Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
|
Title of Each Class of Securities to be Registered
|
Amount to be Registered
|
Proposed Offering Price Per Share
|
Proposed Aggregate Offering Price
|
Amount of Registration Fee
|
|||||||||||
Common Stock underlying Convertible Promissory Notes, $0.001 par value
|
13,871,881
|
$
|
0.25
|
$
|
3,467,970
|
$
|
$349.22
|
||||||||
Common Stock underlying Warrants, $0.001 par value
|
3,000,000
|
$
|
0.40
|
$
|
1,200,000
|
$
|
120.84
|
||||||||
Common Stock – Issuance Shares, $0.001 par value
|
7,500,000
|
$
|
0.001
|
$
|
7,500
|
$
|
$0.76
|
||||||||
Common Stock - GSS & HCW Warrants, $0.001 par value
(2)(3)
|
1,220,000
|
$
|
0.40
|
$
|
488,000
|
$
|
$49.14
|
||||||||
TOTAL
|
25,591,881
|
$
|
5,163,470,
|
(1) |
$
|
$519.96
|
(1)
|
Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
|
(2)
|
Pursuant to Engagement Agreement, Garden State Securities, Inc. is entitled to, among other things, warrants with “piggy back” registration rights, equal to 10% of the amount of securities sold at an exercise price equal to the investor’s warrant exercise price.
|
(3)
|
Pursuant to a letter Agreement dated June 24, 2016 Rodman and Renshaw, a unit of H.C. Wainwright & Co., LLC is entitled to, among other things, warrants with “piggy back” registration rights, equal to 8% of the amount of securities sold at an exercise price equal to the investor’s warrant exercise price.
|
Offering Price Per Share
|
Total
|
|||||||
Common Stock – 13,871,881 Shares underlying Convertible Promissory Notes…
|
$
|
0.25
|
$
|
3,467,970
|
||||
Common Stock – 3,000,000 Shares underlying Warrants…
|
$
|
0.40
|
$
|
1,200,000
|
||||
Common Stock – 7,500,000 Issuance Shares…
|
$
|
0.001
|
$
|
7,500
|
||||
Underwriting discounts and Commissions- 1,220,000 Shares…(1)(2)(3)(4)
|
$
|
0.40
|
$
|
488,000
|
||||
1.
|
Pursuant to an Engagement Agreement, the Company agreed to pay Garden State Securities, Inc. (“GSS”) who acted as a Placement Agent for the Offering, a cash fee of 10% of the gross proceeds from the Offering and issue it a Warrant to purchase the number of common shares equal to 10% of the number of shares that the Notes are convertible into at the Conversion Price on an as converted basis.
|
2.
|
Includes the GSS Compensation of Warrants equal to 10% of the amount of securities sold; 700,000 at the exercise price of $0.40 per share.
|
3.
|
Pursuant to a Letter Agreement, the Company agreed to pay Rodman and Renshaw, a unit of H.C. Wainwright & Co, LLC. (“HCW”) who acted as a Placement Agent for the Offering, a cash fee of 8% of the gross proceeds from the Offering and issue it a Warrant to purchase the number of common shares equal to 8% of the number of shares that the Notes are convertible into at the Conversion Price on an as converted basis.
|
4.
|
Includes the HCW Compensation of Warrants equal to 8% of the amount of securities sold; 520,000 at the exercise price of $0.40 per share.
|
PAGE
|
|
1
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2 | |
8 | |
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21 | |
22 | |
22 | |
25 | |
27 | |
28 | |
29 | |
29 | |
37 | |
37 | |
37 | |
38 | |
39 | |
40 | |
40 | |
46 | |
47 | |
48 | |
50 | |
51 | |
52 | |
F-1 | |
F-2 | |
F-3 | |
F-4 | |
F-6 | |
F-7 | |
G-1 | |
G-2 | |
G-3 | |
G-4 | |
PART II: Information Not Required in Prospectus
|
H-1 |
Issuer
|
Innovus Pharmaceuticals, Inc.
|
Securities Offered
|
25,591,881 shares of common stock of the Company
|
Common Stock Outstanding as of June 29, 2016
|
87,176,763
shares of common stock
|
Use of Proceeds
|
We will not receive any proceeds from the disposition of already outstanding shares of common stock, other than the exercise price of the warrants upon exercise. See “
Use of Proceeds
”
|
Risk Factors
|
An investment in our common stock involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “
Risk Factors
”
|
Note/Warrant Holder
|
Sale Date
|
Value of Each Payment to Holder
(1)
|
Gross Proceeds
Net of OID
|
Net Proceeds to Issuer
|
|||||||||
Anson Investment Master Fund, LP (2)
|
June 30, 2016
|
$ | 2,500 | $ | 1,000,000 | $ | 997,500 | ||||||
FirstFire Global Opportunities Fund, L.L.C. (3)
|
June 30, 2016
|
$ | 625 | $ | 250,000 | $ | 249,375 | ||||||
Intracoastal Capital, LLC (4)
|
June 30, 2016
|
$ | 625 | $ | 250,000 | $ | 249,375 | ||||||
Sabby Healthcare Master Fund, Ltd. (5)
|
July 15, 2016
|
$ | 1,250 | $ | 500,000 | $ | 498,750 | ||||||
CVI Investments, Inc. (6)
|
July 15, 2016
|
$ | 625 | $ | 250,000 | $ | 249,375 | ||||||
H.C. Wainwright & Co. LLC (7) (13)
|
July 25, 2016
|
$ | 825 | $ | 330,000 | $ | 329,175 | ||||||
Noam Rubenstein (8)
|
July 25, 2016
|
$ | 375 | $ | 150,000 | $ | 149,625 | ||||||
Charles Worthman (9)
|
July 25, 2016
|
$ | 50 | $ | 20,000 | $ | 19,950 | ||||||
Anson Investment Master Fund, LP (10)
|
July 25, 2016
|
$ | 625 | $ | 250,000 | $ | 249,375 | ||||||
Garden State Securities (11)
|
June 30, 2016 & July 25, 2016
|
$ | 455,000 | - | $ | (455,000 | ) | ||||||
H.C. Wainwright & Co. LLC (12)
|
June 30, 2016, July 15, 2016 & July 25, 2016
|
$ | 358,000 | - | $ | (358,000 | ) | ||||||
$ | 820,500 | $ | 3,000,000 | $ | 2,179,500 |
(1)
|
Does not include repayment of the Principal on the convertible notes. Includes both cash and value of stock payments.
|
(2)
|
Includes total of 2,500,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(3)
|
Includes total of 625,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(4)
|
Includes total of 625,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(5)
|
Includes total of 1,250,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(6)
|
Includes total of 625,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(7)
|
Includes total of 825,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(8)
|
Includes
total of 375,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(9)
|
Includes total of 50,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(10)
|
Includes total of 625,000 Issuance Shares issued as additional consideration for the purchase of the Notes. Based on price per share of $0.001.
|
(11)
|
Includes total aggregate payments of $175,000 and issuance of a Warrants to purchase an aggregate 700,000 shares of common stock at $0.40 exercise price; $0.50 and $0.21 market price. Together the cash payment and the Warrant issuance equals $455,000.
|
(12)
|
Includes payment of $150,000 and issuance of a Warrants to purchase an aggregate 520,000 shares of common stock at $0.40 exercise price and $0.21, $0.306 and $0.50 market price. Together the cash payment and the Warrant issuance equals $358,000.
|
Note Holder
|
Note Sale Date
|
Note Amount
|
Market Price Per Share on Date of Sale of Convertible Note
|
Par Value Per Share of Issuance Shares
|
Conversion Price as of the date of sale (Fixed)
|
Total possible shares to be received upon Conversion
(1)
|
Total Shares Issued Upon Default
(2)
|
Combined Market Price of the Total Number of Shares
(3)
|
Total possible Shares to be Received and the Combined Conversion Price of the Total Number of Shares
(4)
|
Total Possible Discount to the Market Price
(5)
|
|||||||||||||||||||||||||||
Anson Investment Master Fund, LP
|
June 30, 2016
|
$ | 1,100,000 | $ | 0.210 | $ | 0.001 | $ | 0.25 | 4,400,000 | 8,800,000 | $ | 924,000 | $ | 1,100,000 | $ | 176,000 | ||||||||||||||||||||
FirstFire Global Opportunities Fund, L.L.C.
|
June 30, 2016
|
275,000 | $ | 0.210 | $ | 0.001 | $ | 0.25 | 1,100,000 | 2,200,000 | $ | 231,000 | $ | 275,000 | $ | 44,000 | |||||||||||||||||||||
Intracoastal Capital, LLC
|
June 30, 2016
|
275,000 | $ | 0.210 | $ | 0.001 | $ | 0.25 | 1,100,000 | 2,200,000 | $ | 231,000 | $ | 275,000 | $ | 44,000 | |||||||||||||||||||||
Sabby Healthcare Master Fund, Ltd.
|
July 15, 2016
|
550,000 | $ | 0.306 | $ | 0.001 | $ | 0.25 | 2,200,000 | 4,400,000 | $ | 672,100 | $ | 550,000 | $ | (122,100 | ) | ||||||||||||||||||||
CVI Investments, Inc.
|
July 15, 2016
|
275,000 | $ | 0.306 | $ | 0.001 | $ | 0.25 | 1,100,000 | 2,200,000 | $ | 336,050 | $ | 275,000 | $ | (61,050 | ) | ||||||||||||||||||||
H.C. Wainwright & Co. LLC
|
July 25, 2016
|
366,666.67 | $ | 0.500 | $ | 0.001 | $ | 0.25 | 1,466,667 | 2,933,333 | $ | 733,333 | $ | 366,667 | $ | (366,667 | ) | ||||||||||||||||||||
Noam Rubenstein
|
July 25, 2016
|
165,000 | $ | 0.500 | $ | 0.001 | $ | 0.25 | 660,000 | 1,320,000 | $ | 330,000 | $ | 165,000 | $ | (165,000 | ) | ||||||||||||||||||||
Charles Worthman
|
July 25, 2016
|
22,222.22 | $ | 0.500 | $ | 0.001 | $ | 0.25 | 88,889 | 177,778 | $ | 44,444 | $ | 22,222 | $ | (22,222 | ) | ||||||||||||||||||||
Anson Investment Master Fund, LP
|
July 25, 2016
|
275,000 | $ | 0.500 | $ | 0.001 | $ | 0.25 | 1,100,000 | 2,200,000 | $ | 550,000 | $ | 275,000 | $ | (275,000 | ) | ||||||||||||||||||||
13,215,556 | 26,431,111 | $ | 4,051,928 | $ | 3,303,889 | $ | -748,038.89 |
(1)
|
Assuming full conversion.
|
(2)
|
Using Fixed Conversion rate assuming the Default Amount is paid in common stock.
|
(3)
|
Calculated by using the market price per share on the date of the sale of the convertible note and the total possible shares to be received.
|
(4)
|
Calculated by using the conversion price on the date of the sale of the convertible note and the total possible number of underlying shares.
|
(5)
|
Calculated by subtracting the total conversion/exercise price on the date of the sale of the convertible note from the combined market price of the total number of underlying shares on that date.
|
Warrant Holder
|
Warrant Sale Date
|
Warrant Amount
|
Market Price Per Share on Date of Sale of Warrant
|
Conversion Price as of the date of sale (Fixed)
|
Total possible shares to be Issued upon Exercise
(1)
|
Combined Market Price of the Total Number of Underlying Shares
(2)
|
Total Possible Shares to be Issued and the Combined Exercise Price of the Total Number of Shares Underlying the Warrant
(3)
|
Total Possible Premium to the Market Price as of the date of the Issuance of the Warrant
|
|||||||||||||||||||||
Anson Investment Master Fund, LP
|
June 30, 2016
|
1,000,000 | $ | 0.210 | $ | 0.40 | 1,000,000 | $ | 210,000 | $ | 400,000 | $ | 190,000 | ||||||||||||||||
FirstFire Global Opportunities Fund, L.L.C.
|
June 30, 2016
|
250,000 | $ | 0.210 | $ | 0.40 | 250,000 | $ | 52,500 | $ | 100,000 | $ | 47,500 | ||||||||||||||||
Intracoastal Capital, LLC
|
June 30, 2016
|
250,000 | $ | 0.210 | $ | 0.40 | 250,000 | $ | 52,500 | $ | 100,000 | $ | 47,500 | ||||||||||||||||
Sabby Healthcare Master Fund, Ltd.
|
July 15, 2016
|
500,000 | $ | 0.306 | $ | 0.40 | 500,000 | $ | 152,750 | $ | 200,000 | $ | 47,250 | ||||||||||||||||
CVI Investments, Inc.
