Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
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.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for comploying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [ ]
The aggregate market value of the voting and non-voting common equity held by non-affiliates was $654,902 based on a closing price of $0.0022 as of June 30, 2018
As of April 15, 2019, 1,101,102,071 shares of the registrant’s common stock, par value of $0.001 per share, were outstanding.
PART I.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of federal securities laws, which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about our business strategy, uncertainty regarding our future operating results and our profitability, anticipated sources of funds and all plans, objectives, expectations and intentions and any statements regarding future potential revenue, gross margins and our prospects for 2019 and thereafter. These statements may appear in a number of places and can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "future," "intend," or "certain" or the negative of these terms or other variations or comparable terminology, or by discussions of strategy.
The following factors are among those that may cause actual results to differ materially from our forward-looking statements:
Need for additional capital;
Limited operating history in our new business model;
Limited experience introducing new products;
Our ability to successfully expand our operations and manage our future growth;
Difficulty in managing our growth and expansion;
Dilutive effects of any raising of additional capital;
The deterioration of global economic conditions and the decline of consumer confidence and spending;
Material weaknesses reported in our internal control over financial reporting;
Our ability to protect intellectual property rights and the value of our products;
The potential for product liability claims against us;
Our dependence on third party manufacturers to manufacture our products;
Our common stock is currently classified as a penny stock;
Our stock price may experience future volatility;
The illiquidity of our common stock; and
Substantial sales of shares of our common stock.
Actual results may vary materially from those in such forward-looking statements as a result of various factors, including those identified in "Item 1A. Risk Factors" and elsewhere in this document. No assurance can be given that the risk factors described in this Annual Report on Form 10-K are all of the factors that could cause actual results to vary materially from the forward-looking statements. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. The Company's future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements. Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used. References in this Annual Report on Form 10-K to the “Company,” “TSOI,” “we,” “our,” and “us” refer to Therapeutic Solutions International, Inc.
4
ITEM 1 BUSINESS.
Corporate History
Therapeutic Solutions International, Inc. (“TSI” or the “Company”) was organized August 6, 2007 under the name Friendly Auto Dealers, Inc., under the laws of the State of Nevada. In the first quarter of 2011 the Company changed its name from Friendly Auto Dealers, Inc. to Therapeutic Solutions International, Inc., and acquired Splint Decisions, Inc., a California corporation.
Currently the Company is focused on immune modulation for the treatment of several specific diseases. Immune modulation refers to the ability to upregulate (make more active) or downregulate (make less active) one’s immune system.
Activating one’s immune system is now an accepted method to cure certain cancers, reduce recovery time from viral or bacterial infections and to prevent illness. Additionally, inhibiting one’s immune system is vital for reducing inflammation, autoimmune disorders and allergic reactions.
TSI is developing a range of immune-modulatory agents to target certain cancers, improve maternal and fetal health, fight periodontal disease, and for daily health.
Nutraceutical Division
– TSI has been producing high quality nutraceuticals. Its flagship product, ProJuvenol
®
, is a proprietary mixture containing pterostilbene – one of the most potent antioxidants known. TSI filed a patent application for ProJuvenol
®
on 07-08-2015 titled: “Augmentation of Oncology Immunotherapies by Pterostilbene Containing Compositions” and was granted that patent on June 20, 2017.
Emvolio, Inc.
, – was a wholly-owned subsidiary of TSI, incorporated in the State of Delaware on October 3, 2016, for the purpose of filing an Investigation New Drug (“IND”) application with the FDA for our StemVacs immunotherapy vaccine. In May of 2018 President Donald J. Trump signed into the law, the Right To Try bill. Because of this change, Emvolio has decided to withdraw the IND for a Phase 1 trial in the USA because TSI had previously completed a 10 patient trial in Mexico. TSI has since generated Good Clinical Practice (“GCP”) documentation for the previously treated 10 patients into a Phase I trial, which will be presented to the FDA by TSI as part of an Ex-US trial compliant with 21 CFR 312.120 Foreign clinical studies not conducted under an IND. Therefore we have dissolved Emvolio, Inc. as it is no longer needed.
SandBox Dental Labs, Inc.
– is a wholly-owned subsidiary of TSI consisting of a future dental laboratory to manufacture and fill prescriptions from dentists who will use our proprietary Sleep Appliance to treat their patients with mild to moderate obstructive sleep apnea. The Company needs to seek regulatory approval for its device to treat sleep apnea. As of December 31, 2018 and April 1, 2019, formal operations have not commenced.
Management does not expect existing cash as of December 31, 2018 or as of March 31, 2019 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these December 31, 2018 financial statements. These financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2018, the Company has incurred losses totaling $7.1 million since inception, has not yet generated material revenue from operations, and will require additional funds to maintain its operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company intends to finance operating costs over the next twelve months through its existing financial resources and we may also raise additional capital through equity offerings, debt financings, collaborations and/or licensing arrangements. If adequate funds are not available on acceptable terms, we may be required to delay, reduce the scope of, or curtail, our operations. The accompanying consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
5
CURRENT BUSINESS DESCRIPTION
Currently the Company is focused on immune modulation for the treatment of several specific diseases. Immune modulation refers to the ability to upregulate (make more active) or downregulate (make less active) one’s immune system.
Activating one’s immune system is now an accepted method to treat certain cancers, reduce recovery time from viral or bacterial infections and to prevent illness. Additionally, inhibiting one’s immune system is vital for reducing inflammation, autoimmune disorders and allergic reactions.
TSI is developing a range of immune-modulatory agents to target certain cancers, improve maternal and fetal health, fight periodontal disease, and for daily health.
Nutraceutical Division
– TSI has been producing high quality nutraceuticals. Its flagship product, ProJuvenol
®
, is a proprietary mixture containing pterostilbene – one of the most potent antioxidants known. TSOI filed a patent application for ProJuvenol
®
on 07-08-2015 titled: “Augmentation of Oncology Immunotherapies by Pterostilbene Containing Compositions”. On April 28, 2016 the Company announced the filing of a patent application covering the use of ProJuvenol
©
and its active ingredient pterostilbene for augmentation of stem cell activity.
SandBox Dental Labs, Inc.
SandBox Dental Labs, Inc.,
is a wholly-owned subsidiary of TSI consisting of a dental laboratory to manufacture and fill prescriptions from dentists who will use our proprietary Sleep Appliance to treat their patients with mild to moderate obstructive sleep apnea.
Nutraceutical Division (TSOI)
ProJuvenol
®
is a patented and powerful synergistic blend of complex anti-aging ingredients in capsules.
NanoStilbene
Ô
is an easily absorbed nanoemulsion of nanoparticle pterostilbene derived from the ‘047 patent.
DermalStilbene
is a topical form of pterostilbene delivered via spray application onto skin, derived from the ‘047 patent.
IsoStilbene
an injectable formulation of pterostilbene is available by prescription only,
derived from the ‘047 patent.
NeuroStilbene
Ô
is an intranasal form of pterostilbene delivered via spray application inside the nostril, derived from the ‘047 patent.
Nutraceutical Patents:
TSOI filed a patent in July 2015 covering the use of its ProJuvenol
®
product, as well as various pterostilbene compositions, for use in augmenting efficacy of existing immuno-oncology drugs that are currently on the market. The patent is based on the ability of pterostilbene, one of the major ingredients of ProJuvenol
®
, to reduce oxidative stress produced by cancer cells, which in turn protects the immune system from cancer mediated immune suppression. That patent, U.S. No.: 9,682,047 was granted on 6-20-2017.
In addition, on April 28, 2016 the Company filed a patent application covering the use of ProJuvenol
©
and its active ingredient pterostilbene for augmentation of stem cell activity. Diseases such as diabetes, cardiovascular disease, and neurodegenerative diseases are characterized by deficient stem cell activity. The patent covers the stimulation of stem cells that already exist in the patient’s body, as well as stem cells that are administered therapeutically.
Studies have shown that patients who have higher levels of endogenous stem cell activity have reduced cardiovascular disease risk and undergo accelerated neurological recovery after stroke as compared to patients with lower numbers of such stem cells.
On October 16, 2017 the Company filed a patent application titled "Synergistic Inhibition of Glioma Using Pterostilbene and Analogues Thereof" which was developed to utilize the ability of the immune system to augment the possibility of increasing overall survival of glioma patients after treatment with conventional therapies. Our data suggests that when pterostilbene is combined with brain cancer therapeutics such as Gefitinib, Sertraline, or Temozolomide, the prognosis is vastly improved.
On August 13, 2018 the company filed a patent application titled “
Enhancement of Ozone Therapy using Pterostilbene
” s
howing pterostilbene potently augments killing of breast cancer, prostate cancer, and ovarian cancer cells by ozone therapy. The data obtained is an extension of ongoing work at the Company seeking to identify means of enhancing the effects of pterostilbene administration for treatment of a variety of cancers, as well as enhancing the efficacy of existing cancer therapies.
6
On September 17, 2018 the company filed a patent application titled “Pterostilbene and Compositions Thereof for Prevention and Treatment of Chronic Traumatic Encephalopathy” with new data demonstrating the ability of its NeuroStilbene intranasal formulation of pterostilbene to successfully prevent the development of brain injury in an animal model of Chronic Traumatic Encephalopathy aka CTE.
On September 25, 2018 the company filed a patent application titled “Pterostilbene and Formulations Thereof for Treatment of Pathological Immune Activation” covering novel clinical data using its NanoStilbene™ formulation to reduce inflammatory cytokine production in cancer patients.
The Star Ingredient is Pterostilbene
Pterostilbene, (trans-3,5-dimethoxy-4-hydroxystilbene) is a stilbene compound that is structurally similar to other popular stilbenes such as resveratrol or piceatannol; it is named after its first discovered source (the pterocarpus genus) but is also a component of blueberries and grape products. It is a phytoalexin (compound produced by plants as a defense against parasites and insects) similar to resveratrol albeit more potent.
Pterostilbene has been found to be significantly more stable in vivo than resveratrol, its half-life in vivo is approximately 104 minutes versus resveratrol, for 13 minutes. Further, studies indicate that the body better absorbs pterostilbene than resveratrol, and pterostilbene is more biologically active than resveratrol, and is more efficacious than resveratrol in inhibiting certain biological activities including pro-inflammatory enzymes (providing anti-inflammatory benefits), and cell membranes producing lipid peroxidation (providing anti-oxidant support).
