0001575705-16-000133.txt : 20160520 0001575705-16-000133.hdr.sgml : 20160520 20160520115544 ACCESSION NUMBER: 0001575705-16-000133 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 48 CONFORMED PERIOD OF REPORT: 20160331 FILED AS OF DATE: 20160520 DATE AS OF CHANGE: 20160520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: True Nature Holding, Inc. CENTRAL INDEX KEY: 0000802257 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53601 FILM NUMBER: 161665270 BUSINESS ADDRESS: STREET 1: 1355 PEACHTREE STREET STREET 2: SUITE 1150 CITY: ATLANTA STATE: GA ZIP: 30309 BUSINESS PHONE: 404-254-6980 MAIL ADDRESS: STREET 1: 1355 PEACHTREE STREET STREET 2: SUITE 1150 CITY: ATLANTA STATE: GA ZIP: 30309 FORMER COMPANY: FORMER CONFORMED NAME: Trunity Holdings, Inc. DATE OF NAME CHANGE: 20120125 FORMER COMPANY: FORMER CONFORMED NAME: BRAIN TREE INTERNATIONAL INC DATE OF NAME CHANGE: 19860922 10-Q 1 tnty_1q16.htm FORM 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the Quarter Ended March 31, 2016

OR

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number 000-53601

 

TRUE NATURE HOLDING, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   87-0496850
     
(State or other jurisdiction of incorporation)   (I.R.S. Employer Identification Number)

 

1355 Peachtree Street, Suite 1150

Atlanta, Georgia 30309

(Address, including zip code, of principal executive offices)

 

Trunity Holdings, Inc.

12555 Orange Drive, Suite 202

Davie, Florida 33330

(Former name or former address if changed since last report.)

 

(404) 254-6980

 (Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒   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  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

LARGE ACCELERATED FILER ACCELERATED FILER
       
NON-ACCELERATED FILER SMALLER REPORTING COMPANY

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes  ☐   No  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.  YES  ☐   NO  ☒

 

As of May 19, 2016, 12,500,000 shares of the registrant’s common stock, $0.01 par value, were outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE: None

 

 

 

 

TRUE NATURE HOLDING, INC.

 

TABLE OF CONTENTS

 

      PAGE
PART I FINANCIAL INFORMATION   3
       
Item 1. Consolidated Financial Statements (Unaudited)   3
       
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   15
       
Item 3. Quantitative and Qualitative Disclosures About Market Risk   19
       
Item 4. Controls and Procedures   19
       
PART II OTHER INFORMATION   20
       
Item 1. Legal Proceedings   20
       
Item 1A. Risk Factors   20
       
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   20
       
Item 3. Defaults Upon Senior Securities   21
       
Item 4. Mine Safety Disclosures   21
       
Item 5. Other Information   21
       
Item 6. Exhibits   22
       
  Signatures     26

 

2 

 

 

PART I

FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

TRUE NATURE HOLDING, INC.

Consolidated Balance Sheets

 

   March 31,  December 31,
   2016  2015
   (unaudited)   
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $17,881   $28,185 
Prepaid expenses   11,348     
Prepaid expenses - related party   4,250    17,000 
Total current assets   33,479    45,185 
           
TOTAL ASSETS  $33,479   $45,185 
           
LIABILITIES          
Current liabilities          
Accounts payable  $471,201   $414,463 
Accrued interest    18,812    14,918 
Accrued liabilities   63,465    13,325 
Convertible note payable, net of discount   29,598     
Debentures payable   122,167    122,167 
Total current liabilities   705,243    564,873 
           
TOTAL LIABILITIES   705,243    564,873 
           
Commitments and Contingencies (Note 10)          
           
STOCKHOLDERS’ DEFICIT          
Preferred stock, $0.01 par value - 10,000,000 shares authorized, none issued and outstanding as of March 31, 2016 and December 31, 2015        
Common stock, $0.01 par value – 500,000,000 shares authorized, 12,400,000 shares issued and outstanding at March 31, 2016; $0.01 par value – 500,000,000 shares authorized, 11,765,000 shares issued and outstanding at December 31, 2015   124,000    117,650 
Additional paid-in capital   684,078    3,917 
Accumulated deficit   (1,479,842)   (641,255)
Total Stockholders’ Deficit   (671,764)   (519,688)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $33,479   $45,185 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

3 

 

 

TRUE NATURE HOLDING, INC.

Unaudited Consolidated Statements of Operations and Comprehensive Loss

 

   For the Three Months Ended
   March 31,  March 31,
   2016  2015
Net Sales  $   $ 
Cost of sales        
Gross Profit        
           
Operating Expenses:          
Research and development        
Selling, general and administrative   832,369     
Total operating expenses   832,369     
           
Operating Loss from Continuing Operations   (832,369)    
Interest expense, net   (6,218)    
Loss From Continuing Operations before Income Taxes   (838,587)    
Provision for income taxes        
Net Loss From Continuing Operations  $(838,587)  $ 
           
Discontinued Operations (Note 4):          
Net Loss from discontinued operations, net of tax       (622,470)
Other comprehensive loss, net of tax       (1,275)
Comprehensive Loss from Discontinued Operations  $   $(623,745)
           
Net Loss  $(838,587)  $(622,470)
Comprehensive Net Loss  $(838,587)  $(623,745)
           
           
Net Loss from Continuing Operations Per Share – Basic and Diluted  $(0.07)  $ 
Net Loss from Discontinued Operations Per Share – Basic and Diluted  $   $(1.15)
Net Loss Per Share – Basic and Diluted  $(0.07)  $(1.15)
           
Weighted Average Number of Shares Outstanding During the Period - Basic and Diluted   12,057,500    542,605 

  

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

4 

 

 

TRUE NATURE HOLDING, INC.

Unaudited Consolidated Statements of Changes in Stockholders’ Deficit

 

   Common
Shares
  Common
Stock
  Additional Paid-in
Capital
  Accumulated Deficit  Total
Stockholders’
Deficit
Balance at December 31, 2015   11,765,000   $117,650   $3,917   $(641,255)  $(519,688)
Sale of common stock, net of issuance cost   120,000    1,200    52,800        54,000 
Shares issued to board members and consultants   500,000    5,000    582,500         587,500 
Common stock issued for convertible note payable   15,000    150    16,213        16,363 
Discount related to issuance of note payable and allocated fair value to beneficial conversion feature           16,364        16,364 
Stock compensation expense            12,284        12,284 
Net loss               (838,587)   (838,587)
Balance at March 31, 2016   12,400,000   $124,000   $684,078   $(1,479,842)  $(671,764)

 

The accompanying notes are an integral part of the Consolidated Financial Statements

 

5 

 

 

TRUE NATURE HOLDING, INC.

Unaudited Consolidated Statements of Cash Flows

 

   Three Months Ended
   March 31,  March 31,
   2016  2015
Cash Flows from Operating Activities:          
Net Loss  $(838,587)  $(622,470)
Adjustments to reconcile net loss to net cash used in operating activities:          
Loss from discontinued operations        622,470 
Stock-based compensation   12,284     
Accretion for debt discounts, warrants and issuance costs   2,325     
Shares issued for board of director compensation   290,000     
Shares issued for consulting services   297,500     
Changes in operating assets and liabilities:          
Prepaid expenses   (11,348)    
Prepaid expenses – related party   12,750     
Accounts payable   56,738     
Accrued interest and other liabilities   54,034     
Net Cash Used in Operating Activities  $(124,304)  $ 
           
Cash Flows from Financing Activities:          
Proceeds from issuance of convertible note payable   60,000     
Sale of common stock, net of issuance costs   54,000     
Net Cash Provided by Financing Activities  $114,000   $ 
Discontinued Operations:          
Operating activities       (154,051)
Investing activities       (47,681)
Financing activities       204,137 
Net Increase in Cash and Cash Equivalents for Discontinued Operations       2,405 
Net Decrease in Cash and Cash Equivalents for Continuing Operations   (10,304)    
Cash, Beginning of Period   28,185    14,119 
Cash, End of Period  $17,881   $16,524 
           
Non-cash Financing Transactions:          
Discount cost related to issuance of convertible note payable  $32,577   $202,916 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

6 

 

 

TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

Note 1 – Description of Business

 

True Nature Holding, Inc. (the “Company”), previously known as Trunity Holdings, Inc., became a publicly-traded company through a reverse merger with Brain Tree International, Inc., a Utah corporation (“BTI”). Trunity Holdings, Inc. was the parent company of the prior educational business, named Trunity, Inc., which was formed on July 28, 2009 through the acquisition of certain intellectual property by its three founders. On December 31, 2015, the Company completed the restructuring and spin-out of the educational business.

 

True Nature Holding, Inc. intends to acquire a series of businesses which specialize in compounding pharmacy activities, largely direct to consumers, doctors and veterinary professionals.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, with the instructions to Form 10-Q and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, these consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at March 31, 2016, the results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015. The results for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis included in the Company’s annual report on Form 10-K for the year ended December 31, 2015. In addition, refer to Note 4 regarding the spin-out of the educational business and related discontinued operations classification pertaining to the fiscal 2015 period. Common stock share and per share amounts in these financial statements have been retroactively adjusted for the effects of a 1 for 101 reverse stock split that occurred in January 2016.

 

Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.

 

Per Share Data - Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options and convertible instruments. 

 

The Company has excluded all common equivalent shares outstanding for warrants, options and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of March 31, 2016, the Company had 78,462 warrants, 67,879 options, 7,105 potential shares which may be issued resulting from the provisions of convertible notes, respectively. As of March 31, 2015, the Company had 166,415 warrants, 68,473 options, 223,223 potential shares which may be issued resulting from the provisions of convertible notes, respectively.

 

Recently Issued Accounting Standards-In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Company’s consolidated balance sheets and results of operations due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Company’s cash flows.

 

 

7 

 

 

TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses certain aspects of accounting for share-based payment award transactions. This guidance will be effective in the first quarter of fiscal year 2017 and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

 

Note 3 – Financial Condition and Going Concern

 

As of March 31, 2016, the Company had cash on hand of $17,881 and current liabilities of $705,243 and has incurred a loss from operations. True Nature Holding’s planned principal operations pertain to the business development and acquisition of pharmaceutical compounding companies. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.

 

As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered into discussions to do so with certain individuals and companies. However, as of the date of these consolidated financial statements, no formal agreement exists.

 

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions.

 

Note 4 – Spin-Out and Discontinued Operations

 

On December 31, 2015, the Company completed the restructuring and spin-out of software educational business, resulting in True Nature Holding, Inc. becoming purely focused on acquiring a series of businesses which specialize in compounding pharmacy activities, largely direct to consumers, doctors and veterinary professionals. The results of the operations associated with the spin-out company and Trunity Holdings, Inc., qualifies as discontinued operations as of and for the three month period ended March 31, 2015.

 

8 

 

 

TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

The results of operations associated with discontinued operations were as follows:

 

   March 31,
   2015
Net Sales  $118,679 
Cost of sales   62,128 
Gross Profit   56,551 
      
Operating Expenses:     
Research and development   194,699 
Selling, general and administrative   252,266 
Total operating expenses   446,965 
      
Operating Loss from Discontinued Operations   (390,414)
      
Other Expense:     
Interest expense, net   (232,056)
      
Net Loss from Discontinued Operations  $(622,470)
Other Comprehensive Loss Net of Tax:     
Foreign currency translation adjustments   (1,275)
Comprehensive Loss from Discontinued Operations  $(623,745)

  

Our educational business was fully disposed of in December 2015.  As a result, there were no assets or liabilities of discontinued operations as of 12/31/2015 or 3/31/2016.

