Consolidated Notes to Financial Statements
December 31, 2019
Note 1 – Nature of business
Therapeutic Solutions International, Inc. (“TSI” or the “Company”) was organized August 6, 2007 under the name Friendly Auto Dealers, Inc., under the laws of the State of Nevada. In the first quarter of 2011 the Company changed its name from Friendly Auto Dealers, Inc. to Therapeutic Solutions International, Inc., and acquired Splint Decisions, Inc., a California corporation.
Currently, the Company is focused on immune modulation for the treatment of several specific diseases. Immune modulation refers to the ability to upregulate (make more active) or downregulate (make less active) one’s immune system.
Activating one’s immune system is now an accepted method to 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 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 December 31, 2019 or as of March 31, 2020 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these financial statements. These financial statements have been prepared on a going concern basis which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2019, the Company has incurred losses totaling $8.8 million since inception, has not yet generated material revenue from operations, and will require additional funds to maintain its operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company intends to finance operating costs over the next twelve months through its existing financial resources and we may also raise additional capital through equity offerings, debt financings, collaborations and/or licensing arrangements. If adequate funds are not available on acceptable terms, we may be required to delay, reduce the scope of, or curtail, our operations. The accompanying consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
F-6
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 2 – Basis of presentation and significant accounting policies
Basis of Presentation
The consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In the opinion of the Company’s management, the consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Therapeutic Solutions International, Inc. and its wholly-owned 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.
ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service.
Wholesale policies:
Delivery. The Goods shall be deemed delivered when Buyer has accepted delivery at the above-referenced location. The shipping method shall be determined by Seller, but Buyer will not be responsible for shipping costs.
Purchase Price & Payments. Seller agrees to sell the Goods to Buyer for Fifty Percent (50%) off Sellers listed retail price (see Exhibit A). Seller will provide an invoice to Buyer at the time of delivery. All invoices must be paid, in full, within thirty (30) days. Any balances not paid within thirty (30) days will be subject to a five percent (5%) late payment penalty. In the event Buyer exceeds the aggregate of $500,000.00 worth of aforementioned products having been purchased, delivered, and paid for, Buyer will be entitled to an additional Five Percent (5%) discount up to the aggregate of $750,000.00. In the event Buyer exceeds the aggregate of $750,000.00 worth of aforementioned products having been purchased, delivered, and paid for, Buyer will be entitled to an additional Five Percent (5%) discount up to the aggregate of $1,500,000.00. All future sales after initial $1,500,000 in aggregate purchases will be sold at 60% off retail.
Inspection of Goods & Rejection. Buyer is entitled to inspect the Goods upon delivery. If the Goods are unacceptable for any reason, Buyer must reject them at the time of delivery up to five (5) business days from the date of delivery. If Buyer has not rejected the Goods within five (5) business days from the date of delivery, Buyer shall have waived any right to reject that specific delivery of Goods. In the event Buyer rejects the Goods, Buyer shall allow Seller a reasonable time to cure the deficiency. A reasonable time period shall be determined by industry standards for the particular Goods, as well as the Seller and Buyer.
Risk of Loss. Risk of loss will be on the Seller until the time when the Buyer accepts delivery. Seller shall maintain any and all necessary insurance in order to insure the Goods against loss at Seller’s own expense
F-7
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 2 – Basis of presentation and significant accounting policies (Continued)
Retail policies of e-commerce:
Returns. We will gladly accept the return of products that are defective due to defects in manufacturing and/or workmanship. Fulfillment mistakes that may be made which result in the shipment of incorrect products to you will also be accepted for return.
Shipping. Shipping Time -- Most orders will ship the next business day, provided the product ordered is in stock. Orders are not processed or shipped on Saturday or Sunday, except by prior arrangement. We cannot guarantee when an order will arrive. Consider any shipping or transit time offered to you by this site or other parties only as an estimate. We encourage you to order in a timely fashion to avoid delays caused by shipping or product availability.
Out of Stock. We will ship your product as it becomes available. Usually, products ship by the next business day. However, there may be times when the product you have ordered is out-of-stock, which will delay fulfilling your order. We will keep you informed of any products that you have ordered that are out-of-stock and unavailable for immediate shipment. You may cancel your order at any time prior to shipping.
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.
Inventories
Inventories are stated at lower of cost (using the first-in, first-out method, “FIFO”) or market. Inventories consist of purchased materials and assembly items.
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 $521,700 and $466,612 at December 31, 2019 and 2018, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, prepaids, convertible notes, and payables. The carrying amount of cash and cash equivalents and payables approximates fair value because of the short-term nature of these items.
F-8
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 2 – Basis of presentation and significant accounting policies (Continued)
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 December 31, 2018, the Company has level 3 fair value calculations on derivative liabilities. The table below reflects the results of our Level 3 fair value calculations:
The following is the change in derivative liability for the years ended December 31, 2019 and 2018:
Balance, December 31, 2017
|
$
|
107,769
|
|
|
|
Issuance of new derivative liabilities
|
|
633,122
|
Conversions to paid-in capital
|
|
(311,509)
|
Change in fair market value of derivative liabilities
|
|
37,230
|
|
|
|
Balance, December 31, 2018
|
|
466,612
|
|
|
|
Issuance of new derivative liabilities
|
|
602,934
|
Conversions to paid-in capital
|
|
(498,325)
|
Change in fair market value of derivative liabilities
|
|
(49,521)
|
Balance, December 31, 2019
|
$
|
521,700
|
Use of Estimates
Estimates were made relating to valuation allowances, impairment of assets, share-based compensation expense and accruals. Actual results could differ materially from those estimates.
Comprehensive Loss
Comprehensive loss for the periods reported was comprised solely of the Company’s net loss.
Net Loss Per Share
Basic loss per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued, if such additional common shares were dilutive. Since we had net losses for all the periods presented, basic and diluted loss per share are the same, and additional potential common shares have been excluded as their effect would be antidilutive.
As of December 31, 2019 and 2018, a total of 181,588,903 and 226,902,346, respectively, potential common shares, consisting of shares underlying outstanding convertible notes payable were excluded as their inclusion would be antidilutive.
F-9
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 2 – Basis of presentation and significant accounting policies (Continued)
Depreciation and Amortization
Depreciation is calculated using the straight line method over the estimated useful lives of the assets. Amortization is computed using the straight line method over the term of the agreement. During the years ended December 31, 2019 and 2018, there was no depreciation or amortization expense as all fixed assets have been fully depreciated.