|
July 15, 2016
|
250,000 | $ | 0.306 | $ | 0.40 | 250,000 | $ | 76,375 | $ | 100,000 | $ | 23,625 | ||||||||||||||||
H.C. Wainwright & Co. LLC
|
July 25, 2016
|
330,000 | $ | 0.500 | $ | 0.40 | 330,000 | $ | 165,000 | $ | 132,000 | $ | (33,000 | ) | |||||||||||||||
Noam Rubenstein
|
July 25, 2016
|
150,000 | $ | 0.500 | $ | 0.40 | 150,000 | $ | 75,000 | $ | 60,000 | $ | (15,000 | ) | |||||||||||||||
Charles Worthman
|
July 25, 2016
|
20,000 | $ | 0.500 | $ | 0.40 | 20,000 | $ | 10,000 | $ | 8,000 | $ | (2,000 | ) | |||||||||||||||
Anson Investment Master Fund, LP
|
July 25, 2016
|
250,000 | $ | 0.500 | $ | 0.40 | 250,000 | $ | 125,000 | $ | 100,000 | $ | (25,000 | ) | |||||||||||||||
Garden State Securities, Inc.
|
June 30, 2016 & July 25, 2016
|
700,000 | (4) |
$0.210 & $0.500
|
$ | 0.40 | 700,000 | $ | 210,000 | $ | 400,000 | $ | 104,000 | ||||||||||||||||
H.C. Wainwright & Co. LLC
|
June 30, 2016, July 15, 2016 & July 25, 2016
|
520,000 | (5) |
$0.210, $0.306 & $0.500
|
$ | 0.40 | 520,000 | $ | 264,000 | $ | 208,000 | $ | 56,000 | ||||||||||||||||
3,000,000 | 3,000,000 | $ | 1,393,125 | 1,808,000 | $ | 440,875 |
(1)
|
Assuming full exercise.
|
(2)
|
Assuming full exercise.
|
(3)
|
Using Fixed Conversion price.
|
(4)
|
Of the aggregate 700,000 warrants, 100,000 were issued on July 25, 2016 ($0.500) and 600,000 were issued on June 30, 2016 ($0.210)
|
(5)
|
Of the aggregate 520,000 warrants, 80,000 were issued June 30, 2016 ($0.210), 264,000 were issued July 15, 2016 ($0.306) and 176,000 on July 25, 2016 ($0.50).
|
Note/Warrant Holder
|
Sale Date
|
Gross Proceeds Paid or Payable to Issuer Transaction (1)
|
Payments made or to be made by Issuer
|
Net Proceeds to Issuer
|
Total Possible Discount to the Market Price as of the Date of the issuance of the Note (5)
|
Total possible discount to the Market Price as of the date of the issuance of the Warrant (5)
|
Combined Total Possible Profit (2)
|
||||||||||||||||||
Anson Investment Master Fund, LP
|
June 30, 2016
|
$
|
1,400,000
|
$
|
2,500
|
$
|
1,397,500
|
$
|
176,000
|
$
|
190,000
|
$
|
1,031,500
|
||||||||||||
FirstFire Global Opportunities Fund, L.L.C.
|
June 30, 2016
|
350,000
|
$
|
625
|
$
|
349,375
|
$
|
44,000
|
$
|
47,500
|
$
|
257,875
|
|||||||||||||
Intracoastal Capital, LLC
|
June 30, 2016
|
350,000
|
$
|
625
|
$
|
349,375
|
$
|
44,000
|
$
|
47,500
|
$
|
257,875
|
|||||||||||||
Sabby Healthcare Master Fund, Ltd.
|
July 15, 2016
|
700,000
|
$
|
1,250
|
$
|
698,750
|
$
|
(122,100
|
)
|
$
|
47,250
|
$
|
529,400
|
||||||||||||
CVI Investments, Inc.
|
July 15, 2016
|
350,000
|
$
|
625
|
$
|
349,375
|
$
|
(61,050
|
)
|
$
|
23,625
|
$
|
264,700
|
||||||||||||
H.C. Wainwright & Co. LLC
|
July 25, 2016
|
462,000
|
$
|
825
|
$
|
461,175
|
$
|
(366,667
|
)
|
$
|
(33,000
|
)
|
$
|
61,508
|
|||||||||||
Noam Rubenstein
|
July 25, 2016
|
210,000
|
$
|
375
|
$
|
209,625
|
$
|
(165,000
|
)
|
$
|
(15,000
|
)
|
$
|
29,625
|
|||||||||||
Charles Worthman
|
July 25, 2016
|
28,000
|
$
|
50
|
$
|
27,950
|
$
|
(22,222
|
)
|
$
|
(2,000
|
)
|
$
|
3,728
|
|||||||||||
Anson Investment Master Fund, LP
|
July 25, 2016
|
350,000
|
$
|
625
|
$
|
349,375
|
$
|
(275,000
|
)
|
$
|
(25,000
|
)
|
$
|
49,375
|
|||||||||||
Garden State Securities, Inc. (3)
|
-
|
$
|
455,000
|
-
|
-
|
$
|
104,000
|
$
|
559,000
|
||||||||||||||||
H.C. Wainwright & Co. LLC (4)
|
-
|
$
|
358,000
|
-
|
-
|
$
|
56,000
|
$
|
414,000
|
(1)
|
Includes amount loaned and amount paid at exercise of warrants; Assuming full exercise of Warrants
|
(2)
|
As a result of any conversion discounts regarding the securities underlying the convertible note or any other, warrants, options, notes, or other securities of the issuer
|
(3)
|
Garden State Securities, Inc. acted as a Placement Agent in this Transaction. Pursuant to the Purchase Agreement, the Company agreed to pay Garden State Securities, Inc., who acted as a placement agent for the Offering, a cash fee of 10% of the gross proceeds from the Offering and issue it a Warrant to purchase that number of shares of common stock equal to 10% of the number of shares that the Notes are convertible into at the Conversion Price on an as converted basis
|
(4)
|
H.C. Wainwright & Co, LLC acted as a Placement Agent in this Transaction. Pursuant to the Purchase Agreement, the Company agreed to pay Garden State Securities, Inc., who acted as a placement agent for the Offering, a cash fee of 8% of the gross proceeds from the Offering and issue it a Warrant to purchase that number of shares of common stock equal to 8% of the number of shares that the Notes are convertible into at the Conversion Price on an as converted basis
|
(5)
|
These amounts are from the tables above.
|
Note Holder
|
Note Sale Date
|
Note Amount
|
Total Repayment at Maturity Date(1)
|
||||||
Anson Investment Master Fund, LP
|
June 30, 2016
|
$ | 1,100,000 | $ | 1,154,110 | ||||
FirstFire Global Opportunities Fund, L.L.C.
|
June 30, 2016
|
$ | 275,000 | $ | 288,527 | ||||
Intracoastal Capital, LLC
|
June 30, 2016
|
$ | 275,000 | $ | 288,750 | ||||
Sabby Healthcare Master Fund, Ltd.
|
July 15, 2016
|
$ | 550,000 | $ | 577,500 | ||||
CVI Investments, Inc.
|
July 15, 2016
|
$ | 275,000 | $ | 288,750 | ||||
H.C. Wainwright & Co. LLC
|
July 25, 2016
|
$ | 366,666.67 | $ | 385,000 | ||||
Noam Rubenstein
|
July 25, 2016
|
$ | 165,000 | $ | 173,250 | ||||
Charles Worthman
|
July 25, 2016
|
$ | 22,222.22 | $ | 23,333 | ||||
Anson Investment Master Fund, LP
|
July 25, 2016
|
$ | 275,000 | $ | 288,750 | ||||
$ | 3,467,970 |
(1)
|
Assumes full repayment without conversion of any portion of Note and includes 5% interest per annum.
|
●
|
potentially reduced protection for intellectual property rights;
|
●
|
unexpected changes in tariffs, trade barriers and regulatory requirements;
|
●
|
economic weakness, including inflation or political instability in particular foreign economies and markets;
|
●
|
workforce uncertainty in countries where labor unrest is more common than in the United States;
|
●
|
production shortages resulting from any events affecting a product candidate and/or finished drug product supply or manufacturing capabilities abroad;
|
●
|
business interruptions resulting from geo-political actions, including war and terrorism or natural disasters, including earthquakes, hurricanes, typhoons, floods and fires; and
|
●
|
failure to comply with Office of Foreign Asset Control rules and regulations and the Foreign Corrupt Practices Act, or FCPA.
|
●
|
the ability to profitably manage acquired businesses or successfully integrate the acquired business’ operations and financial reporting and accounting control systems into our business;
|
●
|
increased indebtedness and contingent purchase price obligations associated with an acquisition;
|
●
|
the ability to fund cash flow shortages that may occur if anticipated revenue is not realized or is delayed, whether by general economic or market conditions or unforeseen internal difficulties;
|
●
|
the availability of funding sufficient to meet increased capital needs;
|
●
|
diversion of management’s attention; and
|
●
|
the ability to retain or hire qualified personnel required for expanded operations.
|
●
|
successfully attract and recruit new employees with the expertise and experience we will require;
|
●
|
successfully grow our marketing, distribution and sales infrastructure; and
|
●
|
continue to improve our operational, manufacturing, financial and management controls, reporting systems and procedures.
|
●
|
announcements of technological innovations or new products by us or our competitors;
|
●
|
announcement of FDA approval or disapproval of our product candidates or other product-related actions;
|
●
|
developments involving our discovery efforts and clinical trials;
|
●
|
developments or disputes concerning patents or proprietary rights, including announcements of infringement, interference or other litigation against us or our potential licensees;
|
●
|
developments involving our efforts to commercialize our products, including developments impacting the timing of commercialization;
|
●
|
announcements concerning our competitors or the biotechnology, pharmaceutical or drug delivery industry in general;
|
●
|
public concerns as to the safety or efficacy of our products or our competitors’ products;
|
●
|
changes in government regulation of the pharmaceutical or medical industry;
|
●
|
actual or anticipated fluctuations in our operating results;
|
●
|
changes in financial estimates or recommendations by securities analysts;
|
●
|
developments involving corporate collaborators, if any;
|
●
|
changes in accounting principles; and
|
●
|
the loss of any of our key management personnel.
|
●
|
our board of directors may increase the size of the board of directors up to nine directors and fill vacancies on the board of directors; and
|
●
|
our board of directors is expressly authorized to make, alter or repeal our bylaws.
|
●
|
that a broker or dealer approve a person's account for transactions in penny stocks; and
|
●
|
the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
|
●
|
obtain financial information and investment experience objectives of the person; and
|
●
|
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
|
●
|
sets forth the basis on which the broker or dealer made the suitability determination; and
|
●
|
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
|
●
|
prevailing market conditions, including the history and prospects for the industry in which we compete;
|
●
|
our future prospects; and
|
●
|
our capital structure.
|
Number
of Shares
|
Number of
Shares to
|
Shares Beneficially
Owned After Offering
|
||||||||||||||
Name
|
Owned
|
be Offered
|
Number
|
Percent
|
||||||||||||
Anson Investment Master Fund, LP
|
10,146,438 | (1) | 10,146,438 | (1) | - | 0 | % | |||||||||
FirstFire Global Opportunities Fund, L.L.C.
|
2,029,110 | (2) | 2,029,110 | - | 0 | % | ||||||||||
Intracoastal Capital, LLC
|
2,030,000 | (3) | 2,030,000 | - | 0 | % | ||||||||||
Sabby Healthcare Master Fund, Ltd.
|
4,060,000 | (4) | 4,060,000 | - | 0 | % | ||||||||||
CVI Investments, Inc.
|
2,030,000 | (5) | 2,030,000 | - | 0 | % | ||||||||||
H.C. Wainwright & Co. LLC
|
2,695,000 | (6) | 2,695,000 | - | 0 | % | ||||||||||
Noam Rubenstein
|
1,218,000 | (7) | 1,218,000 | - | 0 | % | ||||||||||
Charles Worthman
|
163,333 | (8) | 163,333 | - | 0 | % | ||||||||||
Garden State Securities, Inc.
|
700,000 | (9)(10) | 700,000 | - | 0 | % | ||||||||||
H.C. Wainwright & Co., LLC
|
520,000 | (9)(11) | 520,000 | - | 0 | % | ||||||||||
Total:
|
25,591,881 | 25,591,881 | - | 0 | % |
(1)
|
Includes the shares resulting from two separate investments: 1) (i) 4,616,438 (including 220,000 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $1,100,000, (ii) 1,000,000 common shares underlying a Warrant, (iii) 2,500,000 common shares issued as additional consideration for the Convertible Note all issued pursuant to the Share Issuance Agreement dated June 30, 2016, and 2) (i) 1,155,000 (including 55,000 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $275,000 (ii) 250,000 common shares underlying a Warrant, and (iii) 625,000 common shares issued as additional consideration for the Convertible Note all issued pursuant to the Share Issuance Agreement dated July 25, 2016. Bruce Winson has voting and dispositive power over the shares held by Anson Investment Master Fund LP. Mr. Winston is Managing Member of Admiralty Advisors, LLC, which is the General Partner of Frigate Ventures, LP, which is the General Partner of Anson Investments LP, which is the General Partner of Anson Investments Master Fund LP.
|
(2)
|
Includes (i) 1,154,110 (including 55,000 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $270,000, (ii) 250,000 common shares underlying a Warrant, and (iii) 625,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreements dated July June 30, 2016. FirstFire Capital Management, LLC is the Manager of FirstFire Global Opportunities Fund, LLC.
