GlobeStar Therapeutics Corp - FORM 10-Q

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EX-32 - SECTION 1350 CERTIFICATION - GlobeStar Therapeutics Corp	ex_32-1.htm
EX-31 - RULE 13(A)-14(A)/15(D)-14(A) CERTIFICATION - GlobeStar Therapeutics Corp	ex_31-1.htm

UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 333-170315

AngioSoma Inc.

(Exact name of registrant as specified in its charter)


Nevada		27-3480481
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

2500 Wilcrest Drive, 3^rd Floor Houston, TX		77042
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: 832-781-8521

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

Yes [X] No [_]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	[_]	Accelerated filer	[_]
Non-accelerated filer	[_]	Smaller reporting company	[X]
(Do not check is smaller reporting company)		Emerging growth company	[_]

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 pursuant to Section 13(a) of the Exchange Act.

[_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes [_] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of February 14, 2018, 52,084,067 shares of common stock are issued and outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION	4

Item 1. Financial Statements	4

Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017 (Unaudited)	4

Consolidated Statements of Operations for the Three Months Ended December 31, 2017 and 2016 (Unaudited)	5

Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2017 and 2016 (Unaudited)	6

Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended December 31, 2017 (Unaudited)	7

Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2017 and 2016 (Unaudited)	8

Notes to the Unaudited Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3. Quantitative and Qualitative Disclosures about Market Risk	14

Item 4. Controls and Procedures	14

PART II — OTHER INFORMATION	14

Item 1. Legal Proceedings	14

Item 1A. Risk Factors	14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3. Defaults upon Senior Securities	15

Item 4. Mine Safety Disclosures	15

Item 5. Other Information	15

Item 6. Exhibits	15

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to AngioSoma Inc., a Nevada corporation and its subsidiaries unless the context specifically indicates otherwise.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ANGIOSOMA INC.

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2017 and SEPTEMBER 30, 2017

(UNAUDITED)


	December 31, 2017			September 30, 2017
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	65,253		$	14,100
Prepaid expenses		750			750
Total current assets		66,003			14,850

Available for sale securities, at market value		11,644			9,703
Intellectual property, net of impairment of $2,990,535		—			—

TOTAL ASSETS	$	77,647		$	24,553

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	148,276		$	137,123
Accounts payable to related party		248,063			141,059
Advances payable		59,650			59,650
Current portion of convertible notes payable, net of discount of $3,000 and $0, respectively		85,000			20,000
Current portion of accrued interest payable		147,470			147,023
Total current liabilities		688,459			504,855

Accrued interest payable		72,329			74,880
Note payable		68,793			68,793
TOTAL LIABILITIES		829,581			648,528

COMMITMENTS AND CONTINGENCIES		—			—

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 480,000,000 shares authorized; 52,084,067 and 45,584,067 shares issued and outstanding at December 31, 2017 and September 30, 2017, respectively		52,084			45,584
Preferred stock, $0.001 par value; 20,000,000 shares authorized:
Series A Preferred Stock, 5,000,000 shares issued and outstanding at December 31, 2017 and September 30, 2017		2,990,535			2,990,535
Series B Preferred Stock, $0.001 par value; 30,000 shares issued and outstanding at December 31, 2017 and September 30, 2017		—			30
Series D Preferred Stock, $0.001 par value; 509,988 shares issued and outstanding at December 31, 2017 and September 30, 2017		510			510
Series E Preferred Stock, $0.001 par value; 1,000,000 shares issued and outstanding at December 31, 2017 and September 30, 2017		1,000			1,000
Series F Preferred Stock; $0.001 par value; 471,975 shares issued and outstanding at December 31, 2017 and September 30, 2017		472			472
Additional paid-in capital		1,849,638			1,520,658
Accumulated other comprehensive income		971			(970	)
Accumulated deficit		(5,647,144	)		(5,181,794	)
Total stockholders’ deficit		(751,934	)		(623,975	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	77,647		$	24,553

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ANGIOSOMA INC.

