UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2018
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 333-215083
IASO BIOMED, INC. |
(Exact name of registrant as specified in its charter) |
Colorado |
| 47-3474169 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification Number) |
7315 East Peakview Avenue
Centennial, Colorado 80111
(Address of principal executive offices)(Zip Code)
(720) 389-0650
(Registrants telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES x NO ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ¨ NO x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | x |
(do not check if a smaller reporting company) |
| Emerging growth company | x |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying any new or revised financial accounting standards provided pursuant to Section 14 (a) if the Exchange Act ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x
As of August 1, 2018 there were 34,927,632 shares of common stock outstanding.
IASO BioMed, Inc.
Table of Contents
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PART I. FINANCIAL INFORMATION | ||||
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Item 1. | Financial Statements |
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Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. | Controls and Procedures |
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PART II. OTHER INFORMATION | ||||
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Item 1. | Legal Proceedings |
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Item 1A. | Risk Factors |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. | Defaults Upon Senior Securities |
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Item 4. | Mine Safety Disclosures |
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Item 5. | Other Information |
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Item 6. | Exhibits |
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| Signatures |
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1
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
IASO BIOMED, INC. | |||||||||||
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CONDENSED BALANCE SHEETS | |||||||||||
JUNE 30, 2018 AND DECEMBER 31, 2017 | |||||||||||
(UNAUDITED) | |||||||||||
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| June 30, |
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| December 31, |
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| 2017 |
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CURRENT ASSETS: |
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| Cash |
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| $ 26,187 |
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| $ 20,191 | ||
| Prepaid expenses |
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| 4,355 |
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| 1,562 | ||||
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| Total current assets |
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| 30,542 |
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| 21,753 | |||
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TOTAL ASSETS |
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| $ 30,542 |
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| $ 21,753 | |||||
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LIABILITIES AND SHAREHOLDERS' DEFICIT |
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CURRENT LIABILITIES: |
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| Accounts payable |
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| $ 129,188 |
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| $ 64,427 | ||||
| Note payable, related party |
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| 60,000 |
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| 60,000 | ||||
| Accrued salaries |
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| 300,000 |
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| 187,500 | ||||
| Accrued board fees |
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| 120,000 |
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| - | ||||
| Accrued interest, related party |
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| 3,989 |
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| 2,203 | ||||
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| Total current liabilities |
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| 613,177 |
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| 314,130 | |||
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TOTAL LIABILITIES |
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| 613,177 |
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| 314,130 | |||||
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COMMITMENTS AND CONTINGENCIES (Note 5) |
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STOCKHOLDERS' DEFICIT: |
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| Preferred stock, $.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding |
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| - |
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| - | ||||
| Common stock, $.0001 par value, 100,000,00 shares authorized; 34,927,632 and 34,252,632 shares issued and outstanding |
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| 3,493 |
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| 3,425 | ||||
| Additional paid-in capital |
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| 1,650,067 |
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| 1,108,126 | ||||
| Accumulated deficit |
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| (2,236,195) |
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| (1,403,928) | ||||
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| Total shareholders' deficit |
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| (582,635) |
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| (292,377) | |||
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
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| $ 30,542 |
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| $ 21,753 |
2
IASO BIOMED, INC. | |||||||||||||||||||||
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CONDENSED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017 | |||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||
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| For the three months ended |
| For the six months ended | ||||||||||
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| June 30, |
| June 30, | ||||||||||
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| 2018 |
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| 2018 |
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| 2017 | ||
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Revenues |
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| $ - |
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| $ - |
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| $ - |
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| $ - | |||||||
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Operating expenses: |
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| General and administrative |
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| 119,793 |
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| 121,921 |
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| 745,481 |
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| 325,652 | ||||||||
| Research and development |
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| 75,000 |
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| 11,497 |
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| 85,000 |
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| 151,078 | ||||||||
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| Total operating expenses |
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| 194,793 |
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| 133,418 |
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| 830,481 |
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| 476,730 | |||
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Loss From Operations |
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| (194,793) |
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| (133,418) |
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| (830,481) |
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| (476,730) | |||||||||
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Other Expenses: |
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| Interest expense, related party |
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| 898 |
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| 374 |
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| 1,786 |
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| 744 | ||||||||
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| Total other expenses |
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| 898 |
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| 374 |
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| 1,786 |
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| 744 | |||
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| Net Loss |
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| $ (195,691) |
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| $ (133,792) |
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| $ (832,267) |
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| $ (477,474) | ||||||
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Earnings per Common Share: |
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| Basic and diluted loss per share |
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| $ (0.01) |
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| $ (0.00) |
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| $ (0.02) |
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Weighted average number of common Shares outstanding: |
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| Basic and diluted |
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| 34,922,412 |
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| 35,586,799 |
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| 34,726,113 |
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| 33,540,410 |
3
IASO BIOMED, INC. | ||||||||||||||||
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CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT | ||||||||||||||||
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SIX MONTHS ENDED JUNE 30, 2018 | ||||||||||||||||
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(UNAUDITED) | ||||||||||||||||
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| ADDITIONAL |
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| COMMON STOCK |
| PAID-IN |
| ACCUMULATED |
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| SHARES |
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| AMOUNT |
| CAPITAL |
| DEFICIT |
| TOTAL | |||
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BALANCE, December 31, 2017 |
| 33,252,632 |
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| 3,425 |
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| 1,108,126 |
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| (1,403,928) |
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| (292,377) | ||
Sale of common stock |
| 250,000 |
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| 25 |
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| 99,975 |
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| - |
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| 100,000 | ||
Warrant exercises |
| 425,000 |
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| 43 |
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| 4,207 |
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| - |
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| 4,250 | ||
Share-based compensation |
| - |
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| - |
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| 437,759 |
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| - |
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| 437,759 | ||
Net loss |
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| (832,267) |
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| (832,267) | ||
BALANCE, June 30, 2018 |
| 33,927,632 |
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| $ 3,493 |
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| $ 1,650,067 |
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| $ (2,236,195) |
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| $ (582,635) |
4
IASO BIOMED, INC. | |||||||||||||
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CONDENSED STATEMENT OF CASH FLOWS | |||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017 | |||||||||||||
(UNAUDITED) | |||||||||||||
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| For the six months ended June 30, | ||||||
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Cash Flows from Operating Activities: |
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| Net loss |
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| $ (832,267) |
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| $ (477,474) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Share-based compensation |
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| 437,759 |
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| 162,940 | |||
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| Contributed services |
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| - |
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| 5,000 | |||
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| Changes in assets and liabilities: |
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| Prepaid expenses |
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| (2,792) |
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| (2,983) | |||
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| Accounts payable |
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| 64,760 |
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| 162,108 | |||
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| Accrued salaries |
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| 112,500 |
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| 75,000 | |||
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| Accrued board fees |
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| 120,000 |
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| - | |||
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| Accrued interest, related party |
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| 1,786 |
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| 744 | |||
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| Net cash used in operating activities |
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| (98,254) |
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| (74,665) | ||||
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Cash Flows from Financing Activities: |
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| Proceeds from issuance of notes payable, related party |
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| - |
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| - | ||||||
| Payments on notes payable, related party |
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| - |
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| - | ||||||
| Proceeds from sale of common stock |
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| 100,000 |
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| 84,000 | ||||||
| Proceeds from the exercise of warrants |
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| 4,250 |
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| - | ||||||
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| Net cash provided by financing activities |
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| 104,250 |
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| 84,000 | ||||
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Net Increase (Decrease) in Cash |
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| 5,996 |
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| 9,335 | |||||||
Cash, beginning of period |
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| 20,191 |
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| 13,191 | |||||||
Cash, end of period |
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| $ 26,187 |
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| $ 22,526 | |||||||
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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| Cash paid for interest, note payable - officer |
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| $ - |
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| $ - |
5
IASO BIOMED, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Nature of Operations and Summary of Significant Accounting Policies:
Nature of Operations IASO BioMed, Inc. (IASO or the Company) is a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well as drugs that may qualify for orphan drug status. The Company is developing a unique, first in class drug that it believes will be a safer alternative to currently available testosterone replacement therapy by stimulating the bodys own production rather than using synthetic hormones and steroids. It is also developing a process, or method, which the Company believes will be the basis for developing an early stage blood or fluid test for Alzheimers disease. There is no assurance that these research and development activities will result in products that can be sold. The Company was incorporated as a C-corporation in the state of Colorado on March 11, 2015. It has its primary place of business in Denver, Colorado.
