Daniel W. Rumsey, Esq.
Jessica R. Sudweeks, Esq.
Disclosure Law Group,
|
Randy Berholtz, Esq.
Executive Vice President, Corporate
Development and General Counsel
|
Gregory Sichenzia, Esq.
Thomas Ross, Esq.
Jay Yamamoto, Esq.
|
a Professional Corporation
|
Innovus Pharmaceuticals, Inc.
|
Sichenzia Ross Ference Kesner LLP
|
600 West Broadway, Suite 700
|
9171 Towne Centre Drive, Suite 440
|
61 Broadway, 32
nd
Floor
|
San Diego, California 92101
|
San Diego, CA 92122
|
New York, NY 10006
|
Tel: (619) 272-7050
|
Tel: (858) 249-9873
|
Tel:
(212)
930-9700
|
Fax: (619) 330-2101
|
Fax: (858) 249-7879
|
Fax:
(212)
930-9725
|
|
|
|
Large
accelerated filer ☐
|
Accelerated
filer ☐
|
Non-accelerated
filer ☐ (Do not check if a
smaller reporting company)
|
Smaller
reporting company ☒
|
Title of Each Class of
Securities to be Registered
|
Amount to
be Registered
|
Proposed Maximum Aggregate
Offering Price
|
Amount of
Registration Fee
|
Primary Offering:
|
|
|
|
Common
stock, par value $0.001 per share
|
–
|
$
10,000,000
(1)
|
$
1,159.00
|
Warrants to purchase shares of common stock
(1) (2)
(4)
|
–
|
$
50,000
(3)
|
$
5.80
|
Common stock issuable upon exercise of
warrants
(1)
(2)
|
–
|
$
6,250,000
|
$
724.38
|
Placement
agent’s warrants
(5)
|
–
|
$
7,000
(3)
|
$
0.81
|
Shares of common stock issuable upon exercise of
the placement agent’s warrants
(5)
|
–
|
$
875,000
|
$
101.41
|
Secondary Offering:
|
|
|
|
Common stock, par value $0.001 per share
(2)
|
25,617,592
|
$
4,867,342.48
(6)
|
$
564.12
|
|
The information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
these securities and is not soliciting an offer to buy these
securities in any state or other jurisdiction where
the offer or sale is not permitted.
|
|
|
Per
share and related warrant
|
Total
|
Public offering
price
|
$
|
$
|
Placement
agent’s fees
(1)
|
$
|
$
|
Offering proceeds,
before expenses, to us
|
$
|
$
|
|
PAGE
|
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23
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25
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27
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36
|
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46
|
|
50
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|
56
|
|
58
|
|
60
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63
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64
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65
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65
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65
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65
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66
|
|
|
|
|
PROSPE
C
TUS
SUMMARY
The following summary highlights information contained elsewhere in
this prospectus and does not contain all of the information that
you should consider in making your investment decision in our
securities. Before investing in our securities, you should
carefully read this entire prospectus, including our financial
statements and the related notes included in this prospectus and
the information set forth under the headings “Risk
Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.”
Our Company
We are an emerging over-the-counter
("
OTC
") consumer goods and specialty pharmaceutical
company
engaged in the commercialization, licensing and
development of safe and effective non-prescription medicine and
consumer care products to improve men’s and women’s
health and vitality and respiratory diseases. We deliver
innovative and uniquely presented and packaged health solutions
through our (a) OTC medicines and consumer and health products,
which we market directly, (b) commercial partners to primary care
physicians, urologists, gynecologists and therapists, and (c)
directly to consumers through our on-line channels, retailers and
wholesalers.
We are dedicated to being
a leader in developing and marketing new OTC and branded
Abbreviated New Drug Application (“
ANDA
”) products. We are actively pursuing
opportunities where existing prescription drugs have recently, or
are expected to, change from prescription (or Rx) to OTC. These
“Rx-to-OTC switches” require Food and Drug
Administration (“
FDA
”) approval through a process initiated by
the New Drug Application (“
NDA
”) holder.
Our
business model leverages our ability to (a) develop and build our
current pipeline of products and (b) to also acquire outright or
in-license commercial products that are supported by scientific
and/or clinical evidence, place them through our existing supply
chain, retail and on-line (including Amazon®-based
business platform) channels to tap new markets and drive demand for
such products and to establish physician relationships. We
currently market and sell 17 products in the United States with six
of those being marketed and sold in multiple countries around the
world through some of our 14 commercial partners. We currently
expect to launch an additional five products in the United States
in 2017 and we currently have approvals to launch certain of our
already marketed products in at least three additional
countries.
Our Strategy
Our
corporate strategy focuses on two primary objectives:
|
|
|
1.
|
Developing a
diversified product portfolio of exclusive, unique and patented
non-prescription OTC and branded
ANDA
drugs and consumer health products
through: (a) the introduction of line extensions and reformulations
of either our or third-party currently marketed products; and (b)
the acquisition of products or obtaining exclusive licensing rights
to market such products; and
|
|
|
2.
|
Building an
innovative, U.S. and global sales and marketing model through
direct to consumer approaches such as our proprietary Beyond
Human™ Sales and Marketing platform, the addition of new
online platforms such as Amazon® and commercial partnerships
with established international complimentary partners that: (a)
generates revenue, and (b) requires a lower cost structure compared
to traditional pharmaceutical companies thereby increasing our
gross margins.
|
|
|
Our Products
We
currently generate revenues from 17 products in the U.S. and six in
international countries, as follows:
1.
Vesele
®
for promoting
sexual and health (U.S. and U.K.);
2.
Zestra
®
for female
arousal (U.S., U.K., Denmark, Canada, Morocco, and the
UAE);
3.
Zestra
Glide
®
(U.S, Canada
and the MENA countries);
4.
EjectDelay
®
indicated
for the treatment of premature ejaculation (U.S. and
Canada);
5.
Sensum+
®
to
alleviate reduced penile sensitivity (U.S., U.K. and
Morocco);
6.
BH
®
Testosterone
Booster;
7.
BH
®
Ketones;
8.
BH
®
Krill
Oil;
9.
BH
®
Omega 3
Fish Oil;
10.
BH
®
Vision
Formula;
11.
BH
®
Blood
Sugar;
12.
BH
®
Colon
Cleanse;
13.
BH
®
Green Coffee
Extract;
14.
BH
®
Growth
Agent;
15.
RecalMax
™
for brain health;
16.
Androferti
®
(U.S. and Canada) for the support of overall male reproductive
health and sperm quality; and
17.