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(UNAUDITED)


	Three Months Ended December 31,
	2017			2016
REVENUE	$	—		$	—

OPERATING EXPENSES
General and administrative expenses		128,695			236,838
Total operating expenses		(128,695	)		(236,838	)

LOSS FROM OPERATIONS		(128,695	)		(236,838	)

OTHER INCOME (EXPENSE)
Loss on conversion		(335,450	)		—
Interest expense		(1,205	)		(80,576	)

NET LOSS	$	(465,350	)	$	(317,414	)

NET LOSS PER COMMON SHARE – Basic and diluted	$	(0.01	)	$	(0.01	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – Basic and diluted		51,356,893			36,241,378

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ANGIOSOMA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(UNAUDITED)


	Three Months Ended December 31,
	2017			2016
NET LOSS	$	(465,350	)	$	(317,414	)

Change in fair value of available-for-sale securities		1,941			2,911

Comprehensive loss	$	(463,409	)	$	(314,503	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ANGIOSOMA INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED DECEMBER 31, 2017

(UNAUDITED)


	Common Stock			Series A Preferred Stock			Series B Preferred Stock					Series D Preferred Stock			Series E Preferred Stock			Series F Preferred Stock			Additional Paid In			Accumulated Other Comprehensive			Accumulated			Total Equity
	Shares	Amount		Shares	Amount		Shares		Amount			Shares	Amount		Shares	Amount		Shares	Amount		Capital			Income			Deficit			(Deficit)

BALANCE, September 30, 2017	45,584,067	$	45,584	5,000,000	$	2,990,535	30,000		$	30		509,988	$	510	1,000,000	$	1,000	471,975	$	472	$	1,520,658		$	(970	)	$	(5,181,794	)	$	(623,975	)

Common stock issued for conversion of convertible notes	6,000,000		6,000	—		—	—			—		—		—	—		—	—		—		(6,000	)		—			—			—
Common stock issued for conversion of Series B Preferred Stock	500,000		500	—		—	(30,000	)		(30	)	—		—	—		—	—		—		6,780			—			—			7,250
Loss on conversion of debt	—		—	—		—	—			—		—		—	—		—	—		—		328,200			—			—			328,200
Net loss	—		—	—		—	—			—		—		—	—		—	—		—		—			—			(465,350	)		(465,350	)
Other comprehensive loss	—		—	—		—	—			—		—		—	—		—	—		—		—			1,941			—			1,941
BALANCE, September 30, 2017	52,084,067	$	52,084	5,000,000	$	2,990,535	—		$	—		509,988	$	510	1,000,000	$	1,000	471,975	$	472	$	1,849,638		$	971		$	(5,647,144	)	$	(751,934	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ANGIOSOMA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(UNAUDITED)


	Three Months Ended December 31,
	2017			2016
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss	$	(465,350	)	$	(317,414	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation		—			199,870
Amortization of discount on convertible note payable		—			46,302
Loss on conversion		335,450			—
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		3,916			17,030
Accounts payable to related party		110,314			—
Accrued interest payable		1,823			31,260
NET CASH USED IN OPERATING ACTIVITIES		(13,847	)		(22,952	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from advances		—			5,000
Proceeds from convertible notes payable		65,000			—
Proceeds from sale of Series B Preferred Stock		—			12,500
NET CASH PROVIDED BY FINANCING ACTIVITIES		65,000			17,500

NET INCREASE IN CASH		51,153			(5,452	)

CASH, at the beginning of the period		14,100			5,845

CASH, at the end of the period	$	65,253		$	393

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	—		$	—
Taxes	$	—		$	—

Noncash investing and financing transaction:
Debt converted to common stock	$	6,000		$	66,118
Preferred stock converted to common stock	$	500		$	—
Change in fair value of available-for-sale securities	$	1,940		$	2,911

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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ANGIOSOMA INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017

Note 1. General Organization and Business

AngioSoma, Inc., a Nevada corporation (“AngioSoma” or the “Company”), is a clinical stage biotechnology company focused on improving the effectiveness of current standard-of-care treatments, especially related to endovascular interventions in the treatment of peripheral artery disease (PAD).

