UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For
the Fiscal Year Ended December 31, 2020
OR
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
For
the Transition Period From ____________ to
____________
Commission
File Number: 000-54933
IMMUNE
THERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
Florida |
|
59-3226705 |
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
Number)
|
2431
Aloma Ave., Suite 124,
Winter
Park, Florida 32792
(Address
of principal executive offices)
(888)
613-8802
Registrant’s
telephone number, including area code:
None
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol |
|
Name
of Exchange on which registered |
Common
stock |
|
IMUN |
|
OTC
Markets |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes
[ ] No [X]
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes
[ ] No [X]
Note
– Checking the box above will not relieve any registrant required
to file reports pursuant to Section 13 or 15(d) of the Exchange Act
from their obligations under those Sections.
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
every Interactive Data File required to be submitted 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 such files). Yes [X] No
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):
Large
accelerated filer |
[ ] |
Accelerated
filer |
[ ] |
Non-accelerated
filer |
[ ]
(Do not check if a smaller reporting company) |
Smaller
reporting company |
[X] |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [X]
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
[ ]
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes [ ] No [X]
The
aggregate market value of voting stock held by non-affiliates of
the registrant on June 30, 2020, the last business day of the
registrant’s most recently completed second quarter, was
$11,826,000, based on the last reported sale price of the
registrant’s Common Stock on the OTC Markets on that
date.
As of
April 15, 2021, the registrant had outstanding 481,906 shares of
common stock, $0.0001 par value per share.
IMMUNE
THERAPEUTICS, INC.
2020
FORM 10-K ANNUAL REPORT
TABLE
OF CONTENTS
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain
statements contained or incorporated by reference in this Annual
Report on Form 10-K are considered forward-looking statements
(within the meaning of the Private Securities Litigation Reform Act
of 1995) concerning our business, results of operations, economic
performance and/or financial condition, based on management’s
current expectations, plans, estimates, assumptions, and
projections. Forward-looking statements are included, for example,
in the discussions about:
|
● |
strategy; |
|
● |
new
product discovery and development; |
|
● |
current
or pending clinical trials; |
|
● |
our
products’ ability to demonstrate efficacy or an acceptable safety
profile; |
|
● |
actions
by the FDA and other regulatory authorities; |
|
● |
product
manufacturing, including our arrangements with third-party
suppliers; |
|
● |
product
introduction and sales; |
|
● |
royalties
and contract revenues; |
|
● |
expenses
and net income; |
|
● |
credit
and foreign exchange risk management; |
|
● |
liquidity; |
|
● |
asset
and liability risk management; |
|
● |
the
outcome of litigation and other proceedings; |
|
● |
intellectual
property rights and protection; |
|
● |
economic
factors; |
|
● |
competition;
and |
|
● |
legal
risks. |
Any
statements contained in this report that are not statements of
historical fact may be deemed forward-looking statements.
Forward-looking statements generally are identified by the words
“expects,” “anticipates,” “believes,” “intends,” “estimates,”
“aims,” “plans,” “may,” “could,” “will,” “will continue,” “seeks,”
“should,” “predict,” “potential,” “outlook,” “guidance,” “target,”
“forecast,” “probable,” “possible” or the negative of such terms
and similar expressions. Forward-looking statements are subject to
change and may be affected by risks and uncertainties, most of
which are difficult to predict and are generally beyond our
control. Forward-looking statements speak only as of the date they
are made, and we undertake no obligation to update any
forward-looking statement in light of new information or future
events, except as required by law, although we intend to continue
to meet our ongoing disclosure obligations under the U.S.
securities laws and other applicable laws.
We
caution you that a number of important factors could cause actual
results or outcomes to differ materially from those expressed in,
or implied by, the forward-looking statements, and therefore you
should not place too much reliance on them. These factors include,
among others, those described herein, and elsewhere in this Annual
Report and in our other public reports filed with the Securities
and Exchange Commission. It is not possible to predict or identify
all such factors, and therefore the factors that are noted are not
intended to be a complete discussion of all potential risks or
uncertainties that may affect forward-looking statements. If these
or other risks and uncertainties materialize, or if the assumptions
underlying any of the forward-looking statements prove incorrect,
our actual performance and future actions may be materially
different from those expressed in, or implied by, such
forward-looking statements. We can offer no assurance that our
estimates or expectations will prove accurate or that we will be
able to achieve our strategic and operational goals.
Forward-looking
statements are based on information we have when those statements
are made or management’s good faith belief as of that time with
respect to future events and are subject to significant risks and
uncertainties that could cause actual performance or results to
differ materially from those expressed in or suggested by the
forward-looking statements.
Important
factors that could cause such differences include, but are not
limited to:
|
● |
our
lack of operating history; |
|
● |
our
current and future capital requirements and our ability to satisfy
our capital needs; |
|
● |
our
inability to keep up with industry competition; |
|
● |
interpretations
of current laws and the passages of future laws; |
|
● |
acceptance
of our business model by investors and our ability to raise
capital; |
|
● |
our
drug discovery and development activities may not result in
products that are approved by the applicable regulatory
authorities. Even if our drug candidates do obtain regulatory
approval, they may never achieve market acceptance or commercial
success; |
|
● |
our
reliance on key personnel and collaborative partners, including our
ability to attract and retain scientists; |
|
● |
our
reliance on third party manufacturing to supply drugs for clinical
trials and sales; |
|
● |
our
limited distribution organization with no sales and marketing
staff; |
|
● |
our
being subject to product liability claims; |
|
● |
our
reliance on key personnel, including our ability to attract and
retain scientists; |
|
● |
legislation
or regulation that may increase the cost of our business or limit
our service and product offerings; |
|
● |
risks
related to our intellectual property, including our ability to
adequately protect intellectual property rights; |
|
● |
risks
related to government regulation, including our ability to obtain
approvals for the commercialization of some or all of our drug
candidates, and ongoing regulatory obligations and continued
regulatory review which may result in significant additional
expense and subject us to penalties if we fail to comply with
applicable regulatory requirements; and |
|
● |
our
ability to obtain regulatory approvals to allow us to market our
products internationally. |
Moreover,
new risks regularly emerge, and it is not possible for our
management to predict or articulate all risks we face, nor can we
assess the impact of all risks on our business or the extent to
which any risk, or combination of risks, may cause actual results
to differ from those contained in any forward-looking statements.
All forward-looking statements included in this prospectus are
based on information available to us on the date of this Annual
Report. Except to the extent required by applicable laws or rules,
we undertake no obligation to publicly update or revise any
forward-looking statement, whether because of new information,
future events or otherwise. All subsequent written and oral
forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the
cautionary statements contained above and throughout this Annual
Report.
PART I
Item 1. Business
Company
Overview
Immune
Therapeutics, Inc. (the “Company”) was initially incorporated in
Florida on December 2, 1993 as Resort Clubs International, Inc.
(“Resort Clubs”). It was formed to manage and market golf course
properties in resort markets throughout the United States. Galliano
International Ltd. (“Galliano”) was incorporated in Delaware on May
27, 1998 and began trading in November 1999 through the filing of a
15C-211. On November 10, 2004, Galliano merged with Resort Clubs.
Resort Clubs was the surviving corporation. On August 23, 2010,
Resort Clubs changed its name to pH Environmental Inc. (“pH
Environmental”).
On
April 23, 2012, pH Environmental completed a name change to TNI
BioTech, Inc., and on April 24, 2012, we executed a share exchange
agreement for the acquisition of all the outstanding shares of TNI
BioTech IP, Inc. On September 4, 2014, a majority of our
shareholders approved an amendment to our Amended and Restated
Articles of Incorporation, as amended, to change our name to Immune
Therapeutics, Inc. We filed our name change amendment with the
Secretary of State of Florida on October 27, 2014 changing our name
to Immune Therapeutics, Inc.
In
July 2012, the Company’s focus turned to acquiring patents that
would protect and advance the development of new uses of
opioid-related immune- therapies,
In
December 2013, the Company formed a subsidiary, Cytocom Inc.
(“Cytocom”), to focus on conducting LDN and MENK clinical trials in
the United States. In December 2014, the Company finalized the
distribution of common stock of Cytocom to its shareholders. As
part of the transaction (“Original Agreement”), the Company
transferred to Cytocom certain of its rights, title and interest in
or relating to intellectual property (i) patents, patent
applications, and all divisional, continuations and
continuations-in-part thereof, together with all reissues,
reexaminations, renewals and extensions thereof and all rights to
obtain such divisionals, continuations and continuations-in-part,
reissues, reexaminations, renewals and extensions, and all utility
models and statutory invention registrations and any other such
analogous rights, (ii) trademarks, service marks, Internet domain
names, trade dress, trade styles, logos, trade names, services
names, brand names, corporate names, assumed business names and
general intangibles and other source identifiers of a like nature,
together with the goodwill associated with any of the foregoing,
and all registrations and applications for registrations thereof,
together with all renewals and extensions thereof and all rights to
obtain such renewals and extensions, (iii) copyrights, mask work
rights, database and design rights, moral rights and rights in
Internet websites, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof
and all applications in connection therewith, together with all
renewals, continuations, reversions and extensions thereof and all
rights to obtain such renewals, continuations, reversions and
extensions, and (iv) confidential and proprietary information,
including, trade secrets and know-how.
On
May 1, 2018, the Company entered into an amended and restated
licensing agreement (the “Restated Agreement”) with Cytocom. The
Restated Agreement restates the licensing arrangement between the
Company and Cytocom as provided by the Original Agreement. The
Restated Agreement grants the Company distribution and marketing
rights for Lodonal™ and MENK for humans in certain Emerging
Markets. In addition, the Company has been granted the rights to
distribute and market Lodonal™ and MENK for animal use in the
United States. The royalty due to Cytocom has been reduced from 5%
to 1% of sales and the Company no longer has any ongoing
obligations to pay for costs in connection with the assets of
Cytocom. While the Company formalized the agreement to
deconsolidate on May 1, 2018, Cato Research Ltd and Penn State
University, both vendors of the Company, did not consent to assign
the payables to Cytocom.
On
June 4, 2018, the Company and Cytocom entered into a Stock Purchase
Agreement (the “Stock Agreement”). Pursuant to the Stock Agreement,
the Company cancelled approximately $4,000,000 of debt owed to it
by Cytocom in exchange for ten percent (10%) of the issued and
outstanding common stock of Cytocom, as calculated on a fully
diluted basis. The Restated Agreement was a condition of the Stock
Agreement.
On
April 8, 2019, the Company signed a second amendment to its
licensing agreement (the “Second Amendment”) with Cytocom. The
Second Amendment confirmed that, as of its effective date (December
31, 2018) the Company owned 15.57% of the common shares issued and
outstanding on that date. The Company agreed to assume the
obligation to repay all accounts payable obligations and accrued
liabilities owed by Cytocom as of the effective date, except those
accounts’ payable obligations and accrued liabilities as specified
in the Second Amendment. The Company also assumed the obligation to
repay all notes payable, together with any interest or fees payable
thereon, owed by Cytocom as of the effective date, except those
notes’ payable obligations, together with any interest or fees
payable thereon, as specified by the Second Amendment. The parties
further agreed that in the event of a change of control of Cytocom,
and at the option of Cytocom, the Company would have the right to
purchase outright the Company’s licensing rights to Emerging
Markets for humans under the License Agreement at a price equal to
value of those licensing rights as determined by and independent
valuator acceptable to the Company and Cytocom.
Original Restructuring Strategy
In
October 2019, the Board of Immune Therapeutics, Inc. (“Immune”)
approved the restructuring of Immune (“Original Restructuring
Strategy”), which included a conversion of Immune promissory notes
(the “Convertible Notes”) into a proposed new class of Series D
Preferred equity. However, Immune was unable to obtain the
requisite shareholder approval to issue the Series D Preferred
equity, so that the plan to convert the debt into a Series D could
not be completed. At the same time, the Shareholders did approve a
1- for 1000 reverse stock split (“Reverse Stock Split”).
Due to its inability to move forward on the proposed plan the
Company has been forced to pursue alternatives to the Original
Restructuring Strategy. In an effort to realize the potential value
of its technology positions, the Board directed management to
pursue possible sublicensing options with Forte and with Cytocom
(with which it holds an equity interest.)
In the first quarter 2020 the Reverse Stock Split was submitted and
approved by the State of Florida. In June 2020, the Company
received notification that its application with the Financial
Industry Regulatory Agency (“FINRA”) had been denied due to a
deficiency cited in the Company’s capitalization. In March 2021,
the Company refiled its application with FINRA for approval of its
1 for 1000 Reverse Stock Split. To date no action has been taken by
FINRA. Management believes it has resolved the deficiency as
reflected in the re-application to FINRA.
On February 27, 2020, the Company approved and entered into a
license agreement (the “License Agreement”) with Forte
Biotechnology International Corp. (“Forte”). As of April 15, 2021,
this license agreement has not been executed as Forte has failed to
fund the consideration defined in the agreement. Under the License
Agreement, the Company granted Forte an exclusive license to
develop and commercialize pharmaceutical products consisting of
Lodonal and MENK for use in veterinary applications for all
indications world-wide. Milestone payments and royalties are
defined in the agreement based on development and royalties are
based on sales during the license period.
The Initial License Fee totals includes the assumption of Company
defaulted Notes and certain other liabilities. Forte will assume
defaulted debt and certain accounts payable and accrued liabilities
of the Company. The note holders and vendors associated with the
assigned liabilities have not yet assigned their rights to
Forte.
Negotiated Consideration
for February 28, 2020 License to Forte
Consideration Assumption of: |
|
|
|
Notes in Default. |
|
$ |
1,787,706 |
|
Accounts payable and accruals |
|
|
261,706 |
|
Past Due
Employee Obligations |
|
|
990,201 |
|
|
|
|
|
|
Total
Consideration to be Recognize Upon Execution |
|
$ |
3,039,613 |
|
The documentation associated with the Forte license has yet to be
signed and the individual lenders need to provide their approval
for the transfer of these notes. As such, the accompanying
financial statements do not reflect any gain on sale. Until such
time as the transaction is completed, Forte does not have clear
title and interest to the veterinary rights.
On May 13, 2020, the Company and Cytocom entered into Amendment to
The Second Amendment to The License Agreement (“Third Amendment”)
that was effective December 31, 2018. The sublicense provides
Cytocom with the Company’s previously licensed rights for LDN and
Menk in Emerging Markets. Terms for consideration for the
sublicense were not finalized until August 12, 2020, at which time
Cytocom and the Company signed a letter agreement in which Cytocom
agreed to assume a combination of defaulted Notes plus certain
other liabilities. The Company agreed to transfer all their rights,
title, and interest to Cytocom in technology licensed from Penn
State Research Foundation in exchange for Cytocom assuming all past
due and future obligations under the Penn State license.
In the third quarter of 2020, the Company received a Notice of
Default (“Notice”) from Cytocom relating to the sublicensing
transaction. The Company disputes the validity of the Notice on the
basis that Cytocom has failed to execute on their consideration for
the license.
As of April 4, 2021, the accounts payable, accruals and employee
obligations transfers has not been fully executed. The Notes in
default have been assigned and the transfer signed off by the
creditors, but Cytocom still has not completed the assumption of
the agreed upon obligations.
Consideration
for May 13, 2020 License to Cytocom
Consideration Assumption of: |
|
|
|
Notes in Default. |
|
$ |
3,038,107 |
|
Accounts payable and accruals |
|
|
105,123 |
|
Past Due
Employee Obligations |
|
|
1,110,567 |
|
Total anticipated
Consideration |
|
$ |
5,200,797 |
|
Recognized
through December31, 2020 |
|
|
(3,314,333 |
) |
To Be
Recognized upon Execution |
|
$ |
1,888,464 |
|
At December 31, 2020, the Company has an equity interest of 13.5%
in Cytocom.
Assuming
that the sublicensing transactions with Cytocom and Forte are
completed as described herein, the Company has no operating assets
which it intends to commercialize. Therefore, as described below,
the Company will continue to explore opportunities to restructure
its capital position and, if successful, resume its focus on
commercializing pharmaceutical products.
Current
Restructuring Strategy
Management
recognizes that the Company cannot move forward without adequate
capital resources. The transactions with Cytocom and Forte do not
provide any new working capital to the Company.
