Cure Pharmaceutical Holding Corp. - FORM 10-Q

Attached files

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EX-32.2 - CERTIFICATION - Cure Pharmaceutical Holding Corp.	curr_ex322.htm
EX-32.1 - CERTIFICATION - Cure Pharmaceutical Holding Corp.	curr_ex321.htm
EX-31.2 - CERTIFICATION - Cure Pharmaceutical Holding Corp.	curr_ex312.htm
EX-31.1 - CERTIFICATION - Cure Pharmaceutical Holding Corp.	curr_ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2018

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 333-204857

CURE PHARMACEUTICAL HOLDING CORP.

(Exact name of registrant as specified in its charter)

Nevada

2834

37-1765151

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Number)

(IRS Employer

Identification Number)

1620 Beacon Place, Oxnard, California 93033

(Address of principal executive offices)

(805) 824-0410

(Issuer’s telephone number)

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, a 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. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

On November 12, 2018, we had 25,845,871 shares of common stock, par value $0.001 per share (the “Common Stock”) issued and outstanding.

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PART I. FINANCIAL INFORMATION:

Item 1.	Unaudited Condensed Consolidated Financial Statements	3

	Condensed Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017	3

	Unaudited Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2018 and 2017	4

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2018 and 2017	5

	Notes to the Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION:

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosure	39

Item 5.	Other Information	39

Item 6.	Exhibits	40

	Signatures	41

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Balance Sheets

	September 30, 2018			December 31, 2017
	Unaudited
Assets
Current assets:
Cash	$	302,538		$	108,249
Accounts receivable		6,590			4,364
Inventory		92,673			44,996
Prepaid expenses and other assets		860,114			586,888
Total current assets		1,261,915			744,497
Property and equipment, net		313,078			337,361
Intellectual property and patents, net		1,033,923			900,472
Prepaid expenses		332,790			-
Other assets		92,334			117,555
Total assets	$	3,034,040		$	2,099,885

Liabilities and Deficit
Current liabilities:
Accounts payable	$	744,765		$	544,980
Accrued expenses		385,895			129,978
Loan payable		-			50,425
Notes payable, net of unamortized discount		886,000			800,000
Convertible promissory notes, net of unamortized discount		4,378,566			1,551,488
Derivative liability		806,379			90,738
Deferred revenue		404,517			361,462
Total current liabilities		7,606,122			3,529,071
License fees		560,000			560,000
Total liabilities		8,166,122			4,089,071

Deficit:
Common stock: $0.001 par value; authorized 75,000,000 shares; 25,795,871 and 23,901,252 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		25,796			23,902
Additional paid-in capital		21,922,680			16,483,632
Stock payable		869,125			324,995
Accumulated deficit		(27,972,054	)		(18,868,599	)
Total CURE Pharmaceutical Holding Corp stockholders’ deficit		(5,154,453	)		(2,036,070	)
Noncontrolling interest in subsidiary		22,371			46,884
Total deficit		(5,132,082	)		(1,989,186	)
Total liabilities and deficit	$	3,034,040		$	2,099,885

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

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CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Statements of Operations (Unaudited)

For the Three and Nine Months Ended September 30, 2018 and 2017

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue
Net product sales	$	67,851		$	59,345		$	286,591		$	118,915
Consulting research & development income		20,000			-			63,192			4,448
Shipping and other sales		-			15,010			-			21,822
Total revenues		87,851			74,355			349,783			145,185

Cost of goods sold		41,958			59,427			171,032			134,575
Gross profit		45,893			14,928			178,751			10,610

Research and development expenses		291,624			239,663			1,094,993			664,931
Selling, general and administrative expenses		2,444,219			1,290,565			5,496,489			5,888,062
Total costs and expenses		2,735,843			1,530,228			6,591,482			6,552,993
Net loss from operations		(2,689,950	)		(1,515,300	)		(6,412,731	)		(6,542,383	)

Other income (expense):
Interest income		-			1			-			6
Other income		-			8,699			7,619			25,841
Loss on disposal of PP&E		-			-			-			(12,351	)
Change in derivative liability		(624,429	)		218,138			(418,042	)		175,593
Other expense		(61,695	)		(8,673	)		(171,402	)		(16,061	)
Interest expense		(1,433,153	)		(511,503	)		(2,133,412	)		(600,709	)
Other income (expense)		(2,119,277	)		(293,338	)		(2,715,237	)		(427,681	)
Net loss before income taxes		(4,809,227	)		(1,808,638	)		(9,127,968	)		(6,970,064	)
Provision for income taxes		-			-			-			-
Net loss		(4,809,227	)		(1,808,638	)		(9,127,968	)		(6,970,064	)
Net loss attributed to noncontrolling interest		(9,935	)		-			(24,513	)		-
Net loss attributed to CURE Pharmaceutical Holding Corp	$	(4,799,292	)		(1,808,638	)	$	(9,103,455	)	$	(6,970,064	)

Net loss per share, basic and diluted	$	(0.20	)		(0.08	)	$	(0.37	)	$	(0.30	)

Weighted average shares outstanding, basic and diluted		24,403,901			23,794,730			24,635,143			23,567,317

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

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CURE PHARMACEUTICAL HOLDING CORP.

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2018 and 2017

	For the Nine Months Ended			For the Nine Months Ended
	September 30, 2018			September 30, 2017
Cash flows from operating activities
Net loss	$	(9,127,968	)	$	(6,970,064	)
Adjustment to reconcile net loss to net cash used in operating activities:
Amortization of stock based compensation – prepaid expenses		1,162,400			1,261,693
Loss on disposal of PP&E		-			12,351
Loss from joint venture		-			14,956
Stock issued for services		45,614			-
Stock issued for amending convertible promissory notes		189,750			-
Equity incentive compensation		560,800			-
Depreciation and amortization		110,454			130,943
Amortization of loan discounts		1,650,705			564,969
Change in derivative liabilities		418,042			(175,593	)
Warrants granted for commission expense		1,154,750			-
Warrants granted for services		-			2,560,607
Change in other assets and liabilities:
Accounts receivable		(2,226	)		(14,151	)
Inventory		(47,677	)		(7,908	)
Prepaid expenses and other assets		165,317			(588,508	)
Other assets		25,221			24,169
Accounts payable		249,785			199,209
Accrued expenses		269,314			48,181
Deferred revenue		43,055			68,088
Net cash used in operating activities		(3,132,664	)		(2,871,058	)

Cash flows from investing activities
Purchase in intangible assets		(71,529	)		(43,621	)
Payment to joint venture		-			(5,000	)
Acquisition of property and equipment, net		(51,093	)		(55,917	)
Net cash used in investing activities		(122,622	)		(104,538	)

Cash flows from financing activities
Proceeds from convertible promissory notes		3,600,000			2,105,000
Proceeds from promissory notes		250,000			-
Loan repayments		(400,425	)		(98,277	)
Capital lease payments		-			(9,453	)
Net cash provided by financing activities		3,449,575			1,997,270

Net increase (decrease) in cash and cash equivalents		194,289			(978,326	)
Cash and cash equivalents, beginning of period		108,249			1,106,142
Cash and cash equivalents, end of period	$	302,538		$	127,816

Supplemental cash flow information
Cash paid for interest and income taxes:
Interest	$	67,085		$	11,800
Income taxes	$	-		$	-

Non-cash financing activities:
Common stock related to prepaid expenses	$	1,018,250		$	1,960,000
Warrants granted for discount on convertible promissory notes	$	1,546,028		$	676,746
Loan discount relating to note payable	$	-		$	10,000
Stock issued for settlement of accounts payable	$	50,000		$	-
Common stock to be issued for issuance of a promissory note	$	144,000		$	-
Common stock to be issued for conversion of convertible note	$	263,397		$	-
Common stock to be issued for patents	$	97,000		$	-
Accrued interest converted to convertible promissory note	$	10,000		$	-

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

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CURE PHARMACEUTICAL HOLDING CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

(UNAUDITED)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

CURE Pharmaceutical Holding Corp. (the “Company”) was incorporated in the State of Nevada on May 15, 2014. The Company was formerly named Makkanotti Group Corp. which was formed to engage in the business of manufacturing food paper bags in Nicosia, Cyprus.

On November 7, 2016, the board of directors and the majority stockholder of the then outstanding shares of the registrant’s common stock executed a written consent to change the registrant’s name to CURE Pharmaceutical Holdings Corp. from Makkanotti Group Corp. The Certificate of Amendment to Articles of Incorporation was filed with the State of Nevada on November 30, 2016.

Our wholly owned subsidiary and operating business, CURE Pharmaceutical Corporation, located in Oxnard, California was originally incorporated in July 2011.

The Company is a drug formulation and delivery technology company that researches and manufactures novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. We operate a 25,000 sqft cGMP manufacturing plant in Oxnard, CA.

Our technology platform includes oral dissolving film (ODF) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements. ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal tract (GI) when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal).

Our commercial strategy seeks to mitigate risk by pursuing a diversified model.

