Quarterly Report (10-q)

Date : 08/16/2019 @ 8:28PM
Source : Edgar (US Regulatory)
Stock : Therapeutic Solutions International, Inc. (PC) (TSOI)
Quote : 0.0013  0.0 (0.00%) @ 9:23PM

Quarterly Report (10-q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

FOR THE QUARTERLY PERIOD ENDED June 30, 2019

 

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

FOR THE TRANSITION PERIOD FROM ________TO ________

 

Commission File Number: 000-54554

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Nevada

 

45-1226465

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

4093 Oceanside Boulevard, Suite B

Oceanside, California 92056

(Address of principal executive offices, including zip code)

 

(760) 295-7208

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [   ]

 

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

 

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

 

[   ]

Large Accelerated Filer

 

[X]

Non-Accelerated Filer

[   ]

Accelerated Filer

 

[X]

Smaller reporting company

 

 

 

[   ]

Emerging growth company

 

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

 

As of August 16, 2019, the Registrant had 1,412,391,182 outstanding shares of Common Stock with a par value of $0.001 per share.


1


 

 

IMPORTANT PREFATORY NOTE

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained in this report and the information incorporated by reference herein may contain “forward-looking statements” (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements, which involve risks and uncertainties, reflect our current expectations, intentions, or strategies regarding our possible future results of operations, performance, and achievements. Forward-looking statements include, without limitation: statements regarding future products or product development; statements regarding future selling, general and administrative costs and research and development spending; statements regarding our product development strategy; and statements regarding future financial performance, results of operations, capital expenditures and sufficiency of capital resources to fund our operating requirements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and applicable rules of the Securities and Exchange Commission and common law.

 

These forward-looking statements may be identified in this report and the information incorporated by reference by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “predict”, “project”, “should” and similar terms and expressions, including references to assumptions and strategies. These statements reflect our current beliefs and are based on information currently available to us. Accordingly, these statements are subject to certain risks, uncertainties, and contingencies, which could cause our actual results, performance, or achievements to differ materially from those expressed in, or implied by, such statements.

 

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. 

Other factors not specifically described above, including the other risks, uncertainties, and contingencies described under “Description of Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Items 1 and 7 of our Annual Report on Form 10-K for the year ended December 31, 2018. 

 

When considering these forward-looking statements, you should keep in mind the cautionary statements in this report and the documents incorporated by reference. We have no obligation and do not undertake to update or revise any such forward-looking statements to reflect events or circumstances after the date of this report.

 

Actual results may vary materially from those in such forward-looking statements as a result of various factors. No assurance can be given that the risk factors described in this Quarterly Report on Form 10-Q are all of the factors that could cause actual results to vary materially from the forward-looking statements. References in this Quarterly Report on Form 10-Q to the “Company,” “TSOI,” “we,” “our,” and “us” refer to Therapeutic Solutions International, Inc.

 


2


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

INDEX

 

PART 1. Financial Information

 

PAGE

 

 

 

Item 1. Financial Statements (Unaudited)

 

4

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

 

4

 

 

 

Condensed Consolidated Statements of Operations for the three months and six months ended

June 30, 2019 and June 30, 2018

 

5

 

 

 

Condensed Consolidated Statement of Changes in Shareholders’ Deficit for the Period from

January 1, 2018 to June 30, 2019

 

6

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended

June 30, 2019 and June 30, 2018

 

7

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

24

Item 4. Controls and Procedures

 

25

 

 

 

PART II. Other Information

 

 

 

 

 

Item 1. Legal Proceedings

 

26

Item 1A. Risk Factors

 

26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

26

Item 3. Defaults upon Senior Securities

 

27

Item 4. Mine Safety Disclosures

 

27

Item 5. Other Information

 

27

Item 6. Exhibits

 

27

 

 

 

Signatures

 

28


3


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

Condensed Consolidated Balance Sheets

 

 

 

(Unaudited)

June 30,

2019

 

December 31,

2018

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

6,585

$

22,397

Accounts receivable

 

1,475

 

-

Prepaid expenses and other current assets

 

140,223

 

113,521

Right-of-use asset

 

22,116

 

-

Total current assets

 

170,399

 

135,918

 

 

 

 

 

Other assets

 

196,764

 

71,013

 

 

 

 

 