|
(3)
|
Includes (i) 1,155,000 (including 55,000 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $275,000 (ii) 250,000 common shares underlying a Warrant, and (iii) 625,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreement dated June 30, 2016. Mitchell P. Kopin (“Mr. Kopin”) and Daniel B. Asher (“Mr. Asher”), each of whom are managers of Intracoastal Capital LLC (“Intracoastal”), have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal. As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the securities reported herein that are held by Intracoastal. Mr. Asher, who is a manager of Intracoastal, is also a control person of a broker-dealer. As a result of such common control, Intracoastal may be deemed to be an affiliate of a broker-dealer. Intracoastal acquired the ordinary shares being registered hereunder in the ordinary course of business, and at the time of the acquisition of the ordinary shares and warrants described herein, Intracoastal did not have any arrangements or understandings with any person to distribute such securities.
|
(4)
|
Includes (i) 2,310,000 (including 110,000 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $550,000 (ii) 500,000 common shares underlying a Warrant, and (iii) 1,250,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreement dated July 15, 2016. This shareholder has indicated that Hal Mintz has voting and investment power over the shares held by it. This shareholder has indicated that Sabby Management, LLC serves as its investment manager, that Hal Mintz is the manager of Sabby Management, LLC, and that each of Sabby Management, LLC and Hal Mintz disclaim beneficial ownership over these shares except to the extent of any pecuniary interest therein.
|
(5)
|
Includes (i) 1,155,000 (including 55,000 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $275,000 (ii) 250,000 common shares underlying a Warrant, and (iii) 625,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreement dated July 15, 2016 Heights Capital Management, Inc., the authorized agent of CVI Investments, Inc. ("CVI"), has discretionary authority to vote and dispose of the shares held by CVI and may be deemed to be the beneficial owner of these shares. Martin Kobinger, in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and voting power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial ownership of the shares. CVI Investments, Inc.is affiliated with one or more FINRA member, none of whom are currently expected to participate in the sale pursuant to the prospectus contained in the Registration Statement of Shares purchased by the Investor in this Offering.
|
(6)
|
Includes (i) 1,540,000 (including 73,332 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $366,666.67 (ii) 330,000 common shares underlying a Warrant, and (iii) 825,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreement dated July 25, 2016. H.C. Wainwright & Co., LLC shares are controlled by and/or voted byMark Viklund, its, Chief Executive Officer.
|
(7)
|
Includes (i) 693,000 (including 33,300 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $165,000 (ii) 150,000 common shares underlying a Warrant, and (iii) 375,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreement dated July 25, 2016.
|
(8)
|
Includes (i) 93,333 (including 4,444 as estimated 5% interest on the principal for one year) common shares underlying a Convertible Note for $22,222 (ii) 20,000 common shares underlying a Warrant, and (iii) 50,000 common shares issued as additional consideration for the Convertible Note; all issued pursuant to the Securities Purchase Agreement dated July 25, 2016.
|
(9)
|
Common shares underlying warrants issued but unexercised. Exercise price of $0.40 per share.
|
(10)
|
Garden State Securities, Inc.is a broker and acted as the Placement Agent for the private offering under which the Convertible Notes were sold. While issued to Garden State Securities pursuant to the Engagement Agreement, the Warrants will be distributed as follows: 262,500 to Ernest Pellegrino, 262,500 to Max Povolotsky and 175,000 to Garden State Securities, Inc. The Owners of Garden State Securities, Inc. will collectively have voting control over the shares owned.
|
(11)
|
H.C. Wainwright is a broker and acted as a Placement Agent for the private offering under which the Convertible Notes were sold. While issued to HCW pursuant to the Engagement Agreement, the Warrants will be distributed as follows: 13,000 to Mark Viklund, 179,400 to Michael Vasinkevich, 163,800 to Noam Rubenstein, 5,200 to Charles Worthman, and 158,600 to H.C. Wainwright & Co. The owners of HCW will collectively have voting control over the shares owned.
|
●
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
●
|
block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block
|
●
|
as principal to facilitate the transaction;
|
●
|
purchases by a broker-dealer as principle and resale by the broker-dealer for its account;
|
●
|
an exchange distribution in accordance with the rules of the applicable exchange;
|
●
|
privately negotiated transaction;
|
●
|
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
|
●
|
specified number of such shares at a stipulated price per share;
|
●
|
a combination of any such methods of sale; and
|
●
|
any other method permitted pursuant to applicable law.
|
●
|
adopt resolutions;
|
●
|
to issue the shares;
|
●
|
to fix the number of shares;
|
●
|
to change the number of shares constituting any series; and
|
●
|
to provide for or change the following:
|
●
|
the voting powers;
|
●
|
designations;
|
●
|
preferences; and
|
●
|
relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following:
|
●
|
dividend rights (including whether dividends are cumulative);
|
●
|
dividend rates;
|
●
|
terms of redemption (including sinking fund provisions);
|
●
|
redemption prices;
|
●
|
conversion rights; and
|
●
|
liquidation preferences of the shares constituting any class or series of the preferred stock.
|
●
|
20 to 33%
|
●
|
33% to 50%
|
●
|
more than 50%.
|
1.
|
Developing a diversified product portfolio of exclusive, unique and patented non-prescription pharmaceutical and consumer health products through: (a) the acquisition of products or obtaining exclusive rights to market such products; and (b) the introduction of line extensions and reformulations of currently marketed products; and
|
2.
|
Building an innovative, global sales and marketing model through commercial partnerships with established complimentary partners that: (a) generates revenue; and (b) requires a lower cost structure compared to traditional pharmaceutical companies.
|
●
|
Focusing on acquisition of commercial, non-prescription pharmaceutical and consumer health products that are well aligned with current therapeutic areas of male and female sexual health, pain, vitality and respiratory diseases
. In general, we seek non-prescription pharmaceutical and consumer health products that are already marketed with scientific and/or clinical data and evidence that are aligned with our therapeutic areas, which we then can grow through promotion to physicians and expanding sales through our existing retail and online channels and commercial partners on a worldwide basis. We have done this through our acquisitions of (1) Ex-U.S. rights to Sensum+® from Centric Research Institute or CRI, (2) Zestra® an
d Zestra® Glide from Semprae, (3) Vesele® from Trōphikōs, (4) US and Canada rights to Androferti® from Laboratorios Q Pharma (Spain) and (5) FlutiCare® from Novalere;
|
●
|
Increasing the number of U.S. non-exclusive distribution channel partners for direct and online sales and also open more channels directly to physicians, urologists, gynecologists and therapists
. One of our goals is to increase the number of U.S. distribution channel partners that sell our products. To do this, we have devised a three-pronged approach. First, we are seeking to expand the number of OTC direct selling partners, such as the larger in-store distributors, and
to expand sales to the more regional, statewide and local distributors, such as regional pharmacy chains, large grocery stores and supplement and health stores. Second, we are working to expand our online presence through relationships with well-known online sellers that we believe have sufficient customers to warrant our relationship with them. Third, we are seeking to expand sales of our OTC products directly through sampling programs and detailing to physicians, urologists, gynecologists, therapists and to other healthcare providers who generally are used to recommending to their patients products that are supported by strong
scientific and/or clinical data and evidence;
|
●
|
Seeking commercial partnerships outside the U.S. and developing consistent international commercial and distribution systems
. We seek to develop a strong network of international distribution partners outside of the U.S. To do so, we are relying in part on past relationships that Dr. Bassam Damaj, our President and Chief Executive Officer, has had with certain commercial partners globally. In addition, we believe we have the ability to develop new relationships with commercial distributors who can demonstrate they have leading positions in their regions and can provide us with effective marketing and sales efforts and teams to detail our products physicians and therapists. Our commercial partners outside the U.S. are responsible for storing, distributing and promoting our products to physicians, urologists, gynecologists, therapists and to other healthcare providers. We have already entered into 11 commercial partnerships covering our products in 60 countries outside the U.S.;
|
●
|
Developing a proprietary patent portfolio to protect the therapeutic products and categories we desire to enter.
We have filed and are working to secure patent claims in the U.S. and abroad covering product inventions and innovations that we believe are valuable. These patents, if issued and ultimately found to be valid, may enable us to create a barrier to entry for competitors on a worldwide basis; and
|
●
|
Achieving cost economies of scale from lower cost manufacturing, integrated distribution channels and multiple product discounts.
We believe that we can achieve higher gross margins per product by shifting manufacturing to lower cost manufacturers. We also feel that we can acquire other OTC and consumer healthcare products and reintroduce them into our networks utilizing our integrated distribution channels, thus receiving multiple product economies of scale from our distribution partners.
|
●
|
completion of extensive nonclinical laboratory tests, animal studies and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice regulations;
|
●
|
submission to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may begin;
|
●
|
for some products, performance of adequate and well-controlled human clinical trials in accordance with the FDA’s regulations, including Good Clinical Practices, to establish the safety and efficacy of the product candidate for each proposed indication;
|
●
|
submission to the FDA of a new drug application, or NDA;
|
●
|
submission to the FDA of an abbreviated new drug application, or ANDA
|
●
|
satisfactory completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess compliance with current Good Manufacturing Practice, or cGMP, regulations; and
|
●
|
FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.
|
●
|
the product is manufactured at FDA registered establishments and in accordance with cGMPs;
|
●
|
the product label meets applicable format and content requirements including permissible “Indications” and all required dosing instructions and limitations, warnings, precautions and contraindications that have been established in an applicable OTC Monograph;
|
●
|
the product contains only permissible active ingredients in permissible strengths and dosage forms;
|
●
|
the product contains only suitable inactive ingredients which are safe in the amounts administered and do not interfere with the effectiveness of the preparation; and
|
●
|
the product container and container components meet FDA’s requirements.
|
●
|
meeting record-keeping requirements;
|
●
|
reporting of adverse experiences with the drug;
|
●
|
providing the FDA with updated safety and efficacy information;
|
●
|
reporting on advertisements and promotional labeling;
|
●
|
drug sampling and distribution requirements; and
|
●
|
complying with electronic record and signature requirements.
|
Name
|
Age
|
Title
|
||
Bassam Damaj, Ph.D.
|
47
|
President, Chief Executive Officer, Chief Accounting Officer
|
||
Henry Esber, Ph.D.
|
76
|
Chairman of the Board of Directors
|
||
Vivian Liu
|
53
|
Director
|
||
Ziad Mirza, M.D.
|
53
|
Director
|
Name of Beneficial Owner
|
Number Of Shares
|
Percent Before Offering (1)
|
Percent After Offering(2)
|
|||||||||
Bassam Damaj
|
19,698,954
|
22.59
|
%
|
17.47
|
%
|
|||||||
Henry Esber
|
0
|
0
|
%
|
0
|
%
|
|||||||
Vivian Liu
|
844,683
|
.97
|
%
|
.75
|
%
|
|||||||
Ziad Mirza
|
417,947
|
.48
|
%
|
.37
|
%
|
|||||||
Novalere Holdings LLC
|
12,808,796
|
14.69
|
%
|
11.36
|
%
|
|||||||
All Directors, Officers and Principle Stockholders as a Group
|
33,770,380
|
38.73
|
%
|
29.95
|
%
|
(1)
|
Percentage based upon 87,176,763 shares of common stock issued and outstanding as of June 29,
2016.
|
(2)
|
Assuming all Notes are converted and Warrants are exercised, total outstanding of up to 112,768,664.
|
●
|
any breach of the director’s duty of loyalty to us or our stockholders
|
●
|
acts or omissions not in good faith or, which involve intentional misconduct or a knowing violation of law
|
●
|
or under applicable Sections of the Nevada Revised Statutes
|
●
|
the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes or,
|
●
|
for any transaction from which the director derived an improper personal benefit.
|
1.
|
Developing a diversified product portfolio of exclusive, unique and patented non-prescription pharmaceutical and consumer health products through: (a) the acquisition of products or obtaining exclusive rights to market such products; and (b) the introduction of line extensions and reformulations of currently marketed products; and
|
2.
|
Building an innovative, global sales and marketing model through commercial partnerships with established complimentary partners that: (a) generates revenue; and (b) requires a lower cost structure compared to traditional pharmaceutical companies.
