UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2016

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

For the transition period from to

COMMISSION FILE NUMBER 333-142076

IRIS BIOTECHNOLOGIES INC.

(Exact Name of small business issuer as specified in its charter)

California		77-0506396
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

5201 Great America Parkway, Suite 320, Santa Clara, California 95054

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (408) 867-2885

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

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

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☑

(Do not check if a smaller

reporting company)

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

As of ~~May~~August 1315, 2016 the ~~issuer~~ issuer had 1920,~~774~~877,~~677~~844 outstanding shares of Common Stock.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2324
Item 4.	Controls and Procedures	2324
	PART II
Item 1.	Legal Proceedings	2425
Item 1A.	Risk Factors	2425
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2425
Item 3.	Defaults Upon Senior Securities	2425
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	2526
	Signatures	2627

PART I

ITEM 1. FINANCIAL STATEMENTS.

INDEX TO FINANCIAL STATEMENTS

	Page
Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015	4
Condensed Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015	4
Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	5
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015 (unaudited)	5
Condensed Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2016	6
Condensed Consolidated Statement of Stockholders’ Deficit for the six months ended June 30, 2016 (unaudited)	6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	7
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015 (unaudited)	7
Notes to the Condensed Consolidated Financial Statements	8

IRIS BIOTECHNOLOGIES, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
		March 31,			December 31,
		June 30,			December 31,
		2016			2015
		(unaudited)
ASSETS
Current assets:
Cash	$	107,~~215~~638		$	19,839
Prepaid expenses		~~906~~—			3,625
Total current assets		117,~~121~~638			23,464
Property, plant and equipment, net of accumulated depreciation of $245,489 and $243,437 at March 31, 2016 and December 31, 2015, respectively		27,565			29,617
Property, plant and equipment, net of accumulated depreciation of $247,540 and $243,437 as of June 30, 2016 and December 31, 2015, respectively		25,514			29,617
Total assets	$	3833,~~686~~152		$	53,081
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	~~140~~95,~~373~~354		$	124,298
Advances, related party		~~230~~261,200			175,200
Convertible notes payable, short term		15,000			—
Derivative liabilities		—			169,082
Total current liabilities		~~370~~371,~~573~~554			468,580
Long term debt:
Convertible notes payable		26,000			26,000
Convertible notes payable, long term		21,000			26,000
Total debt		~~396~~392,~~573~~554			494,580
Commitments and contingencies		—			—
STOCKHOLDERS' DEFICIT
Preferred stock, no par; 25,000,000 and 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		—			—
Preferred stock, no par; 25,000,000 and 5,000,000 shares authorized; no shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		—			—
Common stock, no par; 100,000,000 and 20,000,000 shares authorized; 19,750,677 and 19,607,177 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		8,890,648			8,850,789
Common stock, no par; 100,000,000 and 20,000,000 shares authorized; 19,774,677 and 19,607,177 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively		8,895,320			8,850,789
Additional paid in capital		3,~~395~~578,~~759~~123			2,878,394
Common stock subscription receivable		(128,375	)		(128,375	)
Accumulated deficit		(12,~~515~~704,~~919~~470	)		(12,042,307	)
Total stockholders' deficit		(~~357~~359,~~887~~402	)		(441,499	)
Total liabilities and stockholders' deficit	$	3833,~~686~~152		$	53,081
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements

