As filed with the Securities and Exchange Commission on May 21, 2015
Registration
No. 333-________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RICH
PHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
| Nevada |
2834 |
46-3259117 |
| (State
or other jurisdiction of Incorporation or organization) |
(Primary
Standard Industrial Classification Code Number) |
(I.R.S.
Employer Identification Number) |
9595
Wilshire Blvd., Suite 900
Beverly
Hills, California 90212
(424)
230-7001
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Ben
Chang
Chief Executive Officer
Rich
Pharmaceuticals, Inc.
9595 Wilshire Blvd, Suite 900
Beverly
Hills, California 90212
Telephone
No.: (310) 600-8903
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
of communications to:
Steven
J. Davis, Esq.
Steven
James Davis, A Professional Corporation
1042
N. El Camino Real, B261
Encinitas,
California 92024
Telephone
No: (619) 7882383
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933,
please check the following box and list the Securities Act registration Statement number of the earlier effective registration
statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[ ]
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large
accelerated filer |
[
] |
|
Accelerated
filer |
[
] |
| Non-accelerated
filer |
[
] |
|
Smaller
reporting company |
[X] |
(Do
not check if a smaller reporting company)
CALCULATION
OF REGISTRATION FEE
Title
of Each Class Of Securities to be Registered | |
Amount
to be Registered | |
Proposed
Maximum Aggregate
Offering Price
per share | |
Proposed
Maximum Aggregate
Offering Price | |
Amount
of Registration fee |
| Common Stock,
$0.001 par value per share | |
| 500,000,000 | | |
$ | .0005 | | |
$ | 250,000 | | |
$ | 29.05 | |
(1) We
are registering 500,000,000 shares of our common stock that we will put to LG Capital Funding, LLC, a New York limited liability
company pursuant to that certain Investment Agreement (the “LG Investment Agreement”). The LG Investment Agreement
was entered into on May 19, 2015. In the event of stock splits, stock dividends or similar transactions involving the common stock,
the number of common shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional
securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended (the “Securities
Act”). In the event that the adjustment provisions of the LG Investment Agreement require the registrant to issue more shares
than are being registered in this registration statement, for reasons other than those stated in Rule 416 of the Securities Act,
the registrant will file a new registration statement to register those additional shares.
(2) The
offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule
457(o) of the Securities Act on the basis of the closing bid price of the common stock of the registrant as reported on the OTC
Markets on May 15, 2015.
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the commission, acting pursuant to said section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
| PRELIMINARY
PROSPECTUS |
SUBJECT
TO COMPLETION, DATED MAY 21, 2015 |
500,000,000
Shares of Common Stock
This
prospectus relates to the resale of up to 500,000,000 shares of common stock of Rich Pharmaceuticals, Inc. (“we” or
the “Company”), par value $0.001 per share, issuable to LG Capital Funding, LLC (“LG”) pursuant to that
certain investment agreement between the Company and LG dated May 19, 2015 (the “LG Investment Agreement”). The LG
Investment Agreement permits us to “put” up to $2,000,000 in shares of our common stock to LG over a period of up
to twenty-four (24) months. We will not receive any proceeds from the resale of these shares of common stock. However, we will
receive proceeds from the sale of securities pursuant to our exercise of the put right offered by LG. LG is deemed an underwriter
for our common stock.
The
selling stockholder may offer all or part of the shares for resale from time to time through public or private transactions, at
either prevailing market prices or at privately negotiated prices. LG is paying for all registration, listing and qualification
fees, printing fees and legal fees.
Our
common stock is quoted on the OTC Markets under the ticker symbol “RCHA.” On May 15, 2015, the closing price of our
common stock was $0.0005 per share.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 5 to read about factors you
should consider before investing in shares of our common stock.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
Date of This Prospectus is: ________________, 2015
TABLE
OF CONTENTS
PROSPECTUS
SUMMARY
This
summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information
that you should consider before investing in the common stock of Rich Pharmaceuticals, Inc. (referred to herein as the “Company,”
“Rich,” “we,” “our,” and “us”). You should carefully read the entire Prospectus,
including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and the financial statements before making an investment decision.
Business
Overview
We
were incorporated under the laws of the State of Nevada on August 9, 2010 under the name “Nepia Inc.” From August
9, 2010 to July 18, 2013, the Company was in the business of developing, manufacturing, and selling small boilers aimed at farmers
primarily in Southeast Asia. Beginning on July 19, 2013, the Company acquired bio-pharmaceutical intellectual property for the
treatment of acute myeloid leukemia (AML) and is entering into Phase II clinical trials. The goal is to perfect this indication
for marketing purposes for distribution world-wide. On August 26, 2013, as a consequence of our new business direction, the
Company changed its name to Rich Pharmaceuticals, Inc. (“Rich” or “the Company”).
Investment
Agreement with LG
On
May 19, 2015, we entered into an investment agreement with LG Capital Funding, LLC, a New York limited liability company (“LG”).
Pursuant to the terms of the LG Investment Agreement, LG committed to purchase up to $2,000,000 of our common stock over a period
of up to twenty-four (24) months. From time to time during the twenty-four (24) months period commencing from the effectiveness
of the registration statement, we may deliver a drawdown notice (“Drawdown Notice”) to LG which states the dollar
amount that we intend to sell to LG on a date specified in the drawdown notice (“Drawdown Amount”). The maximum amount
that the Company shall be entitled to drawdown to LG shall be two hundred percent (200%) of average daily trading volume (U.S.
market only) of the Common Stock during the ten (10) days preceding the Drawdown Notice, so long as such amount does render the
Investor a holder of more than 4.99% of the outstanding Shares of the Company. The purchase price per share to be paid by LG shall
be calculated as a thirty percent (30%) discount to the lesser of: (1) the lowest traded price of the Company Common Stock during
the ten (10) consecutive trading days prior to the date the Drawdown Notice was submitted or (2) the closing bid price on the
day before the Drawdown Notice is submitted. We initially reserved 500,000,000 shares of our common stock for issuance under the
LG Investment Agreement.
In
connection with the LG Investment Agreement, we also entered into a registration rights agreement with LG, pursuant to which we
are obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering 500,000,000
shares of our common stock underlying the LG Investment Agreement within 21 days after the closing of the transaction. In addition,
we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC and
maintain the effectiveness of such registration statement until termination of the LG Investment Agreement.
The
LG Investment Agreement is not transferable and any benefits attached thereto may not be assigned.
The
500,000,000 shares to be registered herein represent 27.12% of the shares then issued and outstanding, assuming that the selling
stockholder will sell all of the shares offered for sale. The 500,000,000 shares to be registered herein represent 32.9% of the
shares issued and outstanding held by non-affiliates of the Company.
At
an assumed purchase price of $0.00049 (equal to 70% of the closing price of our common stock of $0.0007 on May 8, 2015), we will
be able to receive up to $242,500 in gross proceeds, assuming the sale of the entire 500,000,000 shares being registered hereunder
pursuant to the LG Investment Agreement. Accordingly, we would be required to register additional 3,581,632,653 shares to obtain
the balance of $1,755,000 under the LG Investment Agreement. We are currently authorized to issue 37,503,000,000 shares of our
common stock. We may be required to increase our authorized shares in order to receive the entire purchase price in the even our
share price decreases. LG has agreed to refrain from holding an amount of shares which would result in LG owning more than 4.99%
of the then-outstanding shares of our common stock at any one time.
There
are substantial risks to investors as a result of the issuance of shares of our common stock under the LG Investment Agreement.
These risks include dilution of stockholders’ percentage ownership, significant decline in our stock price and our inability
to draw sufficient funds when needed.
LG
will periodically purchase our common stock under the LG Investment Agreement and will, in turn, sell such shares to investors
in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing numbers
of common shares to LG to raise the same amount of funds, as our stock price declines.
Because
our ability to draw down any amounts under the LG Investment Agreement is subject to a number of conditions, there is no guarantee
that we will be able to draw down any portion or all of the proceeds of $2,000,000 under the LG Investment Agreement. As such,
we cannot make any guarantee that we will be successful in accessing the full amount under the LG Investment Agreement.
Where
You Can Find Us
Our
principal office is located at 9595 Wilshire Blvd., Suite 900, Beverly Hills, California 90212. Our telephone number is (424)
230-7001.
THE
OFFERING
| Common
stock offered by Selling Stockholder |
500,000,000
shares of common stock. |
| Common
stock outstanding before the offering |
1,843,631,834
shares of common stock as of the date hereof. |
| Common
stock outstanding after the offering |
2,343,631,834
shares of common stock. |
| Use
of proceeds |
We
will not receive any proceeds from the sale of shares by the selling stockholder. However, we will receive proceeds from the
sale of securities pursuant to the LG Investment Agreement. The proceeds received under the LG Investment Agreement will be
used for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other
purposes that the Board of Directors, in its good faith deem to be in the best interest of the Company. |
| OTC
Pink Trading Symbol |
RCHA |
| Risk
Factors |
The
common stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the
loss of their entire investment. See “Risk Factors”. |
RISK
FACTORS
You
should carefully consider the risks described below together with all of the other information included in this Prospectus before
making an investment decision with regard to our securities. The statements contained in or incorporated into this Prospectus
that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually
occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common
stock could decline, and you may lose all or part of your investment.
Risks
Related To Our Business
We
are a development stage company and may never commercialize any of our products or services or earn a profit.
Prior
to July 19, 2013, we were a “shell” company with no or nominal operations. We recently received funding and commenced
operations. We are a development stage company in the business of developing treatments for Acute Myelogenous Leukemia (AML).
We currently have no products ready for commercialization, have not generated any revenue from operations and expect to incur
substantial net losses for the foreseeable future to further develop and commercialize our technology. We cannot predict the extent
of these future net losses, or when we may attain profitability, if at all. If we are unable to generate significant revenue from
our technology or attain profitability, we will not be able to sustain operations. Because of the numerous risks and uncertainties
associated with developing and commercializing our technology, we are unable to predict the extent of any future losses or when
we will become profitable, if ever. We may never become profitable and you may never receive a return on an investment in our
common stock. An investor in our common stock must carefully consider the substantial challenges, risks and uncertainties inherent
in the attempted development and commercialization of medical treatments. We may never successfully commercialize our technology,
and our business may fail.
We
will need to raise substantial additional capital to commercialize our technology, and our failure to obtain funding when needed
may force us to delay, reduce or eliminate our product development programs or collaboration efforts.
As
of the date of this Prospectus, we have limited cash resources. Due to our expectation that we will continue to incur losses
in the future, we will be required to raise additional capital to complete the development and commercialization of our technology.
During the next 12 months and potentially thereafter, we will have to raise additional funds to continue the development
and commercialization of our technology. When we seek additional capital, we may seek to sell additional equity and/or debt securities
or to obtain a credit facility, which we may not be able to do on favorable terms, or at all. Our ability to obtain additional
financing will be subject to a number of factors, including market conditions, our operating performance and investor sentiment.
If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back
or discontinue the development and/or commercialization of one or more of our technologies, restrict our operations or obtain
funds by entering into agreements on unattractive terms.
Our
ability to successfully commercialize our technology will depend largely upon the extent to which third-party payors reimburse
the costs for our treatment in the future. Physicians and patients may decide not to order our products unless third-party payors,
such as managed care organizations as well as government payors such as Medicare and Medicaid pay a substantial portion of the
price of the treatment. Reimbursement by a third-party payor may depend on a number of factors, including a payor’s determination
that our product candidates are:
•
not experimental or investigational;
•
effective;
•
medically necessary;
•
appropriate for the specific patient;
•
cost-effective;
•
supported by peer-reviewed publications; and
•
included in clinical practice guidelines.
Market
acceptance, sales of products based upon our technology, and our profitability may depend on reimbursement policies and health
care reform measures. Several entities conduct technology assessments of medical treatments and provide the results of their assessments
for informational purposes to other parties. These assessments may be used by third-party payors and health care providers as
grounds to deny coverage for a treatment or procedure. The levels at which government authorities and third-party payors, such
as private health insurers and health maintenance organizations, may reimburse the price patients pay for such products could
affect whether we are able to commercialize our products. Our technology may receive negative assessments that may impact our
ability to receive reimbursement of the treatment. Since each payor makes its own decision as to whether to establish a policy
to reimburse a treatment, seeking these approvals may be a time-consuming and costly process. We cannot be sure that reimbursement
in the U.S. or elsewhere will be available for any of our products in the future. If reimbursement is not available or is limited,
we may not be able to commercialize our products.
If
we are unable to obtain reimbursement approval from private payors and Medicare and Medicaid programs for our product candidates,
or if the amount reimbursed is inadequate, our ability to generate revenues could be limited. Even if we are being reimbursed,
insurers may withdraw their coverage policies or cancel their contracts with us at any time, stop paying for our treatment or
reduce the payment rate for our treatment, which would reduce our revenue.
Even
if approved, our product candidates may not achieve broad market acceptance among physicians, patients and healthcare payors,
and as a result our revenues generated from their sales may be limited.
The
commercial success of our products will depend upon its acceptance among the medical community, including physicians, health care
payors and patients. The degree of market acceptance of our current or future product candidates will depend on a number of factors,
including:
•
limitations or warnings contained in our product candidates’ FDA-approved labeling;
•
changes in the standard of care or availability of alternative therapies at similar or lower costs for the targeted indications
for any of our product candidates;
•
limitations in the approved clinical indications for our product candidates;
•
demonstrated clinical safety and efficacy compared to other products;
•
lack of significant adverse side effects;
•
sales, marketing and distribution support;
•
availability of reimbursement from managed care plans and other third-party payors;
•
timing of market introduction and perceived effectiveness of competitive products;
•
the degree of cost-effectiveness;
•
availability of alternative therapies at similar or lower cost, including generics and over-the-counter products;
•
the extent to which our product candidates are approved for inclusion on formularies of hospitals and managed care organizations;
•
whether our product candidates are designated under physician treatment guidelines for the treatment of the indications for which
we have received regulatory approval;
•
adverse publicity about our product candidates or favorable publicity about competitive products;
•
convenience and ease of administration of our product candidates; and
•
potential product liability claims.
If
our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, patients, the medical community
and healthcare payors, sufficient revenue may not be generated from these products and we may not become or remain profitable.
In addition, efforts to educate the medical community and third-party payors on the benefits of our product candidates may require
significant resources and may never be successful.
If
our potential treatments are unable to compete effectively with current and future treatments targeting similar markets as our
potential products, our commercial opportunities will be reduced or eliminated.
The
medical treatment industry for AML and stroke is intensely competitive and characterized by rapid technological progress. In each
of our potential product areas, we face significant competition from large biotechnology, medical diagnostic and other companies.
The technologies associated with the medical industry are evolving rapidly and there is intense competition within such industry.
Certain companies have established technologies that may be competitive to our technology and any future products that we develop.
Some of these competing companies may use different approaches or means to obtain results, which could be more effective or less
expensive than our treatments. Moreover, these and other future competitors have or may have considerably greater resources than
we do in terms of technology, sales, marketing, commercialization and capital resources. These competitors may have substantial
advantages over us in terms of research and development expertise, experience in clinical studies, experience in regulatory issues,
brand name exposure and expertise in sales and marketing as well as in operating central laboratory services. Many of these organizations
have financial, marketing and human resources greater than ours; therefore, there can be no assurance that we can successfully
compete with present or potential competitors or that such competition will not have a materially adverse effect on our business,
financial position or results of operations.
Since
our technology is under development, we cannot predict the relative competitive position of any product based upon the technology.
However, we expect that the following factors will determine our ability to compete effectively: safety and efficacy; product
price; turnaround time; ease of administration; performance; reimbursement; and marketing and sales capability.
If
our clinical studies do not prove the superiority of our technologies, we may never sell our products and services.
The
results of our clinical studies may not show that treatment results using our technology are superior to existing treatment. In
that event, we will have to devote significant financial and other resources to further research and development, and commercialization
of products using our technologies will be delayed or may never occur.
At
present, our success depends solely on the successful development and commercialization of our compound in development, which
cannot be assured.
We
are focused on the development of the RP-323 compound, a naturally occurring compound that has a number of properties that are
uniquely suited for the treatment of patients with AML and in stimulating white blood cells. The successful commercialization
of this product candidate, either by us or by strategic partners, is crucial for our success. Our proposed products and their
potential applications are in an early stage of clinical and manufacturing/process development and face a variety of risks and
uncertainties. Principally, these risks include the following:
•
clinical trial results may show that our product candidates are not well tolerated by recipients at its effective doses or are
not efficacious;
•
future clinical trial results may be inconsistent with testing results obtained to-date;
•
even if our product candidates are shown to be safe and effective for their intended purposes, we may face significant or unforeseen
difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all;
•
even if our product candidates are successfully developed, commercially produced and receive all necessary regulatory approvals,
there is no guarantee that there will be market acceptance of our products; and
•
our ability to complete the development and commercialization of our product candidates for their intended use is substantially
dependent upon our ability to raise sufficient capital or to obtain and maintain experienced and committed partners to assist
us with
•
obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products;
•
our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result that
our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues
to offset the development and manufacturing costs of our product candidates.
If
we are unsuccessful in dealing with any of these risks, or if we are unable to successfully commercialize our cancer-targeting
technologies for some other reason, our business, prospects, financial condition, and results of operations may be adversely affected.
The
failure to complete development of our technology, to obtain government approvals, including required FDA approvals, or to comply
with ongoing governmental regulations could prevent, delay or limit introduction or sale of proposed products and result in failure
to achieve revenues or maintain our ongoing business.
Our
research and development activities and the manufacture and marketing of our intended products are subject to extensive regulation
for safety, efficacy and quality by numerous government authorities in the U.S. and abroad. Before receiving clearance to market
our proposed products by the FDA, we will have to demonstrate that our products are safe and effective for the patient population
for the diseases that are to be treated. Clinical trials, manufacturing and marketing of drugs are subject to the rigorous testing
and approval process of the FDA and equivalent foreign regulatory authorities. The Federal Food, Drug and Cosmetic Act and other
federal, state and foreign statutes and regulations govern and influence the testing, manufacturing, labeling, advertising, distribution
and promotion of drugs and medical devices. As a result, clinical trials and regulatory approval can take many years to accomplish
and require the expenditure of substantial financial, managerial and other resources.
In
order to be commercially viable, we must successfully research, develop, obtain regulatory approval for, manufacture, introduce,
market and distribute our technologies. This includes meeting a number of critical developmental milestones including:
•
demonstrating benefit from delivery of each specific drug for specific medical indications;
•
demonstrating through clinical trials that each drug is safe and effective; and
•
demonstrating that we have established viable Good Manufacturing Practices capable of potential scale-up.
The
timeframe necessary to achieve these developmental milestones may be long and uncertain, and we may not successfully complete
these milestones for any of our intended products in development.
In
addition to the risks previously discussed, our technology is subject to developmental risks that include the following:
•
uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;
•
uncertainties arising as a result of the broad array of alternative potential; and
•
expense and time associated with the development and regulatory approval of treatments for AML and other conditions.
In
order to conduct the clinical trials that are necessary to obtain approval by the FDA to market a product, it is necessary to
receive clearance from the FDA to conduct such clinical trials. The FDA can halt clinical trials at any time for safety reasons
or because we or our clinical investigators do not follow the FDA’s requirements for conducting clinical trials. If any
of our trials are halted, we will not be able to obtain FDA approval until and unless we can address the FDA’s concerns.
If we are unable to receive clearance to conduct clinical trials for a product, we will not be able to achieve any commercial
revenue from such product in the U.S. as it is illegal to sell any drug for use in humans in the U.S. without FDA approval. Even
if we do ultimately receive FDA approval for any of our products, these products will be subject to extensive ongoing regulation,
including regulations governing manufacturing, labeling, packaging, testing, dispensing, prescription and procurement quotas,
record keeping, reporting, handling, shipment and disposal of any such drug. Failure to obtain and maintain required registrations
or to comply with any applicable regulations could further delay or preclude development and commercialization of our drugs and
subject us to enforcement action.
Clinical
trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be
predictive of future trial results.
In
order to receive regulatory approval for the commercialization of our products, we must conduct, at our own expense, extensive
clinical trials to demonstrate safety and efficacy of these product candidates. Clinical testing is expensive, it can take many
years to complete and its outcome is uncertain. Failure can occur at any time during the clinical trial process. The Company estimates
the budget for reaching market approval for the treatment of AML to be $20 million if our products are conferred “orphan
drug” status by the FDA or $40 million or more in the absence of such “orphan drug” status. We may experience
delays in clinical testing of our product candidates. We do not know whether planned clinical trials will begin on time, will
need to be redesigned or will be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including
delays in obtaining regulatory approval to commence a trial, in reaching agreement on acceptable clinical trial terms with prospective
sites, in obtaining institutional review board approval to conduct a trial at a prospective site, in recruiting patients to participate
in a trial or in obtaining sufficient supplies of clinical trial materials. Many factors affect patient enrollment, including
the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, competing
clinical trials and new drugs approved for the conditions we are investigating. Prescribing physicians will also have to decide
to use our product candidates over existing drugs that have established safety and efficacy profiles. Any delays in completing
our clinical trials will increase our costs, slow down our product development and approval process and delay our ability to generate
revenue.
In
addition, prior results of Phase I clinical trials of our product candidates do not necessarily predict the results of later-stage
clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits
despite having progressed through initial clinical testing. The data collected from clinical trials of our product candidates
may not be sufficient to support the submission of a new drug application or to obtain regulatory approval in the United States
or elsewhere. Because of the uncertainties associated with drug development and regulatory approval, we cannot determine if or
when we will have an approved product for commercialization or achieve sales or profits. Our clinical trials may not demonstrate
sufficient levels of efficacy necessary to obtain the requisite regulatory approvals for our drugs, and our proposed drugs may
not be approved for marketing.
We
expect to rely heavily on orphan drug status to develop and commercialize our product candidates, but our orphan drug designations
may not confer marketing exclusivity or other expected commercial benefits.
We
expect to rely on “orphan drug” exclusivity for our product candidates. Orphan drug status confers seven years of
marketing exclusivity under the Federal Food, Drug, and Cosmetic Act, and up to ten years of marketing exclusivity in Europe for
a particular product in a specified indication. For any product candidate for which we have been or will be granted orphan drug
designation in a particular indication, it is possible that another company also holding orphan drug designation for the same
product candidate will receive marketing approval for the same indication before we do. If that were to happen, our applications
for that indication may not be approved until the competing company’s period of exclusivity expires. Even if we are the
first to obtain marketing authorization for an orphan drug indication, there are circumstances under which a competing product
may be approved for the same indication during the seven-year period of marketing exclusivity, such as if the later product is
shown to be clinically superior to the orphan product, or if the later product is deemed a different product than ours. Further,
the seven-year marketing exclusivity would not prevent competitors from obtaining approval of the same product candidate as ours
for indications other than those in which we have been granted orphan drug designation, or for the use of other types of products
in the same indications as our orphan product, or during such seven-year period for other indications.
We
may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety risks that could preclude
approval of our product candidates.
Our
clinical trials may be suspended at any time for a number of reasons. For example, we may voluntarily suspend or terminate our
clinical trials if at any time we believe that they present an unacceptable risk to the clinical trial patients. In addition,
regulatory agencies may order the temporary or permanent discontinuation of our clinical trials at any time if they believe that
the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable
safety risk to the clinical trial patients. Administering any product candidates to humans may produce undesirable side effects.
These side effects could interrupt, delay or halt clinical trials of our product candidates and could result in the FDA or other
regulatory authorities denying further development or approval of our product candidates for any or all targeted indications.
Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover, we could be subject to significant
liability if any volunteer or patient suffers, or appears to suffer, adverse health effects as a result of participating in our
clinical trials.
We
depend on third-party contractors for a substantial portion of our operations and may not be able to control their work as effectively
as if we performed these functions ourselves.
We
outsource substantial portions of our operations to third-party service providers, including the conduct clinical trials, collection
and analysis of data, and manufacturing. Our agreements with third-party service providers and contract research organizations
are on a study-by-study and project-by-project basis. Any contractor that we retain will be subject to FDA and foreign regulatory
requirements and similar standards outside of the United States and Europe and we do not have control over compliance with these
regulations by these providers. Consequently, if these providers do not adhere to applicable governing practices and standards,
the development and commercialization of our product candidates could be delayed or stopped, which could severely harm our business
and financial condition.
Because
we have relied on third parties, our internal capacity to perform these functions is limited to management oversight. Outsourcing
these functions involves the risk that third parties may not perform to our standards, may not produce results in a timely manner
or may fail to perform at all. Although we have not experienced any significant difficulties with our third-party contractors,
it is possible that we could experience difficulties in the future. In addition, the use of third-party service providers requires
us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated.
There are a limited number of third-party service providers that specialize or have the expertise required to achieve our business
objectives. Identifying, qualifying and managing performance of third-party service providers can be difficult, time consuming
and cause delays in our development programs. We currently have a small number of employees, which limits the internal resources
we have available to identify and monitor third-party service providers. To the extent we are unable to identify, retain and successfully
manage the performance of third-party service providers in the future, our business may be adversely affected, and we may be subject
to the imposition of civil or criminal penalties if their conduct of clinical trials violates applicable law.
We
are exposed to product and clinical liability risks that could create a substantial financial burden should we be sued.
Our
business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing and
marketing of pharmaceutical products. In addition, the use, in our clinical trials, of pharmaceutical products that we or our
current or potential collaborators may develop and then subsequently sell may cause us to bear a portion of or all product liability
risks. While we intend to carry an insurance policy covering liability incurred in connection with such claims should they arise,
there can be no assurance that we will be able to obtain insurance or that our insurance will be adequate to cover all situations.
Moreover, there can be no assurance that such insurance if obtained, or additional insurance, if required, will be available in
the future or, if available, will be available on commercially reasonable terms. A successful product liability claim or series
of claims brought against us could have a material adverse effect on our business, prospects, financial condition and results
of operations.
Due
to our limited marketing, sales and distribution experience, we may be unsuccessful in our efforts to sell our proposed products,
enter into relationships with third parties or develop a direct sales organization.
We
have not established marketing, sales or distribution capabilities for our proposed products. Until such time as our proposed
products are further along in the development process, we will not devote any meaningful time and resources to this effort. At
the appropriate time, we will determine whether we will develop our own sales and marketing capabilities or enter into agreements
with third parties to sell our products. We have limited experience in developing, training or managing a sales force. If we choose
to establish a direct sales force, we may incur substantial additional expenses in developing, training and managing such an organization.
We may be unable to build a sales force on a cost-effective basis or at all. Any such direct marketing and sales efforts may prove
to be unsuccessful. In addition, we will compete with many other companies that currently have extensive marketing and sales operations.
Our marketing and sales efforts may be unable to compete against these other companies. We may be unable to establish a sufficient
sales and marketing organization on a timely basis, if at all.
If
we choose to enter into agreements with third parties to sell our proposed products, we may be unable to establish or maintain
third-party relationships on a commercially reasonable basis, if at all. In addition, these third parties may have similar or
more established relationships with our competitors.
We
may be unable to engage qualified distributors. Even if engaged, these distributors may:
•
fail to adequately market our products;
•
fail to satisfy financial or contractual obligations to us;
•
offer, design, manufacture or promote competing products; or
•
cease operations with little or no notice.
If
we fail to develop sales, marketing and distribution channels, we would experience delays in product sales and incur increased
costs, which would have a material adverse effect on our business, prospects, financial condition, and results of operation.
If
we are unable to protect our intellectual property effectively, we may be unable to prevent third parties from using our technologies,
which would impair our competitive advantage.
We
will rely on patent protection as well as a combination of copyright and trade secret protection, and other contractual restrictions
to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or
permit us to gain or keep any competitive advantage. If we fail to protect our intellectual property, we will be unable to prevent
third parties from using our technologies and they will be able to compete more effectively against us. We cannot assure you that
the patent issued to us will not be challenged, invalidated or held unenforceable. We cannot guarantee you that we will be successful
in defending challenges made in connection with our patent and any future patent applications. In addition to our patent and any
future patent applications, we will rely on contractual restrictions to protect our proprietary technology. We will require our
employees and third parties to sign confidentiality agreements and employees to also sign agreements assigning to us all intellectual
property arising from their work for us. Nevertheless, we cannot guarantee that these measures will be effective in protecting
our intellectual property rights.
The
inventor of the intellectual property which was assigned to the Company in July 2013 by Imagic, LLC and Richard L. Chang’s
Holdings, LLC is presently in declaratory relief litigation with Biosuccess Biotech, Co. LTD. (“Biosuccess”), a company
who was previously assigned licensing rights in the intellectual property. In connection with this litigation, on January 17,
2014, the Company received notice of a complaint filed by Biosuccess against the Company, Imagic, LLC, Richard L. Chang’s
Holdings, LLC, and Ben Chang (our CEO and a director) in the United States District Court, Central District of California Western
Division (the “District Court”). The Complaint includes allegations of patent and copyright infringement, misappropriation
of trade secrets, breach of fiduciary duty, unfair competition and other causes of actions against the Company, Imagic, LLC, Richard
L. Chang’s Holdings, LLC, and Ben Chang (the “Litigation”). The Complaint seeks relief which includes compensatory
damages, attorneys’ fees and costs, an award of treble damages, and such other relief as the court may deem just and proper.
The trial for the Litigation involving the Company is scheduled for July 2015. The Company believes the allegations in the complaint
are without merit and that it will prevail in the Litigation. However, we have incurred expenses and the diversion of financial
resources and management personnel in responding to the complaint. Additionally, an adverse determination against us in the Litigation
may subject us to significant liabilities or require us to seek licenses that may not be available from third parties on commercially
favorable terms, if at all. Further, an adverse determination against us in the Litigation may require us to pay substantial financial
damages, which can be tripled if the infringement is deemed willful, or be required to discontinue or significantly delay development,
marketing, selling and licensing of the Company’s affected products and intellectual property rights.
Also,
our competitors may have filed, and may in the future file, patent applications covering technology similar to ours. Any such
patent application may have priority over our patent applications and could further require us to obtain rights to issued patents
covering such technologies. There may be third-party patents, patent applications and other intellectual property relevant to
our potential products that may block or compete with our products or processes. If another party has filed a United States patent
application on inventions similar to ours, we may have to participate in an interference proceeding declared by the United States
Patent and Trademark Office to determine priority of invention in the United States. The costs of these proceedings could be substantial,
and it is possible that such efforts would be unsuccessful, resulting in a loss of our United States patent position with respect
to such inventions. In addition, we cannot assure you that we would prevail in any of these suits or that the damages or other
remedies if any, awarded against us would not be substantial. Claims of intellectual property infringement may require us to enter
into royalty or license agreements with third parties that may not be available on acceptable terms, if at all. We may also become
subject to injunctions against the further development and use of our technology, which would have a material adverse effect on
our business, financial condition and results of operations. Some of our competitors may be able to sustain the costs of complex
patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties
resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise
the funds necessary to continue our operations.
Our
financial statements have been prepared assuming that the Company will continue as a going concern.
We
have generated losses to date and have limited working capital. These factors raise substantial doubt about our ability to continue
as a going concern. Our financial statements do not include any adjustments that might result from this uncertainty. The report
of our independent registered public accounting firm included an explanatory paragraph expressing substantial doubt about our
ability to continue as a going concern in their audit report included herein. If we cannot generate the required revenues and
gross margin to achieve profitability or obtain additional capital on acceptable terms, we will need to substantially revise our
business plan or cease operations and an investor could suffer the loss of a significant portion or all of his investment in our
Company.
We
have had operating losses since inception, and we currently are not profitable; and we may never achieve profitability.
For
the fiscal year ended March 31, 2013, we had a net loss of $31,350 and an accumulated deficit of $81,930. For the fiscal year
ended March 31, 2014, we had a net loss of $3,004,937 and an accumulated deficit of $3,301,404. We have had and we expect to continue
to have losses in the near term and have relied and will rely on capital funding to support our operations in the near future.
To date, such capital funding has been limited in amount. Because we are at the development stage of our products, we do not expect
that they will generate revenues sufficient to cover the costs of our operations in the nearer and medium term. We cannot predict
whether or not we will ever become profitable or be able to continue to find capital to support our development and business plan.
We
do not expect to pay dividends for the foreseeable future, and we may never pay dividends and, consequently, the only opportunity
for investors to achieve a return on their investment is if a trading market develops and investors are able to sell their shares
for a profit or if our business is sold at a price that enables investors to recognize a profit.