Basis of presentation - The interim unaudited financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) as of and for the three and six month periods ended June 30, 2018 and 2017. The December 31, 2017 Balance Sheet included herein was derived from the audited year-end financial statements of the Company. Certain information and footnote disclosures normally included in unaudited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim unaudited financial statements should be read in conjunction with the Companys annual financial statements for the year ended December 31, 2017, notes and accounting policies thereto included in the Companys Annual Report on Form 10-K.
In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented have been made. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year.
Cash and Cash Equivalents For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of six months or less to be cash equivalents.
Use of Estimates The preparation of the Companys financial statements, in conformity with generally accepted accounting principles, requires the Companys management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates include but are not limited to the valuation of share-based awards.
Research and Development Costs Research and development costs are charged to operations in the period incurred. For the six months ended June 30, 2018 and 2017, the Company incurred $85,000 and $151,078 in research and development costs, respectively.
Share-based Compensation Share-based payments are measured at their estimated fair value on the date of grant. Share-based awards to non-employees are re-measured at fair value each financial reporting date until performance is completed. Share-based compensation expense recognized during a period is based on the estimated number of awards that are ultimately expected to vest. For warrants that do not vest immediately but which contain only a service vesting feature, we recognize compensation cost on the unvested warrants on a straight-line basis over the remaining vesting period.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of warrants and the market price of our common stock, or comparable public companies if our stock is not trading, on the date of grant for the fair value. Our determination of fair value of share-based awards is affected by those stock prices as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest rate.
6
IASO BIOMED, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Income Taxes The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Fair Value of Financial Instruments The carrying value of cash and cash equivalents and trade accounts payable are considered to approximate fair value due to the short-term nature of these instruments.
Earnings Per Share Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants, plus the conversion of convertible notes, if any. There were 9,595,000 and 8,660,000, respectively, shares excluded as they were anti-dilutive at June 30, 2018 and 2017.
Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize a right of use asset and related lease liability for those leases classified as operating leases at the commencement date and have lease terms of more than 12 months. This topic retains the distinction between finance leases and operating leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Although the Company currently has no lease obligations, it will adopt the new requirements if it enters into a lease obligation.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. This standard will not have a material impact on the Companys results of operations or financial position.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. For public companies, these amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of ASU 2016-18 is not expected to have a material impact on the financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending June 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company does not expect ASU 2017-09 will have a significant impact on its financial statements upon adoption.
7
IASO BIOMED, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
2. Going Concern:
At June 30, 2018 and December 31, 2017, the Company had cash of $26,187 and $20,191, respectively. It also had a working capital deficit of $582,635 and $292,377, respectively and an accumulated deficit of $2,236,195 and $1,403,928, respectively. This raises substantial doubt about the Company's ability to continue as a going concern. Management is taking action to ensure the Company will continue as a going concern for at least one year beyond the date of the issuance of the Companys financial statements. From March 11, 2015 (Inception) through June 30, 2018, the Company has sold $691,502 in common stock. Common stock sales continue pursuant to the Companys private placement offering. Additionally, the Company received approval for its Form S-1 Registration Statement with the Securities and Exchange Commission, through which it intends to offer for sale additional shares of its common stock. These fundraising efforts may not be successful. While there can be no assurances, management believes that these actions will enable the Company to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
3. Related Party Transactions:
Note Payable In October 2016, the Company executed an unsecured note payable to Richard Schell, the Companys Chief Executive officer, founder and stockholder for $25,000 bearing interest at 6% per annum, which remained outstanding at June 30, 2018 and December 31, 2017 with accrued interest payable of $2,441 and $1,697, respectively.
In October 2017, the Company executed an unsecured promissory note to Richard Schell for $35,000 bearing interest at 6% per annum, which remained outstanding at June 30, 2018 and December 31, 2017 with accrued interest payable of $1,548 and $506, respectively.
A total of $1,786 and $744 of interest expense was accrued during the six-month periods ended June 30, 2018 and 2017, respectively.
Employment Agreements In March 2017 the Company entered into an employment agreement with its CEO for a two-year term. The base salary of $150,000 per annum is payable to the CEO only upon the Companys raising of an additional $750,000. Mr. Schell will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The CEO also received warrants to purchase 250,000 shares of the Companys common stock at $0.40 per share for a period of five years after issuance. 125,000 warrants vested upon signing the agreement and the remaining 125,000 vested in March 2018. The CEO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors. The agreement provides for severance payments.
In March 2017 the Company entered into an employment agreement with its CFO for a two-year term. The CFO will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The base salary of $75,000 per annum is payable to the CFO only upon the Companys raising of an additional $750,000. When the CFO becomes a full-time executive, his salary will be increased to $125,000 per annum. The CFO also received warrants to purchase 500,000 shares of the Companys common stock at $0.40 per share for a period of five years after issuance. 250,000 warrants vested upon signing the agreement and the remaining 250,000 vested in March 2018. The CFO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors. The agreement provides for severance payments.
The Company accrued $112,500 and $75,000 in salaries related to these agreements for the six-month periods ended June 30, 2018 and 2017, respectively.
Contributed Services The Company's CEO and CFO were not paid a salary during the period from March 11, 2015 (inception) through February 28, 2017. The Company recognized the value of their services as contributed services by recognizing $5,000 of compensation expenses in general and administration expenses in the statement of operations for the six months ended June 30, 2017.
