As filed with the Securities and Exchange Commission on December 9,
2019
Registration No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Premier
Biomedical, Inc.
(Exact
name of registrant as specified in its charter)
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Nevada
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2836
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27-2635666
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(State
or other jurisdiction of incorporation or organization
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(Primary Standard
Industrial Classification Code Number)
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(I.R.S.
Employer Identification No.)
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P.O.
Box 25
Jackson
Center, PA 16133
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(814)
786-8849
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(Address, including
zip code, of registrant’s principal executive offices)
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(Telephone number,
including area code)
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William
A. Hartman
Chief
Executive Officer
Premier
Biomedical, Inc.
P.O.
Box 25
Jackson
Center, PA 16133
(814)
786-8849
(Name,
address, including zip code, and telephone number, including
area code, of agent for service)
COPIES
TO:
Brian
A. Lebrecht, Esq.
Clyde
Snow & Sessions, PC
201 S.
Main Street, 13th Floor
Salt
Lake City, UT 84111
(801)
322-2516
Approximate date of
commencement of proposed sale to the public:
From
time to time after this registration statement becomes
effective.
If any
of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [ X ]
If this
Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller
reporting company
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☑
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|
(Do not
check if a smaller reporting company)
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Emerging growth
company
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☐
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If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided to Section 7(a)(2)(B) of the
Securities Act. [ ]
CALCULATION OF
REGISTRATION FEE
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Title of Each
Class of Securities to be Registered
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Amount to be
Registered (1)
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Proposed Maximum
Offering Price Per Share (2)
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Proposed Maximum
Aggregate Offering Price
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Amount of
Registration Fee (3)
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Shares
of Common Stock, par value $0.00001 per share
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1,000,000,000
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$0.0006
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$600,000
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$77.88
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(1)
We are registering
1,000,000,000 shares of our common
stock that we will sell to Green Coast Capital International SA
pursuant to an Equity Purchase Agreement dated October 3, 2019,
which together shall have an aggregate initial offering price not
to exceed $5,000,000.
In the
event the maximum aggregate offering price is reached, any
remaining unsold shares shall be removed from
registration. The proposed maximum offering price per
share will be determined by the registrant in connection with the
issuance by the registrant of the securities registered
hereunder.
(2)
Estimated solely
for the purpose of computing the registration fee pursuant to Rule
457(c) of the Securities Act of 1933, as amended. Price per share
is based on the average of the high and low prices per share of our
common stock reported in the consolidated reporting system as
reported on the Pink Sheets Current Marketplace maintained by OTC
Markets, Inc. on December 3, 2019.
(3)
Calculated pursuant
to Rule 457(o) based on an estimate of the proposed maximum
aggregate offering price.
The
registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may
determine.
The
information in this Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement
filed with the SEC is effective. This Prospectus is not an offer to
sell and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
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Preliminary
Prospectus
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Subject
to Completion
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Dated [•], 2019
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PROSPECTUS
Up to
1,000,000,000 shares of common stock
We are
hereby registering 1,000,000,000 shares, representing 50% of our
authorized common stock1, for sale by Green
Coast Capital International SA, a Panama corporation and an
underwriter in this offering, pursuant to an Equity Purchase
Agreement. The agreement allows us to require Green Coast to
purchase up to $5,000,000 of our common stock.
We are
not selling any shares of common stock in the resale
offering. We, therefore, will not receive any proceeds
from the sale of the shares by the selling
shareholder. We will, however, receive proceeds from the
sale of securities to Green Coast pursuant to Put Notice(s) under
the Equity Purchase Agreement.
This
offering will terminate on the earlier of (i) when all
1,000,000,000 shares are sold, (ii) when the maximum offering
amount of $5,000,000 has been achieved, or (iii) on January
[•],
2022, unless we terminate it earlier.
Investing
in the common stock involves risks. Premier Biomedical, Inc. has
limited operations, limited income, and limited assets, and you
should not invest unless you can afford to lose your entire
investment. See “Risk Factors” beginning on page 5. Neither the
Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense. Our common
stock is governed under The Securities Enforcement and Penny Stock
Reform Act of 1990, and as a result you may be limited in your
ability to sell our stock.
Our
common stock is registered under Section 12(g) of the Securities
Exchange Act of 1934 and is quoted on the Pink Sheets Current
Marketplace maintained by OTC Markets, Inc. under the symbol
“BIEI.” The closing price of our common stock as reported on the
Pink Sheets Current on December 3, 2019 was $0.0006.
These
shares will be sold by Green Coast from time to time whenever the
person or persons who exercise voting control over Green Coast deem
it appropriate and for whatever reason the person or persons
who exercise voting control over Green Coast deem it appropriate in
the over-the-counter market or other national securities exchange
or automated interdealer quotation system on which our common stock
is then listed or quoted, through negotiated transactions or
otherwise at market prices prevailing at the time of sale or at
negotiated prices. We provide more information about how the
Selling Shareholders may sell their shares of common stock in the
section of this prospectus entitled “Plan of Distribution” beginning on page
25.
We will
bear all costs associated with this registration
statement.
Green
Coast, and any participating broker-dealers, will be deemed to be
“underwriters” within the meaning of the Securities Act of 1933, as
amended, or the “Securities Act,” and any commissions or discounts
given to any such broker-dealer may be regarded as underwriting
commissions or discounts under the Securities Act. Green Coast will
purchase the shares of our common stock for ninety percent (90%)
of the lowest closing trade price of
the common stock during the five (5) trading days immediately
following the date Green Coast receives shares of our common stock
pursuant to a put notice issued under the Equity Purchase
Agreement. Green Coast has informed us that they do not have
any agreement or understanding, directly or indirectly, with any
person to distribute their common stock.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense. Our common
stock is governed under The Securities Enforcement and Penny Stock
Reform Act of 1990, and as a result you may be limited in your
ability to sell our stock.
The
date of this Prospectus is [•],
2019.
Table
of Contents
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Page
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Part
I
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Prospectus
Summary
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1
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Risk
Factors
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4
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Use of
Proceeds
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20
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Determination of
Offering Price
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Dilution
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Selling
Security Holders
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21
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Plan of
Distribution
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22
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Description of
Securities to be Registered
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24
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Interests of Named
Experts and Counsel
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25
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Description of
Business
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26
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Description of
Property
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35
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Legal
Proceedings
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35
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Selected Financial
Data
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36
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Management’s
Discussion and Analysis
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37
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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48
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Directors,
Executive Officers, Promoters, and Control Persons
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49
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Executive
Compensation
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52
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Security Ownership
of Certain Beneficial Owners and Management
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55
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Certain
Relationships and Related Transactions
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56
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Disclosure of
Commission Position on Indemnification for Securities Act
Liabilities
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58
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Where
You Can Find More Information
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59
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Experts
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60
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Index
to Financial Statements
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F-1
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed on
behalf of the Selling Shareholders with the Securities and Exchange
Commission (the “Commission”) to permit the Selling Shareholders to
sell the shares described in this prospectus in one or more
transactions. The Selling Shareholders and the plan of distribution
of the shares being offered by them are described in this
prospectus under the headings “Selling Shareholders” and “Plan of Distribution.”
You
should rely only on the information that is contained in this
prospectus. We and the Selling Shareholders have not authorized
anyone to provide you with information that is in addition to or
different from that contained in this prospectus. If anyone
provides you with different or inconsistent information, you should
not rely on it.
The
shares of common stock offered by this prospectus are not being
offered in any jurisdiction where the offer or sale of such common
stock is not permitted. You should not assume that the information
contained in this prospectus is accurate as of any date other than
the date of this prospectus regardless of the date of delivery of
this prospectus or any sale of the common stock offered by this
prospectus. Our business, financial condition, liquidity, results
of operations and prospects may have changed since those dates. The
rules of the Commission may require us to update this prospectus in
the future.
PROSPECTUS
SUMMARY
PREMIER
BIOMEDICAL, INC.
This
summary highlights selected information contained in greater detail
elsewhere in this prospectus. This summary does not contain all the
information you should consider before investing in our common
stock. You should read the entire prospectus, including our
financial statements and related notes and the information set
forth under the heading “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”
before investing in our common stock. In this prospectus, the
“Company,” “we,” “us,” and “our” refer to Premier Biomedical,
Inc.
We were
strictly a research-based company that intended to discover cures
for PTSD, cancer and various other diseases. In order to fund
on-going research and development in these areas, we developed a
line of topical hemp oil pain relief products. We began selling
these pain relief products in January of 2017 with a single product
and currently have eight topical pain relief products.
Through
our continued development and expansion of proprietary drugs and
treatments, we have reorganized the company into six technology
centers: (1) extra-corporeal treatment of disease, (2) PTSD
treatment, (3) anti-breast cancer drugs, (4) hemp oil/CBD pain
relief products, (5) anti-aging treatments, and (6) chemical and
alcohol addiction treatment.
Pain Management Products
We have
developed and are now marketing all-natural, hemp-oil based
products that are pesticide and solvent free. These products
provide generalized, neuropathic and localized topical pain
relief.
We
offer alternatives to dangerous and addictive opioid pain killers,
which are currently the principal contributors to roughly 200 drug
overdose deaths per day in the United States. In the past year we
have rapidly expanded our product offerings, and we now offer eight
pain relief products that are leaders in the pain-relief
field:
1.
96-hour pain relief
patch with 50 mg of hemp oil extract, the highest level of pain
relief ingredient available in the industry;
2.
120 mg/ 10 ml
water-based roll-on applicator;
3.
150 mg/ 10 ml
oil-based roll-on applicator;
4.
150 mg/ 30 ml
oil-based pump spray applicator;
5.
150 mg/ 2 oz.
ointment;
6.
200 mg/10 ml
oil-based roll-on applicator;
7.
500 mg/ 30 ml
oil-based pump spray applicator; and
8.
500 mg/ 1 oz.
ointment.
We
believe that this eight-product array positions us favorably in the
topical pain relief marketplace. The topical pain relief market is
expected to grow rapidly in the next few years, due to the focus on
reduction of opioid pain medication use, and we intend to be a
major player in that expanding market.
Now
that we have completed the product design and development phase, we
are aggressively embarking on the product distribution and sales
phase by:
1.
Expanding our
online sales beyond our web site at:
www.painreliefmeds.com;
2.
Securing the
services of a social media coordinator to ensure that we optimize
that promotional tool;
3.
Recruiting a
National Sales Director to coordinate our growing field of sales
representatives and distributors;
4.
Securing the
services of a sales organization with expertise in marketing to the
government and senior care facilities;
5.
Engaging an
investor relations firm to facilitate television appearances
designed to gain optimum exposure for our company and its
products;
6.
Appearing in radio
and television broadcasts, and podcasts, via Uptick Newswire
periodically to ensure that our story gets out to the public;
and
7.
Retaining the
services of marketing firms to promote the Company and its products
through social media.
8.
Establishing
relationships with major distributors who will blanket specialized
sales outlets such as pharmacies, doctors’ offices, convenience
stores, long-term care facilities, large retail facilities,
etc.
In
addition, we are in the process of seeking potential partnerships
outside the United States to manufacture and market our products
worldwide. We anticipate that these partnerships will make new
markets available to us and allow us to rapidly increase our sales
and profitability through favorable manufacturing
arrangements.
Customers indicate
that they were able to achieve pain relief from our products and
stop the use of opioid painkillers. Public awareness of the harmful
side effects of opioid painkillers has grown significantly, and
many states have initiated litigation against drug makers claiming
they misrepresented the risks of opioid painkillers.2 As patients seek to
cut back their use of opioid painkillers and look for alternatives,
we believe demand for our products will see a significant increase.
We intend to petition national insurance agencies to urge them to
consider covering the use of our all-natural pain relief products
as a safe alternative to opioid painkillers.
Corporate
Information
We
were incorporated on May 10, 2010 in the State of Nevada. We have
two wholly-owned subsidiaries, Premier Biomedical Pain Relief Meds,
LLC, a Nevada limited liability company organized on September 14,
2017, and Health Stations, LLC, a Nevada limited liability company
organized on August 28, 2019.
Our
corporate headquarters are located in Jackson Center, PA. Our
mailing address is P.O. Box 25, Jackson Center, PA 16133,
and our telephone number is (724) 633-7033. We have offices
virtually in the homes of our management team who
reside in Pennsylvania, Michigan and various other states. Our
websites are www.premierbiomedical.com and
www.painreliefmeds.com.
Information contained on our website is not incorporated into, and
does not constitute any part of, this Prospectus.
The
Offering
We are
registering up to 1,000,000,000 shares of our common stock for
resale by Green Coast Capital International SA, a Panama
corporation and an underwriter in this offering, pursuant to an
Equity Purchase Agreement. The agreement allows us to require Green
Coast to purchase up to $5,000,000 of our common
stock.
These
shares will be sold by Green Coast from time to time whenever and
for whatever reason the person or persons who exercise voting
control over Green Coast deem it appropriate in the
over-the-counter market or other national securities exchange or
automated interdealer quotation system on which our common stock is
then listed or quoted, through negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated
prices.
Green
Coast will purchase the shares of our common stock for ninety
percent (90%) of the lowest closing
bid price of the common stock during the five consecutive trading
days immediately following following the Clearing Date
associated with our Put Notice. Green Coast received a convertible
promissory note in the principal amount of $150,000, for which they
paid $25,000 cash, as a commitment for the investment. The shares
of our common stock issuable upon conversion of the note are not
included in this registration statement. Green Coast has informed
us that they do not have any agreement or understanding, directly
or indirectly, with any person to distribute our common
stock.
We will
not be permitted to submit a Put Notice to Green Coast, or draw
down any funds from the financing arrangement, if the shares issued
to Green Coast would cause them to beneficially own more than 4.99%
of our outstanding common stock on the date of the issuance of the
shares. The 1,000,000,000 shares being registered represent a good
faith estimate of the number of shares of common stock that will be
issuable pursuant to the agreement.
On
any Closing Date, we shall deliver to Green Coast the number of
shares of the Common Stock registered in the name of Green Coast as
specified in the Put Notice. In addition, we must deliver the other
required documents, instruments and writings required. Green Coast
is not required to purchase the shares unless:
●
Our Registration
Statement with respect to the resale of the shares of Common Stock
delivered in connection with the applicable put shall have been
declared effective;
●
We shall have
obtained all material permits and qualifications required by any
applicable state for the offer and sale of the Registrable
Securities; and
●
We shall have filed
with the SEC in a timely manner all reports, notices and other
documents required.
Green
Coast has agreed that neither it nor its affiliates will engage in
any short selling of the common stock.
All of
the common stock registered by this Prospectus will be sold by
Green Coast at the prevailing market prices at the time they are
sold. We currently have 186,961,480 shares of common stock
outstanding, and if all of the shares included in the registration
statement of which this Prospectus is a part are issued, and all
outstanding warrants are exercised, we will have over 1.2 billion
shares of common stock outstanding.
RISK
FACTORS
Any
investment in our common stock involves a high degree of risk. You
should consider carefully the following information, together with
the other information contained in this Annual Report, before you
decide to buy our common stock. If one or more of the following
events actually occurs, our business will suffer, and as a result
our financial condition or results of operations will be adversely
affected. In this case, the market price, if any, of our common
stock could decline, and you could lose all or part of your
investment in our common stock.
Currently, our
focus is on the development and distribution of our pain products.
We are also developing medical treatments for Alzheimer’s disease,
multiple sclerosis, amyotrophic lateral sclerosis, fibromyalgia,
traumatic brain injury, blood sepsis and viremia, and cancer. We
face risks in developing our product candidates and services and
eventually bringing them to market. We also face risks that our
business model may become obsolete. The following risks are
material risks that we face. If any of these risks occur, our
business, our ability to achieve revenues, our operating results
and our financial condition could be seriously harmed.
Risk
Factors Related to the Offering
Existing stockholders may experience significant dilution from the
sale of our common stock pursuant to the Green Coast Equity
Purchase Agreement.
The
sale of our common stock to Green Coast Capital International SA in
accordance with the Equity Purchase Agreement may have a dilutive
impact on our shareholders. As a result, our net income per share
could decrease in future periods and the market price of our common
stock could decline. In addition, the lower our stock price is at
the time we exercise our put options, the more shares of our common
stock we will have to issue to Green Coast in order to exercise a
put under the Equity Purchase Agreement. If our stock price
decreases, then our existing shareholders would experience greater
dilution for any given dollar amount raised through the
Offering.
The
perceived risk of dilution may cause our stockholders to sell their
shares, which may cause a decline in the price of our common stock.
Moreover, the perceived risk of dilution and the resulting downward
pressure on our stock price could encourage investors to engage in
short sales of our common stock. By increasing the number of shares
offered for sale, material amounts of short selling could further
contribute to progressive price declines in our common
stock.
The issuance of shares pursuant to the Green Coast Equity Purchase
Agreement may have a significant dilutive effect.
Depending
on the number of shares we issue pursuant to the Green Coast Equity
Purchase Agreement, it could have a significant dilutive effect
upon our existing shareholders. Although the number of shares that
we may issue pursuant to the Equity Purchase Agreement will vary
based on our stock price (the higher our stock price, the less
shares we have to issue) the information set out below indicates
the potential dilutive effect to our shareholders, based on
different potential future stock prices, if the full amount of the
Equity Purchase Agreement is realized.
Dilution based upon common stock put to Green
Coast and the stock price discounted to Green Coast’s purchase
price of 90% of the lowest closing bid price of the common stock
during the five consecutive trading days immediately
following the Clearing Date associated with our Put
Notice. The example below illustrates
dilution based upon a $0.0006 market price/$0.00054 purchase price
and other increased/decreased prices (without regard to Green
Coast’s 4.99% ownership limit):
$5,000,000 Put
|
Stock Price (Green Coast Purchase Price)
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Percentage of Outstanding Shares (1)
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$0.00075
($0.000675) +25%
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7.4
billion
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97%
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$0.0006
($0.00054)
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9.3
billion
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98%
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$0.00045
($0.000405) -25%
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12.3
billion
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99%
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(1)
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Based
on 200,000,000 shares outstanding before the first Put, as of
December 3, 2019.
|
Green Coast Capital Group, LLC will pay less than the
then-prevailing market price of our common stock which could cause
the price of our common stock to decline.
Our common stock to be issued to Green Coast under
the Equity Purchase Agreement will be purchased at a ten percent
(10%) discount or ninety percent (90%) of the lowest closing bid
price of the common stock during the five consecutive trading days
immediately following the Clearing Date associated with our
Put Notice.
Green
Coast has a financial incentive to sell our shares immediately upon
receiving the shares to realize the profit between the discounted
price and the market price. If Green Coast sells our shares, the
price of our common stock may decrease. If our stock price
decreases, Green Coast may have a further incentive to sell such
shares. Accordingly, the discounted sales price in the Equity
Purchase Agreements may cause the price of our common stock to
decline.
Green Coast Capital International SA has entered into similar
agreements with other public companies and may not have sufficient
capital to meet our put notices.
Green
Coast has entered into similar investment agreements with other
public companies, and some of those companies have filed
registration statements with the intent of registering shares to be
sold to Green Coast pursuant to investment agreements. We do not
know if management at any of the companies who have or will have
effective registration statements intend to raise funds now or in
the future, what the size or frequency of each put request would
be, if floors will be used to restrict the amount of shares sold,
or if the investment agreement will ultimately be cancelled or
expire before the entire amount of shares are put to Green Coast.
Since we do not have any control over the requests of these other
companies, if Green Coast receives significant requests, it may not
have the financial ability to meet our requests. If so, the amount
of available funds may be significantly less than we
anticipate.
We are registering an aggregate of 1,000,000,000 shares of common
stock to be issued under the Green Coast Equity Purchase Agreement.
The sale of such shares could depress the market price of our
common stock.
We
are registering an aggregate of 1,000,000,000 shares of common
stock under the registration statement of which this Prospectus
forms a part for issuance pursuant to the Green Coast Equity
Purchase Agreement. The sale of these shares into the public market
by Green Coast could depress the market price of our common
stock.
Risk
Factors Related to the Business of the Company
We have a limited operating history and our financial results are
uncertain.
We have
a limited history and face many of the risks inherent to a new
business. As a result of our limited operating history, it is
difficult to accurately forecast our potential revenue. We were
incorporated in Nevada in 2010. Our revenue and income potential is
unproven and our business model is still emerging. Therefore,there
can be no assurance that we will provide a return on investment in
the future. An investor in our common stock must consider the
challenges, risks and uncertainties frequently encountered in the
establishment of new technologies, products and processes in
emerging markets and evolving industries. These challenges include
our ability to:
●
execute our
business model;
●
create brand
recognition;
●
manage growth in
our operations;
●
create a customer
base in a cost-effective manner;
●
access additional
capital when required; and
●
attract and retain
key personnel.