Each of the benefits below are specifically a growing concern within our targeted demographics, the availability of a natural product to the existing medical protocols provides a logical and affordable alternative, without many of the adverse side effects of traditional medicines.
Reduced insulin sensitivity
Reduction in VLDL and LDL (bad) cholesterol levels
Increasing HDL (good) cholesterol levels
Positive vascular smooth muscle cells
Anti-inflammatory benefits
Anti-oxidant benefits
Cognitive function improvement
Skin protection from Ultra Violet light exposure
|
ProJuvenol
®
which contains 200mg of >99% pure Pterostilbene in each daily dose is powerful synergistic blend of complex anti-aging ingredients inspired by nature to help promote cellular rejuvenation and healthy functionality for everyday living. Based upon pterostilbene, one of nature's unique and intelligent antioxidants/anti-inflammatories. ProJuvenol
®
includes a scientifically valid blend of interactive ingredients with anti-aging and cellular protective properties to help support optimal health and provide the benefits of mental alertness and physical well-being.
ProJuvenol
®
was inspired by natures design and formulated to assist nature’s rejuvenation of the body's cells helping to slow and actually reverse the aging processes and decline in vitality. U.S. Patent No.: 9,682,047
|
ProJuvenol
®
includes:
Pterostilbene
, (trans-3,5-dimethoxy-4-hydroxystilbene) is a stilbene compound that is structurally similar to other popular stilbenes such as resveratrol or piceatannol; it is named after its first discovered source (the pterocarpus genus) but is also a component of blueberries and grape products. It is a phytoalexin (compound produced by plants as a defense against parasites and insects) similar to resveratrol albeit more potent.
Alpha lipoic acid
(
ALA
), a coenzyme that is essential for producing cellular energy, assists in deactivating cell-damaging free radicals and renewing the body's antioxidant defense system. ALA supports a healthy liver function and enhanced insulin sensitivities.
7
Superoxide dismutase
, (
SOD
) an essential enzyme found in all living cells, it is a powerful cellular protector which helps break down potentially harmful oxygen molecules in cells, assisting in the prevention of damage to tissues. Green coffee bean extract, which contains antioxidant polyphenols and plant compounds that help support a variety of biological processes including fat and glucose metabolism. ProJuvenol
®
uses the only known, patented coated source of Superoxide dismutase, to ensure that your body has the ability to absorb and utilize this ingredient. Uncoated versions of SOD have not been shown to be effective when taken orally, ProJuvenol
®
does not include ingredients that are not shown to possess the ability to convey the benefits attributable to that ingredient.
DMAE
, 2-dimethylaminoethanol, an ingredient known to help promote choline production, which is required for healthy neurological and cognitive function. DMAE has been shown to have the ability to scavenge specific types of free radicals, it is also has been shown to assist in improving memory and mood; boosting thinking skills and intelligence; and increasing physical energy, oxygen efficiency, athletic performance, and muscle reflexes. It may also assist in preventing aging or liver spots, improving red blood cell function, and extending life span.
Piperine
for bio-enhanced nutrient absorption. Piperine has been clinically tested in the United States. Piperine significantly enhances the bioavailability of various supplement nutrients through increased absorption. We have included this in ProJuvenol
®
because we believe that it significantly increases the absorption of the amazing active ingredients found in ProJuvenol
®
.
Curcumin
is an anti-inflammatory molecule in the turmeric root, a relative of ginger.
|
NanoStilbene
is prepared by low-energy emulsification which allows for better solubility, stability, and the release performance of pterostilbene nanoparticles. The pterostilbene placed in a nanoemulsion droplet is free from air, light, and hard environment; therefore, as a delivery system, nanoemulsion can not only improve the bioavailability of pterostilbene but also protect it from oxidation and hydrolysis, while it possesses an ability of sustained release at the same time.
The recommended dose is 1.5 milliliters yielding 300 milligrams per dose. In addition to the benefits of the nanoparticle pterostilbene we chose to use medium chain triglycerides (MCT), derived from coconut oil, as one of our oil mediums in preparing the nanoemulsion.
|
MCTs are not stored as fat, but rather convert quickly into Adenosine triphosphate (ATP), which provides energy for the body and brain at the cellular level.
MCT’s are also shown to increase metabolic thermo-genesis, improve stamina, endurance, athletic performance, and energy levels, as well as exhibiting potent anti-microbial properties – providing immune system benefits and helping in balancing candida in the gut.
NanoStilbene
is available in 60ml bottles at a concentration of 200mg per ml with a recommended daily dose of 1.5ml which is equal to 300mg.
Nanotechnology
Therapeutic uses of nanotechnology typically involve the delivery of small-molecule drugs, peptides, proteins, and nucleic acids. Nanoparticles have advanced pharmacological effects compared with the therapeutic entities they contain. Active intracellular delivery and improved pharmacokinetics and pharmacodynamics of drug nanoparticles depend on various factors, including their size and surface properties.
Nanoparticle therapeutics is an emerging treatment modality in cancer and other inflammatory disorders. The National Cancer Institute has recognized nanotechnology as an emerging field with the potential to revolutionize modern medicine for detection, treatment, and prevention of cancer.
On May 15, 2018 TSI announced Institutional Review Board (IRB) clearance to initiate a pilot pharmacokinetic trial of “NanoStilbene.”
Then on July 02, 2018 the Company announced receiving pilot clinical data providing proof of concept that NanoStilbene more effectively increases blood levels of the molecule as compared to conventional formulations. The clinical trial involved the administration of NanoStilbene in comparison to powder in capsule form pterostilbene with healthy volunteers, whom underwent a series of blood draws to determine the concentration of the compound.
8
NanoStilbene Administration Results in Superior Pharmacokinetic Profile
Compared to Pterostilbene Administration
Blood was collected in EDTA tubes and plasma collected subsequent to centrifugation at 700g for 10 minutes. Collection time points were prior to administration of test compound, as well as at times 2hr, 4hr, 6hr, 8hr, 10hr, and 12 hrs. Test compounds were 10 ml of NanoStilbene (provided by Therapeutic Solutions International) and 6 capsules of 50 mg pterostilbene (VitaMonk). A wash out period of 3 days was allowed between two test compound administration.
Results
The results were that at peak concentration NanoStilbene (Square) had a 55% increase in serum levels over the traditional powder (Triangle) form of pterostilbene. The data also shows the half-life to be double to that of the powder form.
The data in Granted U.S. Patent No.: 9,682,047 strongly suggest that pterostilbene administration may be an inexpensive and safe method of augmenting efficacy of numerous immunotherapeutic drugs. Although cancer immunotherapy has revolutionized the prognosis of many patients, the majority of patients still possess poor or suboptimal responses to this approach.
Clinical Trial of NanoStilbene for Immune Derepression in Advanced Cancer
Patients
Twelve advanced cancer patients were recruited for the study. All patients signed informed consent and were told of the investigational nature of the clinical trial. To be eligible patients must have at least 6 months life expectancy, ECOG over 2, metastatic advanced solid tumor, be ambulatory, and not suffer organ failure. Characteristics of the patients is described in Table 1.
NanoStilbene
NanoStilbene, was administered at a concentration of 10 ml orally per day (300mg) for a total of three weeks. Administration was performed by the patients at home and patients were instructed to note the time of dose intake as well as any side effects associated with ingestion. Patients were also instructed to ingest NanoStilbene on a full stomach.
Results
The study assessed whether the administration of NanoStilbene, a nanoformulation of pterostilbene, is effective at reducing inflammatory markers and augmenting immune function in 12 advanced cancer patients.
It has previously been known that pterostilbene possesses direct anticancer activity in the majority of cancers including melanoma
1
, glioma
2
, ovarian cancer
3
, prostate cancer
4
, pancreatic cancer
5
, breast cancer
6
, liver cancer
7
, colorectal cancer
8
, and various liquid tumors (leukemias)
9
.
Chronic inflammation, as measured by CRP, TNF-alpha and IL-6 levels in the blood, has been reported to be immune suppressive in cancer patients and we sought to reduce them through orally administered NanoStilbene. On average we saw CRP reduced by 27%, Interleukin 6 (IL-6) by 26% and TNF-alpha also by 26%. This dramatic reduction showed clinically relevant levels of downregulation of inflammatory cytokines as a result of the NanoStilbene administration.
9
The suppression of interferon gamma (IFN-g) is a hallmark of cancer immune evasion. Given that this cancer immune evasion is typically associated with inflammatory mediators such as TNF-alpha, we assessed the impact of NanoStilbene administration on the production of interferon gamma. We observed an average increase by 12% among the patients treated. The augmentation of interferon gamma production was due to the reduction of pro-inflammatory cytokines CRP, TNF-a, and IL-6.
The augmentation of natural killer cell (NK) activity is one of the most sensitive indicators of anticancer immunity seen clinically. Previous studies have shown that efficacy of antibody, as well as chemotherapy-induced cancer cell death, is dependent on NK activity. Unfortunately, cancer patients have suppressed NK activity, usually as a result of oxidative stress, therefore, it was postulated that NanoStilbene may reverse cancer associated NK depression. We observed on average an increase in NK activity of 37%, validating that 300mg of NanoStilbene daily was sufficient to cause these results.
These results suggest that NanoStilbene may be a useful adjuvant to immunotherapy of cancer rescuing T cell and NK cell activities. Augmentation of NK cell function may stimulate efficacy of approved therapies that depend on an active NK compartment such as Herceptin, Rituximab, and Cetuximab.
*The data provided here is partial and does not contain all materials submitted for publication and is preliminary until peer review is complete. These statements have not been evaluated by the Food and Drug Administration. These products are not intended to diagnose, treat, cure, or prevent any disease.
Dental
SandBox Dental Labs, Inc.
– is a wholly-owned subsidiary of TSI consisting of a future dental laboratory to manufacture and fill prescriptions from dentists who will use our proprietary Sleep Appliance to treat their patients with mild to moderate obstructive sleep apnea. The Company needs to seek regulatory approval for its device to treat sleep apnea. As of December 31, 2018 and April 1, 2019, formal operations have not commenced.