We
currently intend to retain any future earnings to support the development and expansion of our business and do not anticipate
paying cash dividends for the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of
Directors after taking into account various factors, including but not limited to our financial condition, operating results,
cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability
to pay dividends on our common stock may be limited by state law. Accordingly, we cannot assure investors any return on their
investment, other than in connection with a sale of their shares or a sale of our business. At the present time there is a limited
trading market for our shares. Therefore, holders of our securities may be unable to sell them. We cannot assure investors that
an active trading market will develop or that any third party will offer to purchase our business on acceptable terms and at a
price that would enable our investors to recognize a profit.
Capital
Market Risks
Because
we will likely issue additional shares of our common stock, investment in our company could be subject to substantial dilution.
At
an assumed purchase price of $0.00049 (equal to 70% of the closing price of our common stock of $0.0007 on May 8, 2015), we will
be able to receive up to $245,000 in gross proceeds, assuming the sale of the entire 500,000,000 shares being registered hereunder
pursuant to the LG Investment Agreement. Accordingly, we would be required to register additional 3,581,632,653 shares to obtain
the balance of $1,755,000 under the LG Investment Agreement. We are currently authorized to issue 37,503,000,000 shares of our
common stock. We may be required to increase our authorized shares in order to receive the entire purchase price should the purchase
price of our common stock decrease.
In
addition, we anticipate that all or at least some of our future funding, if any, will be in the form of equity financing from
the sale of our common stock. If we do sell more common stock, investors' investment in our company will likely be diluted. Dilution
is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional
shares are sold by us. If dilution occurs, any investment in our company's common stock could seriously decline in value.
LG
will pay less than the then-prevailing market price for our common stock.
The
Common Stock to be issued to LG pursuant to the LG Investment Agreement will be purchased at a 30% discount to the lowest trading
price of our Common Stock during the ten (10) consecutive trading days immediately after LG receives our notice of sale. LG has
a financial incentive to sell our Common Stock immediately upon receiving the shares to realize the profit equal to the difference
between the discounted price and the market price. If LG sells the shares, the price of our Common Stock could decrease. If our
stock price decreases, LG may have a further incentive to sell the shares of our Common Stock that it holds. These sales may have
a further impact on our stock price.
Your
ownership interest may be diluted and the value of our common stock may decline by exercising the put right pursuant to the LG
Investment Agreement.
Pursuant
to the LG Investment Agreement, when we deem it necessary, we may raise capital through the private sale of our Common Stock to
LG at a price equal to a discount to the lowest volume weighted average price of the common stock for the ten (10) consecutive
trading days after LG receives our notice of sale. Because the put price is lower than the prevailing market price of our Common
Stock, to the extent that the put right is exercised, your ownership interest may be diluted.
We
are registering an aggregate of 500,000,000 shares of common stock to be issued under the LG Investment Agreement. The sales of
such shares could depress the market price of our common stock.
We
are registering an aggregate of 500,000,000 shares of Common Stock under the registration statement of which this prospectus is
a part, pursuant to the LG Investment Agreement. Notwithstanding LG’s ownership limitation, the 500,000,000 shares would
represent approximately 27.12% of our shares of Common Stock outstanding immediately after our exercise of the put right under
the Investment Agreement. The sale of these shares into the public market by LG could depress the market price of our Common Stock.
We
may not have access to the full amount available under the LG Investment Agreement.
Our
ability to draw down funds and sell shares under the LG Investment Agreement requires that this resale registration statement
be declared effective and continue to be effective. This registration statement registers the resale of 500,000,000 shares issuable
under the LG Investment Agreement, and our ability to sell any remaining shares issuable under the LG Investment Agreement is
subject to our ability to prepare and file one or more additional registration statements registering the resale of these shares.
These registration statements may be subject to review and comment by the staff of the SEC, and will require the consent of our
independent registered public accounting firm. Therefore, the timing of effectiveness of these registration statements cannot
be assured. The effectiveness of these registration statements is a condition precedent to our ability to sell all of the shares
of Common Stock to LG under the LG Investment Agreement. Even if we are successful in causing one or more registration statements
registering the resale of some or all of the shares issuable under the LG Investment Agreement to be declared effective by the
SEC in a timely manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have
to increase the number of our authorized shares in order to issue the shares to LG. Accordingly, because our ability to draw down
any amounts under the LG Investment Agreement is subject to a number of conditions, there is no guarantee that we will be able
to draw down any portion or all of the proceeds of $2,000,000 under the LG Investment Agreement. We believe that it is likely
that we will be able to drawn down on the full amount of the Agreement, however, prior to drawing down on the full amount, we
may not be able to draw down on the full amount without filing an amendment to our Articles of Incorporation to increase the Company’s
authorized shares of common stock. Pursuant to state law, the filing of the amendment to increase the authorized shares of common
stock may require board and shareholder approval. As such, we cannot make any guarantee that we will be successful in accessing
the full amount under the LG Investment Agreement.
Certain
restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of
our issuance of shares in connection with the LG Investment Agreement, and as such, LG may sell a large number of shares, resulting
in substantial dilution to the value of shares held by existing shareholders.
LG
has agreed, subject to certain exceptions listed in the LG Investment Agreement, to refrain from holding an amount of shares which
would result in LG or its affiliates owning more than 4.99% of the then-outstanding shares of our Common Stock at any one time.
These restrictions, however, do not prevent LG from selling shares of Common Stock received in connection with a put, and then
receiving additional shares of Common Stock in connection with a subsequent put. In this way, LG could sell more than 4.99% of
the outstanding Common Stock in a relatively short time frame while never holding more than 4.99% at one time.
Our
common stock recently commenced trading and has limited volume and high price volatility, so you may be unable to sell your shares
to raise money or otherwise desire to liquidate your shares.
The
Company’s common stock commenced trading March 14, 2014 on the OTC Markets. The trading volume has been very limited by
the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy
of not investing in OTC stocks and certain major brokerage firms restrict their brokers from recommending OTC stocks because they
are considered speculative, volatile, thinly traded and the market price of the common stock may not accurately reflect our underlying
value. The market price of our common stock is subject to wide fluctuations, and may be subject to further fluctuations based
on announcements of new products or services by us, significant sales of our common stock, including “short” sales,
the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating
to trends in our markets or general economic conditions.
The
application of the “penny stock” rules to our common stock could limit the trading and liquidity of the common stock,
adversely affect the market price of our common stock and increase your transaction costs to sell those shares.
As
long as the trading price of our common stock is below $5 per share, the open-market trading of our common stock will be subject
to the “penny stock” rules, unless we otherwise qualify for an exemption from the “penny stock” definition.
The “penny stock” rules impose additional sales practice requirements on certain broker-dealers who sell securities
to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 together with their spouse). These regulations, if they apply, require the delivery, prior
to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks.
Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain
accredited investors must make a special written suitability determination regarding such a purchaser and receive such purchaser’s
written agreement to a transaction prior to sale. These regulations may have the effect of limiting the trading activity of our
common stock, reducing the liquidity of an investment in our common stock and increasing the transaction costs for sales and purchases
of our common stock as compared to other securities. The stock market in general and the market prices for penny stock companies
in particular, have experienced volatility that often has been unrelated to the operating performance of such companies. These
broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance. Stockholders
should be aware that, according to Securities and Exchange Commission (“SEC”) Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include 1) control of the market for
the security by one or a few broker-dealers that are often related to the promoter or issuer; 2) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press releases; 3) boiler room practices involving high-pressure
sales tactics and unrealistic price projections by inexperienced sales persons; 4) excessive and undisclosed bid-ask differential
and markups by selling broker-dealers; and 5) the wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent
investor losses. The occurrence of these patterns or practices could increase the volatility of our share price.
We
may not be able to attract the attention of major brokerage firms, which could have a material adverse impact on the market value
of our common stock.
Security
analysts of major brokerage firms may not provide coverage of our common stock since there is no incentive to brokerage firms
to recommend the purchase of our common stock. The absence of such coverage limits the likelihood that an active market will develop
for our common stock. It will also likely make it more difficult to attract new investors at times when we require additional
capital.
We
may be unable to list our common stock on NASDAQ or on any securities exchange.
Although
we may apply to list our common stock on NASDAQ or the NYSE MKT in the future, we cannot assure you that we will be able to meet
the initial listing standards, including the minimum per share price and minimum capitalization requirements, or that we will
be able to maintain a listing of our common stock on either of those or any other trading venue. If our common stock begins trading,
until such time as we would qualify for listing on NASDAQ, the NYSE MKT or another trading venue, our common stock would trade
on OTC Markets or OTC Bulletin Board or another over-the-counter quotation system where an investor may find it more difficult
to dispose of shares or obtain accurate quotations as to the market value of our common stock. In addition, rules promulgated
by the SEC impose various practice requirements on broker-dealers who sell securities that fail to meet certain criteria set forth
in those rules to persons other than established customers and accredited investors. Consequently, if our common stock begins
trading, these rules may deter broker-dealers from recommending or selling our common stock, which may further affect the liquidity
of our common stock. It would also make it more difficult for us to raise additional capital.
Future
sales of our equity securities could put downward selling pressure on our securities, and adversely affect the stock price.
There
is a risk that this downward pressure may make it impossible for an investor to sell his or her securities at any reasonable price,
if at all. Future sales of substantial amounts of our equity securities in the public market, or the perception that such sales
could occur, could put downward selling pressure on our securities, and adversely affect the market price of our common stock.
Conversion
of our convertible notes into common stock could result in additional dilution to our stockholders.
We
have issued convertible notes which are convertible into shares of our common stock at conversion prices which are at a discount
to the then current trading price of our common stock. Additionally, upon the occurrence of certain events of default (including
conditions outside of our control) the note holders are entitled to increased repayment and interest rates, as well as other remedies.
The note holders have anti-dilution and conversion reset provisions which are triggered by the issuance of lower priced securities.
If shares of our common stock are issued due to the conversion of some or all of the convertible notes in the future, the ownership
interests of existing stockholders will be diluted.
The
Company’s common stock was the subject of an unauthorized spam stock promotion.
In
April 2014, the Company was made aware of spam stock promotion regarding shares of the Company. The Company received complaints,
and was forwarded emails and links to social media sites, relating to unsolicited messages containing false and misleading information
regarding the Company and its stock price. The spam mails touted RCHA as "the opportunity of the year" that could
go past "2 or 3 dollars". The Company did not, and does not, authorize, endorse or sponsor these illegal spam
stock promotions or any of the information contained in the emails. However, the spam stock promotions caused the OTC Markets
to place a skull and crossbones next to the Company’s stock symbol on the OTC Markets website warning investors with respect
to the Company’s stock, and may have caused reputational damage to the Company and its stock. The Company does not have
the ability to stop or restrict any future spam stock promotions which may occur and any such future promotions could have an
adverse effect on the Company and its share price.
We
do not intend to pay dividends on any investment in the shares of stock of our company and any gain on an investment in our company
will need to come through an increase in our stock's price, which may never happen.
We
have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent
that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment
of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through
an increase in the stock's price. This may never happen and investors may lose all of their investment in our company.
FINRA
sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
In
addition to the "penny stock" rules described above, the Financial Industry Regulatory Authority (known as "FINRA")
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial
status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there
is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability
to buy and sell our stock and have an adverse effect on the market for our shares.
Corporate
and Other Risks
Limitations
on director and officer liability and indemnification of our Company’s officers and directors by us may discourage stockholders
from bringing suit against an officer or director.
Our
Company’s certificate of incorporation and bylaws provide, with certain exceptions as permitted by governing state law,
that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director,
except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of
dividends. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and
may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director.
We
are responsible for the indemnification of our officers and directors.
Should
our officers and/or directors require us to contribute to their defense, we may be required to spend significant amounts of our
capital. Our certificate of incorporation and bylaws also provide for the indemnification of our directors, officers, employees,
and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which
they become a party arising from their association with or activities on behalf of our Company. This indemnification policy could
result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant, or involve issues
which result in significant liability for our key personnel, we may be unable to continue operating as a going concern.
Certain
provisions of our Certificate of Incorporation may make it more difficult for a third party to effect a change-of-control.
Our
certificate of incorporation authorizes the Board of Directors to issue up to 10,000,000 shares of preferred stock. The preferred
stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors
without further action by the stockholders. These terms may include preferences as to dividends and liquidation, conversion rights,
redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our
common stock, and therefore could reduce the value of such common stock. In addition, specific rights granted to future holders
of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of the Board
of Directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire
or effect a change-in-control, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable
offer is extended and could materially and negatively affect the market price of our common stock.
The
issuance of Preferred Stock to our Chief Executive Officer provides him with voting control which may limit your ability and the
ability of our other stockholders, whether acting alone or together, to propose or direct the management or overall direction
of our Company.
Our
Chief Executive Officer has 6,000,000 shares of Preferred Stock which provide him with 100 to 1 voting rights over shares of common
stock. This ownership provides him with voting control over matters which require shareholder approval. This concentration of
voting power could discourage or prevent a potential takeover of our Company that might otherwise result in an investor receiving
a premium over the market price for his shares. If you acquire shares of our common stock, you may have no effective voice in
the management of our Company. Such concentrated control of our Company may adversely affect the price of our common stock.
Our principal stockholders may be able to control matters requiring approval by our stockholders, including the election of directors,
mergers or other business combinations. Such concentrated control may also make it difficult for our stockholders to receive a
premium for their shares of our common stock in the event we merge with a third party or enter into different transactions which
require stockholder approval. These provisions could also limit the price that investors might be willing to pay in the future
for shares of our common stock.
We
are dependent for our success on a few key individuals.
Our
success depends on the skills, experience and performance of key members of our management team. Each of those individuals
may voluntarily terminate his relationship with the Company at any time. Were we to lose one or more of these key individuals,
we would be forced to expend significant time and money in the pursuit of a replacement, which would result in both a delay in
the implementation of our business plan and the diversion of limited working capital. We do not maintain a key man insurance policy
on any of our executive officers.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus,
including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects,
plans, objectives of management and expected market growth are forward-looking statements. These statements involve known and
unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
The
words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “should,”
“target,” “will,” “would” and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include,
among other things, statements about:
•
our ability to obtain additional financing;
•
the accuracy of our estimates regarding expenses, future revenues and capital requirements;
•
the success and timing of our preclinical studies and clinical trials;
•
our ability to obtain and maintain regulatory approval of the product candidates we may develop, and the labeling under any approval
we may obtain;
•
regulatory developments in the United States and other countries;
•
the performance of third-party manufacturers;
•
our plans to develop and commercialize our product candidates;
•
our ability to obtain and maintain intellectual property protection for our product candidates;
•
the successful development of our sales and marketing capabilities;
•
the potential markets for our product candidates and our ability to serve those markets;
•
the rate and degree of market acceptance of any future products;
•
the success of competing drugs that are or become available; and
•
the loss of key scientific or management personnel.
The
forward-looking statements in this Prospectus are based upon our management’s beliefs, assumptions and expectations of our
future operations and economic performance, taking into account the information currently available to them. These statements
are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently
known to us that may cause our actual results, performance or financial condition to be materially different from the expectations
of future results, performance or financial condition we express or imply in any forward-looking statements. These forward-looking
statements are based on our current plans and expectations and are subject to a number of uncertainties and risks that could significantly
affect current plans and expectations and our future financial condition and results.
We
undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Prospectus
might not occur. We qualify any and all of our forward-looking statements entirely by these cautionary factors. As a consequence,
current plans, anticipated actions and future financial conditions and results may differ from those expressed in any forward-looking
statements made by or on our behalf. You are cautioned not to unduly rely on such forward-looking statements when evaluating the
information presented herein.
USE
OF PROCEEDS
We
will not receive any proceeds from the sale of shares by the selling stockholder. However, we will receive proceeds from the sale
of securities pursuant to the LG Investment Agreement. The proceeds received from any “Puts” tendered to LG under
the LG Investment Agreement will be used for general corporate and working capital purposes and acquisitions or assets, businesses
or operations or for other purposes that the Board of Directors, in its good faith deem to be in the best interest of the Company.
DILUTION
“Dilution”
as used herein represents the difference between the offering price per share of shares offered hereby and the net tangible book
value per share of the Company’s common stock after completion of the offering. Dilution in the offering is primarily due
to the losses previously recognized by the Company.
At
an assumed purchase price of $0.00049 (equal to 70% of the closing price of our common stock of $0.0007 on May 8, 2015), we will
be able to receive up to $245,000 in gross proceeds, assuming the sale of the entire 500,000,000 shares being registered hereunder
pursuant to the LG Investment Agreement. Accordingly, we would be required to register additional 3,581,632,653 shares to obtain
the balance of $1,755,000 under the LG Investment Agreement.
The
following information is based upon the Company’s unaudited balance sheet as filed in the Company’s Form 10-Q/A on
February 25, 2015, for the period ended December 31, 2014:
The
net tangible book value of the Company at December 31, 2014 was $(1,209,104) or $(0.00174) per share. Net tangible book value
represents the amount of total tangible assets less total liabilities. Assuming that 100% of the shares offered hereby were purchased
by investors (a fact of which there can be no assurance) as of December 31, 2014, the then outstanding 4,778,251,004 shares of
common stock, which would constitute all of the issued and outstanding equity capital of the Company, would have a net tangible
book value $(1,209,104) (after deducting commissions and offering expenses) or approximately $(0.000253) per share.
Assuming
a 50% decrease in the number of shares to be issued, based upon the purchase price of $0.00049 (equal to 70% of the closing price
of our common stock of $0.0007 on May 8, 2015, we will be required to issue an aggregate of 2,040,816,327 shares of common stock,
with net proceeds of $1,000,000 pursuant to the LG Agreement.
Assuming
a 75% decrease in the number of shares to be issued, based upon the purchase price of $0.00049 (equal to 70% of the closing price
of our common stock of $0.0007 on May 8, 2015, we will be required to issue an aggregate of 1,020,408,164 shares of common
stock, with net proceeds of $500,000 pursuant to the Equity Purchase Agreement.
The
dilution associated with the offering and each of the above scenarios is as follows:
| | |
| | | |
| 50 | % | |
| 75 | % |
| |
| | | |
| Decrease | | |
| Decrease | |
| |
| | | |
| in
Shares | | |
| in
Shares | |
| |
| Offering | | |
| Issued | | |
| Issued | |
| Offering price | |
$ | 0.00049 | | |
$ | 0.00049 | | |
$ | 0.00049 | |
| Net tangible book value
before Offering (per share) | |
$ | 0.00174 | | |
$ | 0.00174 | | |
$ | 0.00174 | |
| Net tangible book value
after Offering (per share) | |
$ | 0.000253 | | |
$ | 0.000442 | | |
$ | 0.000704 | |
| Dilution per share to
investor | |
$ | 0.001487 | | |
$ | 0.0013 | | |
$ | 0.00104 | |
| Dilution percentage to
investor | |
| 85.46 | % | |
| 74.6 | % | |
| 59.54 | % |
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Public
Market for Common Stock
Our
common stock is currently trading on the OTCQB Market under the symbol “RCHA”. The table below lists the high and
low closing prices per share of our common stock from the date our stock was first traded on March 14, 2014, as quoted on the
OTCQB Market. Prior to March 14, 2014, there was no public market for our common stock.
| Quarter
Ended | |
High | |
Low |
| | March
31, 2014 | | |
$ | 0.30 | | |
$ | 0.30 | |
| | June
30, 2014 | | |
$ | 0.30 | | |
$ | 0.05 | |
| | September
30, 2014 | | |
$ | 0.04 | | |
$ | 0.04 | |
| | December
31, 2014 | | |
$ | 0.059 | | |
$ | 0.0036 | |
| | March
31, 2015 | | |
$ | 0.014 | | |
$ | 0.0009 | |
Holders
We
had approximately 82 record holders of our common stock as of April 16, 2015, according to the books of our transfer agent. The
number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name,
the accuracy of which cannot be guaranteed.
Dividends
We
have never paid cash dividends on our common stock. We intend to keep future earnings, if any, to finance the expansion of our
business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Our future payment of dividends
will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors that our board
of directors may deem relevant. Our retained earnings deficit currently limits our ability to pay dividends.
Equity
Compensation Plans
The
table below sets forth information as of April 15, 2015 with respect to compensation plans under which our common stock is authorized
for issuance:
| Plan
Category | |
Number
of securities to be issued upon exercise of outstanding options, warrants and rights | |
Weighted-average
exercise price of outstanding options | |
Number
of securities remaining available for future issuance under equity compensation
plans |
Equity Compensation Plans
Approved By security holders | |
| None | | |
| Not
Applicable | | |
Not Applicable |
| Equity Compensation
Plans Not Approved By Security Holders | |
| 390,004,800 | | |
$ | .0019 | | |
118,751,270 |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our
discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated
in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary
Notice Regarding Forward-Looking Statements and Business sections in this Prospectus. We use words such as “anticipate,”
“estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,”
“believe,” “intend,” “may,” “will,” “should,” “could,”
and similar expressions to identify forward-looking statements.
Recent
Developments
On
August 9, 2010 we were incorporated as Nepia Inc. in the State of Nevada. From August 9, 2010 to July 18, 2013, we were in the
business of developing, manufacturing, and selling small boilers aimed at farmers primarily in Southeast Asia.
On
July 18, 2013, we designated, from our 10,000,000 authorized shares of preferred stock, par value $0.001, 6,000,000 shares of
Series “A” Preferred Stock. Our Series “A” Preferred Stock has voting rights of 100 votes per share and
vote with common shares as a single class.
On
July 18, 2013, we entered into a Memorandum of Understanding and Asset Assignment Agreement (the “Assignment Agreement”)
with Imagic, LLC dba Rich Pharmaceuticals and Richard L. Chang’s Holdings, LLC to acquire certain assets including United
States Patent No. 6,063,814 entitled “Phorbol esters as anti-neoplastic and white blood cell elevating agents” and
all related intellectual property associated with the patent. In consideration for the newly acquired assets, we agreed to issue
Imagic, LLC a total of 198,625 pre-split shares of our common stock and to issue Ben Chang 6,000,000 of our newly created Series
“A” Preferred Stock with super voting rights. We further agreed to use its best efforts to complete a financing resulting
in proceeds of at least $2,000,000. If we are unable to raise $400,000 according to the terms of the Assignment Agreement, the
assets revert back to Imagic, LLC and Richard L. Chang’s Holdings. As part of the Assignment Agreement, Imagic, LLC and
Richard L. Chang’s Holdings shall have the option at any time before November 1, 2014, to assign to us any and all interest
these companies have in the indication, patents and intellectual property related to Hodgkin’s Lymphoma in consideration
for us issuing to Ben Chang: (i) 476,820 pre-split common shares; and (i) 1.0408 pre-split common shares for each one pre-split
common share issued by us prior to the date we receive notice of intent to exercise the option, adjusted for any stock split we
happen to undertake.
In
consequence of the Agreement and Assignment Agreement, Sean Webster resigned in his position as an officer and director. In his
stead, Ben Chang was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director.
Li Deng Ke and Xiong Chao Jun sold 1,275,000 pre-split common shares to Ben Chang, and Mr. Chang cancelled 1,200,517 of those
shares he received and returned them to treasury.
On
July 19, 2013, we entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the
“Agreement”) with our prior officer and directors, Li Deng Ke and Xiong Chao Jun. Pursuant to the Agreement, we transferred
all assets and business operations associated with our boiler business to Messrs. Ke and Jun. In exchange, Messrs. Ke and Jun
agreed to assume and cancel all liabilities relating to our former business, including shareholder and officer loans amounting
to $24,318. From and after July 18, 2013, we are in the business of developing RP-323 (formerly called PD-616) for the treatment
of Acute Myelogenous Leukemia (AML), and to cause elevation of white blood cells (WBC) in patients depleted of these elements
due to various conditions. We are no longer engaged in the business of developing, manufacturing, and selling straw burning boilers.
A more complete description of our new business is contained under “Item 2.01 Completion of Acquisition or Disposition of
Assets” in our Current Report on Form 8-K filed with the SEC on July 24, 2013 (the “Super 8-K”). Readers are
encouraged to read the Super 8-K to gain a better understanding of our new business and risk factors.
On
August 26, 2013, we filed Articles of Merger with the Secretary of State of Nevada in order to effectuate a merger with our wholly-owned
subsidiary, Rich Pharmaceuticals, Inc. Shareholder approval was not required under Section 92A.180 of the Nevada Revised Statutes.
As part of the merger, we authorized a change in our name to "Rich Pharmaceuticals, Inc." and our Articles of Incorporation
were amended to reflect this name change. The effectiveness of the name change was subject to approval by the Financial Industry
Regulatory Authority (“FINRA”), which we received on September 3, 2013.
On
September 5, 2013, we resolved to increase the number of authorized shares of our common stock, par value $0.001, from 400,000,000
shares to 37,503,000,000 shares. Correspondingly, we affirmed a forward split of 416.7 for 1 in which each shareholder was issued
416.7 common shares in exchange for 1 common share of their issued common stock. Under the Nevada law, shareholder approval was
not required. We submitted the required information to FINRA and we were informed by FINRA that the effective date of the forward
split was October 2, 2013. Prior to approval of the forward split, we had a total of 993,108 issued and outstanding pre-split
common shares, par value $0.001. On the effective date of the forward split, we had a total of 413,828,104 issued and outstanding
post-split common shares, par value $0.001. New stock certificates will be issued upon surrender of the shareholders’ old
certificates. In connection with the forward split, we were issued the following new CUSIP number: 76303T209. Effective October
30, 2013 our common stock is quoted under the symbol “RCHA.”
On
September 6, 2013, we entered into an Employment Agreement with Ben Chang, our Chief Executive Officer, Chief Financial Officer,
President and Secretary. The Employment Agreement provides for a term of two years; annual compensation of $275,000; an amount
equal to 3 months compensation payable upon entering into the Employment Agreement; and options to purchase up to 3,000,000 shares
of post-split common stock at an exercise price of $0.02 per common share, 50% of which are vested on October 1, 2013, and 50%
of which will vest monthly over 24 months of continued employment. The foregoing is only a brief description of the material terms
of the Employment Agreement, and does not purport to be a complete description of the rights and obligations of the parties thereunder
and such descriptions are qualified in their entirety by reference to the Employment Agreement which is filed as an exhibit to
our Current Report on Form 8-K which was filed with the SEC on September 12, 2013.
On
September 6, 2013, we expanded the number of Board of Directors to two (2) members and appointed David Chou, Ph.D., as a director
to fill the vacancy.
On
September 6, 2013, we approved the adoption of Rich Pharmaceuticals, Inc. 2013 Stock Option/Stock Issuance Plan (the "2013
Plan”). The 2013 Plan is intended to aid us in recruiting and retaining key employees, directors or consultants and to motivate
them by providing incentives through the granting of awards of stock options or other stock based awards. The 2013 Plan is administered
by the board of directors. Directors, officers, employees and consultants and our affiliates are eligible to participate under
the 2013 Plan. A total of 60,000,000 shares of post-split common stock was reserved for awards under the 2013 Plan. On September
6, 2013, we approved the grant of 41,000,000 options to purchase post-split common stock to a total of eight directors, officers,
employees and consultants of our Company. The options have an exercise price of $0.02 per post-split common share and are subject
to vesting schedules and other terms as provided in the individual option grants. The foregoing is only a brief description of
the material terms of the 2013 Plan, and does not purport to be a complete description of the rights and obligations of the parties
thereunder and such descriptions are qualified in their entirety by reference to the 2013 which is filed as an exhibit to our
Current Report on Form 8-K which was filed with the SEC on September 12, 2013.
On
January 17, 2014, the Company executed a Waiver to Memorandum of Understanding and Asset Assignment Agreement with Imagic, LLC
(“Imagic”) and Richard L. Chang Holding's, LLC (“Holdings LLC”) pursuant to which Imagic and Holdings
LLC agreed to waive and terminate their rights to the reversion of the patent assets under the terms of the above-described Memorandum
of Understanding and Asset Assignment Agreement dated as of July 18, 2013. The foregoing is only a brief description of the material
terms of the waiver agreement, and does not purport to be a complete description of the rights and obligations of the parties
thereunder and such descriptions are qualified in their entirety by reference to the agreement which is filed as an exhibit to
our Current Report on Form 8-K which was filed with the SEC on January 17, 2014.
On
July 23, 2014, the Company announced that it had hired San Diego, California based contract research organization (CRO) Therinova
Development, Inc. to file its new drug application (NDA), identify and supervise Phase II clinical trial sites for the use of
RP-323 in Acute Myelocytic Leukemia patients. Therinova is a specialty Contract Research Organization (CRO) that provides comprehensive
product development solutions for the biopharmaceutical industry.
On
October 6, 2014, 2014, the Company executed an Assignment Agreement (the “Assignment Agreement”) with Richard L. Chang
Holding's, LLC (“Holdings LLC”) and Imagic LLC (“Imagic LLC”) pursuant to which Holdings LLC and Imagic
LLC exercised the option under the Memorandum of Understanding and Asset Assignment Agreement dated July 26, 2013 to assign any
and all interest it had in the indication, patents and intellectual property related to treatment of Hodgkin’s Lymphoma,
utility patent application number 61998397, entitled COMPOSITIONS AND METHODS OF USE OF PHORBOL ESTERS FOR THE TREATMENT
OF HODGKIN’S LYMPHOMA pursuant to the terms of the Assignment Agreement. In connection with the Assignment Agreement,
the Company issued 220,792,028 shares of the Company’s restricted common stock to Imagic LLC in accordance with the terms
and subject to the conditions set forth in the Assignment. Imagic LLC is owned and controlled by Ben Chang. This issuance of shares
was made in reliance on the exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”) contained in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated under
the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon
the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public
offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities
by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the
securities took place directly between the third party and the Company; and (f) the recipient of the securities was an accredited
investor.
On
October 6, 2014, the Company approved an amendment to the 2013 Plan to increase the number of authorized shares to 90,004,800,
and approved the grant of 15,500,000 options to purchase Company common stock at an exercise price of $.0191984 per share.
On
October 6, 2014, the Company granted Ben Chang 8,000,000 shares of Company common stock and options to purchase up to 3,000,000
shares of Company common stock at an exercise price of $.0191984 per share.
In
October 2014, the Company submitted its Investigational New Drug (IND) Application for the next Phase, a multi-center study to
evaluate the safety and efficacy of RP-323 in patients with AML and MDS.
Effective
January 12, 2015, the Company approved the re-pricing of all of the 67,253,280 previously granted options under the Company’s
2013 Equity Incentive Plan, which had exercise prices between $0.30 per share and $$.0191984 per share, to $0.0017 per share which
was the closing price of the Company’s common stock on January 9, 2015. All of the other terms of the options remained unchanged.
On
February 2, 2015, the Company announced the completion of the GMP clinical batch of RP-323 study drug that was manufactured at
the state-of-the-art Wuxi Apptec Biopharmaceutical’s facility.
On
April 6, 2015, the Company’s Board of Directors approved an amendment to the 2013 Plan to increase the number of shares
reserved for awards under the 2013 Plan from 90,004,800 shares to 390,004,800 shares.
On
April 6, 2015, the Company’s Board of Directors granted Ben Chang options to purchase 50,000,000 shares of Company common
stock under the Rich Pharmaceuticals, Inc. 2013 Stock Option/Stock Issuance Plan, as amended. The options have an exercise price
of $.0008 per share; a term of 5 years; are immediately vested; and may be exercised by cashless exercise. Ben Chang is the Chief
Executive Officer and a director of the Company.
Investment
Agreement with LG
On
May 19, 2015, we entered into an investment agreement with LG Capital Funding, LLC, a New York limited liability company (“LG”).
Pursuant to the terms of the LG Investment Agreement, LG committed to purchase up to $2,000,000 of our common stock over a period
of up to twenty four (24) months. From time to time during the twenty four (24) months period commencing from the effectiveness
of the registration statement, we may deliver a drawdown notice (“Drawdown Notice”) to LG which states the dollar
amount that we intend to sell to LG on a date specified in the drawdown notice (“Drawdown Amount”). The maximum amount
that the Company shall be entitled to drawdown to LG shall be two hundred percent (200%) of average daily trading volume (U.S.
market only) of the Common Stock during the ten (10) days preceding the Drawdown Notice, so long as such amount does render the
Investor a holder of more than 4.99% of the outstanding Shares of the Company. The purchase price per share to be paid by LG shall
be calculated as a thirty percent (30%) discount to the lesser of: (1) the lowest traded price of the Company Common Stock during
the ten (10) consecutive trading days prior to the date the Drawdown Notice was submitted or (2) the closing bid price on the
day before the Drawdown Notice is submitted. We initially reserved 100,000,000 shares of our common stock for issuance under the
LG Investment Agreement. The obligations of LG to purchase shares under the LG Investment Agreement are subject to numerous conditions
which may not be met by the Company, and the Company cannot therefore provide any assurances that the Company will sell any shares
of Company common stock to LG under the LG Investment Agreement.