Total assets

$

367,163

$

206,931

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

322,174

$

320,812

Accounts payable - related parties

 

8,277

 

7,981

Accrued expenses and other current liabilities

 

873,936

 

717,723

Lease liability

 

22,116

 

-

Convertible notes payable, net of discount of $74,654 and $105,556, at June 30, 2019 and December 31, 2018, respectively

 

52,346

 

45,784

Notes payable-related parties, net

 

486,815

 

458,487

Derivative liabilities

 

85,495

 

466,612

Total current liabilities

 

1,851,159

 

2,017,399

 

 

 

 

 

Commitments and contingencies

 

-

 

-

 

 

 

 

 

Shareholders' Deficit:

 

 

 

 

Preferred stock, $ 0.001 par value; 5,000,000 shares authorized

 

-

 

-

Common stock, $ 0.001 par value; 2,500,000,000 shares authorized; 1,295,013,587 and 1,011,063,182 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively.

 

1,295,013

 

1,011,063

Additional paid-in capital

 

4,959,735

 

4,314,047

Accumulated deficit

 

(7,738,744)

 

(7,135,578)

Total shareholders' deficit

 

(1,483,996)

 

(1,810,468)

 

 

 

 

 

Total liabilities and shareholders' deficit

$

367,163

$

206,931

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.


4


 

 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

For the

Three

Months

ended June

30, 2019

 

For the

Three

Months

ended June

30, 2018

 

For the Six

Months

ended June

30, 2019

 

For the Six

Months

ended June

30, 2018

 

 

 

 

 

 

 

 

 

Net Sales

$

8,931

$

1,019

$

11,395

$

1,619

Cost of Sales

 

1,036

 

104

 

1,182

 

209

Gross Profit

 

7,895

 

915

 

10,213

 

1,410

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative

 

20,138

 

22,879

 

33,621

 

37,417

Salaries, wages, and related costs

 

98,982

 

101,040

 

205,388

 

199,649

Stock compensation

 

-

 

-

 

225,000

 

-

Consulting fees

 

50,966

 

18,606

 

84,351

 

29,371

Legal and professional fees

 

25,809

 

58,393

 

82,443

 

128,227

Research and development

 

6,232

 

34,289

 

6,232

 

39,864

Total operating expenses

 

202,127

 

235,207

 

637,035

 

434,528

 

 

 

 

 

 

 

 

 

Loss from operations

 

(194,232)

 

(234,292)

 

(626,822)

 

(433,118)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Loss on derivative liability

 

(19,133)

 

(42,104)

 

(227,060)

 

(121,455)

Change in fair value of derivatives liabilities

 

88,020

 

(291,923)

 

440,891

 

(247,096)

Interest expense

 

(102,675)

 

(44,739)

 

(190,175)

 

(89,023)

Total other income (expense)

 

(33,788)

 

(378,766)

 

23,656

 

(457,574)

 

 

 

 

 

 

 

 

 

Net loss

$

(228,020)

$

(613,058)

$

(603,166)

$

(890,692)

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

$

(0.00)

$

(0.00)

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – 

basic and diluted

 

1,144,167,799

 

870,445,510

 

1,117,620,490

 

847,785,963

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.


5


 

 

Therapeutic Solutions International, Inc.

Condensed Consolidated Statements of Changes in Shareholders' Deficit

For the six month period ended June 30, 2019

(Unaudited)

 

 

Common

Stock

Shares

 

Common

Stock

Amount

 

Additional

Paid-in

Capital

 

Accumulated

Deficit

 

Total

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2018

806,501,000

$

806,501

$

3,147,811

$

(5,268,666)

$

(1,314,354)

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

15,000,000

 

15,000

 

96,500

 

-

 

111,500

Common stock issued in payment of

convertible note payable

18,907,307

 

18,907

 

121,884

 

-

 

140,791

Common stock issued

51,000,000

 

51,000

 

153,000

 

-

 

204,000

Net Loss

-

 

-

 

-

 

(890,692)

 

(890,692)

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

891,408,307

$

891,408

$

3,519,195

$

(6,159,358)

$

(1,748,755)

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

1,011,063,182

$

1,011,063

$

4,314,047

$

(7,135,578)

$

(1,810,468)

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

70,000,000

 

70,000

 

229,000

 

-

 