UriVarx
™
for overactive
bladder and urinary incontinence.
|
|
|
|
|
|
|
|
|
In
addition, we currently expect to launch in the U.S. the following
products in 2017, subject to the applicable regulatory approvals,
if required:
1.
Xyralid
®
for the relief
of the pain and symptoms caused by hemorrhoids (first half of
2017);
2.
AllerVarx
™
for allergic
rhinitis symptoms (first half of 2017);
3.
Androvit
®
for prostate
and sexual health (second half of 2017);
4.
Urocis
®
for urinary
tract infections (second half of 2017); and
5.
FlutiCare
™
for allergic
rhinitis subject to FDA ANDA approval (second half of
2017).
Sales and Marketing Strategy U.S. and Internationally
Our sales and marketing strategy is based on (a)
the use of direct to consumer advertisements in print and online
media through our proprietary Beyond Human
™
sales
and marketing infrastructure acquired in March 2016; (b) working
with direct commercial channel partners in the U.S. and also
directly marketing the products ourselves to physicians,
urologists, gynecologists and therapists and to other healthcare
providers; and (c) working with exclusive commercial partners
outside of the U.S. that would be responsible for sales and
marketing in those territories. We have now fully integrated most
of our existing line of products such as Vesele
®
,
Sensum+
®
,
UriVarx
™
,
Zestra
®
,
and RecalMax
™
into the Beyond
Human
™
sales and marketing platform. We plan
to integrate Xyralid
®
,
AllerVarx
™
,
Androvit
®
,
Urocis
®
;
and FlutiCare
™
,
subject to regulatory approvals, upon their commercial launches in
2017. We also market and distribute our products in the U.S.
through retailers, wholesalers and other online channels. Our
strategy outside the U.S. is to partner with companies who can
effectively market and sell our products in their countries through
their direct marketing and sales teams. The strategy of using our
partners to commercialize our products is designed to limit our
expenses and fix our cost structure, enabling us to increase our
reach while minimizing the incremental spending impact on the
Company.
Our
current OTC monograph, Rx-to-OTC ANDA switch drugs and consumer
care products marketing strategy is to focus on four main U.S.
markets which we believe each to be in excess of $1.0 billion: (1)
Sexual Health (female and male sexual dysfunction and health); (2)
Urology (bladder and prostate health); (3) Respiratory Disease; and
(4) Brain Health. We will focus our current efforts on these four
markets and will seek to develop, acquire or license products that
we can sell through our sales channels in these
fields.
Acquisition and Licensing Strategy
Our
acquisition and licensing strategy is to acquire or in-license
products that fit our commercialization strategy that are branded,
with growing market shares, that can be sold direct to consumers
and through our on-line partnerships and that can then be sold
internationally through our commercial partnerships.
The
following represents products and product candidates we have
successfully acquired:
1.
Zestra
®
and Zestra Glide
®
(acquired Semprae Laboratories, Inc.
in 2013 - current Innovus subsidiary);
2.
Vesele
®
(from Trophikos, Inc. in
2014);
3.
Sensum+
®
(from Centric Research Institute in
2013);
4.
FlutiCare
™
(acquired Novalere, Inc. in 2015,
current Innovus Pharma subsidiary);
5.
BH
®
Testosterone
Booster; BH
®
Human
Growth Agent; BH
®
Ketones;
BH
®
Krill Oil;
BH
®
Omega 3
Fish Oil; BH
®
Vision Formula;
BH
®
Blood Sugar; and BH
®
Colon Cleanse
(acquired Beyond Human
™
assets in 2016); and
6.
UriVarx
™
(acquired from
Seipel Group in 2016).
The
following represents the products we have in-licensed from third
parties:
1.
Androferti
®
(from Q Pharma in
2015);
2.
AllerVarx
™
(from NTC Pharma in
2016);
3.
Androvit
™
(from Q Pharma in 2015);
and
4.
Urocis
®
(from Q Pharma in
2015).
In addition, we have developed and repurposed
Xyralid
®
for
the relief of the pain and
symptoms caused by hemorrhoids
.
|
|
|
|
|
|
|
|
|
We
currently have 14 partnerships that have the rights to sell certain
of our current products in approximately 65 countries. Our
international partners include the following
companies:
1.
Orimed
Pharma, the OTC subsidiary of Jamp Pharma (Canada);
2.
DanaLife
ApS (Denmark and in alternative markets);
3.
Tramorgan
(U.K);
4.
Sothema
Laboratories (MENA);
5.
Ovation
Pharma (Morocco);
6.
Tabuk
Pharmaceuticals (MENA);
7.
BroadMed
(Lebanon);
8.
Elis
Pharmaceuticals (Turkey and Lebanon);
9.
BioTask
(Malaysia);
10.
Oz
Biogenics (Myanmar and Vietnam);
11.
Khandelwal
Laboratories (India);
12
.
PT
Resources (Select Asian Countries);
13.
Q
Pharma (US and Canada); and
14
.
J&H Co. LTD
(South Korea).
Risks Related to our Business
Our ability to implement our business strategy is subject to
numerous risks, as more fully described in the section entitled
“Risk Factors” immediately following this prospectus
summary. These risks include, among others:
●
We have a short operating history and have not produced significant
revenues from our operations;
●
We have a history of operating losses, including an accumulated
deficit of approximately $25.8 million at September 30, 2016, which
will likely continue in the future;
●
The success of our
business currently depends on market acceptance of all 17 of our
products, but also on our top five products:
Vesele
®
,
Sensum+
®
,
Zestra
®
,
BH
®
Testosterone Booster
and RecalMax
™
that
account for approximately 92% of our annual net revenues during the
nine months ended September 30, 2016. No customer accounted for
more than 10% of total net revenues;
●
We have no commercial manufacturing capacity and rely on
third-party contract manufacturers to produce commercial quantities
of our products;
●
We face significant competition and have limited resources compared
to many of our competitors;
●
We may never receive
approval of our ANDA from the FDA for Fluticare
™
,
which we are relying upon to generate significant future
revenue;
●
If
we fail to protect our intellectual property rights, such as
patents and trademarks, our ability to pursue the development of
our technologies and products would be negatively
affected;
●
We
may not be able to raise the levels of financing required to market
and sell many of our products;
●
We
may not be able to grow effectively and retain or hire the
necessary talent to increase our sales;
●
We
may not be able to grow internationally as we would like due to
regulatory, political, or economic changes in such
countries;
●
We
are currently very reliant on the experience, knowledge, skills and
actions of our President and Chief Executive Officer, Dr. Bassam
Damaj;
●
We
may not be able to acquire or license the necessary products
required for us to grow effectively and increase our product
revenues;
●
We
may face an uncertain U.S. regulatory, political and economic
environment with the ascendancy of a new U.S. Presidential
Administration; and
●
Our
liquidity.