   

Note 5 – Related Party Transactions

 

The Company’s Chairman of the Board, CEO and CFO, Stephen Keaveney has a consulting agreement in the amount of $10,000 per month for professional fees and was paid $16,000 during the three months ending March 31, 2016. On January 25, 2016 board member William L. Ross and Jeffrey Cosman were awarded each 100,000 of shares in Trunity, Inc. in exchange for their services as board members. In addition, a shareholder of the Company has a consulting agreement in the amount of $10,000 per month for professional fees and was paid $17,250 during the three months ended March 31, 2016. $4,250 and $17,000 has been classified as a prepaid asset as of March 31, 2016 and December 31, 2015, respectively, in the consolidated balance sheets related to the prepayment of consulting fees.

 

9 

 

 

TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

Note 6 – Debt

 

Convertible Promissory Note

 

On March 18, 2016, the Company issued a 12% Convertible Promissory Note (the “Convertible Note”) in the principal amount of $60,000 to the Lender. Pursuant to the terms of the Convertible Note, on the date thereof, the Company issued the Convertible Note to the Lender and, as consideration therefor, the Lender paid the Company in cash the full principal amount of the Convertible Note. Upon issuance the lender was awarded 15,000 restricted common shares as an origination fee which have certain registration rights.

 

Pursuant to the terms of the Convertible Note, the Company is obligated to pay monthly installments of not less than $1,000 the first of each month commencing the month following the execution of this note until its full maturity on September 16, 2016 at which time the Company is obligated to repay the full principal amount of the Convertible Note. The Convertible Note is convertible by the holder at any time into shares of the Company’s common stock at an effective conversion price of $1.00 and throughout the duration of this Convertible Note the holder has the right to participate in any and other financing the Company may engage in with the same terms and option as all other investors. The Company allocated the face value of the Convertible Note to the shares and the note based on relative fair values, and the amount allocated to the shares of $16,364 was recorded as a discount against the note, with an offsetting entry to additional paid-in capital. The beneficial conversion feature of $16,364 was recorded as a debt discount with an offsetting entry to additional paid-in capital decreasing the note payable and increasing debt discount. The debt discount is being amortized to interest expense over the term of the debt. As of March 31, 2016, the carrying value of this Convertible Note was $29,598 and accrued interest expense of $260. For the three months ended March 31, 2016, debt discount amortization related to the Convertible Note was $2,325 and interest expense of $260.

 

August 2014 Convertible Debentures (Series C)

 

In fiscal 2015, all debentures issued by Trunity Holdings, Inc. to fund the former educational business were eligible to participate in a debt conversion; however, one debenture holder that was issued a Series C Convertible Debenture (the “Series C Debenture”) in August 2014 with an aggregate face value of $100,000 in exchange for the cancellation of Series B Convertible Debentures with a carrying value of $110,833 did not convert. The Series C Debenture accrues interest at an annual rate of 10%, matured on October 31, 2015, and is convertible into the Company’s common stock at a conversion rate of $20.20 per share. The holders of the Series C Debenture also received warrants to acquire 4,950 shares post-split of common stock for an exercise price of $20.20 per share, exercisable over five years. The former educational business in fiscal 2014 allocated the face value of the Series C Debenture to the warrants and the debentures based on its relative fair values, and allocated to the warrants, which was recorded as a discount against the Series C Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed in fiscal 2014 upon execution of the new debentures. As of March 31, 2016, the carrying value of this Series C Debenture was $110,833 and accrued interest expense of $16,625. For the three months ended March 31, 2016, interest expense related to the Debenture was $3,288.

 

November 2014 Convertible Debentures (Series D)

 

In fiscal 2015, all debentures issued by Trunity Holdings, Inc. to fund the former educational business were eligible to participate in a debt conversion however one debenture holder that was issued a Series D Convertible Debenture (the “Series D Debenture”) in November 2014 with an aggregate face value of $10,000 in exchange for the cancellation of Series B Convertible Debenture with a carrying value of $11,334 that did not participate in the debt conversion restructuring. The Series D Debenture accrues interest at an annual rate of 12%, matured on October 31, 2015, and is convertible into the Company’s common stock at a conversion rate of $16.67 per share. The holders of the Series D Debenture also received warrants to acquire 495 shares post-split of common stock for an exercise price of $20.20 per share, exercisable over five years. The former educational business in fiscal 2014 allocated the face value of the Series D Debenture to the warrants and the debentures based on their relative fair values, and allocated to the warrants, which was recorded as a discount against the Series D Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed in fiscal 2014 upon execution of the new debentures. As of March 31, 2016, the carrying value of the Series D Debenture was $11,334 and accrued interest expense of $1,927. For the three months ended March 31, 2016, interest expense related to the Debenture was $346.

 

10 

 

 

TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

Note 7 – Stockholders’ Deficit

 

Sale of Common Stock – During the quarter ended March 31, 2016, the Company raised gross proceeds of $60,000 through the sale of 120,000 shares of common stock to accredited investors in private placement transactions at a price of $0.50 per share. The Company incurred $6,000 of securities issuance costs representing commissions paid to broker-dealers who assisted with these transactions.

 

Shares for Consulting Services and Board Members – During the quarter ended March 31, 2016, in connection with services rendered, the Company issued 300,000 restricted shares of the Company’s common stock at a value of $1.45 and $0.90 per share in exchange for financial consulting services conducted on behalf of the Company. In addition, in connection with services rendered for board members, the Company issued 200,000 restricted shares of the Company’s common stock at a value of $1.45 per share in exchange for their services conducted on behalf of the Company.

 

Shares issued for convertible note payable – As discussed in Note 6, during the quarter ended March 31, 2016, in connection with conversion of a six-month convertible promissory note, the Company issued 15,000 shares of the Company’s common stock with a fair value of $16,363 that was allocated based on the relative fair value of the note and associated shares.

 

Debt beneficial conversion feature for convertible note payable – During the quarter ended March 31, 2016, the Company raised gross proceeds of $60,000 pursuant to a Convertible Note Payable (“Note”) that allocated the face value of the Note to the shares and debt based on their relative fair values and, resulted in the recording of beneficial conversion features totaling $16,364 as a discount against the Notes, with an offsetting entry to additional paid-in capital. The discount is being amortized into interest expense over the term of the Note.

 

Note 8 – Stock-Based Compensation

 

The Company has two Employee, Director and Consultant Stock Option Plans that were not terminated as a result of the fiscal 2015 restructuring of the Company and spin-out and have continued as part of the operations as detailed below.

 

In fiscal 2015, the option pool pertaining to the 2009 Employee, Director and Consultant Stock Option Plan (the “2009 Plan”) was adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan, resulting in an authorized option pool of 18,152. Stock options typically vest over a three-year period and have a life of ten years from the date granted. As of March 31, 2016 there were 3,610 shares available for future awards under this plan.

 

In fiscal 2015, the option pool pertaining to the 2012 Employee, Director and Consultant Stock Option Plan (the “2012 Plan”) was adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan, resulting in an authorized options pool of 74,257. Stock options typically vest over a three year period and have a life of ten years from the date granted. As of March 31, 2016, there were 45,673 shares available for future awards under this plan.

 

In addition, there are approximately 24,753 in options outstanding that were issued to a former CEO of the Company in fiscal 2014. These options issued are outside of the 2009 and 2012 Plans.

 

During the quarter ended March 31, 2016, the Company did not grant options to acquire shares of common stock to employees, directors or consultants.

 

11 

 

 

TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

For all previous grants the fair value of options is estimated using the Black-Scholes option pricing model. The expected term of options granted is based on the simplified method in accordance with Securities and Exchange Commission Staff Accounting Bulletin 107, and represents the period of time that options granted are expected to be outstanding. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day.

 

As of March 31, 2016, there was approximately $780 of total unrecognized stock compensation expense, related to unvested stock options under the Plans. This expense is expected to be recognized over the remaining weighted average vesting periods of the outstanding options of less than one year. The Company recorded $12,284 in stock compensation expense to continuing operations within selling, general and administrative expenses on the consolidated statements of operations and comprehensive loss pertaining to the vesting of options in fiscal 2016.

 

A summary of options issued, exercised and cancelled are as follows:

 

    Shares   Weighted- Average Exercise Price ($)   Weighted- Average Remaining Contractual Term   Aggregate Intrinsic Value ($)
Outstanding at December 31, 2015       67,879     $ 21.40       7.17        
Granted                          
Cancelled                          
                                   
Outstanding at March 31, 2016       67,879     $ 21.40       6.92        
                                   
Exercisable at March 31, 2016       66,635     $ 21.78       6.82        

 

Note 9 – Warrants to Purchase Common Stock

 

Subsequent to the restructuring of the Company and the spin-out, the Company had warrants to purchase common stock outstanding that were not terminated and have continued as part of the operations as detailed below. The warrants were adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan as authorized. No warrants were issued during the first quarter ended March 31, 2016. All warrants outstanding as of March 31, 2016 are scheduled to expire at various dates through 2019. A summary of warrants issued, exercised and expired are as follows:

 

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TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

  

   Shares  Weighted- Average Exercise Price ($)  Weighted-Average Remaining Contractual Term
Outstanding at December 31, 2015    78,462   $29.55    3.43 
Granted             
Expired    2,475    50.50     
                 
Outstanding at March 31, 2016    75,987   $30.51    3.29 
                 
Exercisable at March 31, 2016    75,987   $30.51    3.29 

  

Note 10 – Commitments and Contingencies

 

Legal

 

National Council for Science and the Environment, Inc. v. Trunity Holdings, Inc., Case No.. 2015 CA 009726 B, Superior Court for the District of Columbia, Civil Division.

 

This action was filed on December 16, 2015 by the National Council for Science and the Environment, Inc. (“NCSE”) in the state court in the District of Columbia against Trunity Holdings, Inc. (“Trunity”) and alleges claims for Breach of Contract. Acknowledgement of Indebtedness and Settlement Agreement and Quantum Meruit arising out of an agreement entered into between NCSE and Trunity in 2014. The Complaint seeks damages in the amount of $177,270, inclusive of attorney’s fees, costs and accrued interest, continuing interest in the amount of 12% per annum and attorney’s fees and costs of collection relating to the case. The Company in its answer on January 27, 2016, denied the material allegations made by NCSE, asserted a number of affirmative defenses and filed a counterclaim alleging claims for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract and unjust enrichment. In its counterclaim, the Company will seek actual and compensatory damages against NCSE that it believes exceed the amount sought by NCSE on its claims, pre-judgment interest, punitive damages and all costs and expenses, including attorney’s fees, incurred by the Company in bringing its claims against NCSE.

 

On February 19, 2016, NCSE filed a motion to dismiss the counterclaim, and the Company has filed its brief in the opposition to that motion. A hearing is scheduled in second quarter 2016 on the motion. No discovery has been conducted by the parties yet, and no trial date has been set by the court. We have recorded a liability as of March 31, 2016 based on our best estimate of the probable exposure pertaining to the claim.

 

Note 11 – Subsequent Events

 

On April 4, 2016 the Company entered into a non-binding letter of intent to acquire a compounding pharmacy in Holly Springs, Georgia, a suburb of Atlanta. The agreement calls for purchase consideration of approximately $450,000. Payment will be split between the issuance of common stock, a convertible note that may convert into stock at a price not less than $2 per share. The final allocation of each of these will be determined prior to closing, which is expected to occur in June 2016. The letter of intent is not a definitive agreement, and the Company anticipates that the definitive agreement will contain customary conditions to closing.