There
can be no assurance that our business model will be successful or
that it will successfully address these and other challenges, risks
and uncertainties.
We will need additional funding in the future, and if we are unable
to raise capital when needed, we may be forced to delay, reduce or
eliminate our product candidate development programs, commercial
efforts, or sales efforts.
Developing products
and methods and procedures of treatment and marketing developed
products is costly. We will need to raise substantial additional
capital in the future in order to execute our business plan and
help us and our collaboration partners fund the development and
commercialization of our product candidates.
In 2014
and through 2019, we raised funds through public and private equity
offerings. We may need to finance future cash needs through public
or private equity offerings, debt financings or strategic
collaboration and licensing arrangements. To the extent that we
raise additional funds by issuing equity securities, our
shareholders may experience additional dilution, and debt
financing, if available, may involve restrictive covenants and may
result in high interest expense. If we raise additional funds
through collaboration and licensing arrangements, it may be
necessary to relinquish some rights to our product candidates,
processes and technologies or our development projects or to grant
licenses on terms that are not favorable to us. We cannot be
certain that additional funding will be available on acceptable
terms, or at all. If adequate funds are not available from the
foregoing sources, we may consider additional strategic financing
options, including sales of assets, or we may be requiredto delay,
reduce the scope of, or eliminate one or more of our research or
development programs or curtail some of our commercialization
efforts of our operations. We may seek to access the public or
private equity markets whenever conditions are favorable, even if
we do not have an immediate need for additional
capital.
Negative public perception of hemp and cannabis-related businesses,
misconceptions about the nature of our business and regulatory
uncertainties could have a material adverse effect on our business,
financial condition, and results of operations.
The hemp plant
and the cannabis/marijuana plant are both part of the
same cannabis sativa
genus species of plant, except that hemp, by
definition, has less than 0.3% tetrahydrocannabinol (“THC”) content
and is legal under federal and state laws, but the same plant with
a higher THC content is cannabis/marijuana, which is legal under
certain state laws, but which is not legal under federal law. The
similarities between these plants can cause confusion, and our
activities with legal hemp may be incorrectly perceived
as us being involved in federally illegal cannabis/marijuana. Also,
despite growing support for the cannabis/marijuana industry and
legalization of cannabis/marijuana in certain U.S. states, many
individuals and businesses remain opposed to the cannabis/marijuana
industry. Any negative press resulting from any incorrect
perception that we have entered into the cannabis/marijuana space
could result in a loss of current or future business. It could also
adversely affect the public’s perception of us and lead to
reluctance by new parties to do business with us or to own our
common stock.
Certain
retailers, like Amazon, do not allow the sale of products
containing CBD. Other platforms such as Facebook and Google have
policies that restrict advertising of CBD products. Until
regulators provide more definitive and consistent rules for CBD
products, many retailers, distributors and business partners tend
to avoid getting involved in CBD businesses because of the
uncertainty of what regulators may do. Misunderstandings about the
legal nature of our business and the difference between CBD and
marijuana may also discourage some business partners and customers
from working with us or purchasing our products.
We
cannot assure you that additional business partners, including but
not limited to online retailers, distributors, financial
institutions and customers, will not attempt to end or curtail
their relationships with us. Any such negative press or cessation
of business could have a material adverse effect on our business,
financial condition, and results of operations.
U.S. federal, state and foreign regulation and enforcement of laws
relating to cannabis and its derivatives may adversely affect our
ability to sell our products and our revenue.
There
are (i) thirty-three (33) states in the United States, the District
of Columbia, Guam and Puerto Rico have approved comprehensive
public medical marijuana/cannabis programs. Approved Efforts in
another thirteen (13) states allow use of low THC, high CBD
products for medical reasons in limited situations or as a legal
defense. Ten (10) of these states and the District of Columbia have
legalized cannabis/marijuana for adult recreational
use. This leaves only
four states (Idaho, Kansas, Conversely, under the federal
Controlled Substances Act (the “CSA”), the policies and regulations
of the federal government and its agencies are that
cannabis/marijuana has no medical benefit and a range of activities
are prohibited, including cultivation, possession, personal use,
and interstate distribution of cannabis/marijuana. In the event the
U.S. Department of Justice (the “DOJ”) begins strict enforcement of
the CSA in states that have laws legalizing medical and/or adult
recreational cannabis/marijuana, there may be a direct and adverse
impact to any future business or prospects that we may have in the
cannabis/marijuana business. Even in those jurisdictions in which
the manufacture and useof medical cannabis/marijuana has been
legalized at the state level, the possession, use, and cultivation
of cannabis/marijuana all remain violations of federal law that are
punishable by imprisonment and substantial fines. Moreover,
individuals and entities may violate federal law if they
intentionally aid and abet another in violating these federal
controlled substance laws, or conspire with another to violate
them.
For
example, the California Bureau of Cannabis Control sent nine
hundred (900) warning letters to marijuana shops suspected of
operating without a state license. The Bureau also issued a
cease-and-desist letter to the operator of an online directory of
marijuana dispensaries, products, and delivery services. The letter
threatened fines and criminal penalties if the company did not
remove the listings for unlicensed marijuana businesses. Likewise,
if we unknowingly do business with unlicensed entities or list them
on our website, we may be subject to similar regulatory action that
would halt our operations and affect our financial
performance.
Local,
state, federal, and international hemp and
cannabis/marijuana laws and regulations are broad in scope and
subject to evolving interpretations, which could require us to
incur substantial costs associated with compliance requirements. In
addition, violations of these laws, or allegations of such
violations, could disrupt our business and result in a material
adverse effect on our operations. In addition, it is possible that
cannabinoid-related regulations may be enacted in the future that
will be directly applicable to our business. It is also possible
that the federal government will begin strictly enforcing existing
laws, which may limit the legal uses of the hemp plant and its
derivatives and extracts, such as cannabinoids. However, our work
in hemp would continue since hemp research, development, and
commercialization activities are permitted under applicable federal
and state laws, rules, and regulations. Until Congress amends the
CSA or the executive branch deschedules or reschedules cannabis
under it, there is a risk that federal authorities may enforce
current federal law. Enforcement of the CSA by federal authorities
could impair the Company’s revenue and profit, and it could even
force the Company to cease manufacturing its products. The risk of
strict federal enforcement of the CSA in light of congressional
activity, judicial holdings, and stated federal policy, including
enforcement priorities, remains uncertain.
Until
such time as the federal government reclassifies marijuana from a
Schedule 1 narcotic, we do not intend to pursue any
involvement in the marijuana business. At this time, we intend to
continue only in the federally legal hemp product business. When
Congress approved the 2018 Farm Bill, it defined hemp as an
agricultural product and differentiated it from marijuana. This
means hemp is not a controlled substance, and may be more broadly
cultivated. Hemp-derived products may now be transferred across
state lines for commercial purposes. The new law also allows for
the sale, transport, or possession of hemp-derived products, so
long as those items are produced in a manner consistent with the
law. There are several restrictions that apply to those who
cultivate hemp and produce hemp-derived products. Key among these
restrictions is that hemp cannot contain more than 0.3 percent
THC.
While
the 2018 Farm Bill legalized the cultivation of hemp and removed
hemp-derived substances from Schedule 1 of the CSA, it does not
legalize CBD generally. The FDA and DOJ continue to exercise
control over CBD and there is still some lack of clarity as to
exactly how CBD will be regulated going forward.
CBD has
been deemed relatively safe and, from now on, should not be subject
to international illicit drug scheduling according to a World
Health Organization (“WHO”) comprehensive review published in July
2018. The WHO has formally submitted its conclusion to United
Nations Secretary-General António Guterres, a prelude to this
officially becoming the case.
On June
25, 2018, the U.S. Food and Drug Administration (“FDA”) approved
CBD-based Epidiolex to treat severe forms of epilepsy. This marked
the groundbreaking admission by the FDA that cannabis has medical
value. On October 1, 2018, the DOJ placed “FDA-approved drugs that
contain CBD derived from cannabis and no more than 0.1 percent THC”
to Schedule 5 of the CSA. This action is narrowly tailored to
reschedule Epidiolex off of Schedule 1 because the DOJ’s ability to
remove all restrictions from cannabis extracts, including CDB, is
restricted by the Single Convention on Narcotic Drugs,
1961.
Our product candidates are not approved by the FDA or other
regulatory authority, and we face risks of unforeseen medical
problems, and up to a complete ban on the sale of our product
candidates.
The
efficacy and safety of pharmaceutical products is established
through a process of clinical testing under FDA oversight. Our
products have not gone through this process because we believe that
the topical products we sell are not subject to this process.
However, if an individual were to use one of our products in an
improper manner, we cannot predict the potential medical harm to
that individual. If such an event were to occur, the FDA or similar
regulatory agency might impose a complete ban on the sale or use of
our products.
The FDA might not approve
our product candidates for marketing and sale.
We
intend to enter into agreements with larger pharmaceutical
companies as collaboration partners, in part to help cover the cost
of seeking regulatory approvals for our pharmaceutical and medical
product candidates. We believe that FDA approval of some of our
product candidates will need to undergo a full investigational new
drug (IND) application with the FDA, including clinical trials.
There can be no assurance that the FDA will approve our IND
application or any other applications. Failure to obtain the
necessary FDA approval will have a material negative affect on our
operations. While we intend to license our Feldetrex® product
to a larger pharmaceutical company, they in turn, may not be able
to obtain the necessary approval to market and sale the
product.
New regulations governing the introduction, marketing and sale of
our products to consumers could harm our business.
Our
pain management products have not been approved by the FDA or any
other regulatory agency, and the FDA does not have a
pre-market approval system for our pain management
products. However, our operations could be harmed if new laws or
regulations are enacted that restrict our ability to market or
distribute our products or impose additional burdens or
requirements on us in order to continue selling our products. In
addition, the adoption of new regulations or changes in the
interpretations of existing regulations may result in significant
compliance costs or discontinuation of product sales and may impair
the marketability of our products, resulting in significant loss of
net sales.
We have
observed a general increase in regulatory activity and activism in
the United States and the regulatory landscape is becoming more
complex with increasingly strict requirements. If this trend
continues, we may find it necessary to alter some of the ways we
have traditionally marketed our products in order to stay in
compliance with a changing regulatory landscape and this could add
to the costs of our operations and/or have an adverse impact on our
business.
We
cannot predict the nature of any future laws, regulations,
interpretations, or applications, nor can we determine what effect
additional governmental regulations or administrative orders, when
and if promulgated, would have on our business. Future changes
could include requirements to make certain changes to our products
to meet new standards, the recall or discontinuation of certain
products that cannot be changed, additional record keeping,
expanded documentation of the properties of certain products,
expanded or different labeling, and additional scientific
substantiation. Any or all of these requirements could have a
material adverse effect on our business, financial condition, and
operating results.
We may fail to deliver commercially successful new product
candidates, methods and procedures of treatment, and
treatments.
Our
technology is at an early stage of research and development. We are
also actively engaged in research and development of new
products.
The
development of commercially viable new products and methods and
procedures of treatment, as well as the development of additional
uses for existing products and methods and procedures of treatment,
is critical to our ability to generate sales and/or sell the rights
to manufacture and distribute our product and process candidates to
another firm. Developing new products and methods and procedures of
treatment is a costly, lengthy and uncertain process. A new product
or process candidate can fail at any stage of the development or
commercialization, and one or more late-stage product or process
candidates could fail to receive regulatory approval.
New
product and process candidates may appear promising in development,
but after significant investment, fail to reach the market or have
only limited commercial success. This, for example, could be as a
result of efficacy or safety concerns, inability to obtain
necessary regulatory approvals, difficulty or excessive costs to
manufacture, erosion of patent term as a result of a lengthy
development period, infringement of third-party patents or other
intellectual property rights of others or inability to
differentiate the product or process adequately from those with
which it competes.
The commercialization of product and process candidates under
development may not be profitable.
In
order for the commercialization of our product candidates to be
profitable, our product and process candidates must be
cost-effective and economical to manufacture on a commercial scale.
Furthermore, if our product candidates and methods and procedures
of treatment do not achieve market acceptance, we may not be
profitable. Subject to regulatory approval, we expect to incur
significant development, sales and marketing expenses in connection
with the commercialization of our new product and process
candidates. Even if we receive additional financing, we may not be
able to complete planned development and marketing of any or all of
our product or process candidates. Our future profitability may
depend on many factors, including, but not limited to:
●
the terms and
timing of any collaborative, licensing and other arrangements that
we may establish;
●
the costs of
filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights;
●
the costs of
establishing manufacturing and production, sales, marketing and
distribution capabilities; and
●
the effect of
competing technological and market developments.
Even if
our collaboration partners receive regulatory approval for our
product and process candidates, we may not earn significant
revenues from such product or process candidates. With respect to
the product and methods and procedures of treatment candidates in
our development pipeline that are being developed by or in close
conjunction with third parties, our ability to generate revenues
from such product and process candidates will depend in large part
on the efforts of such third parties. To the extent that our
collaboration partners are not successful in commercializing our
product or process candidates, our revenues will suffer, we will
incur significant additional losses and the price of our common
stock will be negatively affected.
We may engage in strategic transactions that fail to enhance
shareholder value.
From
time to time, we may consider possible strategic transactions,
including the potential acquisitions or licensing of products or
technologies or acquisition of companies, and other alternatives
with the goal of maximizing shareholder value. We may never
complete a strategic transaction, and in the event that we do
complete a strategic transaction, implementation of such
transactions may impair shareholder value or otherwise adversely
affect our business. Any such transaction may require us to incur
non-recurring or other charges and may pose significant integration
challenges and/or management and business disruptions, any of which
could harm our results of operation and business
prospects.
Our business is heavily regulated by governmental authorities, and
failure to comply with such regulation or changes in such
regulations could negatively impact our financial
results.
We must
comply with a broad range of regulatory controls on the testing,
approval, manufacturing and marketing of our product candidates,
procedures and other treatments, particularly in the United States
and countries of the European Union, that affect not only the cost
of product development but also the time required to reach the
market and the uncertainty of successfully doing so. Health
authorities have increased their focus on safety when assessing the
benefit risk/balance of drugs in the context of not only initial
product approval but also in the context of approval of additional
indications and review of information regarding marketed products.
Stricter regulatory controls also heighten the risk of changes in
product profile or withdrawal by regulators on the basis of
post-approval concerns over product safety, which could reduce
revenues and can result in product recalls and product liability
lawsuits. There is also greater regulatory scrutiny, especially in
the United States, on advertising and promotion and in particular
on direct-to-consumer advertising.
The
regulatory process is uncertain, can take many years, and requires
the expenditure of substantial resources. In particular, proposed
human pharmaceutical therapeutic product requirements set by the
FDA in the United States, and similar health authorities in other
countries, require substantial time and resources to satisfy. We
may never obtain regulatory approval for our product and process
candidates.
We may not be able to gain or sustain market acceptance for our
services and product candidates.
Failure
to establish a brand and presence in the marketplace on a timely
basis could adversely affect our financial condition and results of
operations. Moreover, there can be no assurance that we will
successfully complete our development and introduction of new
products or product enhancements, or methods and procedures of
treatment or that any such product candidates or methods and
procedures of treatment will achieve acceptance in the marketplace.
We may also fail to develop and deploy new products and product
enhancements on a timely basis.
The market for pain management products is highly competitive, and
we may not be able to compete successfully.
We
intend to operate in highly competitive markets. We will likely
face competition both from proprietary products of large
international manufacturers and producers of generic pain
management products. Most of the competitors in the industry have
longer operating histories and significantly greater financial,
technical, marketing and other resources than us, and may be able
to respond more quickly than we can to new or changing
opportunities and customer requirements. Also, many competitors
have greater name recognition and more extensive customer bases
that they can leverage to gain market share. Such competitors are
able to undertake more extensive promotional activities, adopt more
aggressive pricing policies and offer more attractive terms to
purchasers than we can.
Significant product
innovations, technical advances or the intensification of price
competition by competitors could adversely affect our operating
results. We cannot predict the timing or impact of competitive
products or their potential impact on sales of our products under
development.
If any
of our major pain management products were to become subject to a
problem such as unplanned loss of patent protection, unexpected
side effects, regulatory proceedings, publicity affecting doctor or
consumer confidence or pressure from competitive products, or if a
new, more effective alternative should be introduced, the adverse
impact on our revenues and operating results could be
significant.
The market for products, methods and procedures of treatment and
services in the pharmaceuticals industry is highly competitive, and
we may not be able to compete successfully.
We
intend to operate in highly competitive markets. We will likely
face competition both from proprietary products of large
international manufacturers and producers of generic
pharmaceuticals. Most of the competitors in the industry have
longer operating histories and significantly greater financial,
technical, marketing and other resources than us, and may be able
to respond more quickly than we can to new or changingopportunities
and customer requirements. Also, many competitors have greater name
recognition and more extensive customer bases that they can
leverage to gain market share. Such competitors are able to
undertake more extensive promotional activities, adopt more
aggressive pricing policies and offer more attractive terms to
purchasers than we can.
Significant product
innovations, technical advances or the intensification of price
competition by competitors could adversely affect our operating
results. We cannot predict the timing or impact of competitive
products or their potential impact on sales of our product
candidates.
If any
of our major product candidates or methods and procedures of
treatment were to become subject to a problem such as unplanned
loss of patent protection, unexpected side effects, regulatory
proceedings, publicity affecting doctor or patient confidence or
pressure from competitive products and methods and procedures of
treatment, or if a new, more effective treatment should be
introduced, the adverse impact on our revenues and operating
results could be significant.
We are dependent on the services of key personnel and failure to
attract qualified management could limit our growth and negatively
impact our results of operations.
We are
highly dependent on the principal members of our management and
scientific staff and certain key consultants, including our Chief
Executive Officer and the Chairman of our Board of Directors. We
will continue to depend on operations management personnel with
pharmaceutical and scientific industry experience. At this time, we
do not know of the availability of such experienced management
personnel or how much it may cost to attract and retain such
personnel. The loss of the services of any member of senior
management or the inability to hire experienced operations
management personnel could have a material adverse effect on our
financial condition and results of operations.
If physicians and patients do not accept our current or future
product candidates or methods and procedures of treatment, we may
be unable to generate significant additional revenue, if
any.
The
products and methods and procedures of treatment that we may
develop or acquire in the future may fail to gain market acceptance
among physicians, health care payors, patients and the medical
community. Physicians may elect not to recommend these treatments
for a variety of reasons, including:
●
timing of market
introduction of competitive drugs;
●
lower demonstrated
clinical safety and efficacy compared to other drugs or
treatments;
●
lack of
cost-effectiveness;
●
lack of
availability of reimbursement from managed care plans and other
third-party payors;
●
lack of convenience
or ease of administration;
●
prevalence and
severity of adverse side effects;
●
other potential
advantages of alternative treatment methods; and
●
ineffective
marketing and distribution support.
If our
product candidates and processes fail to achieve market acceptance,
we would not be able to generate significant revenue.
We are exposed to the risk of liability claims, for which we may
not have adequate insurance.
Since
we participate in the CBD, pain management and pharmaceutical
industries, we may be subject to liability claims by employees,
customers, end users and third parties. We do not currently have
product liability insurance. We intend to have proper insurance in
place; however, there can be no assurance that any liability
insurance we purchase will be adequate to cover claims asserted
against us or that we will be able to maintain such insurance in
the future. We intend to adopt prudent risk management programs to
reduce these risks and potential liabilities; however, we have not
taken any steps to create these programs and have no estimate as to
the cost or time required to do so and there can be no assurance
that such programs, if and when adopted, will fully protect us. We
may not be able to put risk management programs in place, or obtain
insurance, if we are unable to retain the necessary expertise
and/or are unsuccessful in raising necessary capital in the future.
Adverse rulings in any legal matters, proceedings and other matters
could have a material adverse effect on our business.
Pre-clinical and
clinical trials are conducted during the development of potential
products and other treatments to determine their safety and
efficacy for use by humans. Notwithstanding these efforts, when our
treatments are introduced into the marketplace, unanticipated side
effects may become evident. Manufacturing, marketing, selling and
testing our product candidates under development or to be acquired
or licensed, entails a risk of product liability claims. We could
be subject to product liability claims in the event that our
product candidates, processes, or products under development fail
to perform as intended. Even unsuccessful claims could result in
the expenditure of funds in litigation and the diversion of
management time and resources, and could damage our reputation and
impair the marketability of our product candidates and processes.
While we plan to maintain liability insurance for product liability
claims, we may not be able to obtain or maintain such insurance at
a commercially reasonable cost. If a successful claim were made
against us, and we don’t have insurance or the amount of insurance
was inadequate to cover the costs of defending against or paying
such a claim or the damages payable by us, we would experience a
material adverse effect on our business, financial condition and
results of operations.