As a
result, Management is currently pursuing a strategy to
re-capitalize the Company and position it for future growth. Key
steps in the process include:
|
● |
Re-apply
to secure FINRA approval for the previously approved reverse stock
split. |
|
● |
Improve
the condition of the Company’s financial position and balance
sheet: |
|
○ |
License,
where practical technologies which the Company will otherwise not
be able to commercialize. |
|
○ |
Seek
additional capital to continue to maintain operations and
compliance with OTC reporting requirements. |
|
○ |
Seek
funding from current Note Holders with exercisable warrants to
convert such warrants as a means of raising capital and reducing
outstanding debt. |
|
● |
Identify
and seek to acquire late-stage assets for future
commercialization. |
|
● |
Build
out an appropriate operational infrastructure, generate new
opportunities and grow shareholder value. |
If
the Company is unable to secure new working capital, other
alternatives strategies will be required.
Rationale
for Current Restructuring Strategy
Historically,
the Company has been able to acquire and develop assets, spin them
out and retain both an equity stake and royalties and milestone
payments. In so doing, the Company has acted as an incubator for
drug development. Management believes that this strategy can
continue to be successful.
There
can be no guaranties that the Company will be successful
in:
|
● |
Executing
its restructuring plan |
|
● |
Securing
adequate capital to continue operations. |
|
● |
Identifying
and acquiring assets for future development. |
The Company has rights to the following intellectual property,
which have been substantially licensed from Forte and Cytocom, as
described above. None of which have active programs to
commercialize at this time:
|
|
Patent
Status |
|
Title: |
|
Assigned |
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|
|
US2014024588
2014/01/23 |
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Method
for Inducing Sustained Immune Response |
|
Nicholas
P. Plotnikoff Assigned to TNI Biotech to Cytocom |
|
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|
|
|
|
|
|
AT346605T
Federal Republic of Germany |
|
Method
for triggering a continuous immune response |
|
See
US Patent US2014024588 assigned same as above |
|
|
|
|
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|
|
|
|
2313364
Russian Federation |
|
Method
for triggering a continuous immune response |
|
See
US Patent US2014024588 assigned |
|
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|
|
|
|
|
|
|
India
Patent, Application number 1627/KOLNP/2003 number
220265 |
|
Method
for triggering a continuous immune response |
|
See
US Patent US2014024588 assigned |
|
|
Ireland
EP 1401471 BI |
|
Method
for triggering a continuous immune response |
|
See
US Patent US2014024588 assigned |
|
|
|
|
|
|
|
|
|
People’s
Republic of China, Application No.: 200810165784.8 China Patent
CN1015113407 A |
|
Method
for triggering a continuous immune response |
|
See
US Patent US2014024588 assigned |
|
|
|
|
|
|
|
|
|
United
Kingdom Patent Application 02746503.8 “AN ENKEPHALIN PEPTIDE
COMPOSITION |
|
Method
for triggering a continuous immune response “AN ENKEPHALIN PEPTIDE
COMPOSITION |
|
See
US Patent US2014024588 assigned |
|
|
|
|
|
|
Licensed |
|
|
U.S.
Patent number 7,879,870 |
|
Treatment
of inflammatory and ulcerative disease of the bowel with opioid
antagonists |
|
Exclusive
License from Penn State University Foundation to Jill Smith and LDN
Research Group LLC from Jill Smith and LDN Research to
Cytocom |
|
|
|
|
|
|
|
|
|
Application
number 15/437,365 issued 10/30/2018 Patent No 10111870 |
|
Treatment
of inflammatory and ulcerative disease of the bowel with opioid
antagonists |
|
Exclusive
License Jill Smith and LDN Research Group LLC same as
above |
|
|
|
|
|
|
|
|
|
U.S.
Application Number: 11061932 Claims Priority to US 60648021
Canadian Pending 2,557,504 |
|
Combinatorial
therapies for the treatment of neoplasias using the opioid growth
factor receptor |
|
Pending
/ Continuation Licensed Penn State University |
|
|
|
|
|
|
|
|
|
Publication
number: 20160256517 Pending |
|
COMBINATORIAL
THERAPIES FOR THE TREATMENT OF NEOPLASIAS USING THE OPIOID GROWTH
FACTOR RECEPTOR |
|
Licensed
Penn State University |
|
|
|
|
|
|
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|
|
Patent
number: 9375458 Filed: October 25, 2012
Date of Patent: June 28, 2016 |
|
Combinatorial
therapies for the treatment of neoplasias using the opioid growth
factor receptor |
|
Licensed
Penn State University |
|
|
|
|
|
|
|
|
|
Patent
number: 8003630Filed: August 25, 2006
Date of Patent: August 23, 2011 |
|
Combinatorial
therapies for the treatment of neoplasias using the opioid growth
factor receptor |
|
Exclusive
License Penn State University |
|
|
Publication
number: 20110123437 Type: Application
Filed: February 3, 2011
Publication date: May 26, 2011 |
|
COMBINATORIAL
THERAPIES FOR THE TREATMENT OF NEOPLASIAS USING THE OPIOID GROWTH
FACTOR RECEPTOR |
|
Licensed
Penn State University |
|
|
|
|
|
|
|
|
|
Patent
number: 6737397 Type: Grant
Filed: August 17, 2000
Date of Patent: May 18, 2004 |
|
Control
of cancer growth through the interaction of [MET5]-enkephalin and
the zeta receptor |
|
Licensed
Penn State University |
|
|
|
|
|
|
|
|
|
Patent
number: 6136780 Type: Grant
Filed: March 27, 1997
Date of Patent: October 24, 2000 |
|
Control
of cancer growth through the interaction of [Met.sup.5 ]-enkephalin
and the zeta (.zeta.) receptor |
|
Licensed
Penn State University |
|
|
|
|
|
|
|
|
|
US
7,807,368
(US PgPub 2008-
0146512 A1) |
|
Cyclin-dependent
kinase inhibitors as targets for opioid growth factor
treatment. |
|
Licensed
Penn State University |
|
|
|
|
|
|
|
|
|
US9375458B2 |
|
Combinatorial
therapies for the treatment of neoplasias using the opioid growth
factor receptor |
|
Licensed
Penn State University Pending |
|
|
|
|
|
|
|
|
|
CN
200910011030
(No related apps) |
|
naloxone
and composition thereof in preparing drug for treating cancer. Shan
Fengping: August 26, 2009. |
|
Assigned
Fingping Shan |
|
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|
|
|
|
|
|
Application:
CN20071051586 on 15 Feb 2007
- international: A61K39/00; A61K39/39; A61P37/04
Publication: 15 Feb 2007
PAT: CN101244270 |
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Application
of methionine enkephalin in preparing human or animal
vaccination |
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Assigned
Fingping Shan |
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CN
200710158742 2017 granted |
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application
of compounds methionine enkephalin for preparing medicine for
curing blood medulla hematopoietic system cancer |
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Assigned
Fingping Shan |
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CN
200610046249
(No related U.S. applications) |
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Aerosol
containing Met-Enkephalin. Shan Fengping: November 15,
2006. |
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Assigned
Fingping Shan |
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CN
200310120896 2006 |
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food
for regulating human body immune balance. |
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Assigned
Fingping Shan |
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CN
200610046249 |
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Aerosol
containing Met-Enkephalin. Shan Fengping: |
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Assigned
Fingping Shan |
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WO
2007/067753 (PTC /US2006 /046925 Pending |
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Methods
of reducing side effects in cancer therapy |
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assigned
Fengping Shan |
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CN
200510019964 |
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Use
of Methionine Enkephalin in preparation of medicine for reducing
toxic side effects of chemical or radioactive |
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Assigned
Fengping Shan |
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CA
200810229085 |
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Use
of Methionine Enkephalin in treating intestinal cancer and
pancreatic cancer |
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Assigned
Fengping Shan |
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China
Patent 200810229085 |
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The
invention belongs to the technical field of treating tumors by
immunization therapy. In particular, a method for treating
intestinal cancer and pancreatic cancer cells by Methionine
Enkephalin under conditions of in- vivo injection and in- vitro
cell culture so as to achieve the treating |
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aim. |
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21-Mar-26 |
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IRT-101
(MENK) |
Competition
The
industry for treatment of humans is highly competitive and subject
to rapid and significant technological change. While we believe
that our technology rights provide our sublicenses with competitive
advantages. Our sub-licensees will face potential competition from
many different sources including large pharmaceutical and
biotechnology companies, specialty pharmaceutical and generic drug
companies, academic institutions, government agencies and research
institutions.
Many
of our sublicensee’s potential competitors have substantially
greater financial, technical, and human resources than we do and
significantly greater experience in the discovery and development
of product candidates, obtaining FDA and other regulatory approvals
of products and the commercialization of those products.
Accordingly, those competitors may be more successful than our
sublicensees’ may be in obtaining FDA approval for drugs and
achieving widespread market acceptance. Their competitors’ drugs
may be more effective, or more effectively marketed and sold, than
any drug our sublicensees may commercialize and may render their
product candidates obsolete or non-competitive before they can
recover the expenses of developing and commercializing any of their
product candidates. Further, the development of new treatment
methods for the conditions our sub licensees are targeting could
render their drugs non-competitive or obsolete. The ability of our
sublicensees to overcome competitive factors will materially impact
the value of our equity holdings in such licensees.
Available
Information
Our
Current Reports on Form 8-K, and Quarterly Reports are
electronically filed with or furnished to the Securities and
Exchange Commission (SEC), and all such reports and amendments to
such reports have been and will be made available, free of charge,
through our website (http://www.immunetherapeutics.com) as soon as
reasonably practicable after such submission to the SEC. Such
reports will remain available on our website for at least 12
months. The contents of our website are not incorporated by
reference into this Annual Report on Form 10-K. The public may read
and copy any materials filed by us with the SEC at the SEC’s Public
Reference Room at 100 F Street, NW, Washington, D.C.
20549.
Item 1A. Risk Factors
Not
required for Smaller Reporting Companies
Item 1B. Unresolved Staff
Comments
Not
applicable.
Item 2. Properties
We
maintain our office headquarters at 2431 Aloma Ave., Suite 124,
Winter Park, Florida 32792. The monthly lease cost is approximately
$350. The lease is cancelable upon one month’s notice.
Item 3. Legal
Proceedings
None.
Item 4. Mine Safety
Disclosures
Not
applicable.
PART II
Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market
Information
Our
common stock is listed for quotation on the OTCQB marketplace under
the symbol IMUN. Our common stock began trading in November 1999 on
OTC under the name Galliano International Ltd. Trading under the
name of TNI BioTech, Inc. commenced in March 2012 under the symbol
TNIB. The symbol was changed to IMUN on December 11, 2014. The
following table sets forth the high and low sales prices per share
of our common stock (presented based on a 1:1,000 reverse stock
split) for the periods indicated as reported by the OTC Markets
Group, Inc.
Period
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Price Range |
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High |
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Low |
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Quarter
Ended: |
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December 31, 2020 |
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$ |
49 |
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$ |
11 |
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September 30, 2020 |
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$ |
50 |
|
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$ |
13 |
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June 30, 2020 |
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$ |
29 |
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$ |
10 |
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March 31, 2020 |
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$ |
15 |
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$ |
5 |
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Quarter
Ended: |
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December 31, 2019 |
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$ |
10 |
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$ |
4 |
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September 30, 2019 |
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$ |
10 |
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$ |
4 |
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June 30, 2019 |
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$ |
9 |
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$ |
4 |
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March 31, 2019 |
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$ |
20 |
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$ |
4 |
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Record
Holders
As of March 31, 2021, we have approximately 621 active stockholders
of record of our common stock.
Dividends
The
Company paid no dividends in 2020 or 2019. We do not anticipate
paying any cash dividends in the foreseeable future. The payment of
dividends is within the discretion of our Board of Directors and
will depend on our earnings, capital requirements, financial
condition, and other relevant factors. There are no restrictions
that currently limit our ability to pay dividends on its common
stock other than those generally imposed by applicable state
law.
Securities
Authorized for Issuance under Equity Compensation
Plans
On
September 4, 2014, the Company’s shareholders approved the
Company’s 2014 Stock Incentive Plan (“2014 Plan). The 2014 Plan is
an important incentive for our employees and is critical to the
Company’s ongoing effort to build shareholder value and align the
interests of employees and directors with those of the Company’s
shareholders. Equity awards are a significant part of the Company’s
ability to attract, retain, and motivate our executives and
employees whose skills and performance are critical to our
success.
A
total of 5,000 shares of the Company’s common stock has been
approved, but not yet reserved, for issuance under the 2014 Plan.
Awards under the 2014 Plan may be made to employees, directors,
consultants and advisors of the Company and any successor entity
that adopts the 2014 Plan. Awards under the 2014 Plan may be made
in the form of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock awards and restricted
stock unit awards. Vesting of awards will be determined by our
Board. No more than 500 shares may be issued to a single
participant pursuant to stock options and stock appreciation rights
in a calendar year. Re-pricing of outstanding stock awards is not
permitted under the 2014 Plan. The 2014 Plan will terminate upon
the earlier of the adoption of a resolution of the Board
terminating the 2014 Plan, or September 3, 2024.
Item 6. Selected Financial
Data
Not
required for smaller reporting companies.
Off-Balance
Sheet Arrangements
During
the years ended December 31, 2020 and 2019, we did not engage in
any off-balance sheet arrangements as defined in item 303(a)(4) of
the SEC’s Regulation S-K.
Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operation
General
This
Management’s Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with our
discussion of cautionary statements and significant risks to the
company’s business under Item 1A. Risk Factors of this Annual
report on Form 10-K.
Overview
Revenue, Direct Expenses and Gross Margin
The
Company had no revenue and incurred no direct expenses during the
years ended December 31, 2020 and 2019.
Direct
expenses include the cost of finished product sold from the
Company’s contract manufacturers, sales incentives, associated
travel, and inventory return charges.
Research and Development
R&D
expenses consist of payments made to contractors for services
related to research and product development, product development
costs, payments made for patents and licenses to which the Company
has acquired rights to use. The Company’s spending on R&D has
been primarily to maintain patents and licenses.
Operating Expenses
Selling,
general and administrative expenses primarily include salary and
benefit costs for employees and contractors included in general and
administrative functions, professional services, insurance, travel
expenses, telecommunications, and office expenses. Professional
services consist principally of external legal, audit, tax and
other consulting services.
Other income (expense)
Other
income (expense) consists of interest expense on borrowings,
finance charges reflecting with debt issuance costs and changes in
fair market value of derivative liabilities. During the
twelve-month period ended December 31, 2020, the Company recognized
a non-cash gain upon the assignment of certain debt agreements with
Cytocom.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in
conformity with U.S. generally accepted accounting principles
(“GAAP”) and the Company’s discussion and analysis of its financial
condition and operating results require the Company’s management to
make judgments, assumptions, and estimates that affect the amounts
reported in its consolidated financial statements and accompanying
notes. Note 1, “Summary of Significant Accounting Policies” of the
Notes to Consolidated Financial Statements in Part II, Item 8 of
this Form 10-K describes the significant accounting policies and
methods used in the preparation of the Company’s consolidated
financial statements. Management bases its estimates on historical
experience and on various other assumptions it believes to be
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and
liabilities.
We
have identified the policies below as critical to our business
operations and the understanding of its results of operations. The
Company’s senior management has reviewed these critical accounting
policies and related disclosures with the Company’s Board of
Directors. The impact and any associated risks related to these
policies on our business operations are discussed throughout this
section where such policies affect our reported and expected
financial results. Our preparation of financial statements requires
us to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of our financial statements, and the
reported amounts of revenues and expenses during the reporting
period. There can be no assurance that actual results will not
differ from those estimates and such differences may be
material.
Leases
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).
This standard requires all leases that have a term of over 12
months to be recognized on the balance sheet with the liability for
lease payments and the corresponding right-of-use asset initially
measured at the present value of amounts expected to be paid over
the term. At December 31, 2020 and 2019 the Company had no leases
to which the standard applies.
At
December 31, 2020, the Company was a party to an agreement to a
short-term operating lease for office space in Orlando, Florida.
This agreement allows for cancellation with thirty days’ notice.
Rental expense for the years ended December 31, 2020 and 2019 was
$3,000 and $12,661, respectively.
Use
of Estimates
The
preparation of the Company’s financial statements in conformity
with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from such estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations
of credit risk are primarily cash and cash equivalents. The Company
is exposed to credit risk, subject to federal deposit insurance, in
the event of a default by the financial institutions holding its
cash and cash equivalents to the extent of amounts recorded on the
balance sheets. The cash accounts are insured by the Federal
Deposit Insurance Corporation up to $250,000. At December 31, 2020,
the Company has no cash balances in excess of insured
limits.
Segment
and Geographic Information
Operating
segments are defined as components of an enterprise about which
separate discrete information is available for evaluation by the
chief operating decision maker, or decision-making group, in
deciding how to allocate resources and in assessing performance.
