -    -    -    -    120,000 
                                         
Issuance of warrants in connection with debt agreement   -    -    23,000    -    -    -    -    23,000 
                                         
Issuance of common stock in exchange for debt   18,255,225    1,825    60,609    -    -    -    -    62,434 
                                         
Net loss   -    -    -    -    -    (709,409)   -    (709,409)
                                         
Balance March 31, 2019   455,577,799   $45,558   $370,084,346   $35,303   $-   $(381,919,820)  $-   $(11,754,613)

 

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

 

7
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended 
   March 31, 2019   March 31, 2018 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(709,409)  $(731,938)
Adjustments to reconcile net loss to net cash flows used in operating activities:          
Depreciation   387    434 
Amortization of debt discount   61,271    100,318 
Amortization of stock issued for prepaid services   -    125,000 
Stock issued for services   120,000    127,243 
Change in value of derivative   (12,772)   (494,814)
Loss on settlement of debt   -    18,036 
Stock issued for origination fees and interest expense   -    6,000 
Expenses paid by lender   -    54,661 
           
Changes in operating assets and liabilities:          
Inventories   (0)   19,450 
Accounts payable   210,933    78,199 
Accrued liabilities   303,400    241,595 
           
Net cash used in operating activities   (171)   (455,816)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of computer equipment   -    (1,971)
           
Net cash used in investing activities   -    (1,971)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from sale of stock and exercise of warrants   -    50,000 
Proceeds from issuance of notes payable   -    423,470 
           
Net cash provided by financing activities   -    473,470 
           
Net increase/(decrease) in cash and cash equivalents   (171)   15,683 
Cash and cash equivalents at beginning of period   5,859    14,718 
Cash and cash equivalents at end of period  $5,688   $30,401 

 

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

 

8
 

 

IMMUNE THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended 
   March 31, 2019   March 31, 2018 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
           
Cash paid for interest  $16,000   $15,210 
           
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
           
Debt discount  $23,000   $125,000 
           
Accrue shares to be issued for debt and accrued interest  $-   $108,216 
           
Conversion of debt and accrued interest to common stock  $27,110   $- 
           
Settlement of derivative liability  $-   $243,199 
           
Reclassification from accounts payable to notes payable  $254,479   $- 
           
Reclassification from debt to accounts payable  $-   $17,284 
           
Debt settled and reclassed to accrued expenses  $35,325   $- 
           
Loss on debt conversion  $-   $18,036 

 

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

 

9
 

 

Immune Therapeutics, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

March 31, 2019

(Unaudited)

 

1. Organization and Description of Business

 

Immune Therapeutics, Inc. (the “Company,” “we,” or “our”) 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.

 

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 Original Agreement, 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.

 

10
 

 

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 December 31, 2018, the Company’s equity interest in Cytocom stood at 15.5% 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.

 

At present, the Company is a late development-stage biopharmaceutical company focused on the licensing, development and commercialization of innovative prescription medications for humans in Africa, Central and South America, the Caribbean and China (hereinafter referred to as “Emerging Markets”) and worldwide for animals and companion pet therapeutics. The Company is not permitted to market its licensed products in the United States.

 

Going Concern

 

The Company has incurred significant net losses since inception and has relied on its ability to fund its operations through private equity financings. Management expects operating losses and negative cash flows to continue at more significant levels in the future. As the Company continues to incur losses, transition to profitability is dependent upon the successful development, approval, and commercialization of its product candidate and the achievement of a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings and may seek additional capital through arrangements with strategic partners or from other sources. Based on the Company’s operating plan, existing working capital at March 31, 2019 was not sufficient to meet the cash requirements to fund planned operations through 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 financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

 

The Company experienced a net loss attributable to common shareholders of $709,409 and used cash and cash equivalents for operations in the amount of $171 during the quarter ended March 31, 2019, resulting in stockholders’ deficit of $11,754,613 at that date.

 

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, 2018 (including the notes thereto) set forth in Form 10- K.

 

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We have identified the policies below as critical to our business operations and the understanding of its results of operations. The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Company’s Board of Directors. The impact and any associated risks related to these policies on our business operations are discussed throughout this section where such policies affect our reported and expected financial results.

 

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, 2018. 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 March 31, 2019, the Company’s equity interest in Cytocom stood at 15.5% 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. As the balance of the Company’s investment in Cytocom has been $0 since December 31, 2018, no losses have been recognized during the quarter ended March 31, 2019.

 

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.

 

Sales of LodonalTM pills or capsules product are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of product at a delivery point, as negotiated within each contract. Each quantity of product sold is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the product, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

 

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). On January 1, 2019, the Company applied ASU 842 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. At March 31, 2019, we had no leases that fall within the scope of this standard. Accordingly, the standard has no impact on our consolidated financial position or 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.

 

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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 condensed consolidated balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2019, the Company has no cash balances in excess of insured limits.

 

Segment and Geographic Information

 

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

 

Fair Value of Financial Instruments

 

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash, cash equivalents 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.

 

Derivative Financial Instruments

 

FASB ASC 820, Fair Value Measurements requires bifurcation of certain embedded derivative instruments in certain debt or equity instruments, and measurement at their fair value for accounting purposes. A holder redemption feature embedded in the Company’s note payable requires bifurcation from its host instrument and is accounted for as a freestanding derivative.

 

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.

 

Inventory as of March 31, 2019 was valued at $82,801, a decrease of $95,297 or 54% from the inventory balance at the end of March 2018. Inventory at March 31, 2019 was made up primarily of finished pills and related packaging materials. The year-over-year decrease in inventory was due to the shipments of pills during 2018 to Nigeria and to pills used as samples.

 

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 periods ended March 31, 2019 and March 31, 2018 was $387 and $433, 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.

 

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Income Taxes

 

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

 

The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of March 31, 2019 and 2018, the Company does not have a liability for unrecognized tax uncertainties.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of March 31, 2019, and 2018, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

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

 

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

 

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

 

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

 

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”) and convertible debt (as described in Note 6 to the Financial Statements – “Notes Payable”), have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

 

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

 

   March 31, 2019   March 31, 2018 
Common Stock Purchase Warrants   282,358,856    126,670,720 
Convertible Debt   112,943,167    23,611,111 

 

Recent Accounting Standards

 

During the quarter ended March 31, 2019, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

 

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3. Fixed Assets

 

   March 31, 2019   December 31, 2018 
Fixed Assets:  $   $ 
Computer equipment   13,213    13,213 
Less accumulated depreciation   (10,835)   (10,477)
Fixed assets, net  $2,378   $2,766 

 

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 March 31, 2019, Cytocom had no significant assets or income.

 

5. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

   March 31, 2019   December 31, 2018 
Accrued payroll to officers and others   2,582,839    2,010,570 
Accrued interest and penalties – notes payable   886,859    877,571 
Estimated legal settlements   136,057    136,057 
Other accrued liabilities   -    15,512 
Derivative Liability   738,609    786,706 
           
Total accrued expenses and other liabilities  $4,344,364   $3,826,416 

 

6. Notes payable

 

Notes payable consist of the following:

 

   March 31, 2019   December 31, 2018 
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 March 31, 2019, 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 March 31, 2019, as the Company was unable to pay installments on their due dates.   286,000    286,000 

 

15
 

 

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. The Company was unable to repay the notes at maturity and at March 31, 2019 the note was in default.   725,994    725,994 
           
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 March 31, 2019 the note was in default.   97,737    97,737 
           
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 March 31, 2019 the notes were in default.   206,000    206,000 
           
Notes aggregating $1,350,000 issued in the fourth quarter 2016. The notes accrue interest at 2% per annum and mature between November 1, 2017 and December 31, 2017. As March 31, 2019, 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 March 31, 2019, the notes were in default.   500,000    500,000 
           
Promissory notes issued January 25, 2017. The lenders earn interest at 7% per month. The notes mature on July 5, 2017, and at March 31, 2019 the notes were 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 March 31, 2019, 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 March 31, 2019, the notes were in default.   191,800    191,800 
           
Promissory note from $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 using the lowest value of the Company’s common stock 25 days prior to the conversion. In 2018, The defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at March 31, 2019 had increased to $454,032 $27,110 of accrued interest owed on the note has been converted to stock. The Company has accrued a $738,609 derivative liability for the remaining conversion right.   454,032    455,122 
           
Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum. At March 31, 2019, the notes were in default.   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 March 31, 2019, These notes were in default   47,975    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 $0.0005. At March 31, 2019 the notes were in default   125,000    125,000 
           
Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest between 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 March 31, 2019 the notes were in default   65,000    65,000 

 

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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. At March 31, 2019. $103,000 of these notes were in default   193,000    193,000 
           
Notes aggregating $533,855 issued in the fourth quarter of 2018. The notes accrue interest from 2% to 3.5% per annum and mature between February 2019 and December 2019. These notes include warrants between 200,000 and 39,500,000 shares with an exercise price of $0.005 to $0.04 At March 31, 2019. $379,000 of these notes were in default   533,855    533,855 
           
Notes aggregating $23,000 issued in the first quarter of 2019. The notes accrue interest at 2% per annum and mature during July 2019. These notes include warrants between 4,600,000 shares with an exercise price of $0.005.   23,000    - 
           
Notes aggregating $231,478 issued in the first quarter of 2019. The notes accrue interest at 6% per annum and mature in February 2020.   231,478    - 
           
Less: Original issue discount on notes payable and warrants issued with notes.   (110,986)   (149,256)
           
Total  $5,479,385   $5,187,727 

 

As of March 31, 2019, the Company had accrued $877,570 in unpaid interest and default penalties. During the quarter ended March 31, 2019, 18,255,225 shares with a fair value of $78,500 were issued by the Company for settlement of promissory notes totaling $27,710.

 

7. Derivative Liabilities

 

As of March 31, 2019, and December 31, 2018 the aggregate fair value of the outstanding derivative liability was $738,609 and $786,706, respectively. The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumption during the quarter March 31, 2019:

 

   Three months
ended
March 31, 2019
 
Volatility   295.00%
Risk-free interest rate   2.40%
Expected dividends   -%
Expected term   1 year 

 

The Company determines the fair 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 sheet as of March 31, 2019:

 

   Fair Value Measurements as of March 31, 2019 
   Level 1   Level 2   Level 3 
Assets            
Total assets   -    -    - 
Liabilities               
Conversion option derivative liability  $-   $-   $738,609 
                
Total liabilities  $-   $-   $738,609 

 

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

 

   Significant Unobservable
Input (Level 3)
 
Beginning balance  $786,706 
Change in fair value   (12,772)
Partial settlements of liability   (35,325)
Ending balance  $738,609 

 

8. Capital Structure – Common Stock and Stock Purchase Warrants

,

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

 

As of March 31, 2019, and 2018, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of March 31, 2019, the Company had 455,577,799 shares of common stock outstanding and 434,322,574 outstanding as of December 31, 2018.

 

Stock Warrants

 

In the quarter ended March 31, 2019, 4,600,000 new warrants were issued by the Company.

 

There were no modifications of the terms of any warrants issued by the Company in the quarter ended March 31, 2019 and 2018.