In
connection with the LG Investment Agreement, we also entered into a registration rights agreement with LG, pursuant to which we
are obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering 500,000,000
shares of our common stock underlying the LG Investment Agreement within 21 days after the closing of the transaction. In addition,
we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC and
maintain the effectiveness of such registration statement until termination of the LG Investment Agreement.
The
LG Investment Agreement is not transferable and any benefits attached thereto may not be assigned.
A
copy of the LG Investment Agreement is attached as an exhibit to this Form S-1 Registration Statement.
Results
of Operations for the Nine Months Ended December 31, 2014 and 2013
We
generated no revenue for the nine months ended December 31, 2014 and 2013. We do not anticipate earnings revenues until we are
able to sell or license our products.
Our
operating expenses and net loss during the nine months ended December 31, 2014 were $2,394,658 respectively, as compared with
$321,464 for the same period ended 2013. The operating expenses for the nine months ended December 31, 2014 consisted mainly of
professional fees ($590,955), wages and taxes ($789,266), consulting expenses ($169,192) and stock-based compensation ($679,095).
We
anticipate our operating expenses will continue to increase as we undertake our new plan of operations which went into effect
on July 18, 2013.
Results
of Operations for the Fiscal Year Ended March 31, 2014 Compared to Fiscal Year Ended March 31, 2013
We
had no revenues during the periods ending March 31, 2014 and March 31, 2013. In July 2013, the Company entered the start-up phase
of its operations.
Operating
expenses for the year ending March 31, 2014 were $3,004,595 which consisted primarily of $1,869,273 non-cash charges related to
issuance of stock options to officers and consultants and $335,000 in consulting fees. Operating expenses for the year ending
March 31, 2013 were $31,350 which consisted primarily of accounting expenses. Operating expenses increased significantly compared
to the year ending March 31, 2013 due to entering into operations from the previous non-operational shell status of the Company
in July 2013.
We
had a net loss of $3,004,937 for the year ending March 31, 2014 compared to a net loss of $31,350 for the year ending March 31,
2013. The increase in the net loss was due to the commencement of operations in July 2013 and non-cash charges discussed above.
Liquidity
and Capital Resources
As
of December 31, 2014, we had total current assets of $5,823; we had total current liabilities of $1,195,244; and we had a stockholders’
deficit of $1,126,984. Operating activities used $1,034,393 in cash for the nine months ended December 31, 2014, and used $261,841
in cash for the nine months ended December 31, 2013.
Our
net loss of $1,436,048 for the three months ended December 31, 2014 primarily accounted for our negative operating cash flow.
Financing activities during the nine months ended December 31, 2014 generated $1,027,829 in cash from the issuance of $603,829
in convertible promissory notes and the sale of $607,050 of stock and warrants.
As
of December 31, 2014 and the date of this report, we have insufficient cash to operate our business at the current level for the
next twelve months and insufficient cash to achieve our business goals. Our continuation as a going concern is dependent upon
our ability to obtain additional financing and to generate profits and positive cash flow. We will require additional cash of
$2,000,000 over the next twelve months to cover the costs of overhead and operations, drug manufacturing, maintaining our patent
portfolio, and conducting clinical trials for the indication Acute Myeloid Leukemia (“AML”). We plan to raise the
required capital pursuant to a private equity financing in the near term, but there is no guarantee or assurances that we will
be able to do so.
Off
Balance Sheet Arrangements
As
of December 31, 2014, there were no off balance sheet arrangements.
Contractual
Obligations
We
do not have any contractual obligations.
Going
Concern
We
have negative working capital and have not yet received revenues from sales of products or services. These factors create substantial
doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary
if we are unable to continue as a going concern.
Our
ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt
financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining
debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful
in these efforts.
Critical
Accounting Policies
Our
significant accounting policies are summarized in Note 1 of our financial statements included in this annual report on Form 10-K
for the year ended March 31, 2014. Our financial statements and related public financial information are based on the application
of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates, assumptions,
judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and
expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including
information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions
adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates
under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial
statements.
DESCRIPTION
OF BUSINESS
Business
Overview
The
Company is developing RP-323 (formerly called
PD-616) for the treatment of Acute Myelogenous Leukemia (AML), and to cause elevation of white blood cells (WBC) in patients depleted
of these elements due to various conditions.
The
Technology
The
priority drug development efforts of the Company are focused on the use of RP-323, a naturally occurring compound that has a number
of properties that are uniquely suited for the treatment of patients with Acute Myelocytic Leukemia (AML). Company scientists
had worked with RP-323 in the laboratory for many years studying its ability to convert cancer cells to normal cells, a process
called differentiation. It was also observed in some instances to cause cancer cell death. These observations were the basis of
the proposal to test RP-323 in relapsed AML patients in China and later in the US and resulted in findings that were sufficiently
encouraging to support further interest in this drug to treat AML. During the course of these preliminary clinical studies RP-323
was found to be extremely potent in causing a marked and favorable increase in white blood cells (WBC) in blood, key elements
in fighting infections. These results were also observed in cancer patients whose WBC were depleted due to the toxic effects of
chemotherapeutic drugs used during the course of their therapy.
Clinical
Studies in Acute Myelocytic Leukemia
Based
on the known properties of RP-323, it was first administered in a pilot study in China, either alone or in combination with standard
drugs, and caused temporary remission of AML in some patients’ refractory to standard therapy. Several patients recovered
sufficiently with RP-323 treatment to return to their normal occupations, symptom-free. Interest in these findings led to a Phase
I investigator-sponsored trial in 35 patients by a leading oncologist at a leading cancer hospital in New Jersey, the University
of Medicine and Dentistry of New Jersey (UMDNJ). This study determined the maximum tolerated dose of RP-323 and described its
relatively mild side effects. The results of this Phase I trial led to interest by the same investigator to initiate a Phase II
study. The use of RP-323 in treatment of refractory AML is expected to qualify for a “fast track” designation at the
United States Food and Drug Administration (FDA), and the Company expects to apply for “orphan drug” status. An “orphan
drug” is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the
condition itself being referred to as an orphan disease. The Company’s clinical plans are expected to result in completion
of the required clinical studies in 2016 and provide a basis for market approval for the treatment of AML. The Company estimates
the budget for reaching market approval for the treatment of AML to be $40 million. However, should the Company be able to obtain
“orphan drug” status from the FDA, that timeline could be accelerated to 2015 and budget reduced to $20 million. All
plans are subject to the Company obtaining adequate financing, or partnering with a third party, to fund the cost of the studies.
The Company cannot provide any assurances that it will be able to obtain such financing or partnering arrangement. On July 23,
2014, the Company announced that it had hired San Diego, California based contract research organization (CRO) Therinova Development,
Inc. to file its new drug application (NDA), identify and supervise Phase II clinical trial sites for the use of RP-323 in Acute
Myelocytic Leukemia patients. Therinova is a specialty Contract Research Organization (CRO) that provides comprehensive product
development solutions for the biopharmaceutical industry.
Clinical
Results in Elevation of White Blood Cells
Clinical
studies in over 100 cancer patients demonstrated the potent ability of RP-323 to stimulate the production of white blood cells
(WBC) and neutrophils. Both the treatments for various diseases and the disease themselves can result in extremely low numbers
of these elements. Their elevation is essential to prevent post-treatment infections common to these patients. In comparative
studies in animals, RP-323 is significantly more potent than marketed drugs used for this purpose. The effect of RP-323 on the
elevation of these and other blood elements will be measured during treatment of AML.
Market
Opportunities
AML
It
is estimated that 40,000 people in the US have AML and an additional 14,000 are diagnosed annually with a yearly death rate of
over 10,000. Based on this incidence, the potential market for RP-323 for the treatment of AML is approximately $1 to 2 billion
peak sales annually in the US and more than $5 billion worldwide.
White
Blood Cell
Currently
marketed drugs for elevating key infection-fighting blood elements are used in supportive cancer care, inflammation, nephrology
and bone disease. In 2012, this market exceeded $3 billion. The clinical use of RP-323 for these purposes is expected to have
several key therapeutic advantages over marketed drugs, along with a clean safety profile and observed high efficacy is expected
to result in a 15 to 30 percent market share and peak annual sales of $0.5 to $1 billion. Amgen would be the Company’s largest
competitor in this market.
Patent
and Patent Application
The
Company has been assigned United States Patent No. 6,063,814, entitled “Phorbol esters as anti-neoplastic and white blood
cell elevating agents,” and utility patent application titled “Compositions and Methods of Use Of Phorbol Esters
For The Treatment of Neoplasms (Acute Myeloid Leukemia).” The patent is intended
to provide the Company with exclusive rights to the use of intravenous RP-323 for therapeutic purposes.
The
Company has also been assigned the indication for Hodgkin’s Lymphoma under utility patent application number 61998397, entitled
“COMPOSITIONS AND METHODS OF USE OF PHORBOL ESTERS FOR THE TREATMENT OF HODGKIN’S LYMPHOMA”.
Provided
that the Company can obtain additional funding, the Company intends to expand its patents through the addition of indications
for use and adding protection in appropriate countries.
Government
Regulations
The
research, pre-clinical development, clinical trials, product manufacturing and marketing which may be conducted by the Company
is subject to regulation by the FDA and similar health authorities in foreign countries. The proposed products and technologies
of the Company also may be subject to certain other federal, state and local government regulations, including, without limitation,
the Federal Food, Drug and Cosmetic Act, and their state, local and foreign counterparts. Although there can be no such assurance,
the Company does not believe that compliance with such laws and regulations has, nor is presently expected to have, a material
adverse effect on the business of the Company. However, the Company cannot predict the extent of the adverse effect on its business
or the financial and other cost that might result from any government regulations arising out of future legislative, administrative
or judicial action.
Generally,
the steps required before a pharmaceutical or therapeutic biological agent may be marketed in the United States include: (i) pre-clinical
laboratory tests, in vivo pre-clinical studies in animals, toxicity studies and formulation studies; (ii) the submission to the
FDA of an IND application for human clinical testing, that must become effective before human clinical trials commence; (iii)
adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug; (iv) the submission of a
marketing application to the FDA; and (v) FDA approval of the marketing application prior to any commercial sale or shipment of
the drug.
Pre-clinical
studies include laboratory evaluation of the product, conducted under Good Laboratory Practice (GLP) regulations, and animal studies
to assess the pharmacological activity and the potential safety and effectiveness of the drug. The results of the pre-clinical
studies are submitted to the FDA in the IND. Unless the FDA objects to an IND, it becomes effective 30 days following submission
and the clinical trial described in the IND may then begin.
Every
clinical trial must be conducted under the review and oversight of an institutional review board (IRB) at each institution participating
in the trial. The IRB evaluates, among other things, ethical factors, the safety of human subjects, and the possible liability
of the institution.
Clinical
trials are typically conducted in three sequential phases, although the phases may overlap. Phase I represents the initial introduction
of the drug to a small group of healthy subjects to test for safety, dosage tolerance, and the essential characteristics of the
drug. Phase II involves studies in a limited number of patients to test the safety and efficacy of the drug at different dosages.
Phase III trials involve large-scale evaluation of safety and effectiveness, usually (though not necessarily) in comparison with
placebo or an existing treatment.
The
results of the pre-clinical and clinical trials are submitted to the FDA as part of an application to market the drug. The marketing
application also includes information pertaining to the chemistry, formulation, manufacture of the drug and each component of
the final product. The FDA review of a marketing application takes from one to two years on average to complete, though reviews
of treatments for cancer and other life-threatening diseases may be accelerated. However, the process may take substantially longer
if the FDA has questions or concerns about a product. Following review, the FDA may ultimately decide that an application does
not satisfy regulatory and statutory criteria for approval. In some cases, the FDA may approve a product but require additional
clinical tests following approval (i.e., Phase IV).
In
addition to obtaining FDA approval for each product, each domestic drug manufacturing establishment must be registered with, and
approved by, the FDA. Domestic manufacturing establishments are subject to inspections by the FDA and must comply with Good Manufacturing
Practice ("GMP"). To supply products for use in the United States, foreign manufacturing establishments must comply
with GMP and are subject to periodic inspection by the FDA or by corresponding regulatory agencies in such countries under reciprocal
agreements with the FDA.
If
marketing approval of any Company product is granted, the Company must continue to comply with FDA requirements not only for manufacturing,
but also for labeling, advertising, record keeping, and reporting to the FDA of adverse experiences and other information. In
addition, the Company must comply with federal and state health care anti-kickback laws and other health care fraud and abuse
laws that affect the marketing of pharmaceuticals. Failure to comply with applicable laws and regulations could subject the Company
to administrative or judicial enforcement actions, including but not limited to product seizures, injunctions, civil penalties,
criminal prosecution, refusals to approve new products or withdrawal of existing approvals, as well as increased product liability
exposure, any of which could have a material adverse effect on tile company's business, financial condition, or results of operations.
For
clinical investigation and marketing outside the United States, the Company also is subject to foreign regulatory requirements
governing human clinical trials and marketing approval for drugs. The requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary widely for European countries both within and outside the European Community ("EU").
Outside the United States, the Company's ability to market a product is contingent upon receiving a marketing authorization from
the appropriate regulatory authority. At present, foreign marketing authorizations are applied for at a national level, although
within the EU certain registration procedures are available to companies wishing to market their products in more than one EU
member state. If the regulatory authority is satisfied that adequate evidence of safety, quality and efficacy has been presented,
a marketing authorization will be granted. The system for obtaining marketing authorizations within the EU registration system
is a dual one in which certain products, such as biotechnology and high technology products and those containing new active substances,
will have access to a central regulatory system that provides registration throughout the entire EU. Other products will be registered
by national authorities in individual EU member states, operating on a principle of mutual recognition. This foreign regulatory
approval process includes, at least, all of the risks associated with FDA approval set forth above. The Company could possibly
have greater difficulty in obtaining any such approvals and also might find it more difficult to protect its intellectual property
abroad.
Compliance
with Environmental Laws
The
Company's business may be subject to regulation under federal, state, local, and foreign laws regarding environmental protection
and hazardous substance control. The Company believes that its compliance with these laws will have no adverse impact upon its
capital expenditures, earnings or competitive position. Federal, state and foreign agencies and legislative bodies have expressed
interest in the further environmental regulation of the biotechnology industry. The Company is unable to estimate the extent and
impact of such, if any, future federal, state, local legislation or administrative environmental action.
Seasonality
We
do not expect that our business will experience any seasonality.
Our
Employees
We
have one full time contracted position and 7 part-time contracted positions as of the date of this Prospectus.
Backlog
We
do not have any order backlog as of the date of this Prospectus.
Available
Information
Our
annual and quarterly reports, along with all other reports and amendments filed with or furnished to the SEC are available on
the SEC maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers,
including us, that file electronically with the SEC. The address of that site iswww.sec.gov. In addition
the SEC maintains a Public Reference Room where you can obtain these materials, which is located at 100 F Street, N.E.,
Washington, D.C. 20549. To obtain more information on the operation of the Public Reference Room call the SEC at 1-800-SEC-0330.
July
2013 Business Change
Prior
to July 18, 2013, the Company was a shell company with no or nominal operations after unsuccessfully pursuing a boiler business.
On July 18, 2013, the Company entered into a Memorandum of Understanding and Asset Assignment Agreement (the “Assignment
Agreement”) with Imagic, LLC (“Imagic”) and Richard L. Chang’s Holdings, LLC to acquire certain assets
including United States Patent No. 6,063,814 entitled “Phorbol esters as anti-neoplastic and white blood cell elevating
agents” and all related intellectual property associated with the patent.
On
July 19, 2013, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Agreement”) with our prior officer and directors, Li Deng Ke and Xiong Chao Jun. Pursuant to the Agreement,
we transferred all assets and business operations associated with our boiler business to Messrs. Ke and Jun. In exchange, Messrs.
Ke and Jun agreed to assume and cancel all liabilities relating to our former business, including shareholder and officer loans
amounting to $24,318. In connection with this Agreement, Messrs. Ke and Jun further sold 1,275,000 shares of their common stock
in our company to Mr. Chang, and Mr. Chang cancelled 1,200,517 of those shares he received and returned them to our treasury.
In
connection with the Agreement and Assignment Agreement, Sean Webster resigned in his position as an officer and director with
our company. In his stead, Ben Chang was appointed as our President, Chief Executive Officer, Chief Financial Officer, Secretary,
Treasurer and Director. Under the direction of our newly appointed officer and director, the Company engaged in its new business
to pursue the development of RP-323 (12–O-tetradecanoylphorbol-13-acetate) for the treatment of Acute Myelogenous Leukemia
(AML) and Stroke (for the treatment of loss of function caused by Stroke.)
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All
directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected
and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation
or removal from office. Our directors, executive officers and significant employees, their ages, positions held, and duration
as such, are as follows:
| Name | |
| Age | | |
Position |
| Ben Chang | |
| 50 | | |
President,
Chief Executive Officer, Chief Financial Officer and Chairman of the Board and Director |
| David Chou | |
| 58 | | |
Director |
Ben
Chang was appointed as our President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and
Director on July 18, 2013. Mr. Chang founded Rich Pharmaceuticals in January 2013. From October 2006 until January 2013, Mr. Chang
served as the Chief Financial Officer and subsequently President and Chief Operating Officer of Biosuccess Biotech Co. LTD., a
biopharmaceutical company based in Los Angeles, California. During his tenure at Biosuccess, his responsibilities included arranging
and leading all corporate and financial operations in North America. Mr. Chang started his life-science career as co-founder of
Sun-Rich Chemicals, a product development and distribution organization for nutraceuticals. Mr. Chang has over 25 years of pharmaceutical
and executive level experience. Mr. Chang also has experience in international banking, venture capital acquisition, finance,
and organizational design and operations. Mr. Chang has a Bachelor of Science Degree in Economics from East Carolina University
where he focused on accounting and international business.
David
Chou, Ph.D. was appointed to the Company’s Board of Directors on September 6, 2013. Mr. Chou is a pharmaceutical
development expert with more than 25 years of experience and he has led numerous development projects from pre-clinical evaluation
stage to product commercialization. Prior to joining Rich Pharmaceuticals, Mr. Chou was the Chief Product Development Officer
at Biosuccess Biotech where he led the product development and manufacturing activities for various indications. Before his career
with Biosuccess Biotech, Mr. Chou was the Head of CMC (a Vice President level position) at SBIO, Inc. from 2010 to 2012. While
at SBIO, he managed the technical development of 4 clinical stage products and made significant contributions to the success of
product out-licensing deals with a total value of more than $500 million. From 1998 to 2010, Mr. Chou held director level positions
in pharmaceutical development fields at various biopharmaceutical companies including Neurobiological Technologies, PharmaEngine,
Oculex and SUGEN and his development portfolios included Sutent® currently marketed by Pfizer and OZURDEX® marketed by
Allergan. Prior to his biotech career, Mr. Chou held various management positions at Hoffmann La-Roche for more than 12 years.
At Roche, his development team contributed and submitted more than 20 INDs and 6 full NDAs including marketed products such as
Xeloda® (Capecitabine), Xenical® (Orlistat) and Hivid® (Zalcitabine).
Mr. Chou received a Ph.D. degree in Chemistry from the City University of New York.
Term
of Office
The
Company’s directors are appointed for a one-year term to hold office until the next annual general meeting of the Company’s
shareholders or until removed from office in accordance with the Company’s bylaws and the provisions of the Delaware Corporations
Code. The Company’s directors hold office after the expiration of his or her term until his or her successor is elected
and qualified, or until he or she resigns or is removed in accordance with the Company’s bylaws and the provisions of the
Delaware Corporations Code. The Company’s officers are appointed by the Company’s Board of Directors and hold office
until removed by the Board.
Committees
of the Board
We
do not currently have standing nominating or compensation committees, or committees performing similar functions. Due to the size
of our board, our Board of Directors believes that it is not necessary to have standing nominating or compensation committees
at this time because the functions of such committees are adequately performed by our Board of Directors. We do not have a nominating
or compensation committee charter as we do not currently have such committees. We do not have a policy for electing members to
the board. Our current director is not an independent director as defined in the NASD listing standards.
It
is anticipated that in the future as the Company grows that the Board of Directors will be expanded and form separate compensation
and nominating committees, and appoint members to the audit committee, including an audit committee financial expert.
Audit
Committee
Our
Board of Directors has not established a separate audit committee within the meaning of Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Our Board of Directors currently performs the services of an
audit committee. Our current director cannot be considered an “audit committee financial expert.” We will need to
attract an individual with the qualification of an audit committee expert to our Audit Committee. At this time, we have not identified
such an individual.
Nominations
to the Board of Directors
Our
directors take a critical role in guiding our strategic direction and oversee the management of the Company. Board candidates
are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global
business and social perspective, concern for the long-term interests of the shareholders, diversity, and personal integrity and
judgment. In addition, directors must have time available to devote to Board activities and to enhance their knowledge in the
growing business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to
their substantial duties and responsibilities to the Company. In carrying out its responsibilities, the Board will consider candidates
suggested by shareholders. If a shareholder wishes to formally place a candidate’s name in nomination, however, he or she
must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for candidates to be evaluated by the
proposed directors must be sent to the Board of Directors, c/o Rich Pharmaceuticals, Inc., to the address set forth on the
cover page of this Prospectus.
Board
Leadership Structure and Role on Risk Oversight
Mr.
Chang currently serves as the Company’s principal executive officer and chairman. The Company determined this leadership
structure was appropriate for the Company due to our small size and limited operations and resources. The Board of Directors will
continue to evaluate the Company’s leadership structure and modify as appropriate based on the size, resources and operations
of the Company.
Compensation
Committee Interlocks and Insider Participation
No
interlocking relationship exists between our board of directors and the board of directors or compensation committee of any other
company, nor has any interlocking relationship existed in the past.
Director
Qualifications
In
evaluating director nominees, our Company considers the following factors:
•
The appropriate size of the Board;
•
Our needs with respect to the particular talents and experience of our directors;
•
The knowledge, skills and experience of nominees;
•
Experience with accounting rules and practices; and
•
The nominees’ other commitments.
Our
Company’s goal is to assemble a Board of Directors that brings our Company a variety of perspectives and skills derived
from high quality business, professional and personal experience. Other than the foregoing, there are no stated minimum criteria
for director nominees. Specific talents and qualifications that we considered for the members of our Company’s Board of
Directors are as follows:
•
Mr. Chang has over 25 years of pharmaceutical and executive level experience. Mr. Chang also has experience in international banking,
venture capital acquisition, finance, and organizational design and operations.
•
Mr. Chou is a pharmaceutical development expert with more than 25 years of experience and he has led numerous development projects
from pre-clinical evaluation stage to product commercialization.
Family
Relationships
None.
Code
of Ethics
Effective
as of July 1, 2014, our board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons,
our president or chief executive officer as well as the individuals performing the functions of our chief financial officer, corporate
secretary and controller. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:
•
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships;
• full,
fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities
and Exchange Commission and in other public communications made by us;
• the
prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified
in the Code of Business Conduct and Ethics; and
• accountability
for adherence to the Code of Business Conduct and Ethics.
Our
Code of Business Conduct and Ethics requires, among other things, that all of our personnel be afforded full access to our president
or chief executive officer with respect to any matter which may arise relating to the Code of Business Conduct and Ethics. Further,
all of our personnel are to be afforded full access to our board of directors if any such matter involves an alleged breach of
the Code of Business Conduct and Ethics by our president or chief executive officer.
In
addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors,
have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles,
and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting
manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate
supervisor or to our president or chief executive officer. If the incident involves an alleged breach of the Code of Business
Conduct and Ethics by our president or chief executive officer, the incident must be reported to any member of our board of directors
or use of a confidential and anonymous hotline phone number. Any failure to report such inappropriate or irregular conduct of
others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual
who reports in good faith the violation or potential violation of our Code of Business Conduct and Ethics by another. Our Code
of Business Conduct and Ethics is available, free of charge, to any stockholder upon written request to our Corporate Secretary
at Rich Pharmaceuticals, Inc., at the address on the cover page of this Prospectus. A copy of our Code of Business Conduct and
Ethics is incorporated herein by reference as Exhibit 14.1 to the annual report on Form 10-K filed with the SEC on July 15, 2014.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our current directors or executive officers has been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten
years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our discussion below in "Transactions with Related
Persons; Promoters and Certain Control Persons; Director Independence," none of our current directors, director nominees
or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
EXECUTIVE
COMPENSATION
The
following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named
persons for services rendered in all capacities during the noted periods. No other executive officers received total annual compensation
in excess of $100,000.
| SUMMARY
COMPENSATION TABLE | |
Name
and
principal position | |
| Year | | |
| Salary ($) | | |
| Bonus ($) | | |
Stock Awards ($) | |
| Option Awards ($) | | |
Non-Equity Incentive
Plan Compensation ($) | |
Nonqualified Deferred Compensation Earnings
($) | |
All
Other Compensation ($) | |
| Total ($) | |
| Ben
Chang, Chief Executive Officer, Chief Financial Officer, Director(1) | |
| 2014 2013 | | |
$ | 229,167
— | | |
| — — | | |
—
— | |
$ | 48,535
— | | |
—
— | |
—
— | |
—
— | |
$ | 277,702
— | |
(1) The
Employment Agreement provides for a term of two (2) years; annual base compensation of $275,000, an initial bonus of $68,750;
and a grant of 3,000,240 stock options under the Company’s 2013 Plan. The Company paid a salary to Mr. Chang of $229,167
which includes wages received of $99,450 and wages accrued of $129,717 and was recorded under other current liabilities as of
March 31, 2014.
Employment
Agreements
Effective
September 6, 2013, the Company entered into an Employment Agreement with Mr. Chang, its Chief Executive Officer, Chief Financial
Officer, President and Secretary. The Employment Agreement provides for a term of two (2) years; annual base compensation of $275,000;
the issuance of 3,000,240 options to purchase shares of Company common stock; and an initial bonus of $68,750. The foregoing is
only a brief description of the material terms of the Employment Agreement, and does not purport to be a complete description
of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to
the agreement which is filed as an exhibit to the Company’s Current Report on Form 8K filed with the SEC on September 12,
2013.
Grants
of Stock Awards
During
the fiscal year ending March 31, 2014, Ben Chang, our Chief Executive Officer, was awarded options to purchase up to 3,000,240
shares of our Common Stock under our 2013 Plan. The options vested 50% on grant and 50% monthly over the 24 month term of his
employment agreement and provide for a right of cashless exercise. The exercise price of the options are $.0191984 per share.
During
the fiscal year ending March 31, 2013, there were no grants of plan-based awards to our named executive officers.
Option
Exercises and Stock Vested
During
the fiscal years ending March 31, 2014 and 2013, there were no option exercises or vesting of stock awards to our named executive
officers.
Outstanding
Equity Awards at Fiscal Year End
At
March 31, 2014, Ben Chang had 3,000,240 options issued under the 2013 Plan, and David Chou had 4,000,320 options issued under
the 2013 Plan.
Compensation
of Directors
During
the fiscal year ending March 31, 2014, David Chou received options to purchase up to 4,000,320 shares of common stock under the
2013 Plan as compensation for his services as a director.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of May 8, 2015, information with respect to the securities holdings of (i) our officers and directors,
and (ii) all persons (currently none) which, pursuant to filings with the SEC and our stock transfer records, we have reason to
believe may be deemed the beneficial owner of more than five percent (5%) of the class of stock. The securities "beneficially
owned" by an individual are determined in accordance with the definition of "beneficial ownership" set forth in
the regulations promulgated under the Exchange Act and, accordingly, may include securities owned by or for, among others, the
spouse and/or minor children of an individual and any other relative who resides in the same home as such individual, as well
as other securities as to which the individual has or shares voting or investment power or which each person has the right to
acquire within 60 days through the exercise of options or otherwise. Beneficial ownership may be disclaimed as to certain of the
securities. This table has been prepared based on the number of shares of common stock outstanding totaling 1,843,631,834, and
the number of shares of preferred stock outstanding totaling 6,000,000, adjusted individually to include all warrants held by
such individual which are exercisable within 60 days of May 8, 2014 as shown below.
Name
and Address of Beneficial Owner(1) | |
Amount
and Nature of
Beneficial Ownership of Common Stock | |
Percent
of Common Stock(2) | |
Amount
and Nature
of Beneficial Ownership
of Preferred Stock | |
Percent
of Preferred Stock(2) |
| Directors
and Executive Officers | |
| |
| |
| |
|
| Ben
Chang, Chairman and President | |
| 378,132,131 | (3) | |
| 17 | % | |
| 6,000,000 | (4) | |
| 100 | % |
| David
Chou, Director | |
| 2,750,220 | | |
| — | * | |
| | | |
| | |
| All
directors and officers as a group (2 people) | |
| 380,882,351 | (3) | |
| 17 | % | |
| 6,000,000 | (4) | |
| 100 | % |
| 5%
or Greater Stockholders | |
| | | |
| | | |
| | | |
| | |
Imagic,
LLC
312 North Mansfield Ave.
Los Angeles, CA 90036 | |
| 275,132,685 | (5) | |
| | | |
| | | |
| | |
*
Less than 1 percent.
(1)
Unless otherwise noted, the address is c/o Rich Pharmaceuticals, Inc., 9595 Wilshire Blvd, Suite 900, Beverly Hills, California
90212.
(2)
Percentage of class beneficially owned is calculated by dividing the amount and nature of beneficial ownership (which includes
all options issued to the beneficial owners which are exercisable within 60 days of May 8, 2015) by 2,221,763,965, the total shares
of common stock outstanding as of May 8, 2015 and 53,246,600 options exercisable within 60 days of May 8, 2015.
(3)
Includes options to purchase up to 53,246,000 shares of common stock issued
under the 2013 Plan which are exercisable within 60 days after May 8, 2015. Also includes the 275,132,685 shares of common stock
held by Imagic, LLC which Mr. Chang is deemed to beneficially own.
(4) The
Preferred Stock has 100 to 1 voting rights over shares of common stock.
(5)
Ben Chang is the sole manager and member of Imagic, LLC and has sole investment and voting control of the shares of Company
common stock held by Imagic, LLC. He is therefore deemed to be the beneficial owner of such shares.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions
with Related Persons
The
following includes a summary of any transaction occurring since April 1, 2012, or any proposed transaction, in which any related
person had or will have a direct or indirect material interest (other than compensation described under "Executive Compensation"
above). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions
described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm's-length
transactions.
On
July 19, 2013, we entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the
“Agreement”) with our prior officer and directors, Li Deng Ke and Xiong Chao Jun. Pursuant to the Agreement, we transferred
all assets and business operations associated with our boiler business to Messrs. Ke and Jun. In exchange, Messrs. Ke and Jun
agreed to assume and cancel all liabilities relating to our former business, including shareholder and officer loans amounting
to $24,318. Messrs. Ke and Jun further sold 1,275,000 shares of their common stock in our company to Mr. Chang, and Mr. Chang
cancelled 1,200,517 of those shares he received and returned them to our treasury.
On
July 16, 2013, the Company entered into a Memorandum of Understanding and Asset Assignment Agreement (the “Assignment Agreement”)
with Imagic, LLC (“Imagic”) and Richard L. Chang’s Holdings, LLC (“Holdings LLC”) to acquire certain
assets including United States Patent No. 6,063,814 entitled “Phorbol esters as anti-neoplastic and white blood cell elevating
agents” and all related intellectual property associated with the patent. In consideration for the acquired assets, the
Company agreed to issue Imagic 198,625 shares of our common stock and to issue Ben Chang 6,000,000 shares of Series A Preferred
Stock with super voting rights. Imagic is owned and controlled by Ben Chang, and Holdings LLC is owned and controlled by Ben Chang’s
father, Richard L. Chang. The Assignment Agreement also provided that the Company agreed to use its best efforts to complete a
financing resulting in proceeds of at least US$2,000,000, and if the Company was unable to raise $400,000 according to the terms
of the Assignment Agreement, the assets could revert back to Imagic and Holdings LLC. On January 17, 2014, the Company executed
a Waiver to Memorandum of Understanding and Asset Assignment Agreement with Imagic and Holdings LLC pursuant to which Imagic and
Holdings LLC agreed to waive and terminate their rights to the reversion of the patent assets under the terms of the Assignment
Agreement. As part of the Assignment Agreement, Imagic and Holdings LLC have the option at any time after November 1, 2013 and
before November 1, 2014, to assign to us any and all interest these companies have in the indication, patents and intellectual
property related to Hodgkin’s Lymphoma in consideration for us issuing to Ben Chang: (i) 476,820 restricted shares of our
common stock; and (i) 1.0408 restricted shares of our common stock for each one share of our restricted common stock issued by
us prior to the date which we receive notice of intent to exercise the option, adjusted for any stock split we happen to undertake.