The Company views its operations and manages its business in one
operating segment and does not segment the business for internal
reporting or decision making.
Fair
Value of Financial Instruments
In
accordance with the reporting requirements of Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 825, “Financial Instruments”, the Company calculates
the fair value of its assets and liabilities which qualify as
financial instruments under this standard and includes this
additional information in the notes to the financial statements
when the fair value is different than the carrying value of those
financial instruments. Cash, accounts payable, and accrued
liabilities are accounted for at cost which approximates fair value
due to the relatively short maturity of these instruments. The
carrying value of notes payable also approximate fair value since
they bear market rates of interest and other terms. None of these
instruments are held for trading purposes.
Derivative
Financial Instruments
FASB
ASC 815, Fair Value Measurements requires bifurcation of
certain embedded derivative instruments in certain debt or equity
instruments, and measurement at their fair value for accounting
purposes. A holder redemption feature embedded in the Company’s
note payable requires bifurcation from its host instrument and is
accounted for as a freestanding derivative.
Research
and Development Costs
Research
and development costs are charged to expense as incurred and are
comprised of fees paid to consultants and patent related
costs.
Income
Taxes
The
Company follows ASC Topic 740, Income Taxes, which requires
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred
tax assets and liabilities are based on the differences between the
financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences
are expected to reverse. Deferred tax assets are reduced by a
valuation allowance to the extent management concludes it is more
likely than not that the asset will not be realized. 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.
The
standard addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be
recorded in the financial statements. Under ASC Topic 740, the
Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position
will be sustained on examination by the tax authorities, based on
the technical merits of the position. The tax benefits recognized
in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent
likelihood of being realized upon ultimate settlement. ASC Topic
740 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim
periods and requires increased disclosures. At the date of
adoption, and as of December 31, 2020 and 2019, the Company does
not have a liability for unrecognized tax uncertainties. The
Company’s policy is to record interest and penalties on uncertain
tax positions as income tax expense. As of December 31, 2020, and
2019, the Company has not accrued any interest or penalties related
to uncertain tax positions.
Stock-Based
Compensation and Issuance of Stock for Non-Cash
Consideration
The
Company measures and recognizes compensation expense for all
share-based payment awards made to employees and directors based on
estimated fair values equaling either the market value of the
shares issued, or the value of consideration received, whichever is
more readily determinable. Generally, the non-cash consideration
pertains to services rendered by consultants and others and has
been valued at the fair value of the Company’s common stock at the
date of the agreement.
The
Company’s accounting policy for equity instruments issued to
consultants and vendors in exchange for goods and services follows
the provisions of ASC Topic 505-50, “Equity-Based Payments to
Non-Employees.” The measurement date for the fair value of the
equity instruments issued is determined at the earlier of (i) the
date at which a commitment for performance by the consultant or
vendor is reached or (ii) the date at which the consultant or
vendor’s performance is complete.
The
Company did not grant any stock-based compensation awards during
the years ended December 31, 2020 and 2019.
Net
Income (Loss) per Share
Basic
net income (loss) per share is calculated by dividing the net loss
attributable to common stockholders by the weighted average number
of common shares outstanding for the period, without consideration
for common stock equivalents.
The
Company’s potentially dilutive securities, which include warrants
and potential common shares issuable under certain convertible
notes, have been included in the computation of diluted net income
per share for the twelve-month period ended December 31, 2020. Net
income per share, for the year ended December 31, 2020, was
calculated by dividing the net loss by the weighted-average number
of common share outstanding for the period determined using the
treasury-stock method and the if-converted method.
For
the twelve-month period ended December 31, 2019, the potentially
dilutive securities were excluded from the computation of diluted
loss per share as the effect would be to reduce the net loss per
common share. Therefore, the weighted-average common stock
outstanding used to calculate both basic and diluted net loss per
share for the year ended December 31, 2019.
Results
of Operations
Year Ended December 31, 2020 Compared to Year Ended December 31,
2019
Revenues
(dollar amounts in thousands):
We
had no revenues from operations for the years ended December 31,
2020 and 2019.
Operating
Expenses
Selling,
general and administrative (dollar amounts in
thousands):
Selling,
general and administrative expense for the years ended December 31,
2020 and 2019 were as follows (dollar amounts in
thousands):
|
|
2020 |
|
|
2019 |
|
Selling, general and
administrative |
|
$ |
760 |
|
|
$ |
2,368 |
|
Decrease from prior year |
|
$ |
(1,608 |
) |
|
$ |
(864 |
) |
Percent decrease from prior
year |
|
|
(68 |
)% |
|
|
(27 |
)% |
In 2020, selling, general and administrative expense was $760,
compared to $2,368 for 2019, a decrease of $1,608 or 68%. For the
years ended December 31, 2020 and 2019, selling, general and
administrative expenses were made up as follows (dollar amounts in
thousands):
|
|
2020 |
|
|
2019 |
|
Stock listing and
investor relations expenses |
|
$ |
33 |
|
|
$ |
50 |
|
Professional fees and
consulting |
|
|
530 |
|
|
|
632 |
|
Payroll |
|
|
177 |
|
|
|
1,543 |
|
Other
expenses |
|
|
20 |
|
|
|
143 |
|
|
|
$ |
760 |
|
|
$ |
2,368 |
|
The decrease in selling, general and administrative expense was
attributable primarily to the reduction in payroll costs and on
cost of legal and board fees as the Company has effected a
realignment of its corporate strategy in 2020.
Research
and development
R&D expenses for the years ended December 31, 2020 and 2019
were as follows (dollar amounts in thousands):
|
|
2020 |
|
|
2019 |
|
Research and
development |
|
$ |
126 |
|
|
$ |
336 |
|
Decrease from prior year |
|
$ |
210 |
|
|
$ |
192 |
|
Percent decrease from prior
year |
|
|
(63 |
)% |
|
|
133 |
% |
R&D
is overseen and managed internally, working with individuals, and
universities in order to utilize patents that we have sub-licensed
or acquired since our inception. We continue to seek to expand our
pipeline of patents by reviewing other compounds, technologies, or
capabilities. We also seek out promising compounds and innovative
technologies developed by third parties to incorporate into our
discovery and development processes or projects.
For
the years ended December 31, 2020 and 2019, research and
development expenses were made up as follows (dollar amounts in
thousands):
|
|
2020 |
|
|
2019 |
|
Patent expenses |
|
$ |
33 |
|
|
$ |
318 |
|
Professional
fees |
|
|
93 |
|
|
|
18 |
|
|
|
$ |
126 |
|
|
$ |
336 |
|
Expenses
for research and development decreased by 63% compared to expenses
in the same period 2019. The change was primarily due to higher
professional fees incurred in 2020 offset by reduced patent related
expenses in the current year.
Stock
issued for services
The
cost of stock issued for services was zero in 2020 and $131 in
2019. The decrease in expense reflects that no such professional
services were paid by the issuance of common stock in 2020. The
number of shares issued for consulting services in 2019 was
3,300.
Warrant
valuation expense
The
Company did not issue any warrants in 2020. In 2019, the Company
issued 14,600 warrants as part of notes payable at an exercise
price of $5, for which it recorded a $0 warrant expense.
When
the Company sells its stock to stockholders for cash, it
periodically issues common stock warrants to certain stockholders
to acquire additional stock at prices agreed at the date of the
original sale. The Company incurs a cost for the rights attached to
the warrants, which is calculated using the Black-Scholes Model.
This expense is reported in the Consolidated Statements of
Operations above as the Warrant valuation expense.
Depreciation
and amortization
All
Fixed Assets of the Company were fully depreciated at December 31,
2020. The Company amortizes the costs incurred to acquire
capitalized assets over the estimated useful life of the associated
asset.
Interest
Expense
Interest
expense for the years ended December 31, 2020 and 2019 were as
follows (dollar amounts in thousands):
|
|
2020 |
|
|
2019 |
|
Interest expense |
|
$ |
480 |
|
|
$ |
894 |
|
Increase/(decrease) from prior
year |
|
$ |
(414 |
) |
|
$ |
(289 |
) |
Percentage increase/(decrease) from
prior year |
|
|
(46 |
)% |
|
|
(24 |
)% |
Interest
expense is comprised of loan origination fees and interest owed by
the Company. The decrease year over year was attributable to the
lower level of debt in the Company. During the third quarter of
2020, the Company assigned notes payable aggregating $2,728,731 to
Cytocom.
Gain/(Loss)
on assignment of certain debt and liabilities (dollar amounts
in thousands):
The
Company recorded $3,502,280 in 2020 recognizing a non-cash gain on
the settlement of certain debt and liabilities with the assignment
of these to Cytocom. The Company recorded no gain or loss in 2019
on such assignments.
Liquidity:
Liquidity
is measured by the Company’s ability to secure enough cash to meet
its contractual and operating needs as they arise. The Company had
cash of $9,971 at December 31, 2020 compared to $4,925 at December
31, 2019.
For
the years ended December 31, 2020 and 2019, cash used in operating
activities was $191,954 and $934, respectively. The Company had no
cash inflows or outflows for investing activities for the years
ended December 31, 2020 and 2019. During 2020 the Company received
proceeds of $197,000 from notes issuances. In 2019, the Company was
able to cover its operating and investing cash-flow requirements
through its existing cash balances and without the need to issue
notes payable or to sell equity.
The
Company cannot be certain that it will generate sufficient cash
flows for the next 12 months to pay for operating expenses and to
pay off current and past-due obligations. The Company expects to
fund operations through sales of equity and notes payable, and
conversions of exiting obligations into equity. Over the next 12
months, the Company believes it will require between $500,000 and
$1,000,000 to meet its ongoing expenses and obligations.
If
the Company is unable to generate sufficient cash flows from sales,
or if it does not raise additional working capital to meet all its
operating obligations and expenditures, the Company may have to
modify its business plan.
Off-Balance
Sheet Arrangements
During
the years ended December 31, 2020 and 2019, we did not engage in
any off-balance sheet arrangements as defined in item 303(a)(4) of
the SEC’s Regulation S-K.
Item 7A. Quantitative and Qualitative
Disclosure About Market Risk
Not
applicable.
Item 8. Financial Statements and
Supplementary Data
Our
Consolidated Financial Statements and Notes thereto, for the fiscal
years ended December 31, 2020 and 2019 and the report of Turner,
Stone & Company, L.L.P. (“Turner”), our independent registered
public accounting firm, are set forth on pages F-1 through F-21 of
this Annual Report.
Item 9. Changes in and Disagreements
with Accountants on Accounting and Financial
Disclosure
Not
applicable.
Item 9A. Controls and
Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure
controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under
the Exchange Act is recorded, processed, summarized, and reported,
within the time period specified in the SEC’s rules and forms.
Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange
Act is accumulated and communicated to management, including the
Chief Executive Officer, as appropriate, to allow timely decisions
regarding required disclosure. Based on the evaluation, the has
concluded that our disclosure controls and procedures are
ineffective to ensure that information disclosed by us in the
reports we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods
specified in Securities and Exchange Commission rules and forms.
This determination was based on the limited accounting staff, the
lack of segregation of duties and the lack of an audit committee at
December 31, 2020, which creates a material weakness. A material
weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be
prevented or detected on a timely basis. A material weakness means
there is a risk that our financial reports or other filings may
contain an error or inaccuracy or not submitted timely.
Management Report on Internal Control over Financial
Reporting
Our
management is responsible for establishing and maintaining adequate
internal control over financial reporting. Our internal control
system was designed to provide reasonable assurance to our
management and board of directors regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles.
Any
internal control system, no matter how well designed, has inherent
limitations and may not prevent or detect misstatements.
Accordingly, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation.
Our
Chief Executive Officer has evaluated the effectiveness of our
internal control over financial reporting as of December 31, 2020
based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on this evaluation, because of the
Company’s limited resources and limited number of employees, and
the absence of an audit committee at December 31, 2020, management
concluded that, as of December 31, 2020, our internal control over
financial reporting is not effective in providing reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting
principles.
This
annual report does not include an attestation report of the
Company’s independent registered public accounting firm regarding
internal control over financial reporting. Management’s report was
not subject to attestation by the Company’s independent registered
public accounting firm pursuant to permanent rules of the SEC that
permit the Company to provide only management’s report in this
Annual Report.
Changes in Internal Control over Financial
Reporting
During the
fourth quarter of 2020, the Company’s Chief Financial Officer
resigned and as of the filing of this report on Form 10-K, this
position has not been filled. There were no other changes in the
Company’s internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) under the Securities
and Exchange Act of 1934) during the year ended December 31, 2020
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
Item 9B. Other
Information
None.
PART III
Item 10. Directors, Executive Officers
and Corporate Governance
Directors
As of May
14, 2021, the number of voting members of our Board of Directors
was 3. The members of our Board of Directors as of May 14, 2020 are
as follows:
Name |
|
Age |
|
Director
Since |
|
Position |
Kevin
Phelps |
|
66 |
|
November
2018 |
|
Chief Executive Officer and Director |
Dr.
Roscoe Moore |
|
66 |
|
August
2018 |
|
Director
and Chairman of the Board |
The
biographies of each director below contain information regarding
the person’s service as a director, business experience, director
positions held currently or at any time during the last five years,
and information regarding involvement in certain legal or
administrative proceedings, if applicable.
Kevin
Phelps — Mr. Phelps, 66, is a General Partner in Trillium
Group, LLC, a Rochester, New York based venture capital firm and a
Founder of Cashel Rock Advisors and FinanciaLink Strategic
Alliances, two private wealth management firms specializing in
strategies for corporations and high net-worth individuals. On
April 30, 2020, Mr. Phelps was appointed interim Chief Executive
Officer following the resignation of Mr. Handley,
His professional experience began as a CPA with Price Waterhouse
(now PwC), where he consulted with over 20 companies with a
principal focus on emerging growth opportunities. In 1987, he was
recruited to head financial planning for Eastman Kodak’s
BioProducts Division. He assisted in the spinoff of the business
into an international joint venture and became the Chief Financial
Officer and later Executive VP of Business Development of the new
entity, Genencor International, Inc. Following Genencor, Mr Phelps
joined Trillium Group, LLC a regional private equity firm. . In
addition, Mr. Phelps has served as Chief Financial Officer of
Vaccinex, Inc. (Nasdaq “VCNX”), and is currently Director/Chairman
of OyaGen, Inc., a pre-clinical drug development company and
Director for Arev Nanotek Brands (CSE “AVER”), a plant extraction
and phyto-medicinal development company.
Dr.
Roscoe Moore — Dr. Moore, 66, was a career officer within the
Commissioned Corps of the United States Public Health Service
(USPHS) and Assistant United States Surgeon General (Rear Admiral,
USPHS) within the Immediate Office of the Secretary, Department of
Health and Human Services (HHS). He operated as Principal Liaison
between the HHS and the ministries of health of African countries
for the development of infrastructure for preventive health needs
and was integrally involved in the formation of the President’s
Emergency Program for AIDS Relief (PEPFAR) program under President
George W. Bush, a program which is credited with turning the tide
of the global AIDS pandemic. He was selected as Chief Veterinary
Medical Officer, USPHS, by Surgeon General C. Everett Koop, and was
the Chief Epidemiologist with the Center for Devices and
Radiological Health for the FDA. Dr. Moore served as an Epidemic
Intelligence Service Officer with the U.S. Centers for Disease
Control and Prevention (CDC) and as the ranking veterinarian across
all uniformed services, including the armed forces. Dr. Moore has
conducted clinical research on infectious diseases including
Venezuelan equine encephalitis, tuberculosis, listeriosis,
psittacosis, malaria, and HIV/AIDS. He has also been involved in
the development of a sustainable infrastructure for the
surveillance of emerging and re-emerging diseases worldwide. He has
written or co-authored over 100 publications covering a broad range
of public health issues.
Dr.
Moore has international experience with North Africa (Morocco),
North West Africa Sub-Saharan Africa, West Africa (Senegal,
Nigeria, and Mali), Central Africa (Central African Republic,
Republic of Congo, Rwanda, and Uganda), East Africa and Southern
Africa and the countries of the Southern African Development
Community (SADC).
Dr.
Moore received his Bachelor of Science and Doctor of Veterinary
Medicine degrees from the Tuskegee Institute; his Master of Public
Health degree in Epidemiology from the University of Michigan; and
his Doctor of Philosophy degree in Epidemiology from the Johns
Hopkins University. He was awarded the Doctor of Science degree
(Honoris Causa) by Tuskegee University in recognition of his
distinguished career in public health. Dr. Moore also served as an
Assistant Professor of Oncology within the Howard University
College of Medicine Cancer Center.