 

Following is a summary of outstanding stock warrants at March 31, 2019 and activity during the three months ended:

 

   Number of
Shares
   Exercise
Price
   Weighted
Average
Price
 
Warrants as of December 31, 2018   281,782,856   $0.001-3.74   $0.09 
                
Issued in 2019   4,600,000   $.005-.005   $.01 
                
Expired and forfeited   (4,024,000)  $0.-2.00   $1.25 
                
Exercised   -   $0   $0 
                
Warrants as of March 31, 2019   282,358,856   $.001-3.74   $0.07 

 

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Summary of outstanding warrants as of March 31, 2019:

 

Expiration Date  Number of
Shares
   Exercise
Price
   Remaining
Life (years)
 
             
Second Quarter 2019   135,000   $0.50-2.00    0.25 
Third Quarter 2019   260,000   $0.07-0.23    0.50 
Fourth Quarter 2019   23,222,726   $0.50-1.50    0.75 
Second Quarter 2020   300,000   $0.50    1.25 
Fourth Quarter 2020   1,000,000   $0.20    1.75 
First Quarter 2021   12,600,000   $0.20    2.00 
Second Quarter 2021   5,812,252   $0.01408-0.20    2.25 
Third Quarter 2021   5,166,667   $0.03-0.20    2.50 
Fourth Quarter 2021   300,000   $0.10    2.75 
Second Quarter 2022   1,750,000   $0.15    3.25 
Third Quarter 2022   2,650,000   $0.05-0.10    3.50 
Fourth Quarter 2022   9,811,422   $0.08-0.29    3.75 
First Quarter 2023   8,000,000   $0.005-0.04    4.00 
Second Quarter 2023   15,000,000   $0.005-0.20    4.25 
Third Quarter 2023   76,700,000   $0.005-0.10    4.50 
Fourth Quarter 2023   60,243,000   $0.005    4.75 
First Quarter 2024   34,600,000   $0.005    5.00 
Third Quarter 2028   3,000,000   $0.07    9.50 
Second Quarter 2032   21,807,789   $0.01-.0679    13.25 
                
    282,358,856   $0.005-15.00      

 

9. Stock Compensation

 

Shares Issued for Services

 

During the periods ended March 31, 2019 and 2018, the Company issued 3,000,000 and 2,863,640 shares of common stock respectively for consulting fees. The Company valued these shares at $120,000 and $198,477 respectively, based upon the fair value of the common stock at the dates of the agreements. The consulting fees are amortized over the contract periods, which are typically between 12 and 24 months. The amortization of prepaid services totaled $0 and $125,000 for the quarters ended March 31, 2019 and 2018.

 

10. Income Taxes – Results of Operations

 

There was no income tax expense reflected in the results of operations for the years ended March 31, 2019 and 2018 because the Company incurred a net loss in both years.

 

On December 22, 2018, 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.

 

The Company has recognized no tax benefit for the losses generated for the periods through March 31, 2019. 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 2019 and 2018 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.

 

11. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

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.

 

19
 

 

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

 

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™. There were no shipments under this agreement in the first quarter of 2019.

 

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, fess, 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 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 March 31, 2019, the Company was a party to an agreement to lease office space in Orlando, Florida. Rental expense for the three months ended March 31, 2019 and 2018 was $5,282 and $4,281 respectively.

 

13. Subsequent Events

 

On April 8, 2019, the Company signed a second amendment to its licensing agreement (the “Second Amendment”) with Cytocom. The Second Amendment confirmed that, as of its effective date (December 31, 2018), the Company owned 15.57% of the common shares issued and outstanding on that date. The Company agreed to assume the obligation to repay all accounts payable obligations and accrued liabilities owed by Cytocom as of the effective date, except those accounts payable obligations and accrued liabilities as specified in the Second Amendment. The Company also assumed the obligation to repay all notes payable, together with any interest or fees payable thereon, owed by Cytocom as of the effective date, except those notes payable obligations, together with any interest or fees payable thereon, as specified in the Second Amendment. The parties further agreed that in the event of a change of control of Cytocom, and at the option of Cytocom, the Company would have the right to purchase outright the Company’s licensing rights to Emerging Markets for humans under the License Agreement at a price equal to the value of those licensing rights as determined by an independent valuator acceptable to the Company and Cytocom.

 

20
 

 

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, 2018 filed with the Securities and Exchange Commission on April 16, 2019 (the “2018 Form 10-K”) under the heading “Risk Factors”.

 

The following discussion should be read in conjunction with the 2018 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.

 

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

 

Revenues

 

We had $0 revenues from operations for the three months ended March 31, 2019, compared to $65,013 for the three months ended March 31, 2018. 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 three months ended March 31, 2019 and 2018 were as follows (dollar amounts in thousands):

 

   For the three months ended
March 31,
 
   2019   2018 
Selling, general and administrative  $487   $638 
Decrease from prior year  $(151)  $(28)
Percent decrease from prior year   (24)%   (4)%

 

For the three months ended March 31, 2019 and 2018, selling, general and administrative expenses were made up as follows (dollar amounts in thousands):

 

   For the three months ended
March 31,
 
   2019   2018 
Stock listing and investor relations expenses  $11   $10 
Consulting and contractors   84    143 
Payroll   235    321 
Professional fees   37    47 
Travel   1    32 
Other expenses   119    85 

 

In the three months ended March 31, 2019, total cash and cash accruals for selling, general and administrative expense was $487 compared to $638 for the corresponding period in 2018, a decrease of $151 or 24%. 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 $84 in 2019, a decrease of $59 or 41% over the $143 spent in 2018. The decrease was the result primarily of the expiration of certain consulting contracts by the end of 2018, and the deconsolidation of Cytocom in May 2018, which eliminated a number of consulting contracts from the Company’s books thereafter;

 

21
 

 

  professional fees for legal, tax and accounting services in the amount of $37 in 2019, a decrease of $10 or 21% over the $47 spent in 2018. The decrease was primarily due to the deconsolidation of Cytocom in May 2018, which eliminated Cytocom’s legal fees from the Company’s books thereafter;
     
  payroll in the amount of $235 in 2019, a decrease of $86 or 27% over the $321 spent in 2018. The decrease reflects the deconsolidation of Cytocom in May 2018, which eliminated Cytocom’s payroll costs from the Company’s books thereafter; and
     
  travel in the amount of $1 in 2019, a decrease of $31 or 97% over the $32 spent in 2018, reflecting decreased travel for investor relations and international sales in 2019, and also the elimination of Cytocom-related travel expenses due to the deconsolidation of Cytocom in May 2018.

 

Research and development

 

R&D expenses and related percentages for the three months ended March 31, 2019 and 2018 were as follows (dollar amounts in thousands):

 

   For the three months ended
March 31,
 
   2019   2018 
Research and development  $-   $129 
Increase/(decrease) from prior year  $(129)  $10 
Percent increase/(decrease) from prior year   (100)%   9%

 

Expenses for research and development in the three months ended March 31, 2019 decreased by 100% compared to expenses in the same period in 2018. The decrease was due to the deconsolidation of Cytocom in May 2018, which eliminated Cytocom’s R&D expenses from the Company’s books thereafter.

 

Stock issued for services

 

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

 

Amortization of amounts recorded as Prepaid Services for stock issued for services G&A and related percentages for the three months ended March 31, 2019 and 2018 were as follows (dollar amounts in thousands):

 

   For the three months ended
March 31,
 
   2019   2018 
Amortization of prepaid consulting expense G&A  $-   $125 
Percentage decrease from prior year   (100)%   (74)%

 

The decline in expense reflects the fact that the cost of shares issued for services had been fully amortized in prior years.

 

The number of shares issued for consulting services G&A in the three months ending March 31, 2019 was 3,000,000 (2,863,640 in the corresponding period in 2018).

 

Prepaid consulting services G&A in the three months ended March 31, 2019 consisted of the following:

 

Amortization of cost of stock issued prior to 2018  $- 
Amortization of cost of stock issued in 2018   - 
Amortization of cost incurred for new stock issued in the three months ended March 31, 2019 under consulting contracts entered into in 2019   - 

 

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 8. 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.

 

22
 

 

In the three months ended March 31, 2019, the Company issued 4,600,000 warrants to stockholders at an exercise price of $0.005, for which it recorded a debt discount of $23,000.

 

In the three months ended March 31, 2018, the Company issued 42,510,818 warrants to stockholders at an exercise price range of $0.005 to $12.00, for which it recorded an expense of $125,000.

 

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 were fully amortized by December 31, 2016.

 

Depreciation expense for the three months ended March 31, 2019 and 2018 was as follows (dollar amounts in thousands):

 

   For the three months ended
March 31,
 
   2019   2018 
Depreciation expense  $-   $- 
Decrease from prior year  $-   $- 
Percentage increase/(decrease) from prior year   -%   -%

 

Interest Expense

 

Interest expense for the three months ended March 31, 2019 and 2018 were as follows (dollar amounts in thousands):

 

   For the three months ended
March 31,
 
   2019   2018 
Interest expense  $115   $220 
Decrease from prior year  $(105)  $(356)
Percentage decrease from prior year   (48)%   (62)%

 

The decrease in interest expense was primarily due to (i) the deconsolidation of Cytocom in May 2018, which eliminated Cytocom’s notes payable and related interest expense from the Company’s books thereafter, and (ii) to the conversion in 2018 of certain notes payable for common stock of the Company.

 

Loss on settlement of debt

 

In three months ended March 31, 2019, there was no gain or loss on settlements by lenders or vendors of any of their notes or accounts payable by converting them to equity. In three months ended March 31, 2018, the Company recorded an expense of $18, reflecting the fair value of the shares of common stock issued in exchange for the debt in that period.

 

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 $5,688 at March 31, 2019, compared to $30,401 at March 31, 2018.

 

For the three months ended March 31, 2019 and 2018, net cash used in operating activities from operations was $171 and $455,816, respectively.

 

$0 was used in investing activities for the three months ended March 31, 2019; $1,971 was used in the corresponding period in 2018.

 

During the three months ended March 31, 2019 proceeds from the sale of stock and exercise of stock warrants totaled $0 compared to $50,000 for the corresponding period in 2018. We received $0 from the issuance of notes payable in three months ended March 31, 2019, compared to $468,975 in 2018. There were no loan repayments made in cash in the three months ended March 31, 2019 ($0 in 2018).

 

The Company generated no sales in the first quarter of 2019. If the Company is unable to generate sufficient cash flows from future 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.

 

23
 

 

In addition to the cost of its ongoing operations, the Company expects it will incur future research and development expenditures in the next 12 months, for treatments for animals and in humans in emerging markets. The Company will need approximately $4 million for clinical trials for these activities in the next 12 months. We expect that two-thirds of this amount will be spent on trials for animals.

 

Off-Balance Sheet Arrangements

 

During the three months ended March 31, 2019 and 2018, 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.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Changes in Internal Controls over Financial Reporting

 

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

 

Evaluation of Disclosure Controls and Procedures

 

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

 

Management assessed the effectiveness of the internal controls over financial reporting as of March 31, 2019, using the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our management concluded that, as of March 31, 2019, 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.

 

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. SUBSEQUENT EVENTS

 

On April 8, 2019, the Company signed a second amendment to its licensing agreement (the “Second Amendment”) with Cytocom. The Second Amendment confirmed that, as of its effective date (December 31, 2018), the Company owned 15.57% of the common shares issued and outstanding on that date. The Company agreed to assume the obligation to repay all accounts payable obligations and accrued liabilities owed by Cytocom as of the effective date, except those accounts payable obligations and accrued liabilities as specified in the Second Amendment. The Company also assumed the obligation to repay all notes payable, together with any interest or fees payable thereon, owed by Cytocom as of the effective date, except those notes payable obligations, together with any interest or fees payable thereon, as specified in the Second Amendment. The parties further agreed that in the event of a change of control of Cytocom, and at the option of Cytocom, the Company would have the right to purchase outright the Company’s licensing rights to Emerging Markets for humans under the License Agreement at a price equal to the value of those licensing rights as determined by an independent valuator acceptable to the Company and Cytocom.

 

24
 

 

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

 

In the quarter ended March 31, 2019, the Company issued a total of 21,255,225 shares of common stock (net of stock cancellations. 3,063,640 shares of common stock were issued in the same period in 2018). 18,255,225 of those shares were issued to settle amounts owed under notes payable, including accrued and unpaid interest as applicable (200,000 in 2018). No shares were issued to settle amounts owed to certain of the Company’s vendors and employees (0 in 2018).

 

In total, the Company received $0 as consideration for the exercise of previously-issued warrants ($0 in 2018) and $0 for the purchase of common stock ($50,000 in 2018).

