UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10
 
GENERAL FORM FOR REGISTRATION OF SECURITIES
 
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
 
TNI BIOTECH, INC .
(Exact name of registrant as specified in its charter)
 
Florida
   
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
6701 Democracy Blvd., Suite 300, Bethesda, Maryland
 
20817
(Address of principal executive office)
 
(Zip Code)
 
Registrant’s telephone number including area code: 888-613-8802
 
Securities to be registered pursuant to Section 12(b) of the Act:
 
None
 
None
(Title of class)
 
Name of each exchange on which each class is to be registered

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001
 
None
(Title of class)
 
Name of each exchange on which each class is to be registered

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.

o
 
Large accelerated filer
o
Accelerated filer
o
 
Non-accelerated filer
(Do not check if a smaller reporting company)
þ
 
Smaller reporting company



 
 

 
TABLE OF CONTENTS
 
     
Page
 
Item 1.     4  
Item 1A.     18  
Item 2.     46  
Item 3.     48  
Item 4.     49  
Item 5.     50  
Item 6.     54  
Item 7.     55  
Item 8.     55  
Item 9.     55  
Item 10.     56  
Item 11.     60  
Item 12.     60  
Item 13.     60  
Item 14.     60  
Item 15.     61  

EXPLANATORY NOTE
 
TNI BioTech, Inc. is filing this General Form for Registration of Securities on Form 10, or this "registration statement," to register its common stock, par value $0.001 per share (“Common Stock”), pursuant to Section 12(g) of the Securities Exchange Act of 1934. Unless otherwise mentioned or unless the context requires otherwise, when used in this registration statement, the terms “Company,” “we,” “us,” “our,” “TNI,” and “TNIB” refer to TNI BioTech, Inc.
 
The market data and other statistical information contained in this registration statement are based on independent industry publications, government publications, reports by market research firms and other published independent sources. Some data is also based on our good faith estimates, which are derived from other relevant statistical information, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information.
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This following information specifies certain forward-looking statements of management of the Company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable, possible, should, continue, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
 
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
 
 
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ITEM 1. BUSINESS
 
Company History
 
TNI BioTech, Inc., was initially incorporated in Florida on December 2, 1993 as Resorts Club International, Inc. (“Resorts Club”). 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 June 27, 1998. The Company began trading in November 1999 through the filing of a 15C-211. On November 10, 2004, Galliano merged with Resorts Club International, Inc. Resorts Club was the surviving corporation. On February 27, 2012, Resorts Club 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 pH Environmental executed a share exchange agreement for the acquisition of all of the outstanding shares of TNI BioTech, Inc. The Company currently operates out of Bethesda, Maryland. In July 2012, the Company’s focus turned to acquiring patents that would protect and advance the development of new uses of opioid-related immunomodulatory therapies, such as low-dose naltrexone (“LDN”) and Met-enkephalin (“MENK”).
 
TNI BioTech, Inc., is a specialty pharmaceutical company with the goal of benefitting patients with chronic and often life-threatening diseases through the activation and rebalancing of the body’s immune system using our patented immunotherapy.
 
Our products, technologies and patents are designed to harness the power of the immune system to improve the treatment of cancer, autoimmune diseases such as HIV/AIDS, and infections such as Crohn’s disease or irritable bowel syndrome. We are developing active and adoptive forms of immunotherapies.
 
Our most advanced clinical programs involve immunotherapy using Met-enkephalin (“MENK”) and low dose naltrexone (“LDN”). Both immunotherapies work by triggering opioid receptors on immune cells leading to an activation and expansion of various cells of the immune system.
 
Our Business and Patents
 
Background
 
TNI BioTech is focused on the development and commercialization of therapeutic treatments for cancer, HIV/AIDS and autoimmune diseases by combating these fatal diseases through the activation and mobilization of the body’s immune system. TNI’s growth strategy includes the near-term commercialization of its existing immunotherapies targeting cancer and HIV/AIDS, as well as a potential future contribution from the phase III studies of LDN for use in Crohn’s disease, tentatively scheduled to begin in 2014.
 
Dr. Nicholas Plotnikoff and the late Dr. Bernard Bihari are credited with achieving major breakthroughs in the treatment of certain cancers and HIV/AIDS. Dr. Plotnikoff initiated and completed phase I and phase II clinical testing and studies under protocols approved by the Food and Drug Administration (“FDA”). Stability studies on ampouled MENK were successfully completed, under an Investigational New Drug (“IND”) filed with the FDA. In these clinical trials, MENK has been shown to reduce early AIDS and AIDS Related Complex (“ARC”), a condition also known as pre-AIDS which include symptoms such as fever, diarrhea, weight loss, swollen lymph nodes and herpes.
 
In a double-blind study (conducted in December 2004) designated to measure the effect of a regular dosing schedule of MENK intravenously for 12 weeks on cytotoxic T-cell levels in HIV-infected patients, sustained levels of cytotoxic T-cells were observed 1 month after the last dose of MENK was applied. MENK influences multiple components of the immune system, including T-cells and NK cells. In addition to the therapeutic effects of the treatments, trial reports indicated an elevation in mood of the patients treated.
 
 
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When unable to fund phase III trials in the United States, clinical trials began in 2007 in China, led by Professor Fengping Shan and Dr. Plotnikoff, for the treatment of cancer, using our patented therapies. Clinical trials have shown promising results and the Company intends to file an IND with the State Food and Drug Administration (“SFDA”) and begin additional trials in China by the end of 2013 in conjunction with our Chinese partners.
 
Professor Shan and Dr. Plotnikoff filed a number of patents with the China Patent Office between 2008 and 2010. One patent has received approval and the others are still pending. The Patent Cooperation Treaty (“PCT”) enables the U.S. applicant to file one application, “an international application,” in a standardized format in English in the U.S. Receiving Office of the U.S. Patent and Trademark Office (“USPTO”), and have that application acknowledged as a regular national or regional filing in any state or region that is party to the PCT.
 
In the last year, Professor Shan and Dr. Plotnikoff have published the results involving MENK finding that MENK inhibits regulatory T-cells, which is key to cancer therapy in a number of peer-reviewed international journals. They additionally published results showing that MENK exhibited more advantages than Interleukin-2 (“IL -2”) or Interferon-γ (“IFN-γ”), two widely known cytokines.
 
Research results indicate that MENK, at suitable doses, boosts the immune system through:
 
increasing proliferation and functional activities of CD4+T-cells and CD8+T-cells which will play a role in anti-virus and anti-tumor activities;
 
increasing maturation of dendritic cells which will initiate and intensify T-cell responses;
 
increasing secretion of cytokines such as IL-2, TNF, IL-12 and IFN-γ which will amplify the T-cell response and mediate interaction among immune cells, forming a balanced immunity;
 
increasing functions of macrophages, resulting in enhanced cellular immunity through secreting a set of cytokines; and
 
increasing activity of NK cells which have the ability to kill cancer cells and virus-infected cells.
 
Based on these findings, TNI has developed new therapies that are particularly important when a patient’s immune system is compromised from the side effects of chemotherapy or diseases that suppress the immune system.
 
Patents and Licenses
 
The Company has been developing active and adoptive forms of immunotherapies through the acquisition of patents, Investigational New Drugs (“INDs”), clinical data and all proprietary technical information, know-how, procedures, protocols, methods, prototypes, designs, data and reports which are not readily available to others through public means, and which are owned, generated or developed through experiments or testing by Dr. Plotnikoff, Professor Shan, Dr. Bernard Bihari, Dr. Ian S. Zagon, Dr. Jill Smith, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky.
 
The Company’s Management believes that to be successful, it is imperative to not only acquire all of the intellectual property and patents but also the scientist(s) behind their development. Over the past year, the Company has been able to acquire many of the patents and intellectual property it was seeking, and has also been able to team up with some of the leaders in the field of immunology such as experts Dr. Ronald Herberman, Dr. Angus Dalgleish and Dr. Joseph Fortunak.
 
TNI BioTech’s first acquisition was the patents and intellectual property of Dr. Nicholas P. Plotnikoff and Professor Fengping Shan. While Dr. Plotnikoff was with Oral Roberts University, he was a member of the team that developed and patented the specific application of Met-enkephalin (“MENK”) as a treatment for cancer, HIV/AIDS, and infectious diseases. MENK is a member of the body of hormones known as cytokines which are produced by the immune system. MENK plays an essential role in influencing all components of the immune system. The most important participant in the immune response is a class of white blood cells known as lymphocytes. These cells develop in the bone marrow and are released into general circulation.
 
 
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Dr. Plotnikoff is the inventor behind a number of patents granted for cancer treatments and an adjunct to patents for autoimmune diseases including: European Patents in the United Kingdom, Germany, France, and Ireland number 1627/KOLNP/2003 and number 220265, an enkephalin peptide composition; a Russian Federation Patent, patent number 2313364 EP 1401471 covering BI Methods for inducing sustained immune response; The Patent Office of the People’s Republic of China, application No.: 200810165784.8 China Patent CN101513407 A The Patent Office of the People’s Republic of China ISSN: 1006-2858 CN 21-1349/R.; Government of India Patent, application number 1627/KOLNP/2003, patent number 220265 for an enkephalin peptide composition; the United States Patent is pending, US PTC patent Application Number 10/146.999. The Patent Cooperation Treaty (“PCT”) enables a U.S. applicant to file a single application, known as “an international application,” in a standardized format in English in the U.S. Receiving Office (the U.S. Patent and Trademark Office) that is acknowledged as a regular national or regional filing in any state or region that is party to the PCT.
 
In addition to the above patents, TNI also signed an exclusive licensing agreement for all of the intellectual property developed at Pennsylvania State University by Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Dr. Jill P. Smith for the treatment of cancer. The patents cover methods and formulations related to the treatment and prevention of cancers, particularly gastrointestinal cancer. More specifically, the present inventions describe the use of drugs that interact with opioid receptors (naltrexone, naloxone and the pentapeptide Met-enkephalin) to inhibit and arrest the growth of cancer. Such efficacy has been discovered to be partially due to the functional manipulation of the zeta opioid receptor through exogenous and endogenous Met-enkephalin. This receptor has been determined to be present in a variety of cancers, including pancreatic and colon cancer. US Patent Numbers 6,737,397, CA 2,557,504, US 20010046968 , US 6737397 , US 6136780 , US 20080015211 , US 20070053838 , US 8003630 , US 20110123437 , US 7807368 , US 7576180 , US 7517649 , US 20080146512 , US 7122651 , US 20060073565 , US 20050191241 , Patent No 8,003,630.
 
As part of the agreement, Dr. Jill Smith has agreed to arrange with the FDA the transfer of the Orphan Drug Designation for the use of MENK/OGF which are related to the therapeutic efficacy and action mechanism of Met-enkephalin, referred to as opioid growth factor in the treatment of pancreatic cancer to TNI BioTech. Dr. Smith will also make arrangements to transfer the IND to the Company as well as the relevant clinical data set.
 
TNI also acquired the licensing rights to the patent portfolio and intellectual property developed by Dr. Bernard Bihari relating to treatments with drugs that interact with opioid receptors such as low-dose naltrexone and MENK for a variety of diseases and conditions including malignant lymphoma, chronic lymphocyctic leukemia, Hodgkin’s lymphoma, and non-Hodgkin’s lymphoma, chronic herpes virus infections, and chronic infections due to the Epstein-Barr virus and a treatment method for humans infected with HTLV-III (AIDS) virus including patients clinically diagnosed as suffering from HIV/AIDS and those suffering from HIV/AIDS-related complex (“ARC”). The licensed rights include all reissues or modifications, reexaminations, or other related U.S. patent filings directed to the same subject matter and the use of U.S. Patent Number 6,586,443 , U.S. Patent Number 6,384,044 , U.S. Patent Number 6,288,074 , U.S. Patent Number 5,356,900 , U.S. Patent Number 5,013,739 , U.S. Patent Number 4,888,346 .
 
Once the Company acquired the above patents, it was then able to sign a licensing agreement to acquire the exclusive patent rights for the intellectual property of Dr. Jill Smith and LDN Research Group, LLC, whose members include Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky. The patents cover methods and formulations for the treatment of the inflammatory and ulcerative diseases of the bowel, using naltrexone in low dose as an opioid antagonist. Endogenous opioids and opioid antagonists at low doses have been shown to play a role in stimulating and rebalancing the immune system and the healing and repair of tissues. US Patent No. 6,136,780, Patent No. US 7879870.
 
TNIB then negotiated with Dr. Jill Smith to arrange with the FDA the transfer of the Orphan Drug Designation for the use of naltrexone for the treatment of pediatric Crohn’s disease. Dr. Smith will also make arrangements to transfer the IND to TNI BioTech as well as the relevant clinical data set.
 
The Company acquired these patents and intellectual property because Management believes clinical trials involving low-dose naltrexone (“LDN”) hold great promise for the millions of people worldwide with autoimmune diseases, central nervous system disorders or who face a deadly cancer. Management also believes it could be the first low-cost, easy to administer, and side-effect-free therapy for HIV/AIDS and other autoimmune diseases. TNIB intends to market these therapies under the names IRT-101, IRT-102 and IRT-103 (LDN).
 
TNIB is working with a number of additional universities and patent holders regarding additional patents surrounding LDN and MENK. The Company is also working with Professor Shan to acquire exclusive rights to patents that were filed and approved in China.
 
 
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The Company acquired these patents and intellectual property because Management believes clinical trials involving Low-dose Naltrexone (“LDN”) holds great promise for the millions of people worldwide with autoimmune diseases, central nervous system disorders or who face a deadly cancer. Management also believes it could be the first low-cost, easy to administer, and side-effect-free therapy for HIV/AIDS and other autoimmune diseases.
 
The FDA approved naltrexone in 1984 in a 50 mg dose for the purpose of helping heroin and opium addicts. It acts by blocking the opioid receptors, and thus the effect of such drugs. Naltrexone also blocks the reception of the naturally produced opioids (the body does make opioids) in the brain and adrenal glands including beta-endorphin and Met-enkephalin. Many body tissues have receptors for these endorphins and enkephalins, including virtually every cell of the immune system.
 
Overview of Immunotherapy
 
The role of the immune system in counteracting the development of cancer was initially supported by individual clinical case reports, when it was observed that cancer occurs more frequently in individuals with compromised immune systems. In groundbreaking work in the late 1800s, it was noted that some cancer patients suffering from bacterial infections had regression in their tumors. In trying to fight off the bacterial infection, the patients’ immune systems had become highly activated, thus affording some resistance to the tumor. Since then there have been hundreds of clinical trials conducted to evaluate numerous candidates and decades of research by countless scientists. In April 2010, Provenge became the first cancer immunotherapy to acquire FDA approval.
 
Antigen Presentation
 
Antigen presentation is a process in the body’s immune system, by which antigen-presenting cells (“APCs”), such as macrophages, B-lymphocytes, dendritic cells and other types of cells, process and present antigens on their surfaces to effector cells in the immune system and enable their recognition, inducing two major types of defense (i.e., adaptive and innate) against the target protein. The adaptive response is thought to be “specific” and is composed of highly specialized, systemic cells and processes that eliminate or prevent disease, whereas the innate response is “non-specific.” There are many types of cells involved in the innate immune response, especially natural killer (“NK”) cells and dendritic cells which are present in tissues in contact with the external environment and have garnered the most research interest as antigen presenting cells. Tumor cells display a number of proteins on the cell surface that signal to the immune system that these cells are not normal, healthy cells. As a result, cancer patients often have specific anti-tumor antibodies and T-cells circulating in their blood, demonstrating that the immune system detected the tumor cells and mounted a specific response.
 
In many cases, the immune system response fails due to strategies that tumor cells use to evade immune detection. These strategies range from methods designed to hide tumor cells, to active incapacitation of immune cells by tumor-produced agents that lower the immune system’s responses. Based on the types of antigens and method of their presentation used, the following immunotherapy strategies have been evaluated:
 
Active Immunotherapy which stimulate the body’s own defenses to fight disease;
 
Passive Immunotherapy which uses immune system components (e.g., antibodies or cytokines) created outside the body; and
 
Non-Specific Immunotherapies which stimulate the body’s immune system in general ways, including activity against cancer cells.
 
Brief History of Cancer Immunotherapy Development
 
More than 100 years after researchers first explored the potential to harness the body’s immune system to fight cancer, many of the field’s leading doctors believe the concept will finally prove itself on a large scale within the next two years. A number of large companies now work on immunotherapy drugs for the treatment of cancer and, if proven successful, could gain a significant share of the global market for oncology drugs. IMS Health estimates the oncology drug market will reach $75 Billion USD by 2015. 1 Scores of new immunotherapy vaccines and other immune system modifiers are being tested against a variety of cancers. The new understanding of how immunotherapies work may demand a revised definition of clinical success.
_________________________
1    The Global Use of Medicines: Outlook Through 2015, IMS Institute for Healthcare Informatics (2011), available at http://www.imshealth.com/deployedfiles/ims/Global/Content/Insights/IMS%20Institute%20for%20Healthcare%20Informatics/Global_Use_of_Medicines_Report.pdf.
 
 
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While extending life is the gold standard, most cancer drug trials have been deemed successful when tumors shrink or when a treatment can demonstrate a delay in tumor growth or in worsening of the disease, known as progression-free survival (“PFS”). New approaches based on more recent knowledge of the immune system include activating a variety of cells to go after tumors and modifying mechanisms that keep either the immune system in check or turn it loose.
 
Immunotherapy presents a number of potential advantages over approved cancer treatments. The traditional tools for treating cancer have been around for years, including radiation, which has been used since the 1800s; surgery; and chemotherapy, which evolved from the original use of mustard gas after World War I. All of these treatments are based on destroying the cancer cells either by damaging their DNA, selective toxicity or removing them. All of these therapies have a high number of side effects. The goal of immunotherapy is to treat the disease by avoiding the necessity for these traditional treatments.
 
The immune system is quite diverse and includes major biological functions: (1) immune defense, which works against infectious organisms such as bacteria, viruses, fungi, and parasites; (2) immune homeostasis which works to remove senescent cells and debris; and (3) immune surveillance to clear mutated cells or cancer cells. Researchers discovered that the principal cells in the immune system that attacked viruses and tumors were macrophages, dendritic cells, T-cells, NK cells, NKT cells and gamma/delta T-cells. These cells originate in bone marrow and perform functions in peripheral blood, skin, respiratory and intestinal tracts, and immune organs. The most important participant in the immune response is a class of white blood cells known as lymphocytes. These cells develop in the bone marrow and are released into general circulation. There are different subpopulations of T-Cells including: Helper T-Cells (Th) (CD4+), cytotoxic T-cells (CTL)(CD8+) and CD4+/CD25+T cells (T regulatory cells), and NK cells.
 
One of the most significant medical advances in the past 30 years has been the discovery of the hormones of the immune system, known as “cytokines.” Cytokines are small proteins or polypeptides produced by certain body cells that interact with other cells of the immune system in order to regulate the body’s response to disease or other disorder. The most famous of these are the interleukins (“IL”) and the interferons, such as IL-2 and gamma interferon. Another major group includes the enkephalins, such as Met-enkephalin (“MENK”) and endorphins. MENK, the endogenous neuropeptide generated in the adrenal gland and derived from proenkephalin, is suggested to be involved in the regulatory loop between the immune and neuroendocrine systems, with modulation of various functions of cells related to both innate and adaptive immune systems. Clinically, these cytokines have been found to be useful in stimulating the immune system in treating viral infections such as AIDS and hepatitis as well as in a number of different types of cancer. The resulting balance of systems protects the individual from harmful extremes of uncontrolled activity. Diseases such as those caused by viral infections, bacterial infections and cancer tend to result in deficiencies of the immune system response. Thus, it is critical to restore the body’s immunity to its effective level and to restore system balance.
 