IRIS BIOTECHNOLOGIES, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	Three months ended March 31,
	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Operating expenses:
Selling, general and administrative	$	~~145~~154,~~593~~049		$	~~257~~176,~~220~~411		$	299,642		$	433,631
Research and development (Note 1)		3731,~~544~~934			2122,~~603~~754			69,478			44,357
Depreciation		2,~~052~~051			~~812~~1,166			4,103			1,978
Total operating expenses		~~185~~188,~~189~~034			~~279~~200,~~635~~331			373,223			479,966
Net loss from operations		(~~185~~188,~~189~~034	)		(~~279~~200,~~635~~331	)		(373,223	)		(479,966	)
Other income (expense):
Loss on change in fair value of derivative liabilities		~~(287,938~~—	)		—			(287,938	)		—
Interest income (expense)		(~~485~~517	)		(~~573~~495	)		(1,002	)		(1,068	)
Total other income (expense)		(~~288,423~~517	)		(~~573~~495	)		(288,940	)		(1,068	)
Net loss before provision for income taxes		(~~473~~188,~~612~~551	)		(~~280~~200,~~208~~826	)		(662,163	)		(481,034	)
Income taxes		—			—			—			—
Net loss	$	(~~473~~188,~~612~~551	)	$	(~~280~~200,~~208~~826	)	$	(662,163	)	$	(481,034	)
Loss per common share-basic and diluted	$	(0.0201	)	$	(0.0201	)	$	(0.03	)	$	(0.03	)
Weighted average number of common shares outstanding-basic and diluted		19,~~609~~763,600			15,~~249~~342,~~175~~460			19,686,600			15,296,075
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements

IRIS BIOTECHNOLOGIES, INC
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
THREE MONTHS ENDED MARCH 31, 2016
SIX MONTHS ENDED JUNE 30, 2016
(unaudited)
	Common shares				Additional Paid in		Subscription			Accumulated
					Additional
	Common shares				Paid in		Subscription			Accumulated
		Stock		Amount		Capital		Receivable			Deficit			Total
Balance, December 31, 2015		19,607,177	$	8,850,789	$	2,878,394	$	(128,375	)	$	(12,042,307	)	$	(441,499	)
Common stock issued in March 2016 at $0.352 per share for services rendered		73,500		25,859		—		—			—			25,859
Common stock issued in May 2016 at $0.195 per share for services rendered		24,000		4,672		—		—			—			4,672
Sale of common stock		70,000		14,000		—		—			—			14,000
Net reclassification of common stock equivalents issued in excess of aggregate authorized availability		—		—		6,723		—			—			6,723
Reclassification of fair value of derivative liability to equity upon increase in authorized common shares		—		—		450,297		—			—			450,297
Fair value of vesting warrants for services		—		—		11,~~321~~834		—			—			11,~~321~~834
Fair value of vesting options		—		—		4997,~~024~~255		—			—			4997,~~024~~255
Net loss		—		—		—		—			(473,612	)		(473,612	)
Stock based compensation		—		—		133,620		—			—			133,620
Balance, March 31, 2016		19,750,677	$	8,890,648	$	3,395,759	$	(128,375	)	$	(12,515,919	)	$	(357,887	)
Net loss		—		—		—		—			(662,163	)		(662,163	)
Balance, June 30, 2016		19,774,677	$	8,895,320	$	3,578,123	$	(128,375	)	$	(12,704,470	)	$	(359,402	)
The accompanying notes are an integral part of these financial statements

IRIS BIOTECHNOLOGIES, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	Three months ended March 31,
	Six months ended June 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(~~473~~662,~~612~~163	)	$	(~~280~~481,~~208~~034	)
Adjustments to reconcile net loss to cash used in operating activities:
Adjustments to reconcile net loss to cash (used in) operating activities:
Depreciation		24,~~052~~103			~~812~~1,978
Change in fair value of derivative liabilities		287,938			—
Common stock issued in exchange for services rendered		25,859			152,227
Common stock issued or issuable in exchange for services rendered		164,151			221,216
Options and warrants issued in exchange for services rendered		60109,~~345~~089			62123,~~623~~863
Changes in operating liabilities:
Prepaid expenses		23,~~719~~625			—
Accounts payable and accrued liabilities		16(28,~~075~~944	)		(76116,~~247~~431	)
Net cash used in operating activities		(78,624	)		(140,793	)
Net cash used in operating activities:		(122,201	)		(250,408	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment		—			(327,~~037~~375	)
Net cash used in investing activities		—			(3,037	)
Net cash used in investing activities:		—			(27,375	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		14,000			—
Proceeds from related party advances		55,000			—
Proceeds from issuance of convertible note payable		10,000			—
Net cash provided by financing activities		69,000			—
Proceeds from related party advances		86,000			—
Decrease in cash and cash equivalents		(9,624	)		(143,830	)
Net cash provided by financing activities		110,000			—
(Decrease) increase in cash and cash equivalents		(12,201	)		(277,783	)
Cash and cash equivalents beginning of period		19,839			322,929
Cash and cash equivalents end of period	$	107,~~215~~638		$	~~179~~45,~~099~~146
Supplemental disclosures of cash flow information		—			—
Non-cash investing and financing activities:
Common stock issued in settlement of notes payable and accrued interest	$	—		$	3,467
The accompanying notes are an integral part of these financial statements