 

On April 11, 2016 the Board of Directors elected Mr. James Driscoll, age 54, to the Board of Directors. Mr. Driscoll is currently CEO of Channel Terminals, LLC, a crude oil liquids terminals and refinery based in Houston, TX. Mr. Driscoll is also a member of the Board of Directors at Double Zero Recycling LLC as well as an Advisory Board Member at HealPros LLC, a diabetic retinal imaging business, and Funding University LLC, an early stage online peer to peer lending business targeted on secondary education. Previously he was President of Method Holdings, LLC, from 2011 until late 2013. Between 2006 and 2011 Mr. Driscoll was a Senior Partner with private equity firm 1848 Capital Partners LLC. From 2009 to 2010 he was COO and Executive Vice President of CareDynamix LLC, a healthcare business focused on provision of onsite vaccination services around the US. In addition, Mr. Driscoll, has over 14 years of experience at various senior positions in the power generation and transportation industries in varied locations around the world. He began his professional career as a trader in New York City. He has an MBA from Harvard University (1991) and a BA in English Literature from Bowdoin College (1984). Mr. Driscoll will receive 100,000 shares of restricted common stock as compensation for his term on the Board, consistent with all prior appointments by the Company.

 

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TRUE NATURE HOLDING, INC.

Notes To Consolidated Financial Statements

(Unaudited)

 

On April 11, 2016, Dr. William Ross, age 70, advised the Company that he desired to resign from the Board of Directors, as he intends to retire from all business activities. There were no disagreements, or conflicts with the Board and Dr. Ross.

 

On April 29, 2016, subject to approval by the Georgia Board of Pharmacy, the Company entered into definitive documents to acquire P3 Compounding of Georgia, LLC,following the letter of intent dated March 29, 2016. The total consideration for the transaction is $1,000,000. The transaction includes the acquisition of certain special formulations as “Intellectual Properties”.

 

The consideration paid was comprised of three (3) components:

1)     the business interests were acquired in consideration of a) $425,000 of convertible notes with a conversion price of $1.25 per share and interest of 6% and b) a short term note in the amount of $75,000, non-interest bearing, with a maturity of June 16, 2016;

2)     the specialized formulations of the business, which will be included in the Company’s library of Intellectual Properties, were acquired in consideration a) $425,000 of convertible notes with a conversion price of $1.25 per share and interest of 6% and b) a short term note in the amount of $75,000, non-interest bearing, with a maturity of June 16, 2016;

3)     Mr. Casey Gaetano, employed under a 3 year employment contract as VP of Corporate Development, at an annual salary of $125,000, plus normal benefits commensurate with other executives in the Company of equal stature. He will also receive 125,000 shares of restricted stock in the amount.

 

The notes issued in conjunction with the purchase and the intellectual properties may be converted into restricted common stock at a rate of $1.25 per share. The purchase includes all payables, receivables, cash on hand, inventory and all assets used in the operation of the business.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”). Our consolidated financial statements have been prepared and, unless otherwise stated, the information derived therefrom as presented in this discussion and analysis is presented, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

 

The information contained in this Quarterly Report is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and subsequent reports on Form 8-K, which discuss our business in greater detail. Unless the context indicates otherwise, the “Company”, “we”, “us”, and “our” in this Item 2 and elsewhere in this Quarterly Report refer to True Nature Holdings, Inc., a Delaware corporation, and its consolidated subsidiaries.

 

In addition to historical information, the following discussion contains forward-looking statements regarding future events and our future performance. In some cases, you can identify forward-looking statements by terminology such as “will”, “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “potential” or “continue” or the negative of these terms or other comparable terminology. All statements made in this Quarterly Report other than statements of historical fact are forward-looking statements. These forward-looking statements involve risks and uncertainties and reflect only our current views, expectations and assumptions with respect to future events and our future performance. If risks or uncertainties materialize or assumptions prove incorrect, actual results or events could differ materially from those expressed or implied by such forward-looking statements. Risks that could cause actual results to differ from those expressed or implied by the forward-looking statements we make include, among others, risks related to: our ability to successfully implement our business plan, develop and commercialize our proprietary formulations in a timely manner or at all, identify and acquire additional proprietary formulations, manage our pharmacy operations, service our debt, obtain financing necessary to operate our business, recruit and retain qualified personnel, manage any growth we may experience and successfully realize the benefits of our acquisitions and collaborative arrangements we may pursue; competition from pharmaceutical companies, outsourcing facilities and pharmacies; general economic and business conditions; regulatory and legal risks and uncertainties related to our pharmacy operations and the pharmacy and pharmaceutical business in general; physician interest in and market acceptance of our current and any future formulations and compounding pharmacies generally; our limited operating history; and the other risks and uncertainties described under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation to revise or publicly update any forward-looking statement for any reason.

 

Overview

 

We are an early stage company that intends to acquire a series of businesses which specialize in compounding pharmacy activities, largely direct to consumers, and to doctors and veterinary professionals.

 

Description of Pharmaceutical Compounding

The vast majority of medications are mass-produced by pharmaceutical drug companies. They aim to treat a specific medical condition for a large segment of people. Problems can arise when a patient has a medical condition that can’t be treated by one of these mass-produced products. Pharmaceutical compounding (done in compounding pharmacies) is the creation of a particular pharmaceutical product prescribed by doctors to fit the unique needs of a patient that can’t be met by commercially available drugs. To do this, compounding pharmacists combine or process appropriate ingredients using various tools. This may be done for medically necessary reasons, such as to change the form of the medication from a solid pill to a liquid, to avoid a non-essential ingredient that the patient is allergic to, or to obtain the exact dose(s) needed or deemed best of particular active pharmaceutical ingredient(s). It may also be done for more optional reasons, such as adding flavors to a medication or otherwise altering taste or texture. Examples of compounded formulations include medications with alternative dosage strengths or unique dosage forms, such as topical creams or gels, suspensions or solutions with more tolerable drug delivery vehicles. Compounding pharmacies (and pharmacists) adhere to standards and regulations set by the U.S. Pharmacopeia, National Association of Boards and State Boards of Pharmacy for quality assurance and accuracy. The compounding pharmacy business has the potential to provide high margins, and allow the pharmacy to specialize is certain solutions for specific maladies, so it can target specific markets efficiently.

 

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We intend to focus on the acquisition of compounders who have a) a large client base in the veterinary area, b) a strong set of proprietary compounding solutions, versus non-proprietary “over-the-counter” (OTC) medicine sales, and c) where the combination of incremental operations will allow cross selling of a growing line of proprietary compounds into the respective markets of each new market participant acquired.

 

We expect economies of scale from the consolidation of:

Materials procurement;
Compounding activities combined into larger, more efficient and higher quality facilities;
Expanded marketing nationwide with an emphasis on densely populated urban areas where an expanded product line may increase the profitability of each individual branch, when compared to pre-acquisition sales, and;
Consolidated administration and personnel functions.

 

Off-Balance Sheet Arrangements

 

Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Critical Accounting Policies

 

In the first quarter of 2016, there were no significant changes to our critical accounting policies and estimates from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2015 Form 10-K.

 

Recently Issued and Adopted Accounting Pronouncements

 

See Note 2 to our consolidated financial statements included in this Quarterly Report.

 

Results of Operations

 

The following period-to-period comparisons of our financial results are not necessarily indicative of results for the current period or any future period. In particular, our pharmacy operations activities will commence in the second quarter of 2016 and we have spun-out the prior year educational business which is presented as discontinued operations in the consolidated financial statements. This change in the nature of our operations will have and is expected to continue to have a significant impact on our financial results. As a result, our results of operations in the periods after commencement of our pharmacy operations will include aggregate revenue and expense amounts and the apportionment of expenses among categories, have changed and are expected to continue to change as we further develop these operations. Further, as a result of our acquisitions of our compounding pharmacies, and any additional pharmacy acquisitions or other such transactions we may pursue, we may experience large expenditures specific to the transactions that are not incident to our operations.

 

For the Three Months ended March 31, 2016 and 2015

 

There are no continuing operating sales and related cost of sales for the three months ended March 31, 2016 as the Company is implementing its business plan to acquire and develop compounding pharmacies. We plan to report revenue during the second quarter of 2016 if we close certain acquisitions of our compounding pharmacies. As a result of pharmacy acquisitions or other such transactions we may pursue, we may experience large expenditures specific to these transactions.

 

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Our total operating expenses for the first three months ended March 31, 2016 pertaining to continuing operations were $832,369 that were comprised primarily of expenses of $587,500 pertaining to shares issued for board and consulting services (noncash), $97,973 of management and accounting fees and $75,259 of professional fees related to SEC filings and other legal matters.

 

There is $6,218 of interest expense for the three months ended March 31, 2016 pertaining to continuing operations and relates to interest incurred for outstanding debentures that were not converted resulting from the spin-out and the newly issued convertible promissory note.

 

There was a net loss for continuing operations of $838,587 for the three months ended March 31, 2016 resulting from the aforementioned operating expenses.

 

A comparison has not been provided for three months ended March 31, 2015 as the financial results for three months ended March 31, 2015 are reported as discontinued operations as discolsed in Note 4 to the consolidated financial statements.

 

Liquidity and Capital Resources

 

We have financed our operations through the sale of equity securities. As of March 31, 2016, we had a working capital deficit of $671,764. Our working capital deficit is attributable to the fact that the Company began implementing its business plan of acquiring pharmaceutical compounding businesses at the end of fiscal 2015. No planned revenue activity will be reported until the second quarter of 2016.

 

Net cash used in operating activities from continuing operations was $124,304 for the three months ended March 31, 2016 which primarily reflects our business development efforts that pertaining to acquiring a series of businesses which specialize in compounding pharmacy activities, largely direct to consumers, doctors and veterinary professionals.

 

Net cash provided by financing activities for the three months ended March 31, 2016 was approximately $114,000 which represents the cash that was received from sale of common stock and issuance of a convertible note payable.

 

A comparison has not been provided for three months ended March 31, 2015 as the financial results for three months ended March 31, 2015 are reported as discontinued operations as disclosed in Note 4 to the consolidated financial statements.

 

Specific details related to our financing activities are as follows:

 

2016 Private Placements

 

During the quarter ended March 31, 2016, we raised gross proceeds of $60,000 through the sale of 120,000 shares of common stock to accredited investors in private placement transactions at a price of $0.50 per share. We incurred $6,000 of securities issuance costs representing commissions paid to broker-dealers who assisted with these transactions.

 

On March 18, 2016, we issued a 12% Convertible Promissory Note (the “Convertible Note”) in the principal amount of $60,000 to the Lender. Pursuant to the terms of the Convertible Note, on the date thereof, we issued the Convertible Note to the Lender and, as consideration therefor, the Lender paid us in cash the full principal amount of the Convertible Note. Upon issuance the lender was awarded 15,000 restricted common shares as an origination fee which will have piggy back registration rights.

 

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Plan of Operations

 

We are entering the Compounding Pharmacy Industry via a roll-up of existing compounding pharmacies consolidating fragmented market. The key elements of our strategy include:

 

  we intend to grow regionally, building regional distribution centers, expand sales and marketing with eventually with a national presence;
  we intend to acquire multiple libraries of compounding formulations in the process, recognizing that:
    some are tailored for local needs;
  some will have regional markets with expanded marketing;
  some can become nationally accepted, and further “productized” solutions;
  in all cases, we intend to drive the costs down when compared to alternatives from “big pharma”.