299,000

Common stock issued in payment of

convertible note payable

105,980,405

 

105,980

 

340,606

 

-

 

446,586

Common stock issued for a license

95,970,000

 

95,970

 

57,582

 

-

 

153,552

Common stock issued

12,000,000

 

12,000

 

6,000

 

-

 

18,000

Beneficial conversion feature on

note payable

-

 

-

 

12,500

 

-

 

12,500

Net Loss

-

 

-

 

-

 

(603,166)

 

(603,166)

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

1,295,013,587

$

1,295,013

$

4,959,735

$

(7,738,744)

$

(1,483,996)

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements


6


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the Six

Months Ended

June 30, 2019

 

For the Six

Months Ended

June 30, 2018

Cash flows from operating activities

 

 

 

 

Net loss

$

(603,166)

$

(890,692)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Stock based compensation to consultants

 

74,000

 

111,500

Stock based compensation to related parties

 

225,000

 

-

Accrued interest, notes payable

 

12,960

 

3,360

Accrued interest, notes payable - related parties

 

17,332

 

-

Loss on derivative liability

 

227,060

 

121,455

Change in fair value of derivative liabilities

 

(440,891)

 

247,096

Amortization of debt discount

 

157,902

 

67,069

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(1,475)

 

-

Inventory

 

-

 

(580)

Prepaid expenses and other current assets

 

1,100

 

(67,530)

Right-to-use asset

 

(22,116)

 

-

Accounts payable

 

1,658

 

(10,515)

Accrued expenses and other current liabilities

 

156,213

 

173,195

Lease liability

 

22,116

 

-

Net cash used in operating activities

 

(172,308)

 

(245,642)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from issuance of common stock

 

18,000

 

204,000

Proceeds from convertible notes payable

 

115,000

 

105,000

Proceeds from notes payable - related parties

 

25,000

 

-

Payments on notes payable - related parties

 

(1,505)

 

(1,290)

Net cash provided by financing activities

 

156,495

 

307,710

 

 

 

 

 

Net increase (decrease) in cash

 

(15,813)

 

62,068

Cash at beginning of period

 

32,570

 

10,185

Cash at end of period

$

16,757

$

72,253

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

Cash paid for interest

$

1,980

$

2,721

Cash paid for income taxes

$

-

$

800

 

 

 

 

 

Non-cash investing and financing transactions

 

 

 

 

Original issuance discount on convertible notes payable

$

12,000

$

12,000

Debt discount recorded in connection with derivative liability

$

115,000

$

105,000

Beneficial conversion feature on convertible note

$

12,500

$

-

Common stock issued in payment of license agreement

$

153,552

$

-

Common stock issued in payment of convertible note payable

$

446,586

$

140,792

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

6,585

$

62,080

Restricted cash included in other assets

 

10,172

 

10,173

Total cash, cash equivalents, and restricted cash shown in the condensed consolidated cash flows:

$

16,757

$

72,253

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.


7


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 1 – Organization and Business Description

 

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 current flagship product, NanoStilbene™ PKE, 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’s 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.

 

Cellular Division – TSI recently obtained exclusive rights to a patented adult stem cell for development of therapeutics in the area of chronic traumatic encephalopathy (CTE) and traumatic brain injury (TBI).

 

The stem cell licensed, termed “JadiCell” is unique in that it possesses features of mesenchymal stem cells, however, outperforms these cells in terms of a) enhanced growth factor production; b) augmented ability to secrete exosomes; and c) superior angiogenic and neurogenic ability.

 

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. TSOI has previously filed several patents in the area of CTE based on modulating the brain microenvironment to enhance receptivity of regenerative cells such as stem cells.

 

Management does not expect existing cash as of June 30, 2019 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these June 30, 2019 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 June 30, 2019, the Company has incurred losses totaling $7.7 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.

 

Note 2 – Summary of Significant Accounting Policies

 

On 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 was 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 recorded a Right-of-use asset and a Lease Liability of $22,116 for the six months ended June 30, 2019.


8


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of the Securities and Exchange Commission (SEC) Regulation S-X, and should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2019. The accompanying unaudited condensed consolidated financial statements include the accounts of TSOI and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the balances and results for the interim period included herein. The results of operations for the six months ended June 30, 2019 and 2018 are not necessarily indicative of the results to be expected for the full year or any future interim periods. The accompanying condensed consolidated balance sheet at December 31, 2018 has been derived from the audited consolidated balance sheet at December 31, 2018, contained in the above referenced Form 10-K.