|
Three Months Ended
June 30,
2016
|
Three Months Ended
June 30,
2015
|
$ Change
|
% Change
|
|||||||||||||
NET REVENUES:
|
||||||||||||||||
Product sales, net
|
$
|
1,019,520
|
$
|
178,473
|
$
|
841,047
|
471.2
|
%
|
||||||||
License revenues
|
-
|
5,000
|
(5,000
|
)
|
(100.0
|
)%
|
||||||||||
1,019,520
|
183,473
|
836,047
|
455.7
|
%
|
||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||
Cost of product sales
|
262,934
|
64,029
|
198,905
|
310.6
|
%
|
|||||||||||
Research and development
|
3,892
|
-
|
3,892
|
100.0
|
%
|
|||||||||||
General and administrative
|
1,195,087
|
901,968
|
239,119
|
32.5
|
%
|
|||||||||||
Total Operating Expenses
|
1,461,913
|
965,997
|
495,916
|
51.3
|
%
|
|||||||||||
LOSS FROM OPERATIONS
|
(442,393
|
)
|
(782,524
|
)
|
(340,131
|
)
|
(43.5
|
) %
|
||||||||
Interest expense
|
(1,877,149
|
)
|
(97,484
|
)
|
1,779,665
|
1,825.6
|
%
|
|||||||||
Other income
|
111
|
-
|
111
|
100.0
|
%
|
|||||||||||
Change in fair value of derivative liability
|
(2,040,909
|
)
|
15,735
|
(2,056,644
|
)
|
(13,070.5
|
)%
|
|||||||||
NET LOSS
|
$
|
(4,360,340
|
)
|
$
|
(864,273
|
)
|
3,496,067
|
404.5
|
%
|
Six Months Ended
June 30,
2016
|
Six Months Ended
June 30,
2015
|
$ Change
|
% Change
|
|||||||||||||
NET REVENUES:
|
||||||||||||||||
Product sales, net
|
$
|
1,243,983
|
$
|
375,325
|
$
|
868,658
|
231.4
|
%
|
||||||||
License revenues
|
1,000
|
5,000
|
(4,000
|
)
|
(80.0
|
)%
|
||||||||||
1,244,983
|
380,325
|
864,658
|
227.3
|
%
|
||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||
Cost of product sales
|
383,057
|
140,449
|
242,608
|
172.7
|
%
|
|||||||||||
Research and development
|
3,892
|
-
|
3,892
|
100.0
|
%
|
|||||||||||
General and administrative
|
2,518,320
|
2,349,970
|
168,350
|
7.2
|
%
|
|||||||||||
Total Operating Expenses
|
2,905,269
|
2,490,419
|
414,850
|
16.7
|
%
|
|||||||||||
LOSS FROM OPERATIONS
|
(1,660,286
|
)
|
(2,110,094
|
)
|
(449,808
|
)
|
(21.3
|
) %
|
||||||||
Interest expense
|
(2,273,584
|
)
|
(271,366
|
)
|
2,002,218
|
737.8
|
%
|
|||||||||
Loss on extinguishment of debt
|
-
|
(32,500
|
)
|
(32,500
|
)
|
(100.0
|
)%
|
|||||||||
Other income
|
1,876
|
-
|
1,876
|
100.0
|
%
|
|||||||||||
Change in fair value of derivative liability
|
(1,983,315
|
)
|
47,929
|
(2,031,244
|
)
|
(4,238.0
|
)%
|
|||||||||
NET LOSS
|
$
|
(5,915,309
|
)
|
$
|
(2,366,031
|
)
|
3,549,278
|
150.0
|
%
|
Period ended:
|
High
|
Low
|
||||||
June 30, 2015
|
$
|
0.17
|
$
|
0.12
|
||||
September 30, 2015
|
$
|
0.15
|
$
|
0.07
|
||||
December 31, 2015
|
$
|
0.12
|
$
|
0.05
|
||||
March 31, 2016
|
$
|
0.07
|
$
|
0.03
|
||||
June 30, 2016
|
$
|
0.04
|
$
|
0.31
|
●
|
our financial condition;
|
●
|
earnings;
|
●
|
need for funds;
|
●
|
capital requirements;
|
●
|
prior claims of preferred stock to the extent issued and outstanding; and
|
●
|
other factors, including any applicable laws.
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Stock Unit
Awards
|
All Other
Compensation
|
Total
|
|||||||||||||||||||||
Bassam Damaj
|
2014
|
$
|
-
|
(1)
|
$
|
281,250
|
(2)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
281,250
|
|||||||||||||
President and Chief Executive and Financial
Officer
|
2015
|
$
|
106,993
|
(1)
|
$
|
-
|
$
|
-
|
$
|
646,500
|
(3)
|
$
|
-
|
$
|
753,493
|
|||||||||||||
Lynnette Dillen
|
2014
|
$
|
136,658
|
$
|
-
|
$
|
-
|
$
|
198,000
|
(3)
|
$
|
-
|
$
|
334,658
|
||||||||||||||
Executive Vice President and Chief Financial
Officer
(4)
|
2015
|
$
|
182,560
|
$
|
-
|
$
|
-
|
$
|
207,864
|
(3)
|
$
|
-
|
$
|
390,424
|
(1)
|
Pursuant to the LOC Convertible Debenture, Dr. Damaj has agreed not to draw a salary pursuant to his employment agreement for so long as payment of such salary would jeopardize the Company’s ability to continue as a going concern and not to draw any salary accrued through December 31, 2014.
|
(2)
|
Restricted Stock Units issued in lieu of cash bonus.
|
(3)
|
Represents the total grant date fair value, as determined under FASB ASC Topic 718, Stock Compensation, of restricted stock awards granted during the respective fiscal year.
|
(4)
|
Ms. Dillen resigned as our chief financial officer and executive vice president in July, 2015
|
Name
|
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)
|
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
|
||||||
Bassam Damaj
|
1,875,000
|
131,250
|
||||||
Name
|
Fees Earned
or Paid in
Cash
|
Stock
Awards
|
Stock Unit
Awards
|
Total
|
||||||||||||
Henry Esber
|
$
|
-
|
$
|
-
|
$
|
64,833
|
$
|
64,833
|
||||||||
Vivian Liu
|
-
|
-
|
52,833
|
52,833
|
||||||||||||
Ziad Mirza
|
-
|
-
|
52,833
|
52,833
|
||||||||||||
Total:
|
$
|
-
|
$
|
-
|
$
|
170,499
|
$
|
170,499
|
●
|
no restricted shares will be eligible for immediate sale on the date of this prospectus; and
|
●
|
the remainder of the restricted shares will be eligible for sale from time to time pursuant to available exemptions, subject to restrictions on such sales by affiliates.
|
INDEX TO FINANCIAL STATEMENTS
|
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated Balance Sheets - December 31, 2015 and 2014
|
F-2
|
Consolidated Statements of Operations - Years Ended December 31, 2015 and 2014
|
F-3
|
Consolidated Statements of Cash Flows - Years Ended December 31, 2015 and 2014
|
F-4
|
Consolidated Statements of Stockholders’ Deficit - December 31, 2015 and 2014
|
F-6
|
Notes to the Consolidated Financial Statements - December 31, 2015 and 2014
|
F-7
|
Condensed Consolidated Balance Sheets - June 30, 2016 (Unaudited) and December 31, 2015
|
G-1
|
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2016 and 2015
|
G-2
|
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months ended June 30, 2016 and 2015
|
G-3 |
Notes to Condensed Consolidated Financial Statements - June 30, 2016
|
G-5
|
As of December 31,
|
||||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash
|
$
|
55,901
|
$
|
7,479
|
||||
Accounts receivable, net
|
83,097
|
191,601
|
||||||
Prepaid expenses
|
53,278
|
55,024
|
||||||
Deferred financing costs, net
|
97,577
|
-
|
||||||
Inventories
|
254,443
|
265,959
|
||||||
Total Current Assets
|
544,296
|
520,063
|
||||||
PROPERTY AND EQUIPMENT, NET
|
35,101
|
54,511
|
||||||
OTHER ASSETS
|
||||||||
Security deposits
|
14,958
|
21,919
|
||||||
Goodwill
|
549,368
|
429,225
|
||||||
Intangible assets, net
|
5,300,859
|
1,055,372
|
||||||
TOTAL ASSETS
|
$
|
6,444,582
|
$
|
2,081,090
|
||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
691,365
|
$
|
362,160
|
||||
Deferred revenue and customer deposits
|
24,079
|
25,224
|
||||||
Accrued interest payable
|
79,113
|
52,568
|
||||||
Short-term loans payable
|
230,351
|
-
|
||||||
Derivative liabilities – embedded conversion feature
|
301,779
|
-
|
||||||
Derivative liabilities – warrants
|
432,793
|
-
|
||||||
Current portion of notes payable and convertible debentures, net of
debt discount of $55,982 in 2014
|
73,200
|
314,018
|
||||||
Line of credit convertible debenture and non-convertible debenture –
related parties, net of debt discount of $17,720 in 2015
|
391,472
|
-
|
||||||
Convertible debentures, net of debt discount of $952,464 in 2015
|
505,036
|
-
|
||||||
Total Current Liabilities
|
2,729,188
|
753,970
|
See accompanying notes to these consolidated financial statements.
|
For the Year Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
NET REVENUES:
|
||||||||
License revenues
|
$
|
5,000
|
$
|
375,000
|
||||
Product sales, net
|
730,717
|
655,113
|
||||||
Net Revenues
|
735,717
|
1,030,113
|
||||||
OPERATING EXPENSES:
|
||||||||
Cost of product sales
|
340,713
|
292,080
|
||||||
Research and development
|
-
|
143,914
|
||||||
General and administrative
|
3,910,192
|
4,378,749
|
||||||
Impairment of Goodwill
|
759,428
|
-
|
||||||
Total Operating Expenses
|
5,010,333
|
4,814,743
|
||||||
LOSS FROM OPERATIONS
|
(4,274,616
|
)
|
(3,784,630
|
)
|
||||
OTHER INCOME AND (EXPENSES)
|
||||||||
Interest expense
|
(1,153,376
|
)
|
(532,230
|
)
|
||||
Change in fair value of derivative liabilities
|
393,509
|
-
|
||||||
Other expense, net
|
(8,495
|
)
|
-
|
|||||
Fair value adjustment for contingent consideration
|
115,822
|
(103,274
|
)
|
|||||
Loss on extinguishment of debt
|
(32,500
|
)
|
(406,833
|
)
|
||||
Total Other Expense, Net
|
(685,040
|
)
|
(1,042,337
|
)
|
||||
LOSS BEFORE BENEFIT FROM INCOME TAXES
|
(4,959,656
|
)
|
(4,826,967
|
)
|
||||
Benefit from income taxes
|
(757,028
|
) |
-
|
|||||
NET LOSS
|
$
|
(4,202,628
|
)
|
$
|
(4,826,967
|
)
|
||
NET LOSS PER SHARE OF COMMON STOCK –
BASIC AND DILUTED
|
$
|
(0.08
|
)
|
$
|
(0.20
|
)
|
||
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING –
BASIC AND DILUTED
|
52,517,530
|
24,384,037
|
For the Year Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
NET LOSS
|
$
|
(4,202,628
|
)
|
$
|
(4,826,967
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||
Depreciation
|
28,950
|
63,450
|
||||||
Allowance for doubtful accounts
|
5,892
|
-
|
||||||
Common stock, restricted stock units and stock options issued for
services and board compensation
|
1,508,769
|
2,258,068
|
||||||
Gain of purchase price adjustment to goodwill
|
(759,428
|
) | ||||||
Impairment of goodwill
|
759,428
|
|
||||||
Loss on extinguishment of debt
|
32,500
|
406,833
|
||||||
Change in fair value of contingent consideration
|
(115,822
|
)
|
103,274
|
|||||
Change in fair value of derivative liabilities
|
(393,509
|
)
|
-
|
|||||
Amortization of deferred financing costs
|
53,342
|
-
|
||||||
Shares of common stock issued for debt amendment
|
15,500
|
-
|
||||||
Fair value of embedded conversion feature in convertible
debentures in excess of allocated proceeds
|
71,224
|
-
|
||||||
Amortization of debt discount
|
906,719
|
443,867
|
||||||
Amortization of intangible assets
|
550,789
|
114,006
|
||||||
Changes in operating assets and liabilities, net of acquisition amounts
|
||||||||
Accounts receivable
|
102,612
|
25,040
|
||||||
Prepaid expenses
|
27,653
|
(20,752
|
)
|
|||||
Security deposits
|
6,961
|
22,200
|
||||||
Inventories
|
11,516
|
(88,108
|
)
|
|||||
Accounts payable and accrued expenses
|
329,205
|
721,811
|
||||||
Accrued interest payable
|
29,745
|
86,353
|
||||||
Deferred revenue and customer deposits
|
(1,145
|
)
|
(150,345
|
)
|
||||
Net Cash Used In Operating Activities
|
(1,031,727
|
)
|
(841,270
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property & equipment
|
(9,540
|
)
|
(38,989
|
)
|
||||
Purchase of intangible assets
|
(3,276
|
)
|
(22,545
|
)
|
||||
Net Cash Used In Investing Activities
|
(12,816
|
)
|
(61,534
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net proceeds from (repayments of) line of credit convertible debenture –
related party
|
(14,886
|
)
|
424,078
|
|||||
Proceeds from convertible debentures
|
1,325,000
|
50,000
|
||||||
Fees paid in connection with issuance of convertible debentures
|
(82,500
|
)
|
-
|
|||||
Proceeds from short-term loans payable
|
258,278
|
-
|
||||||
Payments on short-term loans payable
|
(27,927
|
)
|
-
|
|||||
Proceeds from notes payable and convertible debentures
|
130,000
|
340,000
|
||||||
Payments on notes payable and convertible debentures
|
(440,000
|
)
|
-
|
|||||
Payment made on contingent consideration
|
-
|
(87,168
|
)
|
|||||
Proceeds from non-convertible debentures - related party
|
50,000
|
150,000
|
||||||
Payments on non-convertible debentures - related party
|
(105,000
|
)
|
-
|
|||||
Net Cash Provided By Financing Activities
|
1,092,965
|
876,910
|
||||||
NET CHANGE IN CASH
|
48,422
|
(25,894
|
)
|
|||||
CASH AT BEGINNING OF YEAR
|
7,479
|
33,373
|
||||||
CASH AT END OF YEAR
|
$
|
55,901
|
$
|
7,479
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION :
|
||||||||
Cash paid for income taxes
|
$
|
2,400
|
$
|
-
|
||||
Cash paid for interest
|
$
|
107,764
|
$
|
33,363
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION :
|
||||||||
Common stock issued for conversion of notes payable
|
$
|
92,000
|
$
|
110,581
|
||||
Common stock issued for conversion of debentures – related party
|
$
|
75,000
|
$
|
643,226
|
||||
Common stock issued for extinguishment of debt
|
$
|
-
|
$
|
779,000
|
||||
Common stock issued for the purchase of Vesele
|
$
|
-
|
$
|
40,000
|
||||
Common stock issued for acquisition
|
$
|
2,071,625
|
$
|
-
|
||||
Fair value of the contingent consideration for acquisition
|
$
|
2,905,425
|
$
|
-
|
||||
Return of shares of common stock related to license agreement
|
$
|
38,000
|
$
|
-
|
||||
Fair value of warrants issued as deferred financing costs
|
$
|
68,419
|
$
|
-
|
||||
Fair value of embedded conversion feature derivative liabilities
recorded as debt discount
|
$
|
830,560
|
$
|
-
|
||||
Relative fair value of common stock issued in connection with
convertible debentures
|
$
|
374,474
|
$
|
-
|
||||
Relative fair value of warrants issued in connection with convertible
debentures
|
$
|
89,551
|
$
|
-
|
||||
Fair value of warrant derivative liabilities recorded as debt discount
|
$
|
226,297
|
$
|
-
|
||||
Fair value of beneficial conversion feature on line of credit convertible
debenture – related party
|
$
|
8,321
|
$
|
-
|
||||
Accrued interest added to principal in connection with amendment of notes
payable
|
$
|
3,200
|
$
|
-
|
||||
Exchange of restricted stock units for shares of common stock
|
$
|
500
|
$
|
-
|
See accompanying notes to these consolidated financial statements.