 

The human market and the vet market are both large and growing, share many of the same solutions, and are in need of lower cost solutions. We will focus on a balance between legitimate insurance related revenue streams and cash pay business. We believe the pharmacy industry, and especially compounding pharmacy, can easily be described as having multiple “flavors”. We believe the markets for both people and pets are both underserved:

 

Some sell basic OTC medications and provide “delivery only”, and most users rely on insurance reimbursement for payment;
Some are “value added resellers”, using OTC recognized medications, then repackaging, or using combinations, to personalize the product for the client. While vet based is a cash business, the human side is largely insurance reliant;
Some are like “OEM manufacturers”, like a generic drug maker, starting with basic, non-productized materials, and creating both standard and fully customized “novel” formulations for specific maladies and needs. These are more often cash clients, and this approach is well accepted in the pet area, and becoming more accepted for people as alternatives to OTC, and for cash buyers seeking lower cost;
We believe a mix of these can serve the need to drive costs down, and allow innovative approaches to improve patient results.

 

Recent Developments

 

On April 4, 2016 the Company entered into a non-binding letter of intent to acquire a compounding company in Holly Springs, Georgia, a suburb of Atlanta. The agreement calls for purchase consideration of approximately $450,000. Payment will be split between the issuance of common stock, a convertible note that may convert into stock at a price not less than $2 per share. The final allocation of each of these will be determined prior to closing, which is expected to occur in June 2016. The letter of intent is not a definitive agreement, and the Company anticipates that the definitive agreement will contain customary conditions to closing.

 

On April 11, 2016 the Board of Directors elected Mr. James Driscoll, age 54, to the Board of Directors. Mr. Driscoll is currently CEO of Channel Terminals, LLC, a crude oil liquids terminals and refinery based in Houston, TX. Mr. Driscoll is also a member of the Board of Directors at Double Zero Recycling LLC as well as an Advisory Board Member at HealPros LLC, a diabetic retinal imaging business, and Funding University LLC, an early stage online peer to peer lending business targeted on secondary education. Previously he was President of Method Holdings, LLC, from 2011 until late 2013. Between 2006 and 2011 Mr. Driscoll was a Senior Partner with private equity firm 1848 Capital Partners LLC. From 2009 to 2010 he was COO and Executive Vice President of CareDynamix LLC, a healthcare business focused on provision of onsite vaccination services around the US. In addition, Mr. Driscoll, has over 14 years of experience at various senior positions in the power generation and transportation industries in varied locations around the world. He began his professional career as a trader in New York City. He has an MBA from Harvard University (1991) and a BA in English Literature from Bowdoin College (1984).

 

On April 11, 2016, Dr. William Ross, age 70, advised the Company that he desired to resign from the Board of Directors, as he intends to retire from all business activities. There were no disagreements, or conflicts with the Board and Dr. Ross.

 

On April 29, 2016, subject to approval by the Georgia Board of Pharmacy, the Company entered into definitive documents to acquire P3 Compounding of Georgia, LLC., following the letter of intent dated March 29, 2016. The total consideration for the transaction is $1,000,000. The transaction includes the acquisition of certain special formulations as “Intellectual Properties”. It also includes an employment contract for Mr. Gaetano for three (3) years, including a salary of $125,000 per year and 125,000 of restricted stock.

 

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The consideration paid was comprised of three (3) components:

1)     the business interests were acquired in consideration of a) $425,000 of convertible notes with a conversion price of $1.25 per share and cash pay interest of 6% and b) a short term note in the amount of $75,000, accruing 0%, with a maturity of June 16, 2016;

2)     the specialized formulations of the business, which will be included in the Company’s library of Intellectual Properties, were acquired in consideration a) $425,000 of convertible notes with a conversion price of $1.25 per share and cash pay interest of 6% and b) a short term note in the amount of $75,000, accruing 0%, with a maturity of June 16, 2016;

3)     the founder of Integrity, Mr. Casey Gaetano, was employed as VP of Corporate Development, at an annual salary of $125,000, plus normal benefits commensurate with other executives in the Company of equal stature. He will also receive 125,000 shares of restricted stock in the amount.

 

The notes issued in conjunction with the purchase and the intellectual properties may be converted into restricted common stock at a rate of $1.25 per share. The purchase includes all payables, receivables, cash on hand, inventory and all assets used in the operation of the business.

 

During the first quarter of 2016, the Company raised gross proceeds of $60,000 through the sale of 120,000 shares of Common Stock to accredited investors in private placement transactions at a price of $0.50 per share. There were no issuance and commission costs incurred pertaining to the raise.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

This Item is not required for a Smaller Reporting Company.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

As of the end of the period covered by this report (the “Evaluation Date”), we carried out an evaluation regarding the fiscal quarter ended March 31, 2016, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer who is also serving as our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon this evaluation, our management concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms and that our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the Company’s disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. 

 

The Company’s management is also responsible for establishing and maintaining adequate internal control over financial reporting 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. As of the Evaluation Date, no changes in the Company’s internal control over financial reporting occurred that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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Our Annual Report on Form 10-K contains information regarding a material weakness in our internal control over financial reporting as of December 31, 2015 due to an inadequate segregation of duties resulting from our limited number of employees whom duties can be allocated.

 

During the first quarter of 2016, there were no changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II — OTHER INFORMATION

 

ITEM 1. Legal Proceedings

 

In December 2015 we were named as Defendant in a suit from National Council for Science in the Environment (NCSE) seeking to collect $170,000 related to a services and consulting relationship dating back to 2009, a part of the legacy educational business, and not related to our ongoing pharmacy activities. We have filed a response and counterclaims including fraud claim. We believe our counterclaim for damages will far exceed the amounts they sought to recover. We intend to vigorously defend their claims. We have recorded a liability as of March 31, 2016 based on our best estimate of the probably exposure pertaining to the claim.

 

ITEM 1A. Risk Factors

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on May 2nd, 2016.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

2016 Private Placements

 

During the quarter ended March 31, 2016, the Company raised gross proceeds of $60,000 through the sale of 120,000 shares of common stock to accredited investors in private placement transactions at a price of $0.50 per share. The Company incurred $6,000 of securities issuance costs representing commissions paid to broker-dealers who assisted with these transactions.

 

On March 18, 2016, the Company issued a 12% Convertible Promissory Note (the “Convertible Note”) in the principal amount of $60,000 to the Lender. Pursuant to the terms of the Convertible Note, on the date thereof, the Company issued the Convertible Note to the Lender and, as consideration therefor, the Lender paid the Company in cash the full principal amount of the Convertible Note. Upon issuance the lender was awarded 15,000 restricted common shares as an origination fee which will have piggy back registration rights.

 

2015 Private Placements

 

The Company acquired 100% of the membership interests of Newco4pharmacy, LLC, a business aimed at creating a nationwide network of compounding pharmacies. The consideration paid was the issuance of a newly created Series X Preferred stock which was exchanged on December 31, 2015 for 10,000,000 shares of our common stock. The Company obtained approximately $106,900 in cash from Newco4pharmacy. Funds received resulted from a Newco4pharmacy membership interest sale prior to the transaction. As a result of this transaction the Company issued Founders shares of 3,488,900 to the CEO and Founder, Stephen Keaveney and 3,988,900 to individuals and entities that were instrumental in the formation of the N4P business. The Company also issued 455,000 shares to broker-dealers and 1,353,200 to other individuals for services performed in connection with the formation of the company.

 

August 2014 Convertible Debentures (Series C)

 

As part of the restructuring all debentures issued by Trunity Holdings, Inc., to fund the former educational business were eligible to participate in a debt conversion however one debenture holder that was issued a Series C Convertible Debenture (the “Series C Debenture”) in August 2014 with an aggregate face value of $100,000 in exchange for the cancellation of Series B Convertible Debentures with a carrying value of $110,833 did not convert. The Series C Debenture accrues interest at an annual rate of 10%, matured November 2015, and is convertible into the Company’s common stock at a conversion rate of $20.20 per share. The holders of the Series C Debenture also received warrants to acquire 4,950 shares post-split of common stock for an exercise price of $20.20 per share, exercisable over five years. The former educational business allocated the face value of the Series C Debenture to the warrants and the debentures based on its relative fair values, and allocated to the warrants, which was recorded as a discount against the Series C Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed upon execution of the new debentures. As of March, 2016, the carrying value of this Series C Debenture was $110,833 and accrued interest expense of $16,625.

 

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November 2014 Convertible Debentures (Series D)

 

As part of the restructuring all debentures issued by Trunity Holdings, Inc., to fund the former educational business were eligible to participate in a debt conversion however one debenture holder that was issued a Series D Convertible Debenture (the “Series D Debenture”) in November 2014 with an aggregate face value of $10,000 in exchange for the cancellation of Series B Convertible Debenture with a carrying value of $11,333 that did not participate in the debt conversion restructuring. The Series D Debenture accrues interest at an annual rate of 12%, matured November 2015, and is convertible into the Company’s common stock at a conversion rate of $16.67 per share. The holders of the Series D Debenture also received warrants to acquire 495 shares post-split of common stock for an exercise price of $20.20 per share, exercisable over five years. The former educational business allocated the face value of the Series D Debenture to the warrants and the debentures based on their relative fair values, and allocated to the warrants, which was recorded as a discount against the Series D Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed upon execution of the new debentures. As of March 31, 2016, the carrying value of the Series D Debenture was $11,333 and accrued interest expense of $1,927.

 

All of the shares issued in the transactions described above were issued in private placement transactions and were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as sales of securities not involving a public offering.

 

ITEM 3. Defaults upon Senior Securities

 

None.

 

ITEM 4. Mine Safety Disclosures.

 

This Item is not applicable to our company’s operations.

 

ITEM 5. Other Information

 

None.

 

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PART IV

 

Exhibit
Number
  Description
3.1   Certificate of Incorporation of Trunity Holdings, Inc. dated as of January 18, 2012 (incorporated herein by reference to Exhibit 10.1 filed as part of the Company’s Form 8-K dated January 24, 2012 (Commission File No. 000-53601)).
     
3.2   Certificate of Ownership and Merger dated as of January 24, 2012, between Trunity Holdings, Inc. and Brain Tree International, Inc. (incorporated herein by reference to Exhibit 3.3 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
3.3   Certificate of Designation of Series X Preferred Stock of Trunity Holdings, Inc., dated as of December 9, 2015 (incorporated by reference to Exhibit 3.1 as part of the Company’s Form 8-K dated December 15, 2015 (Commission File No. 000-53601)
     
3.4   Certificate of Amendment to the Certificate of Incorporation of Trunity Holdings, Inc., dated as of December 24, 2015 (incorporated by reference to Exhibit 3.1(I) as part of the Company’s Form 8-K dated January 6, 2016 (Commission File No. 000-53601)
     
3.5   Bylaws of Trunity Holdings, Inc. (incorporated herein by reference to Exhibit 10.2 filed as part of the Company’s Form 8-K dated January 24, 2012 (Commission File No. 000-53601)).
     