Crohn’s Disease
 
The treatments currently available for Crohn’s disease do not control the disease well and there are major side effects associated with virtually all of the currently used drugs. In addition, most of these drugs are very expensive. Management believes that LDN provides an attractive alternative. There are published randomized controlled phase II trials, one for adults and another for children, that both show considerably better efficacy than the comparator standard of care alone. Based on these results, the Company has placed a very high priority on implementing a pivotal phase III trial within 15 months. By using the 505(b)(2) pathway and orphan drug designation for pediatric Crohn’s disease, confirmation of efficacy is expected to result in rapid approval by the FDA.
 
With its increasing recognition in children and adolescents, Crohn’s disease has become one of the most significant chronic diseases that affect young people. Pediatric Crohn’s disease affects approximately 80,000 patients in the United States. In addition to the common GI symptoms, children often experience growth failure, malnutrition, pubertal delay, bone demineralization, and psychological issues. Crohn’s tends to be both severe and extensive in the pediatric population with a relatively high proportion of pediatric Crohn’s patients having involvement of their upper GI tract, proximal to the ileum.
 
 
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505(b)(2)
 
Traditionally, pharmaceutical drugs had to be approved by the FDA under the standard 505(b)(1) regulatory pathway, which could take as long as 15 years. Now, drugs approved under 505(b)(2) may rely in part on data from existing reference drugs meaning they can be developed and achieve FDA approval in as little as 30 months with only a fraction of the number of required clinical trials and at a much lower cost.
 
Developing LDN using the 505(b)(2) regulatory pathway lowers the hurdle for FDA approval. As naltrexone is an FDA-approved product for alcohol or opiate dependence, prescriptions are currently being filled for of naltrexone in 50 mg doses by hundreds of local pharmacies and mail-order pharmacies around the United States. The FDA’s 505(b)(2) pathway for approving drugs opens the door for TNIB to gain FDA approval of LDN (which is used at a 4.5 mg dose of naltrexone) for new diseases. A 505(b)(2) drug application contains full reports of clinical investigations of safety and effectiveness, where at least some of the information required for approval comes from studies not conducted by or for the applicant, and for which the applicant has not obtained a right of reference or use, as many of these drugs are now off-patent. With the opportunity to use previous findings of safety, TNIB intends to use the 505(b)(2) pathway to study and gain approval for its own trademark LDN in other diseases, with multiple sclerosis as its first therapeutic indication.
 
The pediatric indication for naltrexone recently received Orphan Drug designation by the FDA. As a result, TNIB is planning a pivotal phase III trial with LDN for treatment of children with Crohn’s disease, as LDN’s first indication, followed by another phase III trial for the treatment of Crohn’s disease in adults.
 
Background on Naltrexone and Endorphins/Enkephalins
 
Endorphins and enkephalins are endogenous opioid peptides that function as neurotransmitters. They are either produced by the pituitary gland and the hypothalamus (endorphins) which are located in central nervous system (“CNS”) structures in the brain or produced in the thalamus or spinal cord (enkephalins). At least 20 types of endorphins, and two types of enkephalins, have been found in humans. Stress and pain are the two most common factors leading to the release of endorphins/enkephalins which act similarly to drugs such as morphine, codeine, and oxycodone, by interacting with opiate receptors in the brain to reduce our perception of pain. In contrast to opiate drugs, however, activation of opiate receptors by the body’s endorphins/enkephalins does not lead to addiction or dependence. In addition to decreased feelings of pain, secretion of endorphins/enkephalins leads to feelings of euphoria, modulation of appetite, and the release of sex hormones. Opiate receptors are also expressed on immune cells in the peripheral blood and lymphoid organs and triggering of those receptors by enkephalins or endorphins induce activation or modulation of immune response.
 
Naltrexone is an antagonist of opioid receptors which are endogenous proteins found on the cell surface that bind endorphins and enkephalins, as well as other endogenous opioids such as dynorphins, endomorphins and nociceptin. The mechanisms of action of endorphins/enkephalins and naltrexone are closely related. Naltrexone is metabolized and excreted within four hours, and there is evidence that subsequent opioid receptors in the brain and immune system are increased, during which time it stimulates production of endorphins/enkephalins by blocking opioid receptors in the hypothalamus. This leads to increased hypothalamic production of hormones, one of which is beta endorphin. Simultaneously, the hypothalamus sends nerve signals to the adrenal medulla inducing increased production of proenkephalin. Of particular relevance to the use of low dose naltrexone, administration late in the evening results in increased levels of endorphins and enkephalins during the day, and this appears to be the main basis for LDN’s effects on the immune system and the potential therapy of a variety of chronic diseases.
 
Brief Drug Development History of Naltrexone
 
Naltrexone was originally patented in 1967 by the specialty pharmaceutical company Endo Health Solutions Inc. At the time, it seemed unlikely that naltrexone would be developed because the experimental drug had relatively low market potential, and naltrexone’s patent protection would likely expire before the completion of clinical trials. With the assistance of DuPont, a division of Merck & Co. that acquired Endo in 1969, the US government’s National Institute on Drug Abuse (“NIDA”) advanced naltrexone through the FDA approval process, leading to approval for marketing as a treatment for heroin addiction in a 50 mg dose in 1984. Although its patent expired that same year, naltrexone gained seven additional years of marketing exclusivity for DuPont when the FDA designated it (trademarked as Trexan) an Orphan Drug. Marketing exclusivity provides a pharmaceutical company the right to sell its drug for a certain length of time free of competition from generic versions of the drug and is often granted to encourage companies to develop a use for a drug whose patent has expired or to encourage a company to develop an already approved drug for a new use. With market exclusivity, the anticipated returns on investment are higher, improving the profitability of a drug. With funding provided by the US National Institute on Alcohol Abuse and Alcoholism (“NIAAA”) and the potential to gain three additional years of post-approval market exclusivity for naltrexone, DuPont advanced naltrexone through additional clinical trials, and gained FDA approval for a 50 mg dose (trademarked as ReVia) as a treatment for alcohol abuse in 1995. As naltrexone had already been on the market for 10 years as a treatment for heroin addiction, the FDA’s confidence in its safety resulted in approval only six months after naltrexone’s regulatory application was submitted.
 
 
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Naltrexone has a black box warning for liver toxicity, which was included based on liver enzyme elevations reported with daily dosing at 100 mg-300 mg. These doses were evaluated in clinical trials for obesity, however, they were not approved for use. Our review of the literature and adverse effect reports in naltrexone clinical trials did not demonstrate a risk for liver damage with a daily dosing at 50 mg. Although the black box warning does remain, the FDA has stated that naltrexone does not appear to be a hepatotoxin at the recommended doses for the currently approved indications. Recently, naltrexone at 4 mg and 8 mg, in combination with the anti-depression drug, bupropion at 90 mg, was evaluated as an anti-obesity drug by Orexigen Therapeutics Inc. and submitted for FDA approval in 2010. Data from studies with the drug combination (trademarked Contrave) showed potential hepatotoxicity in 1.2% of subjects treated with Contrave (n = 3,239). [Note: After the FDA requested a long-term study to demonstrate the daily recommended dose of the drug combination (two tablets each with 8 mg naltrexone plus 90 mg bupropion taken twice daily) does not raise the risk of heart attacks, Orexigen initiated a Phase III trial to evaluate Contrave in a study expected to enroll more than 9,000 subjects and is anticipated to be completed in 2017.] Other than its small potential association with liver toxicity at high doses, the most common adverse effects reported with naltrexone are non-specific gastrointestinal complaints such as diarrhea and abdominal cramping.
 
Our Company’s Immunotherapy
 
Management believes one of the most significant medical advances in the past 20 years has been the discovery of the hormones of the immune system, known as “cytokines.” Met-enkaphalin (“MENK”) is a member of the body of hormones known as cytokines, which are produced by the immune system. MENK plays an essential role in influencing all components of the immune system.
 
Two of the most important compounds being researched by TNIB are Low-Dose Naltrexone (“LDN”) and MENK. Both LDN and MENK in combination are proven immune-modulating drugs that work in synergy. They boost the immune system by increasing the T and NK cells in the body, thereby activating the body’s own natural defenses against cancer and infections. Dr. Plotnikoff and Professor Shan have published articles proving that MENK plays a very important role in immune restoration. In 21 cancer patients or cancer patients after chemotherapy without side effects, Dr. Plotnikoff and Professor Shan have been able to show that MENK has more advantages in boosting the human immune system than either interferon or IL-2 (interleukin-2). MENK inhibits Treg cells while interferon or interleukin-2 does not. This is a unique discovery by TNIB that supports the company’s strategy to combat cancer with its patented technologies and therapies
 
The most important participant in the immune response is a class of white blood cells known as lymphocytes. These cells develop in the bone marrow and are released into general circulation.
 
The lymphocytes (or white blood cells) traveling through the thymus are transformed into T-lymphocytes (or T-Cells) by a hormone known as thymosin. Others, known as B-lymphocytes (or B-Cells), mature in other regions of the body. B-Cells produce specific substances called antibodies that bind to and destroy antigens.
 
Researchers discovered that the principal cells in the immune system that attack viruses and tumors are T-cells and NK cells. These cells originate in certain body tissues such as the bone marrow and are activated by hormones known as enkephalins. Enkephalins are recognized as stress hormones that stimulate the immune system to fight off infections and cancer.
 
Thus, the immune system acts as a defensive system against infectious organisms such as bacteria, viruses, fungi and parasites and, importantly, tumor cells. The immune system includes many different defense cells such as macrophages, T-cells, NK cells, B-cells and neutrophils. These cells communicate with all of the cells in the immune system.
 
 
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Two separate studies demonstrating successful LDN use in HIV/AIDS have been published in the October 2011 issue of the peer reviewed Journal of AIDS and HIV Research. 2 This was made possible with the financial support and guidance of neurologist Dr. Jaquelyn McCandless and her colleague and husband, Jack Zimmerman, the support of Hussein Alfa Nafo, and with the work of the local research team led by Dr. Abdel Kader Traore and other health officials at the University Hospital in Bamako, Mali in Africa. See Clinical Trials for LDN recently published. 3 The Company believes that these scientific studies on LDN as a treatment for HIV-positive individuals clearly demonstrate LDN’s unique ability to strengthen the immune system.
 
The Company plans to offer IRT-103 as a treatment to HIV/AIDS patients throughout the world at a cost of $1.00 per day. The Company understands that even though we might be able to charge more for the treatments, we believe the communities we are working with are in need of an affordable, effective treatment. When TNIB acquired the patents from the estate of Bernard Bahari it was with the understanding that the Company would comply with the wishes of the inventor as to the pricing of the treatment for HIV/AIDS by IRT-103.
 
Studies with Low-Dose Naltrexone
 
Initial clinical trials conducted in patients with HIV/AIDS in 1985 by Bernard Bihari, MD, demonstrated dosing of 3 mg of LDN boosted the immune system. Dr. Bihari also found that patients in his practice with lymphoma, pancreatic cancer or autoimmune disease, such as systemic lupus erythematosis, also showed improvement in symptoms when treated with LDN. After the observation that opioid-related receptors on immune cells have direct effects on the immune system and the inflammatory response, the field of study surrounding LDN exploded, including studies to understand how LDN works. In addition, evidence for a variety of effects on immune cells, by activating delta opioid receptors on cancer cells, endorphins/enkephalins has been shown to induce apoptosis (programmed cell death) of cancer cells.
 
Significant published clinical trial evidence indicates that LDN, particularly daily dosing at 4.5 mg, stimulates the immune system and is effective in the treatment of some immunodeficiency diseases, such as HIV/AIDS. The first clinical trial results with LDN, however, were published only recently in a peer-reviewed medical journal in 2007 which evaluated LDN treatment in 17 patients with Crohn’s disease, a form of inflammatory bowel disease that most commonly affects the ileum and the beginning of the colon. 4 2/3 of patients in this study went into remission after 4.5 mg daily LDN treatment (p < 0.001), with 89% of patients overall showing some degree of response. 5
 
Extensive patient data evaluating the safety and activity of LDN in several diseases continues to be compiled outside of FDA-approved clinical studies. The cost of naltrexone is reasonable, making LDN a treatment that is potentially complementary to a large number of treatment regimens.
 
Our Approach
 
The purpose of TNI BioTech’s immunotherapy is to increase the production of the immune system by increasing production of dendritic cells, macrophages, CD4+T Cells (CD4), CD8+T cells, NK cells, NKT cell and Gammadelta T-cells and inhibiting Tregulatory cells to allow the body to recognize cancer cells as a foreign invader and thereby remove these cancer cells.
_________________________
2 http://www.academicjournals.org/jahr/contents/2011Content/October.htm
3 http://www.lowdosenaltrexone.org/ldn_trials.htm#Recent
4 Jill P. Smith, et al., Low-Dose Naltrexone Therapy Improves Active Crohn’s Disease , American Journal of Gastroenterology, 102, 820-828 (2007), available at http://www.nature.com/ajg/journal/v102/n4/full/ajg2007152a.html
5 Id.
 
 
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The treatment modality focused on using MENK has been demonstrated to be effective while avoiding certain deleterious effects on the body, as is often the case with traditional chemotherapy. Management believes the costs are reasonable, making this an attractive complement for a large number of cancer patients. The adaptive cell immunity of the immune system consists of 3 different arms:
 
1)
Helper T Cells (Th1/Th2) (CD4+), CytotoxicT Cells (CTL)(CD8+) and CD4+CD25+T cells (Treg ). Th1 cells help the regulation of cellular immunity via secreting cytokines such as Gamma Interferon (IFN-γ), Interleukin-2 (IL-2) and tumor necrosis factor (TNF), playing a role in anti-infection like antivirus (anti-HIV) and anti-cancer. Th2 cells help B cells produce antibodies. CTL mediates in killing tumor cells. Treg cells balance immunity through negative feedback regulation;
 
2)
Suppressor T-Cells (CD8) slow down the activities of the immune system. The balance between Helper T-Cells and Suppressor T-Cells plays a critical role in regulating the immune system. In AIDS for example, there is a loss of Helper T-Cells and an increase in Suppressor T-Cells resulting in suppression of the immune system; and
 
3)
Cytotoxic or Killer T-Cells (CD8), which attaches to and destroy viruses (HIV, for example) and tumor cells.
 
Our research results indicate that MENK at suitable doses boosts the immune system through:
 
Increasing proliferation and functional activities of CD4+T cells and CD8+T cells which will play a role in anti-virus and anti-tumor activities;
 
Increasing maturation of dendritic cells which will initiate and intensify T cell responses;
 
Increasing secretion of cytokines suc h as IL-2, TNF, IL-12 and IFN-γ which will amplify the T cell response and mediate interaction among immune cells, forming a balanced immunity;
 
Increasing functions of macrophages, resulting in concerting cellular immunity through secreting a set of cytokines; and
 
Increasing activity of NK cells which will kill cancer cells.
 
Based on these findings, we have developed new therapies. Our therapies are especially important when the patient’s immune system is compromised due to treatment or diseases that can initially prevent an adequate cellular response.
 
The Products
 
IRT-101 is an active immunotherapy systemic administration of MENK that works by activating a patient’s immune system against infectious diseases and tumor cells. This is accomplished by increasing the number of T-cells and NK cells, NKT and gamma/delta T-cells that destroy infective organisms and tumor cells, while simultaneously inhibiting T regulatory cells.
 
IRT-102 is an adaptive immunotherapy that works by isolating and elevating a patient’s own immune cells and following an enriching external incubation, transfusing them back into the patient. This provides the patient with a passive immunity containing large amounts of auto-amplified immune cells that combat cancer cells.
 
TNIB is advancing LDN as an active immunotherapy that works by modulating a patient’s immune system. For treatment against HIV/AIDS or tumor cells, LDN appears to increase enkephalin receptors on immune cells and also increases endogenous levels of enkephalins and endorphins, resulting in an increased number of T cells and NK cells, which are then mobilized to destroy infectious organisms and tumor cells. LDN also modulates the immune system in patients with various autoimmune diseases, such as Crohn’s disease and multiple sclerosis, by reducing pro-inflammatory cells and cytokines in the areas of active disease.
 
Management considers any condition that results in altered-immune response a target for investigation. However, the Company will most likely pursue additional investigations for MENK as a valuable candidate in the treatment of the following:
 
Autoimmune states such as rheumatoid arthritis and multiple sclerosis;
 
As an adjunct to antibiotics in the treatment of infectious diseases;
 
 
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In patients undergoing chemotherapy, radiation treatments or surgery; and
 
In wound healing, herpes viral infections, and in treatment for the elderly.
 
In clinical trials there is significant evidence that LDN and MENK stimulate the immune system and are effective in the treatment of some immune-suppressed diseases. The treatment modality has been demonstrated to be effective while avoiding certain deleterious effects on the body, as is often the case with traditional treatments. The costs are reasonable, making this an attractive complement for a large number of cancer patients.
 
Treatment Focus
 
Cancer
 
In clinical trial laboratory tests around the world, MENK is used to fight cancer in humans, animals, and in-vitro test systems. Uniformly positive results from MENK testing show an increase in Killer T-Cells on the following cancers: Kaposis Sarcoma, L1210, B16 Melanoma, Neuroblastoma, Murine Leukemia, Thyroid Carcinoma, Acute Myelogenous Leukemia, Breast Cancer, Ovarian Cancer, Gastric Carcinoma, Lymphoma, Lung Cancer, Pancreatic Cancer, and Colon Cancer.
 
Data also shows that MENK inhibited angiogenesis and activated apoptosis of tumor cells.
 
AIDS
 
A first stage portion of a phase II clinical trial on AIDS has been completed in the United States. A late phase II program has been approved by the FDA, but requires funding to complete at this time.
 
In these clinical trials, MENK has been shown to reduce early symptoms such as fever, diarrhea, weight loss, swollen lymph nodes, and herpes in patients with AIDS and Aids Related Complex (“ARC”), a condition also known as pre-AIDS. In addition to the therapeutic effects of treatments, trial reports indicate the patients who were treated with MENK experienced an elevation in mood.
 
In a double-blind study conducted under Dr. Nicholas P. Plotnikoff and Dr. Bernard Bihari in December 2004 designated to measure the effect of a regular dosing schedule of MENK on Cytotoxic T-Cell levels in HIV-infected patients, infusion was stopped after 12 weeks. Sustained levels of Cytotoxic T-Cells existed one month after the last dose of MENK was applied; thus, defining MENK as a “therapeutic vaccine.”
 
Hospitalization-Related Infections
 
Management believes that the entire medical community is aware that a patient hospitalized for treatment is at serious risk of developing an infection. The problem arises because the immune system’s effectiveness can be severely reduced by diseases and illnesses, treatments, surgical wounds and old age. The fact that the patient is hospitalized indicates he/she suffers from a condition that results in a lowered immune system resistance. Since treatment with MENK results in stimulating the immune system, Management believes MENK is a logical method for preventing and treating hospital related infections.
 