|
Common Stock
|
Additional
Paid-in
|
Accumulated
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
||||||||||||||||
Balance at January 1, 2014
|
21,548,456
|
$
|
21,549
|
$
|
6,531,110
|
$
|
(6,405,000
|
)
|
$
|
147,659
|
||||||||||
Common stock and options issued
for services
|
1,665,203
|
1,665
|
747,398
|
-
|
749,063
|
|||||||||||||||
|
||||||||||||||||||||
Common stock issued for
product acquisition
|
142,857
|
143
|
39,857
|
-
|
40,000
|
|||||||||||||||
Stock compensation expense
|
-
|
-
|
1,509,005
|
-
|
1,509,005
|
|||||||||||||||
|
||||||||||||||||||||
Common stock issued upon conversion
of debt, of which 1,579,297 shares
were issued to related parties
|
3,755,747
|
3,756
|
1,529,050
|
-
|
1,532,806
|
|||||||||||||||
|
||||||||||||||||||||
Convertible debt discount -
beneficial conversion feature
|
-
|
-
|
325,855
|
-
|
325,855
|
|||||||||||||||
|
||||||||||||||||||||
Convertible debt discount - warrants
|
-
|
-
|
96,532
|
-
|
96,532
|
|||||||||||||||
|
||||||||||||||||||||
Net loss for year ended December 31, 2014
|
-
|
-
|
-
|
(4,826,967
|
)
|
(4,826,967
|
)
|
|||||||||||||
Balances at December 31, 2014
|
27,112,263
|
27,113
|
10,778,807
|
(11,231,967
|
)
|
(426,047
|
)
|
|||||||||||||
Common stock issued for services
|
1,780,625
|
1,780
|
208,749
|
-
|
210,529
|
|||||||||||||||
Stock-based compensation
|
-
|
-
|
1,298,240
|
-
|
1,298,240
|
|||||||||||||||
Common stock issued for
product acquisition
|
12,947,657
|
12,948
|
2,058,677
|
-
|
2,071,625
|
|||||||||||||||
Common stock issued upon conversion of
convertible debentures, note payable and
debentures – related party
|
699,260
|
699
|
166,301
|
-
|
167,000
|
|||||||||||||||
Common stock issued for exchange of
restricted stock units
|
500,000
|
500
|
(500
|
)
|
-
|
-
|
||||||||||||||
Return of shares of common stock from CRI
license transaction
|
(200,000
|
)
|
(200
|
)
|
(37,800
|
)
|
-
|
(38,000
|
)
|
|||||||||||
Return of shares of common stock from
Semprae merger transaction
|
(386,075
|
)
|
(386
|
)
|
(115,436
|
)
|
-
|
(115,822
|
)
|
|||||||||||
Fair value of beneficial conversion
on line of credit convertible debenture –
related party
|
-
|
-
|
8,321
|
-
|
8,321
|
|||||||||||||||
Shares of common stock issued for
extension of February 2014 convertible
debentures
|
250,000
|
250
|
32,250
|
-
|
32,500
|
|||||||||||||||
Shares of common stock issued for
amendment of January 2015 convertible
debentures
|
100,000
|
100
|
15,400
|
-
|
15,500
|
|||||||||||||||
Relative fair value of shares of
common stock issued in connection with
convertible debentures
|
4,337,500
|
4,337
|
370,137
|
-
|
374,474
|
|||||||||||||||
Relative fair value of warrants
issued in connection with convertible
debentures
|
-
|
-
|
89,551
|
-
|
89,551
|
|||||||||||||||
Fair value of warrants issued to
placement agents in connection with
convertible debentures
|
-
|
-
|
68,419
|
-
|
68,419
|
|||||||||||||||
Net loss for year ended December 31, 2015
|
-
|
-
|
-
|
(4,202,628
|
)
|
(4,202,628
|
)
|
|||||||||||||
Balances at December 31, 2015
|
47,141,230
|
$
|
47,141
|
$
|
14,941,116
|
$
|
(15,434,595
|
)
|
$
|
(446,338
|
)
|
● |
Level 1 measurements are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
|
● |
Level 2 measurements are inputs other than quoted prices included in Level 1 that are observable either directly or indirectly.
|
|
● |
Level 3 measurements are unobservable inputs.
|
2015
|
2014 | ||||||||||||||||
Retailer 1
|
$ | 131,900 | 18 | % | $ | 171,600 | 16 | % | |||||||||
Partner 1
|
$ | 102,300 | 14 | % | $ | - | - | % | |||||||||
Partner 2
|
$ | 84,500 | 11 | % | $ | - | - | % | |||||||||
Partner 3
|
$ | - | - | % | $ | 175,000 | 17 | % | |||||||||
Partner 4
|
$ | 50,000 | <10 | % | $ | 245,380 | 23 | % |
·
|
all of CRI’s rights in past, present and future Sensum+® product formulations and presentations, and
|
·
|
an exclusive, perpetual license to commercialize Sensum+® products in all territories except for the United States.
|
Shares
|
FMV
|
|||||||
Closing Consideration Shares
|
12,947,657 | $ | 2,071,625 | |||||
ANDA Consideration Shares
|
12,947,655 | 1,657,300 | ||||||
Total
|
25,895,312 | $ | 3,728,925 |
Cash
|
$
|
43,124
|
||
Prepaid expenses
|
25,907
|
|||
Total tangible assets
|
69,031
|
|||
Product rights and related manufacturing agreement
|
4,681,000
|
|||
Trademarks
|
150,000
|
|||
Total identifiable intangible assets
|
4,831,000
|
|||
Goodwill
|
120,143
|
|||
Total acquired assets
|
5,020,174
|
|||
Other current liabilities
|
(43,125
|
)
|
||
Total assumed liabilities
|
(43,125
|
)
|
||
Acquired assets net of assumed liabilities
|
$
|
4,977,049
|
Year Ended
December 31, 2015
|
Year Ended
December 31, 2014
|
|||||||||||||||
As Reported
|
Pro Forma (unaudited)
|
As Reported
|
Pro Forma (unaudited)
|
|||||||||||||
Net revenues
|
$ | 735,717 | $ | 735,717 | $ | 1,030,113 | $ | 1,030,113 | ||||||||
Net loss
|
$ | (4,202,628 | ) | $ | (4,578,521 | ) | $ | (4,826,967 | ) | $ | (8,350,196 | ) | ||||
Net loss per share of common stock – basic and diluted
|
$ | (0.08 | ) | $ | (0.09 | ) | $ | (0.20 | ) | $ | (0.22 | ) | ||||
Weighted average number of shares outstanding – basic and diluted
|
52,517,530 | 53,794,559 | 24,384,037 | 37,331,694 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Raw materials and supplies
|
$ | 77,649 | $ | 191,186 | ||||
Work in process
|
90,540 | - | ||||||
Finished goods
|
86,254 | 74,773 | ||||||
Total
|
$ | 254,443 | $ | 265,959 |
December 31,
|
|||||||||
2015
|
2014
|
||||||||
Computer equipment
|
$ | 5,254 | $ | 5,254 | |||||
Office furniture and fixtures
|
33,376 | 33,376 | |||||||
Production equipment
|
276,479 | 266,939 | |||||||
Software
|
338,976 | 338,976 | |||||||
Total cost
|
654,085 | 644,545 | |||||||
Less accumulated depreciation
|
618,984 | 590,034 | |||||||
Property and equipment, net
|
$ | 35,101 | $ | 54,511 |
Amount
|
Accumulated
Amortization
|
Net Amount
|
Useful Lives
(years)
|
|||||||||||||
Patent & Trademarks
|
$ | 417,597 | $ | 57,593 | $ | 360,004 | 7 - 15 | |||||||||
Customer Contracts
|
611,119 | 127,316 | 483,803 | 10 | ||||||||||||
Sensum+® License (from CRI)
|
234,545 | 60,554 | 173,991 | 10 | ||||||||||||
Vesele® trademark
|
25,287 | 3,886 | 21,401 | 8 | ||||||||||||
Novalere Mfg. Contract
|
4,681,000 | 419,340 | 4,261,660 | 10 | ||||||||||||
Total
|
$ | 5,969,548 | $ | (668,689 | ) | $ | 5,300,859 |
Amount
|
Accumulated Amortization
|
Net Amount
|
Useful Lives
(years)
|
|||||||||||||
Patent & Trademarks
|
$ | 264,321 | $ | (23,671 | ) | $ | 240,650 | 7 - 14 | ||||||||
Customer Contracts
|
611,119 | (62,262 | ) | 548,857 | 10 | |||||||||||
Sensum+® license (from CRI)
|
272,545 | (31,250 | ) | 241,295 | 10 | |||||||||||
Vesele® trademark
|
25,287 | (717 | ) | 24,570 | 8 | |||||||||||
Total
|
$ | 1,173,272 | $ | (117,900 | ) | $ | 1,055,372 |
December 31, 2015
|
||||
Beginning balance December 31, 2013
|
$
|
421,372
|
||
Purchase price adjustment for acquisition of Semprae Laboratories, Inc. in 2013
|
7,853
|
|||
Ending Balance December 31, 2014
|
429,225
|
|||
Acquisition of Novalere (see Note 3)
|
120,143
|
|||
Release of valuation allowance in connection with acquisition of Novalere (see Note 10)
|
759,428
|
|||
Impairment of valuation allowance in connection with acquisition of Novalere (see Note 10)
|
(759,428
|
)
|
||
Ending Balance December 31, 2015
|
$
|
549,368
|
2015
|
2014
|
|||||||
Current notes payable and convertible debentures:
|
||||||||
February 2014 Convertible Debenture
|
$ | - | $ | 330,000 | ||||
July 2015 Debenture (Amended August 2014 Debenture)
|
73,200 | 40,000 | ||||||
Total current notes payable and convertible debentures
|
73,200 | 370,000 | ||||||
Less: Debt discount
|
- | (55,982 | ) | |||||
$ | 73,200 | $ | 314,018 | |||||
Long-term notes-payable and convertible debentures
|
||||||||
September 2014 Convertible Debenture
|
$ | - | $ | 92,000 | ||||
Less: Debt discount
|
- | (67,726 | ) | |||||
$ | - | $ | 24,274 |
2015
|
2014
|
|||||||
Investor 1 - July 27, 2015
|
$ | 500,000 | $ | - | ||||
Investor 1 - September 30, 2015
|
100,000 | - | ||||||
Investor 2 - August 25, 2015
|
500,000 | - | ||||||
Investor 2 - September 21, 2015
|
100,000 | - | ||||||
Investor 3 – August 27, 2015
|
125,000 | - | ||||||
Sub-total of gross proceeds received
|
1,325,000 | - | ||||||
Plus: Original issue discount (10%)
|
132,500 | - | ||||||
Face amount
|
1,457,500 | - | ||||||
Less: Debt discount
|
(952,464 | - | ||||||
Carrying value
|
505,036 | - | ||||||
Less: Current portion
|
(505,036 | - | ||||||
Convertible debentures – long-term
|
$ | - | $ | - |
|
1.
|
A common stock purchase warrant to each Buyer, which allows the Buyers to purchase an aggregate of 1,325,000 shares of common stock and the placement agent to purchase 483,333 shares of common stock (aggregating 1,808,333 shares of the Company’s common stock) at an exercise price of $0.30 per share (See Note 8); and
|
|
2.