10.1   Spin-off and Asset Transfer Agreement dated as of December 31, 2015, by and among Trunity Holdings, Inc., Trunity, Inc., a Delaware corporation, and Trunity, Inc., a Florida corporation.(incorporated by reference to Exhibit 10.1 as part of the Company’s Form 8-K dated January 6, 2016 (Commission File No. 000-53601))
     
10.2   Securities Exchange Agreement dated as of December 9, 2015 by and among Trunity Holdings, Inc. and the Members of Newco4Pharmacy, LLC (incorporated by reference to Exhibit 10.1 as part of the Company’s Form 8-K dated December 15, 2015 (Commission File No. 000-53601))
     
10.3   Consulting Agreement dated as of December 1, 2015 by and between Trunity Holdings, Inc. and Stephen Keaveney (incorporated by reference to Exhibit 10.2 as part of the Company’s Form 8-K dated December 15, 2015 (Commission File No. 000-53601))

 

22 

 

 

10.4   Securities Purchase Agreement dated as of November 5, 2014 by and between Trunity Holdings, Inc. and Peak One Opportunity Fund, L.P. (incorporated by reference to Exhibit 10.15 as part of the Company’s Form 10-Q for the quarter ending September 30, 2014 (Commission File No. 000-53601))
     
10.5   Trunity Holdings, Inc. Non-Qualified Stock Option Agreement dated as of December 13, 2013 by and between Arol Buntzman and Trunity Holdings, Inc. (incorporated by reference to Exhibit 10.14 as part of the Company’s Form 10-K for the year ending December 31, 2013 (Commission File No. 000-53601))
     
10.6   Memorandum of Understanding Regarding Trunity Holdings, Inc. and PIC Partners dated as of June 5, 2013 by and between Pan-African Investment Company and Trunity Holdings, Inc. (incorporated by reference to Exhibit 10.13 as part of the Company’s Form 10-K for the year ending December 31, 2013 (Commission File No. 000-53601))
     
10.7   Indemnification Agreement dated May 30, 2013 between the Company and Pan African Investment Company (incorporated herein by reference to Exhibit 10.12 filed as part of the Company’s Form 10-K for the year ended December 31, 2013 (Commission File No. 000-53601)).
     
10.8   Voting Agreement dated June 5, 2013 by and among Trunity Holdings, Inc., Terry Anderton, RRM Ventures, LLC, Aureus Investments, LLC and Pan-African Investment Company, LLC (incorporated by reference to Exhibit C as part of the Company’s Schedule 13D dated July 25, 2013 (Commission File No. 000-53601))
     
10.9   Voting Agreement dated May 30, 2013 by and among Trunity Holdings, Inc., Terry Anderton, RRM Ventures, LLC, Aureus Investments, LLC and Pan-African Investment Company, LLC (incorporated by reference to Exhibit 10.11 as part of the Company’s Form 10-K for the year ending December 31, 2013 (Commission File No. 000-53601))
     
10.10   Investors Rights Agreement dated May 30, 2013 between the Company and Pan African Investment Company (incorporated herein by reference to Exhibit 10.10 filed as part of the Company’s Form 10-K for the year ended December 31, 2013 (Commission File No. 000-53601)).
     
10.11   Investors Rights Agreement dated June 5, 2013 between the Company and Pan African Investment Company (incorporated herein by reference to Exhibit D filed as part of the Company’s Schedule 13D dated July 25, 2013 (Commission File No. 000-53601)).

 

23 

 

 

10.12   Subscription Agreement dated May 28, 2013 between the Company and Pan African Investment Company (incorporated herein by reference to Exhibit 10.9 filed as part of the Company’s Form 10-K for the year ended December 31, 2013 (Commission File No. 000-53601)).
     
10.13   Form of Indemnification Agreement between Trunity and its Directors (incorporated herein by reference to Exhibit 10.8 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000- 53601)).
     
10.14   License Agreement dated as of March 20, 2013, between Trunity and Educom Ltd. (incorporated herein by reference to Exhibit 10.7 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
10.15   Share Purchase Agreement dated as of March 20, 2013, between Trunity and InnSoluTech LLP (incorporated herein by reference to Exhibit 10.6 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
10.16   Investment Project Contract dated as of March 20, 2013, among Trunity, InnSoluTech LLP and Educom Ltd. (incorporated herein by reference to Exhibit 10.5 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
10.17   Trunity Holdings, Inc. 2012 Employee, Director and Consultant Stock Option Plan (incorporated herein by reference to Exhibit 10.4 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
10.18   Agreement and Plan of Merger, dated as of January 24, 2012 by and among Trunity Holdings, Inc., Trunity Acquisitions Corp. and Trunity, Inc. (incorporated herein by reference to Exhibit 10.5 filed as part of the Company’s Form 8-K dated January 24, 2012 (Commission File No. 000-53601)).

 

24 

 

 

10.19   Stock Purchase Agreement between dated as of January 24, 2012 by and among George Norman, Donna Norman, Lane Clissold, Trunity Holdings, Inc. and Trunity, Inc. (incorporated herein by reference to Exhibit 10.3 filed as part of the Company’s Form 8-K dated January 24, 2012 (Commission File No. 000-53601)).
     
10.20   Agreement and Plan of Merger, dated as of January 24, 2012 by and among Brain Tree International, Inc. and Trunity Holdings, Inc. (incorporated herein by reference to Exhibit 10.4 filed as part of the Company’s Form 8-K dated January 24, 2012 (Commission File No. 000-53601)).
     
14   Code of Ethics (incorporated herein by reference to Exhibit 14 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
21   Subsidiaries of the Company (incorporated herein by reference to Exhibit 21 filed as part of the Company’s Form 10-K for the year ended December 31, 2012 (Commission File No. 000-53601)).
     
31.1 *   Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2 *   Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1 *   Certification of Chief Executive Officer 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.
     
101.INS *   XBRL INSTANCE DOCUMENT
     
101.SCH *   XBRL TAXONOMY EXTENSION SCHEMA
     
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XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

     
101.DEF *  

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

     
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XBRL TAXONOMY EXTENSION LABEL LINKBASE

     
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XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

* Filed herewith.

 

25 

 

 

SIGNATURE

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

  TRUE NATURE HOLDING, INC.
     
Dated: May 20, 2016   By: /s/ Stephen Keaveney
    Stephen Keaveney
Chief Executive Officer and Chief Financial Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 

Signature and Title   Date
     
/s/ Stephen Keaveney   May 20, 2016
Stephen Keaveney    
Chief Executive Officer, Chief Financial Officer, and Chairman of the Board    
     
/s/ Jeff S. Cosman   May 20, 2016
Jeff S. Cosman    
Director    
     
/s/ James Driscoll   May 20, 2016
James Driscoll    
Director    

 

26

 

EX-31.1 2 ex31_1.htm EXHIBIT 31.1

 

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

I, Stephen Keaveney, certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q of True Nature Holding, 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 registrant’s other certifying officers 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s 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 registrant’s internal control over financial reporting; and

 

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (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 registrant’s 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 registrant’s internal control over financial reporting.

 

  TRUE NATURE HOLDING, INC.
     
Dated: May 20, 2016 By: /s/ Stephen Keaveney
    Stephen Keaveney
Chief Executive Officer
(Principal Executive Officer)

 

 

 

 

EX-31.2 3 ex31_2.htm EXHIBIT 31.2

 

 

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

I, Stephen Keaveney, certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q of True Nature Holding, 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 registrant’s other certifying officers 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s 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 registrant’s internal control over financial reporting; and

 

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (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 registrant’s 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 registrant’s internal control over financial reporting.

 

  TRUE NATURE HOLDING, INC.
     
Dated: May 20, 2016   By: /s/ Stephen Keaveney
    Stephen Keaveney
Chief Financial Officer
(Principal Financial and Accounting Officer)

 

 

 

EX-32 4 ex32.htm EXHIBIT 32

 

 

Exhibit 32

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of True Nature Holding, Inc. (the “Company”) for the quarter year ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen Keaveney, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

  TRUE NATURE HOLDING, INC.
     
Dated: May 20, 2016   By: /s/ Stephen Keaveney
    Stephen Keaveney
Chief Executive Officer and Chief Financial Officer  

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certifications are accompanying the Company’s Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

 

 

 

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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2016
May. 19, 2016
Document And Entity Information    
Entity Registrant Name True Nature Holding, Inc.  
Entity Central Index Key 0000802257  
Document Type 10-Q  
Document Period End Date Mar. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Is Entity a Well-known Seasoned Issuer No  
Is Entity a Voluntary Filer No  
Is Entity's Reporting Status Current Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   12,500,000
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2016  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Balance Sheets (unaudited) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
CURRENT ASSETS    
Cash and Cash Equivalents $ 17,881 $ 28,185
Prepaid expenses 11,348
Prepaid expenses - related party 4,250 $ 17,000
Total current assets 33,479 45,185
TOTAL ASSETS 33,479 45,185
Current liabilities    
Accounts payable 471,201 414,463
Accrued interest 18,812 14,918
Accrued liabilities 63,465 $ 13,325
Convertible note payable, net of discount 29,598
Debentures payable 122,167 $ 122,167
Total current liabilities 705,243 564,873
TOTAL LIABILITIES $ 705,243 $ 564,873
Commitments and Contingencies (Note 10)
STOCKHOLDERS' DEFICIT    
Preferred stock, $0.01 par value - 10,000,000 shares authorized, none issued and outstanding as of March 31, 2016 and December 31, 2015
Common stock, $0.01 par value - 500,000,000 shares authorized, 12,400,000 shares issued and outstanding at March 31, 2016; $0.01 par value - 500,000,000 shares authorized, 11,765,000 shares issued and outstanding at December 31, 2015 $ 124,000 $ 117,650
Additional paid-in capital 684,078 3,917
Accumulated deficit (1,479,842) (641,255)
Total Stockholders' Deficit (671,764) (519,688)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 33,479 $ 45,185
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.4.0.3
Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares
Mar. 31, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]    
Preferred stock par value $ 0.01 $ 0.01
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 $ 0.01 $ 0.01
Common stock shares authorized 500,000,000 500,000,000
Common stock shares issued 12,400,000 11,765,000
Common stock shares outstanding 12,400,000 11,765,000
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.4.0.3
Unaudited Consolidated Statements of Operations and Comprehensive Loss - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Net Sales
Cost of sales
Gross Profit
Operating expenses:    
Research and development
Selling, general and administrative $ 832,369
Total operating expenses 832,369
Operating Loss from Continuing Operations (832,369)
Interest expense, net (6,218)
Loss From Continuing Operations before Income Taxes $ (838,587)
Provision for income taxes
Net Loss From Continuing Operations $ (838,587)
Discontinued Operations (Note 4):    
Net Loss from discontinued operations, net of tax $ (622,470)
Other comprehensive loss, net of tax (1,275)
Comprehensive Loss from Discontinued Operations (623,745)
Net Loss $ (838,587) (622,470)
Comprehensive Net Loss $ (838,587) $ (623,745)
Net Loss from Continuing Operations Per Share - Basic and Diluted $ (0.07)
Net Loss from Discontinued Operations Per Share - Basic and Diluted $ (1.15)
Net Loss Per Share - Basic and Diluted $ (0.07) $ (1.15)
Weighted Average Number of Shares Outstanding During the Period - Basic and Diluted 12,057,500 542,605
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.4.0.3
Unaudited Consolidated Statements of Changes in Stockholders' Deficit - 3 months ended Mar. 31, 2016 - USD ($)
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Total
Beginning Balance, Amount at Dec. 31, 2015 $ 117,650 $ 3,917 $ (641,255) $ (519,688)
Beginning Balance, Shares at Dec. 31, 2015 11,765,000     11,765,000
Sale of common stock, net of issuance cost, Amount $ 1,200 52,800 $ 54,000
Sale of common stock, net of issuance cost, Shares 120,000      
Shares issued to board members and consultants, Amount $ 5,000 582,500 587,500
Shares issued to board members and consultants, Shares 500,000      
Common stock issued for convertible note payable, Amount $ 150 16,213 $ 16,363
Common stock issued for convertible note payable, Shares 15,000     15,000
Discount related to issuance of note payable and allocated fair value to beneficial conversion feature 16,364 $ 16,364
Stock compensation expense $ 12,284 12,284
Net loss $ (838,587) (838,587)
Ending Balance, Amount at Mar. 31, 2016 $ 124,000 $ 684,078 $ (1,479,842) $ (671,764)
Ending Balance, Shares at Mar. 31, 2016 12,400,000     12,400,000
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.4.0.3
Unaudited Consolidated Statements of Cash Flows - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash Flows from Operating Activities:    
Net Loss $ (838,587) $ (622,470)
Adjustments to reconcile net loss to net cash used in operating activities:    
Loss from discontinued operations $ 622,470
Stock-based compensation $ 12,284
Accretion for debt discounts, warrants and issuance costs 2,325
Shares issued for board of director compensation 290,000
Shares issued for consulting services 297,500
Changes in operating assets and liabilities:    
Prepaid expenses (11,348)
Prepaid expenses - related party 12,750
Accounts payable 56,738
Accrued interest and other liabilities 54,034
Net Cash Used in Operating Activities (124,304)
Cash Flows from Financing Activities:    
Proceeds from issuance of convertible note payable 60,000
Sale of common stock, net of issuance costs 54,000
Net Cash Provided by Financing Activities $ 114,000
Discontinued Operations:    
Operating activities $ (154,051)
Investing activities (47,681)
Financing activities 204,137
Net Increase in Cash and Cash Equivalents for Discontinued Operations $ 2,405
Net Decrease in Cash and Cash Equivalents for Continuing Operations $ (10,304)
Cash, Beginning of Period 28,185 $ 14,119
Cash, End of Period 17,881 16,524
Non-cash Financing Transactions:    
Discount cost related to issuance of convertible note payable $ 32,577 $ 202,916
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 1 - Description of Business
3 Months Ended
Mar. 31, 2016
Note 1 - Description of Business  
Note 1 - Description of Business