1. Dietary supplements. We manufacture select dietary supplements that complement our portfolio and align with our mission which are white labeled and distributed by third parties. Dietary supplements are regulated under the Dietary Supplement Health and Education Act of 1994 (DSHEA) under which supplements are effective by the FDA for Good Manufacturing Practices under 21 CFR Part 111 but do not require FDA approval. By developing, manufacturing and selling dietary supplements, we can generate modest short term revenue while improving our production capabilities and generating platform-wide intellectual property.

2. Pharmaceuticals. We partner with companies that are responsible for clinical development, regulatory approval, marketing and sales of the products. We provide the Chemistry, Manufacturing, and Controls (CMC) documentation required for regulatory submissions and in some instances, we may conduct preclinical and clinical testing. Deal terms may include upfront licensing fees, development costs, milestone payments, royalties and exclusive manufacturing rights. Within this category, we are further diversifying risk and return by pursuing both competitive differentiation of marketed drugs (product life cycle opportunities) and improved pharmacokinetics of investigational drugs. While we currently commercially manufacture dietary supplements in our facility, we are undertaking steps to scale up manufacturing of pharmaceutical drugs for clinical and commercial use.

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3. Cannabinoids. We are researching and developing drugs in the cannabinoid family of molecules. The oral bioavailability of cannabinoids is very low due to extensive gut and liver metabolism. Consequently, potency and release times are unpredictable and inconsistent. Moreover, cannabinoids don’t readily dissolve in water which adds to dosing difficulties and discrepancies. In addition to improving bioavailability, CUREfilm technology enables the loading of combinations of cannabinoids and other plant extracts that, together, provide maximum therapeutic benefit. Development and manufacturing of cannabinoid drugs are regulated by the FDA and the Drug enforcement Agency (DEA). A research license filed with the DEA in January 2018 was determined to be submitted in error given our proposed activities. As such, we have applied for a Schedule 1 manufacturer license with the DEA which is under review.

4. Underserved patient populations. Consistent with our mission of improving the lives of all people in need, regardless of geography or economic status, we licensed our technology to our majority-owned subsidiary, Oak Therapeutics, for the development of novel drug formulations for patients in developing nations such as a rapidly dissolving film to treat tuberculosis.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principal of Consolidation and Basis of Presentation

The condensed consolidated financial statements include the accounts of CURE Pharmaceutical Holding Corp (“CPHC”), its wholly-owned subsidiary, CURE Pharmaceutical Corporation (“CURE”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“OAK”), collectively referred to as (“CURE”, “we”, “us”, “our” or the “Company” All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s film strip product represents the principal operations of the Company.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2018, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2018 and 2017, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal period ended December 31, 2017 filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2018.

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. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

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Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of September 30, 2018 and December 31, 2017, the Company had no cash equivalents. At September 30, 2018 and December 31, 2017, the Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions.

Investment in Associates

An associate is an entity over which the Company has significant influence through a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.

The results of assets and liabilities of associates are incorporated in the condensed consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Company’s share of the net assets of the associate, less any impairment in the value of the investment. Losses of an associate in excess of the Company’s interest in that associate are not recognized. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment.

On January 8, 2016, the Company received 50% ownership in Cure Innovations, Inc (“CI”). CI was created in 2015 by IncuBrands Studio, Inc (“IncuBrands”). The Company and IncuBrands each own 50% of the common stock of CI. The Company and IncuBrands entered into a Joint Venture agreement in 2013 to distribute several OTF products utilizing IncuBrands marketing and contacts in various industries as well as utilize the Company’s technology and capabilities of manufacturing OTF’s.

On December 6, 2016, the Company entered into a Joint Venture Agreement (“Joint Venture”) with Pace Wellness, Inc. (“Pace”) to jointly develop three Active Pharmaceutical Ingredients (“API”) within the nonprescription and/or Over-the-Counter (OTC) medicines specifically utilizing the Company’s patented and proprietary CUREFilm™ Technology. The three API’s to be jointly developed are Diphenhydramine HCL, Omeprazole and a third API to be determined at a later date (“Products”). Pace shall be the exclusive global distributor of the Products under the Solves Strips® branding or other private or branded labels. All benefits, advantages, and liabilities derived from, or incurred in respect of the Joint Venture shall be borne by the parties in proportion of their respective participating interests of 50/50 equal interest. As of September 30, 2018, the Company has only contributed $5,000 to the Joint Venture. The Company is looking to dissolve this Joint Venture due to Pace’s insolvency and we are no longer looking to develop these Products.

Property and Equipment

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Depreciation has been provided using the straight-line method on the following estimated useful lives:

Manufacturing equipment		5-7 Years
Computer and other equipment		3-7 Years
Leasehold Improvements		Lesser of useful life or the term of the lease

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Accounts Receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts.

Impairment of Long-Lived Assets

Long-lived assets include equipment and intangible assets other than those with indefinite lives. We assess the carrying value of our long-lived asset groups when indicators of impairment exist and recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable when compared to undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Indicators of impairment include significant underperformance relative to historical or projected future operating results, significant changes in our use of the assets or in our business strategy, loss of or changes in customer relationships and significant negative industry or economic trends. When indications of impairment arise for a particular asset or group of assets, we assess the future recoverability of the carrying value of the asset (or asset group) based on an undiscounted cash flow analysis. If carrying value exceeds projected, net, undiscounted cash flows, an additional analysis is performed to determine the fair value of the asset (or asset group), typically a discounted cash flow analysis, and an impairment charge is recorded for the excess of carrying value over fair value. There was no impairment on our long-lived assets during the three and nine month periods ended September 30, 2018 and 2017.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition”. The Company adopted Topic 606 using a modified retrospective approach and will be applied prospectively in the Company’s financial statements from January 1, 2018 forward. Revenues under Topic 606 are required to be recognized either at a “point in time” or “ over time”, depending on the facts and circumstances of the arrangement, and will be evaluated using a five-step model. The adoption of Topic 606 did not have a material impact on the Company’s financial statements, at initial implementation nor will it have a material impact on an ongoing basis. We derive revenues from two primary sources: products and services. Product revenue includes the shipment of product according to the agreement with our customers. Services include research and development contracts for the development of OTF products utilizing our CureFilm™ Technology or our other proprietary technologies. Rarely, contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are typically estimated based on observable transactions when these services are sold on a standalone basis.

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The Company’s consulting research and development income include services for the development of OTF products utilizing our CureFilm™ Technology. Most of our development contracts have four phases. Revenue is recognized based on progress toward completion of the performance obligation in each phase. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. Costs to fulfill these obligations mainly include materials, labor, supplies and consultants.

Deferred revenue is shown separately in the condensed consolidated balance sheets. At September 30, 2018 we had deferred revenue of $404,517. At December 31, 2017, we had deferred revenue of $361,462.

Advertising Expense

The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying statements of operations. The Company recorded advertising costs of $45,775 and $144,598 for the three and nine month periods ended September 30, 2018, respectively. The Company recorded advertising costs of $8,567 and $13,062, for the three and nine month periods ended September 30, 2017, respectively.

Research and Development

Costs incurred in connection with the development of new products and processes are charged to research and development expenses as incurred. The Company recorded research and development expenses of $291,624 and $1,094,993 for the three and nine month periods ended September 30, 2018, respectively. The Company recorded research and development expenses of $239,663 and $664,931 for the three and nine month periods ended September 30, 2017, respectively.

Income Taxes

The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

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Convertible Debentures

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 ““Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

Derivative Liabilities

ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula and present value pricing. At September 30, 2018 and December 31, 2017, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations and comprehensive loss.

Fair Value Measurements

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

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, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The Company has no assets or liabilities valued at fair value on a recurring basis.

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Basic and diluted loss per share

Basic loss per share is computed by dividing the net loss to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing the net loss for the period by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares, which consist of stock options and warrants, have been excluded from the diluted loss per share calculation because their effect is anti-dilutive.

	September 30, 2018

Number of common stock shares issued and outstanding		25,795,871
Number of common stock shares from conversion of convertible notes		1,330,905
Number of common stock shares from exercise of warrants		3,804,751
Number of common stock shares from exercise of stock options		655,634
Total fully-diluted common stock shares		31,587,161

Going Concern

The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had an accumulated deficit at September 30, 2018 of $27,972,054. The Company had a working capital deficit of $6,344,207 as of September 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. The Company is continually analyzing its current costs and is attempting to make additional cost reductions where possible. We expect that we will continue to generate losses from operations throughout 2018.

Historically, the Company has had operating losses and negative cash flows from operations which cast significant doubt upon the Company’s ability to continue as a going concern. The Company will need to raise capital in order to fund its operations. This need may be adversely impacted by uncertain market conditions and changes in the regulatory environment. To address its financing requirements, the Company intends to seek financing through debt and equity issuances to existing stockholders.

Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise between $7,000,000 to $9,000,000 in capital over the next 12 months through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 months. However, the outcome of these matters cannot be predicted with certainty at this time.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

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Recently Issued Standards

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The purpose is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. This ASU is effective for the Company in the first quarter of 2018. Early adoption is not permitted except for limited provisions. The adoption of ASU 2016-01 did not have an impact on the Company’s condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842), requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard requires recognition of the income tax effects of vested or settled awards in the income statement and involves several other aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This new standard became effective for the Company on January 1, 2017. The adoption of this standard did not have a material impact on its financial position, results of operations or statements of cash flows upon adoption.