Immune-Oncology – Right To Try
In May of 2018 President Donald J. Trump signed into the law, the Right To Try bill. In 2015/2016 TSI began and completed a 10 patient clinical trial of advanced cancer patients in Mexico at the Pan Am Cancer Treatment Center located in Tijuan Mexico using our dendritic cell vaccine code named StemVacs. TSI has since generated GCP documentation for the previously treated 10 patients into a Phase I trial, which will be presented to the FDA by TSI as part of an Ex-US trial compliant with 21 CFR 312.120 Foreign clinical studies not conducted under an IND. This is a required step to conform to the new Right To Try law.
StemVacs is an immunotherapy platform that consists of 5 components. The overarching approach to the StemVacs Immunotherapy Platform is as follows:
1.
Treat innate immune suppression: Administration of oral apigenin/NanoStilbene (Cancer DeTox Product) to decrease immune suppressive toxic molecules made by tumor and tumor microenvironment.
2.
Treat adaptive immune suppression: Administration of MemoryMune to activate dormant memory cells recognizing the tumor. Administration of LymphoBoost to repair deficient IL-12 production.
3.
Stimulation of immune response to cancer stem cells (StemVacs).
4.
Consolidation and maintenance of immunity: Cycles of StemVacs, supported by innaMune and LymphoBoost
StemVacs
: StemVacs is a subcutaneously administered vaccine comprised of immune stimulatory peptides resembling cancer stem cell specific proteins.
10
Cancer Metabolic DeTox
: This is an orally administered agent that is derived from various herbs termed apigenin. The unique property of apigenin is that it inhibits a cancer associated metabolic pathway that degrades the amino acid tryptophan. Specifically, apigenin inhibits the enzyme indolamine 2,3 deoxygenase (IDO), which is responsible for breaking down tryptophan in the vicinity of the tumor and generating by-products such as kynurenine. It is known that immune activation is dependent on tryptophan being present in the tumor environment. The depletion of tryptophan and generation of kynurenine by tumor cells and tumor associated cells is a major cause of immune suppression in cancer. By administering Cancer Metabolic DeTox, the innate arm of the immune system has a chance to regenerate. This positions the patient for better outcome after administration of specific immune stimulating vaccines.
MemoryMune
: This is a product derived from a two-step culture process of donor blood cells. The product MemoryMune reawakens dormant immune memory cells. It is known that many cancer patients possess memory T cells that enter the tumor, however, once inside the tumor these cells are inactivated. MemoryMune contains a unique combination of growth factors specific for immune system cells called “cytokines”.
LymphoBoost
: LymphoBoost is a proprietary formulation of Misoprostol, a drug approved for another indication, which we have shown to be capable of stimulating lymphocytes, particularly NK cells and T cells, both critical in maintaining anti-tumor immunity.
innaMune
: This is a biological product derived from tissue culture of blood cells derived from healthy donors. It is a combination of cytokines that maintain activity of innate immune system cells, as well as having ability to shift M2 macrophages to M1.
Chronic Traumatic Encephalopathy (CTE), and Traumatic Brain Injury (TBI)
– Right To Try
On December 10, 2018 Therapeutic Solutions International, Inc., announced the signing of an agreement between TSOI and Jadi Cell LLC for licensing of the Jadi Cell universal donor adult stem cell, as covered in US Patent No.: 9,803,176 B2 for use in Chronic Traumatic Encephalopathy (CTE), and Traumatic Brain Injury (TBI).
The Jadi Cell product, which belongs to the mesenchymal stem cell (MSC) family of cells, is a unique adult stem cell, which produces higher levels of therapeutic factors compared to other stem cells. The cells have demonstrated safety in animal models and pilot human trials. The Jadi Cell product is generated from umbilical cords, which are a source of medical waste and available in large quantities at inexpensive prices.
Chronic Traumatic Encephalopathy (CTE) is caused by repetitive concussive/sub-concussive hits to the head sustained over a period of years and is often found in football players. The condition is characterized by memory loss, impulsive/erratic behavior, impaired judgment, aggression, depression, and dementia. In many patients with CTE, it is anatomically characterized by brain atrophy, reduced mass of frontal and temporal cortices, and medial temporal lobe.
Traumatic brain injury (TBI) is an insult to the brain, not of a degenerative or congenital nature, but caused by external physical force that may produce a diminished or altered state of consciousness, which results in an impairment of cognitive abilities or physical functioning.
CTE represents a significant unmet medical need which we believe is amenable to stem cell intervention. We are eager to accelerate treatments and potential cures for debilitating conditions such as CTE and traumatic brain injury and plan to leverage New regulatory pathways such as the recently approved “Right to Try” Law to deliver these medicines as soon as possible to patients which currently have no other options.
The Jadi Cell product because of its advanced stage of development in contrast to other stem cell types, which require years, if not decades of development before entry into American patients, will allow us we believe to be treating patients within 12 months. Currently means of isolating, producing, scaling up, and delivery of the cells has all been worked out by Jadi Cell and Collaborators.
11
GOVERNMENT REGULATION
The Company’s business is subject to varying degrees of regulation by a number of government authorities in the United States, including the United States Food and Drug Administration (FDA), the Federal Trade Commission (FTC), and the Consumer Product Safety Commission. The Company will be subject to additional agencies and regulations if it enters the manufacturing business. Various agencies of the state and localities in which we operate and in which our products are sold also regulate our business, such as the California Department of Health Services, Food and Drug Branch. The areas of our business that these and other authorities regulate include, among others:
product claims and advertising;
product labels;
product ingredients; and
how we package, distribute, import, export, sell and store our products.
The FDA, in particular, regulates the formulation, manufacturing, packaging, storage, labeling, promotion, distribution and sale of vitamins and other nutritional supplements in the United States, while the FTC regulates marketing and advertising claims. The FDA issued a final rule called “Statements Made for Dietary Supplements Concerning the Effect of the Product on the Structure or Function of the Body,” which includes regulations requiring companies, their suppliers and manufacturers to meet Good Manufacturing Practices in the preparation, packaging, storage and shipment of their products. Management is committed to meeting or exceeding the standards set by the FDA.
The FDA has also issued regulations governing the labeling and marketing of dietary and nutritional supplement products. They include:
the identification of dietary or nutritional supplements and their nutrition and ingredient labeling;
requirements related to the wording used for claims about nutrients, health claims, and statements of nutritional support;
labeling requirements for dietary or nutritional supplements for which “high potency” and “antioxidant” claims are made;
notification procedures for statements on dietary and nutritional supplements; and
pre-market notification procedures for new dietary ingredients in nutritional supplements.
The Dietary Supplement Health and Education Act of 1994 (DSHEA) revised the existing provisions of the Federal Food, Drug and Cosmetic Act concerning the composition and labeling of dietary supplements and defined dietary supplements to include vitamins, minerals, herbs, amino acids and other dietary substances used to supplement diets. DSHEA generally provides a regulatory framework to help ensure safe, quality dietary supplements and the dissemination of accurate information about such products. The FDA is generally prohibited from regulating active ingredients in dietary supplements as drugs unless product claims, such as claims that a product may heal, mitigate, cure or prevent an illness, disease or malady, trigger drug status.
The Company is also subject to a variety of other regulations in the United States, including those relating to taxes, labor and employment, import and export, and intellectual property.
EMPLOYEES
As of December 31, 2018, we had three full-time employees, all non-union. We believe that our relations with our employees are good.
COMPETITION
The bio-technology, bio-pharma, and nutraceutical industries are subject to rapid technological change. Competition from domestic and foreign companies, large pharmaceutical companies and other interested businesses is intense and expected to increase. A number of companies with significantly greater resources are pursuing the development of pharmaceuticals, biologics, and nutraceuticals in our targeted areas.
12
ITEM 1A RISK FACTORS
As a smaller reporting company we are not required to provide a statement of risk factors. However, we believe this information may be valuable to our shareholders for this filing. We reserve the right to not provide risk factors in our future filings. Our primary risk factors and other considerations include:
This Annual Report on Form 10-K contains forward-looking statements concerning our future programs, expenses, revenue, liquidity and cash needs as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information, except as required by applicable laws and regulations. Numerous factors could cause actual results to differ significantly from the results described in these forward-looking statements, including the following risk factors.
Internal Control
Our management has concluded that our internal control over financial reporting is not effective. Material weaknesses in our internal control over financial reporting could cause our financial reporting to be unreliable and could lead to misinformation being disseminated to the public.
Our management concluded that as of December 31, 2018 our internal control over financial reporting was not effective, and that material weaknesses existed in the following areas as of December 31, 2018:
1.
we do not employ full time in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With respect to material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;
2.
we have inadequate segregation of duties consistent with the control objectives including but not limited to the disbursement process, transaction or account changes, and the performance of account reconciliations and approval ;
3.
we have ineffective controls over the period end financial disclosure and reporting process caused by reliance on third-party experts and/or consultants and insufficient accounting staff; and
Based on our current plan, we believe we will need additional capital to support our operations.
Based on our current business plan, we believe that our cash and cash equivalents at December 31, 2018 will not be sufficient to meet our anticipated cash requirements during the twelve-month period subsequent to the issuance of the financial statements included in this Annual Report on Form 10-K. Our current commercialization of products and clinical trial strategy will undergo continual prioritization and in the future we may adjust our commercialization efforts to preserve our existing cash. We need to raise additional capital to fund our operations. We may raise additional capital through equity offerings, debt financings, collaborations and/or licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of, or curtail, our operations. To the extent that we raise additional funds by issuing equity securities, our shareholders will experience dilution, and debt financing or other preferred equity instruments, if available, may involve restrictive covenants.
There is substantial doubt about our ability to continue as a going concern.
Our recurring losses from operations raise substantial doubt about our ability to continue as a going concern, and as a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2018 with respect to this uncertainty. This going concern uncertainty, and any future going concern uncertainty, could materially limit our ability to raise additional capital. We have incurred significant losses since our inception, and it is possible we will never achieve future profitability. The Company is currently developing its new NanoStilbene product for commercialization. In addition, we are currently seeking regulatory clearance for our subsidiary SandBox’s product to treat obstructive sleep apnea in the United States. As a result, we continue to incur significant general and administrative expenses related to our operations. As a result, we have incurred substantial net losses to date. Our net losses for the years ended December 31, 2018 and 2017 were $1.9 million and $0.99 million, respectively. As of December 31, 2018, we had an accumulated deficit of $7.135 million. Meaningful revenues will likely not be available until, and unless, the Company can successfully launch our current TSI product line and our SandBox subsidiary’s product is cleared by the FDA and successfully commercialized. The perception that we may not be able to continue as a going concern may cause potential partners or investors to choose not to deal with us due to concerns about our ability to meet our contractual and financial obligations.