Executive Officers
Biographical
information concerning our Chief Executive Officer is set forth
above.
Board Committees
In
February of 2015, the Board authorized the formation of and adopted
charters for an audit committee, compensation committee and
nominating committee. At December 31, 2020, we had not yet
established an audit committee, compensation committee, or
nominating committee. In April 2020, the full Board resolved to
constitute itself as the Company’s audit committee until such time
as an audit committee is appointed. During 2020, the functions
ordinarily handled by these committees were handled by our entire
Board. As of the date of filing this annual report, no members were
appointed to the audit committee, compensation committee or
nominating committee. The compensation committee and nominating
committee have not yet held any meetings.
Family Relationships
There
are no familial relationships between any of our officers and
directors.
Director or Officer Involvement in Certain Legal
Proceedings
Our
directors and executive officers were not involved in any legal
proceedings as described in Item 401(f) of Regulation S-K in the
past ten years.
Director Independence
The
Company is not currently listed on any national securities exchange
that has a requirement that the board of directors be independent.
At December 31, 2020, Dr. Moore, is deemed an “independent
director” as that term is defined under the rules of the NASDAQ
Capital Market.
Code of Ethics
We
have adopted a Code of Ethics that applies to all our employees and
officers, and the members of our Board of Directors. The Code of
Ethics is available on our corporate website at
www.immunetherapeutics.com. You can access the Code of Ethics on
our website by first clicking “About Us” and then “Corporate
Governance.” Any amendment to or waiver of the Code of Ethics will
be disclosed on our website promptly following the date of such
amendment or waiver.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section
16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes
in ownership with the SEC. Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based on our
review of the reports filed by Reporting Persons, we believe that,
during the year ended December 31, 2020, the Reporting Persons met
all applicable Section 16(a) filing requirements.
Item 11. Executive
Compensation
The
following table summarizes the annual compensation of our Named
Executive Officers (defined below), as of December 31, 2020. “Named
Executive Officers,” consistent with Item 402(m) of Regulation S-K
promulgated under the Exchange Act, include: (i) the Company’s
Principal Executive Officer and individuals acting in a similar
capacity during fiscal year 2020, regardless of compensation level;
(ii) the Company’s two most highly compensated executive officers
other than the Principal Executive Officer who were serving as
executive officers at the end of fiscal year 2020; and (iii) up to
two additional individuals who would have been included under (ii)
above but for the fact that the applicable individual was not
serving as an executive officer of the Company at the end of fiscal
year 2020.
Name and Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus |
|
|
Stock Awards |
|
|
Option Awards |
|
|
All Other Compensation |
|
|
Total($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Phelps (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive
Officer |
|
2020 |
|
|
$ |
160,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
160,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Aronstam (2) |
|
2020 |
|
|
$ |
52,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
52,500 |
|
Former Chief Financial Officer |
|
2019 |
|
|
$ |
60,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
60,000 |
|
(1) Mr.
Phelps became Chief Executive Officer on April 29, 2020. In 2020,
Mr. Phelps agreed to defer payment of his of salary until the
Company had sufficient income to pay the compensation in cash. At
December 31, 2020, the salary deferred for Mr. Phelps was $160,000.
In 2020, no stock compensation awards were issued to Mr.
Phelps.
(2)
Mr. Aronstam resigned as the Company’s Chief Financial Officer on
November 16, 2020.
Summary
Director Compensation Table
The
following table shows information regarding the compensation earned
or paid during 2020 to Non-Employee Directors who served on the
Board during the year.
Name
and
Principal
Position |
|
Year |
|
Fees
Paid
or Earned
in Cash
($) |
|
|
Stock
Awards
($) |
|
|
Option
Awards
($) |
|
|
Non-equity
incentive
plan
compensation |
|
|
Non-qualified
incentive
plan
compensation |
|
|
All
Other
Compensation
($) |
|
|
Total
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr.
Roscoe Moore, |
|
2020 |
|
|
60,000 |
(1) |
|
|
- |
(1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
60,000 |
|
Director,
Chairman of the Board |
|
2019 |
|
|
60,000 |
(1) |
|
|
- |
(1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
Phelps, |
|
2020 |
|
|
60,000 |
(2) |
|
|
1,340 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
61,340 |
|
Director |
|
2019 |
|
|
60,000 |
(2) |
|
|
1,340 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
61,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Sander, |
|
2020 |
|
|
60,000 |
(3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
60,000 |
|
Director |
|
2019 |
|
|
10,000 |
(3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
For
2020, all members of the Board of Directors who are not our
employees, or Non-Employee Directors, currently earn an annual
retainer of $60,000 per year, payable monthly in arrears. No
payments were made on these retainers in 2020.
In
addition, Non-Employee Directors are eligible to receive stock or
warrants upon their appointment to the Board. Certain members of
the Board of Directors are also entitled to receive quarterly or
annual payment of Company shares or warrants to acquire shares for
their services. No stock compensation awards were issued in 2020.
We do not currently have minimum stock ownership guidelines for
Non-Employee Directors.
We
reimburse Non-Employee Directors for actual out-of-pocket costs
incurred to attend board meetings. No additional compensation is
paid for attendance in person or by telephone at board
meetings.
(1)
For services as a director in 2020, Dr. Moore was entitled to
receive payment of $60,000 ($60,000 in 2019). Dr. Moore has agreed
to defer his fees. 300 shares of common stock were issued to Dr.
Moore in 2019 for services as director in 2019. Dr. Moore also
served as a senior advisor to the Company between November 2017 and
November 2019. As compensation for his services in that role, Dr.
Moore was to be paid a monthly fee of $1,500. Dr. Moore has agreed
to defer such fees.
(2)
For services as a director in 2020, Mr. Phelps was entitled to
receive payment of $60,000 ($60,000 in 2019). Mr. Phelps has agreed
to defer his fees. until 2020. 200 shares of common stock were
issued to Mr. Phelps in 2019 for services as director in 2019 for
which the Company recorded an expense of $1,340.
(3)
Mr. Sander resigned as a director on January 21, 2021. For services
as a director in 2020 and 2019, Mr. Sander was entitled to receive
payment of $60,000 and $10,000, respectively. Mr. Sander agreed to
defer his fees. In accordance with his director’s agreement with
the Company, Mr. Sander is entitled to receive each quarter either
5,000 restricted shares of Company stock or warrants to purchase
5,000 shares of Company stock, at his election. Mr. Sander did not
make an election in 2019; accordingly, no shares of common stock or
warrants were issued to Mr. Sander in 2019 for services as director
in 2019 and no expense was accrued.
Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters
The
following table sets forth certain information regarding the
ownership of our common stock as of March 31, 2021 (the
“Determination Date”) by: (i) each current director of our company;
(ii) each of our named executive officers; (iii) all current
executive officers and directors of our company as a group; and
(iv) all those known by us to be beneficial owners of more than
five percent (5%) of our common stock.
Beneficial
ownership and percentage ownership are determined in accordance
with the rules of the SEC. Under these rules, beneficial ownership
generally includes any shares as to which the individual or entity
has sole or shared voting power or investment power and includes
any shares that an individual or entity has the right to acquire
beneficial ownership of within 60 days of the Determination Date,
through the exercise of any option, warrant or similar right (such
instruments being deemed to be “presently exercisable”). In
computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of our common stock
that could be issued upon the exercise of presently exercisable
options and warrants are considered to be outstanding. These
shares, however, are not considered outstanding as of the
Determination Date when computing the percentage ownership of each
other person.
To
our knowledge, except as indicated in the footnotes to the
following table, and subject to state community property laws where
applicable, all beneficial owners named in the following table have
sole voting and investment power with respect to all shares shown
as beneficially owned by them. Percentage of ownership is based on
481,906 shares of common stock outstanding as of March 31, 2021.
Unless otherwise indicated, the business address of each person in
the table below is c/o Immune Therapeutics, Inc., 2431 Aloma Ave.,
Suite 124, Winter Park, Florida 32792.
Name and Address |
|
Amount of Beneficial Ownership* |
|
|
Percentage of Class % |
|
|
|
|
|
|
|
|
Dr. Roscoe Moore, Director
and Chairman of the Board |
|
|
2,175 |
|
|
|
<1% |
|
Kevin Phelps, Director and Chief
Executive Officer |
|
|
200 |
|
|
|
<1% |
|
|
|
|
|
|
|
|
|
|
All directors and officers as a group
(2 persons) |
|
|
2,375 |
|
|
|
<1% |
|
Noreen Griffin, Investor (1) |
|
|
61,010 |
|
|
|
11.3% |
|
* |
The
percentages are calculated using 481,906 outstanding shares of the
Company’s common stock on March 24, 2021, as adjusted pursuant to
Rule 13d-3(d)(1)(i). Pursuant to Rule 13d-3(d)(1) of the Exchange
Act, shares beneficially owned by a person or group includes shares
of common stock that such person or group has the right to acquire
within 60 days after March 31, 2020, which includes, but is not
limited to, (i) shares subject to exercisable options or options
exercisable within 60 days of March 31, 2021 and (ii) shares
subject to RSUs or performance share awards that will vest within
60 days of March 31, 2021. |
(1) |
Ms.
Griffin served as the Company’s CEO until September 2019.
Represents 704 shares held in the name of Griffin Enterprises
Group, Inc. which is 50% owned and managed by Robert Wilson, Ms.
Griffin’s son; 2,685 shares held by Griffin Family Trust, an
irrevocable trust that is not managed by Ms. Griffin; 429 shares
held by Ms. Griffin, individually. In addition, 49,772 shares
associated with a convertible note held Global Reverb Corp., an
entity owned 100$ by Ms. Griffin; and 7,420 common stock warrants
which have been issued to Ms. Griffin. |
Item 13. Certain Relationships and
Related Party Transactions
None
Item 14. Principal Accounting Fees and
Services
The
following table sets forth fees billed to us by Turner, Stone &
Company, L.L.P., our independent registered public accounting firm,
during the fiscal years ended December 31, 2020 and December 31,
2019 for: (i) services rendered for the audit of our annual
financial statements and the review of our quarterly financial
statements; (ii) services by our independent registered public
accounting firms that are reasonably related to the performance of
the audit or review of our financial statements and that are not
reported as audit fees; (iii) services rendered in connection with
tax compliance, tax advice and tax planning; and (iv) all other
fees for services rendered.
|
|
December
31, 2020 |
|
|
December
31, 2019
|
|
|
|
|
|
|
|
|
Audit
Fees |
|
$ |
57,000 |
|
|
$ |
48,000 |
|
Audited
Related Fees |
|
$ |
— |
|
|
$ |
— |
|
Tax
Fees |
|
$ |
— |
|
|
$ |
— |
|
All
Other Fees |
|
$ |
— |
|
|
$ |
— |
|
PART IV
Item 15. Exhibits, Financial Statement
Schedules.
Exhibits
Schedule
The
following exhibits are filed with this Annual Report:
Exhibit |
|
Description |
|
|
|
3.1 |
|
Restated
Articles of Incorporation* |
3.2 |
|
Bylaws* |
10.1 |
|
Sale
and Assignment of Patent and Transfer of Technology Agreement with
Nicholas Plotnikoff †> |
10.2 |
|
Agreement
with Professor Shan †> |
10.3 |
|
Patent
License Agreement with Penn State Research Foundation
r† |
10.4 |
|
Patent
License Agreement Between Immune Therapeutics, Inc. and Jacqueline
Young for the intellectual property of Dr. Bernard
Bihari# |
10.5 |
|
Strategic
Framework Agreement for Cooperation with Hubei Qianjiang
Pharmaceutical Company, and Commissioned Processing Contract, and
Addendum to Venture Cooperation †> |
10.6 |
|
Malawi
Memorandum of Agreement with GB Oncology & Imaging Group
Ltd.# |
10.7 |
|
Letter
of Intent between GB Oncology & Imaging Group Ltd. and G-Ex
Technologies St. Maris Pharma Limited # |
10.8 |
|
Distribution
Agreement in Nigeria with GB Pharma Holdings Inc.
†> |
10.9 |
|
ViPharma
Agreement †> |
10.10 |
|
Strategic
Framework Agreement, Addendum to Venture Cooperation and
Supplementary Agreement with Hubei Qianjiang Pharmaceutical Company
(MENK) (filed as Exhibit 10.11 to our Annual Report on Form 10-K
for the fiscal year ended December 31, 2013, and incorporated
herein by reference). |
10.11 |
|
Manufacturing
Agreement with Laboratorios Ramos (and English
translation)> |
10.12 |
|
Engagement
Agreement for Corporate Advisory Services by the Brewer
Group? |
10.13 |
|
Employment
Agreement with Noreen Griffin (filed as Exhibit 10.14 to our Annual
Report on Form 10-K for the fiscal year ended December 31, 2013,
and incorporated herein by reference). |
10.14 |
|
Master
Service Agreement with American Peptide Company (filed as Exhibit
10.17 to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2013, and incorporated herein by
reference). |
10.15 |
|
Agreement
with AHAR Pharma (filed as Exhibit 10.18 to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2013, and
incorporated herein by reference). |
10.16 |
|
Consulting
agreement with Dr. Graham Burton (filed as Exhibit 10.19 to our
Annual Report on Form 10-K for the fiscal year ended December 31,
2013, and incorporated herein by reference). |
10.17 |
|
Promissory
note to Robert J. Dailey, issued February 6, 2014, for $200,000
(filed as Exhibit 10.1 to our Quarterly Report on Form 10-K for the
quarter ended March 31, 2014, and incorporated herein by
reference). |
10.18 |
|
Promissory
note to Robert J. Dailey, issued March 7, 2014, for $200,000 (filed
as Exhibit 10.2 to our Quarterly Report on Form 10-K for the
quarter ended March 31, 2014, and incorporated herein by
reference). |
10.19 |
|
Promissory
note to Robert J. Dailey, issued March 28, 2014, for $200,000
(filed as Exhibit 10.3 to our Quarterly Report on Form 10-K for the
quarter ended March 31, 2014, and incorporated herein by
reference). |
10.20 |
|
Promissory
Note Settlement Agreement, dated September 26, 2014, between Immune
Therapeutics, Inc. and Robert Dailey for notes equaling $399,000
µ |
10.21 |
|
Promissory
Note Settlement Agreement, dated September 26, 2014, between Immune
Therapeutics, Inc. and Robert Dailey for notes equaling $400,000
µ |
10.22 |
|
Distribution
Agreement, effective June 11, 2014, between Airmed Biopharma
Limited and PanAm Global Logistics, Inc. (filed as Exhibit 1.1 to
our Current Report on Form 8-K filed June 25, 2014, and
incorporated herein by reference). |
10.23 |
|
Immune
Therapeutics, Inc. 2014 Stock Incentive Plan (filed as Appendix A
to our Definitive Proxy Statement on Schedule 14A filed on July 17,
2014, and incorporated herein by reference). |
10.24 |
|
Supplementary
Agreement on New Drug Methionine – Enkephalin Cooperation, dated
August 6, 2014, between Immune Therapeutics, Inc. and Hubei
Qianjiang Pharmaceutical Co., Ltd. (filed as Exhibit 1.1 to our
Current Report on Form 8-K on August 13, 2014, and incorporated
herein by reference). |
10.25 |
|
Assignment
by Professor Fengping Shan Ph.D. to Immune Therapeutics, Inc.,
executed August 6, 2014 (filed as Exhibit 1.2 to our Current Report
on Form 8-K on August 13, 2014, and incorporated herein by
reference). |
10.26 |
|
Clinical
Trial Agreement, dated October 20, 2014, between TNI BioTech
International Ltd. and American Hospital and Resorts (filed as
Exhibit 10.1 to our Current Report on Form 8-K on October 30, 2014,
and incorporated herein by reference). |
10.27 |
|
Contract
for the Compounding of Pharmaceutical Products, dated December 8,
2014, between Immune Therapeutics, Inc. and KRS Global
Biotechnology, Inc. (filed as Exhibit 10.1 to our Current Report on
Form 8-K on December 15, 2014, and incorporated herein by
reference). |
10.28 |
|
Services
Agreement, dated December 15, 2014, between Immune Therapeutics,
Inc. and Aronstam Management Services, Inc. µ |
10.29 |
|
Royalty
Agreement (Filed as Exhibit 10.1 to our Current Report on Form 8-K
on May 21, 2015, and incorporated herein by
reference.) |
10.30 |
|
Change
of Transfer Agent Agreement (Filed as Exhibit 99.1 to our Current
Report on Form 8-K on January 26, 2015, and incorporated herein by
reference.) |
10.31 |
|
Real
Property Leases for Florida Office and Extensions dated July 19,
2017 and November 13, 2017 |
10.32 |
|
Compounding
Contract with Complete Pharmacy and Medical Solutions, LLC (filed
as Exhibit 10.1 to our Current Report 8-K on May 20, 2016, and
incorporated herein by reference.) |
10.33 |
|
Employment
Agreement with Robert Wilson (filed as Exhibit 10.1 to our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016,
and incorporated herein by reference). |
10.34 |
|
Letter
of Intent with Super T-Cell Cancer Co., (filed as Exhibit 10.1 to
our Current Report on Form 8-K on April 21, 2016, and incorporated
herein by reference.) |
10.35 |
|
Extension of Employment Agreement
with Noreen Griffin dated March 9, 2018. |
10.36 |
|
Extension
of AHAR Agreement dated March 29, 2016. µ |
10.37 |
|
Extension of Employment Agreement
with Peter Aronstam dated July 1, 2017. |
10.38 |
|
Consulting
Agreement with Joyce Banda dated September 1, 2016.