IRIS BIOTECHNOLOGIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~JUNE 3130, 2016

(Unaudited)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying unaudited condensed consolidated financial statements follows.

General

The accompanying unaudited condensed financial statements of Iris Biotechnologies, Inc., (the “Company”), have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Accordingly, the results from operations for the three and six month ~~period~~periods ended ~~March~~June 3130, 2016, are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. The unaudited condensed consolidated financial statements should be read in conjunction ~~with~~ with the December 31, 2015 financial statements and footnotes thereto included in the Company’s Form 10-K filed on March 30, 2016.

Business and Basis of Presentation

Iris Biotechnologies Inc. (the “Company”, “we”, “us”, “our”) was incorporated on February 16, 1999 under the laws of the State of California. The Company efforts are principally devoted to developing solutions for the detection and monitoring of monogenic and complex genomic diseases. The Company has not generated any revenue to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise.

On April 9, 2014, the Company formed Iris Wellness Labs, Inc., a wholly owned subsidiary and Delaware Corporation, for the purpose of developing certain business lines. As of ~~March~~June 3130, 2016, there were no significant assets or liabilities in Iris Wellness Labs, Inc., or operations since its formation.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For purposes of the Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 3 to 5 years.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, the fair value of the Company’s stock, stock-based compensation, fair values relating to derivative liabilities and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

Income Taxes

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and relate primarily to stock based compensation basis differences and Net Operating Losses. As of ~~March~~June 3130, 2016, the Company has provided a 100% valuation against the deferred tax benefits. The periods from December 31, 2012 to December 31, 2014 remain open to examination by the U.S. Internal Revenue Service and state authorities.

Net Income (loss) Per Common Share

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.

The computation of basic and diluted loss per share as of ~~March~~June 3130, 2016 and 2015 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.

Potentially dilutive securities excluded from the computation of basic and diluted net ~~income (~~loss) per share are as follows:

	March 31, 2016		March 31, 2015
	June 30, 2016		June 30, 2015
Convertible notes		2636,000		3126,000
Options to purchase common stock		1,387,696		21,~~404~~957,571
Warrants to purchase common stock		215,300		120,300
Totals		1,~~628~~638,996		2,~~555~~103,871

Concentrations of Credit Risk

Financial instruments and related items which potentially subject the Company to concentrations of credit risk, consist primarily of cash. The Company places its cash with quality credit institutions. At times, such amounts may be in excess of the FDIC insurance limit of $250,000.

Fair Values

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes 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 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company’s cash, accounts payable, related party advances, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

As of ~~March~~June 3130, 2016 and December 31, 2015, the Company did not have any items that would be classified as level 1 or 2 disclosures.

The Company recognized its derivative liabilities as level 3 and values its derivatives using the methods discussed in Note 5. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed in Note 5 are that of volatility and market price of the underlying common stock of the Company.

Stock based compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the statements of operations, as if such amounts were paid in cash.

10As of June 30, 2016, there were outstanding stock options to purchase 1,387,696 shares of common stock, 949,467 shares of which were vested. As of December 31, 2015, the Company had 1,957,571 options outstanding to purchase shares of common stock, of which 1,609,779 were vested.