 

The following table lists all securities issued during in the three months ended March 31, 2019 without registering the securities under the Securities Act of 1933, as amended (the “Securities Act”):

 

Date  Description  Number   Purchaser   Proceeds   Consideration   Exemption 
2/26/2019  Common Stock Purchase   120,000    Consultant   $ Nil    Advisory Services    Sec. 4(a)(2) 
                             
1/31/2019  Common Stock Purchase   18,255,225    Lender   $Nil    Debt Settlement    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.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

The current portion of notes payable on the Company’s Condensed Consolidated Balance Sheets above contains, at March 31, 2019, 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 March 31, 2019, 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 March 31, 2019, 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 $505,994 earn interest at rates between 2% and 18% per annum. On loans aggregating $200,000, interest is payable in a fixed amount not tied to a specific interest rate. Notes aggregating $475,994 were in default at March 31, 2019, 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 March 31, 2019 the notes were in default.
     
  5. Promissory notes for $206,000 issued between July 1, 2016 and December 31, 2016 The notes mature on December 31, 2017. Lenders earn an interest rate of 2% per annum The Company was unable to repay the note at maturity and at March 31, 2019 the notes were 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 March 31, 2019 the notes were in default.

     
  7. Promissory 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. The Company was unable to repay the notes at maturity and at March 31, 2019 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 March 31, 2019 the note was in default.

 

25
 

 

  9. 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 March 31, 2019, the notes were in default.
     
  10. 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 March 31, 2019, the notes were in default.
     
  11. Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum. At March 31, 2019, 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 March 31, 2019, $10,000 of the notes were in default.
     
  13. 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 March 31, 2019, the notes were in default.
     
  14. 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 March 31, 2019, the notes were in default.
     
  15. 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. At March 31, 2019, the notes were in default.
     
  16. Notes aggregating $533,855 issued in the fourth quarter of 2018. The notes accrue interest from 2% to 3.5% per annum and mature between February 2019 and December 2019. These notes include warrants between 200,000 and 39,500,000 shares with an exercise price of $0.005 to $0.04. At March 31, 2019 $419,000 of the notes were in default

 

At March 31, 2019, the Company had insufficient cash on hand to repay these notes.

 

26
 

 

ITEM 6. EXHIBITS

 

Exhibit Number   Name of Exhibit
     
10.59   Promissory Note dated February 27, 2019 to Phoenix Group in the principal amount of $231,478.39.
     
10.60   Second Amendment to License Agreement by and between: Cytocom Inc. and Immune Therapeutics Inc., signed April 8, 2019.
     
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

 

27
 

 

SIGNATURES

 

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

 

  Immune Therapeutics, Inc.
     
Date: May 20, 2019 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
     
  Immune Therapeutics, Inc.
     
Date: May 20, 2019 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer

 

28
 

 

 

 

EX-10.59 2 ex10-59.htm

 

PROMISSORY NOTE

 

$231,478.39 February 27, 2019

 

RECITALS

 

WHEREAS Immune Therapeutics, Inc (the “COMPANY” entered into an agreement with the Phoenix Group (“TPG”) on November 21, 2016.

 

WHEREAS TPG has accrued monthly payments of $37,000 (thirty-seven thousand dollars) for the services of Mr. Rudy Williams and Dr. Vincent Ahonkhai for the months of January 2018 through June of 2018 totaling $222,000 (two-hundred twenty-two thousand dollars).

 

WHEREAS TPG has also incurred expenses totaling $9478.39 (nine-thousand four-hundred seventy-eight dollars and thirty-nine cents), with a total owed amount $231,478.39 (Two-hundred thirty-one thousand four-hundred seventy-eight dollars and thirty-nine cents) “VALUE OWED”.

 

WHEREAS, TPG has requested that the Company provide TPG with a Promissory Note for the VALUE OWED bearing interest at a fixed rate as more particularly described in this Agreement; and

 

WHEREAS, the Company has agreed to provide TPG with a Promissory Note, subject to the terms and conditions set forth herein (as defined below).

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: for VALUE OWED, the undersigned, Immune Therapeutics , Inc., a Florida corporation (referred to herein as the “Company” or the “Company”), with offices at 2431 Aloma Ave, Suite 124 Winter Park, FL 32792 , hereby unconditionally promises to pay to the order of TPG, its endorsees, successors and assigns, in lawful money of the United States, at such address as TPG may from time to time designate, the principal sum of Two-hundred Thirty-one thousand four-hundred seventy-eight dollars and thirty-nine cents ($231,478.39). This Promissory Note (the “Note”) shall mature and become due and payable in full on February 27, 2020 (the “Maturity Date”).

 

1. Terms of Repayment. Principal of and interest on this Note shall be paid by the Company as follows:

 

(a) On the Maturity Date, Company shall pay all principal and interest. Interest shall accrue at a rate of Six Percent (6%) per annum (the “Interest”).

 

(b) The Company further agrees that, if any payment made by the Company or any other person is applied to this Note and is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of any property hereafter pledged as security for this Note is required to be returned by TPG to the Company, its estate, trustee, receiver or any other party, including, without limitation, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, the Company’s liability hereunder (and any lien, security interest or other collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, or, if prior thereto any such lien, security interest or other collateral hereunder securing the Company’s liability hereunder shall have been released or terminated by virtue of such cancellation or surrender, this Note (and such lien, security interestor other collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of the Company in respect to the amount of such payment (or any lien, security interest or other collateral securing such obligation).

 

2. Liability of the Company. The Company is unconditionally, and without regard to the liability of any other person, liable for the payment and performance of this Note and such liability shall not be affected by an extension of time, renewal, waiver, or modification of this Note or the release, substitution. Each person signing this Note consents to any and all extensions of time, renewals, waivers, or modifications, as well as to release, substitution, or addition of guarantors or collateral security, without affecting the Company’s liabilities hereunder. TPG is entitled to the benefits of any collateral agreement, guarantee, security agreement, assignment, or any other documents which may be related to or are applicable to the debt evidenced by this Note, all of which are collectively referred to as “Loan Documents” as they now exist, may exist in the future, have existed, and as they may be amended, modified, renewed, or substituted.

 

 

 

 

3. Representations and Warranties. The Company represents and warrants as follows: (i) the Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida; (ii) the execution, delivery and performance by the Company of this Note are within the Company’s powers, have been duly authorized by all necessary action, and do not contravene (A) the Company’s certificate of incorporation or (B) bylaws or (x) any law or (y) any agreement or document binding on or affecting the Company, not otherwise disclosed to the TPG prior to execution of this Note, (iii) no authorization or approval or other action by, and no notice to or filing with, any governmental authority, regulatory body or third person is required for the due execution, delivery and performance by the Company of this Note; (iv) this Note constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except as enforcement hereof may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally and subject to the applicability of general principles of equity; (v) the Company has all requisite power and authority to own and operate its property and assets and to conduct its business as now conducted and proposed to be conducted and to consummate the transactions contemplated hereby; (vi) the Company is duly qualified to conduct its business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it, or in which the transaction of its business makes such qualification necessary; (vii) there is no pending or, to the Company’s knowledge, information or belief, threatened action or proceeding affecting the Company before any governmental agency or arbitrator which challenges or relates to this Note or which may otherwise have a material adverse effect on the Company; (viii) the Company is not in violation or default of any provision of (A) its certificate of incorporation or by-laws, each as currently in effect, or (B) any instrument, judgment, order, writ, decree or contract, statute, rule or regulation to which the Company is subject not otherwise disclosed to the TPG prior to the execution of this Note, and (ix) this Note is validly issued, free of any taxes, liens, and encumbrances related to the issuance hereof and is not subject to preemptive right or other similar right of members of the Company.

 

4. Covenants. So long as any principal or interest is due hereunder and shall remain unpaid, the Company will, unless the TPG shall otherwise consent in writing:

 

(a) Maintain and preserve its existence, rights and privileges;

 

(b) Not directly or indirectly sell, lease or otherwise dispose of (A) any of its property or assets other than in its ordinary course of business or (B) substantially all of its properties and assets, in the aggregate, to any person(s) or company, whether in one transaction or in a series of transactions over any period of time, or adopt any plan or arrangement for the dissolution or liquidation of the Company;

 

(c) Not use the proceeds from the issuance of this Note in any way for any purpose that entails a violation of, or is inconsistent with, Regulation U of the Board of Governors of the Federal Reserve System of the United States of America.

 

(d) Comply in all material respects with all applicable laws (whether federal, state or local and whether statutory. administrative or judicial or other) and with every applicable lawful governmental order (whether administrative or judicial);

 

(e) Not (i) make any advance or loan to any person, firm or corporation, except for reasonable travel or business expenses advanced to the Company’s employees or independent contractors in the ordinary course of business, or (ii) acquire all or substantially all of the assets of another entity;

 

(f) Not prepay any indebtedness, except for trade payables incurred in the ordinary course of the Company’s business;

 

(g) Maintain disclosure of Current Public Information as that term is defined in Rule 144(c) of the Securities Act, including proper disclosure of this Note as required in its next quarter or annual filing; and

 

(h) Not take any action which would impair the rights and privileges of this Note set forth herein or the rights and privileges of the holder of this Note.

 

5. Events of Default. Each and any of the following shall constitute a default and, after expiration of a grace period which shall be Thirty (30) calendar days, shall constitute an “Event of Default” hereunder:

 

(a) Non-payment of the Note pursuant to Section 1(a) will constitute an Event of Default.

 

(b) any other failure of the Company to observe or perform any present or future agreement of any nature whatsoever with TPG, including, without limitation, any covenant set forth in this Note;

 

(c) if Company shall commence any case, proceeding or other action: (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution, composition or other relief with respect to it or its debts; or (ii) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, or the Company shall make a general assignment for the benefit of its creditors; or (iii) there shall be commenced against the Company any case, proceeding or other action of a nature referred to above or seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property, which case, proceeding or other action results in the entry of any order for relief or remains undismissed, undischarged or unbonded for a period of Sixty (60) days; or (iv) the Company shall take any action indicating its consent to, approval of, or acquiescence in, or in furtherance of, any of the acts set forth; or (v) the Company shall generally not, or shall be unable to, pay its debts as they become due or shall admit in writing its inability to pay its debts;

 

(d) any representation or warranty made by the Company or any other person or entity under this Note or under any other Loan Documents shall prove to have been incorrect in any material respect when made;

 

 

 

 

(e) the sale of all or substantially all of the assets, or change in ownership or the dissolution, liquidation, consolidation, or reorganization of Company without the TPG’s prior written notice;

 

(f) if Company shall fail to maintain disclosure of Current Public Information as that term is defined in Rule 144(c) of the Securities Act of 1933;

 

(g) the Company’s shares of Common Stock are suspended from trading or delisted from trading on the Over the Counter Market on which it is currently listed;

 

(h) if the Company fails to disclose the existence of this Note in its next quarter or annual filing;

 

(i) in the event that the Company proposes to replace or replaces its transfer agent and the Company fails to provide, prior to the effective date of such replacement, a fully executed Transfer Agent Instructions in a form as initially delivered pursuant to the terms of this Note (including but not limited to the provision to reserve shares of Common Stock) signed by the successor transfer agent to Company and the Company.

 

6. TPG’s Rights Upon Default. Upon the occurrence of any Event of Default, the TPG may, at its sole and exclusive option, do any or all of the following, either concurrently or separately: (a) accelerate the maturity of this Note and demand immediate payment in full, whereupon the outstanding principal amount of the Note and all obligations of Company to TPG, together with accrued interest thereon and accrued charges and costs, shall become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived; and (b) exercise all legally available rights and privileges.