|
|
|
|
|
|
|
|
|
The
Offering
|
|
|
|
|
|
|
Common stock we are offering
|
shares of common stock
|
|
|
|
|
|
|
Warrants we are offering
|
Each share of common stock sold in this offering will be
accompanied by a warrant to purchase share of our common stock, at
an exercise price of
$ per share
( % of the public
offering price of our common stock). The warrants will be
immediately exercisable, and may be exercised for a period
of
years following the
date of issuance. This prospectus also covers the shares of common
stock issuable upon exercise of the warrants offered
hereby.
|
|
|
Common stock outstanding after this offering
|
shares of common
stock
|
|
|
|
|
|
|
Use of Proceeds
|
We
estimate that the net proceeds to us from this offering, after
deducting the estimated offering expenses payable by us, will be
approximately
$ million,
excluding any proceeds we may receive upon exercise of the
warrants, if any. We intend to use the net proceeds of this
offering for the commercial launch of FlutiCare™, if approved
by the FDA, working capital and general corporate purposes,
including sales and marketing activities, product development,
capital expenditures, the potential repayment of certain debt of
the Company and product acquisitions and product licenses. See
“
Use of
Proceeds
” for a more complete description of the
intended use of proceeds from this offering.
|
|
|
|
|
|
|
Risk Factors
|
You
should read the “
Risk
Factors
” section of this prospectus and the other
information in this prospectus for a discussion of factors to
consider carefully before deciding to invest in shares of our
common stock.
|
|
|
|
|
|
|
OTCQB Marketplace Symbol
|
“INNV.”
We do not intend to apply for listing of the warrants on any
securities exchange or other nationally recognized trading system
and we do not expect such a market to develop.
|
|
|
|
|
|
The number of shares of our common stock
to be outstanding after this offering is based on 121,694,293
shares of our common stock outstanding as of December 31, 2016 and
excludes the following, in each case as of such date:
●
237,500 shares of common stock issuable
upon the exercise of stock options outstanding as of December 31,
2016, at a weighted average exercise price of $0.22 per
share;
●
15,983,814
unallocated shares of common stock reserved for future issuance
under our stock-based compensation plans, consisting of no shares
of common stock reserved for future issuance under our 2013 Equity
Incentive Plan ("
2013
Plan
"), 146,314 shares of common stock reserved for future
issuance under our 2014 Equity Incentive Plan ("
2014 Plan
"), and 15,837,500 shares of
common stock reserved for future issuance under our 2016 Equity
Incentive Plan ("
2016
Plan
") (together, the “
Incentive Plans
”), and such
additional shares that become available under our Incentive Plans
pursuant to provisions thereof that automatically increase the
share reserves under the Incentive Plans each
year;
●
12,874,848
shares of
common stock reserved for issuance of outstanding restricted stock
units;
●
5,967,054
shares of common stock issuable upon the exercise of warrants
outstanding as of December 31, 2016, at a weighted average exercise
price of $0.34 per share; and
●
shares of common stock issuable upon exercise of warrants to be
issued in connection with this offering, including warrants to be
issued to the placement agent.
Except as
otherwise indicated, all information in this prospectus assumes no
exercise of the outstanding options and warrants or the conversion
of restricted stock units into common shares described
above.
|
|
|
|
|
|
|
|
|
SUMMARY
CONSOLIDATED FINANCIAL DATA
The
summary consolidated statements of operations data presented below
for the years ended December 31, 2014 and 2015 are derived
from our audited financial statements included elsewhere in this
prospectus. The selected consolidated statements of operations data
for the nine months ended September 30, 2015 and 2016 and the
summary consolidated balance sheet data as of September 30,
2016 have been derived from our unaudited consolidated financial
statements included elsewhere in this prospectus. Our unaudited
consolidated financial statements have been prepared on the same
basis as our audited financial statements and, in the opinion of
management, reflect all adjustments, which consist only of normal
recurring adjustments, necessary for the fair statement of those
unaudited consolidated financial statements. The following summary
consolidated financial data should be read with “
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
” and our
financial statements and related notes included elsewhere in this
prospectus. Our historical results are not necessarily indicative
of the results that may be expected in any future period. The
summary financial data in this section are not intended to replace
the financial statements and are qualified in their entirety by the
financial statements and related notes included elsewhere in this
prospectus.
|
|
|
|
Year
Ended
December 31,
|
Nine Months
Ended
September 30,
|
|
||
|
|
2014
|
2015
|
2015
|
2016
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations Data:
|
|
|
|
|
|
|
Net
Revenues:
|
|
|
|
|
|
|
License
revenues
|
$
375,000
|
$
5,000
|
$
5,000
|
$
1,000
|
|
|
Product sales,
net
|
655,113
|
730,717
|
555,069
|
3,126,112
|
|
|
Net
Revenues
|
1,030,113
|
735,717
|
560,069
|
3,127,112
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Cost of product
sales
|
292,080
|
340,713
|
242,808
|
714,284
|
|
|
Research and
development
|
143,914
|
—
|
—
|
47,667
|
|
|
Selling, general
and administrative
|
4,378,749
|
3,910,192
|
3,081,191
|
6,269,523
|
|
|
Impairment of
goodwill
|
—
|
759,428
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
4,814,743
|
5,010,333
|
3,323,999
|
7,031,474
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(3,784,630
)
|
(4,274,616
)
|
(2,763,930
)
|
(3,904,362
)
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
|
|
|
|
|
|
Interest
expense
|
(532,230
)
|
(1,153,376
)
|
(744,726
)
|
(6,000,752
)
|
|
|
Change in fair
value of derivative liabilities
|
—
|
393,509
|
316,378
|
(632,627
)
|
|
|
Other income
(expense), net
|
—
|
(8,495
)
|
—
|
196,620
|
|
|
Fair value
adjustment for contingent consideration
|
(103,274
)
|
115,822
|
—
|
—
|
|
|
Loss on
extinguishment of debt
|
(406,833
)
|
(32,500
)
|
(32,500
)
|
—
|
|
|
|
|
|
|
|
|
|
Total other
expense, net
|
(1,042,337
)
|
(685,040
)
|
(460,848
)
|
(6,436,759
)
|
|
|
|
|
|
|
|
|
|
Loss before benefit
from income taxes
|
(4,826,967
)
|
(4,959,656
)
|
(3,224,778
)
|
(10,341,121
)
|
|
|
Benefit from income
taxes
|
—
|
(757,028
)
|
—
|
—
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(4,826,967
)
|
$
(4,202,628
)
|
$
(3,224,778
)
|
$
(10,341,121
)
|
|
|
|
|
|
|
|
|
|
Net loss per common
share
:(1)
|
|
|
|
|
|
|
Basic and
diluted
|
$
(0.20
)
|
$
(0.08
)
|
$
(0.06
)
|
$
(0.12
)
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding:
(1)
|
|
|
|
|
|
|
Basic
|
24,384,037
|
52,517,530
|
50,486,501
|
86,498,234
|
|
|
|
|
|
|
|
|
|
Diluted
|
24,384,037
|
52,517,530
|
50,486,501
|
86,498,234
|
|
|
|
|
|
|
|
|
(1)
|
See
Note 2 to our audited consolidated financial statements for an
explanation of the method used to calculate basic and diluted net
loss per common share and the weighted-average number of shares
used in the computation of the per share amounts.