 

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 2019 and 2018 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 $85,495 and $466,612 at June 30, 2019 and December 31, 2018, respectively.


9


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

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.

 

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 June 30, 2019, 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 six months ended June 30, 2019:

 

Balance - December 31, 2018

$

466,612

Issuance of new derivative liabilities

 

342,060

Conversions to paid-in capital

 

(282,286)

Change in fair market value of derivative liabilities

 

(440,891)

Balance – June 30, 2019

$

85,495

 

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 June 30, 2019 and 2018, a total of 876,393,993 and 226,902,346, respectively, potential common shares, consisting of shares underlying outstanding convertible notes payable were excluded as their inclusion would be antidilutive.

 

Depreciation and Amortization


10


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

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 six months ended June 30, 2019 and 2018, 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.

 

Other assets include a license from Jadi Cell, LLC. The license will be amortized over the estimated useful life of 48 months.

 

Research and Development

 

Research and Development costs are expensed as incurred. Research and Development expenses were $6,232 and $34,289 for the three months ended June 30, 2019 and 2018, respectively. Research and Development costs are expensed as incurred. Research and Development expenses were $6,232 and $39,864 for the six months ended June 30, 2019 and 2018, respectively.

 

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 was 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 recorded a Right-of-use asset and a Lease Liability of $22,116 for the three months ended June 30, 2019.

 

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.


11


 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 2 – Summary of Significant Accounting Policies (Continued)

 

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.

 

Note 3 – Restricted Cash

 

Included in cash and non-cash equivalents is a $10,000 certificate of deposit with an annual interest rate of 0.6%. This certificate matures on June 17, 2020, and is used as collateral for a Company credit card, pursuant to a security agreement dated June 20, 2011.

 

Note 4 – Notes Payable-Related Party

 

On May 23, 2019 entered into a $25,000 convertible 8% promissory note with a related party due May 24, 2020. This note is convertible into shares of the Company’s common stock at $.002 per share. 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 six months ended June 30, 2019 the Company amortized $1,294 to interest expense. As of June 30, 2019, discounts of $11,206 remained for which will be amortized through May 24, 2020.

 

At June 30, 2019 and June 30, 2018, the Company has unsecured interest bearing demand notes outstanding to certain officers and directors amounting to $498,021 and $458,487, respectively. Interest accrued on these notes during the three months ended June 30, 2019 and 2018 was $8,103 and $7,936, respectively.

 

Note 5 – Convertible notes payable

 

On January 2, 2019, February 7, 2019, March 11, 2019, and April 23, 2019, the Company entered into one $28,000 convertible promissory note and three $33,000 convertible promissory notes with a third party for which the proceeds were used for operations. The Company received net proceeds of $115,000, and a $12,000 original issuance discount was recorded. The convertible promissory notes incur interest at 12% per annum for which $28,000 plus accrued interest is due on January 30, 2020 and $33,000 plus accrued interest are due October 30, 2019, November 30, 2019, and February 28, 2020. 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 June 30, 2019, a total of 1,086,631,016 common shares in connection with the promissory notes.

 

On June 1, 2019, the Company entered into a $153,552 convertible promissory note in regard to a license with Jadi Cell, LLC. The note was converted into 95,970,000 shares of the Company’s common stock on June 18, 2019,

 

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.

 

For the four notes issued during the six months ended June 30, 2019, the Company valued the conversion features on the dates of issuance resulting in initial liabilities of $342,060. Since the fair value of the derivatives were in excess of the proceeds received of $115,000, a full discount to convertible notes payable and a day one loss on derivative liabilities of $227,060 was recorded during the six months ended June 30, 2019. The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from of $0.002 to $0.003, the closing stock price of the Company's common stock on the date of valuation ranging from $0.004 to $0.009, an expected dividend yield of 0%, expected volatility ranging from 236% to 262%, risk-free interest rates ranging from 2.43% to 2.60%, and expected terms ranging from 0.81 to 0.89 years.