8
IASO BIOMED, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Scientific Advisory Board Agreements - Effective March 1, 2018, the Company entered into a Scientific Advisory Board Agreement with our director Dr. Papadopoulos (the Papadopoulos Agreement), through which Dr. Papadopoulos agreed to serve on our Scientific Advisory Board. The term of the Papadopoulos Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Papadopoulos Agreement provides for payments as follows: an annual fee of $35,000, which includes $10,000 to serve as the Scientific Advisory Board Chairman; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $45,000 payable following a successful financing round of a minimum of $2,000,000; and should the Papadopoulos Agreement be renewed after one year, a $95,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Papadopoulos must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Papadopoulos and the Companys Chief Executive Officer.
Also, effective March 1, 2018, we entered into a Scientific Advisory Board Agreement with our director Dr. Karatzas (the Karatzas Agreement), through which Dr. Karatzas agreed to serve on our Scientific Advisory Board. The term of the Karatzas Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Karatzas Agreement provides for payments as follows: an annual fee of $25,000; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $40,000 payable following a successful financing round of a minimum of $2,000,000; and should the Karatzas Agreement be renewed after one year, a $90,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Karatzas must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Karatzas and the Companys Chief Executive Officer.
The Company accrued a total of $120,000 in fees related to these agreements for the six-month period ended June 30, 2018, which includes $20,000 in fees and $100,000 in signing bonuses.
Services Agreement Effective January 1, 2017, the Company pays the Company's Corporate Secretary's company $400 per month for reimbursement of certain administrative charges such as computer, internet, phone and similar items. The agreement is on a month-to-month basis and may be terminated at any time by either party. Total expense for the six months ended June 30, 2018 and 2017 was $2,400.
4. Stockholders Equity:
The Company has the authority to issue 110,000,000 shares of $.0001 par value stock, of which 100,000,000 shares are common stock and 10,000,000 shares are preferred stock. As of June 30, 2018, and December 31, 2017 there were 34,927,632 and 34,252,632 common stock shares issued and outstanding.
For the six-month period ended June 30, 2018, the Company sold $100,000 in its private placement, issuing 250,000 shares of our common stock at $0.40 per share that included warrants to purchase up to 250,000 shares of our common stock exercisable at $0.75 per share for a period of three years from issuance.
During the six-month period ended June 30, 2018, the Company issued warrants to purchase up to 860,000 shares of common stock at an exercise price of $0.01 per share to business, legal and scientific consultants; 400,000 of which were to expire in December 2022 and 460,000 of which expire in February 2021. Subsequent to issuance, 425,000 of these warrants were exercised for proceeds to the Company of $4,250. We incurred stock compensation expense totaling $417,257 in connection with the issuance of these warrants as more fully explained in Note 6 Share-based Compensation.
9
IASO BIOMED, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
5. Commitments and Contingencies:
Royalties In January 2016, the Company signed a license agreement with The Royal Institution for the Advancement of Learning/McGill University in Canada on the Companys potential products. This agreement requires, for each of the Companys potential products, a 3% payment of annual net revenues, with a minimum royalty of CAD $5,000 each, per year starting on the date of commercialization of the first product developed using the intellectual property covered by the license agreement. The Company must pay milestone payments for the testosterone replacement therapy as follows:
| · | CAD $5,000 on the issuance of the first US patent |
|
|
|
| · | CAD $25,000 on the filing of an investigational new drug application or regulatory filing |
|
|
|
| · | CAD $50,000 on the initiation of the first Phase II clinical study |
|
|
|
| · | CAD $100,000 on the initiation of the first Phase III clinical study |
|
|
|
| · | CAD $300,000 on receipt of regulatory approval |
The Company must also pay milestone payments as follows for the out of body test to identify Alzheimer’s disease as follows:
| · | CAD $5,000 on the issuance of the first US patent |
|
|
|
| · | CAD $50,000 on the filing of a 510(k) or PMA application |
|
|
|
| · | CAD $200,000 on receipt of regulatory approval |
In addition, the Company issued 5% of the total number of issued and outstanding shares in the Company’s Series A financing to the same institution, or 1,652,632 shares in March 2016. This agreement, payable in Canadian dollars, exposes the Company to foreign exchange transaction gains and losses. In August 2016, the Company issued an additional 300,000 shares of the Companys common stock to McGill in lieu of the pre-existing anti-dilution provision. As McGill owns more than 5% of the Companys outstanding common stock, it is considered a related party.
Research Agreement In January 2016 the Company signed a Research Agreement with The Research Institute of the McGill University Health Centre (RIMUHC) in Canada for research activities on the Companys potential products. The agreement covers a period of one year and required the Company to pay a total of $130,000. The Agreement was amended in March 2017 to extend the term for one year and required the payment of an additional $130,000 over that period. The Company paid these installment payments in July and October 2017 leaving no balance due. The Company agreed in June 2018 to an additional payment of $65,000 to continue research and development activities at RIMUHC, but has not yet extended or amended the prior agreement. This amount remained unpaid at June 30, 2018.
10
IASO BIOMED, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
6. Share-based Compensation
In March 2017, the Company issued 750,000 warrants to the Companys officers to purchase shares of our common stock at $0.40 per share. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Risk-free interest rate |
|
| 1.55% |
Expected term |
|
| 3 years |
Volatility |
|
| 154% |
Dividend yield |
|
| |
Fair value |
|
| $ 0.33 |
Expected term represents the period that the Companys stock-based awards are expected to be outstanding. The Companys historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share based compensation related to these warrants was $20,502 and $162,940 for the six months ended June 30, 2018 and 2017, respectively.
In February and March 2018 the Company issued warrants to purchase up to 860,000 shares of common stock at an exercise price of $0.01 per share to business, legal and scientific consultants; 400,000 of which were to expire in December 2022 and 460,000 of which expire in February 2021. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Risk-free interest rate |
| 1.98 2.02% |
Expected term |
| 1.0 years |
Volatility |
| 115-137% |
Dividend yield |
| - |
Fair value |
| $ 0.26-0.29 |
Expected term represents the period that the Companys stock-based awards are expected to be outstanding. The Companys historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share based compensation related to these warrants was $417,257 for the six months ended June 30, 2018.
7. Subsequent Events:
Management has determined that there are no further events subsequent to the balance sheet date that should be disclosed in these financial statements.
11
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Overview
The following discussion should be read in conjunction with our Registration Statement on Form S-1, and the financial statements and accompanying notes included in Part I, Item I of this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including the statements listed in the section below entitled Part II, Item 1ARisk Factors. These statements are based on our beliefs and expectations about future outcomes, and are subject to risks and uncertainties that could cause our actual results to differ materially from anticipated results. Factors that could cause or contribute to such differences include those described in Part II, Item 1ARisk Factors of this Quarterly Report on Form 10-Q; factors described in our Registration Statement on Form S-1, under the section entitled Part I, Item 1A—Risk Factors—Forward-Looking Statements; and factors described in other cautionary statements, cautionary language and risk factors set forth in other filings with the Securities and Exchange Commission (SEC). We undertake no obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.