Other companies may claim that we have infringed upon their
intellectual property or proprietary rights.
We do
not believe that our product candidates and methods and procedures
violate third-party intellectual property rights; however, we have
not had an independent party conduct a study of possible patent
infringements. Nevertheless, we cannot guarantee that claims
relating to violation of such rights will not be asserted by third
parties. If any of our product candidates or methods and procedures
of treatment are found to violate third-party intellectual property
rights, we may be required to expend significant funds to
re-engineer or cause to be re-engineered one or more of those
product candidates or methods and procedures of treatment to avoid
infringement, or seek to obtain licenses from third parties to
continue offering our product candidates or methods and procedures
of treatment without substantial re-engineering, and such efforts
may not be successful.
In
addition, future patents may be issued to third parties upon which
our product candidates and methods and procedures of treatment may
infringe. We may incur substantial costs in defending against
claims under any such patents. Furthermore, parties making such
claims may be able to obtain injunctive or other equitable relief,
which effectively could block our ability to further develop or
commercialize some or all of our products or methods and procedures
of treatment in the United States or abroad, and could result in
the award of substantial damages against us. In the event of a
claim of infringement, we may be required to obtain one or more
licenses from third parties. There can be no assurance that we will
be able to obtain such licenses at a reasonable cost, if at all.
Defense of any lawsuit or failure to obtain any such license could
be costly and have a material adverse effect on our
business.
Our success depends on our ability to protect our proprietary
technology.
Our
success depends, to a significant degree, upon the protection of
our proprietary technology, and that of any licensors. Legal fees
and other expenses necessary to obtain and maintain appropriate
patent protection could be material. Insufficient funding may
inhibit our ability to obtain and maintain such protection.
Additionally, if we must resort to legal proceedings to enforce our
intellectual property rights, the proceedings could be burdensome
and expensive, and could involve a high degree of risk to our
proprietary rights if we are unsuccessful in, or cannot afford to
pursue, such proceedings.
Our
licensors have been granted three U.S. patents: Sequential
Extracorporeal Treatment of Bodily Fluids, U.S. Patent No.
9,216,386; Utilization of Stents for the Treatment of Blood Borne
Carcinomas, U.S. Patent No. 8,758,287; and Medication and
Treatmentfor Disease, U.S. Patent No. 8,865,733, in the areas of
cancer, sepsis, and multiple sclerosis. We expect these patents to
cover the medical treatments for multiple sclerosis, blood sepsis,
and cancer and be effective until 2029. Our licensors have licensed
these technologies to us pursuant to the terms of the license
agreements. We anticipate that other technologies that derive from
these patents will also belong to us and are covered by the license
agreements. However, we have not conducted thorough prior art or
novelty studies, but we are not aware of existing prior art that
would prevent us from obtaining patents on our product candidates
or methods and procedures of treatment. Prior art preventing us
from obtaining broad patent protection is a possibility. Inability
to obtain valid and enforceable patent protection would have a
material negative impact on our business opportunities and success.
Because the patent positions of pharmaceutical and biotechnology
companies are highly uncertain and involve complex legal and
factual questions, the patents may not be granted on our
applications, and any future patents owned and licensed by us may
not prevent other companies from developing competing products or
ensure that others will not be issued patents that may prevent the
sale of our products or require licensing and the payment of
significant fees or royalties. Furthermore, to the extent that:
(i) any of our future products or methods are not patentable;
(ii) such products or methods infringe upon the patents of
third parties; or (iii) our patents or future patents fail to
give us an exclusive position in the subject matter to which such
patents relate, our business will be adversely affected. We may be
unable to avoid infringement of third-party patents and may have to
obtain a license, or defend an infringement action and challenge
the validity of such patents in court. A license may be unavailable
on terms and conditions acceptable to us, if at all. Patent
litigation is costly and time consuming, and we may be unable to
prevail in any such patent litigation or devote sufficient
resources to even pursue such litigation. If we do not obtain a
license under such patents, are found liable for infringement and
are not able to have such patents declared invalid, we may be
liable for significant monetary damages, encounter significant
delays in bringing products to market or may be precluded from
participating in the manufacture, use or sale of products or
methods of treatment requiring such licenses.
We may
also rely on trademarks, trade secrets and contract law to protect
certain of our proprietary technology. There can be no assurance
that any trademarks will be approved, that such contract will not
be breached, or that if breached, we will have adequate remedies.
Furthermore, there can be no assurance that any of our trade
secrets will not become known or independently discovered by third
parties.
Additionally, we
may, from time to time, support and collaborate in research
conducted by universities and governmental research organizations.
There can be no assurance that we will have or be able to acquire
title or exclusive rights to the inventions or technical
information derived from such collaborations, or that disputes will
not arise with respect to rights in derivative or related research
programs conducted by us or such collaborators.
Our future growth may be inhibited by the failure to implement new
technologies.
Our
future growth is partially tied to our ability to improve our
knowledge and implementation of medical and pharmaceutical
technologies. The inability to successfully implement commercially
viable medical and pharmaceutical technologies in response to
market conditions in a manner that is responsive to our customers’
requirements could have a material adverse effect on our
business.
We do not own certain of our technologies, they are owned by, and
licensed from, entities that are under the control of the Chairman
of our Board of Directors.
We do
not currently own the certain technologies necessary to conduct our
operations. The patents necessary to pursue our intended business
plan are under the control of our Chairman of the Board of
Directors. As consideration for the two licenses, we agreed to (i)
pay a royalty of five percent (5%) of any sales of products using
the technology, with no minimum royalty and (ii) reimburse the
licensor for any costs incurred in pursuing its proprietary rights
in the licensed technology and pay any costs incurred for
maintaining or obtaining the licensors’ proprietary rights in the
licensed technology in the U.S. and in extending the intellectual
property to other countries around the world. The licensor has the
sole discretion to select other countries into which exclusive
rights in the licensed technology may be pursued, and if we decline
to pay those expenses, then the licensor may pay said expenses and
our licensed rights in those countries will revert to the licensor.
The license agreements contain provisions that require us to
indemnify thelicensor for any claims, including costs of
litigation, brought against them related to the licenses, and
require us to maintain insurance that may be burdensome. In the
event of a breach of our obligations under the license agreements,
the licensors are entitled to various damages and remedies, up to
and including termination of said license agreements. The licensors
are entities under the control of Dr. Mitchell S. Felder, the
Chairman of our Board of Directors. While Dr. Felder is one of our
Company’s founders and the Chairman of our Board of Directors,
there can be no assurance that he will extend the offer to license
these technologies to us in the future as currently
contemplated.
We do not intend to take our Feldetrex® product candidate past the
development stage, but instead intend to enter into collaboration
agreements with collaboration partners. If we are unable to enter
into an agreement with collaboration partners, our Feldetrex®
product candidate cannot be marketed, and it will not generate
revenue for us.
We do
not intend to conduct clinical trials on our Feldetrex®
product candidate. We instead intend to enter into one or more
collaboration agreements with third parties to do so. However, we
have not entered into any such agreements, or discussions for any
such agreements, and we cannot guarantee that we will be successful
in doing so. If we do not find a collaboration partner, the
Feldetrex®
product candidate cannot be marketed, and it will not generate any
revenue for us.
The
failure to generate revenue from our Feldetrex®
product candidate will have a materially adverse effect on our
overall revenues, profitability.
Risks
Related To Our Common stock
The market price of our common stock may be volatile and may be
affected by market conditions beyond our control.
The
market price of our common stock is subject to significant
fluctuations in response to, among other factors:
●
variations in our
operating results and market conditions specific to Biomedical
Industry companies;
●
changes in
financial estimates or recommendations by securities
analysts;
●
announcements of
innovations or new products or services by us or our
competitors;
●
the emergence of
new competitors;
●
operating and
market price performance of other companies that investors deem
comparable;
●
changes in our
board or management;
●
sales or purchases
of our common stock by insiders;
●
commencement of, or
involvement in, litigation;
●
changes in
governmental regulations; and
●
general economic
conditions and slow or negative growth of related
markets.
In
addition, if the market for stocks in our industry or the stock
market in general, experiences a loss of investor confidence, the
market price of our common stock could decline for reasons
unrelated to our business, financial condition or results of
operations. If any of the foregoing occurs, it could cause the
price of our common stock to fall and may expose us to lawsuits
that, even if unsuccessful, could be costly to defend and a
distraction to the board of directors and management.
If we default on our convertible notes and are unable to repay the
notes, we will not have the funds we need to operate our business
and may lose access to additional financing.
We are
currently in default on the Note issued on August 8, 2017 because
the Maturity Date has passed. Per the terms of the Notes, the
Selling Shareholders have the option to demand payment of 130% of
the outstanding principal amount of a Note and any accrued and
unpaid interest thereon. We are currently unable to pay these
amounts in full. If the Selling Shareholders elect to exercise this
right rather than convert the Notes, we could possibly face
litigation. If we repay the Notes or any part thereof, we may not
be able to satisfy the obligations we have to other business
partners and may be forced to cease our business operations. Any
action by the Selling Shareholders would adversely affect our
financial position and ability to operate.
If we are unable to pay the costs associated with being a public,
reporting company, we may be forced to discontinue
operations.
We
expect to have significant costs associated with being a public,
reporting company, which may raise substantial doubt about our
ability to continue as a going concern. Our ability to continue as
a going concern will depend on positive cash flow, if any, from
future operations and on our ability to raise additional funds
through equity or debt financing. If we are unable to achieve the
necessary product sales or raise or obtain needed funding to cover
the costs of operating as a public, reporting company, we may be
forced to discontinue operations.
If we do not continue to meet the eligibility requirements of the
Pink Sheets Current tier, our common stock may be removed from Pink
Sheets Current and moved for quotation on a lower tier of the
marketplace maintained by OTC Markets Group, Inc., which may make
it more difficult for investors to resell their shares due to
suitability requirements.
Our
common stock is currently quoted on the Pink Sheets Current tier of
the marketplace maintained by OTC Markets Group, Inc. The Pink
Sheets Current tier does not require a minimum bid price. If we are
removed from the Pink Sheets Current tier, our stock will be quoted
on a lower tier. Broker-dealers often decline to trade in
over-the-counter stocks that are quoted on the OTC Pink tier, or a
lower tier, given the market for such securities are often limited,
the stocks are more volatile, and the risk to investors is greater.
These factors may reduce the potential market for our common stock
by reducing the number of potential investors. This may make it
more difficult for investors in our common stock to sell shares to
third parties or to otherwise dispose of their shares. This could
cause our stock price to decline.
If we
move down from the OTC Pink Current tier, we may be unable to
restore eligibility for quotation of our common stock on the Pink
Sheets Current tier or the OTCQB tier, and this will have a
negative impact on our market price. The lower tiers maintained by
OTC Markets, Inc. does not provide as much liquidity as the Pink
Sheets Current tier or the OTCQB tier. Many broker-dealers will not
trade or recommend OTC Pink stocks for their
clients.
Our principal shareholders have the ability to exert significant
control in matters requiring shareholder approval and could delay,
deter, or prevent a change in control of our company.
William
A. Hartman and Dr. Mitchell S. Felder collectively own 157,031
shares of our outstanding common stock, 2,000,000 shares of our
Series A Convertible Preferred Stock (which is convertible into an
aggregate of 2,000,000 shares of our common stock), and through the
exercise of warrants could acquire another 1,782,040 shares of our
common stock. The shares of our preferred stock have 100 votes per
share, giving these two shareholders approximately 51% of our
current voting securities. As a result, they have the ability to
influence matters affecting our shareholders, including the
election of our directors, the acquisition or disposition of our
assets, and the future issuance of our shares. Because they control
such shares, investors may find it difficult to replace our
management if they disagree with the way our business is being
operated. Because the influence by these shareholders could result
in management making decisions that are in the best interest of
those shareholders and not in the best interest of the investors,
you may lose some or all of the value of your investment in our
common stock. Investors who purchase our common stock should be
willing to entrust all aspects of operational control to our
current management team.
We do not intend to pay dividends in the foreseeable
future.
We do
not intend to pay any dividends in the foreseeable future. We do
not plan on making any cash distributions in the manner of a
dividend or otherwise. Our Board presently intends to follow a
policy of retaining earnings, if any.
We have the right to issue additional common stock and preferred
stock without consent of shareholders. This would have the effect
of diluting investors’ ownership and could decrease the value of
their investment.
Following an
amendment to our articles of incorporation, which has already been
approved by our shareholders and is anticipated to take effect on
or about December 19, 2019, we will be authorized to issue up to
2,000,000,000 shares of common stock, of which there were
186,961,480 shares issued and outstanding as of November 12, 2019.
An additional 3,570,600 shares may be issued and outstanding if all
of our currently outstanding preferred stock and warrants were
exercised and converted into common stock. Our outstanding
convertible notes require a reserve of approximately 220
million shares.
In
addition, our certificate of incorporation authorizes the issuance
of shares of preferred stock, the rights, preferences, designations
and limitations of which may be set by the Board of Directors. Our
certificate of incorporation has authorized the issuance of up to
10,000,000 shares of preferred stock in the discretion of our
Board. The shares of authorized but undesignated preferred stock
may be issued upon filing of an amended certificate of
incorporation and the payment of required fees; no further
shareholder action is required. If issued, therights, preferences,
designations and limitations of such preferred stock would be set
by our Board and could operate to the disadvantage of the
outstanding common stock. Such terms could include, among others,
preferences as to dividends and distributions on liquidation. We
have designated a series of convertible preferred stock, the Series
A Convertible Preferred Stock. Each share of Series A Preferred
Stock is convertible, at the option of the holder thereof, at any
time after the issuance of such shareinto one (1) fully paid and
non-assessable share of Common Stock. Each outstanding share of
Series A Preferred Stock is entitled to one hundred (100) votes per
share on all matters to which the shareholders of the Corporation
are entitled or required to vote. As of the date hereof, there were
2,000,000 shares of Series A Convertible Preferred Stock issued and
outstanding.
Our officers and directors can sell some of their stock, which may
have a negative effect on our stock price and ability to raise
additional capital, and may make it difficult for investors to sell
their stock at any price.
Our
officers and directors, as a group, are the owners of 169,845
shares of our common stock, and with convertible preferred stock,
options and warrants to acquire another 3,570,600 shares of our
common stock, representing approximately 2% of our total issued and
outstanding shares of common stock. Each individual officer and
director may be able to sell up to 1% of our outstanding common
stock (currently approximately 1.8 million shares) every ninety
(90) days in the open market pursuant to Rule 144, which may have a
negative effect on our stock price and may prevent us from
obtaining additional capital. In addition, if our officers and
directors are selling their stock into the open market, it may make
it difficult or impossible for investors to sell their stock at any
price.
Our common stock is governed under The Securities Enforcement and
Penny Stock Reform Act of 1990.
The
Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in
connection with trades in any stock defined as a penny stock. The
Commission has adopted regulations that generally define a penny
stock to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ and any
equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in
continuous operation for three years; (ii) net tangible assets
of at least $5,000,000, if such issuer has been in continuous
operation for less than three years; or (iii) average annual
revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years. Unless an exception
is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated
therewith.
SPECIAL
NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have
made forward-looking statements in this Annual Report, including
the sections entitled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Business,” that
are based on our management’s beliefs and assumptions and on
information currently available to our management. Forward-looking
statements include the information concerning our possible or
assumed future results of operations, business strategies,
financing plans, competitive position, industry environment,
potential growth opportunities, the effects of future regulation,
and the effects of competition. Forward-looking statements include
all statements that are not historical facts and can be identified
by the use of forward-looking terminology such as the words
“believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or
similar expressions. These statements are only predictions and
involve known and unknown risks and uncertainties, including the
risks outlined under “Risk Factors” and elsewhere in this Annual
Report.
Although we believe
that the expectations reflected in our forward-looking statements
are reasonable, we cannot guarantee future results, events, levels
of activity, performance or achievement. We are not under any duty
to update any of the forward-looking statements after the date of
this annual report to conform these statements to actual results,
unless required by law.
USE
OF PROCEEDS
This
Prospectus relates to shares of our common stock that may be
offered and sold from time to time by the selling stockholders. We
will not receive any proceeds from the sale of shares of common
stock by the selling stockholders in this offering. We will pay for
expenses of this offering, except that the selling stockholders
will pay any broker discounts or commissions or equivalent expenses
applicable to the sale of their shares.
However, we will
receive up to $5,000,000 from the sale of common stock to Green
Coast Capital International SA under the Equity Purchase Agreement.
These proceeds would be received from time-to-time as Put Notices
are delivered to Green Coast, and we will use these proceeds for
working capital needs.
Our
allocation of proceeds represents our best estimate based upon the
expected requirements of our proposed business and marketing plan.
If any of these factors change, we may reallocate some of the net
proceeds. The portion of any net proceeds not immediately required
will be invested in certificates of deposit or similar short-term
interest bearing instruments.
INVESTMENT
AGREEMENT
On
October 4, 2019, we entered into the Equity Purchase Agreement and
a Registration Rights Agreement with Green Coast Capital
International SA in order to establish a possible source of funding
for us.
Under the Equity Purchase Agreement, Green Coast
has agreed to provide us with up to $5,000,000 of funding upon effectiveness
of this prospectus; for which
1,000,000,000 shares of our common stock are being registered
pursuant to this prospectus. During this period, we can deliver a
put under the Equity Purchase Agreement by selling shares of our
common stock to Green Coast and Green Coast will be obligated to
purchase the shares. A put
transaction must close before
we can deliver another put notice to Green
Coast.
We may
request a put by sending a put notice to Green Coast, stating the
amount of the put. During the five trading days following a notice,
we will calculate the amount of shares we will sell to Green Coast
and the purchase price per share. The number of shares of Common
Stock that Green Coast shall purchase pursuant to each put notice
shall be determined by dividing the amount of the put by the
purchase price.
The
purchase price per share of common stock will be set at ninety
percent (90%) of the lowest closing
bid price of the common stock during the five consecutive trading
days immediately following the Clearing Date associated with
our Put Notice.
There
is no minimum amount we can put to Green Coast at any one time.
Upon effectiveness of the Registration Statement, the Company shall
deliver instructions to its transfer agent to issue shares of
Common Stock to Green Coast free of restrictive legends on or
before each closing date.
Pursuant to the Equity Purchase Agreement, Green
Coast and its affiliates shall not be issued shares of our common
stock that would result in its beneficial ownership
equaling more than 4.99% of our
outstanding common stock.
Green Coast will not enter into any short selling
or any other hedging activities during the pricing period.
On October 4, 2019, we entered into a
Registration Rights Agreement
with Green Coast requiring, among other things, that we prepare and
file with the SEC a Registration Statement on Form S-1 covering the
shares issuable to Green Coast
under the Equity Purchase Agreement. As per the Equity Purchase Agreement, none of
Green Coast’s obligations thereunder are transferrable and may not
be assigned to a third party.
SELLING
SECURITY HOLDERS
The Selling Shareholder is Green Coast Capital
International SA, a Panama corporation and an underwriter in
this offering. Kevin Bobryk, President, has the sole voting and
dispositive power with respect to shares of stock beneficially
owned by Green Coast. Pursuant to the terms of an Equity Purchase
Agreement, at our election we may sell to Green Coast up to
$5,000,000 worth of our common stock at a price equal to ninety percent (90%) of the lowest
closing bid price of the common stock during the five consecutive
trading days immediately following the date of our notice to Green
Coast of our election to put shares pursuant to the Equity Purchase
Agreement.
In
connection with the Equity Purchase Agreement, we (i) issued to
Green Coast a convertible promissory note in the principal amount
of $150,000, for which they paid $25,000, and (ii) will pay to
Green Coast a cash fee of $10,000 out of the proceeds from the
first Put Notice.
As
of the date of this Prospectus, assuming a closing bid price of
$0.75 per share, our sales price to Green Coast would be $0.5625
per share and we would have to issue approximately 8,888,888 shares
of our common stock to receive all $5,000,000.
As
of the date of this Prospectus, there are approximately 186 million
shares of our common stock held by or currently issuable to
non-affiliates, representing approximately 99% of the outstanding
common stock prior to any sales to Green Coast. The 1,000,000,000
shares we are registering for resale by Green Coast represents
approximately 50% of the total authorized common
stock.
We
cannot sell shares to Green Coast if such shares would cause Green
Coast to own more than 4.99% of our common stock. As a result, as
of the date of this Prospectus, Green Coast cannot own more than
approximately 95 million shares after giving effect to that
issuance to Green Coast. If our total number of outstanding shares
of common stock increases, as it will as we sell shares to Green
Coast under the Equity Purchase Agreement, then we would be able to
sell more shares to Green Coast before reaching the 4.99%
threshold. In the event gross proceeds reach $5,000,000 from the
sale of less than 1,000,000,000 shares, the offering will end with
no further shares sold. Our limited trading volume and price
volatility is likely to inhibit Green Coast’s ability to resell
shares we sell to them, which will negatively impact our ability to
sell more shares to them. It is also likely that each sale will
decrease our stock price which means subsequent sale may provide
less proceeds per share that the previous sale. In addition, we
have only registered 1,000,000,000 shares for resale by Green
Coast.