|
4,337,500 restricted shares of common stock to the Buyers.
|
December 31, 2015
|
||||
Expected terms (in years)
|
5.00 | |||
Expected volatility
|
101 - 119 | % | ||
Risk-free interest rate
|
1.37 – 1.58 | % | ||
Dividend yield
|
- |
2015
|
2014
|
|||||||
Line of credit convertible debenture – related party
|
$ | 409,192 | $ | 424,078 | ||||
2014 non-convertible debentures - related parties
|
25,000 | 150,000 | ||||||
Total
|
434,192 | 574,078 | ||||||
Less : Debt discount
|
(17,720 | ) | (76,492 | ) | ||||
Carrying value
|
416,472 | 497,586 | ||||||
Less: Current portion
|
(391,472 | ) | - | |||||
Total long-term debentures – related parties
|
$ | 25,000 | $ | 497,586 |
2015
|
2014
|
|||||
Wages
|
$
|
1,178,909
|
$
|
791,987
|
||
Vacation
|
170,371
|
114,941
|
||||
Payroll taxes on the above
|
93,510
|
-
|
||||
Total
|
1,442,790
|
906,928
|
||||
Classified as long-term
|
(906,928
|
)
|
(906,928
|
)
|
||
Accrued compensation
|
$
|
535,862
|
$
|
-
|
2015
|
2014
|
|||||||
Expected life (in years)
|
6.0
|
6.0
|
||||||
Expected volatility
|
228.78
|
%
|
224.42% - 236.78
|
%
|
||||
Average risk free interest rate
|
2.16
|
%
|
1.69% - 2.02
|
%
|
||||
Dividend yield
|
0
|
%
|
0
|
%
|
||||
Grant date fair value
|
$
|
0.10
|
$
|
0.31
|
Options
|
Weighted average exercise price
|
Weighted remaining contractual life (years)
|
Aggregate intrinsic value
|
|||||||||||||
Outstanding at December 31, 2013
|
21,000 | $ | 0.64 | 9.9 | - | |||||||||||
Granted
|
92,000 | $ | 0.31 | 9.6 | - | |||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Cancelled
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Outstanding at December 31, 2014
|
113,000 | $ | 0.37 | 9.5 | - | |||||||||||
Granted
|
83,000 | $ | 0.10 | 9.7 | - | |||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Cancelled
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Outstanding at December 31, 2015
|
196,000 | $ | 0.31 | 9.0 | $ | - | ||||||||||
Vested at December 31, 2014
|
113,000 | $ | 0.37 | 9.5 | $ | - | ||||||||||
Vested at December 31, 2015
|
196,000 | $ | 0.31 | 9.0 | $ | - |
Restricted Stock Units
|
||||
Outstanding at December 31, 2013
|
6,311,250 | |||
Granted
|
1,958,989 | |||
Expired
|
- | |||
Cancelled
|
- | |||
Forfeited
|
- | |||
Outstanding at December 31, 2014
|
8,270,239 | |||
Granted
|
10,354,497 | |||
Exchanged
|
(500,000 | |||
Cancelled
|
(570,000 | |||
Outstanding at December 31, 2015
|
17,554,736 | |||
Vested at December 31, 2014
|
7,228,565 | |||
Vested at December 31, 2015
|
14,398,487 |
As of December 31,
|
||||||||
2015
|
2014
|
|||||||
Gross number of shares excluded:
|
||||||||
Restricted stock units - unvested
|
3,156,249
|
1,041,674
|
||||||
Stock options
|
196,000
|
113,000
|
||||||
Convertible debentures
|
12,751,512
|
2,115,195
|
||||||
Warrants
|
6,372,831
|
630,973
|
||||||
Total
|
22,476,592
|
3,900,842
|
December 31, 2015
|
||||
Expected life (in years)
|
4.06 – 5.00 | |||
Expected volatility
|
226 | % | ||
Average risk free interest rate
|
1.15% - 1.54 | % | ||
Dividend yield
|
0 | % |
December 31, 2015
|
||||
Stock price
|
$ | 0.07 – $0.16 | ||
Strike price
|
$ | 0.15 | ||
Expected life (in years)
|
0.74 – 1.08 | |||
Expected volatility
|
101% – 119 | % | ||
Average risk free interest rate
|
0.28% – 0.60 | % |
Fair value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Embedded conversion feature derivative liabilities
|
$ | 301,779 | $ | - | $ | - | $ | 301,779 | $ | 301,779 | ||||||||||
Warrant derivative liabilities
|
432,793 | - | - | 432,793 | 432,793 | |||||||||||||||
Total
|
$ | 734,572 | $ | - | $ | - | $ | 734,572 | $ | 734,572 |
Warrant derivative liabilities
|
December 31, 2015
|
|||
Beginning balance December 31, 2014
|
$ | - | ||
Initial fair value of warrant derivative liability with January 2015 Non-Convertible
Debenture
|
99,999 | |||
Initial fair value of warrant derivative liability with January 2015 Non-Convertible
Debenture to Former CFO
|
49,999 | |||
Initial fair value of warrant derivative liability with the February 2014 Convertible
Debentures
|
76,299 | |||
Change in Fair Value
|
206,496 | |||
Ending Balance December 31, 2015
|
$ | 432,793 | ||
Embedded conversion feature derivative liabilities
|
||||
Beginning Balance December 31, 2014
|
$ | - | ||
Initial fair value of embedded conversion feature derivative liabilities with the Q3 2015
Notes
|
901,784 | |||
Change in Fair Value
|
(600,005 | ) | ||
Ending Balance December 31, 2015
|
$ | 301,779 |
|
|
2015
|
|
|
2014
|
|
||
Current:
|
||||||||
Federal
|
|
$
|
(759,428
|
)
|
|
$
|
-
|
|
State
|
2,400
|
-
|
||||||
Total current
|
|
|
(757,028
|
)
|
|
|
-
|
|
Deferred:
|
|
|
|
|
|
|
||
Federal
|
|
(67,000
|
)
|
|
1,680,000
|
|
||
State
|
34,000
|
300,000
|
||||||
Change in valuation allowance
|
33,000
|
(1,980,000
|
)
|
|||||
Total deferred
|
|
|
-
|
|
|
|
-
|
|
Income tax provision (benefit)
|
|
$
|
(757,028
|
)
|
|
$
|
-
|
|
|
|
2015
|
|
|
2014
|
|
||
|
|
|
|
|
|
|
||
Net operating loss carry-forwards
|
|
$
|
3,521,000
|
|
|
$
|
2,218,000
|
|
State taxes
|
1,000
|
-
|
||||||
Equity based instruments
|
|
|
2,181,000
|
|
|
|
1,515,000
|
|
Deferred compensation
|
|
|
575,000
|
|
|
|
361,000
|
|
Intangibles
|
|
|
158,000
|
|
|
|
173,000
|
|
Derivative liabilities
|
331,000
|
-
|
||||||
Warrants
|
|
|
-
|
|
|
|
759,000
|
|
Other
|
|
|
106,000
|
|
|
|
46,000
|
|
Total deferred tax assets
|
6,873,000
|
5,072,000
|
||||||
Intangibles
|
(1,687,000
|
)
|
-
|
|||||
Debt discount
|
(142,000
|
)
|
-
|
|||||
Other
|
(5,000
|
)
|
-
|
|||||
Total deferred tax liabilities
|
(1,834,000
|
)
|
-
|
|||||
|
||||||||
Less: valuation allowance
|
|
|
(5,039,000
|
)
|
|
|
(5,072,000
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
-
|
|
|
|
-
|
|
|
|
|
2015
|
|
|
|
2014
|
|
Expected federal tax
|
|
|
34.00
|
%
|
|
|
34.00
|
%
|
State tax (net of federal benefit)
|
|
|
(0.04
|
)%
|
|
|
6.13
|
%
|
Release of valuation allowance
|
18.10
|
%
|
-
|
%
|
||||
Other
|
|
|
(0.01
|
)%
|
|
|
0.89
|
%
|
Valuation allowance
|
|
|
(33.97
|
)%
|
|
|
(41.02
|
)%
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
18.08
|
%
|
|
|
-
|
%
|
See accompanying notes to these condensed consolidated financial statements.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
NET REVENUES:
|
||||||||||||||||
Product sales, net
|
$
|
1,019,520
|
$
|
178,473
|
$
|
1,243,983
|
$
|
375,325
|
||||||||
License revenues
|
-
|
5,000
|
1,000
|
5,000
|
||||||||||||
Net revenues
|
1,019,520
|
183,473
|
1,244,983
|
380,325
|
||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||
Cost of product sales
|
262,934
|
64,029
|
383,057
|
140,449
|
||||||||||||
Research and development
|
3,892
|
-
|
3,892
|
-
|
||||||||||||
General and administrative
|
1,195,087
|
901,968
|
2,518,320
|
2,349,970
|
||||||||||||
Total operating expenses
|
1,461,913
|
965,997
|
2,905,269
|
2,490,419
|
||||||||||||
LOSS FROM OPERATIONS
|
(442,393
|
)
|
(782,524
|
)
|
(1,660,286
|
)
|
(2,110,094
|
)
|
||||||||
OTHER INCOME AND (EXPENSES):
|
||||||||||||||||
Interest expense
|
(1,877,149
|
)
|
(97,484
|
)
|
(2,273,584
|
)
|
(271,366
|
)
|
||||||||
Loss on extinguishment of debt
|
-
|
-
|
-
|
(32,500
|
)
|
|||||||||||
Other income
|
111
|
-
|
1,876
|
-
|
||||||||||||
Change in fair value of derivative liabilities
|
(2,040,909
|
)
|
15,735
|
(1,983,315
|
)
|
47,929
|
||||||||||
Total other expense, net
|
(3,917,947
|
)
|
(81,749
|
)
|
(4,255,023
|
)
|
(255,937
|
)
|
||||||||
NET LOSS
|
$
|
(4,360,340
|
)
|
$
|
(864,273
|
)
|
$
|
(5,915,309
|
)
|
$
|
(2,366,031
|
)
|
||||
NET LOSS PER SHARE OF COMMON STOCK – BASIC AND DILUTED
|
$
|
(0.05
|
)
|
$
|
(0.02
|
)
|
$
|
(0.08
|
)
|
$
|
(0.06
|
)
|
||||
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING – BASIC AND DILUTED
|
85,395,846
|
40,816,767
|
70,271,333
|
37,909,664
|
See accompanying notes to these condensed consolidated financial statements.