Intangible Assets
Intangible assets consisted primarily of intellectual properties such as proprietary nutraceutical formulations. Intellectual assets are capitalized in accordance with ASC Topic 350 “Intangibles – Goodwill and Other.” Intangible assets with finite lives are amortized over their respective estimated lives and reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable. Amortization expense for the years ended December 31, 2019 and 2018 was $6,591 and $0, respectively.
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.
Research and Development
Research and Development costs are expensed as incurred. Research and Development expenses were $27,685 and $74,970 for the years ended December 31, 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 adopted during the year ended December 31, 2018 for which there was no impact on the consolidated financial statements.
Leases
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 became effective for the Company in the first quarter of 2019 and 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 $5,619 as of December 31, 2019.
F-10
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 2 – Basis of presentation and significant accounting policies (Continued)
Recent Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The new guidance improves and clarifies the fair value measurement disclosure requirement of ASC 820. The new disclosure requirements include the changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurement held at the end of the reporting period and the explicit requirement to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The other provisions of ASU 2018-13 also include eliminated and modified disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, including in an interim period for which financial statements have not been issued or made available for issuance. The Company has evaluated the impact of adoption of this ASU and determined that it will have no significant impact on its consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminated certain exceptions and changed guidance on other matters. The exceptions relate to the allocation of income taxes in separate company financial statements, tax accounting for equity method investments and accounting for income taxes when the interim period year-to-date loss exceeds the anticipated full year loss. Changes relate to the accounting for franchise taxes that are income-based and non-income-based, determining if a step up in tax basis is part of a business combination or if it is a separate transaction, when enacted tax law changes should be included in the annual effective tax rate computation, and the allocation of taxes in separate company financial statements to a legal entity that is not subject to income tax. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the potential impact but does not believe there will be an impact of the adoption of this standard on its results of operations, financial position and cash flows and related disclosures.
Note 3 – Restricted cash
Included in current assets 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 – Prepaid expense and other current assets
Prepaid expenses and other current assets consist of the following:
|
|
December 31,
2019
|
|
December 31,
2018
|
Prepaid consulting
|
$
|
88,261
|
$
|
111,655
|
Insurance
|
|
-
|
|
848
|
Prepaid costs
|
|
1,118
|
|
1,018
|
Total
|
$
|
89,379
|
$
|
113,521
|
Note 5 – Fixed assets
Fixed assets consist of the following:
|
|
December 31,
2019
|
|
December 31,
2018
|
Computer hardware
|
$
|
10,747
|
$
|
10,747
|
Office furniture and equipment
|
|
3,639
|
|
3,639
|
Shipping and other equipment
|
|
1,575
|
|
1,575
|
Total
|
|
15,961
|
|
15,961
|
Accumulated depreciation
|
|
(15,961)
|
|
(15,961)
|
Property and equipment, net
|
$
|
-
|
$
|
-
|
Depreciation expense was $0 for December 31, 2019 and 2018.
F-11
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 6 – Other assets
Other assets consist of the following:
|
|
December 31,
2019
|
|
December 31,
2018
|
Prepaid consulting
|
$
|
20,238
|
$
|
56,717
|
Deposit
|
|
4,123
|
|
4,123
|
Licenses, net
|
|
146,961
|
|
-
|
Total
|
$
|
171,322
|
$
|
60,840
|
Prepaid consulting agreements are for one to two years and are expensed monthly over the term of the agreement. The net licenses amount above consists of the following:
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
|
|
|
License
|
$
|
153,552
|
$
|
-
|
Accumulated amortization
|
|
(6,591)
|
|
-
|
Licenses, net
|
$
|
146,961
|
$
|
-
|
As of June 1, 2019, we entered into a license agreement, which will be amortized over the life of the Patent. The Patent expires December 31, 2032. The Exclusive Patent License to the Jadi Cell is for use under the designated areas of CTE (Chronic Traumatic Encephalopathy), and TBI (Traumatic Brain Injury). The Jadi Cell is an cGMP grade and Research grade manufactured allogenic mesenchymal stem cells derived from US Patent No.: 9,803,176 B2. Forward looking the Company intends to file an Investigational New Drug Application (IND) for brain injured patients who have been intensively cared for and mechanically ventilated due to covid-19 illness and a second IND for CTE/TBI as well in keeping with the spirit of the licensing agreement to advance the Jadi Cell through to FDA Approval for CTE/TBI.
F-12
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 7 – Convertible notes payable
On January 3, 2018, February 27, 2018, May 1, 2018, June 5, 2018, July 2, 2018, August 6, 2018, October 3, 2018, November 15, 2018, and December 6, 2018, the Company entered into five $28,000 convertible promissory notes and four $33,000 convertible promissory notes with third parties for which the proceeds were used for operations. The Company received net proceeds of $245,000 and a $27,000 original issuance discount was recorded. The convertible promissory notes incur interest at 12% per annum for which $28,000 plus accrued interest were due on October 15, 2018, November 20, 2018, February 15, 2019, April 15, 2019 and May 30, 2019 and $33,000 plus accrued interest were due March 30, 2019, July 30, 2019, August 30, 2019, and September 30, 2019. The convertible promissory notes were convertible to shares of the Company's common stock 180 days after issuance. The conversion price per share was equal to 55% of the average of the three (3) lowest trading price of the Company's common stock during the fifteen (15) trading days immediately preceding the applicable conversion date. The Company had the option to prepay the convertible notes in the first 180 days from closing subject to prepayment penalties ranging from 120 of 145% of principal balance plus interest, depending upon the date of prepayment. The convertible promissory notes included various default provisions for which the default interest rate increases to 22% per annum with the outstanding principal and accrued interest increasing by 150%.
On January 2, 2019, February 7, 2019, March 11, 2019, April 23, 2019, August 28, 2019, October 30, 2019 and December 13, 2019, the Company entered into two $28,000 convertible promissory notes, three $33,000 convertible promissory notes, one $78,000 convertible promissory note and one $38,000 convertible promissory note with a third party for which the proceeds were used for operations. The Company received net proceeds of $250,000 and a $21,000 original issuance discount was recorded. The convertible promissory notes incur interest at 12% per annum for which $28,000 plus accrued interest are due on January 30, 2020 and October 30, 2020 and $33,000 plus accrued interest are/were due October 30, 2019, November 30, 2019 and February 28, 2020 and $78,000 plus accrued interest is due June 30, 2020 and $38,000 plus accrued interest is due June 30, 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 convertible promissory note dated February 7, 2019 was paid in full on July 26, 2019. The Company was required to reserve at December 31, 2019, a total of 872,670,108 common shares in connection with the promissory notes.