 

7. Usury. In no event shall the amount of interest paid or agreed to be paid hereunder exceed the highest lawful rate permissible under applicable law. Any excess amount of deemed interest shall be null and void and shall not interfere with or affect the Company’s obligation to repay the principal of and interest on the Note. This confirms that the Company and, by its acceptance of this Note, the TPG intend to contract in strict compliance with applicable usury laws from time to time in effect. Accordingly, the Company and the TPG stipulate and agree that none of the terms and provisions contained herein shall ever be construed to create a contract to pay, for the use or forbearance of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from time to time in effect.

 

8. Prepayment. The Company may prepay the Note including accrued but unpaid Interest at any time.

 

9. Costs of Enforcement. Company hereby covenants and agrees to indemnify, defend and hold TPG harmless from and against all costs and expenses, including reasonable attorneys’ fees and their costs, together with interest thereon at the Prime Rate, incurred by TPG in enforcing its rights under this Note; or if TPG is made a party as a defendant in any action or proceeding arising out of or in connection with its status as a TPG, or if TPG is requested to respond to any subpoena or other legal process issued in connection with this Note; or reasonable disbursements arising out of any costs and expenses, including reasonable attorneys’ fees and their costs incurred in any bankruptcy case; or for any legal or appraisal reviews, advice or counsel performed for TPG following a request by Company for waiver, modification or amendment of this Note or any of the other Loan Documents.

 

10. Governing Law. This Note shall be binding upon and inure to the benefit of the Company and the TPG and their respective successors and assigns; provided that the Company may not assign this Note, in whole or in part, by operation of law or otherwise, without the prior written consent of the TPG. The TPG may assign or otherwise participate out all or part of, or any interest in, its rights and benefits hereunder and to the extent of such assignment or participation such assignee shall have the same rights and benefits against the Company as it would have had if it were the TPG. This Note, and any claims arising out of relating to this Note, whether in contract or tort, statutory or common law, shall be governed exclusively by, and construed in accordance with the laws of the State of Florida, without regard to principles of conflicts of laws.

 

11. Jurisdiction. THE COMPANY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS NOTE, OR ANY OTHER INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH SHALL BE BROUGHT EXCLUSIVELY IN ANY COURT OF THE STATE OF FLORIDA OR IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA. THE COMPANY, BY THE EXECUTION AND DELIVERY OF THIS NOTE, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDINGS. THE COMPANY AGREES THAT PERSONAL JURISDICTION OVER IT MAY BE OBTAINED BY THE DELIVERY OF A SUMMONS BY PERSONAL DELIVERY OR OVERNIGHT COURIER AT THE ADDRESS PROVIDED IN THIS NOTE. ASSUMING DELIVERY OF THE SUMMONS IN ACCORDANCE WITH THIS PROVISION, THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS OR ANY SIMILAR BASIS.

 

12. Miscellaneous. (a) Company hereby waives protest, notice of protest, presentment, dishonor, and demand. (b) Time is of the essence for each of Company’s covenants under this Note. (c) The rights and privileges of TPG under this Note shall inure to the benefit of its successors and assigns. All obligations of Company in connection with this Note shall bind Company’s successors and assigns, and TPG’s rights shares of the Company shall succeed to any successor securities to Company’s common stock. (d) If any provision of this Note shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Note shall be construed as if such invalid or unenforceable provision had never been contained herein. (e) The waiver of any Event of Default or the failure of TPG to exercise any right or remedy to which it may be entitled shall not be deemed a waiver of any subsequent Event of Default or TPG’s right to exercise that or any other right or remedy to which TPG is entitled. No delay or omission by TPG in exercising, or failure by TPG to exercise on anyone or more occasions, shall be construed as a waiver or novation of this Note or prevent the subsequent exercise of any or all such rights. (f) This Note may not be waived, changed, modified, or discharged orally, but only in writing.

 

 

 

 

13. Notice, Etc. Any notice required by the provisions of this Note will be in writing and will be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient; if not, then on the next business day; (c) Five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) One (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt, and delivered as follows:

 

If to Company

 

Immune Therapeutics Inc

2431 Aloma Ave, Suite 124

Winter Park, FL 32792

 

If to the TPG:

The Phoenix Group

 

or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties.

 

[SIGNATURE PAGE TO FOLLOW]

 

The remainder of this page is intentionally left blank.

 

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of the date first set forth above.

 

THE COMPANY

 

Immune Therapeutics, Inc.

 

By:    
Name: Noreen Griffin  
Title: CEO  

 

TPG

 

The Phoenix Group

 

By:    
Name:    
Title:    

 

 

 

 

EX-10.60 3 ex10-60.htm

 

SECOND AMENDMENT TO LICENSE AGREEMENT

 

This Second Amendment to License Agreement (“Second Amendment”) is effective December 31, 2018 (“Effective Date”), by and between: Cytocom Inc., a for profit corporation duly organized and existing under the laws of the Commonwealth of Delaware, having an office at 37 North Orange Ave Suite 607 Orlando Florida 32801 (“CYTO”), and Immune Therapeutics Inc., a Florida Corporation formerly doing business as TNI BioTech, Inc., having an office at 2431 Aloma Ave #124 Winter Park, FL 32792 (“IMUN and or Company or Licensee”). CYTO and Licensee may each be referred to individually as “Party” and collectively as “Parties”.

 

WITNESSETH

 

WHEREAS, the Parties entered into that certain Amended License Agreement, effective May 1, 2018 (the “License Agreement”); and

 

WHERAS, as a consequence of the License Agreement, the Company deconsolidated CYTO as of May 1, 2018 in its financial reporting, and now accounts for its retained interest in CYTO under the equity method of accounting;

 

WHERAS, as a consequence of the deconsolidation of CYTO in the Company’s financial reporting, the Parties wish to clarify and confirm which obligations of the Parties incurred by either Party before the Effective Date will become the sole obligations of CYTO on and after the Effective Date;

 

WHEREAS, the Parties desire to further amend the License Agreement to provide for the assumption of additional obligations of CYTO by IMUN as consideration for the agreement that China will be included as a Territory under the License Agreement;

 

NOW THEREFORE, in consideration of the foregoing and the mutual promises and covenants set forth herein and for good and valuable consideration, the adequacy and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

1.       Definitions. For purposes of this Second Amendment, all capitalized terms shall have the meaning ascribed by the License Agreement unless expressly amended herein.

 

1.1       “Territory” means, all countries listed in the License Agreement signed May 1, 2018, together with the Republic of China.

 

1.2       “Accounts Payable “means those accounts payable obligations and accrued liabilities as specified in Schedule 1 “Cytocom Inc. Accounts Payable and Accrued Obligations” attached hereto.

 

1.6       “Notes Payable” means those obligations owed under certain promissory notes as specified in Schedule 2 “Cytocom Inc. Notes Payable” hereto.

 

2.       Confirmation of Ownership of Cytocom Inc, by Company. The Parties confirm and agree that in accordance with the Stock Purchase Agreement signed by the Parties on June 4, 2018, as of the Effective Date IMUN owns common stock of CYTO representing 15.57% of the outstanding common shares of CYTO as of the Effective Date, and that, in the event that CYTO issues additional shares after the Effective Date and up to and including the completion of a Series A round in an amount greater than $3 million, or IPO, or Sale of CYTO, CYTO will cause additional shares to be issued to IMUN in such number that IMUN’s percentage of outstanding common stock will not fall below 15.57%.

 

 Page 1 of 5 
   

 

3.       Assumption of Accounts Payable. The Parties agree that IMUN shall assume the obligation to repay all accounts payable obligations and accrued liabilities owed by CYTO as of the Effective Date, except those accounts payable obligations and accrued liabilities as specified in Schedule 1 “Cytocom Inc. Accounts Payable and Accrued Obligations” attached hereto, which shall continue to be obligations of CYTO on and after the date of this Second Amendment.

 

4.       Assumption of Notes Payable. The Parties agree that IMUN shall assume the obligation to repay all notes payable, together with any interest or fees payable thereon, owed by CYTO as of the Effective Date, except those notes payable obligations, together with any interest or fees payable thereon, as specified in Schedule 2 “Cytocom Inc. Notes Payable” attached hereto, which shall continue to be obligations of CYTO on and after the date of this Second Amendment.

 

5.        Buyout. In the event of a Change of Control of CYTO, and at the option of CYTO, the Company shall have the right to purchase outright the Company’s licensing rights to Emerging Markets for humans under the License Agreement at a price equal to the value of those licensing rights as determined by an independent valuator acceptable to the Company and CYTO, which determination shall be final and binding. The cost of said valuation will be paid for by CYTO.

 

6.       Interpretation. Except to the extent specifically amended by this Second Amendment, all terms and conditions set forth in the License Agreement shall remain unchanged and in full force and effect.

 

7.       Entire Agreement. This Second Amendment, in conjunction with the License Agreement, constitutes the entire agreement between the Parties regarding the subject matter hereof and supersedes any prior understandings, agreements or representations between the Parties, written or oral, relating to the subject matter hereof.

 

8.       Counterparts. This Second Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original as against a Party whose signature appears thereon, and each of which shall together constitute one and the same instrument. Any counterpart signature page delivered by electronic means or by facsimile transmission shall be deemed to have the same force and effect as an originally executed signature page.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

 Page 2 of 5 
   

 

IN WITNESS WHEREOF, the Parties, intending to be legally bound hereby, have each caused a duly authorized representative to execute this Second Amendment on the day and year set forth below.

 

LICENSEE:  
Immune Therapeutics, Inc.  
     
By:    
Name Noreen Griffin  
Title: Chief Executive Officer  
Date: April 8, 2019  
     
LICENSOR:  
Cytocom, Inc.  
     
By:    
Name: Noreen Griffin  
Title: President  
Date: April 8, 2019  

 

 Page 3 of 5 
   

 

Schedule 1

 

Cytocom Inc. Accounts Payable and Accrued Obligations

 

Vendors and Accounts Payable  Amount ($) 
LDN Research Group LLC  $74,670.00 
Elisa DeLaet Jagerson   37,500.00 
Dr. Jill Smith   24,669.98 
Aronstam Management Services Inc   24,000.00 
Birch Stewart Kolash Birch LLP   20,569.76 
Molski Management Services Inc   16,666.67 
The Pennsylvania State University   8,747.41 
Husch Blackwell LLP   4,586.70 
ClearTrust, LLC   750.00 
Corporate Creations   561.85 
Dr. Nicholas J. Sisti Esq.   (500.00)
TOTAL  $212,222.37 

 

Creditors and Accrued Liabilities  Amount ($) 
Noreen Griffin  $520,000.00 
Kelly Wilson   32,000.00 
Robert Wilson   32,000.00 
TOTAL  $584,000.00 

 

 Page 4 of 5 
   

 

Schedule 1

 

Cytocom Inc. Notes Payable

 

Borrower at Date of Note Signing  Effective
Date of Note
  Lender  Principal Amount of Note ($)   Maturity
Date
  Accrued Interest and Fees at 12/31/20118 ($)  

Total Owing at

12/31/2018

($)