IASO BioMedÒ, Inc. (IASO or the "Company") is a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well and/or and drugs that may qualify for orphan drug status. The Company is developing a drug that it believes will be a safer alternative to currently available testosterone replacement therapy by stimulating the body's own testosterone production rather than using synthetic hormones and steroids, and developing an out of body test to identify Alzheimer's disease. IASO is also developing a process, or method, which the Company believes will be the basis for developing an early stage blood or fluid test for Alzheimer's disease. The Company was incorporated as a C-corporation in the state of Colorado on March 11, 2015. It has its primary place of business in Denver, Colorado.
JOBS Act We are an "emerging growth company" as defined in the recently-enacted JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not "emerging growth companies." As an "emerging growth company" under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain reporting and disclosure requirements, which may make our future public filings different than that of other public companies.
Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain new accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We will remain an "emerging growth company" until the earliest of: (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed a "large accelerated filer" as defined under the federal securities laws.
We have not generated any revenue to date, and we do not currently have a product ready for sale.
12
At June 30, 2018 and December 31, 2017, the Company had cash of $26,187 and $20,191, respectively. It also had a working capital deficit of $582,635 and $292,377, respectively and an accumulated deficit of $2,236,195 and $1,403,928, respectively. Our losses have principally been operating expenses incurred in startup research and development costs, general and administrative, legal, and intellectual property expenses. We expect to continue to incur substantial costs for these activities over at least the next year. Management is taking action to ensure the Company will continue as a going concern for at least one year beyond the date of the issuance of the Companys financial statements. From March 11, 2015 (Inception) through June 30, 2018, the Company has sold $691,502 in common stock. Common stock sales continue pursuant to the Companys private placement offering. Additionally, the Company received approval for its Form S-1 Registration Statement with the Securities and Exchange Commission, through which it intends to offer for sale additional shares of its common stock.
If we are unable to obtain additional financing on a timely basis, we may have to curtail our development, and business activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately, we could be forced to discontinue our operations and liquidate. See "Liquidity and Capital Resources" below.
Results of Operations
Six months ended June 30, 2018 compared to six months ended June 30, 2017
The following table presents a summary of our statements of operations for the six months ended June 30, 2018 and 2017.
| For the Six Months Ended | ||||
| June 30, | ||||
| 2018 |
| 2017 | ||
Revenues |
| $ - |
|
| $ - |
Operating Expenses |
| 830,481 |
|
| 476,730 |
Loss from Operations |
| (830,481) |
|
| (476,730) |
Other Expenses |
| (1,786) |
|
| (744) |
Net Loss |
| $ (832,267) |
|
| $ (477,474) |
Earnings per Common Share: |
|
|
|
|
|
Basic and Diluted |
| $ (0.01) |
|
| $ (0.01) |
Weighted Average Number of Common Shares Outstanding |
|
|
|
|
|
Basic and Diluted |
| 34,726,113 |
|
| 33,540,410 |
Revenues
The Company was incorporated on March 11, 2015 and has no revenues to-date and has no products ready for sale.
General and administrative
General and administrative expenses consist primarily of professional legal and accounting fees related to the preparation and filing of the Companys Form S-1 registration statement and Form 10-Qs and Form 10-K, and compensation. Total general and administrative expenses increased by $419,829 the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The primary reason for the increase is the recording of share-based compensation of $437,759 in 2018 compared to $162,940 in 2017, and accrued Scientific Advisory Board fees of $120,000 in 2018 and none in 2017. We expect that our general and administrative expenses will increase as we expand our staff, develop our infrastructure and incur additional costs to support the execution of our business plan.
The Company incurred $2,256 and $8,531, respectively, in intellectual property expenses for the six months ended June 30, 2018 and 2017 that are included as general and administrative expenses.
13
Research and development
Research and development costs are charged to operations in the period incurred. For six months ended June 30, 2018 and 2017, total research and development expenses were $85,000 and $151,078, respectively.
Interest expense
For the six months ended June 30, 2018 and 2017, the Company accrued interest expense of $1,786 and $744, respectively, for note payable related party totaling $60,000 during that period which was outstanding at June 30, 2018 and December 31, 2017.
Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
|
| June 30, 2018 |
|
| December 31, 2017 |
| ||
|
|
|
|
|
|
| ||
Cash |
|
| $ 26,187 |
|
|
| $ 20,191 |
|
|
|
|
|
|
|
|
|
|
Working Capital Deficit |
|
| $ (582,635) |
|
|
| $ (292,377) |
|
Since our inception, we have not generated any revenues and have funded our operations through the sale of our equity securities and through notes payable from the Companys CEO. The implementation of our business plan, as discussed in "Business," will require the receipt of sufficient grant, equity and/or debt financing to purchase necessary technology and materials, fund our research and development efforts, and otherwise fund our operations. If we are able to complete our offering under the recently approved Form S-1 Registration Statement in full, we anticipate that the estimated net proceeds of $4,800,000 from that offering (assuming no underwriter or brokerage commissions are paid in connection with the offering) will fund our operations until at least December 31, 2018.
|
| For the six months ended June 30, |
| |||||
|
| 2018 |
|
| 2017 |
| ||
|
|
|
|
|
|
| ||
Cash (used in) provided by: |
|
|
|
|
|
| ||
Operating activities |
|
| $ (98,245) |
|
|
| $ (74,665) |
|
Financing activities |
|
| $ 104,250 |
|
|
| $ 84,000 |
|
Net Cash Used in Operating Activities
For the six months ended June 30, 2018 and 2017, we experienced negative cash flows from operating activities of $98,254 and $74,665, respectively. This is due primarily to a net loss of $832,267 and $477,474, respectively. The loss for the six months ended June 30, 2018 is reduced by share-based compensation of $437,759, accrued Scientific Advisory Board fees of $125,000, accrued salaries of $112,500, an increase in accounts payable of $64,760 and accrued interest expense of $1,786, less a decrease in increase of prepaid expenses of $2,792. For the six months ended June 30, 2017 the loss is reduced by share-based compensation of $162,940, an increase in accounts payable of $162,108, accrued salaries of $75,000, non-cash contributed services of $5,000, less a change in prepaid expenses of $2,983. We anticipate that we will continue to use cash in operating activities in the near future.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2018 and 2017 totaled $104,250 and $84,000, respectively, as a result of common stock sales in both years and warrant exercises in 2018. We continue to seek additional funding through our private placement and through a public offering.
14
For the six months ended June 30, 2018 the Company sold $100,000 in its private placement, issuing 250,000 shares of our common stock at $0.40 per share. There were also 425,000 shares issued for an exercise of warrants for proceeds of $4,250. For the six months ended June 30, 2017, the Company issued 135,000 shares of commons stock for total proceeds of $84,000 through its private placement memorandum.