Derivative liabilities
These convertible promissory notes are convertible into a variable number of shares of common stock for which there is not a floor to the number of common stock we might be required to issue. Based on the requirements of ASC 815 Derivatives and Hedging, the conversion feature represented an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results each reporting period.
For the nine notes issued during the year ended December 31, 2018, the Company valued the conversion feature on the date of issuance resulting in initial liability of $633,121. Since the fair value of the derivatives were in excess of the proceeds received of $245,000, a full discount to convertible notes payable and a day one loss on derivative liabilities of $388,121 was recorded during the year ended December 31, 2018. Upon issuance, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $0.002 to $0.006, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0045 to $0.0220, an expected dividend yield of 0%, expected volatility ranging from 214% to 304%, risk-free interest rates ranging from 1.81% to 2.70%, and an expected term ranging from 0.76 to 0.82 years.
F-13
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 7 – Convertible notes payable (Continued)
During the year ended December 31, 2018, five of the $28,000 convertible notes and one of the $33,000 convertible notes were converted into 63,848,737 shares of common stock. At each conversion date, the Company recalculated the value of the derivative liability associated with the convertible note recording a gain (loss) in connection with the change in fair market value. In addition, the pro-rata portion of the derivative liability as compared to the portion of the convertible note converted was reclassed to additional paid-in capital. During the year ended December 31, 2018, the Company recorded a gain of $165,563 related to the change of fair value of the derivative liability and recorded $311,509 to additional paid-in capital. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $0.0033 to $0.005 the closing stock price of the Company's common stock on the date of valuation ranging from $0.0028 to $0.02720, an expected dividend yield of 0%, expected volatility ranging from 185% to 277%, risk-free interest rates ranging from 1.81% to 2.70%, and expected terms ranging from 0.07 to 0.75 years.
On December 31, 2018, the derivative liabilities on the remaining five convertible notes were revalued at $466,612 resulting in a loss of $202,793 for the year ended December 31, 2018 related to the change in fair value of the derivative liabilities. The derivative liabilities were revalued using the Black-Scholes option pricing model with the following assumptions: exercise price of $0.002, the closing stock price of the Company's common stock on the date of valuation of $0.0055, an expected dividend yield of 0%, expected volatility ranging from 248% to 279%, risk-free interest rate of 2.63%, and an expected term ranging from 0.29 to 0.75 years.
For the seven notes issued during the year ended December 31, 2019, the Company valued the conversion feature on the date of issuance resulting in initial liability of $602,934. Since the fair value of the derivatives were in excess of the proceeds received of $250,000, a full discount to convertible notes payable and a day one loss on derivative liabilities of $352,934 was recorded during the year ended December 31, 2019. Upon issuance, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $0.001 to $0.003, 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 236% to 262%, risk-free interest rates ranging from 1.55% to 2.60%, and an expected term ranging from 0.81 to 1 years.
During the year ended December 31, 2019, three of the $28,000 convertible notes and five of the $33,000 convertible notes were converted into 235,561,296 shares of common stock. At each conversion date, the Company recalculated the value of the derivative liability associated with the convertible note recording a gain (loss) in connection with the change in fair market value. In addition, the pro-rata portion of the derivative liability as compared to the portion of the convertible note converted was reclassed to additional paid-in capital. During the year ended December 31, 2019, the Company recorded a gain of $310,347 related to the change of fair value of the derivative liability and recorded $498,324 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 $0.0004 to $0.002, the closing stock price of the Company's common stock on the date of valuation ranging from $0.001 to $0.009, an expected dividend yield of 0%, expected volatility ranging from 214% to 263%, risk-free interest rates ranging from 1.56% to 2.59%, and expected terms ranging from 0.26 to 0.38 years.
On December 31, 2019, the derivative liabilities on the remaining three convertible notes were revalued at $521,700 resulting in a loss of $260,826 for the year ended December 31, 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 $0.003, an expected dividend yield of 0%, expected volatility ranging from 245% to 262%, risk-free interest rate of 1.59%, and an expected term ranging from 0.5 to 0.95 years.
The Company amortizes the discounts over the term of the convertible promissory notes using the straight line method which is similar to the effective interest method. During the years ended December 31, 2019 and 2018, the Company amortized $278,593 and $194,985 to interest expense, respectively. As of December 31, 2019, discounts of $105,525 remained for which will be amortized through December 2020.
F-14
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 8 – Notes payable-related parties
Notes payable-related parties consist of:
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
|
|
|
Note payable – Scientific Advisory Board Member, unsecured, including interest at 10% per annum, with a maturity date of December 31, 2019
|
|
18,162
|
$
|
17,015
|
|
|
|
|
|
Three notes payable – Chief Executive Officer, unsecured, including interest at 8%, 10% and 10% per annum, respectively, with maturity date of December 31, 2019
|
|
37,671
|
|
138,105
|
|
|
|
|
|
One note payable – Chief Executive Officer, unsecured, no interest, paid from a % of revenues
|
|
534,700
|
|
-
|
|
|
|
|
|
Note payable – Chief Financial Officer, unsecured, including interest at 8% per annum, with a maturity date of December 31, 2019
|
|
105,600
|
|
99,200
|
|
|
|
|
|
Three notes payable – Business Advisory Board Member, unsecured, including interest at 8% and 10% per annum, convertible into common stock at $0.005 and $0.004,respectively, with maturity date of April 20, 2019
|
|
246,334
|
|
204,167
|
|
|
942,467
|
|
458,487
|
Less debt discount
|
|
(4,939)
|
|
-
|
|
$
|
937,528
|
$
|
458,487
|
Note 9 – Related party transactions
As of December 31, 2019 and 2018, the Company had accrued officers’ salary of $439,534 and $663,100, respectively. One of the officers settled with the company for a note payable that is unsecured and doesn’t accrue interest and will be paid as 0.5% of revenues. This decreased accrued officers’ salary.
On October 25, 2018, we issued 15,000,000 shares of common stock, valued at $0.0071 each to two officers and one director of the Company under a Restricted Stock Award.
On December 12, 2019, we issued 100,000,000 shares of common stock, valued at $0.0013 each to one officer and one director of the Company under a Restricted Stock Award.