µ |
10.39 |
|
Intellectual Property Assignment
Agreement with Cytocom, Inc. dated September 4,
2015. |
10.40 |
|
Consulting Master Services Agreement
with Coté Orphan, LLC dated February 16, 2016. |
10.41 |
|
Securities
Purchase Agreement and related agreements with JMJ Financial dated
April 12, 2016 (filed as Exhibit 10.1 to our Current Report 8-K on
April 18, 2016, and incorporated herein by
reference). |
10.43 |
|
Patent License Agreement dated
September 24, 2014 between Dr. Jill P. Smith, LDN Research Group
LLC and Cytocom, Inc. and related agreements. |
10.44 |
|
Promissory
Note dated February 6, 2017 issued to Phoenix Fund Management,
LLC. |
10.45 |
|
Settlement agreement with Phoenix
Fund Management, LLC dated February 28, 2017. |
10.46 |
|
Settlement agreement with Mr.
Marshall Faulk dated April 3, 2017. |
10.47 |
|
Promissory
Note dated April 5, 2017 to Robert J. Dailey in the principal
amount of $150,000. |
10.48 |
|
Securities Purchase Agreement and
Warrant dated May 1, 2017 with Ira Gaines. |
10.49 |
|
Distribution
Agreement with TNI BioTech International Ltd. and Omaera
Pharmaceuticals Ltd. Dated August 22, 2017. |
10.50 |
|
Settlement and mutual release
agreement dated October 12, 2017 with Phoenix Fund Management, LLC
and Far East Holdings, LLC. |
10.51 |
|
Securities Purchase Agreement dated
October 25, 2017 with Iliad Research and Trading,
L.P. |
10.52 |
|
Iliad Research and Trading (i)
promissory note and (ii) warrant dated October 25,
2017. |
10.53 |
|
Independent Corporate Development and
Consulting Agreement with CSJ Group, LLC, and Advanced
BioStrategies, Inc. dated December 5, 2017. |
10.54 |
|
Independent Corporate Development and
Legal Advising Agreement with CSJ and August Strategic & Legal
Advisors, Inc. dated December 6, 2017 |
10.55 |
|
Loan
agreement and promissory note with Joel Yanowitz, dated January 9,
2018, for $50,000 (filed as Exhibit 10.23 to our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2018, and incorporated
herein by reference). |
10.56 |
|
Loan
agreement and promissory note with Rogoff Family Trust, dated
February 13, 2018, for $50,000 (filed as Exhibit 10.24 to our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018,
and incorporated herein by reference). |
10.57 |
|
Amended
and restated License Agreement with Cytocom, Inc. dated May 1, 2018
(filed as Exhibit 10.1 to our Current Report dated June 4, 2018,
and incorporated herein by reference). |
10.58 |
|
Stock
Purchase Agreement with Cytocom, Inc. dated June 4, 2018 (filed as
Exhibit 10.2 to our Report on Form 8-K dated June 4, 2018, and
incorporated herein by reference). |
10.59 |
|
Promissory
Note dated February 27, 2019 to Phoenix Group in the principal
amount of $231,478.39. |
10.60 |
|
Second
Amendment to License Agreement with Cytocom Inc., effective
December 31, 2018 and signed April 8, 2019.∞ |
10.61 |
|
Employment
Agreement with Michael Handley dated September 20, 2019 (Filed as
Exhibit 10.1 to our Current Report on Form 8-K on September 25,
2019, and incorporated herein by reference.). |
10.62 |
|
License
Agreement dated January 15, 2020 with Forte Biotechnology Int’l.
Corp. ∞ |
10.63 |
|
Letter
of Intent dated March 17, 2020 with Cytocom, Inc., setting forth
the preliminary terms and conditions of a potential collaboration
agreement for the development of Lodonal™ and IRT-101 for use
against COVID-19 (Filed as Exhibit 10.1 to our Current Report on
Form 8-K on March 20, 2020, and incorporated herein by
reference.). |
10.64 |
|
Convertible
Promissory Note dated March 30, 2020 to Redstart Holdings Corp. in
the principal amount of $53,000. ∞ |
10.65 |
|
PRC
Amendment to The Second Amendment to the License Agreement
effective December 31, 2018 with Cytocom, Inc. and signed May 12,
2020. ∞ |
21.1 |
|
List
of Subsidiaries |
31.1 |
|
Chief Executive Officer certification under Section 302 of the
Sarbanes-Oxley Act of 2002 |
31.2 |
|
Chief Financial Officer certification under Section 302 of the
Sarbanes-Oxley Act of 2002 |
32.1 |
|
Chief Executive Officer certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |
* |
filed
with the Form 10 Registration Statement filed with the SEC on April
22, 2013 and the Amendment No. 1 to the Form 10 Registration
Statement filed with the SEC on June 7, 2013 and incorporated
herein by reference. |
# |
filed
with the Amendment No. 1 to the Form 10 Registration Statement
filed with the SEC on June 7, 2013 and incorporated herein by
reference. |
+ |
filed
with the Amendment No. 2 to the Form 10 Registration Statement
filed with the SEC on July 18, 2013 and incorporated herein by
reference. |
^ |
filed
with the Amendment No. 3 to the Form 10 Registration Statement
filed with the SEC on August 23, 2013 and incorporated herein by
reference. |
? |
filed
with the Amendment No. 4 to the Form 10 Registration Statement
filed with the SEC on September 25, 2013 and incorporated herein by
reference. |
Î |
filed
with the Amendment No. 5 to the Form 10 Registration Statement
filed with the SEC on October 11, 2013 and incorporated herein by
reference. |
† |
Portions
of this exhibit have been redacted pursuant to a confidential
treatment order granted by the Securities and Exchange
Commission. |
> |
Filed
with the Amendment No. 6 to the Form 10 Registration Statement
filed with the SEC on November 21, 2013 and incorporated hereby by
reference. |
R |
Filed
with the Amendment No. 7 to the Form 10 Registration Statement
filed with the SEC on January 22, 2015 and incorporated hereby by
reference. |
∞ |
Filed
with Form 10-K for the year ended December 31, 2019. |
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of Immune Therapeutics,
Inc.
Opinion on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Immune
Therapeutics, Inc. and its subsidiaries (the “Company”) as of
December 31, 2020 and 2019 and the related consolidated statements
of operations, stockholders’ deficit and cash flows for the years
then ended, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Company as of
December 31, 2020 and 2019, and the results of its consolidated
operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the
United States of America.
Explanatory Paragraph – Going Concern
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the
Company has suffered recurring losses from operations since
inception and expects to continue to generate operating losses and
negative cash flows for the foreseeable future. These conditions
raise substantial doubt about its ability to continue as a going
concern. Management’s plans in regard to these matters are also
described in Note 1. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These
consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our
audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due
to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures include examining, on a
test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/
Turner, Stone & Company, L.L.P.
Dallas,
Texas
April
15, 2021
We
have served as the Company’s auditor since 2012.
IMMUNE
THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2020 AND 2019
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
9,971 |
|
|
$ |
4,925 |
|
Total
current assets |
|
|
9,971 |
|
|
|
4,925 |
|
|
|
|
|
|
|
|
|
|
Fixed Assets: |
|
|
|
|
|
|
|
|
Computer
equipment, net |
|
|
- |
|
|
|
691 |
|
Deposits |
|
|
200 |
|
|
|
200 |
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
10,171 |
|
|
$ |
5,816 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
2,562,515 |
|
|
$ |
2,655,952 |
|
Accrued
payroll |
|
|
3,627,648 |
|
|
|
3,610,810 |
|
Accrued
interest |
|
|
635,217 |
|
|
|
899,904 |
|
Accrued
liabilities |
|
|
221,057 |
|
|
|
136,057 |
|
Net due to related
parties |
|
|
531,420 |
|
|
|
48,217 |
|
Notes payable, net
of debt discount |
|
|
2,844,851 |
|
|
|
5,545,371 |
|
Derivative liability |
|
|
1,254,444 |
|
|
|
798,126 |
|
Total
current liabilities |
|
|
11,677,152 |
|
|
|
13,694,437 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
11,677,152 |
|
|
|
13,694,437 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
Common stock – par
value $0.0001; 750,000,000 and 500,000,000 shares authorized,
respectively; 476,504 and 457,578 shares issued and outstanding
respectively |
|
|
48 |
|
|
|
46 |
|
Additional paid in
capital |
|
|
371,341,120 |
|
|
|
370,908,099 |
|
Stock issuances
due |
|
|
10,303 |
|
|
|
10,303 |
|
Accumulated deficit |
|
|
(383,018,452 |
) |
|
|
(384,607,069 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders’ deficit |
|
|
(11,666,981 |
) |
|
|
(13,688,621 |
) |
Total
liabilities and stockholders’ deficit |
|
$ |
10,171 |
|
|
$ |
5,816 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
IMMUNE
THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Revenues, net |
|
$ |
- |
|
|
$ |
- |
|
Cost of
products sold |
|
|
- |
|
|
|
- |
|
Gross profit |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
760,132 |
|
|
|
2,368,474 |
|
Research and
development expense |
|
|
126,259 |
|
|
|
336,110 |
|
Stock issued for
services general and administrative |
|
|
- |
|
|
|
131,390 |
|
Depreciation and amortization expense |
|
|
639 |
|
|
|
2,074 |
|
Total
operating expenses |
|
|
887,030 |
|
|
|
2,838,048 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(887,030 |
) |
|
|
(2,838,048 |
) |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(479,931 |
) |
|
|
(894,173 |
) |
Finance
charges |
|
|
(173,118 |
) |
|
|
- |
|
Loss on valuation
of derivative |
|
|
(373,584 |
) |
|
|
(46,745 |
) |
Gain (loss) on
settlement of debt and liabilities assigned |
|
|
3,502,280 |
|
|
|
- |
|
Recovery of amount due from Cytocom |
|
|
- |
|
|
|
382,308 |
|
Total
other income (expense) |
|
|
2,475,647 |
|
|
|
(558,610 |
) |
Net income
(loss) attributable to common stockholders |
|
$ |
1,588,617 |
|
|
$ |
(3,396,658 |
) |
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
attributed to common stockholders |
|
$ |
3.44 |
|
|
$ |
(7.59 |
) |
Diluted earnings (loss) per share
attributed to common stockholders |
|
$ |
0.11 |
|
|
$ |
(7.59 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
|
16,016,427 |
|
|
|
447,530 |
|
Basic weighted average number of shares
outstanding
|
|
|
461,190
|
|
|
|
447,530
|
|
The
accompanying footnotes are an integral part of these consolidated
financial statements.
IMMUNE
THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
Common
Stock |
|
|
Additional
Paid-in |
|
|
Stock
To Be |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Issued |
|
|
Deficit |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2018 |
|
|
434,323 |
|
|
|
44 |
|
|
$ |
369,924,426 |
|
|
$ |
35,303 |
|
|
$ |
(381,210,411 |
) |
|
$ |
(11,250,638 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for services |
|
|
3,000 |
|
|
|
- |
|
|
|
145,000 |
|
|
|
(25,000 |
) |
|
|
- |
|
|
|
120,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extinguishment
of debt assumed by related party |
|
|
- |
|
|
|
- |
|
|
|
691,850 |
|
|
|
- |
|
|
|
- |
|
|
|
691,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock in exchange for debt |
|
|
18,255 |
|
|
|
2 |
|
|
|
62,433 |
|
|
|
- |
|
|
|
- |
|
|
|
62,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock to board members |
|
|
2,000 |
|
|
|
- |
|
|
|
11,390 |
|
|
|
- |
|
|
|
- |
|
|
|
11,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
common stock warrants in connection with debt agreement |
|
|
- |
|
|
|
- |
|
|
|
73,000 |
|
|
|
- |
|
|
|
- |
|
|
|
73,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,396,658 |
) |
|
|
(3,396,658 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2019 |
|
|
457,578 |
|
|
$ |
46 |
|
|
$ |
370,908,099 |
|
|
$ |
10,303 |
|
|
$ |
(384,607,069 |
) |
|
$ |
(13,688,621 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock upon conversion of debt |
|
|
18,926 |
|
|
|
2 |
|
|
|
152,638 |
|
|
|
- |
|
|
|
- |
|
|
|
152,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extinguishment
of derivative liability upon conversion of debt |
|
|
- |
|
|
|
- |
|
|
|
280,383 |
|
|
|
- |
|
|
|
- |
|
|
|
280,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,588,617 |
|
|
|
1,588,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2020 |
|
|
476,504 |
|
|
$ |
48 |
|
|
$ |
371,341,120 |
|
|
$ |
10,303 |
|
|
$ |
(383,018,452 |
) |
|
$ |
(11,666,981 |
) |
The
accompanying footnotes are an integral part of these consolidated
financial statements.
IMMUNE
THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
2020 |
|
|
2019 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net
income (loss) including non-controlling interest |
|
$ |
1,588,617 |
|
|
$ |
(3,396,658 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net loss to net cash flows used in operating
activities: |
|
|
|
|
|
|
|
|
Gain on assignment
of certain debt and liabilities |
|
|
(3,502,280 |
) |
|
|
- |
|
Non-cash finance
charge |
|
|
173,118 |
|
|
|
- |
|
Amortization of
debt discount |
|
|
162,210 |
|
|
|
222,257 |
|
Change in value of
derivative liability |
|
|
373,584 |
|
|
|
46,745 |
|
Depreciation |
|
|
639 |
|
|
|
2,074 |
|
Recovery of amount
due from Cytocom |
|
|
- |
|
|
|
(382,308 |
) |
Stock issued for
services |
|
|
- |
|
|
|
131,390 |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventory |
|
|
- |
|
|
|
82,801 |
|
Accounts
payable |
|
|
99,234 |
|
|
|
894,951 |
|
Accrued
payroll |
|
|
16,838 |
|
|
|
1,600,240 |
|
Accrued
interest |
|
|
327,883 |
|
|
|
645,201 |
|
Accrued
liabilities |
|
|
85,000 |
|
|
|
32,705 |
|
Due
to related parties |
|
|
483,203 |
|
|
|
119,668 |
|
|
|
|
|
|
|
|
|
|
Net cash used
in operating activities |
|
|
(191,954 |
) |
|
|
(934 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from issuance of notes (net) |
|
|
197,000 |
|
|
|
- |
|
Net
cash provided by financing activities |
|
|
192,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Decrease in
cash |
|
|
5,046 |
|
|
|
(934 |
) |
Cash
and cash equivalents, beginning of year |
|
|
4,925 |
|
|
|
5,859 |
|
Cash
and cash equivalents, end of year |
|
$ |
9,971 |
|
|
$ |
4,925 |
|
The
accompanying footnotes are an integral part of these consolidated
financial statements.
IMMUNE
THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2020 and 2019
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for
interest |
|
$ |
- |
|
|
$ |
16,000 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes, accrued
liabilities and accounts payable to common stock |
|
$ |
152,640 |
|
|
$ |
27,110 |
|
Debt settled and reclassed to accrued
expenses |
|
$ |
- |
|
|
$ |
35,325 |
|
Reclassification from accounts payable
to notes payable |
|
$ |
- |
|
|
$ |
304,478 |
|
Notes Payable, interest, and
liabilities assigned |
|
$ |
3,502,280 |
|
|
$ |
691,850 |
|
Debt discounts on notes payable and
warrants |
|
$ |
197,000 |
|
|
$ |
73,000 |
|
The
accompanying footnotes are an integral part of these consolidated
financial statements.