AngioSoma is developing its lead product, a drug candidate called Liprostin^TM for the treatment of peripheral artery disease, or PAD, which has completed FDA Phase I and three Phase II clinical trials. We are in discussions with several contract research organizations for completion of our FDA protocol for Phase III and submission of our new drug application for marketing in the US and its territories.

The Company was incorporated on April 29, 2016. The Company’s year-end is September 30.

Note 2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the nine months ended December 31, 2017, the Company had a net loss of $465,350 and negative cash flow from operating activities of $13,847. As of December 31, 2017, the Company had negative working capital of $622,456. Management does not anticipate having positive cash flow from operations in the near future.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company, which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.

Note 3. Summary of Significant Accounting Policies

Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. The results of operations for the nine months ended December 31, 2017 are not necessarily indicative of the results to be expected for the full fiscal year ending September 30, 2018.

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Consolidated Financial Statements

The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, AngioSoma Research, LLC, First Titan Energy, LLC and First Titan Technical, LLC from the date of their formations or acquisition. Significant intercompany transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.

FASB Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


Level 1 -	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 -	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 -	Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.

The following table presents assets that were measured and recognized at fair value as of December 31, 2017 and the period then ended on a recurring and nonrecurring basis:


Description	Level 1		Level 2		Level 3		Total		Gain (Loss)
Available for sale securities	$	11,644	$	—	$	—	$	11,644	$	1,941
Totals	$	11,644	$	—	$	—	$	11,644	$	1,941

The following table presents assets that were measured and recognized at fair value as of September 30, 2017 and the period then ended on a recurring and nonrecurring basis:


Description	Level 1		Level 2		Level 3		Total
Available for sale securities	$	9,703	$	—	$	—	$	9,703
Totals	$	9,703	$	—	$	—	$	9,703

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Commitments and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. There are no known commitments or contingencies as of December 31, 2017.

Recently Issued Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Note 4. Advances

As of December 31, 2017 and September 30, 2017, the Company had non-interest bearing advances payable to third parties of $59,650. These advances are payable on demand.

Note 5. Convertible Notes Payable

Convertible notes payable consisted of the following at December 31, 2017 and September 30, 2017:


	December 31, 2017			September 30, 2017
Convertible note dated April 13, 2017 in the original principal amount of $20,000, no stated maturity date, bearing interest at 3% per year, convertible into common stock at a rate of $0.01 per share	$	20,000		$	20,000
Convertible note dated December 11, 2017 in the original principal amount of $68,000, maturing September 20, 2018, bearing interest at 12% per year, convertible beginning June 11, 2018 into common stock at a rate of 65% of the average of the two lowest trading prices during the 15 trading days prior to conversion		68,000			—
Total current convertible notes payable		88,000			20,000

Less: discount on convertible notes payable		(3,000	)		—
Total convertible notes payable, net of discount	$	85,000		$	20,000

All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.9% of the outstanding stock of the Company.

Conversions to Common Stock

During three months ended December 31, 2017, the holders of the Convertible Note Payable dated June 30, 2015 elected to convert principal of $0 into 6,000,000 shares of common stock. A loss of $328,200 was recognized on the conversions as they occurred after all debt had been fully converted as of September 30, 2017. This is recorded under additional paid in capital.

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Note 6. Related Party Transactions

David Summers, a significant shareholder of the Company, provides consulting services to the Company related to the development of our products. In addition, the Company rents office space from Mr. Summers for $400 per month under a month to month lease. As of December 31, 2017, services, rent and other expense reimbursements in the amount of $112,804 was unpaid.

Alex Blankenship is paid $5,000 per month under her employment agreement with the Company. As of December 31, 2017, the Company owed Ms. Blankenship $100,438 for unpaid compensation.

As of December 31, 2017, the Company owed Sydney Jim, our former CEO, $34,821 for accrued but unpaid compensation.

Note 7. Stockholders’ Equity

Common Stock issued for conversion of Series B Preferred Stock

During the three months ended December 31, 2017, the Company issued 2,400,000 shares of common stock upon conversion of the Series B Preferred Stock. A loss of $7,250 was recognized and is recorded in Additional paid-in capital on the consolidated balance sheet.