12


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 5 – Convertible notes payable (Continued)

 

At December 31, 2018, the Company had existing derivative liabilities of $466,612 related to two $28,000 and three $33,000 convertible notes. During the six months ended June 30, 2019, these convertible notes were converted into 105,980,072 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 six months ended June 30, 2019, the Company recorded a gain of $440,891 related to the change of fair value of the derivative liability and recorded $(282,286) 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 $0.001 to $0.002, the closing stock price of the Company's common stock on the date of valuation ranging from $0.002 to $0.009, an expected dividend yield of 0%, expected volatility ranging from 214% to 243%, risk-free interest rates ranging from 1.96% to 2.59%, and expected terms ranging from 0.26 to 0.30 years.

 

On June 30, 2019, the derivative liabilities on the remaining four convertible notes were revalued at $85,495 resulting in a gain of $440,891for the six months ended June 30, 2019 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 $0.001, the closing stock price of the Company's common stock on the date of valuation of $0.002, an expected dividend yield of 0%, expected volatility ranging from 215% to 233%, risk-free interest rate of 1.92%, and an expected term ranging from 0.50 to 0.67 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 six months ended June 30, 2019 and 2018, the Company amortized $157,902 and $67,069 to interest expense, respectively. As of June 30, 2019, discounts of $74,654 remained for which will be amortized through February 28, 2020.

 

Note 6 – 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 June 30, 2019, we have 1,295,013,587 shares of Common Stock and no preferred shares issued and outstanding.

 

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.

 

On April 15, 2019, we issued 6,000,000 shares of common stock for the partial conversion of $12,000 for a convertible note dated October 3, 2018.


13


 

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

 

Note 6 – Equity (Continued)

 

On April 24, 2019, we issued 11,490,000 shares of common stock for the partial conversion of $11,980 for a convertible note dated October 3, 2018.

 

On May 20, 2019, we issued 6,666,667 shares of common stock for the partial conversion of $12,000 for a convertible note dated November 15, 2018.

 

On May 24, 2019, we issued 12,766,667 shares of common stock for the partial conversion of $22,980 for a convertible note dated November 15, 2018.

 

On June 11, 2019, we issued 10,909,091 shares of common stock for the partial conversion of $12,000 for a convertible note dated November 6, 2018.

 

On June 11, 2019, we issued 10,909,091 shares of common stock for the partial conversion of $12,000 for a convertible note dated November 6, 2018.

 

On June 18, 2019, we issued 95,970,000 shares of commons stock for conversion of a convertible note dated June 1, 2019.

 

On June 18, 2018, we issued 15,000,000 shares of common stock, valued at $.0016 per share, for consulting services.

 

On June 19, 2019, we issued 12,200,000 shares of common stock for the partial conversion of $10,980 for a convertible note dated November 6, 2018.

 

On June 28, 2019, we issued 12,000,000 shares of common stock, valued at $.0015 to a related party in regard to a subscription agreement

 

Note 7– Subsequent Events

 

On July 8, 2019, we issued 24,590,164 shares of common stock for the partial conversion of $15,000 for a convertible note dated January 2, 2019.

 

On July 11, 2019, we issued 32,754,098 shares of common stock for the partial conversion of $19,980 for a convertible note dated January 2, 2019.

 

On July 23, 2019, we issued 56,033,333 shares of common stock, valued at $.0009 to a related party in regard to a subscription agreement.

 

On August 5, 2019, we issued 4,000,000 shares of common stock, valued at $.002 to a related party in regard to a subscription agreement.

 

In accordance with ASC 855, the Company has analyzed its operations subsequent to June 30, 2019 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.


14


 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws. The safe harbor provided in section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 (“statutory safe harbors”) shall apply to forward-looking information provided pursuant to the statements made in this filing by the Company. We urge you to carefully review our description and examples of forward-looking statements included in the section entitled “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report. Forward-looking statements speak only as of the date of this report and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this report. Actual events or results may differ materially from such statements. In evaluating such statements, we urge you to specifically consider various factors identified in this report, any of which could cause actual results to differ materially from those indicated by such forward-looking statements. The following discussion and analysis should be read in conjunction with the accompanying financial statements and related notes, as well as the Financial Statements and related notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and the risk factors discussed therein.

 

General

 

Our principal executive office is located at 4093 Oceanside Blvd., Suite B, Oceanside, California 92056, our telephone number is (760) 295-7208 and our website is www.therapeuticsolutionsint.com. The reference to our website does not constitute incorporation by reference of the information contained on our website.