|
|
|
|
|
High
|
Low
|
Year
Ending December 31, 2017
|
|
|
First quarter
ending March 31, 2017 (through January 31, 2017)
|
$
0.26
|
$
0.18
|
|
|
|
Year
Ended December 31, 2016
|
|
|
First quarter ended
March 31, 2016
|
$
0.10
|
$
0.03
|
Second quarter
ended June 30, 2016
|
$
0.37
|
$
0.05
|
Third quarter ended
September 30, 2016
|
$
0.66
|
$
0.21
|
Fourth quarter
ended December 31, 2016
|
$
0.33
|
$
0.16
|
|
|
|
Year
Ended December 31, 2015
|
|
|
First quarter ended
March 31, 2015
|
$
0.28
|
$
0.13
|
Second quarter
ended June 30, 2015
|
$
0.19
|
$
0.11
|
Third quarter ended
September 30, 2015
|
$
0.16
|
$
0.05
|
Fourth quarter
ended December 31, 2015
|
$
0.12
|
$
0.05
|
Assumed public
offering price per share
|
|
$
|
|
|
|
Net tangible book
value (deficit) per share as of September 30, 2016
|
$
(0.05
)
|
|
|
|
|
Increase per share
attributable to new investors in this offering
|
|
|
|
|
|
As adjusted net
tangible book value (deficit) per share after this
offering
|
|
|
|
|
|
Dilution per share
to new investors in this offering
|
|
$
|
1.
|
Developing
a diversified product portfolio of exclusive, unique and patented
non-prescription OTC and branded
ANDA
drugs and consumer health products
through: (a) the introduction of line extensions and reformulations
of either our or third-party currently marketed products; and (b)
the acquisition of products or obtaining exclusive licensing rights
to market such products; and
|
2.
|
Building
an innovative, U.S. and global sales and marketing model through
direct to consumer approaches such as our proprietary Beyond
Human™ Sales and Marketing platform, the addition of new
online platforms such as Amazon® and commercial partnerships
with established international complimentary partners that: (a)
generates revenue, and (b) requires a lower cost structure compared
to traditional pharmaceutical companies thereby increasing our
gross margins.
|
|
Nine
Months
Ended
September 30, 2016
|
Nine Months
Ended
September 30, 2015
|
$ Change
|
% Change
|
NET
REVENUES:
|
|
|
|
|
Product
sales, net
|
$
3,126,112
|
$
555,069
|
$
2,571,043
|
463.2
%
|
License
revenues
|
1,000
|
5,000
|
(4,000
)
|
(80.0
)%
|
|
3,127,112
|
560,069
|
2,567,043
|
458.3
%
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
Cost
of product sales
|
714,284
|
242,808
|
471,476
|
194.2
%
|
Research
and development
|
47,667
|
-
|
47,667
|
100.0
%
|
Sales
and marketing
|
2,257,166
|
132,778
|
2,124,388
|
1,600.0
%
|
General
and administrative
|
4,012,357
|
2,948,413
|
1,063,944
|
36.1
%
|
Total
operating expenses
|
7,031,474
|
3,323,999
|
3,707,475
|
111.5
%
|
LOSS
FROM OPERATIONS
|
(3,904,362
)
|
(2,763,930
)
|
(1,140,432
)
|
41.3
%
|
|
|
|
|
|
Interest
expense
|
(6,000,752
)
|
(744,726
)
|
(5,256,026
)
|
705.8
%
|
Loss
on extinguishment of debt
|
-
|
(32,500
)
|
32,500
|
(100.0
)%
|
Other
income, net
|
196,620
|
-
|
196,620
|
100.0
%
|
Change
in fair value of derivative liabilities
|
(632,627
)
|
316,378
|
(949,005
)
|
(300.0
)%
|
NET
LOSS
|
$
(10,341,121
)
|
$
(3,224,778
)
|
(7,116,343
)
|
220.7
%
|
1.
|
Developing
a diversified product portfolio of exclusive, unique and patented
non-prescription OTC and branded
ANDA
drugs and consumer health products
through: (a) the introduction of line extensions and reformulations
of either our or third-party currently marketed products; and (b)
the acquisition of products or obtaining exclusive licensing rights
to market such products; and
|
2.
|
Building
an innovative, U.S. and global sales and marketing model through
direct to consumer approaches such as our proprietary Beyond
Human™ Sales and Marketing platform, the addition of new
online platforms such as Amazon® and commercial partnerships
with established international complimentary partners that: (a)
generates revenue, and (b) requires a lower cost structure compared
to traditional pharmaceutical companies thereby increasing our
gross margins.
|
●
|
Focusing on acquisition and licensing 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 (OTC monograph, Rx
to OTC ANDA switched drugs) 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 and
licensing of (1) Sensum+
®
from Centric
Research Institute or CRI, (2) Zestra
®
and
Zestra
®
Glide from
Semprae, (3) Vesele
®
from
Trōphikōs, (4) US and Canada rights to
Androferti
®
from
Laboratorios Q Pharma (Spain),(5) FlutiCare
™
from Novalere,
and (6) UriVarx
™
from Seipel
Group.
|
●
|
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 for selected products,
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 for selected products.