Three months ended June 30, 2018 compared to three months ended June 30, 2017
The following table presents a summary of our statements of operations for the three months ended June 30, 2018 and 2017.
| For the Three Months Ended | ||||
| June 30, | ||||
| 2018 |
| 2017 | ||
Revenues |
| $ - |
|
| $ - |
Operating Expenses |
| 194,793 |
|
| 133,418 |
Loss from Operations |
| (194,793) |
|
| (133,418) |
Other Expenses |
| (898) |
|
| (374) |
Net Loss |
| $ (165,691) |
|
| $ (133,792) |
Earnings per Common Share: |
|
|
|
|
|
Basic and Diluted |
| $ (0.01) |
|
| $ (0.01) |
Weighted Average Number of Common Shares Outstanding |
|
|
|
|
|
Basic and Diluted |
| 34,922,412 |
|
| 35,586,799 |
Revenues
The Company was incorporated on March 11, 2015 and has no revenues to-date and has no products ready for sale.
General and administrative
General and administrative expenses consist primarily of professional legal and accounting fees related to the preparation and filing of the Companys Form S-1 registration statement and Form 10-Qs and Form 10-K, and compensation. Total general and administrative expenses remained relatively stable with a decrease $2,128 the three months ended June 30, 2018 compared to the three months ended June 30, 2017. We expect that our general and administrative expenses will increase as we expand our staff, develop our infrastructure and incur additional costs to support the execution of our business plan.
The Company incurred $2,256 and $7,064, respectively, in intellectual property expenses for the three months ended June 30, 2018 and 2017 that are included as general and administrative expenses.
Research and development
Research and development costs are charged to operations in the period incurred. For three months ended June 30, 2018 and 2017, total research and development expenses were $75,000 and $11,498, respectively.
Interest expense
For the three months ended June 30, 2018 and 2017, the Company accrued interest expense of $898 and $374, respectively, for note payable related party totaling $60,000 during that period which was outstanding at June 30, 2018 and December 31, 2017.
15
Off-Balance Sheet Arrangements
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties other than as described following under Contractual Obligations. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures.
Our management including our CEO and CFO, who act as our principal executive officer and principal financial officer, respectively, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our CEO and CFO concluded that, as of June 30, 2018, our disclosure controls and procedures were not effective as of such date because due to the small size and limited financial resources, our chief financial officer, corporate secretary and chief executive officer are the only individuals involved in the accounting and financial reporting. As a result, the Company lacks sufficient accounting personnel to ensure the accurate and timely filing of its periodic reports. This limited segregation of duties represents a material weakness.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
You should consider carefully the factors discussed in the Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, which could materially affect our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In April 2018, the Company issued 25,000 shares of common stock upon the exercise of a common stock purchase warrant by an unaffiliated third party at an exercise price of $0.01 per share for total proceeds to the Company of $250.
We offered and sold the securities in reliance on an exemption from federal registration under Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibits filed as a part of this Quarterly Report on Form 10-Q are listed on the Exhibit Index, which is incorporated by reference herein.
Exhibits:
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
|
|
101 | Interactive data files pursuant to Rule 405 of Regulation S-T. |
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| IASO BioMed, Inc. |
| |
| (Registrant) |
| |
|
|
|
|
Date: August 14, 2018 | By: | /s/ Mr. Richard Schell |
|
|
| Mr. Richard Schell |
|
|
| Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
Date: August 14, 2018 | By: | /s/ Mr. Duane Knight |
|
|
| Mr. Duane Knight |
|
|
| Chief Financial Officer |
|
|
| (Principal Accounting Officer) |
|
18
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Richard Schell, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2018, of IASO BioMed, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants BOD (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 14, 2018 | By: | /s/ Mr. Richard Schell |
|
|
| Mr. Richard Schell |
|
|
| Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Duane Knight, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2018, of IASO BioMed, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants BOD (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 14, 2018 | By: | /s/ Duane Knight |
|
|
| Duane Knight |
|
|
| Chief Financial Officer |
|
|
| (Principal Financial Officer) |
|
EXHIBIT 32.1
CERTIFICATIONS OF PRESIDENT AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard Schell, hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of IASO BioMed, Inc. for the quarterly period ended June 30, 2018, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of IASO BioMed, Inc.
Date: August 14, 2018 | By: | /s/ Mr. Richard Schell |
|
|
| Mr. Richard Schell |
|
|
| Chief Executive Officer |
|
|
| (Principal Executive Officer) |
|
I, Duane Knight, hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of IASO BioMed, Inc. for the quarterly period ended June 30, 2018, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of IASO BioMed, Inc.
Date: August 14, 2018 | By: | /s/ Duane Knight |
|
|
| Duane Knight |
|
|
| Chief Financial Officer |
|
|
| (Principal Financial Officer) |
|
The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not to be incorporated by reference into any filing of IASO BioMed, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Document and Entity Information |
6 Months Ended |
---|---|
Jun. 30, 2018
shares
| |
Document and Entity Information: | |
Entity Registrant Name | IASO BIOMED, INC. |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2018 |
Trading Symbol | iaso |
Entity Incorporation, State Country Name | Colorado |
Entity Incorporation, Date of Incorporation | Mar. 11, 2015 |
Amendment Flag | false |
Entity Central Index Key | 0001662907 |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 34,927,632 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | Q2 |
IASO BIOMED, INC. - Balance Sheets - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|
Current Assets: | ||||
Cash | $ 26,187 | $ 20,191 | ||
Prepaid expenses | 4,355 | 1,562 | ||
Total Currents Assets | 30,542 | 21,753 | ||
Total Assets | 30,542 | 21,753 | ||
Current Liabilities: | ||||
Accounts payable | 129,188 | 64,427 | ||
Note payable, related party | 60,000 | 60,000 | ||
Accrued salaries | 300,000 | 187,500 | ||
Accrued board fees | 120,000 | |||
Accrued interest, related party | 3,989 | 2,203 | ||
Total Current Liabilities | 613,177 | 314,130 | ||
Total Liabilities | 613,177 | 314,130 | ||
Commitments and Contingencies | [1] | |||
Stockholders' Deficit | ||||
Preferred stock | ||||
Common stock | 3,493 | 3,425 | ||
Additional paid-in capital | 1,650,067 | 1,108,126 | ||
Accumulated deficit | (2,236,195) | (1,403,928) | ||
Total Stockholders' Deficit | (582,635) | (292,377) | ||
Total Liabilities and Stockholders' Deficit | $ 30,542 | $ 21,753 | ||
|
Statement of Financial Position - Parenthetical - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued | 34,927,632 | 34,252,632 |
Common Stock, Shares Outstanding | 34,927,632 | 34,252,632 |
IASO BIOMED, INC. - Statements of Operations - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement | ||||
Revenues | ||||
Operating Expenses: | ||||
General and administrative | 119,793 | 121,921 | 745,481 | 325,652 |
Research and development | 75,000 | 11,497 | 85,000 | 151,078 |
Total operating expenses | 194,793 | 133,418 | 830,481 | 476,730 |
Loss From Operations | (194,793) | (133,418) | (830,481) | (476,730) |
Other Expenses: | ||||
Interest expense, related party | 898 | 374 | 1,786 | 744 |
Total other expenses | 898 | 374 | 1,786 | 744 |
Net Loss | $ (195,691) | $ (133,792) | $ (832,267) | $ (477,474) |
Earnings per Common Share: | ||||
Basic and diluted loss per share | $ (0.01) | $ (0.00) | $ (0.02) | $ (0.01) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted | 34,922,412 | 33,586,799 | 34,726,113 | 33,540,410 |
1. Nature of Operations and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
1. Nature of Operations and Summary of Significant Accounting Policies: | 1. Nature of Operations and Summary of Significant Accounting Policies:
Nature of Operations
IASO BioMed, Inc. (IASO or the Company) is a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well as drugs that may qualify for orphan drug status. The Company is developing a unique, first in class drug that it believes will be a safer alternative to currently available testosterone replacement therapy by stimulating the bodys own production rather than using synthetic hormones and steroids. It is also developing a process, or method, which the Company believes will be the basis for developing an early stage blood or fluid test for Alzheimers disease. There is no assurance that these research and development activities will result in products that can be sold. The Company was incorporated as a C-corporation in the state of Colorado on March 11, 2015. It has its primary place of business in Denver, Colorado.