Green
Coast intends to sell up to 1,000,000,000 shares and is an
“underwriter” within the meaning of the Securities Act of 1933, as
amended, in connection with the resale of our common stock under
the Equity Purchase Agreement. As of date of this Prospectus, Green
Coast or its affiliates owns zero shares of our common stock prior
to the offering. After the offering is completed, unless they have
sold some or all of the shares held as of the date hereof, Green
Coast will continue to own zero shares of our common
stock.
All of
the shares held by the selling stockholders are restricted
securities as that term is defined in Rule 144 promulgated under
the Securities Act of 1933.
PLAN
OF DISTRIBUTION
The
Selling Shareholder of the common stock and any of their pledgees,
assignees and successors-in-interest may, from time to time, sell
any or all of their shares of common stock on the principal trading
market on which our common stock trades or any other stock
exchange, market or trading facility on which the shares are traded
or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Shareholder may use any one or more
of the following methods when selling shares:
●
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers;
●
block trades in
which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
●
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;
●
privately
negotiated transactions;
●
broker-dealers may
agree with the Selling Shareholder to sell a specified number of
such shares at a stipulated price per share;
●
a combination of
any such methods of sale; or
●
any other method
permitted pursuant to applicable law.
The
Selling Shareholder may also sell shares under Rule 144 under the
Securities Act of 1933, as amended, if available, rather than under
this Prospectus.
Broker-dealers
engaged by the Selling Shareholder may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Shareholder (or, if any
broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in
a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA
IM-2440.
The Selling Shareholder is an underwriter within
the meaning of the Securities Act and any broker-dealers or agents
that are involved in selling the shares may be deemed to be
“underwriters” within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of
the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling
Shareholder has informed the Company that it does not have any
written or oral agreement or understanding, directly or indirectly,
with any person to distribute the Common Stock. Pursuant to a requirement by the Financial
Industry Regulatory Authority, or FINRA, the maximum commission or
discount to be received by any FINRA member or independent
broker/dealer may not be greater than eight percent (8%) of the
gross proceeds received by us for the sale of any securities being
registered pursuant to SEC Rule 415 under the Securities
Act.
Discounts,
concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by the Selling
Shareholder. The Selling Shareholder may agree to indemnify
any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.
We will
pay all expenses in connection with the registration and sale of
the common stock by the Selling Shareholder. The estimated expenses
of issuance and distribution are set forth below:
|
Registration
Fees
|
Approximately
|
$13
|
|
Transfer Agent
Fees
|
Approximately
|
1,000
|
|
Costs
of Printing and Engraving
|
Approximately
|
1,000
|
|
Legal
Fees
|
Approximately
|
15,000
|
|
Accounting and
Audit Fees
|
Approximately
|
5,000
|
|
Total
|
|
$22,013
|
We
will not receive any proceeds from the resale of any of the shares
of our common stock by the Selling Shareholder. We may,
however, receive proceeds from the sale of our common stock under
the Equity Purchase Agreement. Neither the Equity Purchase
Agreement, nor any rights of the parties thereunder, may be
assigned or delegated to any other person.
Because
the Selling Shareholder is an “underwriter” within the meaning of
the Securities Act, it will be subject to the Prospectus delivery
requirements of the Securities Act including Rule 172 thereunder.
In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act may
be sold under Rule 144 rather than under this Prospectus. There is
no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the Selling
Shareholder.
We
agreed to keep this Prospectus effective until all the shares
covered by the registration statement of which this Prospectus is a
part (i) have been sold, thereunder or pursuant to Rule 144, or
(ii) (A) may be sold without volume or manner-of-sale restrictions
pursuant to Rule 144 and (B) (I) may be sold without the
requirement for us to be in compliance with the current public
information requirement under Rule 144 or (II) we are in compliance
with the current public information requirement under Rule 144, or
(iii) the commitment period under the Committed Equity Facility
Agreement has expired and no registrable securities are then held
of record by the Selling Shareholder that are subject to any resale
restriction under Rule 144, as determined by our counsel in a
written opinion letter to such effect, addressed and acceptable to
the transfer agent and the affected Selling Shareholder. The resale
shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold
unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied
with.
Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not
simultaneously engage in market making activities with respect to
the common stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In
addition, the Selling Shareholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the Selling
Shareholder or any other person. We will make copies of this
Prospectus available to the Selling Shareholder and have informed
them of the need to deliver a copy of this Prospectus to each
purchaser at or prior to the time of the sale.
The
Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in
connection with trades in any stock defined as a penny stock. The
Commission has adopted regulations that generally define a penny
stock to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ and any
equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in
continuous operation for three years, (ii) net tangible assets
of at least $5,000,000, if such issuer has been in continuous
operation for less than three years, or (iii) average annual
revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years. Unless an exception
is available, the regulations require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated
therewith.
DESCRIPTION
OF SECURITIES
Our
authorized capital stock consists of 2,000,000,000 shares of common
stock, par value $0.00001, and 10,000,000 shares of preferred
stock, par value $0.001. As of November 12, 2019, there were
186,961,480 shares of our common stock issued and outstanding, and
2,000,000 shares of Series A Convertible Preferred Stock issued and
outstanding.
Common Stock. Each shareholder of our
common stock is entitled to a pro rata share of cash distributions
made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record
on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of our directors or
any other matter. Therefore, the holders of more than 50% of the
shares voted for the election of those directors can elect all of
the directors. The holders of our common stock are entitled to
receive dividends when and if declared by our Board of Directors
from funds legally available therefore. Cash dividends are at the
sole discretion of our Board of Directors. In the event of our
liquidation, dissolution or winding up, the holders of common stock
are entitled to share ratably in all assets remaining available for
distribution to them after payment of our liabilities and after
provision has been made for each class of stock, if any, having any
preference in relation to our common shareholders of shares of our
common stock have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to our
common stock.
On June
26, 2018, we conducted a reverse split of our common stock at a
ratio of 1-for-250 (the “Reverse
Split”). All share numbers in this prospectus reflect the
effect of the reverse stock split of our common stock on June 26,
2018.
Preferred Stock. We are authorized to
issue 10,000,000 shares of preferred stock, par value $0.001 per
share, of which 2,000,000 shares of Series A Convertible Preferred
stock have been authorized and issued. The Preferred Stock is
convertible, at the option of the holder, into one share of common
stock for each share of Preferred Stock converted. The holders of
our Preferred Stock also have 100 votes per share of Preferred
Stock that they hold, to be voted as a group along with the common
shareholders on all matters on which the shareholders are entitled
to vote. Other than these votes, the holders of our Preferred Stock
have no specific rights, as a group, to elect directors. The
holders of our preferred stock are not entitled to a dividend
preference over the common stock, but are entitled to a liquidation
preference in the amount of $1.25 per share. The preferred stock is
not redeemable. Finally, the holders of the preferred stock are
entitled to protective provisions as follows:
The
Company may not take any of the following actions without the
approval of a majority of the holders of the outstanding Series A
Convertible Preferred Stock: (i) effect a sale of all or
substantially all of the Company’s assets or which results in the
holders of the Company’s capital stock prior to the transaction
owning less than fifty percent (50%) of the voting power of the
Company’s capital stock after the transaction; (ii) alter or
change the rights, preferences, or privileges of the Series A
Convertible Preferred Stock; (iii) increase or decrease the number
of authorized shares of Series A Convertible Preferred Stock; (iv)
authorize the issuance of securities having a preference over or on
par with the Series A Convertible Preferred Stock; or (v)
effectuate a forward or reverse stock split or dividend of the
Company’s common stock.
An increase in our
authorized common stock has been approved by our shareholders and
is anticipated to be effective on or about December 19,
2019.
The
voting rights of the Series A Convertible Preferred Stock were not
affected by the Reverse Split, and as a result, the Series A
Convertible Preferred stockholders now have voting control of over
51% of our voting stock.
Dividend Policy. We have not declared or
paid a cash dividend on our capital stock in our last two fiscal
years and we do not expect to pay cash dividends on our common
stock in the foreseeable future. We currently intend to retain our
earnings, if any, for use in our business. Any dividends declared
in the future will be at the discretion of our Board of Directors
and subject to any restrictions that may be imposed by our
lenders.
Options and Warrants.
Mitchell S. Felder
owns outstanding warrants to acquire a total of 12,000 shares of
our common stock at $0.0025 per share.
There
are outstanding warrants to acquire 11,760 shares of our common
stock at $362.50 per share. Of these warrants, William A. Hartman
and Dr. Mitchell S. Felder each hold 620, Heidi Carl holds 480,
John S. Borza holds 4,480 and Jay Rosen holds 200. The remaining
4,880 warrants are held equally by Ramon D. Foltz, Scott Barnes and
Richard T. Najarian, former members of our Board of
Directors.
There
are outstanding warrants to acquire 44,800 shares of our common
stock at $62.50 per share. Of these warrants, William A. Hartman
and Dr. Mitchell S. Felder each hold 6,400, Heidi Carl holds 5,600,
John S. Borza holds 4,800, Dr. Patricio Reyes holds 2,800, Jay
Rosen holds 1,600, and three (3) investors own 17,200.
There
are outstanding warrants to acquire 2,000 shares of our common
stock at $50 per share held by one (1) investor.
There
are outstanding warrants to acquire 2,000 shares of our common
stock at $25 per share held by one (1) investor.
There
are outstanding warrants to acquire 22,200 shares of our common
stock at $12.50 per share. Of these warrants, William A. Hartman
and Dr. Mitchell S. Felder each holds 4,000, Heidi Carl holds
3,000, John S. Borza holds 2,400, Dr. Patricio Reyes holds 1,400,
Jay Rosen holds 800 and six (6) investors hold 6,600.
There
are outstanding 121,215 Series A Warrants to acquire shares of our
common stock at $7.5 per share and 121,215 Series B Warrants to
acquire shares of our common stock at $12.50 per share held by
three (3) investors.
There
are outstanding warrants to acquire 163,000 shares of our common
stock at $1.25 per share. Of these warrants, William A. Hartman and
Dr. Mitchell S. Felder each holds 34,000, Heidi Carl holds 24,000,
John S. Borza holds 29,000, Dr. Patricio Reyes holds 16,000, Jay
Rosen holds 4,000, John Pauly holds 8,000, and three (3) investors
hold 14,000.
Other
than as set forth above, as of the date of this prospectus, we do
not have any outstanding options, warrants, or other convertible
securities.
INTEREST
OF NAMED EXPERTS AND COUNSEL
Clyde
Snow & Sessions, PC serves as our legal counsel in connection
with this offering. Clyde Snow & Sessions does not directly,
nor do any of its attorneys, own any shares of our common
stock.
DESCRIPTION
OF BUSINESS
Corporate Information
We
were incorporated on May 10, 2010 in the State of Nevada. We have
two wholly-owned subsidiaries, Premier Biomedical Pain Relief Meds,
LLC, a Nevada limited liability company organized on September 14,
2017, and Health Stations, LLC, a Nevada limited liability company
organized on August 28, 2019.
Our
corporate headquarters are located in Jackson Center, PA. Our
mailing address is P.O. Box 25, Jackson Center, PA 16133,
and our telephone number is (724) 633-7033. We have offices
virtually in the homes of our management team who
reside in Pennsylvania, Michigan and various other states. Our
websites are www.premierbiomedical.com and
www.painreliefmeds.com.
Information contained on our website is not incorporated into, and
does not constitute any part of, this Annual Report.
Overview
We were
strictly a research-based company that intended to discover cures
for PTSD, cancer and various other diseases. In order to fund
on-going research and development in these areas, we developed a
line of topical hemp oil pain relief products. We began selling
these pain relief products in January of 2017 with a single product
and currently have nine topical pain relief products.
Through
our continued development and expansion of proprietary drugs and
treatments, we have reorganized the company into six technology
centers: (1) extra-corporeal treatment of disease, (2) PTSD
treatment, (3) anti-breast cancer drugs, (4) hemp oil/CBD pain
relief products, (5) anti-aging treatments, and (6) chemical and
alcohol addiction treatment.
In the
first quarter of 2017, initial sales of our pain management
products were made through a joint venture. In the third quarter of
2017, the joint venture was terminated and we began sales of our
pain management products directly from the Company.
Nature’s Pain Relief
We have not yet launched our latest brand,
Nature’s Pain
Relief, which will be marketing
12 hemp oil products, including a 96-hour anti-pain patch, three
roll-on topical products, two sprays, two ointments, two tincture
drop products, a help oil capsule, and a “doggie” pet product. All
of these products will be available through a new website at
www.naturespainrelief.com.
Pain Management Products
We have
developed and are now marketing all-natural, hemp-oil based
products that are pesticide and solvent free. These products
provide generalized, neuropathic and localized topical pain
relief.
We
offer alternatives to dangerous and addictive opioid pain killers.
In the past year we have rapidly expanded our product offerings,
and we now offer nine pain relief products that are leaders in the
pain-relief field:
1.
96-hour pain relief
patch with 50 mg of hemp oil extract, the highest level of pain
relief ingredient available in the industry;
2.
120 mg/ 10 ml
water-based roll-on applicator;
3.
150 mg/ 10 ml
oil-based roll-on applicator;
4.
150 mg/ 30 ml
oil-based pump spray applicator;
5.
150 mg/ 2 oz.
ointment;
6.
200 mg/10 ml
oil-based roll-on applicator;
7.
500 mg/ 30 ml
oil-based pump spray applicator; and
8.
500 mg/ 1 oz.
ointment.
We
believe that this nine-product array positions us favorably in the
topical pain relief marketplace. The topical pain relief market is
expected to grow rapidly in the next few years, due to the focus on
reduction of opioid pain medication use, and we intend to be a
major player in that expanding market.
Now
that we have completed the product design and development phase, we
are aggressively embarking on the product distribution and sales
phase by:
1.
Expanding our
online sales beyond our web site at: www.painreliefmeds.com;
2.
Securing the
services of a social media coordinator to ensure that we optimize
that promotional tool;
3.
Recruiting a
National Sales Director to coordinate our growing field of sales
representatives and distributors;
4.
Securing the
services of a sales organization with expertise in marketing to the
government and senior care facilities;
5.
Engaging an
investor relations firm to facilitate television appearances
designed to gain optimum exposure for our company and its
products;
6.
Appearing in radio
and television broadcasts, and podcasts, via Uptick Newswire
periodically to ensure that our story gets out to the public;
and
7.
Retaining the
services of marketing firms to promote the Company and its products
through social media.
8.
Establishing
relationships with major distributors who will blanket specialized
sales outlets such as pharmacies, doctors’ offices, convenience
stores, long-term care facilities, large retail facilities,
etc.
In
addition, we are in the process of seeking potential partnerships
outside the United States to manufacture and market our products
worldwide. We anticipate that these partnerships will make new
markets available to us and allow us to rapidly increase our sales
and profitability through favorable manufacturing
arrangements.
Customers indicate
that they were able to achieve pain relief from our products and
stop the use of opioid painkillers. Public awareness of the harmful
side effects of opioid painkillers has grown significantly, and
many states have initiated litigation against drug makers claiming
they misrepresented the risks of opioid painkillers. As patients
seek to cut back their use of opioid painkillers and look for
alternatives, we believe demand for our products will see an
increase. We intend to petition national insurance agencies to urge
them to consider covering the use of our all-natural pain relief
products as a safe alternative to opioid painkillers.
Sales of our pain management products began on
February 1, 2017 through our former joint venture. Upon termination
of the joint venture, we began selling our products via our
website at www.painreliefmeds.com and
through various distributors. To
date, three pharmacies
and three chiropractic clinics have approved our products for sale and are
distributing our products. We anticipate that our products will
eventually be placed in several large pharmacy chains and sold in
several states.
Research and Development
We
intend to continue to discover and develop medical treatments for
humans, specifically targeting the pain management industry and the
treatment of:
|
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Cancer
|
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Fibromyalgia
|
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|
Multiple
Sclerosis (MS)
|
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|
Traumatic
Brain Injury (TBI)
|
|
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Neuropathic
Pain
|
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Alzheimer’s
Disease (AD)
|
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Amyotrophic
Lateral Sclerosis
(ALS/Lou
Gehrig’s Disease)
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Blood
Sepsis and Viremia
|
To
target cancer, Alzheimer’s disease, ALS, blood sepsis, leukemia,
and other life-threatening cancers, we intend to develop our
proprietary Sequential-Dialysis
Technique. The methodology involved in this technique is
largely unexplored and has been described by scientists as the
“wild west” of modern medicine. Consequently, our first entry into
the therapeutics market for medications that work against cancer,
multiple sclerosis, infectious diseases, Alzheimer’s disease,
strokes and traumatic brain injury carries significant obstacles
before reaching the opportunities of a $700 billion
industry.
Feldetrex®
We also
are in the process of developing our proprietary drug candidate
Feldetrex™, a
potential treatment for multiple sclerosis, fibromyalgia,
neuropathic pain and traumatic brain injury. The formulation used
in the current Feldetrex® will be
individually tailored to the various illnesses we intend to target,
with each formulation being given a unique proprietary brand name.
The annual market size of multiple sclerosis treatment is $500
million and the annual market size for all proposed Feldetrex® market
segments is $16 billion.
To
overcome the significant obstacles inherent to the development of
our Sequential-Dialysis
Technique and Feldetrex® candidate
drug, we are seeking to partner with prestigious institutions and
pharmaceutical companies with the substantial infrastructure and
resource capacity to perform experimentation and to engage in
product development in an inexpensive and efficient
manner.
Innovation
by our research and development operations is very important to our
success. Our goal is to discover, develop and bring to market
innovative products and treatments that address major unmet medical
needs, including initially, multiple sclerosis, septicemia, and
cancer. We expect this goal to be supported by substantial research
and development investments.
We
plan on conducting research internally and may also research
through contracts with third parties, through collaborations with
universities and biotechnology companies, and in cooperation with
pharmaceutical firms. We may also seek out promising compounds and
innovative technologies developed by third parties to incorporate
into our discovery or development methods and procedures or
projects, as well as our future product lines, through acquisition,
licensing or other arrangements.
In
addition to discovering and developing new products, methods and
procedures of treatment and treatments, we expect our research
operations to add value to our existing products and methods and
procedures of treatment in development by improving their
effectiveness and by discovering new uses for them.
Sequential-Dialysis Technique
Our
proprietary Sequential-Dialysis
Technique is a methodology for the removal of those
molecules which are harmful and responsible for causing diseases. A
significant disappointment in the practice of modern medicine is
that the capabilities do exist to eliminate the presence of most
illnesses, including life-threatening diseases such as AIDS and
cancer, but with a caveat that the process of treatment comes with
catastrophic side effects that can and often do kill the
patient.
Our
development is that the innovative Sequential-Dialysis
Methodology is done extracorporeally (outside the body).
This is a truly unique and innovative method for alleviating
disease.
We
believe that this methodology can be used for the prevention of
cancer metastasis, for directly attacking the causation of
intractable seizures, for preventing the death of anterior motor
neurons in ALS, for preventing the cause of the neuropathological
changes in Alzheimer’s disease and traumatic brain injury and for
eradicating the causations of infectious diseases, and our
intention is that the effectiveness of this technique will be
demonstrated and supported in future clinical studies.
Through
our Sequential-Dialysis
Technique, we ultimately hope to provide a cure for cancer
if not only to dramatically extend the lives of suffering patients.
Our initial focus is on lab and animal tests. Clinical trials, as
required, will be undertaken subsequently.
Feldetrex™
Although a
combination of generic medications, we have a U.S. Patent (No.
8,865,733) on our Feldetrex® candidate
drug. In this way, Feldetrex® is
similar to Viagra®, which was a proprietary cardiac drug prior to
its current use and ownership by Pfizer. Consequently, we have one
pending patent application for our Feldetrex® candidate
drug—intending to increase our Feldetrex® related
patent applications to three in the near future.
Feldetrex® may serve
as an additional medication utilized by physicians for the
treatment of multiple sclerosis, fibromyalgia, or traumatic brain
injury, and is designed to decrease symptomatology in those
conditions. Feldetrex® will not
compete against our proprietary Sequential-Dialysis
Technique in the market to treat traumatic brain injury, but
rather the two will work conjunctively.