 
Cytocom  6/16/2015  MJW Properties  $25,000.00   9/30/2015  $3,775.00   $28,775.00 
Cytocom  9/30/2015  Richard Gostanian   400,000.00   9/30/2016   104,153.42    504,153.42 
Cytocom  1/8/2016  RJ Dailey   80,000.00   1/8/2017   23,846.58    103,846.58 
Cytocom  2/8/2016  Paul Akin   50,000.00   2/8/2017   14,479.45    64,479.45 
Immune  3/9/2016  Paul Akin   20,000.00   3/8/2017   5,705.56    25,705.56 
Immune  4/11/2016  P Akin-QS   21,000.00   4/11/2017   5,798.33    26,798.33 
Immune  9/30/2016  Paul Akin   20,000.00   9/30/2017   1,959.00    21,959.00 
Immune  9/30/2016  Paul Akin   25,000.00   9/30/2017   2,448.75    27,448.75 
Immune  9/30/2016  Paul Akin   33,000.00   9/30/2017   3,232.35    36,232.35 
Immune  9/30/2016  Paul Akin   6,000.00   9/30/2017   587.70    6,587.70 
Immune  10/7/2016  Paul Akin   10,000.00   10/7/2017   975.42    10,975.42 
Immune  11/1/2016  Richard Gostanian   275,000.00   11/1/2017   26,422.92    301,422.92 
Immune  11/1/2016  RJ Dailey   275,000.00   11/1/2017   26,422.92    301,422.92 
Immune  12/31/2016  Richard Gostanian   30,000.00   2/18/1982   2,777.50    32,777.50 
Immune  3/31/2017  RJ Dailey   165,000.00   3/31/2018   14,410.00    179,410.00 
Immune  3/31/2017  Paul Akin   5,000.00   3/31/2018   436.67    5,436.67 
Immune  4/3/2017  RJ Dailey   150,000.00   4/3/2018   13,073.75    163,073.75 
Immune  9/30/2017  Paul Akin   25,000.00   9/30/2018   1,916.46    26,916.46 
Cytocom  3/31/2018  Jared Kroeger   50,000.00   3/31/2019   1,909.72    51,909.72 
Cytocom  3/31/2018  Richard Gostanian   101,000.00   3/31/2019   3,857.64    104,857.64 
Cytocom  3/31/2018  RJ Dailey   70,000.00   3/31/2019   6,307.29    76,307.29 
Cytocom  3/31/2018  Susan St Ledger   75,000.00   3/31/2019   2,864.58    77,864.58 
Cytocom  5/14/2018  Susan St Ledger   50,000.00   5/14/2019   1,604.17    51,604.17 
Cytocom  6/30/2018  Paul Akin   10,000.00   6/30/2019   255.56    10,255.56 
Cytocom  6/30/2018  Richard Gostanian   37,500.00   6/30/2019   958.33    38,458.33 
Cytocom  6/30/2018  RJ Dailey   50,000.00   6/30/2019   1,277.78    51,277.78 
Cytocom  7/1/2018  Alan Cunningham (replace)   83,000.00   7/1/2019   2,080.68    85,080.68 
Cytocom  7/13/2018  Alan Cunningham   10,000.00   7/13/2019   237.50    10,237.50 
Cytocom  8/23/2018  Richard Kelley   10,000.00   12/23/2018   575.83    10,575.83 
Cytocom  9/30/2018  Richard Gostanian   62,000.00   9/30/2019   792.22    62,792.22 
Cytocom  9/30/2018  RJ Dailey   30,000.00   9/30/2019   383.33    30,383.33 
                         
TOTAL        $2,253,500.00      $275,526.41   $2,529,026.41 

 

 Page 5 of 5 
   

 

EX-31.1 4 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: May 20, 2019 By: /s/ Noreen Griffin
    Noreen Griffin
    Chief Executive Officer
    (Principal Executive Officer)

 

 
 

 

I, Peter Aronstam, certify that:

 

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

 

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

 

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

 

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

 

Date: May 20, 2019 By: /s/ Peter Aronstam
    Peter Aronstam
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

 
 

EX-32.1 5 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 March 31, 2019 as filed with the Securities and Exchange Commission (the “Report”), we, Noreen Griffin, Chief Executive Officer (Principal Executive Officer) and Peter Aronstam, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of our knowledge:1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

 

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

 

Date: May 20, 2019 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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May 20, 2019
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Document Type 10-Q  
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Current Fiscal Year End Date --12-31  
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Trading Symbol IMUN  
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Mar. 31, 2019
Dec. 31, 2018
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Cash and cash equivalents $ 5,688 $ 5,859
Inventories 82,801 82,801
Total current assets 88,489 88,660
Fixed Assets:    
Computer equipment, net of accumulated depreciation of $10,865 and $10,477 respectively 2,378 2,766
Deposits 200 200
Total assets 91,067 91,626
Current Liabilities:    
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Accrued liabilities 3,605,755 3,302,355
Notes payable, net of debt discount 5,479,385 5,187,727
Derivative liability 738,609 786,706
Total current liabilities 11,845,680 11,342,264
Total liabilities 11,845,680 11,342,264
Commitments and Contingencies (Note 11)
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Mar. 31, 2018
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Research and development expense 129,191
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Depreciation and amortization expense 387 433
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Gain on Derivative Liability Revaluation 12,772 494,814
Loss on settlement of debt (18,036)
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Additional Paid-in Capital [Member]
Stock To Be Issued [Member]
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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            
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Issuance of common stock for interest expense, shares 200,000            
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Net loss (8,175,228) (450,382) (8,625,610)
Balance at Dec. 31, 2018 $ 43,433 369,881,037 35,303 (381,210,411) (11,250,638)
Balance, shares at Dec. 31, 2018 434,322,574            
Issuance of common stock for prepaid services $ 300 119,700 120,000
Issuance of common stock for prepaid services, shares 3,000,000            
Amortization of prepaid services             0
Issuance of common stock in exchange for debt $ 1,825 60,609 62,434
Issuance of common stock in exchange for debt, shares 18,255,225            
Issuance of warrants in connection with debt agreement 23,000 23,000
Net loss (709,409) (709,409)
Balance at Mar. 31, 2019 $ 45,558 $ 370,084,346 $ 35,303 $ (381,919,820) $ (11,754,613)
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3 Months Ended
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Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES    
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Adjustments to reconcile net loss to net cash flows used in operating activities:    
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Amortization of debt discount 61,271 100,318
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Expenses paid by lender 54,661
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Accounts payable 210,933 78,199
Accrued liabilities 303,400 241,595
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CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of computer equipment (1,971)
Net cash used in investing activities (1,971)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from sale of stock and exercise of warrants 50,000
Proceeds from issuance of notes payable 423,470
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Cash and cash equivalents at beginning of period 5,859 14,718
Cash and cash equivalents at end of period 5,688 30,401
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 16,000 15,210
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
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Organization and Description of Business
3 Months Ended
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Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business

1. Organization and Description of Business

 

Immune Therapeutics, Inc. (the “Company,” “we,” or “our”) 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.

 

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 Original Agreement, 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 December 31, 2018, the Company’s equity interest in Cytocom stood at 15.5% 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.

 

At present, the Company is a late development-stage biopharmaceutical company focused on the licensing, development and commercialization of innovative prescription medications for humans in Africa, Central and South America, the Caribbean and China (hereinafter referred to as “Emerging Markets”) and worldwide for animals and companion pet therapeutics. The Company is not permitted to market its licensed products in the United States.

 

Going Concern

 

The Company has incurred significant net losses since inception and has relied on its ability to fund its operations through private equity financings. Management expects operating losses and negative cash flows to continue at more significant levels in the future. As the Company continues to incur losses, transition to profitability is dependent upon the successful development, approval, and commercialization of its product candidate and the achievement of a level of revenues adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings and may seek additional capital through arrangements with strategic partners or from other sources. Based on the Company’s operating plan, existing working capital at March 31, 2019 was not sufficient to meet the cash requirements to fund planned operations through 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 financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

 

The Company experienced a net loss attributable to common shareholders of $709,409 and used cash and cash equivalents for operations in the amount of $171 during the quarter ended March 31, 2019, resulting in stockholders’ deficit of $11,754,613 at that date.

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Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2019
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, 2018 (including the notes thereto) set forth in Form 10- K.

 

We have identified the policies below as critical to our business operations and the understanding of its results of operations. The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Company’s Board of Directors. The impact and any associated risks related to these policies on our business operations are discussed throughout this section where such policies affect our reported and expected financial results.

 

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, 2018. 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 March 31, 2019, the Company’s equity interest in Cytocom stood at 15.5% 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. As the balance of the Company’s investment in Cytocom has been $0 since December 31, 2018, no losses have been recognized during the quarter ended March 31, 2019.

 

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.

 

Sales of LodonalTM pills or capsules product are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of product at a delivery point, as negotiated within each contract. Each quantity of product sold is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the product, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

 

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). On January 1, 2019, the Company applied ASU 842 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. At March 31, 2019, we had no leases that fall within the scope of this standard. Accordingly, the standard has no impact on our consolidated financial position or 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 condensed consolidated balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2019, the Company has no cash balances in excess of insured limits.

 

Segment and Geographic Information

 

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

 

Fair Value of Financial Instruments

 

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash, cash equivalents 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.

 

Derivative Financial Instruments

 

FASB ASC 820, Fair Value Measurements requires bifurcation of certain embedded derivative instruments in certain debt or equity instruments, and measurement at their fair value for accounting purposes. A holder redemption feature embedded in the Company’s note payable requires bifurcation from its host instrument and is accounted for as a freestanding derivative.

 

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.

 

Inventory as of March 31, 2019 was valued at $82,801, a decrease of $95,297 or 54% from the inventory balance at the end of March 2018. Inventory at March 31, 2019 was made up primarily of finished pills and related packaging materials. The year-over-year decrease in inventory was due to the shipments of pills during 2018 to Nigeria and to pills used as samples.

 

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 periods ended March 31, 2019 and March 31, 2018 was $387 and $433, 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 March 31, 2019 and 2018, the Company does not have a liability for unrecognized tax uncertainties.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of March 31, 2019, and 2018, the Company has not accrued any interest or penalties related to uncertain tax positions.

 

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

 

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

 

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

 

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

 

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”) and convertible debt (as described in Note 6 to the Financial Statements – “Notes Payable”), have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

 

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

 

    March 31, 2019     March 31, 2018  
Common Stock Purchase Warrants     282,358,856       126,670,720  
Convertible Debt     112,943,167       23,611,111  

 

Recent Accounting Standards

 

During the quarter ended March 31, 2019, 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
3 Months Ended
Mar. 31, 2019
Fixed Assets:  
Fixed Assets

3. Fixed Assets

 

    March 31, 2019     December 31, 2018  
Fixed Assets:   $       $    
Computer equipment     13,213       13,213  
Less accumulated depreciation     (10,835 )     (10,477 )
Fixed assets, net   $ 2,378     $ 2,766  

 

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
3 Months Ended
Mar. 31, 2019
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 March 31, 2019, Cytocom had no significant assets or income.

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Accrued Liabilities
3 Months Ended
Mar. 31, 2019
Payables and Accruals [Abstract]  
Accrued Liabilities

5. Accrued Liabilities

 

Accrued expenses and other liabilities consist of the following:

 

    March 31, 2019     December 31, 2018  
Accrued payroll to officers and others     2,582,839       2,010,570  
Accrued interest and penalties – notes payable     886,859       877,571  
Estimated legal settlements     136,057       136,057  
Other accrued liabilities     -       15,512  
Derivative Liability     738,609       786,706  
                 
Total accrued expenses and other liabilities   $ 4,344,364     $ 3,826,416  

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Notes Payable
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Notes Payable

6. Notes payable

 

Notes payable consist of the following:

 

    March 31, 2019     December 31, 2018  
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 March 31, 2019, 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 March 31, 2019, 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. The Company was unable to repay the notes at maturity and at March 31, 2019 the note was in default.     725,994       725,994  
                 
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 March 31, 2019 the note was in default.     97,737       97,737  
                 
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 March 31, 2019 the notes were in default.     206,000       206,000  
                 
Notes aggregating $1,350,000 issued in the fourth quarter 2016. The notes accrue interest at 2% per annum and mature between November 1, 2017 and December 31, 2017. As March 31, 2019, 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 March 31, 2019, the notes were in default.     500,000       500,000  
                 
Promissory notes issued January 25, 2017. The lenders earn interest at 7% per month. The notes mature on July 5, 2017, and at March 31, 2019 the notes were 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 March 31, 2019, 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 March 31, 2019, the notes were in default.     191,800       191,800  
                 
Promissory note from $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 using the lowest value of the Company’s common stock 25 days prior to the conversion. In 2018, The defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at March 31, 2019 had increased to $454,032 $27,110 of accrued interest owed on the note has been converted to stock. The Company has accrued a $738,609 derivative liability for the remaining conversion right.     454,032       455,122  
                 
Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum. At March 31, 2019, the notes were in default.     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 March 31, 2019, These notes were in default     47,975       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 $0.0005. At March 31, 2019 the notes were in default     125,000       125,000  
                 
Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest between 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 March 31, 2019 the notes were in default     65,000       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. At March 31, 2019. $103,000 of these notes were in default     193,000       193,000  
                 
Notes aggregating $533,855 issued in the fourth quarter of 2018. The notes accrue interest from 2% to 3.5% per annum and mature between February 2019 and December 2019. These notes include warrants between 200,000 and 39,500,000 shares with an exercise price of $0.005 to $0.04 At March 31, 2019. $379,000 of these notes were in default     533,855       533,855  
                 
Notes aggregating $23,000 issued in the first quarter of 2019. The notes accrue interest at 2% per annum and mature during July 2019. These notes include warrants between 4,600,000 shares with an exercise price of $0.005.     23,000       -  
                 
Notes aggregating $231,478 issued in the first quarter of 2019. The notes accrue interest at 6% per annum and mature in February 2020.     231,478       -  
                 
Less: Original issue discount on notes payable and warrants issued with notes.     (110,986 )     (149,256 )
                 
Total   $ 5,479,385     $ 5,187,727  

 

As of March 31, 2019, the Company had accrued $877,570 in unpaid interest and default penalties. During the quarter ended March 31, 2019, 18,255,225 shares with a fair value of $78,500 were issued by the Company for settlement of promissory notes totaling $27,710.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.19.1
Derivative Liabilities
3 Months Ended
Mar. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liabilities

7. Derivative Liabilities

 

As of March 31, 2019, and December 31, 2018 the aggregate fair value of the outstanding derivative liability was $738,609 and $786,706, respectively. The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumption during the quarter March 31, 2019:

 

    Three months
ended
March 31, 2019
 
Volatility     295.00 %
Risk-free interest rate     2.40 %
Expected dividends     - %
Expected term     1 year  

 

The Company determines the fair 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 sheet as of March 31, 2019:

 

    Fair Value Measurements as of March 31, 2019  
    Level 1     Level 2     Level 3  
Assets                  
Total assets     -       -       -  
Liabilities                        
Conversion option derivative liability   $ -     $ -     $ 738,609  
                         
Total liabilities   $ -     $ -     $ 738,609  

 

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

 

    Significant Unobservable
Input (Level 3)
 
Beginning balance   $ 786,706  
Change in fair value     (12,772 )
Partial settlements of liability     (35,325 )
Ending balance   $ 738,609  

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Capital Structure - Common Stock and Stock Purchase Warrants
3 Months Ended
Mar. 31, 2019
Equity [Abstract]  
Capital Structure - Common Stock and Stock Purchase Warrants

8. Capital Structure – Common Stock and Stock Purchase Warrants

,

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

 

As of March 31, 2019, and 2018, the Company was authorized to issue 500,000,000 common shares at a par value of $0.0001 per share.

 

As of March 31, 2019, the Company had 455,577,799 shares of common stock outstanding and 434,322,574 outstanding as of December 31, 2018.

 

Stock Warrants

 

In the quarter ended March 31, 2019, 4,600,000 new warrants were issued by the Company.

 

There were no modifications of the terms of any warrants issued by the Company in the quarter ended March 31, 2019 and 2018.

 

Following is a summary of outstanding stock warrants at March 31, 2019 and activity during the three months ended:

 

    Number of
Shares
    Exercise
Price
    Weighted
Average
Price
 
Warrants as of December 31, 2018     281,782,856     $ 0.001-3.74     $ 0.09  
                         
Issued in 2019     4,600,000     $ .005-.005     $ .01  
                         
Expired and forfeited     (4,024,000 )   $ 0.-2.00     $ 1.25  
                         
Exercised     -     $ 0     $ 0  
                         
Warrants as of March 31, 2019     282,358,856     $ .001-3.74     $ 0.07  

 

Summary of outstanding warrants as of March 31, 2019:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Second Quarter 2019     135,000     $ 0.50-2.00       0.25  
Third Quarter 2019     260,000     $ 0.07-0.23       0.50  
Fourth Quarter 2019     23,222,726     $ 0.50-1.50       0.75  
Second Quarter 2020     300,000     $ 0.50       1.25  
Fourth Quarter 2020     1,000,000     $ 0.20       1.75  
First Quarter 2021     12,600,000     $ 0.20       2.00  
Second Quarter 2021     5,812,252     $ 0.01408-0.20       2.25  
Third Quarter 2021     5,166,667     $ 0.03-0.20       2.50  
Fourth Quarter 2021     300,000     $ 0.10       2.75  
Second Quarter 2022     1,750,000     $ 0.15       3.25  
Third Quarter 2022     2,650,000     $ 0.05-0.10       3.50  
Fourth Quarter 2022     9,811,422     $ 0.08-0.29       3.75  
First Quarter 2023     8,000,000     $ 0.005-0.04       4.00  
Second Quarter 2023     15,000,000     $ 0.005-0.20       4.25  
Third Quarter 2023     76,700,000     $ 0.005-0.10       4.50  
Fourth Quarter 2023     60,243,000     $ 0.005       4.75  
First Quarter 2024     34,600,000     $ 0.005       5.00  
Third Quarter 2028     3,000,000     $ 0.07       9.50  
Second Quarter 2032     21,807,789     $ 0.01-.0679       13.25  
                         
      282,358,856     $ 0.005-15.00          

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.19.1
Stock Compensation
3 Months Ended
Mar. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock Compensation

9. Stock Compensation

 

Shares Issued for Services

 

During the periods ended March 31, 2019 and 2018, the Company issued 3,000,000 and 2,863,640 shares of common stock respectively for consulting fees. The Company valued these shares at $120,000 and $198,477 respectively, based upon the fair value of the common stock at the dates of the agreements. The consulting fees are amortized over the contract periods, which are typically between 12 and 24 months. The amortization of prepaid services totaled $0 and $125,000 for the quarters ended March 31, 2019 and 2018.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes - Results of Operations
3 Months Ended
Mar. 31, 2019
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 years ended March 31, 2019 and 2018 because the Company incurred a net loss in both years.

 

On December 22, 2018, 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.

 

The Company has recognized no tax benefit for the losses generated for the periods through March 31, 2019. 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 2019 and 2018 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.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.19.1
Licenses and Supply Agreements
3 Months Ended
Mar. 31, 2019
Licenses And Supply Agreements  
Licenses and Supply Agreements

11. Licenses and Supply Agreements

 

Patent and Subsidiary Acquisition

 

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 29 R18.htm IDEA: XBRL DOCUMENT v3.19.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

12. Commitments and Contingencies

 

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™. There were no shipments under this agreement in the first quarter of 2019.

 

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, fess, 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 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 March 31, 2019, the Company was a party to an agreement to lease office space in Orlando, Florida. Rental expense for the three months ended March 31, 2019 and 2018 was $5,282 and $4,281 respectively.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent Events
3 Months Ended
Mar. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

13. Subsequent Events

 

On April 8, 2019, the Company signed a second amendment to its licensing agreement (the “Second Amendment”) with Cytocom. The Second Amendment confirmed that, as of its effective date (December 31, 2018), the Company owned 15.57% of the common shares issued and outstanding on that date. The Company agreed to assume the obligation to repay all accounts payable obligations and accrued liabilities owed by Cytocom as of the effective date, except those accounts payable obligations and accrued liabilities as specified in the Second Amendment. The Company also assumed the obligation to repay all notes payable, together with any interest or fees payable thereon, owed by Cytocom as of the effective date, except those notes payable obligations, together with any interest or fees payable thereon, as specified in the Second Amendment. The parties further agreed that in the event of a change of control of Cytocom, and at the option of Cytocom, the Company would have the right to purchase outright the Company’s licensing rights to Emerging Markets for humans under the License Agreement at a price equal to the value of those licensing rights as determined by an independent valuator acceptable to the Company and Cytocom.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2019
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, 2018 (including the notes thereto) set forth in Form 10- K.

 

We have identified the policies below as critical to our business operations and the understanding of its results of operations. The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Company’s Board of Directors. The impact and any associated risks related to these policies on our business operations are discussed throughout this section where such policies affect our reported and expected financial results.

 

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, 2018. 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 March 31, 2019, the Company’s equity interest in Cytocom stood at 15.5% 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. As the balance of the Company’s investment in Cytocom has been $0 since December 31, 2018, no losses have been recognized during the quarter ended March 31, 2019.

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.

 

Sales of LodonalTM pills or capsules product are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of product at a delivery point, as negotiated within each contract. Each quantity of product sold is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the product, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant.

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). On January 1, 2019, the Company applied ASU 842 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. At March 31, 2019, we had no leases that fall within the scope of this standard. Accordingly, the standard has no impact on our consolidated financial position or 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 condensed consolidated balance sheets. The cash accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. At March 31, 2019, the Company has no cash balances in excess of insured limits.

Segment and Geographic Information

Segment and Geographic Information

 

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

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

In accordance with the reporting requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. Cash, cash equivalents 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.

Derivative Financial Instruments

Derivative Financial Instruments

 

FASB ASC 820, Fair Value Measurements requires bifurcation of certain embedded derivative instruments in certain debt or equity instruments, and measurement at their fair value for accounting purposes. A holder redemption feature embedded in the Company’s note payable requires bifurcation from its host instrument and is accounted for as a freestanding derivative.

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.

 

Inventory as of March 31, 2019 was valued at $82,801, a decrease of $95,297 or 54% from the inventory balance at the end of March 2018. Inventory at March 31, 2019 was made up primarily of finished pills and related packaging materials. The year-over-year decrease in inventory was due to the shipments of pills during 2018 to Nigeria and to pills used as samples.

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 periods ended March 31, 2019 and March 31, 2018 was $387 and $433, 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 March 31, 2019 and 2018, the Company does not have a liability for unrecognized tax uncertainties.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of March 31, 2019, and 2018, the Company has not accrued any interest or penalties related to uncertain tax positions.

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

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

 

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

 

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

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

 

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”) and convertible debt (as described in Note 6 to the Financial Statements – “Notes Payable”), have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

 

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

 

    March 31, 2019     March 31, 2018  
Common Stock Purchase Warrants     282,358,856       126,670,720  
Convertible Debt     112,943,167       23,611,111  

Recent Accounting Standards

Recent Accounting Standards

 

During the quarter ended March 31, 2019, 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 32 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Schedule of Antidilutive Securities

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

 

    March 31, 2019     March 31, 2018  
Common Stock Purchase Warrants     282,358,856       126,670,720  
Convertible Debt     112,943,167       23,611,111  

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.19.1
Fixed Assets (Tables)
3 Months Ended
Mar. 31, 2019
Fixed Assets:  
Schedule of Fixed Assets

    March 31, 2019     December 31, 2018  
Fixed Assets:   $       $    
Computer equipment     13,213       13,213  
Less accumulated depreciation     (10,835 )     (10,477 )
Fixed assets, net   $ 2,378     $ 2,766  

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.19.1
Accrued Liabilities (Tables)
3 Months Ended
Mar. 31, 2019
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities

Accrued expenses and other liabilities consist of the following:

 

    March 31, 2019     December 31, 2018  
Accrued payroll to officers and others     2,582,839       2,010,570  
Accrued interest and penalties – notes payable     886,859       877,571  
Estimated legal settlements     136,057       136,057  
Other accrued liabilities     -       15,512  
Derivative Liability     738,609       786,706  
                 
Total accrued expenses and other liabilities   $ 4,344,364     $ 3,826,416  

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable (Tables)
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Schedule of Notes Payable

Notes payable consist of the following:

 

    March 31, 2019     December 31, 2018  
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 March 31, 2019, 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 March 31, 2019, 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. The Company was unable to repay the notes at maturity and at March 31, 2019 the note was in default.     725,994       725,994  
                 