In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, to clarify certain core recognition principles including collectability, sales tax presentation, noncash consideration, contract modifications and completed contracts at transition and disclosures no longer required if the full retrospective transition method is adopted. The effective date and transition requirements for these amendments are annual reporting periods beginning after December 15, 2017, including interim reporting periods therein, and that would also permit public entities to elect to adopt the amendments as of the original effective date as applicable to reporting periods beginning after December 15, 2016. The new guidance allows for the amendment to be applied either retrospectively to each prior reporting period presented or retrospectively as a cumulative-effect adjustment as of the date of adoption. The adoption of ASU 2016-12 did not have an impact on the Company’s condensed consolidated financial statements.

In August, 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (“ASU 2016-15”). The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under ASC Topic 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. The adoption of ASU 2016-15 did not have an impact on the Company’s condensed consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

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In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of this ASU are effective for the Company in the first quarter of 2018, with early adoption permitted. The adoption of ASU 2017-09 did not have an impact on the Company’s condensed consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-7, Compensation – Stock Compensation (Topic 718) )— Improvements to Nonemployee Share-Based Payment Accounting. This guidance supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The guidance permits early adoption and was adopted by the Company in the first quarter of fiscal year 2019. The adoption of this ASU did not have any impact on the Company’s condensed consolidated financial statements.

There are various other updates recently issued, however, they are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

NOTE 3 - INVENTORY

Inventory consists of raw materials, packaging components, work-in-process and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market. The carrying value of inventory consisted of the following at September 30, 2018 and December 31, 2017:

	September 30, 2018			December 31, 2017
Raw materials	$	69,748		$	67,664
Packaging components		17,986			17,546
Work-in-process		49,049			829
		136,783			86,039
Reserve for obsolescence		(44,110	)		(41,043	)
Total inventory	$	92,673		$	44,996

NOTE 4 - PREPAID EXPENSES AND OTHER ASSETS

As of September 30, 2018 and December 31, 2017, prepaid expenses and other assets consisted of the following:

	September 30, 2018			December 31, 2017

Prepaid consulting services– stock-based compensation	$	1,018,467		$	258,918
Prepaid consulting services		90,667			116,167
Prepaid clinical study		-			110,538
Prepaid insurance		10,942			60,180
Other receivables		8,683			5,858
Prepaid inventory		15,945			12,182
Prepaid expenses		48,200			23,045
Prepaid expenses and other assets		1,192,904			586,888
Current portion of prepaid expenses and other assets		(860,114	)		(586,888	)
Prepaid expenses and other assets less current portion	$	332,790		$	-

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NOTE 5 - PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

As of September 30, 2018 and December 31, 2017, property and equipment and intangible assets consisted of the following:

	September 30, 2018			December 31, 2017

Manufacturing equipment	$	835,860		$	797,513
Computer and other equipment		180,273			169,499
Leasehold improvements		44,638			42,666
Less accumulated depreciation		(747,693	)		(672,317	)
Property and Equipment, net	$	313,078		$	337,361

Depreciation expense for the three and nine month periods ended September 30, 2018 was $25,724 and $75,376, respectively. Depreciation expense for the three and nine months ended September 30, 2017 was $21,882 and $98,325, respectively, which includes depreciation of $2,160 and $6,480 for capitalized leased assets for the three and nine months ended September 30, 2017, respectively.

	September 30, 2018			December 31, 2017

Intellectual Property	$	814,582		$	814,582
Patents		393,056			224,527
Less accumulated amortization		(173,715	)		(138,637	)
Intangible assets, net	$	1,033,923		$	900,472

The Company incurred $168,529 and $43,621 of legal patent costs that were capitalized during the nine months period ended September 30, 2018 and 2017, respectively. In addition, the Company purchased $97,000 of patents through the issuance of 120,000 common stock shares of the Company during the nine months period ended September 30, 2018 and no shares were issued for the purchase of patents for the nine months ended September 30, 2017. Amortization expense for the three and nine month periods ended September 30, 2018 was $12,226 and $35,078, respectively. Amortization expense for the three and nine month periods ended September 30, 2017 was $10,899 and $30,619, respectively.

The estimated aggregate amortization expense over each of the next five years is as follows:

2018	$	12,226
2019		47,305
2020		47,305
2021		47,305
2022		47,305
Thereafter		584,850
Total Amortization	$	786,296

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NOTE 6 – LOAN PAYABLE

Loan payable consists of the following at September 30, 2018 and December 31, 2017:

	September 30, 2018		December 31, 2017
Notes to a company due August 29, 2018 and September 21, 2018, including interest at 7.55% and 7.05%, respectively per annum; unsecured; interest due monthly	$	-	$	50,425
Current portion of loan payable		-		(50,425	)
Loan payable, less current portion	$	-	$	-

Interest expense for the three and nine month periods ended September 30, 2018 was $187 and $1,482, respectively. Interest expense for the three and nine month periods ended September 30, 2017 was $281 and $1,946, respectively.

NOTE 7 – NOTES PAYABLE

Notes payable consist of the following at September 30, 2018 and December 31, 2017:

	September 30, 2018			December 31, 2017

Note to a company amended on August 27, 2017 and due on or before one month from the amended date and the maturity date shall be extended for one month periods as long as the Company is not in default, interest shall accrue at 10% per annum, secured by the Company’s intellectual property	$	650,000		$	650,000
Note to a company of $100,000 due January 31, 2018 including interest of $3,000 per month, unsecured, principal and interest due at maturity, principal and interest repaid on January 23, 2018		-			100,000
Note to an individual, non-interest bearing, unsecured and has no fixed terms of repayment		50,000			50,000
Note to an individual due October 22, 2018, interest payable at 6% per annum, unsecured, principal and accrued interest due at maturity. The Company issued 50,000 shares of its common stock on October 18, 2018 at a price per share of $2.88 as an equity kicker.		150,000			-
Note to a company due December 15, 2018, interest payable at 5% per annum, unsecured, principal and accrued interest due at maturity. If this note is still outstanding as of the date of any bona fide sale of the Company’s preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a serious of related transactions, which offering definitively sets a price per share of common stock and results in a listing of the Company’s common stock on a national securities exchange		100,000			-
		950,000			800,000

Unamortized discount		(64,000	)		-
Current portion of loan payable		(886,000	)		(800,000	)
Loan payable, less current portion	$	-		$	-

Interest expense for the three and nine month periods ended September 30, 2018 was $17,225 and $49,458, respectively. Interest expense for the three and nine months ended September 30, 2017 was $8,842.

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NOTE 8 – CONVERTIBLE PROMISSORY NOTES

Convertible promissory notes consist of the following at September 30, 2018 and December 31, 2017:

	September 30, 2018			December 31, 2017

Convertible promissory notes totaling $1,400,000 due between December 31, 2018 and January 31, 2019, interest payable at 8% per annum; unsecured; principal and accrued interest convertible into common stock at the lower of $7.00 per share or the price per share of the latest closing of a debt or equity offering by the Company greater than $3,000,000; accrued interest due between August 31, 2018 and September 30, 2018	$	1,400,000		$	1,900,000
Convertible promissory notes totaling $2,025,000 due November 30, 2018, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018, which has not yet been paid		2,025,000			-
Convertible promissory note totaling $500,000 due April 30, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS		500,000			-
Convertible promissory note totaling $500,000 due December 31, 2018, interest payable at 9% per annum; secured by all assets of the company; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018		500,000			-
Convertible promissory notes totaling $575,000 due June 27, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018		575,000			-
		5,000,000			1,900,000

Unamortized discount		(621,434	)		(348,512	)
Current portion of convertible promissory notes		4,378,566			1,551,488
Convertible promissory notes, less current portion	$	-		$	-

During the three and nine month period ended September 30, 2018, the Company incurred $427,327 and $1,286,420, respectively, amortization of discount. During the three and nine months ended September 30, 2017, the Company incurred $477,285 and $554,968, respectively, amortization of discount. Interest expense for the three and nine month periods ended September 30, 2018 was $90,856 and $233,009, respectively. Interest expense for the three and nine months ended September 30, 2017 was $23,617 and $26,922, respectively.