|
For the Six Months Ended
June 30,
|
||||||||
2016
|
2015
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
NET LOSS
|
$
|
(5,915,309
|
)
|
$
|
(2,366,031
|
)
|
||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
|
||||||||
Depreciation
|
7,370
|
17,815
|
||||||
Allowance for doubtful accounts
|
5,708
|
-
|
||||||
Common stock, restricted stock units and stock options issued for services and board compensation
|
1,223,941
|
1,071,411
|
||||||
Loss on extinguishment of debt
|
-
|
32,500
|
||||||
Imputed interest on contingent consideration
|
22,334
|
-
|
||||||
Change in fair value of derivative liabilities
|
1,983,315
|
(47,929
|
)
|
|||||
Fair value of embedded conversion feature in convertible debentures in excess
of allocated proceeds
|
938,840
|
-
|
||||||
Amortization of debt discount and deferred financing costs
|
1,161,131
|
220,417
|
||||||
Amortization of intangible assets
|
335,685
|
239,582
|
||||||
Changes in operating assets and liabilities, net of acquisition amounts
|
||||||||
Accounts receivable
|
55,242
|
153,716
|
||||||
Prepaid expenses
|
24,964
|
1,778
|
||||||
Security deposits
|
(37,460
|
)
|
6,961
|
|||||
Inventories
|
32,006
|
(25,130
|
)
|
|||||
Accounts payable and accrued expenses
|
378,563
|
530,778
|
||||||
Accrued interest payable
|
56,147
|
53,241
|
||||||
Deferred revenue and customer deposits
|
(16,325
|
)
|
(17,470
|
)
|
||||
Net cash provided by (used in) operating activities
|
256,152
|
(128,361
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property & equipment
|
(6,565
|
)
|
(9,537
|
)
|
||||
Purchase of intangible assets
|
-
|
(3,277
|
)
|
|||||
Net cash used in investing activities
|
(6,565
|
)
|
(12,814
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from (repayments of) line of credit convertible debenture – related party
|
(119,000
|
)
|
113
|
|||||
Proceeds from short-term loans payable
|
21,800
|
-
|
||||||
Payments on short-term loans payable
|
(180,995
|
)
|
-
|
|||||
Proceeds from notes payable and convertible debentures
|
416,500
|
100,000
|
||||||
Payments on notes payable
|
(226,660
|
)
|
-
|
|||||
Deferred financing costs in connection with convertible debentures
|
(19,000
|
)
|
-
|
|||||
Proceeds from non-convertible debentures – related party
|
-
|
50,000
|
||||||
Net cash (used in) provided by financing activities
|
(107,355
|
)
|
150,113
|
|||||
NET CHANGE IN CASH
|
142,232
|
8,938
|
||||||
CASH AT BEGINNING OF PERIOD
|
55,901
|
7,479
|
||||||
CASH AT END OF PERIOD
|
$
|
198,133
|
$
|
16,417
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for income taxes
|
$
|
-
|
$
|
-
|
||||
Cash paid for interest
|
$
|
87,085
|
$
|
-
|
||||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING & FINANCING ACTIVITIES:
|
||||||||
Common stock issued for conversion of notes payable, convertible debentures and accrued interest
|
$
|
1,515,635
|
$
|
92,000
|
||||
Reclassification of the fair value of the embedded conversion features from derivative liability to additional paid-in capital upon conversion
|
$
|
2,018,565
|
$
|
-
|
||||
Cashless exercise of warrants
|
$
|
3,194
|
$
|
-
|
||||
Reclassification of the fair value of the warrants from derivative liability to additional paid-in capital upon cashless exercise
|
$
|
518,224
|
$
|
-
|
||||
Common stock issued for acquisition
|
$
|
-
|
$
|
2,071,625
|
||||
Relative fair value of common stock issued in connection with notes payable recorded as debt discount
|
$
|
93,964
|
$
|
-
|
||||
Relative fair value of warrants issued in connection with convertible debentures recorded as debt discount
|
$
|
186,526
|
$
|
-
|
||||
Relative fair value of common stock subscribed but unissued in connection with convertible debentures recorded as debt discount
|
$
|
472,814
|
$
|
-
|
||||
Fair value of embedded conversion feature derivative liabilities recorded as debt discount
|
$ |
470,824
|
$ |
-
|
||||
Fair value of warrants issued to placement agents recorded as debt discount | $ | 140,836 | $ | - | ||||
Deferred financing costs included in accounts payable and accrued expenses
|
$
|
15,000
|
$
|
-
|
||||
Net proceeds from convertible debentures in escrow included in restricted cash
|
$
|
1,305,000
|
$
|
-
|
||||
Fair value of the contingent consideration for acquisition
|
$
|
314,479
|
$
|
2,905,425
|
||||
Proceeds from note payable paid to seller in connection with acquisition
|
$
|
300,000
|
$
|
-
|
||||
Deferred financing costs paid with proceeds from note payable
|
$
|
7,500
|
$
|
-
|
||||
Fair value of unamortized non-forfeitable common stock issued to consultant included in prepaid expenses
|
$
|
9,500
|
$
|
-
|
||||
Issuance of shares of common stock for vested restricted stock units
|
$
|
18,888
|
$
|
-
|
||||
Return of shares of common stock related to license agreement
|
$
|
-
|
$
|
38,000
|
||||
Common stock issued in connection with debt amendment
|
$
|
-
|
$
|
32,500
|
||||
Fair value of beneficial conversion feature on line of credit convertible debenture – related party
|
$
|
3,444
|
$
|
4,154
|
See accompanying notes to these condensed consolidated financial statements.
|
●
|
Level 1 measurements are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
●
|
Level 2 measurements are inputs other than quoted prices included in Level 1 that are observable either directly or indirectly.
|
●
|
Level 3 measurements are unobservable inputs.
|
The total purchase price is summarized as follows:
|
||||
Cash consideration
|
$
|
300,000
|
||
Fair value of future earn out payments
|
314,479
|
|||
Total
|
$
|
614,479
|
Six Months Ended
June 30, 2016
|
Six Months Ended
June 30, 2015
|
||||||||||||||||
As
Reported
|
Pro Forma (unaudited)
|
As Reported
|
Pro Forma (unaudited)
|
||||||||||||||
Net revenues
|
$
|
1,244,983
|
$
|
1,294,621
|
$
|
380,325
|
$
|
1,868,770
|
|||||||||
Net loss
|
$
|
(5,915,309
|
)
|
$
|
(5,928,345
|
)
|
$
|
(2,366,031
|
)
|
$
|
(2,178,643
|
)
|
|||||
Net loss per share of common stock – basic and diluted
|
$
|
(0.08
|
)
|
$
|
(0.08
|
)
|
$
|
(0.06
|
)
|
$
|
(0.06
|
)
|
|||||
Weighted average number of shares outstanding – basic and diluted
|
70,271,333
|
70,271,333
|
37,909,664
|
37,909,664
|
Three Months Ended
June 30, 2015
|
|||||||||
As
Reported
|
Pro Forma (unaudited)
|
||||||||
Net revenues
|
$
|
183,473
|
$
|
1,123,661
|
|||||
Net loss
|
$
|
(864,273
|
)
|
$
|
(645,347
|
)
|
|||
Net loss per share of common stock – basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
|||
Weighted average number of shares outstanding – basic and diluted
|
40,816,767
|
40,816,767
|
Six Months Ended
June 30, 2015
|
||||||||
As
Reported
|
Pro Forma (unaudited)
|
|||||||
Net revenues
|
$
|
380,325
|
$
|
380,325
|
||||
Net loss
|
$
|
(2,366,031
|
)
|
$
|
(2,682,161
|
)
|
||
Net loss per share of common stock – basic and diluted
|
$
|
(0.06
|
)
|
$
|
(0.07
|
)
|
||
Weighted average number of shares outstanding – basic and diluted
|
37,909,664
|
40,413,334
|
June
30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Raw materials and supplies
|
$
|
8,088
|
$
|
77,649
|
||||
Work in process
|
28,410
|
90,540
|
||||||
Finished goods
|
185,939
|
86,254
|
||||||
Total
|
$
|
222,437
|
$
|
254,443
|
June 30, 2016
|
||||||||||||||||
Amount
|
Accumulated
Amortization
|
Net Amount
|
Useful Lives
(years)
|
|||||||||||||
Patent & Trademarks
|
$
|
1,032,076
|
$
|
(112,864
|
)
|
$
|
919,212
|
5 - 15
|
||||||||
Customer Contracts
|
611,119
|
(157,872
|
)
|
453,247
|
10
|
|||||||||||
Sensum+(R) License (from CRI)
|
234,545
|
(72,282
|
)
|
162,263
|
10
|
|||||||||||
Vesele(R) trademark
|
25,287
|
(5,466
|
)
|
19,821
|
8
|
|||||||||||
Novalere Mfg. Contract
|
4,681,000
|
(655,890
|
)
|
4,025,110
|
10
|
|||||||||||
Total
|
$
|
6,584,027
|
$
|
(1,004,374
|
)
|
$
|
5,579,653
|
December 31, 2015
|
||||||||||||||||
Amount
|
Accumulated
Amortization
|
Net Amount
|
Useful Lives
(years)
|
|||||||||||||
Patent & Trademarks
|
$
|
417,597
|
$
|
(57,593
|
)
|
$
|
360,004
|
7 - 15
|
||||||||
Customer Contracts
|
611,119
|
(127,316
|
)
|
483,803
|
10
|
|||||||||||
Sensum+(R) License (from CRI)
|
234,545
|
(60,554
|
)
|
173,991
|
10
|
|||||||||||
Vesele(R) trademark
|
25,287
|
(3,886
|
)
|
21,401
|
8
|
|||||||||||
Novalere Mfg. Contract
|
4,681,000
|
(419,340
|
)
|
4,261,660
|
10
|
|||||||||||
Total
|
$
|
5,969,548
|
$
|
(668,689
|
)
|
$
|
5,300,859
|
Remainder of 2016
|
$
|
310,000
|
||
2017
|
651,000
|
|||
2018
|
651,000
|
|||
2019
|
651,000
|
|||
2020
|
651,000
|
|||
Thereafter
|
2,666,000
|
|||
$
|
5,580,000
|
2016
|
2015
|
|||||||
Note payable and non-convertible debentures:
|
||||||||
February 2016 Note Payable
|
$
|
473,340
|
$
|
-
|
||||
May 2016 Debenture
|
24,000
|
-
|
||||||
July 2015 Debenture (Amended August 2014 Debenture)
|
73,200
|
73,200
|
||||||
Total note payable and non-convertible debentures
|
570,540
|
73,200
|
||||||
Less: Debt discount
|
(6,093
|
)
|
-
|
|||||
Carrying value
|
564,447
|
73,200
|
||||||
Less: Current portion
|
(333,750
|
)
|
(73,200
|
)
|
||||
Note payable and non-convertible debentures, net of current portion
|
$
|
230,697
|
$
|
-
|
Remainder of 2016
|
$
|
198,543
|
||
2017
|
317,013
|
|||
2018
|
54,984
|
|||
$
|
570,540
|
December 31,
2015
|
||||
Investor 1 - July 27, 2015
|
$
|
500,000
|
||
Investor 1 - September 30, 2015
|
100,000
|
|||
Investor 2 - August 25, 2015
|
500,000
|
|||
Investor 2 - September 21, 2015
|
100,000
|
|||
Investor 3 – August 27, 2015
|
125,000
|
|||
|
1,325,000
|
|||
Plus: Original issue discount (10%)
|
132,500
|
|||
Face amount
|
1,457,500
|
|||
Less: Debt discount
|
(1,050,041
|
)
|
||
Carrying value
|
407,459
|
|||
Less: Current portion
|
(407,459
|
)
|
||
Convertible debentures – long-term
|
$
|
-
|
June 30,
2016
|
||||
Investor 1 – June 30, 2016
|
$
|
1,000,000
|
||
Investor 2 – June 30, 2016
|
250,000
|
|||
Investor 3 – June 30, 2016
|
250,000
|
|||
Sub-total of gross proceeds received
|
1,500,000
|
|||
Plus: Original issue discount (10%)
|
150,000
|
|||
Face amount
|
1,650,000
|
|||
Less: Debt discount
|
(1,650,000
|
)
|
||
Carrying value
|
-
|
|||
Less: Current portion
|
-
|
|||
Convertible debentures – long-term
|
$
|
-
|
1.
|
A common stock purchase warrant to each Investor, which allows the Investors to purchase an aggregate of 1,500,000 shares of common stock and the placement agent to purchase 680,000 shares of common stock (aggregating 2,180,000 shares of the Company’s common stock) at an exercise price of $0.40 per share (see Note 8); and
|
|
2.
|
3,750,000 restricted shares of common stock to the Investors.
|
June 30,
2016
|
||||
Expected terms (in years)
|
5.00
|
|||
Expected volatility
|
229%
|
|||
Risk-free interest rate
|
1.01%
|
|||
Dividend yield
|
-
|
June 30,
2016
|
December 31,
2015
|
|||||||
Line of credit convertible debenture – related party
|
$
|
290,192
|
$
|
409,192
|
||||
2014 non-convertible debenture – related party
|
25,000
|
25,000
|
||||||
Total
|
315,192
|
434,192
|
||||||
Less : Debt discount
|
(5,445
|
)
|
(17,720
|
)
|
||||
Carrying value
|
309,747
|
416,472
|
||||||
Less: Current portion
|
(309,747
|
)
|
(391,472
|
)
|
||||
Total long-term debentures – related party
|
$
|
-
|
$
|
25,000
|
June 30,
2016
|
December 31,
2015
|
|||||||
Wages
|
$
|
1,411,821
|
$
|
1,178,909
|
||||
Vacation
|
198,292
|
170,371
|
||||||
Payroll taxes on the above
|
112,405
|
93,510
|
||||||
Total
|
1,722,518
|
1,442,790
|
||||||
Classified as long-term
|
(906,928
|
)
|
(906,928
|
)
|
||||
Accrued compensation
|
$
|
815,590
|
$
|
535,862
|
2016
|
2015
|
|||||||
Expected life (in years)
|
10.0
|
6.0
|
||||||
Expected volatility
|
227.9
|
%
|
222.8
|
%
|
||||
Average risk free interest rate
|
1.77
|
%
|
1.54
|
%
|
||||
Dividend yield
|
0
|
%
|
0
|
%
|
||||
Grant date fair value
|
$
|
0.16
|
$
|
0.14
|
Options
|
Weighted average exercise price
|
Weighted remaining contractual life (years)
|
Aggregate intrinsic value
|
|||||||||||||
Outstanding at December 31, 2015
|
196,000
|
$
|
0.31
|
9.0
|
-
|
|||||||||||
Granted
|
58,500
|
$
|
0.09
|
10.0
|
-
|
|||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Cancelled
|
-
|
-
|
-
|
-
|
||||||||||||
Forfeited
|
-
|
-
|
-
|
-
|
||||||||||||
Outstanding at June 30, 2016
|
254,500
|
$
|
0.22
|
8.8
|
$
|
16,145
|
||||||||||
Vested at June 30, 2016
|
254,500
|
$
|
0.22
|
8.8
|
$
|
16,145
|
Restricted Stock Units
|
||||
Outstanding at December 31, 2015
|
17,554,736
|
|||
Granted
|
10,787,947
|
|||
Exchanged
|
(18,887,859
|
)
|
||
Cancelled
|
-
|
|||
Outstanding at June 30, 2016
|
9,454,824
|
|||
Vested at June 30, 2016
|
7,561,071
|
As of June 30,
|
||||||||
2016
|
2015
|
|||||||
Gross number of shares excluded:
|
||||||||
Restricted stock units - unvested
|
1,893,753
|
6,274,572
|
||||||
Stock options
|
254,500
|
134,000
|
||||||
Convertible debentures and accrued interest
|
6,600,000
|
2,281,128
|
||||||
Warrants
|
5,206,011
|
1,630,973
|
||||||
Total
|
13,954,264
|
10,320,673
|
June 30, 2016
|
||||
Expected life (in years)
|
3.56 – 3.95
|
|||
Expected volatility
|
222.7% -229.7
|
%
|
||
Average risk free interest rate
|
0.86% - 1.07
|
%
|
||
Dividend yield
|
0
|
%
|
June 30, 2016
|
||||
Stock price
|
$ |
0.05 - $0.32
|
||
Strike price
|
$ |
0.15 - $0.25
|
||
Expected life (in years)
|
0.26 – 1.08
|
|||
Expected volatility
|
121% – 274
|
%
|
||
Average risk free interest rate
|
0.28% – 0.46
|
%
|
||
Dividend yield | - |
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
Embedded conversion feature derivative liabilities
|
$
|
1,409,664
|
$
|
-
|
$
|
-
|
$
|
1,409,664
|
$
|
1,409,664
|
||||||||||
Warrant derivative liabilities
|
181,098
|
-
|
-
|
181,098
|
181,098
|
|||||||||||||||
Total
|
$
|
1,590,762
|
$
|
-
|
$
|
-
|
$
|
1,590,762
|
$
|
1,590,762
|
Warrant derivative liabilities
|
||||
Beginning balance December 31, 2015
|
$
|
432,793
|
||
Reclassification of fair value of warrant derivative liability to
additional paid-in capital upon exercise of warrants
|
(518,224
|
)
|
||
Change in fair value
|
266,529
|
|||
Ending balance June 30, 2016
|
$
|
181,098
|
||
Embedded conversion feature derivative liabilities
|
||||
Beginning balance December 31, 2015
|
$
|
301,779
|
||
Fair value of Q2 2016 Notes embedded conversion feature derivative liability
|
1,409,664
|
|||
Reclassification of fair value of embedded conversion feature derivative liability to
additional paid-in capital upon conversions of Q3 2015 Notes
|
(2,018,565
|
)
|
||
Change in fair value
|
1,716,786
|
|||
Ending balance June 30, 2016
|
$
|
1,409,664
|
|
(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
(i)
|
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
|
|
(ii)
|
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
|
|
(iii)
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
|
|
(A)
|
Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8 (§239.16b of this chapter), and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and
|
|
(B)
|
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 (§239.13 of this chapter) or Form F-3 (§239.33 of this chapter) and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) (§230.424(b) of this chapter) that is part of the registration statement.