Feldetrex® utilizes
a low dosage of Naltrexone which has been shown in multiple medical
articles in the medical literature to increase endogenous
enkephalins4 (endogenous
enkephalins are pain-relieving pentapeptides produced in the body,
located in the pituitary gland, brain, and GI tract. Axon terminals
that release enkephalins are concentrated in the posterior horn of
the gray matter of the spinal cord, in the central part of the
thalamus, and inthe amygdala of the limbic system of the cerebrum.
Endogenous Enkephalins function as neurotransmitters that inhibit
neurotransmitters in the pathway for pain perception, thereby
reducing the emotional as well as the physical impact of pain). We
have not independently conducted medical or laboratory tests to
show the mechanism of action of this medication. While Naltrexone in high dosages acts
as an opioid antagonist, it inhibits opiate receptors.
Naltrexone in low dosages causes a compensatory upregulation
(increase in the number of receptors) of native endorphins and
enkephalins, which last beyond the effects of the Naltrexone
itself. We believe that this means, paradoxically, that a daily
dose of low dose Naltrexone can be used to chronically
increase endorphin and enkephalin levels. We believe that by
utilizing a low dosage, Naltrexone has a unique ability to
increase enkephalins and other neurotransmitters in the brainstem
of patients.
Marketing
Currently, we manage our marketing
responsibilities internally. Sales of our pain management products
are made primarily online through our website: www.painreliefmeds.com. We intend to seek
a partnership with and/or sale of our product
candidates/technologies to large
pharmaceutical and/or medical devices firms. These firms have the
ability to effectively promote our product candidates to healthcare
providers and patients. Through their marketing organizations, they
can explain the approved uses, benefits and risks of our product
candidates to healthcare providers such as doctors, nurse
practitioners, physician assistants, pharmacists, hospitals,
Pharmacy Benefit Managers (PBMs), Managed Care Organizations
(MCOs), employers and government agencies. They also market
directly to consumers in the U.S. through direct-to-consumer
advertising that communicates the approved uses, benefits, and
risks of our product candidates while continuing to motivate people
to have meaningful conversations with their doctors. In addition,
they sponsor general advertising to educate the public on disease
awareness, important public health issues, and patient assistance
programs.
A.
Bowling, Allen C..
"Low-dose naltrexone (LDN) The "411" on LDN" National Multiple
Sclerosis Society.
http://www.nationalmssociety.org/multimedia-library/momentum-magazine/back-issues/momentum-spring-09/index.aspx.
Retrieved 6 July 2011.
B.
Bourdette, Dennis.
"Spotlight on Low Dose Naltrexone (LDN)". US Department of Veteran
Affairs.
http://www.va.gov/MS/articles/Spotlight_on_Low_Dose_Naltrexone_LDN.asp.
Retrieved 5 July 2011.
C.
Giesser, Barbara S.
(2010). Primer on Multiple Sclerosis. New York: Oxford University
Press US. pp. 377. ISBN 978-0-19-536928-1.
D.
Moore, Elaine A.
1948. The promise of low dose naltrexone therapy: potential
benefits in cancer, autoimmune, neurological and infectious
disorders. Elaine A. Moore and Samantha Wilkinson. ISBN
978-0-7864-3715-3.
E.
Crain SM, Shen K-F
(1995). Ultra-low concentrations of naloxone selectively antagonize
excitatory effects of morphine on sensory neurons, thereby
increasing its antinociceptive potency and attenuating
tolerance/dependence during chronic cotreatment. Proc Natl Acad Sci
USA 92: 10540–10544.
F.
Powell KJ,
Abul-Husn NS, Jhamandas A, Olmstead MC, Beninger RJ, et al. (2002).
Paradoxical effects of the opioid antagonist naltrexone on morphine
analgesia, tolerance, and reward in rats. J Pharmacol Exp Ther 300:
588–596.
G.
Wang H-Y, Friedman
E, Olmstead MC, Burns LH (2005). Ultra-low-dose naloxone suppresses
opioid tolerance, dependence and associated changes in Mu opioid
receptor-G protein
coupling and Gbc signaling; Neuroscience 135:
247–261.
The
large pharmaceutical/medical devices firms principally sell their
products to wholesalers, but they also sell directly to retailers,
hospitals, clinics, government agencies and pharmacies and also
work with MCOs, PBMs, employers and other appropriate healthcare
providers to assist them with disease management, patient education
and other tools that help their medical treatment
routines.
Patents and Intellectual Property Rights
We have
licensed three U.S. patents: Sequential Extracorporeal Treatment of
Bodily Fluids, U.S. Patent No. 9,216,386 and Utilization of Stents
for the Treatment of Blood Borne Carcinomas, U.S. Patent No.
8,758,287 (both from Marv Enterprises, LLC), and Medication and
Treatment for Disease, U.S. Patent No. 8,865,733 (from Altman
Enterprises, LLC), in the areas of cancer, sepsis, and multiple
sclerosis. We expect these patents to cover the medical treatments
discussed above for multiple sclerosis, blood sepsis, and cancer
and be effective until 2029. Marv and Altman have licensed these
technologies to us pursuant to the terms of license agreements.
Because our license agreements cover the patents and “all applications of the United States and foreign
countries that claim priority to the above PCT applications,
including any non-provisionals, continuations,
continuations-in-part, divisions, reissues, re-examinations or
extensions thereof,” we anticipate that other technologies
that derive from these patents will also belong to us and are
covered by the license agreements.
Patents
extend for twenty years from the date of patent filing. The actual
protection afforded by a patent, which can vary from country to
country, depends upon the type of patent, the scope of its coverage
and the availability of legal remedies in the country.
Dr.
Felder is the owner of the Feldetrex mark, and has also licensed
this to us pursuant to the terms of a license
agreement.
We
expect our patent and related rights to be of material importance
to our business.
Competition
Our
business is conducted in an intensely competitive and often highly
regulated market. Our treatments face competition in the form of
branded drugs, generic drugs and the currently practiced treatments
for multiple sclerosis, blood sepsis, and cancer. The principal
forms of competition include efficacy, safety, ease of use, and
cost effectiveness. Where possible, companies compete on the basis
of the unique features of their products, such as greater efficacy,
better patient ease of use or fewer side effects. A lower overall
cost of therapy is also an important factor. Products that
demonstrate fewer therapeutic advantages must compete for inclusion
based primarily on price. Though the means of competition vary
among product categories, demonstrating the value of our
medications and procedures will be a critical factor for our
success.
Our
competitors include large worldwide research-based drug companies,
smaller research companies with more limited therapeutic focus, and
generic drug manufacturers. We compete with other companies that
manufacture and sell products that treat similar diseases as our
major medications and procedures.
Environment
Our
business may be subject to a variety of federal, state and local
environmental protection measures. We intend to comply in all
material respects with applicable environmental laws and
regulations.
Regulation
Pain Management Products
A major
obstacle to our growth is the public perception that hemp and
marijuana are the same thing. This perception drives much of the
regulation of hemp products. Although hemp and marijuana are both
part of the cannabis family, they differ in cultivation, function,
and application. Despite the use of marijuana becoming more widely
legalized, it is viewed by many regulators and many others as an
illegal product. Hemp, on the other hand, is used in a variety of
other ways that include clothing, skin products, pet products,
dietary supplements (the use of CBD oil), and thousands of other
applications. Hemp may be legally sold, however the inability of
many to understand the difference between hemp and marijuana often
causes burdensome regulation and confusion among potential
customers. Therefore, we are affected by laws related to cannabis
and marijuana, even though our products are not the direct targets
of these laws.
Cannabis is
currently a Schedule I controlled substance under the Controlled
Substance Act (“CSA”) and is, therefore, illegal under federal law.
Even in those states in which the use of cannabis has
been legalized pursuant to state law, its use, possession and/or
cultivation remains a violation of federal law. A Schedule I
controlled substance is defined as one that has no currently
accepted medical use in the United States, a lack of safety for use
under medical supervision and a high potential for abuse. The U.S.
Department of Justice (the “DOJ”) describes Schedule I controlled
substances as “the most dangerous drugs of all the drug schedules
with potentially severe psychological or physical dependence.” If
the federal government decides to enforce the CSA in the states,
persons that are charged with distributing, possessing with intent
to distribute or growing cannabis could be subject to
fines and/or terms of imprisonment, the maximum being life
imprisonment and a $50 million fine.
Notwithstanding the
CSA, 29 U.S. states, the District of Columbia and the U.S.
territories of Guam and Puerto Rico allow their residents to use
medical cannabis. The states of Alaska, California, Colorado,
Maine, Massachusetts, Nevada, Oregon, Vermont (effective July 1,
2018) and Washington, and the District of Columbia, allow
cannabis for adult recreational use. Such state and
territorial laws are in conflict with the federal CSA, which
makes cannabis use and possession illegal at the federal
level.
In
light of such conflict between federal laws and state laws
regarding cannabis, the previous administration under
President Obama had effectively stated that it was not an efficient
use of resources to direct federal law enforcement agencies to
prosecute those lawfully abiding by state-designated laws allowing
the use and distribution of medical cannabis. For example, the
prior DOJ Deputy Attorney General of the Obama administration,
James M. Cole, issued a memorandum (the “Cole Memo”) to all United
States Attorneys providing updated guidance to federal prosecutors
concerning cannabis enforcement under the CSA. In
addition, the Financial Crimes Enforcement Network (“FinCEN”)
provided guidelines (the “FinCEN Guidelines”) on February 14, 2014,
regarding how financial institutions can provide services
to cannabis-related businesses consistent with their Bank
Secrecy Act (“BSA”) obligations.
Additional existing
and pending legislation provides, or seeks to provide, protection
to persons acting in violation of federal law but in compliance
with state laws regarding cannabis. The Rohrabacher-Blumenauer
Amendment (formerly known as the Rohrbacher-Farr Amendment) to the
Commerce, Justice, Science and Related Agencies Appropriations
Bill, which funds the DOJ, since 2014 has prohibited the DOJ from
using funds to prevent states with laws authorizing the use,
distribution, possession or cultivation of
medical cannabis from implementing such laws. On August
2016, the Ninth Circuit Court of Appeals ruled in United States v. McIntosh that the
Amendment bars the DOJ from spending funds on the prosecution of
conduct that is allowed by state medical cannabis laws,
provided that such conduct is in strict compliance with applicable
state law. The Rohrabacher-Blumenauer Amendment is currently
effective through September 30, 2018, but as an amendment to an
appropriations bill, it must be renewed annually.
These
developments previously were met with a certain amount of optimism
in the cannabis industry, but (i) neither the CARERS Act
nor the Respect State Marijuana Laws Act of 2017 have yet been
adopted, (ii) the Rohrabacher-Blumenauer Amendment, being an
amendment to an appropriations bill that must be renewed annually,
has not currently been renewed beyond September 30, 2018, and (iii)
the ruling in United States
v. McIntosh is only applicable precedent in the Ninth
Circuit.
Because
of the discrepancy between the laws in some states, which permit
the distribution and sale of medical and
recreational cannabis, from federal law that prohibits any
such activities, DOJ Deputy Attorney General James M. Cole issued
the Cole Memo concerning cannabis enforcement under the
CSA.
At the
time of its issuance, the Cole Memo reiterated Congress’s
determination that cannabis is a dangerous drug and that
the illegal distribution and sale of cannabis is a
serious crime that provides a significant source of revenue to
large-scale criminal enterprises, gangs, and cartels. The Cole Memo
noted that the DOJ was committed to enforcement of the CSA
consistent with those determinations. It also noted that the DOJ
was committed to using its investigative and prosecutorial
resources to address the most significant threats in the most
effective, consistent, and rational way. In furtherance of those
objectives, the Cole Memo provided guidance to DOJ attorneys and
law enforcement to focus their enforcement resources on persons or
organizations whose conduct interferes with any one or more of the
following important priorities (the “Enforcement Priorities”) in
preventing:
●
the distribution
of cannabis to minors;
●
revenue from the
sale of cannabis from going to criminal enterprises,
gangs, and cartels;
●
the diversion
of cannabis from states where it is legal under state law
in some form to other states;
●
state-authorized cannabis activity
from being used as a cover or pretext for the trafficking of other
illegal drugs or other illegal activity;
●
violence and the
use of firearms in the cultivation and distribution
of cannabis;
●
drugged driving and
the exacerbation of other adverse public health consequences
associated with cannabis use;
●
the growing
of cannabis on public lands and the attendant public
safety and environmental dangers posed
by cannabis production on public lands; and
●
cannabis possession
or use on federal property.
However, on January
4, 2018, the U.S. Attorney General, Jeff Sessions, issued a
memorandum for all U.S. Attorneys (the “Sessions Memo”) stating
that the Cole Memo was rescinded effective immediately. In
particular, Mr. Sessions stated that “prosecutors should follow the
well-established principles that govern all federal prosecutions,”
which require “federal prosecutors deciding which cases to
prosecute to weigh all relevant considerations, including federal
law enforcement priorities set by the Attorney General, the
seriousness of the crime, the deterrent effect of criminal
prosecution, and the cumulative impact of particular crimes on the
community.” The Sessions Memo went on to state that given the DOJ’s
well-established general principles, “previous nationwide guidance
specific to marijuana is unnecessary and is rescinded, effective
immediately.”
It is
unclear at this time whether the Sessions Memo indicates that the
Trump administration will strongly enforce the federal laws
applicable to cannabis or what types of activities will
be targeted for enforcement. However, a significant change in the
federal government’s enforcement policy with respect to current
federal laws applicable to cannabis could cause
significant financial damage to us. We do not currently cultivate,
distribute or sell cannabis, but our hemp oil products are
closely tied to the cannabis industry.
Although the
Sessions Memo has rescinded the Cole Memo and it is unclear at this
time what the ultimate impact of that rescission will have on our
business, if any, we intend to continue to conduct rigorous due
diligence to verify the legality of all activities that we engage
in and ensure that our activities do not interfere with any of the
Enforcement Priorities set forth in the Cole Memo.
On
March 26, 2018, Senate Majority Leader Mitch McConnell, R-Kentucky,
announced plans to introduce The Hemp Farming Act of 2018 to
exclude hemp from the CSA. The proposed bill would legalize hemp as
an agricultural commodity and remove it from the list of controlled
substances. This would greatly reduce the uncertainty we face with
respect to regulation of hemp products. However, Congress has not
yet taken formal action to pass the bill.
Other Medical Products
The
development of proprietary drugs and medications is subject to
varying degrees of governmental regulation in the United States and
any other countries in which our operations are conducted. In the
United States, regulation by various federal and state agencies has
long been focused primarily on product safety, efficacy,
manufacturing, advertising, labeling and safety reporting. The
exercise of broad regulatory powers by the U.S. Federal Drug
Administration (“FDA”) continues to result in increases in the
amounts of testing and documentation required for FDA clearance of
new drugs and devices and a corresponding increase in the expense
of product introduction. Likewise, the approval process with the
FDA is estimated to take approximately seven (7) years from the
time it is started. Similar trends are also evident in major
markets outside of the United States.
Clinical
trials are a set of procedures in medical
research conducted to allow safety (or more specifically,
information about adverse drug reactions and adverse
effects of other treatments) and efficacy data to be
collected for health interventions (e.g., drugs, diagnostics,
devices, therapy protocols). These trials can take place only after
satisfactory information has been gathered on the quality of the
non-clinical safety, and Health Authority/Ethics
Committee approval is granted in the country where the trial
is taking place.
Depending on the
type of product and the stage of its development, investigators
enroll healthy volunteers and/or patients into small pilot
studies initially, followed by larger scale studies in
patients that often compare the new product with the currently
prescribed treatment. As positive safety and efficacy data are
gathered, the number of patients is typically increased. Clinical
trials can vary in size from a single center in one country to
multicenter trials in multiple countries.
Due to
the sizable cost a full series of clinical trials may incur, the
burden of paying for all the necessary people and services is
usually borne by the sponsor who may be a governmental
organization, a pharmaceutical,
or biotechnology company. Since the diversity of roles
may exceed resources of the sponsor, often a clinical trial is
managed by an outsourced partner such as a contract
research organization or a clinical trials unit in the
academic sector.
The
regulatory agencies under whose purview we intend to operate have
administrative powers that may subject us to such actions as
product withdrawals, recalls, seizure
of products and other civil and criminal
sanctions.
Because we intend to seek a partnership with
and/or sale of our product candidates/technologies to large
pharmaceutical and/or medical devices firms, we anticipate that a
larger pharmaceutical company will undertake to navigate the
regulatory pathway, including conducting clinical trials, for a
product such as Feldetrex™.
Employees
As of
the date hereof, we do not have any employees other than our
officers and directors. Our officers and directors will continue to
work for us for the foreseeable future. We anticipate hiring
appropriate personnel on an as-needed basis, and utilizing the
services of independent contractors as needed.
DESCRIPTION
OF PROPERTY
We do
not currently lease or use any office space. We have not paid any
amounts to Mr. Hartman for the use of his personal office or for
reimbursement of personal office expenses incurred by
him.
LEGAL
PROCEEDINGS
We are
not a party to or otherwise involved in any legal
proceedings.
In the
ordinary course of business, we are from time to time involved in
various pending or threatened legal actions. The litigation process
is inherently uncertain and it is possible that the resolution of
such matters might have a material adverse effect upon our
financial condition and/or results of operations. However, in the
opinion of our management, other than as set forth herein, matters
currently pending or threatened against us are not expected to have
a material adverse effect on our financial position or results of
operations.
SELECTED
FINANCIAL DATA
|
|
As
of and for the Nine Months ended September 30,
|
As
of and for the Year Ended December 31,
|
As
of and for the Year Ended December 31,
|
|
Premier
Biomedical, Inc.
|
|
|
|
|
|
|
|
|
|
Statement of
Operations Data:
|
|
|
|
|
|
|
|
|
|
Revenue
|
$12,975
|
$39,795
|
$39,761
|
|
Net
operating income (loss)
|
$(219,688)
|
$(692,842)
|
$(1,289,838)
|
|
Net
income (loss)
|
$(340,171)
|
$(398,886)
|
$(3,763,558)
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
Cash
|
$117,209
|
$86,827
|
$83,704
|
|
Current
assets
|
$177,582
|
$159,787
|
$203,603
|
|
Total
assets
|
$185,500
|
$164,990
|
$209,081
|
|
|
|
|
|
|
Current
liabilities
|
$2,303,710
|
$2,312,382
|
$2,819,807
|
|
Total
liabilities
|
$2,303,710
|
$2,312,382
|
$2,819,807
|
|
Accumulated
deficit
|
$(17,067,869)
|
$(16,727,698)
|
$(16,328,812)
|
|
|
|
|
|
|
Net
loss per common share – basic and diluted
|
$(0.02)
|
$(0.11)
|
$(0.92)
|
Our
cash and total current assets remained relatively steady as we
continued to sustain losses funded by the sale of convertible
notes. Our total current liabilities decreased primarily due to the
reduction of our accounts payable of $66,718 and the conversion of
outstanding convertible notes of $177,423, offset by a net increase
in accrued interest of $27,049 and the change in the value of our
derivative liabilities of $148,348, along with $338,300 of
additional debt financing, net of debt discounts of $278,228. Our
stockholders’ deficit decreased by $29,182 to
($2,118,210).
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Disclaimer
Regarding Forward Looking Statements
You
should read the following discussion in conjunction with our
financial statements and the related notes and other financial
information included in this Form S-1. In addition to historical
financial information, the following discussion contains
forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially. Factors that
could cause or contribute to these differences include those
discussed below and elsewhere in this Form S-1, particularly in the
Section titled Risk Factors.
Although the
forward-looking statements in this registration statement reflect
the good faith judgment of our management, such statements can only
be based on facts and factors currently known by them.
Consequently, and because forward-looking statements are inherently
subject to risks and uncertainties, the actual results and outcomes
may differ materially from the results and outcomes discussed in
the forward-looking statements. You are urged to carefully review
and consider the various disclosures made by us in this report and
in our other reports as we attempt to advise interested parties of
the risks and factors that may affect our business, financial
condition, and results of operations and prospects.
The
following discussion and analysis of financial condition and
results of operations of the Company is based upon, and should be
read in conjunction with, its audited and unaudited financial
statements and related notes elsewhere in this Form S-1, which have
been prepared in accordance with accounting principles generally
accepted in the United States.
Summary
Overview
We were
strictly a research-based company that intended to discover cures
for PTSD, cancer and various other diseases. In order to fund
on-going research and development in these areas, we developed a
line of topical hemp oil pain relief products. We began selling
these pain relief products in January of 2017 with a single product
and currently have nine topical pain relief products.
Through
our continued development and expansion of proprietary drugs and
treatments, we have reorganized the company into six technology
centers: (1) extra-corporeal treatment of disease, (2) PTSD
treatment, (3) anti-breast cancer drugs, (4) hemp oil/CBD pain
relief products, (5) anti-aging treatments, and (6) chemical and
alcohol addiction treatment.