F-15
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 10 – Income taxes
The Company is subject to United States federal and state income taxes at an approximate rate of 30%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:
|
|
December 31,
2019
|
|
December 31,
2018
|
Expected income tax at statutory rate
|
$
|
(356,438)
|
$
|
(391,884)
|
State tax
|
|
168
|
|
168
|
Permanent differences
|
|
220,501
|
|
253,768
|
Other
|
|
6,556
|
|
(11,756)
|
Change in valuation allowance
|
|
129,213
|
|
149,704
|
Provision for income taxes
|
$
|
-
|
$
|
-
|
The significant components of deferred income tax assets and liabilities at December 31, 2019 and 2018 are as follows:
|
|
December 31,
2019
|
|
December 31,
2018
|
Net operating loss carry-forward
|
$
|
1,450,896
|
$
|
1,321,683
|
Valuation allowance
|
|
(1,450,896)
|
|
(1,321,683)
|
Net deferred tax asset
|
$
|
-
|
$
|
-
|
The Company has net operating losses carried forward of approximately $5.7 million and $5 million as of December 31, 2019 and 2018, respectively, available to offset taxable income in future years which expire beginning in fiscal 2032.
As of and for the years ended December 31, 2019 and 2018, management does not believe the Company has any uncertain tax positions. Accordingly, there are no recognized tax benefits at December 31, 2019 and 2018.
The Company is subject to tax in the United States and files tax returns in the U.S. Federal jurisdiction and California state jurisdiction. The Company is subject to U.S. Federal, state and local income tax examinations by tax authorities starting in 2016. The Company currently is not under examination by any tax authority.
Note 11 – Equity
Our authorized capital stock consists of an aggregate of 3,505,000,000 shares, comprised of 3,500,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, which may be issued in various series from time to time and the rights, preferences, privileges and restrictions of which shall be established by our board of directors. As of December 31, 2019, we have 1,614,627,811 shares of common stock and no preferred shares issued and outstanding.
On January 26, 2018, we issued 2,424,242 shares of common stock for the partial conversion of $8,000 for convertible note dated July 24, 2017.
On February 1, 2018, we issued 6,376,471 shares of common stock for the conversion of the balance of $20,000 for convertible note dated July 24, 2017.
On February 1, 2018, we issued 5,000,000 shares of common stock, valued at $0.009 per share, for consulting services.
On February 1, 2018, we issued 2,500,000 shares of common stock, valued at $0.009 per share, for consulting services.
On February 20, 2018, we issued 15,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
F-16
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 11 – Equity (Continued)
On February 20, 2018, we issued 2,500,000 shares of common stock, valued at $0.0062 per share, for consulting services.
On April 14, 2018, we issued 2,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On April 14, 2018, we issued 5,000,000 shares of common stock, valued at $0.0057 per share, for consulting services.
On April 27, 2018, we issued 3,225,806 shares of common stock for the partial conversion of $8,000 for convertible note dated September 7, 2017.
On May 1, 2018, we issued 4,137,931 shares of common stock for the partial conversion of $12,000 for convertible note dated September 7, 2017.
On May 2, 2018, we issued 25,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement to a related party.
On May 21, 2018, we issued 2,742,857 shares of common stock for the partial conversion of $6,000 for convertible note dated September 7, 2017.
On June 15, 2018, we issued 8,500,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 3, 2018, we issued 5,000,000 shares of common stock, valued at $0.004 per share, for an investment in the Company’s Private Placement.
On July 9, 2018, we issued 4,166,667 shares of common stock for the partial conversion of $15,000 for convertible note dated January 3, 2018.
On July 12, 2018, we issued 4,077,778 shares of common stock for the partial conversion of $13,000 for convertible note dated January 3, 2018.
On July 19, 2018, we issued 2,500,000 shares of common stock, valued at $0.015 per share, to a Scientific Advisory Board member for consulting services.
On August 7, 2018, we issued 11,000,000 shares of common stock at $0.011 per share, for consulting services.
On September 5, 2018, we issued 3,260,870 shares of common stock for the partial conversion of $15,000 for convertible note dated February 27, 2018.
On September 10, 2018, we issued 3,262,222 shares of common stock for the partial conversion of $13,000 for convertible note dated February 27, 2018.
On September 19, 2018, we issued 5,000,000 shares of common stock, valued at $0.005 per share, for an investment in the Company’s Private Placement.
On September 19, 2018, we issued 1,500,000 shares of common stock, valued at $0.01 per share, to a Scientific Advisory Board member for consulting services.
On October 25, 2018, we issued 15,000,000 shares of common stock, valued at .0071 each to two officers and one director of the Company under a Restricted Stock Award.
On November 15, 2018, we issued 2,500,000 shares of common stock, valued at $0.008 per share, to a Scientific Advisory Board member for consulting services.
F-17
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 11 – Equity (Continued)
On November 23, 2018, we issued 3,805,899 shares of common stock for the partial conversion of $12,000 for convertible note dated May 1, 2018.
On November 26, 2018, we issued 4,347,826 shares of common stock for the partial conversion of $10,000 for convertible note dated May 1, 2018.
On November 28, 2018, we issued 3,657,143 shares of common stock for the partial conversion of $6,000 for convertible note dated May 1, 2018.
On December 7, 2018, we issued 8,823,529 shares of common stock for the partial conversion of $15,000 for convertible note dated June 5, 2018.
On December 14, 2018, we issued 5,882,353 shares of common stock for the partial conversion of $10,000 for convertible note dated June 5, 2018.
On December 17, 2018, we issued 5,870588 shares of common stock for the partial conversion of $8,000 for convertible note dated June 5, 2018.
On January 3, 2019, we issued 15,000,000 shares of common stock, valued at $0.0071 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 convertible note dated October 3, 2018.
On April 24, 2019, we issued 11,490,000 shares of common stock for the partial conversion of $22,980 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 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 convertible note dated November 15, 2018.
On June 11, 2019, we issued 21,818,182 shares of common stock for the partial conversion of $24,000 for convertible note dated December 6, 2018.
F-18
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 11 – Equity (Continued)
On June 18, 2019, we issued 95,970,000 shares of common stock, valued at $0.0016 per share, for a license.
On June 18, 2019, we issued 15,000,000 shares of common stock, valued at $0.0016 per share, to a Scientific Advisory Board member for consulting services.
On June 19, 2019, we issued 12,200,000 shares of common stock for the partial conversion of $10,980 for convertible note dated December 6, 2018.
On June 28, 2019, we issued 12,000,000 shares of common stock, valued at $0.0015 per share, for an investment in the Company’s Private Placement.