As of March 31, 2016, there were outstanding stock options to purchase 1,387,696 shares of common stock, 891,029 shares of which were vested. As of December 31, 2015, the Company had 1,957,571 options outstanding to purchase shares of common stock, of which 1,609,779 were vested.

Derivative Liability

The Company accounts for derivatives in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At ~~March~~June 3130, 2016 and December 31, 2015, the Company did not have any derivative instruments that were designated as hedges.

At December 31, 2015 through March 18, 2016, the Company had a derivative liability due to the possibility of exceeding their common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions for all existing instruments that could be settled in shares. At March 18, 2016, upon increasing the number of common shares authorized, the fair value of the derivative liability was reclassified to equity. See Note 5.

Research and development costs

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development ~~expenses~~expenditures of $3731,~~544 and~~934 and $2169,~~603~~478 for the three and six months ended ~~March~~June 3130, 2016, respectively and $22,754 and $44,357 for the three and six months ended June 30, 2015, respectively.

Liquidity and Dependency of Key Management

To date the Company has generated no revenues, has incurred expenses, and has sustained losses. As shown in the accompanying consolidated financial statements, the Company incurred a loss of $~~473~~662,~~612~~163 and $~~280~~481,~~208~~034 during the ~~three~~six months ended ~~March~~June 3130, 2016 and 2015, respectively. For the period from February 16, 1999 (date of inception) through ~~March~~June 3130, 2016, the Company has accumulated losses of $12,~~515~~704,~~919~~470. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise.

The Company's primary source of operating funds since inception has been cash proceeds from the private placements of common stock and proceeds from private placements of convertible debt. The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations.

The future success or failure of the Company is dependent primarily upon the Company raising funds from third parties, and the continued efforts and financial support of Simon Chin, the Company’s Chief Executive Officer, Chief Financial Officer and the majority shareholder. As in the past, Mr. Chin has committed to provide all necessary funding if needed to the meet the Company’s financial obligations through 2016. Additionally, management feels that the Company's fixed cash obligations can be reduced to approximately $100,000 if necessary.

Recent Accounting Pronouncements

There are various 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.

NOTE 2 - PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment at ~~March~~June 3130, ~~2016~~ 2016 and December 31, 2015 are as follows:

	March 31, 2016			December 31, 2015
	June 30, 2016			December 31, 2015
Computer equipment	$	87,112		$	87,112
Office equipment		1,728			1,728
Furniture and fixtures		4,952			4,952
Manufacturing equipment		179,262			179,262
		273,054			273,054
Less: accumulated depreciation		(~~245~~247,~~489~~540	)		(243,437	)
	$	2725,~~565~~514		$	29,617

NOTE 3 - LONG TERM CONVERTIBLE NOTE PAYABLE

Long-term debt at ~~March~~June 3130, 2016 and December 31, 2015 are as follows:

	March 31, 2016		December 31, 2015
	June 30, 2016		December 31, 2015
Note payable, dated June 22, 2012	$	15,000	$	15,000
Note payable, dated December 4, 2012		2,000		2,000
Note payable, dated February 1, 2013		4,000		4,000
Notes payable, dated April 4, 2013		4,000		4,000
Note payable, dated September 24, 2013		1,000		1,000
Total		26,000		26,000
Note payable, dated June 17, 2016		10,000		—
Less: current portion		—		—
Total		36,000		26,000
Long term portion	$	26,000	$	26,000
Less: current portion		15,000		—
Long term portion	$	21,000	$	26,000

On June 17, 2016, the Company issued a $10,000 note to an unrelated party, unsecured and bearing an interest rate of 7.5% per annum, due five years from date of issuance. The note is convertible into the Company’s common stock at a conversion rate of $1.00 per share. Based upon the value of the stock, an embedded beneficial conversion feature was not present in the note.