Common stock issued for conversion of convertible note payable

During three months ended December 31, 2017, the Company issued 6,000,000 shares of common stock upon the conversion of principal of $0. A loss of $328,200 was recognized on the transaction because it occurred after all debt had been fully converted as of September 30, 2017. This is recorded under additional paid-in capital.

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

Overview

AngioSoma is a clinical stage biotechnology company focused on improving the effectiveness of current standard-of-care treatments, especially related to endovascular interventions in the treatment of peripheral artery disease (PAD).

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed consolidated financial statements are prepared. We regularly review our accounting policies, and how they are applied and disclosed in our condensed consolidated financial statements.

While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

Results of Operations

Three Months Ended December 31, 2017 Compared to the Three Months Ended December 31, 2016

General and administrative expense. We recognized general and administrative expense of $128,695 for the three months ended December 31, 2017 compared to $236,838 for the comparable period of 2016. The decrease in general and administrative expense was related to a decrease in spending as a result of having less available cash.

We recognized a loss on conversions of debt and preferred stock into common stock of $335,450 for the three months ended December 31, 2017, as compared to $0 in 2016.

Interest expense. We recognized interest expense of $1,205 for the three months ended December 31, 2017 compared to $80,576 for the comparable period of 2016. The decrease was primarily related to most convertible notes being converted into preferred and common stock during the year ended September 30, 2017.

Net loss. We recognized a net loss of $465,350 for the three months ended December 31, 2017 and $317,414 for the three months ended December 31, 2016. The increase was a result of the loss on conversion of debt and preferred stock discussed in note 7.

Liquidity and Capital Resources

At December 31, 2017, we had cash on hand of $65,253. The Company has negative working capital of $622,456. Net cash used in operating activities for the three months ended December 31, 2017 was $13,847. Cash on hand is adequate to fund our operations for less than twelve months. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of December 31, 2017.

Additional Financing

Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.

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Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2017. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2017, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


	1.	As of December 31, 2017, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

	2.	As of December 31, 2017, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Change in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

ITEM 1A. RISK FACTORS

Not applicable to a smaller reporting company.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Set forth below is information regarding the securities sold during the quarter ended December 31, 2017 that were not registered under the Securities Act:


Date of Sale	Title of Security	Number Sold	Consideration Received and Description of Underwriting or Other Discounts to Market Price or Convertible Security, Afforded to Purchasers	Exemption from Registration Claimed	If Option, Warrant or Convertible Security, terms of exercise or conversion
October 2, 2017	Common Stock	1,800,000	Conversion of convertible note payable	Section 3(a)(9) of the Securities Act	Convertible at $0.01 per share
October 3, 2017	Common Stock	1,800,000	Conversion of convertible note payable	Section 3(a)(9) of the Securities Act	Convertible at $0.01 per share
October 23, 2017	Common Stock	2,400,000	Conversion of convertible note payable	Section 3(a)(9) of the Securities Act	Convertible at $0.01 per share
December 14, 2017	Common Stock	500,000	Conversion of Series B preferred stock	Section 3(a)(9) of the Securities Act	Convertible at $0.01 per share

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has not defaulted upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable to smaller reporting companies.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


3.1	Articles of Incorporation (1)
3.2	Bylaws (2)
14.1	Code of Ethics (3)
31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (4)
32.1	Section 1350 Certification of principal executive officer and principal financial accounting officer. (4)
101	XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (4)(5)

__________


(1)	Incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed on April 8, 2015.
(2)	Incorporated by reference to our Form 10-K/A Amendment No. 1 for the year ended September 30, 2015 filed on January 22, 2016.
(3)	Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on November 3, 2010.
(4)	Filed or furnished herewith.
(5)	In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	AngioSoma Inc.

Date: February 15, 2018	BY: /s/ Alex Blankenship
	Alex Blankenship
	Chief Executive Officer, President, Secretary, Treasurer, Principal Executive Officer, Principal Finance and Accounting Officer and Sole Director

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