IMMUNE
THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,
2020
1.
Organization and Description of Business
Company
Overview
Immune
Therapeutics Inc. (the “Company” or “IMUN”) is a Florida Public
Company trading on the OTC-Pink. The Company has been inactive for
the last year due to a lack of funding, and with the Company’s
current structure, it is impossible to move forward until a
restructuring of the Company is completed.
Going
Concern
The
Company has incurred significant net losses since inception and has
relied on its ability to fund its operations through private equity
financings. Management expects operating losses and negative cash
flows to continue at more significant levels in the future. As the
Company continues to incur losses, transition to profitability is
dependent upon the successful development, approval, and
commercialization of its product candidates and the achievement of
a level of revenues adequate to support the Company’s cost
structure. The Company may never achieve profitability, and unless
and until it does, the Company will continue to need to raise
additional cash. Management intends to fund future operations
through additional private or public debt or equity offerings and
may seek additional capital through arrangements with strategic
partners or from other sources.
Based
on the Company’s operating plan, working capital at December 31,
2020 is not sufficient to meet the cash requirements to fund
planned operations through the next twelve months without
additional sources of cash. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern and do not
include adjustments that might result from the outcome of this
uncertainty. This basis of accounting contemplates the recovery of
the Company’s assets and the satisfaction of liabilities in the
normal course of business.
Management
recognizes that the Company cannot move forward without adequate
capital resources. The transactions with Cytocom and Forte do not
provide any new working capital to the Company.
Management
is currently pursuing a strategy to re-capitalize the Company and
position it for future growth. Key steps in the process
include:
|
● |
Re-apply
to secure FINRA approval of the reverse stock split. |
|
● |
Improve
the condition of the Company’s financial position and balance
sheet: |
|
○ |
License,
where practical technologies which the Company will otherwise not
be able to commercialize. |
|
○ |
Seek
additional capital to continue to maintain operations and
compliance with OTC reporting requirements. |
|
○ |
Seek
funding from current noteholders with exercisable warrants to
convert such warrants as a means of raising capital and reducing
outstanding debt. |
|
● |
Identify
and seek to acquire late-stage assets for future
commercialization. |
|
● |
Build
out an appropriate operational infrastructure, generate new
opportunities and grow shareholder value. |
If
the Company is unable to secure new working capital, other
alternatives strategies will be required.For the twelve months
ended December 31, 2020, the Company reported net income
attributable to common shareholders of $1,588,617 which included a
non-cash gain of $3,502,280 during the period. As of December 31,
2020, the Company has a stockholders’ deficit of
$11,666,981.
Historically,
the Company has been able to acquire and develop assets, spin them
out and retain both an equity stake and royalties and milestone
payments. In so doing, the Company has acted as an incubator for
late-stage drug development. Management believes that this strategy
can continue to be successful.
At
this time, the Company is reviewing several opportunities which it
may pursue as soon as funding is available. At present no
definitive actions have been taken.
There
can be no guaranties that the Company will be successful
in:
|
● |
Executing
its restructuring plan |
|
● |
Securing
adequate capital to continue operations. |
|
● |
Identifying
and acquiring assets for future development. |
Company
History
Immune
Therapeutics, Inc. (the “Company”) was initially incorporated in
Florida on December 2, 1993 as Resort Clubs International, Inc.
(“Resort Clubs”). It was formed to manage and market golf course
properties in resort markets throughout the United States. Galliano
International Ltd. (“Galliano”) was incorporated in Delaware on May
27, 1998 and began trading in November 1999 through the filing of a
15C-211. On November 10, 2004, Galliano merged with Resort Clubs.
Resort Clubs was the surviving corporation. On August 23, 2010,
Resort Clubs changed its name to pH Environmental Inc. (“pH
Environmental”).
On
April 23, 2012, pH Environmental completed a name change to TNI
BioTech, Inc., and on April 24, 2012, we executed a share exchange
agreement for the acquisition of all of the outstanding shares of
TNI BioTech IP, Inc. On September 4, 2014, a majority of our
shareholders approved an amendment to our Amended and Restated
Articles of Incorporation, as amended, to change our name to Immune
Therapeutics, Inc. We filed our name change amendment with the
Secretary of State of Florida on October 27, 2014 changing our name
to Immune Therapeutics, Inc.
In
July 2012, the Company’s focus turned to acquiring patents that
would protect and advance the development of new uses of
opioid-related immune- therapies,
In
December 2013, the Company formed a subsidiary, Cytocom Inc.
(“Cytocom”), to focus on conducting LDN and MENK clinical trials in
the United States. In December 2014, the Company finalized the
distribution of common stock of Cytocom to its shareholders. As
part of the transaction (“Original Agreement”), the Company
transferred to Cytocom certain of its rights, title and interest in
or relating to intellectual property (i) patents, patent
applications, and all divisional, continuations and
continuations-in-part thereof, together with all reissues,
reexaminations, renewals and extensions thereof and all rights to
obtain such divisionals, continuations and continuations-in-part,
reissues, reexaminations, renewals and extensions, and all utility
models and statutory invention registrations and any other such
analogous rights, (ii) trademarks, service marks, Internet domain
names, trade dress, trade styles, logos, trade names, services
names, brand names, corporate names, assumed business names and
general intangibles and other source identifiers of a like nature,
together with the goodwill associated with any of the foregoing,
and all registrations and applications for registrations thereof,
together with all renewals and extensions thereof and all rights to
obtain such renewals and extensions, (iii) copyrights, mask work
rights, database and design rights, moral rights and rights in
Internet websites, whether registered or unregistered and whether
published or unpublished, all registrations and recordings thereof
and all applications in connection therewith, together with all
renewals, continuations, reversions and extensions thereof and all
rights to obtain such renewals, continuations, reversions and
extensions, and (iv) confidential and proprietary information,
including, trade secrets and know-how.
On
May 1, 2018, the Company entered into an amended and restated
licensing agreement (the “Restated Agreement”) with Cytocom. The
Restated Agreement restates the licensing arrangement between the
Company and Cytocom as provided by the Original Agreement. The
Restated Agreement grants the Company distribution and marketing
rights for Lodonal™ and MENK for humans in certain Emerging
Markets. In addition, the Company has been granted the rights to
distribute and market Lodonal™ and MENK for animal use in the
United States. The royalty due to Cytocom has been reduced from 5%
to 1% of sales and the Company no longer has any ongoing
obligations to pay for costs in connection with the assets of
Cytocom. While the Company formalized the agreement to
deconsolidate on May 1, 2018, Cato Research Ltd and Penn State
University, both vendors of the Company, did not consent to assign
the payables to Cytocom.
On
June 4, 2018, the Company and Cytocom entered into a Stock Purchase
Agreement (the “Stock Agreement. Pursuant to the Stock Agreement,
the Company cancelled approximately $4,000,000 of debt owed to it
by Cytocom in exchange for ten percent (10%) of the issued and
outstanding common stock of Cytocom, as calculated on a fully
diluted basis. The Restated Agreement was a condition of the Stock
Agreement.
On
April 8, 2019, the Company signed a second amendment to its
licensing agreement (the “Second Amendment”) with Cytocom. The
Second Amendment confirmed that, as of its effective date (December
31, 2018) the Company owned 15.57% of the common shares issued and
outstanding on that date. The Company agreed to assume the
obligation to repay all accounts payable obligations and accrued
liabilities owed by Cytocom as of the effective date, except those
accounts’ payable obligations and accrued liabilities as specified
in the Second Amendment. The Company also assumed the obligation to
repay all notes payable, together with any interest or fees payable
thereon, owed by Cytocom as of the effective date, except those
notes’ payable obligations, together with any interest or fees
payable thereon, as specified by the Second Amendment. The parties
further agreed that in the event of a change of control of Cytocom,
and at the option of Cytocom, the Company would have the right to
purchase outright the Company’s licensing rights to Emerging
Markets for humans under the License Agreement at a price equal to
value of those licensing rights as determined by and independent
valuator acceptable to the Company and Cytocom.
In
October 2019, the Board of Immune Therapeutics, Inc. (“Immune”)
approved the restructuring of Immune (“Original Restructuring
Strategy”), which included a conversion of Immune promissory notes
(the “Convertible Notes”) into a proposed new class of Series D
Preferred equity. However, Immune was unable to obtain the
requisite shareholder approval to issue the Series D Preferred
equity, so that the plan to convert the debt into a Series D could
not be completed. At the same time, the Shareholders did approve a
1- for 1000 reverse stock split (“Reverse Stock Split”).
Due to its inability to move forward on the proposed plan the
Company has been forced to pursue alternatives to the Original
Restructuring Strategy. To realize the potential value of its
technology positions, the Board approved Management to pursue
possible sublicensing options to Forte and Cytocom.
2.
Summary of Significant Accounting Policies
Basis
of Presentation
The
preparation of financial statements and related disclosures in
conformity with U.S. generally accepted accounting principles
(“GAAP”) and the Company’s discussion and analysis of its financial
condition and operating results require the Company’s management to
make judgments, assumptions, and estimates that affect the amounts
reported in its consolidated financial statements and accompanying
notes. Management bases its estimates on historical experience and
on various other assumptions it believes to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and
liabilities.
We
have identified the policies below as critical to our business
operations and the understanding of its results of operations. The
Company’s management has reviewed these critical accounting
policies and related disclosures with the Company’s Board of
Directors. The impact and any associated risks related to these
policies on our business operations are discussed throughout this
section where such policies affect our reported and expected
financial results.
Equity
investment in Cytocom,
Inc.
Prior
to May 1, 2018, the Company consolidated Cytocom. On May 1, 2018,
the Company entered into an amended and restated licensing
agreement (the “Restated Agreement”) with Cytocom, Inc., in
accordance with which the Company no longer has any ongoing
obligations to pay for costs in connection with the assets of
Cytocom. The Company deconsolidated Cytocom as of May 1, 2018, and
accounts for its retained interest in Cytocom under the equity
method of accounting, with the Company’s share of Cytocom’s
earnings recorded in “loss from equity method investment” in the
consolidated statements of operations. As the balance of the
Company’s investment in Cytocom has been zero since December 31,
2018, no losses have been recognized during the year ended December
31, 2019.
Leases
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842).
This standard requires all leases that have a term of over 12
months to be recognized on the balance sheet with the liability for
lease payments and the corresponding right-of-use asset initially
measured at the present value of amounts expected to be paid over
the term. At December 31, 2020 and 2019 the Company had no leases
to which the standard applies.
At
December 31, 2020, the Company was a party to an agreement to a
short-term operating lease for office space in Orlando, Florida.
This agreement allows for cancellation with thirty days’ notice.
Rental expense for the years ended December 31, 2020 and 2019 was
$3,000 and $12,661 respectively.
Use
of Estimates
The
preparation of the Company’s financial statements in conformity
with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from such estimates.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations
of credit risk are primarily cash and cash equivalents. The Company
is exposed to credit risk, subject to federal deposit insurance, in
the event of a default by the financial institutions holding its
cash and cash equivalents to the extent of amounts recorded on the
balance sheets. The cash accounts are insured by the Federal
Deposit Insurance Corporation up to $250,000. At December 31, 2020,
the Company has no cash balances in excess of insured
limits.
Segment
and Geographic Information
Operating
segments are defined as components of an enterprise about which
separate discrete information is available for evaluation by the
chief operating decision maker, or decision-making group, in
deciding how to allocate resources and in assessing performance.
The Company views its operations and manages its business in one
operating segment and does not segment the business for internal
reporting or decision making.
Fair
Value of Financial Instruments
In
accordance with the reporting requirements of Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 825, “Financial Instruments”, the Company calculates
the fair value of its assets and liabilities which qualify as
financial instruments under this standard and includes this
additional information in the notes to the financial statements
when the fair value is different than the carrying value of those
financial instruments. Cash, accounts payable, and accrued
liabilities are accounted for at cost which approximates fair value
due to the relatively short maturity of these instruments. The
carrying value of notes payable also approximate fair value since
they bear market rates of interest and other terms. None of these
instruments are held for trading purposes.
Derivative
Financial Instruments
FASB
ASC 815, Fair Value Measurements requires bifurcation of
certain embedded derivative instruments in certain debt or equity
instruments, and measurement at their fair value for accounting
purposes. A holder redemption feature embedded in the Company’s
note payable requires bifurcation from its host instrument and is
accounted for as a freestanding derivative.
Research
and Development Costs
Research
and development costs are charged to expense as incurred and are
comprised of fees paid to consultants and patent related
costs.
Income
Taxes
The
Company follows ASC Topic 740, Income Taxes, which requires
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred
tax assets and liabilities are based on the differences between the
financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences
are expected to reverse. Deferred tax assets are reduced by a
valuation allowance to the extent management concludes it is more
likely than not that the asset will not be realized. 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.
The
standard addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be
recorded in the financial statements. Under ASC Topic 740, the
Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position
will be sustained on examination by the tax authorities, based on
the technical merits of the position. The tax benefits recognized
in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent
likelihood of being realized upon ultimate settlement. ASC Topic
740 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim
periods and requires increased disclosures. At the date of
adoption, and as of December 31, 2020 and 2019, the Company does
not have a liability for unrecognized tax uncertainties. The
Company’s policy is to record interest and penalties on uncertain
tax positions as income tax expense. As of December 31, 2020, and
2019, the Company has not accrued any interest or penalties related
to uncertain tax positions.
Stock-Based
Compensation and Issuance of Stock for Non-Cash
Consideration
The
Company measures and recognizes compensation expense for all
share-based payment awards made to employees and directors based on
estimated fair values equaling either the market value of the
shares issued, or the value of consideration received, whichever is
more readily determinable. Generally, the non-cash consideration
pertains to services rendered by consultants and others and has
been valued at the fair value of the Company’s common stock at the
date of the agreement.
The
Company’s accounting policy for equity instruments issued to
consultants and vendors in exchange for goods and services follows
the provisions of ASC Topic 505-50, “Equity-Based Payments to
Non-Employees.” The measurement date for the fair value of the
equity instruments issued is determined at the earlier of (i) the
date at which a commitment for performance by the consultant or
vendor is reached or (ii) the date at which the consultant or
vendor’s performance is complete.
The
Company did not grant any stock-based compensation awards during
the years ended December 31, 2020 and 2019.
Net
Income (Loss) per Share
Basic
net income (loss) per share is calculated by dividing the net loss
attributable to common stockholders by the weighted average number
of common shares outstanding for the period, without consideration
for common stock equivalents.
The
Company’s potentially dilutive securities, which include warrants
and potential common shares issuable under certain convertible
notes, have been included in the computation of diluted net income
per share for the twelve-month period ended December 31, 2020. Net
income per share, for the year ended December 31, 2020, was
calculated by dividing the net loss by the weighted-average number
of common share outstanding for the period determined using the
treasury-stock method and the if-converted method.
For
the twelve-month period ended December 31, 2019, the potentially
dilutive securities were excluded from the computation of diluted
loss per share as the effect would be to reduce the net loss per
common share. Therefore, the weighted-average common stock
outstanding used to calculate both basic and diluted net loss per
share for the year ended December 31, 2019.
A
reconciliation of the weighted average shares outstanding used in
basic and diluted earnings per share computation is as
follows:
|
|
Net Income
(Numerator) |
|
|
Weighted Average
Common Shares
(Denominator) |
|
|
Per Share Amount |
|
Basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders |
|
$ |
1,588,617 |
|
|
|
461,190 |
|
|
$ |
3.44 |
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Effect of warrants
convertible into common stock |
|
|
|
|
|
|
20,012,082 |
|
|
|
|
|
Potential shares
purchasable using proceeds of warrants |
|
|
|
|
|
|
(4,629,476 |
) |
|
|
|
|
Effect of convertible debt |
|
|
142,247 |
|
|
|
103,677 |
|
|
|
|
|
Income available to common stockholders |
|
$ |
1,730,864 |
|
|
|
15,947,473 |
|
|
$ |
0.11 |
|
Recent
Accounting Standards
During
the year ended December 31, 2020, there were several new accounting
pronouncements issued by the Financial Accounting Standards Board.
Each of these pronouncements, as applicable, has been or will be
adopted by the Company. Management does not believe the adoption of
any of these accounting pronouncements has had or will have a
material impact on the Company’s consolidated financial
statements.
3.
Fixed Assets
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Fixed assets: |
|
|
|
|
|
|
|
|
Computer equipment |
|
$ |
13,213 |
|
|
$ |
13,213 |
|
|
|
|
|
|
|
|
|
|
Less
accumulated depreciation |
|
|
(13,213 |
) |
|
|
(12,522 |
) |
|
|
|
|
|
|
|
|
|
Fixed assets,
net |
|
$ |
- |
|
|
$ |
691 |
|
The
Company utilizes the straight-line method for depreciation, using
three to five-year depreciable asset lives. Depreciation expense
was not material for all periods presented.