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 March 31, 2019 the note was in default.     97,737       97,737  
                 
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 March 31, 2019 the notes were in default.     206,000       206,000  
                 
Notes aggregating $1,350,000 issued in the fourth quarter 2016. The notes accrue interest at 2% per annum and mature between November 1, 2017 and December 31, 2017. As March 31, 2019, 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 March 31, 2019, the notes were in default.     500,000       500,000  
                 
Promissory notes issued January 25, 2017. The lenders earn interest at 7% per month. The notes mature on July 5, 2017, and at March 31, 2019 the notes were 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 March 31, 2019, 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 March 31, 2019, the notes were in default.     191,800       191,800  
                 
Promissory note from $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 using the lowest value of the Company’s common stock 25 days prior to the conversion. In 2018, The defaults also resulted in certain penalties, as a result of which the principal amount of the note outstanding at March 31, 2019 had increased to $454,032 $27,110 of accrued interest owed on the note has been converted to stock. The Company has accrued a $738,609 derivative liability for the remaining conversion right.     454,032       455,122  
                 
Notes aggregating $105,500 issued in the fourth quarter of 2017. The notes accrue interest at 2% per annum. At March 31, 2019, the notes were in default.     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 March 31, 2019, These notes were in default     47,975       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 $0.0005. At March 31, 2019 the notes were in default     125,000       125,000  
                 
Notes aggregating $65,000 issued in the second quarter of 2018. The notes accrue interest between 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 March 31, 2019 the notes were in default     65,000       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. At March 31, 2019. $103,000 of these notes were in default     193,000       193,000  
                 
Notes aggregating $533,855 issued in the fourth quarter of 2018. The notes accrue interest from 2% to 3.5% per annum and mature between February 2019 and December 2019. These notes include warrants between 200,000 and 39,500,000 shares with an exercise price of $0.005 to $0.04 At March 31, 2019. $379,000 of these notes were in default     533,855       533,855  
                 
Notes aggregating $23,000 issued in the first quarter of 2019. The notes accrue interest at 2% per annum and mature during July 2019. These notes include warrants between 4,600,000 shares with an exercise price of $0.005.     23,000       -  
                 
Notes aggregating $231,478 issued in the first quarter of 2019. The notes accrue interest at 6% per annum and mature in February 2020.     231,478       -  
                 
Less: Original issue discount on notes payable and warrants issued with notes.     (110,986 )     (149,256 )
                 
Total   $ 5,479,385     $ 5,187,727  

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.19.1
Derivative Liabilities (Tables)
3 Months Ended
Mar. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Estimated Fair Value of Derivative Liability Valuation Assumptions

The Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model using the following key assumption during the quarter March 31, 2019:

 

    Three months
ended
March 31, 2019
 
Volatility     295.00 %
Risk-free interest rate     2.40 %
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 sheet as of March 31, 2019:

 

    Fair Value Measurements as of March 31, 2019  
    Level 1     Level 2     Level 3  
Assets                  
Total assets     -       -       -  
Liabilities                        
Conversion option derivative liability   $ -     $ -     $ 738,609  
                         
Total liabilities   $ -     $ -     $ 738,609  

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

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

 

    Significant Unobservable
Input (Level 3)
 
Beginning balance   $ 786,706  
Change in fair value     (12,772 )
Partial settlements of liability     (35,325 )
Ending balance   $ 738,609  

XML 37 R26.htm IDEA: XBRL DOCUMENT v3.19.1
Capital Structure - Common Stock and Stock Purchase Warrants (Tables)
3 Months Ended
Mar. 31, 2019
Equity [Abstract]  
Schedule of Outstanding Stock Warrants

Following is a summary of outstanding stock warrants at March 31, 2019 and activity during the three months ended:

 

    Number of
Shares
    Exercise
Price
    Weighted
Average
Price
 
Warrants as of December 31, 2018     281,782,856     $ 0.001-3.74     $ 0.09  
                         
Issued in 2019     4,600,000     $ .005-.005     $ .01  
                         
Expired and forfeited     (4,024,000 )   $ 0.-2.00     $ 1.25  
                         
Exercised     -     $ 0     $ 0  
                         
Warrants as of March 31, 2019     282,358,856     $ .001-3.74     $ 0.07  

Summary of Outstanding Warrants

Summary of outstanding warrants as of March 31, 2019:

 

Expiration Date   Number of
Shares
    Exercise
Price
    Remaining
Life (years)
 
                   
Second Quarter 2019     135,000     $ 0.50-2.00       0.25  
Third Quarter 2019     260,000     $ 0.07-0.23       0.50  
Fourth Quarter 2019     23,222,726     $ 0.50-1.50       0.75  
Second Quarter 2020     300,000     $ 0.50       1.25  
Fourth Quarter 2020     1,000,000     $ 0.20       1.75  
First Quarter 2021     12,600,000     $ 0.20       2.00  
Second Quarter 2021     5,812,252     $ 0.01408-0.20       2.25  
Third Quarter 2021     5,166,667     $ 0.03-0.20       2.50  
Fourth Quarter 2021     300,000     $ 0.10       2.75  
Second Quarter 2022     1,750,000     $ 0.15       3.25  
Third Quarter 2022     2,650,000     $ 0.05-0.10       3.50  
Fourth Quarter 2022     9,811,422     $ 0.08-0.29       3.75  
First Quarter 2023     8,000,000     $ 0.005-0.04       4.00  
Second Quarter 2023     15,000,000     $ 0.005-0.20       4.25  
Third Quarter 2023     76,700,000     $ 0.005-0.10       4.50  
Fourth Quarter 2023     60,243,000     $ 0.005       4.75  
First Quarter 2024     34,600,000     $ 0.005       5.00  
Third Quarter 2028     3,000,000     $ 0.07       9.50  
Second Quarter 2032     21,807,789     $ 0.01-.0679       13.25  
                         