Second, we are working to expand our online presence through
relationships with well-known online sellers and the acquisition of
additional platforms such as established Amazon stores. 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 14 commercial partnerships
covering our products in 65 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
and sales and marketing platforms utilizing our integrated
distribution and direct to consumer channels, thus receiving
multiple product economies of scale from our distribution
partners.
|
Name
|
|
Age
|
|
Title
|
Bassam
Damaj, Ph.D.
|
|
48
|
|
President,
Chief Executive Officer, Chief Accounting Officer
|
Robert
E. Hoffman
|
|
51
|
|
Executive
Vice President and Chief Financial Officer
|
Randy
Berholtz, MBA, JD
|
|
55
|
|
Executive
Vice President, Corporate Development and General
Counsel
|
Henry
Esber, Ph.D.
|
|
78
|
|
Chairman
of the Board of Directors
|
Vivian
Liu
|
|
55
|
|
Director
|
Ziad
Mirza, MBA, M.D.
|
|
55
|
|
Director
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
(1)
|
Stock
Awards
|
Stock
Unit
Awards
|
All
Other
Compen-sation
|
Total
|
Bassam Damaj Ph
D.,
President and Chief
Executive and Financial
|
2016
|
$
532,400
(2)
|
$
-
|
$
-
|
$
240,000
(3)
|
$
-
|
$
772,400 |
Officer
(4)
|
2015
|
$
484,000
(2)
|
$
-
|
$
-
|
$
630,000
(3)
|
$
-
|
$
1,114,000
|
|
|
|
|
|
|
|
|
Robert E.
Hoffman,
|
|
|
|
|
|
|
|
Executive Vice
President and Chief Financial
|
|
|
|
|
|
|
|
Officer
(5)
|
2016
|
$
96,731
|
$
-
|
$
-
|
$
675,000
(3)
|
$
-
|
$
771,731
|
(1)
|
Our
board of directors has not yet determined the amounts of bonuses
payable to our named executive officers earned in 2016. We
anticipate that bonuses, if any, for 2016 will be determined by our
board of directors by mid-February 2017.
|
(2)
|
Pursuant
to the LOC Convertible Debenture, Dr. Damaj 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, 2015. Salary through June 30, 2016 was accrued
for and remains unpaid as of December 31, 2016. Effective July 1,
2016, Dr. Damaj started receiving his salary in cash.
|
(3)
|
Represents
the total grant date fair value, as determined under FASB ASC Topic
718, Stock Compensation, of restricted stock unit awards granted
during the respective fiscal year.
|
(4)
|
Dr. Damaj served as Chief Financial Officer from July 2015 until
September 6, 2016 when Mr. Robert E. Hoffman became Executive Vice
President and Chief Financial Officer.
|
(5)
|
Represents
Mr. Hoffman’s salary from the commencement of his employment
on September 6, 2016, through December 31, 2016.
|
|
|
Option Awards
|
|||
Name
|
Grant Date
(1)
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option Exercise
Price ($)
|
Option Expiration
Date
|
Robert E. Hoffman
(1)
|
Sep.
30, 2013
|
10,500
|
—
|
$
0.90
|
Sep.
29, 2023
|
|
Dec. 31, 2013
|
10,500
|
—
|
$
0.38
|
Dec.
30, 2023
|
|
Mar. 31, 2014
|
10,500
|
—
|
$
0.40
|
Mar. 30, 2024
|
|
Jun. 30, 2014
|
10,500
|
—
|
$
0.25
|
Jun.
29, 2024
|
|
Sep. 30, 2014
|
10,500
|
—
|
$
0.40
|
Sep. 29, 2024
|
|
Dec. 31, 2014
|
10,500
|
—
|
$
0.18
|
Dec.
30, 2024
|
|
Mar
31, 2015
|
10,500
|
—
|
$
0.14
|
Mar.
30, 2025
|
|
Jun. 30, 2015
|
10,500
|
—
|
$
0.12
|
Jun.
29, 2025
|
|
Sep. 30, 2015
|
10,500
|
—
|
$
0.07
|
Sep. 29, 2025
|
|
Dec. 31, 2015
|
10,500
|
—
|
$
0.07
|
Dec. 30, 2025
|
|
Mar.
31, 2016
|
10,500
|
—
|
$
0.05
|
Mar.
30, 2026
|
Name
|
Grant Date
(1)
|
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
|
Bassam
Damaj
(1)
|
Mar. 31,
2015
|
375,000
|
$
75,000
|
Robert E.
Hoffman
(2)
|
Sep. 6, 2016
|
2,500,000
|
$
500,000
|
(1)
|
Represents
the total grant date fair value, as determined under FASB ASC Topic
718, Stock Compensation, of RSU awards granted during the
respective fiscal year.
|
(2)
|
Includes
an award of 833,333 RSUs granted to each of the directors on
January 29, 2016 under the 2014 Plan in connection with the
acquisition of Beyond Human™ assets. One-half of the RSUs
were vested upon grant and the remaining RSUs vested upon the
closing of the Beyond Human™ acquisition on March 1,
2016.
|
|
September
30,
2016
|
December
31,
2015
|
Wages
|
$
1,407,486
|
$
1,178,909
|
Vacation
|
215,279
|
170,371
|
Bonus
|
282,773
|
-
|
Payroll taxes on
the above
|
118,318
|
93,510
|
Total
|
2,023,856
|
1,442,790
|
Classified as
long-term
|
(1,506,010
)
|
(906,928
)
|
Accrued
compensation
|
$
517,846
|
$
535,862
|
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 ACTIVITES
|
|
|
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
consideration
|
$
43,124
|
Fair
value of common stock issued at closing
|
2,071,625
|
Fair
value of ANDA consideration shares
|
1,657,300
|
Fair
value of future earn out payments
|
1,205,000
|
Total
|
$
4,977,049
|
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
|
|
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
|
|
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
%
|
-
%
|
Year Ended December 31, 2016
|
$
88,087
|
Year Ended December 31, 2017
|
91,849
|
Year Ended December 31, 2018
|
95,880
|
Year Ended December 31,
2019
|
8,018
|
Total minimum lease
payments
|
$
283,834
|
|
For
the
Three Months Ended
September 30,
|
For the
Nine
Months Ended
September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
NET
REVENUES:
|
|
|
|
|
Product sales, net
|
$
1,882,129
|
$
179,744
|
$
3,126,112
|
$
555,069
|
License revenues
|
-
|
-
|
1,000
|
5,000
|
Net
revenues
|
1,882,129
|
179,744
|
3,127,112
|
560,069
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
Cost of product sales
|
331,227
|
102,359
|
714,284
|
242,808
|
Research and development
|
43,775
|
-
|
47,667
|
-
|
Sales and marketing
|
1,972,155
|
80,682
|
2,257,166
|
132,778
|
General and administrative
|
1,779,048
|
650,539
|
4,012,357
|
2,948,413
|
Total
operating expenses
|