Antibiotics/Other Applicable Diseases
 
TNIB has suggested MENK as a valuable adjunct to antibiotics. While the antibiotic may decrease the immune system, MENK may complement and increase the specific antibiotic’s effect.
 
HCV
 
Hepatitis C Virus (“HCV”) infection is one of the most prevalent and devastating viral diseases in the world. Without immediate therapy, acute infection generally develops into chronic HCV. Unfortunately, this occurs in 85% of acutely infected patients due to HCV’s sub-clinical symptom profile. Management believes next-generation therapeutics are needed to act directly on the virus.
 
 
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HCV is the most common chronic blood borne infection in the United States, The Center for Disease Control estimates that approximately 3,200,000 people are chronically infected in the United States. The World Health Organization estimates that 150,000,000 people worldwide are chronically infected. More than 350,000 people die each year from Hepatitis C related liver disease.
 
Crohn’s Disease
 
Crohn’s disease is an inflammatory bowel disease (“IBD”) marked by chronic inflammation potentially involving any location of the gastrointestinal tract (“GI”) causing abdominal pain, diarrhea, GI bleeding, and weight loss. Crohn’s disease can be both painful and debilitating, and sometimes may lead to life-threatening complications. Current therapies for the condition reduce the inflammation but can be expensive and may incur rare but serious side effects, including infections and lymphoma. Prior research has suggested that endorphins and enkephalins may play a role in the development or continuation of inflammation.
 
Researchers at the Pennsylvania State University College of Medicine recently studied the possible benefits of treating the condition with naltrexone in 40 patients with active Crohn’s disease. 6 Patients in a double-blind, placebo-controlled trial were randomized to receive either low-dose oral naltrexone (4.5 mg) or placebos daily for 12 weeks. 7 All subjects then continued on naltrexone for an additional 12 weeks. 88% of those treated with naltrexone had at least a 70 point decline in disease activity, as measured by the Crohn’s Disease Activity Index (“CDAI”), compared to 40% of placebo-treated patients. 8 Naltrexone also promoted mucosal healing, as determined through colonoscopies, in 78% of subjects. 9
 
These prior studies supported expanding the evaluation of naltrexone in children with active Crohn’s disease. Once considered rare in the pediatric population, it is recognized with increasing frequency among children of all ages. Approximately 20-30% of all patients with Crohn’s disease had the disease present when they were younger than 20 years old. 10 These prior studies supported expanding the evaluation of naltrexone in children with active Crohn’s disease. With its increasing recognition, Crohn’s disease has become one of the most important chronic diseases that affect children and adolescents. 11 In a pilot study conducted in children with moderate to severe Crohn’s disease, 92% of subjects who received after treatment with an 8 week course of naltrexone were considered in remission or had improved disease activity. 12 Oral naltrexone was well-tolerated without any serious adverse events observed, thus meriting further evaluation in both adult and pediatric Crohn’s disease.
 
Business Strategy
 
The Company’s business strategy focuses on 4 key areas:
 
The establishment of treatment facilities throughout Africa, the Caribbean and South America for cancer, HIV/AIDS and other autoimmune diseases that can benefit from IRT-101, IRT-102 and IRT-103 patented technology and therapies;
 
The large scale treatment of HIV/AIDS and immune-enhancing therapy using IRT-103;
 
The large scale manufacturing and distribution of IRT-103 LDN, either in pill form, or cream for those unable to handle the medication in pill form, throughout Africa and expanding to other developing nations; and
 
The Joint Venture with the Hubei Qianjiang Pharmaceutical Company that will provide the funding required for the phase III trials in China in exchange for TNIB providing exclusive licensing rights in China. TNIB will also receive a percentage of the gross revenue from sales in China.
_____________________________
6 Jill P. Smith, et al., Low-Dose Naltrexone Therapy Improves Active Crohn’s Disease , American Journal of Gastroenterology, 102, 820-828 (2007), available at http://www.nature.com/ajg/journal/v102/n4/full/ajg2007152a.html; Use of Naltrexone Reduces Inflammation in Crohn’s Patients , Penn State Live (May 19, 2011), available at http://live.psu.edu/story/53494.
10 Jill P. Smith, et al., Safety and Tolerability of Low-dose Naltrexone Therapy in Children with Moderate to Severe Crohn’s Disease: A Pilot Study , J Clin Gastroenterol (Dec. 13, 2012).
12 Id.
 
 
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TNIB, in conjunction with GB Energie LLC, under the leadership of Dr. Gloria B. Herndon, established GB Oncology and Imagining Group LTD (“GBOIB”) to meet the demands for oncological and infectious diseases expertise. Dr. Herndon has been involved in healthcare related issues in Africa since the mid 1990s and is a consulting resource for the National Institute of Health (“NIH”) regarding the impact of the HIV/AIDS pandemic on the insurance industry and the dissemination of AIDS-related information to the United States Department of State. The goal of TNIB/GBOIG, together with the ministries of health across Africa, is to provide better access to and public awareness of the prevention, diagnosis and treatment of cancer and chronic infectious diseases. TNIB plans to work with onsite clinics which will permit TNIB to complete patient assessments at little or no cost and prescribe treatments used to modulate the immune system of the patients with various chronic diseases, especially HIV/AIDS and/or cancer so that it decreases the inflammatory attack on normal cells and allows an improvement in normal functions of the nerves or gastrointestinal cells. As a result, treatment with LDN is potentially synergistic in combination with current drugs for autoimmune diseases such as Crohn’s disease. In advanced cases, the patients can be transferred to TNIB’s offsite treatment facility for further evaluation and treatment, where they can benefit from TNIB’s patented technology and therapies.
 
Through these clinics, TNIB intends to begin delivery of IRT-103, the company’s proprietary LDN, for the treatment of HIV/AIDS and/or cancer in 2013. The contract with the Republic of Malawi calls for 25,000 pills a day, increasing to 500,000 pills a day within 24 months. TNIB anticipates people will take IRT-103 365 days a year. The contracts with Equatorial Guinea will begin with about 10,000 people per day growing to about 125,000 people per day over the next two years.
 
In November, TNIB signed an exclusive distributor agreement with G-Ex Technologies/St. Maris Pharma and GB Pharma Holdings LLC for the Federal Republic of Nigeria. Under the terms of the agreement, G-Ex Technologies/St. Maris Pharma & GB Pharma Holdings LLC will have exclusive marketing and distribution rights to IRT-103 LDN and LDN cream in Nigeria. TNIB will be responsible for the manufacture and supply, initially funded by a revolving letter of credit from G-Ex Technologies/St. Maris Pharma. TNIB will be responsible for the minimum monthly purchase of 25,000 doses of IRT-103 LDN or LDN cream, beginning March 1, 2013, and increasing to 500,000 doses per day within the following 24 months. TNIB intends to charge $1.00 per daily dose with an estimated profit of $0.40 per dose. As a result, TNIB stands to realize near-term revenues by providing services and distributing its own version of an approved product. The Company anticipates the strong revenue growth projected from sales by its partners in China, Africa, and other countries of the developing world will be adequate to offset clinical development of its LDN and MENK immunotherapy in the United States.
 
Management believes the pharmaceutical industry is eager to acquire advanced clinical-phase and approved products. However, despite the strong demand for advanced clinical-phase products, nearly 4,000 known compounds have had their development suspended in phase II or earlier. Many of these are promising therapeutic drug candidates, but their development was discontinued because of strategic or financial constraints rather than for clinical reasons.
 
TNIB is focused on the infectious disease market with its lead compounds designed for cancer, HIV/AIDS and autoimmune diseases. Management believes there are clear market opportunities with a significant amount of unmet needs and a robust potential for partnering activities.
 
Distribution and Production
 
TNIB has entered into a contract for the supervision and inspection of manufacturing processes with ViPharma and a manufacturing agreement with Laboratorios Ramos, a current good manufacturing practice (“cGMP”) facility for IRT-103 low-dose naltrexone (“LDN”). The Company anticipates receiving final approval for Free Sale from the Ministry of Health of Nicaragua (“MINSA”). The Company decided to cancel its agreement with Laboratorio Biotécnico Industrial S.A., as they were unable to provide the Company with a cGMP-certified facility in a timely manner. The Company has no ongoing liability in connection with the termination of that agreement. Once the Company obtains final approval, TNIB expects to begin production and shipment of IRT-103 (LDN) within 60 days.
 
 
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Under signed agreements with the Republic of Malawi, TNIB will begin shipping 25,000 doses a day increasing to 500,000 a day within 24 months. The Company is in negotiations with a number of other African Nations as well as major corporations in Africa and believes we will have contracts for the delivery of over 1,000,000 doses a day by 2014.
 
TNIB anticipates opening our first cancer treatment center by the last quarter of 2013 and Management believes continued preclinical and clinical development of the company’s drug compounds will drive most expenses.
 
Raw Materials and Principal Suppliers
 
The Company has decided to enter into third party manufacturing agreements; accordingly, we rely on third parties for clinical production of our products and product candidates.
 
We obtained the Active Pharmaceutical Ingredient (“API”) for IRT-103 (LDN) from a number of suppliers. Another pharmaceutical company currently manufactures the API for IRT-101 and IRT-102. Our current agreements with our suppliers do not provide for the entire supply of the API necessary for additional clinical trials or for full-scale commercialization.
 
Competition
 
The pharmaceutical industry is characterized by rapidly evolving technology and intense competition. A large number of companies of all sizes, including major pharmaceutical companies and specialized biotechnology companies, engage in activities similar to our activities. Many of our competitors have substantially greater financial and other resources available to them. In addition, colleges, universities, governmental agencies and other public and private research organizations continue to conduct research and are becoming more active in seeking patent protection and licensing arrangements to collect royalties for use of technologies that they have developed. Some of our competitors’ current or future products and technologies may be in direct competition with ours. We also must compete with these institutions in recruiting highly qualified personnel.
 
Established pharmaceutical companies that currently sell or are developing drugs in our markets of interest include, for example, Abbott Laboratories, Amgen, AstraZeneca, Biogen Idec, Bayer, Elan, Johnson & Johnson, Merck, Merck Serono, Takeda, Novartis, Pfizer, Reata, Sanofi-Aventis and Teva. Many or all of these established competitors are also involved in research and drug development regarding various OGF receptors. Pharmaceutical and biotechnology companies which are known to be involved in immuno therapy research and related drug development include Pfizer, Bristol-Myers Squibb, Merck, Takeda, Sanofi-Aventis, Incyte, and UCB Pharma among others.
 
There are also comparable companies focused on advancing drugs for various diseases using the FDA’s 505(b)(2) pathway including Akorn Inc., Chelsea Therapeutics Inc., MAP Pharmaceuticals Inc., Pain Therapeutics Inc., Rexahn Pharmaceuticals Inc., Santarus Inc., Ventrus Biosciences Inc., and XenoPort Inc.
 
Analysis
 
All revenue is based upon sale of IRT-103 and one cancer treatment center. Management believes that in 2013, based on contracts in place, TNIB could potentially generate $27 Million Dollars in operating revenue increasing to over $200 Million Dollars by year five. This is based upon TNIB attaining a small percentage of the HIV/AIDS and infectious disease market in Africa and South America.
 
Customers
 
TNIB is dependent on its contracts with Malawi, Nigeria, and Equatorial Guinea. The Company is in negotiations with other potential customers.
 
Government Regulations
 
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are subject to extensive regulation by the United States Food and Drug Administration (“FDA”) and other regulatory authorities in the United States and other countries with regulations differing from country to country. Neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a New Drug Application (“NDA”) from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process.
 
 
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Prior to receiving approval to commercialize any of our drug candidates in the United States or abroad, we and our collaboration partners must demonstrate with substantial evidence from well controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities abroad, that such drug candidates are safe and effective for their intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. Regulatory approval of an NDA or NDA supplement is not guaranteed, and the approval process is expensive and may take several years.
 
Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our drug candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S. regulatory authorities approve any of our drug candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with current cGMP regulations which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations.
 
We intend to seek a distribution and marketing partner for IRT-101, IRT-102 and IRT-103 (LDN) outside North America and may market future products in international markets. In order to market our future products in the European Economic Area (“EEA”) (which is comprised of the 27 member states of the European Union (“EU”) plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization (“MA”).
 
The Community MA is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency (“EMA”), and is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.
 
National MAs, which are issued by the competent authorities of the member states of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a member state of the EEA, this National MA can be recognized in another member state through the Mutual Recognition Procedure. If the product has not received a National MA in any member state at the time of application, it can be approved simultaneously in various member states through the Decentralized Procedure.
 
Under the procedures described above, before granting the MA, the EMA or the competent authorities of the member states of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
 
Research and Development
 
Prior to the Company’s purchase of its patents and licenses, the Company did not incur research and development costs. The individuals or companies TNIB acquired the licenses from had previously borne research and development costs. TNIB reimbursed some patent holders for their costs upon TNIB’s acquisition of the patent or license. Going forward, TNIB intends to grow its patents and licenses by allocating funds directly to research and development.
 
 
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Employees
 
As of December 31, 2012, TNIB had 6 full time employees and 3 part time employees.
 
Reports to Security Holders
 
Once the Company is subject to the reporting requirements of Section 13 and Section 15(d) of the Exchange Act, it intends to file all required disclosures.
 
You may read and copy any materials the Company files with the SEC in the SEC’s Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
 
ITEM 1A. RISK FACTORS.
 
RISK FACTORS
 
An investment in our Common Stock is highly speculative and involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described below together with all of the other information included in this Form 10. The statements contained in or incorporated into this Form 10 that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the value of our Common Stock could decline, and an investor in our securities may lose all or part of their investment.
 
Risks Related to the Issuer
 
We will see losses from our clinical trials for the foreseeable future, and if we fail at one or more of our clinical trials, it could affect the value of the Company’s stock.
 
We do not anticipate that we will generate revenue from the sale of our products for the foreseeable future. In addition, if approved, we expect to incur significant costs to commercialize our drug candidates and our drugs may never gain market acceptance. If our drug candidates fail to demonstrate safety and efficacy in clinical trials, do not gain regulatory approval, or do not achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or whether we will become profitable.
 
Since inception, we have invested a significant portion of our time and financial resources in the acquisition and development of our most advanced drug candidate, IRT-103 low-dose naltrexone (“LDN”). While we currently have 3 other drug candidates in clinical trials, we anticipate that our ability to generate significant product revenues in the near term will depend primarily on the successful development, regulatory approval, marketing and commercialization of IRT-103 (LDN) by us or by one of our potential partners. It is uncertain whether IRT-103 (LDN) will have successful results in its development, regulatory approval, marketing and commercialization.
 
 
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We rely on our private placement to fund and conduct the current pivotal phase III trials with respect to IRT-103 (LDN). Any of the following events or factors could have a material adverse effect on our ability to generate revenue from the commercialization of IRT-103 (LDN):
 
TNIB may be unable to successfully complete the clinical development of IRT-103 (LDN);
 
TNIB must comply with any possible additional requests and recommendations from the United States Food and Drug Administration (“FDA”), including additional clinical trials;
 
TNIB may not obtain all necessary approvals from the FDA and similar foreign regulatory agencies;
 
TNIB may not commit sufficient resources to the development, regulatory approval, marketing and distribution of IRT-103 (LDN);
 
IRT-103 (LDN) must be manufactured in compliance with requirements of the FDA and similar foreign regulatory agencies and in commercial quantities sufficient to meet market demand;
 
IRT-103 (LDN) may not achieve market acceptance by physicians, patients and third party payors;
 
IRT-103 (LDN) may not successfully compete against alternative products and therapies; and
 
TNIB or any other pharmaceutical organization may independently develop products that compete with IRT-103 (LDN).
 
In order to obtain approval from the FDA of a New Drug Application (“NDA”), for IRT-103 (LDN), TNIB will need to demonstrate through evidence of adequate and well-controlled clinical trials that IRT-103 (LDN) is safe and effective for each proposed indication. However, IRT-103 (LDN) may not be approved even though it achieved its specified endpoints in the current and/or future pivotal Phase III clinical trials intended to support an NDA, which may be conducted by TNIB. The FDA may disagree with the trial design and the interpretation of data from clinical trials, may ask the Company to conduct additional costly and time consuming clinical trials in order to obtain marketing approval or approval to enter into an advanced phase of development, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials. The FDA may also approve IRT-103 (LDN) for fewer or more limited indications than TNIB may request, or may grant approval contingent on the performance of costly post-approval clinical trials. In addition, the FDA may not approve the labeling claims that we believe are necessary or desirable for the successful commercialization of IRT-103 (LDN).
 
If TNIB or any of our future collaboration partners does not perform in the manner we expect or fulfill its responsibilities in a timely manner, or at all, the clinical development, regulatory approval, and commercialization efforts related to IRT-103 (LDN) could be delayed or terminated. It may be necessary for us to assume the responsibility at our own expense for the development of IRT-103 (LDN). In that event, we would likely be required to limit the size and scope of one or more of our programs or increase our expenditures and seek additional funding. If we had to limit the scope of our programs or seek additional funding the potential to generate future revenue from IRT-103 (LDN) will be significantly reduced and our business will be materially and adversely harmed.
 
The development of new drugs is a highly risky undertaking which involves a lengthy process, and therefore our drug discovery and development activities may not result in products that are approved by the applicable regulatory authorities on the time schedule we have planned, or at all.
 
Our drug candidates are in early stages of drug discovery or clinical trials and are prone to the risks of failure inherent in drug development. As of the date of this Form 10, only 3 of our current drug candidates, IRT-103 (LDN), IRT-101 and IRT-102 have been tested on human beings. We will need to conduct additional clinical trials before we can demonstrate that our drug candidates are safe and effective to the satisfaction of the FDA and other regulatory authorities. Clinical trials are expensive and uncertain processes that can take multiple years to complete. We cannot assure you that our ongoing clinical trials or any future clinical trial of any of our other drug candidates, will be completed on schedule, or at all, or whether our planned clinical trials will start in a timely manner. The commencement of our planned clinical trials could be substantially delayed or prevented by a number of factors, including:
 
 
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delays or failures in obtaining sufficient quantities of the Active Pharmaceutical Ingredient (“API”) and/or drug product;
 
delays or failures in reaching an agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites;
 
delays or failures in obtaining Institutional Review Board (“IRB”) approval to conduct a clinical trial at a prospective site;
 
the need to successfully complete, on a timely basis, preclinical safety pharmacology studies;
 
the limited number of, and competition for, suitable sites to conduct the clinical trials;
 
the limited number of, and competition for, suitable patients for enrollment in the clinical trials; and
 
delays or failures in obtaining regulatory approval to commence a clinical trial.
 
The completion of our clinical trials could also be substantially delayed or prevented by a number of factors, including:
 
slower than expected rates of patient recruitment and enrollment;
 
failure of patients to complete the clinical trials;
 
failure of our third party vendors to timely or adequately perform their contractual obligations relating to the clinical trials;
 
inability or unwillingness of patients or medical investigators to follow our clinical trial protocols;
 
inability to monitor patients adequately during or after treatment;
 
termination of the clinical trials by one or more clinical trial sites;
 
unforeseen safety issues;
 
lack of efficacy demonstrated during clinical trials;
 
lack of adequate funding to continue the clinical trials;
 
the need for unexpected discussions with the FDA or other foreign regulatory agencies regarding the scope or design of our clinical trials or the need to conduct additional trials;
 
unforeseen delays by the FDA or other foreign regulatory agencies after submission of our results;
 
an unfavorable FDA inspection of our contract manufacturers of APIs or drug products; and/or
 
inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold.
 