Pain Management Products
We have
developed and are now marketing all-natural, hemp-oil based
products that are pesticide and solvent free. These products
provide generalized, neuropathic and localized topical pain
relief.
We
offer alternatives to dangerous and addictive opioid pain killers.
In the past year we have rapidly expanded our product offerings,
and we now offer nine pain relief products that are leaders in the
pain-relief field:
1.
96-hour pain relief
patch with 50 mg of hemp oil extract, the highest level of pain
relief ingredient available in the industry;
2.
120 mg/ 10 ml
water-based roll-on applicator;
3.
150 mg/ 10 ml
oil-based roll-on applicator;
4.
150 mg/ 30 ml
oil-based pump spray applicator;
5.
150 mg/ 2 oz.
ointment;
6.
200 mg/10 ml
oil-based roll-on applicator;
7.
500 mg/ 30 ml
oil-based pump spray applicator; and
8.
500 mg/ 1 oz.
ointment.
We
believe that this eight-product array positions us favorably in the
topical pain relief marketplace. The topical pain relief market is
expected to grow rapidly in the next few years, due to the focus on
reduction of opioid pain medication use, and we intend to be a
major player in that expanding market.
Now
that we have completed the product design and development phase, we
are aggressively embarking on the product distribution and sales
phase by:
1.
Expanding our
online sales beyond our web site at: www.painreliefmeds.com;
2.
Securing the
services of a social media coordinator to ensure that we optimize
that promotional tool;
3.
Recruiting a
National Sales Director to coordinate our growing field of sales
representatives and distributors;
4.
Securing the
services of a sales organization with expertise in marketing to the
government and senior care facilities;
5.
Engaging an
investor relations firm to facilitate television appearances
designed to gain optimum exposure for our company and its
products;
6.
Appearing in radio
and television broadcasts, and podcasts, via Uptick Newswire
periodically to ensure that our story gets out to the public;
and
7.
Retaining the
services of marketing firms to promote the Company and its products
through social media.
8.
Establishing
relationships with major distributors who will blanket specialized
sales outlets such as pharmacies, doctors’ offices, convenience
stores, long-term care facilities, large retail facilities,
etc.
In
addition, we are in the process of seeking potential partnerships
outside the United States to manufacture and market our products
worldwide. We anticipate that these partnerships will make new
markets available to us and allow us to rapidly increase our sales
and profitability through favorable manufacturing
arrangements.
Customers indicate
that they were able to achieve pain relief from our products and
stop the use of opioid painkillers. Public awareness of the harmful
side effects of opioid painkillers has grown significantly, and
many states have initiated litigation against drug makers claiming
they misrepresented the risks of opioid painkillers. As patients
seek to cut back their use of opioid painkillers and look for
alternatives, we believe demand for our products will see an
increase. We intend to petition national insurance agencies to urge
them to consider covering the use of our all-natural pain relief
products as a safe alternative to opioid painkillers.
Financing
In the
past, as we worked through the development of our products, we have
relied heavily on financing through various issuances of common
stock, warrants and convertible debt. As our sales grow, we expect
to find financing solutions in the future that help us expand our
operations, avoid dilution to our shareholders, and ultimately
increase our company valuation.
Through
the remainder of 2019, we will continue to market our pain
management products and seek a wider distribution network through
the negotiation of distribution agreements with large pharmacy
chains, military branches, government agencies, senior care
facilities and international partners.
Through
our reorganization into six technology centers, we are positioned
to take advantage of opportunities to individually sell, license or
commercialize the technologies produced within each of these
centers to suitable investment partners, without dilutive equity
issuances. In the long run, we believe that this will be most
beneficial to our investors.
Going Concern
As a
result of our current financial condition, we have received a
report from our independent registered public accounting firm for
our financial statements for the years ended December 31, 2018 and
2017 that includes an explanatory paragraph describing the
uncertainty as to our ability to continue as a going concern. In
order to continue as a going concern, we must effectively balance
many factors and generate more revenue so that we can fund our
operations from our sales and revenues. If we are not able to do
this, we may not be able to continue as an operating company.
During the nine months ended September 30, 2019, we completed the sale of convertible notes to raise $
308,400 of net proceeds from several investors. We cannot be
sure that sources of capital will be available to us for the
remainder of 2019 and into 2020. However, without additional
capital in the short term, we may not be able to push forward in
the production and marketing of our new pain management products.
Until we are able to grow revenues sufficient to meet our operating
expenses, we must continue to raise capital by issuing debt or
through the sale of our stock. There is no assurance that our cash
flow will be adequate to satisfy our operating expenses and capital
requirements.
Results
of Operations for the Three and Nine Months Ended September 30,
2019 and 2018
Introduction
We had
revenues of $3,465 and $12,975 for the three and nine months ended
September 30, 2019, respectively, compared to $8,225 and $30,709
for the three and nine months ended September 30, 2018,
respectively. This was a decrease of $9,510, or 73%, for the three
months ended September 30, 2019 compared to 2018, and $22,484, or
73%, for the nine months ended September 30, 2019 compared to
2018.
Our
operating expenses were $66,366 and $227,193 for the three and nine
months ended September 30, 2019, respectively, compared to $85,185
and $240,834 for the three and nine months ended September 30,
2018, respectively. This was a decrease of $18,819, or 22%, for the
three months ended September 30, 2019 compared 2018, and a decrease
of $13,641, or 6%, for the nine months ended September 30, 2019
compared to 2018.
Our
results of operations for the three and nine months ended September
30, 2019 and 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$3,465
|
$8,225
|
$12,975
|
$30,709
|
|
Cost of
goods sold
|
1,653
|
4,373
|
5,470
|
20,577
|
|
Gross
profit
|
1,812
|
3,852
|
7,505
|
10,132
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General
and administrative
|
36,757
|
65,572
|
138,589
|
139,881
|
|
Professional
fees
|
29,609
|
22,613
|
88,604
|
100,953
|
|
Total
operating expenses
|
66,366
|
85,185
|
227,193
|
240,834
|
|
|
|
|
|
|
|
Net
operating loss
|
(64,554)
|
(81,333)
|
(219,688)
|
(230,702)
|
|
Other
income (expense)
|
(117,080)
|
(282,202)
|
(120,483)
|
333,485
|
|
|
|
|
|
|
|
Net
income (loss)
|
$(181,634)
|
$(363,535)
|
$(340,171)
|
$102,783
|
Revenues
The
Company was established on May 10, 2010, and began to generate
revenues during the third quarter of 2017 from the sale of pain
patches made with CBD oils. Our sales are comprised of both website
sales to individual consumers and brick and mortar pharmacies, and
we have expanded from patches to oils, sprays, and roll-ons. Our
cost of goods sold primarily consists of the products and the
packaging. The decrease in our revenues for the three and nine
months ended September 30, 2019, compared to three and nine months
ended September 30, 2018, while significant in percentage terms,
was not material in absolute terms and reflects the timing of
product sales.
Cost of Goods Sold
Cost of
goods sold for the three and nine
months ended September 30, 2019 were $1,653, or 48% of
sales, and $5,470, or 42% of sales, compared to $4,373, or 53% of
sales, and $20,577, or 67% of sales, for the three and nine months
ended September 30, 2018. Cost of sales consists primarily of
product materials and packaging supplies. Our cost of goods sold as
a percentage of sales was reduced because of lower prices in the
marketplace and slightly higher volume pricing.
General and Administrative
General
and administrative expenses were $36,757 and $138,589,
respectively, for the three and nine months ended September 30,
2019, compared to $62,572 and $139,881, respectively, for the three
and nine months ended September 30, 2018, a decrease of $25,815 and
$1,292, or 41% and less than 1%, respectively. The decrease was
primarily due to decreased investor relations and advertising
expenses.
Professional Fees
Professional fees expense was $29,609 and $88,604,
respectively, for the three and nine months ended September 30,
2019, compared to $22,613 and $100,953, respectively, for the three
and nine months ended September 30, 2018, an increase of $6,996 and
a decrease of $12,349, or 31% and 12%, respectively.
Professional fees consist primarily of legal and, accounting and
auditing services.
Net Operating Loss
Net
operating loss was $64,554 and $219,688, respectively, for the
three and nine months ended September 30, 2019, compared to $81,333
and $230,702, respectively, for the three and nine months ended
September 30, 2018, a decrease of $16,779 and $11,014, or 21% and
5%, respectively. The net operating loss decreased during the nine
months ended September 30, 2019 because of decreased operating
expenses as previously described.
Other Income/Expense
Other
income (expense) was ($117,080) and ($120,483), respectively, for
the three and nine months ended September 30, 2019, compared to
($282,202) and $333,485, respectively, for the three and nine
months ended September 30, 2018, a decrease in expenses of $165,122
and $453,968, respectively. Other expense for the nine months ended
September 30, 2019 consisted of interest expense of $101,793 and a
change in derivative liabilities of $18,690. Other expense for the
nine months ended September 30, 2018 consisted of interest
expense of $322,323 offset by a gain of $655,808 in market value of
derivative liabilities.
Net Income (Loss)
Net
income (loss) for the three and nine months ended September 30,
2019, was ($181,634) or ($0.01) per share, and ($340,171) or
($0.02) per share, respectively, compared to ($363,535) or ($0.11)
per share, and $102,783 or $0.03 per share, respectively, for the
three and nine months ended September 30, 2018. Net loss changes,
as set forth above, were primarily due to the change in derivative
liabilities.
Liquidity and Capital Resources as of and for the nine months ended
September 30, 2019 and the year ended December 31,
2018.
Introduction
During
the three and nine months ended September 30, 2019, we had negative
operating cash flows. Our cash on hand as of September 30, 2019 was
$117,209, which was derived from the sale of convertible promissory
notes to investors. Our monthly cash flow burn rate for the first
nine months of 2018 was approximately $35,000, and our monthly burn
rate through the nine months ended September 30, 2019 was
approximately $30,000. Although we have moderate short term cash
needs, as our operating expenses increase as we ramp up production
and sales of our new products we will face strong medium to long
term cash needs. We anticipate that these needs will be satisfied
through the issuance of debt or the sale of our securities until
such time as our cash flows from operations will satisfy our cash
flow needs.
Our
cash, current assets, total assets, current liabilities, and total
liabilities as of September 30, 2019 and December 31, 2018,
respectively, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$117,209
|
$86,827
|
$30,382
|
|
Total
Current Assets
|
177,582
|
159,787
|
17,795
|
|
Total
Assets
|
185,500
|
164,990
|
20,510
|
|
Total
Current Liabilities
|
2,303,710
|
2,312,382
|
(8,672)
|
|
Total
Liabilities
|
$2,303,710
|
$2,312,382
|
$(8,672)
|
Our
cash and total current assets remained relatively steady as we
continued to sustain losses funded by the sale of convertible
notes. Our total current liabilities decreased primarily due to the
reduction of our accounts payable of $66,718 and the conversion of
outstanding convertible notes of $177,423, offset by a net increase
in accrued interest of $27,049 and the change in the value of our
derivative liabilities of $148,348, along with $338,300 of
additional debt financing, net of debt discounts of $278,228. Our
stockholders’ deficit decreased by $29,182 to
($2,118,210).
In
order to repay our obligations in full or in part when due, we will
be required to raise significant capital from other sources. There
is no assurance, however, that we will be successful in these
efforts.
Cash Requirements
Our
cash on hand as of September 30, 2019 was $117,209. Based on our
minimal revenues and current monthly burn rate of approximately
$30,000 per month, we will need to continue to fund operations by
raising capital from the sale of our stock and debt
financings.
Sources and Uses of Cash
Operations
We had
net cash used in operating activities of ($273,168) for the nine
months ended September 30, 2019, compared to ($318,471) for the
nine months ended September 30, 2018. This decrease in net cash
used in operating activities was a result of an increase in the
fair market value of derivative liabilities of $674,498 and an
increase in inventory of $39,861, offset by a decrease in
amortization of debt discounts of $246,886.
Investments
We had
$4,850 net cash used in investing activities for the nine months
ended September 30, 2019, and $2,029 net cash used in investing
activities for the nine months ended September 30, 2018. We
outsource the manufacturing of our products, so our investment
expenses are minimal.
Financing
Our net
cash provided by financing activities for the nine months ended
September 30, 2019 was $308,400, which consisted of the proceeds
from the sale of convertible notes. For the nine months ended
September 30, 2018, net cash provided by financing activities was
$300,000, which consisted of the proceeds from the sale of
convertible notes.
Results
of Operations for the Years Ended December 31, 2018 and
2017
Introduction
We had
revenues of $39,795 and $39,761 for the years ended December 31,
2018 and 2017, respectively. Our operating expenses were $618,910
for the year ended December 31, 2018 compared to $1,304,160 for the
year ended December 31, 2017, an increase of $685,250, or 53%. Our
operating expenses consisted of research and development costs,
general and administrative expenses, and professional fees,
including $296,944 and $783,404 of stock-based compensation for the years ended
December 31, 2018 and 2017, respectively.
Revenues and Net Operating Loss
Our
revenues, operating expenses, and net operating loss for the years
ended December 31, 2018 and 2017 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$39,795
|
$39,761
|
$34
|
|
Cost of
goods sold
|
113,727
|
25,439
|
88,288
|
|
Gross
profit (loss)
|
(73,932)
|
14,322
|
(88,254)
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Research and
development
|
-
|
184,315
|
(184,315)
|
|
General
and administrative
|
189,285
|
196,670
|
(7,385)
|
|
Professional
fees
|
429,625
|
923,175
|
(493,550)
|
|
Total
operating expenses
|
618,910
|
1,304,160
|
(685,250)
|
|
|
|
|
|
|
Net
operating loss
|
(692,842)
|
(1,289,838)
|
(596,996)
|
|
Other
income (expense)
|
293,956
|
(2,473,720)
|
2,767,676
|
|
|
|
|
|
|
Net
loss
|
$(398,886)
|
$(3,763,558)
|
$(3,364,672)
|
Revenues
The
Company was established on May 10, 2010, and began initial sales of
our pain management products during the year ended December 31,
2017.
Research and Development
Research
and development expenses were $-0- for the year ended December 31,
2018 compared to $184,315 for the year ended December 31, 2017, an
increase of $184,315. The expenses decreased due to final invoices
from the University of Texas at El Paso. We plan to continue to
reduce our research and development activities as we focus on our
pain management products.
General and Administrative
General
and administrative expenses were $189,285 for the year ended
December 31, 2018 as compared to $196,670 for the year ended
December 31, 2017, a decrease of $7,385, or 4%.
Professional Fees
Professional
fees expense was $429,625 for the year ended December 31, 2018,
compared to $923,175 for the year ended December 31, 2017, a
decrease of $493,550, or 53%. The decrease was primarily due to the
decrease of stock-based compensation issued to debt holders,
directors and consultants for services rendered. A total of
$296,944 of stock-based compensation was awarded during the year
ended December 31, 2018, compared to $783,404 of stock-based
compensation during the year ended December 31, 2017, a decrease of
$486,460 from 2017 to 2018. The decrease in stock-based
compensation was the result of $671,424 of shares of common stock
that were awarded to note holders during 2017.
Net Operating Loss
Net
operating loss for the year ended December 31, 2018 was $692,842,
compared to a net operating loss of $1,289,838 for the year ended
December 31, 2017, a decrease of $596,996, or 46%. Net operating
loss decreased, as set forth above, primarily due to a decrease in
stock-based compensation issued to note holders for services
rendered.
Other Income (Expense)
Other
income (expense) for the year ended December 31, 2018 was $293,956,
compared to ($2,473,720) for the year ended December 31, 2017, a
net increase of $2,767,676, or 112%. Other income (expense)
consisted of interest and finance charges on debt and equity
financing, gain on early extinguishment of debt, and a change in
the fair value of derivative liabilities during the year ended
December 31, 2018. Other income (expense) consisted of interest and
finance charges on debt and equity financing, a change in the fair
value of derivative liabilities, as well as a net loss on our joint
venture during the year ended December 31, 2017. The net increase
was primarily due to an increase of approximately $2,818,479 in the
value of derivative liabilities related to significant decreased
convertible debt financing during the year ended December 31, 2018,
compared to the year ended December 31, 2017.
Net Loss
Net
loss for the year ended December 31, 2018 was $398,886, or $(0.11)
per share, compared to a net loss of $3,763,558, or $(1.92) per
share, for the year ended December 31, 2017, a decrease of
$3,364,672, or 89%. Net loss decreased, as set forth above,
primarily due to an increase of approximately $2,818,479 in the
value of derivative liabilities and decreased stock-based
compensation issued to note holders for services
rendered.
Liquidity
and Capital Resources as of and for the Nine Months ended September
30, 2019 and 2017
Introduction
During
the three and nine months ended September 30, 2019, we had negative
operating cash flows. Our cash on hand as of September 30, 2019 was
$117,209, which was derived from the sale of convertible promissory
notes to investors. Our monthly cash flow burn rate for the first
nine months of 2018 was approximately $35,000, and our monthly burn
rate through the nine months ended September 30, 2019 was
approximately $30,000. Although we have moderate short term cash
needs, as our operating expenses increase as we ramp up production
and sales of our new products we will face strong medium to long
term cash needs. We anticipate that these needs will be satisfied
through the issuance of debt or the sale of our securities until
such time as our cash flows from operations will satisfy our cash
flow needs.
Our
cash, current assets, total assets, current liabilities, and total
liabilities as of September 30, 2019 and December 31, 2018,
respectively, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$117,209
|
$86,827
|
$30,382
|
|
Total
Current Assets
|
177,582
|
159,787
|
17,795
|
|
Total
Assets
|
185,500
|
164,990
|
20,510
|
|
Total
Current Liabilities
|
2,303,710
|
2,312,382
|
(8,672)
|
|
Total
Liabilities
|
$2,303,710
|
$2,312,382
|
$(8,672)
|
Our
cash and total current assets remained relatively steady as we
continued to sustain losses funded by the sale of convertible
notes. Our total current liabilities decreased primarily due to the
reduction of our accounts payable of $71,855 and the conversion of
outstanding convertible notes of $95,075, offset by an increase in
accrued interest of $27,049 and the value of our derivative
liabilities of $148,348. Our stockholders’ deficit decreased by
$29,182 to ($2,118,210).
In
order to repay our obligations in full or in part when due, we will
be required to raise significant capital from other sources. There
is no assurance, however, that we will be successful in these
efforts.
Cash Requirements
Our
cash on hand as of September 30, 2019 was $117,209. Based on our
minimal revenues and current monthly burn rate of approximately
$30,000 per month, we will need to continue to fund operations by
raising capital from the sale of our stock and debt
financings.
Sources and Uses of Cash
Operations
We had
net cash used in operating activities of ($273,168) for the nine
months ended September 30, 2019, compared to ($318,471) for the
nine months ended September 30, 2018. This decrease in net cash
used in operating activities was a result of an increase in the
fair market value of derivative liabilities of $674,498 and an
increase in inventory of $39,861, offset by a decrease in
amortization of debt discounts of $246,886.
Investments
We had
$4,850 net cash used in investing activities for the nine months
ended September 30, 2019, and $2,029 net cash used in investing
activities for the nine months ended September 30, 2018. We
outsource the manufacturing of our products, so our investment
expenses are minimal.
Financing
Our net
cash provided by financing activities for the nine months ended
September 30, 2019 was $308,400, which consisted of the proceeds
from the sale of convertible notes. For the nine months ended
September 30, 2018, net cash provided by financing activities was
$300,000, which consisted of the proceeds from the sale of
convertible notes.
Liquidity
and Capital Resources as of and for the Years ended December 31,
2018 and 2018
Introduction
During
the year ended December 31, 2018, because we did not generate any
revenues, we had negative operating cash flows. Our cash on hand as
of December 31, 2018 was $86,827, which was derived from the sale
of convertible promissory notes to investors. Our monthly cash flow
burn rate has increased from approximately $37,000 in 2018 to
approximately $42,500 in 2017. Although we have moderate short-term
cash needs, as our operating expenses increase we will face strong
medium to long-term cash needs. We anticipate that these needs will
be satisfied through the issuance of debt or the sale of our
securities until such time as our cash flows from operations will
satisfy our cash flow needs.
Our
cash, current assets, total assets, current liabilities, and total
liabilities as of December 31, 2018 and December 31, 2017,
respectively, are as follows:
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$86,827
|
$83,704
|
$3,123
|
|
Total
Current Assets
|
159,787
|
203,603
|
(43,816)
|
|
Total
Assets
|
164,990
|
209,081
|
(44,091)
|
|
Total
Current Liabilities
|
2,312,382
|
2,819,807
|
(507,425)
|
|
Total
Liabilities
|
$2,312,382
|
$2,819,807
|
$(507,425)
|
Our
cash increased by $3,123 as of December 31, 2018, compared to
December 31, 2017. Our total current assets decreased by $43,816
primarily because we recognized an $87,650 allowance for inventory
obsolescence in 2018. Our total assets decreased by $44,091
primarily for the same reasons.