13
SandBox Dental Labs, Inc.
We are subject to FDA regulations which have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. Before we can market or sell our proprietary Sleep Appliance named Morpheus™ in the U.S., we must obtain clearance under Section 510(k) from the FDA.
Emvolio, Inc
.
Emvolio, Inc.
, – was a wholly-owned subsidiary of TSI, incorporated in the State of Delaware on October 3, 2016, for the purpose of filing an Investigation New Drug application with the FDA for our StemVacs immunotherapy vaccine. In May of 2018 President Donald J. Trump signed into the law, the Right To Try bill. Because of this change, Emvolio has decided to withdraw the IND for a Phase 1 trial in the USA because TSI had previously completed a 10 patient trial in Mexico. TSI has since generated GCP documentation for the previously treated 10 patients into a Phase I trial, which will be presented to the FDA by TSI as part of an Ex-US trial compliant with 21 CFR 312.120 Foreign clinical studies not conducted under an IND. Therefore we have dissolved Emvolio, Inc. as it is no longer needed.
We may not be able to effectively manage our potential growth and the execution of our business plan.
Our potential growth and the execution of our business plan together are likely to place significant strain on our managerial, operational and financial resources. To effectively manage our potential growth and execute our business plan, we will need to, among other things:
retain additional personnel across several departments in the Company;
develop strong customer loyalty for new products in a crowded competitive marketplace;
continue to establish and continue to increase awareness of our brands;
price our products and services at points which will allow us to maximize sales while at the same time maximizing gross profit margins;
establish, maintain, expand and manage multiple relationships with various vendors, strategic partners, licensees and other third parties, including suppliers of the products we sell on our website and elsewhere, warehousing distributors, shipping companies and others;
rapidly respond to competitive developments, particularly when new high-demand products become available;
build an operations structure to support our business and provide efficient and effective customer service and support;
expand our IT infrastructure to respond to increasing customer traffic to our website, demand for content from site users and to manage growing e-commerce transactions;
establish and maintain effective financial and management controls, reporting systems and procedures;
control our expenses;
provide competitive employee salaries and benefit packages; and,
avoid lawsuits and other adverse claims.
There can be no assurance that we will be able to accomplish any or all of the above goals. If we prove unable to effectively execute our business plan or manage our growth, it is likely to have a material adverse effect on our business, financial condition, including liquidity and profitability, and our results of operations.
If our proposed product sales model does not successfully operate at a profit our growth strategy may be impeded.
To effectively expand and meet our growth objectives our products sales model must be executed upon in a profitable manner. Profitability is dependent upon a variety of factors, some beyond our control, including, but not limited to the amount of traffic we can consistently attract to our brand, to retail sales in “brick and mortar” retailers, to our website, and our ability to stock or otherwise make available products that our customers purchase, our ability to stock or otherwise make available the best new products as they enter the market, our ability to provide consistent and superior customer service, the general economic conditions, particularly in the U.S., that could impact the amount of money customers spend collectively on the products we sell, and/or that could reduce the amount of money our average customer spends, and/or could reduce the number or frequency of repeat orders for products, and/or could result in customers finding products in other venues if they can find those products for a lower price. Other factors that could impact our ability to execute on our business model in a profitable manner include, but are not limited to, competition in our markets, recruiting, training and retaining qualified personnel and management, maintenance of required local, state and federal governmental approvals and permits, costs associated with principal component products and supplies, delivery shortages or interruptions, consumer trends, our ability to finance operations externally, changes in supply or prices of the products we sell and disruptions or business failures among our product suppliers, distributors, warehouses or shippers. Any failure to operate in a profitable manner could hurt our ability to meet our growth objectives by attracting licensees, and our business, financial condition, including liquidity and profitability, and our results of operations would be negatively affected.
14
We face significant competition for our products.
The markets in which we operate are intensely competitive, continually evolving and, in some cases, subject to rapid change. Our competitors include:
traditional and well established companies with recognized and well patronized brands in the nutritional supplements and health products industry segment;
entrenched nutritional supplements and health products companies with well known customer on-line services and portals and other high-traffic web sites that provide sales access to healthcare and nutritional supplements and related products; and
companies that focus on providing on-line and/or off-line healthcare related content, including some that promote competitor brands.
Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These companies may be better known than we are and have more customers than we do. We cannot provide assurance that we will be able to compete successfully against these companies or any alliances they have formed or may form. If we are unable to compete with one or more of our competitors, our growth strategy may be impeded, which could negatively affect our business, financial condition, including liquidity and profitability, and our results of operations.
Government regulation could adversely affect our business.
Our products and their associated component ingredients are subject to existing and potential government regulation. Our failure, or the failure of our business partners or third party providers, to accurately anticipate the application of laws and regulations affecting our products and the manner in which we deliver them, or any failure to comply, could create liability for us, result in adverse publicity, or negatively affect our business. In addition, new laws and regulations, or new interpretations of existing laws and regulations, may be adopted with respect to consumer protection and other issues, including pricing, products liability, copyrights and patents, distribution and characteristics and quality of products and services. We cannot predict whether these laws or regulations will change or how such changes will affect our business. Any of this government regulation could impact our growth strategy, which could negatively affect our business, financial condition, including liquidity and profitability, and our results of operations.
Third parties may claim that we are infringing their intellectual property, and we could suffer significant litigation or licensing expense or be prevented from providing certain services, and which may otherwise harm our business.
We could be subject to claims that we are misappropriating or infringing intellectual property, trade secrets or other proprietary rights of others. These claims, even if not meritorious, could be expensive to defend and divert management’s attention from our operations. If we become liable to third parties for infringing these rights, we could be required to pay substantial damage awards and to develop non-infringing products, obtain a license or cease selling the products that use or contain the infringing intellectual property. We may be unable to develop non-infringing products or obtain a license on commercially reasonable terms, or at all. Any claims against our company for infringement could impede our growth strategy, which could negatively affect our business, financial condition, including liquidity and profitability, and our results of operations.
We may be subject to claims brought against us as a result of product associated content we provide.
Consumers are reasonably expected to access health-related information regarding our products through our on-line web site. If our content, or content we obtain from third parties, contains inaccuracies, it is possible that consumers or others may sue us for various causes of action. Although our planned web site contains terms and conditions, including disclaimers of liability, that are intended to reduce or eliminate our liability, the law governing the validity and enforceability of on-line agreements with consumers that provide the terms and conditions for use of our public or private portals are unenforceable. A finding by a court that these agreements are invalid and that we are subject to liability could harm our business and require costly changes to our business. We have planned editorial procedures in place to provide quality control of the information that we publish or provide. However, we cannot assure you that our editorial and other quality control procedures will be sufficient to ensure that there are no errors or omissions in particular content. Even if potential claims do not result in liability to us, the fact that we would need to investigate and defend against these claims could be expensive and time consuming and could divert management’s attention away from our operations. In addition, our business is in part based on establishing a reputation amongst consumers that our portals as trustworthy and dependable sources of healthcare information. Allegations of impropriety or inaccuracy, even if unfounded, could therefore harm our reputation and business, which could negatively affect our business, financial condition, including liquidity and profitability, and our results of operations.
15
Changes in commodity and other operating costs or supply chain and business disruptions could adversely affect our results of operations.
Changes in product costs are a part of our business; any increase in the prices that suppliers charge for their products could adversely affect our operating results. We remain susceptible to increases in prices as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather conditions, demand, safety concerns, product recalls, labor disputes and government regulations. We rely on third-party distribution companies to deliver ingredients to our manufacturers and ultimately our products to customers. Interruption of distribution services due to financial distress or other issues could adversely affect our operations.
We face substantial competition in attracting and retaining qualified senior management and key personnel and may be unable to develop and grow our business if we cannot attract and retain such senior management and key personnel.
As an early stage company, our ability to develop and grow our business, to a large extent, depends upon our ability to attract, hire and retain highly qualified and knowledgeable senior management and key personnel who possess the skills and experience necessary to satisfy our business needs. Our ability to attract and retain such senior management and key personnel will depend on numerous factors, including our ability to offer salaries, benefits and professional growth opportunities that are comparable with and competitive to those offered by more established companies operating in our marketplace. We may be required to invest significant time and resources in attracting and retaining additional senior management and key personnel as needed. Moreover, many of the companies with which we will compete for any such individuals have greater financial and other resources, affording them the ability to undertake more extensive and aggressive hiring campaigns, than we can. The normal running of our operations may be interrupted, and our financial condition and results of operations negatively affected, as a result of any inability on our part to attract or retain the services of qualified and experienced senior management and key personnel, or should our prospective key personnel refuse to serve, or, once appointed, leave prior to a suitable replacement being found.
Risks Associated With Our Restricted Securities
Because there is currently a limited public trading market for our common stock, investor may not be able to resell stock
.
Our stock is now traded in OTC Markets under the stock symbol TSOI, which results in a very illiquid and limited market for our common stock.
There is currently no liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.
The trading market for our common stock is currently not liquid. We cannot predict how liquid the market for our common stock might become. Our common stock is quoted in OTC Markets under the symbol TSOI.
Our common stock may be deemed a “penny stock”, which would make it more difficult for investors to sell their shares.
Our common stock is subject to the “penny stock” rules adopted under the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities and investors may find it more difficult to dispose of our securities.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
If our stockholders have the right to sell substantial amounts of common stock in the public market, e.g. upon the expiration of any statutory holding period under Rule 144, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make our ability to raise additional financing through the sale of equity or equity-related securities in the future, at a time and price that we deem reasonable or appropriate, more difficult.
16
The elimination of monetary liability against our directors and officers under the Company’s Articles of Incorporation and Nevada law, and the existence of indemnification rights to our directors, officers and employees, may result in substantial expenditures by the Company.