 

We file our quarterly and annual reports with the Securities and Exchange Commission (SEC), which the public may view and copy at the SEC’s Public Reference Room at 100 F Street, N.E. Washington D.C. 20549, on official business days during the hours of 10 a.m. to 3 p.m. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1–800–SEC–0330. The SEC also maintains an Internet site, the address of which is www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers which file electronically with the SEC. The periodic and current reports that we file with the SEC can also be obtained from us free of charge by directing a request to Therapeutic Solutions International, Inc., 4093 Oceanside Blvd, Suite B, Oceanside, California 92056, Attn: Corporate Secretary.

 

DESCRIPTION OF BUSINESS

 

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 current flagship product, NanoStilbene™ PKE, 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’s 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.

 

Cellular Division – TSI recently obtained exclusive rights to a patented adult stem cell for development of therapeutics in the area of chronic traumatic encephalopathy (CTE) and traumatic brain injury (TBI).

 

The stem cell licensed, termed “JadiCell” is unique in that it possesses features of mesenchymal stem cells, however, outperforms these cells in terms of a) enhanced growth factor production; b) augmented ability to secrete exosomes; and c) superior angiogenic and neurogenic ability.

 

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. TSOI has previously filed several patents in the area of CTE based on modulating the brain microenvironment to enhance receptivity of regenerative cells such as stem cells.


15


 

 

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 August 16, 2019, formal operations have not commenced.

 

Nutraceutical Division (TSOI)

 

ProJuvenol ® is a patented, (US No.: 9,682,047) 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.

 

NanoPlus is a blend of NanoStilbene and NanoCannabidiol which are an easily absorbed Nanoparticles formulation of Pterostilbene and Cannabidiol.

 

NanoCannabidiol is an easily absorbed Nanoparticle formulation of Cannabidiol Isolate in the range of 75-90 nanometers. This product is built on the same nano platform as NanoStilbene and is delivered at a concentration of 200mg per milliliter.

 

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.

 

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.


16


 

 

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 

 

PICTURE 7  

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.

 

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.


17


 

 

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.

 

PICTURE 9  

NanoStilbene PKE 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.

 

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.


18


 

 

PICTURE 6  

 

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.

 

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.

 

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.


19


 

 

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 August 16, 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 Tijuana 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.

 

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.


20


 

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.

 

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. 


21


 

 

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.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that re not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

 

The Company adopted the new accounting pronouncement ASC 842, Leases for the six months ended June 30, 2019.

 

Related Party

 

On May 23, 2019 entered into a $25,000 convertible 8%promissory note with a related party due May 24, 2020. This note is convertible into shares of the Company’s common stock at $.002 per share.

 

At June 30, 2019 and June 30, 2018, the Company has unsecured interest bearing demand notes outstanding to certain officers and directors amounting to $498,021 and $458,487, respectively. Interest accrued on these notes during the three months ended June 30, 2019 and 2018 was $8,103 and $7,936, respectively.

 

Recent Accounting Pronouncements

 

Recent accounting pronouncements are disclosed in Note 2 to the accompanying unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on form 10-Q.

 

Results of Operations

 

You should read the following discussion of our financial condition and results of operations together with the unaudited financial statements and the notes to the unaudited financial statements included in this quarterly report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

 

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.

 

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”.


22


 

 

For the three months ended June 30, 2019 and 2018

 

Prepaid expenses and other current assets increased $26,702, from $113,521 to $140,223 for the six months ended June 30, 2019. This increase was mainly due to an increase in consulting agreements and scientific board member agreements that were entered into during the six months ended June 30, 2019. These agreements are capitalized over the number of months of their respective agreements.

 

We had a net loss of $228,020 for the three months ended June 30, 2019, compared to a net loss of $613,058 for the three months ended June 30, 2018, a decrease of $385,038. This decrease was mainly due to a decrease in legal and professional fees, research and development, change in derivatives liabilities along with an increase in consulting fees and interest expense. We had a net loss of $603,166 for the six months ended June 30, 2019, compared to a net loss of $890,692 for the six months ended June 30, 2018, a decrease of $287,526. This decrease was mainly due to a decrease in legal and professional fees, research and development, change in derivatives liabilities along with an increase in consulting fees and interest expense along with an increase in consulting fees and interest expense.