|
By:
|
/s/ Bassam Damaj
|
|
Bassam Damaj, President and Chief Executive Officer
|
||
and Principal Financial Officer
|
Signature
|
Title
|
Date
|
||
/s/ Bassam Damaj
|
President and Chief Executive Officer
|
August 8, 2016
|
||
Bassam Damaj
|
||||
/s/ Bassam Damaj
|
Director
|
August 8, 2016
|
||
Bassam Damaj
|
||||
/s/ Bassam Damaj
|
Principal Executive Officer
|
August 8, 2016
|
||
Bassam Damaj
|
||||
/s/ Bassam Damaj
|
Principal Financial Officer
|
August 8, 2016
|
||
Bassam Damaj
|
||||
/s/ Bassam Damaj
|
Principal Accounting Officer
|
August 8, 2016
|
||
Bassam Damaj
|
||||
/s/ Bassam Damaj
|
Secretary
|
August 8, 2016
|
||
Bassam Damaj
|
Reports of Independent Registered Public Accounting Firms
|
s | |||
Consolidated Balance Sheets - December 31, 2015 and 2014
|
F-2 | |||
Consolidated Statements of Operations - Years Ended December 31, 2015 and 2014
|
F-3 | |||
Consolidated Statements of Cash Flows - Years Ended December 31, 2015 and 2014
|
F-4 | |||
Consolidated Statements of Stockholders’ Deficit - December 31, 2015 and December 31, 2014
|
F-6 | |||
Notes to the Consolidated Financial Statements - December 31, 2015 and 2014
|
F-7 - F-37 | |||
Condensed Consolidated Balance Sheets - June 30, 2015 (Unaudited) and December 31, 2015
|
G-1 | |||
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2016 and 2015
|
G-2 | |||
Condensed Consolidated Statements of Cash Flows (Unaudited) – For the Six Months Ended June 30, 2016 and 2015
|
G-3 | |||
Notes to Condensed Consolidated Financial Statements - June 30, 2016
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G-4 - G-30 |
Incorporated by reference
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||||||||||||
Exhibit
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Description
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Form
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Exhibit
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Filing date
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||||||||
3
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(i)(a)
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Amended and Restated Articles of Incorporation of Innovus Pharmaceuticals, Inc.
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8-K
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3.3
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12/11/2011
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3(ii)(a)
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Bylaws of Innovus Pharmaceuticals, Inc.
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10-K
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3.2
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12/2/2007
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5
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*
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Opinion of Weintraub Law Group, PC
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10.1
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*
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Form of Securities Purchase Agreement
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10.2
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*
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Form of Convertible Promissory Note
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10.3
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*
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Form of Common Stock Purchase Warrant Agreement
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10.4
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*
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Form of Registration Agreement
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10.5
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*
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Garden State Securities Engagement Agreement
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10.6
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*
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H.C. Wainwright and Co, LLC Engagement Agreement
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23.1
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*
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Consent of Hall & Company, Inc.
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23.2 | * |
Consent of Eisner Amper, LLP
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Weintraub
LAW GROUP PC
Business and Corporate Finance
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10085 CARROLL CANYON ROAD, SUITE 230
SAN DIEGO, CALIFORNIA 92131
TELEPHONE (858) 566-7010
FACSIMILE (858) 566-7015
INFO@WEINTRAUBLAWGROUP.COM
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·
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should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing;
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·
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the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and
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·
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the Company may not assert staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
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By:
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Name: Bassam Damaj, Ph.D.
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Title: President & CEO
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By:
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Name:
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Title:
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Address:
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Principal Amount: $
[ ]
.00
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Actual Amount of Purchase Price: $
[ ]
.00
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1.Semprae Laboratories, Inc.
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Delaware
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2. Novalere, Inc.
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Delaware
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3.FastTrack Pharmaceuticals, Inc.
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Nevada
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(1)
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Anson, FirstFire and SBI Convertible Promissory Note date July 2015 and related warrants
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(2)
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SBI note dates March 2016
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Principal Amount: $
[ ]
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Issue Date: June 30 , 2016
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Actual Amount of Purchase Price:
$
[ ]
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By:
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Name: Bassam Damaj
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Title: President & CEO
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☐
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The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
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Name of DTC Prime Broker:
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Account Number:
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☐
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The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
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mailto:
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Date of Conversion:
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Applicable Conversion Price:
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$
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Number of Shares of Common Stock to be Issued Pursuant to Conversion of the Note:
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Amount of Principal Balance Due remaining Under the Note after this conversion:
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By:
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Name:
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Title:
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Date:
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Issuance Date: June ___, 2016
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Name of Assignee
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Address
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Number of Shares
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By:
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Name: Bassam Damaj, Ph.D.
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Title: President & CEO
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By:
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Name:
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Title:
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1.
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Review the business and operation of the Company and its historical and projected financial condition.
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2.
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Advise Company of “best efforts” private placement of debt or equity securities to fulfill the Company’s business plan and a possible public listing through a self-filing and/or reverse merger.
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3.
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Contact for the Company possible financing sources.
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(a)
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The Company recognizes and confirms that GSS, in acting pursuant to this engagement, will be using information in reports and other information provided by others, including, without limitation, information provided by or on behalf of the Company, and that GSS does not assume responsibility for and may rely, without independent verification, on the accuracy and the completeness of any such reports and information. The Company hereby warrants that all of its information relating to the Company will not contain any untrue statement of a material fact or omit to state any material fact or omit to state any material fact necessary to make the statements contained herein, in the light of the circumstances under which they were made, not misleading. The Company agrees to provide GSS with (i) prompt notice of any material development affecting the Company; (ii) such other information concerning the business and financial condition of the Company as GSS may from time to time reasonably request provided that such information is maintained by GSS pursuant to a confidentiality agreement. GSS agrees to distribute information regarding the Company, not in the public domain, only with written approval by the Company.
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(b)
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The Company agrees that any information or advice rendered by GSS or its representatives in connection with this engagement is for the confidential use of the Company only and, except as otherwise required by law, the Company has not and will not permit any third party to disclose or otherwise refer to such advice or information in any manner without GSS’s prior written consent, unless such information becomes part of the public domain through no fault of the Company.
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(c)
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GSS agrees that any information, plans or data regarding the Company and its activities are for the confidential use of GSS only and, except as otherwise required by law or otherwise in the public domain, GSS will not disclose or otherwise permit any third party to disclose or otherwise refer to, without the Company’s prior written consent.
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June 24, 2016 |
Very truly yours,
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||
RODMAN & RENSHAW, A UNIT OF H.C. WAINWRIGHT & CO., LLC | ||
By
/s/ MARK W VIKLUND
Name: Mark W Viklund
Title: CEO
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A.
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On [____] the Company entered into a securities purchase agreement (the “Purchase Agreement”) and issued a Convertible Promissory Note, Issuance Shares and Warrants to Buyers as more fully described in the Securities Purchase Agreement and Convertible Promissory Note and Common Stock Purchase Warrant (“Transaction Documents”). Capitalized terms are used herein and not defined shall have the meanings given to them in the Purchase Agreement and Transaction Documents.
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B.
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The Company and Buyer entered into a Registration Rights Agreement dated [___] (the “Registration Rights Agreement”) concerning the registration of the common shares and underlying shares described in the Securities Purchase Agreement.
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C.
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The Company and the Buyer desire to amend the Purchase Agreement, Convertible Note, Common Stock Purchase Warrant and the Registration Rights Agreement as set for herein.
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1.
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Section 2(g) has been amended to include the addition of the following three paragraphs:
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2.
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Section 4(d) has been revised and restated in its entirety, as follows:
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i.
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From the date first written above until
the later of (A) the 12-month anniversary of the date hereof and (B) the
date the Note (including all principal, interest, fees and expenses related thereto) is
fully repaid or converted, the Company will not, (i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries' debt, equity or equity equivalent securities, including without limitation any debt, preferred shares, options, warrants or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock (any such offer, sale, grant, disposition or announcement being referred to as a “
Subsequent Offering
”) or (ii) enter into any definitive agreement with regard to the foregoing, in each case unless the Company shall have first complied with this Section 4(d), except for any grants of stock, options to purchase stock, restricted stock units to its directors, officers, employees, consultants or its corporate collaborators or pursuant to any merger or acquisition event.
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ii.
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At least
three (3)
Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Buyer a written notice of its intention to effect a Subsequent Financing (“
Pre-Notice
”), which Pre-Notice shall ask such
Buyer if it wants to review the details of such financing (such additional notice, a “
Subsequent Financing Notice
”). Upon the request of a
Buyer, and only upon a request by such Buyer, for a Subsequent Financing Notice, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Buyer. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected, shall include a term sheet or similar document relating thereto as an attachment and offer to issue and sell to or exchange with the Buyer at least fifty percent (50%) of the Offered Securities (the “
Subscription Amount
”).
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iii.
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To accept an Offer, in whole or in part, the Buyer must deliver a written notice to the Company prior to the end of the
2
nd
Trading
Day after the Buyer’s receipt of the
Subsequent Financing Notice (the “
Offer Period
”), setting forth the portion of the Subscription Amount that the Buyer elects to purchase (the “
Notice of Acceptance
”). The Company shall have
one Trading Day
from the expiration of the Offer Period to complete the Subsequent Offering and in connection therewith to issue and sell the Subscription Amount to the Buyer but only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the Buyer or less favorable to the Company than those set forth in the Offer Notice. Following
such the first Trading Day following the Offer Period, the Company shall either (A) public announce the consummation of the Subsequent Offering or (B) notify the Buyer of the termination of the Subsequent Offering, and after such time the Buyer shall not be in possession of material, non-public information.
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iv.
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Notwithstanding anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company shall
be
required to comply with the above procedures again as if the new terms were a new Subsequent Offering; provided that at least 5 Trading Days shall have elapsed between Offer Periods.
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v.
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If by the
3
rd
Business Day following delivery of the Offer Notice no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by the Buyer, such transaction shall be deemed to have been abandoned and the Buyer shall not be deemed to be in possession of any material, non-public information with respect to the Company.
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vi.
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The Company and the Buyer agree that if the Buyer elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Buyer.”
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3.
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Section 7 has been revised to include a new subsection 7(i) as follows:
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4.
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Section 1.4 has been revised to include a new subsection 1.4(g) as follows:
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5.
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Section 1.4 has been revised to include a new subsection 1.4(h) as follows:
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6.
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Section 7 have been revised to include a new subsection 7(a) as follows:
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7.
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Section 7 hae been revised to include a new subsection 7(b) as follows:
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8.
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Section 2(d) has been replaced and restated as follows:
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9.
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Section 2(e) has been replaced and restated as follows:
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By:
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Name: Bassam Damaj, Ph.D.
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||
Title: President & CEO
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By:
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Name:
|
||
Title:
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