4.
Notes payable
During
the twelve months ended December 31, 2020, the Company issued
$197,000, in new promissory notes. As of December 31, 2020,
the Company had $1,639,275 in notes payable to shareholders of
record.
On August 16, 2020, the Company and Cytocom entered into an
agreement for the Company to sublicense LDN and MENK for emerging
markets to Cytocom. Pursuant to the agreement, effective September
30, 2020, the Company assigned notes payable aggregating $2,728,731
to Cytocom. The owner of each assigned note provided their written
consent to assignment, assumption, and amendment of the promissory
notes.
Redstart
Holdings Corp.
On
March 30, 2020, the Company issued a Convertible Promissory Note
(the “Note”) to Redstart Holdings Corp. (“Redstart”) in the
principal amount of $53,000. The Note matures on March 30, 2021,
and bears interest at the rate of 12% per annum. Any amount of the
Note not repaid at maturity, will bear interest at the rate of 22%
per annum. Redstart has the right, at any time during the period
beginning 180 days following the date of the Note and ending the
later of the maturity date or the date of payment of the default
amount, to convert all or any part of the outstanding and unpaid
amount of the Note into shares of the Company’s common stock. The
conversion price will be equal to 61% multiplied by the lowest
trading price for the common stock during the 20-trading day period
ending on the latest complete trading day prior to the conversion
date.
Redstart
converted the Note and related accrued interest in the amount of
$3,180 in October 2020. The Company issued 6,893 shares of common
stock at an average price per share of $8.15 in connection with
this conversion.
Geneva
Roth Remark Holdings, Inc.
During
the second and third quarters of 2020, the Company issued three
Convertible Promissory Notes (the “Notes”) aggregating $144,000 to
Geneva Roth Remark Holdings Corp. (“GRRH”). The Notes matures one
year from the date of issuance, and bear interest at the rate of
12% per annum. Any amount of the Notes not repaid at maturity, will
bear interest at the rate of 22% per annum. GRRH has the right, at
any time during the period beginning 180 days following the date of
the Notes and ending the later of the maturity date or the date of
payment of the default amount, to convert all or any part of the
outstanding and unpaid amount of the Notes into shares of the
Company’s common stock. The conversion price will be equal to 61%
multiplied by the lowest trading price for the common stock during
the 20-trading day period ending on the latest complete trading day
prior to the conversion date.
During
the fourth quarter of 2020, GRRH converted $91,000 in principal and
$5,460 in accrued interest on their outstanding Notes. The Company
issued 12,034 shares of common stock at an average price per share
of $8.02 in connection with this conversion.
As of
December 31, 2020, the Company has $53,000 in principal outstanding
in notes due to GRRH with a maturity date of August 13, 2021. GRRH
converted this note and associated accrued interest during the
first quarter of 2021.
The
Company has agreed to reserve from its authorized and unissued
common stock a sufficient number of shares, free from preemptive
rights, to provide for the issuance of common stock upon the full
conversion of the outstanding $53,000 Note. The Company is also
required to have authorized and reserved six times the number of
shares that would be issuable upon full conversion of the Note. As
of December 31, 2020, the Company had reserved 5,401,923 shares for
this instrument.
Gain
on Settlement of Debt
On
August 16, 2020, the Company and Cytocom entered into an agreement
for the Company to sublicense LDN and MENK for emerging markets to
Cytocom. Pursuant to the agreement, effective September 30, 2020
the Company assigned notes payable aggregating principal amount of
$2,728,731 and related accrued interest of $495,409 to
Cytocom.
Notes
Payable at December 31, 2020 and 2019:
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Promissory notes issued
between December 2014 and January 2015. Lender earns interest at
10%, plus a pro-rata share of two percent of the Company’s gross
receipts for sales of IRT-103-LDN in perpetuity. Notes were to be
repaid in 36 monthly installments of principal and interest
commencing no later than October 15, 2015. These notes are in
default at. In connection with an August 16, 2020 agreement with
Cytocom, $216,000 of the notes were assumed by Cytocom. |
|
$ |
70,000 |
|
|
$ |
286,000 |
|
|
|
|
|
|
|
|
|
|
Promissory notes issued between May
2015 and June 2016 and maturing between February 2017 and November
2018. Lenders earn interest at rates between 2% and 10%. In
connection with an August 16, 2020 agreement with Cytocom, $476,494
of the notes were assumed by Cytocom. These notes are in
default. |
|
$ |
149,500 |
|
|
|
625,994 |
|
|
|
|
|
|
|
|
|
|
Promissory notes issued to a former
officer of the Company in 2015 with a maturity of November 3, 2016
in settlement of accrued payroll, bearing interest at 10% and
including a stock conversion feature. These notes were assumed by
Cytocom in connection with the August 16, 2020 agreement. |
|
$ |
- |
|
|
|
97,737 |
|
|
|
|
|
|
|
|
|
|
Promissory notes issued between
July 2016 and December 2016. Lenders earn interest at 2%. The notes
matured on December 31, 2017. These notes were assumed by Cytocom
in connection with the August 16, 2020 agreement. |
|
$ |
- |
|
|
|
206,000 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$1,350,000 issued in 2016. The notes accrue interest at 2% and
mature between November 2017 and December 2017. In connection with
an August 16, 2020 agreement with Cytocom, $747,500 of the notes
were assumed by Cytocom. These notes are in default. |
|
$ |
606,500 |
|
|
|
1,354,000 |
|
Promissory notes
aggregating $500,000 issued in 2017 accrue interest at 2% and
mature between January 2018 and September 2018 In connection with
an August 16, 2020 agreement with Cytocom, $295,000 of the notes
outstanding at June 30, 2020 were assumed by Cytocom. These notes
are in default. |
|
$ |
205,000 |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$300,000 issued in 2017 accrue interest at 2% and mature in May
2018. In connection with an August 16, 2020 agreement with Cytocom,
$150,000 of the notes were assumed by Cytocom. These notes are in
default. |
|
$ |
150,000 |
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$191,800 issued in 2017 accrue interest at 2% and mature between
August 2018 and September 2018. In connection with an August 16,
2020 agreement with Cytocom, $75,000 of the notes were assumed by
Cytocom. These notes are in default. |
|
$ |
116,800 |
|
|
|
191,800 |
|
|
|
|
|
|
|
|
|
|
Promissory note for
$425,000 issued in October 2017 with an original issue discount of
$70,000. The note is in default, giving the holder an option to
convert the note to stock using the lowest value of the Company’s
common stock 25 days prior to the conversion. In 2018, the defaults
also resulted in certain penalties, as a result of which the
principal amount of the note outstanding had increased to $454,032.
$49,943 of accrued interest owed on the note has been converted to
stock. The Company recognized a $1,200,129 derivative liability for
remaining conversion right. On November 10, 2020, the noteholder
entered into an agreement to sell all rights to the note to Global
Reverb Corp., an entity wholly owned by the Company’s former Chief
Executive Officer and director, Noreen Griffin. |
|
$ |
454,032 |
|
|
|
454,032 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$105,500 issued in 2017 accrue interest at 2%. At September 30,
2020, the notes were in default. |
|
$ |
105,500 |
|
|
|
105,500 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$47,975 issued in the 2018 accrue interest at 2% and mature between
May 2018 and January 2019. These notes are in default. |
|
$ |
47,975 |
|
|
|
47,975 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$125,000 issued in 2018 accrue interest between 2% and 12% and
mature between April 2018 and June 2018. These notes include
warrants between 500,000 and 2,000,000 shares with an exercise
price of $0.05. In connection with an August 16, 2020 agreement
with Cytocom, these notes were assumed by Cytocom (the warrants
remained with the Company). |
|
$ |
- |
|
|
|
125,000 |
|
Promissory notes
aggregating $65,000 issued in 2018 accrue interest at 2% and mature
between July 2018 and October 2018. These notes include warrants
between 1,000 and 5,000 shares with an exercise price of $5. These
notes are in default. |
|
$ |
65,000 |
|
|
|
65,000 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$208,000 were issued in 2018, of which $3,000 were issued to a
related party. The notes accrue interest at 2% and mature between
August 2019 and January 2019. These notes include warrants between
60,000 and 500,000 shares with an exercise price of $0.05. In
connection with an August 16, 2020 agreement with Cytocom, $80,000
of the notes outstanding were assumed by Cytocom. These notes are
in default. |
|
$ |
118,000 |
|
|
|
198,000 |
|
|
|
|
|
|
|
|
|
|
Promissory notes aggregating
$533,855 were issued in 2018, of which $210,000 is to a related
party. The notes accrue interest at 2% and mature between January
2019 and November 2019. These notes include warrants between 200
and 39,500 shares with an exercise price of $5 to $40. In
connection with an August 16, 2020 agreement with Cytocom, $210,000
of the notes were assumed by Cytocom. These notes are in
default. |
|
$ |
323,855 |
|
|
|
533,855 |
|
Promissory note for
$23,000 issued to a related party in the first quarter of 2019. The
note accrues interest at 2% and matured during July 2019. The note
includes warrants for 4,600 shares with an exercise price of $5.
The note is in default. |
|
$ |
23,000 |
|
|
|
23,000 |
|
|
|
|
|
|
|
|
|
|
Promissory note for $231,478 issued
in the first quarter of 2019. The note accrues interest at 6% and
matured in February 2020. The note is in default. |
|
$ |
231,478 |
|
|
|
231,478 |
|
|
|
|
|
|
|
|
|
|
Promissory notes for $50,000 issued
in the second quarter of 2019 accrues interest at 2% and matured in
July 2019. The notes include warrants for 10,000 shares with an
exercise price of $5. In connection with an August 16, 2020
agreement with Cytocom, $40,000 of the notes were assumed by
Cytocom. The note is in default. |
|
$ |
10,000 |
|
|
|
50,000 |
|
Promissory note in the
amount of $150,000 issued on October 2019 for the settlement of
outstanding debt in the same amount. The note accrues interest at
15% per annum, with $1,875 due in monthly interest payments, and
matures on April 30, 2021. |
|
$ |
150,000 |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
Promissory
note in the amount of $53,000 issued in the third quarter of 2020
accrues interest at 12% and matures in August 2021. The Company
recognized a $54,312 derivative liability for the conversion rights
attached to the note as of December 31, 2020. |
|
$ |
53,000 |
|
|
|
- |
|
|
|
|
2,879,640 |
|
|
|
5,545,371 |
|
Less:
Original issue discount on notes payable and warrants issued with
notes. |
|
|
(34,789 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,844,851 |
|
|
$ |
5,545,371 |
|
As of
December 31, 2020, the Company had accrued $635,217 in unpaid
interest and default penalties.
As of
December 31, 2019, the Company had accrued $899,904 in unpaid
interest and default penalties. During the twelve-month period
ended December 31, 2019 the Company issued 18,255 shares with a
fair value of $78,500 in settlement of $62,435 in promissory notes.
Also, during the twelve-month period ended December 31, 2019, the
Company settled a $100,000 note with accrued interest and penalties
in the aggregate amount of $596,850, by assigning such amounts to a
related party. In accordance with ASC 470-50-40-2, the
extinguishment transactions between related entities may be in
essence capital transactions. When related parties are involved,
recognition of the difference between the retired debt’s
reacquisition price and carrying amount as a gain is not
appropriate. As such, no gain on the extinguishment of the
transaction was recorded.
5.
Derivative Liability
As of
December 31, 2020, and December 31, 2019, the fair value of the
outstanding derivative liability was $1,254,444 and $798,126,
respectively. The Company estimated the fair value of the
derivative liability using the binomial option pricing model on
December 31, 2020. The Black-Scholes option pricing model was used
to determine the fair market value of the liability as of December
31, 2019.
|
|
Year End
December 31, 2020 |
|
|
Year
Ended
December
31, 2019
|
|
Volatility |
|
|
178.65 |
% |
|
|
165.62 |
% |
Risk-free interest rate |
|
|
1.0 |
% |
|
|
1.96 |
% |
Expected dividends |
|
|
na |
|
|
|
na |
|
Expected term (years) |
|
|
.25 -
1.00 |
|
|
|
1 |
|
The
Company determines the fair market values of its financial
instruments based on the fair value hierarchy, which requires an
entity to maximize the use of observable inputs and minimize the
use of unobservable inputs when measuring fair value. The following
three levels of inputs may be used to measure fair
value:
Level
1 |
Quoted
prices in active markets for identical assets or liabilities that
the Company has the ability to access at the measurement
date. |
|
|
Level
2 |
Observable
inputs other than Level 1 prices, such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the
assets or liabilities. |
|
|
Level
3 |
Unobservable
inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or
liabilities. |
The
Company uses Level 3 inputs to estimate the fair value of its
derivative liabilities.
The
following schedule summarizes the valuation of financial
instruments at fair value in the balance sheets as of December 31,
2020:
|
|
Fair Value Measurements as of
December 31, 2020 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Conversion option derivative liability |
|
|
- |
|
|
|
- |
|
|
|
1,254,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,254,444 |
|
The
following schedule summarizes the valuation of financial
instruments at fair value in the balance sheets as of December 31,
2019:
|
|
Fair Value Measurements as of
December 31, 2019 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Conversion option derivative liability |
|
|
- |
|
|
|
- |
|
|
|
798,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
798,126 |
|
The
following table sets forth a reconciliation of changes in the fair
value of derivative liabilities classified as Level 3 in the fair
value hierarchy:
|
|
Significant
Unobservable
Inputs (Level 3) |
|
Balance January 1,
2019 |
|
$ |
786,706
|
|
Change in fair value |
|
|
46,745
|
|
Partial settlement of
liability |
|
|
(35,325
|
) |
Balance December 31, 2019 |
|
|
798,126
|
|
Additions |
|
|
361,116 |
|
Change in fair value |
|
|
375,584 |
|
Conversion
of notes to common stock |
|
|
(280,382 |
) |
Ending balance |
|
$ |
1,254,444 |
|
6.
Common Stock and Common Stock Warrants
Each
holder of common stock is entitled to vote on all shareholder
matters and is entitled to one vote for each share held. No holder
of shares of stock of any class shall be entitled as a matter of
right to subscribe for or purchase or receive any part of any new
or additional issue of shares of stock of any class, or of
securities convertible into shares of stock or any class, whether
now hereafter authorized or whether issued for money, for
consideration other than money, or by way of dividend.
As of
December 31, 2020, and 2019, the Company was authorized to issue
750,000,000 and 500,000,000 common shares, respectively, at a par
value of $0.0001 per share. As of December 31, 2020, and 2019, the
Company had 476,505 and 457,758 shares of common stock outstanding,
respectively.
Reverse Stock Split FINRA approval
On October 25, 2019, the Company closed voting by written consent
as detailed in its Proxy Statement on form 14A, filed September 5,
2019 pursuant to Section 14(a) of the Securities Exchange Act of
1934, as amended (“Proxy Statement”). The Proxy Statement disclosed
actions for which the Company was soliciting written consent,
including consent to effect a reverse stock split of the Company’s
issued and outstanding, but not authorized, common stock (the
“Reverse Split”) at a ratio of 1,000-to-1.
A 1 for 1,000 reverse stock split (“Reverse”) was approved by over
55% of the shareholders in 2019. An application for approval was
filed with both the State of Florida and with the Financial
Industry Regulatory Authority (“FINRA”). The request was approved
by the State of Florida in March 2020. In June 2020, FINRA informed
the Company that it would not approve the request citing a
deficiency in the Company’s capital structure. Management believes
it has resolved the deficiency and a re-application to FINRA is in
process. Assuming approval is received, it is the Company’s intent
to proceed with the Reverse and the restructuring of the
company.
The financial statements accompanying this Form 10-K are presented
based on the implementation of the shareholder consent.
Common
Stock Warrants
The
Company did not issue or modify any warrants in the twelve-month
periods ended December 31, 2020.
When
the Company sells its stock to stockholders for cash, it
periodically issues common stock warrants to the investors at
prices agreed at the date of the original sale. The Company incurs
a cost for the rights attached to the warrants, which is calculated
using the Black-Scholes Model and is reported in the Statements of
Operations in the period of issuance.
