x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________

Delaware		27-0801073
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
1750 Elm Street, Suite 103, Manchester, NH		03104
(Address of principal executive offices)		(Zip Code)

Class		Outstanding at May 9, 2014
Common Stock, $0.001 par value per share		38,381,516 shares

PART I - FINANCIAL INFORMATION
Item 1. Unaudited Condensed Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3. Quantitative and Qualitative Disclosures About Market Risk	16
Item 4. Controls and Procedures	16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	17
Item 1A. Risk Factors	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Mine Safety Disclosures	17
Item 5. Other Information	17
Item 6. Exhibits	18
SIGNATURES	19

 

 

 

Boston Therapeutics, Inc.
Balance Sheet (Unaudited)
March 31, 2014 and December 31, 2013
		March 31,					December 31,
		2014					2013
ASSETS
Cash and cash equivalents		$	2,512,404			$	3,387,428
Accounts receivable			42,600				99,786
Prepaid expenses and other current assets			47,044				153,681
Inventory			97,572				110,625
Total current assets			2,699,620				3,751,520
Property and equipment, net			17,841				15,176
Intangible assets			680,357				696,429
Goodwill			69,782				69,782
Other assets			2,125				2,125
Total assets		$	3,469,725			$	4,535,032
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	71,775			$	170,977
Accrued expenses and other current liabilities			242,851				720,965
Total current liabilities			314,626				891,942
Notes payable - related parties			297,820				297,820
Total liabilities			612,446				1,189,762
COMMITMENTS AND CONTINGENCIES (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding			-				-
Common stock, $0.001 par value, 200,000,000 shares authorized at March 31, 2014 and December 31, 2013, 38,378,516 and 37,362,160 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively			38,378				37,362
Additional paid-in capital			11,684,226				10,606,810
Accumulated deficit			(8,865,325	)			(7,298,902	)
Total stockholders’ equity			2,857,279				3,345,270
Total liabilities and stockholders’ equity		$	3,469,725			$	4,535,032

Boston Therapeutics, Inc.
Statement of Operations (Unaudited)
For the Three Months Ended March 31, 2014 and 2013
		Three Months Ended
		March 31,				March 31,
		2014				2013
Revenue		$	43,827			$	23,336
Cost of goods sold			54,558				47,937
Gross margin (deficit)			(10,731	)			(24,601	)
Operating expenses:
Research and development			269,434				28,661
Sales and marketing			172,735				81,226
General and administrative			1,105,230				528,170
Total operating expenses			1,547,399				638,057
Operating loss			(1,558,130	)			(662,658	)
Interest expense			(4,728	)			(4,764	)
Other expense			(2,940	)			-
Foreign currency loss			(625	)			-
Net loss		$	(1,566,423	)		$	(667,422	)
Net loss per share- basic and diluted		$	(0.04	)		$	(0.04	)
Weighted average shares outstanding basic and diluted			37,451,156				18,880,845

Boston Therapeutics, Inc.
Statement of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2014 and 2013
		Three Months Ended
		March 31,					March 31,
		2014					2013
Cash flows from operating activities:
Net loss		$	(1,566,423	)		$	(667,422	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			17,547				16,500
Stock-based compensation			503,772				192,165
Issuance of common stock for consulting services			74,160				5,250
Changes in operating assets and liabilities:
Accounts receivable			57,186				(3,335	)
Inventory			13,053				(8,570	)
Prepaid expenses and other current assets			106,637				(36,193	)
Accounts payable			(99,202	)			61,473
Accrued expenses			(228,114	)			24,942
Net cash used in operating activities			(1,121,384	)			(415,190	)
Cash flows from investing activities:
Purchase of property and equipment			(4,140	)			(2,451	)
Net cash used in investing activities			(4,140	)			(2,451	)
Cash flows from financing activities:
Proceeds from issuance of common stock upon option exercises			500				-
Proceeds from issuance of common stock and common stock warrants			250,000				250,000
Net cash provided by financing activities			250,500				250,000
Net decrease in cash and cash equivalents			(875,024	)			(167,641	)
Cash and cash equivalents, beginning of period			3,387,428				552,315
Cash and cash equivalents, end of period		$	2,512,404			$	384,674
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest		$	-			$	-
Income taxes		$	3,000			$	-
Non-cash financing activities:
Issuance of common stock for stock subscription received in 2013		$	250,000			$	-
Value of common stock issued to settle accrued liabilities		$	-			$	14,000