NOTE 4 — RELATED PARTY TRANSACTIONS

Officer Advances

The Company’s President and shareholders have advanced funds on a non-interest-bearing basis to the Company for working capital purposes since the Company’s inception in February 1999. No formal repayment terms or arrangements exist. During 2016, the Company's President advanced funds of $5586,000 to the Company. There were $~~230~~261,200 and $175,200 outstanding at ~~March~~June 3130, 2016 and December 31, 2015, respectively.

NOTE 5 — DERIVATIVE LIABILITIES

Excessive committed shares

Beginning on December 29, 2015 through March 18, 2016, in connection with the previously issued convertible debt, stock options and warrants, the Company had the possibility of exceeding their common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions of these agreements after consideration of all existing instruments that could be settled in shares. This resulted in a derivative liability as a result of the Company having a potential to settle the obligation to issue these excess shares. The accounting treatment of derivative financial instruments required that the Company reclassify the derivative from equity to a liability at their fair values as of the date possible issuable shares exceeded the authorized level and at fair value as of each subsequent balance sheet date. On March 18, 2016, the Company amended the Articles of Incorporation to increase of authorized shares of common stock from 20,000,000 to 100,000,000 thereby having sufficient authorized common shares to meet any settlement provisions.

The Company recognized its derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.

During the ~~three~~six months ended ~~March~~June 3130, 2016, the fair value of the net derivative liabilities reclassified to equity of $6,723 was determined using the Black Scholes Option Pricing model with the following assumptions: dividend yield: 0%; volatility: 404.69%; risk free rate: 1.55%; and expected life: 7.71 years.

At March 18, 2016, the fair value of the derivative liabilities of $450,297 was determined using the Black Scholes Option Pricing model with the following assumptions: dividend yield: 0%; volatility: 406.32%; risk free rate: 0.62% to 1.88%; and expected life: 1.00 to 8.80 years.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of ~~three~~six months ended ~~March~~June 3130, 2016:

	Excess Share Derivative
Balance, December 31, 2015	$	169,082
Transfers out of Level 3 liability upon reduction of excess over authorized shares		(6,723	)
Transfers out of Level 3 liability upon increasing authorized shares		(450,297	)
Mark-to-market adjustment at March 18, 2016:		287,938
Balance, March 31, 2016	$	—
Net loss for the period included in earnings relating to the liabilities held at March 31, 2016	$	(287,938	)

	Excess Share Derivative
Balance, December 31, 2015	$	169,082
Transfers out of Level 3 liability upon reduction of excess over authorized shares		(6,723	)
Transfers out of Level 3 liability upon increasing authorized shares		(450,297	)
Mark-to-market adjustment at March 18, 2016:		287,938
Balance, June 30, 2016	$	—

Net loss for the period included in earnings relating to the liabilities held at June 30, 2016	$	(287,938	)

Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. The Company’s stock price increased by 122% from December 31, 2015 to March 18, 2016. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s consolidated balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement.

NOTE 6 - STOCKHOLDER EQUITY

On March 18, 2016, the Company amended its Articles of Incorporation by filing a Certificate of Amendment with the Secretary of State of California to effect an increase in the number of the Company’s authorized common shares and preferred shares from 20,000,000 to 100,000,000 and 5,000,000 to 25,000,000 respectively.

Preferred stock

From date of inception through ~~March~~June 3130, 2016, the Company has not issued any preferred shares.

Common stock

As of ~~March~~June 3130, 2016 and December 31, 2015 ~~the~~ the Company has 19,~~750~~774,677 and 19,607,177 shares of common stock issued and outstanding, respectively.

During the ~~three~~six months ended ~~March~~June 3130, 2016, the Company issued an aggregate of 7397,500 shares of common stock for services in the amount of $2530,~~859~~531 based on quoted market prices at the time of issuance.

During the ~~three~~six months ended ~~March~~June 3130, 2016, the Company sold an aggregate of 70,000 shares of common stock for net proceeds of $14,000.