Our
current liabilities decreased by $507,425 as of December 31, 2018,
compared to December 31, 2017, primarily due to decreases in
accounts payable of $97,854 and derivative liabilities of $565,477.
Our total liabilities decreased by the same amount for the same
reasons as we do not have long term liabilities.
In
order to repay our obligations in full or in part when due, we will
be required to raise significant capital from other sources. There
is no assurance, however, that we will be successful in these
efforts.
Cash Requirements
Our
cash on hand as of December 31, 2018 was $86,827, which was derived
from the sale of convertible promissory notes and common stock. Our
monthly cash flow burn rate is approximately $37,000. Although we
have moderate short-term cash needs, as our operating expenses
increase we will face strong medium to long term cash needs. We
anticipate that these needs will be satisfied through the sale of
our securities until such time as our cash flows from operations
will satisfy our cash flow needs.
Sources and Uses of Cash
Operations
Our net
cash used in operating activities for the years ended December 31,
2018 and 2017 was $444,878 and $507,116, respectively, a decrease
of $62,238, or 12%. The primary uses of our cash were purchasing
inventory and operating our pain management business, along with
the public company compliance costs.
Investments
Our net
cash used in investing activities for the years ended December 31,
2018 and 2017 was $2,029 and $2,694, respectively, a decrease of
$665. The slight decrease reflected a lack of purchases of property
and equipment in 2018 compared to 2017.
Financing
Our net
cash provided by financing activities for the years ended December
31, 2018 and 2017 was $450,030 and $573,393, respectively, a
decrease of $123,363, or 22%. The decrease was primarily a result
of a decrease in proceeds from the sale of stock of $135,000 in
2018, compared to $285,000 of proceeds from the sale of stock in
2017 and a decrease in repayments of convertible notes payable from
$30,000 to zero. This was offset by a decrease in the proceeds from
the sale of stock on equity line of credit from $18,323 to
$-0-.
Securities Purchase Agreement
On
March 30, 2017, we entered into a Securities Purchase Agreement
with three investors and raised $300,000 through the sale of stock
and warrants. These same investors purchased $150,000 of common
stock and warrants in the second tranche on May 30, 2017.On August
8, 2017, we exchanged convertible notes with the investors for the
warrants issued in the first tranche and the common stock issued in
the second tranche. We also amended the Securities Purchase
Agreement on that date, and on October 30, 2017, the investors
purchased an additional $150,000 of our convertible notes. We
expect these investments, our growing revenues and sales of common
stock, warrants and convertible notes will finance our operations
for the next several months as we seek to expand revenues from our
new pain management products.
Sale of Convertible Notes
On March 1, 2018, we received $60,000 from two
investors from the sale of convertible notes. These investors have
also committed to provide an additional $240,000 in the near
future. The investors purchased convertible notes at the
signing of a Securities Purchase Agreement for an aggregate amount
of $60,000. The investors will buy additional convertible notes for
an aggregate of $60,000 within five trading days of our filing a
registration statement to cover the investors’ shares of common
stock issuable upon conversion of the convertible notes. Within
five trading days of the registration statement being declared
effective, the investors will buy additional convertible notes for
an aggregate of $180,000. For further details, see our Form 8-K
filed on March 5, 2018 and copies of the agreements filed herewith
as Exhibits 10.60, 10.61 and 10.62.
Critical
Accounting Policies and Estimates
See
Note 1 to the Financial Statements for the year ended December 31,
2018 on page F-6 which is incorporated herein by
reference.
CHANGES
IN AND DISAGREEMENTS WITH
ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have
no disclosure required by this item.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The
following table sets forth the names, ages, and biographical
information of each of our current directors and executive
officers, and the positions with the Company held by each person,
and the date such person became a director or executive officer of
the Company. Our executive officers are elected annually by the
Board of Directors. The directors serve one-year terms until their
successors are elected. The executive officers serve terms of one
year or until their death, resignation or removal by the Board of
Directors. Family relationships among any of the directors and
officers are described below.
|
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
|
|
William
A. Hartman
|
|
77
|
|
President, Chief
Executive Officer, and Director (June 2010)
|
|
|
|
|
|
|
|
Dr.
Mitchell S. Felder
|
|
65
|
|
Chairman of the
Board of Directors and the Scientific Advisory Board (June
2010)
|
|
|
|
|
|
|
|
Heidi
H. Carl
|
|
49
|
|
Chief
Financial Officer, Secretary, Treasurer and Director (June
2010)
|
|
|
|
|
|
|
|
Dr.
Patricio F. Reyes
|
|
72
|
|
Chief
Technology Officer and Director (August 2016)
|
|
|
|
|
|
|
|
John S.
Borza
|
|
65
|
|
Vice
President and Director (August 2012)
|
|
|
|
|
|
|
|
Jay
Rosen
|
|
65
|
|
Director
(June 2010)
|
|
|
|
|
|
|
|
John
Pauly
|
|
58
|
|
Director
(December 2017)
|
William A. Hartman, age 77, is our
President and Chief Executive Officer and a member of our Board of
Directors. From March 2008 until June 2010, Mr. Hartman was not
directly employed but was planning the formation of Premier
Biomedical, Inc. From October 2006 to March 2008, Mr. Hartman was
the Chief Operating Officer of Nanologix, Inc. From July 1991 to
July 2000, Mr. Hartman was a Director at TRW Automotive. From 1984
to 1991, Mr. Hartman was Chief Engineer at TRW Automotive and from
1979 to 1984 he was Division Quality Compliance Manager at Ford
Motor Company. At TRW Automotive, Mr. Hartman was one of the auto
industry pioneers of the concept of grouping related components
into systems and modules and shipping just-in-time to the vehicle
assembly plants. He founded and headed a separate business group
within TRW Automotive with plants in the U.S., Mexico and Europe
with combined annual sales of $1.3 Billion. Academic credentials
include a BSME degree from Youngstown State University and a MSIA
degree (Industrial Administration/Management) from the University
of Michigan.
Dr. Mitchell S.
Felder, age 65, is our Chairman
of the Board of Directors and our Scientific Advisory Board.
Dr. Felder is a practicing Board Certified Neurologist. Dr. Felder
acquired a B.A. Degree from the University of Pennsylvania in 1975
and an M.D. Degree from the University of Rome, Faculty of Medicine
in 1983. He has been Board Certified by both the American Academy
of Clinical Neurology and the American Board of Psychiatry and
Neurology. Dr. Felder has authored or co-authored six publications,
three studies, and has 18 issued patents. Dr. Felder is the former
President, Chairman, and founder of Infectech/Nanologix (from its
founding in 1989 through March 2007)—growing the company from
startup to a $100 million market cap. During the past five years,
Dr. Felder has had as his principal occupation and employment work
as an attending neurologist. Dr. Felder is presently an attending
neurologist at the William Beaumont Army Medical Center in El Paso,
Texas. Dr. Felder has more than 20 years of management
experience.
Heidi H.
Carl, age 49, is our Chief
Financial Officer, Secretary, Treasurer, and a member of our
Board of Directors. From May
2009 until June 2010, Ms. Carl was not directly employed but was
working with Mr. Hartman in planning the formation of Premier
Biomedical, Inc. From June 2007 to May
2009, Ms. Carl was the Product Development Specialist at General
Motors Corporation. From May 2006 to May 2007, Ms. Carl was the
Associate Marketing Manager at General Motors Corporation. From May
2003 to May 2006, Ms. Carl was the Marketing Specialist at General
Motors Corporation and from May 1999 to May 2003, Ms. Carl was the
District Area Parts Manager at General Motors Corporation. Academic
credentials include a BSBA degree from Madonna University and an
ASBA degree from Oakland Community College.
Dr. Patricio F. Reyes, MD, FAAN,
age 72, is a board certified neurologist and neuropathologist, has
served as the Chief Medical Officer and Board Member of the Retired
National Football League Players Association since 2013.
Dr. Reyes has been a board member of the Association of
Ringside Physicians since 2008 and was previously its Chair of the
Education Committee and 2009 Distinguished Educator.
Dr. Reyes has worked as a neurologist and
neuropathologist for the Phoenix VA Hospital since 2014.
Dr. Reyes is the co-founder, Chief Medical Officer and
Chair of the Scientific Advisory Board of Yuma Therapeutics, Inc.
where he has worked since 2012. He is a Fellow of the American
Academy of Neurology and was former Professor of Neurology and
Neuropathology at Thomas Jefferson Medical School in Philadelphia,
Pennsylvania, and Professor of Neurology, Pathology and Psychiatry
at Creighton University School of Medicine in Omaha,
Nebraska.
John S.
Borza, PE, AVS, age 65, is our
Vice President and was appointed to our Board of Directors on
August 17, 2012. Mr. Borza is currently the President and Chief
Executive Officer of Value Innovation, LLC, a consulting firm
focused on value engineering and creative problem solving, where he
has served since August 2009. Prior to Value Innovation, Mr. Borza
was a Specialist with TRW Automotive from September 2007 to
September 2009, and a Director at TRW Automotive from May 1999 to
September 2007. Earlier in his career, Mr. Borza worked in
R&D for 12 years on a variety of products and technologies in
various capacities ranging from Engineer to Chief Engineer, before
moving into launch and production support roles. Mr. Borza is an
Altshuller Institute certified TRIZ Practitioner, and a SAVE
International certified Associate Value Specialist. He is active in
the local chapter of SAVE International and currently serves as the
chapter Past-President. Mr. Borza holds a BS degree in Electrical
Engineering and an MBA from the University of
Michigan.
Jay Rosen, age 65, has been a member of
our Board of Directors since our inception in June 2010. Mr. Rosen
has been a partner at Rosen
Associates, a real estate holding and management company, since
1971. He is also a partner at Midway Industrial Terminal, a real
estate holding and management company, and has been since 2005. Mr.
Rosen privately owns and manages the Rosen Farm, cellular towers
and various other real estate properties, is the President of
XintCorp, a small start-up company for developing intellectual
property, and is a former member of the NY Mercantile Exchange and
the New York Futures Exchange. Mr. Rosen studied economics and
finance at New York University and Columbia
University.
John Pauly, age 58, has served as Executive Vice
President at HealthWarehouse.com, Inc., an online Verified Internet
Pharmacy Practice Site (VIPPS), since October 2017. From January
2017 through March 2017, Mr. Pauly served as the interim Chief
Executive Officer of HealthWarehouse.com. From January 2016 until
his time at HealthWarehouse.com, he was the Chief Operating Officer
of Specialty Medical Drug Store, also a VIPPS accredited online
pharmacy business.
Since
January 2014, Mr. Pauly has been an independent consultant and
investor to businesses in the pharmaceutical industry. From August
2013 through December 2013, he was Vice President at Acton
Pharmaceuticals where he was responsible for the strategy and
operations to commercialize its first FDA approved product,
handling all implementation activities through outsourced
third-parties.
From
January 2013 through August 2013, Mr. Pauly was a consultant to the
Chief Executive Officer of Crown Laboratories, Inc., a fully
integrated specialty pharmaceutical company. There he assisted in
creating and implementing corporate strategy, and OTC and Rx drug
development, manufacturing and commercialization.
Prior
to his time at Crown Laboratories, Mr. Pauly was at Merz
Pharmaceuticals, LLC, a specialty healthcare company and subsidiary
of Merz Pharmaceuticals GmbH, where he served as Vice President of
Commercial Operations from May 2011 to June 2012 and Executive
Director of OCG Strategy and Operations from March 2009 to April
2011. His duties at Merz included management of a unit of 98 people
covering a wide-range of business functions. He played a major role
in corporate strategy and evaluating licensing and M&A
opportunities.
Mr.
Pauly has also served in a variety of management positions within
the healthcare and pharmaceutical industries since 1990 and brings
a wide range of skills and expertise to the Board of
Directors.
Family Relationships
Heidi
H. Carl is the daughter of William A. Hartman.
Other
Directorships; Director Independence
Other
than as set forth above, none of our officers and directors is a
director of any company with a class of securities registered
pursuant to section 12 of the Exchange Act or subject to the
requirements of section 15(d) of such Act or any company registered
as an investment company under the Investment Company Act of
1940.
For
purposes of determining director independence, we have applied the
definitions set out in NASDAQ Rule 5605(a)(2). Neither the OTC Pink
Tier on which shares of common stock are quoted, nor the Pink
Sheets Current tier, has any director independence requirements.
The NASDAQ definition of “Independent Officer” means a person other
than an Executive Officer or employee of the Company or any other
individual having a relationship which, in the opinion of the
Company's Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director. According to the NASDAQ definition, only Mr. Rosen and
Mr. Pauly are an independent directors.
Board
Committees
Our
Board of Directors does not maintain a separate audit, nominating
or compensation committee. Functions customarily performed by such
committees are performed by its Board of Directors as a whole. We
are not required to maintain such committees under the applicable
rules of the OTC Markets. We do not currently have an “audit
committee financial expert” since we currently do not have an audit
committee in place. We intend to create board committees, including
an independent audit committee, in the near future. We have a
Scientific Advisory Board that serves an advisory role to
management and the Board of Directors.
We do
not currently have a process for security holders to send
communications to the Board.
During
the fiscal years ended December 31, 2018 and 2017, the Board of
Directors met approximately on a bi-weekly basis. Only Mr. Rosen
attended fewer than 75 percent of the meetings. We have no policy
with regard to attendance at meetings of the Board of
Directors.
Involvement
in Certain Legal Proceedings
None of
our officers or directors has, in the past ten years, filed
bankruptcy, been convicted in a criminal proceeding or named in a
pending criminal proceeding, been the subject of any order,
judgment, or decree of any court permanently or temporarily
enjoining him or her from any securities activities, or any other
disclosable event required by Item 401(f) of Regulation
S-K.
Code
of Ethics
We have
not adopted a written code of ethics, primarily because we believe
and understand that our officers and directors adhere to and follow
ethical standards without the necessity of a written
policy.
Scientific
Advisory Board
Our
Board of Directors has established a Scientific Advisory Board
that assists management and the Board of Directors on an advisory
basis with respect to the research, development, clinical,
regulatory and commercial plans and activities relating to
research, manufacture, use and sale of our pain management products
and drug candidates. The Scientific Advisory Board meets
on an ad hoc basis and
may attend meetings of the Board at the Board’s request. Its
current members are Mitchell S. Felder, MD, Patricio F. Reyes, MD,
FAAN, Carl E. Meyer, DO, MBA, and Kathryn Meyer, DO. All members of
the Scientific Advisory Board are doctors and have extensive
knowledge, experience and training in the fields of medicine
relevant to our business.
Scientific Advisory
Board members are not entitled to receive compensation, but
warrants or other benefits may be awarded at the discretion of the
Board of Directors. We granted warrants, to purchase 2,000 shares of our common
stock at an exercise price of $1.25 over seven (7) years from the
grant date on December 22, 2017, to each of Carl Meyer and
Katherine Meyer for their services on the Scientific Advisory
Board.
EXECUTIVE
COMPENSATION
Narrative
Disclosure of Executive Compensation
Effective on
September 28, 2012, we entered into employment agreements with our
President and Chief Executive Officer, William A. Hartman, and our
Chairman of the Board of Directors and Chairman of the Scientific
Advisory Board, Dr. Mitchell S. Felder. In December 2012, the
Company and Dr. Felder agreed to terminate his employment
agreement, effective as of its date of inception.
Pursuant to the
employment agreement with Hartman, he will be compensated in the
amount of $150,000 per year for the duration of the agreement.
Pursuant to the agreement, Hartman has waived the salary and the
accrual thereof in exchange for being issued a Common Stock
Purchase Warrant whereby Hartman may purchase a maximum of 105,000
shares of our common stock at a purchase price of $1.45 per share.
The agreement has a one-year term and provides for two (2) years of
severance at his then-current salary in the event Hartman is
terminated due to death, disability or without cause. Mr. Hartman
is still employed under the terms of the agreement.
We do
not currently have a written employment agreement with our other
executives. All other executives are at-will employees or
consultants whose compensation is set forth in the Summary
Compensation Table below.
Summary Compensation Table
The
following table sets forth information with respect to compensation
earned by our Chief Executive Officer, President, and Chief
Financial Officer for the years ended December 31, 2018 and
2017.
Name and
Principal Position
|
|
|
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation ($)
|
All
Other
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
-0-
|
-0-
|
-0-
|
68,146(2)
|
-0-
|
-0-
|
-0-
|
68,146
|
Chief
Executive Officer (1)
|
2017
|
-0-
|
-0-
|
-0-
|
23,358(3)
|
-0-
|
-0-
|
-0-
|
23,358
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
Chief Financial
Officer(4)
|
2017
|
-0-
|
-0-
|
-0-
|
16,488(4)
|
-0-
|
-0-
|
-0-
|
16,488
|
(1)
Mr. Hartman does
not receive a salary for his services as Chief Executive
Officer.
(2)
Option awards
consist of warrants to purchase
842,000 shares of our common stock at an exercise price of $0.05
over seven (7) years from the grant date on December 15,
2018.
(3)
Option awards
consist of warrants to purchase 34,000
shares of our common stock at an exercise price of $1.25 over seven
(7) years from the grant date on December 22,
2017.
(4)
Ms. Carl does not
receive a salary for her services as Secretary and
Treasurer.
(5)
Option awards
consist of warrants to purchase
500,000 shares of our common stock at an exercise price of $0.09
over seven (7) years from the grant date on December 15,
2018.
(6)
Option awards
consist of warrants to purchase 24,000
shares of our common stock at an exercise price of $1.25 over seven
(7) years from the grant date on December 22,
2017.
Officer and Director Compensation
On
December 20, 2018, we issued warrants to the following officers and
directors, which will allow them to purchase shares of our common
stock in the amounts indicated: William Hartman (842,000 shares);
Mitchell Felder (842,000 shares), Heidi Carl (500,000 shares), John
Borza (579,000 shares), Patricio Reyes (500,000 shares), John Pauly
(52,500 shares) and Jay Rosen (52,500 shares). We also issued
warrants to purchase shares of our common stock to three members of
our Scientific Advisory Board in the amounts indicated: Heleno
Souza (131,000 shares), Carl Meyer (26,000 shares) and Katherine
Meyer (26,000 shares). The exercise price of the foregoing warrants
is Nine Cents ($0.09) per share. The warrants also have a cashless
exercise option.
The
warrants were issued with respect to services provided in 2018 and
vested immediately upon issuance. The issuance of the warrants was
fully approved by our Board of Directors on December 20, 2018, the
date a fully executed resolution authorizing the issuance was
delivered to us.
On
December 22, 2017, we issued warrants to the following officers and
directors, which will allow them to purchase shares of our common
stock in the amounts indicated: William Hartman (8,500,000 shares);
Mitchell Felder (8,500,000 shares), Heidi Carl (6,000,000 shares),
John Borza (7,250,000 shares), Patricio Reyes (4,000,000 shares)
and Jay Rosen (1,000,000 shares). We also issued warrants to
purchase shares of our common stock to three members of our
Scientific Advisory Board in the amounts indicated: Heleno Souza
(2,500,000 shares), Carl Meyer (500,000 shares) and Katherine Meyer
(500,000 shares). The exercise price of the foregoing warrants is
One Half Cent ($0.005) per share. The warrants also have a cashless
exercise option.
The
warrants were issued with respect to services provided in 2017 and
vested immediately upon issuance. The issuance of the warrants was
fully approved by our Board of Directors on December 22, 2017, the
date a fully executed resolution authorizing the issuance was
delivered to us.
Also on
December 22, 2017, we issued a warrant to John Pauly as an initial
incentive award following his appointment to the Board of
Directors, which will allow him to purchase 2,000,000 shares of our
common stock. The terms of this warrant are the same as those in
the warrants issued to the other directors on this date, having an
exercise price of One Half Cent ($0.005) and a cashless exercise
option.
We
do not currently have an established policy to provide compensation
to members of our Board of Directors for their services in that
capacity. We intend to develop such a policy in the near
future.
Outstanding Equity Awards at Fiscal Year-End
We
do not currently have a stock option or grant plan.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth, as of November 7, 2019, certain
information with respect to the Company’s equity securities owned
of record or beneficially by (i) each Officer and Director of the
Company; (ii) each person who owns beneficially more than 5% of
each class of the Company’s outstanding equity securities; and
(iii) all Directors and Executive Officers as a group.
|
|
|
Percentage of
Common Stock Ownership (2)
|
Series A
Preferred Stock Ownership
|
Percentage of
Series A Preferred Stock Ownership (3)
|
|
|
|
|
|
|
|
William
A. Hartman (4)(10)
|
971,020(8)
|
1.50%
|
1,000,000
|
50.0%
|
|
|
|
|
|
|
|
Dr.