As
of March 31, 2014, the Company received loans with a total balance of $11,000 from Imagic, LLC and $25,000 from Rich BioScience,
both of which entities are controlled by Ben Chang, our Chief Executive Officer.
On
October 6, 2014, 2014, the Company executed an Assignment Agreement (the “Assignment Agreement”) with Richard L. Chang
Holding's, LLC (“Holdings LLC”) and Imagic LLC (“Imagic LLC”) pursuant to which Holdings LLC and Imagic
LLC exercised the option under the Memorandum of Understanding and Asset Assignment Agreement dated July 26, 2013 to assign any
and all interest it had in the indication, patents and intellectual property related to treatment of Hodgkin’s Lymphoma,
utility patent application number 61998397, entitled COMPOSITIONS AND METHODS OF USE OF PHORBOL ESTERS FOR THE TREATMENT
OF HODGKIN’S LYMPHOMA pursuant to the terms of the Assignment Agreement. In connection with the Assignment Agreement,
the Company issued 220,792,028 shares of the Company’s restricted common stock to Imagic LLC in accordance with the terms
and subject to the conditions set forth in the Assignment. Imagic LLC is owned and controlled by Ben Chang. This issuance of shares
was made in reliance on the exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”) contained in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated under
the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon
the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public
offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities
by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the
securities took place directly between the third party and the Company; and (f) the recipient of the securities was an accredited
investor.
Review,
approval or ratification of transactions with related persons
We
do not have any other special committee, policy or procedure related to the review, approval or ratification of related party
transactions.
Promoters
and Control Persons
Mr.
Chang as an the sole officer, a director and beneficial owner of 17% of the outstanding common stock and 100% of the preferred
stock would be considered a control person of the Company.
Director
Independence
The
Board has determined that neither of our directors is independent as the term "independent" is defined by the rules
of NASDAQ Rule 5605.
SELLING
STOCKHOLDER
We
are registering for resale shares of our common stock that are issued and outstanding held by the selling stockholder identified
below. We are registering the shares to permit the selling stockholder to resell the shares when and as it deems appropriate in
the manner described in the “Plan of Distribution.” As of May 8, 2015, there are 1,843,631,834 shares of common stock
issued and outstanding.
The
following table sets forth:
| |
• |
the
name of the selling stockholder, |
|
| |
• |
the
number of shares of our common stock that the selling stockholder beneficially owned prior to the offering for resale of the
shares under this Prospectus, |
| |
• |
the
maximum number of shares of our common stock that may be offered for resale for the account of the selling stockholder under
this Prospectus, and |
| |
• |
the
number and percentage of shares of our common stock to be beneficially owned by the selling stockholder after the offering
of the shares (assuming all of the offered shares are sold by the selling stockholder). |
The
selling stockholder has never served as our officer or director or any of its predecessors or affiliates within the last three
years, nor has the selling stockholder had a material relationship with us. The selling stockholder is neither a broker-dealer
nor an affiliate of a broker-dealer. The selling stockholder did not have any agreement or understanding, directly or indirectly,
to distribute any of the shares being registered at the time of purchase.
The
selling stockholder may offer for sale all or part of the shares from time to time. The table below assumes that the selling stockholder
will sell all of the shares offered for sale. The selling stockholder is under no obligation, however, to sell any shares pursuant
to this Prospectus.
| Name | |
Shares
of
Common Stock
Beneficially
Owned prior to Offering(1) | |
Maximum
Number of Shares of Common Stock to be Offered | |
Number
of
Shares of Common
Stock Beneficially
Owned after
Offering | |
Percent
Ownership
after Offering |
| LG Capital Funding,
LLC (2) | |
| 0 | | |
| 500,000,000 | | |
| 0 | | |
| 0 | % |
| (1) |
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into
shares of our common stock, or convertible or exercisable into shares of our common stock within 60 days of the date hereof
are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership
of any other person. Except as indicated in the footnotes to the following table, each stockholder named in the table has
sole voting and investment power with respect to the shares set forth opposite such stockholder’s name. |
| (2) |
Includes
400,000,000 shares issuable to LG pursuant to the LG Investment Agreement. Joseph Lerman, Boruch Greenberg and Daniel
Louis Gellman have voting control over LG Capital Funding, LLC. |
PLAN
OF DISTRIBUTION
On
May 19, 2015, we entered into an investment agreement with LG Capital Funding, LLC, a New York limited liability company (“LG”).
Pursuant to the terms of the LG Investment Agreement, LG committed to purchase up to $2,000,000 of our common stock over a period
of up to twenty-four (24) months. From time to time during the twenty-four (24) month period commencing from the effectiveness
of the registration statement, we may deliver a drawdown notice (“Drawdown Notice”) to LG which states the dollar
amount that we intend to sell to LG on a date specified in the drawdown notice (“Drawdown Amount”). The maximum amount
that the Company shall be entitled to drawdown to LG shall be two hundred percent (200%) of average daily trading volume (U.S.
market only) of the Common Stock during the ten (10) days preceding the Drawdown Notice, so long as such amount does render the
Investor a holder of more than 4.99% of the outstanding Shares of the Company. The purchase price per share to be paid by LG shall
be calculated as a thirty percent (30%) discount to the lesser of: (1) the lowest traded price of the Company Common Stock during
the ten (10) consecutive trading days prior to the date the Drawdown Notice was submitted or (2) the closing bid price on the
day before the Drawdown Notice is submitted. We initially reserved 100,000,000 shares of our common stock for issuance under the
LG Investment Agreement.
In
connection with the LG Investment Agreement, we also entered into a registration rights agreement with LG, pursuant to which we
are obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”) covering 500,000,000
shares of our common stock underlying the LG Investment Agreement within 21 days after the closing of the transaction. In addition,
we are obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC and
maintain the effectiveness of such registration statement until termination of the LG Investment Agreement.
At
an assumed purchase price of $0.00049 (equal to 70% of the closing price of our common stock of $0.0007 on May 8, 2015), we will
be able to receive up to $245,000 in gross proceeds, assuming the sale of the entire 500,000,000 shares being registered hereunder
pursuant to the LG Investment Agreement. Accordingly, we would be required to register additional3,581,632,653 shares to obtain
the balance of $1,755,000 under the LG Investment Agreement. We are currently authorized to issue 37,503,000,000 shares of our
common stock. We may be required to increase our authorized shares in order to receive the entire purchase price in the even our
share price decreases. LG has agreed to refrain from holding an amount of shares which would result in LG owning more than 4.99%
of the then-outstanding shares of our common stock at any one time.
The
selling stockholder may, from time to time, sell any or all of its shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling
stockholder may use any one or more of the following methods when selling shares:
| |
• |
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| |
• |
block
trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction |
| |
• |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| |
• |
an
exchange distribution in accordance with the rules of the applicable exchange; |
| |
• |
privately
negotiated transactions; |
| |
• |
broker-dealers
may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share; |
| |
• |
broker-dealers
may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share; |
| |
• |
through
the writing of options on the shares; |
| |
• |
a
combination of any such methods of sale; and |
| |
• |
any
other method permitted pursuant to applicable law. |
The
selling stockholder may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents
for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions
from the selling stockholder and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell
as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market
makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that
a selling stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at
a price per share which may be below the then market price. The selling stockholder cannot assure that all or any of the shares
offered in this prospectus will be issued to, or sold by, the selling stockholder. The selling stockholder and any brokers, dealers
or agents, upon effecting the sale of any of the shares offered in this prospectus, are “underwriters” as that term
is defined under the Securities Act, or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
Pursuant
to the LG Investment Agreement, the Company may enter into an agreement with a registered broker-dealer to act as a placement
agent. The Company has no intention to engage a placement agent in connection with this registration statement, and has not had
any discussions with any broker-dealers. Additionally, LG does not have the right to require the Company to engage a placement
agent, or pick the broker-dealer to act as placement agent. Furthermore, the engagement of a placement agent does not impact LG’s
obligation to provide the Company cash funds in connection with the delivery of a put notice.
Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling
stockholder. The selling stockholder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the shares if liabilities are imposed on that person under the Securities Act. Notwithstanding the foregoing,
if the Company decides to engage a placement agent in connection with this registration statement, then the Company shall be obligated
to pay the fees connected to the placement agent. This may result in the Company receiving less than the expected total proceeds.
LG
intends to sell/distribute the shares of common stock that they acquire from the Company in the open market.
The
selling stockholder shall acquire the securities offered hereby in the ordinary course of business and has advised us that it
has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale
of its shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of
shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this
prospectus.
If
the selling stockholder uses this Prospectus for any sale of the shares of common stock, it will be subject to the prospectus
delivery requirements of the Securities Act.
As
described in more detail below under “Item 15. Recent Sales of Unregistered Securities”, the Company has also entered
into convertible promissory notes with the selling stockholder.
Regulation
M
The
anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of our common stock and activities of the selling
stockholder.
During
such time as it may be engaged in a distribution of any of the shares we are registering by this registration statement, LG is
required to comply with Regulation M. In general, Regulation M precludes any selling security holder, any affiliated purchasers
and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce
any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete.
Regulation M defines a "distribution" as an offering of securities that is distinguished from ordinary trading activities
by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a
"distribution participant" as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed
to participate or who is participating in a distribution.
Regulation
M under the Exchange Act prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for
an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution.
Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution
of the security. We have informed LG that the anti-manipulation provisions of Regulation M may apply to the sales of their shares
offered by this prospectus, and we have also advised LG of the requirements for delivery of this prospectus in connection with
any sales of the common stock offered by this prospectus.
Pursuant
to the LG Investment Agreement, LG shall not sell stock short, either directly or indirectly through its affiliates, principals
or advisors, our common stock during the term of the agreement.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Authorized
Capital Stock
We
are authorized to issue 37,503,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock,
$0.001 par value per share.
Common
Stock
As
of May 8, 2015, 1,843,631,834 shares of common stock are issued and outstanding.
The
holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board
of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon
liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription
or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to
one non-cumulative vote per share on all matters on which shareholders may vote.
All
shares of common stock now outstanding are fully paid for and non-assessable. We refer you to our Articles of Incorporation, Bylaws
and the applicable statutes of the state of Nevada for a more complete description of the rights and liabilities of holders of
our securities. All material terms of our common stock have been addressed in this section.
Holders
of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding
shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event,
the holders of the remaining shares will not be able to elect any of our directors.
Preferred
Stock
Our
Board of Directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred
stock in one or more series, and to fix the designations, powers, preferences and relative, participating, optional and other
special rights, if any, of each such class or series and the qualifications, limitations and restrictions thereof, including dividend
rights, conversion rights, voting rights, sinking-fund provisions, terms of redemption, liquidation preferences, preemption rights,
and the number of shares constituting any series or the designation of such series, without any further vote or action by the
stockholders. The issuance of preferred stock could adversely affect the voting power of holders of our common stock and could
have the effect of delaying, deferring or preventing a change in control of us.
Series
A Preferred Stock
On
July 18, 2013, the Company designated, from our 10,000,000 authorized shares of preferred stock, par value $0.001, 6,000,000 shares
of Series “A” Preferred Stock. Our Series “A” Preferred Stock has voting rights of 100 votes per share
and votes with common shares as a single class.
Dividends
We
have never declared or paid any cash dividends on shares of our capital stock. We currently intend to retain earnings, if any,
to fund the development and growth of our business and do not anticipate paying cash dividends in the foreseeable future. Our
payment of any future dividends will be at the discretion of our board of directors after taking into account various factors,
including our financial condition, operating results, cash needs and growth plans.
LEGAL
MATTERS
The
validity of the common stock offered by this prospectus will be passed upon for us by Steven James Davis, A Professional Corporation.
EXPERTS
The
consolidated financial statements of our company included in this prospectus and in the registration statement have been audited
by Silberstein Ungar, PLLC, an independent registered public accounting firm, to the extent and for the periods set forth in their
report appearing elsewhere herein and in the registration statement, and are included in reliance on such report, given the authority
of said firm as an expert in auditing and accounting.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering
of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with
the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director,
officer, or employee. The validity of the common stock offered by this prospectus will be passed upon for the Company by Steven
James Davis, A Professional Corporation, which is owned by Steven J. Davis who is a shareholder and option holder of the Company.
WHERE
YOU CAN FIND MORE INFORMATION
We
filed with the Securities and Exchange Commission a registration statement under the Securities Act for the common stock in this
offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule
that were filed with the registration statement. For further information with respect to us and our common stock, we refer you
to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained
in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement
are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration
statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement
may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street,
N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and
Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be
obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains
a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically
with the SEC. The address of the website is www.sec.gov .
We
file periodic reports under the Exchange Act, including annual, quarterly and special reports, and other information with the
Securities and Exchange Commission. These periodic reports and other information are available for inspection and copying at the
regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above.
RICH
PHARMACEUTICALS, INC.
FINANCIAL
STATEMENTS
TABLE
OF CONTENTS
RICH
PHARMACEUTICALS, INC.
BALANCE
SHEETS (UNAUDITED)
AS
OF DECEMBER 31, 2014 AND MARCH 31, 2014
| |
December
31, 2014 | |
March
31, 2014 |
| ASSETS |
| | | |
| | |
| Current Assets |
| | | |
| | |
| Cash
and equivalents |
$ | 5,823 | | |
$ | 12,387 | |
| Prepaid
expenses |
| 0 | | |
| 1,561 | |
| Total Current Assets |
| 5,823 | | |
| 13,948 | |
| |
| | | |
| | |
| Property and equipment,
net |
| 907 | | |
| 1,261 | |
| |
| | | |
| | |
| Intangible
assets |
| 82,120 | | |
| 0 | |
| |
| | | |
| | |
| TOTAL
ASSETS |
$ | 88,850 | | |
$ | 15,209 | |
| |
| | | |
| | |
| LIABILITIES
AND STOCKHOLDERS’ DEFICIT |
| | | |
| | |
| Current Liabilities |
| | | |
| | |
| Accounts payable |
$ | 182,663 | | |
$ | 180,672 | |
| Accrued expenses |
| 382,722 | | |
| 451,290 | |
| Due to related parties |
| 0 | | |
| 36,000 | |
| Stock deposits |
| 0 | | |
| 147,050 | |
| Convertible notes
payable, net of debt discount |
| 325,069 | | |
| 37,500 | |
| Derivative
liabilities |
| 304,790 | | |
| 0 | |
| Total Current Liabilities |
| 1,195,244 | | |
| 852,512 | |
| |
| | | |
| | |
| Long-term Liabilities |
| | | |
| | |
| Convertible
notes payable, net of debt discount |
| 20,590 | | |
| 0 | |
| Total Liabilities |
| 1,215,834 | | |
| 852,512 | |
| |
| | | |
| | |
| Stockholders’
Deficit |
| | | |
| | |
| Preferred stock,
$.001 par value, 10,000,000 shares authorized, 6,000,000 shares issued and outstanding, respectively |
| 6,000 | | |
| 6,000 | |
| Common stock, $.001
par value, 37,503,000,000 shares authorized, 696,618,351 and 414,411,438 shares issued and outstanding, respectively |
| 696,619 | | |
| 414,411 | |
| Additional paid-in
capital |
| 4,099,206 | | |
| 2,043,690 | |
| Accumulated
deficit |
| (5,928,809 | ) | |
| (3,301,404 | ) |
| Total
Stockholders’ Deficit |
| (1,126,984 | ) | |
| (837,303 | ) |
| TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ | 88,850 | | |
$ | 15,209 | |
See
accompanying notes to financial statements.
RICH PHARMACEUTICALS, INC.
STATEMENTS
OF OPERATIONS (UNAUDITED)
FOR
THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2014 AND 2013
| |
Three
Months ended
December 31, 2014 | |
Three
Months ended
December 31, 2013 | |
Nine
Months ended
December 31, 2014 | |
Nine
Months ended
December 31, 2013 |
| |
| |
| |
| |
|
| REVENUES |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| |
| | | |
| | | |
| | | |
| | |
| OPERATING
EXPENSES |
| | | |
| | | |
| | | |
| | |
| Consulting expenses |
| 7,981 | | |
| 79,856 | | |
| 169,192 | | |
| 149,306 | |
| Office expenses |
| 30,950 | | |
| 17,008 | | |
| 73,268 | | |
| 20,343 | |
| Depreciation expense |
| 118 | | |
| 39 | | |
| 355 | | |
| 39 | |
| Wages and taxes |
| 543,311 | | |
| 15,736 | | |
| 789,266 | | |
| 15,736 | |
| Professional fees |
| 261,412 | | |
| 22,035 | | |
| 590,955 | | |
| 85,608 | |
| Regulatory fees |
| 6,548 | | |
| 936 | | |
| 42,195 | | |
| 35,856 | |
| Stock-based compensation |
| 497,654 | | |
| 0 | | |
| 679,095 | | |
| 0 | |
| Travel,
meals and entertainment |
| 10,649 | | |
| 8,318 | | |
| 50,332 | | |
| 14,576 | |
| TOTAL
OPERATING EXPENSES |
| 1,358,623 | | |
| 143,928 | | |
| 2,394,658 | | |
| 321,464 | |
| |
| | | |
| | | |
| | | |
| | |
| LOSS
FROM OPERATIONS |
| (1,358,623 | ) | |
| (143,928 | ) | |
| (2,394,658 | ) | |
| (321,464 | ) |
| |
| | | |
| | | |
| | | |
| | |
| OTHER
INCOME (EXPENSE) |
| | | |
| | | |
| | | |
| | |
| Amortization of
debt discount |
| (85,596) | | |
| 0 | | |
| (112,381 | ) | |
| 0 | |
| Change in value
of derivative liability |
| 49,606 | | |
| 0 | | |
| 40,871 | | |
| 0 | |
| Derivative expense |
| (25,187 | ) | |
| 0 | | |
| (135,059 | ) | |
| 0 | |
| Interest
expense |
| (16,248 | ) | |
| 0 | | |
| (26,177 | ) | |
| 0 | |
| Total Other Income |
| (77,425 | ) | |
| 0 | | |
| (232,746 | ) | |
| 0 | |
| |
| | | |
| | | |
| | | |
| | |
| LOSS
BEFORE PROVISION FOR INCOME TAXES |
| (1,436,048 | ) | |
| (143,928 | ) | |
| (2,627,404 | ) | |
| (321,464 | ) |
| PROVISION
FOR INCOME TAXES |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
| NET
LOSS |
$ | (1,436,048 | ) | |
$ | (143,928 | ) | |
$ | (2,627,404 | ) | |
$ | (321,464 | ) |
| NET
LOSS PER SHARE: BASIC AND DILUTED |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.00 | ) |
| WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED |
| 671,142,222 | | |
| 414,053,647 | | |
| 505,702,264 | | |
| 680,429,772 | |
See
accompanying notes to financial statements.
RICH PHARMACEUTICALS, INC.
STATEMENTS
OF CASH FLOWS (UNAUDITED)
FOR
THE NINE MONTHS ENDED DECEMBER 31, 2014 AND 2013
| |
Nine
months ended
December 31, 2014 | |
Nine
months ended
December 31, 2013 |
| CASH
FLOWS FROM OPERATING ACTIVITIES: |
| | | |
| | |
| Net loss
for the period |
$ | (2,627,404 | ) | |
$ | (321,464 | ) |
| Adjustments to reconcile
net loss to net cash used in operating activities |
| | | |
| | |
| Depreciation expense |
| 355 | | |
| 39 | |
| Amortization of debt
discount |
| 112,381 | | |
| 0 | |
| Change in value of
derivative liability |
| (40,871 | ) | |
| 0 | |
| Amortization of original
issue discount recorded as interest |
| 5,958 | | |
| 0 | |
| Derivative expense |
| 135,059 | | |
| 0 | |
| Stock-based compensation |
| 1,445,145 | | |
| 0 | |
| Changes in operating
assets and liabilities: |
| | | |
| | |
| Decrease in prepaid
expenses |
| 1,561 | | |
| 0 | |
| Increase in accounts
payable |
| 1,991 | | |
| 59,584 | |
| Increase
(decrease) in accrued expenses |
| (68,568 | ) | |
| 0 | |
| Net
Cash Used by Operating Activities |
| (1,034,393 | ) | |
| (261,841 | ) |
| |
| | | |
| | |
| CASH
FLOWS FROM INVESTING ACTIVITIES: |
| | | |
| | |
| Acquisition of fixed
assets |
| 0 | | |
| (1,419 | ) |
| Acquisition
of intangible assets |
| 0 | | |
| (22,413 | ) |
| Net
Cash Used by Investing Activities |
| 0 | | |
| (23,832 | ) |
| |
| | | |
| | |
| CASH
FLOWS FROM FINANCING ACTIVITIES: |
| | | |
| | |
| Loans received (repaid) |
| (147,050 | ) | |
| 147,050 | |
| Loans received (repaid)
from/to related parties |
| (36,000 | ) | |
| 4,600 | |
| Proceeds from sale
of common stock and warrants |
| 607,050 | | |
| 150,000 | |
| Issuance
of convertible note payable |
| 603,829 | | |
| 0 | |
| Net
Cash Provided by Financing Activities |
| 1,027,829 | | |
| 301,650 | |
| |
| | | |
| | |
| Net Increase (Decrease)
in Cash and Cash Equivalents |
| (6,564 | ) | |
| 15,977 | |
| |
| | | |
| | |
| Cash
and cash equivalents, beginning of period |
| 12,387 | | |
| 1,588 | |
| Cash
and cash equivalents, end of period |
$ | 5,823 | | |
$ | 17,565 | |
| |
| | | |
| | |
| SUPPLEMENTAL
CASH FLOW INFORMATION: |
| | | |
| | |
| Interest
paid |
$ | 0 | | |
$ | 0 | |
| Income
taxes paid |
$ | 0 | | |
$ | 0 | |
| |
| | | |
| | |
| SUPPLEMENTAL
NON-CASH INVESTING AND FINANCING INFORMATION: |
| | | |
| | |
| Stock
deposits reclassified as common stock and stock warrants |
$ | 147,050 | | |
$ | 0 | |
| Common
stock issued for accrued expense |
$ | 6,225 | | |
$ | 0 | |
| Original
issue discounts recorded on notes payable |
$ | 18,341 | | |
$ | 0 | |
| Debt
discounts recorded on convertible notes payable |
$ | 163,920 | | |
$ | 0 | |
| Acquisition
of intangibles for stock |
$ | 82,120 | | |
$ | 6,200 | |
| Debt
converted to common stock |
$ | 197,183 | | |
$ | 0 | |
See
accompanying notes to financial statements.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business
On
August 9, 2010 the Company was incorporated as Nepia Inc. in the State of Nevada. From August 9, 2010 to July 18, 2013, the Company
was in the business of developing, manufacturing, and selling small boilers aimed at farmers primarily in Southeast Asia. Beginning
on July 19, 2013, the Company acquired bio-pharmaceutical intellectual property for the treatment of acute myeloid leukemia (AML)
and is entering into phase II human studies. The goal is to perfect this indication for marketing purposes for distribution
world-wide. On August 26, 2013, as a consequence of our new business direction, the Company changed its name to Rich Pharmaceuticals,
Inc. (“Rich” or “the Company”).
On
July 18, 2013, the Company designated, from our 10,000,000 authorized shares of preferred stock, par value $0.001, 6,000,000 shares
of Series “A” Preferred Stock. Our Series “A” Preferred Stock has voting rights of 100 votes per share
and votes with common shares as a single class.
On
July 18, 2013, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic, LLC
and its principals to acquire certain assets including a US Patent entitled “Phorbol esters as anti-neoplastic and white
blood cell elevating agents” and all related intellectual property associated with the patent. In consideration for the
intellectual property the Company issued 82,767,038 common shares, and 6,000,000 Series “A” Preferred shares. The
common and preferred shares were valued at $123,973. The Company further agreed to use its best efforts to complete a financing
resulting in proceeds of at least $2,000,000. If the Company was unable to raise $400,000 according to the terms of the Assignment
Agreement, the patent reverts back to Imagic, LLC and its principals. On January 17, 2014, the right of reversion was terminated
in exchange for a payment of $20,000.
On
July 19, 2013, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Sale Agreement”) with our prior officers and directors. Pursuant to the Sale Agreement, the Company transferred
all assets and business operations associated with our boiler business in exchange for assumption of all obligations associated
with that business and cancellation of loans amounting to $28,818. The cancellation of debt was recorded as additional paid-in
capital. In consequence to the Sale Agreement two former officers sold 531,292,500 common shares held by them to our new officer/director.
In turn, our new officer/director agreed to cancel 500,255,434 of those shares he received and returned them to treasury for retirement.
Certain other shareholders also agreed to cancel 262,521,000 common shares.
On
September 5, 2013, the Company increased the authorized common shares, par value $0.001, from 90,000,000 shares to 37,503,000,000
shares. Correspondingly, the Company affirmed a forward split of 416.7 for 1 in which each shareholder was issued 416.7 common
shares for each share held. All share and per share date included in these financial statements has been retrospectively adjusted
to account for the stock split.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At December 31,
2014 and March 31, 2014 the Company had $5,823 and $12,387, respectively, of unrestricted cash.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis
of Presentation
The
financial statements of the Company have been prepared using the accrual basis of accounting in accordance with generally accepted
accounting principles in the United States of America and are presented in U.S. dollars. The Company has adopted a March 31 fiscal
year end.
Certain
information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with
a reading of the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March
31, 2014, as filed with the U.S. Securities and Exchange Commission.
Property
and Equipment
Property
and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the related
assets. The useful lives of the assets are as follows: Computer equipment, 3 years.
Long-Lived
and Intangible Assets
The
Company accounts for long-lived and intangible assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment
or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.
The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result
from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
As of March 31, 2014, the Company fully impaired their intangible assets to $0. As of December, 31, 2014, the Company purchased
another intangible asset from a related party and valued it at the cost of the intangible to the related party, $82,120.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses,
amounts due to related parties, stock deposits, and a convertible note payable. The carrying amount of these financial instruments
approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise
disclosed in these financial statements.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
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 and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue
Recognition
The
Company will recognize revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based
Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC Topic 718. On September 6, 2013, the Company approved the adoption
of Rich Pharmaceuticals, Inc. 2013 Stock Option/Stock Issuance Plan (the "2013 Plan”). The 2013 Plan is intended to
aid in recruiting and retaining key employees, directors or consultants and to motivate them by providing incentives through the
granting of awards of stock options or other stock based awards. The 2013 Plan is administered by the board of directors. Directors,
officers, employees and consultants and our affiliates are eligible to participate under the 2013 Plan.
A total of 90,004,800 common shares have been reserved for awards under the 2013 Plan. During the nine months ended December
31, 2014, the Company granted 18,083,336 stock options to officers, directors, employees and consultants.
Basic
Loss Per Share
The
basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the
weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the
Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding
during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as
of the first of the year for any potentially dilutive debt or equity.
Recent
Accounting Pronouncements
On
June 10, 2014, the Financial Accounting Standards Board ("FASB") issued update ASU 2014-10, Development Stage Entities
(Topic 915). Amongst other things, the amendments in this update removed the definition of development stage entity from Topic
915, thereby removing the distinction between development stage entities and other reporting entities from US GAAP. In addition,
the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements
of income, cash flows and shareholder’s equity, (2) label the financial statements as those of a development stage entity;
(3) disclose a description of the development stage activities in which the entity is engaged and (4) disclose in the first year
in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments
are effective for annual reporting periods beginning after December 31, 2014 and interim reporting periods beginning after December
15, 2015, however entities are permitted to early adopt for any annual or interim reporting period for which the financial statements
have yet to be issued. The Company has elected to early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented inception-to-date information on the respective financial
statements.
The
Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on the
Company’s results of operations, financial position or cash flow.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
2 – PROPERTY AND EQUIPMENT
Property
and equipment, recorded at cost, consisted of the following as of December 31, 2014 and March 31, 2014:
| |
December
31, 2014 | |
March
31, 2014 |
| Computer
equipment |
$ | 1,419 | | |
$ | 1,419 | |
| Less:
accumulated depreciation |
| (512 | ) | |
| (158 | ) |
| Property
and equipment, net |
$ | 907 | | |
$ | 1,261 | |
Depreciation
expense was $118 and $355 for the three and nine months ended December 31, 2014, respectively. Depreciation expense was $39 for
the three and nine months ended December 31, 2013.
NOTE
3 – INTANGIBLE ASSETS
On
July 18, 2013, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic, LLC
and its principals to acquire certain assets including a US Patent entitled “Phorbol esters as anti-neoplastic and white
blood cell elevating agents” and all related intellectual property associated with the patent. In consideration for the
intellectual property the Company issued 82,767,038 common shares and 6,000,000 Series “A” Preferred Stock. These
shares were valued at a total of $123,973. The Company has also paid additional funds to third parties to further the development
of this asset and terminate the right of reversion totaling $45,000. The Company analyzed the assets at March 31, 2014 and determined
that the value could not be supported and impaired the assets to $0.
On
October 6, 2014, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic,
LLC and its principals to acquire certain assets including a US Patent entitled “Compositions and methods of use of Phorbol
Esters for the treatment of Hodgkin’s Lymphoma”, and all related intellectual property, inventions and trade secrets,
data and clinical study results. In consideration for the intellectual property the Company issued 220,792,028 common shares.
These shares were valued at a total of $7,904,355; however, since the asset was acquired from a related party the Company valued
the asset at the cost of the asset to the related party, $82,120, and treated the excess value as a reduction to additional paid
in capital.
NOTE
4 – ACCRUED EXPENSES
Accrued
expenses consisted of the following as of December 31, 2014 and March 31, 2014:
| |
December
31, 2014 | |
March
31, 2014 |
| Wages
and taxes |
| 367,833 | | |
| 151,290 | |
| Accrued interest |
| 14,889 | | |
| 0 | |
| Consulting |
| 0 | | |
| 300,000 | |
| Total
accrued expenses |
$ | 382,722 | | |
$ | 451,290 | |
The
Company amended a consulting agreement on May 7, 2014, to grant 2,500,000 shares to a consultant for work performed through June
30, 2014. The shares were valued on the grant date at $300,000 and that amount had been accrued as of March 31, 2014.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
5 – RELATED PARTY DEBT AND TRANSACTIONS
On
July 19, 2013, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Sale Agreement”) with our prior officers and directors. Pursuant to the Sale Agreement, the Company transferred
all assets and business operations associated with its boiler business in exchange for assumption of all obligations associated
with that business and cancellation of loans amounting to $28,818. The cancellation of debt was recorded as additional paid-in
capital.
During
the year ended March 31, 2014, the Company received loans from companies controlled by its new CEO or shareholders totaling $36,000.
The loans are unsecured, non-interest bearing with no specific terms of repayment. The total due to related parties was $0 as
of December 31, 2014.
On
September 6, 2013, the Company entered into an Employment Agreement with our Chief Executive Officer, Chief Financial Officer,
President and Secretary. The Employment Agreement provides for a term of two years; annual compensation of $275,000, a signing
bonus of $68,750, and options to purchase up to 3,000,240 shares of common stock at an exercise price of $0.02 per share. The
CEO earned $227,133 for the nine months ended December 31, 2014 as a result of this agreement, of which, $216,543 has been accrued
as of December 31, 2014.
NOTE
6 – STOCK DEPOSITS
The
Company received deposits for future stock purchases during the year ended March 31, 2014 totaling $147,050. The Company signed
subscription agreements with four investors on June 16, 2014 to grant 1,469,000 shares of common stock in exchange for the deposits.
The remaining balance as of December 31, 2014 is $0.
NOTE
7 - CONVERTIBLE NOTES PAYABLE
On
March 11, 2014, the Company issued a convertible promissory note in the amount of $37,500. The note is due on December 13, 2014
and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price,
which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending
on the latest complete trading day prior to the conversion date. On September 22, 2014 the note holder converted $12,000 of the
principle into 550,459 common shares at $0.0218 per share, on October 1, 2014 the
note holder converted $12,000 of the principle into 648,649 common shares at $0.0185 per share, on October 8, 2014 the note holder
converted $9,000 of the principle into 505,618 common shares at $0.0178 per share, on October 16, 2014 the note holder converted
$4,500 of the principle and $1,500 in accrued interest into 454,545 common shares at $0.0132 per share leaving a remaining balance
of $0. Interest accrued on this note for the period ended December 31, 2014 is $0.
