10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 333-204857

CURE PHARMACEUTICAL HOLDING CORP.

(Exact name of registrant as specified in its charter)

Nevada	2834	37-1765151
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Number)	(IRS Employer Identification Number)

1620 Beacon Place, Oxnard, California 93033

(Address of principal executive offices)

(805) 824-0410

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

On May 13, 2019, we had 30,547,469 shares of common stock, par value $0.001 per share (the “Common Stock”) issued and outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION:
Item 1.	Unaudited Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2019 (Unaudited) and December 31, 2018	3
	Unaudited Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2019 and 2018	4
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three month periods ended March 31, 2019 and 2018	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2019 and 2018	6
	Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II. OTHER INFORMATION:
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosure	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Balance Sheets

	March 31, 2019			December 31, 2018
ASSETS	(Unaudited)			(Audited)
Current assets:
Cash	$	2,593,976		$	500,962
Accounts receivable, net		-			102,799
Inventory		39,801			37,776
Prepaid expenses and other assets		965,641			946,386
Total current assets		3,599,418			1,587,923
Property and equipment, net		296,825			299,910
Intellectual property and patents, net		1,212,961			1,206,011
Prepaid expenses and other assets		133,116			232,407
Other assets		59,153			69,837
Total assets	$	5,301,473		$	3,396,088
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable	$	861,614		$	774,387
Accrued expenses		274,491			508,733
Loan payable		66,842			105,125
Notes payable, net		699,375			920,000
Convertible promissory notes, net		2,374,999			5,242,431
Derivative Liability		770,248			617,628
Deferred revenue		311,275			383,275
Total current liabilities		5,358,844			8,551,579
License Fees		97,500			-
Total liabilities		5,456,344			8,551,579
Commitments and Contingencies (see Note 14)
Stockholders' deficit:
Common stock: $0.001 par value; authorized 75,000,000 shares; 30,366,794 shares and 26,784,019 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		30,367			26,785
Additional paid-in capital		37,097,902			23,424,737
Stock payable		2,004,307			645,575
Accumulated deficit		(39,297,168	)		(29,269,000	)
Total CURE Pharmaceutical Holding Corp stockholders’ deficit		(164,592	)		(5,171,903	)
Noncontrolling interest		9,721			16,412
Total stockholders' deficit		(154,871	)		(5,155,491	)
Total liabilities and stockholders' deficit	$	5,301,473		$	3,396,088

  

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

3

CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Statements of Operations (Unaudited)

For the Three Months Ended March 31, 2019 and 2018

	For the Three Months Ended
	March 31, 2019			March 31, 2018
Revenue:
Net product sales	$	-		$	69,322
Consulting research & development income		72,000			35,692
Shipping and other sales		2,500			-
Total revenues		74,500			105,014
Cost of goods sold:
Cost of goods sold		2,584			59,086
Gross profit		71,916			45,928
Operating expenses:
Research and development expenses		360,870			426,529
Selling, general and administrative expenses		2,365,086			1,018,510
Total operating expenses		2,725,956			1,445,039
Net Operating (loss) before other income (expense)		(2,654,040	)		(1,399,111	)
Other income (expense):
Interest income		-			-
Other income		-			7,533
Change in fair value of derivative liability		(152,620	)		24,777
Other expense		(271,201	)		(107,881	)
Interest expense		(3,297,480	)		(433,830	)
Loss on conversion of convertible promissory notes		(3,659,518	)		-
Other income (expense)		(7,380,819	)		(509,401	)
Net loss before income taxes		(10,034,859	)		(1,908,512	)
Provision for income taxes		-			-
Net loss		(10,034,859	)		(1,908,512	)
Net loss attributable to non-controlling interest		(6,691	)		(6,676	)
Net loss attributable to Cure Pharmaceutical Holding Corp.		(10,028,168	)		(1,901,836	)
Net loss per share, basic
Basic and diluted	$	(0.35	)	$	(0.08	)
Weighted average common shares outstanding
Basic and diluted		28,595,784			23,937,919

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

4

CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)

For the Three Months Ended March 31, 2019 and 2018

					Additional
	Common Stock				Paid-in			Stock		Accumulated			Noncontrolling
	Shares		Par		Capital			Payable		Deficit			Interest			Total
Balance, December 31, 2018		26,784,019	$	26,785	$	23,424,737		$	645,575	$	(29,269,000	)	$	16,412		$	(5,155,491	)
Issuance of common stock for professional services		86,744		87		165,371			355,952								521,410
Issuance of common stock for extension of maturity dates relating to convertible promissory notes		105,000		105		320,744											320,849
Issuance of common stock for conversion of convertible promissory notes		2,844,156		2,844		8,620,784			938,260								9,561,888
Issuance of common stock from the equity incentive plan		130,208		130		(130	)										-
Issuance of common stock for cash		416,667		416		499,584											500,000
Issuance of common stock for cancellation of accounts payable									64,520								64,520
Warrants granted						3,035,190											3,035,190
Beneficial conversion features						801,331											801,331
Fair value of stock options and restricted stock granted						230,291											230,291
Noncontrolling interest of Oak Therapeutics, Inc.														(6,691	)		(6,691	)
Net loss											(10,028,168	)					(10,028,168	)
Balance, March 31, 2019		30,366,794	$	30,367	$	37,097,902		$	2,004,307	$	(39,297,168	)	$	9,721		$	(154,871	)

					Additional
	Common Stock				Paid-in		Stock		Accumulated			Noncontrolling
	Shares		Par		Capital		Payable		Deficit			Interest			Total
Balance, December 31, 2017		23,901,252	$	23,902	$	16,483,632	$	324,995	$	(18,868,599	)	$	46,885		$	(1,989,185	)
Issuance of common stock for professional services		50,000		50		73,950		1,228,333								1,302,333
Warrants granted						37,137										37,137
Beneficial conversion features						646,126										646,126
Noncontrolling interest of Oak Therapeutics, Inc.													(6,676	)		(6,676	)
Net loss										(1,901,836	)					(1,901,836	)
Balance, March 31, 2018		23,951,252	$	23,952	$	17,240,845	$	1,553,328	$	(20,770,435	)	$	40,209		$	(1,912,101	)

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

5

CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2019 and 2018

	For the Three Months Ended
	March 31, 2019			March 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,034,859	)	$	(1,908,512	)
Adjustment to reconcile net loss to net cash used in operating activities:
Stock based compensation - services		91,833			-
Stock based compensation - prepaid		468,146			237,689
Stock issued for amending convertible promissory notes		320,850			-
Loss on conversion of convertible promissory notes		3,659,518			-
Warrant expense from convertible promissory notes		2,173,056			-
Depreciation and amortization		40,437			34,954
Amortization of loan discounts		488,274			360,089
Recovery of bad debt expense		(7,500	)		-
Inventory reserve for obsolesce		2,436			-
Change of fair value in derivative liabilities		152,620			(24,777	)
Fair value of vested stock options		230,291			-
Warrants granted for commission expense		590,933			37,137
Warrants granted for broker fee expense		271,201			-
Change in other assets and liabilities:
Accounts receivable		110,299			(35,543	)
Inventory		(4,461	)		(24,991	)
Prepaid expenses and other assets		41,466			58,813
Other assets		10,684			8,687
Accounts payable		151,747			14,225
Accrued expenses		193,128			53,621
Deferred revenue		(72,000	)		35,022
License fees		97,500			-
Cash used in operating activities		(1,024,401	)		(1,153,586	)
Cash flows from investing activities
Purchase in intangible assets		(21,180	)		(6,638	)
Acquisition of property and equipment, net		(23,122	)		(15,549	)
Cash used in investing activities		(44,302	)		(22,187	)
Cash flows from financing activities
Proceeds from convertible notes payable		3,425,000			2,025,000
Proceeds from common stock issuance		500,000			-
Repayment of convertible notes payable		(725,000	)		-
Repayment of loans payable		(38,283	)		(116,899	)
Cash provided by financing activities		3,161,717			1,908,101
Net increase in cash and cash equivalents		2,093,014			732,328
Cash and cash equivalents, beginning of period		500,962			108,249
Cash and cash equivalents, end of period	$	2,593,976		$	840,577
Supplemental cash flow information
Cash paid for interest and income taxes:
Interest	$	81,341		$	19,973
Income taxes	$	-		$	-
Non-cash financing activities:
Common stock related to prepaid expense	$	-		$	1,323,562
Warrants granted for discount on convertible promissory notes	$	-		$	646,127
Common stock issued for conversion of promissory notes and accrued interest	$	5,373,781		$	-
Common stock payable for note conversion	$	528,589		$	-
Common issued for settlement of accounts payable	$	64,520		$	-
Beneficial conversion features for convertible promissory notes	$	801,331		$	-

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

6

CURE PHARMACEUTICAL HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(UNAUDITED)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Business Operations

CURE Pharmaceutical Holding Corp., its wholly-owned subsidiaries, CURE Pharmaceutical Corporation (“CURE Pharmaceutical”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“Oak”) (collectively (the “Company,” “we,” “our,” “us,” or “CURE”) is an emerging growth company focusing on drug formulation and delivery technology company that researches and manufactures novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. We operate a 25,000 square foot cGMP manufacturing plant in Oxnard, CA.

Our technology platform includes oral dissolving film (ODF) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements. ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal tract (GI) when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal).

We currently have two commercial products and several development programs underway:

7

Background

CURE, formerly known as Makkanotti Group Corp, was incorporated in the State of Nevada on May 15, 2014. The Company was originally formed to engage in the business of manufacturing food paper bags in Nicosia, Cyprus. On November 7, 2016, the Company changed its name to CURE Pharmaceutical Holding Corp.

On November 7, 2016, the Company, in a reverse take-over transaction, acquired CURE Pharmaceutical Corporation (“CURE Pharmaceutical”), a specialty pharmaceutical and bioscience company based in California that specializes in drug delivery technologies, by executing a Share Exchange Agreement and Conversion Agreement (“Exchange Agreement”) by and among the Company and a holder of a majority of the issued and outstanding capital stock of the registrant prior to the closing (the “Majority Stockholder”), on the one hand, and CURE Pharmaceutical, a California corporation, all of the shareholders of CURE Pharmaceutical’s issued and outstanding share capital (the “CURE Pharm Shareholders”) and the holders of certain convertible promissory notes of CURE Pharmaceutical (“CURE Pharm Noteholders”), on the other hand. Hereinafter, this share exchange transaction is described as the “Share Exchange.” As a result of the Share Exchange, CURE Pharmaceutical became a wholly owned subsidiary of the Company, and the CURE Pharm Shareholders and CURE Pharm Noteholders became the controlling shareholders of the Company.

For accounting purposes, CURE Pharmaceutical was the surviving entity. The transaction was accounted for using the reverse acquisition method of accounting. As a result of the recapitalization and change in control, CURE Pharmaceutical was the acquiring entity in accordance with ASC 805, Business Combinations.

We licensed our technology available to a private company, Oak Therapeutics (“Oak”), to develop products for sale in the developing world (“Territory”). On November 10, 2017, we received 269,000 shares of Oak as consideration for an exclusive license to our patent rights in the Territory, along with a royalty-free non-exclusive license to any improvements made by Oak. As a result of this transaction, we owned approximately 63% of Oak’s outstanding shares and have consolidated Oak’s financial statements as of the fourth quarter 2017. Due to the lack of performance by Oak under the license agreement, on April 15, 2019, we terminated all contractual relationships with Oak, including the license and surrendered our Oak shares to Oak. Further information can be found in NOTE 15 – SUBSEQUENT EVENTS.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity.

Principle of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of CURE Pharmaceutical Holding Corp (“CPHC”), its wholly-owned subsidiary, CURE Pharmaceutical Corporation (“CURE”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“OAK”), collectively referred to as (“CURE”, “we”, “us”, “our” or the “Company”). All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s film strip product represents the principal operations of the Company.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal period ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

8

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2019 and December 31, 2018, the Company had no cash equivalents. At March 31, 2019 and December 31, 2018, the Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions.

Investment in Associates

An associate is an entity over which the Company has significant influence through a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.

The results of assets and liabilities of associates are incorporated in the condensed consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Company’s share of the net assets of the associate, less any impairment in the value of the investment. Losses of an associate in excess of the Company’s interest in that associate are not recognized. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment.

On January 8, 2016, the Company received 50% ownership in Cure Innovations, Inc (“CI”). CI was created in 2015 by IncuBrands Studio, Inc (“IncuBrands”). The Company and IncuBrands each own 50% of the common stock of CI. The Company and IncuBrands entered into a Joint Venture agreement in 2013 to distribute several OTF products utilizing IncuBrands marketing and contacts in various industries as well as utilize the Company’s technology and capabilities of manufacturing OTF’s. On December 28, 2018, in agreement with IncuBrands, the Company dissolved CI as we did not see a viable future relating to this joint venture.

On December 6, 2016, the Company entered into a Joint Venture Agreement (“Joint Venture”) with Pace Wellness, Inc. (“Pace”) to jointly develop three Active Pharmaceutical Ingredients (“API”) within the nonprescription and/or Over-the-Counter (OTC) medicines specifically utilizing the Company’s patented and proprietary CUREFilm™ Technology. The three API’s to be jointly developed are Diphenhydramine HCL, Omeprazole and a third API to be determined at a later date (“Products”). Pace shall be the exclusive global distributor of the Products under the Solves Strips® branding or other private or branded labels. All benefits, advantages, and liabilities derived from, or incurred in respect of the Joint Venture shall be borne by the parties in proportion of their respective participating interests of 50/50 equal interest. As of March 31, 2019, the Company has only contributed $5,000 to the Joint Venture. The Company is looking to dissolve this Joint Venture due to Pace’s insolvency and we are no longer looking to develop these Products.

Property and Equipment

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Depreciation has been provided using the straight-line method on the following estimated useful lives:

Manufacturing equipment	5-7 Years
Computer and other equipment	3-7 Years
Leasehold Improvements	Lesser of useful life or the term of the lease

9

Accounts Receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. At March 31, 2019 and December 31, 2018, management determined that an allowance was necessary which amounted to approximately $0 and $7,500, respectively.

Inventory

Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of its inventory, which includes amounts related to materials, direct labor, and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventories to their realizable value in the period in which the impairment is first identified.

Impairment of Long-Lived Assets

We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, we record charges for impairments. Specifically:

· For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and

· For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

Management determined that no impairment indicators were present and that no impairment charges were necessary as of March 31, 2019 or December 31, 2018.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition”. The Company adopted Topic 606 using a modified retrospective approach for the years ended December 31, 2017 and prior and has been applied prospectively in the Company’s financial statements beginning January 1, 2018. Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time”, depending on the facts and circumstances of the arrangement, and will be evaluated using a five-step model. The adoption of Topic 606 did not have a material impact on the Company’s financial statements, at initial implementation nor will it have a material impact on an ongoing basis. 

To achieve the core principle of Topic 606, we perform the following steps:

1.	Identify the contract(s) with customer;
2.	Identify the performance obligations in the contract;
3.	Determine the transactions price;
4.	Allocate the transactions price to the performance obligations in the contract; and
5.	Recognize revenue when (or as) we satisfy a performance obligation.

We derive revenues from two primary sources: products and services. Product revenue includes the shipment of product according to the agreement with our customers. Services include research and development contracts for the development of OTF products utilizing our CureFilm™ Technology or our other proprietary technologies. Rarely, contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are typically estimated based on observable transactions when these services are sold on a standalone basis.

The Company’s formulation and product development income include services for the development of OTF products utilizing our CureFilm™ Technology. Our development contracts have up to four phases. Revenue is recognized based on progress toward completion of the performance obligation in each phase. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. Costs to fulfill these obligations mainly include materials, labor, supplies and consultants.

Deferred revenue is shown separately in the condensed consolidated balance sheets. At March 31, 2019 and December 31, 2018 we had deferred revenues of $311,275 and $383,275, respectively.

10

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying statements of operations. The Company did not record advertising costs for the three months periods ended March 31, 2019 and 2018.

Research and Development

Costs incurred in connection with the development of new products and processes are charged to research and development expenses as incurred. The Company recorded research and development expenses of $360,870 and $426,529 for the three months periods ended March 31, 2019 and 2018, respectively.

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the 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 determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

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Convertible Debentures

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 ““Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

Derivative Liabilities

ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula and present value pricing. At March 31, 2019 and December 31, 2018, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations and comprehensive loss.

Fair Value Measurements

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements and establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:	Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3:	Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses and notes and loans payable approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying amount of the notes and convertible promissory notes approximates the estimated fair value for these instruments as management believes that such notes constitute substantially all of the Company’s debt and the interest payable on the notes approximates the Company’s incremental borrowing rate. We measured the liability for price adjustable warrants and embedded derivative features in the convertible notes, using the probability adjusted Black-Scholes option pricing model (“Black-Scholes”), which management has determined approximates values using more complex methods, using Level 3 inputs. (See Note 10)

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Net Loss per Common Share

Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock awards. Diluted net loss per share includes the effect of common stock equivalents (stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. Net loss is adjusted for the dilutive effect of the change in fair value liability for price adjustable warrants, if applicable.

The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Year ended December 31,
	March 31, 2019		December 31, 2018
Restricted stock and stock options outstanding		-		97,742
Warrants		90,000		2,879,695
Shares to be issued upon conversion of convertible payable		115,047		236,475
Total		205,047		3,213,912

Going Concern and Management’s Liquidity Plans

The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At March 31, 2019, we had a significant accumulated deficit of approximately $39.3 million and a negative working capital of approximately $1.8 million. Our operating activities consume the majority of our cash resources. We anticipate that we will continue to incur operating losses as we execute our commercialization and research and development plans, as well as strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations, at least into the near future. We have previously funded, and plan to continue funding, our losses primarily through the sale of common and preferred stock, combined with or without warrants, the sale of notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. However, we cannot be certain that we will be able to obtain such funds required for our operations at terms acceptable to us or at all.

Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise between $8,000,000 to $10,000,000 in capital over the next 12 months through a merger and $1,000,000 to $2,000,000 through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 to 18 months. However, the outcome of these matters cannot be predicted with certainty at this time.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of and classification of assets carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

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Recently Issued Standards

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"). This guidance, as amended by subsequent ASU's on the topic, improves transparency and comparability among companies by recognizing right of use (ROU) assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We will adopt ASU No. 2016-02 in our fiscal year beginning January 1, 2019 and will use the alternative transition method provided by the FASB in ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, with no restatement of comparative periods.

The new standard provides optional practical expedients in transition. We expect to only elect the "package of practical expedients" where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting and we do not expect to elect any of these practical expedients on adoption. We continue to assess the impact of the new standard and believe it will not have a material effect on the condensed consolidated balance sheet.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard became effective for the Company on January 1, 2018. There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and did not have a material impact on the Company’s financial position, results of operations or cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ASU. 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two‑step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of this ASU became effective for the Company in the first quarter of 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s condensed consolidated financial statements.

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In June 2018, the FASB issued ASU No. 2018-7, Compensation – Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting. This guidance supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The guidance permits early adoption and was adopted by the Company in the first quarter of fiscal year 2019. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

There are various other updates recently issued, however, they are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 3 - INVENTORY

Inventory consists of raw materials, packaging components, work-in-process and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market. The carrying value of inventory consisted of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019			December 31, 2018
Raw materials	$	27,094		$	25,297
Packaging components		7,687			7,687
Work-in-process		8,162			8,162
		42,943			41,146
Reserve for obsolescence		(3,142	)		(3,370	)
Total inventory	$	39,801		$	37,776

NOTE 4 - PREPAID EXPENSES AND OTHER ASSETS

As of March 31, 2019 and December 31, 2018, prepaid expenses and other assets consisted of the following:

	March 31, 2019			December 31, 2018
Prepaid consulting services– stock-based compensation	$	897,313		$	935,883
Prepaid consulting services		73,667			82,167
Prepaid insurance		87,911			120,877
Other receivables		2,666			2,666
Prepaid expenses		37,200			37,200
Prepaid expenses and other assets		1,098,757			1,178,793
Current portion of prepaid expenses and other assets		(965,641	)		(946,386	)
Prepaid expenses and other assets less current portion	$	133,116		$	232,407

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NOTE 5 - PROPERTY AND EQUIPMENT

As of March 31, 2019 and December 31, 2018, property and equipment consisted of the following:

	March 31, 2019			December 31, 2018
Manufacturing equipment	$	857,612		$	841,098
Computer and other equipment		186,655			183,346
Leasehold improvements		51,788			48,488
Less accumulated depreciation		(799,230	)		(773,022	)
Property and Equipment, net	$	296,825		$	299,910

For the three months periods ended March 31, 2019 and 2018, depreciation expense amounted to $26,207 and $24,055, respectively, which includes depreciation of $0 and $2,160 for capitalized leased assets for each of the periods ended, respectively. Accumulated depreciation for property held under capital leases were $43,201 and $39,337 for the three months periods ended March 31, 2019 and 2018, respectively.

NOTE 6 - INTANGIBLE ASSETS

The Company incurred $21,180 and $6,638 of legal patent costs that were capitalized during the three months periods ended March 31, 2019 and 2018, respectively. In addition, the Company did not purchase any patents through issuance of common stock shares of the Company for the three months period ended March 31, 2019. The Company purchased $280,100 of patents through the issuance of 200,000 common stock shares of the Company during the year ended December 31, 2018.