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NOTE 9 – DERIVATIVE LIABILITY

The following table summarizes fair value measurements by level at September 30, 2018 for assets and liabilities measured at fair value on a recurring basis:

	Level I		Level II		Level III			Total
Derivative liability	$	-	$	-	$	(806,379	)	$	(806,379	)

The following table summarizes fair value measurements by level at December 31, 2017 for assets and liabilities measured at fair value on a recurring basis:

	Level I		Level II		Level III			Total
Derivative liability	$	-	$	-	$	(90,738	)	$	(90,738	)

The Company has issued convertible promissory notes during 2017 and 2018. The convertible notes require us to record the value of the conversion feature as a liability, at fair value, pursuant to ASC 815, including provisions in the notes that protect the holders from declines in the Company’s stock price, which is considered outside the control of the Company. The derivative liabilities are marked-to-market each reporting period and changes in fair value are recorded as a non-operating gain or loss in our statement of operations, until they are completely settled. The fair value of the conversion feature is determined each reporting period using the Black-Scholes option pricing model, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, interest rates and expected term. The assumptions used in valuing the derivative liability during 2018 were as follows:

	September 30, 2018
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.94	%
Expected stock price volatility		146.68	%
Expected dividend payout		-
Expected option life (in years)		1
Expected forfeiture rate		0	%

The following is a reconciliation of the derivative liability for 2018:

	September 30, 2018
Value at December 31, 2017	$	90,738
Increase in value		418,042
Initial value at debt issuance		297,599
Value at September 30, 2018	$	806,379

NOTE 10 – STOCK BASED AWARDS

On December 29, 2017 (“Effective Date”), the Company adopted the CURE Pharmaceutical Holding Corp. 2017 Equity Incentive Plan (the “Plan”), pursuant to which an aggregate of 5,000,000 shares of the common stock of the Company are available for grant. The Board of Directors have determined that it is in the best interests of the Company and its stockholders to provide an additional incentive for certain employees, including executive officers, and non-employee members of the Board of Directors of the Company by granting to them awards with respect to the common stock of the Company pursuant to the Plan. The Plan seeks to achieve this purpose by providing for awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards (“Awards”). The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date.

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On April 6, 2018, the Company awarded 371,250 Restricted Common Stock (“RCS”), 1,251,700 Nonstatutory Stock Options (“NSO”) and 932,750 Incentive Stock Options (“ISO”) to employees, including executive officers, non-employee members of the Board of Directors of the Company, members of the Advisory Board Committee and consultants at a $0.74 price per share. Vesting period for the awarded RCS, NSO and ISO’s range from immediate to quarterly over a 4 year period. For NSO’s and ISO awarded, the term to exercise their NSO or ISO is 10 years.

Stock Options

The Company’s stock option activity was as follows:

	Options		Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2017		-		-		-
Granted		2,184,450		0.73		9.52
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding, September 30, 2018		2,184,450		0.73		9.52
Exercisable at September 30, 2018		655,634		0.74		9.52

Range of

Exercise Price

Number of Options

Weighted Average Remaining Contractual Life (years)

Weighted Average Exercise Price

Number of Warrants Exercisable

Weighted Average Exercise Price

0.61-$0.74

2,184,450

9.52

0.73

655,634

0.74

2,184,450

9.52

0.73

655,634

0.74

The aggregate intrinsic value of options outstanding and exercisable at September 30, 2018 was $644.

The aggregate grant date fair value of options granted during the nine months ended September 30, 2018 and year ended December 31, 2017 amounted to $1,299,862 and $0, respectively. Compensation expense related to stock options was $76,407 and $390,136 for the three and nine month periods ended September 30, 2018, respectively. No compensation expense related to stock options were incurred during the three and nine month periods ended September 30, 2017.

As of September 30, 2018, the total unrecognized fair value compensation cost related to unvested stock options was $909,726, which is to be recognized over a remaining weighted average period of approximately 9.52years.

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The weighted-average fair value of options granted during the nine months ended September 30, 2018 and year ended December 31, 2017, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	September 30, 2018			December 31, 2017
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.94	%		0	%
Expected stock price volatility		146.68	%		0	%
Expected dividend payout		-			-
Expected option life (in years)		10			-
Expected forfeiture rate		0	%		0	%

Restricted Stock

The Company’s restricted stock activity was as follows:

Compensation expense related to restricted shares was $23,125 and $170,663 for the three and nine month periods ended September 30, 2018, respectively. There was no compensation expense related to restricted shares for the three and nine month periods ended September 30, 2017. Information relating to non-vested restricted award shares is as follows:

	Restricted Stock Shares			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2017		-			-
Granted		371,250			0.74
Vested		(230,625	)		0.74
Forfeited/Expired		-			-
Non-vested, September 30, 2018		140,625			0.74

NOTE 11 – WARRANT AGREEMENTS

On January 24, 2018, the Company issued an additional 55,000 warrants at a fair market value of $50,094 and with an exercise price of $1.00 per share in connection with issuance of $1,100,000 convertible promissory notes in 2017 and amended on January 24, 2018 to extend the maturity date to March 31, 2018. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 55,000 warrants issued as a debt discount that has been fully amortized as of September 30, 2018.

On April 15, 2018, the Company issued an additional 275,000 warrants at a fair market value of $87,828 and with an exercise price of $1.00 per share in connection with issuance of $1,100,000 convertible promissory notes in 2017, amended on January 24, 2018 to extend the maturity date to March 31, 2018 and a second amendment on April 15, 2018 to extend the maturity date to May 31, 2018. In addition, the Company extended the term of the warrant agreements for one additional year for each of the convertible promissory notes. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 275,000 warrants issued as a debt discount that has been fully amortized as of September 30, 2018.

On May 1, 2018, the Company issued 110,000 warrants at a fair market value of $27,479 and with an exercise price of $1.00 per share in connection with commission earned for the issuance of convertible promissory notes by the Company.

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On July 7, 2018, the Company issued 148,644 warrants at a fair market value of $48,249 and with an exercise price of $1.00 per share in connection with the conversion of a convertible promissory note issued by the Company. As per the warrant agreement dated May 15, 2018, the Company shall issue fifty percent (50%) of the Company’s common stock shares issued upon conversion of the convertible promissory note. The convertible promissory note is to be converted into 297,288 common stock shares of the Company and as a result, 148,644 warrants were issued. As of our filing of our Form 10-Q for the quarterly period ended September 30, 2018, the company has not yet issued these common stock shares and has recorded a stock payable.

Warrants that vest at the end of a one-year period are amortized over the vesting period using the straight-line method.

The Company’s warrant activity was as follows:

	Warrants		Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2017		4,752,107		2.90		4.98
Granted		588,644		1.00		2.76
Exercised		-		-		-
Forfeited/Expired		-		-		-
Outstanding, September 30, 2018		5,340,751		1.95		2.25
Exercisable at September 30, 2018		3,804,751		1.93		2.28

Range of Exercise Price

Number of Warrants

Weighted Average Remaining Contractual Life (years)

Weighted Average Exercise Price

Number of Warrants Exercisable

Weighted Average Exercise Price

1.00 – $7.00

5,340,751

2.25

1.95

3,804,751

1.93

5,340,751

2.25

1.95

3,804,751

1.93

The weighted-average fair value of warrants granted to during the nine months ended September 30, 2018 and year ended December 31, 2017, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	September 30, 2018			December 31, 2017
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		2.94	%		2.20	%
Expected stock price volatility		146.68	%		75.43	%
Expected dividend payout		-			-
Expected option life (in years)		3			3
Expected forfeiture rate		0	%		0	%

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NOTE 12 – STOCKHOLDERS’ EQUITY

Authorized Stock

The Company has authorized to issue is 75,000,000 common shares with a par value of $0.001 per share.

As of September 30, 2018 and December 31, 2017, there were 25,795,871 and 23,901,252 shares of the Company’s common stock issued and outstanding, respectively.

Common Share Issuances

On January 24, 2018, the Company issued 50,000 common stock shares at $1.48 per share for consulting services to be performed over a one year period. The total value of this issuance was $74,000 and as of September 30, 2018, $23,108 is included in prepaid expenses and other assets.

On May 16, 2018, the Company issued 70,150 common stock shares at $0.65 per share for consulting services performed. The total value of this issuance was $45,614.

On May 16, 2018, the Company issued 1,000,000 common stock shares at $0.97 per share for consulting services to be performed over a 30 month period. The total value of this issuance was $970,000 and as of September 30, 2018, $831,429 is included in prepaid expenses and other assets.

On July 17, 2018, the Company issued 70,000 common stock shares at $1.85 per share for consulting services to be performed over a six month period. The total value of this issuance was $129,500.

On July 17, 2018, the Company issued 69,444 common stock shares at $0.72 per share for the cancellation of two months rent and overages for property tax and general liability insurance. The total value of this issuance was $50,000.

On July 17, 2018, the Company issued 250,000 common stock shares at $1.10 per share for strategic marketing and development advisory services to be performed over a six month period. The total value of this issuance was $275,000.

On August 17, 2018, the Company issued a total of 115,000 common stock shares at $1.65 per share for compensation of extending the maturity dates of convertible promissory notes of three note holders. The total value of this issuance was $189,750. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 115,000 common stock shares issued as a debt discount that has been fully amortized as of September 30, 2018.

On September 4, 2018, the Company issued 90,000 common stock shares at $0.71 per share and 90,000 shares at $1.00 per share for media and advertising services to be performed over a six month period. The total value of these issuances was $153,900.

On September 4, 2018, the Company issued 90,000 common stock shares at $3.24 per share for media and advertising services to be performed over a six month period. The total value of this issuance was $291,600.