Any failure or significant delay in completing clinical trials for our drug candidates will harm the commercial prospects for our drug candidates and adversely affect our financial results.
 
Additionally, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. If we experience delays in completion of a clinical trial, or if we terminate, any of our clinical trials, the commercial prospects for our drug candidates may be harmed and our ability to generate product revenues will be delayed. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a drug candidate.
 
 
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If we are required to suspend or discontinue clinical trials due to side effects or other safety risks, or if we are required to conduct studies on the long-term effects associated with the use of our drug candidates, our efforts to commercialize our products could be delayed or halted.
 
Our clinical trials may be suspended or terminated at any time for a number of safety-related reasons. For example, administering any drug candidate to humans may produce undesirable side effects. We may voluntarily suspend or terminate our clinical trials if at any time we believe that our drug candidates present an unacceptable safety risk to the clinical trial patients. In addition, IRBs or regulatory agencies may order the temporary discontinuation or termination of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, including if they present an unacceptable safety risk to patients. The existence of undesirable side effects resulting from our drug candidates could cause us or regulatory authorities, such as the FDA, to interrupt, delay or halt clinical trials of our drug candidates and could result in the FDA or other regulatory agencies denying further development or approval of our drug candidates for any or all targeted indications.
 
Further, cytokine receptors and opiate growth factor receptors are a novel class of targets. As a result, we may experience unforeseen adverse side effects with our existing and future drug candidates, including IRT-101 and IRT-103. As of the date of this Form 10, 3 of our current drug candidates have been tested in human beings. Although we have not observed significant harmful side effects in prior studies of IRT-103 low-dose naltrexone (“LDN”), IRT-101 or Met-enkephalin (“MENK”), or our other drug candidates, later trials could reveal such side effects. The pharmacokinetic profile of preclinical studies may not be indicative of results in any clinical trial.
 
We have not conducted studies on the long-term effects associated with the use of our drug candidates. Studies of these long-term effects may be required for regulatory approval and would delay introduction of our therapies or our other drug candidates into the market. These studies could also be required at any time after regulatory approval of any of our drug candidates. Absence of long-term data may also limit the approved uses of our products, if any, to short-term use. Some or all of our drug candidates may prove to be unsafe for human use.
 
Even if our drug candidates do obtain regulatory approval they may never achieve market acceptance or commercial success.
 
Even if we obtain FDA or other regulatory approval, our drug candidates may not achieve market acceptance among physicians, patients and third party payors, and ultimately, may not be commercially successful. Market acceptance of our drug candidates for which we receive approval depend on a number of factors, including:
 
the efficacy and safety of our drug candidates as demonstrated in clinical trials;
 
the clinical indications for which the drug is approved;
 
acceptance by physicians, major operators of clinics and patients of the drug as a safe and effective treatment;
 
the potential and perceived advantages of our drug candidates over alternative treatments;
 
the safety of drug candidates seen in a broader patient group, including its use outside the approved indications;
 
the cost of treatment in relation to alternative treatments;
 
the availability of adequate reimbursement and pricing by third parties and government authorities;
 
relative convenience and ease of administration;
 
the prevalence and severity of adverse side effects; and
 
 
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the effectiveness of our sales and marketing efforts.
 
If our drug candidates that obtain regulatory approval fail to achieve market acceptance or commercial success, the Company’s financial results will be adversely affected.
 
The commercial success of IRT-101, IRT-102 and IRT-103 depends, in part, on our ability to develop and market the drug in North America, and if we fail in these initiatives, our ability to generate future revenue in the United States could be significantly reduced.
 
If we successfully complete the Phase III program for our lead independent drug candidate, IRT-103 (LDN), we plan to retain commercial rights to IRT-103 as we have exclusive licensing rights. The Company may look to a partner for co-development and commercialization outside North America. Any of the following events or factors could have a material adverse effect on our ability to generate revenue from the commercialization of IRT-103:
 
we may be unable to successfully complete the clinical development of IRT-103;
 
our lack of experience in commercializing and marketing drug products;
 
we may not have or be able to obtain sufficient financial resources to develop and commercialize IRT-103;
 
we may not be able to identify a suitable co-development partner;
 
we, or any of our future partners, may fail to fulfill our responsibilities in a timely manner or fail to commit sufficient resources to the development, regulatory approval, and commercialization efforts related to IRT-103;
 
we, or any of our future partners, must comply with additional requests and recommendations from the FDA, including additional clinical trials;
 
we, or any of our future partners, may not obtain all necessary approvals from the FDA and similar foreign regulatory agencies;
 
IRT-103 must be manufactured in compliance with requirements of the FDA and similar foreign regulatory agencies and in commercial quantities sufficient to meet market demand;
 
IRT-103 may not achieve market acceptance by physicians, patients and third party payors;
 
IRT-103 (LDN) may not compete successfully against alternative products and therapies; and
 
we, or any pharmaceutical company, may independently develop products that compete with IRT-103 (LDN).
 
Changes in pharmaceutical and biotechnology industry trends could adversely affect TNIB’s operating results.
 
Industry trends, economic and political factors that affect pharmaceutical, biotechnology, medical device companies and academic/government entities sponsoring clinical research directly affect TNIB’s business. For example, many companies in such industries and government organizations have been hiring companies (like TNIB) to conduct large development projects. TNIB’s operations, financial condition and growth rate could be materially and adversely affected if these industries reduce outsourcing of such projects. In the past, mergers, product withdrawals, liability lawsuits and other factors in the pharmaceutical industry have slowed decision making by pharmaceutical companies and correlating government bodies significantly delaying and/or halting drug development projects. Continuation or increases in such trends could have an adverse effect on TNIB’s business. Additionally, numerous government agencies have undertaken efforts to control growing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and pharmaceutical companies. If future regulatory cost-containment efforts limit potential profits derived from new drugs, TNIB’s clients may reduce their drug discovery and development spending. A reduction in drug discovery and development spending could have a material adverse effect on the Company’s results and operations creating a significant reduction of TNIB’s revenue.
 
 
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We rely on third parties to conduct all our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize any of our drug candidates.
 
We currently do not have the ability to independently conduct clinical trials. We rely on medical institutions, clinical investigators, contract laboratories, collaborative partners and other third parties, such as clinical research organizations (“CROs”), to conduct clinical trials on our drug candidates. The third parties with which we contract for execution of our clinical trials play a significant role in the conduct of these trials and the subsequent collection and analysis of data. These third parties are not our employees, and except for contractual duties and obligations, we have limited ability to control the amount or timing of resources that they devote to our programs. In particular, we rely on outside sources and our own revenue to fund and conduct the current pivotal Phase III trials with respect to IRT-103 (LDN). Although we rely on these third parties to conduct our clinical trials, we remain responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol. Moreover, the FDA and foreign regulatory authorities require us to comply with regulations and standards, commonly referred to as current Good Clinical Practices (“cGCPs”) for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.
 
In addition, the execution of preclinical studies and clinical trials, and the subsequent compilation and analysis of the data produced, requires coordination among various parties. In order for these functions to be carried out effectively and efficiently, it is imperative that these parties communicate and coordinate with one another. Moreover, these third parties may also have relationships with other commercial entities, some of which may compete with us. In most cases, these third parties may terminate their agreements upon a material breach by us that is not cured within 30 days by providing us with 30 days’ prior written notice. Many of these agreements may also be terminated by such third parties under certain other circumstances, including our insolvency or our failure to comply with applicable laws. In general, these agreements require such third parties to reasonably cooperate with us at our expense for an orderly winding down of services of such third parties under the agreements. If the third parties conducting our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical trial protocols or cGCPs, or for any other reason, we may need to enter into new arrangements with alternative third parties, which could be costly, and our clinical trials may be extended, delayed or terminated or may need to be repeated, and we may not be able to obtain regulatory approval for or commercialize the drug candidate being tested in such trials.
 
If any of our drug candidates receive marketing approval, and the Company or others later identify undesirable side effects caused by the drug candidate, our ability to market and derive revenue from the drugs could be compromised.
 
If the Company or others identify undesirable side effects caused by one of our drug candidates, any of the following adverse events could occur:
 
regulatory authorities may withdraw approval of the drug or seize the drug;
 
we may be required to recall the drug or change the way the drug is administered;
 
additional restrictions may be imposed on the marketing or the manufacturing processes of the particular drug;
 
we may be subject to fines, injunctions or the imposition of civil or criminal penalties;
 
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
 
we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
 
 
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we could be sued and held liable for harm caused to patients;
 
the drug may become less competitive; and
 
our reputation may suffer.
 
Any of these could result in the loss of significant revenues, which would materially and adversely affect our results of operations and business.
 
We may need additional financing and may be unable to raise capital on acceptable terms, or at all, when needed, which could force us to delay, reduce or eliminate our research and development programs and other operations or commercialization efforts.
 
We are advancing multiple drug candidates through discovery and development and will require substantial funds to conduct development, including preclinical studies and clinical trials, of our drug candidates. Commercialization of any drug candidate will also require substantial expenditures. To further the development and commercialization efforts of our drug candidates, we may need additional financing to hire additional employees to co-promote drug candidates or to commercialize drug candidates that may not be covered by our current collaboration agreements.
 
As of December 31, 2012, we had approximately $330,000 in cash and cash equivalents. We believe that our available cash and cash equivalents will not be sufficient to fund our anticipated level of operations for the next 12 months. Our future financing requirements will depend on many factors, some of which are beyond our control, including:
 
the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;
 
the timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals;
 
the continuation and success of our strategic alliances and future collaboration partners;
 
the exercise of remaining options under current collaborative agreements;
 
the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, including litigation costs and the results of such litigation;
 
our ability to enter into additional collaboration, licensing, government or other arrangements and the terms and timing of such arrangements;
 
potential acquisition or in-licensing of other products or technologies; and
 
the emergence of competing technologies or other adverse market developments.
 
Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies. We currently have no understandings, commitments or agreements relating to any of these types of transactions.
 
Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings, government grants and contracts and/or strategic collaborations. Additional financing may not be available to us when we need it or it may not be available on favorable terms, if at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or our commercialization efforts. We may be required to enter into collaborative partnerships for one or more of our drug candidate programs at an earlier stage of development or on less favorable terms, which may require us to relinquish rights to some of our drug candidates that we would otherwise have pursued on our own.
 
 
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We may form additional strategic alliances in the future with respect to our independent programs, and we may not realize any benefits of such alliances.
 
We may form strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties with respect to our independent programs that we believe will complement or augment our existing business. For example, we plan to find a partner to co-develop and commercialize IRT-101, IRT-102 and IRT-103 (LDN) outside North America upon completion of clinical development of IRT-103 (LDN) CCX140 for the treatment of patients with pediatric Crohn’s Disease and Crohn’s Disease. We face significant competition in seeking appropriate strategic partners. The negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for any future product candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early a stage of development for collaborative effort and/or third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy. We cannot be certain that, following a strategic transaction or license, we will achieve the revenues or specific net income that justifies such transactions. Any delays in entering into new strategic partnership agreements related to our product candidates could also delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.
 
TNI BioTech intends to manufacture LDN and therefore must rely on third party manufacturing to supply the drug for clinical trials. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers. We may also face delays in the development and commercialization of our drug candidates.
 
The manufacture of pharmaceutical products in compliance with cGMPs requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including stability of the drug candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced FDA cGMP requirements, other federal and state regulatory requirements, and foreign regulations. If our manufacturers were to encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability to provide study drugs in our preclinical studies and clinical trials would be jeopardized. Any delay or interruption in the supply of preclinical study or clinical trial materials could delay the completion of our preclinical studies and clinical trials, increase the costs associated with maintaining our preclinical study and clinical trial programs and, depending upon the period of delay, require us to commence new trials at significant additional expense or terminate the studies and trials completely.
 
All manufacturers of our drug candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our component materials may be unable to comply with these cGMP requirements and with other FDA, state and foreign, regulatory requirements. The FDA or similar foreign regulatory agencies at any time may also implement new standards, or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of products. We have little control over our manufacturers’ compliance with these regulations and standards. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products, and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of our drug candidates or entail higher costs or impair our reputation.
 
We have assumed responsibility for supplying the Active Pharmaceutical Ingredient (“API”) for IRT-103 (LDN). Another pharmaceutical company currently manufactures the API for IRT-101 and IRT-102. Our current agreements with our suppliers do not provide for the entire supply of the API necessary for additional clinical trials or for full-scale commercialization. In the event that we and our suppliers cannot agree to the terms and conditions for them to provide some or all of our API clinical and commercial supply needs, or if any single source supplier terminates the agreement in response to a breach by us, we would not be able to manufacture the API on a commercial scale until a qualified alternative supplier is identified, which could also delay the development of, and impair our ability to commercialize, our drug candidates.
 
 
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Although alternative sources of supplies exist, the number of third party suppliers with the necessary manufacturing and regulatory expertise and facilities are limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of any API would be required to qualify under applicable regulatory requirements and would need to have sufficient rights to the method of manufacturing such ingredients under applicable intellectual property laws. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us.
 
We currently have only a limited distribution organization with no sales and marketing staff. If we are unable to develop sales and marketing and expand distribution capability on our own or through collaborations with marketing partners, we will not be successful in commercializing our future products.
 
We currently have only a limited distribution organization with no sales or marketing. If our products are approved for sale in the United States we will need to execute a number of sales and marketing agreements, but there can be no assurance that the Company will be able to sign an agreement to market and distribute our products. To the extent we rely on third parties for marketing and distributing our approved products, any revenue we receive will depend upon the efforts of third parties, which may not be successful, and are only partially within our control. Our reliance on third parties makes it likely that our product revenue is likely to be lower than if we directly marketed or sold our products. The Company’s collaborations may fail to develop or effectively commercialize our drug candidates because they cannot obtain necessary regulatory approvals, development or commercialization is not fiscally reasonable, they elect to pursue competitive products outside of the collaboration, or for other reasons. If we are unable to enter into arrangements with third parties to commercialize the approved products on acceptable terms or at all, we may not be able to successfully commercialize our future products or we will have to market these products ourselves, which will be expensive and require us to build our own sales force, which we do not have experience doing. We cannot assure you we will be successful in any of these initiatives. If we are not successful in commercializing our future products, either on our own or through collaborations with one or more third parties, our future product revenue will be materially adversely affected.
 
We will need to increase the size of our organization, but we may experience difficulties in managing growth.
 
As of December 31, 2012, we had 6 full time employees . We will need to continue to expand our managerial, operational, financial and other resources in order to manage our operations and clinical trials, continue our development activities and commercialize our drug candidates. Our current management, personnel systems and facilities may not be adequate to support this future growth. Our need to effectively execute our growth strategy requires that we:
 
manage our clinical trials effectively, including our phase II clinical trials for IRT-103 (LDN) which are being conducted at numerous trial sites throughout the world;
 
manage our internal development efforts effectively while carrying out our contractual obligations to licensors, contractors, collaborators, government agencies and other third parties;
 
continue to improve our operational, financial and management controls and reporting systems and procedures; and
 
identify, recruit, maintain, motivate and integrate additional employees.
 
We face substantial competition. Our competitors may discover, develop or commercialize products faster or more successfully than us.
 
 
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The biotechnology and pharmaceutical industries are highly competitive. We face significant competition from companies in the pharmaceutical, biotechnology and other related markets that are researching and marketing products designed to address Crohn’s Disease, multiple sclerosis, rheumatoid arthritis, other autoimmune diseases and inflammatory disorders, and cancer. Established pharmaceutical companies that currently sell or are developing drugs in our markets of interest include, for example, Abbott Laboratories, Amgen, AstraZeneca, Biogen Idec, Bayer, Elan, Johnson & Johnson, Merck, Merck Serono, Takeda, Novartis, Pfizer, Reata, Sanofi-Aventis and Teva. Many or all of these established competitors are also involved in research and drug development regarding various OFG receptors. Pharmaceutical and biotechnology companies which are known to be involved in immunotherapy research and related drug development include Pfizer, Bristol-Myers Squibb, Merck, Takeda, Sanofi-Aventis, Incyte, and UCB Pharma among others.
 
We are developing small molecule therapeutics that will compete with other drugs and alternative therapies that are currently marketed or are being developed to treat Crohn’s Disease, HIV/AIDS, rheumatoid arthritis, other autoimmune diseases and inflammatory disorders, and cancer. If approved for marketing by the FDA, IRT-103 (LDN), our lead Inflammatory Bowel Disease (“IBD”) drug candidate, would compete against existing IBD treatments such as Sulfasalazine ( Azulfidine ); Mesalamine ( Asacol, Rowasa ) Corticosteroids; Azathioprine ( Imuran ) and mercaptopurine ( Purinethol ); Infliximab ( Remicade ); Adalimumab ( Humira ); Certolizumab pegol ( Cimzia ); Methotrexate ( Rheumatrex ); Cyclosporine (Gengraf, Neoral, Sandimmune) and Natalizumab (Tysabri). Similarly, other future drug candidates we are pursuing would compete against numerous existing and established drugs and potentially against other novel drugs and therapies that are currently in development. We also anticipate that we will face increased competition in the future as new companies enter our target markets and scientific developments surrounding the chemokine system continue to develop.
 
Many of our competitors have greater name recognition and financial, manufacturing, marketing, research and drug development resources than we do. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors
 
We may be subject to costly product liability claims related to our clinical trials and drug candidates and, if we are unable to obtain adequate insurance or are required to pay for liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage, a material liability claim could adversely affect our financial condition.
 
Because we conduct clinical trials with human patients, we face the risk that the use of our drug candidates may result in adverse side effects to patients and to otherwise healthy volunteers in our clinical trials. We face even greater risks upon any commercialization of our drug candidates. Although we have product liability insurance for clinical trials, our insurance may be insufficient to reimburse us for any expenses or losses we may suffer, and we will be required to increase our product liability insurance coverage for our advanced clinical trials that we plan to initiate. We do not know whether we will be able to continue to obtain product liability coverage and obtain expanded coverage on acceptable terms, or at all. We may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage. There is also a risk that third parties that we have agreed to indemnify could incur liability. An individual may bring a product liability claim against us if one of our drug candidates or products cause, or is claimed to have caused, an injury or is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result in:
 
withdrawal of clinical trial volunteers, investigators, patients or trial sites;
 
the inability to commercialize our drug candidates;
 
decreased demand for our drug candidates;
 
regulatory investigations that could require costly recalls or product modifications;
 
 
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loss of revenues;
 
substantial costs of litigation;
 
liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourselves;
 
an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;
 
the diversion of management’s attention from our business; and
 
damage to our reputation and the reputation of our products.
 
Our business involves the use of hazardous materials. As a result, we, including our third party manufacturers, must comply with environmental laws and regulations, which may be expensive and restrict how we do business.
 
Our third party manufacturers’ activities and our own activities involve the controlled storage, use and disposal of hazardous materials, including the components of our pharmaceutical products, test samples and reagents, biological materials and other hazardous compounds. We and our manufacturers are subject to federal, state and local, and foreign laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these hazardous materials. We currently carry no insurance specifically covering environmental claims relating to the use of hazardous materials. Although we believe that our safety procedures for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials. In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and/or interrupt our business operations. In addition, if an accident or environmental discharge occurs, or if we discover contamination caused by prior operations, including by prior owners and operators of properties we acquire, we could be liable for cleanup obligations, damages and fines. The substantial unexpected costs we may incur could significantly harm our financial condition and results of operations.
 