Note 1 – Description of Business

 

True Nature Holding, Inc. (the “Company”), previously known as Trunity Holdings, Inc., became a publicly-traded company through a reverse merger with Brain Tree International, Inc., a Utah corporation (“BTI”). Trunity Holdings, Inc. was the parent company of the prior educational business, named Trunity, Inc., which was formed on July 28, 2009 through the acquisition of certain intellectual property by its three founders. On December 31, 2015, the Company completed the restructuring and spin-out of the educational business.

 

True Nature Holding, Inc. intends to acquire a series of businesses which specialize in compounding pharmacy activities, largely direct to consumers, doctors and veterinary professionals.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 2 - Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Note 2 - Summary of Significant Accounting Policies  
Note 2 - Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, with the instructions to Form 10-Q and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, these consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at March 31, 2016, the results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015. The results for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis included in the Company’s annual report on Form 10-K for the year ended December 31, 2015. In addition, refer to Note 4 regarding the spin-out of the educational business and related discontinued operations classification pertaining to the fiscal 2015 period. Common stock share and per share amounts in these financial statements have been retroactively adjusted for the effects of a 1 for 101 reverse stock split that occurred in January 2016.

 

Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.

 

Per Share Data - Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options and convertible instruments. 

 

The Company has excluded all common equivalent shares outstanding for warrants, options and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of March 31, 2016, the Company had 78,462 warrants, 67,879 options, 7,105 potential shares which may be issued resulting from the provisions of convertible notes, respectively. As of March 31, 2015, the Company had 166,415 warrants, 68,473 options, 223,223 potential shares which may be issued resulting from the provisions of convertible notes, respectively.

 

Recently Issued Accounting Standards-In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Company’s consolidated balance sheets and results of operations due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Company’s cash flows.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses certain aspects of accounting for share-based payment award transactions. This guidance will be effective in the first quarter of fiscal year 2017 and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 3 - Financial Condition and Going Concern
3 Months Ended
Mar. 31, 2016
Note 3 - Financial Condition and Going Concern  
Note 3 - Financial Condition and Going Concern

Note 3 – Financial Condition and Going Concern

 

As of March 31, 2016, the Company had cash on hand of $17,881 and current liabilities of $705,243 and has incurred a loss from operations. True Nature Holding’s planned principal operations pertain to the business development and acquisition of pharmaceutical compounding companies. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.

 

As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered into discussions to do so with certain individuals and companies. However, as of the date of these consolidated financial statements, no formal agreement exists.

 

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 4 - Spin-Out and Discontinued Operations
3 Months Ended
Mar. 31, 2016
Note 4 - Spin-Out and Discontinued Operations  
Note 4 - Spin-Out and Discontinued Operations

Note 4 – Spin-Out and Discontinued Operations

 

On December 31, 2015, the Company completed the restructuring and spin-out of software educational business, resulting in True Nature Holding, Inc. becoming purely focused on acquiring a series of businesses which specialize in compounding pharmacy activities, largely direct to consumers, doctors and veterinary professionals. The results of the operations associated with the spin-out company and Trunity Holdings, Inc., qualifies as discontinued operations as of and for the three month period ended March 31, 2015.

 

The results of operations associated with discontinued operations were as follows:

 

    March 31,
    2015
Net Sales   $ 118,679  
Cost of sales     62,128  
Gross Profit     56,551  
         
Operating Expenses:        
Research and development     194,699  
Selling, general and administrative     252,266  
Total operating expenses     446,965  
         
Operating Loss from Discontinued Operations     (390,414 )
         
Other Expense:        
Interest expense, net     (232,056 )
         
Net Loss from Discontinued Operations   $ (622,470 )
Other Comprehensive Loss Net of Tax:        
Foreign currency translation adjustments     (1,275 )
Comprehensive Loss from Discontinued Operations   $ (623,745 )

  

Our educational business was fully disposed of in December 2015.  As a result, there were no assets or liabilities of discontinued operations as of 12/31/2015 or 3/31/2016.

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Note 5 - Related Party Transactions
3 Months Ended
Mar. 31, 2016
Note 5 - Related Party Transactions  
Note 5 - Related Party Transactions

Note 5 – Related Party Transactions

 

The Company’s Chairman of the Board, CEO and CFO, Stephen Keaveney has a consulting agreement in the amount of $10,000 per month for professional fees and was paid $16,000 during the three months ending March 31, 2016. On January 25, 2016 board member William L. Ross and Jeffrey Cosman were awarded each 100,000 of shares in Trunity, Inc. in exchange for their services as board members. In addition, a shareholder of the Company has a consulting agreement in the amount of $10,000 per month for professional fees and was paid $17,250 during the three months ended March 31, 2016. $4,250 and $17,000 has been classified as a prepaid asset as of March 31, 2016 and December 31, 2015, respectively, in the consolidated balance sheets related to the prepayment of consulting fees.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 6 - Debt
3 Months Ended
Mar. 31, 2016
Note 6 - Debt  
Note 6 - Debt

Note 6 – Debt

 

Convertible Promissory Note

 

On March 18, 2016, the Company issued a 12% Convertible Promissory Note (the “Convertible Note”) in the principal amount of $60,000 to the Lender. Pursuant to the terms of the Convertible Note, on the date thereof, the Company issued the Convertible Note to the Lender and, as consideration therefor, the Lender paid the Company in cash the full principal amount of the Convertible Note. Upon issuance the lender was awarded 15,000 restricted common shares as an origination fee which have certain registration rights.

 

Pursuant to the terms of the Convertible Note, the Company is obligated to pay monthly installments of not less than $1,000 the first of each month commencing the month following the execution of this note until its full maturity on September 16, 2016 at which time the Company is obligated to repay the full principal amount of the Convertible Note. The Convertible Note is convertible by the holder at any time into shares of the Company’s common stock at an effective conversion price of $1.00 and throughout the duration of this Convertible Note the holder has the right to participate in any and other financing the Company may engage in with the same terms and option as all other investors. The Company allocated the face value of the Convertible Note to the shares and the note based on relative fair values, and the amount allocated to the shares of $16,364 was recorded as a discount against the note, with an offsetting entry to additional paid-in capital. The beneficial conversion feature of $16,364 was recorded as a debt discount with an offsetting entry to additional paid-in capital decreasing the note payable and increasing debt discount. The debt discount is being amortized to interest expense over the term of the debt. As of March 31, 2016, the carrying value of this Convertible Note was $29,598 and accrued interest expense of $260. For the three months ended March 31, 2016, debt discount amortization related to the Convertible Note was $2,325 and interest expense of $260.

 

August 2014 Convertible Debentures (Series C)

 

In fiscal 2015, all debentures issued by Trunity Holdings, Inc. to fund the former educational business were eligible to participate in a debt conversion; however, one debenture holder that was issued a Series C Convertible Debenture (the “Series C Debenture”) in August 2014 with an aggregate face value of $100,000 in exchange for the cancellation of Series B Convertible Debentures with a carrying value of $110,833 did not convert. The Series C Debenture accrues interest at an annual rate of 10%, matured on October 31, 2015, and is convertible into the Company’s common stock at a conversion rate of $20.20 per share. The holders of the Series C Debenture also received warrants to acquire 4,950 shares post-split of common stock for an exercise price of $20.20 per share, exercisable over five years. The former educational business in fiscal 2014 allocated the face value of the Series C Debenture to the warrants and the debentures based on its relative fair values, and allocated to the warrants, which was recorded as a discount against the Series C Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed in fiscal 2014 upon execution of the new debentures. As of March 31, 2016, the carrying value of this Series C Debenture was $110,833 and accrued interest expense of $16,625. For the three months ended March 31, 2016, interest expense related to the Debenture was $3,288.

 

November 2014 Convertible Debentures (Series D)

 

In fiscal 2015, all debentures issued by Trunity Holdings, Inc. to fund the former educational business were eligible to participate in a debt conversion however one debenture holder that was issued a Series D Convertible Debenture (the “Series D Debenture”) in November 2014 with an aggregate face value of $10,000 in exchange for the cancellation of Series B Convertible Debenture with a carrying value of $11,334 that did not participate in the debt conversion restructuring. The Series D Debenture accrues interest at an annual rate of 12%, matured on October 31, 2015, and is convertible into the Company’s common stock at a conversion rate of $16.67 per share. The holders of the Series D Debenture also received warrants to acquire 495 shares post-split of common stock for an exercise price of $20.20 per share, exercisable over five years. The former educational business in fiscal 2014 allocated the face value of the Series D Debenture to the warrants and the debentures based on their relative fair values, and allocated to the warrants, which was recorded as a discount against the Series D Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed in fiscal 2014 upon execution of the new debentures. As of March 31, 2016, the carrying value of the Series D Debenture was $11,334 and accrued interest expense of $1,927. For the three months ended March 31, 2016, interest expense related to the Debenture was $346.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 7 - Stockholders' Deficit
3 Months Ended
Mar. 31, 2016
Note 7 - Stockholders' Deficit  
Note 7 - Stockholders' Deficit

Note 7 – Stockholders’ Deficit

 

Sale of Common Stock – During the quarter ended March 31, 2016, the Company raised gross proceeds of $60,000 through the sale of 120,000 shares of common stock to accredited investors in private placement transactions at a price of $0.50 per share. The Company incurred $6,000 of securities issuance costs representing commissions paid to broker-dealers who assisted with these transactions.

 

Shares for Consulting Services and Board Members – During the quarter ended March 31, 2016, in connection with services rendered, the Company issued 300,000 restricted shares of the Company’s common stock at a value of $1.45 and $0.90 per share in exchange for financial consulting services conducted on behalf of the Company. In addition, in connection with services rendered for board members, the Company issued 200,000 restricted shares of the Company’s common stock at a value of $1.45 per share in exchange for their services conducted on behalf of the Company.

 

Shares issued for convertible note payable – As discussed in Note 6, during the quarter ended March 31, 2016, in connection with conversion of a six-month convertible promissory note, the Company issued 15,000 shares of the Company’s common stock with a fair value of $16,363 that was allocated based on the relative fair value of the note and associated shares.