		2014				2013
Raw materials		$	2,935			$	7,672
Work in process			-				-
Finished goods			94,637				102,953
		$	97,572			$	110,625

 

During the period ended March 31, 2014, the Company issued 99,000 shares of its restricted common stock with a fair value of $74,160 in exchange for consulting services rendered during those periods in connection with three separate consulting agreements.

On March 31, 2014, the Company issued 833,340 shares of common stock at a price per share of $0.60 and issued warrants to purchase 416,670 additional shares of common stock with an exercise price of $1.00 per share for gross proceeds of $500,000.  The Company had received $250,000 of these proceeds during the fourth quarter of 2013 which was recorded as a stock subscription in accrued expenses as of December 31, 2013.   The warrants are exercisable immediately and have a five year term.  The Company has evaluated these warrants for proper classification based on terms of the warrant agreement and has determined that equity classification is appropriate. The Company estimated the relative fair value of the warrant to be $125,251 using the Black Scholes model, which has been recorded as a component of permanent equity in additional paid in capital.

In February 2014 the Board of Directors approved a grant of non-qualified stock options to the independent directors of the Company to purchase an aggregate of 279,000 shares of the Company’s common stock. The options were allocated among the directors based on service in, and chairmanship of the Company’s committees and service as lead independent director. The options vest as of December 31, 2014, provided that the directors remain directors on that date and have attended at least 75% of the scheduled meetings of the Board and the committees on which such directors serve during the 2014 calendar year. In addition, during the period ended March 31, 2014, the Company granted incentive stock options to members of management, non-management, and directors of the Company to purchase an aggregate of 800,000 shares of the Company’s common stock at exercises prices ranging from $0.69 to $1.21 per share, of which 450,000 of these options vested immediately. The remaining unvested stock options vest quarterly over a period of one to four years. In addition, the Company granted, to consultants of the Company, non-qualified stock options to purchase up to 140,000 shares of the Company’s common stock at exercise prices ranging from $1.00 to $1.21 per share vesting over a one to two year period.

 

		2014				2013
Risk-free interest rate			0.55% - 2.29	%			0.66% - 1.00	%
Expected dividend yield			0	%			0	%
Volatility factor			85.6 – 98.4	%			85	%
Expected life of option		2.50 to 7 years				4.50 to 6 years

		Shares				Exercise Price per Share				Weighted Average Exercise Price per Share
Outstanding as of December 31, 2013			5,741,400			$	0.10-1.85			$	0.40
Granted			1,219,000				0.69-1.21				1.15
Exercised			(84,016	)			0.10-0.57				0.54
Options forfeited/cancelled			(54,264	)			0.57				0.57
Outstanding as of March 31, 2014			6,822,120			$	0.10-1.85			$	0.54

 

Vested or Expected to Vest																				Exercisable Options
								Weighted				Weighted												Weighted				Weighted
								Average				Average												Average				Average
								Exercise				Remaining				Aggregate				Number				Exercise				Remaining				Aggregate
Exercise				Number of				Price Per				Contractual				Intrinsic				of				Price				Contractual				Intrinsic
Price				Options				Share				Life (Years)				Value				Options				Per Share				Life (Years)				Value
$	0.10				1,795,000			$	0.10				2.63			$	1,112,900				1,795,000			$	0.10				2.63			$	1,112,900
	0.42				63,000				0.42				6.76				18,900				63,000				0.42				6.76				18,900
	0.50				3,310,000				0.50				4.09				728,200				3,310,000				0.50				4.09				728,200
	0.57				266,720				0.57				4.37				40,008				50,000				0.57				4.37				7,500
	0.69				100,000				0.69				9.96				3,000				100,000				0.69				9.96				3,000
	1.00				180,000				1.00				5.41				-				90,000				1.00				3.89				-
	1.21				1,029,000				1.21				9.85				-				275,000				1.21				9.88				-
	1.85				78,400				1.85				1.50				-				78,400				1.85				1.50				-
$	0.10-1.85				6,822,120			$	0.54				4.70			$	1,903,008				5,761,400			$	0.44				4.00			$	1,870,500