Intangible Asset Summary

The following table summarizes the estimated fair values as of March 31, 2019 of the identifiable intangible assets acquired, their useful life, and method of amortization:

	Estimated Fair Value			Remaining Estimated Useful Life (Years)		Three Months Amortization Expense
Intellectual Property	$	814,582			14.41	$	10,206
Patents		600,344			17.96		4,024
Total	$	1,414,926				$	14,230
Less: accumulated amortization		(201,965	)
Intellectual property and patents, net		1,212,961
Less: pending patents not subject to amortization		(272,415	)
Net intangible assets subject to amortization	$	940,546

The net intangible asset was $1,212,961, net of accumulated amortization of $201,965, as of March 31, 2019. Amortization expense was $14,230 and $10,899 for the three months periods ended March 31, 2019 and 2018, respectively.

The estimated aggregate amortization expense over each of the next five years is as follows:

2019	$	43,950
2020		58,600
2021		58,600
2022		58,600
2023		58,600
Thereafter		662,196
Total Amortization	$	940,546

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NOTE 7 – LOAN PAYABLE

Loan payable consists of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019			December 31, 2018
Notes to a company due September 29, 2019, including interest at 6.00% per annum; unsecured; interest due monthly	$	66,842		$	105,125
Current portion of loan payable		(66,842	)		(105,125	)
Loan payable, less current portion	$	-		$	-

Interest expense for the three months periods ended March 31, 2019 and 2018 was $2,230 and $800, respectively.

NOTE 8 – NOTES PAYABLE

Notes payable consist of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019			December 31, 2018
Note to a company amended on August 27, 2017 and February 27, 2019, due on or before one month from the amended date and the maturity date shall be extended for one month periods as long as the Company is not in default, interest shall accrue at 10% per annum, secured by the Company’s intellectual property	$	400,000		$	650,000
Note to an individual, non-interest bearing, unsecured and has no fixed terms of repayment		50,000			50,000
Note to an individual due April 1, 2019, interest payable at 6% per annum, unsecured, principal and accrued interest due at maturity. The Company issued 50,000 shares of its common stock on October 18, 2018 at a price per share of $2.88 as an equity kicker. This note and accrued interest was repaid on April 2, 2019,		150,000			150,000
Note to a company due December 15, 2018, interest payable at 5% per annum, unsecured, principal and accrued interest due at maturity. If this note is still outstanding as of the date of any bona fide sale of the Company’s preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a serious of related transactions, which offering definitively sets a price per share of common stock and results in a listing of the Company’s common stock on a national securities exchange. On January 1, 2019, we entered into an Amendment to extend the maturity date to June 30, 2019.		100,000			100,000
		700,000			950,000
Unamortized discount		(625	)		(30,000	)
Current portion of loan payable		(699,375	)		(920,000	)
Loan payable, less current portion	$	-		$	-

Interest expense for the three month periods ended March 31, 2019 and 2018 was $21,661 and $19,027, respectively.

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NOTE 9 – CONVERTIBLE PROMISSORY NOTES

Convertible promissory notes consist of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Convertible promissory notes totaling $1,400,000 due between December 31, 2018 and February 28, 2019, interest payable at 8% per annum; unsecured; principal and accrued interest convertible into common stock at the lower of $7.00 per share or the price per share of the latest closing of a debt or equity offering by the Company greater than $3,000,000; accrued interest due between December 31, 2018 and February 28, 2019. A total of $250,000 convertible promissory notes was repaid in 2018 and $450,000 convertible promissory notes were repaid in 2019. A total $400,000 of convertible promissory notes plus accrued interest of $71,342 have been converted in to 254,779 common stock shares of the Company in 2019. Remaining $550,000 of convertible promissory notes are currently in default.	$	550,000	$	1,400,000
Convertible promissory notes totaling $1,275,000 due November 30, 2018 and $750,000 due February 28, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018, which has not yet been paid. During the first quarter of 2019, the Company repaid $275,000. On February 13, 2019, $750,000 of convertible promissory notes plus accrued interest and penalties of $135,825 were converted into 479,144 common stock shares of the Company. On February 15, 2019, $1,000,000 of convertible promissory notes plus accrued interest and penalties of $94,750 were converted into 591,757 common stock shares of the Company.		-		2,025,000
Convertible promissory note totaling $500,000 due April 30, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS. This convertible promissory note and accrued interest was repaid on April 29, 2019.		500,000		500,000
Convertible promissory note totaling $500,000 due December 31, 2018, interest payable at 9% per annum; secured by all assets of the company; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price.		-		500,000

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Convertible promissory notes totaling $575,000 due June 27, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018. $575,000 convertible promissory notes due June 27, 2019 plus accrued interest and penalties of $78,034 have been converted into 353,221 common stock shares of the Company in 2019.		-			575,000
Convertible promissory notes totaling $2,000,000 due October 31, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018, which has not yet been paid. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price.		-			575,000
Convertible demand note totaling $2,000,000 due on demand at any time after the earlier of (i) an Event of Default, (ii) the closing of a proposed merger (the “Merger”) of a wholly-owned subsidiary of the Company with and into Chemistry Holdings, Inc., a Delaware corporation, and (iii) May 13, 2019 if a binding definitive agreement and plan of merger with respect to the Merger has not been executed by that date, in each case if this Note has not previously converted into Common Stock. If the Merger has not been consummated by May 13, 2019, the outstanding principal balance of this Note (the “Outstanding Balance”) shall automatically be converted (the “Conversion”) into shares of common stock, par value $0.001 per share, of the Company at a price per share equal to $3.34 (the “Conversion Price”) effective as of May 13, 2019 (the “Conversion Date”), and the Outstanding Balance shall thereafter be considered repaid in full. Please see Note 15 - Subsequent Events footnote for further information.		2,000,000			-
		3,050,000			5,575,000
Unamortized discount		(675,001	)		(332,569	)
Current portion of convertible promissory notes		2,374,999			5,242,431
Convertible promissory notes, less current portion	$	-		$	-

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During the three month periods ended March 31, 2019 and 2018, the Company incurred $458,899 and $147,608, respectively, amortization of discount. Interest expense for the three month periods ended March 31, 2019 and 2018 was $72,813 and $303,174, respectively. 

NOTE 10 – DERIVATIVE LIABILITY

The Company evaluates its convertible instruments, options, warrants or other contracts, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instruments, the instrument is marked to fair value at the conversion date then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.

The following table summarizes fair value measurements by level at March 31, 2019 for assets and liabilities measured at fair value on a recurring basis:

	Total		Level 1		Level 2		Level 3
Fair value of Derivative Liability	$	770,248	$	-	$	-	$	770,248

The following table summarizes fair value measurements by level at December 31, 2018 for assets and liabilities measured at fair value on a recurring basis:

	Total		Level 1		Level 2		Level 3
Fair value of Derivative Liability	$	617,628	$	-	$	-	$	617,628

The Company has issued convertible promissory notes during 2018 and 2017. The convertible notes require us to record the value of the conversion feature as a liability, at fair value, pursuant to ASC 815, including provisions in the notes that protect the holders from declines in the Company’s stock price, which is considered outside the control of the Company. The derivative liabilities are marked-to-market each reporting period and changes in fair value are recorded as a non-operating gain or loss in our statement of operations, until they are completely settled. The fair value of the conversion feature is determined each reporting period using the Black-Scholes option pricing model and is affected by changes in inputs to that model including our stock price, expected stock price volatility, dividends, interest rates and expected term. The assumptions used in valuing the derivative liability during 2019 were as follows:

Significant assumptions:
Risk-free interest rate at grant date	2.23	%
Expected stock price volatility	138.42	%
Expected dividend payout	-
Expected option life (in years)	1
Expected forfeiture rate	0

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis from December 31, 2017 to March 31, 2019:

	Fair value of derivative liabilities
Balance at December 31, 2017	$	90,738
Initial fair value of derivative liability recorded as debt discount		297,599
Loss on change in fair value included in earnings		229,291
Balance at December 31, 2018		617,628
Loss on change in fair value included in earnings		152,620
Balance at March 31, 2019	$	770,248

NOTE 11 – STOCK BASED AWARDS

On December 29, 2017 (“Effective Date”), the Company adopted the CURE Pharmaceutical Holding Corp. 2017 Equity Incentive Plan (the “Plan”), pursuant to which an aggregate of 5,000,000 shares of the common stock of the Company are available for grant. The Board of Directors have determined that it is in the best interests of the Company and its stockholders to provide an additional incentive for certain employees, including executive officers, and non-employee members of the Board of Directors of the Company by granting to them awards with respect to the common stock of the Company pursuant to the Plan. The Plan seeks to achieve this purpose by providing for awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards (“Awards”). The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date.

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The Company did not issue any Restricted Common Stock (“RCS”), Nonstatutory Stock Options (“NSO”) or Incentive Stock Options (“ISO”) to any employees, including executive officers, non-employee members of the Board of Directors of the Company, members of the Advisory Board Committee and consultants during the three months period ended March 31, 2019. Vesting period for awarded RCS, NSO and ISO’s range from immediate to quarterly over a 4 year period. For NSO’s and ISO awarded, the term to exercise their NSO or ISO is 10 years.

Stock Options

The Company’s stock option activity was as follows:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2017		2,313,050			0.79		9.27
Granted		-			-		-
Exercised		-			-		-
Forfeited/Expired		(89,544	)		0.74		-
Outstanding, December 31, 2018		2,223,506			0.79		9.02
Exercisable at December 31, 2018		982,934			0.81		9.02

Range of Exercise Price	Number of Awards		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Awards Exercisable		Weighted Average Exercise Price
$0.61 - $1.81		2,223,506		9.02	$	0.79		982,934	$	0.81
		2,223,506		9.02	$	0.79		982,934	$	0.81

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2019 was $7,926.

The aggregate grant date fair value of options granted during the three months ended March 31, 2019 and year ended December 31, 2018 amounted to $1,488,070 and $1,541,353, respectively. Compensation expense related to stock options was $94,041 and $0 for the three months periods ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the total unrecognized fair value compensation cost related to unvested stock options was $817,722, which is to be recognized over a remaining weighted average period of approximately 9.02 years.

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The weighted-average fair value of options granted during the three months ended March 31, 2019 and year ended December 31, 2018, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	March 31, 2019			December 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.23	%		2.51	%
Expected stock price volatility		138.42	%		156.15	%
Expected dividend payout		-			-
Expected option life (in years)		10			10
Expected forfeiture rate		0	%		0	%

Restricted Stock

The Company’s restricted stock activity was as follows:

Compensation expense related to restricted shares was $136,250 and $0 for the three months periods ended March 31, 2019 and 2018, respectively. Information relating to non-vested restricted award shares is as follows:

	Restricted Stock Shares			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2018		317,708			1.44
Granted		-			-
Vested		(93,750	)		1.44
Forfeited/Expired		-			-
Non-vested, March 31, 2019		223,958			1.44

NOTE 12 – WARRANT AGREEMENTS

On February 13, 2019, the Company issued 657,655 warrants at a fair market value of $1,792,965 and with an exercise price of $2.31 per share in connection with the conversion of $1,325,000 convertible promissory notes.

On February 13, 2019, the Company issued 99,476 warrants at a fair market value of $271,202 and with an exercise price of $2.31 per share in connection with the broker fees earned from the conversion of $1,325,000 convertible promissory notes.

On February 15, 2019, the Company issued 312,500 warrants at a fair market value of $866,620 and with an exercise price of $2.00 per share in connection with the conversion of $500,000 convertible promissory notes.

On February 15, 2019, the Company issued 295,879 warrants at a fair market value of $814,834 and with an exercise price of $2.31 per share in connection with the conversion of $1,000,000 convertible promissory notes.

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Warrants that vest at the end of a one-year period are amortized over the vesting period using the straight-line method.

The Company’s warrant activity was as follows:

	Warrants		Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2018		5,340,751		2.20		3.80
Granted		1,365,510		2.24		3.33
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding, March 31, 2019		6,706,261		2.01		2.08
Exercisable at March 31, 2019		5,682,261		2.01		2.15

Range of Exercise Price		Number of Warrants		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Warrants Exercisable		Weighted Average Exercise Price
$	1.00 – $7.00		6,706,261		2.08	$	2.01		5,682,261	$	2.01
			5,340,751		2.08	$	2.01		5,682,261	$	2.01

The weighted-average fair value of warrants granted to during the three months ended March 31, 2019 and year ended December 31, 2018, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	March 31, 2019			December 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.23	%		2.51	%
Expected stock price volatility		138.42	%		156.15	%
Expected dividend payout		-			-
Expected option life (in years)		3			3
Expected forfeiture rate		0	%		0	%

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NOTE 13 – STOCKHOLDERS’ EQUITY

Common Share Issuances

On January 1, 2019, the Company issued 13,827 common stock shares at $2.26 per share for investor relations consulting services to be performed over a six-month period. The total value of this issuance was $31,249 and as of March 31, 2019, $6,388 is included in prepaid expenses and other assets.

On December 14, 2018, the Company entered into an Advisory Consulting Agreement (“Agreement”). Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company that vest 30 days from December 14, 2018 and an additional 250,000 common stock shares of the Company that vest monthly over 24 months. On January 14, 2019, the Company issued 50,000 common stock shares of the Company at $1.84 per share per the terms of this Agreement. On February 14, 2019, the Company issued 10,417 common stock shares of the Company at $3.35 per share per the terms of this Agreement.

On December 14, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 833,333 shares of common stock of the Company (the “Shares” or “Securities”) at $1.20 per share (the “Share Price”) for a total purchase price of One Million Dollars ($1,000,000) (the “Purchase Price”). Per the terms of the SPA, the Company and the investor agreed to multiple Closings and Closing Dates (as hereinafter defined): (1) a Closing of $250,000 five (5) business days after the Closing Date; (2) a Closing of $250,000 ten (10) business days after the Closing Date; (3) a Closing of $250,000 thirty (30) business days after the Closing Date; and (4) a Closing $250,000 sixty (60) business days after the Closing Date. Each of the aforementioned being a Closing and the dates of each Closing being a Closing Date. The investor funded $250,000 on December 26, 2018 and the Company issued 208,333 common stock shares. The investor funded another $250,000 on December 31, 2018 and the Company issued another 208,333 common stock shares. The investor funded $250,000 on January 22, 2019 and another $250,000 on February 25, 2019 and the Company issued 208,333 common stock shares and 208,334 common stock shares, respectively.

On February 1, 2019, the Company amended two convertible promissory notes totaling $600,000 to extend the maturity dates to February 28, 2019. For extending the maturity date, the Company will issue a total of 30,000 common stock shares of the Company at $2.32 price per share. The total value of this issuance was $69,600. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 30,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019.

On February 13, 2019, the Company entered into Debt Conversion Agreements (“Agreements”) with thirty convertible promissory note holders totaling $1,325,000 plus accrued interest and penalties of $213,859 that were converted into 832,365 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $812,241. In connection with the conversion of the convertible promissory notes, the Company will issue 657,655 warrants that were priced at $2.31 price per share.

On February 14, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”), where $250,000 (Two Hundred Fifty Thousand Dollars) of $650,000 (Six Hundred Fifty Thousand Dollars) of the Outstanding Balance under the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note dated August 27, 2017 (the “Note”) shall be converted into 135,135 (One Hundred Thirty-Five Thousand, One Hundred Thirty-Five) shares of Common Stock of the Company (the “Conversion Shares”) at a conversion price of $1.85 per share (a discounted rate calculated as an approximation based on 20% discount on 5 days volume weighted average price of the market rate). As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $201,351.

On February 14, 2019, the Company entered into a First Amendment to Amended and Restated Senior Secured Promissory Note, that amends the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note effective August 27, 2017 (“Amended Agreement”) with the Note Holder (“Holder”). The Company and the Holder have agreed that the Maturity Date shall be extended to February 27, 2019 in exchange for 75,000 common stock shares of the Company at a price per share of $3.35. The total value of this issuance was $251,250. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 75,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019.

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On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) to convert $400,000 of convertible promissory notes plus accrued interest of $71,342 into 254,779 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $630,238.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,000,000 plus accrued interest of $94,750 that were converted into 591,757 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $860,087. In connection with the conversion of the convertible promissory notes, the Company will issue 295,879 warrants that were priced at $2.31 price per share.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,575,000 plus accrued interest of $18,406 that were converted into 861,301 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $745,929.

On February 19, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $425,000 plus accrued interest of $425 that were converted into 168,819 common stock shares of the Company with a conversion price per share $2.52 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.

On February 19, 2019, the Company entered into a Consulting Agreement (“Agreement”) with a Company. Per the terms of the Agreement, the Company is to issue 25,000 common stock shares of the Company for providing investor relations services, where 12,500 common stock shares of the Company are due immediately and the remaining 12,500 common stock shares of the Company is due June 19, 2019. On February 19, 2019, the Company issued 250,000 common stock shares of the Company at $3.39 per share.

On February 25, 2019, the Company issued 46,875 and 83,333 common stock shares of the Company at $0.74 and $1.81 per share, respectively, relating to restricted stock issued from the Company’s 2017 Equity Incentive Plan.

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Stock Payable

On January 4, 2019, the Company entered into a Consulting Agreement (“Agreement”) with an individual. Per the terms of the Agreement, the Company is to issue 45,000 common stock shares of the Company for providing investor relations services. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $68,400.

On January 15, 2019, the Company entered into an Advisory Consulting Agreement (“Agreement”) with an individual. Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company for providing investor relations services. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $92,000.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $500,000 plus accrued interest of $28,588 that were converted into 285,723 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $528,588. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $409,672. In connection with the conversion of the convertible promissory notes, the Company will issue 312,500 warrants that were priced at $2.00 price per share.

On February 26, 2019, the Company entered into a Media Advertising Agreement (“Agreement”). Per the terms of the Agreement, the Company was to issue 60,000 common stock shares at $3.78 per share for providing media and advertising services over a six month period. The total value of these issuances was $226,800 and as of March 31, 2019, $185,450 is included in prepaid expenses and other assets. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $226,800.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

Litigation:

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The only significant matter of which the Company is aware of is discussed below.

On May 22, 2017, Sandy Sierra Garate (“Applicant”), an employee of the Company, filed an application for benefits due to serious and willful misconduct of the employer pursuant to labor code section 4553 with the State of California Workers’ Compensation Appeals Board (“WCAB”) (WCAB Case No: ADJ 10686812) resulting in injury arising out of and in the course of the Applicant’s employment on August 5, 2016. The Applicant was requesting relief in this matter for a one-half increase in all compensation recoverable in connection with the injury of August 5, 2016, for the allowance of costs and expenses in an amount to be determined and for such further relief as is deemed appropriate. On February 13, 2019, the Company and the Applicant entered to into a Workers’ Compensation Appeals Board Compromise and Release Agreement (“Agreement”) where the Applicant was awarded a settlement amount of $8,500 relating to WCAB Case No: ADJ 10686812. Out of the settlement amount, $1,250 is to be paid to the Applicant’s attorney. On February 20, 2019, the Company received an Order Approving Compromise and Release of WCAB Case No: ADJ 10686812 based on the Agreement entered into with the Company and the Applicant.

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Operating leases

The Company maintains its corporate offices and manufacturing facility at 1620 Beacon Place, Oxnard, CA 93033, which contains approximately 25,000 square feet. The Company is currently on a month-to-month lease.

Total rent expense for the three months periods ended March 31, 2019 and 2018 was $63,028 and $74,178, respectively.

NOTE 15 – SUBSEQUENT EVENTS

On April 8, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 150,000 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $495,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 9, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 100,000 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $330,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 12, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,152 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 15, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 60,606 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $200,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 15, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,152 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 15, 2019, the Company entered into a Termination and Release Agreement (“Agreement”) with Oak Therapeutics (“Oak”) to surrender all of its Oak shares to Oak and terminating any rights the Company might have to acquire additional shares or interest in Oak. The parties terminated all contractual relationships between them, whether written or verbal, express or implied. All license or other rights previously granted by Oak to the Company or the Company to Oak were terminated, including all licenses or rights of any kind granted by the Company.

On April 17, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 127,273 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $420,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

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On May 6, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,151 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On May 13, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 45,455 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $150,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On May 14, 2019 (the “Closing Date”), Cure Pharmaceutical Holding Corp., a Nevada corporation (the “Company”), and CURE Chemistry Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), completed the transactions contemplated by the Agreement and Plan of Merger and Reorganization, dated March 31, 2019 (the “Merger Agreement”), with Chemistry Holdings, Inc., a Delaware corporation (“Chemistry Holdings”). As agreed in the Merger Agreement, the Company acquired Chemistry Holdings pursuant to a merger of the Merger Sub with and into Chemistry Holdings (the “Merger”). Pursuant to the Merger, Chemistry Holdings became a wholly-owned subsidiary of the Company and the stockholders of Chemistry Holdings received shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) and warrants to purchase Common Stock in exchange for all of the issued and outstanding shares of Chemistry Holdings.

In connection with signing the Merger Agreement, the Company received an investment of $2,000,000 (the “Principal Amount”) from Chemistry Holdings pursuant to a convertible note (the “Note”). Such Note, on the Closing Date, supersedes the amended convertible note executed on April 30, 2019 and became an intercompany payable and will be cancelled. As a condition to closing, Chemistry Holdings had a cash balance at closing of at least $8,000,000 plus the amount of certain liabilities and expenses (the “Closing Cash Requirement”).