Future financings may adversely affect our stockholders or impose restrictions on our assets or operations, which may harm our business.
 
If we raise additional capital by issuing equity securities or convertible debt securities, our existing stockholders’ ownership will be diluted and the terms of any new equity securities may have preferences over our common stock. If we raise additional capital through the issuance of debt securities, the debt will have rights senior to the holders of our common stock and may contain covenants that restrict our operational flexibility or impose liens or other restrictions on our assets. In addition, the terms of future financings may restrict our ability to raise additional capital, which would delay or prevent the further development or commercialization of our drug candidates.
 
If we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish potentially valuable rights to our current drug candidates, potential products or proprietary technologies, or grant licenses on terms that are not favorable to us. If adequate funds are not available, our ability to achieve profitability or to respond to competitive pressures would be significantly limited and we may be required to delay, significantly curtail or eliminate the development of one or more of our drug candidates.
 
We may be adversely affected by the current economic environment.
 
Our ability to attract and retain collaboration partners or customers, invest in and grow our business and meet our financial obligations depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States and inflationary pressures. We cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.
 
 
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We are exposed to risks associated with reduced profitability and potential financial instability of our collaboration partners or customers, many of which may be adversely affected by volatile conditions in the financial markets. For example, unemployment and underemployment, and the resultant loss of insurance, may decrease the demand for healthcare services and pharmaceuticals. If fewer patients are seeking medical care because they do not have insurance coverage, our collaboration partners or customers may experience reductions in revenues, profitability and/or cash flow that could lead them to reduce their support of our programs or financing activities. If collaboration partners or customers are not successful in generating sufficient revenue or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. This, in turn, could adversely affect our financial condition and liquidity. In addition, if economic challenges in the United States result in widespread and prolonged unemployment, either regionally or on a national basis, prior to the effectiveness of certain provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “Affordable Care Act”), a substantial number of people may become uninsured or underinsured. To the extent economic challenges result in fewer individuals pursuing or being able to afford our products once commercialized, our business, results of operations, financial condition and cash flows could be adversely affected.
 
Our internal computer systems, or the computer systems of other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our drug development programs.
 
Despite the implementation of security measures our internal computer systems and the computer systems of other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing clinical trials for any of our drug candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our drug candidates could be delayed.
 
TNIB’s revenue depends on a small number of industries and clients.
 
TNIB provides services to the pharmaceutical, biotechnology and medical device industries as well as academic and government organizations sponsoring clinical trials. TNIB’s revenue is highly dependent on expenditures by these clients. Accordingly, TNIB’s operations could be materially and adversely affected by the consolidation of these industries or one or more of the client companies or governmental organizations cutting back on spending or going out of business resulting in a decreased number of potential clients. If the number of potential clients further declines, any potential new client(s) may negotiate price discounts or other terms for services and products that are not favorable to TNIB. The loss or reduction of business from a significant client could have a material and adverse effect on the overall results of TNIB’s operations.
 
Clients may terminate or delay contracts for a variety of reasons, including but not limited, to the following:
 
testing products that fail to satisfy safety requirements;
 
products having undesirable clinical results;
 
the client deciding to forego a particular study;
 
inability to enroll enough patients for a study;
 
inability to recruit enough investigators for a study;
 
production problems causing shortages of the drug; and
 
actions by regulatory authorities.
 
 
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The loss or reduction of business from the termination or delay of a contract could have a material and adverse effect on the overall results of TNIB’s operations.
 
Dependence on and availability of Management.
 
TNIB’s future success depends on the efforts and abilities of principal members of its senior management and scientific staff to provide strategic direction, business development, operations management and maintenance of a cohesive and stable work environment. TNIB relies on the services of Dr. Nicholas P. Plotnikoff and Professor Fengping Shan. If we lost their services or the services of any other key member of management, it could be impossible to replace them
 
Scientists .
 
TNIB’s ability to maintain, expand and renew existing business with its clients and maximize potential business opportunities from new clients (in both the drug development and the drug discovery areas) depend on its ability to hire and retain scientists with necessary skills. The scientists working for TNIB must have the ability to lead ahead of continuing changes and trends in drug discovery and development technologies to create the most innovative products on the market in order to remain competitive within the drug development industry. TNIB faces risks, challenges and competition attracting and retaining experienced scientists and healthcare providers.
 
TNIB’s inability to hire qualified personnel may increase the workload for both existing and new personnel. TNIB may not be successful in attracting new healthcare providers, scientists and management or in retaining/motivating existing personnel. The shortage of experienced healthcare providers, scientists or other factors may lead to increased recruiting, relocation and compensation costs for the Company. Such increased costs may reduce profit margins or make hiring necessary experts (i.e. healthcare providers or scientists) impracticable. If TNIB is unable to attract or retain any of its key personnel its ability to execute a competitive and profitable business plan will be adversely affected. Services and products will be less competitive if not obsolete. If competing companies introduce superior technologies that compete with TNIB’s services and products, TNIB may not be able to make the necessary enhancements to its services and products that will maintain a competitive position in the marketplace. TNIB’s competitive position, business, revenues and financial condition will be materially and adversely affected.
 
Any failure by TNIB to comply with existing health care and drug regulations could harm its reputation, operating results, the quality of TNIB’s business strategy and the quality of TNIB’s products.
 
Any failure by TNIB to comply with existing health care and drug regulations could result in the termination of ongoing research and/or the disqualification of data for submission to regulatory authorities. Failure to comply with existing regulations will harm TNIB’s reputation, brand name, its prospects for immediate and future work and its operating results. For example, if TNIB fails to verify that informed consent is obtained from patient participants in connection with a particular clinical trial or grant deviations from the inclusion/exclusion criteria in a study protocol, the data collected from that trial could be disqualified at which point TNIB may be required to conduct the trial again at no further cost to its client. Furthermore, the issuance of a FDA notice based on a finding of a material violation of good clinical practice, good laboratory practice or good manufacturing practice requirements could materially and adversely affect TNIB.
 
Proposed and future legislation or regulation may increase the cost of TNIB’s business or limit its service and product offerings.
 
Federal, state, and/or international authorities might adopt healthcare legislation or regulation that are more burdensome than existing regulations. For example, recent product safety concerns and the creation of the Drug Safety Oversight Board could change the regulatory environment for drug products including the process for FDA product approval and post-approval safety surveillance. Such changes and other possible changes in regulation could increase TNIB’s expenses or limit its ability to offer some of its services or products. For example, the confidentiality of patient-specific information and the circumstances under which it may be released for inclusion in TNIB’s databases or used in other aspects of business are subject to substantial government regulation. Additional legislation or regulation governing the possession, use and dissemination of medical record information or other personal health information may require TNIB to implement new security measures requiring substantial expenditures or limiting the ability to offer services and products. These regulations might also increase costs by creating new privacy requirements for TNIB’s business mandating additional privacy procedures for its clinical research business.
 
 
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Requirements associated with being a public company will increase our costs significantly, as well as divert significant company resources and management attention.
 
Prior to this Form 10, we have not been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that will be required in order to adequately prepare for being a public company could be material. Compliance with the various reporting and other requirements applicable to public companies will also require considerable time and attention of management. In addition, the changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.
 
In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
 
If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, we may be subject to sanctions by regulatory authorities.
 
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal controls over financial reporting, beginning with our annual report for fiscal year 2013 which provides a management report on the internal controls over the Company’s financial reporting. If we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. We will be evaluating our internal control systems to allow management to report on, and our independent auditors to attest to, our internal controls. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are unable to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission (the “SEC”) or the NASDAQ Stock Market (“NASDAQ”). Any such action could adversely affect our financial results or investors’ confidence in us and could cause our stock price to fall. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which would entail expenditure of additional financial and management resources and could materially adversely affect our stock price.
 
If TNIB is unable to attract suitable and willing investigators and volunteers for clinical trials and product development, business may suffer.
 
TNIB’s clinical research studies rely on the accessibility and participation of physician investigators and volunteer subjects. Investigators are typically located at hospitals, clinics or other sites and supervise administration of the study drug to patients during the course of a clinical trial. Volunteer subjects generally include local individuals from where the studies are conducted. TNIB’s clinical research development business could be adversely affected if it is unable to attract suitable and willing investigators or volunteers on a consistent basis.
 
 
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The nature of TNIB’s business creates potential liability for personal injury claims that could affect the Company’s financial condition.
 
TNIB’s business involves the testing of new drugs and medical devices on human volunteers. If marketing approval is given to permit patients to use experimental drugs, TNIB is exposed to the risk of liability for personal injury or death to patients resulting from (among other things) possible unforeseen adverse side effects or improper administration of a drug or device. Many of these volunteers and patients are already seriously ill, thus at risk of further illness or death. TNIB could be materially and adversely affected both financially and reputationally if required to pay damages or incur defense costs in connection with a claim outside the scope of indemnification agreements TNIB has with its clients and collaborative partners. If any indemnification agreement is not performed in accordance with its terms, TNIB’s liability exceeds the amount of any applicable indemnification limits, or the amount of money awarded a potential defendant exceeds the amount of insurance coverage, TNIB may face large costs and untenable insurance rate risks in the future.
 
If serious or unexpected adverse side effects are identified during the development of our treatment, we may need to abandon or limit our development of some or all of our treatments.
 
All of our treatments are in preclinical or clinical development and their risk of failure is high. If our treatments are associated with serious or unexpected adverse effects, we may need to abandon their development or limit development to certain uses or subpopulations in which these effects are less prevalent, less severe or more acceptable from a risk-benefit perspective.
 
TNIB may not obtain government approval for its products and/or uses.
 
The development and commercialization of pharmaceutical products are subject to extensive governmental regulation in the United States and foreign countries. Government approvals are required to develop, market and sell potential drug candidates. Obtaining government approval to develop, market and sell drug candidates is time-consuming and expensive. The clinical trial results for a particular drug candidate might not satisfy necessary requirements to obtain government approvals. Even if TNIB is successful in obtaining all required approvals to market and sell a drug candidate, post-approval requirements and the failure to comply with other regulations could result in suspension or limitation of government approvals.
 
In connection with drug discovery activities outside of the United States, TNIB and its strategic partners will be subject to foreign regulatory requirements governing testing, approval, manufacturing, labeling, marketing and sale of pharmaceutical products. These requirements vary with location. Even if approval has been obtained for a product in the United States, approval in a foreign country must be obtained prior to marketing the product. The approval process in foreign countries may be more or less rigorous than the United States and the time required for approval may be longer or shorter. Clinical studies conducted outside of a specific country may not be acceptable. The approval of a pharmaceutical product in one country does not guarantee approval in another.
 
Even if approved, the products TNIB may develop and market may be later withdrawn from the market or subject to promotional limitations.
 
We may not be able to obtain the labeling claims necessary or desirable for the promotion of our treatments if approved. We may also be required to undertake post-marketing clinical trials. If the results of such post-marketing studies are not satisfactory or if adverse events or other safety issues arise after approval, the FDA or a comparable regulatory agency in another country may withdraw marketing authorization or may condition continued marketing on commitments from us that may be expensive and/or time consuming to complete. In addition, if we or others identify adverse side effects after any of our products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn and reformulation of our products, additional clinical trials, changes in labeling of our products and additional marketing applications may be required. Any reformulation or labeling changes may limit the marketability of our products if approved.
 

TNIB may not have enough trained personnel.
 
The novel nature of our products may result in fewer people being trained in or experienced with products of this type, which may make it difficult to recruit, hire and retain capable personnel for the research, development and manufacturing positions that will be required to continue development and commercialization of our treatment.
 
TNIB may incur substantial expenses by developing products that will never be successful, fully developed and/or commercialized.
 
TNIB has incurred, and expects to continue incurring, substantial research, development and other costs in connection with compound partnering agreements.
 
Our treatments, even if approved, may not be accepted in the marketplace; therefore, we may not be able to generate significant revenue, if any.
 
Even if TNIB products or other potential treatments that we develop in the future are approved for sale, physicians and the medical community may not ultimately use them or may use them only in applications more restricted than we anticipate. Our treatments, if successfully developed, will compete with a number of traditional products manufactured and marketed by major pharmaceutical and biotechnology companies. Our treatments may also compete with new products currently under development by such companies and others. Physicians will prescribe a product only if they determine, based on experience, clinical data, side effect profiles and other factors, that it is beneficial as compared to other products currently available and in use. Physicians also will prescribe a product based on their traditional preferences. Many other factors influence the adoption of new products, including patient perceptions and preferences, marketing and distribution restrictions, adverse publicity, product pricing, views of thought leaders in the medical community and reimbursement by government and private payers. Any of these factors could have a material adverse effect on our business, financial condition, and results of operations.
 
Health care reform measures could adversely affect our business.
 
In the United States and other jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations. Specifically, there have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs. Most recently, in March, 2010, the Patient Protection and Affordable Health Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), was enacted which includes measures to significantly change the way that health care is financed by both governmental and private insurers.
 
Many of the details regarding the implementation of the PPACA are yet to be determined, and at this time, it remains unclear what effect PPACA would have on our business, but there is a possibility that it will have a negative affect on TNIB.
 
Individual states have become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, designed to encourage importation from other countries and bulk purchasing. Also, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. These initiatives could reduce the demand for our products or result in lower than expected product pricing which could negatively affect our business, results of operations, financial condition and prospects.
 
In addition, given recent federal and state government initiatives directed at lowering the overall cost of healthcare, Congress and state legislatures will likely continue to focus on healthcare reform, the cost of prescription drugs and biologics and the reform of the Medicare and Medicaid programs. While we cannot predict the full outcome of any such legislation, it may result in decreased reimbursement for drugs and biologics. This could harm our ability to generate revenues.
 

TNIB’s operations may be affected by the occurrence of a natural disaster or other catastrophic event.
 
TNIB depends on its clients, investigators, collaboration partners, laboratories and other facilities for the continued operation of business. Although TNIB has contingency plans in effect for natural disasters or other catastrophic events, these events, including terrorist attacks, pandemic flu, hurricanes, ice storms, etc., could disrupt operations or prevent TNIB’s clients, investigators and collaboration partners from performing their necessary roles within TNIB. Although TNIB carries business interruption insurance policies and has provisions in its contracts for protection during certain natural disasters and other catastrophic events, TNIB might suffer a loss resulting in business interruptions exceeding the available coverage under such insurance policies or from events in which TNIB does not have coverage. Any natural disaster or catastrophic event affecting TNIB or its clients, investigators or collaboration partners could have a significantly negative impact on operations and financial performance.
 
Florida Law and our Articles of Incorporation may protect our Directors from certain types of lawsuits.
 
Florida law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment or other circumstances.
 
We may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect on us.
 
From time to time we expect to consider opportunities to acquire or make investments in other technologies, products and businesses that may enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. Potential and completed acquisitions and strategic investments involve numerous risks, including:
 
problems assimilating the purchased technologies, products or business operations;
   
issues maintaining uniform standards, procedures, controls and policies;
   
unanticipated costs associated with acquisitions;
   
diversion of management’s attention from our core business;
   
adverse effects on existing business relationships with suppliers and customers;
   
risks associated with entering new markets in which we have limited or no experience;
   
potential loss of key employees of acquired businesses; and
   
Increased legal and accounting compliance costs.

We have no current commitments with respect to any acquisition or investment. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired business, product or technology into our business or retain any key personnel, suppliers or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable target businesses and to obtain any necessary financing. These efforts could be expensive and time-consuming, and may disrupt our ongoing business and prevent management from focusing on our operations. If we are unable to integrate any acquired businesses, products or technologies effectively, our business, results of operations and financial condition will be materially adversely affected.
 
 
We may expend our limited resources to pursue a particular opportunity and fail to capitalize on current research and products that may be more profitable or for which there is a greater likelihood of success.
 
Because we have limited financial and managerial resources, we have focused on specific research programs, treatments, and products. As a result, we may forego or delay pursuit of opportunities with other products or research that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial treatments or profitable market opportunities. Our spending on current and future research and development programs may not yield any commercially viable treatments.
 
We are subject to risks associated with our non-U.S. operations .
 
The Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made. Because of the predominance of government-sponsored healthcare systems around the world, many of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws. Our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction and result in a material adverse effect on our business, results of operations and financial condition. We also could suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures, including further changes or enhancements to our procedures, policies and controls, as well as potential personnel changes and disciplinary actions.
 
Furthermore, we are subject to the export controls and economic embargo rules and regulations of the United States, including, but not limited to, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce. These regulations limit our ability to market, sell, distribute or otherwise transfer our products or technology to prohibited countries or persons. A determination that we have failed to comply, whether knowingly or inadvertently, may result in substantial penalties, including fines and enforcement actions and civil and/or criminal sanctions, the disgorgement of profits, the imposition of a court-appointed monitor, the denial of export privileges and/or an adverse effect on our reputation.
 
These and other factors may have a material adverse effect on our international operations or on our business, results of operations and financial condition generally.
 
Risks Related to Intellectual Property
 
TNIB’s inability to adequately protect its intellectual property rights could hurt business.
 
TNIB’s success will depend on its ability to protect the compositions, compounds, therapies, technologies, processes, software and other technologies developed during the drug development process. Additionally, one of TNIB’s core business strategies is in-licensing and/or out-licensing rights to drug candidates, thus entering into collaborations with pharmaceutical and biotechnology companies for the development of proprietary drug candidates. Inability to protect such intellectual property rights could materially and adversely affect TNIB’s business.
 
Any patents or licenses TNIB secures may not provide valuable protection for the covered technology or products. TNIB’s patent applications may never result in the issuance of a patent. Competitors might develop similar products or methods not covered by TNIB’s issued patent claims. Additionally, an issued patent might be narrowed or invalidated by a court challenge. The value of an issued patent could also diminish if a patent is issued to a competitor that blocks TNIB’s ability to use its patented technology. If blocked, TNIB may be forced to stop using some or all of its technology or may be forced to license technology from third parties on unfavorable terms.
 
 
TNIB also relies on copyright, trademark and trade secret protection in addition to patent protection. In an effort to maintain the confidentiality and ownership of intellectual property, TNIB requires its employees, consultants and advisors to execute confidentiality and proprietary information agreements. These agreements and other procedures may not provide TNIB with adequate protection against improper use or disclosure of confidential information. In the event of unauthorized use or disclosure, adequate remedies may not exist or may not be feasible. Furthermore, TNIB may hire scientific personnel formerly employed by other companies involved in one or more areas similar to the activities TNIB conducts. In certain situations, TNIB’s confidentiality and proprietary information agreements might conflict with or be subject to the rights of third parties with whom employees, consultants or advisors have prior employment and consulting relationships. Although TNIB requires employees and consultants to maintain the confidentiality of such confidential information from previous employers, both the company and these individuals may be subject to allegations of trade secret misappropriation or other similar claims as a result of their prior affiliations. Finally, other individuals not connected to TNIB in any way may independently develop substantial and equivalent proprietary information or otherwise gain access to TNIB’s trade secrets. TNIB’s failure to protect such proprietary information and techniques might inhibit or limit its ability to exclude competitors from the market and execute business strategies.
 
The drug discovery and development industry has a history of patent and other intellectual property litigation; thus, TNIB may be involved in costly intellectual property lawsuits.
 