4,126,205
|
833,580
|
7,031,474
|
3,323,999
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
(2,244,076
)
|
(653,836
)
|
(3,904,362
)
|
(2,763,930
)
|
|
|
|
|
|
OTHER
INCOME AND (EXPENSES):
|
|
|
|
|
Interest expense
|
(3,727,168
)
|
(473,360
)
|
(6,000,752
)
|
(744,726
)
|
Loss on extinguishment of debt
|
-
|
-
|
-
|
(32,500
)
|
Other income, net
|
194,744
|
-
|
196,620
|
-
|
Change in fair value of derivative liabilities
|
1,350,688
|
268,449
|
(632,627
)
|
316,378
|
Total
other expense, net
|
(2,181,736
)
|
(204,911
)
|
(6,436,759
)
|
(460,848
)
|
|
|
|
|
|
NET
LOSS
|
$
(4,425,812
)
|
$
(858,747
)
|
$
(10,341,121
)
|
$
(3,224,778
)
|
|
|
|
|
|
NET
LOSS PER SHARE OF COMMON STOCK - BASIC AND DILUTED
|
$
(0.04
)
|
$
(0.02
)
|
$
(0.12
)
|
$
(0.06
)
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING –
BASIC AND DILUTED
|
104,972,645
|
55,076,819
|
86,498,234
|
50,486,501
|
|
For the
Nine Months Ended
Ended
September 30,
|
|
|
2016
|
2015
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
NET
LOSS
|
$
(10,341,121
)
|
$
(3,224,778
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|
|
Depreciation
|
9,431
|
24,943
|
Allowance
for doubtful accounts
|
918
|
-
|
Common stock, restricted stock units and stock
options issued for services and board
compensation
|
1,889,837
|
1,288,993
|
Loss
on extinguishment of debt
|
-
|
32,500
|
Stock
issued for interest on debt amendment
|
-
|
48,000
|
Gain
on return of shares of common stock issued in Semprae
merger
|
-
|
(115,822
)
|
Imputed
interest on contingent consideration
|
30,302
|
-
|
Non-cash
gain on contingent consideration
|
(194,781
)
|
-
|
Change
in fair value of derivative liabilities
|
632,627
|
(316,378
)
|
Fair value of embedded conversion feature in
convertible debentures in excess
of allocated proceeds
|
2,756,899
|
71,462
|
Amortization
of debt discount
|
2,997,061
|
555,362
|
Amortization
of intangible assets
|
513,767
|
387,011
|
Changes
in operating assets and liabilities, net of acquisition
amounts
|
|
|
Accounts
receivable
|
51,304
|
123,372
|
Prepaid
expenses and other current assets
|
(450,394
)
|
27,324
|
Deposits
|
-
|
9,394
|
Inventories
|
(142,329
)
|
(45,245
)
|
Accounts
payable and accrued expenses
|
928,044
|
(53,794
)
|
Accrued
compensation
|
581,066
|
407,860
|
Accrued
interest payable
|
10,976
|
11,254
|
Deferred
revenue and customer deposits
|
(13,079
)
|
(17,470
)
|
Net
cash used in operating activities
|
(739,472
)
|
(786,012
)
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchase of property and equipment
|
(6,565
)
|
(9,540
)
|
Purchase of intangible assets
|
-
|
(3,276
)
|
Payments on Beyond Human™ contingent
consideration
|
(150,000
)
|
-
|
Net
cash used in investing activities
|
(156,565
)
|
(12,816
)
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds from (repayments of) line of credit convertible debenture
– related party
|
(409,192
)
|
114
|
Proceeds from short-term loans payable
|
21,800
|
50,000
|
Payments
on short-term loans payable
|
(252,151
)
|
(23,811
)
|
Proceeds
from notes payable and convertible debentures
|
3,074,000
|
1,455,000
|
Payments
on notes payable
|
(384,916
)
|
(402,933
)
|
Proceeds
from warrant exercises
|
310,140
|
-
|
Financing
costs in connection with convertible debentures
|
(40,000
)
|
(82,500
)
|
Proceeds
from non-convertible debentures – related party
|
-
|
50,000
|
Payments
on non-convertible debentures – related party
|
(25,000
)
|
(105,000
)
|
Net
cash provided by financing activities
|
2,294,681
|
940,870
|
|
|
|
NET
CHANGE IN CASH
|
1,398,644
|
142,042
|
|
|
|
CASH
AT BEGINNING OF PERIOD
|
55,901
|
7,479
|
|
|
|
CASH
AT END OF PERIOD
|
$
1,454,545
|
$
149,521
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
Cash paid for income taxes
|
$
-
|
$
-
|
Cash paid for interest
|
$
205,456
|
$
-
|
SUPPLEMENTAL
DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
|
|
|
Common stock issued
for conversion of notes payable, convertible debentures and
accrued interest
|
$
2,935,900
|
$
167,000
|
Reclassification of
the fair value of the embedded conversion features from
derivative
liability to
additional paid-in capital upon conversion
|
$
2,962,666
|
$
-
|
Cashless exercise of warrants
|
$
3,385
|
$
-
|
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
|
$
445,603
|
$
89,551
|
Relative fair value
of common stock issued in connection with convertible
debentures
recorded as debt
discount
|
$
1,127,225
|
$
374,474
|
Fair value of
embedded conversion feature derivative liabilities recorded
as
debt
discount
|
$
687,385
|
$
830,322
|
Fair value of
warrants issued to placement agents in connection with
convertible
debentures recorded
as debt discount
|
$
357,286
|
$
68,419
|
Fair value of the contingent consideration for
acquisition
|
$
314,479
|
$
2,862,300
|
Fair value of warrant derivative liabilities recorded as debt
discount
|
$
-
|
$
226,297
|
Proceeds from note payable paid to seller in connection with
acquisition
|
$
300,000
|
$
-
|
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
and other current assets
|
$
135,540
|
$
-
|
Fair value of
non-forfeitable common stock to be issued to consultant included in
prepaid
expenses and other
current assets and accounts payable and accrued
expenses
|
$
540,000
|
$
-
|
Issuance of shares of common stock for vested restricted stock
units
|
$
19,229
|
$
-
|
Return of shares of common stock related to license
agreement
|
$
-
|
$
38,000
|
Common stock issued in connection with debt amendment
|
$
-
|
$
48,000
|
Fair value of
beneficial conversion feature on line of credit convertible
debenture –
related
party
|
$
3,444
|
$
6,275
|
|
●
|
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.
|
|
●
|
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.