 

Debt beneficial conversion feature for convertible note payable – During the quarter ended March 31, 2016, the Company raised gross proceeds of $60,000 pursuant to a Convertible Note Payable (“Note”) that allocated the face value of the Note to the shares and debt based on their relative fair values and, resulted in the recording of beneficial conversion features totaling $16,364 as a discount against the Notes, with an offsetting entry to additional paid-in capital. The discount is being amortized into interest expense over the term of the Note.

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Note 8 - Stock-Based Compensation
3 Months Ended
Mar. 31, 2016
Note 8 - Stock-Based Compensation  
Note 8 - Stock-Based Compensation

Note 8 – Stock-Based Compensation

 

The Company has two Employee, Director and Consultant Stock Option Plans that were not terminated as a result of the fiscal 2015 restructuring of the Company and spin-out and have continued as part of the operations as detailed below.

 

In fiscal 2015, the option pool pertaining to the 2009 Employee, Director and Consultant Stock Option Plan (the “2009 Plan”) was adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan, resulting in an authorized option pool of 18,152. Stock options typically vest over a three-year period and have a life of ten years from the date granted. As of March 31, 2016 there were 3,610 shares available for future awards under this plan.

 

In fiscal 2015, the option pool pertaining to the 2012 Employee, Director and Consultant Stock Option Plan (the “2012 Plan”) was adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan, resulting in an authorized options pool of 74,257. Stock options typically vest over a three year period and have a life of ten years from the date granted. As of March 31, 2016, there were 45,673 shares available for future awards under this plan.

 

In addition, there are approximately 24,753 in options outstanding that were issued to a former CEO of the Company in fiscal 2014. These options issued are outside of the 2009 and 2012 Plans.

 

During the quarter ended March 31, 2016, the Company did not grant options to acquire shares of common stock to employees, directors or consultants.

 

For all previous grants the fair value of options is estimated using the Black-Scholes option pricing model. The expected term of options granted is based on the simplified method in accordance with Securities and Exchange Commission Staff Accounting Bulletin 107, and represents the period of time that options granted are expected to be outstanding. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day.

 

As of March 31, 2016, there was approximately $780 of total unrecognized stock compensation expense, related to unvested stock options under the Plans. This expense is expected to be recognized over the remaining weighted average vesting periods of the outstanding options of less than one year. The Company recorded $12,284 in stock compensation expense to continuing operations within selling, general and administrative expenses on the consolidated statements of operations and comprehensive loss pertaining to the vesting of options in fiscal 2016.

 

A summary of options issued, exercised and cancelled are as follows:

 

    Shares   Weighted- Average Exercise Price ($)   Weighted- Average Remaining Contractual Term   Aggregate Intrinsic Value ($)
Outstanding at December 31, 2015       67,879     $ 21.40       7.17        
Granted                          
Cancelled                          
                                   
Outstanding at March 31, 2016       67,879     $ 21.40       6.92        
                                   
Exercisable at March 31, 2016       66,635     $ 34.75       6.82        
XML 25 R15.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Warrants to Purchase Common Stock
3 Months Ended
Mar. 31, 2016
Note 9 - Warrants to Purchase Common Stock  
Note 9 - Warrants to Purchase Common Stock

Note 9 – Warrants to Purchase Common Stock

 

Subsequent to the restructuring of the Company and the spin-out, the Company had warrants to purchase common stock outstanding that were not terminated and have continued as part of the operations as detailed below. The warrants were adjusted for a 1 for 101 stock split due to the spin-out and restructuring plan as authorized. No warrants were issued during the first quarter ended March 31, 2016. All warrants outstanding as of March 31, 2016 are scheduled to expire at various dates through 2019. A summary of warrants issued, exercised and expired are as follows:

 

    Shares   Weighted- Average Exercise Price ($)   Weighted-Average Remaining Contractual Term
Outstanding at December 31, 2015       78,462     $ 29.55       3.43  
Granted                    
Expired       2,475       50.50        
                           
Outstanding at March 31, 2016       75,987     $ 30.51       3.29  
                           
Exercisable at March 31, 2016       75,987     $ 30.51       3.29  
XML 26 R16.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 10 - Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Note 10 - Commitments and Contingencies  
Note 10 - Commitments and Contingencies

Note 10 – Commitments and Contingencies

 

Legal

 

National Council for Science and the Environment, Inc. v. Trunity Holdings, Inc., Case No.. 2015 CA 009726 B, Superior Court for the District of Columbia, Civil Division.

 

This action was filed on December 16, 2015 by the National Council for Science and the Environment, Inc. (“NCSE”) in the state court in the District of Columbia against Trunity Holdings, Inc. (“Trunity”) and alleges claims for Breach of Contract. Acknowledgement of Indebtedness and Settlement Agreement and Quantum Meruit arising out of an agreement entered into between NCSE and Trunity in 2014. The Complaint seeks damages in the amount of $177,270, inclusive of attorney’s fees, costs and accrued interest, continuing interest in the amount of 12% per annum and attorney’s fees and costs of collection relating to the case. The Company in its answer on January 27, 2016, denied the material allegations made by NCSE, asserted a number of affirmative defenses and filed a counterclaim alleging claims for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract and unjust enrichment. In its counterclaim, the Company will seek actual and compensatory damages against NCSE that it believes exceed the amount sought by NCSE on its claims, pre-judgment interest, punitive damages and all costs and expenses, including attorney’s fees, incurred by the Company in bringing its claims against NCSE.

 

On February 19, 2016, NCSE filed a motion to dismiss the counterclaim, and the Company has filed its brief in the opposition to that motion. A hearing is scheduled in second quarter 2016 on the motion. No discovery has been conducted by the parties yet, and no trial date has been set by the court. We have recorded a liability as of March 31, 2016 based on our best estimate of the probable exposure pertaining to the claim.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 11 - Subsequent Events
3 Months Ended
Mar. 31, 2016
Note 11 - Subsequent Events  
Note 11 - Subsequent Events

Note 11 – Subsequent Events

 

On April 4, 2016 the Company entered into a non-binding letter of intent to acquire a compounding pharmacy in Holly Springs, Georgia, a suburb of Atlanta. The agreement calls for purchase consideration of approximately $450,000. Payment will be split between the issuance of common stock, a convertible note that may convert into stock at a price not less than $2 per share. The final allocation of each of these will be determined prior to closing, which is expected to occur in June 2016. The letter of intent is not a definitive agreement, and the Company anticipates that the definitive agreement will contain customary conditions to closing.

 

On April 11, 2016 the Board of Directors elected Mr. James Driscoll, age 54, to the Board of Directors. Mr. Driscoll is currently CEO of Channel Terminals, LLC, a crude oil liquids terminals and refinery based in Houston, TX. Mr. Driscoll is also a member of the Board of Directors at Double Zero Recycling LLC as well as an Advisory Board Member at HealPros LLC, a diabetic retinal imaging business, and Funding University LLC, an early stage online peer to peer lending business targeted on secondary education. Previously he was President of Method Holdings, LLC, from 2011 until late 2013. Between 2006 and 2011 Mr. Driscoll was a Senior Partner with private equity firm 1848 Capital Partners LLC. From 2009 to 2010 he was COO and Executive Vice President of CareDynamix LLC, a healthcare business focused on provision of onsite vaccination services around the US. In addition, Mr. Driscoll, has over 14 years of experience at various senior positions in the power generation and transportation industries in varied locations around the world. He began his professional career as a trader in New York City. He has an MBA from Harvard University (1991) and a BA in English Literature from Bowdoin College (1984). Mr. Driscoll will receive 100,000 shares of restricted common stock as compensation for his term on the Board, consistent with all prior appointments by the Company.

 

On April 11, 2016, Dr. William Ross, age 70, advised the Company that he desired to resign from the Board of Directors, as he intends to retire from all business activities. There were no disagreements, or conflicts with the Board and Dr. Ross.

 

On April 29, 2016, subject to approval by the Georgia Board of Pharmacy, the Company entered into definitive documents to acquire P3 Compounding of Georgia, LLC,following the letter of intent dated March 29, 2016. The total consideration for the transaction is $1,000,000. The transaction includes the acquisition of certain special formulations as “Intellectual Properties”.

 

The consideration paid was comprised of three (3) components:

1)     the business interests were acquired in consideration of a) $425,000 of convertible notes with a conversion price of $1.25 per share and interest of 6% and b) a short term note in the amount of $75,000, non-interest bearing, with a maturity of June 16, 2016;

2)     the specialized formulations of the business, which will be included in the Company’s library of Intellectual Properties, were acquired in consideration a) $425,000 of convertible notes with a conversion price of $1.25 per share and interest of 6% and b) a short term note in the amount of $75,000, non-interest bearing, with a maturity of June 16, 2016;

3)     Mr. Casey Gaetano, employed under a 3 year employment contract as VP of Corporate Development, at an annual salary of $125,000, plus normal benefits commensurate with other executives in the Company of equal stature. He will also receive 125,000 shares of restricted stock in the amount.

 

The notes issued in conjunction with the purchase and the intellectual properties may be converted into restricted common stock at a rate of $1.25 per share. The purchase includes all payables, receivables, cash on hand, inventory and all assets used in the operation of the business.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 2 - Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2016
Note 2 - Summary of Significant Accounting Policies  
Basis of Presentation

Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, with the instructions to Form 10-Q and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, these consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at March 31, 2016, the results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015. The results for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis included in the Company’s annual report on Form 10-K for the year ended December 31, 2015. In addition, refer to Note 4 regarding the spin-out of the educational business and related discontinued operations classification pertaining to the fiscal 2015 period. Common stock share and per share amounts in these financial statements have been retroactively adjusted for the effects of a 1 for 101 reverse stock split that occurred in January 2016.

Use of Estimates

Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.

Per Share Data

Per Share Data - Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options and convertible instruments. 

 

The Company has excluded all common equivalent shares outstanding for warrants, options and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of March 31, 2016, the Company had 78,462 warrants, 67,879 options, 7,105 potential shares which may be issued resulting from the provisions of convertible notes, respectively. As of March 31, 2015, the Company had 166,415 warrants, 68,473 options, 223,223 potential shares which may be issued resulting from the provisions of convertible notes, respectively.

Recently Issued Accounting Standards

Recently Issued Accounting Standards-In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This updated guidance supersedes the current revenue recognition guidance, including industry-specific guidance. The updated guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for interim and annual periods beginning after December 15, 2016, and early adoption is not permitted. In July 2015, the FASB decided to delay the effective date of ASU 2014-09 until December 15, 2017. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. The Company is currently evaluating which transition method it will adopt and the expected impact of the updated guidance, but does not believe the adoption of the updated guidance will have a significant impact on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases, which requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 with early adoption permitted. While the Company is still evaluating ASU 2016-02, the Company expects the adoption of ASU 2016-02 to have a material effect on the Company’s consolidated balance sheets and results of operations due to the recognition of the lease rights and obligations as assets and liabilities. The Company does not expect ASU 2016-02 to have a material effect on the Company’s cash flows.