On
April 8, 2014, the Company issued a convertible note payable in the amount of $53,000. The note bears 8% interest and is due on
January 14, 2015. The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied
by the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading
day period ending on the latest complete trading day prior to the conversion date. On October
29, 2014 the note holder converted $15,000 of the principle into 1,250,000 common shares at $0.012 per share, on
November 3, 2014 the note holder converted $10,000 of the principle into 819,672 common shares at $0.0122 per share, on November
7, 2014 the note holder converted $12,000 of the principle into 1,188,119 common shares at $0.0101 per share, on November 19,
2014 the note holder converted $16,000 of the principle and $2,120 in accrued interest into 2,831,250 common shares at $0.0064
per share leaving a remaining balance of $0. Interest accrued on this note for the period ended December 31, 2014 is $0.
On
May 21, 2014, the Company issued a convertible note payable in the amount of $42,500. The note bears 8% interest and is due on
February 23, 2015. The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied
by the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading
day period ending on the latest complete trading day prior to the conversion date. On December 8, 2014 the note holder converted
$15,000 of the principle into 3,488,372 common shares at $0.0043 per share, on December 15, 2014 the note holder converted $12,000
of the principle into 4,285,714 common shares at $0.0028 per share, on December 26, 2014 the note holder converted $15,500 of
the principle and $1,700 in accrued interest into 7,478,261 common shares at $0.0023 per share leaving a remaining balance of
$0. Interest accrued on this note for the period ended December 31, 2014 is $0.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
7 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
August 14, 2014, the Company issued a convertible note payable in the amount of $66,780 including an original issue discount of
$3,380. The note bears 8% interest and is due on August 14, 2015. The loan becomes convertible
180 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three (3) trading prices for
the common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date.
Interest accrued on this note for the period ended December 31, 2014 is $2,035. This loan has an unamortized original issue
discount of $2,363 as of the end of the period.
On
August 14, 2014, the Company issued a convertible note payable in the amount of $58,300 including an original issue discount of
$3,300. The note bears 8% interest and is due on August 14, 2015. The loan becomes convertible
180 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three (3) trading prices for
the common stock during the twenty-two (22) trading day period ending on the latest complete trading day prior to the conversion
date. Interest accrued on this note for the period ended December 31, 2014 is $1,776. This loan has an unamortized original
issue discount of $2,063 as of the end of the period.
On
August 13, 2014, the Company issued a convertible note payable in the amount of $61,111 including an original issue discount of
$5,500. The note bears 12% interest and is due on August 14, 2016. The loan becomes convertible
immediately at the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 60% multiplied by the market price, which is the lowest trading prices for the common stock during the
twenty (20) trading day period ending on the latest complete trading day prior to the conversion date. Interest accrued
on this note for the period ended December 31, 2014 is $2,813. This loan has an unamortized original issue discount of $4,469
as of the end of the period.
On
August 19, 2014, the Company issued a convertible note payable in the amount of $57,895 including an original issue discount of
$2,895. The note bears 12% interest and is due on August 19, 2016. The loan becomes convertible
immediately upon the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 60% multiplied by the market price, which is the lowest trading prices for the common stock during the
twenty (20) trading day period ending on the latest complete trading day prior to the conversion date. Interest accrued
on this note for the period ended December 31, 2014 is $2,551. This loan has an unamortized original issue discount of $2,355
as of the end of the period.
On
September 18, 2014, the Company issued a convertible note payable in the amount of $64,500 including an original issue discount
of $5,500. The note bears a one-time 12% interest rate and is due on September 18, 2015.
The loan becomes convertible immediately upon the date of the note. The loan and any accrued interest can then be converted into
shares of the Company’s common stock at a rate of 60% multiplied by the market price, which is the average of the lowest
three (3) trading prices for the common stock during the twenty (20) trading day period ending on the latest complete trading
day prior to the conversion date. However, if the market price during the 20 day trading period (mentioned above) is below $0.03,
then the conversion factor will be reduced to 55%. Interest accrued on this note for the period ended December 31, 2014
is $2,205. This loan has an unamortized original issue discount of $3,897 as of the end of the period.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
7 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
September 23, 2014, the Company issued a convertible note payable in the amount of $55,000. The note bears 8% interest and is
due on June 23, 2015. The loan becomes convertible 180 days after the date of the note.
The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 55% multiplied
by the market price, which is the average of the lowest two (2) trading prices for the common stock during the twenty-five (25)
trading day period ending on the latest complete trading day prior to the conversion date. Interest accrued on this note
for the period ended December 31, 2014 is $1,193.
On
October 6, 2014, the Company issued a convertible promissory note in the amount of $33,000. The note is due on July 6, 2015 and
bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued interest
can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is
the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest
complete trading day prior to the conversion date. Interest accrued
on this note for the period ended December 31, 2014 is $622.
On
November 6, 2014, the Company issued a convertible promissory note in the amount of $55,000. The note is due on May 6, 2015 and
bears interest at 12% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued interest
can then be converted into shares of the Company’s common stock at a rate of 52.5% multiplied by lowest daily market price,
for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion
date. Interest accrued on this note for the period ended December
31, 2014 is $1,047.
On
November 25, 2014, the Company issued a convertible promissory note in the amount of $43,000. The note is due on August 28, 2015
and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price,
which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending
on the latest complete trading day prior to the conversion date. Interest
accrued on this note for the period ended December 31, 2014 is $457.
On
December 16, 2014, the Company issued a convertible note payable in the amount of $33,333 including an original issue discount
of $3,333. The note bears 12% interest and is due on December 16, 2016. The loan becomes
convertible immediately at the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 60% multiplied by the market price, which is the lowest trading prices for the common stock during the
twenty (20) trading day period ending on the latest complete trading day prior to the conversion date. Interest accrued
on this note for the period ended December 31, 2014 is $190. This loan has an unamortized original issue discount of $3,194 as
of the end of the period.
NOTE
8 – DERIVATIVE LIABILITIES
In
accordance with AC 815, the Company has bifurcated the conversion feature of their convertible notes and recorded a derivative
liability on the date each note became convertible. The derivative liability was then revalued on each reporting date.
As
detailed in Note 7 (above) the Company has issued several convertible notes in varying amounts and terms, with the following loans
becoming convertible during the nine months ending December 31, 2014:$64,500 note dated September 18, 2014; $61,111 note dated
August 13, 2014; $57,895 note dated August 19, 2014; $33,333 note dated December 16, 2014.
The
Company uses the Black-Scholes option pricing model to value the derivative liability. Included in the model to value
the derivative liabilities of the above loans are the following assumptions: stock price at valuation date of $0.004 - $0.0129,
exercise price of $0.00186 - $0.00546, dividend yield of zero, years to maturity of 0.126 – 1.95, a risk free rate of 0.026%
- 0.69%, and annualized volatility of 143% - 181%. The above loans were all discounted in full based on the valuations and the
Company recognized an additional derivative expense of $135,059 upon recording of the derivative liabilities. Once the loans are
fully converted, the remaining derivative liability is reclassified to equity as additional paid-in capital. As of December 31,
2014, unamortized debt discount totaling $163,920 remained.
ASC
815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize
any change in the fair market value as another income or expense item. The Company’s only asset or liability
measured at fair value on a recurring basis is its derivative liability associated with the above convertible debt. During
the period ended December 31, 2014, the Company recorded a total change in the value of the derivative liabilities of $40,871.
NOTE
9 – EQUITY TRANSACTIONS
The
Company has 37,503,000,000 common shares authorized with a par value of $ 0.001 per share.
The
Company has 10,000,000 preferred shares authorized with a par value of $ 0.001 per share.
At
inception, the Company issued 1,093,837,500 shares of common stock for total cash proceeds of $52,500.
On
July 18, 2013, the Company designated, from the 10,000,000 authorized shares of preferred stock, 6,000,000 shares of Series “A”
Preferred Stock. The Series “A” Preferred Stock has voting rights of 100 votes per share and votes with common shares
as a single class.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
9 – EQUITY TRANSACTIONS (CONTINUED)
On
July 18, 2013, the Company granted 6,000,000 Series “A” Preferred shares and 82,767,038 common shares for the intellectual
property. The common and preferred shares were valued at a total of $123,973.
On
July 19, 2013, our new officer/director agreed to cancel 500,255,434 common shares and returned them to treasury. Certain other
shareholders also agreed to cancel 262,521,000 common shares.
On
September 5, 2013, the Company increased the authorized common shares from 90,000,000 to 37,503,000,000. Correspondingly, the
Company affirmed a forward split of 416.7 for 1 in which each shareholder was issued 416.7 common shares for each share held.
All share and per share date included in these financial statements has been retrospectively adjusted to account for the stock
split.
On
October 29, 2013, the Company granted 250,000 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one
common stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs can is below.
On
December 11, 2013, the Company granted 250,000 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one
common stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs can is below.
On
March 10, 2014, the Company issued 83,334 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs is below.
On
April 4, 2014, the Company issued 83,334 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs is below.
On
April 15, 2014, the Company issued 1,000,000 units at $0.25 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.35 and a three year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs is below.
On
May 7, 2014, the Company granted 2,500,000 shares to a consultant for prior services rendered. The Company had accrued $300,000
for these services as of March 31, 2014.
On
June 16, 2014, the Company issued 1,469,000 shares of common stock for stock deposits of $147,050. The Company had received the
deposits during the year ended March 31, 2014.
On
July 1, 2014, the Company granted 1,000,000 shares to a professional for prior legal services rendered. The Company had accrued
$30,000 for these services as of June 30, 2014.
On
July 10, 2014, the Company issued 700,000 units at $0.043 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.15 and a three year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs is below.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
9 – EQUITY TRANSACTIONS (CONTINUED)
The
Company issued the following common shares to satisfy the conversion of the following debt:
| Date | |
Debt/Interest Converted | |
Common Stock Issued | |
Price per Share |
| | September
22, 2014 | | |
$ | 12,000 | | |
| 550,459 | | |
$ | 0.0218 | |
| | October
1, 2014 | | |
$ | 12,000 | | |
| 648,649 | | |
$ | 0.0185 | |
| | October
8, 2014 | | |
$ | 9,000 | | |
| 505,618 | | |
$ | 0.0178 | |
| | October
16, 2014 | | |
$ | 7,000 | | |
| 454,545 | | |
$ | 0.0132 | |
| | October
29, 2014 | | |
$ | 15,000 | | |
| 1,250,000 | | |
$ | 0.0120 | |
| | November
3, 2014 | | |
$ | 10,000 | | |
| 819,672 | | |
$ | 0.0122 | |
| | November
7, 2014 | | |
$ | 12,000 | | |
| 1,188,119 | | |
$ | 0.0101 | |
| | November
19, 2014 | | |
$ | 18,120 | | |
| 2,831,250 | | |
$ | 0.0064 | |
| | December
8, 2014 | | |
$ | 15,000 | | |
| 3,488,372 | | |
$ | 0.0043 | |
| | December
15, 2014 | | |
$ | 12,000 | | |
| 4,285,714 | | |
$ | 0.0028 | |
| | December
26, 2014 | | |
$ | 17,200 | | |
| 7,478,261 | | |
$ | 0.0023 | |
| | Total | | |
$ | 139,320 | | |
| 23,500,659 | | |
| | |
On
July 29, 2014, the Company issued 700,000 units at $0.05 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.15 and a three year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs is below.
The
following is a summary of the inputs used to determine the value of the warrants issued in connection with common stock using
the Black-Scholes option pricing model.
| Date |
October
29, 2013 |
December
11, 2013 |
March
10, 2014 |
April
4, 2014 |
April
15, 2014 |
July
10, 2014 |
July
29, 2014 |
| Warrants |
250,000 |
250,000 |
83,334 |
83,334 |
1,000,000 |
700,000 |
700,000 |
| Stock
price on grant date |
$0.30 |
$0.02 |
$0.02 |
$0.199 |
$0.252 |
$0.037 |
$0.037 |
| Exercise
price |
$0.50 |
$0.50 |
$0.50 |
$0.50 |
$0.35 |
$0.15 |
$0.15 |
| Expected
life |
1
year |
1
year |
1
year |
1
year |
3
year |
3
year |
3
year |
| Volatility |
147% |
64% |
65% |
113% |
76% |
119% |
119% |
| Risk-free
rate |
0.12% |
0.11% |
0.13% |
0.12% |
0.84% |
0.96% |
0.98% |
| Calculated
value |
$10,473 |
$0 |
$0 |
$3,181 |
$104,416 |
$12,130 |
$12,102 |
| Fair value
allocation of proceeds |
$7,381 |
$0 |
$0 |
$3,181 |
$104,416 |
$8,637 |
$8,992 |
The
following is a summary of the warrant activity for the nine months ended December 31, 2014:
| | |
Number
of warrants | |
Weighted
average exercise price |
| | Outstanding,
March 31, 2014 | | |
| 583,334 | | |
$ | 0.50 | |
| | Granted | | |
| 2,483,334 | | |
| 0.24 | |
| | Exercised | | |
| — | | |
| — | |
| | Expired | | |
| — | | |
| — | |
| | Outstanding,
December 31, 2014 | | |
| 3,066,668 | | |
$ | 0.29 | |
During
the year ended March 31, 2014, the Company granted 47,503,280 stock options to officers, directors, employees and consultants.
During the nine months ended December 31, 2014, the Company granted 18,083,336 stock options to officers, directors, employees
and consultants.
The
Company accounts for employee stock-based compensation in accordance with the guidance of ASC Topic 718: Compensation - Stock
Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized
in the financial statements based on their fair values.
The
Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants
and other non-employees. In accordance with ASC Topic 505-50, these stock options issued as compensation for services provided
to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the
option, whichever can be more clearly determined.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
9 – EQUITY TRANSACTIONS (CONTINUED)
The
following is a summary of the inputs used to determine the value of the options using the Black-Scholes option pricing model.
| Date |
September
6, 2013 |
February
7, 2014 |
March
14, 2014 |
May
7, 2014 |
July
25, 2014 |
October
6, 2014 |
| Options |
41,003,280 |
1,500,000 |
5,000,000 |
3,500,000 |
750,000 |
15,500,000 |
| Stock
price grant date |
$0.02 |
$0.02 |
$0.30 |
$0.12 |
$0.07 |
$.0358 |
| Exercise
price |
$0.0191984 |
$0.0191984 |
$0.30 |
$0.12 |
$0.06 |
$0.0191984 |
| Expected
life |
10.00 |
10.00 |
10.00 |
10.00 |
10.00 |
5.0 |
| Volatility |
76% |
74% |
74% |
73% |
88% |
101% |
| Risk-free
rate |
2.94% |
2.71% |
2.65% |
2.56% |
2.53% |
1.04% |
| Calculated
value |
$663,307 |
$23,825 |
$1,182,141 |
$315,772 |
$45,109 |
$454,798 |
The
following is a summary of the option activity for the nine months ended December 31, 2014:
| | |
Number
of options | |
Weighted
average exercise price |
| | Outstanding,
March 31, 2014 | | |
| 47,503,280 | | |
$ | 0.05 | |
| | Granted | | |
| 19,750,000 | | |
$ | 0.039 | |
| | Exercised | | |
| — | | |
| — | |
| | Expired | | |
| — | | |
| — | |
| | Outstanding,
December 31, 2014 | | |
| 67,253,280 | | |
$ | 0.05 | |
NOTE
10 – COMMITMENTS AND CONTINGENCIES
The
Company leases office space on a verbal month-to-month agreement. Monthly rent is approximately $2,500.
The
inventor of the intellectual property which was assigned to Rich Pharmaceuticals, Inc. in July 2013 by Imagic, LLC and Richard
L. Chang’s Holdings, LLC is presently in declaratory relief litigation with Biosuccess Biotech, Co. LTD. (“Biosuccess”),
a company who was previously assigned licensing rights in the intellectual property. In connection with this litigation, on January
17, 2014, the Company received notice of a complaint filed by Biosuccess against the Company, Imagic, LLC, Richard L. Chang’s
Holdings, LLC, and Ben Chang (our CEO and a director) in the United States District Court, Central District of California Western
Division (the “District Court”). The Complaint includes allegations of patent and copyright infringement, misappropriation
of trade secrets, breach of fiduciary duty, unfair competition and other causes of actions against the Company, Imagic, LLC, Richard
L. Chang’s Holdings, LLC, and Ben Chang (the “Litigation”). The Complaint seeks relief which includes compensatory
damages, attorneys’ fees and costs, an award of treble damages, and such other relief as the court may deem just and proper.
The trial for the Litigation involving the Company is scheduled for July 2015.
The
Company believes the allegations in the complaint are without merit and the Company intends to defend itself in the Litigation.
However, the Company has incurred expenses and the diversion of financial resources and management personnel in responding to
the complaint. Additionally, an adverse determination against the Company in the Litigation may subject us to significant liabilities
or require us to seek licenses that may not be available from third parties on commercially favorable terms, if at all. Further,
an adverse determination against the Company in the Litigation may require us to pay substantial financial damages, which can
be tripled if the infringement is deemed willful, or be required to discontinue or significantly delay development, marketing,
selling and licensing of the Company’s affected products and intellectual property rights.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
11 – INCOME TAXES
As
of December 31, 2014, the Company had net operating loss carry forwards of approximately $5,928,809 that may be available to reduce
future years’ taxable income in varying amounts through 2033. Future tax benefits which may arise as a result of these losses
have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly,
the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision
for Federal income tax consists of the following for the nine months ended December 31, 2014 and 2013:
| |
2014 | |
2013 |
| Federal income tax
benefit attributable to: |
| | | |
| | |
| Current
operations |
$ | 893,300 | | |
$ | 109,300 | |
| Less:
valuation allowance |
| (893,300 | ) | |
| (109,300 | ) |
| Net
provision for Federal income taxes |
$ | 0 | | |
$ | 0 | |
The cumulative
tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of December
31, 2014 and March 31, 2014:
| |
December
31, 2014 | |
March
31, 2014 |
| Deferred tax asset
attributable to: |
| | | |
| | |
| Net
operating loss carryover |
$ | 1,942,835 | | |
$ | 1,049,535 | |
| Less:
valuation allowance |
| (1,942,835 | ) | |
| (1,049,535 | ) |
| Net
deferred tax asset |
$ | 0 | | |
$ | 0 | |
Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $5,928,809
for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating
loss carry forwards may be limited as to use in future years.
NOTE
12 – LIQUIDITY AND GOING CONCERN
The
Company has a working capital deficit, has not yet received revenues from sales of products or services, and has incurred losses
since inception. These factors create substantial doubt about the Company’s ability to continue as a going concern. The
financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common
stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its
equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no
assurance the Company will be successful in these efforts.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER
31, 2014
NOTE
13 – SUBSEQUENT EVENTS
Effective
January 6, 2015, the Company entered into a financing agreement related to annual insurance coverage of $10,623. The agreement
stipulates ten monthly payments of $792.13 and carries an interest rate of 10.5%.
On
January 9, 2015, the Company issued a convertible note payable in the amount of $33,000. The note bears 8% interest and is due
on October 13, 2015. The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied
by the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading
day period ending on the latest complete trading day prior to the conversion date.
Effective
January 12, 2015, the Company approved the re-pricing of all of the 67,253,280 previously granted options under the Company’s
2013 Equity Incentive Plan, which had exercise prices between $0.30 per share and $.0191984 per share, to $0.0017 per share which
was the closing price of the Company’s common stock on January 9, 2015. All of the other terms of the options remained unchanged.
On
January 28, 2015 the Company issued 35,000,000 common shares at $0.00057 per share related to the agreement dated August 12, 2014,
where the Company entered into an Investment Agreement and Registration Rights Agreement with Macallan Partners (“Macallan”)
pursuant to which Macallan has agreed to purchase up to $4,000,000 in shares of Company common stock. The obligations of Macallan
to purchase the shares of Company common stock are subject to the conditions set forth in the Investment Agreement, including,
without limitation, the condition that a registration statement on Form S-1 registering the shares of Company common stock to
be sold to Macallan be filed with the Securities and Exchange Commission and become effective.
On
February 11, 2015, the Company issued 74,750,000 shares of Company common stock to satisfy the conversion of $29,900 of a convertible
note payable with Vista Capital Investments, LLC. The issuance of the shares was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
February 12, 2015, the Company issued 37,356,055 shares of Company common stock to satisfy the conversion of $17,333.21 of a convertible
note payable with Toledo Advisors, LLC. The issuance of the shares was made in reliance on the exemption provided by Section 4(2)
of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which
was negotiated directly between the investor and the Company.
On
February 15, 2015, the Company issued 73,924,324 shares of Company common stock to satisfy the conversion of $35,730.09 of a convertible
note payable with LG Capital Funding LLC. The issuance of the shares was made in reliance on the exemption provided by Section
4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which
was negotiated directly between the investor and the Company.
On
February 18, 2015, the Company closed a financing pursuant to which it issued a convertible note payable (the “Note”)
in the amount of $54,000 to KBM Worldwide, Inc. The Note bears 8% interest and is due on November 9, 2015.
The Note becomes convertible 180 days after the date of the Note. The principal amount of the Note and any accrued interest can
then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the
average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest
complete trading day prior to the conversion date. The Note also contains certain representations, warranties, covenants
and events of default, and increases in the amount of the principal and interest rates under the Note in the event of such defaults.
The foregoing is only a brief description of the material terms of the Note, and does not purport to be a complete description
of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to
the Note which is filed as an exhibit to this Quarterly Report. The issuance of the Note was made in reliance on the exemption
provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one
investor who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by
us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the issuance of the securities
took place directly between the investor and the Company.
In
accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31,
2014 to the date these financial statements were issued, and has determined that it does not have any material subsequent events
to disclose in these financial statements other than the events described above.
Silberstein
Ungar, PLLC CPAs and Business Advisors
Phone
(248) 203-0080
Fax (248)
281-0940
30600
Telegraph Road, Suite 2175
Bingham
Farms, MI 48025-4586
www.sucpas.com
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Boards of Directors
Rich
Pharmaceuticals, Inc.
Beverly
Hills, California
We
have audited the accompanying balance sheets of Rich Pharmaceuticals, Inc. (formerly Nepia, Inc.), as of March 31, 2014 and 2013,
and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and the
period from August 9, 2010 (date of inception) to March 31, 2014. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rich
Pharmaceuticals, Inc. (formerly Nepia, Inc.), as of March 31, 2014 and 2013 and the results of its operations and cash flows for
the years then ended and the period from August 9, 2010 (date of inception) to March 31, 2014, in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Rich Pharmaceuticals, Inc. (formerly Nepia, Inc.) will
continue as a going concern. As discussed in Note 11 to the financial statements, the Company has not received revenue from sales
of products or services, has a working capital deficit, and has incurred losses from operations since inception. These factors
raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard
to these matters are described in Note 11. The accompanying financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/
Silberstein Ungar, PLLC
Silberstein
Ungar, PLLC
Bingham
Farms, Michigan
July
10, 2014
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS
OF MARCH 31, 2014 AND 2013
| | |
2014 | |
2013 |
| ASSETS | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash
and equivalents | |
$ | 12,387 | | |
$ | 1,588 | |
| Prepaid
expenses | |
| 1,561 | | |
| 0 | |
| Total Current Assets | |
| 13,948 | | |
| 1,588 | |
| Property
and equipment, net | |
| 1,261 | | |
| 0 | |
| TOTAL
ASSETS | |
$ | 15,209 | | |
$ | 1,588 | |
| | |
| | | |
| | |
| LIABILITIES
AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 180,672 | | |
$ | 6,700 | |
| Accrued expenses | |
| 451,290 | | |
| 0 | |
| Due to related parties | |
| 36,000 | | |
| 24,318 | |
| Stock deposits | |
| 147,050 | | |
| 0 | |
| Convertible
note payable | |
| 37,500 | | |
| 0 | |
| Total
Liabilities | |
| 852,512 | | |
| 31,018 | |
| Stockholders’
Deficit | |
| | | |
| | |
| Preferred stock,
$.001 par value, 10,000,000 shares authorized, 6,000,000 and 0 shares issued and outstanding, respectively | |
| 6,000 | | |
| 0 | |
| Common stock, $.001
par value, 37,503,000,000 shares authorized, 414,411,438 and 1,093,837,500 shares issued and
outstanding, respectively | |
| 414,411 | | |
| 2,625 | |
| Additional paid-in
capital | |
| 2,043,690 | | |
| 49,875 | |
| Deficit
accumulated during the development stage | |
| (3,301,404 | ) | |
| (81,930 | ) |
| Total
Stockholders’ Deficit | |
| (837,303 | ) | |
| (29,430 | ) |
| TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
$ | 15,209 | | |
$ | 1,588 | |
See
accompanying notes to financial statements.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
FOR
THE YEARS ENDED MARCH 31, 2014 AND 2013
FOR
THE PERIOD FROM AUGUST 9, 2010 (INCEPTION) TO MARCH 31, 2014
| |
Year
ended
March 31, 2014 | |
Year
ended
March 31, 2013 | |
Period
from
August 9, 2010
(Inception) to
March 31, 2014 |
| REVENUES | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| OPERATING
EXPENSES | |
| | | |
| | | |
| | |
| Consulting expenses | |
| 335,000 | | |
| 0 | | |
| 335,000 | |
| Office expenses | |
| 39,569 | | |
| 0 | | |
| 39,569 | |
| Depreciation expense | |
| 158 | | |
| 0 | | |
| 158 | |
| Wages and taxes | |
| 291,358 | | |
| 0 | | |
| 291,358 | |
| Professional fees | |
| 115,304 | | |
| 31,350 | | |
| 197,234 | |
| Regulatory fees | |
| 37,591 | | |
| 0 | | |
| 37,591 | |
| Research and development | |
| 123,802 | | |
| 0 | | |
| 123,802 | |
| Stock-based compensation | |
| 1,869,273 | | |
| 0 | | |
| 1,869,273 | |
| Impairment of intangible
assets | |
| 168,973 | | |
| 0 | | |
| 168,973 | |
| Travel,
meals and entertainment | |
| 23,567 | | |
| 0 | | |
| 23,567 | |
| TOTAL
OPERATING EXPENSES | |
| 3,004,595 | | |
| 31,350 | | |
| 3,086,525 | |
| LOSS
FROM OPERATIONS | |
| (3,004,595 | ) | |
| (31,350 | ) | |
| (3,086,525 | ) |
| OTHER
INCOME (EXPENSE) | |
| | | |
| | | |
| | |
| Interest
expense | |
| (342 | ) | |
| 0 | | |
| (342 | ) |
LOSS
BEFORE PROVISION FOR INCOME TAXES | |
| (3,004,937 | ) | |
| (31,350 | ) | |
| (3,086,867 | ) |
| PROVISION
FOR INCOME TAXES | |
| 0 | | |
| 0 | | |
| 0 | |
| NET
LOSS | |
$ | (3,004,937 | ) | |
$ | (31,350 | ) | |
$ | (3,086,867 | ) |
| NET
LOSS PER SHARE: BASIC AND DILUTED | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
| | |
| WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | |
| 615,222,893 | | |
| 1,093,837,500 | | |
| | |
See
accompanying notes to financial statements.
RICH PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE PERIOD FROM AUGUST 9, 2010 (INCEPTION) TO MARCH 31, 2014
| |
| Preferred
Stock | | |
Common Stock | | |
| Additional
Paid-in | | |
| Deficit
Accumulated During the Development | | |
| Total
Stockholders’ Equity | |
| |
| Shares | | |
| Amount | | |
| Shares | | |
| Amount | | |
| Capital | | |
| Stage | | |
| (Deficit) | |
| Inception, August 9, 2010 | |
| — | | |
$ | — | | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Issuance
of common stock for cash | |
| — | | |
| — | | |
| 1,093,837,500 | | |
| 2,625 | | |
| 49,875 | | |
| — | | |
| 52,500 | |
| Net loss for the
period ended March 31, 2011 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (18,689 | ) | |
| (18,689 | ) |
| Balance, March 31, 2011 | |
| — | | |
| — | | |
| 1,093,837,500 | | |
| 2,625 | | |
| 49,875 | | |
| (18,689 | ) | |
| 33,811 | |
| Net
loss for the year ended March 31, 2012 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (31,891 | ) | |
| (31,891 | ) |
| Balance, March 31, 2012 | |
| — | | |
| — | | |
| 1,093,837,500 | | |
| 2,625 | | |
| 49,875 | | |
| (50,580 | ) | |
| 1,920 | |
| Net
loss for the year ended March 31, 2013 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (31,350 | ) | |
| (31,350 | ) |
| Balance, March 31, 2013 | |
| — | | |
| — | | |
| 1,093,837,500 | | |
| 2,625 | | |
| 49,875 | | |
| (81,930 | ) | |
| (29,430 | ) |
| Stock issued for
intangible assets | |
| 6,000,000 | | |
| 6,000 | | |
| 82,767,038 | | |
| 199 | | |
| 117,774 | | |
| — | | |
| 123,973 | |
| Share cancellation | |
| — | | |
| — | | |
| (762,776,434 | ) | |
| (1,831 | ) | |
| 1,831 | | |
| — | | |
| — | |
| Forgiveness of shareholder
debt | |
| — | | |
| — | | |
| — | | |
| — | | |
| 28,818 | | |
| — | | |
| 28,818 | |
| Stock split –
416.7 to 1 | |
| — | | |
| — | | |
| — | | |
| 412,835 | | |
| (198,298 | ) | |
| (214,537 | ) | |
| — | |
| Stock options granted
for services | |
| — | | |
| — | | |
| — | | |
| — | | |
| 663,307 | | |
| — | | |
| 663,307 | |
| Stock and warrants
issued for cash | |
| — | | |
| — | | |
| 583,334 | | |
| 583 | | |
| 174,417 | | |
| — | | |
| 175,000 | |
| Stock options granted
for services | |
| — | | |
| — | | |
| — | | |
| — | | |
| 23,825 | | |
| — | | |
| 23,825 | |
| Stock options granted
for services | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,182,141 | | |
| — | | |
| 1,182,141 | |
| Net
loss for the year ended March 31, 2014 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,004,937 | ) | |
| (3,004,937 | ) |
| Balance, March
31, 2014 | |
| 6,000,000 | | |
$ | 6,000 | | |
| 414,411,438 | | |
$ | 414,411 | | |
$ | 2,043,690 | | |
$ | (3,301,404 | ) | |
$ | (837,303 | ) |
See
accompanying notes to financial statements.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR
THE YEARS ENDED MARCH 31, 2014 AND 2013
FOR
THE PERIOD FROM AUGUST 9, 2010 (INCEPTION) TO MARCH 31, 2014
| |
Year
ended
March 31, 2014 | |
Year
ended
March 31, 2013 | |
Period
from
August 9, 2010
(Inception) to
March 31, 2014 |
| CASH
FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | | |
| | |
| Net loss
for the period | |
$ | (3,004,937 | ) | |
$ | (31,350 | ) | |
$ | (3,086,867 | ) |
| Adjustments to reconcile
net loss to net cash used in operating activities | |
| | | |
| | | |
| | |
| Depreciation expense | |
| 158 | | |
| 0 | | |
| 158 | |
| Impairment of intangible
assets | |
| 168,973 | | |
| 0 | | |
| 168,973 | |
| Stock-based compensation | |
| 1,869,273 | | |
| 0 | | |
| 1,869,273 | |
| Changes in operating
assets and liabilities: | |
| | | |
| | | |
| | |
| (Increase) in prepaid
expenses | |
| (1,561 | ) | |
| 0 | | |
| (1,561 | ) |
| Increase in accounts
payable | |
| 173,972 | | |
| 120 | | |
| 180,672 | |
| Increase
in accrued expenses | |
| 451,290 | | |
| 0 | | |
| 451,290 | |
| Net Cash Used by
Operating Activities | |
| (342,832 | ) | |
| (31,230 | ) | |
| (418,062 | ) |
| CASH
FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | | |
| | |
| Purchase of fixed
assets | |
| (1,419 | ) | |
| 0 | | |
| (1,419 | ) |
| Acquisition
of intangible assets | |
| (45,000 | ) | |
| 0 | | |
| (45,000 | ) |
| Net
Cash Used by Investing Activities | |
| (46,419 | ) | |
| 0 | | |
| (46,419 | ) |
| CASH
FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | | |
| | |
| Loans received from
related parties | |
| 40,500 | | |
| 20,318 | | |
| 64,818 | |
| Proceeds from stock
deposits | |
| 147,050 | | |
| 0 | | |
| 147,050 | |
| Proceeds from sale
of common stock | |
| 175,000 | | |
| 0 | | |
| 227,500 | |
| Issuance
of convertible note payable | |
| 37,500 | | |
| 0 | | |
| 37,500 | |
| Net
Cash Provided by Financing Activities | |
| 400,050 | | |
| 20,318 | | |
| 476,868 | |
| Net Increase (Decrease)
in Cash and Cash Equivalents | |
| 10,799 | | |
| (10,912 | ) | |
| 12,387 | |
| Cash
and cash equivalents, beginning of period | |
| 1,588 | | |
| 12,500 | | |
| 0 | |
| Cash
and cash equivalents, end of period | |
$ | 12,387 | | |
$ | 1,588 | | |
$ | 12,387 | |
| SUPPLEMENTAL
CASH FLOW INFORMATION: | |
| | | |
| | | |
| | |
| Interest
paid | |
$ | 342 | | |
$ | 0 | | |
$ | 342 | |
| Income
taxes paid | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| SUPPLEMENTAL
NON-CASH INVESTING AND FINANCING INFORMATION: | |
| | | |
| | | |
| | |
| Forgiveness
of shareholder debt recorded as contributed capital | |
$ | 28,818 | | |
$ | 0 | | |
$ | 28,818 | |
| Common
and preferred stock issued for intangible assets | |
$ | 123,973 | | |
$ | 0 | | |
$ | 123,973 | |
See
accompanying notes to financial statements.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business
On
August 9, 2010 the Company was incorporated as Nepia Inc. in the State of Nevada. From August 9, 2010 to July 18, 2013, the Company
was in the business of developing, manufacturing, and selling small boilers aimed at farmers primarily in Southeast Asia. Beginning
on July 19, 2013, the Company acquired bio-pharmaceutical intellectual property for the treatment of acute myeloid leukemia (AML)
and is entering into phase II human studies. The goal is to perfect this indication for marketing purposes for distribution
world-wide. On August 26, 2013, as a consequence of our new business direction, the Company changed its name to Rich Pharmaceuticals,
Inc. (“Rich” or “the Company”).