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Stock Payable

On April 2, 2018 (the “Effective Date”), the Company entered into a patent purchase agreement (“Agreement”) with an individual (“Assignor”) who is the owner of all rights, title and interest in and to certain Assigned Patents to purchase the rights to the Assigned Patents. As consideration for the assignment of the Assigned Patents and other rights under the Agreement, the Company shall issue to Assignor shares of its Common Stock (“Shares”) as follows, provided, that the maximum number of Shares issuable hereunder shall not exceed Two Hundred Thousand (200,000): (a) 50,000 Shares will be issued on the Effective Date; (b) 10,000 Shares will be issued for each Abandoned Application the prosecution of which is revived by the United States Patent and Trademark Office (“USPTO”); and (c) 50,000 Shares will be issued upon issuance by the USPTO of each patent that includes at least one specific claim in a patent application that recites subject matter to be defined by Assignee in its sole discretion (“Target Claim”). For the nine months period ended September 30, 2018, the Company owed 50,000 Shares at $0.69 price per share,20,000 Shares at $0.70 price per share and 50,000 shares at $0.97 price per share, for a total of 120,000 Shares. As the Company has not yet issued the 120,000 Shares as of September 30, 2018, the Company recorded a stock payable of $97,000, where $94,618 is included in intellectual property and patents as of September 30, 2018.

On July 7, 2018, a convertible promissory note and accrued interest totaling $263,398 was converted into 297,288 shares of common stock of the Company at a price of $0.886 per share. As of our filing of our Form 10-Q for the quarterly period ended September 30, 2018, the company has not yet issued these common stock shares and has recorded a stock payable.

On August 3, 2018, the Company entered into a Media Advertising Agreement (“Agreement”). Per the terms of the Agreement, the Company was to issue 30,000 common stock shares at $1.88 per share for providing media and advertising services over a six month period. The total value of these issuances was $56,400. As of our filing of our Form 10-Q for the quarterly period ended September 30, 2018, the company has not yet issued these common stock shares and has recorded a stock payable.

On September 5, 2018, the Company issued an unsecured $150,000 Promissory Note (“Note”) with an individual. As part of the issuance of the Note, the Company is to issue 50,000 common stock shares as an equity kicker at a $2.88 price per share. As the Company did not issue the 50,000 common stock shares as of September 30, 2018, the Company recorded a stock payable of $144,000.

As of September 30, 2018, the Company still has $308,328 worth of stock payable not yet issued that is from the year ended December 31, 2017 audited figures.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Litigation:

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The only significant matter of which the Company is aware of is discussed below.

On May 22, 2017, Sandy Sierra Garate (“Applicant”), an employee of the Company, filed an application for benefits due to serious and willful misconduct of the employer pursuant to labor code section 4553 with the State of California Workers’ Compensation Appeals Board (WCAB Case No: ADJ 10686812) resulting in injury arising out of and in the course of the Applicant’s employment on August 5, 2016. The Applicant is requesting relief in this matter for a one half increase in all compensation recoverable in connection with the injury of August 5, 2016, for the allowance of costs and expenses in an amount to be determined and for such further relief as is deemed appropriate. The Company is currently unable to determine what additional expenses will be incurred in order to defend this matter. As such, the Company cannot determine whether there is a reasonable possibility that a loss will be incurred nor can it estimate the range of any such potential loss. Accordingly, the Company has not accrued an amount for any potential loss associated with this action.

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Operating leases

The Company maintains its corporate offices and manufacturing facility at 1620 Beacon Place, Oxnard, CA 93033, which contains approximately 25,000 square feet. The Company is currently on a month-to-month lease.

The Company also leased additional office and warehouse space at 1612 Fiske Place, Oxnard, CA 93033, which contains approximately 2,227 square feet. The Company was on a month-to-month lease and vacated this facility on August 6, 2018.

Total rent expense for the three and nine month periods ended September 30, 2018 was $63,992 and $205,962, respectively. Total rent expense for the three and nine month periods ended September 30, 2017 was $73,415 and $219,230, respectively.

NOTE 14 – SUBSEQUENT EVENTS

On October 9, 2018, the United States Patent and Trademark Office (“USPTO”) allowed for an oral thin film patent (U.S. Patent No. 10,092,611), which covers the processing and integration of bioactive cannabinoid molecules into oral thin film dosage forms, such as CUREfilm™. These molecules, such as cannabidiol (CBD), are obtained from the Company’s patented methods (U.S. Patent No. 9,044,390 and 9,186,386) of extraction and purification of cannabis plant material. This patent allowance by the USPTO and per the patent purchase agreement entered on April 2, 2018, the Company will issue 50,000 common stock shares at $2.81 price per share. As of the date of this filing, the Company has not yet issued these shares.

On October 12, 2018, the Company sent a written 30-Day Notice of Default (“Notice”) to Altair International Corp (“Altair”), regarding the Exclusive License and Distribution Agreement (“Agreement”), dated August 10, 2016 (“Effective Date”), with Altair. The Notice was provided to Altair due to Altair failing to fulfill its obligations under the Agreement and has materially breached the Agreement. To maintain the rights granted under the Agreement, Altair was to make minimum orders in the amount of $1,500,000 of the collective Products, as defined in the Agreement, within the first 24 months following the Effective Date. As of October 26, 2018, Altair did not order any collective Products and has provided written confirmation that Altair has failed to fulfill its obligations under the Agreement and that the Notice will not be cured. As a result, the Agreement is terminated and license fees totaling $560,000 will be recognized as other income in the fourth quarter of 2018.

On October 15, 2018, Cure Pharmaceutical Holding Corp. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with accredited investors (each an “Investor” and collectively, the “Investors”). Pursuant to the terms of the Securities Purchase Agreement, the Company sold up to $2,000,000 in convertible notes (the “Notes”), initially convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at a conversion price equal to $2.50 at the earlier of (1) the Investor’s discretion or (2) the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock and results in a listing of the Company’s Common Stock on a national securities exchange. The Notes shall be issued in tranches with (1) a closing of $250,000 on October 15, 2018; (2) a closing of $250,000 on or before November 15, 2018; (3) a closing of $250,000 on or before December 1, 2018; and a closing of $1,250,000 on or before December 31, 2018.

On October 30, 2018, the Company issued 50,000 common stock shares at a $2.88 price per share to an individual as an equity kicker for issuing an unsecured promissory note dated September 5, 2018. As the Company did not issue the 50,000 common stock shares as of September 30, 2018, the Company recorded a stock payable of $144,000.

On October 31, 2018, the Company amended four convertible promissory notes totaling $850,000 to extend the maturity dates to December 31, 2018. For extending the maturity date, the Company will issue a total of 115,000 common stock shares of the Company at $1.95 price per share.

On October 31, 2018, the Company amended a promissory notes totaling $150,000 to extend the maturity date to December 31, 2018. For extending the maturity date, the Company will issue 30,000 common stock shares of the Company at $1.95 price per share.

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

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

BUSINESS

Our wholly owned subsidiary and operating business, CURE Pharmaceutical Corporation, located in Oxnard, California was originally incorporated in July 2011.

Industry Overview and Trends

The pharmaceutical industry is facing ever-growing R&D expenditure and fewer new drug approvals as a result of increasing regulation, a failure to predict safety problems or a lack of efficacy early in a drug’s development, and high investment in new technologies to improve the speed and accuracy of drug development. In addition to these challenges to the industry’s operators, many leading drugs are coming off-patent, creating a need to fill revenue gaps. The pharmaceutical industry is also challenged by the many patients who do not adhere to a regime of prescription drugs because of side effects, difficulty in administration or the taste of a drug. According to HealthPrize and Capgemini, the loss of global revenues by drug makers due to non-adherence to medicines is $630 billion every year.

Improved formulations can address these many challenges by cutting down development costs, reducing the time to market, extending product patent protection, improving patient compliance and increasing drug efficacy. For example, reformulation can enable drug repositioning, the process of finding new uses for failed drugs, such as those abandoned for lack of efficacy after Phase II trials, or marketed drugs for which new uses will extend patent life and, therefore, profitability.

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The FDA approves more reformulations than new chemical entities (NCEs) each year under Section 505(b)(2) of the Food, Drug, and Cosmetic Act, (“505(b)(2)”) the FDA. The number of 2017 NDA approvals that used the 505(b)(2) regulatory pathway rose dramatically from 45 approvals in each of the last two years to an all-time high of 63 in 2017. Under Section 505(b)(2), the FDA may grant market exclusivity for a term of up to three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage, dosage form, route of administration or indication for use. Taken together, the exclusivity period of a drug and the lower R&D cost for reformulating a drug, have led to pharmaceutical companies taking a keen interest in reformulating their drugs as part of their lifecycle management protocols.

We are a drug formulation and delivery technology company that researches and manufactures novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. We operate a 25,000 sq ft cGMP manufacturing plant in Oxnard, CA.

Technology

Our technology platform includes oral dissolving film (ODF) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements.

ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal tract (GI) when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal).

Sublingual and buccal drug delivery are non-invasive routes for drug delivery that allows for absorption directly into the vascularized tissue in the mouth, avoiding degradation of the active molecule in the stomach, intestines and liver. These routes can reduce overall drug exposure and toxicities.

As an ODF, active ingredients are often pre-solubilized within the film matrix which can accelerate the onset of action, whether the GI is targeted of the systemic circulation. Active ingredients can also be encapsulated within the film matrix which can cause a sustained release profile. Combined sustain release and rapid release strategies can be achieved with ODFs.