Article 6 of our Articles of Incorporation exculpates our directors and officers from certain monetary liabilities. Article 7 of our Articles of Incorporation provides that we shall indemnify all directors (and all persons serving at our request as a director or officer of another corporation) to the fullest extent permitted by Nevada law.
Further pursuant to Article 7, the expenses of the indemnified person incurred in defending a civil suit or proceeding must be paid by us as incurred and in advance of the final disposition of the action, suit, or proceeding under receipt of an undertaking by or on behalf of the indemnified person to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by us.
The foregoing indemnification obligations could result in us incurring substantial expenditures, which we may be unable to recoup. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors and officers for breaches of their fiduciary duties even though such actions, if successful, might otherwise benefit us and our stockholders.
Public company compliance may make it more difficult to attract and retain officers and directors.
The Sarbanes-Oxley Act and related rules implemented by the SEC have required changes in corporate governance practices of public companies. As a public entity, these rules and regulations increase compliance costs and make certain activities more time consuming and costly. As a public entity, these rules and regulations also make it more difficult and expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve as directors or as executive officers.
We do not plan to pay any cash or stock dividends in the foreseeable future.
The payment of dividends upon our capital stock is solely within the discretion of our future board of directors and is dependent upon our financial condition, results of operations, capital requirements, restrictions contained in our future financing instruments and any other factors our board of directors may deem relevant. We have never declared or paid any cash or stock dividends on our capital stock and we currently anticipate that we will retain earnings, if any, to finance the development and expansion of our business and, as such, do not intend on paying any cash or stock dividends in the foreseeable future.
ITEM 1B UNRESOLVED STAFF COMMENTS
As a Smaller Reporting Company, we are not required to furnish information under this Item 1B.
ITEM 2 PROPERTIES.
We do not own any real-estate property or manufacturing equipment. Our business is conducted in
approximately 1,300
square feet of rented offices and warehouse space located at 4093 Oceanside Blvd., Suite B, Oceanside, CA 92056.
ITEM 3 LEGAL PROCEEDINGS.
From time to time, claims are made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods.
However, as of the date of this report, management believes the outcome of currently identified potential claims and lawsuits will not have a material adverse effect on our financial condition or results of operations.
ITEM 4 MINE SAFETY DISCLOSURES.
No disclosure required.
17
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our stock is now traded in OTC Markets under the stock symbol TSOI, which results in a very illiquid and limited market for our common stock.
As of the date of Annual Report on Form 10-K there are approximately 171 stockholders of record of our common stock.
The following table sets forth the quarterly high and low closing sales prices for our common stock from January 1, 2017 through December 31, 2018.
Quarter Ended
|
High
|
Low
|
December 31, 2018
|
$0.017
|
$0.003
|
September 30, 2018
|
$0.032
|
$0.008
|
June 30, 2018
|
$0.025
|
$0.004
|
March 31, 2018
|
$0.009
|
$0.005
|
December 31, 2017
|
$0.009
|
$0.004
|
September 30, 2017
|
$0.02
|
$0.005
|
June 30, 2017
|
$0.018
|
$0.004
|
March 31, 2017
|
$0.013
|
$0.002
|
Dividends
We did not declare or pay dividends during 2017 to 2018.
Issuances of Unregistered Securities
On January 17, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On March 2, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On April 3, 2017, we issued 1,000,000 shares of common stock, valued at $0.0067 per share for consulting services.
On April 20, 2017, we issued a six month convertible note in the amount of $100,000 with an annual interest rate of 10% to a related party.
On April 28, 2017, we issued 10,000,000 shares of common stock, valued at $0.008 per share, for legal services and 1,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 6, 2017, we issued 2,000,000 shares of common stock, valued at $0.0083 per share for consulting services.
On July 24, 2017, we issued a six month convertible note in the amount of $28,000 with an annual interest rate of 10%.
On August 21, 2017, we issued 6,250,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement and 1,000,000 shares of common stock, valued at $0.0053 per share, for consulting services.
On August 28, 2017, we issued 2,000,000 shares of common stock, valued at $0.0063 per share, for consulting services.
On September 7, 2017, we issued a six month convertible note in the amount of $28,000 with an annual interest rate of 10%.
On September 20, 2017, we issued 3,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On October 2, 2017, we issued 2,500,000 shares of common stock, valued at $0.0095 per share for consulting services.
On October 20, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
18
On January 26, 2018, we issued 2,424,242 shares of common stock for the partial conversion of $8,000 for convertible note dated July 24, 2017.
On February 1, 2018, we issued 6,376,471 shares of common stock for the conversion of the balance of $20,000 for convertible note dated July 24, 2017.
On February 1, 2018, we issued 5,000,000 shares of common stock, valued at $0.009 per share, for consulting services.
On February 1, 2018, we issued 2,500,000 shares of common stock, valued at $0.009 per share, for consulting services.
On February 20, 2018, we issued 15,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On February 20, 2018, we issued 2,500,000 shares of common stock, valued at $0.0062 per share, for consulting services.
On April 14, 2018, we issued 2,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On April 14, 2018, we issued 5,000,000 shares of common stock, valued at $0.0057 per share, for consulting services.
On April 27, 2018, we issued 3,225,806 shares of common stock for the partial conversion of $8,000 for convertible note dated September 7, 2017.
On May 1, 2018, we issued 4,137,931 shares of common stock for the partial conversion of $12,000 for convertible note dated September 7, 2017.
On May 2, 2018, we issued 25,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On May 21, 2018, we issued 2,742,857 shares of common stock for the partial conversion of $6,000 for convertible note dated September 7, 2017.
On June 15, 2018, we issued 8,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 3, 2018, we issued 5,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 9, 2018, we issued 4,166,667 shares of common stock for the partial conversion of $15,000 for convertible note dated January 3, 2018.
On July 12, 2018, we issued 4,077,778 shares of common stock for the partial conversion of $13,000 for convertible note dated January 3, 2018.
On July 19, 2018, we issued 2,500,000 shares of common stock, valued at $0.015 per share, to a Scientific Advisory Board member for consulting services.
On August 7, 2018, we issued 11,000,000 shares of common stock at $0.011 per share, for consulting services.
On September 5, 2018, we issued 3,260,870 shares of common stock for the partial conversion of $15,000 for convertible note dated February 27, 2018.
On September 10, 2018, we issued 3,262,222 shares of common stock for the partial conversion of $13,000 for convertible note dated February 27, 2018.
On September 19, 2018, we issued 5,000,000 shares of common stock, valued at $0.005 per share, for an investment in the Company’s Private Placement.
19
On September 19, 2018, we issued 1,500,000 shares of common stock, valued at $0.01 per share, to a Scientific Advisory Board member for consulting services.
On October 25, 2018, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award.
On November 15, 2018, we issued 2,500,000 shares of common stock, valued at $0.008 per share, to a Scientific Advisory Board member for consulting services.
On November 23, 2018, we issued 3,805,899 shares of common stock for the partial conversion of $12,000 for convertible note dated May 1, 2018.
On November 26, 2018, we issued 4,347,826 shares of common stock for the partial conversion of $10,000 for convertible note dated May 1, 2018.
On November 28, 2018, we issued 3,657,143 shares of common stock for the partial conversion of $6,000 for convertible note dated May 1, 2018.
On December 7, 2018, we issued 8,823,529 shares of common stock for the partial conversion of $15,000 for convertible note dated June 5, 2018.
On December 14, 2018, we issued 5,882,353 shares of common stock for the partial conversion of $10,000 for convertible note dated June 5, 2018.
On December 17, 2018, we issued 5,870,588 shares of common stock for the partial conversion of $8,000 for convertible note dated June 5, 2018.
On January 3, 2019, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award.
On January 3, 2019, we issued 10,000,000 shares of common stock, valued at $0.005 per share, to a Scientific Advisory Board member for consulting services.
On January 7, 2019, we issued 7,500,000 shares of common stock for the partial conversion of $12,000 for convertible note dated July 2, 2018.
On January 9, 2019, we issued 6,250,000 shares of common stock for the partial conversion of $10,000 for convertible note dated July 2, 2018.
On January 9, 2019, we issued 4,800,000 shares of common stock for the partial conversion of $7,680 for convertible note dated July 2, 2018.
On February 8, 2019, we issued 8,333,333 shares of common stock for the partial conversion of $10,000 for convertible note dated August 6, 2018.
On February 12, 2019, we issued 8,155,556 shares of common stock for the partial conversion of $14,680 for convertible note dated August 6, 2018.
ITEM 6
SELECTED FINANCIAL DATA.
Not required for a “smaller reporting company”.
20
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report.
Overview
Currently the Company is focused on immune modulation for the treatment of several specific diseases. Immune modulation refers to the ability to upregulate (make more active) or downregulate (make less active) one’s immune system.
Activating one’s immune system is now an accepted method to cure certain cancers, reduce recovery time from viral or bacterial infections and to prevent illness. Additionally, inhibiting one’s immune system is vital for reducing inflammation, autoimmune disorders and allergic reactions.
Critical accounting policies can be found in Note 2 and related party disclosures in Note 9 can be found in the Consolidated Notes to the Financal Statements elsewhere in this Annual Report.
Nutraceutical Division
– TSI has been producing high quality nutraceuticals. Its flagship product, ProJuvenol
®
, is a proprietary mixture containing pterostilbene – one of the most potent antioxidants known. TSI filed a patent application for ProJuvenol
®
on 07-08-2015 titled: “Augmentation of Oncology Immunotherapies by Pterostilbene Containing Compositions”.
Results of Operations
We had a net loss of approximately $1.9 million in 2018 compared to a net loss of approximately $0.99 million in 2017.
Net sales increased $614 from $2,851 to $3,485, for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due to any increase in sales of the Company’s nutraceutical line of products.
Cost of goods sold increased $1,334, from $823 to $2,157, for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due an inventory write down in 2018 to higher net sales of the Company’s new nutraceutical line of products in 2018 vs 2017
Operating expenses for the years ended December 31, 2018 and December 31, 2017 were approximately $1.201 million and $0.886 million, respectively, an increase of $0.315 million. This increase was mainly due a combination of increased general and administrative expenses, increased salaries, wages and related costs, an increase in consulting fees, a decrease in legal and accounting fees, and an increase in Research and development.