		Number of Options				Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2013			862,135			$	0.25
Granted			1,219,000				0.83
Forfeited			-				-
Vested			(1,095,415	)			0.53
Non-vested as of March 31, 2014			985,720			$	0.69

			2014				2013
SUGARDOWN® technology and provisional patents		$	900,000			$	900,000
Less accumulated amortization			(219,643	)			(203,571	)
Intangible assets, net		$	680,357			$	696,429

Fiscal year
2014			45,459
2015			62,169
2016			64,299
2017			66,519
2018			16,770
		$	255,216

 

 

 

 

 

 

 

 

Item 1.  Legal Proceedings
	The Company may become involved in certain legal proceedings and claims which arise in the normal course of business.  On March 12, 2014, a complaint against the Company and the Company's CEO, David Platt, was filed in Middlesex Superior Court in Massachusetts by Eliezer Zomer. Mr. Zomer alleges that the Company and Dr. Platt have refused to deliver 400,000 shares of the Company's Common Stock that Mr. Zomer believes are owed to him, and seeks delivery of the shares and damages. The Company and Dr. Platt intend to contest the allegations set forth in the complaint.
Item 1A.  Risk Factors
	There have not been any material changes from the risk factors previously disclosed  in our  Annual Report on Form 10-K for the year ended December 31, 2013.
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
	The only unregistered sales of equity securities made by the Company during the quarter ended March 31, 2014 and not previously reported on Form 8-K are as follows:   During the period ended March 31, 2014, the Company issued 99,000 shares of its restricted common stock with a fair value of $74,160 in exchange for consulting services rendered during those periods in connection with three separate consulting agreements.   On March 31, 2014, the Company issued 833,340 shares of common stock at a price per share of $0.60 and issued warrants to purchase 416,670 additional shares of common stock  with an exercise price of $1.00 per share for gross proceeds of $500,000.  The Company had received $250,000 of these proceeds during the fourth quarter of 2013 which was recorded as a stock subscription in accrued expenses as of December 31, 2013.  The warrants are exercisable immediately and have a five year term.  The Company has evaluated these warrants for proper classification based on terms of the warrant agreement and has determined that equity classification is appropriate. The Company estimated the relative fair value of the warrant to be $125,251 using the Black Scholes model, which has been recorded as a component of permanent equity in additional paid in capital.   Each of the preceding sales and issuances was made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act for transactions not involving a public offering.
Item 3.  Defaults Upon Senior Securities
	None.
Item 4.  (Removed and Reserved)
Item 5.  Other Information
	None.

Exhibit No.		Title of Document
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended*
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended*
32.1		Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Executive Officer)**
32.2		Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Financial Officer)**
101		The following financial statements from the Quarterly Report on Form 10-Q of Boston Therapeutics, Inc. for the quarter ended March 31, 2014 formatted in XBRL: (i) Condensed Balance Sheets (unaudited), (ii) Condensed Statements of Operations (unaudited), (iii) Condensed  Statements of Cash Flows (unaudited), and (iv) Notes to Condensed Financial Statements (unaudited), tagged as blocks of text.*

 

 

 

 

	BOSTON THERAPEUTICS, INC.
Date:  May 13, 2014	By:	/s/ David Platt
		David Platt
		Chief Executive Officer

 

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