On
July 18, 2013, the Company designated, from our 10,000,000 authorized shares of preferred stock, par value $0.001, 6,000,000 shares
of Series “A” Preferred Stock. Our Series “A” Preferred Stock has voting rights of 100 votes per share
and votes with common shares as a single class.
On
July 18, 2013, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic, LLC
and its principals to acquire certain assets including a US Patent entitled “Phorbol esters as anti-neoplastic and white
blood cell elevating agents” and all related intellectual property associated with the patent. In consideration for the
intellectual property the Company issued 82,767,038 common shares, and 6,000,000 Series “A” Preferred shares. The
common and preferred shares were valued at $123,973. The Company further agreed to use its best efforts to complete a financing
resulting in proceeds of at least $2,000,000. If the Company was unable to raise $400,000 according to the terms of the Assignment
Agreement, the patent reverts back to Imagic, LLC and its principals. On January 17, 2014, the right of reversion was terminated
in exchange for a payment of $20,000.
On
July 19, 2013, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Sale Agreement”) with our prior officers and directors. Pursuant to the Sale Agreement, the Company transferred
all assets and business operations associated with our boiler business in exchange for assumption of all obligations associated
with that business and cancellation of loans amounting to $28,818. The cancellation of debt was recorded as additional paid-in
capital. In consequence to the Sale Agreement two former officers sold 531,292,500 common shares held by them to our new officer/director.
In turn, our new officer/director agreed to cancel 500,255,434 of those shares he received and returned them to treasury for retirement.
Certain other shareholders also agreed to cancel 262,521,000 common shares.
On
September 5, 2013, the Company increased the authorized common shares, par value $0.001, from 90,000,000 shares to 37,503,000,000
shares. Correspondingly, the Company affirmed a forward split of 416.7 for 1 in which each shareholder was issued 416.7 common
shares for each share held. All share and per share date included in these financial statements has been retrospectively adjusted
to account for the stock split.
Development
Stage Company
The
accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development-stage
companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have
commenced, and there has been no significant revenues there from.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis
of Presentation
The
financial statements of the Company have been prepared using the accrual basis of accounting in accordance with generally accepted
accounting principles in the United States of America and are presented in U.S. dollars. The Company has adopted a March 31 fiscal
year end.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At March 31, 2014
and 2013 the Company had $12,387 and $1,588, respectively, of unrestricted cash.
Property
and Equipment
Property
and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the related
assets. The useful lives of the assets are as follows:
| Computer
equipment | |
| 3
years | |
Long-Lived
and Intangible Assets
The
Company accounts for long-lived and intangible assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment
or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.
The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result
from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
As of March 31, 2014, the Company fully impaired their intangible assets to $0.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses,
amounts due to related parties, stock deposits, and a convertible note payable. The carrying amount of these financial instruments
approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise
disclosed in these financial statements.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
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 and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based
Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC Topic 718. On September 6, 2013, the Company approved the adoption
of Rich Pharmaceuticals, Inc. 2013 Stock Option/Stock Issuance Plan (the "2013 Plan”). The 2013 Plan is intended to
aid in recruiting and retaining key employees, directors or consultants and to motivate them by providing incentives through the
granting of awards of stock options or other stock based awards. The 2013 Plan is administered by the board of directors. Directors,
officers, employees and consultants and our affiliates are eligible to participate under the 2013 Plan. A total of 60,000,000
common shares have been reserved for awards under the 2013 Plan. During the year ended March 31, 2014, the Company granted 47,503,280
stock options to officers, directors, employees and consultants.
Basic
loss per share
The
basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the
weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the
Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding
during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as
of the first of the year for any potentially dilutive debt or equity.
Revenue
Recognition
The
Company will recognize revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Recent
Accounting Pronouncements
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.
NOTE
2 – PROPERTY AND EQUIPMENT
Property
and equipment, recorded at cost, consisted of the following as of March 31, 2014 and 2013:
| | |
2014 | |
2013 |
| Computer
equipment | |
$ | 1,419 | | |
$ | — | |
| Less:
accumulated depreciation | |
| (158 | ) | |
| — | |
| Property
and equipment, net | |
$ | 1,261 | | |
$ | — | |
NOTE
3 – INTANGIBLE ASSETS
On
July 18, 2013, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic, LLC
and its principals to acquire certain assets including a US Patent entitled “Phorbol esters as anti-neoplastic and white
blood cell elevating agents” and all related intellectual property associated with the patent. In consideration for the
intellectual property the Company issued 82,767,038 common shares and 6,000,000 Series “A” Preferred Stock. These
shares were valued at a total of $123,973. The Company has also paid additional funds to third parties to further the development
of this asset and terminate the right of reversion totaling $45,000. The Company analyzed the assets at March 31, 2014 and determined
that the value could not be supported and impaired the assets to $0.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
4 – ACCRUED EXPENSES
Accrued
expenses consisted of the following as of March 31, 2014 and 2013:
| | |
2014 | |
2013 |
| Wages
and taxes | |
| 151,290 | | |
| 0 | |
| Consulting | |
| 300,000 | | |
| 0 | |
| Total
accrued expenses | |
$ | 451,290 | | |
$ | 0 | |
The
Company amended a consulting agreement on May 7, 2014, to grant 2,500,000 shares to a consultant for work performed through March
31, 2014. The shares were valued on the grant date at $300,000 and that amount has been accrued as of March 31, 2014.
NOTE
5 – RELATED PARTY DEBT AND TRANSACTIONS
A
former shareholder had loaned the company funds to help support operations. The amounts were unsecured, non-interest bearing and
due on demand. The total due to the shareholder was $16,818 as of March 31, 2013.
A
former officer had loaned the company funds to help support operations as well. The amount was unsecured, non-interest bearing
and due on demand. The total due to the officer was $7,500 as of March 31, 2013.
During
the three months ended June 30, 2013, former officers and shareholders loaned the Company $4,500.
On
July 19, 2013, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Sale Agreement”) with our prior officers and directors. Pursuant to the Sale Agreement, the Company transferred
all assets and business operations associated with its boiler business in exchange for assumption of all obligations associated
with that business and cancellation of loans amounting to $28,818. The cancellation of debt was recorded as additional paid-in
capital.
During
the year ended March 31, 2014, the Company received loans from companies controlled by its new CEO or shareholders totaling $36,000.
The loans are unsecured, non-interest bearing with no specific terms of repayment. The total due to related parties was $36,000
as of March 31, 2014.
On
September 6, 2013, the Company entered into an Employment Agreement with our Chief Executive Officer, Chief Financial Officer,
President and Secretary. The Employment Agreement provides for a term of two years; annual compensation of $275,000, a signing
bonus of $68,750, and options to purchase up to 3,000,240 shares of common stock at an exercise price of $0.02 per share. The
CEO earned $229,167 through March 31, 2014 as a result of this agreement, of which, $129,717 has been accrued as of March 31,
2014.
NOTE
6 – STOCK DEPOSITS
The
Company received deposits for future stock purchases during the year ended March 31, 2014 totaling $147,050. The Company signed
subscription agreements with four investors on June 16, 2014 to grant 1,469,000 shares of common stock in exchange for the deposits.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
7 – CONVERTIBLE NOTE PAYABLE
On
March 20, 2014, the Company issued a convertible promissory note in the amount of $37,500. The note is due on December 13, 2014
and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price,
which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending
on the latest complete trading day prior to the conversion date. As
of March 31, 2014, the Company has not converted any portion of this note into shares of common stock.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
The
Company leases office space on a verbal month-to-month agreement. Monthly rent is approximately $2,500.
The
inventor of the intellectual property which was assigned to Rich Pharmaceuticals, Inc. in July 2013 by Imagic, LLC and Richard
L. Chang’s Holdings, LLC is presently in declaratory relief litigation with Biosuccess Biotech, Co. LTD. (“Biosuccess”),
a company who was previously assigned licensing rights in the intellectual property. In connection with this litigation, on January
17, 2014, the Company received notice of a complaint filed by Biosuccess against the Company, Imagic, LLC, Richard L. Chang’s
Holdings, LLC, and Ben Chang (our CEO and a director) in the United States District Court, Central District of California Western
Division. The Complaint includes allegations of patent and copyright infringement, misappropriation of trade secrets, breach of
fiduciary duty, unfair competition and other causes of actions against the Company, Imagic, LLC, Richard L. Chang’s Holdings,
LLC, and Ben Chang. The Complaint seeks relief which includes compensatory damages, attorneys’ fees and costs, an award
of treble damages, and such other relief as the court may deem just and proper.
The
Company believes the allegations in the complaint are without merit and the Company intends to defend itself in the litigation.
However, the Company may incur substantial expenses and the diversion of financial resources and management personnel in responding
to the complaint. Additionally, an adverse determination against us in the litigation may subject us to significant liabilities
or require us to seek licenses that may not be available from third parties on commercially favorable terms, if at all. Further,
an adverse determination against us in the litigation may require us to pay substantial financial damages, which can be tripled
if the infringement is deemed willful, or be required to discontinue or significantly delay development, marketing, selling and
licensing of the Company’s affected products and intellectual property rights.
NOTE
9 – EQUITY TRANSACTIONS
The
Company has 37,503,000,000 common shares authorized with a par value of $ 0.001 per share.
The
Company has 10,000,000 preferred shares authorized with a par value of $ 0.001 per share.
At
inception, the Company issued 1,093,837,500 shares of common stock for total cash proceeds of $52,500.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
9 – EQUITY TRANSACTIONS
On
July 18, 2013, the Company designated, from the 10,000,000 authorized shares of preferred stock, 6,000,000 shares of Series “A”
Preferred Stock. The Series “A” Preferred Stock has voting rights of 100 votes per share and votes with common shares
as a single class.
On
July 18, 2013, the Company granted 6,000,000 Series “A” Preferred shares and 82,767,038 common shares for the intellectual
property The common and preferred shares were valued at a total of $123,973.
On
July 19, 2013, our new officer/director agreed to cancel 500,255,434 common shares and returned them to treasury. Certain other
shareholders also agreed to cancel 262,521,000 common shares.
On
September 5, 2013, the Company increased the authorized common shares from 90,000,000 to 37,503,000,000. Correspondingly, the
Company affirmed a forward split of 416.7 for 1 in which each shareholder was issued 416.7 common shares for each share held.
All share and per share date included in these financial statements has been retrospectively adjusted to account for the stock
split.
On
October 29, 2013, the Company granted 250,000 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one
common stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs can is below.
On
December 11, 2013, the Company granted 250,000 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one
common stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs can is below.
On
March 10, 2014, the Company issued 83,334 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.50 and a one year term. The value of the warrants was derived by using the Black-Scholes
valuation model. A summary of the valuation inputs can is below.
The
following is a summary of the inputs used to determine the value of the warrants using the Black-Scholes option pricing model.
| Date | |
October
29, 2013 | |
December
11, 2013 | |
March
10, 2014 |
| Warrants | |
| 250,000 | | |
| 250,000 | | |
| 83,334 | |
| Stock
price on grant date | |
$ | 0.30 | | |
$ | 0.02 | | |
$ | 0.02 | |
| Exercise
price | |
$ | 0.50 | | |
$ | 0.50 | | |
$ | 0.50 | |
| Expected
life | |
| 1
year | | |
| 1
year | | |
| 1
year | |
| Volatility | |
| 147 | % | |
| 64 | % | |
| 65 | % |
| Risk-free
rate | |
| 0.12 | % | |
| 0.11 | % | |
| 0.13 | % |
| Calculated
value | |
$ | 10,473 | | |
$ | 0 | | |
$ | 0 | |
| Fair
value allocation of proceeds | |
$ | 7,381 | | |
$ | 0 | | |
$ | 0 | |
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
9 – EQUITY TRANSACTIONS
The
following is a summary of the warrant activity for the year ended March 31, 2014:
| |
Number
of warrants | |
Weighted
average exercise price |
| | Outstanding,
April 1, 2013 | | |
| 0 | | |
$ | 0.00 | |
| | Granted | | |
| 583,334 | | |
$ | 0.50 | |
| | Exercised | | |
| — | | |
| — | |
| | Expired | | |
| — | | |
| — | |
| | Outstanding,
March 31, 2014 | | |
| 583,334 | | |
$ | 0.50 | |
During
the year ended March 31, 2014, the Company granted 47,503,280 stock options to officers, directors, employees and consultants.
The
Company accounts for employee stock-based compensation in accordance with the guidance of ASC Topic 718: Compensation - Stock
Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized
in the financial statements based on their fair values.
The
Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants
and other non-employees. In accordance with ASC Topic 505-50, these stock options issued as compensation for services provided
to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the
option, whichever can be more clearly determined.
The
following is a summary of the inputs used to determine the value of the options using the Black-Scholes option pricing model.
| Date | |
September
6, 2013 | |
February
7, 2014 | |
March
14, 2014 |
| Options | |
| 41,003,280 | | |
| 1,500,000 | | |
| 5,000,000 | |
| Stock
price on grant date | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.30 | |
| Exercise
price | |
$ | 0.0191984 | | |
$ | 0.0191984 | | |
$ | 0.30 | |
| Expected
life | |
| 10.00 | | |
| 10.00 | | |
| 10.00 | |
| Volatility | |
| 76 | % | |
| 74 | % | |
| 74 | % |
| Risk-free
rate | |
| 2.94 | % | |
| 2.71 | % | |
| 2.65 | % |
| Calculated
value | |
$ | 663,307 | | |
$ | 23,825 | | |
$ | 1,182,141 | |
The
following is a summary of the option activity for the year ended March 31, 2014:
| |
Number
of options | |
Weighted
average exercise price |
| | Outstanding,
April 1, 2013 | | |
| 0 | | |
$ | 0.00 | |
| | Granted | | |
| 47,503,280 | | |
$ | 0.05 | |
| | Exercised | | |
| — | | |
| — | |
| | Expired | | |
| — | | |
| — | |
| | Outstanding,
March 31, 2014 | | |
| 47,503,280 | | |
$ | 0.05 | |
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
10 – INCOME TAXES
As
of March 31, 2014, the Company had net operating loss carry forwards of approximately $3,086,867 that may be available to reduce
future years’ taxable income in varying amounts through 2033. Future tax benefits which may arise as a result of these losses
have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly,
the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision
for Federal income tax consists of the following for the years ended March 31, 2014 and 2013:
| | |
2014 | |
2013 |
| Federal income tax
benefit attributable to: | |
| | | |
| | |
| Current
operations | |
$ | 1,021,679 | | |
$ | 10,659 | |
| Less:
valuation allowance | |
| (1,021,679 | ) | |
| (10,659 | ) |
| Net
provision for Federal income taxes | |
$ | 0 | | |
$ | 0 | |
The cumulative
tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of March 31,
2014 and 2013:
| | |
2014 | |
2013 |
| Deferred tax asset
attributable to: | |
| | | |
| | |
| Net
operating loss carryover | |
$ | 1,049,535 | | |
$ | 27,856 | |
| Less:
valuation allowance | |
| (1,049,535 | ) | |
| (27,856 | ) |
| Net
deferred tax asset | |
$ | 0 | | |
$ | 0 | |
Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $3,086,867
for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating
loss carry forwards may be limited as to use in future years.
NOTE
11 – LIQUIDITY AND GOING CONCERN
The
Company has a working capital deficit, has not yet received revenues from sales of products or services, and has incurred losses
since inception. These factors create substantial doubt about the Company’s ability to continue as a going concern. The
financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common
stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its
equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no
assurance the Company will be successful in these efforts.
RICH
PHARMACEUTICALS, INC.
(FORMERLY
NEPIA, INC.)
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2014
NOTE
12 – SUBSEQUENT EVENTS
The
Company amended a consulting agreement on May 7, 2014, to grant 2,500,000 shares to a consultant for work performed through March
31, 2014. The shares were valued on the grant date at $300,000 and that amount has been accrued as of March 31, 2014.
The
Company signed subscription agreements with four investors on June 16, 2014 to grant 1,469,000 shares of common stock in exchange
for the stock deposits totaling $147,050.
On
April 18, 2014, the Company issued a convertible note payable in the amount of $53,000. The note bears 8% interest and is due
on January 14, 2015. The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied
by the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading
day period ending on the latest complete trading day prior to the conversion date.
On
May 21, 2014, the Company issued a convertible note payable in the amount of $42,500. The note bears 8% interest and is due on
February 23, 2015. The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied
by the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading
day period ending on the latest complete trading day prior to the conversion date.
On
July 1, 2014, the Company issued 1,000,000 shares to its outside legal counsel for payment against past and future invoices for
services provided.
In
accordance with ASC 855-10, the Company has analyzed its operations subsequent to March 31,
2014 to the date these financial statements were issued, and has determined that it does not have any material subsequent events
to disclose in these financial statements other than the events described above.
PART
II - INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item.
13 Other Expenses Of Issuance And Distribution.
| Securities
and Exchange Commission registration fee | |
$ | 29.05 | |
| Federal Taxes | |
$ | 0 | |
| State Taxes and Fees | |
$ | 0 | |
| Transfer Agent Fees | |
$ | 500 | |
| Accounting fees and expenses | |
$ | 5,000 | |
| Legal fees and expense | |
$ | 15,000 | |
| Blue Sky fees and expenses | |
$ | 0 | |
| Miscellaneous | |
$ | 0 | |
| Total | |
$ | 20,529.05 | |
All
amounts are estimates other than the Commission’s registration fee and Legal fees and expenses. The Company is responsible
for paying these fees.
Item.
14 Indemnification of Directors And Officers.
Nevada
Revised Statute 78.037 permits a corporation to eliminate or limit the personal liability of a director or officer to the corporation
or its stockholders for damages relating to breach of fiduciary duty as a director or officer, but such a provision must not eliminate
or limit the liability of a director or officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law or (b) the payment of distributions in violation of Nevada Revised Statute 78.300.
Nevada
Revised Statutes 78.7502 provides as follows with respect to indemnification of directors, officers, employees and agents:
| |
(a) |
We
may indemnify any person who was or is a party or is threatened to be made a party to any action, except an action by us,
by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving as a director, officer,
employee or agent of any other person at our request, against expenses actually and reasonably incurred by him in connection
with the action, suit or proceeding if he: (i) is not liable for breach of his fiduciary duties as a director or officer pursuant
to Nevada Revised Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not
opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. |
| |
(b) |
We
may indemnify any person who was or is a party or is threatened to be made a party to any action by us, by reason of the fact
that he is or was our director, officer, employee or agent, or is or was serving as a director, officer, employee or agent
of any other person at our request, against expenses actually and reasonably incurred by him in connection with the defense
or settlement of the action or suit if he: (i) is not liable for breach of his fiduciary duties pursuant to Nevada Revised
Statutes 78.138; and (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to our
best interest. We may not indemnify him for any claim, issue or matter as to which he has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to us or for amounts paid in settlement to us, unless
and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines
upon application that in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper. |
| |
(c) |
To
the extent that our director, officer, employee or agent has been successful on the merits or otherwise in defense of any
action, suit or proceeding, or in defense of any claim, issue or matter therein, we are required to indemnify him against
expenses, including attorneys’ fees actually and reasonably incurred by him in connection with the defense. |
Our
Articles of Incorporation and Bylaws provide for elimination of any liability of our directors and officers and indemnity of our
directors and officers to the fullest extent permitted by Nevada law.
The
above-described provisions relating to the exclusion of liability and indemnification of directors and officers are sufficiently
broad to permit the indemnification of such persons in certain circumstances against liabilities arising under the Securities
Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors and officers
and to persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Item.
15 Recent Sales of Unregistered Securities.
Set
forth below is information regarding securities sold by us within the past three years that were not registered under the Securities
Act:
On
May 6, 2015, the Company issued a Convertible Promissory Note Payable (the “Note”) in the amount of $10,500 to Vis
Veres Group, Inc. The Note bears 8% interest and is due on nine months after the date of issuance.
The Note becomes convertible 180 days after the date of the Note. The principal amount of the Note and any accrued interest can
then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the
average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest
complete trading day prior to the conversion date. The Note also contains certain representations, warranties, covenants
and events of default, and increases in the amount of the principal and interest rates under the Note in the event of such defaults.
The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and
sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by
us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no
subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations;
and (e) the negotiations for the issuance of the securities took place directly between the investor and the Company.
On
May 6, 2015, the Company entered into a Securities Purchase Agreement with LG Capital Funding LLC (“LG”) providing
for the purchase of two Convertible Promissory Notes in the in the aggregate principal amount of $137,800, with the first note
being in the amount of $68,900 and the second note being in the amount of $68,900 (the “Note” or “Notes”).
The Notes contain a 6% original issue discount such that the purchase price of each Note is $65,000. The first Note was funded
on execution of the Note. The second Note shall initially be paid for by the issuance of an offsetting $65,000 secured note issued
by LG to the Company. The funding of the second Note is subject to certain conditions as described in the second Note. The Notes
bear interest at the rate of 8% per annum; are due and payable on May 5, 2016; and may be converted by LG at any time after 180
days of the date of issuance into shares of Company common stock at a conversion price equal to 58% of the market price (as determined
in the Notes) calculated at the time of conversion. The Notes also contain certain representations, warranties, covenants and
events of default, and increases in the amount of the principal and interest rates under the Notes in the event of such defaults.
The issuance of the Notes was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and
sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient;
(c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not
broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the
individual and the Company; and (f) the recipient of the Notes was an accredited investor.
On
April 9, 2015, the Company issued 32,545,455 shares of Company common stock to satisfy the conversion of $14,320 of a previously
issued convertible note payable with KBM Worldwide Inc. The issuance of shares was made in reliance on the exemption provided
by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
April 8, 2015, the Company issued 45,454,545 shares of Company common stock to satisfy the conversion of $20,000.00 of a previously
issued convertible note payable with KBM Worldwide Inc. The issuance of shares was made in reliance on the exemption provided
by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
April 8, 2015, the Company issued 45,356,111 shares of Company common stock to satisfy the conversion of $15,307.69 of a previously
issued convertible note payable with Auctus Private Equity Fund LLC. The issuance of shares was made in reliance on the exemption
provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one
investor who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by
us; (d) the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible
note payable which was negotiated directly between the investor and the Company.
On
April 7, 2015, the Company issued 20,964,361 shares of Company common stock to satisfy the conversion of $10,000 of a previously
issued convertible note payable with Typenex Co-Investment LLC. The issuance of shares was made in reliance on the exemption provided
by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
April 2, 2015, the Company issued 41,111,111 shares of Company common stock to satisfy the conversion of $16,650.00 of a previously
issued convertible note payable with Auctus Private Equity Fund LLC. . The issuance of shares was made in reliance on the exemption
provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one
investor who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by
us; (d) the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible
note payable which was negotiated directly between the investor and the Company.
On
March 30, 2015, the Company issued 18,181,818 shares of Company common stock to satisfy the conversion of $10,000 of a previously
issued convertible note payable with Typenex Co-Investment LLC. The issuance of shares was made in reliance on the exemption provided
by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
March 31, 2015, the Company completed a financing pursuant to a Securities Purchase Agreement (the “SPA”) and two
Convertible Promissory Notes in the aggregate principal amount of $59,360 (the “Notes”) with Adar Bays, LLC (“Adar
Bays”). The Notes bear interest at the rate of 8% and must be repaid on or before November 26, 2015 and March 26, 2016.
The Notes may be converted by Adar Bays at any time after the date of issuance into shares of Company common stock at a conversion
price equal to 58% of the market price (as determined in the Notes). One of the Notes is secured by a collateralized secured promissory
note issued by Adar Bays to the Company. The SPA and Notes also contain certain representations, warranties, covenants and events
of default, and increases in the amount of the principal and interest rates under the Notes in the event of such defaults. The
issuance of the Notes was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale
of securities not involving a public offering, and Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”). The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities
was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not
involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings
of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for
the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the Note was
an accredited investor.
On
March 26, 2015, the Company issued 70,000,000 shares of Company common stock to satisfy the conversion of $25,200 of a convertible
note payable with Auctus Private Equity Fund, LLC. The issuance of the shares was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
March 11, 2015, the Company completed a financing pursuant to a Securities Purchase Agreement (the “SPA”) and Convertible
Promissory Note in the original principal amount of $55,000 (the “Note”) with Auctus Private Equity Fund, LLC (“Auctus”)
pursuant to which Auctus funded $52,750 to the Company after the deduction of fees of $2,250. The Note bears interest at the rate
of 8% and must be repaid on or before December 9, 2015. The Note may be converted by Auctus at any time after 180 days of the
date of issuance into shares of Company common stock at a conversion price equal to 55% of the market price (as determined in
the Note). The SPA and Note also contain certain representations, warranties, covenants and events of default, and increases in
the amount of the principal and interest rates under the Note in the event of such defaults. The issuance of the Note was made
in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving
a public offering, and Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors:
(a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there
was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d)
the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place
directly between the individual and the Company; and (f) the recipient of the Note was an accredited investor.
On
March 10, 2015, the Company issued 47,518,166 shares of Company common stock to satisfy the conversion of $33,899.46 of a convertible
note payable with LG Capital Funding, LLC. The issuance of the shares was made in reliance on the exemption provided by Section
4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which
was negotiated directly between the investor and the Company.
On
March 5, 2015, the Company issued 121,555,062 shares of Company common stock to satisfy the conversion of $56,405.55 of a convertible
note payable with Toledo Advisors, LLC. The issuance of the shares was made in reliance on the exemption provided by Section 4(2)
of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving
a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the
following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public
offering; (b) there was only a one investor who was an accredited investor; (c) there were no subsequent or contemporaneous public
offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the issuance of
shares was pursuant to a convertible note payable which was negotiated directly between the investor and the Company.
On
March 2, 2015, the Company issued 56,000,000 shares of Company common stock to satisfy the conversion of $26,880 of a convertible
note payable with JMJ Financial. The issuance of the shares was made in reliance on the exemption provided by Section 4(2) of
the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a
public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following
factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering;
(b) there was only a one investor who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings
of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the issuance of shares was
pursuant to a convertible note payable which was negotiated directly between the investor and the Company.
On
February 26, 2015, the Company issued 105,075,000 shares of Company common stock to satisfy the conversion of $42,030 of a convertible
note payable with Vista Capital Investments, LLC. The issuance of the shares was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
February 24, 2015, the Company issued 36,643,945 shares of Company common stock to satisfy the conversion of $17,002.79 of a convertible
note payable with Toledo Advisors, LLC, and on February 25, 2015 the Company issued 20,447,291 shares of Company common stock
to satisfy the conversion of $9,487.54 of the same note payable Toledo Advisors, LLC. The issuances of the shares were made in
reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”)
for the offer and sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities
Act in issuing the securities was based upon the following factors: (a) the issuances of the securities were isolated private
transactions by us which did not involve a public offering; (b) there was only a one investor who was an accredited investor;
(c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down
into smaller denominations; and (e) the issuances of shares were pursuant to a convertible note payable which was negotiated directly
between the investor and the Company.
On
February 24, 2015, the Company issued 47,090,000 shares of Company common stock to satisfy the conversion of $22,603.20 of a convertible
note payable with JMJ Financial. The issuance of the shares was made in reliance on the exemption provided by Section 4(2) of
the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section 4(2)
of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an
isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an accredited
investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not
broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which was negotiated
directly between the investor and the Company.
On
February 23, 2015, the Company issued 36,643,945 shares of Company common stock to satisfy the conversion of $17,002.79 of a convertible
note payable with Toledo Advisors, LLC, and on February 24, 2015 the Company issued 20,447,291 shares of Company common stock
to satisfy the conversion of $9,487.54 of the same note payable Toledo Advisors, LLC. The issuances of the shares were made in
reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”)
for the offer and sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities
Act in issuing the securities was based upon the following factors: (a) the issuances of the securities were isolated private
transactions by us which did not involve a public offering; (b) there was only a one investor who was an accredited investor;
(c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down
into smaller denominations; and (e) the issuances of shares were pursuant to a convertible note payable which was negotiated directly
between the investor and the Company.
On
February 23, 2015, the Company issued 47,090,000 shares of Company common stock to satisfy the conversion of $22,603.20 of a convertible
note payable with JMJ Financial. The issuance of the shares was made in reliance on the exemption provided by Section 4(2) of
the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section 4(2)
of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an
isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an accredited
investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not
broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which was negotiated
directly between the investor and the Company.
On
February 18, 2015, the Company closed a financing pursuant to which it issued a convertible note payable (the “Note”)
in the amount of $54,000 to KBM Worldwide, Inc. The Note bears 8% interest and is due on November 9, 2015.
The Note becomes convertible 180 days after the date of the Note. The principal amount of the Note and any accrued interest can
then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the
average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest
complete trading day prior to the conversion date. The Note also contains certain representations, warranties, covenants
and events of default, and increases in the amount of the principal and interest rates under the Note in the event of such defaults.
The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and
sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by
us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no
subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations;
and (e) the negotiations for the issuance of the securities took place directly between the investor and the Company.
On
February 15, 2015, the Company issued 73,924,324 shares of Company common stock to satisfy the conversion of $35,730.09 of a convertible
note payable with LG Capital Funding LLC. The issuance of the shares was made in reliance on the exemption provided by Section
4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which
was negotiated directly between the investor and the Company.
On
February 12, 2015, the Company issued 37,356,055 shares of Company common stock to satisfy the conversion of $17,333.21 of a convertible
note payable with Toledo Advisors, LLC. The issuance of the shares was made in reliance on the exemption provided by Section 4(2)
of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note payable which
was negotiated directly between the investor and the Company.
On
February 11, 2015, the Company issued 74,750,000 shares of Company common stock to satisfy the conversion of $29,900 of a convertible
note payable with Vista Capital Investments, LLC. The issuance of the shares was made in reliance on the exemption provided by
Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible note
payable which was negotiated directly between the investor and the Company.
On
January 13, 2015, the Company and KBM Worldwide, Inc. (“KBM”) completed a financing pursuant to which the Company
issued a Convertible Promissory Note in the original principal amount of $33,000 (the “Note”), and KBM funded the
Company $30,000 after the deduction of KBM legal fees of $3,000. The Note bears 8% interest and is due on October 13, 2015.
The Note becomes convertible 180 days after the date of the Note. The principal amount of the Note and any accrued interest can
then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the
average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest
complete trading day prior to the conversion date. The Note also contains certain representations, warranties, covenants
and events of default, and increases in the amount of the principal and interest rates under the Note in the event of such defaults.