The maximum number of shares of Common Stock that may be issued to the stockholders of Chemistry Holdings in connection with the Merger, including escrowed shares and shares issuable pursuant to earn-out provisions and warrants, is 32,072,283 shares allocated as follows: (i) 5,700,000 shares of Common Stock as upfront consideration issued at the Closing (the “Upfront Consideration”); (ii) 7,128,913 shares to be held in escrow, subject to indemnification and clawback rights that lapse upon the achievement of certain milestones; (iii) 3,207,228 shares that may be issued pursuant to an earn-out over five years upon the achievement of certain technological implementations; (iv) 8,018,071 shares that may be issued pursuant to an earn-out over two years upon the achievement of certain revenue goals; and (v) 8,018,071 shares issuable upon exercise of warrants that become exercisable upon achieving certain revenue goals between the second and fourth anniversary of the Closing Date at an exercise price of $5.01 per share, exercisable, to the extent vested, for five years from the Closing Date.

In addition, certain stockholders of Chemistry Holdings agreed to return to the Company certain shares of Common Stock (approximately 231,294 shares) in satisfaction of their tax withholding obligations related to the exercise of Chemistry Holdings stock options in connection with the Merger.

Unaudited pro forma results of operations for the three months ended March 31, 2019 and 2018, as if the Company and Chemistry Holdings had been combined as of the beginning of the period, follows. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future.

	CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2019			Chemistry Holdings Inc for the Three Months Ended March 31, 2019			Chemistry Spirits LLC for the Three Months Ended March 31, 2019			Chemistry Labs LLC for the Three Months Ended March 31, 2019			Consolidated
Net revenues	$	74,500		$	-		$	-		$	-		$	74,500
Net loss	(10,028,168		)		(5,054	)		(2,137	)		(26,323	)		(10,061,682	)
Net loss per share, basic and diluted	$	(0.17	)	$	-		$	-		$	-		$	(0.17	)

	CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2018			Chemistry Holdings Inc for the Three Months Ended March 31, 2018		Chemistry Spirits LLC for the Three Months Ended March 31, 2018			Chemistry Labs LLC for the Three Months Ended March 31, 2018		Consolidated
Net revenues	$	105,014		$	-	$	-		$	326,172	$	431,186
Net income (loss)		(1,901,836	)		21,599		(88,535	)		29,347		(1,939,425	)
Net loss per share, basic and diluted	$	(0.03	)	$	-	$	-		$	-	$	(0.03	)

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

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

BUSINESS

Overview

We are a biopharmaceutical company focusing on the development and manufacturing of drug formulation and drug delivery technologies in novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. We operate in a 25,000 square foot cGMP manufacturing plant in Oxnard, CA.

We were incorporated in the State of Nevada on May 15, 2014. The Company was formerly named Makkanotti Group Corp. which was formed to engage in the business of manufacturing food paper bags in Nicosia, Cyprus. On November 7, 2016, the board of directors and the majority stockholder of the then outstanding shares of registrant’s common stock executed a written consent to change registrant’s name from Makkanotti Group Corp. to CURE Pharmaceutical Holding Corp. The Certificate of Amendment to Articles of Incorporation was filed with the State of Nevada on November 30, 2016.

Further, on November 7, 2016, we, in a reverse take-over transaction, acquired a specialty pharmaceutical and bioscience company based in California that specializes in drug delivery technologies, by executing a Share Exchange Agreement and Conversion Agreement (“Exchange Agreement”) by and among us and a holder of a majority of our issued and outstanding capital stock prior to the closing (the “Majority Stockholder”), on the one hand, and CURE Pharmaceutical, all of the shareholders of CURE Pharmaceutical’s issued and outstanding share capital (the “CURE Pharm Shareholders”) and the holders of certain convertible promissory notes of CURE Pharmaceutical (“CURE Pharm Noteholders”), on the other hand. Hereinafter, this share exchange transaction is described as the “Share Exchange.”

As a result of the Share Exchange, CURE Pharmaceutical became a wholly owned subsidiary of the Company, and the CURE Pharm Shareholders and CURE Pharm Noteholders became our controlling shareholders owning, at such time, approximately 65% of our issued and outstanding common stock. For accounting purposes, CURE Pharmaceutical was the surviving entity. As a result of the recapitalization and change in control, CURE Pharmaceutical was deemed to be the accounting acquirer in accordance with ASC 805, Business Combinations.

Nature of Business

Our technology platform includes oral dissolving film (“ODF”) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements. ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal, or GI, tract when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal).

We currently have two commercial products and several development programs underway:

CURE 3068 (CUREfilm Sleep – Commercially Launched)

This is a melatonin-containing sleep aid CUREfilm ODF that is manufactured and sold as a dietary supplement under the brand name “ID Life Sleep Strips”. Our non-exclusive distributor is ID Life, a health and wellness company focused on customized nutrition and selling within the United States. We completed a purchase order with ID Life for approximately 3,200,000 units of product in 2018 and we are seeking additional distributors.

CURE 5079 (CUREfilm Sleep – Commercially Launched)

This novel sleep aid containing a dietary cannabinoid CUREfilm ODF was launched Q3 2018 by Incubrands under the brand name “Sleep Stripzzz”. The distribution rights were exclusive through the end of 2018. A purchase order was placed on February 22, 2018 and we are seeking additional distributors.

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CURE 5003 (CUREfilm Blue)

We are developing a sildenafil CUREfilm ODF for oral administration. The product, which will be launched for the treatment of erectile disorder, is in early stage clinical development with human studies planned in 2019. We completed a pre-IND meeting with the FDA on March 21, 2019.

CURE 5067 (CUREfilm D)

We are developing a 50,000IU, once per week, Vitamin D3 CUREfilm ODF for oral administration. On February 18, 2017, we entered into an exclusive 5-year license and distribution agreement with Meroven Limited in the MENA region: Iraq, Saudi Arabia, Yemen, Syria, UAE, Jordan, Palestine, Lebanon, Oman, Kuwait, Qatar, Bahrain, Sudan, Egypt, Tunisia, Morocco, Algeria and Africa. On April 30, 2019, we entered into a supply agreement with Meroven Limited for this product for distribution in the United States. The product is currently in the optimization development stage.

CURE 5210 (CUREfilm Beta-Caryophyllene)

We are developing a dietary cannabinoid ODF using food grade beta-caryophyllene to target the CB2 receptor. We are in early feasibility stages of development of this product and have not yet signed with a distribution partner.

CURE 5200

We are developing a novel CUREfilm ODF substrate with an undisclosed partner. On June 4, 2018, we entered into a development agreement with an undisclosed partner for product development feasibility of CURE 5200. In order to protect CURE’s and our partner’s competitive advantage, no details of the product have been disclosed at this stage.

CURE 5209

We are developing a CUREfilm ODF for mood enhancement as a dietary supplement. On May 30, 2018, we entered into a development agreement with an undisclosed partner for product development feasibility of CURE 5209. In order to protect CURE’s and our partner’s competitive advantage, no further details of the product have been disclosed at this stage.

CURE Pharmaceutical Corporation

Our wholly owned subsidiary and operating business, CURE Pharmaceutical Corporation, located in Oxnard, California was originally incorporated in July 2011 to develop novel drug formulation and delivery technologies.

The pharmaceutical industry is facing ever-growing R&D expenditures and fewer new drug approvals as a result of increasing regulation, a failure to predict safety problems or a lack of efficacy early in a drug’s development, and high investment in new technologies to improve the speed and accuracy of drug development. Researching and developing new molecular entities (NMEs) is risky as measured by an ever-increasing R&D spend (13.4% average increase per year), low clinical trial success rate (10%) and sluggish NME drug approvals – with 55 NMEs approved in 2018. Faced with these challenges, drug developers are looking toward alternative dosage forms, for which R&D investments dwarves those of NMEs. Alternative dosage forms can address safety and efficacy limitations observed during clinical development of an NME using conventional formulations, by improving its pharmacokinetic profile.

In addition to these challenges, many marketed drugs are coming off-patent, creating a need to fill revenue gaps. Novel dosage forms can offer strategies for surviving patent cliffs by extending market exclusivity when they address a bona fide unmet need.

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The pharmaceutical industry is also challenged by the many patients who do not adhere to a regime of prescription drugs because of side effects, difficulty in administration or the taste of a drug. According to HealthPrize and Capgemini, the loss of global revenues by drug makers due to non-adherence to medicines is $630 billion every year and according to a recent paper published in The Annals of Pharmacotherapy titled "Cost of Prescription Drug-Related Morbidity and Mortality" the estimated annual cost of prescription drug-related morbidity and mortality resulting from nonoptimized medication therapy was $528.4 billion in 2016 US dollars and about 275,689 deaths per year. Medication adherence and the patient experience can be improved with strategies such as replacing an injectable drug with a sublingual drug, simplifying the dosing schedule with a sustained release dosage form and reducing toxicities by avoiding the GI tract (e.g. through transdermal or transmucosal delivery).

Improved formulations can address these many challenges by cutting down development costs, reducing the time to market, extending product patent protection, improving patient compliance and increasing drug efficacy. For example, reformulation can enable drug repositioning, the process of finding new uses for failed drugs, such as those abandoned for lack of efficacy or excessive toxicity after Phase II trials, or marketed drugs for which new uses will extend patent life and, therefore, profitability.

The FDA approves more reformulations than new chemical entities (NCEs) each year under Section (505)(b)(2) of the Food, Drug, and Cosmetic Act, (“505(b)(2)”) the FDA. The number of 2017 NDA approvals that used the 505(b)(2) regulatory pathway rose dramatically from 45 approvals in each of the last two years to an all-time high of 63 in 2017. Under Section (505)(b)(2), the FDA may grant market exclusivity for a term of up to three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage, dosage form, route of administration or indication for use. Taken together, the exclusivity period of a drug and the lower R&D cost for reformulating a drug, have led to some pharmaceutical companies investigating reformulating their drugs as part of their lifecycle management protocols.

Our Strategy

Our commercial strategy is designed to mitigate risk by pursuing a diversified model in the following categories:

Pharmaceuticals

We partner with companies that are responsible for marketing and distribution of the products we develop and manufacture. On a case-by-case basis, we may be responsible for clinical development and regulatory approval with the FDA and/or other regulatory bodies. Deal terms may include upfront licensing fees, development costs, milestone payments, royalties and exclusive manufacturing rights. Within this category, we are pursuing products with 505(b)(2) approval pathways such as our Sildenafil ODF – CUREfilm Blue. While we currently manufacture nutraceutical products in our state-of-the-art cGMP oral dissolving film manufacturing facility, we are undertaking steps to manufacture pharmaceutical products for commercial use.

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Cannabinoids

We are specifically investing in pharmaceutical-grade cannabinoid products, such as tetrahydrocannabinol (THC) and cannabidiol (CBD). The oral bioavailability of cannabinoids is very low due to extensive “first-pass” metabolism. Consequently, potency and release times are unpredictable and inconsistent. Moreover, cannabinoids do not readily dissolve in water which adds to dosing difficulties and discrepancies. In addition to improving bioavailability, CUREfilm enables the loading of combinations of cannabinoids and botanical extracts which may provide maximum therapeutic benefit. We have a licensing rights agreement with Canopy Growth Corporation (“Canopy”) for the global commercialization of ODFs containing cannabinoids, under which Canopy is granted non-exclusive in the United States and exclusive rights in the rest of the world excluding Asia. We are sponsoring preclinical cannabinoid research at the Technion – Israel Institute of Technology, where the laboratory of Dr. Dedi Meiri is identifying specific combinations of cannabinoids with anti-tumor effects. We are registered with the Drug Enforcement Agency (DEA) to manufacture schedule 1 controlled substances at the Oxnard facility.

Nutraceuticals

Increasingly, patients are encouraged to take part in their own treatments, and a consumer market has been developing midway between the supermarket-based world of consumer goods companies and the scientific, pharmacy-based world of pharmaceutical firms. The front lines of this battle are nutraceutical products that have been proven to help prevent or cure disease. Breakthroughs in functional medicine suggest a number of opportunities for pharmaceutical companies like CURE. Functional medicines focus on the imbalances underlying disease processes (rather than only symptomatic relief) and they rely on molecular nutrition for patient-specific solutions. These types of nutraceuticals can be synergistic with pharmaceutical treatments. We therefore focus on evidence-based nutraceuticals that are differentiated by using proprietary and/or proven active ingredients that we formulate for greater stability, overall quality and increased bioavailability. Nutraceutical products do not require FDA approval but do require following all GMPs. Thus, they are less costly and faster to launch in the marketplace. While manufacturing fees for nutraceuticals have lower margins than prescription drugs, they provide us with short term revenue opportunities.

Technology Platform Expansion

As a drug delivery company, we seek to grow our technological capabilities through internal innovation and acquisitions. On March 31, 2019, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Chemistry Holdings, Inc., a Delaware corporation (“Chemistry Holdings”) to acquire Chemistry Holdings, with a closing date to complete the transaction on May 13, 2019. Chemistry Holdings is a formulation technology company that is developing innovative delivery systems for nutraceutical, pharmaceutical and other industries. There is an increased demand for solid, chewable or dissolvable products for immediate and controlled-release, oral delivery of active ingredients and particularly poorly soluble active pharmaceutical ingredients. However, such dosage forms can pose challenges such as (i) stability of the active ingredient, (ii) overall integrity and shelf life of the product, and (iii) palatability. Chemistry Holdings is developing a novel biopolymer technology for both liquid encapsulation and microencapsulation of dry powders, which are designed to improve the stability and solubility of active ingredients. Encapsulated active ingredients can then be formulated in various final dosage forms including oral thin film. This technology extends our technology platform beyond oral soluble films, to chewables and fast dissolving tablets along with micro- and nano-encapsulation methods. Further information can be found in NOTE 15 – SUBSEQUENT EVENTS.

Underserved Patient Populations

On November 10, 2017, we received 269,000 shares of Oak Therapeutics as consideration for an exclusive license to certain patents rights and trademarks of CURE for the commercialization of products in developing nations as defined in the 2013 International Statistics Institute. As a result of this transaction, we own approximately 63% of Oak’s outstanding shares and have consolidated Oak’s financial statements as of the fourth quarter 2017. Due to the lack of performance by Oak under the license agreement, on April 15, 2019, we terminated all contractual relationships with Oak, including the exclusive license and we surrendered our Oak shares to Oak. Further information can be found in NOTE 15 – SUBSEQUENT EVENTS.

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CUREfilm^TM Technology

The founders of CURE Pharmaceutical are pioneers in drug delivery and ODF, having launched the first therapeutic ODF product, Chloraseptic® relief strips in 2003. ODF products are about the size of a postage stamp and can deliver medicines through the mucosal tissue in the mouth, sublingually or buccally – on the cheek or more traditionally via the GI tract. Oral transmucosal drug delivery is a non-invasive route for drug delivery that allows for absorption directly into the vascularized tissue in the mouth, bypassing the hepatic first pass effect. This leads to reduced drug exposure and can offer a rapid onset of action. As an oral ODF, active ingredients can be either pre-solubilized within the matrix or encapsulated, or both for more effective GI absorption and/or sustained release. The quick dissolution nature of ODF means that no water is required for administration, improving patient compliance - especially among the elderly, children, and in conditions where patients have difficulty in swallowing.

ODFs have significant advantages compared to other dosage forms (e.g., tablets and capsules), including:

Safety and Efficacy

· Potential for rapid onset of action which can be especially useful for indications such as motion sickness, erectile dysfunction, seizures, allergic attack or coughing, bronchitis or asthma.

· Potential to extend a drug’s half-life and consequently extending dosage intervals

· Transmucosal delivery can improve a drug’s safety profile of therapy such as reduced gastric irritation

· Transmucosal delivery can improve a drug’s efficacy in patients with GI absorption issues.

· Accuracy in the administered dose can be better assured for each film.

Patient Experience and Medication Adherence

· Difficulty swallowing tablets and capsules can be a problem for many individuals and can lead to a variety of adverse events and patient noncompliance with treatment regimens. It is estimated that over 16 million people in the United States have some difficulty swallowing, also known as dysphagia. Studies in adults evaluating the effect of tablet and capsule size on ease of swallowing suggest that increases in size are associated with increases in patient complaints related to swallowing difficulties at tablet sizes greater than approximately 8 mm in diameter. ODFs can readily be taken without the need to swallow or use of water or other beverages.

· Upon administration, there is a relatively low risk of the patient choking which can be most beneficial for patients suffering from motion sickness, dysphagia and repeated emesis.

· Easily administered to bedridden and non-cooperative patients (e.g., geriatric, pediatric, and psychiatric). They are hard to spit out.

· Configured with physical dimensions such that it is relatively easy and convenient to store and carry. Patients can conveniently carry multiple dissolvable films in his or her pocket or wallet. A single dose of strip can be carried individually without requiring the secondary container.

· ODFs are flexible with a pleasant mouth feel unlike oral dissolvable tablets which are brittle.

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Manufacturing and logistics

· The pouches or sachets offer larger printable 2D areas which traditional drug product formats do not. This allows the manufacturer to adapt to rapidly evolving labeling and regulatory requirements for information and anti-counterfeiting, such as product serialization.

· The manufacturing process has a low carbon foot print, with lower use of water for component preparation and sterilization as compared with other dosage forms.

· Even though not necessarily sterile, each dose unit is packed individually avoiding contact with other units.

· Tensile strength and plasticity of ODF allow for handling single, individual dose units without damage to the dosage form.

· Multiple SKUs can be produced by simply modifying the length of the ODF

· Enables anti-counterfeit management and dose management

· Adaptable for use with dispensing devices for pharmacy preparation or self-administration

· Can be easily and conveniently handled, stored, and transported at room temperature

The CUREfilm platform is a scalable and versatile formulation and drug delivery system for both oral (ODF) and transdermal (skin) delivery. We believe that CUREfilm formulations can improve or match the pharmacokinetics of drugs in accordance with the desired outcome. The platform is compatible with a broad spectrum of molecules, for the formulation of both investigational and marketed prescription drugs and nutraceutical products.

The specific advantages below are present with multiple CUREfilm products and platform technologies. The advantages listed below are expressly described in CURE’s patent documents. Other advantages are present in specific products and platform technologies but not outlined in the patent documents and kept as trade secrets and proprietary equipment designs. Additional advantages are described in pending and unpublished patent documents.

· Loading of multiple active ingredients on one dose unit

· Can accommodate high drug load per dose unit (e.g. > 200 mg)

· Quickly dissolving/disintegrating (e.g. < 2 minutes)

· Potential for low moisture level (e.g. < 10 wt.% water)

· Can achieve desired performance characteristics while maintaining pleasant feeling in the mouth (e.g. soft, plush feeling with pliable film)

· Can achieve desired performance characteristics while formulating active ingredients susceptible to degradation from low pH environments, light, heat, moisture, and oxygen

· Multiple and unique ways to mask the bitter, metallic or salty taste of an active ingredient

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Intellectual Property

The competitive advantages of the CUREfilm platform and products over other ODF technology and products are protected by issued and ending patents, as well as trade secrets such as proprietary equipment design and manufacturing processes which allow us to produce CUREfilm products at commercial scale in a cGMP environment. We will be able to protect our technology and products from unauthorized use by third parties only to the extent it is covered by valid and enforceable claims of our patents or is effectively maintained as trade secrets. Patents and other proprietary rights are thus an essential element of our business.

Our success will depend in part on our ability to obtain and maintain proprietary protection for our product candidates, technology, and know-how, to operate without infringing on the proprietary rights of others, and to prevent others from infringing it proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions, and improvements that are important to the development of our business. We also rely on trade secrets, know-how, continuing technological innovation, and in-licensing opportunities to develop and maintain our proprietary position.

We own or have exclusive rights to ten (11) issued patents, eight (8) pending applications in the United States, one (1) pending application in China and one (1) international Patent Cooperation Treaty (“PCT”) patent application. These patents and applications relate, among others, to (1) a method and apparatus for minimizing heat, moisture, and shear damage to medicant incorporated into an edible film, (2) edible films for administration of medicaments to animals, (3) methods for modulating dissolution, bioavailability, bioequivalence, (4) pharmaceutical composition and method of manufacturing, (5) pharmaceutical composition with ionically crosslinked polymer encapsulation of active ingredient, (6) multi-layered high dosage dissolvable film for oral administration, (7) thin films with high load of active ingredient, (8) high dosage dissolvable films for oral administration, (9) methods and composition for improving sleep, (10) oral dissolvable film that includes plant extracts and (10) rapidly disintegrating film matrix for moisture sensitive compounds.

Granted U.S. patents will expire between 2023 and 2035, excluding any patent term extensions that might be available following the grant of marketing authorizations. If issued, pending applications would expire in 2038, excluding any patent term adjustment that might be available following the grant of the patent and any patent term extensions that might be available following the grant of marketing authorizations.

We applied for six (6) trademark and logomark registrations, for which the opposition periods have expired without any opposition being filed.

Competition

We face competition from pharmaceutical companies, generic drug companies, wellness and nutraceutical companies, as well as organizations developing advanced drug delivery platforms such as Acquestive Therapeutics, BioDelivery Sciences International, IntelGenx, ARx Pharma and LTS Lohmann which have substantially greater financial, technical and human resources than we have. Furthermore, we face competition from these entities as well as universities, governmental agencies and other public and private research organizations for collaborative arrangements with pharmaceutical and biotechnology companies, in recruiting and retaining highly qualified scientific and management personnel and for licenses to additional technologies. Our success will be based in part on our ability to develop and manufacture products that address unmet medical needs and create value to patients at competitive price points. In addition, continuing to build our intellectual property portfolio and designing innovative approaches that surpass our competitors’ patents will be critical to success.