Mitchell S. Felder (4)
(5)
|
968,051(9)
|
1.50%
|
1,000,000
|
50.0%
|
|
|
|
|
|
|
|
Heidi
H. Carl (4)(10)
|
537,080(12)
|
*
|
-
|
-
|
|
|
|
|
|
|
|
Jay
Rosen (4)
|
63,120(13)
|
*
|
-
|
-
|
|
|
|
|
|
|
|
John S.
Borza (4)
|
619,934(11)
|
*
|
-
|
-
|
|
|
|
|
|
|
|
John
Pauly(4)
(6)
|
60,500(15)
|
*
|
-
|
-
|
|
|
|
|
|
|
|
Dr.
Patricio Reyes(4)
(7)
|
520,680(14)
|
*
|
-
|
-
|
|
|
|
|
|
|
|
All
Officers and Directors as a Group (7 Persons)
|
3,740,445(8)(9)(11)(12)(13)(14)(15)
|
5.56%
|
2,000,000
|
100.0%
|
(1)
Unless otherwise
indicated, the address of the shareholder is c/o Premier
Biomedical, Inc.
(2)
Unless otherwise
indicated, based on 63,723,186 shares of common stock issued and
outstanding. Shares of common stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person
or group holding such options or warrants, but are not deemed
outstanding for purposes of computing the percentage of any other
person.
(3)
Unless otherwise
indicated, based on 2,000,000 shares of Series A Convertible
Preferred Stock issued and outstanding.
(4)
Indicates one of
our officers or directors.
(5)
Dr. Felder’s
address is P.O. Box 1332, Hermitage, PA 16148.
(6)
Mr. Pauly’s address
is 900 Squire Oaks Drive, Villa Hills, KY 41017.
(7)
Dr. Reyes’ address
is 10618 North Eleventh Place, Phoenix, AZ 85020.
(8)
Includes 4,000
shares of common stock that may be acquired upon the conversion of
1,000,000 shares of Series A Convertible Preferred Stock, 200
shares of common stock that may be acquired at $362.50 per share,
420 shares of common stock that may be acquired at $362.50 per
share if the Company’s common stock reaches a closing bid price of
$750.00 per share and remains at or above $750.00 per share for
thirty (30) consecutive trading days on any and all markets or
exchanges on which the Company’s common stock is traded, 6,400
shares of common stock that may be acquired upon the exercise of
warrants at $62.50 per share, 4,000 shares of common stock that may
be acquired upon the exercise of warrants at $12.50 per share,
34,000 shares of common stock that may be acquired upon the
exercise of warrants at $1.25 per share, and 842,000 shares of
common stock that may be acquired upon the exercise of warrants at
$0.09 per share.
(9)
Includes 12,000
shares of common stock that may be acquired upon the exercise of
warrants at $0.0025 per share, 4,000 shares of common stock that
may be acquired upon the conversion of 1,000,000 shares of Series A
Convertible Preferred Stock, 200 shares of common stock that may be
acquired at $362.50 per share, 420 shares of common stock that may
be acquired at $362.50 per share if the Company’s common stock
reaches a closing bid price of $750.00 per share and remains at or
above $750.00 per share for thirty (30) consecutive trading days on
any and all markets or exchanges on which the Company’s common
stock is traded, 6,400 shares of common stock that may be acquired
upon the exercise of warrants at $62.50 per share, 4,000 shares of
common stock that may be acquired upon the exercise of warrants at
$12.50 per share, 34,000 shares of common stock that may be
acquired upon the exercise of warrants at $1.25 per share, and
579,000 shares of common stock that may be acquired upon the
exercise of warrants at $0.09 per share.
(10)
William A. Hartman
is the father of Heidi H. Carl. Mr. Hartman disclaims ownership of
shares held by his daughter.
(11)
Includes 110 shares
of common stock owned members of Mr. Borza’s household, 4,200
shares of common stock that may be acquired by Mr. Borza at $362.50
per share upon the exercise of warrants, 280 shares of common stock
that may be acquired at $362.50 per share upon the exercise of
warrants if the Company’s common stock reaches a closing bid price
of $750.00 per share and remains at or above $750.00 per share for
thirty (30) consecutive trading days on any and all markets or
exchanges on which the Company’s common stock is traded, 4,800
shares of common stock that may be acquired upon the exercise of
warrants at $62.50 per share, 2,400 shares of common stock that may
be acquired upon the exercise of warrants at $12.50 per share,
29,000 shares of common stock that may be acquired upon the
exercise of warrants at $1.25 per share, and 579,000 shares of
common stock that may be acquired upon the exercise of warrants at
$0.09 per share.
(12)
Includes 200 shares
of common stock that may be acquired upon the exercise of warrants
at $362.50 per share, 280 shares of common stock that can be
acquired at $362.50 per share if the Company’s common stock reaches
a closing bid price of $750.00 per share and remains at or above
$750.00 per share for thirty (30) consecutive trading days on any
and all markets or exchanges on which the Company’s common stock is
traded, 5,600 shares of common stock that may be acquired upon the
exercise of warrants at $62.50 per share, 3,000 shares of common
stock that may be acquired upon the exercise of warrants at $12.50
per share, 24,000 shares of common stock that may be acquired upon
the exercise of warrants at $1.25 per share, and 500,000 shares of
common stock that may be acquired upon the exercise of warrants at
$0.09 per share.
(13)
Includes 200 shares
of common stock that may be acquired upon the exercise of warrants
at $362.50 per share, 1,600 shares of common stock that may be
acquired upon the exercise of warrants at $62.50 per share, 800
shares of common stock that may be acquired upon the exercise of
warrants at $12.50 per share, 4,000 shares of common stock that may
be acquired upon the exercise of warrants at $1.25 per share, and
52,500 shares of common stock that may be acquired upon the
exercise of warrants at $0.09 per share.
(14)
Includes 2,800
shares or the Company’s common stock that may be acquired upon the
exercise of warrants at $62.50 per share, 1,400 per share, 16,000
shares of common stock that may be acquired upon the exercise of
warrants at $1.25 per share, and 500,000 shares of common stock
that may be acquired upon the exercise of warrants at $0.09 per
share.
(15)
Consists of 8,000
shares of common stock that may be acquired upon the exercise of
warrants at $1.25 per share, and 52,500 shares of common stock that
may be acquired upon the exercise of warrants at $0.09 per
share.
Other
than as set forth above, the issuer is not aware of any person who
owns of record, or is known to own beneficially, five percent (5%)
or more of the outstanding securities of any class of the
issuer.
There
are no current arrangements which will result in a change in
control.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Joint
Venture
On
September 13, 2016, we entered into an operating agreement to form
a pain management joint venture company with Advanced Technologies
Solutions (ATS), a company owned by Ronald T. La Borde, a member of
our Board of Directors. The joint venture company, Premier
Biomedical Pain Management Solutions, LLC, a Nevada limited
liability company (PBPMS), was formed to develop and market natural
and cannabis-based generalized, neuropathic, and localized pain
relief treatment products. We owned 50% of PBPMS and ATS owned the
other 50%, with 89% of the profits allocated to us and the
remaining 11% of profits allocated to ATS.
The
PBPMS operating agreement called for ATS to enter into a licensing
agreement with PBPMS. Upon entering into the license agreement, Mr.
La Borde was to receive 5,000 warrants to purchase our common stock
at an exercise price of $12.50 per share.
However,
the license agreement was never entered into, the joint venture was
terminated, and PBPMS was dissolved on September 19,
2017.
License
Agreements
On May
12, 2010, we entered into two separate license agreements. One
license agreement was entered into with Altman Enterprises, LLC,
wherein we obtained certain exclusive rights in (i) proprietary
technology that is the subject of one pending PCT patent
application relating to the treatment of auto-immune diseases, and
(ii) the Feldetrex®
trademark. The other license agreement was entered into with Marv
Enterprises, LLC, wherein we obtained certain exclusive rights in
proprietary technology that is the subject of two PCT patent
applications relating to the treatment of blood borne carcinomas
and sequential extracorporeal treatment of blood. Authority to
execute the license agreements on behalf of Altman and Marv is
vested in Dr. Mitchell S. Felder, the Chairman of our Board of
Directors. Because the licensors are controlled by one of our
directors, there may exist a conflict of interest in decisions made
by the Company with respect to the licenses.
As
consideration for the two licenses, we agreed to (i) pay a royalty
of five percent (5%) of any sales of products using the technology,
with no minimum royalty, and (ii) reimburse the licensor for any
costs already incurred in pursuing its proprietary rights in the
licensed technology and pay any costs incurred for maintaining or
obtaining the licensors’ proprietary rights in the licensed
technology in the U.S. and in extending the intellectual property
to other countries around the world. Licensor shall have sole
discretion to select other countries into which exclusive rights in
the licensed technology may be pursued, and if we decline to pay
those expenses, then licensor may pay said expenses and our
licensed rights in those countries will revert to the
licensor.
As of
December 31, 2018, we have not sold any products using the licensed
technology and thus have not paid any license fees. We have,
however, reimbursed expenses associated with the technology we have
licensed, and owe them an additional $46,016.
Stock
Issuances
Preferred Stock
On
January 2, 2016, two of our officers and directors, William A.
Hartman and Mitchell Felder, each exercised warrants to acquire one
million (1,000,000) shares of Series A Convertible Preferred Stock
each. Each share of Series A Convertible Preferred Stock is
convertible, at the election of the holder thereof, into 0.004 of a
share of our common stock, and has one hundred (100) votes per
share. We issued the warrants on June 21, 2010 and they had an
exercise price of $0.001 per share.
The
Preferred Stock also contains protective provisions as
follows:
The
Company may not take any of the following actions without the
approval of a majority of the holders of the outstanding Series A
Convertible Preferred Stock: (i) effect a sale of all or
substantially all of the Company’s assets or which results in the
holders of the Company’s capital stock prior to the transaction
owning less than fifty percent (50%) of the voting power of the
Company’s capital stock after the transaction, (ii) alter or
change the rights, preferences, or privileges of the Series A
Convertible Preferred Stock, (iii) increase or decrease the number
of authorized shares of Series A Convertible Preferred Stock, (iv)
authorize the issuance of securities having a preference over or on
par with the Series A Convertible Preferred Stock, or (v)
effectuate a forward or reverse stock split or dividend of the
Company’s common stock.
Warrant Exercise
On
November 22, 2017, we issued 28,000 shares of common stock,
restricted in accordance with Rule 144, to William Hartman, an
officer and director of the Company, upon the exercise of warrants
at $0.63 per share.
On
December 20, 2016, we issued 24,000 shares of common stock,
restricted in accordance with Rule 144, to each of William Hartman
and Mitchell Felder, officers and directors of the Company, upon
the exercise of warrants at $0.63 per share.
On
August 19, 2016, we issued 16,000 shares of common stock,
restricted in accordance with Rule 144, to each of William Hartman
and Mitchell Felder, officers and directors of the Company, upon
the exercise of warrants at $0.63 per share.
DISCLOSURE
OF COMMISSION POSITION ON
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Article
9 of our Articles of Incorporation provides that, the personal
liability of the directors of the corporation is hereby eliminated
to the fullest extent permitted by paragraph 1 of Section 78.037 of
the General Corporation Law of the State of Nevada, as the same may
be amended and supplemented. Paragraph 1 of Section 78.037 states
that the articles of incorporation of a Nevada corporation may
contain any provision, not contrary to the laws of the State of
Nevada, for the management of the business and for the conduct of
the affairs of the corporation.
Article
10 of our Articles of Incorporation provides that, the corporation
shall, to the fullest extent permitted by Section 78.751 of the
General Corporation Law of the State of Nevada, as the same may be
amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against
any and all expenses, liabilities, or other matters referred to in
or covered by said section. Section 78.751 states that the articles
of incorporation of a Nevada corporation may provide that the
expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation
as they are incurred and in advance of the final disposition. It
further states that indemnification does not exclude any other
rights that an officer or director may have pursuant to the
articles, bylaws, shareholders agreement or otherwise, and that it
continues for a person who has ceased to be a director, officer, or
employee of the company.
Article
V of our Bylaws further addresses indemnification, including
procedures for indemnification claims. Indemnification applies to
any person that is made a party to, or threatened to be made a
party to, any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or
she was an officer or director of the company.
Insofar
as indemnification for liabilities arising under the Securities Act
of 1933 (the “Act”) may be
permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed with the Securities and Exchange Commission a registration
statement on Form S-1, together with all amendments and exhibits
thereto, under the Securities Act of 1933 with respect to the
common stock offered hereby. This Prospectus, which constitutes a
part of the registration statement, does not contain all of the
information set forth in the registration statement and the
exhibits and schedules thereto. You should refer to the
registration statement and its exhibits and schedules for further
information. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not
necessarily complete and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the
registration statement, each such statement being qualified in all
respects by such reference.
Copies
of documents we file with the Commission, including this
prospectus, the registration of which it is a part and the related
exhibits, may be read and copies at the Commission’s Public
Reference Room at 100 F Street, NE, Washington, DC 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our filings with the Commission are also
available through the Commission’s website at the following
address: http://www.sec.gov.
We are
subject to the information and periodic reporting requirements of
the Securities Exchange Act of 1934, and, in accordance therewith,
file periodic reports, proxy statements and other information with
the Commission. Such periodic reports, proxy statements and other
information are available for inspection and copying at the Public
Reference Room and website of the SEC referred to above. We also
furnish our shareholders with annual reports containing our
financial statements audited by an independent registered public
accounting firm and quarterly reports containing our unaudited
financial information. We maintain a website at
www.premierbiomedical.com. You may access our annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,
and amendments to those reports, filed or furnished pursuant to
section 13(a) or 15(d) of the Exchange Act with the Commission free
of charge at our website as soon as reasonably practicable after
this material is electronically filed with, or furnished to, the
Commission. The reference to our website or web address does not
constitute incorporation by reference of the information contained
at that site.
INCORPORATION
BY REFERENCE
We
“incorporate by reference” information from other documents that we
file with the SEC into this prospectus, which means that we
disclose important information to you by referring you to those
documents. The information incorporated by reference is deemed to
be part of this prospectus except for any information that is
superseded by information included directly in this prospectus, and
the information that we file later with the SEC will automatically
supersede this information. Any statement contained in this
prospectus or any prospectus supplement or a document incorporated
by reference in this prospectus or in any prospectus supplement
will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document that is
incorporated by reference in this prospectus modifies or superseded
the statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part
of this prospectus. You should not assume that the information in
this prospectus is current as of the date other than the date on
the cover page of this prospectus.
We are
incorporating by reference into this prospectus any additional
documents that we may file with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act on or after the effective
date of the registration statement and prior to the termination of
the offering.
You may
request a copy of any document incorporated by reference in this
prospectus and any exhibit specifically incorporated by reference
in those documents, at no cost, by writing or telephoning us at the
following address or phone number:
Premier
Biomedical, Inc.
P.O.
Box 25
Jackson
Center, PA 16133
Attn:
Investor Relations
(724)
633-7033
EXPERTS
The
audited financial statements of Premier Biomedical, Inc. as of
December 31, 2018 and 2017 appearing in this prospectus which is
part of a registration statement have been so included in reliance
on the report of M&K CPAS, PLLC, given on the authority of such
firm as experts in accounting and auditing.
INDEX
TO FINANCIAL STATEMENTS
For the
Three and Nine Months ended September 30, 2019 and
2018
|
Condensed
Consolidated Balance Sheets as of September 30, 2019 and December
31, 2018 (Unaudited)
|
F-1
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the three and nine months
ended September 30, 2019 and 2018 (Unaudited)
|
F-2
|
|
|
|
|
Condensed
Consolidated Statement of Stockholders’ Equity (Deficit) for
the nine months ended September 30, 2019 and 2018
(Unaudited)
|
F-3
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2019 and 2018 (Unaudited)
|
F-4
|
|
|
|
|
Notes
to Condensed
Consolidated Financial Statements
|
F-5 to
F-20
|
For the
Years ended December 31, 2018 and 2017
|
Report
of Independent Registered Public Accounting Firm
|
F-21
|
|
|
|
|
Balance
Sheets as of December 31, 2018 and 2017
(Audited)
|
F-22
|
|
|
|
|
Statements of
Operations for the years ended December 31, 2018 and 2017
(Audited)
|
F-23
|
|
|
|
|
Statement of
Stockholders’ Equity (Deficit) for the years ended December 31,
2018 and 2017 (Audited)
|
F-24
|
|
|
|
|
Statements of Cash
Flows for the years ended December 31, 2018 and 2017
(Audited)
|
F-25
|
|
|
|
|
Notes
to Financial Statements
|
F-26 to
F-44
|
PREMIER
BIOMEDICAL, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
$117,209
|
$86,827
|
|
Accounts
receivable
|
3,387
|
3,092
|
|
Inventory
|
20,516
|
25,985
|
|
Other
current assets
|
36,470
|
43,883
|
|
Total
current assets
|
177,582
|
159,787
|
|
|
|
|
|
Property and
equipment, net
|
7,918
|
5,203
|
|
|
|
|
|
Total
assets
|
$185,500
|
$164,990
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$192,543
|
$264,398
|
|
Accounts payable,
related parties
|
31,081
|
25,944
|
|
Accrued
interest
|
49,148
|
22,099
|
|
Convertible notes
payable, net of discounts of $278,228 and $-0- at September 30,
2019
|
|
|
|
and
December 31, 2018, respectively, including $139,614 currently in
default
|
192,286
|
309,637
|
|
Derivative
liabilities
|
1,838,652
|
1,690,304
|
|
Total
current liabilities
|
2,303,710
|
2,312,382
|
|
|
|
|
|
Total
liabilities
|
2,303,710
|
2,312,382
|
|
|
|
|
|
Commitments and
contingencies
|
-
|
-
|
|
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
|
Series
A convertible preferred stock, $0.001 par value, 10,000,000 shares
authorized, 2,000,000 shares designated, issued
and outstanding at September 30, 2019 and December 31, 2018,
respectively
|
2,000
|
2,000
|
|
Series
B convertible preferred stock, $0.001 par value, 1,000,000 shares
designated, 133,780 shares issued and
outstanding at September 30, 2019 and December 31, 2018,
respectively
|
134
|
150
|
|
Common
stock, $0.00001 par value, 1,000,000,000 shares authorized,
49,216,810 and 5,652,410 shares issued and
outstanding at September 30, 2019 and December 31, 2018,
respectively
|
492
|
57
|
|
Additional paid in
capital
|
14,947,033
|
14,572,754
|
|
Subscriptions
payable, consisting of 276,960 shares at December 31,
2018
|
-
|
5,345
|
|
Accumulated
deficit
|
(17,067,869)
|
(16,727,698)
|
|
Total
stockholders' equity (deficit)
|
(2,118,210)
|
(2,147,392)
|
|
|
|
|
|
Total
liabilities and stockholders' equity (deficit)
|
$185,500
|
$164,990
|
See
accompanying notes to financial statements.
PREMIER
BIOMEDICAL, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$3,465
|
$8,225
|
$12,975
|
$30,709
|
|
Cost of
goods sold
|
1,653
|
4,373
|
5,470
|
20,577
|
|
Gross
profit
|
1,812
|
3,852
|
7,505
|
10,132
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General
and administrative
|
36,757
|
62,572
|
138,589
|
139,881
|
|
Professional
fees
|
29,609
|
22,613
|
88,604
|
100,953
|
|
Total
operating expenses
|
66,366
|
85,185
|
227,193
|
240,834
|
|
|
|
|
|
|
|
Net
operating loss
|
(64,554)
|
(81,333)
|
(219,688)
|
(230,702)
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
Interest
expense
|
(56,002)
|
(184,624)
|
(101,793)
|
(322,323)
|
|
Change
in derivative liabilities
|
(61,078)
|
(97,578)
|
(18,690)
|
655,808
|
|
Total
other income (expense)
|
(117,080)
|
(282,202)
|
(120,483)
|
333,485
|
|
|
|
|
|
|
|
Net
income (loss)
|
$(181,634)
|
$(363,535)
|
$(340,171)
|
$102,783
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic
|
26,817,415
|
3,306,069
|
14,837,666
|
3,058,442
|
|
Weighted average
number of common shares outstanding - fully diluted
|
26,817,415
|
3,306,069
|
14,837,666
|
3,070,392
|
|
|
|
|
|
|
|
Net
income (loss) per share - basic
|
$(0.01)
|
$(0.11)
|
$(0.02)
|
$0.03
|
|
Net
income (loss) per share - fully diluted
|
$(0.01)
|
$(0.11)
|
$(0.02)
|
$0.03
|
See
accompanying notes to financial statements.
PREMIER
BIOMEDICAL, INC.
STATEMENT
OF STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
Series
B Convertible
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|