On July 8, 2019, we issued 24,590,164 shares of common stock for the partial conversion of $15,000 for 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 convertible note dated January 2, 2019.
On July 23, 2019, we issued 56,033,333 shares of common stock, valued at $0.0009 per share, for an investment in the Company’s Private Placement.
On August 5, 2019, we issued 4,000,000 shares of common stock, valued at $0.002 per share, for an investment in the Company’s Private Placement.
On September 12, 2019, we issued 10,000,000 shares of common stock for the partial conversion of $12,000 for convertible note dated March 11, 2019.
On September 18, 2019, we issued 10,909,091 shares of common stock for the partial conversion of $12,000 for convertible note dated March 11, 2019.
On September 20, 2019, we issued 5,737,374 shares of common stock for the partial conversion of $5,680 for convertible note dated March 11, 2019.
On October 29, 2019, we issued 12,345,679 shares of common stock for the partial conversion of $10,000 for convertible note dated April 23, 2019.
On October 31, 2019, we issued 18,987,342 shares of common stock for the partial conversion of $15,000 for convertible note dated April 23, 2019.
On November 4, 2019, we issued 14,257,143 shares of common stock for the partial conversion of $9,980 for convertible note dated April 23, 2019.
On December 12, 2019, we issued 30,000,000 shares of common stock, valued at $0.0013 per share, for consulting services.
On December 12, 2019, we issued 100,000,000 shares of common stock, valued at $0.0013 each to one officer and one director of the Company under a Restricted Stock Award.
F-19
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Consolidated Notes to Financial Statements
December 31, 2019
Note 12 – Legal proceedings
From time to time, claims are made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods.
However, as of the date of this report, management believes the outcome of currently identified potential claims and lawsuits will not have a material adverse effect on our financial condition or results of operations.
Note 13 – Commitments and Contingencies
Effective May 1, 2017, the Company entered into a fourth amendment to a Lease Agreement for property located in Oceanside, CA. The lease consists of approximately 1,700 square feet and the amendment is for a term of 36 months and expires on April 30, 2020.
During the year ended December 31, 2019 and 2018, the Company incurred rent expense of $22,494 and $21,774.
Future minimum lease payments as of December 31, 2019 are as follows:
For the year ending December 31,
|
|
|
|
|
|
2020
|
$
|
7,492
|
Effective November 8, 2019, the Company entered into a royalty agreement with one of the officers, refer to Note 9.
Note 14 – Subsequent events
On February 3, 2020. we issued a annual convertible note in the amount of $33,000 with an annual interest rate of 12%.
On March 1, 2020, the Company entered into a fifth amendment to the lease agreement for property located in Oceanside, CA. The amendment extends the expiration date to April 30, 2023 with escalating monthly payments ranging from $2,024 to $2,153.
On March 2, 2020, we issued 8,333,333 shares of common stock for the partial conversion of $10,000 for the convertible note dated August 28, 2019.
On March 5, 2020, we filed with the Nevada Secretary of State a Certificate of Amendment to Articles of Incorporation to effect an amendment (the “Amendment”) changing the number of authorized shares of our common stock to 3,500,000,000 (and changing the total number of authorized shares of stock to 3,505,000,000).
On March 3, 2020, our stockholders acted by way of nonunanimous majority written consent action (pursuant to a solicitation of consents commenced on February 27, 2020, and in lieu of a special meeting of stockholders) to approve the Amendment. The number of shares giving written consent (i.e., voting) in favor of such matter was 927,629,005 (57.45%); no shares were overtly “voted against” the Amendment; and 686,998,806 shares did not participate in the nonunanimous majority written consent action (42.55%).
On March 12, 2020, we issued 11,764,706 shares of common stock for the partial conversion of $10,000 for the convertible note dated August 28, 2019.
On March 26, 2020, we issued 21,818,182 shares of common stock for the partial conversion of $12,000 for the convertible note dated August 28, 2019.
In accordance with ASC 855, the Company has analyzed its operations subsequent to December 31, 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.
F-20
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
|
|
March 31,
2020
|
|
December 31,
2019
|
|
|
(Unaudited)
|
|
(Audited)
|
ASSETS
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
3,859
|
$
|
26,410
|
Restricted cash
|
|
10,187
|
|
10,187
|
Accounts receivable
|
|
3,625
|
|
2,904
|
Inventory
|
|
4,488
|
|
5,180
|
Prepaid expenses and other current assets
|
|
61,731
|
|
89,379
|
Right-of-use asset
|
|
24,137
|
|
5,619
|
Total current assets
|
|
108,027
|
|
139,679
|
|
|
|
|
|
Other assets
|
|
213,007
|
|
171,322
|
|
|
|
|
|
Total assets
|
$
|
321,034
|
$
|
311,001
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
|
332,497
|
$
|
324,936
|
Accounts payable-related parties
|
|
10,700
|
|
12,715
|
Accrued expenses and other current liabilities
|
|
529,867
|
|
505,072
|
Lease liability
|
|
24,137
|
|
5,619
|
Convertible notes payable, net of discount of $93,855 and $105,525, at March 31, 2020 and December 31, 2019, respectively
|
|
56,455
|
|
38,475
|
Notes payable-related parties, net
|
|
946,979
|
|
937,528
|
Derivative liabilities
|
|
303,097
|
|
521,700
|
Total current liabilities
|
|
2,203,732
|
|
2,346,045
|
|
|
|
|
|
LONG TERM LIABILITIES
|
|
|
|
|
Lease liability, net of current portion
|
|
55,254
|
|
-
|
TOTAL LIABILITIES
|
|
2,258,986
|
|
2,346,045
|
|
|
|
|
|
Commitments and contingencies
|
|
-
|
|
-
|
|
|
|
|
|
Shareholders' Deficit:
|
|
|
|
|
Preferred stock, $ 0.001 par value; 5,000,000 shares authorized
|
|
-
|
|
-
|
Common stock, $ 0.001 par value; 3,500,000,000 shares authorized; 1,656,544,032 and 1,614,627,811 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively.
|
|
1,656,544
|
|
1,614,628
|
Additional paid-in capital
|
|
5,206,268
|
|
5,183,228
|
Accumulated deficit
|
|
(8,800,764)
|
|
(8,832,900)
|
Total shareholders' deficit
|
|
(1,937,952)
|
|
(2,035,044)
|
|
|
|
|
|
Total liabilities and shareholders' deficit
|
$
|
321,034
|
$
|
311,001
|
See accompanying notes to condensed consolidated financial statements.