The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and
sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by
us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no
subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations;
and (e) the negotiations for the issuance of the securities took place directly between the investor and the Company.
The
Company issued the following shares of Company common stock to satisfy the conversion of a total of $62,320 of debt under convertible
notes payable to KMB Worldwide, Inc.:
| | Date | | |
| Conversion
Amount | | |
| Shares
Issued | |
| | November
19, 2014 | | |
$ | 18,120 | | |
| 2,831,250 | |
| | December
8, 2014 | | |
$ | 15,000 | | |
| 3,488,372 | |
| | December
15, 2014 | | |
$ | 12,000 | | |
| 4,285,714 | |
| | December
26, 2014 | | |
$ | 17,200 | | |
| 7,478,261 | |
The
issuances of the shares were made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and
sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuances of the securities were isolated private transactions by
us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no
subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations;
and (e) the issuances of shares was pursuant to a convertible note payable which was negotiated directly between the investor
and the Company.
On
November 7, 2014, the Company issued a Convertible Promissory Note to JSJ Investments, Inc. (“JSJ”) in the original
principal amount of $55,00 (the “Note”), pursuant to which JSJ agreed to fund the Company $53,000 after the deduction
of JSJ legal fees of $2,000. The principal amount under the Note accrues interest at the rate of 12% per annum. The Note is due
and payable on demand by JSJ at any time on or after May 6, 2015. The Note may be converted by JSJ at any time into shares of
Company common stock at a conversion price equal to a 47.5% discount to the lowest daily volume weighted average price for the
20 trading days prior to conversion. The Note may be prepaid by the Company at a premium as provided in the Note. The Note also
contains certain representations, warranties, covenants and events of default. The issuance of the Note was made in reliance on
the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering,
and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in
issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction
by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous
public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the
negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient
of the Note was an accredited investor.
On
October 7, 2014, the Company issued a convertible note payable (the “Note”) in the amount of $33,000 to KBM Worldwide,
Inc. The Note bears 8% interest and is due on July 9, 2015. The Note becomes convertible
180 days after the date of the Note. The principal amount of the Note and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three
(3) trading prices for the common stock during the ten (10) trading day period ending on the latest complete trading day prior
to the conversion date. The Note also contains certain representations, warranties, covenants and events of default, and
increases in the amount of the principal and interest rates under the Note in the event of such defaults. The issuance of the
Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities
not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing the securities was
based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve
a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no subsequent or contemporaneous
public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations
for the issuance of the securities took place directly between the investor and the Company.
On
October 6, 2014, the Company granted Ben Chang 8,000,000 bonus shares of the Company’s restricted common stock and granted
the Company’s outside legal counsel 4,000,000 shares of Company’s restricted common stock. The issuance of the shares
was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not
involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing the securities was based
upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve
a public offering; (b) there was only a one investor who was an accredited investor in each issuance; (c) there were no subsequent
or contemporaneous public offerings of the securities by us; and (d) the securities were not broken down into smaller denominations.
On
October 6, 2014, 2014, the Company executed an Assignment Agreement (the “Assignment Agreement”) with Richard L. Chang
Holding's, LLC (“Holdings LLC”) and Imagic LLC (“Imagic LLC”) pursuant to which Holdings LLC and Imagic
LLC exercised the option under the Memorandum of Understanding and Asset Assignment Agreement dated July 26, 2013 to assign any
and all interest it had in the indication, patents and intellectual property related to treatment of Hodgkin’s Lymphoma,
utility patent application number 61998397, entitled COMPOSITIONS AND METHODS OF USE OF PHORBOL ESTERS FOR THE TREATMENT
OF HODGKIN’S LYMPHOMA pursuant to the terms of the Assignment Agreement. In connection with the Assignment Agreement,
the Company issued 220,792,028 shares of the Company’s restricted common stock to Imagic LLC in accordance with the terms
and subject to the conditions set forth in the Assignment. Imagic LLC is owned and controlled by Ben Chang. This issuance of shares
was made in reliance on the exemptions or exclusions from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”) contained in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated under
the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon
the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public
offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities
by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the
securities took place directly between the third party and the Company; and (f) the recipient of the securities was an accredited
investor.
On
September 24, 2014, the Company entered into Securities Purchase Agreement (the “SPA”) and Convertible Promissory
Note in the original principal amount of $55,000 (the “Note”) with Auctus Private Equity Fund, LLC (“Auctus”)
pursuant to which Auctus funded $50,000 to the Company after the deduction of fees of $5,000. The Note bears interest at the rate
of 8% and must be repaid on or before June 23, 2015. The Note may be converted by Auctus at any time after 180 days of the date
of issuance into shares of Company common stock at a conversion price equal to 55% of the market price (as determined in the Note).
The SPA and Note also contain certain representations, warranties, covenants and events of default, and increases in the amount
of the principal and interest rates under the Note in the event of such defaults. The issuance of the Note was made in reliance
on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering,
and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in
issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction
by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous
public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the
negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient
of the Note was an accredited investor.
On
September 22, 2014 the Company issued 550,459 shares at $0.218 per share to satisfy the conversion of $12,000 of a $37,500 convertible
note payable, leaving a remaining principal balance owing of $25,500. The issuance of the shares was made in reliance on the exemption
provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one
investor who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by
us; (d) the securities were not broken down into smaller denominations; and (e) the issuance of shares was pursuant to a convertible
note payable which was negotiated directly between the investor and the Company.
On
September 19, 2014, the Company entered into the Master Convertible Promissory Note with Typenex Co-Investment LLC (“TCI”)
in the original principal amount of $64,500 (the “Note”), pursuant to which TCI funded $55,000 to the Company after
the Original Issue Discount of $5,000 and the deduction of TCI legal fees of $4,000. The Note may be repaid at any time during
the first 90 days in which event the interest rate shall be 0%. After 90 days, the Note has a one time interest charge of 12%
and may be repaid only upon the consent of TCI and at an amount equal to 125% of the outstanding balance. The Note is due and
payable one year after the date of issuance, and may be converted by TCI at any time after 180 days of the date of issuance into
shares of Company common stock at a conversion price equal to 60% of the market price (as determined in the Note) calculated at
the time of conversion, or 55% of the market price (as determined in the Note) if the Company’s stock price is below $.03
(as determined in the Note). The Note also provides that, with the consent of the Company, TCI may fund up to two additional Convertible
Promissory Notes in the amount of $60,500 each on terms similar to the Note. The Note also contains certain representations, warranties,
covenants and events of default, and increases in the amount of the principal and interest rates under the Note in the event of
such defaults. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act for
the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient;
(c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not
broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the
individual and the Company; and (f) the recipient of the Note was an accredited investor.
On
August 14, 2014, the Company entered into a Securities Purchase Agreement with Toledo Advisors LLC (“Toledo”) providing
for the purchase of two Convertible Promissory Notes in the in the aggregate principal amount of $116,600, with the first note
being in the amount of $58,300 and the second note being in the amount of $58,300 (the “Note” or “Notes”).
The Notes contain a 6% original issue discount such that the purchase price of each Note is $55,000. The first Note was funded
on execution of the Note. The second Note shall initially be paid for by the issuance of an offsetting $55,000 secured note issued
by Toledo to the Company. The funding of the second Note is subject to certain conditions as described in the second Note. The
Notes bear interest at the rate of 8% per annum; are due and payable on August 15, 2015; and may be converted by Toledo at any
time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 58% of the market
price (as determined in the Notes) calculated at the time of conversion. The Notes also contain certain representations, warranties,
covenants and events of default, and increases in the amount of the principal and interest rates under the Notes in the event
of such defaults. The issuance of the Notes was made in reliance on the exemption provided by Section 4(2) of the Securities Act
of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and
Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by
us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous
public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the
negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient
of the Notes was an accredited investor.
On
August 14, 2014, the Company entered into a Securities Purchase Agreement with LG Capital Funding LLC (“LG”) providing
for the purchase of two Convertible Promissory Notes in the in the aggregate principal amount of $133,560, with the first note
being in the amount of $66,780 and the second note being in the amount of $66,780 (the “Note” or “Notes”).
The Notes contain a 6% original issue discount such that the purchase price of each Note is $63,000. The first Note was funded
on execution of the Note. The second Note shall initially be paid for by the issuance of an offsetting $63,000 secured note issued
by LG to the Company. The funding of the second Note is subject to certain conditions as described in the second Note. The Notes
bear interest at the rate of 8% per annum; are due and payable on August 15, 2015; and may be converted by LG at any time after
180 days of the date of issuance into shares of Company common stock at a conversion price equal to 58% of the market price (as
determined in the Notes) calculated at the time of conversion. The Notes also contain certain representations, warranties, covenants
and events of default, and increases in the amount of the principal and interest rates under the Notes in the event of such defaults.
The issuance of the Notes was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and
sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient;
(c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not
broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the
individual and the Company; and (f) the recipient of the Notes was an accredited investor.
On
August 14, 2014, the Company entered into a Convertible Promissory Note with Vista Capital Investments, LLC (“Vista”)
in the original principal amount of $250,000 (the “Note”), pursuant to which Vista funded $55,000. The Note has a
one time interest charge of 12%; is due and payable two years after the date of issuance; and may be converted by Vista at any
time after 180 days of the date of issuance into shares of Company common stock at a conversion price equal to 60% of the market
price (as determined in the Note) calculated at the time of conversion. The Note also contains certain representations, warranties,
covenants and events of default, and increases in the amount of the principal and interest rates under the Note in the event of
such defaults. The issuance of the Note was made in reliance on the exemption provided by Section 4(2) of the Securities Act for
the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s
reliance upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance
of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient;
(c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not
broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the
individual and the Company; and (f) the recipient of the Note was
On
August 12, 2014, the Company entered into a Convertible Promissory Note with JMJ Financial (“JMJ”) in the original
principal amount of $350,000 (the “Note”), pursuant to which JMJ funded $55,000. The Note is interest free for the
first 90 days and has a one time interest charge of 12% if not repaid in the first 90 days; is due and payable two years after
the date of issuance; and may be converted by JMJ at any time after 180 days of the date of issuance into shares of Company common
stock at a conversion price equal to 60% of the market price (as determined in the Note) calculated at the time of conversion.
The Note also contains certain representations, warranties, covenants and events of default, and increases in the amount of the
principal and interest rates under the Note in the event of such defaults. The issuance of the Note was made in reliance on the
exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering,
and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(2) of the Securities Act in
issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction
by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous
public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the
negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient
of the Note was an accredited investor.
On
May 21, 2014, the Company issued a convertible note payable in the amount of $42,500. The note bears 8% interest and is due on
February 23, 2015. The loan becomes convertible 180 days after the date of the note. The loan and any accrued interest can then
be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the average
of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest complete
trading day prior to the conversion date. The issuance of the note was made in reliance on the exemption provided by Section 4(2)
of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the negotiations for the issuance of the securities took place directly
between the investor and the Company.
On
April 15, 2014, the Company issued 1,000,000 units at $0.25 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.35 and a three year term. The issuance of shares and warrants was made in reliance
on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act") for the offer
and sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by
us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no
subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations;
and (e) the negotiations for the issuance of the securities took place directly between the investor and the Company.
On
April 8, 2014, the Company issued a convertible note payable in the amount of $53,000. The note bears 8% interest and is due on
January 14, 2015. The loan becomes convertible 180 days after the date of the note. The loan and any accrued interest can then
be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the average
of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest complete
trading day prior to the conversion date. The issuance of the note was made in reliance on the exemption provided by Section 4(2)
of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance upon Section
4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities
was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor who was an
accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities
were not broken down into smaller denominations; and (e) the negotiations for the issuance of the securities took place directly
between the investor and the Company.
On
April 4, 2014, the Company issued 83,334 units at $0.30 per unit. Each unit consisted of 1 share of common stock and one common
stock warrant with an exercise price of $0.50 and a one year term. The issuance of shares and warrants was made in reliance on
the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act") for the offer
and sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities Act in issuing
the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by
us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c) there were no
subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations;
and (e) the negotiations for the issuance of the securities took place directly between the investor and the Company.
On
March 20, 2014, the Company issued a convertible promissory note in the amount of $37,500. The note is due on December 13, 2014
and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued
interest can then be converted into shares of the Company's common stock at a rate of 58% multiplied by the market price, which
is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the
latest complete trading day prior to the conversion date. During the period ended March 31, 2014, the Company has not converted
any portion of this note into shares of common stock. The issuance of the note was made in reliance on the exemption provided
by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering. The Company's reliance
upon Section 4(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the
securities was an isolated private transaction by us which did not involve a public offering; (b) there was only a one investor
who was an accredited investor; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d)
the securities were not broken down into smaller denominations; and (e) the negotiations for the issuance of the securities took
place directly between the investor and the Company.
On
March 10, 2014 the Company issued 83,334 shares of Company common stock at Thirty Cents ($.30) per share, and warrants to purchase
83,334 shares of Company common stock at Fifty Cents ($.50) per share for a one year term. The issuance of shares was made in
reliance on the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act")
for the offer and sale of securities not involving a public offering. The Company's reliance upon Section 4(2) of the Securities
Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private
transaction by us which did not involve a public offering; (b) there was only a one investor who was an accredited investor; (c)
there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down
into smaller denominations; and (e) the negotiations for the issuance of the securities took place directly between the investor
and the Company.
Effective
as of October 29, 2013, we sold 250,000 shares of our common stock, and warrants to purchase 250,000 shares of Company common
stock at fifty cents ($.50) per share for a one year term, to an accredited investor for a total purchase price of $75,000.00.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The investor
represented its intention to acquire the securities for investment only and not with a view towards distribution. The investor
was given adequate information about us to make an informed investment decision. We did not engage in any general solicitation
or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed
to the restricted stock.
Effective
as of December 11, 2013, we sold 250,000 shares of our common stock and warrants to purchase 250,000 shares of Company common
stock at fifty cents ($.50) per share for a one year term, to an accredited investor for a total purchase price of $75,000.00.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The investor
represented its intention to acquire the securities for investment only and not with a view towards distribution. The investor
was given adequate information about us to make an informed investment decision. We did not engage in any general solicitation
or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed
to the restricted stock.
On
July 18, 2013, we designated, from our 10,000,000 authorized shares of preferred stock, par value $0.001, 6,000,000 shares of
Series “A” Preferred Stock. Our Series “A” Preferred Stock has voting rights of 100 votes per share and
vote with common shares as a single class. On July 18, 2013, we entered into a Memorandum of Understanding and Asset Assignment
Agreement with Imagic, LLC dba Rich Pharmaceuticals and Richard L. Chang’s Holdings, LLC to acquire certain assets including
United States Patent No. 6,063,814 entitled “Phorbol esters as anti-neoplastic and white blood cell elevating agents”
and all related intellectual property associated with the patent. In consideration for the newly acquired assets, we agreed to
issue Imagic, LLC a total of 198,625 pre-split shares of our common stock and to issue Ben Chang 6,000,000 of our newly created
Series “A” Preferred Stock with super voting rights. These securities were issued pursuant to Section 4(2) of the
Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment
only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment
decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates
with the appropriate restrictive legend affixed to the restricted stock.
Item
16 Exhibits and Financial Statement Schedules.
*
Filed herein.
| |
(1) |
Incorporated
herein by reference to the registration statement on Form S-1 filed with the SEC on April 25, 2011. |
| |
(2) |
Incorporated
herein by reference to the current report on Form 8-K filed with the SEC on July 24, 2013. |
| |
(3) |
Incorporated
herein by reference to the current report on Form 8-K filed with the SEC on August 27, 2013. |
|
| |
(4) |
Incorporated
herein by reference to the current report on Form 8-K filed with the SEC on October 2, 2013. |
|
Item
17. Undertakings.
Undertaking
Required by Item 512 of Regulation S-K.
| |
(a) |
The
undersigned registrant hereby undertakes: |
| |
(1) |
to
file, during any period in which it offers or sells securities are being made, a post-effective amendment to this Registration
Statement to: |
| |
(i) |
include
any prospectus required by Section 10(a)(3) of the Securities Act; |
| |
(ii) |
reflect
in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
and |
| |
(iii) |
include
any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
of this rule do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant
to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the registration statement; and paragraphs
(a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3
and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed
with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b)
that is not part of the registration statement. |
Provided
further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed
securities on Form S-1 or Form S-3, and the information required to be included in a post-effective amendment is provided pursuant
to item 1100(c) of Regulation AB.
| |
(2) |
For
determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the initial bona fide offering. |
| |
(3) |
File
a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. |
| |
(b) |
For
determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities,
the registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold
to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such purchaser: |
| |
(1) |
Any
preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424; |
| |
(2) |
Any
free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the
registrant; |
| |
(3) |
The
portion of any other free writing prospectus relating to the offering containing material information about the registrant
or its securities provided by or on behalf of the registrant; and |
| |
(4) |
Any
other communication that is an offer in the offering made by the registrant to the purchaser. |
| |
(c) |
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| |
(d) |
That,
for the purpose of determining liability under the Securities Act to any purchaser: |
If
the registrant is relying on Rule 430B:
| |
(i) |
Each
prospectus filed by the registrant pursuant to 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and |
| |
(ii) |
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as
of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such effective date; or |
If
the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or prospectus that is part of a registration statement or
made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part
of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
If
the registrant is relying on Rule 430A:
| |
(i) |
For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective. |
| |
(ii) |
For
the purpose of determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Beverly Hills, California on May 21, 2015.
| |
|
RICH
PHARMACEUTICALS, INC. |
| |
|
|
| |
By: |
/s/
Ben Chang |
| |
|
Ben
Chang |
| |
|
Chief
Executive Officer, Chief Financial Officer and Chairman of the Board |
| |
|
(Principal
Executive Officer and Principal Financial and Accounting Officer) |
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
| Name |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Ben Chang |
|
Chief
Executive Officer, Chief Financial Officer and Chairman of the Board |
|
May
21, 2015 |
| Ben
Chang |
|
(Principal
Executive Officer and Principal Financial and Accounting Officer) |
|
|
| |
|
|
|
|
| /s/
David Chou |
|
Director |
|
May
21, 2015 |
| David
Chou |
|
|
|
|
| |
|
|
|
|
STEVEN
JAMES DAVIS
A
Professional Corporation
1042
N. El Camino Real, B261
Encinitas,
California 92024
May
19, 2015
Rich
Pharmaceuticals, Inc.
9595 Wilshire Blvd., Suite 900
Beverly Hills, California 90212
Gentlemen:
You
have requested our opinion as counsel for Rich Pharmaceuticals, Inc., a Nevada corporation (the “Company”),
in connection with the registration statement on Form S-1 (the “Registration Statement”), under the Securities
Act of 1933 (the “Act”), filed by the Company with the Securities and Exchange Commission. The Registration
Statement relates to an offering of 500,000,000 shares of the Company’s common stock, par value $0.001 per share (the “Shares”),
that are to be issued to LG Capital Funding, LLC (the “Shareholder”) pursuant to that certain investment agreement
(the “Investment Agreement”) dated May 19, 2015 (the “Offering”) and resold pursuant to
this Registration Statement.
In
order to render our opinion, we have examined the following documents identified and authenticated to our satisfaction:
| |
(a) |
the Registration
Statement which includes the prospectus; |
| |
(b) |
the Certificate
of Officers of the Company dated May 18, 2015 (the “Officer’s Certificate”); |
| |
(c) |
a Board
of Directors Consent Action dated May 18, 2015 approving the Investment Agreement and filing of the S-1 Registration Statement
to register the shares under the Offering; |
| |
(d) |
the executed
Investment Agreement; |
| |
(e) |
the Articles
of Incorporation of the Company dated August 9, 2010 and the Certificate of Change dated September 17, 2013; |
| |
(f) |
the Articles
of Merger of the Company dated August 23, 2013; and |
| |
(g) |
a Good Standing
Certificate from the Secretary of State of Nevada as of May 18, 2015. |
In
each instance we have relied upon the content of each of the documents set forth above, and have relied upon the content of the
Officer’s Certificate. In reliance thereon, and based upon our review of the foregoing, we are of the opinion that,
if, as and when the Shares are issued and sold (and proper and sufficient consideration therefor received and appropriate stock
certificates therefor executed and delivered) pursuant to the Investment Agreement, such Shares will be validly issued, fully
paid and non-assessable.
We
express no opinion on securities issued pursuant to any other registration statement of the Company. This opinion letter is rendered
as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments
which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion
is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other
matters relating to the Company, the Investment Agreement, or the Shares issuable under the Investment Agreement. We advise you
that we are licensed to practice law in the States of California, Minnesota and the District of Columbia.
We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under
the caption “Experts” in the Registration Statement. In so doing, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Act and the rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
Very
truly yours,
Steven
James Davis, A Professional Corporation
By:
/s/ Steven J. Davis
Steven
J. Davis, President
INVESTMENT
AGREEMENT
This
INVESTMENT AGREEMENT (the "Agreement"), dated as of May 19, 201 5 (the "Execution Date"), is
entered into by and between Rich Pharmaceuticals, Inc., a Nevada corporation (the "Company"), with its principal
executive office at 9595 Wilshire Blvd, Suite 900, Beverly Hills, CA 90212, and LG Capital Funding, LLC, a New York limited liability
company (the "Investor"), with its principal executive office at 1218 Union Street, Suite #2, Brooklyn, NY 1 1225.
RECITALS:
WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained herein, the Investor shall purchase up to 500,000,000
shares of the Company's common stock, par value $0.001 per share (the "Common Stock");
NOW
THEREFORE, in consideration of the foregoing recitals, which shall be considered an integral part of this Agreement, the covenants
and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Investor hereby agree as follows:
SECTION
I.
DEFINITIONS
For
all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall
be equally applicable to the singular and plural forms of such defined terms.
"1933
Act" shall have the meaning set forth in the recitals.
"1934
Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations
of the SEC thereunder, all as the same will then be in effect.
"Affiliate"
shall have the meaning set forth in Section 5.7.
"Agreement"
shall have the meaning set forth in the preamble.
"By-laws"
shall have the meaning set forth in Section 4.3
"Certificate
of incorporation" shall have the meaning set forth in Section 4.3.
"Closing"
shall have the meaning set forth in Section 2.4.
"Closing
Date" shall have the meaning set faith in Section 2.4.
"Common
Stock" shall have the meaning set forth in the recitals.
"Control"
or "Controls" shall have the meaning set forth in Section 5.7.
"Drawdown"
shall have the meaning set forth in Section 2.2.
"Drawdown
Amount" shall have the meaning set forth in Section 2.2.
"Drawdown
Notice" shall mean a written notice sent to the Investor by the Company stating the Drawdown Amount in U.S. dollars that
the Company intends to sell to the Investor pursuant to the terms of the Agreement and stating the current number of Shares issued
and outstanding on such date.
"Drawdown
Notice Date" shall mean the Trading Day, as set forth below, on which the Investor receives a Drawdown Notice, however
a Drawdown Notice shall be deemed delivered on (a) the Trading Day it is received by facsimile or otherwise by the Investor if
such notice is received prior to 12:00 pm Eastern Time, or (b) the immediately succeeding Trading Day if it is received by facsimile
or otherwise after 12:00 pm Eastern Time on a Trading Day. No Drawdown Notice may be deemed delivered on a day that is not a Trading
Day.
"Effective
Date" shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Securities.
"Environmental
Laws" shall have the meaning set forth in Section 4.13.
"Execution
Date" shall have the meaning set forth in the preamble.
"Financing
Agreements" shall mean this Agreement between the Company and the Investor as of the date herewith.
"Indemnified
Liabilities" shall have the meaning set forth in Section l0.
"Indemnitees"
shall have the meaning set forth in Section 10.
"Indemnitor"
shall have the meaning set forth in Section 10.
"Ineffective
Period'' shall mean any period of time that the Registration Statement or any supplemental registration statement becomes
ineffective or unavailable for use for the sale or resale, as applicable, of any or all of the Registerable Securities for any
reason (or in the event the prospectus under either of the above is not current and deliverable).
"Investor"
shall have the meaning set faith in the preamble.
"Market
Price" shall mean the lesser of: (1) the lowest traded price of the Company Common Stock during the Pricing Period or
(2) closing bid price on the day before the Drawdown Notice is submitted.
"Material
Adverse Effect" shall have the meaning set forth in Section 4.1.
"Maximum
Common Stock Issuance" shall have the meaning set forth in Section 2.6.
"Open
Period" shall mean the period beginning on and including the Trading Day immediately following the Effective Date and
ending on the earlier to occur of (a) the date which is thirty-six (36) months from the Effective Date; or (b) termination of
the Agreement in accordance with Section 8.
"PCAOB"
shall have the meaning set forth in Section 4.6.
"Pricing
Period" shall mean ten (10) consecutive Trading Days prior to the Drawdown Notice Date.
"Principal
Market" shall mean the New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the OTC Markets or the OTC Bulletin Board, whichever is the principal market on which the Common
Stock is listed.
"Prospectus"
shall mean the prospectus, preliminary prospectus and supplemental prospectus used in connection with the Registration Statement.
"Purchase
Amount" shall mean the total amount being paid by the Investor on a particular Closing Date to purchase the Securities.
"Purchase
Price" shall mean seventy percent (70%) of the Market Price.
"Registerable
Securities" means (i) the shares of Common Stock issued or issuable pursuant to this Agreement, and (ii) any shares of
capital stock issued or issuable with respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, which have not been (x) included in the Registration Statement that
has been declared effective by the SEC, or (y) sold under circumstances meeting all of the applicable conditions of Rule 1 44
(or any similar provision then in force) under the 1933 Act.
"Registration
Statement" means the registration statement of the Company filed under the 1933 Act covering the Securities issuable
hereunder.
"Related
Party" shall have the meaning set forth in Section 5.7.
"Resolution"
shall have the meaning set forth in Section 7.5.
"SEC"
shall mean the U.S. Securities and Exchange Commission.
"SEC
Documents" shall have the meaning set forth in Section 4.6
"Securities"
shall mean the Shares issued pursuant to the terms of the Agreement.
"Shares"
shall mean the shares of the Company's Common Stock.
"Subsidiaries"
shall have the meaning set forth in Section 4.1.
"Trading
Day" shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30
am until 4:00 pm.
SECTION
II
PURCHASE
AND SALE OF COMMON STOCK
2.1
PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions set forth herein, the Company shall issue and sell
to the Investor, and the Investor shall purchase from the Company, five hundred thousand shares of the Common Stock of the Company.
2.2
DELIVERY OF DRAWDOWN NOTICES. Subject to the terms and conditions of the Financing Agreements, and from time to time during
the Open Period, but no more than once every ten trading (10) days, the Company may, in its sole discretion, deliver a Drawdown
Notice to the Investor which states the dollar amount (designated in U.S. Dollars), which the Company intends to sell to the Investor
on a Closing Date (the ''Drawdown"). The Drawdown Notice shall be in the form attached hereto as Exhibit A and incorporated
herein by reference. The maximum amount that the Company shall be entitled to Drawdown to the Investor (the "Drawdown Amount")
shall be two hundred percent (200%) of average daily trading volume (U.S. market only) of the Common Stock during the ten (10)
days preceding the Drawdown Notice, so long as such amount does not render the Investor a holder of more than 4.99% of the outstanding
Shares of the Company.
2.3
CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the contrary in this Agreement, the
Company shall not be entitled to deliver a Drawdown Notice and the Investor shall not be obligated to purchase any Shares at a
Closing unless each of the following conditions are satisfied:
| I. | a
Registration Statement shall have been declared effective and shall remain effective
and available for the resale of all the Registerable Securities at all times until the
Closing with respect to the subject Drawdown Notice; |
| II. | at
all times during the period beginning on the related Drawdown Notice Date and ending
on and including the related Closing Date, the Common Stock shall have been listed or
quoted for trading on the Principal Market and shall not have been suspended from trading
thereon for a period of two (2) consecutive Trading Days du ring the Open Period and
the Company shall not have been notified of any pending or threatened proceeding or other
action to suspend the trading of the Com mon Stock; |
| III. | the
Company has complied in all respects with its obligations and is otherwise not in breach
of or in default under this Agreement or any other agreement executed in connection herewith
which has not been cured prior to delivery of the Investor's Drawdown Notice Date; |
| IV. | no
injunction shall have been issued and remain in force, or action commenced by a govern
mental authority which has not been stayed or abandoned, prohibiting the purchase or
the issuance of the Securities; and |
| V. | the
issuance of the Securities will not violate any stockholder approval requirements of
the Principal Market. |
If
any of the events described in clauses (i) through (v) above occurs during a Pricing Period, then the Investor shall have no obligation
to purchase the Drawdown Amount of Common Stock set forth in the applicable Drawdown Notice.
2.4
MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of the conditions set forth in Sections 2.6, 7
and 8 of this Agreement, the closing of the purchase of the Securities by the Investor (a "Closing") shall occur on
the date (each a "Closing Date"), provided that, the Company has delivered to the Investor pursuant to this Agreement,
certificates representing the Securities to be issued to the Investor on such date and registered in the name of the Investor
(the "Certificate"), together with any supporting documentation reasonably necessary to allow the Certificate
to be cleared for trading prior to 12:00 pm Eastern Time on such date. If the Certificate is delivered for trading after 12:00
pm Eastern Time on a Trading Day, the Closing shall occur on the next Trading Day. If the Investor notifies the Company of a deficiency
in delivery within four business days of receiving such delivery, a Closing will be delayed by single consecutive Trading
Days until such deficiency is cured. If, after the expiration of the four business day period, the Investor is notified of a deficiency
in the delivery and/or the need of additional documentation to allow the Certificate to be cleared for trading, upon notification
from the Investor of the deficiency and/or necessary additional documentation, the Company agrees to use its commercially reasonable
efforts to ensure that such deficiency is cured and all additional documentation is delivered to the Investor. On the Closing
Date, the Investor shall deliver to the Company the Purchase Price to be paid for such Securities. In lieu of delivering physical
certificates representing the Securities and provided that the Company's transfer agent then is participating in The Depository
Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the
Investor, the Company shall use all commercially reasonable efforts to cause its transfer agent to electronically transmit the
Securities by crediting the account of the Investor's prime broker (as specified by the Investor within a time reasonably in advance
of the Investor's Drawdown Notice) with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.
2.5
OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained herein to the contrary, if during the Open Period
the Company becomes listed on an exchange that limits the number of Shares that may be issued without stockholder approval, then
the number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the Shares that
may be issuable without stockholder approval (the "Maximum Common Stock Issuance"). If such issuance of Shares
could cause a delisting on the Principal Market, then the Maximum Common Stock Issuance shall first be approved by the Company's
stockholders in accordance with applicable law and the Certificate of Incorporation and By-laws of the Company. The parties understand
and agree that the Company's failure to seek or obtain such stockholder approval shall in no way adversely affect the validity
and due authorization of the issuance and sale of Securities or the Investor's obligation in accordance with the terms and conditions
hereof to purchase a number of Shares in the aggregate up to the Maximum Common Stock Issuance limitation, and that such approval
pertains only to the applicability of the Maximum Common Stock Issuance limitation provided in this Section 2.5.
2.6
LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor
be entitled to purchase that number of Shares, which when added to the sum of the number of Shares beneficially owned (as such
term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 4.99% of the number of Shares
outstanding on the Closing Date, as determined in accordance with Rule 13d-l(j) of the 1934 Act.
SECTION
III
INVESTOR'S
REPRESENTATIONS, WARRANTIES AND COVENANTS
The
Investor represents and warrants to the Company, and covenants, that:
3.1
SOPHISTICATED INVESTOR. The Investor has, by reason of its business and financial experience, such knowledge, sophistication
and experience in financial and business matters and in making investment decisions of this type that it is capable of (a) evaluating
the merits and risks of an investment in the Securities and making an informed investment decision; (b) protecting its own interest;
and (c) bearing the economic risk of such investment for an indefinite period of time.
3.2
AUTHORIZATION: ENFORCEMENT. This Agreement has been duly and validly authorized, executed and delivered on behalf of the
Investor and is a valid and binding agreement of the Investor enforceable against the Investor in accordance with its terms, subject
as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
3.3
SECTION 9 OF THE 1934 ACT. During the term of this Agreement, the Investor will comply with the provisions of Section 9
of the 1934 Act, and the rules promulgated thereunder, with respect to transactions involving the Common Stock. The Investor agrees
not to sell the Company's stock short or otherwise engage in hedging transactions regarding the stock, either directly or indirectly
through its affiliates, principals or advisors during the term of this Agreement.