ODFs can be designed for rapid dissolution or slower dissolution in the case of a buccal patch. In each case, ODFs must mask the taste of the active ingredient if unpalatable, throughout the dissolution process. The self-dissolving nature of ODF means that no water or swallowing are required for administration, improving medication adherence - especially among the elderly, children, and in conditions where patients have difficulty in swallowing.

The CUREfilm platform is a scalable and versatile formulation and drug delivery system for both oral (ODF) and transdermal (skin) delivery. CUREfilm formulations can improve or match the pharmacokinetics of drugs depending on the desired outcome. The platform is compatible with a broad spectrum of molecules and can be applied to investigational and marketed drugs or dietary supplements.

Our CUREfilm transdermal technology has been tested at laboratory scale on a dozen different molecules. Our CUREfilm ODF technology, which is our core focus, has been used to develop hundreds of products at laboratory scale and over 20 dietary supplements at commercial scale in our GMP plant located in Oxnard, CA.

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Intellectual Property

The competitive advantages of the CUREfilm platform and products over other ODF technology and products are protected by issued and pending patents, as well as trade secrets such as proprietary equipment design and manufacturing processes which allow us to produce CUREfilm products at commercial scale in a cGMP environment.

			Filing Date/
Title	Serial No. / Patent No.		Application Date	Type	Status

Method and apparatus for minimizing heat, moisture, and shear damage to medicant		8,840,919	23-Sept-14	Utility	Issued
Method and apparatus for minimizing heat, moisture,
and shear damage to medicant		9,155,698	13-Oct-15	Utility	Issued
Edible films for administration of medicaments to animals		9,561,182	18-Jan-17	Utility	Issued
Methods for modulating dissolution, bioavailability, bioequivalence		8,999,372	7-Apr-15	Utility	Issued
Pharmaceutical Composition and Method of Manufacturing		9,044,390	2-Jun-15	Utility	Issued
Pharmaceutical Composition and Method of Manufacturing		9,186,386	17-Nov-15	Utility	Issued
Pharmaceutical Composition and Method of Manufacturing		9,980,996	29-May-18	Utility	Issued
Pharmaceutical Composition and Method of Manufacturing		10,092,611	*9-Oct-18*	Utility	*Issued*
Pharmaceutical Composition and Method of Manufacturing	14/934,940		6-Nov-15	Utility	Pending
Pharmaceutical Composition and Method of Manufacturing	*16/151,436*		*4-Oct-18*	*Utility*	*Pending*
Pharmaceutical Composition with Ionically Crosslinked
Polymer Encapsulation of Active Ingredient	15/315,264		30-Nov-16	Utility	Pending
Method and Apparatus For Minimizing Heat, Moisture, and Shear Damage To Medicants and Other Compositions During Incorporation of Same with Edible Films	15/666,057		1-Aug-17	Utility	Pending
Thin Film with High Load of Active Ingredient	13/890,875		9-May-13	Utility	Pending
Thin Film with High Load of Active Ingredient	14/069,239		31-Oct-13	Utility	Pending
Thin Film with High Load of Active Ingredient		2.0148	9-May-13	CN	Pending
High dosage dissolvable films for oral administration	PCT/US18/38034		18-Jun-18	PCT	Pending
Methods and Compositions For Improving Sleep	62/680,325		4-Jun-18	PRV	Pending
Rapidly Disintegrating Film Matrix for Moisture Sensitive Compounds	*62/696,359*		*11-Jul-18*	*PRV*	*Pending*

Business Strategy

Our commercial strategy seeks to mitigate risk by pursuing a diversified model.

1. Dietary supplements. We manufacture select dietary supplements that complement our portfolio and align with our mission which are white labeled and distributed by third parties. Dietary supplements are regulated under the Dietary Supplement Health and Education Act of 1994 (DSHEA) under which supplements are effective by the FDA for Good Manufacturing Practices under 21 CFR Part 111 but do not require FDA approval. By developing, manufacturing and selling dietary supplement, we can generate modest short term revenue while improving our production capabilities and generating platform-wide intellectual property.

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Growth Strategy

We will drive growth by (1) securing additional distributors for our dietary supplements, (2) out licensing rights to our drug products in available territories; (3) in-licensing novel drug delivery technologies and cannabinoid related patents and (4) developing additional ODF drug products with biotech and pharmaceutical partners.

Product Portfolio and Partnerships

Products

Our product portfolio includes dietary supplements and prescription drugs. To manufacture our products, we depend on raw material suppliers and packaging material suppliers. There are several global suppliers of packaging laminate appropriate for dietary supplements and drug product ODFs. We are currently purchasing our packaging laminate from Glenroy Inc. and Bemis Company.

CURE 3068 (Launched)

This is a melatonin-containing sleep aid CUREfilm ODF that is manufactured and sold as a dietary supplement. Our non-exclusive distributor is ID Life, a health and wellness company focused on customized nutrition and selling within the United States. We have an open purchase order with ID Life for 3,210,252 units of product in 2018.

CURE 5079 (Launched)

This novel sleep aid containing a dietary cannabinoid CUREfilm ODF was launched Q3 2018 by Incubrands under its Sleep Club initiative. The distribution rights are exclusive through the end of 2018. A purchase order was placed on February 22, 2018.

CURE 5003

We are developing a sildenafil CUREfilm ODF for p.o. administration. On August 1, 2017, we entered into a development agreement with an undisclosed partner for China, Hong Kong, Japan, Korea, Singapore, Philippines, Taiwan, Vietnam and Thailand. The product which will be launched for the treatment of erectile disorder, is in late stage development. We are qualifying the API supplier and have qualified our contract packaging partner.

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CURE 5067

We are developing a 50,000IU, once per week, vitamin D3 CUREfilm ODF for p.o. administration. On February 18, 2017, we entered into an exclusive 5-year license and distribution agreement with Meroven Limited in the MENA region: Iraq, Saudi Arabia, Yemen, Syria, UAE, Jordan, Palestine, Lebanon, Oman, Kuwait, Qatar, Bahrain, Sudan, Egypt, Tunisia, Morocco, Algeria and Africa. The product is currently in the optimization development stage.

CURE 5198

We are developing a Palmitoylethanolamine (PEA) & Dronabinol (THC) CUREfilm ODF for buccal administration. On October 27, 2017, we entered into a development agreement with Therapix Biosciences for worldwide rights. The product is in formulation development for PEA. We will need our DEA license to incorporate THC into the product.

CURE 5200

We are developing a novel CUREfilm ODF substrate with an undisclosed partner. On June 4, 2018, we entered into a development agreement with an undisclosed partner for product development feasibility of CURE 5200. In order to protect CURE’s and our partner’s competitive advantage, no further details of the product can be disclosed at this stage.

CURE 5209

We are developing a CUREfilm ODF for mood enhancement as a dietary supplement. On May 30, 2018, we entered into a development agreement with an undisclosed partner for product development feasibility of CURE 5209. In order to protect CURE’s and our partner’s competitive advantage, no further details of the product can be disclosed at this stage.

CURE 5210

We are developing a dietary cannabinoid ODF using food grade beta-caryophyllene to target the CB2 receptor. We are in early feasibility stages of development of this product and have not yet signed with a distribution partner.

Partnerships

On September 4, 2018, CURE entered into its first multi-year licensing agreement (the “Licensing Agreement”) with Canopy Growth Corporation, a company that engages in the production and sale of medical cannabis (“Canopy”). Under the terms of the Licensing Agreement, Canopy will have an exclusive license to certain of the Company’s intellectual property rights, including the Company’s patented, multi-layer oral thin film (OTF), CUREfilm™ technology for use with cannabis extracts and biosynthetic cannabinoids (“Products”) and the Company’s trademarks in markets around the world where it is legal for Canopy to sell the Products, excluding Asia. The Company will retain the right to manufacture synthetic cannabinoids for pharmaceutical applications. Canopy will manufacture CUREfilms that deliver cannabis extracts, expanding the commercialization and monetization of the CUREfilm technology. The parties will collaborate on new products and uses for the products. Canopy shall pay the Company approximately $250,000 for costs associated with a feasibility study and technology transfer as well as certain milestone payments and royalties on product sales by Canopy with minimum royalties starting in 2020.

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On July 9, 2018, CURE entered into a non-binding Confidential Term Sheet (“Term Sheet) with Therapix Bioscience Ltd., an Israeli public company (“Therapix”) to acquire all of Therapix’s non-pain assets, which include several clinical drug candidates as well as two pre-clinical drug candidates (“Assets”), in consideration for the issuance by the Company to Therapix of newly issued shares of common stock of the Company (the “Shares”). The parties retained an independent third-party to value the Assets and the Shares as the basis for the acquisition. The resulting Asset valuation and Shares offered were not agreeable to Therapix and therefore, the Parties concluded that entering into a definitive agreement would not be in the best interest of their respective shareholders. CURE will continue to evaluate in-licensing and acquisition opportunities in the pharmaceutical cannabinoid space.

Dependence on Major Customers

We currently rely on a few distributors for our dietary supplements. We also depend upon a limited number of partners to provide funding for the development of our products, to assist in obtaining regulatory approvals that are required in order to commercialize these products, and to market and sell our products.