F-21
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
For the Three
Months Ended
March 31, 2020
|
|
For the Three
Months Ended
March 31, 2019
|
|
|
|
|
|
Net sales
|
$
|
19,514
|
$
|
2,464
|
Cost of goods sold
|
|
3,490
|
|
146
|
|
|
|
|
|
Gross profit
|
|
16,024
|
|
2,318
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
General and administrative
|
|
15,431
|
|
13,483
|
Salaries, wages, and related costs
|
|
53,170
|
|
106,406
|
Stock compensation
|
|
-
|
|
225,000
|
Consulting fees
|
|
37,219
|
|
33,385
|
Legal and professional fees
|
|
32,580
|
|
56,634
|
Total operating expenses
|
|
138,400
|
|
434,908
|
|
|
|
|
|
Loss from operations
|
|
(122,376)
|
|
(432,590)
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
Loss on derivatives liabilities
|
|
(20,755)
|
|
(207,927)
|
Change in fair value of derivative liabilities
|
|
236,402
|
|
352,871
|
Interest expense
|
|
(61,135)
|
|
(87,500)
|
Total other income (expense)
|
|
154,512
|
|
57,444
|
|
|
|
|
|
Net income (loss)
|
$
|
32,136
|
$
|
(375,146)
|
|
|
|
|
|
Net income (loss) per share - basic
|
$
|
0.00
|
$
|
(0.00)
|
|
|
|
|
|
Net income (loss) per share - diluted
|
$
|
0.00
|
$
|
(0.00)
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
1,621,008,777
|
|
1,091,073,182
|
|
|
|
|
|
Weighted average shares outstanding - diluted
|
|
1,895,283,682
|
|
1,091,073,182
|
See accompanying notes to condensed consolidated financial statements.
F-22
Therapeutic Solutions International, Inc.
Condensed Consolidated Statements of Changes in Shareholders' Deficit
(Unaudited)
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total
Stockholders'
Deficit
|
|
|
Shares
|
|
Amount
|
|
|
|
December 31, 2018
|
|
1,011,063,182
|
$
|
1,011,063
|
$
|
4,314,047
|
$
|
(7,135,578)
|
$
|
(1,810,468)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
55,000,000
|
|
55,000
|
|
220,000
|
|
-
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued upon conversion of convertible notes payable
|
|
35,038,889
|
|
35,039
|
|
174,981
|
|
-
|
|
210,020
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
-
|
|
-
|
|
(375,146)
|
|
(375,146)
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
1,101,102,071
|
$
|
1,101,102
|
$
|
4,709,028
|
$
|
(7,510,724)
|
$
|
(1,700,594)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total Stockholders' Deficit
|
|
|
Shares
|
|
Amount
|
|
|
|
December 31, 2019
|
|
1,614,627,811
|
$
|
1,614,628
|
$
|
5,183,228
|
$
|
(8,832,900)
|
$
|
(2,035,044)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of convertible notes, accrued interest and derivative liabilities
|
|
41,916,221
|
|
41,916
|
|
(9,916)
|
|
-
|
|
32,000
|
|
|
|
|
|
|
|
|
|
|
|
Relief of derivative liabilities
|
|
-
|
|
-
|
|
32,956
|
|
-
|
|
32,956
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
-
|
|
-
|
|
-
|
|
32,136
|
|
32,136
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020
|
|
1,656,544,032
|
$
|
1,656,544
|
$
|
5,206,268
|
$
|
(8,800,764)
|
$
|
(1,937,952)
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
F-23
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
For the Three
Months Ended
March 31, 2020
|
|
For the Three
Months Ended
March 31, 2019
|
Cash flows from operating activities
|
|
|
|
|
Net income (loss)
|
$
|
32,136
|
$
|
(375,146)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
Stock-based compensation to consultants
|
|
-
|
|
50,000
|
Stock-based compensation to related parties
|
|
-
|
|
225,000
|
Accrued interest, notes payable
|
|
5,310
|
|
-
|
Loss on derivative liabilities
|
|
20,755
|
|
207,927
|
Change in fair value of derivatives liabilities
|
|
(236,402)
|
|
(352,871)
|
Amortization of debt discount
|
|
47,769
|
|
71,732
|
Patent amortization
|
|
1,648
|
|
-
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
(721)
|
|
(1,475)
|
Inventory
|
|
692
|
|
-
|
Prepaid expenses and other current assets
|
|
37,219
|
|
(16,570)
|
Right-of-use asset
|
|
(71,422)
|
|
(22,116)
|
Accounts payable
|
|
7,562
|
|
(2,367)
|
Accounts payable - related parties
|
|
(2,015)
|
|
-
|
Accrued expenses and other current liabilities
|
|
31,632
|
|
87,711
|
Lease liability
|
|
73,771
|
|
22,116
|
Net cash used in operating activities
|
|
(29,515)
|
|
(106,059)
|
Cash flows from financing activities
|
|
|
|
|
Payments on notes payable to related party
|
|
(485)
|
|
(747)
|
Proceeds from convertible notes payable
|
|
30,000
|
|
85,000
|
Net cash provided by financing activities
|
|
29,515
|
|
84,253
|
Net decrease in cash, cash equivalents and restricted cash
|
|
(22,551)
|
|
(21,806)
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
36,597
|
|
32,570
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
14,046
|
$
|
10,764
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
Cash paid for interest
|
$
|
1,220
|
$
|
812
|
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
|
|
|
|
|
Non-cash investing and financing transactions:
|
|
|
|
|
Original issuance discount on convertible notes payable
|
$
|
3,000
|
$
|
9,000
|
Debt discount recorded in connection with derivative liability
|
$
|
30,000
|
$
|
85,000
|
Common stock issued in conversion of convertible notes payable and interest
|
$
|
64,956
|
$
|
210,020
|
Accrued interest added to principal
|
$
|
12,147
|
$
|
-
|
|
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash to the
|
|
|
|
|
consolidated balance sheets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
3,859
|
$
|
592
|
Restricted cash
|
|
10,187
|
|
10,172
|
Total cash, cash equivalents, and restricted cash shown in the
|
|
|
|
|
consolidated statements of cash flows:
|
$
|
14,046
|
$
|
10,764
|
See accompanying notes to condensed consolidated financial statements.