General and administrative expenses increased approximately $298 thousand, from $107 thousand to $405 thousand, for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due to an increase in Restricted Stock Awards granted to two officers and one director during the year.
Salaries, wages and related expenses increased approximately $12 thousand, from $403 thousand to $415 thousand, for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due to an increase in officers’ salaries.
Selling expenses decreased approximately $0.8 thousand, from $3.3 thousand to $2.5 thousand, for the years ended December 31, 2017 and 2018, respectively. This decrease was mainly due to decreased selling and marketing expenses related to the Company’s nutraceutical line of products.
Consulting fees increased approximately $43 thousand from $70 thousand to $113 thousand for the years ended December 31, 2017 and 2018, respectively, due to an increase in overall consulting services during 2018.
Legal and professional fees decreased approximately $88 thousand, from $278 thousand to $190 thousand for the years ended December 31, 2017 and 2018, respectively, due to a decrease in overall accounting, patent and general counsel services.
Research and Development costs increased approximately $50 thousand, from $25 thousand to $75 thousand, for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due to research and development expenses related to the Company’s nutraceutical line of products.
21
Loss on derivatives liability increased approximately $304 thousand, from $84 thousand to $388 thousand, for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due to derivative liability increases from certain convertible notes in 2018 compared to 2017.
Change in fair derivatives liabilities increased approximately $11 thousand from $26 to $37 thousand for the years ended December 31, 2017 and 2018, respectively. This increase was due to a derivative liability expense from certain convertible notes in 2018 compared to 2017.
Net interest expense increased approximately $189 thousand from $53 thousand to $242 thousand for the years ended December 31, 2017 and 2018, respectively. This increase was mainly due to increased debt balances.
Liquidity and Capital Resources
We have experienced recurring losses over the past years which have resulted in accumulated deficits of approximately $7.1 million and a working capital deficit of approximately $1.8 million at December 31, 2018. These conditions raise significant doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is contingent upon its ability to secure additional financing, increase sales of its products and attain profitable operations. It is the intent of management to continue to raise additional capital. However, there can be no assurance that the Company will be able to secure such additional funds or obtain such on terms satisfactory to the Company, if at all.
There is no guarantee we will receive the required financing to complete our business strategies, and it is uncertain whether future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations.
Off-Balance Sheet Arrangements
.
We currently do not have any off-balance sheet arrangements.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for a “smaller reporting company”.
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements and the accompanying notes that are filed as part of this Annual Report on Form 10-K are listed and set forth beginning on page F-1 immediately following the signature page of this Form 10-K.
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On January 3, 2019, the Board of Directors engaged Fruci & Associates II, PLLC
(“Fruci”), as the Company's independent registered public accounting firm for the year ending December 31, 2018. The Company filed a Form 8-K on January 7, 2019 in regard to this change.
ITEM 9A CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed , summarized and reported , within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
At the end of the period covered by this Annual Report on Form 10-K for the fiscal year ended December 31, 2018, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation the CEO and the CFO have concluded that as of the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective.
22
Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a- 15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Our management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making our assessment, we used the framework and criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") (2013) in Internal Control-Integrated Framework. Based on that assessment, our management has identified certain material weaknesses in our internal control over financial reporting.
Our management concluded that as of December 31, 2018 our internal control over financial reporting was not effective, and that material weaknesses existed in the following areas as of December 31, 2018:
(1)
we do not employ full time in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With respect to material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;
(2)
we have inadequate segregation of duties consistent with the control objectives including but not limited to the disbursement process, transaction or account changes, and the performance of account reconciliations and approval ;
(3)
we have ineffective controls over the period end financial disclosure and reporting process caused by reliance on third-party experts and/or consultants and insufficient accounting staff.
Changes in Internal Control Over Financial Reporting
No substantial changes in our internal control over financial reporting occurred during 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except that we have increased our use of external accounting services, adopted policies to improve timely reviews by management and coordination with accounting consultants, and engaged corporate and securities legal counsel with better capabilities than our previous provider's.
ITEM 9B OTHER INFORMATION.
None
23
Consolidated Notes to Financial Statements
December 31, 2018
Note 1 – Nature of business
Therapeutic Solutions International, Inc. (“TSI” or the “Company”) was organized August 6, 2007 under the name Friendly Auto Dealers, Inc., under the laws of the State of Nevada. In the first quarter of 2011 the Company changed its name from Friendly Auto Dealers, Inc. to Therapeutic Solutions International, Inc., and acquired Splint Decisions, Inc., a California corporation.
Currently the Company is focused on immune modulation for the treatment of several specific diseases. Immune modulation refers to the ability to upregulate (make more active) or downregulate (make less active) one’s immune system.
Activating one’s immune system is now an accepted method to cure certain cancers, reduce recovery time from viral or bacterial infections and to prevent illness. Additionally, inhibiting one’s immune system is vital for reducing inflammation, autoimmune disorders and allergic reactions.
Nutraceutical Division
– TSI has been producing high quality nutraceuticals. Its flagship product, ProJuvenol
®
, is a proprietary mixture containing pterostilbene – one of the most potent antioxidants known. TSI filed a patent application for ProJuvenol
®
on 07-08-2015 titled: “Augmentation of Oncology Immunotherapies by Pterostilbene Containing Compositions”.
Emvolio, Inc.
, – was a wholly-owned subsidiary of TSI, incorporated in the State of Delaware on October 3, 2016, for the purpose of filing an Investigation New Drug (“IND”) application with the FDA for our StemVacs immunotherapy vaccine. In May of 2018 President Donald J. Trump signed into the law, the Right To Try bill. Because of this change, Emvolio has decided to withdraw the IND for a Phase 1 trial in the USA because TSI had previously completed a 10 patient trial in Mexico. TSI has since generated generated Good Clinical Practice (“GCP”) documentation for the previously treated 10 patients into a Phase I trial, which will be presented to the FDA by TSI as part of an Ex-US trial compliant with 21 CFR 312.120 Foreign clinical studies not conducted under an IND. Therefore we have dissolved Emvolio, Inc. as it is no longer needed.
SandBox Dental Labs, Inc.
– is a wholly-owned subsidiary of TSI consisting of a future dental laboratory to manufacture and fill prescriptions from dentists who will use our proprietary Sleep Appliance to treat their patients with mild to moderate obstructive sleep apnea. The Company needs to seek regulatory approval for its device to treat sleep apnea. As of December 31, 2018 and April 1, 2019, formal operations have not commenced.
Management does not expect existing cash as of December 31, 2018 or as of March 31, 2019 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these December 31, 2018 financial statements. These financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2018, the Company has incurred losses totaling $7.1 million since inception, has not yet generated material revenue from operations, and will require additional funds to maintain its operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company intends to finance operating costs over the next twelve months through its existing financial resources and we may also raise additional capital through equity offerings, debt financings, collaborations and/or licensing arrangements. If adequate funds are not available on acceptable terms, we may be required to delay, reduce the scope of, or curtail, our operations. The accompanying consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 2 – Basis of presentation and significant accounting policies
These consolidated financial statements have been prepared by management assuming that the Company will be able to continue as a going concern and realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted above currently exist which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which our net assets are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. The accompanying financial statements do not reflect any adjustments related to the outcome of this uncertainty.
F-7
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 2 – Basis of presentation and significant accounting policies (continued)
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Therapeutic Solutions International, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606,”Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, the company applies the following methodology to recognize revenue:
|
1)
|
Identify the contract with a customer.
|
|
2)
|
Identify the performance obligations in the contract.
|
|
3)
|
Determine the transaction price.
|
|
4)
|
Allocate the transaction price to the performance obligations in the contract.
|
|
5)
|
Recognize revenue when (or as) the entity satisfies a performance obligation.
|
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
Derivative Liabilities
A derivative is an instrument whose value is “derived” from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities.
As a matter of policy, the Company does not invest in separable financial derivatives or engage in hedging transactions. However, the Company entered into certain debt financing transactions in fiscal 2018 and 2017, as disclosed in Note 5, containing certain conversion features that have resulted in the instruments being deemed derivatives. We evaluate such derivative instruments to properly classify such instruments within equity or as liabilities in our financial statements. Our policy is to settle instruments indexed to our common shares on a first-in-first-out basis.
The classification of a derivative instrument is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Instruments classified as derivative liabilities are remeasured using the Black-Scholes model at each reporting period (or upon reclassification) and the change in fair value is recorded on our consolidated statement of operations. We recorded derivative liabilities of $466,612 and $107,769 at December 31, 2018 and 2017, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, prepaids, convertible notes, and payables. The carrying amount of cash and cash equivalents and payables approximates fair value because of the short-term nature of these items.
Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:
Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
F-8
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 2 – Basis of presentation and significant accounting policies (continued)
Fair Value of Financial Instruments (continued)
Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 – Inputs lack observable market data to corroborate management’s estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
When determining fair value, whenever possible the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available. As of December 31, 2018, the Company has level 3 fair value calculations on derivative liabilities. The table below reflects the results of our Level 3 fair value calculations:
The following is the change in derivative liability for the year ended December 31, 2018:
Balance - December 31, 2017
|
$
|
107,769
|
Issuance of new derivative liabilities
|
|
633,122
|
Conversions to paid-in capital
|
|
(311,509)
|
Change in fair market value of derivative liabilities
|
|
37,230
|
Balance – December 31, 2018
|
$
|
466,612
|
Use of Estimates
Estimates were made relating to valuation allowances, impairment of assets, share-based compensation expense and accruals. Actual results could differ materially from those estimates.
Comprehensive Loss
Comprehensive loss for the periods reported was comprised solely of the Company’s net loss.
Net Loss Per Share
Basic loss per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued, if such additional common shares were dilutive. Since we had net losses for all the periods presented, basic and diluted loss per share are the same, and additional potential common shares have been excluded as their effect would be antidilutive.
As of December 31, 2018 and 2017, a total of
226,902,346 and zero,
respectively, potential common shares, consisting of shares underlying outstanding convertible notes payable were excluded as their inclusion would be antidilutive.
Depreciation and Amortization
Depreciation is calculated using the straight line method over the estimated useful lives of the assets. Amortization is computed using the straight line method over the term of the agreement. During the years ended December 31, 2018 and 2017, there was no depreciation or amortization expense as all fixed assets have been fully depreciated.