Environmental Compliance

Our research and development activities involve the controlled use of hazardous materials and chemicals. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specific waste products. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of bio-hazardous materials. The cost of compliance with these laws and regulations could be significant and may adversely affect capital expenditures to the extent we are required to procure expensive capital equipment to meet regulatory requirements. At this time, we believe that we are in compliance with environmental regulations applicable to our research and development and manufacturing facility located in Oxnard, California.

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Employees

As of the date of this filing, we have 16 full-time employees. None of our employees are covered by collective bargaining agreements. We consider our relations with our employees to be good.

RESULTS OF OPERATIONS

Revenues for the Three Months Ended March 31, 2019 and 2018

Revenues for the three months ended March 31, 2019 was $74,500 as compared to $105,014 for the three months ended March 31, 2018. The decrease was principally due to the Company seeing a decrease in orders from ID Life, LLC for Sleep Strips. However, the Company experienced an increase in research and development income as the Company successfully completed phases I of our research and development agreement with Canopy Growth Corporation. for the development of a CBD OTF and with Isagenix for the development of CURE 5209 during the 1^st quarter of 2019.

Cost of Goods Sold

Cost of goods sold was $2,584 in the three months ended March 31, 2019 compared to 59,086 in the three months ended March 31, 2018. Cost of goods sold decreased by $56,502 during the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The decrease was primarily due to the Company not generating revenue from ID Life during the three months ended March 31, 2019 as where the company did incur revenues during the three months ended March 31, 2018.

Research and Development Expenses

For the three months ended March 31, 2019, research and development expenses decreased to $360,870 compared to the three months ended March 31, 2018 of $426,529. The decrease in research and development expenses is mainly due to the Company no longer developing a PEA CUREfilm as this development project has been canceled as well as not incurring costs associated with the preclinical cannabinoid research at the Technion – Israel Institute of Technology, where the laboratory of Dr. Dedi Meiri is identifying specific combinations of cannabinoids with anti-tumor effects. However, the decrease in these projects was offset with the continuous development of CURE 5003 (CUREfilm Blue), CURE 5067 (CUREfilm D), CURE 5200, CURE 5209 and CURE 5210 (CUREfilm Beta-Caryophyllene) during the three months ended March 31, 2019.

Selling, General and Administrative Expenses

Our expenses for the three months ended March 31, 2019 are summarized as follows in comparison to our expenses for the three months ended March 31, 2018.

	Three Months Ended
	March 31, 2019		March 31, 2018
Consulting	$	1,232,193	$	345,296
Salaries and wages		246,713		256,841
Selling, general and administrative		312,960		231,057
Professional and investor relations		342,929		185,316
Noncash compensation		230,291		-
Total operating expenses	$	2,365,086	$	1,018,510

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Consulting

Consulting expense increased by $886,897 for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018. This was due to the Company increasing the number of consultants used during the three months ended March 31, 2018 compared to the same period in 2018. In addition, majority of the expenses related to noncash consulting services where the Company issued common stock shares in exchange for services performed over a period of time as well as the recording of the fair market value of warrants vested during the three months ended March 31, 2019 for services performed.

Salaries and wages

Salaries and wages expense decreased by approximately $10,000 during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. This was due two less officers employed during the three months ended March 31, 2019 compared to the same period in 2018. However, this decrease in officers was offset by the Company recognizing a full quarters worth of salary during the three months ended March 31, 2019 for two officers hired during the three months ended March 31, 2018.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expense increased by approximately $82,000 for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018. This was due to the following factors: (i) increase in our D&O insurance as the Company increased coverage by getting an excess D&O policy, (ii) increase in our sales and marketing efforts to promote the technology and Company and (iii) increase in conference expenses as the Company attending more conferences in the three months ended March 31, 2019 compared to the same period in 2018.

Professional and Investor Relations

Professional and investor relations expenses increased by approximately $158,000 for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. This was due to the Company increasing our investor relation efforts to help increase awareness of our Company with potential new investors as well as to update our existing shareholder base. In addition, the Company increased our legal and accounting professional services during the three months ended March 31, 2019 compared to the same period in 2018 as to assist the Company in strategic planning and advisory for potential business acquisitions, patent and technology acquisitions and general and corporate compliance services.

Non-cash Compensation

Non-cash compensation expense increased by approximately $230,000 for the three months ended March 31, 2019 as compared to the three months ended December 31, 2018. This was primarily due to the Company recording the fair value of vested stock options and vested restricted stock issued from our 2017 Equity Incentive Plan during the three months ended March 31, 2019. The Company did not issue any stock options or restricted stock from our 2017 Equity Incentive Plan during the same period in 2018.

Other Expense/Income

Other expense increased by approximately $6.8 million during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. This was mainly due to (i) recording of fair value of warrants issued relating to convertible promissory notes (ii) change in the warrant values relating to convertible promissory notes and (iii) a loss on conversion on convertible promissory notes of $3.7 million due to additional shares to be issued as a result of a lower conversion price compared to the fair market value at the date of issuance.

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LIQUIDITY AND CAPITAL RESOURCES

For the Three Months ended March 31, 2019

Working Capital Deficit

	March 31, 2019			December 31, 2018
Current assets	$	3,599,418		$	1,587,923
Current liabilities		(5,358,844	)		(8,551,579	)
Working capital (deficiency)	$	(1,759,426	)	$	(6,963,656	)

Working capital deficit as of March 31, 2019 was approximately $1.8 million, as compared to a working capital deficit of approximately $7 million as of December 31, 2018. As of March 31, 2019, current assets were approximately $3.6 million, primarily attributable to (i) an increase in cash of approximately $2 million primarily due to the issuance of new convertible debt. As of December 31, 2018, current assets were approximately $1.6 million, primarily attributable to (i) an increase in cash of approximately $0.4 million primarily due to the issuance of new convertible debt and (ii) an increase in prepaid expenses of approximately $0.4 million primarily due to prepaid stock-based compensation.

As of March 31, 2019, current liabilities were approximately $5.4 million, comprised primarily of (i) approximately $3.1 million in notes and convertible notes payable, (ii) $0.8 million in derivative liability, (iii) approximately $0.8 million in accounts payable; and (iv) approximately $0.3 million in accrued expenses. Comparatively, as of December 31, 2018, current liabilities were approximately $8.6 million, comprised primarily of (i) approximately $6.2 million in notes and convertible notes payable, (ii) $0.6 million in derivative liability, (iii) approximately $0.8 million in accounts payable; and (iv) approximately $0.5 million in accrued expenses.

	For the Three Months Ended
	March 31, 2019			March 31, 2018
Net cash used in operating activities	$	(1,024,401	)	$	(1,153,586	)
Net cash used in investing activities		(44,302	)		(22,187	)
Net cash provided by financing activities		3,161,717			1,908,101
Increase in cash	$	2,093,014		$	732,328

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Net cash used in Operating Activities

Net cash used in operating activities was approximately $1 million during the three months ended March 31, 2019. This was primarily due to the net loss of approximately $10 million, partially offset by (i) the amortization of the debt discount of approximately $0.5 million, (ii) stock based compensation of approximately $0.6 million, (iii) the fair value of stock issued for amending convertible notes of approximately $0.3 million, (iv) the fair value of vested stock options of approximately $0.3 million (v) fair value of warrant granted for commission expense of approximately $0.6 million, (vi) loss on conversion of convertible promissory notes of approximately $3.7 million, (vii) warrant expense from convertible promissory notes of approximately $2.2 million; and (viii) the fair value of warrant granted for broker fee expense of approximately $0.3 million.

Comparatively, net cash used in operating activities was approximately $1.1 million during the three months ended March 31, 2018. This was primarily due to the net loss of approximately $1.9 million offset by (i) the amortization of the debt discount of approximately $0.3 million, and (ii) stock-based compensation of approximately $0.2 million.

Net cash used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2019 was due to (i) the purchase of an intangible asset for approximately $21,000 and (ii) the purchase of property and equipment for approximately $23,000. Comparatively, net cash used in investing activities during the three months ended March 31, 2018 was due to (i) the purchase of an intangible asset for approximately $7,000, and (ii) the purchase of property and equipment for approximately $15,000.

Net cash provided by Financing Activities

Net cash provided by financing activities of approximately $3.1 million during the three months ended March 31, 2019 was primarily due to the approximately $3.4 million received from the issuances of new convertible notes payable and approximately $0.5 million in proceeds from issuances of common stock which was offset by approximately $0.7 million in repayments of convertible promissory notes and loans payable. Correspondingly, during the three months ended March 31, 2018, net cash provided by financing activities was approximately $1.9 million. This was primarily attributable to proceeds of approximately $2.0 million from the issuances of new convertible notes payable which was offset by approximately $0.1 million in repayments of loans payable.

We may need to raise additional operating capital in calendar year 2019 in order to maintain our operations and to realize our business plan. Without additional sources of cash and/or the deferral, reduction, or elimination of significant planned expenditures, we may not have the cash resources to continue as a going concern thereafter.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“U.S. GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Note 2 – “Summary of Significant Accounting Policies”. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or condition.

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Impairment of Long-Lived Assets

Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. There was no impairment on our long-lived assets during the three months ended March 31, 2019 and 2018.

Going Concern

For the year ended December 31, 2018, the auditors’ opinion contained a going concern paragraph, which stated that the Company had an accumulated deficit, working deficit and net loss. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements.

The Company has an accumulated deficit balance as of March 31, 2019. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. The Company is continually analyzing its current costs and is attempting to make additional cost reductions where possible. We expect that we will continue to generate losses from operations throughout the remainder of 2019.

Historically, the Company has had operating losses and negative cash flows from operations which cast significant doubt upon the Company’s ability to continue as a going concern. The Company will need to raise capital in order to fund its operations. This need may be adversely impacted by uncertain market conditions and changes in the regulatory environment. To address its financing requirements, the Company intends to seek financing through debt and equity issuances to existing stockholders.

Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise $8,000,000 to $10,000,000 in capital over the next 12 months through a merger and $1,000,000 to $2,000,000 through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 to 18 months. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected. However, the outcome of these matters cannot be predicted with certainty at this time.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

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OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(t) under the Exchange Act. Our internal control over financial reporting is designed 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. Our internal control over financial reporting includes those policies and procedures that:

1.	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
2.	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and
3.	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2019. Based on this assessment, management concluded that the Company did not maintain effective internal controls over financial reporting as a result of the identified material weakness in our internal control over financial reporting described below. In making this assessment, management used the framework set forth in the report entitled Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring.

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Identified Material Weakness

A material weakness in our internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement or the financial statements will not be prevented or detected. Management identified the segregation of duties as a material weakness during its assessment of internal controls over financial reporting as of March 31, 2019. As of March 31, 2019, we had one full-time employee with the requisite expertise in the key functional areas of finance and accounting. As a result, there is a lack of proper segregation of duties necessary to ensure that all transactions are accounted for accurately and in a timely manner. As our resources allow, we will add financial personnel to our management team.

Management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) as of March 31, 2019, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based upon that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that as of the Evaluation Date, the Company’s disclosure controls are not effective as a result of the identified material weakness described herein.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the fiscal quarter ended March 31, 2019 that materially affected, or is reasonably likely to have a material effect, on our internal control over financial reporting.

ITEM 1. LEGAL PROCEEDINGS

The information set forth under Note 14 of Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Not Applicable.

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

On January 1, 2019, the Company issued 13,827 common stock shares at $2.26 per share for investor relations consulting services to be performed over a six-month period. The total value of this issuance was $31,249 and as of March 31, 2019, $6,388 is included in prepaid expenses and other assets.

42

On December 14, 2018, the Company entered into an Advisory Consulting Agreement (“Agreement”). Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company that vest 30 days from December 14, 2018 and an additional 250,000 common stock shares of the Company that vest monthly over 24 months. On January 14, 2019, the Company issued 50,000 common stock shares of the Company at $1.84 per share per the terms of this Agreement. On February 14, 2019, the Company issued 10,417 common stock shares of the Company at $3.35 per share per the terms of this Agreement.

On December 14, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 833,333 shares of common stock of the Company (the “Shares” or “Securities”) at $1.20 per share (the “Share Price”) for a total purchase price of One Million Dollars ($1,000,000) (the “Purchase Price”). Per the terms of the SPA, the Company and the investor agreed to multiple Closings and Closing Dates (as hereinafter defined): (1) a Closing of $250,000 five (5) business days after the Closing Date; (2) a Closing of $250,000 ten (10) business days after the Closing Date; (3) a Closing of $250,000 thirty (30) business days after the Closing Date; and (4) a Closing $250,000 sixty (60) business days after the Closing Date. Each of the aforementioned being a Closing and the dates of each Closing being a Closing Date. The investor funded $250,000 on December 26, 2018 and the Company issued 208,333 common stock shares. The investor funded another $250,000 on December 31, 2018 and the Company issued another 208,333 common stock shares. The investor funded $250,000 on January 22, 2019 and another $250,000 on February 25, 2019 and the Company issued 208,333 common stock shares and 208,334 common stock shares, respectively.

On February 1, 2019, the Company amended two convertible promissory notes totaling $600,000 to extend the maturity dates to February 28, 2019. For extending the maturity date, the Company will issue a total of 30,000 common stock shares of the Company at $2.32 price per share. The total value of this issuance was $69,600. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 30,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019.

On February 13, 2019, the Company entered into Debt Conversion Agreements (“Agreements”) with thirty convertible promissory note holders totaling $1,325,000 plus accrued interest and penalties of $213,859 that were converted into 832,365 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. In connection with the conversion of the convertible promissory notes, the Company will issue 657,655 warrants that were priced at $2.31 price per share.

On February 14, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”), where $250,000 (Two Hundred Fifty Thousand Dollars) of $650,000 (Six Hundred Fifty Thousand Dollars) of the Outstanding Balance under the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note dated August 27, 2017 (the “Note”) shall be converted into 135,135 (One Hundred Thirty-Five Thousand, One Hundred Thirty-Five) shares of Common Stock of the Company (the “Conversion Shares”) at a conversion price of $1.85 per share (a discounted rate calculated as an approximation based on 20% discount on 5 days volume weighted average price of the market rate).

43

On February 14, 2019, the Company entered into a First Amendment to Amended and Restated Senior Secured Promissory Note, that amends the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note effective August 27, 2017 (“Amended Agreement”) with the Note Holder (“Holder”). The Company and the Holder have agreed that the Maturity Date shall be extended to February 27, 2019 in exchange for 75,000 common stock shares of the Company at a price per share of $3.35. The total value of this issuance was $251,250. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 75,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) to convert $400,000 of convertible promissory notes plus accrued interest of $71,342 into 254,779 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,000,000 plus accrued interest of $94,750 that were converted into 591,757 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. In connection with the conversion of the convertible promissory notes, the Company will issue 295,879 warrants that were priced at $2.31 price per share.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,575,000 plus accrued interest of $18,406 that were converted into 861,301 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.

On February 19, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $425,000 plus accrued interest of $425 that were converted into 168,819 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.

On February 19, 2019, the Company entered into a Consulting Agreement (“Agreement”) with a Company. Per the terms of the Agreement, the Company is to issue 25,000 common stock shares of the Company for providing investor relations services, where 12,500 common stock shares of the Company are due immediately and the remaining 12,500 common stock shares of the Company is due June 19, 2019. On February 19, 2019, the Company issued 250,000 common stock shares of the Company at $3.39 per share.

On February 25, 2019, the Company issued 46,875 and 83,333 common stock shares of the Company at $0.74 and $1.81 per share, respectively, relating to restricted stock issued from the Company’s 2017 Equity Incentive Plan.

44

ITEM 3. DEFAULTS UPON SENIOR SECURITES

As of March 31, 2019, there were two convertible promissory notes (“Notes”) totaling $550,000 that were in default. The Company has offered to either repay the Notes or request to have them converted into common stock shares of the Company. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the note holders of the Notes have not yet communicated their intent to either receive payment or convert.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

None.

45

ITEM 6. EXHIBITS

31.1	Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

46

SIGNATURES

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

	CURE PHARMACEUTICAL HOLDING CORP.
Dated: May 17, 2019	By:	/s/ Robert Davidson
		Robert Davidson
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

/s/ Robert Davidson

Robert Davidson

Chief Executive Officer

May 17, 2019

/s/ Mark Udell

Mark Udell

Chief Accounting Officer

May 17, 2019

47

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

AND RULE 13A-14 OF THE EXCHANGE ACT OF 1934

CERTIFICATION

I, Robert Davidson, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of CURE Pharmaceutical Holding Corp.;
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.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 my 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 my 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 year (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. I have disclosed, based on my 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 17, 2019	By:	/s/ Robert Davidson
		Robert Davidson
		Chief Executive Officer and Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

AND RULE 13A-14 OF THE EXCHANGE ACT OF 1934

CERTIFICATION

I, Mark Udell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CURE Pharmaceutical Holding Corp.;

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 15d-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 the 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 17, 2019	By:	/s/ Mark Udell
		Mark Udell
		Chief Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CURE Pharmaceutical Holding Corp., (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Davidson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Report fully complies with the requirements of Section 13 (a) or 15 (d) 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.

Date: May 17, 2019	By:	/s/ Robert Davidson
		Robert Davidson
		Chief Executive Officer and Principal Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CURE Pharmaceutical Holding Corp., (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Udell, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)	The Report fully complies with the requirements of Section 13 (a) or 15 (d) 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.

Date: May 17, 2019	By:	/s/ Mark Udell
		Mark Udell
		Chief Accounting Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 13, 2019
Document And Entity Information
Entity Registrant Name	CURE PHARMACEUTICAL HOLDING CORP.
Entity Central Index Key	0001643301
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		30,547,469
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	true

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash	$ 2,593,976	$ 500,962
Accounts receivable, net		102,799
Inventory	39,801	37,776
Prepaid expenses and other assets	965,641	946,386
Total current assets	3,599,418	1,587,923
Property and equipment, net	296,825	299,910
Intellectual property and patents, net	1,212,961	1,206,011
Prepaid expenses and other assets	133,116	232,407
Other assets	59,153	69,837
Total assets	5,301,473	3,396,088
Current liabilities:
Accounts payable	861,614	774,387
Accrued expenses	274,491	508,733
Loan payable	66,842	105,125
Notes payable, net	699,375	920,000
Convertible promissory notes, net	2,374,999	5,242,431
Derivative liability	770,248	617,628
Deferred revenue	311,275	383,275
Total current liabilities	5,358,844	8,551,579
License Fees	97,500
Total liabilities	5,456,344	8,551,579
Commitments and Contingencies (see Note 14)
Stockholders' deficit:
Common stock: $0.001 par value; authorized 75,000,000 shares; 30,366,794 shares and 26,784,019 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	30,367	26,785
Additional paid-in capital	37,097,902	23,424,737
Stock payable	2,004,307	645,575
Accumulated deficit	(39,297,168)	(29,269,000)
Total CURE Pharmaceutical Holding Corp stockholders’ deficit	(164,592)	(5,171,903)
Noncontrolling interest	9,721	16,412
Total stockholders' deficit	(154,871)	(5,155,491)
Total liabilities and stockholders' deficit	$ 5,301,473	$ 3,396,088

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
STOCKHOLDERS' DEFICIT
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	75,000,000	75,000,000
Common Stock, Shares Issued	30,366,794	26,784,019
Common Stock, Shares Outstanding	30,366,794	26,784,019

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue:
Net product sales		$ 69,322
Consulting research & development income	72,000	35,692
Shipping and other sales	2,500
Total revenues	74,500	105,014
Cost of goods sold:
Cost of goods sold	2,584	59,086
Gross profit	71,916	45,928
Operating expenses:
Research and development expenses	360,870	426,529
Selling, general and administrative expenses	2,365,086	1,018,510
Total operating expenses	2,725,956	1,445,039
Net Operating (loss) before other income (expense)	(2,654,040)	(1,399,111)
Other income (expense):
Interest income
Other income		7,533
Change in fair value of derivative liability	(152,620)	24,777
Other expense	(271,201)	(107,881)
Interest expense	(3,297,480)	(433,830)
Loss on conversion of convertible promissory notes	(3,659,518)
Other income (expense)	(7,380,819)	(509,401)
Net loss before income taxes	(10,034,859)	(1,908,512)
Provision for income taxes
Net loss	(10,034,859)	(1,908,512)
Net loss attributable to non-controlling interest	(6,691)	(6,676)
Net loss attributable to Cure Pharmaceutical Holding Corp.	$ (10,028,168)	$ (1,901,836)
Net loss per share, basic
Basic and Diluted	$ (0.35)	$ (0.08)
Weighted average common shares outstanding
Basic and Diluted	28,595,784	23,937,919