F-24
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 1 – Organization and Business Description
Therapeutic Solutions International, Inc. (“TSOI” or the “Company”) was organized August 6, 2007 under the name Friendly Auto Dealers, Inc., under the laws of the State of Nevada. In the first quarter of 2011, the Company changed its name from Friendly Auto Dealers, Inc. to Therapeutic Solutions International, Inc., and acquired Splint Decisions, Inc., a California corporation.
Currently, the Company is focused on immune modulation for the treatment of several specific diseases. Immune modulation refers to the ability to upregulate (make more active) or downregulate (make less active) one’s immune system.
Activating one’s immune system is now an accepted method to cure certain cancers, reduce recovery time from viral or bacterial infections and to prevent illness. Additionally, inhibiting one’s immune system is vital for reducing inflammation, autoimmune disorders, and allergic reactions.
TSI is developing a range of immune-modulatory agents to target certain cancers, improve maternal and fetal health, fight periodontal disease, and for daily health.
Nutraceutical Division – TSOI has been producing high quality nutraceuticals. Its current flagship product, NanoStilbene™ PKE, which 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 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 – TSOI recently obtained exclusive rights to a patented adult stem cell for development of therapeutics in the areas 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 March 31, 2020 to be sufficient to fund the Company’s operations for at least twelve months from the issuance date of these 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 March 31, 2020, the Company has incurred losses totaling $8.8 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.
F-25
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
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, 2019, included in the Company’s Annual Report on Form 10-K filed with the SEC on May 21, 2020. 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 three months ended March 31, 2020 and 2019 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, 2019 has been derived from the audited consolidated balance sheet at December 31, 2019, 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.
ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service.
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 2020 and 2019 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.
F-26
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 2 – Summary of Significant Accounting Policies (Continued)
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 $303,097 and $521,700 at March 31, 2020 and December 31, 2019, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, prepaids, convertible notes, and payables. The carrying amount of cash and cash equivalents and payables approximates fair value because of the short-term nature of these items.
Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:
Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
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 March 31, 2020, 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 three months ended March 31, 2020:
Balance- December 31, 2019
|
$
|
521,700
|
Issuance of new derivative liabilities
|
|
50,755
|
Conversions to paid-in capital
|
|
(32,956)
|
Change in fair market value of derivative liabilities
|
|
(236,402)
|
Balance- March 31, 2020
|
$
|
303,097
|
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses during the reporting period. Estimates were made relating to valuation allowances, impairment of assets, share-based compensation expense and accruals. Actual results could differ materially from those estimates.
F-27
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 2 – Summary of Significant Accounting Policies (Continued)
Net Income (Loss) Per Share
Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted income (loss) per share is computed similar to basic income (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. In periods in which a net loss is incurred, basic and diluted loss per share are the same, and additional potential common shares are excluded as their effect would be antidilutive.
Depreciation and Amortization
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Amortization is computed using the straight-line method over the term of the agreement. During the three months ended March 31, 2020 and 2019, there was no depreciation or amortization expense as all fixed assets have been fully depreciated.
Intangible Assets
Intangible assets consisted primarily of intellectual properties such as proprietary nutraceutical formulations. Intellectual assets are capitalized in accordance with ASC Topic 350 “Intangibles – Goodwill and Other.” Intangible assets with finite lives are amortized over their respective estimated lives and reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable. Amortization expense for the three months ended March 31, 2020 and 2019 was $1,648 and $0, respectively.
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.
Research and Development
Research and Development costs are expensed as incurred. Research and Development expenses were $(505) and $2,676 for the three months ended March 31, 2020 and 2019, respectively. Research and Development expenses are included in General and Administrative expenses.
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.
F-28
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 2 – Summary of Significant Accounting Policies (Continued)
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.
Leases
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. The Company recorded a Right-of-use asset of $77,041 and a Lease Liability of $79,391 as of March 31, 2020. The lease was amended to expire on April 30, 2023.
Future minimum lease payments as of March 31, 2020 are as follows:
For the quarter ending March 31,
|
|
|
2021
|
$
|
24,792
|
2022
|
|
25,572
|
2023
|
|
6,459
|
Recent Accounting Pronouncements
In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions in existing guidance and improves consistency in application by clarifying and amending existing guidance. This guidance is effective for annual periods beginning after December 15, 2020, and interim periods within those annual periods, where the transition method varies depending upon the specific amendment. Early adoption is permitted, including adoption in any interim period. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period, and all amendments must be adopted in the same period. The Company has reviewed the provisions of the new standard, but it is not expected to have a significant impact on the Company.
In January 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-01, "Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815", which clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting under Topic 323, and the accounting for certain forward contracts and purchased options accounted for under Topic 815. This guidance is effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company has reviewed the provisions of the new standard, but it is not expected to have a significant impact on the Company.
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, 2021 and is used as collateral for a Company credit card, pursuant to a security agreement dated June 20, 2011.
F-29
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 4 – Other Assets
Other assets consist of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
2020
|
|
|
2019
|
Prepaid consulting
|
$
|
10,667
|
|
$
|
20,238
|
Deposit
|
|
4,123
|
|
|
4,123
|
Licenses, net
|
|
145,313
|
|
|
146,961
|
Right to use asset
|
|
52,904
|
|
|
-
|
Total
|
$
|
213,007
|
|
$
|
171,322
|
Prepaid consulting agreements are for one to two years and are expensed monthly over the term of the agreement. The net licenses amount above consists of the following:
|
|
March 31,
|
|
|
December 31,
|
|
|
2020
|
|
|
2019
|
License
|
$
|
153,552
|
|
$
|
153,552
|
Accumulated amortization
|
|
(8,239)
|
|
|
(6,591)
|
Licenses, net
|
$
|
145,313
|
|
$
|
146,961
|
As of June 1, 2019, we entered into a license agreement, which will be amortized over the life of the Patent. The Patent expires December 31, 2032. The Exclusive Patent License to the Jadi Cell is for use under the designated areas of CTE (Chronic Traumatic Encephalopathy), and TDI (Traumatic Brain Injury). The Jadi Cell is am cGMP grade and Research grade manufactured allogenic mesenchymal stem cells derived from US Patent No.: 9,803,176 B2. Forward looking the Company intends to file an investigative New Drug Application (IND) for brain injured patients who have been intensively cared for and mechanically ventilated due to COVID-19 illness and a second IND for CTE/TBI as well in keeping with the spirit of the licensing agreement to advance the Jadi Cell through FDA Approval for CTE/TBI.