Long-lived Assets
In accordance with ASC 360, Property, Plant and Equipment, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
F-9
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 2 – Basis of presentation and significant accounting policies (continued)
Research and Development
Research and Development costs are expensed as incurred. Research and Development expenses were $74,970 and 25,106 for the years ended December 31, 2018 and 2017, respectiverly.
Income Taxes
The Company accounts for income taxes under ASC 740
"Income Taxes,"
which codified SFAS 109,
"Accounting for Income Taxes"
and FIN 48
“Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109.”
Under the asset and
liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
Stock-Based Compensation
Compensation expense for stock issued to employees is determined as the fair value of consideration or services received or the fair value of the equity instruments issued, whichever is more reliably measured. The Financial Accounting Standards Board (FASB) issued ASU 2018-07 to expand the scope of Topic 718 to include share-based payments issued to nonemployees. The effective date for public companies is for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the effective date is fiscal years beginning after December 15, 2019. The Company has elected to early adopt.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. ASU 2016-02 will be effective for the Company in the first quarter of 2019 and will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 was effective for the Company in the first quarter of 2018 and allows for full retrospective or a modified retrospective adoption approach. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations.
The Financial Accounting Standards Board (FASB) issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting to expand the scope of Topic 718 to include share-based payments issued to nonemployees. The effective date for public companies is for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the effective date is fiscal years beginning after December 15, 2019. The Company has elected to early adopt.
Reclassifications
Certain reclassifications have been made to the prior year’s consolidated financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of consolidated operations or equity.
F-10
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 3 – Restricted cash
Included in non-current asset is a $10,000 certificate of deposit with an annual interest rate of 0.6%. This certificate matures on June 17, 2019, and is used as collateral for a Company credit card, pursuant to a security agreement dated June 20, 201
1.
Note 4 – Prepaid expense and other current assets:
Prepaid expenses and other current assets consist of the following:
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
Prepaid Consulting
|
$
|
111,655
|
$
|
-
|
Insurance
|
|
848
|
|
1,054
|
Prepaid costs
|
|
1,018
|
|
-
|
Total
|
$
|
113,521
|
$
|
1,054
|
Prepaid consulting agreements are for one to two years and are expensed monthly over the term of the agreement.
Note 5 – Fixed assets
Fixed assets consist of the following:
|
|
December 31,
2018
|
|
December 31,
2017
|
Computer Hardware
|
$
|
10,747
|
$
|
10,747
|
Office Furniture and Equipment
|
|
3,639
|
|
3,639
|
Shipping and Other Equipment
|
|
1,575
|
|
1,575
|
Total
|
|
15,961
|
|
15,961
|
Accumulated Depreciation
|
|
(15,961)
|
|
(15,961)
|
Property and Equipment, net
|
$
|
-
|
$
|
-
|
Depreciation expense was $0 for December 31, 2018 and 2017.
Note 6 – Other Assets
Other assets consist of the following:
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
|
|
Prepaid Consulting
|
$
|
56,718
|
$
|
-
|
Deposit
|
|
4,123
|
|
4,123
|
Restricted cash
|
|
10,172
|
|
10,156
|
Prepaid costs
|
|
-
|
|
9,648
|
Total
|
$
|
71,013
|
$
|
23,927
|
Prepaid consulting agreements are for one to two years and are expensed monthly over the term of the agreement.
F-11
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 7 – Convertible notes payable
On July 24, 2017 and September 7, 2017, the Company entered into two $28,000 convertible promissory notes with a third party for which the proceeds were used for operations. The Company received net proceeds of $50,000 and thus a $6,000 original issuance discount was recorded. The convertible promissory notes incur interest at 12% per annum for which $28,000 plus accrued interest were due on April 30, 2018 and June 15, 2018. The convertible promissory notes were convertible to shares of the Company's common stock 180 days after issuance. The conversion price per share was equal to 55% of the average of the three (3) lowest trading price of the Company's common stock during the fifteen (15) trading days immediately preceding the applicable conversion date. The Company had the option to prepay the convertible notes in the first 180 days from closing subject to prepayment penalties ranging from 120 of 145% of principal balance plus interest, depending upon the date of prepayment. The convertible promissory notes included various default provisions for which the default interest rate increases to 22% per annum with the outstanding principal and accrued interest increasing by 150%. These notes were fully converted into 18,907,307 shares of common stock during the year ended December 31, 2018.
On January 3, 2018, February 27, 2018, May 1, 2018, June 5, 2018, July 2, 2018, August 6, 2018, October 3, 2018, November 15, 2018, and December 6, 2018, the Company entered into five $28,000 convertible promissory notes and four $33,000 convertible promissory notes with a third party for which the proceeds were used for operations. The Company received net proceeds of $245,000 and a $27,000 original issuance discount was recorded. The convertible promissory notes incur interest at 12% per annum for which $28,000 plus accrued interest are/were due on October 15, 2018, November 20, 2018, February 15, 2019, April 15, 2019 and May 30, 2019 and $33,000 plus accrued interest are/were due March 30, 2019, July 30, 2019, August 30, 2019, and September 30, 2019. The convertible promissory notes are convertible to shares of the Company's common stock 180 days after issuance. The conversion price per share is equal to 55% of the average of the three (3) lowest trading prices of the Company's common stock during the fifteen (15) trading days immediately preceding the applicable conversion date. The Company has the option to prepay the convertible notes in the first 180 days from closing subject to prepayment penalties ranging from 120% to 145% of principal balance plus interest, depending upon the date of prepayment. The convertible promissory notes include various default provisions for which the default interest rate increases to 22% per annum with the outstanding principal and accrued interest increasing by 150%. The Company was required to reserve at December 31, 2018, a total of 659,706,845 common shares in connection with the promissory notes.
Derivative liabilities
These convertible promissory notes are convertible into a variable number of shares of common stock for which there is not a floor to the number of common stock we might be required to issue. Based on the requirements of ASC 815 Derivatives and Hedging, the conversion feature represented an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results each reporting period.
On July 24, 2017 and September 7, 2017, the convertible note issuance dates, the Company valued the conversion feature resulting in initial liability of $133,968. Since the fair value of the derivatives were in excess of the proceeds received of $50,000, a full discount to convertible notes payable and a day one loss on derivative liabilities of $83,968 was recorded. The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from of $0.003 to $0.004, the closing stock price of the Company's common stock on the date of valuation ranging from $0.008 to $0.009, an expected dividend yield of 0%, expected volatility ranging from 299% to 319%, risk-free interest rates ranging from 1.21% to 1.23%, and an expected term of 0.77 years. On December 31, 2017, the derivative liabilities were revalued at $107,769 resulting in a loss of $57,769 related to the change in fair value of the derivative liabilities. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following assumptions: conversion price of $0.003, the closing stock price of the Company's common stock on the date of valuation of $0.008, an expected dividend yield of 0%, expected volatility ranging from 330% to 341%, risk-free interest rate of 1.31%, and an expected term ranging from 0.33 to 0.45 years.
For the nine notes issued during the year ended December 31, 2018, the Company valued the conversion feature on the date of issuance resulting in initial liability of $633,121. Since the fair value of the derivatives were in excess of the proceeds received of $245,000, a full discount to convertible notes payable and a day one loss on derivative liabilities of $388,121 was recorded during the year ended December 31, 2018. Upon issuance, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $0.002 to $0.006, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0045 to $0.0220, an expected dividend yield of 0%, expected volatility ranging from 214% to 304%, risk-free interest rates ranging from 1.81% to 2.70%, and an expected term ranging from 0.76 to 0.82 years.
F-12
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 7 – Convertible notes payable (continued)
During the year ended December 31, 2018, five of the $28,000 convertible notes and one of the $33,000 convertible notes were converted into 66,062,182 shares of common stock. At each conversion date, the Company recalculated the value of the derivative liability associated with the convertible note recording a gain (loss) in connection with the change in fair market value. In addition, the pro-rata portion of the derivative liability as compared to the portion of the convertible note converted was reclassed to additional paid-in capital. During the year ended December 31, 2018, the Company recorded a gain of $165,563 related to the change of fair value of the derivative liability and recorded $311,509 to additional paid-in capital. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $0.0033 to $0.005 the closing stock price of the Company's common stock on the date of valuation ranging from $0.0028 to $0.02720, an expected dividend yield of 0%, expected volatility ranging from 185% to 277%, risk-free interest rates ranging from 1.81% to 2.70%, and expected terms ranging from 0.07 to 0.75 years.
On December 31, 2018, the derivative liabilities on the remaining five convertible notes were revalued at $466,612 resulting in a loss of $388,121for the year ended December 31, 2018 related to the change in fair value of the derivative liabilities. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following assumptions: exercise price of $0.002, the closing stock price of the Company's common stock on the date of valuation of $0.0055, an expected dividend yield of 0%, expected volatility ranging from 248% to 279%, risk-free interest rate of 2.63%, and an expected term ranging from 0.29 to 0.75 years.
The Company amortizes the discounts over the term of the convertible promissory notes using the straight line method which is similar to the effective interest method. During the years ended December 31, 2018 and 2017, the Company amortized $194,985 and $27,459 to interest expense, respectively. As of December 31, 2018, discounts of $105,556 remained for which will be amortized through September 30, 2019.
Note 8 – Notes payable-related parties
Notes payable-related parties consist of:
|
|
2018
|
|
2017
|
Note payable – Scientific Advisory Board Member, unsecured, including interest at 10% per annum, with a maturity date of December 31, 2019
|
$
|
17,015
|
$
|
15,868
|
|
|
|
|
|
Three notes payable – Chief Executive Officer, unsecured, including interest at 8%, 10% and 10% per annum, respectively, with maturity dates of December 31, 2019.
|
|
138,105
|
|
132,366
|
|
|
|
|
|
Note payable – Chief Financial Officer, unsecured, including interest at 8% per annum, with a maturity date of December 31, 2019.
|
|
99,200
|
|
92,800
|
|
|
|
|
|
Two notes payable – Business Advisory Board Member, unsecured, including interest at 8% and 10% per annum, convertible into common stock at $0.005 and $0.004, respectively, with maturity dates of April 20, 2019
|
|
204,167
|
|
188,167
|
|
|
|
|
|
|
$
|
458,487
|
$
|
429,201
|
F-13
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 9 – Related party transactions
As of December 31, 2018 and 2017, the Company
accrued officers’ salary of $663,100 and $391,000, respectively.