Basis of presentation
The interim unaudited financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) as of and for the three and six month periods ended June 30, 2018 and 2017. The December 31, 2017 Balance Sheet included herein was derived from the audited year-end financial statements of the Company. Certain information and footnote disclosures normally included in unaudited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim unaudited financial statements should be read in conjunction with the Companys annual financial statements for the year ended December 31, 2017, notes and accounting policies thereto included in the Companys Annual Report on Form 10-K.
In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented have been made. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of six months or less to be cash equivalents.
Use of Estimates
The preparation of the Companys financial statements, in conformity with generally accepted accounting principles, requires the Companys management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates include but are not limited to the valuation of share-based awards.
Research and Development Costs
Research and development costs are charged to operations in the period incurred. For the six months ended June 30, 2018 and 2017, the Company incurred $85,000 and $151,078 in research and development costs, respectively.
Share-based Compensation
Share-based payments are measured at their estimated fair value on the date of grant. Share-based awards to non-employees are re-measured at fair value each financial reporting date until performance is completed. Share-based compensation expense recognized during a period is based on the estimated number of awards that are ultimately expected to vest. For warrants that do not vest immediately but which contain only a service vesting feature, we recognize compensation cost on the unvested warrants on a straight-line basis over the remaining vesting period.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of warrants and the market price of our common stock, or comparable public companies if our stock is not trading, on the date of grant for the fair value. Our determination of fair value of share-based awards is affected by those stock prices as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest rate.
Income Taxes
The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents and trade accounts payable are considered to approximate fair value due to the short-term nature of these instruments.
Earnings Per Share
Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants, plus the conversion of convertible notes, if any. There were 9,595,000 and 8,660,000, respectively, shares excluded as they were anti-dilutive at June 30, 2018 and 2017.
Recently Issued Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize a right of use asset and related lease liability for those leases classified as operating leases at the commencement date and have lease terms of more than 12 months. This topic retains the distinction between finance leases and operating leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Although the Company currently has no lease obligations, it will adopt the new requirements if it enters into a lease obligation.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. This standard will not have a material impact on the Companys results of operations or financial position.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. For public companies, these amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of ASU 2016-18 is not expected to have a material impact on the financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending June 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company does not expect ASU 2017-09 will have a significant impact on its financial statements upon adoption.
|
2. Going Concern |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
2. Going Concern: | 2. Going Concern:
At June 30, 2018 and December 31, 2017, the Company had cash of $26,187 and $20,191, respectively. It also had a working capital deficit of $582,635 and $292,377, respectively and an accumulated deficit of $2,236,195 and $1,403,928, respectively. This raises substantial doubt about the Company's ability to continue as a going concern. Management is taking action to ensure the Company will continue as a going concern for at least one year beyond the date of the issuance of the Companys financial statements. From March 11, 2015 (Inception) through June 30, 2018, the Company has sold $691,502 in common stock. Common stock sales continue pursuant to the Companys private placement offering. Additionally, the Company received approval for its Form S-1 Registration Statement with the Securities and Exchange Commission, through which it intends to offer for sale additional shares of its common stock. These fundraising efforts may not be successful. While there can be no assurances, management believes that these actions will enable the Company to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
3. Related Party Transactions |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
3. Related Party Transactions: | 3. Related Party Transactions:
Note Payable In October 2016, the Company executed an unsecured note payable to Richard Schell, the Companys Chief Executive officer, founder and stockholder for $25,000 bearing interest at 6% per annum, which remained outstanding at June 30, 2018 and December 31, 2017 with accrued interest payable of $2,441 and $1,697, respectively.
In October 2017, the Company executed an unsecured promissory note to Richard Schell for $35,000 bearing interest at 6% per annum, which remained outstanding at June 30, 2018 and December 31, 2017 with accrued interest payable of $1,548 and $506, respectively.
A total of $1,786 and $744 of interest expense was accrued during the six-month periods ended June 30, 2018 and 2017, respectively.
Employment Agreements In March 2017 the Company entered into an employment agreement with its CEO for a two-year term. The base salary of $150,000 per annum is payable to the CEO only upon the Companys raising of an additional $750,000. Mr. Schell will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The CEO also received warrants to purchase 250,000 shares of the Companys common stock at $0.40 per share for a period of five years after issuance. 125,000 warrants vested upon signing the agreement and the remaining 125,000 vested in March 2018. The CEO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors. The agreement provides for severance payments.
In March 2017 the Company entered into an employment agreement with its CFO for a two-year term. The CFO will assume his responsibilities on a part time basis until requested by the Board of Directors to become a full-time executive. The base salary of $75,000 per annum is payable to the CFO only upon the Companys raising of an additional $750,000. When the CFO becomes a full-time executive, his salary will be increased to $125,000 per annum. The CFO also received warrants to purchase 500,000 shares of the Companys common stock at $0.40 per share for a period of five years after issuance. 250,000 warrants vested upon signing the agreement and the remaining 250,000 vested in March 2018. The CFO will also be eligible to earn discretionary annual performance bonuses upon meeting certain objectives as determined by the Board of Directors. The agreement provides for severance payments.
The Company accrued $112,500 and $75,000 in salaries related to these agreements for the six-month periods ended June 30, 2018 and 2017, respectively.