XML

Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Stock Payable	Accumulated Deficit	Noncontrolling Interest	Total
Beginning Balance, Shares at Dec. 31, 2017	23,901,252
Beginning Balance, Amount at Dec. 31, 2017	$ 23,902	$ 16,483,632	$ 324,995	$ (18,868,599)	$ 46,885	$ (1,989,185)
Issuance of common stock for professional services, Shares	50,000
Issuance of common stock for professional services, Amount	$ 50	73,950	1,228,333			1,302,333
Warrants granted		37,137				37,137
Beneficial conversion features		646,126				646,126
Noncontrolling interest of Oak Therapeutics, Inc.					(6,676)	(6,676)
Net loss				(1,901,836)		(1,901,836)
Ending Balance, Shares at Mar. 31, 2018	23,951,252
Ending Balance, Amount at Mar. 31, 2018	$ 23,952	17,240,845	1,553,328	(20,770,435)	40,209	(1,912,101)
Beginning Balance, Shares at Dec. 31, 2018	26,784,019
Beginning Balance, Amount at Dec. 31, 2018	$ 26,785	23,424,737	645,575	(29,269,000)	16,412	(5,155,491)
Issuance of common stock for professional services, Shares	86,744
Issuance of common stock for professional services, Amount	$ 87	165,371	355,952			521,410
Warrants granted		3,035,190				3,035,190
Issuance of common stock for extension of maturity dates relating to convertible promissory notes, Shares	105,000
Issuance of common stock for extension of maturity dates relating to convertible promissory notes, Amount	$ 105	320,744				320,849
Issuance of common stock for conversion of convertible promissory notes, Shares	2,844,156
Issuance of common stock for conversion of convertible promissory notes, Amount	$ 2,844	8,620,784	938,260			9,561,888
Issuance of common stock from the equity incentive plan, Shares	130,208
Issuance of common stock from the equity incentive plan, Amount	$ 130	(130)
Issuance of common stock for cash, Shares	416,667
Issuance of common stock for cash, Amount	$ 416	499,584				500,000
Issuance of common stock for cancellation of accounts payable, Amount			64,520			64,520
Fair value of stock options and restricted stock granted		230,291				230,291
Net loss				(10,028,168)		(10,028,168)
Ending Balance, Shares at Mar. 31, 2019	30,366,794
Ending Balance, Amount at Mar. 31, 2019	$ 30,367	$ 37,097,902	$ 2,004,307	$ (39,297,168)	$ 9,721	$ (154,871)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (10,034,859)	$ (1,908,512)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation - services	91,833
Stock based compensation - prepaid	468,146	237,689
Stock issued for amending convertible promissory notes	320,850
Loss on conversion of convertible promissory notes	3,659,518
Warrant expense from convertible promissory notes	2,173,056
Depreciation and amortization	40,437	34,954
Amortization of loan discounts	488,274	360,089
Recovery of bad debt expense	(7,500)
Inventory reserve for obsolesce	2,436
Change of fair value in derivative liabilities	152,620	(24,777)
Fair value of vested stock options	230,291
Warrants granted for commission expense	590,933	37,137
Warrants granted for broker fee expense	271,201
Change in other assets and liabilities:
Accounts receivable	110,299	(35,543)
Inventory	(4,461)	(24,991)
Prepaid expenses and other assets	41,466	58,813
Other assets	10,684	8,687
Accounts payable	151,747	14,225
Accrued expenses	193,128	53,621
Deferred revenue	(72,000)	35,022
License fees	97,500
Cash used in operating activities	(1,024,401)	(1,153,586)
Cash flows from investing activities
Purchase in intangible assets	(21,180)	(6,638)
Acquisition of property and equipment, net	(23,122)	(15,549)
Cash used in investing activities	(44,302)	(22,187)
Cash flows from financing activities
Proceeds from convertible notes payable	3,425,000	2,025,000
Proceeds from common stock issuance	500,000
Repayment of convertible notes payable	(725,000)
Repayment of loans payable	(38,283)	(116,899)
Cash provided by financing activities	3,161,717	1,908,101
Net increase in cash and cash equivalents	2,093,014	732,328
Cash and cash equivalents, beginning of period	500,962	108,249
Cash and cash equivalents, end of period	2,593,976	840,577
Cash paid for interest and income taxes:
Interest	81,341	19,973
Income taxes
Non-cash financing activities:
Common stock related to prepaid expenses		1,323,562
Warrants granted for discount on convertible promissory notes		646,127
Common stock issued for conversion of promissory notes and accrued interest	5,373,781
Common stock payable for note conversion	528,589
Common issued for settlement of accounts payable	64,520
Beneficial conversion features for convertible promissory notes	$ 801,331

XML

ORGANIZATION AND DESCRIPTION OF BUSINESS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Business Operations

CURE Pharmaceutical Holding Corp., its wholly-owned subsidiaries, CURE Pharmaceutical Corporation (“CURE Pharmaceutical”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“Oak”) (collectively (the “Company,” “we,” “our,” “us,” or “CURE”) is an emerging growth company focusing on drug formulation and delivery technology company that researches and manufactures novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. We operate a 25,000 square foot cGMP manufacturing plant in Oxnard, CA.

Our technology platform includes oral dissolving film (ODF) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements. ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal tract (GI) when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal).

We currently have two commercial products and several development programs underway:

Background

CURE, formerly known as Makkanotti Group Corp, was incorporated in the State of Nevada on May 15, 2014. The Company was originally formed to engage in the business of manufacturing food paper bags in Nicosia, Cyprus. On November 7, 2016, the Company changed its name to CURE Pharmaceutical Holding Corp.

On November 7, 2016, the Company, in a reverse take-over transaction, acquired CURE Pharmaceutical Corporation (“CURE Pharmaceutical”), a specialty pharmaceutical and bioscience company based in California that specializes in drug delivery technologies, by executing a Share Exchange Agreement and Conversion Agreement (“Exchange Agreement”) by and among the Company and a holder of a majority of the issued and outstanding capital stock of the registrant prior to the closing (the “Majority Stockholder”), on the one hand, and CURE Pharmaceutical, a California corporation, all of the shareholders of CURE Pharmaceutical’s issued and outstanding share capital (the “CURE Pharm Shareholders”) and the holders of certain convertible promissory notes of CURE Pharmaceutical (“CURE Pharm Noteholders”), on the other hand. Hereinafter, this share exchange transaction is described as the “Share Exchange.” As a result of the Share Exchange, CURE Pharmaceutical became a wholly owned subsidiary of the Company, and the CURE Pharm Shareholders and CURE Pharm Noteholders became the controlling shareholders of the Company.

For accounting purposes, CURE Pharmaceutical was the surviving entity. The transaction was accounted for using the reverse acquisition method of accounting. As a result of the recapitalization and change in control, CURE Pharmaceutical was the acquiring entity in accordance with ASC 805, Business Combinations.

We licensed our technology available to a private company, Oak Therapeutics (“Oak”), to develop products for sale in the developing world (“Territory”). On November 10, 2017, we received 269,000 shares of Oak as consideration for an exclusive license to our patent rights in the Territory, along with a royalty-free non-exclusive license to any improvements made by Oak. As a result of this transaction, we owned approximately 63% of Oak’s outstanding shares and have consolidated Oak’s financial statements as of the fourth quarter 2017. Due to the lack of performance by Oak under the license agreement, on April 15, 2019, we terminated all contractual relationships with Oak, including the license and surrendered our Oak shares to Oak. Further information can be found in NOTE 15 – SUBSEQUENT EVENTS.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity.

Principle of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of CURE Pharmaceutical Holding Corp (“CPHC”), its wholly-owned subsidiary, CURE Pharmaceutical Corporation (“CURE”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“OAK”), collectively referred to as (“CURE”, “we”, “us”, “our” or the “Company”). All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s film strip product represents the principal operations of the Company.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal period ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2019 and December 31, 2018, the Company had no cash equivalents. At March 31, 2019 and December 31, 2018, the Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions.

Investment in Associates

An associate is an entity over which the Company has significant influence through a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.

The results of assets and liabilities of associates are incorporated in the condensed consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Company’s share of the net assets of the associate, less any impairment in the value of the investment. Losses of an associate in excess of the Company’s interest in that associate are not recognized. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment.

On January 8, 2016, the Company received 50% ownership in Cure Innovations, Inc (“CI”). CI was created in 2015 by IncuBrands Studio, Inc (“IncuBrands”). The Company and IncuBrands each own 50% of the common stock of CI. The Company and IncuBrands entered into a Joint Venture agreement in 2013 to distribute several OTF products utilizing IncuBrands marketing and contacts in various industries as well as utilize the Company’s technology and capabilities of manufacturing OTF’s. On December 28, 2018, in agreement with IncuBrands, the Company dissolved CI as we did not see a viable future relating to this joint venture.

On December 6, 2016, the Company entered into a Joint Venture Agreement (“Joint Venture”) with Pace Wellness, Inc. (“Pace”) to jointly develop three Active Pharmaceutical Ingredients (“API”) within the nonprescription and/or Over-the-Counter (OTC) medicines specifically utilizing the Company’s patented and proprietary CUREFilm™ Technology. The three API’s to be jointly developed are Diphenhydramine HCL, Omeprazole and a third API to be determined at a later date (“Products”). Pace shall be the exclusive global distributor of the Products under the Solves Strips® branding or other private or branded labels. All benefits, advantages, and liabilities derived from, or incurred in respect of the Joint Venture shall be borne by the parties in proportion of their respective participating interests of 50/50 equal interest. As of March 31, 2019, the Company has only contributed $5,000 to the Joint Venture. The Company is looking to dissolve this Joint Venture due to Pace’s insolvency and we are no longer looking to develop these Products.

Property and Equipment

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Depreciation has been provided using the straight-line method on the following estimated useful lives:

Manufacturing equipment	5-7 Years
Computer and other equipment	3-7 Years
Leasehold Improvements	Lesser of useful life or the term of the lease

Accounts Receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. At March 31, 2019 and December 31, 2018, management determined that an allowance was necessary which amounted to approximately $0 and $7,500, respectively.

Inventory

Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of its inventory, which includes amounts related to materials, direct labor, and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventories to their realizable value in the period in which the impairment is first identified.

Impairment of Long-Lived Assets

We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, we record charges for impairments. Specifically:

• For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and

• For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

Management determined that no impairment indicators were present and that no impairment charges were necessary as of March 31, 2019 or December 31, 2018.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition”. The Company adopted Topic 606 using a modified retrospective approach for the years ended December 31, 2017 and prior and has been applied prospectively in the Company’s financial statements beginning January 1, 2018. Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time”, depending on the facts and circumstances of the arrangement, and will be evaluated using a five-step model. The adoption of Topic 606 did not have a material impact on the Company’s financial statements, at initial implementation nor will it have a material impact on an ongoing basis. 

To achieve the core principle of Topic 606, we perform the following steps:

1.	Identify the contract(s) with customer;
2.	Identify the performance obligations in the contract;
3.	Determine the transactions price;
4.	Allocate the transactions price to the performance obligations in the contract; and
5.	Recognize revenue when (or as) we satisfy a performance obligation.

We derive revenues from two primary sources: products and services. Product revenue includes the shipment of product according to the agreement with our customers. Services include research and development contracts for the development of OTF products utilizing our CureFilm™ Technology or our other proprietary technologies. Rarely, contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are typically estimated based on observable transactions when these services are sold on a standalone basis.

The Company’s formulation and product development income include services for the development of OTF products utilizing our CureFilm™ Technology. Our development contracts have up to four phases. Revenue is recognized based on progress toward completion of the performance obligation in each phase. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. Costs to fulfill these obligations mainly include materials, labor, supplies and consultants.

Deferred revenue is shown separately in the condensed consolidated balance sheets. At March 31, 2019 and December 31, 2018 we had deferred revenues of $311,275 and $383,275, respectively.

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying statements of operations. The Company did not record advertising costs for the three months periods ended March 31, 2019 and 2018.

Research and Development

Costs incurred in connection with the development of new products and processes are charged to research and development expenses as incurred. The Company recorded research and development expenses of $360,870 and $426,529 for the three months periods ended March 31, 2019 and 2018, respectively.

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the 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 determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Convertible Debentures

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 ““Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

Derivative Liabilities

ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula and present value pricing. At March 31, 2019 and December 31, 2018, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations and comprehensive loss.

Fair Value Measurements

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements and establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level  1:	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level  2:	Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level  3:	Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses and notes and loans payable approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying amount of the notes and convertible promissory notes approximates the estimated fair value for these instruments as management believes that such notes constitute substantially all of the Company’s debt and the interest payable on the notes approximates the Company’s incremental borrowing rate. We measured the liability for price adjustable warrants and embedded derivative features in the convertible notes, using the probability adjusted Black-Scholes option pricing model (“Black-Scholes”), which management has determined approximates values using more complex methods, using Level 3 inputs. (See Note 10)

Net Loss per Common Share

Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock awards. Diluted net loss per share includes the effect of common stock equivalents (stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. Net loss is adjusted for the dilutive effect of the change in fair value liability for price adjustable warrants, if applicable.

The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Year ended December 31,
	March 31, 2019		December 31, 2018
Restricted stock and stock options outstanding		-		97,742
Warrants		90,000		2,879,695
Shares to be issued upon conversion of convertible payable		115,047		236,475
Total		205,047		3,213,912

Going Concern and Management’s Liquidity Plans

The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At March 31, 2019, we had a significant accumulated deficit of approximately $39.3 million and a negative working capital of approximately $1.8 million. Our operating activities consume the majority of our cash resources. We anticipate that we will continue to incur operating losses as we execute our commercialization and research and development plans, as well as strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations, at least into the near future. We have previously funded, and plan to continue funding, our losses primarily through the sale of common and preferred stock, combined with or without warrants, the sale of notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. However, we cannot be certain that we will be able to obtain such funds required for our operations at terms acceptable to us or at all.

Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise between $8,000,000 to $10,000,000 in capital over the next 12 months through a merger and $1,000,000 to $2,000,000 through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 to 18 months. However, the outcome of these matters cannot be predicted with certainty at this time.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of and classification of assets carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Recently Issued Standards

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"). This guidance, as amended by subsequent ASU's on the topic, improves transparency and comparability among companies by recognizing right of use (ROU) assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We will adopt ASU No. 2016-02 in our fiscal year beginning January 1, 2019 and will use the alternative transition method provided by the FASB in ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, with no restatement of comparative periods.

The new standard provides optional practical expedients in transition. We expect to only elect the "package of practical expedients" where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting and we do not expect to elect any of these practical expedients on adoption. We continue to assess the impact of the new standard and believe it will not have a material effect on the condensed consolidated balance sheet.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard became effective for the Company on January 1, 2018. There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and did not have a material impact on the Company’s financial position, results of operations or cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ASU. 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of this ASU became effective for the Company in the first quarter of 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s condensed consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-7, Compensation – Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting. This guidance supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The guidance permits early adoption and was adopted by the Company in the first quarter of fiscal year 2019. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

There are various other updates recently issued, however, they are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

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INVENTORY

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 3 - INVENTORY

Inventory consists of raw materials, packaging components, work-in-process and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market. The carrying value of inventory consisted of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019			December 31, 2018
Raw materials	$	27,094		$	25,297
Packaging components		7,687			7,687
Work-in-process		8,162			8,162
		42,943			41,146
Reserve for obsolescence		(3,142	)		(3,370	)
Total inventory	$	39,801		$	37,776

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PREPAID EXPENSES AND OTHER ASSETS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 4 - PREPAID EXPENSES AND OTHER ASSETS

As of March 31, 2019 and December 31, 2018, prepaid expenses and other assets consisted of the following:

	March 31, 2019			December 31, 2018
Prepaid consulting services– stock-based compensation	$	897,313		$	935,883
Prepaid consulting services		73,667			82,167
Prepaid insurance		87,911			120,877
Other receivables		2,666			2,666
Prepaid expenses		37,200			37,200
Prepaid expenses and other assets		1,098,757			1,178,793
Current portion of prepaid expenses and other assets		(965,641	)		(946,386	)
Prepaid expenses and other assets less current portion	$	133,116		$	232,407

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PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 5 - PROPERTY AND EQUIPMENT

As of March 31, 2019 and December 31, 2018, property and equipment consisted of the following:

	March 31, 2019			December 31, 2018
Manufacturing equipment	$	857,612		$	841,098
Computer and other equipment		186,655			183,346
Leasehold improvements		51,788			48,488
Less accumulated depreciation		(799,230	)		(773,022	)
Property and Equipment, net	$	296,825		$	299,910

For the three months periods ended March 31, 2019 and 2018, depreciation expense amounted to $26,207 and $24,055, respectively, which includes depreciation of $0 and $2,160 for capitalized leased assets for each of the periods ended, respectively. Accumulated depreciation for property held under capital leases were $43,201 and $39,337 for the three months periods ended March 31, 2019 and 2018, respectively.

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INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 6 - INTANGIBLE ASSETS

The Company incurred $21,180 and $6,638 of legal patent costs that were capitalized during the three months periods ended March 31, 2019 and 2018, respectively. In addition, the Company did not purchase any patents through issuance of common stock shares of the Company for the three months period ended March 31, 2019. The Company purchased $280,100 of patents through the issuance of 200,000 common stock shares of the Company during the year ended December 31, 2018.

Intangible Asset Summary

The following table summarizes the estimated fair values as of March 31, 2019 of the identifiable intangible assets acquired, their useful life, and method of amortization:

	Estimated Fair Value			Remaining Estimated Useful Life (Years)		Three Months Amortization Expense
Intellectual Property	$	814,582			14.41	$	10,206
Patents		600,344			17.96		4,024
Total	$	1,414,926				$	14,230
Less: accumulated amortization		(201,965	)
Intellectual property and patents, net		1,212,961
Less: pending patents not subject to amortization		(272,415	)
Net intangible assets subject to amortization	$	940,546

The net intangible asset was $1,212,961, net of accumulated amortization of $201,965, as of March 31, 2019. Amortization expense was $14,230 and $10,899 for the three months periods ended March 31, 2019 and 2018, respectively.

The estimated aggregate amortization expense over each of the next five years is as follows:

2019	$	43,950
2020		58,600
2021		58,600
2022		58,600
2023		58,600
Thereafter		662,196
Total Amortization	$	940,546

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LOAN PAYABLE

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 7 - LOAN PAYABLE

Loan payable consists of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019			December 31, 2018
Notes to a company due September 29, 2019, including interest at 6.00% per annum; unsecured; interest due monthly	$	66,842		$	105,125
Current portion of loan payable		(66,842	)		(105,125	)
Loan payable, less current portion	$	-		$	-

Interest expense for the three months periods ended March 31, 2019 and 2018 was $2,230 and $800, respectively.

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NOTES PAYABLE

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 8 - NOTES PAYABLE

Notes payable consist of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019			December 31, 2018
Note to a company amended on August 27, 2017 and February 27, 2019, due on or before one month from the amended date and the maturity date shall be extended for one month periods as long as the Company is not in default, interest shall accrue at 10% per annum, secured by the Company’s intellectual property	$	400,000		$	650,000
Note to an individual, non-interest bearing, unsecured and has no fixed terms of repayment		50,000			50,000
Note to an individual due April 1, 2019, interest payable at 6% per annum, unsecured, principal and accrued interest due at maturity. The Company issued 50,000 shares of its common stock on October 18, 2018 at a price per share of $2.88 as an equity kicker. This note and accrued interest was repaid on April 2, 2019,		150,000			150,000
Note to a company due December 15, 2018, interest payable at 5% per annum, unsecured, principal and accrued interest due at maturity. If this note is still outstanding as of the date of any bona fide sale of the Company’s preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a serious of related transactions, which offering definitively sets a price per share of common stock and results in a listing of the Company’s common stock on a national securities exchange. On January 1, 2019, we entered into an Amendment to extend the maturity date to June 30, 2019.		100,000			100,000
		700,000			950,000
Unamortized discount		(625	)		(30,000	)
Current portion of loan payable		(699,375	)		(920,000	)
Loan payable, less current portion	$	-		$	-

Interest expense for the three month periods ended March 31, 2019 and 2018 was $21,661 and $19,027, respectively.

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CONVERTIBLE PROMISSORY NOTES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 9 - CONVERTIBLE PROMISSORY NOTES

Convertible promissory notes consist of the following at March 31, 2019 and December 31, 2018:

	March 31, 2019		December 31, 2018
Convertible promissory notes totaling $1,400,000 due between December 31, 2018 and February 28, 2019, interest payable at 8% per annum; unsecured; principal and accrued interest convertible into common stock at the lower of $7.00 per share or the price per share of the latest closing of a debt or equity offering by the Company greater than $3,000,000; accrued interest due between December 31, 2018 and February 28, 2019. A total of $250,000 convertible promissory notes was repaid in 2018 and $450,000 convertible promissory notes were repaid in 2019. A total $400,000 of convertible promissory notes plus accrued interest of $71,342 have been converted in to 254,779 common stock shares of the Company in 2019. Remaining $550,000 of convertible promissory notes are currently in default.	$	550,000	$	1,400,000
Convertible promissory notes totaling $1,275,000 due November 30, 2018 and $750,000 due February 28, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018, which has not yet been paid. During the first quarter of 2019, the Company repaid $275,000. On February 13, 2019, $750,000 of convertible promissory notes plus accrued interest and penalties of $135,825 were converted into 479,144 common stock shares of the Company. On February 15, 2019, $1,000,000 of convertible promissory notes plus accrued interest and penalties of $94,750 were converted into 591,757 common stock shares of the Company.		-		2,025,000
Convertible promissory note totaling $500,000 due April 30, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS. This convertible promissory note and accrued interest was repaid on April 29, 2019.		500,000		500,000
Convertible promissory note totaling $500,000 due December 31, 2018, interest payable at 9% per annum; secured by all assets of the company; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price.		-		500,000

Convertible promissory notes totaling $575,000 due June 27, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018. $575,000 convertible promissory notes due June 27, 2019 plus accrued interest and penalties of $78,034 have been converted into 353,221 common stock shares of the Company in 2019.		-			575,000
Convertible promissory notes totaling $2,000,000 due October 31, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018, which has not yet been paid. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price.		-			575,000
Convertible demand note totaling $2,000,000 due on demand at any time after the earlier of (i) an Event of Default, (ii) the closing of a proposed merger (the “Merger”) of a wholly-owned subsidiary of the Company with and into Chemistry Holdings, Inc., a Delaware corporation, and (iii) May 13, 2019 if a binding definitive agreement and plan of merger with respect to the Merger has not been executed by that date, in each case if this Note has not previously converted into Common Stock. If the Merger has not been consummated by May 13, 2019, the outstanding principal balance of this Note (the “Outstanding Balance”) shall automatically be converted (the “Conversion”) into shares of common stock, par value $0.001 per share, of the Company at a price per share equal to $3.34 (the “Conversion Price”) effective as of May 13, 2019 (the “Conversion Date”), and the Outstanding Balance shall thereafter be considered repaid in full. Please see Note 15 - Subsequent Events footnote for further information.		2,000,000			-
		3,050,000			5,575,000
Unamortized discount		(675,001	)		(332,569	)
Current portion of convertible promissory notes		2,374,999			5,242,431
Convertible promissory notes, less current portion	$	-		$	-

During the three month periods ended March 31, 2019 and 2018, the Company incurred $458,899 and $147,608, respectively, amortization of discount. Interest expense for the three month periods ended March 31, 2019 and 2018 was $72,813 and $303,174, respectively. 