 

Net sales increased $7,912, from $1,019 to $8,931, for the three months ended June 30, 2018 and June 30, 2019, respectively. Net sales increased $9,776, from $1,619 to $11,395, for the six months ended June 30, 2018 and June 30, 2019, respectively.

 

Cost of goods sold increased $932, from $104 to $1,036, for the three months ended June 30, 2018 and June 30, 2019, respectively. Cost of goods sold increased $973, from $209 to $1,182, for the six months ended June 30, 2018 and June 30, 2019, respectively.

 

Operating expenses for the three month periods ended June 30, 2019 and 2018 were $202,127 and $235,207, a decrease of $33,080. This decrease was mainly due to decreases in legal and professional fees and research and development along with an increase in consulting fees. Operating expenses for the six month periods ended June 30, 2019 and 2018 were $637,035 and $434,528, an increase of $202,507. This increase was mainly due to increases in stock compensation and consulting fees along with decreases in legal and professional fees and research and development.

 

General and administrative expenses decreased $2,741, from $22,879 to $20,138 for the three months ended June 30, 2018 and 2019, respectively. This decrease was mainly due decreased marketing costs along with an increase in supplies expense in the comparable quarters in 2019 vs 2018. General and administrative expenses decreased $3,796, from $37,417 to $33,621 for the six months ended June 30, 2018 and 2019, respectively. This decrease was mainly due decreased marketing costs along with an increase in supplies expense in the comparable quarters in 2019 vs 2018.

 

Salaries, wages and related expenses decreased $2,058, from $101,040 to $98,982 for the three months ended June 30, 2018 and 2019, respectively. This decrease was mainly due to a decrease in wage related expenses for the three months ended June 30, 2019. Salaries, wages and related expenses increased $5,739, from $199,649 to $205,388 for the six months ended June 30, 2018 and 2019, respectively. This increase was mainly due to an increase in wage related expenses for the six months ended June 30, 2019.

 

Stock compensation was $0, for the three months ended June 30, 2018 and 2019, respectively. Stock compensation increased $225,000, from $0 to $225,000, for the six months ended June 30, 2018 and 2019, respectively. This was mainly due an issuance to Restricted Stock Awards to two officers and one director for the three months ended June 30, 2019.

 

Consulting fees increased $32,360 from $18,606 to 50,966 for the three months ended June 30, 2018 and 2019, respectively, due to an increase in overall consulting services. Consulting fees increased $54,980 from $29,371 to $84,351 for the six months ended June 30, 2018 and 2019, respectively, due to an increase in overall consulting services.

 

Legal and professional fees decreased $32,584, from $58,393 to $25,809 for the three months ended June 30, 2019 and June 30, 2018, respectively, due to a decrease in independent public accounting fees and legal expense. Legal and professional fees decreased $45,784, from $128,227 to $82,443 for the six months ended June 30, 2019 and June 30, 2018, respectively, due to a decrease in independent public accounting fees and legal expense.

 

Research and development costs decreased $28,057, from $34,289 to $6,232, for the three months ended June 30, 2018 and 2019, respectively. This decrease was mainly due to decreased research and development expenses related our NanoStilbene products for the comparable three month periods. Research and development costs decreased $33,632, from $39,864 to $6,232, for the six months ended June 30, 2018 and 2019, respectively. This decrease was mainly due to decreased research and development expenses for the comparable six month periods.

 

Loss on derivatives liability decreased $22,971, from $42,104 to $19,133, for the three months ended June 30, 2018 and 2019, respectively. This decrease was mainly due to derivative liability decreases from certain convertible notes for the three months ended June 30, 2018 and 2019, respectively. Loss on derivatives liability increased $105,605, from $121,455 to $227,060, for the six months ended June 30, 2018 and 2019, respectively. This increase was mainly due to derivative liability increases from certain convertible notes for the three months ended June 30, 2018 and 2019, respectively.