|
The
total purchase price is summarized as follows:
|
|
Cash
consideration
|
$
300,000
|
Fair
value of future earn out payments
|
314,479
|
Total
|
$
614,479
|
|
Nine Months Ended
September 30, 2016
|
Nine
Months Ended
September 30, 2015
|
||
|
As
Reported
|
Pro
Forma (unaudited)
|
As
Reported
|
Pro
Forma (unaudited)
|
Net
revenues
|
$
3,119,126
|
$
3,175,750
|
$
555,069
|
$
2,636,107
|
Net
loss
|
$
(10,341,121
)
|
$
(10,354,157
)
|
$
(3,224,778
)
|
$
(3,029,008
)
|
Net
loss per share of common stock – basic and
diluted
|
$
(0.12
)
|
$
(0.12
)
|
$
(0.06
)
|
$
(0.06
)
|
Weighted
average number of shares of common stock outstanding – basic
and diluted
|
86,498,234
|
86,498,234
|
50,486,501
|
50,486,501
|
|
Three Months Ended
September 30, 2015
|
|
|
As
Reported
|
Pro
Forma (unaudited)
|
Net
revenues
|
$
179,744
|
$
772,337
|
Net
loss
|
$
(858,747
)
|
$
(850,364
)
|
Net
loss per share of common stock – basic and
diluted
|
$
(0.02
)
|
$
(0.02
)
|
Weighted
average number of shares of common stock outstanding – basic
and diluted
|
55,076,819
|
55,076,819
|
|
Nine
Months Ended
September 30, 2015
|
|
|
As
Reported
|
Pro
Forma (unaudited)
|
Net
revenues
|
$
555,069
|
$
555,069
|
Net
loss
|
$
(3,224,778
)
|
$
(3,540,908
)
|
Net
loss per share of common stock – basic and
diluted
|
$
(0.06
)
|
$
(0.07
)
|
Weighted
average number of shares of common stock outstanding – basic
and diluted
|
50,486,501
|
52,193,884
|
|
September 30,
|
December 31,
|
|
2016
|
2015
|
Raw
materials and supplies
|
$
99,492
|
$
77,649
|
Work
in process
|
-
|
90,540
|
Finished
goods
|
297,280
|
86,254
|
Total
|
$
396,772
|
$
254,443
|
|
September 30,
2016
|
|||
|
Amount
|
Accumulated
Amortization
|
Net Amount
|
Useful
Lives
(years)
|
|
|
|
|
|
Patent
& Trademarks
|
$
1,032,076
|
$
(154,489
)
|
$
877,587
|
5 - 15
|
Customer
Contracts
|
611,119
|
(173,150
)
|
437,969
|
10
|
Sensum+
®
License (from CRI)
|
234,545
|
(78,145
)
|
156,400
|
10
|
Vesele
®
trademark
|
25,287
|
(6,257
)
|
19,030
|
8
|
Novalere
Mfg. Contract
|
4,681,000
|
(770,415
)
|
3,910,585
|
10
|
Total
|
$
6,584,027
|
$
(1,182,456
)
|
$
5,401,571
|
|
Remainder
of 2016
|
$
178,000
|
2017
|
712,000
|
2018
|
712,000
|
2019
|
712,000
|
2020
|
712,000
|
2021
|
609,000
|
Thereafter
|
1,767,000
|
|
$
5,402,000
|
|
September 30,
|
December 31,
|
|
2016
|
2015
|
Prepaid
insurance
|
$
97,237
|
$
27,816
|
Prepaid
inventory
|
127,000
|
-
|
Merchant
net settlement reserve receivable
|
228,855
|
-
|
Prepaid
consulting and other expenses
|
50,580
|
25,462
|
Prepaid
consulting and other service stock-based compensation expenses (see
Note 8)
|
675,540
|
-
|
Total
|
$
1,179,212
|
$
53,278
|
|
September 30,
|
December 31,
|
|
2016
|
2015
|
Accounts
payable
|
$
649,785
|
$
63,826
|
Accrued
credit card balances
|
55,391
|
91,037
|
Accrued
royalties
|
54,956
|
-
|
Sales
returns and allowances
|
103,533
|
-
|
Accrual
for stock to be issued to consultants (see Note 8)
|
540,000
|
-
|
Accrual
for amounts due under license agreement (see Note 2)
|
200,000
|
-
|
Accrued
other
|
19,882
|
640
|
Total
|
$
1,623,547
|
$
155,503
|
|
2016
|
2015
|
Note
payable and non-convertible debenture:
|
|
|
February
2016 Note Payable
|
$
412,284
|
$
-
|
July
2015 Debenture (Amended August 2014 Debenture)
|
-
|
73,200
|
Total note payable and non-convertible debenture
|
412,284
|
73,200
|
Less:
Debt discount
|
(5,155
)
|
-
|
Carrying value
|
407,129
|
73,200
|
Less:
Current portion
|
(274,536
)
|
(73,200
)
|
Note payable and non-convertible debenture, net of current
portion
|
$
132,593
|
$
-
|
Remainder
of 2016
|
$
64,286
|
2017
|
293,013
|
2018
|
54,985
|
|
$
412,284
|
|
December 31,
2015
|
|
|
Convertible
debentures
|
$
1,457,500
|
Less:
Debt discount
|
(1,050,041
)
|
Carrying value
|
407,459
|
Less:
Current portion
|
(407,459
)
|
Convertible debentures – long-term
|
$
-
|
|
September 30,
2016
|
|
|
Convertible
debentures
|
$
1,884,922
|
Less:
Debt discount
|
(1,474,342
)
|
Carrying value
|
410,580
|
Less:
Current portion
|
(410,580
)
|
Convertible debentures – long-term
|
$
-
|
|
September 30,
2016
|
Expected
terms (in years)
|
5.00
|
Expected
volatility
|
229
%
|
Risk-free
interest rate
|
1.01 - 1.15
%
|
Dividend
yield
|
-
|
|
December 31,
2015
|
Line
of credit convertible debenture – related party
|
$
409,192
|
2014
non-convertible debenture – related party
|
25,000
|
Total
|
434,192
|
Less
: Debt discount
|
(17,720
)
|
Carrying
value
|
416,472
|
Less:
Current portion
|
(391,472
)
|
Total
long-term debentures – related party
|
$
25,000
|
|
September 30,
2016
|
December 31,
2015
|
Wages
|
$
1,407,486
|
$
1,178,909
|
Vacation
|
215,279
|
170,371
|
Bonus
|
282,773
|
-
|
Payroll
taxes on the above
|
118,318
|
93,510
|
Total
|
2,023,856
|
1,442,790
|
Classified
as long-term
|
(1,506,010
)
|
(906,928
)
|
Accrued
compensation
|
$
517,846
|
$
535,862
|
|
2016
|
2015
|
Expected
life (in years)
|
10.0
|
6.0
|
Expected
volatility
|
227.8
%
|
219.3
%
|
Average
risk-free interest rate
|
1.71
%
|
1.54
%
|
Dividend
yield
|
0
%
|
0
%
|
Grant
date fair value
|
$
0.17
|
$
0.12
|
|
Options
|
Weighted
average exercise price
|
|
Aggregate
intrinsic value
|
Outstanding
at December 31, 2015
|
196,000
|
$
0.31
|
9.0
|
-
|
Granted
|
82,500
|
$
0.17
|
10.0
|
-
|
Exercised
|
-
|
-
|
-
|
-
|
Cancelled
|
(50,000
)
|
$
0.31
|
-
|
-
|
Forfeited
|
-
|
-
|
-
|
-
|
Outstanding
at September 30, 2016
|
228,500
|
$
0.21
|
8.8
|
$
27,060
|
|
|
|
|
|
Vested
at September 30, 2016
|
228,500
|
$
0.21
|
8.8
|
$
27,060
|
|
Restricted Stock Units
|
Outstanding
at December 31, 2015
|
17,554,736
|
Granted
|
14,593,247
|
Exchanged
|
(19,228,494
)
|
Cancelled
|
-
|
Outstanding
at September 30, 2016