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DERIVATIVE LIABILITY

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 10 - DERIVATIVE LIABILITY

The Company evaluates its convertible instruments, options, warrants or other contracts, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instruments, the instrument is marked to fair value at the conversion date then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.

The following table summarizes fair value measurements by level at March 31, 2019 for assets and liabilities measured at fair value on a recurring basis:

	Total		Level 1		Level 2		Level 3
Fair value of Derivative Liability	$	770,248	$	-	$	-	$	770,248

The following table summarizes fair value measurements by level at December 31, 2018 for assets and liabilities measured at fair value on a recurring basis:

	Total		Level 1		Level 2		Level 3
Fair value of Derivative Liability	$	617,628	$	-	$	-	$	617,628

The Company has issued convertible promissory notes during 2018 and 2017. The convertible notes require us to record the value of the conversion feature as a liability, at fair value, pursuant to ASC 815, including provisions in the notes that protect the holders from declines in the Company’s stock price, which is considered outside the control of the Company. The derivative liabilities are marked-to-market each reporting period and changes in fair value are recorded as a non-operating gain or loss in our statement of operations, until they are completely settled. The fair value of the conversion feature is determined each reporting period using the Black-Scholes option pricing model and is affected by changes in inputs to that model including our stock price, expected stock price volatility, dividends, interest rates and expected term. The assumptions used in valuing the derivative liability during 2019 were as follows:

Significant assumptions:
Risk-free interest rate at grant date	2.23	%
Expected stock price volatility	138.42	%
Expected dividend payout	-
Expected option life (in years)	1
Expected forfeiture rate	0

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis from December 31, 2017 to March 31, 2019:

	Fair value of derivative liabilities
Balance at December 31, 2017	$	90,738
Initial fair value of derivative liability recorded as debt discount		297,599
Loss on change in fair value included in earnings		229,291
Balance at December 31, 2018		617,628
Loss on change in fair value included in earnings		152,620
Balance at March 31, 2019	$	770,248

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STOCK BASED AWARDS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 11 - STOCK BASED AWARDS

On December 29, 2017 (“Effective Date”), the Company adopted the CURE Pharmaceutical Holding Corp. 2017 Equity Incentive Plan (the “Plan”), pursuant to which an aggregate of 5,000,000 shares of the common stock of the Company are available for grant. The Board of Directors have determined that it is in the best interests of the Company and its stockholders to provide an additional incentive for certain employees, including executive officers, and non-employee members of the Board of Directors of the Company by granting to them awards with respect to the common stock of the Company pursuant to the Plan. The Plan seeks to achieve this purpose by providing for awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards (“Awards”). The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date.

The Company did not issue any Restricted Common Stock (“RCS”), Nonstatutory Stock Options (“NSO”) or Incentive Stock Options (“ISO”) to any employees, including executive officers, non-employee members of the Board of Directors of the Company, members of the Advisory Board Committee and consultants during the three months period ended March 31, 2019. Vesting period for awarded RCS, NSO and ISO’s range from immediate to quarterly over a 4 year period. For NSO’s and ISO awarded, the term to exercise their NSO or ISO is 10 years.

Stock Options

The Company’s stock option activity was as follows:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2017		2,313,050			0.79		9.27
Granted		-			-		-
Exercised		-			-		-
Forfeited/Expired		(89,544	)		0.74		-
Outstanding, December 31, 2018		2,223,506			0.79		9.02
Exercisable at December 31, 2018		982,934			0.81		9.02

Range of Exercise Price	Number of Awards		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Awards Exercisable		Weighted Average Exercise Price
$0.61 - $1.81		2,223,506		9.02	$	0.79		982,934	$	0.81
		2,223,506		9.02	$	0.79		982,934	$	0.81

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2019 was $7,926.

The aggregate grant date fair value of options granted during the three months ended March 31, 2019 and year ended December 31, 2018 amounted to $1,488,070 and $1,541,353, respectively. Compensation expense related to stock options was $94,041 and $0 for the three months periods ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the total unrecognized fair value compensation cost related to unvested stock options was $817,722, which is to be recognized over a remaining weighted average period of approximately 9.02 years.

The weighted-average fair value of options granted during the three months ended March 31, 2019 and year ended December 31, 2018, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	March 31, 2019			December 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.23	%		2.51	%
Expected stock price volatility		138.42	%		156.15	%
Expected dividend payout		-			-
Expected option life (in years)		10			10
Expected forfeiture rate		0	%		0	%

Restricted Stock

The Company’s restricted stock activity was as follows:

Compensation expense related to restricted shares was $136,250 and $0 for the three months periods ended March 31, 2019 and 2018, respectively. Information relating to non-vested restricted award shares is as follows:

	Restricted Stock Shares			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2018		317,708			1.44
Granted		-			-
Vested		(93,750	)		1.44
Forfeited/Expired		-			-
Non-vested, March 31, 2019		223,958			1.44

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WARRANT AGREEMENTS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 12 - WARRANT AGREEMENTS

On February 13, 2019, the Company issued 657,655 warrants at a fair market value of $1,792,965 and with an exercise price of $2.31 per share in connection with the conversion of $1,325,000 convertible promissory notes.

On February 13, 2019, the Company issued 99,476 warrants at a fair market value of $271,202 and with an exercise price of $2.31 per share in connection with the broker fees earned from the conversion of $1,325,000 convertible promissory notes.

On February 15, 2019, the Company issued 312,500 warrants at a fair market value of $866,620 and with an exercise price of $2.00 per share in connection with the conversion of $500,000 convertible promissory notes.

On February 15, 2019, the Company issued 295,879 warrants at a fair market value of $814,834 and with an exercise price of $2.31 per share in connection with the conversion of $1,000,000 convertible promissory notes.

Warrants that vest at the end of a one-year period are amortized over the vesting period using the straight-line method.

The Company’s warrant activity was as follows:

	Warrants		Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2018		5,340,751		2.20		3.80
Granted		1,365,510		2.24		3.33
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding, March 31, 2019		6,706,261		2.01		2.08
Exercisable at March 31, 2019		5,682,261		2.01		2.15

Range of Exercise Price		Number of Warrants		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Warrants Exercisable		Weighted Average Exercise Price
$	1.00 – $7.00		6,706,261		2.08	$	2.01		5,682,261	$	2.01
			5,340,751		2.08	$	2.01		5,682,261	$	2.01

The weighted-average fair value of warrants granted to during the three months ended March 31, 2019 and year ended December 31, 2018, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	March 31, 2019			December 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.23	%		2.51	%
Expected stock price volatility		138.42	%		156.15	%
Expected dividend payout		-			-
Expected option life (in years)		3			3
Expected forfeiture rate		0	%		0	%

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 13 - STOCKHOLDERS' EQUITY

Common Share Issuances

On January 1, 2019, the Company issued 13,827 common stock shares at $2.26 per share for investor relations consulting services to be performed over a six-month period. The total value of this issuance was $31,249 and as of March 31, 2019, $6,388 is included in prepaid expenses and other assets.

On December 14, 2018, the Company entered into an Advisory Consulting Agreement (“Agreement”). Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company that vest 30 days from December 14, 2018 and an additional 250,000 common stock shares of the Company that vest monthly over 24 months. On January 14, 2019, the Company issued 50,000 common stock shares of the Company at $1.84 per share per the terms of this Agreement. On February 14, 2019, the Company issued 10,417 common stock shares of the Company at $3.35 per share per the terms of this Agreement.

On December 14, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 833,333 shares of common stock of the Company (the “Shares” or “Securities”) at $1.20 per share (the “Share Price”) for a total purchase price of One Million Dollars ($1,000,000) (the “Purchase Price”). Per the terms of the SPA, the Company and the investor agreed to multiple Closings and Closing Dates (as hereinafter defined): (1) a Closing of $250,000 five (5) business days after the Closing Date; (2) a Closing of $250,000 ten (10) business days after the Closing Date; (3) a Closing of $250,000 thirty (30) business days after the Closing Date; and (4) a Closing $250,000 sixty (60) business days after the Closing Date. Each of the aforementioned being a Closing and the dates of each Closing being a Closing Date. The investor funded $250,000 on December 26, 2018 and the Company issued 208,333 common stock shares. The investor funded another $250,000 on December 31, 2018 and the Company issued another 208,333 common stock shares. The investor funded $250,000 on January 22, 2019 and another $250,000 on February 25, 2019 and the Company issued 208,333 common stock shares and 208,334 common stock shares, respectively.

On February 1, 2019, the Company amended two convertible promissory notes totaling $600,000 to extend the maturity dates to February 28, 2019. For extending the maturity date, the Company will issue a total of 30,000 common stock shares of the Company at $2.32 price per share. The total value of this issuance was $69,600. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 30,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019.

On February 13, 2019, the Company entered into Debt Conversion Agreements (“Agreements”) with thirty convertible promissory note holders totaling $1,325,000 plus accrued interest and penalties of $213,859 that were converted into 832,365 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $812,241. In connection with the conversion of the convertible promissory notes, the Company will issue 657,655 warrants that were priced at $2.31 price per share.

On February 14, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”), where $250,000 (Two Hundred Fifty Thousand Dollars) of $650,000 (Six Hundred Fifty Thousand Dollars) of the Outstanding Balance under the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note dated August 27, 2017 (the “Note”) shall be converted into 135,135 (One Hundred Thirty-Five Thousand, One Hundred Thirty-Five) shares of Common Stock of the Company (the “Conversion Shares”) at a conversion price of $1.85 per share (a discounted rate calculated as an approximation based on 20% discount on 5 days volume weighted average price of the market rate). As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $201,351.

On February 14, 2019, the Company entered into a First Amendment to Amended and Restated Senior Secured Promissory Note, that amends the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note effective August 27, 2017 (“Amended Agreement”) with the Note Holder (“Holder”). The Company and the Holder have agreed that the Maturity Date shall be extended to February 27, 2019 in exchange for 75,000 common stock shares of the Company at a price per share of $3.35. The total value of this issuance was $251,250. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 75,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) to convert $400,000 of convertible promissory notes plus accrued interest of $71,342 into 254,779 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $630,238.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,000,000 plus accrued interest of $94,750 that were converted into 591,757 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $860,087. In connection with the conversion of the convertible promissory notes, the Company will issue 295,879 warrants that were priced at $2.31 price per share.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,575,000 plus accrued interest of $18,406 that were converted into 861,301 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $745,929.

On February 19, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $425,000 plus accrued interest of $425 that were converted into 168,819 common stock shares of the Company with a conversion price per share $2.52 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.

On February 19, 2019, the Company entered into a Consulting Agreement (“Agreement”) with a Company. Per the terms of the Agreement, the Company is to issue 25,000 common stock shares of the Company for providing investor relations services, where 12,500 common stock shares of the Company are due immediately and the remaining 12,500 common stock shares of the Company is due June 19, 2019. On February 19, 2019, the Company issued 250,000 common stock shares of the Company at $3.39 per share.

On February 25, 2019, the Company issued 46,875 and 83,333 common stock shares of the Company at $0.74 and $1.81 per share, respectively, relating to restricted stock issued from the Company’s 2017 Equity Incentive Plan.

Stock Payable

On January 4, 2019, the Company entered into a Consulting Agreement (“Agreement”) with an individual. Per the terms of the Agreement, the Company is to issue 45,000 common stock shares of the Company for providing investor relations services. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $68,400.

On January 15, 2019, the Company entered into an Advisory Consulting Agreement (“Agreement”) with an individual. Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company for providing investor relations services. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $92,000.

On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $500,000 plus accrued interest of $28,588 that were converted into 285,723 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $528,588. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $409,672. In connection with the conversion of the convertible promissory notes, the Company will issue 312,500 warrants that were priced at $2.00 price per share.

On February 26, 2019, the Company entered into a Media Advertising Agreement (“Agreement”). Per the terms of the Agreement, the Company was to issue 60,000 common stock shares at $3.78 per share for providing media and advertising services over a six month period. The total value of these issuances was $226,800 and as of March 31, 2019, $185,450 is included in prepaid expenses and other assets. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $226,800.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 14 - COMMITMENTS AND CONTINGENCIES

Litigation:

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The only significant matter of which the Company is aware of is discussed below.

On May 22, 2017, Sandy Sierra Garate (“Applicant”), an employee of the Company, filed an application for benefits due to serious and willful misconduct of the employer pursuant to labor code section 4553 with the State of California Workers’ Compensation Appeals Board (“WCAB”) (WCAB Case No: ADJ 10686812) resulting in injury arising out of and in the course of the Applicant’s employment on August 5, 2016. The Applicant was requesting relief in this matter for a one-half increase in all compensation recoverable in connection with the injury of August 5, 2016, for the allowance of costs and expenses in an amount to be determined and for such further relief as is deemed appropriate. On February 13, 2019, the Company and the Applicant entered to into a Workers’ Compensation Appeals Board Compromise and Release Agreement (“Agreement”) where the Applicant was awarded a settlement amount of $8,500 relating to WCAB Case No: ADJ 10686812. Out of the settlement amount, $1,250 is to be paid to the Applicant’s attorney. On February 20, 2019, the Company received an Order Approving Compromise and Release of WCAB Case No: ADJ 10686812 based on the Agreement entered into with the Company and the Applicant.

Operating leases

The Company maintains its corporate offices and manufacturing facility at 1620 Beacon Place, Oxnard, CA 93033, which contains approximately 25,000 square feet. The Company is currently on a month-to-month lease.

Total rent expense for the three months periods ended March 31, 2019 and 2018 was $63,028 and $74,178, respectively.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Note 15 - SUBSEQUENT EVENTS

On April 8, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 150,000 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $495,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 9, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 100,000 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $330,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 12, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,152 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 15, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 60,606 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $200,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 15, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,152 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On April 15, 2019, the Company entered into a Termination and Release Agreement (“Agreement”) with Oak Therapeutics (“Oak”) to surrender all of its Oak shares to Oak and terminating any rights the Company might have to acquire additional shares or interest in Oak. The parties terminated all contractual relationships between them, whether written or verbal, express or implied. All license or other rights previously granted by Oak to the Company or the Company to Oak were terminated, including all licenses or rights of any kind granted by the Company.

On April 17, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 127,273 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $420,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On May 6, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,151 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On May 13, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 45,455 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $150,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares.

On May 14, 2019 (the “Closing Date”), Cure Pharmaceutical Holding Corp., a Nevada corporation (the “Company”), and CURE Chemistry Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), completed the transactions contemplated by the Agreement and Plan of Merger and Reorganization, dated March 31, 2019 (the “Merger Agreement”), with Chemistry Holdings, Inc., a Delaware corporation (“Chemistry Holdings”). As agreed in the Merger Agreement, the Company acquired Chemistry Holdings pursuant to a merger of the Merger Sub with and into Chemistry Holdings (the “Merger”). Pursuant to the Merger, Chemistry Holdings became a wholly-owned subsidiary of the Company and the stockholders of Chemistry Holdings received shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) and warrants to purchase Common Stock in exchange for all of the issued and outstanding shares of Chemistry Holdings.

In connection with signing the Merger Agreement, the Company received an investment of $2,000,000 (the “Principal Amount”) from Chemistry Holdings pursuant to a convertible note (the “Note”). Such Note, on the Closing Date, supersedes the amended convertible note executed on April 30, 2019 and became an intercompany payable and will be cancelled. As a condition to closing, Chemistry Holdings had a cash balance at closing of at least $8,000,000 plus the amount of certain liabilities and expenses (the “Closing Cash Requirement”).

The maximum number of shares of Common Stock that may be issued to the stockholders of Chemistry Holdings in connection with the Merger, including escrowed shares and shares issuable pursuant to earn-out provisions and warrants, is 32,072,283 shares allocated as follows: (i) 5,700,000 shares of Common Stock as upfront consideration issued at the Closing (the “Upfront Consideration”); (ii) 7,128,913 shares to be held in escrow, subject to indemnification and clawback rights that lapse upon the achievement of certain milestones; (iii) 3,207,228 shares that may be issued pursuant to an earn-out over five years upon the achievement of certain technological implementations; (iv) 8,018,071 shares that may be issued pursuant to an earn-out over two years upon the achievement of certain revenue goals; and (v) 8,018,071 shares issuable upon exercise of warrants that become exercisable upon achieving certain revenue goals between the second and fourth anniversary of the Closing Date at an exercise price of $5.01 per share, exercisable, to the extent vested, for five years from the Closing Date.

In addition, certain stockholders of Chemistry Holdings agreed to return to the Company certain shares of Common Stock (approximately 231,294 shares) in satisfaction of their tax withholding obligations related to the exercise of Chemistry Holdings stock options in connection with the Merger.

Unaudited pro forma results of operations for the three months ended March 31, 2019 and 2018, as if the Company and Chemistry Holdings had been combined as of the beginning of the period, follows. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future.

	CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2019			Chemistry Holdings Inc for the Three Months Ended March 31, 2019			Chemistry Spirits LLC for the Three Months Ended March 31, 2019			Chemistry Labs LLC for the Three Months Ended March 31, 2019			Consolidated
Net revenues	$	74,500		$	-		$	-		$	-		$	74,500
Net loss	(10,028,168		)		(5,054	)		(2,137	)		(26,323	)		(10,061,682	)
Net loss per share, basic and diluted	$	(0.17	)	$	-		$	-		$	-		$	(0.17	)

	CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2018			Chemistry Holdings Inc for the Three Months Ended March 31, 2018		Chemistry Spirits LLC for the Three Months Ended March 31, 2018			Chemistry Labs LLC for the Three Months Ended March 31, 2018		Consolidated
Net revenues	$	105,014		$	-	$	-		$	326,172	$	431,186
Net income (loss)		(1,901,836	)		21,599		(88,535	)		29,347		(1,939,425	)
Net loss per share, basic and diluted	$	(0.03	)	$	-	$	-		$	-	$	(0.03	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2019

Summary Of Significant Accounting Policies Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity.

Principle of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of CURE Pharmaceutical Holding Corp (“CPHC”), its wholly-owned subsidiary, CURE Pharmaceutical Corporation (“CURE”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“OAK”), collectively referred to as (“CURE”, “we”, “us”, “our” or the “Company”). All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s film strip product represents the principal operations of the Company.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal period ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2019 and December 31, 2018, the Company had no cash equivalents. At March 31, 2019 and December 31, 2018, the Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions.

Investment in Associates

An associate is an entity over which the Company has significant influence through a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.

The results of assets and liabilities of associates are incorporated in the condensed consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Company’s share of the net assets of the associate, less any impairment in the value of the investment. Losses of an associate in excess of the Company’s interest in that associate are not recognized. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment.

On January 8, 2016, the Company received 50% ownership in Cure Innovations, Inc (“CI”). CI was created in 2015 by IncuBrands Studio, Inc (“IncuBrands”). The Company and IncuBrands each own 50% of the common stock of CI. The Company and IncuBrands entered into a Joint Venture agreement in 2013 to distribute several OTF products utilizing IncuBrands marketing and contacts in various industries as well as utilize the Company’s technology and capabilities of manufacturing OTF’s. On December 28, 2018, in agreement with IncuBrands, the Company dissolved CI as we did not see a viable future relating to this joint venture.

On December 6, 2016, the Company entered into a Joint Venture Agreement (“Joint Venture”) with Pace Wellness, Inc. (“Pace”) to jointly develop three Active Pharmaceutical Ingredients (“API”) within the nonprescription and/or Over-the-Counter (OTC) medicines specifically utilizing the Company’s patented and proprietary CUREFilm™ Technology. The three API’s to be jointly developed are Diphenhydramine HCL, Omeprazole and a third API to be determined at a later date (“Products”). Pace shall be the exclusive global distributor of the Products under the Solves Strips® branding or other private or branded labels. All benefits, advantages, and liabilities derived from, or incurred in respect of the Joint Venture shall be borne by the parties in proportion of their respective participating interests of 50/50 equal interest. As of March 31, 2019, the Company has only contributed $5,000 to the Joint Venture. The Company is looking to dissolve this Joint Venture due to Pace’s insolvency and we are no longer looking to develop these Products.