At June 30, 2016, the Company accrued the subsequent issuance of 1,041,667 shares of officer compensation at a fair value of $125,000.

At June 30, 2016 the Company accrued the subsequent issuance of 37,500 shares of Board of Directors compensation at a fair value of $6,868, and 12,000 shares of legal and consulting services at a fair value of $1,752. (See Note 9)

NOTE 7 – WARRANTS AND OPTIONS

Warrants

The following table summarizes warrants outstanding and related prices for the shares of the Company’s common stock issued at ~~March~~June 3130, 2016:

Exercise Price		Number Outstanding		Warrants Outstanding Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise price		Number Exercisable		Warrants Exercisable Weighted Average Exercise Price
$	1.00		155,100		3.90	$	1.00		83.850	$	1.00
	2.00		60,200		3.56		2.00		60,200		2.00
			215,300		3.80		1.28		144,050	$	1.42

Transactions involving the Company’s warrant issuance are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2015		120,300	$	1.50
Issued		95,000		1.00
Exercised		—		—
Expired		—		—
Outstanding at March 31, 2016		215,300	$	1.28

On January 1, 2016, the Company issued an aggregate of 95,000 warrants for services with an exercise price of $1.00 with vesting over one year and expiring five years from issuance. The fair value of the vested warrants during the three months ended March 31, 2016 and 2015 of $11,321, and $4,341, respectively was charged to operations.

Exercise Price		Number Outstanding		Warrants Outstanding Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise price		Number Exercisable		Warrants Exercisable Weighted Average Exercise Price
$	1.00		155,100		3.66	$	1.00		107,600	$	1.00
	2.00		60,200		3.31		2.00		60,200		2.00
			215,300		3.56		1.28		167,800	$	1.36

Transactions involving the Company’s warrant issuance are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2015		120,300	$	1.50
Issued		95,000		1.00
Exercised		—		—
Expired		—		—
Outstanding at June 30, 2016		215,300	$	1.28

On January 1, 2016, the Company issued an aggregate of 95,000 warrants for services with an exercise price of $1.00 with vesting over one year and expiring five years from issuance. The fair value of the vested warrants during the three and six months ended June 30, 2016 of $513 and $11,834, and $8,581 and $12,922 for the three and six months ended June 30, 2015, respectively, (as determined as described below) was charged to operations.

The fair value of these vesting 2016 warrants issued and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

Significant assumptions:
Risk-free interest rate at grant date	1.01% to 1.21	%
Expected stock price volatility	391.69% to 408.40	%
Expected dividend payout	—
Expected option life-years (a)	4.51 to 4.76

__________________________

(a) The expected option life is based on contractual expiration dates

Options

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from using the Company’s historical stock prices. Management determined this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual life of options for non-employees. For employees, the Company accounts for the expected life of options based on remaining contractual expiration dates.

The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. The fair value of stock-based payment awards during the ~~three~~six months ended ~~March~~June 3130, 2016 was estimated using the Black-Scholes pricing model.

In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options as a percentage of total options outstanding. If the Company’s actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

Based on no historical forfeitures, the Company estimated forfeitures related to option grants at a weighted average annual rate of 0% per year based on historical data, for options granted during the three and six months ended ~~March~~June 3130, 2016 and 2015.

Employee Options

The following table summarizes options outstanding and the related prices for the shares of the Company’s common stock issued to employees under a stock option plan at ~~March~~June 3130, 2016:

	Options Outstanding					Options Exercisable
	Exercise Prices (S)	Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (S)	Number Exercisable		Weighted Average Exercise Price
$	0.80	85,000	4.70	$	0.80	85,000	$	0.80
	1.00	185,000	4.03		1.00	149,896		1.00
	1.11	100,000	4.50		1.11	100,000		1.11
	1.25	600,000	5.17		1.25	225,000		1.25
	2.25	162,696	1.90		2.25	162,696		2.25
		1,132,696	4.42	$	1.31	722,592	$	1.35