Note 5 – Notes Payable-Related Party
At March 31, 2020 and December 31, 2019, the Company has unsecured interest-bearing demand notes outstanding to certain officers and directors amounting to $946,979 and $937,528, respectively. Interest accrued on these notes during the three months ended March 31, 2020 and 2019 was $6,837 and $7,936, respectively. Of these, $251,000 are convertible into common stock at prices ranging from $0.004 and $0.005.
Note 6 – Convertible Notes Payable
On February 4, 2020, the Company entered into a $33,000 convertible promissory note with a third party for which the proceeds were used for operations. The Company received net proceeds of $30,000, and a $3,000 original issuance discount was recorded. The convertible promissory note incurs interest at 12% per annum and matures on February 3, 2021. The convertible promissory note is convertible to shares of the Company's common stock 180 days after issuance. The conversion price per share is equal to 61% 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 March 31, 2020 a total of 190,935,390 common shares in connection with this promissory note.
F-30
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 6 – Convertible notes payable (Continued)
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 shares 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 one note issued during the three months ended March 31, 2020, the Company valued the conversion features on the date of issuance resulting in an initial liability of $50,755. Since the fair value of the derivative was in excess of the proceeds received of $30,000, a full discount to convertible notes payable and a day one loss on derivative liabilities of $20,755 was recorded during the three months ended March 31, 2020. The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion price of $0.0012, the closing stock price of the Company's common stock on the date of valuation of $0.0023, an expected dividend yield of 0%, expected volatility of 239%, risk-free interest rate of 1.48%, and an expected term of one year.
At December 31, 2019, the Company had existing derivative liabilities of $521,700 related to three convertible notes totaling $144,000. During the three months ended March 31, 2020, one convertible note with an original principal value of $78,000 was partially converted into 41,916,221 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 three months ended March 31, 2020, the Company recorded $32,956 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 $0.00055 to $0.0012, the closing stock price of the Company's common stock on the dates of valuation ranging from $0.001 to $0.002, an expected dividend yield of 0%, expected volatility ranging from 197% to 220%, risk-free interest rates ranging from 0.13% to 0.89%, and expected terms ranging from 0.26 to 0.33 years.
On March 31, 2020, the derivative liabilities on the remaining four convertible notes were revalued at $303,097 resulting in a gain of $236,402 for the three months ended March 31, 2020 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 $0.0005, the closing stock price of the Company's common stock on the date of valuation of $0.0014, an expected dividend yield of 0%, expected volatility ranging from 212% to 251%, risk-free interest rate of 0.17%, and an expected term ranging from 0.25 to 0.85 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 three months ended March 31, 2020 and 2019, the Company amortized $44,670 and $71,732 to interest expense, respectively. As of March 31, 2020, discounts of $93,855 remained for which will be amortized through February 3, 2021.
Note 7 – Equity
Our authorized capital stock consists of an aggregate of 3,505,000,000 shares, comprised of 3,500,000,000 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 March 31, 2020, we have 1,656,544,032 shares of common stock and no preferred shares issued and outstanding. On March 12, 2020, we issued 11,764,706 shares of common stock for the partial conversion of $10,000 for convertible note dated August 28, 2019. On March 26, 2020, we issued 21,818,182 shares of common stock for the partial conversion of $12,000 for convertible note dated August 28, 2019. There shares were issued at below par which decreased Additional Paid-in Capital.
On March 2, 2020 we issued 8,333,333 shares of common stock for the partial conversion of $10,000 for a convertible note dated August 28, 2019.
On March 12, 2020 we issued 11,764,706 shares of common stock for the partial conversion of $10,000 for convertible note dated August 28, 2019.
F-31
THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 7 – Equity (continued)
On March 26, 2020 we issued 21,818,182 shares of common stock for the partial conversion of $12,000 for convertible note dated August 28, 2019.
Note 8– Subsequent Events
On May 29, 2020, we issued 10,000,000 shares of common stock for the partial conversion of $12,000 for convertible note dated August 28, 2019.
On June 2, 2020, we issued 12,500,000 shares of common stock for the partial conversion of $15,000 for convertible note dated August 28, 2019.
On June 3, 2020, we issued 19,733,333 shares of common stock for the partial conversion of $23,680 for convertible note dated August 28, 2019.
On June 4, 2020, we issued 24,733,333 shares of common stock for the complete conversion of $29,680 for convertible note dated October 30, 2019.
On June 4, 2020, we issued 5,000,000 shares of common stock, valued at $0.0021 per share, for consulting services.
On June 4, 2020 we issued 70,000,000 shares of common stock, valued at .0021 each to three officers and one director of the Company under a Restricted Stock Award.
On June 8, 2020, we issued 10,000,000 shares of common stock, valued at $0.01 per share, for consulting services.
On June 9, 2020, the Company settled an accrual of wages with Timothy G. Dixon with a convertible note payable of $60,000 with interest at 5% per annum.
On June 9, 2020, we issued 18,292,818 shares of common stock for the complete conversion of $60,000 for convertible note dated June 9, 2020.
On June 11, 2020 we issued 40,000,000 shares of common stock, valued at .0046 each to three officers and one director of the Company under a Restricted Stock Award.
On June 15, 2020 we issued 3,000,000 shares of common stock, valued at .0017 each to one officer and one director of the Company under a Restricted Stock Award.
On June 15, 2020, we issued 10,000,000 shares of common stock, valued at $0.0023 per share, to the medical officer for consulting services.
On June 16, 2020, we issued 33,566,667 shares of common stock for the complete conversion of $40,280 for convertible note dated December 12, 2019.
On June 22, 2020, we issued 13,634,482 shares of common stock, valued at $0.005 per share, for an investment in the Company’s Private Placement.
On June 22, 2020, we issued 8,000,000 shares of common stock, valued at $0.0029 per share, for a donation in Triton Funds LP pursuant to the Donation Agreement (“DA”) and Registration Rights Agreement (“RRA”) dated January 24, 2020.
On June 25, 2020, we issued 10,000,000 shares of common stock, valued at $0.0083 per share, to the medical officer for consulting services.
On June 29, 2020, we issued 344,827 shares of common stock, valued at $0.0029 per share, for an investment in the Company’s Private Placement.
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THERAPEUTIC SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
Note 8– Subsequent Events (continued)
On June 29, 2020, we issued 2,200,000 shares of common stock, valued at $0.005 per share, for an investment in the Company’s Private Placement.
In accordance with ASC 855, the Company has analyzed its operations subsequent to March 31, 2020 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 .
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