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial statements. This guidance will be effective in the first quarter of fiscal year 2019 and early adoption is not permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

 

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses certain aspects of accounting for share-based payment award transactions. This guidance will be effective in the first quarter of fiscal year 2017 and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 4 - Spin-Out and Discontinued Operations (Tables)
3 Months Ended
Mar. 31, 2016
Note 4 - Spin-Out and Discontinued Operations  
Results of operations associated with discontinued operations

The results of operations associated with discontinued operations were as follows:

 

    March 31,
    2015
Net Sales   $ 118,679  
Cost of sales     62,128  
Gross Profit     56,551  
         
Operating Expenses:        
Research and development     194,699  
Selling, general and administrative     252,266  
Total operating expenses     446,965  
         
Operating Loss from Discontinued Operations     (390,414 )
         
Other Expense:        
Interest expense, net     (232,056 )
         
Net Loss from Discontinued Operations   $ (622,470 )
Other Comprehensive Loss Net of Tax:        
Foreign currency translation adjustments     (1,275 )
Comprehensive Loss from Discontinued Operations   $ (623,745 )
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 8 - Stock-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2016
Note 8 - Stock-Based Compensation  
Summary of options issued, exercised and cancelled

A summary of options issued, exercised and cancelled are as follows:

 

    Shares   Weighted- Average Exercise Price ($)   Weighted- Average Remaining Contractual Term   Aggregate Intrinsic Value ($)
Outstanding at December 31, 2015       67,879     $ 21.40       7.17        
Granted                          
Cancelled                          
                                   
Outstanding at March 31, 2016       67,879     $ 21.40       6.92        
                                   
Exercisable at March 31, 2016       66,635     $ 34.75       6.82        
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Warrants to Purchase Common Stock (Tables)
3 Months Ended
Mar. 31, 2016
Note 9 - Warrants to Purchase Common Stock  
Summary of warrants issued, exercised and expired

A summary of warrants issued, exercised and expired are as follows:

 

    Shares   Weighted- Average Exercise Price ($)   Weighted-Average Remaining Contractual Term
Outstanding at December 31, 2015       78,462     $ 29.55       3.43  
Granted                    
Expired       2,475       50.50        
                           
Outstanding at March 31, 2016       75,987     $ 30.51       3.29  
                           
Exercisable at March 31, 2016       75,987     $ 30.51       3.29
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 2 - Summary of Significant Accounting Policies (Details Narrative) - shares
1 Months Ended 3 Months Ended
Jan. 31, 2016
Mar. 31, 2016
Mar. 31, 2015
Reverse spilit 1 for 101    
Warrant [Member]      
Antidilutive securities excluded from computation of earnings per share, amount   78,462 166,415
Options [Member]      
Antidilutive securities excluded from computation of earnings per share, amount   67,879 68,473
Potential shares [Member]      
Antidilutive securities excluded from computation of earnings per share, amount   7,105 223,223
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 3 - Financial Condition and Going Concern (Details Narrative) - USD ($)
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Note 3 - Financial Condition and Going Concern        
Cash and Cash Equivalents $ 17,881 $ 28,185 $ 16,524 $ 14,119
Current liabilities $ 705,243 $ 564,873    
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 4 - Spin-Out and Discontinued Operations (Details) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Note 4 - Spin-Out and Discontinued Operations    
Net Sales   $ 118,679
Cost of sales   62,128
Gross Profit   56,551
Operating expenses:    
Research and development   194,699
Selling, general and administrative   252,266
Total operating expenses   446,965
Operating Loss from Discontinued Operations   (390,414)
Other Expense:    
Interest expense, net   (232,056)
Net Loss from Discontinued Operations (622,470)
Other Comprehensive Loss Net of Tax:    
Foreign currency translation adjustments   (1,275)
Comprehensive Loss from Discontinued Operations $ (623,745)
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 5 - Related Party Transactions (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Jan. 25, 2016
Mar. 31, 2016
Dec. 31, 2015
Prepaid expenses - related party   $ 4,250 $ 17,000
Stephen Keaveney [Member]      
Professional fees per month paid   10,000  
Accrued Professional fees   16,000  
Shareholder [Member]      
Professional fees per month paid   10,000  
Accrued Professional fees   $ 17,250  
William L. Ross and Jeffrey Cosman [Member]      
Shares purchased 100,000    
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 6 - Debt (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Mar. 18, 2016
Mar. 31, 2016
Dec. 31, 2015
Convertible Promissory Note [Member]      
Convertible promissory note principal amount $ 60,000    
Convertible Debentures, Face Value $ 16,364    
Restricted common shares awarded 15,000    
Interest rate 12.00%    
Maturity date Sep. 16, 2016    
Debt instrument conversion price $ 1.00    
Convertible Debentures, Carrying Value   $ 29,598  
Accrued Interest   260  
Interest expense related to the Debenture   260  
Debt discount amortization related to the Convertible Note $ 16,364 2,325  
Obligated to pay monthly installments $ 1,000    
August 2014 Convertible Debentures (Series C) [Member]      
Convertible Debentures, Face Value     $ 100,000
Interest rate     10.00%
Maturity date     Oct. 31, 2015
Debt instrument conversion price     $ 20.20
Warrants to purchase of common stock     4,950
Warrants to purchase of common stock exercise price     $ 20.20
Warrants to purchase of common stock term     5 years
Convertible Debentures, Carrying Value   110,833 $ 110,833
Accrued Interest   16,625  
Interest expense related to the Debenture   $ 3,288  
November 2014 Convertible Debentures (Series D) [Member]      
Convertible Debentures, Face Value   $ 10,000
Interest rate     12.00%
Maturity date     Oct. 31, 2015
Debt instrument conversion price     $ 16.67
Warrants to purchase of common stock     495
Warrants to purchase of common stock exercise price     $ 20.20
Warrants to purchase of common stock term     5 years
Convertible Debentures, Carrying Value   $ 11,334 $ 11,334
Accrued Interest   1,927  
Interest expense related to the Debenture   $ 346  
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 7 - Stockholders' Deficit (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Gross proceeds from sale of common stock $ 60,000  
Gross proceeds from sale of common stock shares 120,000  
Common stock shares issued price per share $ 0.50  
Securities issuance costs commissions paid to broker-dealers $ 6,000  
Conversion of six-month convertible promissory note to common stock 15,000  
Conversion of six-month convertible promissory note common stock, value $ 16,363  
Gross proceeds from convertible note payable 60,000
Debt beneficial conversion feature for convertible note payable $ 16,364  
Restricted Stock [Member]    
Common stock shares issued for services rendered 300,000  
Restricted Stock [Member] | Minimum [Member]    
Common stock shares issued price per share $ 0.90  
Restricted Stock [Member] | Maximum [Member]    
Common stock shares issued price per share 1.45  
Restricted Stock [Member] | Board Member [Member]    
Common stock shares issued price per share $ 1.45  
Common stock shares issued for services rendered 200,000  
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 8 - Stock-Based Compensation (Details)
3 Months Ended
Mar. 31, 2016
USD ($)
$ / shares
shares
Note 8 - Stock-Based Compensation  
Options Outstanding | shares 67,879
Option Granted | shares
Option Cancelled | shares
Options Outstanding | shares 67,879
Options exercisable at End | shares 66,635
Outstanding at Beginning, Weighted-Average Exercise Price | $ / shares $ 21.40
Weighted- Average Exercise Price, Granted | $ / shares
Weighted- Average Exercise Price, Cancelled | $ / shares
Outstanding at Ending, Weighted-Average Exercise Price | $ / shares $ 21.40
Weighted- Average exercisable at End | $ / shares $ 21.78
Weighted- Average Remaining Contractual Term, Beginning balance 7 years 2 months 1 day
Weighted- Average Remaining Contractual Term, Ending Balance 6 years 11 months 1 day
Weighted- Average Remaining Contractual Term, exercisable at End 6 years 9 months 26 days
Aggregate Intrinsic Value | $
Aggregate Intrinsic Value, exercisable at End | $
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 8 - Stock-Based Compensation (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 31, 2016
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Dec. 31, 2014
Reverse spilit 1 for 101        
Options Outstanding   67,879   67,879  
Unrecognized stock compensation expense   $ 780      
Unrecognized stock compensation expense recognition period   1 year      
Share based compensation   $ 12,284    
Chief Executive Officer [Member]          
Options Outstanding         24,753
2009 Employee, Director and Consultant Stock Option Plan (the " 2009 Plan")          
Reverse spilit       1 for 101  
Authorized option pool       18,152  
Stock option description       Stock options typically vest over a three-year period and have a life of ten years from the date granted.  
Shares available for awards   3,610      
2012 Employee, Director and Consultant Stock Option Plan (the "2012 Plan")          
Reverse spilit       1 for 101  
Authorized option pool       74,257  
Stock option description       Stock options typically vest over a three year period and have a life of ten years from the date granted.  
Shares available for awards   45,673      
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Warrants to Purchase Common Stock (Details)
3 Months Ended
Mar. 31, 2016
$ / shares
shares
Options Outstanding | shares 67,879
Options Granted | shares
Options Expired | shares
Options Outstanding | shares 67,879
Options exercisable at End | shares 66,635
Outstanding at Beginning, Weighted-Average Exercise Price | $ / shares $ 21.40
Weighted- Average Exercise Price, Granted | $ / shares
Weighted- Average Exercise Price, Expired | $ / shares
Outstanding at Ending, Weighted-Average Exercise Price | $ / shares $ 21.40
Weighted- Average exercisable at End | $ / shares $ 21.78
Weighted- Average Remaining Contractual Term, Beginning balance 7 years 2 months 1 day
Weighted- Average Remaining Contractual Term, Ending Balance 6 years 11 months 1 day
Weighted- Average Remaining Contractual Term, exercisable at End 6 years 9 months 26 days
Warrant [Member]  
Options Outstanding | shares 78,462
Options Granted | shares
Options Expired | shares 2,475
Options Outstanding | shares 75,987
Options exercisable at End | shares 75,987
Outstanding at Beginning, Weighted-Average Exercise Price | $ / shares $ 29.55
Weighted- Average Exercise Price, Granted | $ / shares
Weighted- Average Exercise Price, Expired | $ / shares $ 50.50
Outstanding at Ending, Weighted-Average Exercise Price | $ / shares 30.51
Weighted- Average exercisable at End | $ / shares $ 30.51
Weighted- Average Remaining Contractual Term, Beginning balance 3 years 5 months 5 days
Weighted- Average Remaining Contractual Term, Ending Balance 3 years 3 months 15 days
Weighted- Average Remaining Contractual Term, exercisable at End 3 years 3 months 15 days
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 9 - Warrants to Purchase Common Stock (Details Narrative)
1 Months Ended 3 Months Ended
Jan. 31, 2016
Mar. 31, 2016
Reverse spilit 1 for 101  
Warrant [Member]    
Reverse spilit   1 for 101
Warrants expires through   Dec. 31, 2019
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 10 - Commitments and Contingencies (Details Narrative)
1 Months Ended
Dec. 16, 2015
USD ($)
Note 10 - Commitments and Contingencies  
Damages sought $ 177,270
Interest rate 12.00%
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.4.0.3
Note 11 - Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($)
1 Months Ended
Apr. 11, 2016
Apr. 29, 2016
Apr. 04, 2016
Agreement purchase consideration     $ 450,000
Debt instrument conversion price     $ 1.25
Intellectual Properties [Member]      
Debt instrument conversion price   $ 1.25  
P3 Compounding of Georgia, LLC [Member]      
Agreement purchase consideration   $ 1,000,000  
Debt instrument conversion price   $ 1.25  
Convertible debt   $ 425,000  
Interest rate   6.00%  
Short term note   $ 75,000  
Maturity date   Jun. 16, 2016  
P3 Compounding of Georgia, LLC [Member] | Intellectual Properties [Member]      
Debt instrument conversion price   $ 1.25  
Convertible debt   $ 425,000  
Interest rate   6.00%  
Short term note   $ 75,000  
Maturity date   Jun. 16, 2016  
Mr. James Driscoll [Member]      
Restricted common stock issued as compensation 100,000    
Mr. Casey Gaetano [Member] | P3 Compounding of Georgia, LLC [Member]      
Restricted common stock issued as compensation   125,000  
Officers compensation   $ 125,000  
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