There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. We or one of our collaborators may be subject to third party claims in the future that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages, including treble damages and attorney’s fees if we are found to be willfully infringing a third party’s patents. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or drug candidate that is the subject of the suit. As a result of patent infringement claims, or in order to avoid potential claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or forced to redesign it, or to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms. This could harm our business significantly.
 
In addition to infringement claims against us, if third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings with the United States Patent and Trademark Office (“USPTO”) to determine the priority of invention. We may also become involved in similar opposition proceedings in the European Patent Office regarding our intellectual property rights with respect to our products and technology.
 
Restrictions on our patent rights may limit our ability to prevent third parties from competing against us .
 
Our success will depend, in part, on our ability to obtain and maintain patent protection for our drug candidates, preserve our trade secrets, prevent third parties from infringing upon our proprietary rights and operate without infringing upon the proprietary rights of others. Composition of Matter patents on APIs are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, as they apply without regard to any method of use. Entirely new individual chemical compounds, often referred to as new chemical entities, are typically entitled to Composition of Matter coverage. However, we cannot be certain that the current law will remain the same, or that our drug candidates will be considered novel and non-obvious by the USPTO and courts.
 
In addition to Composition of Matter patents and patent applications, we also have filed Method of Use patent applications. This type of patent protects the use of the product only for the specified method. However, this type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if these competitors do not actively promote their product for our targeted indication, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of Method of Use patents, the practice is common and such infringement is difficult to prevent or prosecute.
 
 
Patent applications in the United States and most other countries are confidential for a period of time until they are published. The publication of discoveries in scientific or patent literature typically lags actual discoveries by several months or more. As a result, we cannot be certain whether the Company or another inventor were the inventors of the issued patents and applications or that the Company or another inventor were the first to conceive of the inventions covered by such patents and pending patent applications or that the Company or another inventor were the first to file patent applications covering such inventions.
 
We have numerous issued patents and some patent applications pending before the USPTO. The protection may lapse before we manage to obtain commercial value from the patents, which might result in increased competition and materially affect our position in the market.
 
We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.
 
Many of our employees were previously employed at universities, biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to commercialize, or prevent us from commercializing our drug candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
 
Some of our intellectual property that is discovered through government funded programs is subject to federal regulation such as “march-in” rights, certain reporting requirements, and a preference for United States industry. Compliance with such regulations may limit our exclusive rights, subject us to expenditure of resources with respect to reporting requirements, and limit our ability to contract with foreign manufacturers.
 
Some of our existing drug candidates, including LDN and MENK, and some of our research and development work are funded, at least in part, by the U.S. government and are therefore subject to certain federal regulations. For example, some of our research and development work on vaccine adjuvants and immunomodulation for biothreat applications are funded by government research grants. In addition, as noted on several of our patents were supported, at least in part, by the National Institute of Health (“NIH”) funding (U19-AI056690-01). Under the “march-in” provisions of the Bayh-Dole Act, the government may have the right under limited circumstances to require us to grant exclusive, partially exclusive or non-exclusive rights to third parties for intellectual property discovered through the government-funded program. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the new invention or because action is necessary to alleviate health or safety needs of the public. Intellectual property discovered under the government-funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. Such intellectual property is also subject to a preference for U.S. industry, which may limit our ability to contract with foreign product manufacturers for products covered by such intellectual property. We plan to apply for additional U.S. government funding, and it is possible that we may discover compounds or drug candidates as a result of such funding. Intellectual property under such discoveries would be subject to the applicable provisions of the Bayh-Dole Act.
 
Risks Related to Government Regulation
 
The regulatory approval process is expensive, time consuming and uncertain and may prevent us or our collaboration partners from obtaining approvals for the commercialization of some or all of our drug candidates.
 
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries which regulations differ from country to country. Neither we nor our collaboration partners are permitted to market our drug candidates in the United States until we receive approval of a NDA from the FDA. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our drug candidates. Obtaining approval of an NDA can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including:
 

  
warning letters;
 
  
civil and criminal penalties;
 
  
injunctions;
 
  
withdrawal of approved products;
 
  
product seizure or detention;
 
  
product recalls;
 
  
total or partial suspension of production; and
 
  
refusal to approve pending NDAs or supplements to approved NDAs.
 
Prior to receiving approval to commercialize any of our drug candidates in the United States or abroad, we and our collaboration partners must demonstrate with substantial evidence from well controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities abroad, that such drug candidates are safe and effective for their intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. Even if we and our collaboration partners believe the preclinical or clinical data for our drug candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering any of our drug candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials of our drug candidates and result in the FDA or other regulatory authorities denying approval of our drug candidates for any or all targeted indications.
 
Regulatory approval of an NDA or NDA supplement is not guaranteed, and the approval process is expensive and may take several years. The FDA also has substantial discretion in the approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon or repeat clinical trials, or perform additional preclinical studies and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the drug candidate, the disease or condition that the drug candidate is designed to address, and the regulations applicable to any particular drug candidate. The FDA can delay, limit or deny approval of a drug candidate for many reasons, including, but not limited to, the following:
 
  
a drug candidate may not be deemed safe or effective;
 
  
FDA officials may not find the data from preclinical studies and clinical trials sufficient;
 
  
the FDA might not approve our or our third party manufacturer’s processes or facilities; or
 
  
the FDA may change its approval policies or adopt new regulations.
 
If any of our drug candidates fail to demonstrate safety and efficacy in clinical trials or do not gain regulatory approval, our business and results of operations will be materially and adversely harmed.
 
 
Even if we receive regulatory approval for a drug candidate, we will be subject to 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.
 
Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our drug candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S. regulatory authorities approve any of our drug candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with current cGMP regulations which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. If we or a regulatory authority discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing. If we, our drug candidates or the manufacturing facilities for our drug candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S. regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including:
 
  
warning letters;
 
  
civil or criminal penalties;
 
  
injunctions;
 
  
suspension of or withdrawal of regulatory approval;
 
  
suspension of any ongoing clinical trials;
 
  
voluntary or mandatory product recalls and publicity requirements;
 
  
refusal to approve pending applications for marketing approval of new drugs or supplements to approved applications filed by us;
 
  
restrictions on operations, including costly new manufacturing requirements; or
 
  
seizure or detention of our products or import bans.
 
The regulatory requirements and policies may change and additional government regulations may be enacted for which we may also be required to comply. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or in other countries. If we are not able to maintain regulatory compliance, we will not be permitted to market our future products and our business will suffer.
 
The availability of adequate third-party coverage and reimbursement for newly approved drugs is uncertain, and failure to obtain adequate coverage and reimbursement from third-party payors could impede our ability to market any future products we may develop and could limit our ability to generate revenue.
 
There is significant uncertainty related to the third-party payor coverage and reimbursement of newly approved drugs. The commercial success of our future products in both domestic and international markets depends on whether such third-party coverage and reimbursement is available for our future products. Governmental payors, including Medicare and Medicaid, health maintenance organizations and other third-party payors are increasingly attempting to manage their healthcare expenditures by limiting both coverage and the level of reimbursement of new drugs and, as a result, they may not cover or provide adequate reimbursement for our future products. These payors may not view our future products as cost-effective, and coverage and reimbursement may not be available to our customers or may not be sufficient to allow our future products to be marketed on a competitive basis. Third-party payors are exerting increasing influence on decisions regarding the use of, and coverage and reimbursement levels for, particular treatments. Such third-party payors, including Medicare, are challenging the prices charged for medical products and services, and many third-party payors limit or delay coverage and reimbursement for newly approved healthcare products. In particular, third-party payors may limit the covered indications. Cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues. If the prices for our drug candidates decrease or if governmental and other third-party payors do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.
 
 
Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.
 
We intend to seek a distribution and marketing partner for IRT-101, IRT-102 and IRT-103 (LDN) outside North America that may market future products in international markets. In order to market our future products in the European Economic Area (“EEA”) (which is comprised of the 27 member states of the European Union (“EU”) plus Norway, Iceland and Liechtenstein) and many other foreign jurisdictions, we must obtain separate regulatory approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization (“MA”). There are two types of marketing authorizations:
 
  
The Community MA is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency (“EMA”), and is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.
 
  
National MAs, which are issued by the competent authorities of the Member States of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a Member State of the EEA, this National MA can be recognized in another Member State through the Mutual Recognition Procedure. If the product has not received a National MA in any member state at the time of application, it can be approved simultaneously in various member states through the Decentralized Procedure.
 
Under the procedures described above, before granting the MA, the EMA or the competent authorities of the member states of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
 
We have had limited interactions with foreign regulatory authorities. The approval procedures vary among countries, can involve additional clinical testing, and require time to obtain approval that may differ from that required to obtain FDA approval. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and even if we file we may not receive necessary approvals to commercialize our products in any market.
 
Healthcare reform measures could hinder or prevent the commercial success of our drug candidates .
 
In the United States, there have been and we expect there will continue to be a number of legislative and regulatory changes to the healthcare system. These changes could affect our future revenues and profitability and the future revenue and profitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services. For example, in March 2010, United States president Barack Obama signed one of the most significant healthcare reform measures in decades, the Affordable Care Act. It contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impact existing government healthcare programs and will result in the development of new programs. The Affordable Care Act, among other things:
 

  
imposes a non-deductible annual fee on certain pharmaceutical manufacturers or importers who sell “branded prescription drugs,” effective in 2011;
 
  
increases the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1%;
 
  
requires collection of rebates for drugs paid by Medicaid managed care organizations;
 
  
requires manufacturers to participate in a coverage gap discount program, under which manufacturers must agree to offer 50% point-of-sale discounts off of negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D, effective January 2011; and
 
  
mandates a further shift in the burden of Medicaid payments to the states.
 
A number of states have challenged the constitutionality of certain provisions of the Affordable Care Act, and many of these challenges are still pending final adjudication in several jurisdictions as well as the United States Supreme Court. Congress has also proposed a number of legislative initiatives, including possible repeal of the Affordable Care Act. At this time, it remains unclear whether there will be any changes made to the Affordable Care Act, whether to certain provisions or its entirety. We cannot assure you that the Affordable Care Act, as currently enacted or as amended in the future, will not adversely affect our business and financial results and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.
 
In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of health care may adversely affect:
 
  
our ability to set a price we believe is fair for our products;
 
  
our ability to generate revenues and achieve or maintain profitability; and
 
  
the availability of capital.
 
If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
 
Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate include, without limitation:
 
  
the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
 
  
the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government, and which may apply to entities like us which provide coding and billing advice to customers;
 
 
  
federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; and
 
  
the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
 
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert Management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.
 
Risks Related to our Common Stock
 
Because of their significant stock ownership, our chief executive officer, our other executive officers, and our directors and principal stockholders may be able to exert control over us and our significant corporate decisions.
 
This concentration of ownership may harm the value of our common stock by, among other things:
 
delaying, deferring or preventing a change in control of our company;
   
impeding a merger, consolidation, takeover or other business combination involving our company; or
   
causing us to enter into transactions or agreements that are not in the best interests of all stockholders

The price of our common stock may be volatile, and you may not be able to resell your shares .
 
An active and liquid trading market for our common stock may not develop or be sustainable. Shareholders may be unable to sell shares of common stock at or above their purchase price due to fluctuations in the market price of our common stock. Factors that could cause volatility in the market price of our common stock include, but are not limited to:
 
  
results from, and delays in, clinical trial programs relating to our drug candidates, including the ongoing and planned clinical trials for IRT-103 (LDN), IRT-101 and IRT-102 and other drug candidates;
 
  
announcements of regulatory approvals or disapprovals of our drug candidates including IRT-103 (LDN), IRT-101 and IRT-102 or delays in any regulatory agency review or approval processes;
 
  
failure or discontinuation of any of our research programs; 
 
  
announcements relating to future collaborations or our existing collaborations;
 
  
general economic conditions in the United States and abroad;
 
  
acquisitions and sales of new products, technologies or business;
 
  
delays in the commercialization of any of our drug candidates;
 
 
  
market conditions in the pharmaceutical, biopharmaceutical and biotechnology sectors; 
 
  
the issuance of new or changed securities analysts’ reports or recommendations regarding us, our competitors or our industry in general;
 
  
actual and anticipated fluctuations in our quarterly operating results; 
 
  
disputes concerning our intellectual property or other proprietary rights; 
 
  
introduction of technological innovations or new products by us or our competitors;
 
  
manufacturing issues related to our drug candidates for clinical trials or future products for commercialization;
 
  
market acceptance of our future products;
 
  
deviations in our operating results from the estimates of analysts; 
 
  
third party payor coverage and reimbursement policies;
 
  
new legislation in the United States relating to the sale or pricing of pharmaceuticals;
 
  
FDA or other U.S. or foreign regulatory actions affecting us or our industry; 
 
  
product liability claims or other litigation or public concern about the safety of our drug candidates or future drugs; 
 
  
our ability to obtain necessary intellectual property licenses including, if necessary, those relating to IRT-103 (LDN) and other drug candidates;
 
  
the outcome of any future legal actions to which we are a party;
 
  
sales of our common stock by our officers, directors or significant stockholders;
 
  
frequent, irregular, under market, or large sales of shares of our common stock by any shareholder;
 
  
additions or departures of key personnel; and
 
  
external factors, including natural disasters and other crises.
 
In addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation suits against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.
 
Future sales of our common stock or securities convertible or exchangeable for our common stock may depress our stock price.
 
If our existing stockholders or holders of our convertible notes, options or warrants sell, or indicate an intention to sell substantial amounts of our common stock in the public market, the trading price of our common stock could decline. The perception in the market place that these sales may occur could also cause the trading price of our common stock to decline.
 
 
Certain holders of shares of our common stock, warrants to purchase our common stock, and shares of common stock issuable upon exercise of warrants will be entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. In addition, our directors may, and we expect that our executive officers, will establish programmed selling plans under Rule 10b5-1 of the Exchange Act, for the purpose of effecting sales of our common stock. Any sales of securities by these stockholders, or the perception that those sales may occur, including the entry into such programmed selling plans, could have a material adverse effect on the trading price of our common stock.
 
If we sell shares of our common stock in future financings, common stockholders may experience immediate dilution and, as a result, our stock price may decline.
 
We may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock. As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such a discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock.
 
Provisions of our charter documents or Florida law could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for you to change management.
 
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors.
 
We do not anticipate paying any cash dividends on our capital stock in the foreseeable future, therefore capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
 
We have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of the common stock will be your sole source of gain for the foreseeable future.
 
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
 
The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
 
Our board of directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.
 
Our amended and restated certificate of incorporation authorizes our board of directors, without the approval of our stockholders, to issue shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value. We do not currently have any class of preferred stock authorized.
 
 
Our shares may be subject to the “penny stock” rules, which may subject you to restrictions on marketability and limit your ability to sell your shares.
 
Broker-dealer practices in connection with transactions in “Penny Stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission (the “SEC”). Penny stocks generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer must make a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. The Company’s securities may be subject to the penny stock rules, and investors may find it more difficult to sell their securities.
 
The market price of our Common Stock may fluctuate significantly, which could cause a decline in value of your shares.
 
The market price of our Common Stock may fluctuate significantly in response to factors, some of which are beyond our control. The market price of our Common Stock could be subject to significant fluctuations and the market price could be subject to any of the following factors:
 
  
our failure to achieve and maintain profitability;
 
  
changes in earnings estimates and recommendations by financial analysts;
 
  
actual or anticipated variations in our quarterly and annual results of operations;
 
  
changes in market valuations of similar companies;
 
  
announcements by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments;
 
  
loss of significant clients or customers;
 
  
loss of significant strategic relationships;
 
  
variations in the level of expenses related to our drug candidates or future development programs;
 
  
wholesalers’ buying patterns;
 
  
addition or termination of clinical trials or funding support;
 
  
regulatory developments affecting our drug candidates or those of our competitors;
 
  
the Company’s sales decrease internationally;
 
  
ability to secure new government contracts and allocation of our resources to or away from performing work under government contracts; and
 
  
general market, political and economic conditions.
 
 
Recently, the stock market in general has experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of shares of our Common Stock, which could cause a decline in the value of our shares. Price volatility may be worse if the trading volume of our Common Stock is low.
 
We will need additional capital, which we may be unable to obtain; should we fail to obtain sufficient financing, our potential revenues will be negatively impacted.
 
We may have insufficient revenues to cover our operating costs or be unable to obtain financing in the amounts needed or on terms acceptable to us, if at all, which will negatively affect our ability to complete development of our business, establish a marketing platform and revenue generating operations. Additionally, we will have legal and accounting costs associated with being an SEC reporting company should our registration statement be declared effective. You should consider the risks that we will be unable to obtain adequate capital financing, which will delay our operations, lead to accumulated losses, and negatively affect our ability to complete development of our services and to generate revenues.
 
Our Common Stock is quoted on the OTC Pink Market, which may have an unfavorable impact on our stock price and liquidity.
 
Our Common Stock is currently quoted on the OTC Pink Market under the trading symbol “TNIB.” The OTC Pink Market is a significantly more limited market than the New York Stock Exchange or NASDAQ. The quotation of our shares on the OTC Pink Market may result in a less liquid market available for existing and potential shareholders to trade shares of our Common Stock, could depress the trading price of our Common Stock and could have a long-term adverse impact on our ability to raise capital in the future.
 
If we fail to remain current on our SEC reporting requirements, we could be removed from any market on which our common stock trades, which may limit the liquidity of our stock and the price of our stock.
 
Companies trading on the OTCQB or OTC Bulletin Board must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTCQB or OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTCQB or OTC Bulletin Board. As a result, the market liquidity and the stock price for our securities would be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.
 
We may not be able to operate our business or implement our operating policies and strategies successfully.
 
The results of our operations are dependent on many factors, including, without limitation, readily accessible funding in the financial markets and our ability to cost-effectively manage and produce events and productions as well as overall economic conditions. We may not be able to maintain any agreements with our lenders on favorable terms or at all. Furthermore, we may not be able to operate our business successfully or implement our operating policies and strategies as described in this Form 10, which could result in the loss of some or all of your investment.
 
ITEM 2. FINANCIAL INFORMATION.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with the Financial Statements of the Company and notes thereto included elsewhere in this Registration Statement.
 
Forward Looking Statements
 
The following information specifies certain forward-looking statements of the management of the Company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable, possible, should, continue, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information statement have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
 
 
The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements. Such forward-looking statements include statements regarding our anticipated financial and operating results, our liquidity, goals and plans.
 
All forward-looking statements in this Registration Statement are based on information available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.
 
Overview
 
We have invested a significant portion of our time and financial resources in the acquisition and development of our most advanced drug candidate, IRT-103 low-dose naltrexone (“LDN”). While we currently have 3 other drug candidates in clinical trials, we anticipate that our ability to generate significant product revenues in the near term will depend primarily on the successful development, regulatory approval, marketing and commercialization of IRT-103 (LDN) by us or by one of our potential partners. It is uncertain whether IRT-103 (LDN) will have successful results in its development, regulatory approval, marketing and commercialization.
 
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, the transition to profitability is dependent upon the successful development, approval, and commercialization of its product candidate and achieving a level of revenue 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 funds. 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.
 
Results of Operations – Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
 
Revenues
 
We had no revenues from operations for the years ended December 31, 2012 and 2011. We do not anticipate having any significant future revenues until we have sufficiently funded operations.
 