A
summary of outstanding warrants as of December 31, 2020
follows:
Expiration Date |
|
Number of Shares |
|
|
Exercise Price |
|
|
Remaining Life (years) |
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2021 |
|
|
12,600 |
|
|
$ |
200 |
|
|
|
.25 |
|
Second Quarter 2021 |
|
|
5,812 |
|
|
|
$
14-200 |
|
|
|
.50 |
|
Third Quarter 2021 |
|
|
5,167 |
|
|
|
$
30-200 |
|
|
|
.75 |
|
Fourth Quarter 2021 |
|
|
300 |
|
|
$ |
100 |
|
|
|
1.00 |
|
First Quarter 2022 |
|
|
150 |
|
|
$ |
200 |
|
|
|
1.25 |
|
Second Quarter 2022 |
|
|
1,750 |
|
|
$ |
150 |
|
|
|
1.50 |
|
Third Quarter 2022 |
|
|
1,650 |
|
|
|
$
50-100 |
|
|
|
1.75 |
|
Fourth Quarter 2022 |
|
|
9,811 |
|
|
|
$
80-290 |
|
|
|
2.00 |
|
First Quarter 2023 |
|
|
1,204,000 |
|
|
|
$
0.05-40 |
|
|
|
2.25 |
|
Second Quarter 2023 |
|
|
802,000 |
|
|
|
$
0.05-200 |
|
|
|
2.50 |
|
Third Quarter 2023 |
|
|
7,521,500 |
|
|
|
$
0.05-100 |
|
|
|
2.75 |
|
Fourth Quarter 2023 |
|
|
6,024,300 |
|
|
|
$
0.05-0.20 |
|
|
|
3.00 |
|
First Quarter 2024 |
|
|
3,660,000 |
|
|
$ |
0.05 |
|
|
|
3.25 |
|
Second Quarter 2024 |
|
|
800,000 |
|
|
$ |
5.00 |
|
|
|
3.50 |
|
Third Quarter 2028 |
|
|
3,000 |
|
|
$ |
70 |
|
|
|
8.00 |
|
Second Quarter
2032 |
|
|
28,995 |
|
|
|
$ 10-70 |
|
|
|
11.75 |
|
|
|
|
20,081,035 |
|
|
|
$ 0.05-200 |
|
|
|
|
|
Following
is a summary of outstanding stock warrants activity for the twelve
months ended December 31, 2020:
|
|
Number
of
Shares |
|
|
Exercise
Price Per Share |
|
|
Weighted
Average
Price |
|
|
|
|
|
|
|
|
|
|
|
Warrants
as of December 31, 2018 |
|
|
20,083,348 |
|
|
$ |
.05-3740 |
|
|
$ |
0.09 |
|
Issued |
|
|
15 |
|
|
$ |
5 |
|
|
$ |
0.005 |
|
Expired
and forfeited |
|
|
(28 |
) |
|
$ |
50-3740 |
|
|
$ |
0.54 |
|
Exercised |
|
|
|
|
|
$ |
- |
|
|
$ |
|
|
Warrants
as of December 31, 2019 |
|
|
20,083,335 |
|
|
$ |
0.05-500 |
|
|
$ |
4.21 |
|
Issued |
|
|
- |
|
|
$ |
|
|
|
$ |
|
|
Expired
and forfeited |
|
|
(2,300 |
) |
|
$ |
100-500 |
|
|
$ |
195.65 |
|
Exercised |
|
|
- |
|
|
$ |
|
|
|
$ |
|
|
Warrants
as of December 31, 2020 |
|
|
20,081,035 |
|
|
$ |
0.05-200 |
|
|
$ |
4.22 |
|
7.
Income Taxes
There
was no income tax expense reflected in the results of operations
for the years ended December 31, 2020 and 2019. As of December 31,
2020, the Company had federal and state net operating loss
carryforwards of $99,724,000 which may be used to offset future
taxable income.
Approximately
$70,497,000 will expire in 2033 while $27,227,000 will be limited
to 80% of taxable income but will not expire.
The
tax effects of temporary differences which give rise to deferred
tax assets (liabilities) are summarized as follows:
Deferred
tax assets:
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Net operating losses |
|
$ |
19,892,000 |
|
|
$ |
20,346,000 |
|
Stock based compensation |
|
|
39,284,000 |
|
|
|
39,284,000 |
|
Amortization, depreciation, and
impairment |
|
|
4,178,000 |
|
|
|
4,178,000 |
|
Capitalization of start-up costs for
tax purposes |
|
|
1,145,000 |
|
|
|
1,145,000 |
|
Gain/(loss) on
conversion of debt |
|
|
713,000 |
|
|
|
713,000 |
|
Total deferred tax assets |
|
|
65,212,000 |
|
|
|
65,666,000 |
|
|
|
|
|
|
|
|
|
|
Valuation
allowance |
|
|
(65,212,000 |
) |
|
|
(65,666,000 |
) |
|
|
|
|
|
|
|
|
|
Total deferred
tax assets, net |
|
$ |
- |
|
|
$ |
- |
|
In
assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the
realization of future taxable income during the periods in which
those temporary differences become deductible. Deferred tax assets
consist primarily of the tax effect of NOL carry-forwards. The
Company has provided a full valuation allowance on the deferred tax
assets because of the uncertainty regarding
realizability.
|
|
For the year
ended December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Statutory federal tax
rate |
|
|
21.00 |
% |
|
|
21.00 |
% |
Permanent differences |
|
|
4.94 |
% |
|
|
- |
|
Prior period adjustment |
|
|
2.63 |
% |
|
|
- |
|
Valuation
allowance |
|
|
(28.57 |
)% |
|
|
(21.00 |
)% |
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
|
- |
|
|
|
- |
|
The
Company’s policy is to record interest and penalties associated
with unrecognized tax benefits as additional income taxes in the
statement of operations. As of December 31, 2020, and 2019, the
Company had no unrecognized tax benefits. There were no changes in
the Company’s unrecognized tax benefits during the years ended
December 31, 2020 and 2019. The Company did not recognize any
interest or penalties during fiscal 2020 or 2019 related to
unrecognized tax benefits.
All
tax years remain open to examination for federal income tax
purposes and by other taxing jurisdictions to which the Company is
subject.
8.
Licenses and Supply Agreements
Forte
Biotechnology International Corp.
On
February 27, 2020, the Company approved and entered into a license
agreement (the “License Agreement”) with Forte Biotechnology
International Corp. (“Forte”). As of April 15, 2021, this license
agreement has not been executed as Forte has failed to fund the
consideration defined in the agreement.
Under
the License Agreement, the Company granted Forte an exclusive
license to develop and commercialize pharmaceutical products
consisting of Lodonal and MENK for use in veterinary applications
for all indications world-wide. . Milestone payments and royalties
are defined in the agreement based on development and royalties are
based on sales during the license period.
The
Initial License Fee totals $3,039,599 comprised of the assumption
of certain Company defaulted Notes and other liabilities. Forte
will assume a minimum of IMUN defaulted debt and to assume certain
additional $ obligations of the Company. The note holders and
vendors associated with the assigned liabilities have not yet
assigned their rights to Forte.
Consideration
for February 28, 2020 License to Forte
Consideration Assumption of: |
|
|
|
Notes in Default. |
|
$ |
1,787,706 |
|
Accounts payable and accruals |
|
|
261,706 |
|
Past Due Employee Obligations |
|
|
990,201 |
|
|
|
|
|
|
Total Consideration to be Recognize Upon
Execution |
|
$ |
3,039,613 |
|
The
documentation and sign off of this agreement related to the Forte
license has yet to be signed and the individual lenders need to
provide their approval for the transfer of these notes. As such the
accompanying financial statements do not reflect any gain on sale.
Until such time as the transaction is completed Forte does not have
clear title and interest to the veterinary rights.
Forte
has agreed to make payments to the Company in connection with this
agreement as follows:
|
● |
Initial
License Fee of $3,740,746 by May 16, 2020 upon the assignment of
certain Company Notes Payable. |
|
● |
Development
Milestone Payments upon the occurrence of the identified events,
the following one-time, non-creditable, non-refundable milestone
payments: |
Event |
|
Milestone
Payment* |
|
Successful MUMS
Designation |
|
$ |
100,000 |
|
Successful Conditional
Approval |
|
$ |
100,000 |
|
|
● |
Commercial
Milestone Payments upon reaching the mutually agreed aggregate net
sales, Forte will pay one-time, non-creditable, non-refundable
milestone payments to be negotiated and addressed in a separate
Amendment later. |
|
● |
Royalties
during the royalty term (generally 15 years from the first sale of
a product in a country), royalties on annual net sales as
follows: |
Annual
Sales of Royalty Qualifying Licensed Products |
|
Royalty
Rate |
|
<$500,000,000 |
|
|
2% |
|
500,000,000 to <
$1,000,000,000 |
|
|
4% |
|
> $1,000,000,000) |
|
|
6% |
|
Cytocom
In
December 2014, the Company transferred to Cytocom certain of its
rights, title and interest in or relating to intellectual property.
Cytocom licensed back to the Company a perpetual, non-exclusive,
royalty-free right and license to use the assigned intellectual
property for veterinary indications and for the marketing rights to
emerging markets, access to all clinical data, use of the
formulation for LDN and MENK.
The
Original Agreement also granted the Company rights to market
Lodonal™ and Met-Enkephalin (“MENK”) in “Emerging Markets,” which
included all countries excluding Canada, Italy, Japan, France,
Germany, United Kingdom, European Community, and the United States.
Pursuant to the Original Agreement, the Company was required to pay
Cytocom a 5% royalty on all sales all ongoing drug development and
fees due in connection with the underlying patents until such time
as Cytocom was funded.
On
May 1, 2018, the Company entered into an amended and restated
licensing agreement (the “Restated Agreement”) with Cytocom. The
Restated Agreement grants the Company distribution and marketing
rights for Lodonal™ and MENK for humans in Emerging Markets. In
addition, the Company has been granted the rights to distribute and
market Lodonal™ and MENK for animal use in the United States. The
royalty due to Cytocom was reduced from 5% to 1% of sales and the
Company no longer has any ongoing obligations to pay for the cost
in connection with the assets of Cytocom.
On
May 13, 2020, the Company and Cytocom entered into Amendment to The
Second Amendment to The License Agreement (“Third Amendment”) The
License Agreement that was effective December 31, 2018. The
sublicense provides Cytocom with the Company’s previously licensed
rights for LDN and Menk in Emerging Markets.
Terms
for consideration for the sublicense were not finalized until
August 12, 2020 at which time Cytocom and the Company signed a
letter agreement in which Cytocom agreed to assume a combination of
defaulted notes plus certain other liabilities. The Company agreed
to transfer all the rights, title, and interest to Cytocom in
technology licensed from Penn State Research Foundation in exchange
for Cytocom assuming all past due and future obligations under the
Penn State license. While the Company formalized the agreement to
deconsolidate on May 1, 2018, Cato Research Ltd and Penn State
University, both vendors of the Company, did not consent to assign
the payables to Cytocom. As of December 31, 2020, the Company had
outstanding accounts payable balances of $330,552 and $400,065 due
to Cato Research Ltd and Penn State University,
respectively.
In the third quarter of 2020, the Company received a Notice of
Default (“Notice”) from Cytocom relating to the sublicensing
transaction. The Company disputes the validity of the Notice on the
basis that Cytocom has failed to execute on their consideration for
the license.
As of
April 4, 2021, the Notes transaction has not been fully executed.
The Notes in default have been assigned and the transfer signed off
by the creditors, but Cytocom still has not completed the
assumption of the agreed upon obligations.
Consideration
for May 13, 2020 License to Cytocom
Consideration Assumption of: |
|
|
|
Notes in Default. |
|
$ |
3,038,107 |
|
Accounts payable and accruals |
|
|
105,123 |
|
Past Due
Employee Obligations |
|
|
1,110,567 |
|
Total anticipated
Consideration |
|
$ |
5,200,797 |
|
Recognized
through December31, 2020 |
|
|
(3,314,333 |
) |
To Be
Recognized upon Execution |
|
$ |
1,888,464 |
|
At
December 31, 2020, the Company has an equity interest of 13.5% in
Cytocom. In connection with the May 1, 2018 “Restated Agreement”
with Cytocom, the Company no longer has ongoing obligations to pay
for costs in connection with the assets of Cytocom. Accordingly,
effective May 1, 2018, the Company deconsolidated Cytocom. The
Company uses the equity method to account for its retained interest
in Cytocom.
On
December 31, 2019, the Company reached a settlement with Cytocom to
recover the net payable balance outstanding of $382,308. The
Company recorded a gain on the settlement of that
amount.
9.
Commitments and Contingencies
Distribution
Agreements in Nigeria
In
October 2013, the Company announced the signing of a Distribution
Agreement with AHAR Pharma, a Nigerian company, to market Lodonal™,
in Nigeria for the treatment of autoimmune diseases and cancer.
AHAR intends to distribute Lodonal™ through a local distributor
network, an Internet client base and directly to hospitals,
pharmacists and doctors in Nigeria. The first deliveries under the
agreement took place in February 2018. Under the original
agreement, the Company is obligated to provide delivery of an
initial supply of between 1 million and 1.5 million doses of
Lodonal™ product to cover AHAR Pharma’s first-year purchase
commitment. Due to the fact that AHAR Pharma failed to meet its
contractual purchase obligations, the Company formally issued
notice of default under the agreement.
On
April 18, 2018, AHAR Pharma transferred its rights under the
Distribution Agreement to Fidson Healthcare Plc (“Fidson”), and
Fidson signed an exclusive distribution agreement with the Company
to distribute Lodonal™. There were no shipments under this
agreement during the years ended December 31, 2020 and 2019. There
were also no discussions with Fidson regarding the Distribution
Agreement in 2020 or 2019.
Contract
Manufacturing Agreements
On
October 25, 2016, the Company and Acromax Dominicana, SA
(“Acromax”), which is based in the Dominican Republic, entered into
a contract for manufacturing of LDN tablets, capsules and/or creams
(“Agreement”). Subject to the terms and conditions of the
Agreement, Acromax will obtain all necessary licenses and permits
to carry out the manufacturing and packaging of LDN in exchange for
a fixed fee per tablet plus an additional fee for packaging,
shipping and customs clearance. The Agreement has an initial term
of five years unless terminated by either party in accordance with
the terms.
10.
Related Party Transactions
Board
and Officer Transactions
Kevin
Phelps, the Company’s Chief Executive Officer, and a member of the
board of directors, is earned board compensation of $5,000 a month
during 2020. Mr. Phelps has unpaid board fees of $125,000 and
$65,000 at December 31, 2020 and 2019, respectively, which is
included in amounts due to related parties. Mr. Phelps serves as
the Company’s Chief Executive Officer with an annual salary of
$240,000. As of December 31, 2020, Mr. Phelps had $160,000 in
earned and unpaid compensation included in amounts due to related
parties.
Dr. Roscoe Moore, the chairman of the board of directors, is
entitled to receive compensation of $5,000 a month for board fees.
Dr. Moore has unpaid board fees of $155,250 and $95,250 at December
31, 2020 and 2019, respectively, which is included in amounts due
to related parties. Dr. Moore had a note payable with a balance of
$3,000 at December 31, 2020.
Noreen
Griffin, the Company’s former Chief Executive Officer, has unpaid
cash compensation of $1,962,464 at December 31, 2020 and 2019,
respectively, which is included in accrued payroll expenses. There
was an additional $55,500 due to Mrs. Griffin at December 31, 2020
and 2019 related to certain benefits. During the fourth quarter of
2020, Ms. Griffin acquired a convertible note with a face amount of
$454,032 and accrued unpaid interest of $243,569 from an existing
noteholder of the Company. As of December 31, 2020, the principal
and interest in this note was convertible into 96,889 commons
shares. Subsequent to December 31, 2020, Ms. Griffin assigned 50%
of the principal and unpaid interest to another investor of the
Company.
11.
Subsequent Events
Subsequent
to December 31, 2020, the Company received a notice of conversion
of the May 4, 2020 convertible promissory note with a face value of
$53,000 and $3,180 in accrued interest. In connection with this
notice, the Company issued 5,402 in common stock on February 26,
2021 reflecting a conversion price of $10.40 per share.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
Immune
Therapeutics, Inc. |
|
|
|
Date:
April 15, 2021 |
By: |
/s/
Kevin Phelps |
|
Name: |
Kevin
Phelps |
|
Title: |
Chief
Executive Officer and Chief Financial Officer |
|
|
(Principal
Executive and Accounting Officer) |
In
accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Person |
|
Capacity |
|
Date |
|
|
|
|
|
/s/
Dr. Roscoe Moore |
|
Director |
|
April 15,
2021 |
Roscoe
Moore |
|
|
|
|
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