|
12,919,489
|
|
|
Vested
at September 30, 2016
|
7,906,990
|
|
September
30,
2016
|
Expected
life (in years)
|
3.31
- 3.95
|
Expected
volatility
|
206
%
- 230%
|
Average
risk-free interest rate
|
0.86
%
- 1.07%
|
Dividend
yield
|
0
%
|
|
September
30, 2016
|
Stock
price
|
$
0.05
- 0.50
|
Strike
price
|
$
0.15
- 0.25
|
Expected
life (in years)
|
0.26
- 1.08
|
Expected
volatilty
|
121
%
- 274%
|
Average
risk-free interest rate
|
0.28
%
- 0.62%
|
Dividend
yield
|
-
|
|
Fair value
|
Level
1
|
Level
2
|
Level 3
|
Total
|
Embedded
conversion feature derivative liabilities
|
$
1,091,544
|
$
-
|
$
-
|
$
1,091,544
|
$
1,091,544
|
Warrant
derivative liabilities
|
239,049
|
-
|
-
|
239,049
|
239,049
|
Total
|
$
1,330,593
|
$
-
|
$
-
|
$
1,330,593
|
$
1,330,593
|
Warrant
derivative liabilities:
|
|
Beginning
balance December 31, 2015
|
$
432,793
|
Reclassification of fair value of warrant
derivative liability to
additional paid-in capital upon cashless exercise
of warrants
|
(518,224
)
|
Change
in fair value
|
324,480
|
Ending
balance September 30, 2016
|
$
239,049
|
|
|
Embedded
conversion feature derivative liabilities:
|
|
Beginning
balance December 31, 2015
|
$
301,779
|
Fair
value of 2016 Notes embedded conversion feature derivative
liability
|
3,444,284
|
Reclassification of fair value of embedded
conversion feature derivative liability to
additional paid-in capital upon conversions of Q3
2015 Notes
|
(2,018,565
)
|
Reclassification of fair value of embedded
conversion feature derivative liability to
additional paid-in capital upon conversions of
2016 Notes
|
(944,101
)
|
Change
in fair value
|
308,147
|
Ending
balance September 30, 2016
|
$
1,091,544
|
|
|
|
The information in this preliminary prospectus is not complete and
may be changed. Neither we nor the selling stockholder may sell any
of these securities until the registration statement filed with
Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale
is not permitted.
|
||
|
|
|
Common stock offered by Selling Stockholder
|
25,617,592
shares as of the date of this prospectus.
|
|
|
Common stock outstanding
|
shares
of common stock.
|
|
|
Use of proceeds
|
We will
not receive any proceeds from the sale of the common stock by the
Selling Stockholder.
|
|
|
Risk factors
|
You
should read the “
Risk
Factors
” section of this prospectus and the other
information in this prospectus for a discussion of factors to
consider carefully before deciding to invest in shares of our
common stock.
|
|
|
OTCQB symbol
|
“INNV”
|
(1)
|
Information
concerning other Selling Stockholders will be set forth in one or
more prospectus supplements from time to time, if
required.
|
(2)
|
See
table titled “
Security
Ownership of Certain Beneficial Owners and Management
”
on page of this prospectus for information regarding securities
held by Novalere Holdings, LLC (“
Novalere
”) prior to this
offering.
|
(3)
|
Robert
Kargman, David Cohen, and Valerie Friedman jointly shave voting and
dispositive power over the shares of common stock beneficially
owned by Novalere. The address of Novalere is 151 Tremont Street,
Penthouse, Boston, MA 02111.
|
●
|
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 Stockholder 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.
|
SEC registration
fee
|
$
2,555.52
|
Accounting fees and
expenses
|
$
15,000.00
|
Legal fees and
expenses
|
$
150,000.00
|
FINRA filing
fee
|
$
3,078.00
|
Blue Sky filing
fees
|
$
7,500.00
|
Miscellaneous fees
and expenses
|
$
10,000.00
|
Total
|
$
188,132.52
|
●
|
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.
|
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;
and
|
|
(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.
|
|
2.
|
That,
for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
|
|
3.
|
To
remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
|
|
4.
|
That,
for the purpose of determining liability under the Securities Act
of 1933 to any purchaser, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other
than prospectuses filed in reliance on Rule 430A, shall be deemed
to be part of and included in the registration statement as of the
date it is first used after effectiveness.
Provided, however
, that no statement
made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of
first use.
|
|
5.
|
That,
for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial
distribution of the securities:
|
|
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used
to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities
to such purchaser:
|
|
(i)
|
Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424;
|
|
(ii)
|
Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
|
|
(iii)
|
The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
|
|
(iv)
|
Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
|
|
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
|
|
|
INNOVUS
PHARMACEUTICALS, INC.
|
|
|
|
|
|
|
|
By:
/s/ Bassam
Damaj
|
|
|
|
Bassam
Damaj
President and
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Bassam
Damaj
|
|
President
and Chief Executive Officer
|
|
February 1
, 2017
|
Bassam
Damaj
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/ Robert E.
Hoffman
|
|
Executive
Vice President
and Chief Financial
Officer
|
|
February 1
, 2017
|
Robert
E. Hoffman
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Henry
Esber
|
|
Chairman
of the Board of Directors
|
|
February 1
, 2017
|
Henry
Esber
|
|
|
|
|
|
|
|
|
|
/s/
Vivian
Liu
|
|
Director
|
|
February 1
, 2017
|
Vivian Liu
|
|
|
|
|
|
|
|
|
|
/s/ Ziad Mirza
|
|
Director
|
|
February 1
, 2017
|
Ziad Mirza
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|