Operating Expenses
 
Selling, general and administrative expenses were $1,361,228 for 2012, as compared to $0 for 2011. We anticipate that certain operating expenses will continue to increase for fiscal year 2013 as we continue to build our infrastructure and develop our products. Our total operating expenses were $153,088,578 in 2012, compared to $0 in 2011, primarily due to the impairment of goodwill.
 
The Company’s carrying value of goodwill is the residual of the purchase price over the fair value of the net assets acquired from various acquisitions including the acquisition of TNI BioTech IP, Inc. In accordance with ASC Topic 350, “Goodwill and Other Intangible Assets ,” goodwill and intangible assets with indefinite useful lives are not amortized. The Company tests goodwill for impairment at the reporting unit level on an annual basis, as of December 31, or whenever potential impairment triggers occur, such as a significant change in business climate or regulatory changes that would indicate that an impairment may have occurred. Goodwill and indefinite lived intangible assets are required to be tested for impairment at least annually. The Company may use a qualitative test, known as “Step 0” or a two-step quantitative method to determine whether impairment has occurred. Based on the two-step tests performed during the quarter ended December 31, 2012, the Company determined that there was a material impairment of goodwill and recorded an impairment of $98,000,000. See Notes to the Financial Statements.
 
 
Liquidity
 
Liquidity is measured by our ability to secure enough cash to meet our contractual and operating needs as they arise. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. Our cash flows from financing activities were primarily derived from the sale of common stock sold pursuant to a private placement. We had cash of $313,095 at the end of year 2012, compared to $12 at the end of year 2011.
 
Our cash reserves will not be sufficient to meet our operational needs and we need to raise additional capital to pay for our operational expenses and provide for capital expenditures. Above the basic operational expenses, which are estimated at $150,000 per month,   we estimate that we need approximately $7-15 Million USD in 2013 to fully develop our products and for phase III clinical trials for Crohn’s disease. If we are not able to raise additional working capital, we may have to cease operations altogether.
 
For the years ended December 31, 2012 and 2011, we had net cash provided by (used in) operating activities from continuing operations of ($944,466) and ($38), respectively. The decrease in 2012 is primarily due to the loss of $175,220,849 from continuing operations. For the years ended December 31, 2012 and 2011, we had net cash used in investing activities from continued operations of ($1,062) and $0, respectively. The decrease in 2012 is due to the purchase of computer equipment.
 
We issued a total of 7,285,000 shares of common stock for cash in 2012, which generated $1,136,500 in proceeds. We additionally generated $146,128 from issued notes payable in 2012, compared to $0 of proceeds generated from issued notes in 2011.
 
Summary
 
Our ability to continue as a going concern is dependent entirely on raising funds through the sale of equity or debt. We anticipate that we will continue our attempt to raise capital through private equity transactions, develop a credit facility with a lender or the exercise of options and warrants; however, such additional capital may not be available to us at acceptable terms or available at all. In the event that we are unable to obtain additional capital, we would be forced to cease operations altogether.
 
Off-Balance Sheet Arrangements
 
During the year ended December 31, 2012, 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 3. PROPERTIES.
 
Bethesda Office
 
TNIB’s headquarters are located at 6701 Democracy Boulevard, Suite 300, Bethesda, Maryland 20817. Dr. Herberman is the TNIB executive stationed at the Bethesda Office. The Company also leases office space in Orlando, Florida on a month-to-month basis.
 
Malawi Clinic
 
The Company has begun preparing its Malawi Clinic. It is currently being cleaned and painted and the equipment is being installed in the building. Management anticipates that the Clinic will be open within 6 months.
 
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
The following table sets forth, as of the date of this filing, certain information concerning the beneficial ownership of our common stock by (i) each stockholder known by us to own beneficially 10% or more of our outstanding common stock; (ii) each director; (iii) each named executive officer; and (iv) all of our executive officers and directors as a group, and their percentage ownership and voting power.
 
Name and Address
 
Amount of Beneficial Ownership(1)
   
Percentage of
Class %
 
             
Nicholas Plotnikoff
    8,000,000 (2)     14.9  
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
Eugene Youkilis
    1,000,000 (3)     1.9  
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
Noreen Griffin
    3,900,000 (4)     7.3  
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
Gloria Herndon
    1,684,182 (5)     3.1 (6)
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
Christopher Pearce
    4,900,000 (6)     9.1  
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
Fengping Shan
    1,500,000       2.8  
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
Dr. Ronald Herberman
    1,000,000 (7)     1.9  
6701 Democracy Blvd. #300
               
Bethesda, Maryland 20817
               
                 
All directors and officers as a group (7 persons)
    21,984,182       41.0  
_________________
 
(1)
Except as otherwise indicated, each person possesses sole voting and investment power with respect to the shares shown as beneficially owned.
 
(2)
These shares are held by the Plotnikoff Family Trust
 
(3)
1,000,000 shares are held in the name of CDR Youkilis, LLC, Eugene Youkilis is the manager
 
(4)
Represents 300,000 shares held in the name of Griffin Enterprises Group, LLC, Ms. Griffin is the manager; 1,000,000 shares held by the Griffin Family Trust, 600,000 held by Noreen Griffin, 1,000,000 shares issuable under her employment agreement and 1,000,000 shares issuable under her stock option warrants.
 
(5)
Represents 4,182 shares held by GB Investment Holdings Ltd, 180,000 held by Gloria Herndon and 1,500,000 held by The Gloria Herndon 2010 Irrevocable Trust
 
(6)
Represents 1,000,000 shares issuable upon the exercise of options, 1,000,000 shares issuable under his employment agreement, 1,000,000 held by Chris Pearce and 1,900,000 held by the Pearce Family Trust
 
(7)
These shares are held by Harriet Herberman
 
Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of our common stock, except to the extent authority is shared by spouses under community property laws. Unless otherwise indicated below, the address for beneficial ownership shall be the Company’s address at 6701 Democracy Blvd., Suite 300, Bethesda, Maryland 20817.
 
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
 
Our directors and executive officers and additional information concerning them are as follows:
 
Name
 
Age
 
Term
 
Position
Noreen Griffin
 
60
 
2 Years
 
Chief Executive Officer and Director
Dr. Nicholas Plotnikoff
 
82
 
1 Year
 
Non-Executive Chairman of the Board
Christopher Pearce
 
69
 
2 Years
 
Chief Operating Officer and Director (*)
Dr. Eugene Youkilis
 
74
 
2 Years
 
President and Director
Peter Aronstam
 
61
     
Chief Financial Officer
Dr. Fengping Shan
 
54
     
Chief Science Officer and Director
Dr. Gloria B. Herndon
 
62
 
1 Year
 
Director and Advisory Board
Dr. Ronald Herberman
 
72
     
Chief Medical Officer and Director of Research and Development
_____________
(*) Mr. Pearce began his term as Chief Financial Officer of TNIB. Upon the appointment of Mr. Aronstam as Chief Financial Officer on January 1, 2013, Mr. Pearce was appointed Chief Operating Officer.
 
Directors and Officers
 
Dr. Nicholas Plotnikoff, Non-Executive Chairman of the Board
 
Professor Plotnikoff has a Ph.D. in Pharmacology and has over 20 years experience in the pharmaceutical industry working in Pharmacology, Toxicology and Clinical Research. Dr. Plotnikoff was a Professor of Pharmacology at the University of Illinois Medical Center in Chicago. Dr. Plotnikoff helped develop the immunological effects of MENK. He successfully managed the project teams that developed the new drug applications (“NDA”) on Traxene (Valium-like tranquilizer) and Cylert (non-amphetamine psychostimulant).
 
In his basic research, Dr. Plotnikoff was the first to identify the central nervous system effects of hypothalamic releasing factors (brain hormones), resulting in clinical developments for the treatment of depression and Parkinson’s disease. Dr Plotnikoff co-authored 25 publications with Dr. Andrew Schally, covering basic research in the field of depression and Parkinson’s disease. Dr. Plotnikoff was issued a number of international patents for the use of MENK in HIV/AIDS and cancer. TNI BioTech acquired the patents in 2012.
 
Noreen Griffin, Founder, Chief Executive Officer and Director
 
Noreen Griffin is one of the Founders and is the Chief Executive Officer of TNI BioTech, Inc. Ms. Griffin was a vital part of the acquisition of the patents and therapies involving MENK and LDN. She was involved with the inventors and patent holders for over 5 years before deciding to join the team that formed TNI BioTech, Inc.
 
Ms. Griffin has over 25 years of industry experience having founded and led a number of startup companies. She has played an integral role in raising multiple rounds of private and venture capital funds on behalf of clients. Ms. Griffin has owned and operated a small consulting firm located in Washington, D.C. and Florida. Ms. Griffin has served as chief financial officer and vice president of a number of small public companies over the last 10 years.
 
Dr. Eugene Youkilis, Director and President
 
Dr. Eugene Youkilis has a Ph.D. in Toxicology and is a Diplomate of the American Board of Toxicology. He was President and Founder of Clinical Bio-Tox Laboratories, Director of Toxicology and Immunobiology at Baxter International, Laboratory Section Chief and Director at Stroger Hospital (formerly Cook County Hospital) and is currently a Principal Associate with Toxicology Resource Associates. Dr. Youkilis has provided consulting services to industry organizations, research facilities and the legal profession in the areas of forensic, clinical and industrial/occupational toxicology. Dr. Youkilis has over 25 years of experience in the pharmaceutical and healthcare industry working in Toxicology, Pharmacology and Clinical Research. Dr. Youkilis was a Senior Research Investigator with G. D. Searle & Company. Dr. Youkilis is the author or co-author of over 25 presentations and publications, and from 1983 to present, has worked with Dr. Nicholas Plotnikoff on the patented technology for the treatment of HIV/AIDS and cancer patients acquired by TNIB.
 
 
Dr. Fengping Shan, Director and Chief Science Officer
 
Fengping Shan has a Ph.D. in Microbiology/Immunology. Dr. Shan is Professor of Immunology and Vice Director of the Institute of Immunology, China Medical University in Shenyang, China. Dr. Shan was the Senior Scientist for Penta Biotech and Chief Scientist for the Institute of Microbiological Science and Studies at the Nation Cancer Research in Paris, France. Dr. Shan has authored 50 Publications, has been issued 11 patents and is a unique inventor of a thrombolytic enzyme from the earthworm. From 2000 to present, Dr. Shan has worked on the clinical trials with Dr. Nicholas Plotnikoff involving new immunotherapies for the treatment of cancer. Based on these trials, a number of patents were filed in China in 2009 and 2010, and approved in 2011.
 
Christopher Pearce, Director and Chief Operating Officer
 
Mr. Pearce was born in the United Kingdom and educated at Lord Wandsworth College and London University where he received his LLB (Bachelor of Law). He agreed to accept a position with TNIB in late 2011 because of his relationship with Dr. Nicholas Plotnikoff.
 
Mr. Pearce has over 30 years experience as director and chief operating officer of a New York Stock Exchange listed company with more than 5,000 employees worldwide $500,000,000 revenue per annum. His responsibilities included running large operations that require sourcing products and services, contract negotiation, marketing and advertising, scheduling, warehousing and inventory management and employee oversight.
 
Peter Aronstam, Chief Financial Officer
 
Peter Aronstam is Chief Financial Officer of TNI BioTech, Inc. Mr. Aronstam brings more than 30 years of experience in accounting, finance, banking, international trade and law to his clients. His career is marked by a progression of senior finance roles with growth and performance-driven enterprises, from start-up technology and internet companies to chief financial officer roles with small service providers ($50 Million USD) to very large international manufacturers ($25 Billion USD) to global banks.
 
Mr. Aronstam has advised publicly-held and privately-owned businesses since 1978, providing both full-time and part-time CFO services. His background includes start-up VC-backed entrepreneurial companies, manufacturing technology and service companies, serving as a public-company CFO, corporate and international banking in major multinational banks, managing HR and IT functions, and raising more than $500,000,000 in debt and equity for his companies and their customers.
 
From 2001 to 2006, Mr. Aronstam was the Chief Financial Officer of Airspan Networks, Inc., a public reporting company in Boca Raton, Florida. He also was the CFO of private company Mainstream Holdings, LLC in West Palm Beach, Florida from 2007 to 2008 and private company The Neptune Society in Plantation, Florida from 2008 to 2009. Since 2010, Mr. Aronstam has been a partner of B2B CFO Partners, LLC, doing business as B2B CFO. The firm provides CFO services to its clients on a part time basis.
 
Born and educated in South Africa, Mr. Aronstam earned his Bachelor of Commerce, Bachelor of Law and PhD from the University of the Witwatersrand in South Africa. Mr. Aronstam has worked in South Africa, Canada, and Florida. He currently lives in Boca Raton, FL.
 
Dr. Ronald B. Herberman, Chief Medical Officer and Director of Research and Development
 
Dr. Ronald Herberman was the founding director of University of Pittsburgh Cancer Institute (“UPCI”) and the UPMC Cancer Center, and Associate Vice Chancellor for cancer research within the School of Medicine, Department of Health Sciences. In serving as Vice Chancellor for cancer research, he has the responsibility for enhancing and facilitating the basic and clinical research activities of the 6 schools of the health sciences and of the University of Pittsburgh Medical Center (“UPMC”). Other appointments include Chief of the Division of Hematology/Oncology and the Hillman Professor of Oncology. He is also a professor of Medicine and Pathology. Dr. Herberman remains personally involved in several cancer research programs.
 
In 1968, prior to joining the University of Pittsburgh, Dr. Herberman was a senior investigator in the immunology branch of the National Cancer Institute, where he organized a research program related to tumor and cellular immunology. In 1971, he became head of a newly established cellular and tumor immunology section in the Laboratory of Cell Biology of the National Cancer Institute. During this period, he had responsibility for a research program of several investigators related to studies in animal model systems and in patients with cancer, studying the cell-mediated immune responses to tumors. As a result of this research, a new category of lymphocytes was discovered in Dr. Herberman’s laboratory and termed natural killer (“NK”) cells. Since then, much of Dr. Herberman’s research has been focused on the characterization of these natural effector cells and on their role in resistance to cancer growth.
 
 
In 1975, the National Cancer Institute organized an intramural and extramural research program focused on immunodiagnostics of cancer. Dr. Herberman was selected as the chief of the new Laboratory of Immunodiagnostic and also assumed responsibility for the national contract program on immunodiagnostics of cancer.
 
In 1988, he was appointed chairman of the Biological Response Modifiers Committee of the National Institute of Allergy and Infectious Diseases (“NIAID”) AIDS Clinical Trials Group and also served as a member of the NIAID AIDS Clinical Drug Development Committee. Dr. Herberman left the National Cancer Institute in 1985 to establish the UPCI facility, now a National Cancer Institute-designated comprehensive cancer center specializing in innovative approaches to cancer treatment.
 
Dr. Herberman has served on the Board of Directors of the American Association for Cancer Research. He has been given the Award for Excellence in the Sciences by the governor of Pennsylvania and the Lifetime Science Award by the Institute for Advanced Studies in Immunology and Aging. He has also served as interim chairman of the National Surgical Adjuvant Breast and Bowel Project (“NSABP”) from 1994 to 1995. He currently serves as President of the American Association of Cancer Institutes and is the former president of the Society for Biological Therapy and the Society for Natural Immunity. He is also the first recipient of an endowed chair in oncology from the Hillman Foundation.
 
Dr. Herberman serves on the editorial boards of numerous scientific journals. He has been featured in several publications for his work in the field of immunology, particularly as it relates to cancer research and currently serves as editor-in-chief for the international journal Natural Immunity as he continues his efforts to gain a better understanding of cancer and improve modern methods of treatment. He is also the principal investigator of a cancer center support grant of over $250,000 from the National Institutes of Health.
 
The Advisory Board
 
Professor Angus Dalgleish MD, FRACP, FRCP, FRCPath, FMedSci 
 
Professor Angus Dalgleish studied medicine at University College London where he obtained an MBBS and a BSc in Anatomy. He is a Fellow of The Royal College of Physicians of the UK and Australia, Royal College of Pathologists and The Academy of Medical Scientists. He also trained in Internal Medicine and Oncology in Brisbane and Sydney. Following an interest in how viruses caused cancer, he undertook a PhD with Professor Robin Weiss, a FRS at the Institute of Cancer Research and Royal Marsden Hospital before becoming a senior clinical scientist at the MRC Clinical Research Center in Northwick Park. He was appointed to Foundation Chair of Oncology at St. George’s University of London in 1991. His main interests there have been the immunology of cancer and the development of immunotherapies to treat, in particular, melanoma. In 1997, he founded Onyvax Ltd., a privately funded biotechnology company developing cancer vaccines and currently holds a position as Research Director.
 
Professor Dalgleish currently sits on 8 editorial boards, he has published over 300 peer-reviewed papers and authored or co-authored over 70 chapters in medical books. He is the co-editor of 5 medical books. He has been on numerous grant committees and is currently on the European Commission Cancer Board.
 
Professor Dalgleish’s career to date includes several key oncological discoveries that stemmed from an original interest in the pathogenesis of cancer. Some of these discoveries include: confirmation of the link between Hepatitis B (“HBV”) and liver cancer in native Australians, showing through the use of newly available sensitive assays that most instances were not due to alcohol as claimed before; co-discovered the CD4 receptor for HIV; published the first paper linking Slim Disease in East Africa with HIV; developed the theory of pathogenesis that HIV only causes AIDS by immune activation and not by cytopathic killing; and investigated anti-idiotype and allogeneic based vaccines for HIV and then applied the theory to cancer; pioneered melanoma vaccines in the U.K. (Megavax and CancerVax) and adapted this approach to prostate cancer. In Phase II active agent is 42% with near doubling of time to progression to disease, compared with matched cancers and the therapies (Journal Clinical Oncology 2005) and showed that even small volume colon cancer cause cell mediated immunosuppression, which is reverted following surgery and developed cancer arises due to chronic inflammation theory, thereby causing immunosuppression and angiogenesis and the ideal environment for stochastic changes to survival. Professor Angus Dalgleish currently has an active interest and group optimizing dendritic cell treatment for cancer, both basic research and clinical groups and the identification of novel anti-inflammatory agent in vaccinated goat serum therapy is patent pending.
 
 
Dr. Gloria B. Herndon
 
Dr. Herndon earned her Bachelor Degrees in Economics and Political Science, as well as a Masters and a PhD in International Law and Economics from Johns Hopkins University. Subsequently, she worked for the U.S. Department of Agriculture as an economist, then joined the State Department and was posted to U.S. Embassy Commerce positions in Africa and Europe. 
 
Upon leaving the State Department, Dr. Herndon founded GB Herndon and Associates, which is domiciled in the District of Columbia. The company initially focused structuring medical and benefits insurance for its corporate clients, but evolved into a multi-line insurance broker and is more than a decade old. Its diverse clientele includes the National Medical Association, embassies of foreign governments, the National Association of Postal and Federal Employees (“NAPFE”) and the University of the District of Columbia.
 
In recent years, Dr. Herndon has further diversified the company by forging strategic partnerships with leading providers of insurance and student financial services for the higher education market. GB Herndon and Associates maintains corporate affiliations with National Association for Equal Opportunity in Higher Education (“NAFEO”), the American Association of Community Colleges (“AACC”), and the Association of Community College Trustees (“ACCT”).
 