      282,358,856     $ 0.005-15.00          

XML 38 R27.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Description of Business (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Jun. 04, 2018
May 01, 2018
Dec. 08, 2014
Dec. 31, 2014
Mar. 31, 2014
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Dec. 31, 2017
Net loss attributable to common shareholders           $ 709,409 $ 610,653    
Cash and cash equivalents used in operating activities           171 $ 455,816    
Stockholder's deficit           $ 11,754,613   $ 11,250,638 $ 11,103,386
Cytocom Inc., [Member]                  
Ownership percentage           15.50%   15.50%  
Cytocom Inc., [Member]                  
Royalty percentage       5.00%          
Amount of debt converted into common stock $ 4,000,000                
Percentage of common stock issued in exchange of debt 10.00%                
Cytocom Inc., [Member] | Minimum [Member]                  
Royalty percentage   1.00%              
Cytocom Inc., [Member] | Maximum [Member]                  
Royalty percentage   5.00%              
Cytocom Inc., [Member] | Original Agreement [Member]                  
Number of common stock issued     140,100,000            
Ownership percentage     55.30%            
Cytocom Inc., [Member] | Shareholders [Member]                  
Number of common stock issued     113,242,522            
Irish Limited Liability [Member]                  
Percentage of low corporate income tax rate         12.50%        
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies (Details Narrative)
3 Months Ended 12 Months Ended
Jun. 04, 2018
USD ($)
Mar. 31, 2019
USD ($)
Segment
Mar. 31, 2018
USD ($)
Dec. 31, 2018
USD ($)
Maximum of annual gross revenue       $ 1,000,000,000
Federal deposit insurance corporation value   $ 250,000    
Number of operating segment | Segment   1    
Inventory   $ 82,801   $ 82,801
Decrease in inventory   $ (0) $ (19,450)  
Percentage on decrease in inventory   54.00%    
Depreciation expense   $ 387 434  
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]        
Percentage of equity ownership   15.50%   15.50%
Cytocom Inc., [Member]        
Amount of debt converted into common stock $ 4,000,000      
Percentage of common stock issued in exchange of debt 10.00%      
Investment       $ 0
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.19.1
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Common Stock Purchase Warrants [Member]    
Potentially dilutive securities 282,358,856 126,670,720
Convertible Debt [Member]    
Potentially dilutive securities 112,943,167 23,611,111
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.19.1
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Fixed Assets:    
Computer equipment $ 13,213 $ 13,213
Less accumulated depreciation (10,865) (10,477)
Fixed assets, net $ 2,378 $ 2,766
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.19.1
Investments: Deconsolidation of Cytocom (Details Narrative) - Cytocom Inc., [Member] - USD ($)
3 Months Ended
Mar. 31, 2019
May 01, 2018
Equity method investments   $ 1,189
Loss on investment $ 0  
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.19.1
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Payables and Accruals [Abstract]    
Accrued payroll to officers and others $ 2,582,839 $ 2,010,570
Accrued interest and penalties - notes payable 886,859 877,571
Estimated legal settlements 136,057 136,057
Other accrued liabilities 15,512
Derivative Liability 738,609 786,706
Total accrued expenses and other liabilities $ 4,344,364 $ 3,826,416
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Accrued unpaid interest and default penalties $ 877,570  
Issuance of common stock for conversion of debt $ 62,434 $ 671,597
Promissory Notes [Member]    
Issuance of common stock for conversion of debt, shares 18,255,225  
Issuance of common stock for conversion of debt $ 78,500  
Settlement of promissory notes $ 27,710  
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable - Schedule of Notes Payable (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Oct. 31, 2017
Total $ 5,479,385 $ 5,187,727  
Less: Original issue discounts on notes payable and warrants issued with notes (110,986) (149,256)  
Notes Payable One [Member]      
Total 100,000 100,000  
Notes Payable Two [Member]      
Total 286,000 286,000  
Notes Payable Three [Member]      
Total 725,994 725,994  
Notes Payable Four [Member]      
Total 97,737 97,737  
Notes Payable Five [Member]      
Total 206,000 206,000  
Notes Payable Six [Member]      
Total 1,354,000 1,354,000  
Notes Payable Seven [Member]      
Total 500,000 500,000  
Notes Payable Eight [Member]      
Total 50,000 50,000  
Notes Payable Nine [Member]      
Total 300,000 300,000  
Notes Payable Ten [Member]      
Total 191,800 191,800  
Notes Payable Eleven [Member]      
Total 454,032 455,122  
Less: Original issue discounts on notes payable and warrants issued with notes     $ (70,000)
Notes Payable Twelve [Member]      
Total 105,500 105,500  
Notes Payable Thirteen [Member]      
Total 47,975 47,975  
Notes Payable Fourteen [Member]      
Total 125,000 125,000  
Notes Payable Fifteen [Member]      
Total 65,000 65,000  
Notes Payable Sixteen [Member]      
Total 193,000 193,000  
Notes Payable Seventeen [Member]      
Total 533,855 533,855  
Notes Payable Eighteen [Member]      
Total 23,000  
Notes Payable Nineteen [Member]      
Total $ 231,478  
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.19.1
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical)
3 Months Ended 6 Months Ended 13 Months Ended 20 Months Ended
Jan. 25, 2017
Nov. 03, 2015
Jul. 29, 2014
Mar. 31, 2019
USD ($)
$ / shares
shares
Dec. 31, 2018
USD ($)
$ / shares
shares
Sep. 30, 2018
USD ($)
$ / shares
shares
Jun. 30, 2018
USD ($)
$ / shares
shares
Mar. 31, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Jun. 30, 2017
USD ($)
Mar. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Installments
Dec. 31, 2016
USD ($)
Dec. 31, 2017
USD ($)
Oct. 31, 2017
USD ($)
Accrued interest       $ 886,859 $ 877,571                        
Original issuance discount       110,986 $ 149,256                        
Notes Payable Two [Member]                                  
Percentage of interest rate per annum                           10.00%      
Number of installments, months | Installments                           36      
Notes Payable Two [Member] | Maximum [Member]                                  
Maximum amount raise in debt                           $ 2,000,000      
Notes Payable Four [Member]                                  
Note matures date   Nov. 03, 2016                              
Percentage of interest rate per annum   10.00%                              
Notes Payable Five [Member] | Lenders [Member]                                  
Note matures date                         Dec. 31, 2017        
Percentage of interest rate per annum                       2.00% 2.00%   2.00%    
Notes Payable Six [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                       $ 1,350,000 $ 1,350,000   $ 1,350,000    
Notes Payable Seven [Member]                                  
Percentage of interest rate per annum                     2.00%            
Debt instrument maturity date description                     January 12, 2018 and March 31, 2018            
Notes aggregating default amount                     $ 500,000            
Notes Payable Nine [Member]                                  
Percentage of interest rate per annum                   2.00%              
Debt instrument maturity date description                   April 3, 2018 and May 31, 2018              
Notes aggregating default amount                   $ 300,000              
Notes Payable Ten [Member]                                  
Percentage of interest rate per annum                 2.00%                
Debt instrument maturity date description                 June 16, 2018 and December 31, 2018                
Notes aggregating default amount                 $ 191,800                
Notes Payable Eleven [Member]                                  
Maximum amount raise in debt       454,032                          
Accrued interest       27,110                          
Notes aggregating default amount                                 $ 425,000
Original issuance discount                                 $ 70,000
Derivative liability       738,609                          
Notes Payable Twelve [Member]                                  
Percentage of interest rate per annum                               2.00%  
Notes aggregating default amount                               $ 105,500  
Notes Payable Thirteen [Member]                                  
Percentage of interest rate per annum               2.00%                  
Debt instrument maturity date description               May 2018 and January 2019                  
Notes aggregating default amount               $ 47,975                  
Notes Payable Fourteen [Member]                                  
Debt instrument maturity date description               April 2018 and June 2018                  
Notes aggregating default amount               $ 125,000                  
Warrant exercise price per share | $ / shares               $ 0.0005                  
Notes Payable Fourteen [Member] | Maximum [Member]                                  
Percentage of interest rate per annum               12.00%                  
Number of warrants | shares               20,000,000                  
Notes Payable Fourteen [Member] | Minimum [Member]                                  
Percentage of interest rate per annum               2.00%                  
Number of warrants | shares               5,000,000                  
Notes Payable Fifteen [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 Fifteen [Member] | Maximum [Member]                                  
Number of warrants | shares             5,000,000                    
Notes Payable Fifteen [Member] | Minimum [Member]                                  
Number of warrants | shares             1,000,000                    
Notes Payable Sixteen [Member]                                  
Percentage of interest rate per annum           2.00%                      
Debt instrument maturity date description           November 2018 and January 2019                      
Notes aggregating default amount       103,000   $ 193,000                      
Warrant exercise price per share | $ / shares           $ 0.005                      
Notes Payable Sixteen [Member] | Maximum [Member]                                  
Number of warrants | shares           5,000,000                      
Notes Payable Sixteen [Member] | Minimum [Member]                                  
Number of warrants | shares           600,000                      
Notes Payable Seventeen [Member]                                  
Debt instrument maturity date description         February 2019 and December 2019                        
Notes aggregating default amount       $ 379,000 $ 533,855                        
Notes Payable Seventeen [Member] | Maximum [Member]                                  
Percentage of interest rate per annum         3.50%                        
Number of warrants | shares         39,500,000                        
Warrant exercise price per share | $ / shares         $ 0.04                        
Notes Payable Seventeen [Member] | Minimum [Member]                                  
Percentage of interest rate per annum         2.00%                        
Number of warrants | shares         200,000                        
Warrant exercise price per share | $ / shares         $ 0.005                        
Notes Payable Eighteen [Member]                                  
Note matures date       Jul. 31, 2019                          
Percentage of interest rate per annum       2.00%                          
Notes aggregating default amount       $ 23,000                          
Number of warrants | shares       4,600,000                          
Warrant exercise price per share | $ / shares       $ 0.005                          
Notes Payable Nineteen [Member]                                  
Note matures date       Feb. 29, 2020                          
Percentage of interest rate per annum       6.00%                          
Notes aggregating default amount       $ 231,478                          
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]                                  
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    
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 Eight [Member]                                  
Note matures date Jul. 05, 2017                                
Percentage of interest rate per annum 7.00%                                
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.19.1
Derivative Liabilities (Details Narrative) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]    
Derivative liabilities $ 738,609 $ 786,706
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.19.1
Derivative Liabilities - Schedule of Estimated Fair Value of Derivative Liability Valuation Assumptions (Details) - Black-Scholes Option Pricing Model [Member]
3 Months Ended
Mar. 31, 2019
Volatility [Member]  
Fair value assumptions, measurement input, percentages 295.00%
Risk-Free Interest Rate [Member]  
Fair value assumptions, measurement input, percentages 2.40%
Expected Dividends [Member]  
Fair value assumptions, measurement input, percentages 0.00%
Expected Term [Member]  
Fair value assumptions, measurement input, term 1 year
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.19.1
Derivative Liabilities - Schedule of Valuation of Financial Instruments (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Total assets $ 91,067 $ 91,626
Total liabilities 11,845,680 $ 11,342,264
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 738,609  
Total liabilities $ 738,609  
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.19.1
Derivative Liabilities - Schedule of Reconciliation of Changes in the Fair Value of Derivative Liabilities (Details)
3 Months Ended
Mar. 31, 2019
USD ($)
Derivative liabilities beginning balance $ 786,706
Derivative liabilities ending balance 738,609
Level 3 [Member]  
Derivative liabilities beginning balance 786,706
Change in fair value (12,772)
Partial settlements of liability (35,325)
Derivative liabilities ending balance $ 786,706
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.19.1
Capital Structure - Common Stock and Stock Purchase Warrants (Details Narrative) - $ / shares
Mar. 31, 2019
Dec. 31, 2018
Common stock, shares authorized 500,000,000 500,000,000
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares outstanding 445,577,799 434,322,574
Warrant [Member]    
Number of warrants issued during period 4,600,000  
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.19.1
Capital Structure - Common Stock and Stock Purchase Warrants - Schedule of Outstanding Stock Warrants (Details)
3 Months Ended
Mar. 31, 2019
$ / shares
shares
Number of Shares Warrants, Beginning balance | shares 281,782,856
Number of Shares Warrants, Issued | shares 4,600,000
Number of Shares Warrants, Expired and forfeited | shares (4,024,000)
Number of Shares Warrants, Exercised | shares
Number of Shares Warrants, Ending balance | shares 282,358,856
Exercise Price, Exercised $ 0
Weighted average price, Beginning balance 0.09
Weighted average price, Issued .01
Weighted average price, Expired and forfeited 1.25
Weighted average price, Exercised 0
Weighted average price, Ending balance 0.07
Minimum [Member]  
Exercise Price, Beginning balance 0.001
Exercise Price, Issued .005
Exercise Price, Expired and forfeited 0.
Exercise Price, Ending balance .001
Maximum [Member]  
Exercise Price, Beginning balance 3.74
Exercise Price, Issued .005
Exercise Price, Expired and forfeited 2.00
Exercise Price, Ending balance $ 3.74
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.19.1
Capital Structure - Common Stock and Stock Purchase Warrants - Summary of Outstanding Warrants (Details)
3 Months Ended
Mar. 31, 2019
$ / shares
shares
Number of Shares | shares 282,358,856
Exercise Price Lower Limit $ 0.005
Exercise Price Upper Limit $ 15.00
Second Quarter 2019 [Member]  
Number of Shares | shares 135,000
Exercise Price Lower Limit $ 0.50
Exercise Price Upper Limit $ 2.00
Remaining Life (years) 2 months 30 days
Third Quarter 2019 [Member]  
Number of Shares | shares 260,000
Exercise Price Lower Limit $ 0.07
Exercise Price Upper Limit $ 0.23
Remaining Life (years) 6 months
Fourth Quarter 2019 [Member]  
Number of Shares | shares 23,222,726
Exercise Price Lower Limit $ 0.50
Exercise Price Upper Limit $ 1.50
Remaining Life (years) 9 months
Second Quarter 2020 [Member]  
Number of Shares | shares 300,000
Exercise Price Upper Limit $ 0.50
Remaining Life (years) 1 year 2 months 30 days
Fourth Quarter 2020 [Member]  
Number of Shares | shares 1,000,000
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 1 year 9 months
First Quarter 2021 [Member]  
Number of Shares | shares 12,600,000
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 2 years
Second Quarter 2021 [Member]  
Number of Shares | shares 5,812,252
Exercise Price Lower Limit $ 0.01408
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 2 years 2 months 30 days
Third Quarter 2021 [Member]  
Number of Shares | shares 5,166,667
Exercise Price Lower Limit $ 0.03
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 2 years 6 months
Fourth Quarter 2021 [Member]  
Number of Shares | shares 300,000
Exercise Price Upper Limit $ 0.10
Remaining Life (years) 2 years 9 months
Second Quarter 2022 [Member]  
Number of Shares | shares 1,750,000
Exercise Price Upper Limit $ 0.15
Remaining Life (years) 3 years 2 months 30 days
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) 3 years 6 months
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) 3 years 9 months
First Quarter 2023 [Member]  
Number of Shares | shares 8,000,000
Exercise Price Lower Limit $ 0.005
Exercise Price Upper Limit $ 0.04
Remaining Life (years) 4 years
Second Quarter 2023 [Member]  
Number of Shares | shares 15,000,000
Exercise Price Lower Limit $ 0.005
Exercise Price Upper Limit $ 0.20
Remaining Life (years) 4 years 2 months 30 days
Third Quarter 2023 [Member]  
Number of Shares | shares 76,700,000
Exercise Price Lower Limit $ 0.005
Exercise Price Upper Limit $ 0.10
Remaining Life (years) 4 years 6 months
Fourth Quarter 2023 [Member]  
Number of Shares | shares 60,243,000
Exercise Price Upper Limit $ 0.005
Remaining Life (years) 4 years 9 months
First Quarter 2024 [Member]  
Number of Shares | shares 34,600,000
Exercise Price Upper Limit $ 0.005
Remaining Life (years) 5 years
Third Quarter 2028 [Member]  
Number of Shares | shares 3,000,000
Exercise Price Upper Limit $ 0.07
Remaining Life (years) 9 years 6 months
Second Quarter 2032 [Member]  
Number of Shares | shares 21,807,789
Exercise Price Lower Limit $ 0.01
Exercise Price Upper Limit $ .0679
Remaining Life (years) 13 years 2 months 30 days
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.19.1
Stock Compensation (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Number of common stock issued for services, value $ 120,000 $ 198,477 $ 545,828
Amortization of prepaid services $ 0 $ 125,000 $ 226,667
Minimum [Member]      
Consulting fees amortized period 12 months    
Maximum [Member]      
Consulting fees amortized period 24 months    
Common Stock [Member]      
Number of common stock issued for services 3,000,000 2,863,640 16,988,640
Number of common stock issued for services, value $ 300   $ 1,698
Amortization of prepaid services    
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes - Results of Operations (Details Narrative)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
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%  
Effective tax rate 0.00% 0.00%
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.19.1
Licenses and Supply Agreements (Details Narrative) - Cytocom Inc., [Member]
1 Months Ended
May 01, 2018
Dec. 31, 2014
Royalty percentage   5.00%
Maximum [Member]    
Royalty percentage 5.00%  
Minimum [Member]    
Royalty percentage 1.00%  
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.19.1
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Oct. 31, 2013
Mar. 31, 2019
Mar. 31, 2018
Rental expense   $ 5,282 $ 4,281
AHAR Pharma [Member]      
Distribution agreement, description The Company is obligated to provide delivery of an initial supply of between 1 million and 1.5 million doses of Lodonal™ product to cover AHAR Pharma's first-year purchase commitment.    
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.19.1
Subsequent Events (Details Narrative)
Apr. 08, 2019
Subsequent Event [Member] | Licensing Agreement [Member]  
Ownership percentage 15.57%
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