Competition

We compete with other companies within the drug delivery industry that may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Some of these drug delivery competitors include Aquestive Therapeutics Inc (formerly Monosol Rx), Tesa-Labtec GmbH, BioDelivery Sciences International, Inc., LTS Lohmann Therapy Systems Corp and IntelGenx. New entrants such as Zim Laboratories in India and CMG Pharmaceuticals in Korea are also pursuing ODF products. Some of these competitors, such as IntelGenx are also pursuing cannabinoid formulations.

Our cannabinoid product candidates may compete with medical and recreational marijuana, in markets where the recreational and/or medical use of marijuana is legal. There is support in the United States for further legalization of marijuana. In markets where recreational and/or medical marijuana is not legal, our product candidates may compete with marijuana purchased in the illegal drug market. We cannot assess the extent to which patients may utilize marijuana obtained illegally for the treatment of the indications for which we are developing our product candidates.

Government Regulations

In the U.S., the FDA regulates drug products under the Federal Food, Drug and Cosmetic Act (the “FDCA”), and other laws within the Public Health Service Act. Failure to comply with applicable U.S. requirements, both before and after approval, may subject us to administrative and judicial sanctions, such as a delay in approving or refusal by the FDA to approve pending applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, and/or criminal prosecutions. Before our drug products are marketed they must be approved by the FDA. The steps required before a novel drug product is approved by the FDA include: (1) pre-clinical laboratory, animal, and formulation tests; (2) submission to the FDA of an Investigational New Drug Application (“IND”) for human clinical testing, which must become effective before human clinical trials may begin; (3) adequate and well-controlled clinical trials to establish the safety and effectiveness of the product for each indication for which approval is sought; (4) submission to the FDA of a New Drug Application (“NDA”) or an ANDA, for generic drugs. In certain cases, an application for marketing approval may include information regarding safety and efficacy of a proposed drug that comes from studies not conducted by or for the applicant. Such applications, known as a 505(b)(2) NDA, are permitted for new drug products that incorporate previously approved active ingredients, even if the proposed new drug incorporates an approved active ingredient in a novel formulation or for a new indication; (5) satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug product is produced to assess compliance with cGMP and FDA review; and finally (6) approval of an NDA or ANDA.

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The cost of complying with the foregoing requirements, including preparing and submitting an NDA or ANDA, may be substantial. Accordingly, we typically rely upon our partners in the pharmaceutical industry to spearhead and bear the costs of the FDA approval process. We also seek to mitigate regulatory costs by focusing on 505(b)(2) NDA opportunities. By applying our drug delivery technology to existing drugs, we seek to develop products with lower research & development expenses and shorter time-to-market timelines as compared to regular NDA products.

In addition, our facility will require a license by the U.S. Drug Enforcement Administration to produce scheduled controlled substances, such as cannabinoids.

Research and Development Expense

Our R&D expenses, net of R&D tax credits, for the year ended December 31, 2017 increased by $673,972 to $1,427,341, compared with $753,369 for the year ended December 31, 2016. The increase in R&D expenditure is explained in the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Environmental Compliance

Our research and development activities involve the controlled use of hazardous materials and chemicals. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specific waste products. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of bio-hazardous materials. The cost of compliance with these laws and regulations could be significant and may adversely affect capital expenditures to the extent we are required to procure expensive capital equipment to meet regulatory requirements. At this time, we believe that we are in compliance with environmental regulations applicable to our research and development and manufacturing facility located in Oxnard, California.

Employees

As of the date of this filing, we have 13 full-time and 1 part-time employees. None of our employees are covered by collective bargaining agreements. We consider our relations with our employees to be good.

RESULTS OF OPERATIONS

Revenues for the Three and Nine Months Ended September 30, 2018 and 2017

Revenues for the three and nine months ended September 30, 2018 were $87,851 and $349,783, respectively, as compared to $74,355 and $145,185 for the three and nine months ended September 30, 2017, respectively. The increase was principally due to the Company increased orders from ID Life, LLC for Sleep Strips. Revenues earned from ID Life have increased by 103% for the nine months ended September 30, 2018 compared to the same period in 2017. In addition, the Company successfully completed a new sleep OTF product for another customer during the nine months ended September 30, 2018. As this was a new customer in 2018, we did not generate this type of revenue in the same period in 2017. Finally, The Company completed phases I and II of our research and development agreement with Aveneon Technology Ltd. for the development of a Sildenafil OTF during the 1^st quarter of 2018. The Company did not generate this type of revenue in the same period in 2017.

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Cost of Goods Sold

Cost of goods sold was $41,958 and $171,032 in the three and nine months ended September 30, 2018 compared to $59,427 and $134,575 in the three and nine months ended September 30, 2017, respectively. Cost of goods sold decreased by $17,469 and increased by $36,457 in the three and nine months ended September 30, 2018, respectively, compared to the three and nine months ended September 30, 2017, respectively. The decrease in the three months period ended September 30, 2018 was primarily due to the Company generating revenue from ID Life on higher margin products during the three months ended September 30, 2018 compared to the same period in 2017. The increase in the nine months period ended September 30, 2018 compared to the nine months ended September 30, 2017 was primarily due to the increased sales to ID Life for Sleep Strips as well as sales from a new customer for another sleep OTF product during the nine months ended September 30, 2018.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three and nine months ended September 30, 2018 amounted to $2,444,219 and $5,496,489, respectively, and for the three and nine months ended September 30, 2017 amounted to $1,290,565 and $5,888,062, respectively. For the three and nine months ended September 30, 2018 and 2017, selling, general and administrative expenses were mainly comprised of amortization, commission, insurance, payroll, consulting, investor relation services, PR services and rent expenses. The increase in the three months ended September 30, 2018 compared to the three months ended September 30, 2017 was mainly due to the increase in noncash transactions relating to common stock issued for consulting services and recording the fair value of warrants issued for services recorded in the three months ended September 30, 2018 compared to the same period in 2017. In addition, the Company saw an increase in payroll, legal, accounting, investor relations, and PR services during the three months ended September 30, 2018 compared to the three months ended September 30, 2017. The decrease in the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 was mainly due to the decrease in noncash transaction relating to recording the fair value of warrants issued for services recorded during the nine months ended September 30, 2017 compared to same period in 2018. However, this decrease was offset by increases in payroll, legal, accounting, investor relations, and PR services during the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.

Research and Development Expenses

For the three and nine months ended September 30, 2018, research and development expenses increased to $291,624 and $1,094,993, respectively, compared to the three and nine months ended September 30, 2017 of $239,663 and $664,931, respectively. The increase in research and development expenses is due to the Company’s focus on developing potential partnerships with pharmaceutical and bioscience companies and new OTC and prescription products. This is evident by our research and development deals for the development of a Sildenafil CUREfilm, a Palmitoylethanolamine (PEA) & Dronabinol (THC) CUREfilm ODF for buccal administration, a novel CUREfilm ODF substrate with an undisclosed partner, and a CUREfilm ODF for mood enhancement as a dietary supplement once per week. In addition, the Company continues to work on the development of a 50,000IU vitamin D3 CUREfilm ODF for p.o. administration as well as developing a novel dietary cannabinoid.

LIQUIDITY AND CAPITAL RESOURCES

For the Nine Months ended September 30, 2018

As of September 30, 2018, our total assets were $3,034,040 comprised of cash of $302,538, accounts receivable of $6,590, inventory of $92,673, prepaid expenses and other assets of $860,114, net property and equipment of $313,078, net intangibles of $1,033,923, prepaid expenses of $332,790 and other assets $92,334. Our total liabilities were $8,166,122 comprised of accounts payable of $744,765, accrued expenses of $385,895, current portion of note payables, net of $886,000 convertible promissory notes, net, of $4,378,566, derivative liability of $806,379, deferred revenue of $404,517 and license fees of $560,000.

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Cash flows used in operating activities

For the nine months ended September 30, 2018, operating activities consumed $3,132,664 of cash. This was primarily the result of a net loss of $9,127,968, offset by depreciation and amortization of $110,454, amortization of stock based compensation – prepaid expenses of $1,162,400, amortization of loan discounts of $1,650,706, noncash compensation of $560,800, common stock issued for services of $45,614, change in derivative liabilities of $418,042, warrants granted for commission expense of $1,154,50, stock issued for amending convertible notes of $189,750, as well as the changes in accounts receivable of $2,226, inventory of $47,677, prepaid expenses of $165,317, other assets of $25,221, accounts payable of $249,785, accrued expenses of $269,314 and deferred revenue of $43,055. For the nine months ended September 30, 2017, operating activities consumed $2,871,058 of cash. This was primarily the result of a net loss of $6,970,064, offset by depreciation and amortization of $130,943, amortization of prepaid stock-based compensation of $1,261,693, amortization of loan discounts of $564,969, warrants issued for services of $2,560,607 as well as the changes in prepaid expenses of $588,508, other assets of $24,169, accounts payable of $199,209, accrued expenses of $48,181 and deferred revenue of $68,088.

Cash flows used in investing activities

Investment activities used an additional $122,622 of cash during the nine months ended September 30, 2018, primarily as a result of payments for patents and costs associated in the development and improvement of our intellectual property of $71,529 and acquisition of property and equipment of $51,093. Investment activities used an additional $104,538 of cash during the nine months ended September 30, 2017, primarily as a result of payments for patents and costs associated in the development and improvement of our intellectual property of $43,621, payment to joint venture investment of $5,000 and acquisition of property and equipment of $55,917.