23


 

 

Change in fair derivatives liabilities expense decreased $379,943 from $291,923 to $(88,020) for the three months ended June 30, 2018 and June 30, 2019, respectively. This decrease was due to a lower derivative liability expense from certain convertible notes in 2019 compared to 2018. Change in fair derivatives liabilities expense decreased $687,987 from $247,096 to $(440,891) for the six months ended June 30, 2018 and June 30, 2019, respectively. This increase was due to a derivative liability expense from certain convertible notes in 2019 compared to 2018

 

Net interest expense increased $57,936 from $44,739 to $102,675 for the three months ended June 30, 2018 and June 30, 2019, respectively. This increase was mainly due to increased debt balances. Net interest expense increased $101,152 from $89,023 to $190,075 for the six months ended June 30, 2018 and June 30, 2019, 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 $7.7 million and a working capital deficit of approximately $1.7 million at June 30, 2019. 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 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide this information requested by this item.


24


 

 

Item 4. Controls and Procedures

 

A. Disclosure Controls and Procedures  

 

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, or Exchange Act, our principal executive officer and principal financial officer evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2019. Based on this evaluation, these officers concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, these disclosure controls and procedures were not operating effectively to ensure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and include controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

 

B. Changes in Internal Control over Financial Reporting  

 

There were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended June 30, 2019 that materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

Our management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of June 30, 2019. In making our assessment, we used the framework and criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013). Based on that assessment, our management has identified certain material weaknesses in our internal control over financial reporting.

 

Our management concluded that as of June 30, 2019 our internal control over financial reporting was not effective, and that material weaknesses existed in the following areas as of June 30, 2019

 

(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 insufficient accounting staff. 


25


 

 

 

PART II - OTHER INFORMATION

 

Item 1. 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 1A. Risk Factors

 

No material changes to risk factors have occurred as previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on April 15, 2019.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On April 15, 2019, we issued 6,000,000 shares of common stock for the partial conversion of $12,000 for convertible note dated October 3, 2018.

 

On April 24, 2019, we issued 11,490,000 shares of common stock for the partial conversion of $11,980 for convertible note dated October 3, 2018.

 

On May 20, 2019, we issued 6,666,667 shares of common stock for the partial conversion of $12,000 for a convertible note dated November 15, 2018.

 

On May 24, 2019, we issued 12,766,667 shares of common stock for the partial conversion of $22,980 for a convertible note dated November 15, 2018.

 

On June 11, 2019, we issued 10,909,091 shares of common stock for the partial conversion of $12,000 for a convertible note dated November 6, 2018.

 

On June 11, 2019, we issued 10,909,091 shares of common stock for the partial conversion of $12,000 for a convertible note dated November 6, 2018.

 

On June 18, 2019, we issued 95,970,000 shares of commons stock for conversion of a convertible note dated June 1, 2019.

 

On June 18, 2018, we issued 15,000,000 shares of common stock, valued at $.0016 per share, for consulting services.

 

On June 19, 2019, we issued 12,200,000 shares of common stock for the partial conversion of $10,980 for a convertible note dated November 6, 2018.

 

On June 28, 2019, we issued 12,000,000 shares of common stock, valued at $.0015 to a related party in regard to a subscription agreement.

 

On July 8, 2019, we issued 24,590,164 shares of common stock for the partial conversion of $15,000 for a convertible note dated January 2, 2019.

 

On July 11, 2019, we issued 32,754,098 shares of common stock for the partial conversion of $19,980 for a convertible note dated January 2, 2019.

 

On July 23, 2019, we issued 56,033,333 shares of common stock, valued at $.0009 to a related party in regard to a subscription agreement.

 

On August 5, 2019, we issued 4,000,000 shares of common stock, valued at $.002 to a related party in regard to a subscription agreement.


26


 

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

No disclosure required.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

EXHIBIT NUMBER

DESCRIPTION

31.1

Rule 13a-14(a)/Section 302 Certification of Principal Executive Officer

31.2

Rule 13a-14(a)/Section 302 Certification of Principal Financial Officer

32.1

Certification pursuant to 18 U.S.C. Section 1350/Rule 13a-14(b)


27


 

 

SIGNATURES

 

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

 

THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.

 

Date: August 16, 2019

 

 

 

By:

/s/ Timothy G. Dixon

 

 

Timothy G. Dixon

 

 

President and Chief Executive Officer

(Principal Executive Officer)

 

 

/s/ Timothy G. Dixon

 

 

 

Date: August 16, 2019

 

 

 

By:

/s/ Gerry B. Berg

 

 

Gerry B. Berg

 

 

Chief Financial Officer

 

 

(Principal Financial Officer)


28

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