Contributed Services The Company's CEO and CFO were not paid a salary during the period from March 11, 2015 (inception) through February 28, 2017. The Company recognized the value of their services as contributed services by recognizing $5,000 of compensation expenses in general and administration expenses in the statement of operations for the six months ended June 30, 2017.
Scientific Advisory Board Agreements - Effective March 1, 2018, the Company entered into a Scientific Advisory Board Agreement with our director Dr. Papadopoulos (the Papadopoulos Agreement), through which Dr. Papadopoulos agreed to serve on our Scientific Advisory Board. The term of the Papadopoulos Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Papadopoulos Agreement provides for payments as follows: an annual fee of $35,000, which includes $10,000 to serve as the Scientific Advisory Board Chairman; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $45,000 payable following a successful financing round of a minimum of $2,000,000; and should the Papadopoulos Agreement be renewed after one year, a $95,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Papadopoulos must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Papadopoulos and the Companys Chief Executive Officer.
Also, effective March 1, 2018, we entered into a Scientific Advisory Board Agreement with our director Dr. Karatzas (the Karatzas Agreement), through which Dr. Karatzas agreed to serve on our Scientific Advisory Board. The term of the Karatzas Agreement is one year from execution and may be renewed annually by mutual consent of both parties. The Karatzas Agreement provides for payments as follows: an annual fee of $25,000; a signing bonus of $50,000 payable after successful closing of any cumulative minimum $1,000,000 investment in the Company; a non-discretionary bonus of $40,000 payable following a successful financing round of a minimum of $2,000,000; and should the Karatzas Agreement be renewed after one year, a $90,000 bonus payable only after the signing bonus and non-discretionary bonus from year one have been earned. In order to receive the non-discretionary bonus payments Dr. Karatzas must be actively involved in the creation and execution of strategies necessary for the Company to achieve its strategic plan including the scientific, commercial and business objectives, as applicable and as agreed upon between the Dr. Karatzas and the Companys Chief Executive Officer.
The Company accrued a total of $120,000 in fees related to these agreements for the six-month period ended June 30, 2018, which includes $20,000 in fees and $100,000 in signing bonuses.
Services Agreement Effective January 1, 2017, the Company pays the Company's Corporate Secretary's company $400 per month for reimbursement of certain administrative charges such as computer, internet, phone and similar items. The agreement is on a month-to-month basis and may be terminated at any time by either party. Total expense for the six months ended June 30, 2018 and 2017 was $2,400. |
4. Stockholders' Equity |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
4. Stockholders' Equity: | 4. Stockholders Equity:
The Company has the authority to issue 110,000,000 shares of $.0001 par value stock, of which 100,000,000 shares are common stock and 10,000,000 shares are preferred stock. As of June 30, 2018, and December 31, 2017 there were 34,927,632 and 34,252,632 common stock shares issued and outstanding.
For the six-month period ended June 30, 2018, the Company sold $100,000 in its private placement, issuing 250,000 shares of our common stock at $0.40 per share that included warrants to purchase up to 250,000 shares of our common stock exercisable at $0.75 per share for a period of three years from issuance.
During the six-month period ended June 30, 2018, the Company issued warrants to purchase up to 860,000 shares of common stock at an exercise price of $0.01 per share to business, legal and scientific consultants; 400,000 of which were to expire in December 2022 and 460,000 of which expire in February 2021. Subsequent to issuance, 425,000 of these warrants were exercised for proceeds to the Company of $4,250. We incurred stock compensation expense totaling $417,257 in connection with the issuance of these warrants as more fully explained in Note 6 Share-based Compensation. |
5. Commitments and Contingencies |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
5. Commitments and Contingencies: | 5. Commitments and Contingencies:
Royalties In January 2016, the Company signed a license agreement with The Royal Institution for the Advancement of Learning/McGill University in Canada on the Companys potential products. This agreement requires, for each of the Companys potential products, a 3% payment of annual net revenues, with a minimum royalty of CAD $5,000 each, per year starting on the date of commercialization of the first product developed using the intellectual property covered by the license agreement. The Company must pay milestone payments for the testosterone replacement therapy as follows:
· CAD $5,000 on the issuance of the first US patent
· CAD $25,000 on the filing of an investigational new drug application or regulatory filing
· CAD $50,000 on the initiation of the first Phase II clinical study
· CAD $100,000 on the initiation of the first Phase III clinical study
· CAD $300,000 on receipt of regulatory approval
The Company must also pay milestone payments as follows for the out of body test to identify Alzheimers disease as follows:
· CAD $5,000 on the issuance of the first US patent
· CAD $50,000 on the filing of a 510(k) or PMA application
· CAD $200,000 on receipt of regulatory approval
In addition, the Company issued 5% of the total number of issued and outstanding shares in the Companys Series A financing to the same institution, or 1,652,632 shares in March 2016. This agreement, payable in Canadian dollars, exposes the Company to foreign exchange transaction gains and losses. In August 2016, the Company issued an additional 300,000 shares of the Companys common stock to McGill in lieu of the pre-existing anti-dilution provision. As McGill owns more than 5% of the Companys outstanding common stock, it is considered a related party.
Research Agreement In January 2016 the Company signed a Research Agreement with The Research Institute of the McGill University Health Centre (RIMUHC) in Canada for research activities on the Companys potential products. The agreement covers a period of one year and required the Company to pay a total of $130,000. The Agreement was amended in March 2017 to extend the term for one year and required the payment of an additional $130,000 over that period. The Company paid these installment payments in July and October 2017 leaving no balance due. The Company agreed in June 2018 to an additional payment of $65,000 to continue research and development activities at RIMUHC, but has not yet extended or amended the prior agreement. This amount remained unpaid at June 30, 2018. |
6. Share-based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||
6. Share-based Compensation | 6. Share-based Compensation
In March 2017, the Company issued 750,000 warrants to the Companys officers to purchase shares of our common stock at $0.40 per share. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Expected term represents the period that the Companys stock-based awards are expected to be outstanding. The Companys historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share based compensation related to these warrants was $20,502 and $162,940 for the six months ended June 30, 2018 and 2017, respectively.
In February and March 2018 the Company issued warrants to purchase up to 860,000 shares of common stock at an exercise price of $0.01 per share to business, legal and scientific consultants; 400,000 of which were to expire in December 2022 and 460,000 of which expire in February 2021. Estimated fair values of warrants granted were determined using the Black-Scholes option pricing model with the following average assumptions:
Expected term represents the period that the Companys stock-based awards are expected to be outstanding. The Companys historical stock warrant exercise experience does not provide a reasonable basis upon which to estimate expected term. As such, the simplified method was used to calculate the expected term.
The Company calculated volatility based on the volatilities of comparable public companies.