Property and Equipment

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Depreciation has been provided using the straight-line method on the following estimated useful lives:

Manufacturing equipment	5-7 Years
Computer and other equipment	3-7 Years
Leasehold Improvements	Lesser of useful life or the term of the lease

Accounts Receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. At March 31, 2019 and December 31, 2018, management determined that an allowance was necessary which amounted to approximately $0 and $7,500, respectively.

Inventory

Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of its inventory, which includes amounts related to materials, direct labor, and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventories to their realizable value in the period in which the impairment is first identified.

Impairment of Long-Lived Assets

We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, we record charges for impairments. Specifically:

· For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and

· For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any.

Management determined that no impairment indicators were present and that no impairment charges were necessary as of March 31, 2019 or December 31, 2018.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition”. The Company adopted Topic 606 using a modified retrospective approach for the years ended December 31, 2017 and prior and has been applied prospectively in the Company’s financial statements beginning January 1, 2018. Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time”, depending on the facts and circumstances of the arrangement, and will be evaluated using a five-step model. The adoption of Topic 606 did not have a material impact on the Company’s financial statements, at initial implementation nor will it have a material impact on an ongoing basis. 

To achieve the core principle of Topic 606, we perform the following steps:

1.	Identify the contract(s) with customer;
2.	Identify the performance obligations in the contract;
3.	Determine the transactions price;
4.	Allocate the transactions price to the performance obligations in the contract; and
5.	Recognize revenue when (or as) we satisfy a performance obligation.

We derive revenues from two primary sources: products and services. Product revenue includes the shipment of product according to the agreement with our customers. Services include research and development contracts for the development of OTF products utilizing our CureFilm™ Technology or our other proprietary technologies. Rarely, contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are typically estimated based on observable transactions when these services are sold on a standalone basis.

The Company’s formulation and product development income include services for the development of OTF products utilizing our CureFilm™ Technology. Our development contracts have up to four phases. Revenue is recognized based on progress toward completion of the performance obligation in each phase. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. Costs to fulfill these obligations mainly include materials, labor, supplies and consultants.

Deferred revenue is shown separately in the condensed consolidated balance sheets. At March 31, 2019 and December 31, 2018 we had deferred revenues of $311,275 and $383,275, respectively.

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying statements of operations. The Company did not record advertising costs for the three months periods ended March 31, 2019 and 2018.

Research and Development

Costs incurred in connection with the development of new products and processes are charged to research and development expenses as incurred. The Company recorded research and development expenses of $360,870 and $426,529 for the three months periods ended March 31, 2019 and 2018, respectively.

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the 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 determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Convertible Debentures

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 ““Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

Derivative Liabilities

ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula and present value pricing. At March 31, 2019 and December 31, 2018, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations and comprehensive loss.

Fair Value Measurements

The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements and establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:	Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3:	Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses and notes and loans payable approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying amount of the notes and convertible promissory notes approximates the estimated fair value for these instruments as management believes that such notes constitute substantially all of the Company’s debt and the interest payable on the notes approximates the Company’s incremental borrowing rate. We measured the liability for price adjustable warrants and embedded derivative features in the convertible notes, using the probability adjusted Black-Scholes option pricing model (“Black-Scholes”), which management has determined approximates values using more complex methods, using Level 3 inputs. (See Note 10)

Net Loss per Common Share

Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock awards. Diluted net loss per share includes the effect of common stock equivalents (stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. Net loss is adjusted for the dilutive effect of the change in fair value liability for price adjustable warrants, if applicable.

The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive:

	Year ended December 31,
	March 31, 2019		December 31, 2018
Restricted stock and stock options outstanding		-		97,742
Warrants		90,000		2,879,695
Shares to be issued upon conversion of convertible payable		115,047		236,475
Total		205,047		3,213,912

Going Concern and Management’s Liquidity Plans

The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At March 31, 2019, we had a significant accumulated deficit of approximately $39.3 million and a negative working capital of approximately $1.8 million. Our operating activities consume the majority of our cash resources. We anticipate that we will continue to incur operating losses as we execute our commercialization and research and development plans, as well as strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations, at least into the near future. We have previously funded, and plan to continue funding, our losses primarily through the sale of common and preferred stock, combined with or without warrants, the sale of notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. However, we cannot be certain that we will be able to obtain such funds required for our operations at terms acceptable to us or at all.

Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise between $8,000,000 to $10,000,000 in capital over the next 12 months through a merger and $1,000,000 to $2,000,000 through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 to 18 months. However, the outcome of these matters cannot be predicted with certainty at this time.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of and classification of assets carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Recently Issued Standards

In February 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02"). This guidance, as amended by subsequent ASU's on the topic, improves transparency and comparability among companies by recognizing right of use (ROU) assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We will adopt ASU No. 2016-02 in our fiscal year beginning January 1, 2019 and will use the alternative transition method provided by the FASB in ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, with no restatement of comparative periods.

The new standard provides optional practical expedients in transition. We expect to only elect the "package of practical expedients" where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting and we do not expect to elect any of these practical expedients on adoption. We continue to assess the impact of the new standard and believe it will not have a material effect on the condensed consolidated balance sheet.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard became effective for the Company on January 1, 2018. There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and did not have a material impact on the Company’s financial position, results of operations or cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ASU. 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of this ASU became effective for the Company in the first quarter of 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s condensed consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-7, Compensation – Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting. This guidance supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The guidance permits early adoption and was adopted by the Company in the first quarter of fiscal year 2019. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements.

There are various other updates recently issued, however, they are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2019

Summary Of Significant Accounting Policies Tables

Property and equipment

Manufacturing equipment	5-7 Years
Computer and other equipment	3-7 Years
Leasehold Improvements	Lesser of useful life or the term of the lease

Basic and diluted loss per share

	Year ended December 31,
	March 31, 2019		December 31, 2018
Restricted stock and stock options outstanding		-		97,742
Warrants		90,000		2,879,695
Shares to be issued upon conversion of convertible payable		115,047		236,475
Total		205,047		3,213,912

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INVENTORY (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Tables

Schedule of inventory

	March 31, 2019			December 31, 2018
Raw materials	$	27,094		$	25,297
Packaging components		7,687			7,687
Work-in-process		8,162			8,162
		42,943			41,146
Reserve for obsolescence		(3,142	)		(3,370	)
Total inventory	$	39,801		$	37,776

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PREPAID EXPENSES AND OTHER ASSETS (Tables)

3 Months Ended

Mar. 31, 2019

Prepaid Expenses And Other Assets Tables

Schedule of prepaid expenses and other assets

	March 31, 2019			December 31, 2018
Prepaid consulting services– stock-based compensation	$	897,313		$	935,883
Prepaid consulting services		73,667			82,167
Prepaid insurance		87,911			120,877
Other receivables		2,666			2,666
Prepaid expenses		37,200			37,200
Prepaid expenses and other assets		1,098,757			1,178,793
Current portion of prepaid expenses and other assets		(965,641	)		(946,386	)
Prepaid expenses and other assets less current portion	$	133,116		$	232,407

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2019

Property And Equipment And Intangible Assets Tables

Schedule of property and equipment, net

	March 31, 2019			December 31, 2018
Manufacturing equipment	$	857,612		$	841,098
Computer and other equipment		186,655			183,346
Leasehold improvements		51,788			48,488
Less accumulated depreciation		(799,230	)		(773,022	)
Property and Equipment, net	$	296,825		$	299,910

XML

INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2019

Intangible Assets

Schedule of intangible assets, net

	Estimated Fair Value			Remaining Estimated Useful Life (Years)		Three Months Amortization Expense
Intellectual Property	$	814,582			14.41	$	10,206
Patents		600,344			17.96		4,024
Total	$	1,414,926				$	14,230
Less: accumulated amortization		(201,965	)
Intellectual property and patents, net		1,212,961
Less: pending patents not subject to amortization		(272,415	)
Net intangible assets subject to amortization	$	940,546

Schedule of future amortization expense

2019	$	43,950
2020		58,600
2021		58,600
2022		58,600
2023		58,600
Thereafter		662,196
Total Amortization	$	940,546

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LOAN PAYABLE (Tables)

3 Months Ended

Mar. 31, 2019

Loan Payable Tables

Schedule of loan Payable

	March 31, 2019			December 31, 2018
Notes to a company due September 29, 2019, including interest at 6.00% per annum; unsecured; interest due monthly	$	66,842		$	105,125
Current portion of loan payable		(66,842	)		(105,125	)
Loan payable, less current portion	$	-		$	-

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NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2019

Notes Payable Tables

Schedule of notes payable

	March 31, 2019			December 31, 2018
Note to a company amended on August 27, 2017 and February 27, 2019, due on or before one month from the amended date and the maturity date shall be extended for one month periods as long as the Company is not in default, interest shall accrue at 10% per annum, secured by the Company’s intellectual property	$	400,000		$	650,000
Note to an individual, non-interest bearing, unsecured and has no fixed terms of repayment		50,000			50,000
Note to an individual due April 1, 2019, interest payable at 6% per annum, unsecured, principal and accrued interest due at maturity. The Company issued 50,000 shares of its common stock on October 18, 2018 at a price per share of $2.88 as an equity kicker. This note and accrued interest was repaid on April 2, 2019,		150,000			150,000
Note to a company due December 15, 2018, interest payable at 5% per annum, unsecured, principal and accrued interest due at maturity. If this note is still outstanding as of the date of any bona fide sale of the Company’s preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a serious of related transactions, which offering definitively sets a price per share of common stock and results in a listing of the Company’s common stock on a national securities exchange. On January 1, 2019, we entered into an Amendment to extend the maturity date to June 30, 2019.		100,000			100,000
		700,000			950,000
Unamortized discount		(625	)		(30,000	)
Current portion of loan payable		(699,375	)		(920,000	)
Loan payable, less current portion	$	-		$	-

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CONVERTIBLE PROMISSORY NOTES (Tables)

3 Months Ended

Mar. 31, 2019

Convertible Promissory Notes Tables

Schedule of convertible promissory notes

	March 31, 2019		December 31, 2018
Convertible promissory notes totaling $1,400,000 due between December 31, 2018 and February 28, 2019, interest payable at 8% per annum; unsecured; principal and accrued interest convertible into common stock at the lower of $7.00 per share or the price per share of the latest closing of a debt or equity offering by the Company greater than $3,000,000; accrued interest due between December 31, 2018 and February 28, 2019. A total of $250,000 convertible promissory notes was repaid in 2018 and $450,000 convertible promissory notes were repaid in 2019. A total $400,000 of convertible promissory notes plus accrued interest of $71,342 have been converted in to 254,779 common stock shares of the Company in 2019. Remaining $550,000 of convertible promissory notes are currently in default.	$	550,000	$	1,400,000
Convertible promissory notes totaling $1,275,000 due November 30, 2018 and $750,000 due February 28, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018, which has not yet been paid. During the first quarter of 2019, the Company repaid $275,000. On February 13, 2019, $750,000 of convertible promissory notes plus accrued interest and penalties of $135,825 were converted into 479,144 common stock shares of the Company. On February 15, 2019, $1,000,000 of convertible promissory notes plus accrued interest and penalties of $94,750 were converted into 591,757 common stock shares of the Company.		-		2,025,000
Convertible promissory note totaling $500,000 due April 30, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS. This convertible promissory note and accrued interest was repaid on April 29, 2019.		500,000		500,000
Convertible promissory note totaling $500,000 due December 31, 2018, interest payable at 9% per annum; secured by all assets of the company; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price.		-		500,000

Convertible promissory notes totaling $575,000 due June 27, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018. $575,000 convertible promissory notes due June 27, 2019 plus accrued interest and penalties of $78,034 have been converted into 353,221 common stock shares of the Company in 2019.		-			575,000
Convertible promissory notes totaling $2,000,000 due October 31, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018, which has not yet been paid. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price.		-			575,000
Convertible demand note totaling $2,000,000 due on demand at any time after the earlier of (i) an Event of Default, (ii) the closing of a proposed merger (the “Merger”) of a wholly-owned subsidiary of the Company with and into Chemistry Holdings, Inc., a Delaware corporation, and (iii) May 13, 2019 if a binding definitive agreement and plan of merger with respect to the Merger has not been executed by that date, in each case if this Note has not previously converted into Common Stock. If the Merger has not been consummated by May 13, 2019, the outstanding principal balance of this Note (the “Outstanding Balance”) shall automatically be converted (the “Conversion”) into shares of common stock, par value $0.001 per share, of the Company at a price per share equal to $3.34 (the “Conversion Price”) effective as of May 13, 2019 (the “Conversion Date”), and the Outstanding Balance shall thereafter be considered repaid in full. Please see Note 15 - Subsequent Events footnote for further information.		2,000,000			-
		3,050,000			5,575,000
Unamortized discount		(675,001	)		(332,569	)
Current portion of convertible promissory notes		2,374,999			5,242,431
Convertible promissory notes, less current portion	$	-		$	-

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DERIVATIVE LIABILITY (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Liability Tables

Schedule of fair value measurements on recurring basis

The following table summarizes fair value measurements by level at March 31, 2019 for assets and liabilities measured at fair value on a recurring basis:

	Total		Level 1		Level 2		Level 3
Fair value of Derivative Liability	$	770,248	$	-	$	-	$	770,248

The following table summarizes fair value measurements by level at December 31, 2018 for assets and liabilities measured at fair value on a recurring basis:

	Total		Level 1		Level 2		Level 3
Fair value of Derivative Liability	$	617,628	$	-	$	-	$	617,628

Schedule of derivative liability assumptions used

Significant assumptions:
Risk-free interest rate at grant date	2.23	%
Expected stock price volatility	138.42	%
Expected dividend payout	-
Expected option life (in years)	1
Expected forfeiture rate	0

Reconciliation of derivative liabilities

	Fair value of derivative liabilities
Balance at December 31, 2017	$	90,738
Initial fair value of derivative liability recorded as debt discount		297,599
Loss on change in fair value included in earnings		229,291
Balance at December 31, 2018		617,628
Loss on change in fair value included in earnings		152,620
Balance at March 31, 2019	$	770,248

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STOCK BASED AWARDS (Tables)

3 Months Ended

Mar. 31, 2019

Stock Based Awards

Schedule of stock option activity

	Options			Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2017		2,313,050			0.79		9.27
Granted		-			-		-
Exercised		-			-		-
Forfeited/Expired		(89,544	)		0.74		-
Outstanding, December 31, 2018		2,223,506			0.79		9.02
Exercisable at December 31, 2018		982,934			0.81		9.02

Range of Exercise Price	Number of Awards		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Awards Exercisable		Weighted Average Exercise Price
$0.61 - $1.81		2,223,506		9.02	$	0.79		982,934	$	0.81
		2,223,506		9.02	$	0.79		982,934	$	0.81

Weighted-average fair value of options granted

	March 31, 2019			December 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.23	%		2.51	%
Expected stock price volatility		138.42	%		156.15	%
Expected dividend payout		-			-
Expected option life (in years)		10			10
Expected forfeiture rate		0	%		0	%

Schedule of non-vested restricted award shares

	Restricted Stock Shares			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2018		317,708			1.44
Granted		-			-
Vested		(93,750	)		1.44
Forfeited/Expired		-			-
Non-vested, March 31, 2019		223,958			1.44

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WARRANT AGREEMENTS (Tables)

3 Months Ended

Mar. 31, 2019

Warrant Agreements Tables

Schedule of change in warrant

	Warrants		Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2018		5,340,751		2.20		3.80
Granted		1,365,510		2.24		3.33
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding, March 31, 2019		6,706,261		2.01		2.08
Exercisable at March 31, 2019		5,682,261		2.01		2.15

Range of Exercise Price		Number of Warrants		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Warrants Exercisable		Weighted Average Exercise Price
$	1.00 – $7.00		6,706,261		2.08	$	2.01		5,682,261	$	2.01
			5,340,751		2.08	$	2.01		5,682,261	$	2.01

Schedule of fair value of warrant valuation assumptions

	March 31, 2019			December 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.23	%		2.51	%
Expected stock price volatility		138.42	%		156.15	%
Expected dividend payout		-			-
Expected option life (in years)		3			3
Expected forfeiture rate		0	%		0	%

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SUBSEQUENT EVENTS (Tables)

3 Months Ended

Mar. 31, 2019

Subsequent Events

Schedule of business combination

	CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2019			Chemistry Holdings Inc for the Three Months Ended March 31, 2019			Chemistry Spirits LLC for the Three Months Ended March 31, 2019			Chemistry Labs LLC for the Three Months Ended March 31, 2019			Consolidated
Net revenues	$	74,500		$	-		$	-		$	-		$	74,500
Net loss	(10,028,168		)		(5,054	)		(2,137	)		(26,323	)		(10,061,682	)
Net loss per share, basic and diluted	$	(0.17	)	$	-		$	-		$	-		$	(0.17	)

	CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2018			Chemistry Holdings Inc for the Three Months Ended March 31, 2018		Chemistry Spirits LLC for the Three Months Ended March 31, 2018			Chemistry Labs LLC for the Three Months Ended March 31, 2018		Consolidated
Net revenues	$	105,014		$	-	$	-		$	326,172	$	431,186
Net income (loss)		(1,901,836	)		21,599		(88,535	)		29,347		(1,939,425	)
Net loss per share, basic and diluted	$	(0.03	)	$	-	$	-		$	-	$	(0.03	)

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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)	3 Months Ended
	Mar. 31, 2019 ft²	Nov. 10, 2017 shares	Jan. 08, 2016
State of Incorporation	Nevada
Date of Incorporation	May 15, 2014
Ownership percentage			50.00%
Oxnard, CA [Member]
Area of cGMP manufacturing plant | ft²	25,000
Oak Therapeutics [Member]
Shares received | shares		269,000
Ownership percentage		63.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended
	Mar. 31, 2019
Manufacturing Equipment [Member] | Minimum [Member]
Estimated useful lives	5 years
Manufacturing Equipment [Member] | Maximum [Member]
Estimated useful lives	7 years
Computer and other equipment [Member] | Minimum [Member]
Estimated useful lives	3 years
Computer and other equipment [Member] | Maximum [Member]
Estimated useful lives	7 years
Leasehold Improvements [Member]
Estimated useful lives description	Lesser of useful life or the term of the lease

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares	Mar. 31, 2019	Dec. 31, 2018
Summary Of Significant Accounting Policies
Restricted stock and stock options outstanding		97,742
Warrants	90,000	2,879,695
Shares to be issued upon conversion of convertible payable	115,047	236,475
Total	205,047	3,213,912

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Nov. 10, 2017	Jan. 08, 2016
Federal deposit insurance corporation insured limit	$ 250,000		$ 250,000
Ownership interest					50.00%
Valuation allowance percentage	100.00%
Accumulated deficit	$ (39,297,168)		(29,269,000)
Working capital deficit	(1,800,000)
Research and development expense	360,870	$ 426,529
Advertising costs	0		0
Joint venture contributions	5,000
Allowance for doubtful accounts	0		7,500
Deferred revenue	311,275		$ 383,275
Minimum [Member]
Capital required to sustain in operations	$ 4,000,000
Capital to be raised through a merger	8,000,000
Capital to be raised through issuance of common stock	$ 1,000,000
Maximum [Member]
Capital to be raised through a merger	10,000,000
Capital to be raised through issuance of common stock	$ 2,000,000
Oak Therapeutics [Member]
Ownership interest				63.00%

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INVENTORY (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Inventory Details
Raw Materials	$ 27,094	$ 25,297
Packaging Components	7,687	7,687
Work-In-Process	8,162	8,162
Inventory, Gross	42,943	41,146
Reserve for Obsolescence	(3,142)	(3,370)
Total inventory	$ 39,801	$ 37,776

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PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Prepaid Expenses And Other Assets Details
Prepaid consulting services stock-based compensation	$ 897,313	$ 935,883
Prepaid consulting services	73,667	82,167
Prepaid insurance	87,911	120,877
Other Receivables	2,666	2,666
Prepaid expenses	37,200	37,200
Prepaid expenses and other assets	1,098,757	1,178,793
Current portion of prepaid expenses and other assets	(965,641)	(946,386)
Prepaid expenses and other assets less current portion	$ 133,116	$ 232,407

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PROPERTY AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Less accumulated depreciation	$ (799,230)	$ (773,022)
Property and Equipment, net	296,825	299,910
Computer and other equipment [Member]
Property and Equipment	186,655	183,346
Leasehold Improvements [Member]
Property and Equipment	51,788	48,488
Manufacturing equipment [Member]
Property and Equipment	$ 857,612	$ 841,098

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PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Depreciation expense	$ 26,207	$ 24,055
Accumulated depreciation	43,201	39,337
Capitalized Leased Assets [Member]
Depreciation expense	$ 0	$ 2,160

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INTANGIBLE ASSETS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Intellectual property and patents, gross	$ 1,414,926
Less accumulated amortization	(201,965)
Intellectual property and patents, net	1,212,961		$ 1,206,011
Less: pending patents not subject to amortization	(272,415)
Net intangible assets subject to amortization	940,546
Amortization Expense	14,230	$ 10,899
Intellectual Property [Member]
Intellectual property and patents, gross	$ 814,582
Remaining Estimated Useful Life (Years)	14 years 4 months 28 days
Amortization Expense	$ 10,206
Patents [Member]
Intellectual property and patents, gross	$ 600,344
Remaining Estimated Useful Life (Years)	17 years 11 months 15 days
Amortization Expense	$ 4,024