	Options Outstanding					Options Exercisable
	Exercise Prices (S)	Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (S)	Number Exercisable		Weighted Average Exercise Price
$	0.80	85,000	4.95	$	0.80	85,000	$	0.80
	1.00	185,000	4.27		1.00	138,333		1.00
	1.11	100,000	4.75		1.11	100,000		1.11
	1.25	600,000	5.42		1.25	187,500		1.25
	2.25	162,696	2.15		2.25	162,696		2.25
		1,132,696	4.67	$	1.31	673,529	$	1.36

Transactions involving employee stock options issued are summarized as follows:

	Number of Shares			Weighted Average Price Per Share
Outstanding at December 31, 2015		1,597,571		$	1.22
Granted		—			—
Exercised		—			—
Expired		(464,875	)		(1.00	)
Outstanding at March 31, 2016:		1,132,696		$	1.31
Outstanding at June 30, 2016:		1,132,696		$	1.35

The fair value of the vested portion previously granted employee options of $47,~~056~~057 and $5594,~~477~~114 was charged during the three and six months ended ~~March~~June 3130, 2016, and $47,057 and $102,534 for the three and six months ended June 30, 2015, respectively.

Non-employee options

The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued to non-employees under a stock option plan at ~~March~~June 3130, 2016:

	Options Outstanding					Options Exercisable
	Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	1.00	150,000	6.95	$	1.00	112,500	$	1.00
	1.40	105,000	2.98		1.40	105,000		1.40
		255,000	5.32	$	1.16	217,500	$	1.19

Transactions involving non-employee stock options issued are summarized as follows:

	Number of Shares			Weighted Average Price Per Share
Outstanding at December 31, 2014:		360,000		$	1.12
Granted		—			—
Exercised		—			—
Expired		(105,000	)		(1.00	)
Outstanding at March 31, 2016:		255,000		$	1.16

The fair value of the vested portion of previously granted non-employee options of $1,968 and $2,805 was charged during the three months ended March 31, 2016 and 2015, respectively.

	Options Outstanding					Options Exercisable
	Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	1.00	150,000	6.70	$	1.00	121,875	$	1.00
	1.40	105,000	2.73		1.40	105,000		1.40
		255,000	5.07	$	1.16	226,875	$	1.19

Transactions involving non-employee stock options issued are summarized as follows:

	Number of Shares			Weighted Average Price Per Share
Outstanding at December 31, 2015:		360,000		$	1.12
Granted		—			—
Exercised		—			—
Expired		(105,000	)		(1.00	)
Outstanding at June 30, 2016:		255,000		$	1.16

The fair value (as determined as described below) of the non-employee options of $1,172 and $3,141 for the three and six months ended June 30, 2016, and $5,602 and $8,407 for the three and six months ended June 30, 2015 was charged to operations, respectively.

The fair value of these options issued and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

Significant assumptions:
Risk-free interest rate at grant date	1.30% to 1.54	%
Expected stock price volatility	391.69% to 408.40	%
Expected dividend payout	—
Expected option life-years (a)	6.74 to 6.99

NOTE 8 - COMMITMENTS AND CONTINGENCIES

From time to time, the Company is involved in various litigation matters in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position or results of operations.

In 2016 upon settlement, the Company reversed a prior service obligation of $50,000 as a reduction in current period operating expenses.

NOTE 9 - SUBSEQUENT EVENTS

In ~~May~~July 2016, the Company issued 16,000 ~~shares~~ shares of Common Stock for legal fees, 1,041,667 shares of Common Stock for officer compensation, 37,500 shares of Common Stock for Board fees and 8,000 shares of Common Stock for consulting services. (See Note 6)

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

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Overview

Since inception on February 16, 1999 through ~~March~~June 3130, 2016, we have sustained cumulative net losses of $12,~~515~~704,~~919~~470. Our losses have resulted primarily from research and development expenses, patent costs and legal and accounting expenses. From inception through ~~March~~June 3130, 2016, we have not generated any revenue from operations. We expect to incur additional losses to perform further research and development activities. In order to accelerate our product introduction and to grow dynamically, we will need to raise additional funds. We do not currently have any commercial products. With additional funding, we expect to launch our Nano-biochip products in the future.