Total share based compensation related to these warrants was $417,257 for the six months ended June 30, 2018. |
7. Subsequent Events |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Notes | |
7. Subsequent Events: | 7. Subsequent Events:
Management has determined that there are no further events subsequent to the balance sheet date that should be disclosed in these financial statements. |
1. Nature of Operations and Summary of Significant Accounting Policies: Nature of Operations (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Nature of Operations | Nature of Operations
IASO BioMed, Inc. (IASO or the Company) is a developmental stage biotechnology company focusing on researching and developing drugs and diagnostic tests for products with a large commercial market potential as well as drugs that may qualify for orphan drug status. The Company is developing a unique, first in class drug that it believes will be a safer alternative to currently available testosterone replacement therapy by stimulating the bodys own production rather than using synthetic hormones and steroids. It is also developing a process, or method, which the Company believes will be the basis for developing an early stage blood or fluid test for Alzheimers disease. There is no assurance that these research and development activities will result in products that can be sold. The Company was incorporated as a C-corporation in the state of Colorado on March 11, 2015. It has its primary place of business in Denver, Colorado. |
1. Nature of Operations and Summary of Significant Accounting Policies: Basis of Presentation (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Basis of Presentation | Basis of presentation
The interim unaudited financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) as of and for the three and six month periods ended June 30, 2018 and 2017. The December 31, 2017 Balance Sheet included herein was derived from the audited year-end financial statements of the Company. Certain information and footnote disclosures normally included in unaudited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim unaudited financial statements should be read in conjunction with the Companys annual financial statements for the year ended December 31, 2017, notes and accounting policies thereto included in the Companys Annual Report on Form 10-K.
In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim periods presented have been made. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year. |
1. Nature of Operations and Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of six months or less to be cash equivalents. |
1. Nature of Operations and Summary of Significant Accounting Policies: Use of Estimates (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Use of Estimates | Use of Estimates
The preparation of the Companys financial statements, in conformity with generally accepted accounting principles, requires the Companys management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates include but are not limited to the valuation of share-based awards. |
1. Nature of Operations and Summary of Significant Accounting Policies: Research and Development Costs (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Research and Development Costs | Research and Development Costs
Research and development costs are charged to operations in the period incurred. For the six months ended June 30, 2018 and 2017, the Company incurred $85,000 and $151,078 in research and development costs, respectively. |
1. Nature of Operations and Summary of Significant Accounting Policies: Share-based Compensation (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Share-based Compensation | Share-based Compensation
Share-based payments are measured at their estimated fair value on the date of grant. Share-based awards to non-employees are re-measured at fair value each financial reporting date until performance is completed. Share-based compensation expense recognized during a period is based on the estimated number of awards that are ultimately expected to vest. For warrants that do not vest immediately but which contain only a service vesting feature, we recognize compensation cost on the unvested warrants on a straight-line basis over the remaining vesting period.
The Company uses the Black-Scholes option-pricing model to estimate the fair value of warrants and the market price of our common stock, or comparable public companies if our stock is not trading, on the date of grant for the fair value. Our determination of fair value of share-based awards is affected by those stock prices as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest rate. |
1. Nature of Operations and Summary of Significant Accounting Policies: Income Taxes (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Income Taxes | Income Taxes
The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. |
1. Nature of Operations and Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments
The carrying value of cash and cash equivalents and trade accounts payable are considered to approximate fair value due to the short-term nature of these instruments. |
1. Nature of Operations and Summary of Significant Accounting Policies: Earnings Per Share (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Earnings Per Share | Earnings Per Share
Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding, plus the impact of common shares, if dilutive, resulting from the exercise of outstanding stock options and warrants, plus the conversion of convertible notes, if any. There were 9,595,000 and 8,660,000, respectively, shares excluded as they were anti-dilutive at June 30, 2018 and 2017. |
1. Nature of Operations and Summary of Significant Accounting Policies: Recently Issued Accounting Pronouncements (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Policies | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize a right of use asset and related lease liability for those leases classified as operating leases at the commencement date and have lease terms of more than 12 months. This topic retains the distinction between finance leases and operating leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Although the Company currently has no lease obligations, it will adopt the new requirements if it enters into a lease obligation.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. This standard will not have a material impact on the Companys results of operations or financial position.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. For public companies, these amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of ASU 2016-18 is not expected to have a material impact on the financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending June 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company does not expect ASU 2017-09 will have a significant impact on its financial statements upon adoption. |
6. Share-based Compensation: ScheduleOfAssumptions2017 (Tables) |
6 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||
Tables/Schedules | ||||||||||||||||
ScheduleOfAssumptions2017 |
|
6. Share-based Compensation: Schedule of Assumptions Used (Tables) |
6 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | ||||||||||||||||
Tables/Schedules | ||||||||||||||||
Schedule of Assumptions Used |
|
1. Nature of Operations and Summary of Significant Accounting Policies: Nature of Operations (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Details | |
Entity Incorporation, State Country Name | Colorado |
Entity Incorporation, Date of Incorporation | Mar. 11, 2015 |
1. Nature of Operations and Summary of Significant Accounting Policies: Research and Development Costs (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Details | ||||
Research and development | $ 75,000 | $ 11,497 | $ 85,000 | $ 151,078 |
1. Nature of Operations and Summary of Significant Accounting Policies: Earnings Per Share (Details) - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 9,595,000 | 8,660,000 |
2. Going Concern (Details) - USD ($) |
40 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|
Details | |||
Cash | $ 26,187 | $ 20,191 | $ 20,191 |
Sale of Stock, Consideration Received on Transaction | $ 691,502 |
4. Stockholders' Equity (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Excess Stock, Shares Authorized | 110,000,000 | |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Shares Outstanding | 34,927,632 | 34,252,632 |
Private Placement | ||
Stock Issued During Period, Value, New Issues | $ 100,000 | |
Stock Issued During Period, Shares, New Issues | 250,000 | |
Sale of Stock, Price Per Share | $ 0.40 | |
Private Placement | Warrant | ||
Common Stock, Capital Shares Reserved for Future Issuance | 0.75 | |
Business, Legal and Scientific Consultants | ||
Warrants Issued to Purchase Common Stock | 860,000 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.01 |
6. Share-based Compensation (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Mar. 31, 2017 |
|
Share Based Compensation Related to Warrants | $ 20,502 | $ 162,940 | |
Officer | |||
Class of Warrant or Right, Outstanding | 750,000 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.40 |
6. Share-based Compensation: ScheduleOfAssumptions2017 (Details) - $ / shares |
1 Months Ended | 2 Months Ended |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2018 |
|
Details | ||
Fair Value Assumptions, Risk Free Interest Rate | 1.55% | |
Expected Term | 3 years | 1 year |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 154.00% | |
Assumptions Fair Value | $ 0.33 |
6. Share-based Compensation: Schedule of Assumptions Used (Details) - $ / shares |
1 Months Ended | 2 Months Ended |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2018 |
|
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum | 1.98% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 2.02% | |
Expected Term | 3 years | 1 year |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum | 115.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 137.00% | |
Fair Value Minimum | $ 0.26 | |
Fair Value Maximum | $ 0.29 |
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