3.4
ACCREDITED INVESTOR. Investor is an "Accredited Investor" as that term is defined in Rule 501(a) of Regulation
D of the 1933 Act.
3.5
NO CONFLICTS. The execution, delivery and performance of the Financing Agreements by the Investor and the consummation
by the Investor of the transactions contemplated hereby and thereby will not result in a violation of Partnership Agreement or
other organizational documents of the Investor.
3.6
OPPORTUNITY TO DISCUSS. The Investor has received all materials relating to the Company's business, finance and operations
which it has requested. The Investor has had an opportunity to discuss the business, management and financial affairs of the Company
with the Company's management
3.7
INVESTMENT PURPOSES. The Investor is purchasing the Securities for its own account for investment purposes and not with
a view towards distribution and agrees to resell or otherwise dispose of the Securities solely in accordance with the registration
provisions of the 1933 Act (or pursuant to an exemption from such registration provisions).
3.8
NO REGISTRATION AS A DEALER. The Investor is not and will not be required to be registered as a "dealer" under
the 1934 Act, either as a result of its execution and performance of its obligations under this Agreement or otherwise.
3.9
ORGANIZATION: GOOD STANDING. The Investor is a Delaware limited liability company, duly organized, validly existing and
in good standing in the States of Delaware and New York.
3.10
TAX LIABILITIES. The Investor understands that it is liable for its own tax liabilities.
3.11
REGULATION M. The Investor will comply with Regulation M under the 1934 Act, if applicable.
3.12
NO SHORT SALES. No short sales shall be permitted by the Investor or its affiliates during the period commencing on the
Execution Date and continuing through the termination of this Agreement.
3.13
ACKNOWLEDGEMENT OF RISK. The Investor agrees, acknowledges and understands that its investment in the Securities involves
a significant degree of risk, including, without limitation that: (a) the Company is a development stage business and may require
substantial funds; (b) an investment in the Company is highly speculative and only persons who can afford the loss of their entire
investment should consider investing in the Company and the Securities; (c) the Investor may not be able to liquidate its investment;
(d) transferability of the Securities is extremely limited; and (e) in the event of a disposition of the Securities, the Investor
can sustain the loss of its entire investment. The Investor has considered carefully and understands the risks associated with
an investment in the Securities.
3.14
RELIANCE ON REPRESENTATIONS. The Investor agrees, acknowledges and understands that the Company and its counsel are entitled
to rely on the representations, warranties and covenants made by the Investor herein. The Investor further represents and warrants
that this Agreement does not contain any untrue statement or a material fact or omit any material fact concerning the Investor
and that the Investor Questionnaire accompanying this Agreement in the form attached hereto as Exhibit B does not contain
any untrue statement or a material fact or on it any material fact concerning the
Investor.
SECTION
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as set forth in the Schedules attached hereto, or as disclosed in the Company's SEC Documents, the Company represents and warrants
to the Investor on the date of this Agreement that:
4.1
ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized and validly existing in good standing under
the laws of the State of Nevada, and has the requisite corporate power and authorization to own its properties and to carry on
its business as now being conducted. Both the Company and the companies it owns or controls ("Subsidiaries")
are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary. As used in this Agreement, "Material Adverse Effect"
means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, an ad verse effect
on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be
entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Financing
Agreements; provided, however, that none of the following, individually or in the aggregate, shall be taken into
account in determining whether a Material Adverse Effect has occurred or insofar as reasonably can be foreseen would likely occur:
(a) changes in conditions in the U.S. or global capital, credit or financial markets generally, including changes in the availability
of capital or currency exchange rates; (b) any effect of the announcement of, or the consummation of the transactions contemplated
by, this Agreement and the other Financing Agreements on the Company's relationships, contractual or otherwise, with customers,
suppliers, vendors, bank lenders, strategic venture partners or employees; and (c) the receipt of any notice that the Common Stock
may be ineligible to continue listing or quotation on the Trading Market, other than a final and non-appealable notice that the
listing or quotation of the Common Stock on the Trading Market shall be terminated on a date certain.
4.2
AUTHORIZATION: INSTRUMENTS. ENFORCEMENT: COMPLIANCE WITH OTHER
i. The Company has the requisite corporate power and authority
to enter into and perform the Financing Agreements, and to issue the Securities in accordance with the terms hereof and thereof.
ii. The execution and delivery of the Financing Agreements by
the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the issuance
of the Securities pursuant to this Agreement, have been duly and validly authorized by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board of Directors, or its stockholders
iii. The Financing Agreements have been duly and validly executed
and delivered by the Company.
iv. The Financing Agreements constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of creditors' rights and remedies.
4.3
CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of 37,503,000,000 shares of the Common
Stock of which, as of May 9, 2015, 1,732,515,540 shares are issued and outstanding, and 6,000,000 shares of preferred stock are
issued and outstanding. To the knowledge of the executive officers of the Company, all of such outstanding shares have been, or
upon issuance will be, validly issued and are fully paid and non-assessable.
Except
as disclosed in the Company's SEC Documents or as otherwise set forth on Schedule 4.3:
i. no shares of the Company's capital stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;
ii. there are no outstanding debt securities;
iii. there are no outstanding shares of capital stock, options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capita l
stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any
of its Subsidiaries;
iv. there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act;
v. there are no outstanding securities of the Company or any
of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or
any of its Subsidiaries;
vi. there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement;
vii. the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; and
viii. there is no dispute as to the classification of any shares
of the Company's capital stock.
The
Investor has had access through EDGAR to, true and correct copies of the Company's Second Amended and Restated Certificate of
Incorporation, as in effect on the date hereof (the "Certificate of Incorporation"), and the Company's Amended and Restated
By-laws, as in effect on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable
for Common Stock and the material rights of the holders thereof in respect thereto.
4.4
ISSUANCE OF SECURITIES. The Company has reserved 500,000,000 Shares for issuance pursuant to the Financing Agreements,
which have been duly authorized and reserved (subject to adjustment pursuant to the Company's covenant set forth in Section 5.5
below) pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Securities, will be validly issued, fully
paid for and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. I n the event the
Company cannot register a sufficient number of Securities for issuance pursuant to this Agreement, the Company will use its commercially
reasonable efforts to authorize and reserve for issuance the number of Securities required for the Company to perform its obligations
hereunder as soon as reasonably practicable.
4.5
NO CONFLICTS. The execution, delivery and performance of the Financing Agreements by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation,
any Certificate of Designations, Preferences and Rights of any outstanding series of preferred stock of the Company or the By-laws;
or (ii) conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a
material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material
agreement, contract, indenture mortgage, indebtedness or instrument to which the Company or any of its Subsidiaries is a party,
or to the Company's knowledge result in a violation of any law, rule, regulation, order, judgment or decree (including United
States federal and state securities laws and regulations and the rules and regulations of the Principal Market or principal securities
exchange or trading market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor its
Subsidiaries is in violation of any term of, or in default under, the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the Company or the By-laws or their organizational charter
or by-laws, respectively, or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order
or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations that would not individually or in the aggregate have or constitute a Material
Ad verse Effect. The business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation
of any law, statute, ordinance, rule, order or regulation of any govern mental authority or agency, regulatory or self-regulatory
agency, or court, except for possible violations the sanctions for which either individually or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities
laws of any states, to the Company's knowledge, the Company is not required to obtain any consent, authorization, permit or order
of, or make any filing or registration (with, any court, governmental authority or agency, regulatory or self-regulatory agency
or other third party in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the Financing
Agreements in accordance with the terms hereof or thereof. Except for state blue sky filings and filings required as a result
of the transactions contemplated herein pursuant to the federal securities laws or regulation, all consents, authorizations, permits,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof and are in full force and effect as of the date hereof. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company is not, and will not be,
in violation of the listing requirements of the Principal Market as in effect on the date hereof and on each of the Closing Dates
and is not aware of any facts which would reasonably lead to delisting of the Common Stock by the Principal Market in the foreseeable
future.
4.6
SEC DOCUMENTS: FINANCIAL STATEMENTS. As of the date hereof, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1 934 Act (all of the
foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, and amendments thereto, being hereinafter referred to as the "SEC Documents").
The Company has delivered to the Investor or its representatives, or they have had access through EDGAR to, true and complete
copies of the SEC Documents. As of their respective filing dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC or the time they were amended, if amended, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles, by a firm that is a member of the Public Companies
Accounting Oversight Board ("PCAOB") consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in al l material respects
the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information
provided by or on behalf of the Company to the Investor which is not included in the SEC Documents, including, without l imitation,
information referred to in Section 4.3 of this Agreement, contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any of their officers, directors, or agents have provided the Investor
with any material, nonpublic information which was not publicly disclosed prior to the date hereof and any material, nonpublic
information provided to the Investor by the Company or its Subsidiaries or any of their officers, directors, or agents prior to
any Closing Date shall be publicly disclosed by the Company prior to such Closing Date.
4.7
ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth in the SEC Documents, the Company does not intend to change the
business operations of the Company in any material way. The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge
or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings.
4.8
ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set forth in the SEC Documents, there is no material action,
sui t, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the executive officers of Company or any of its Subsidiaries, threatened against or affecting
the Company, the Common Stock or any of the Company's Subsidiaries or any of the Company's or the Company's Subsidiaries' officers
or directors in their capacities as such.
4.9
ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The Company acknowledges and agrees that the Investor is acting
solely in the capacity of an arm's length purchaser with respect to the Financing Agreements and the transactions contemplated
hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Financing Agreements and the transactions contemplated hereby and thereby
and any ad vice given by the Investor or any of its respective representatives or agents in connection with the Financing Agreements
and the transactions contemplated here by and thereby is merely incidental to the Investor's purchase of the Securities, and is
not being relied on by the Company. The Company further represents to the Investor that the Company's decision to enter into the
Financing Agreements has been based solely on the independent evaluation by the Company and its representatives.
4.10
NO UNDISCLOSED EVENTS·LIABILITIES·DEVELOPMENTS OR CIRCUMSTANCES. Except as set forth in the SEC Documents,
as of the date hereof, no event, liability, development or circumstance has occurred or exists, or to the Company's knowledge
is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business, properties, assets, prospects,
operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a
registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not
been publicly announced.
4.11
EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company or any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees
are good. No executive officer (as defined in Rule 50 I (f) of the 1933 Act) has notified the Company that such officer intends
to leave the Company's employ or otherwise terminate such officer's employment with the Company.
4.12
INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted.
Except as set forth in the SEC Documents, none of the Company's trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have expired or terminated,
or are expected to expire or terminate with in two (2) years from the date of this Agreement. Except as set forth in the SEC Documents,
the Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical
information by others and, except as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret
or other infringement; and the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
4.13
ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are, to the knowledge of the executive officers and directors
of the Company and its Subsidiaries, in compliance with any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws''); (ii) have, to the knowledge of the executive officers and directors of the Company,
received all perm its, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance, to the knowledge of the executive officers and directors of the Company, with all terms
and conditions of any such permit, license or approval where, in each of the three (3) foregoing cases, the failure to so comply
would have, individually or in the aggregate, a Material Adverse Effect
4.14
TITLE. The Company and its Subsidiaries have good and marketable title to all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in the SEC Documents or such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any of its Subsidiaries. Any real property and facilities
held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings
by the Company and its Subsidiaries.
4.15
INSURANCE. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as the executive officers of the Company reasonably believe to be prudent and customary
in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been
refused any insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
4.16
REGULATORY PERMITS. The Company and its Subsidiaries have in full force and effect all ce1tificates, approvals, authorizations
and permits from the appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies,
necessary to own, lease or operate their respective properties and assets and conduct their respective businesses, and neither
the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such
certificate, approval, authorization or permit, except for such certificates, approvals, authorizations or perm its which if not
obtained, or such revocations or modifications which would not have a Material Adverse Effect.
4.17
INTERNAL ACCOUNTING CONTROLS. Except as otherwise set forth in the SEC Documents, the Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles by a firm with membership to the PCAOB and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. The Company's executive officers have determined that the Company's internal accounting controls were effective
as of the date of this Agreement as further described in the SEC Documents.
4.18
NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate
or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company's officers has or is expected to have a Material Adverse Effect.
4.19
TAX STATUS. The Company and each of its Subsidiaries has made or filed all United States federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other govern mental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no basis for any such claim.
4.20
CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents filed at least ten (10) days prior to the date hereof and/or
except for arm 's length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from disinterested third parties and other than the grant of stock options disclosed
in the SEC Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with
the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property
to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company,
any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner, such that disclosure would be required in the SEC Documents.
4.21
DILUTIVE EFFECT. The Company understands and acknowledges that the number of Shares issuable upon purchases pursuant to
this Agreement will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the
trading price of the Common Stock declines during the period between the Effective Date and the end of the Open Period. The Company's
executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement
and recognize that they have a potential dilutive effect on the stockholders of the Company. The Board of Directors of the Company
has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in
the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set
forth in the Financing Agreements, its obligation to issue Shares upon purchases pursuant to this Agreement is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.
4.22
NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D of the 1933 Act) in connection
with the offer or sale of the Common Stock to the Investor as set forth in this Agreement.
4.23
NO BROKERS FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial advisory fees or commissions
will be payable by the Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement.
SECTION
V
COVENANTS
OF THE COMPANY
5.1
REASONABLE EFFORTS. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions
set forth in Section 7 of this Agreement.
5.2
REPORTING STATUS. Until one of the following occurs, the Company shall file all reports required to be fi led with the
SEC pursuant to the 1 934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which
would terminate its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and
the Investor has the right to sell all of the Securities without restrictions pursuant to Ru le 144 promulgated under the 1933
Act, or such other exemption, or (ii) the date on which the Investor has sold all the Securities and this Agreement has been terminated
pursuant to Section 8.
5.3
USE OF PROCEEDS. The Company will use the proceeds from the sale of the Securities (excluding amounts paid by the Company
for fees as set forth in the Financing Agreements) for general corporate and working capital purposes and acquisitions or assets,
businesses or operations or for other purposes that the board of directors, in its good faith deem to be in the best interest
of the Company.
5.4
FINANCIAL INFORMATION. During the Open Period, the Company agrees to make available to the Investor via EDGAR or other
electronic means the following documents and information on the forms set forth: (i) within five (5) Trading Days after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form
8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information
made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof
to the stockholders; and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents filed with,
and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry Regulatory
Association, unless such information is material nonpublic information.
5.5
RESERVATION OF SHARES. The Company shall take all action necessary to at all times have authorized, and reserved the amount
of Shares, included in the Company's registration statement for issuance pursuant to the Financing Agreements. In the event that
the Company determines that it does not have a sufficient number of authorized Shares to reserve and keep available for issuance
as described in this Section 5.5, the Company shall use all commercially reasonable efforts to increase the number of authorized
Shares by seeking stockholder approval for the authorization of such additional Shares.
5.6
LISTING. The Company shall promptly secure and maintain the listing of all of the Registerable Securities on the Principal
Market and each other national securities exchange and automated quotation system, if any, upon which Shares are then listed (subject
to official notice of issuance) and shall maintain, such listing of all Registerable Securities from time to time issuable under
the terms of the Financing Agreements. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Common Stock on the Principal Market (excluding suspensions of not more
than two (2) Trading Days resulting from business announcements by the Company). The Company shall promptly provide to the Investor
copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing
on such automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying
its obligations under this Section 5.6.
5.7
FILING OF FORM 8-K. On or before the date which is four (4) Trading Days after the Execution Date, the Company shall file
a Current Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the Financing Agreements in
the form required by the I 934 Act, if such filing is required.
5.8
CORPORATE EXISTENCE. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence
of the Company.
5.9
NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION: SUSPENSION OF RIGHT TO MAKE A DRAWDOWN. The Company shall promptly notify
the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in
respect of an offering of the Securities: (i) receipt of any request for additional information by the SEC or any other federal
or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements
to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of
the Securities for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening
of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement
of a material fact or om it to state any material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading; and (v) the Company's reasonable determination that
a post-effective amendment or supplement to the Registration Statement would be appropriate, and the Company shall promptly make
available to Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to Investor any
Drawdown Notice during the continuation of any of the foregoing events in this Section .10.
5.10
TRANSFER AGENT. Upon effectiveness of the Registration Statement, and for so long as the Registration Statement is effective,
following delivery of a Drawdown Notice, the Company shall deliver instructions to its transfer agent to issue Shares to the Investor
that are covered for resale by the Registration Statement free of restrictive legends.
5.11
OTC PROGRAM. If the Company is eligible for DTC's "FAST" program, it will, for a period of at least two (2) years
from the Execution Date, use its best effectors to employ as the transfer agent for the Securities a participant in the DTC's
Automated Securities Transfer Program that is eligible to deliver shares via the DWAC System.
5.12
ACKNOWLEDGEMENT OF TERMS. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering
into this Agreement of its own free will, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this
Agreement are reasonable and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review
this Agreement, advise the Company with respect to this Agreement, and represent the Company in connection with this Agreement.
SECTION
VI
CONDITIONS
OF THE COMPANY'S OBLIGATION TO SELL
The
obligation hereunder of the Company to issue and sell the Securities to the Investor is further subject to the satisfaction, at
or before each Closing Date, of each of the following conditions set forth below. These conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion.
6.1
The Investor shall have executed the Financing Agreements and delivered the same to the Company.
6.2
The Investor shall have delivered to the Company the Purchase Price for the Securities being purchased by the Investor between
the end of the Pricing Period and the Closing Date via a Drawdown Settlement Sheet (hereto attached as Exhibit C). After receipt
of confirmation of delivery and clearance for trading of such Securities to the Investor, the Investor, by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company will disburse the funds constituting the Purchase Amount.
The Investor shall have no obligation to disburse the Purchase Amount until the Company delivers the Securities pursuant to a
Drawdown Notice.
6.3
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated
by this Agreement.
SECTION
VII
FURTHER
CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE
The
obligation of the Investor hereunder to purchase Securities is subject to the satisfaction, on or before each Closing Date, of
each of the following conditions set forth below.
7.1
The Company shall have executed the Financing Agreements and delivered the same to the Investor.
7.2
The Common Stock shall be authorized for quotation on the Principal Market and trading in the Common Stock shall not have been
suspended by the Principal Market or the SEC, at any time beginning on the date hereof and through and including the respective
Closing Date (excluding suspensions of not more than two (2) Trading Days resulting from business announcements by the Company,
provided that such suspensions occur prior to the Company's delivery of the Drawdown Notice related to such Closing).
7.3
The representations and warranties of the Company shall be true and correct in all material respects as of the date when made
and as of the applicable Closing Date as though made at that time and the Company shall have performed satisfied and complied
in all material respects with the covenants, agreements and conditions required by the Financing Agreements to be performed, satisfied
or complied with by the Company on or before such Closing Date, or shall have cured any such non performance or non-compliance
on or before such Closing Date. The Investor may request an update as of such Closing Date regarding the representation contained
in Section 4.3.
7.4
The Company shall have executed and delivered to the Investor the certificates representing, or have executed electronic book-entry
transfer of, the Securities (in such denominations as the Investor shall request) being purchased by the Investor at such Closing.
7.5
The Board of Directors of the Company shall have adopted resolutions consistent with Section 4.2(ii) (the "Resolutions")
and such Resolutions shall not have been amended or rescinded prior to such Closing Date.
7.6
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7.7
The Registration Statement shall be effective on each Closing Date and no stop order suspending the effectiveness of the Registration
Statement shall be in effect or to the Company's knowledge shall be pending or threatened. Furthermore, on each Closing Date (I)
neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with
respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC's concerns have been addressed),
and (II) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus
shall exist.
7.8
At the time of each Closing, the Registration Statement (including information or documents incorporated by reference therein)
and any amendments or supplements thereto shall not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein not misleading or which would require public disclosure
or an update supplement to the prospectus.
7.9
If applicable, the stockholders of the Company shall have approved the issuance of any Shares in excess of the Maxim um Common
Stock Issuance in accordance with Section 2.5 or the Company shall have obtained appropriate approval pursuant to the requirements
of Nevada law and the Company's Certificate of Incorporation and By-laws.
7.10
The conditions to such Closing set forth in Section 2.3 shall have been satisfied on or before such Closing Date.
7.11
The Company shall have certified to the Investor the number of Shares of Common Stock outstanding when a Drawdown Notice is given
to the Investor. The Company's delivery of a Drawdown Notice to the Investor constitutes the Company's certification of the existence
of the necessary number of Shares reserved for issuance and that the representations contained herein are and remain true.
SECTION
VIII
TERMINATION
This
Agreement shall terminate upon any of the following events:
8.1
when the Investor has purchased an aggregate of five hundred thousand shares of the Common Stock of the Company pursuant to this
Agreement; or
8.2
on the date which is twenty four (24) months after the Effective Date; or
8.3
at such time that the Registration Statement is no longer in effect, not including such periods as the effectiveness may be temporarily
suspended in order to amend or update the Registration Statement.
Any
and all Shares or penalties, if any, due under this Agreement shall be immediately payable and due upon termination of this Agreement.
Notwithstanding anything in this Agreement to the contrary, no termination of this Agreement by any party affect any rights of
any holder thereof,
SECTION
IX
SUSPENSION
This
Agreement shall be suspended upon any of the following events, and shall remain suspended until such event is rectified:
i.
The trading of the Common Stock is suspended by the SEC, the Principal Market or FIN RA for a period of two (2) consecutive Trading
Days during the Open Period; or
ii.
The Common Stock ceases to be registered under the 1934 Act or listed or traded on the Principal Market or the Registration Statement
is no longer effective (except as permitted hereunder). Immediately upon the occurrence of one of the above-described events,
the Company shall send written notice of such event to the Investor.
SECTION
X
INDEMNIFICATION
In
consideration of the parties mutual obligations set forth in the Financing Documents, each of the parties (in such capacity, an
"Indemnitior") shall defend, protect, indemnify and hold harmless the other and all of the other party's stockholders,
officers, directors, employees, counsel, and direct or indirect investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively,
the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and reasonable expenses in connection therewith (i1Tespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (I) any
misrepresentation or breach of any representation or warranty made by the Indemnitor or any other certificate, instrument or document
contemplated hereby or thereby; (II) any breach of any covenant, agreement or obligation of the Indemnitor contained in the Financing
Agreements or any other certificate, instrument or document contemplated hereby or thereby; or (Ill) any cause of action, suit
or claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery,
performance or enforcement of the Financing Agreements or any other certificate, instrument or document contemplated here by or
thereby, except insofar as any such m is representation, breach or any untrue statement, alleged untrue statement, omission or
alleged omission is made in reliance upon and i n conformity with information furnished to Indemnitor which is specifically intended
for use in the preparation of any such Registration Statement, preliminary prospectus, prospectus or amendments to the prospectus.
To the extent that the foregoing undertaking by the Indemnitor may be unenforceable for any reason, the Indemnitor shall make
the maxi m um contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable
law. The indemnity provisions contained herein shall be in addition to any cause of action or similar rights Indemnitor may have,
and any liabilities the Indemnitor or the Indemnitees may be subject to.
SECTION
XI
MISCELLANEOUS
11.1
LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning
the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts
located in the state and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based
upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered
in connection herewith on behalf of the Company agree to submit to herein person am jurisdiction of such courts and hereby irrevocably
waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby it irrevocably waives personal service of process and consents to process being served in any suit, action or
proceeding in connection with this Agreement or any other Financing Agreements by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
11.2
LEGAL FEES: AND MISCELLANEOUS FEES. Except as otherwise set forth in the Financing Agreements, each party shall pay the
fees and expenses of its advisers, counsel, the accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Any attorneys' fees and
expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and delivery
of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of any breach
of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated hereunder,
shall be paid on demand by the party which breached the Agreement and/or defaulted, as the case may be. All legal expenses, other
than underwriting discounts and commissions and other than as set forth in this Agreement, incurred in connection with registrations
including comments, filings or qualifications, including, without limitation, all registration, listing and qualifications fees,
printing fees, and the legal fees of Investor's counsel of $3,750, shall be paid by the Company from each the first and the second
Drawdown's totaling $7.500. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance
of any Securities.
11.3
COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar
electronic means with the same force and effect as if such signature page were an original thereof.
11.4
HEADINGS: SINGULAR/PLURAL. The headings of this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include
the plural and masculine shall include the feminine.
11.5
SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.
11.6
ENTIRE AGREEMENT: AMENDMENTS. This Agreement is the FINAL AGREEMENT between the Company and the Investor with respect to
the terms and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the parties. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the Investor, and no provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. The execution and delivery of the Financing Agreements shall not alter the force
and effect of any other agreements between the parties, and the obligations under those agreements.
11.7
NOTICES. Any notices or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered (I) upon receipt, when delivered personally; (II) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or
(Ill) one ( I ) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to
the party to receive the same. The addresses and facsimile numbers for such communications shall be:
I
f to the Company:
Rich
Pharmaceuticals, Inc.
9595
Wilshire Blvd., Suite 900
Beverly
Hills, CA 90212
Attn:
Ben Chang
Email:
With
a copy to:
Steven
J. Davis, Esq.
6118
Pasco Delicias
Rancho
Santa Fe, California 92067
Facsimile:
Email:
If
to the Investor:
LG
Capital Funding, LLC
1218
Union Street, Suite #2,
Brooklyn,
NY I 1225
Attn:
Joseph Lerman
Email:
With
a copy to:
New
Venture Attorneys, PC
101
Church Street, Suite 22
Los
Gatos, CA 95030
Attn:
Tomer Tai, Esq.
Facsimile:
Email:
Each
party shall provide five (5) days prior written notice to the other party of any change in address or facsimile number.
11.8
NO ASSIGNMENT. This Agreement may not be assigned.
11.9
NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and is not for the benefit
of, nor may any provision hereof be enforced by, any other person, except that the Company acknowledges that the rights of the
Investor may be enforced by its general partner.
11.10
SURVIVAL. The representations and warranties of the Company and the Investor contained i n Sections 3 and 4, the agreements
and covenants set forth in Sections 5 and 6, and the indemnification provisions set forth in Section I 0, shall survive until
the termination of the Agreement.
11.11
PUBLICITY. The Company and the Investor shall consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise
make any such public statement without the prior consent of the other party, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing
party shall provide the other party with prior notice of such public statement. Notwithstanding the foregoing, the Company shall
not publicly disclose the name of the Investor without the prior consent of the Investor, except to the extent required by law.
The Investor acknowledges that this Agreement and all or part of the Financing Agreements may be deemed to be "material contracts"
as that term is defined by Item 60!(b)(1 0) of Regulation S-K, and that the Company may therefore be required to fi le such documents
as exhibits to reports or registration statements filed under the 1933 Act or the 1934 Act. The Investor further agrees that the
status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its
counsel.
11.12
FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
11.13
NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party, as the parties mutually agree
that each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.
11.14
REMEDIES. The Investor shall have all rights and remedies set forth in this Agreement and all of the rights which the Investor
has by law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any default or breach of any provision of this Agreement,
including the recovery of reasonable attorney’s fees and costs, and to exercise al l other rights granted by law. NEITHER
PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY SPECIAL,
CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES OR FOR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY.
11.15
PAYMENT SET ASIDE. To the extent that the Company makes a payment or payments to the Investor hereunder or the Investor enforces
or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under
any law (including, without l imitation, any bankruptcy Jaw, state or federal Jaw, common Jaw or equitable cause of action), then
to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
11.16
PRICING OF COMMON STOCK. For purposes of this Agreement, the bid price of the Common Stock shall be as reported on Quotestream.
SECTION
XII
NON-DISCLOSURE
OF NON-PUBLIC INFORMATION
The
Company shall not disclose non-public information to the Investor, or to the investor's advisors or representatives.
Nothing
herein shall require the Company to disclose non-public information to the Investor or its advisors or representatives, and the
Company represents that it does not disseminate non-public information to any investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary,
the Company will, as herein above provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters,
of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which
it becomes aware, constituting nonpublic information (whether or not requested of the Company specifically or generally during
the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration
Statement would cause such prospectus to include a material misstatement or to om it a material fact required to be stated therein
in order to make the statements, therein, in light of the circumstances i n which they were made, not misleading. Nothing contained
in this Section 1 2 shall be construed to mean that such persons or entities other than the Investor (without the written consent
of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due
diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from notifying
the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary
to make the statements contained therein, in light of the circumstances in which they were made, not misleading.
SECTION
XIII
ACKNOWLEDGEMENTS
OF THE PARTIES
Notwithstanding
anything in this Agreement to the contrary, the parties hereto hereby acknowledge and agree to the following: (i) the Investor
makes no representations or covenants that it will not engage in trading in the securities of the Company, other than the Investor
will not short or engage in hedging transactions with regard to, the Company's Common Stock at any time during this Agreement;
(ii) the Company shall, by 8:30 a.m. EST on the fourth Trading Day following the date hereof, file a current report on From 8-K
disclosing the material terms of the transactions contemplated hereby and in the other Financing Agreements; (iii) the Company
has not and shall not provide material non-public information to the Investor unless prior thereto the Investor shall have executed
a written agreement regarding the confidentiality and use of such information; and (iv) the Company understands and confirms that
the Investor will be relying on the acknowledgements set forth in clauses (i) through (iii) above if the Investor effects any
transactions in the securities of the Company.
[Signature
page follows]
Your
signature on this signature page evidences your agreement to be bound by the terms and conditions of this Agreement as of the
date first written above. The undersigned signatory hereby certifies that he has read and understands this Agreement, and the
representations made by the undersigned in this Agreement are true and accurate, and agrees to be bound by its terms.
RICH
PHACEUTICALS, INC.
By:
/s/ Ben Chang
Name:
Ben Chang
Title:
Chief Executive Officer
LG
CAPITA/ZING, LLC
By:
/s/ Joseph Lerman
Name:
Joseph Lerman
Title:
Manager
[SIGNATURE
PAGE OF INVESTMENT AGREEMENT]
LIST
OF EXHIBITS
EXHIBIT
A Form of Drawdown Notice
EXHIBIT
B Investor Questionnaire
EXHIBIT
C Drawdown Settlement Sheet
EXHIBIT
A
FORM
OF DRAWDOWN NOTICE
Date:
RE:
Drawdown Notice N umber
Dear------
This
is to inform you that as of today, Rich Pharmaceuticals, Inc., a Nevada corporation (the "Company"), hereby elects to
exercise its right pursuant to the Investment Agreement to require LG Capital Funding, LLC to purchase shares of its common stock.
The Company hereby certifies that:
The
amount of this Drawdown is $-----
The
Pricing Period runs from-------until-------
The
Purchase Price is: $-------
The
n umber of Drawdown Shares Due:
The
ctment number of shares of common stock issued and outstanding is:
The
number of shares currently available for issuance on the Registration Statement on Form S-1 1s:
Regards,
Rich
Pharmaceuticals, Inc.
By:
Name:
Title:
EXHIBIT
B
Form
of Investor Questionnaire
EXHIBIT
C
DRAWDOWN
SETTLEMENT SHEET
Date:
Dear
Pursuant
to the Drawdown given by Rich Pharmaceuticals, Inc. (the "Company") to LG Capital Funding, LLC (the "Investor")
on _____201_, we are now submitting the amount of common shares for you to issue to the Investor.
Please
have a certificate bearing no restrictive legend totaling _______shares issued to Investor immediately and send via its Deposit
Withdrawal Agent Commission ("DWAC") system to the following account:
[INSERT]
If
not DWAC eligible, please send Fed Ex Priority Overnight to:
[INSERT
ADDRESS]
Once
these shares are received by us, we will have the funds wired to the Company.
Regards,
LG
CAPITAL FUNDING, LLC
By:
Name:
Title:
Silberstein
Ungar, PLLC CPAs and Business Advisors
30600
Telegraph Road, Suite 2175
Bingham
Farms, MI 48025-4586
May
11, 2015
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of Directors
Rich
Pharmaceuticals, Inc.
Beverly
Hills, California
To
Whom It May Concern:
Silberstein
Ungar, PLLC hereby consents to the use in the Form S-1, Registration Statement Under the Securities Act of 1933, filed by Rich
Pharmaceuticals, Inc. of our report dated July 10, 2014, relating to the financial statements of Rich Pharmaceuticals, Inc., as
of and for the years ending March 31, 2014 and 2013, and for the period from August 9, 2010 (date of inception) to March 31, 2014.
Sincerely,
/s/
Silberstein Ungar, PLLC
Silberstein
Ungar, PLLC
Bingham
Farms, Michigan