Dr. Herndon is active in the business and local communities through her involvement with various organizations, some of which include the Board of Trade, the DC Chamber of Commerce, the National Conference of Negro Women (“NCNW”), Africare, and Women’s Business Network. Corporations including Office Depot, Six Continent Hotels, and American Express have appointed her to Advisory Board positions. Dr. Herndon co-chairs the Board of Directors of the Women’s Business Center and chairs the Corporate Advisory Boards of the National Head Start Association (“NHSA”) and the National Association for Equal Opportunity in Higher Education (“NAFEO”). On occasion, she is a consulting resource for the National Institutes of Health (“NIH”) regarding the impact of the HIV/AIDS pandemic on the insurance industry and provides other AIDS-related information when requested by the United States Department of State.
 
Dr. Herndon is a published author, member of numerous public and private entity boards and the recipient of a number of awards. She also established the Small Business Administration’s (“SBA”) program for advising small and minority-owned businesses on the design and implementation of business and benefits insurance programs.
 
Dr. Ndiouga Dieng, PD
 
Dr. Ndiouga Dieng has been Senior Pharmacy Manager of John Hopkins Hospital since 2007. He manages the evening and overnight hospital operations and staff, supervises the preparation of admixtures including investigational medications. He has provided rapport to international patients, directed overseas pathologist projects between John Hopkins and Senegal, directed an overseas vaccination project between John Hopkins, the Serum Institute of India and Senegal. Dr. Dieng is a graduate of Howard University.
 
ITEM 6. EXECUTIVE COMPENSATION.
 
The Company’s directors are not compensated. The Officers receive an annual salary as described in the table below for the services rendered on behalf of the Company.
 
   
Annual Compensation
             
                   
Option
   
All Other
       
Name and Principal Position
 
Year
 
Salary (**)
   
Bonus (***)
   
Awards
   
Compensation
   
Total ($)
 
                                   
Noreen Griffin
 
2012
  $ 300,000 (1)   $ (2)   $     $ 18,000 (3)   $ 293,000  
Chief Executive Officer 
 
2011
  $     $     $     $     $  
                                             
Eugene Youkilis
 
2012
  $ 60,000     $ (4)   $     $     $ 60,000  
 President
 
2011
  $     $     $     $     $  
                                             
Dr. Fengping Shan
 
2012
  $ 60,000     $ (5)   $     $          
Chief Science Officer
 
2011
  $     $     $     $     $ 60,000  
                                             
Christopher Pearce
 
2012
  $ 250,000 (6)   $ (7)   $     $ 18,000 (8)   $ 218,000  
Chief Operating Officer (*)
 
2011
  $     $     $     $     $  
                                             
Dr. Ronald B. Herberman
 
2012
  $ 250,000     $ (9)   $     $     $ 250,000  
Chief Medical Officer and Director of Medical Research and Development
 
2011
  $     $     $       $     $  
                                             
Peter Aronstam (*)
 
2012
  $     $     $     $     $  
Chief Financial Officer
 
2011
  $     $     $     $     $  
                                             
Dr. Nicholas Plotnikoff
 
2012
  $     $     $     $     $  
Non-Executive Chairman of the Board
 
2011
  $     $     $       $     $  
______________
(1)  
The Company issued Ms. Griffin common stock purchase warrants in TNIB to purchase up to 1,000,000 shares of common stock at a purchase price of $1.00 per share for 5 years as part of her salary.
(2)  
The Company issued Ms. Griffin 3,000,000 shares of common stock as a signing bonus.
(3)  
The Company pays Ms. Griffin $1,500 per month as unaccountable expenses during each month of the term.
(4)  
The Company issued Dr. Youkilis 500,000 shares of common stock as a signing bonus.
(5)  
The Company issued Dr. Shan 500,000 shares of common stock as a signing bonus.
(6)  
The Company issued Mr. Pearce common stock purchase warrants to purchase up to 1,000,000 shares of common stock at a purchase price of $1.00 per share for 5 years as part of his salary.
(7)  
The Company issued 2,000,000 shares of common stock to Mr. Pearce as a signing bonus.
(8)  
The Company pays Mr. Pearce $1,500 per month as unaccountable expenses during each month of the term.
(9)  
The Company issued Dr. Herberman 1,000,000 shares of common stock as a signing bonus.

(*)   Mr. Pearce was the Chief Financial Officer of the Company during the 2012 term. He was appointed Chief Operating Officer on January 1, 2013 when Mr. Aronstam was appointed Chief Financial Officer.
 
(**)    Salary is established by the market rate for the specific officer’s experience level and position and may be increased upon the Company’s receipt of sufficient capital. Compensation is only for an individual’s role as an officer of the Company, Directors receive no compensation for their role as a director.
 
(***) The Company, in its sole discretion, will determine whether to pay to an employee a bonus based on the Officers’ performance in comparison to the Company and the performance criteria set by the Board of Directors.
 
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 
Director Independence
 
We are not currently listed on any national securities exchange that has a requirement that the board of directors be independent. At this time we do not have an “independent director” as that term is defined under the rules of the NASDAQ Capital Market.
 
Related Transactions
 
See the Notes to the Financial Statements.
 
ITEM 8. LEGAL PROCEEDINGS.
 
None.
 
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
a. Market information.
 
TNI BioTech is currently traded on the Over the Counter Pink Market (“OTC Pink Market”). The Company’s ticker symbol is “TNIB.” To have our securities quoted on OTC QB or OTCBB we must: (1) be a company that reports its current financial information to the Securities and Exchange Commission (“SEC”), banking regulators or insurance regulators; and (2) have at least one market maker who completes and files a Form 211 with FINRA. Over the Counter Markets differ substantially from national and regional stock exchanges because it: (a) operates through communication of bids, offers and confirmations between broker-dealers, rather than one centralized market or exchange; and (b) securities admitted to quotation are offered by one or more broker-dealers rather than “specialists” which operate in stock exchanges.
 
The following table sets forth the high and low transaction price for each quarter within the two most recent fiscal years as provided by OTC Markets Group, Inc. The information reflects prices between dealers, and does not include retail markup, markdown, or commission, and may not represent actual transactions.
 
   
Over The Counter Pink Sheets Market(1)
 
Quarter Ended
 
High
   
Low
 
March 31, 2013
  $ 10.20     $ 4.00  
December 31, 2012
  $ 9.70     $ 1.40  
September 30, 2012
  $ 2.75     $ 0.72  
June 30, 2012
  $ 5.50     $ 2.60  
March 31, 2012
  $ N/A     $ N/A  
December 31, 2011
  $ N/A     $ N/A  
September 30, 2011
  $ N/A     $ N/A  
June 30, 2011
  $ N/A     $ N/A  
March 31, 2011
  $ N/A     $ N/A  
________________
(1)
Over The Counter Market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. The transfer agent and registrar for our common stock is American Stock Transfer and Trust Company, LLC. As of the date of this report, we had approximately 401 shareholders of record, not including those common shares held in street name.
 
b. Holders.
 
As of April 19, 2013, there are 401 holders of the Company’s common stock and there is no authorized preferred stock.
 
 
c. Dividends.
 
The Company issued a one-time dividend of 1,182,474 shares of TNIB to the existing shareholders of pH Environmental, Inc. (now known as TNI BioTech, Inc.) with a record date of April 23, 2012. The dividend was distributed in two installments due to a calculation error made by a previous transfer agent.
 
TNIB has no plans of paying cash dividends in the future.
 
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
 
The Company did not issued any shares of its stock during 2011 and 2010.
 
The Company has an outstanding note payable to K-C Operations (an unrelated party) issued on October 15, 2009. The balance as of December 31, 2012 and 2011 was $398,000 and $498,000, respectively. The note matured on October 31, 2010 and accrues interest at a rate of 6% per annum and is convertible to shares of common stock at a rate of $0.20 per share. The following conversions of principal and interest resulting in share issuances occurred in 2012: On March 25, 2012: $4,028 was converted to 20,140 shares; April 24, 2012: $100,000 was converted to 500,000 shares; May 25, 2012: $25,000 was converted to 125,000 shares; November 28, 2012: $2,500 was converted to 12,500 shares; November 29, 2012: $66,500 was converted to 332,500 shares. These issuances were subject to the requirements of Rule 144 of the Securities Act of 1933.

The Company has an outstanding note payable to Robert Johnson (former officer and director) issued on September 30, 2006 with a balance as of December 31, 2012 and 2011 of $21,546.60 and $161,547, respectively. The note matured on September 30, 2007 and is convertible to shares of common stock at a rate of $0.20 per share. On April 24, 2012, $140,000 of the note was converted to 700,000 shares of common stock. This issuance was subject to the requirements of Rule 144 of the Securities Act of 1933.
 
The Company has an outstanding note payable to Lexicon (an unrelated party) issued on January 15, 2009.  The note is due upon demand.  The balance as of December 31, 2012 and 2011 was $12,817 and $23,316, respectively.  The note bears an interest rate of 6% per annum and is convertible to shares of common stock at a rate of $0.01 per share. On April 24, 2012, $10,850 of this note was converted into 1,085,000 shares of common stock. This issuance was subject to the requirements of Rule 144 of the Securities Act of 1933.

The Company issued a convertible promissory note on May 21, 2012 for $5,000. The note accrued interest at a rate of 9.875% per semi-annum. On December 5, 2012, the holder converted the $5,542.92 balance of the note into 1,310 shares of restricted common stock. This issuance was subject to the requirements of Rule 144 of the Securities Act of 1933.

Shares Issued for Subsidiary and Patent Acquisition:
 
The Company acquired TNI BioTech IP, Inc., its wholly-owned subsidiary in exchange for 20,250,000 shares of the Company’s common stock of which 8,000,000 shares were issued for the acquisition of the patent and the remaining 12,250,000 shares were issued to the founders of TNI IP in exchange for all of their right, title and interest in their TNI IP shares.

As part of the License Agreement for the intellectual property developed by Dr. Bernard Bihari, the Company is required to issue 540,000 shares of the Company’s common stock. The Company issued 300,000 shares under the Patent License Agreement for the acquisition of patent rights for the intellectual property of Dr. Jill Smith and LDN Research Group, LLC. The Company issued 600,000 shares of its restricted Common Stock to Penn State University under the exclusive license agreement with the Penn State Research Foundation executed on January 18, 2013. (For additional information on the license and patent acquisitions, see Note 10 of the Notes to the Financial Statements).

Shares Issued under Private Placement:
 
The Company conducted a private placement of units consisting of common stock and common stock purchase warrants. During 2012, the Company received $1,134,000 from the sale of units consisting of a total of 7,260,000 shares of common stock and common stock purchase warrants for the purchase of up to 7,260,000 shares of common stock at exercise prices ranging from $1.00 to $1.50. The Offering was exempt from registration under the Securities Act Rule 506. These shares are not registered and are restricted in accordance with Rule 144 until they are either registered or an exemption from registration is available. The stock certificates bear a restrictive legend.
 
 
Shares Issued For Services, Consulting and Prepaid Consulting:
 
All Shares issued for Services are restricted; certificates representing restricted shares will contain a legend stating that the shares have not been registered under the Securities Act and the restrictions on transferability under the Securities Act. During the year ended December 31, 2012, the Company issued 6,966,800 shares of common stock for services, which included founder shares, and 6,790,000 shares of common stock for consulting fees. The Company valued these shares based upon the fair market value of the common stock at the date of the agreements.
 
Dividend
 
The Company issued a 6% dividend calculated based on the number of shares that were to be outstanding after the issuance for the acquisition of TNI (now known as TNI BioTech IP, Inc.) and awarded to shareholders of record before the close of the acquisition. The Company’s former transfer agent mistakenly issued a dividend based on the number of shares outstanding before the close of the share exchange.  The Company has instructed its new transfer agent, Issuer Direct, to deliver the correct number of shares authorized under the dividend to the shareholders according to their ownership percentage of common shares as of the record date. The estimated number of shares issued under the dividend was 1,182,474.
 
Warrant Exercises
 
On October 8, 2012 a warrant holder exercised its rights to purchase 25,000 shares for $2,500. Certificates representing restricted shares will contain a legend stating that the shares have not been registered under the Securities Act and the restrictions on transferability under the Securities Act.
 
The Company made an offer to the holders of Common Stock Purchase Warrants issued in the Company’s 2012 Private Placement offering a reduced exercise price of $0.75 per share if they exercised by the deadline, which was subsequently extended to March 22, 2013.
 
During the first quarter of 2013, warrant holders purchased a total of 1,180,434 shares at the reduced exercise price of $0.75 per share for a total for $885,326. Under the terms of the exercise, warrant holders exercising at the Reduced Warrant Price newly-issued five-year Common Stock Purchase Warrants with an exercise price of $15 per share (the “Series C Warrants”). The number of shares purchasable under the Series C Warrants will equal 25% the total number of shares exercised at the Reduced Warrant Price.
 
ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.
 
Common Stock
 
The Company is authorized to issue 500,000,000 shares of Common Stock at a par value of $0.001 per share. The Common Stock of the corporation that is issued and outstanding shall be entitled to vote 100% of the stockholder voting rights. Each holder of Common Stock shall be entitled to one vote per share.
 
As of March 18, 2012, the Company reversed the Common Stock leaving approximately 113,644 shares issued and outstanding.
 
On April 24, 2012, the Company acquired TNI BioTech, Inc. for 20,250,000 shares as part of a share exchange agreement.
 
The Company issued a one-time dividend of 1,182,474 shares to the existing shareholders of ph Environmental, Inc. (now TNI BioTech, Inc.), with a record date of April 23, 2012. The dividend shares were issued in two installments.
 
As of April 19, 2013 there are 53,676,535 shares of common stock issued and outstanding an no shares of Preferred Stock authorized, issued or outstanding.
 
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
The Company’s Articles of Incorporation and Bylaws provide for the indemnification of a present or former director or officer to the fullest extent permitted by Florida law, against all expense, liability and loss reasonably incurred or suffered by the officer or director in connection with any action against such officer or director. The Company also maintains director and officer liability insurance.
 
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
Please see our financial statements attached at the end of this registration statement.
 
Notes to the Financial Statements for December 31, 2012 and 2011
 
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
The Company has not had a change in its independent registered public accounting firm during its last two fiscal years or through the date of this filing. The Company notes that it has not had any disagreements with its current public accounting firm during the last two fiscal years or through the date of this filing on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of the public accounting firm, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements.
 
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
 
List of Financial Statements
 
Exhibits Schedule
 
The following exhibits are filed with this Form 10:
 
Exhibit
 
Description
3.1
 
Restated Articles of Incorporation
3.2
 
Bylaws
23.1
 
Opinion of Turner Stone
 
 
SIGNATURES
 
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
 
TNI BioTech, Inc.
 
 
 
 
 
 
By:
/s/ Noreen Griffin
 
 
 
Noreen Griffin
 
 
 
Chief Executive Officer
 
 
 
59

 
 
Report of Independent Registered Public Accounting Firm




Board of Directors and Stockholders
TNI BioTech, Inc.
Bethesda, Maryland

We have audited the accompanying balance sheets of TNI BioTech, Inc. (the “Company”) as of December 31, 2012 and 2011 and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TNI BioTech, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations since inception and has a working capital deficiency both of which 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 financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Turner, Stone & Company, L.L.P.

Dallas, Texas
April 9, 2013
 
 
 
 
F-1

 
TNI BIOTECH, INC.
BALANCE SHEETS
DECEMBER 31, 2012 AND 2011
 
   
2012
   
2011
 
ASSETS
 
Current Assets:
           
Cash and cash equivalents
  $ 313,095     $ 12  
                 
     Total current assets
    313,095       12  
                 
Fixed Assets:
               
Computer equipment, net of accumulated depreciation
               
  of $118 and $0 respectively
    944       -  
                 
Intangible Assets:
               
Patents and licenses, net of amortization
               
  of $1,570,114 and $0, respectively (Note 2 and 10)
    18,688,270       -  
                 
Deposits
    24,928       -  
Net assets of discontinued operations
    -       911,614  
                 
Total assets
  $ 19,027,237     $ 911,626  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
 
               
Current Liabilities:
               
Accounts payable
  $ 286,698     $ -  
Payable to officer
    76,000       -  
Accrued liabilities
    427,211       69,185  
Current portion patent liability
    200,000       -  
Notes payable
    432,363       682,863  
Net liabilities of discontinued operations
    -       1,106,987  
                 
     Total current liabilities
    1,422,272       1,859,035  
                 
Non-current Liabilities:
               
Notes payable related party
    121,128       -  
Long-term portion patent liability
    140,000       -  
     Total non-current liabilities
    261,128       -  
                 
Total Liabilities
    1,683,400       1,859,035  
                 
Stockholders' Equity (Deficit):
               
Common stock - par value $0.001; 500,000,000 shares authorized;
               
       45,489,368 and 113,644 shares issued and outstanding respectively
    45,489       114  
Additional paid in capital
    196,632,775       1,005,603  
Stock issuances due
    3,690,960       -  
Prepaid services
    (6,082,771 )     -  
Accumulated deficit
    (176,942,616 )     (1,953,126 )
                 
     Total stockholders' equity (deficit)
    17,343,837       (947,409 )
  Total liabilities and stockholders' equity (deficit)
  $ 19,027,237     $ 911,626  
 
The accompanying footnotes are an integral part of these financial statements.
 
 
F-2

 
 
TNI BIOTECH, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
 
   
2012
   
2011
 
             
Revenues, net
  $ -     $ -  
                 
Operating expenses:
               
Selling, general and administrative
    1,361,228       -  
Research and development expense
    181,190       -  
Depreciation and amortization expense
    1,570,232       -  
Impairment of goodwill
    98,000,000       -  
Stock issued for services
    9,160,980       -  
Amortization of stock issued for prepaid services
    17,004,479          
Stock warrant expense
    25,810,469       -  
Total operating expenses
    153,088,578       -  
                 
Loss from operations
    (153,088,578 )     -  
                 
Other income (expense):
               
Interest expense
    (27,003 )     (31,279 )
Loss on settlement of debt
    (22,105,265 )     -  
     Total other income (expense)
    (22,132,268 )     (31,279 )
                 
Loss from continuing operations
    (175,220,846 )     (31,279 )
                 
Gain (loss) from discontinued operations
    231,356       (94,376 )
                 
Net loss
  $ (174,989,490 )   $ (125,655 )
                 
Basic and diluted loss per share:
               
Loss from continuing operations
  $ (6.85 )   $ (0.28 )
Gain (loss) from discontinued operations
    0.01       (0.83 )
    $ (6.84 )   $ (1.11 )
                 
Weighted average number of shares outstanding
    25,583,111       113,644  
 
The accompanying footnotes are an integral part of these financial statements.
 
 
F-3

 
 
TNI BIOTECH, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
 
   
Common Stock
   
Additional Paid
   
Stock to
   
Prepaid
   
Accumulated
       
   
Shares
   
Amount
   
in Capital
   
Be Issued
   
Services
   
Deficit
   
Total
 
                                           
Balance, December 31, 2010 as originally reported
    113,644,000     $ 113,644     $ 892,073     $ -     $ -     $ (1,827,471 )   $ (821,754 )
                                                         
Effect of reverse stock split
    (113,530,356 )     (113,530 )     113,530       -       -       -       -  
                                                         
Adjusted balance, December 31, 2010
    113,644       114       1,005,603       -       -       (1,827,471 )     (821,754 )
                                                         
Net loss
    -       -       -       -       -       (125,655 )     (125,655 )
                                                         
Balance, December 31, 2011
    113,644       114       1,005,603       -       -       (1,953,126 )     (947,409 )
                                                         
Issuance