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INTANGIBLE ASSETS (Details 1)	Mar. 31, 2019 USD ($)
Property And Equipment And Intangible Assets Details 2
2019	$ 43,950
2020	58,600
2021	58,600
2022	58,600
2023	58,600
Thereafter	662,196
Total Amortization	$ 940,546

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INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Amortization expense	$ 14,230	$ 10,899
Intangible asset	1,212,961		$ 1,206,011
Accumulated amortization	201,965
Patents [Member]
Patent costs capitalized	21,180		6,638
Amortization expense	$ 4,024
Purchase of patent			$ 280,100
Issuance of common stock shares			200,000

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LOAN PAYABLE (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Loan payable	$ (66,842)	$ (105,125)
Loan payable, less current portion
Loans Payable [Member]
Loan payable	$ 66,842	$ 105,125

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LOAN PAYABLE (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest expense	$ 3,297,480	$ 433,830
Loans Payable [Member]
Interest expense	$ 2,230	$ 800

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NOTES PAYABLE (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Notes payable	$ 700,000	$ 950,000
Unamortized discount	(625)	(30,000)
Current portion of loan payable	(699,375)	(920,000)
Loan payable, less current portion
Individual [Member]
Notes payable	50,000	50,000
Individual One [Member]
Notes payable	150,000	150,000
Company [Member]
Notes payable	400,000	650,000
Company One [Member]
Notes payable	$ 100,000	$ 100,000

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NOTES PAYABLE (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest expense	$ 3,297,480	$ 433,830
NotePayable [Member]
Interest expense	$ 21,661	$ 19,027

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CONVERTIBLE PROMISSORY NOTES (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Total Convertible promissory notes	$ 3,050,000	$ 5,575,000
Unamortized discount	(675,001)	(332,569)
Current portion of convertible promissory notes	2,374,999	5,242,431
Convertible promissory notes, less current portion
Convertible Promissory Note [Member]
Total Convertible promissory notes	550,000	1,400,000
Convertible Promissory Notes One [Member]
Total Convertible promissory notes		2,025,000
Convertible Promissory Notes Two [Member]
Total Convertible promissory notes	500,000	500,000
Convertible Promissory Notes Three [Member]
Total Convertible promissory notes		500,000
Convertible Promissory Notes Four [Member]
Total Convertible promissory notes		575,000
Convertible Promissory Notes Five [Member]
Total Convertible promissory notes		575,000
Convertible Promissory Notes Six [Member]
Total Convertible promissory notes	$ 2,000,000

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CONVERTIBLE PROMISSORY NOTES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest expense	$ 3,297,480	$ 433,830
Convertible promissory note [Member]
Amortization of discount	458,899	147,608
Interest expense	$ 72,813	$ 303,174

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DERIVATIVE LIABILITY (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Fair value of Derivative Liability	$ 770,248	$ 617,628
Fair Value, Inputs, Level 1 [Member]
Fair value of Derivative Liability
Fair Value, Inputs, Level 2 [Member]
Fair value of Derivative Liability
Fair Value, Inputs, Level 3 [Member]
Fair value of Derivative Liability	$ 770,248	$ 617,628

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DERIVATIVE LIABILITY (Details 1)	3 Months Ended
	Mar. 31, 2019
Significant assumptions:
Risk-free interest rate at grant date	2.23%
Expected stock price volatility	138.42%
Expected dividend payout
Expected option life (in years)	1 year
Expected forfeiture rate	0.00%

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DERIVATIVE LIABILITY (Details 2) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Derivative Liability Tables
Derivative liability measured at fair value, beginning balance	$ 617,628	$ 90,738
Initial fair value of derivative liability recorded as debt discount		297,599
Gain/loss on change in fair value included in earnings	152,620	229,291
Derivative liability measured at fair value, ending balance	$ 770,248	$ 617,628

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STOCK BASED AWARDS (Details)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Stock option
Outstanding, March 31, 2019 | shares	5,340,751
Exercisable at March 31, 2019 | shares	5,682,261
Weighted Average Exercise Price
Outstanding, March 31, 2019 | $ / shares	$ 2.01
Exercisable at March 31, 2019 | $ / shares	$ 2.01
Weighted Average Contractual Remaining Life
Outstanding, December 31, 2018	2 years 29 days
Stock Option [Member]
Stock option
Outstanding, December 31, 2018 | shares	2,313,050
Granted | shares
Exercised | shares
Forfeited/Expired | shares
Outstanding, March 31, 2019 | shares	2,223,506
Exercisable at March 31, 2019 | shares	982,934
Weighted Average Exercise Price
Outstanding, December 31, 2018 | $ / shares	$ 0.79
Granted | $ / shares
Exercised | $ / shares
Forfeited/Expired | $ / shares	0.74
Outstanding, March 31, 2019 | $ / shares	0.79
Exercisable at March 31, 2019 | $ / shares	$ 0.81
Weighted Average Contractual Remaining Life
Outstanding, December 31, 2018	9 years 3 months 8 days
Granted	0 years
Outstanding, March 31, 2019	9 years 7 days
Exercisable at March 31, 2019	9 years 7 days

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STOCK BASED AWARDS (Details 1) - $ / shares	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Number of Warrants	5,340,751
Weighted Average Exercise Price	$ 2.01
Number of Warrants Exercisable	5,682,261
Weighted Average Exercise Price	$ 2.01
Stock Option [Member]
Number of Warrants	2,223,506	2,313,050
Weighted Average Remaining Contractual Life (years)	9 years 7 days
Weighted Average Exercise Price	$ 0.79	$ 0.79
Number of Warrants Exercisable	982,934
Weighted Average Exercise Price	$ 0.81
$0.61 - $1.81 [Member]
Range of Exercise Price Lower Limit	1.00
Range of Exercise Price Upper Limited	$ 7.00
Number of Warrants	6,706,261
Weighted Average Exercise Price	$ 2.01
Number of Warrants Exercisable	5,682,261
Weighted Average Exercise Price	$ 2.01
$0.61 - $1.81 [Member] | Stock Option [Member]
Range of Exercise Price Lower Limit	0.61
Range of Exercise Price Upper Limited	$ 1.81
Number of Warrants	2,223,506
Weighted Average Remaining Contractual Life (years)	9 years 7 days
Weighted Average Exercise Price	$ 0.79
Number of Warrants Exercisable	982,934
Weighted Average Exercise Price	$ 0.81

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STOCK BASED AWARDS (Details 2)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date	2.23%
Expected stock price volatility	138.42%
Expected dividend payout
Expected option life (in years)	1 year
Expected forfeiture rate	0.00%
Stock Option [Member]
Significant assumptions (weighted-average):
Risk-free interest rate at grant date	2.23%	2.51%
Expected stock price volatility	138.42%	156.15%
Expected dividend payout
Expected option life (in years)	10 years	10 years
Expected forfeiture rate	0.00%	0.00%

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STOCK BASED AWARDS (Details 3) - Stock Option [Member]	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Restricted Stock Shares
Non-vested, December 31, 2018 | shares	317,708
Granted | shares
Vested | shares	(93,750)
Forfeited/Expired | shares
Non-vested, March 31, 2019 | shares	223,958
Weighted Average Grant Date Fair Value
Non-vested, December 31, 2018 | $ / shares	$ 1.44
Granted | $ / shares
Vested | $ / shares	1.44
Forfeited/Expired | $ / shares
Non-vested, March 31, 2019 | $ / shares	$ 1.44

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STOCK BASED AWARDS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Dec. 29, 2017	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Fair value of options granted		$ 1,488,070		$ 1,541,353
Equity Incentive Plan [Member]
Common stock available for grant	5,000,000
Equity incentive plan, description	The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date
Restricted Common Stock [Member]
Awarded vesting period		4 years
Compensation expense		$ 136,250	$ 0
Nonstatutory Stock Options [Member]
Awarded vesting period		4 years
Term of exercise period		10 years
Incentive Stock Options [Member]
Awarded vesting period		4 years
Term of exercise period		10 years
Stock Option [Member]
Aggregate intrinsic value		$ 7,926
Compensation expense		94,041	$ 0
Unrecognized fair value of compensation cost		$ 817,722
Weighted Average Remaining Contractual Life (years)		9 years 7 days

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WARRANT AGREEMENTS (Details)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Warrants
Outstanding, March 31, 2019 | shares	5,340,751
Exercisable at March 31, 2019 | shares	5,682,261
Weighted Average Exercise Price
Outstanding, March 31, 2019 | $ / shares	$ 2.01
Exercisable at March 31, 2019 | $ / shares	$ 2.01
Outstanding, December 31, 2018	2 years 29 days
Warrant [Member]
Warrants
Outstanding, December 31, 2018 | shares	5,340,751
Granted | shares	1,365,510
Exercised | shares
Forfeited/Expired | shares
Outstanding, March 31, 2019 | shares	6,706,261
Exercisable at March 31, 2019 | shares	5,682,261
Weighted Average Exercise Price
Outstanding, December 31, 2018 | $ / shares	$ 2.20
Granted | $ / shares	2.24
Exercised | $ / shares
Forfeited/Expired | $ / shares
Outstanding, March 31, 2019 | $ / shares	2.01
Exercisable at March 31, 2019 | $ / shares	$ 2.01
Outstanding, December 31, 2018	3 years 9 months 18 days
Granted	3 years 3 months 29 days
Outstanding, March 31, 2019	2 years 29 days
Exercisable at March 31, 2019	2 years 1 month 24 days

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WARRANT AGREEMENTS (Details 1)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Number of Warrants | shares	5,340,751
Weighted Average Remaining Contractual Life (years)	2 years 29 days
Weighted Average Exercise Price	$ 2.01
Number of Warrants Exercisable | shares	5,682,261
Weighted Average Exercise Price	$ 2.01
$1.00 - $7.00 [Member]
Range of Exercise Price Lower Limit	1.00
Range of Exercise Price Upper Limited	$ 7.00
Number of Warrants | shares	6,706,261
Weighted Average Remaining Contractual Life (years)	2 years 29 days
Weighted Average Exercise Price	$ 2.01
Number of Warrants Exercisable | shares	5,682,261
Weighted Average Exercise Price	$ 2.01

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WARRANT AGREEMENTS (Details 2)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date	2.23%
Expected stock price volatility	138.42%
Expected dividend payout
Expected option life (in years)	1 year
Expected forfeiture rate	0.00%
Warrant [Member]
Significant assumptions (weighted-average):
Risk-free interest rate at grant date	2.23%	2.51%
Expected stock price volatility	138.42%	156.15%
Expected dividend payout
Expected option life (in years)	3 years	3 years
Expected forfeiture rate	0.00%	0.00%

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WARRANT AGREEMENTS (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended
	Feb. 15, 2019	Feb. 13, 2019	Mar. 31, 2019	Mar. 31, 2018
Fair market value			$ 3,035,190	$ 37,137
Warrant exercise price			$ 2.00
Warrant [Member]
Warrants issued	312,500	657,655
Fair market value	$ 866,620	$ 1,792,965
Warrant exercise price	$ 2.00	$ 2.31
Warrant [Member] | Convertible promissory note [Member]
Debt conversion amount converted	$ 500,000	$ 1,325,000
Warrant 1 [Member]
Warrants issued	295,879	99,476
Fair market value	$ 814,834	$ 271,202
Warrant exercise price	$ 2.31	$ 2.31
Warrant 1 [Member] | Convertible promissory note [Member]
Debt conversion amount converted	$ 1,000,000	$ 1,325,000

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STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)				1 Months Ended				3 Months Ended
	Jan. 15, 2019	Jan. 04, 2019	Dec. 14, 2018	Feb. 19, 2019	Feb. 15, 2019	Feb. 14, 2019	Feb. 13, 2019	Mar. 31, 2019	Mar. 31, 2018	Feb. 26, 2019	Feb. 25, 2019	Jan. 22, 2019	Jan. 14, 2019	Dec. 31, 2018	Dec. 26, 2018	Jan. 24, 2018
Common stock, shares issued			250,000			10,417		30,366,794			208,333	208,333	50,000	26,784,019	208,333
Proceeds from issuance of common stock								$ 500,000
Prepaid expenses and other assets								965,641						$ 946,386
Vesting period description			vest monthly over 24 months.
Stock payable								$ 528,588
Price per share						$ 3.35							$ 1.84
Investor funded amount											$ 250,000	$ 250,000		$ 250,000	$ 250,000
Debt conversion, converted instrument, warrants issued								312,500
Warrants exercised price								$ 2.00
Loss on conversion								$ 409,672
Common Stock
Common stock, shares issued																13,827
Prepaid expenses and other assets								6,388
Common stock issuances, value																$ 31,249
Price per share																$ 2.26
Advisory Consulting Agreement [Member]
Common stock, shares issued			50,000
Vesting period description			vest 30 days from December 14, 2018
On February 1, 2019 [Member]
Stock payable								$ 30,000
Price per share								$ 2.32
Amended promissory note								$ 600,000
Amended maturity date								Feb. 28, 2019
Accredited Investor [Member] | Securities Purchase Agreement [Member]
Price per share			$ 1.20
Common stock shares purchase			833,333
Total purchase price			$ 1,000,000
Hereinafter description			(1) a Closing of $250,000 five (5) business days after the Closing Date; (2) a Closing of $250,000 ten (10) business days after the Closing Date; (3) a Closing of $250,000 thirty (30) business days after the Closing Date; and (4) a Closing $250,000 sixty (60) business days after the Closing Date. Each of the aforementioned being a Closing and the dates of each Closing being a Closing Date.
Equity Incentive Plan [Member]
Common stock, shares issued											83,333
Price per share											$ 1.81
Equity Incentive Plan [Member]
Common stock, shares issued											46,875
Price per share											$ 0.74
Media Advertising Agreement [Member]
Common stock, shares issued										60,000
Proceeds from issuance of common stock								$ 226,800
Prepaid expenses and other assets								185,450
Stock payable								$ 226,800
Price per share										$ 3.78
Advisory Consulting Agreement [Member]
Stock payable	$ 92,000
Consulting agreement description	the Company is to issue 50,000 common stock shares of the Company for providing investor relations services.
Consulting Agreement [Member]
Common stock, shares issued				250,000
Stock payable		$ 68,400
Price per share				$ 3.39
Consulting agreement description		the Company is to issue 45,000 common stock shares of the Company for providing investor relations services.		the Company is to issue 25,000 common stock shares of the Company for providing investor relations services, where 12,500 common stock shares of the Company are due immediately and the remaining 12,500 common stock shares of the Company is due June 19, 2019.
Debt Conversion Agreements [Member]
Debt instrument converted amount, principal						$ 250,000	$ 1,325,000
Debt instrument converted amount, interest							$ 213,859
Debt conversion, converted instrument, shares issued						135,135	832,365
Debt instrument, convertible, conversion price description						Conversion price of $1.85 per share (a discounted rate calculated as an approximation based on 20% discount on 5 days volume weighted average price of the market rate).	Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.
Debt conversion, converted instrument, warrants issued							657,655
Warrants exercised price							$ 2.31
Loss on conversion						$ 201,351	$ 812,241
Conversion price						$ 1.85
Debt Conversion Agreements [Member] | Senior Secured Promissory Note [Member]
Outstanding Balance						$ 650,000
Debt Conversion Agreements [Member] | Senior Secured Promissory Note [Member] | April 27, 2017 [Member]
Common stock, shares issued						75,000
Common stock issuances, value						$ 251,250
Stock issuable						75,000
Price per share						$ 3.35
Amended maturity date						Feb. 27, 2019
Debt Conversion Agreements [Member] | Convertible Promissory Note Holder [Member]
Debt instrument converted amount, principal					$ 500,000
Debt instrument converted amount, interest					$ 28,588
Debt conversion, converted instrument, shares issued					285,723
Debt instrument, convertible, conversion price description					Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.
Conversion price					$ 1.85
Debt Conversion Agreements [Member] | Convertible Promissory Note Holder [Member]
Debt instrument converted amount, principal				$ 425,000	$ 1,000,000
Debt instrument converted amount, interest				$ 425	$ 94,750
Debt conversion, converted instrument, shares issued				168,819	591,757
Debt instrument, convertible, conversion price description				Conversion price per share $2.52 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.	Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.
Debt conversion, converted instrument, warrants issued					295,879
Warrants exercised price					$ 2.31
Loss on conversion					$ 860,087
Conversion price				$ 2.52	$ 1.85
Debt Conversion Agreements [Member] | Convertible Promissory Note Holder [Member]
Debt instrument converted amount, principal					$ 1,575,000
Debt instrument converted amount, interest					$ 18,406
Debt conversion, converted instrument, shares issued					861,301
Debt instrument, convertible, conversion price description					Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.
Loss on conversion					$ 745,929
Conversion price					$ 1.85
Debt Conversion Agreements [Member] | Convertible Promissory Note [Member]
Common stock, shares issued					254,779
Debt instrument converted amount, principal					$ 400,000
Debt instrument converted amount, interest					$ 71,342
Debt instrument, convertible, conversion price description					Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days.
Loss on conversion					$ 630,238
Conversion price					$ 1.85

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COMMITMENTS AND CONTINGENCIES (Details Narrative)	1 Months Ended	3 Months Ended
	May 22, 2017 USD ($)	Mar. 31, 2019 USD ($) ft²	Mar. 31, 2018 USD ($)
Operating lease rent expense		$ 63,028	$ 74,178
Attorney [Member]
Litigation settlement amount	$ 1,250
Sandy Sierra Garate [Member]
Litigation settlement amount	$ 8,500
Offices And Manufacturing Facility [Member]
Offices and manufacturing facility area | ft²		25,000

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SUBSEQUENT EVENTS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net revenues	$ 74,500	$ 105,014
Net income (loss)	$ (10,034,859)	$ (1,908,512)
Net loss per share, basic and diluted	$ (0.35)	$ (0.08)
Subsequent Event [Member] | CURE Pharmaceutical Holding Corp [Member]
Net revenues	$ 74,500	$ 105,014
Net income (loss)	$ (10,028,168)	$ (1,901,836)
Net loss per share, basic and diluted	$ (0.17)	$ (0.03)
Subsequent Event [Member] | Chemistry Holdings [Member]
Net revenues
Net income (loss)	$ (5,054)	$ 21,599
Net loss per share, basic and diluted
Subsequent Event [Member] | Chemistry Spirits LLC [Member]
Net revenues
Net income (loss)	$ (2,137)	$ (88,535)
Net loss per share, basic and diluted
Subsequent Event [Member] | Chemistry Labs LLC [Member]
Net revenues		$ 326,172
Net income (loss)	$ (26,323)	$ 29,347
Net loss per share, basic and diluted
Subsequent Event [Member] | Consolidated [Member]
Net revenues	$ 74,500	$ 431,186
Net income (loss)	$ (10,061,682)	$ (1,939,425)
Net loss per share, basic and diluted	$ (0.17)	$ (0.03)

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)							1 Months Ended
	May 14, 2019	May 13, 2019	May 06, 2019	Apr. 12, 2019	Apr. 09, 2019	Apr. 08, 2019	Apr. 17, 2019	Apr. 15, 2019	Mar. 31, 2019	Feb. 25, 2019	Feb. 14, 2019	Jan. 22, 2019	Jan. 14, 2019	Dec. 31, 2018	Dec. 26, 2018	Dec. 14, 2018	Mar. 31, 2018	Dec. 31, 2017
Price per share											$ 3.35		$ 1.84
Cash balance									$ 2,593,976					$ 500,962			$ 840,577	$ 108,249
Common Stock, Shares Issued									30,366,794	208,333	10,417	208,333	50,000	26,784,019	208,333	250,000
Common stock, par value per share									$ 0.001					$ 0.001
Subsequent Event [Member] | Merger Agreement [Member]
Common stock, par value per share	$ 0.001
Subsequent Event [Member] | Merger Agreement [Member] | Convertible Note [Member]
Debt instrument converted amount, principal	$ 2,000,000
Subsequent Event [Member] | Chemistry Holdings [Member]
Cash balance	$ 8,000,000
Common stock including escrowed shares description	The maximum number of shares of Common Stock that may be issued to the stockholders of Chemistry Holdings in connection with the Merger, including escrowed shares and shares issuable pursuant to earn-out provisions and warrants, is 32,072,283 shares allocated as follows: (i) 5,700,000 shares of Common Stock as upfront consideration issued at the Closing (the “Upfront Consideration”); (ii) 7,128,913 shares to be held in escrow, subject to indemnification and clawback rights that lapse upon the achievement of certain milestones; (iii) 3,207,228 shares that may be issued pursuant to an earn-out over five years upon the achievement of certain technological implementations; (iv) 8,018,071 shares that may be issued pursuant to an earn-out over two years upon the achievement of certain revenue goals; and (v) 8,018,071 shares issuable upon exercise of warrants that become exercisable upon achieving certain revenue goals between the second and fourth anniversary of the Closing Date at an exercise price of $5.01 per share, exercisable, to the extent vested, for five years from the Closing Date.
Common Stock, Shares Issued	231,294
Subsequent Event [Member] | Investor [Member] | Securities Purchase Agreement [Member]
Price per share		$ 3.30	$ 3.30	$ 3.30	$ 3.30	$ 3.30	$ 3.30	$ 3.30
Common stock shares purchase		45,455	15,151	15,152	100,000	150,000	127,273	60,606
Total purchase price		$ 150,000	$ 50,000	$ 50,000	$ 330,000	$ 495,000	$ 420,000	$ 200,000
Subsequent Event [Member] | Investor [Member] | Securities Purchase Agreement [Member]
Price per share								$ 3.30
Common stock shares purchase								15,152
Total purchase price								$ 50,000