Cash flows provided by financing activities

Financing activities provided $3,449,575 of cash for the nine months ended September 30, 2018, primarily as the result of proceeds from the issuance of convertible promissory notes of $3,600,000 and $250,000 from the issuance of promissory notes; and repayments of convertible promissory note and loan payables of $400,425. Financing activities provided $1,997,270 of cash for the nine months ended September 30, 2017, primarily as the result of proceeds from loans of $2,105,000 and repayments of loan and capital lease payables of $107,730.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles of the United States (“U.S. GAAP”) requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. For additional information, see Note 2 – “Summary of Significant Accounting Policies”. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or condition.

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Impairment of Long-Lived Assets

Going Concern

For the year ended December 31, 2017, the auditors opinion contained a going concern paragraph, which stated that the Company had an accumulated deficit, working deficit and net loss. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements.

The Company has an accumulated deficit balance as of September 30, 2018. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable. The Company is continually analyzing its current costs and is attempting to make additional cost reductions where possible. We expect that we will continue to generate losses from operations throughout the remainder of 2018.

Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise $7,000,000 to $9,000,000 in capital over the next 12 months through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 months. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected. However, the outcome of these matters cannot be predicted with certainty at this time.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

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OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, 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 are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(t) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

	1.	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

	2.	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

	3.	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2018. Based on this assessment, management concluded that the Company did not maintain effective internal controls over financial reporting as a result of the identified material weakness in our internal control over financial reporting described below. In making this assessment, management used the framework set forth in the report entitled Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring.

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Identified Material Weakness

A material weakness in our internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement or the financial statements will not be prevented or detected. Management identified the segregation of duties as a material weakness during its assessment of internal controls over financial reporting as of September 30, 2018. As of September 30, 2018, we had one full-time employee with the requisite expertise in the key functional areas of finance and accounting. As a result, there is a lack of proper segregation of duties necessary to ensure that all transactions are accounted for accurately and in a timely manner. As our resources allow, we will add financial personnel to our management team.

Management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) as of September 30, 2018, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based upon that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that as of the Evaluation Date, the Company’s disclosure controls are not effective as a result of the identified material weakness described herein.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2018 that materially affected, or is reasonably likely to have a material effect, on our internal control over financial reporting.

ITEM 1. LEGAL PROCEEDINGS

The information set forth under Note 13 of Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Not Applicable.

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

On January 24, 2018, the Company issued 50,000 common stock shares at $1.48 per share for consulting services to be performed over a one year period.

The shares of common stock described above were issued without registration under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act promulgated thereunder and in reliance on similar exemptions under applicable state laws.

On January 24, 2018, the Company issued an additional 55,000 warrants in connection with the issuance of $1,100,000 convertible promissory notes issued in 2017. The warrants have an exercise price of $1.00 per share and a term of 3 years.

From January 30, 2018 to March 28, 2018, the Company issued up to $2,025,000 convertible promissory notes with investors (“Investors”) due November 30, 2018. The notes bear interest at 9% per year and are convertible into common stock at either a price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange. The Investors in this offering also received warrants (the “Warrants”) for the option to purchase equal to 50% of the shares of Common Stock that the Investor is entitled to receive in connection with the conversion of the Investor’s Note. The Warrants’ price per share shall equal the lower of (a) $2.00 or (b) 125% of the price per share of the Qualified Offering. The Warrants will have a three year term and shall be exercisable in cash.

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The Company has previously adopted and maintains the CURE Pharmaceutical Holding Corp. 2017 Equity Incentive Plan (the “Plan”), pursuant to which an aggregate of 5,000,000 shares of the common stock of the Company were authorized to be granted. The Board of Directors have determined that it is in the best interests of the Company and its stockholders to provide an additional incentive for certain employees, including executive officers, and non-employee members of the Board of Directors of the Company by granting to them awards with respect to the common stock of the Company pursuant to the Plan. On April 6, 2018, the Company awarded 500,000 Restricted Common Stock (“RCS”), 1,251,700 Nonstatutory Stock Options (“NSO”) and 804,000 Incentive Stock Options (“ISO”) to employees, including executive officers, non-employee members of the Board of Directors of the Company, members of the Advisory Board Committee and consultants at a $0.74 price per share. Vesting period for the awarded RCS, NSO and ISO’s range from immediate to quarterly over a 4 year period. For NSO’s and ISO awarded, the term to exercise their NSO or ISO is 10 years.

On April 15, 2018, the Company amended six convertible promissory notes totaling $1,100,000 to extend the maturity dates to May 31, 2018. For extending the maturity date, the Company granted an additional 275,000 warrants to purchase common stock of the Company at a strike price of $1.00 per share. In addition, the Company extended the term of the warrant agreements for one additional year for each of the convertible promissory notes. On April 23, 2018, the Company repaid two of these convertible promissory notes totaling $250,000.

On April 24, 2018, the Company received in total $500,000 (“Investment Amount”) by issuing a convertible promissory note (“Convertible Note”) to a Company, Therapix Biosciences Ltd., (“Investor”) that is due April 30, 2019 (“Maturity Date”). The Convertible Note shall accrue interest at 9% per annum and is unsecured. Unless earlier converted, at the election of the Investor, the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS.

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On May 1, 2018, the Company issued 110,000 warrants at a fair market value of $27,479 and with an exercise price of $1.00 per share in connection with convertible promissory notes purchased issued by the Company.

On May 15, 2018, the Company issued a $250,000 convertible promissory note with an investor (“Investor”) due December 31, 2018. The notes bear interest at 9% per year and are convertible into common stock at either a price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange. The Investors in this offering also received warrants (the “Warrants”) for the option to purchase equal to 50% of the shares of Common Stock that the Investor is entitled to receive in connection with the conversion of the Investor’s Note. The Warrants’ price per share shall equal the lower of (a) $2.00 or (b) 125% of the price per share of the Qualified Offering. If the Qualified Offering has not occurred, then the Exercise Price shall be $2.00. The Warrants will have a three-year term and shall be exercisable in cash.

On June 30, 2018, the Company issued a $500,000 convertible promissory note (“Convertible Note”) with an investor (“Investor”) due December 31, 2018. The Convertible Note are secured by all of the assets of the Company and Subsidiaries, including ownership of the Subsidiaries The Convertible Note bears interest at 9% per year and are convertible into common stock at either a price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange. The Investor in this offering also received warrants (the “Warrants”) for the option to purchase equal to 50% of the shares of Common Stock that the Investor is entitled to receive in connection with the conversion of the Investor’s Note. The Warrants’ price per share shall equal the lower of (a) $2.00 or (b) 125% of the price per share of the Qualified Offering. If the Qualified Offering has not occurred, then the Exercise Price shall be $2.00. The Warrants will have a three-year term and shall be exercisable in cash.

On May 16, 2018, the Company issued 1,000,000 common stock shares at $0.97 per share for investor relation services to be performed over 30 month period.

On May 16, 2018, the Company issued 70,175 common stock shares at $0.65 per share for consulting services performed.

On July 17, 2018, the Company issued 70,000 common stock shares at $1.85 per share for consulting services to be performed over a six month period.

On July 17, 2018, the Company issued 69,444 common stock shares at $0.72 per share for the cancellation of two months rent and overages for property tax and general liability insurance.

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On July 17, 2018, the Company issued 250,000 common stock shares at $1.10 per share for strategic marketing and development advisory services to be performed over a six month period.

On September 4, 2018, the Company issued 90,000 common stock shares at $0.71 per share and 90,000 shares at $1.00 per share for media and advertising services to be performed over a six month period.

On September 4, 2018, the Company issued 90,000 common stock shares at $3.24 per share for media and advertising services to be performed over a six month period.

September 27, 2018, the Company issued up to $575,000 convertible promissory notes with investors (“Investors”) due June 27, 2019. The notes bear interest at 9% per year and are convertible into common stock at either a price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange. The Investors in this offering also received warrants (the “Warrants”) for the option to purchase equal to 50% of the shares of Common Stock that the Investor is entitled to receive in connection with the conversion of the Investor’s Note. The Warrants’ price per share shall equal the lower of (a) $2.00 or (b) 125% of the price per share of the Qualified Offering. The Warrants will have a three year term and shall be exercisable in cash.

The warrants and notes described above were issued and sold without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.

ITEM 3. DEFAULTS UPON SENIOR SECURITES

None.

ITEM 4. MINE SAFETY DISCLOSURE

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

31.1		Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CURE PHARMACEUTICAL HOLDING CORP.

Dated: November 14, 2018	By:	/s/ Robert Davidson
		Robert Davidson
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

/s/ Robert Davidson
Robert Davidson
Chief Executive Officer
November 14, 2018

/s/ Mark Udell
Mark Udell
Chief Financial Officer
November 14, 2018

Cure Pharmaceutical Holding Corp. - FORM 10-Q - November 14, 2018

Attached files

Cure Pharmaceutical Holding Corp. Reports