On January 17, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On March 2, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On April 20, 2017, we issued a six month convertible note in the amount of $100,000 with an annual interest rate of 10% to a related party.
On October 20, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On October 25, 2018, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award. The Financial Accounting Standards Board (FASB) issued ASU 2018-07 to expand the scope of Topic 718 to include share-based payments issued to nonemployees. The effective date for public companies is for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the effective date is fiscal years beginning after December 15, 2019. The Company has elected to early adopt.
Note 10 – Inc
ome taxes
The Company is subject to United States federal and state income taxes at an approximate rate of 30%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
Expected income tax at statutory rate
|
$
|
(391,884)
|
$
|
(338,188)
|
State tax
|
|
168
|
|
272
|
Permanent differences
|
|
253,768
|
|
829
|
Change in valuation allowance
|
|
149,704
|
|
(223,742)
|
Change in tax rate
|
|
-
|
|
561,529
|
Other
|
|
(11,756)
|
|
100
|
Provision for income taxes
|
$
|
-
|
$
|
800
|
The significant components of deferred income tax assets and liabilities at December 31, 2018 and 2017 are as follows:
|
|
December 31,
2018
|
|
December 31,
2017
|
|
|
|
Net operating loss carry-forward
|
$
|
1,321,683
|
$
|
1,208,949
|
Valuation allowance
|
|
(1,321,683)
|
|
(1,208,949)
|
Net deferred income tax asset
|
$
|
-
|
$
|
-
|
The Company has net operating losses carried forward of approximately $5 million and $4.3 million as of December 31, 2018 and 2017, respectively, available to offset taxable income in future years which expire beginning in fiscal 2032.
As of and for the years ended December 31, 2018 and 2017, management does not believe the Company has any uncertain tax positions. Accordingly, there are no recognized tax benefits at December 31, 2018 and 2017.
F-14
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 10 – Income taxes (continued)
On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law including lowering the corporate tax rate from 34% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets and liabilities recorded on our balance sheet. The Company has completed the accounting for the effects of the Act during the year ended December 31, 2018. Given that current deferred tax assets are offset by a full valuation allowance, these changes did not have an impact on the balance sheet.
Note 11 – Equity
Our authorized capital stock consists of an aggregate of 2,505,000,000 shares, comprised of 2,500,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, which may be issued in various series from time to time and the rights, preferences, privileges and restrictions of which shall be established by our board of directors. As of December 31, 2018, we have 1,011,063,182 shares of Common Stock and no preferred shares issued and outstanding.
Issuances of Unregistered Securities
On January 17, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On March 2, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On April 3, 2017, we issued 1,000,000 shares of common stock, valued at $0.0067 per share for consulting services.
On April 20, 2017, we issued a six month convertible note in the amount of $100,000 with an annual interest rate of 10% to a related party.
On April 28, 2017, we issued 10,000,000 shares of common stock, valued at $0.008 per share, for legal services and 1,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 6, 2017, we issued 2,000,000 shares of common stock, valued at $0.0083 per share for consulting services.
On July 24, 2017, we issued a six month convertible note in the amount of $28,000 with an annual interest rate of 10%.
On August 21, 2017, we issued 6,250,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement and 1,000,000 shares of common stock, valued at $0.0053 per share, for consulting services.
On August 28, 2017, we issued 2,000,000 shares of common stock, valued at $0.0063 per share, for consulting services.
On September 7, 2017, we issued a six month convertible note in the amount of $28,000 with an annual interest rate of 10%.
On September 20, 2017, we issued 3,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On October 2, 2017, we issued 2,500,000 shares of common stock, valued at $0.0095 per share for consulting services.
On October 20, 2017, we issued 12,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On January 26, 2018, we issued 2,424,242 shares of common stock for the partial conversion of $8,000 for convertible note dated July 24, 2017.
On February 1, 2018, we issued 6,376,471 shares of common stock for the conversion of the balance of $20,000 for convertible note dated July 24, 2017.
F-15
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 11 – Equity (continued)
On February 1, 2018, we issued 5,000,000 shares of common stock, valued at $0.009 per share, for consulting services.
On February 1, 2018, we issued 2,500,000 shares of common stock, valued at $0.009 per share, for consulting services.
On February 20, 2018, we issued 15,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On February 20, 2018, we issued 2,500,000 shares of common stock, valued at $0.0062 per share, for consulting services.
On April 14, 2018, we issued 2,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On April 14, 2018, we issued 5,000,000 shares of common stock, valued at $0.0057 per share, for consulting services.
On April 27, 2018, we issued 3,225,806 shares of common stock for the partial conversion of $8,000 for convertible note dated September 7, 2017.
On May 1, 2018, we issued 4,137,931 shares of common stock for the partial conversion of $12,000 for convertible note dated September 7, 2017.
On May 2, 2018, we issued 25,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On May 21, 2018, we issued 2,742,857 shares of common stock for the partial conversion of $6,000 for convertible note dated September 7, 2017.
On June 15, 2018, we issued 8,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 3, 2018, we issued 5,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 9, 2018, we issued 4,166,667 shares of common stock for the partial conversion of $15,000 for convertible note dated January 3, 2018.
On July 12, 2018, we issued 4,077,778 shares of common stock for the partial conversion of $13,000 for convertible note dated January 3, 2018.
On July 19, 2018, we issued 2,500,000 shares of common stock, valued at $0.015 per share, to a Scientific Advisory Board member for consulting services.
On August 7, 2018, we issued 11,000,000 shares of common stock at $0.011 per share, for consulting services.
On September 5, 2018, we issued 3,260,870 shares of common stock for the partial conversion of $15,000 for convertible note dated February 27, 2018.
On September 10, 2018, we issued 3,262,222 shares of common stock for the partial conversion of $13,000 for convertible note dated February 27, 2018.
On September 19, 2018, we issued 5,000,000 shares of common stock, valued at $0.005 per share, for an investment in the Company’s Private Placement.
F-16
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 11 – Equity (continued)
On September 19, 2018, we issued 1,500,000 shares of common stock, valued at $0.01 per share, to a Scientific Advisory Board member for consulting services.
On October 25, 2018, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award.
On November 15, 2018, we issued 2,500,000 shares of common stock, valued at $0.008 per share, to a Scientific Advisory Board member for consulting services.
On November 23, 2018, we issued 3,805,899 shares of common stock for the partial conversion of $12,000 for convertible note dated May 1, 2018.
On November 26, 2018, we issued 4,347,826 shares of common stock for the partial conversion of $10,000 for convertible note dated May 1, 2018.
On November 28, 2018, we issued 3,657,143 shares of common stock for the partial conversion of $6,000 for convertible note dated May 1, 2018.
On December 7, 2018, we issued 8,823,529 shares of common stock for the partial conversion of $15,000 for convertible note dated June 5, 2018.
On December 14, 2018, we issued 5,882,353 shares of common stock for the partial conversion of $10,000 for convertible note dated June 5, 2018.
On December 17, 2018, we issued 5,870,588 shares of common stock for the partial conversion of $8,000 for convertible note dated June 5, 2018.
On January 3, 2019, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award.
On January 3, 2019, we issued 10,000,000 shares of common stock, valued at $0.005 per share, to a Scientific Advisory Board member for consulting services.
On January 7, 2019, we issued 7,500,000 shares of common stock for the partial conversion of $12,000 for convertible note dated July 2, 2018.
On January 9, 2019, we issued 6,250,000 shares of common stock for the partial conversion of $10,000 for convertible note dated July 2, 2018.
On January 9, 2019, we issued 4,800,000 shares of common stock for the partial conversion of $7,680 for convertible note dated July 2, 2018.
On February 8, 2019, we issued 8,333,333 shares of common stock for the partial conversion of $10,000 for convertible note dated August 6, 2018.
On February 12, 2019, we issued 8,155,556 shares of common stock for the partial conversion of $14,680 for convertible note dated August 6, 2018.
F-17
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2018
Note 12 – Legal proceedings
From time to time, claims are made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods.
However, as of the date of this report, management believes the outcome of currently identified potential claims and lawsuits will not have a material adverse effect on our financial condition or results of operations.
Note 13 –
Commitments and Contingencies
Effective May 1, 2017, the Company entered into a fourth amendment to a Lease Agreement for property located in Oceanside, CA. The lease consists of approximately 1,700 square feet and the amendment is for a term of 36 months and expires on April 30, 2020.
During the year ended December 31, 2018 and 2017,the Company incurred rent expense of $21,774 and $21,145.
Future minimum lease payments as of December 31, 2018 are as follows:
2019
|
$
|
22,272
|
2020
|
$
|
7,492
|
Note 14 – Subsequent events
On January 2, 2019, we issued a nine month convertible note in the amount of $33,000 with an annual interest rate of 12%.
On January 3, 2019, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award.
On January 3, 2019, we issued 10,000,000 shares of common stock, valued at $0.005 per share, to a Scientific Advisory Board member for consulting services.
On January 7, 2019, we issued 7,500,000 shares of common stock for the partial conversion of $12,000 for convertible note dated July 2, 2018.
On January 9, 2019, we issued 6,250,000 shares of common stock for the partial conversion of $10,000 for convertible note dated July 2, 2018.
On January 9, 2019, we issued 4,800,000 shares of common stock for the partial conversion of $7.680 for convertible note dated July 2, 2018.
On February 2, 2019, we issued a nine month convertible note in the amount of $33,000 with an annual interest rate of 12%.
On February 8, 2019, we issued 8,333,333 shares of common stock for the partial conversion of $10,000 for convertible note dated August 6, 2018.
On February 12, 2019, we issued 8,155,556 shares of common stock for the partial conversion of $14,680 for convertible note dated August 6, 2018.
On March 11, 2019, we issued a nine month convertible note in the amount of $28,000 with an annual interest rate of 12%.
In accordance with ASC 855, the Company has analyzed its operations subsequent to December 31, 2018 through the date these financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial statements.
F-18