In October 2010, Iris was awarded $245,000, the maximum amount given per grant under the US Qualifying Therapeutic Discovery Project (QTDP) Program. The QTDP grant provided recognition of Iris's patented Nano-Biochip™ and BioWindows™ Medical Informatics System for optimizing personalized and targeted medical treatment.

The selection criteria includes a company’s ability to diagnose diseases or conditions; to determine molecular factors related to diseases or conditions by developing molecular diagnostic guided therapeutic decisions; or to develop a product, process, or technology to further the delivery or administration of therapeutics. The award was given to projects that show reasonable potential to result in new therapies to treat areas of unmet medical needs or to prevent, detect or treat chronic or acute diseases and conditions; to reduce long-term health care costs in the U.S.; or to significantly advance the goal of curing cancer within the next 30 years.

In 2014, Iris received the IAIR Award for Best Company for Leadership in Personalized Medicine. Iris is in preparation for the launch of multiple products and services based upon its patented Nano-biochip and BioWindows Medical Informatics System. We currently have six US patents plus a portfolio of patents issued worldwide. We expect additional patent issuance in 2016. The Company has been keeping up and making adjustments to our products and technology, as well as to our intellectual property portfolio to stay at the forefront of its market sector.

The Company has an extensive pipeline of personalized, precision medical products and services, including an integrated blood test, IVF applications, a BreastCancerChip, ColonCancerChip, NeuroChip, PrenatalChip, Comprehensive CancerChip, CardioChip, ViralChip and MetabolicChip; however, we have focused our initial efforts on helping breast cancer patients.

We have been in discussions with various entities in regard to launching our products in the US and abroad. We have also had discussions with equipment financing sources with respect to building or buying additional equipment, which would allow us to expand our manufacturing capacity.

With the addition of outstanding people, who have a passion for making a difference in helping people through precision medicine, we have positioned ourselves well to offer our solution to the world as we prepare for dynamic growth.

There are some risks with respect to clinical testing, regulatory approval and review cycles and uncertainty of the costs. Net positive cash inflows from any products developed may take several years to achieve. Management plans to continue financing operations with a combination of equity issuances and debt arrangements. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate our research or development programs, or cease operations.

History

We were incorporated in the State of California on February 16, 1999 and planned to sell theranostic (choosing therapy based upon personalized diagnostic results) products and services in the medical field. In an effort to develop that business, we set up operations in three locations in California - Headquarters in Santa Clara (near Stanford University), Laboratory in San Leandro (near UC Berkeley and UC San Francisco), and Business Development in Davis (near UC Davis).

Beginning on March 11, 1999, Simon Chin, MBA, our founder, President and CEO, Secretary and principal shareholder, entered into Common Stock Purchase Agreements with various companies, investment groups and private individuals. On March 1, 2003, Daniel Farnum, M.D., an owner of Humboldt Orthopedics and a key shareholder, and Grace Osborne, MBA, President of GCO Recruiting, joined Mr. Chin on our board of directors. On April 9, 2003, the board approved a 2 for 1 stock split, changed the authorized shares of common stock from 10 million to 20 million, and the authorized preferred stock remained at 5 million shares. On March 18, 2016, the Company amended its articles of incorporation and increased its authorizes shares of common stock to 100,000,000 and preferred stock to 25,000,000.

Plan of Operation

We are a life science company focused on the development and commercialization of Nano-Biochips™ and an artificial intelligence system to assist in establishing the foundation for personalized medicine, which will initially be utilized in the treatment of breast cancer. The Nano-Biochips™ have the ability to quickly and very accurately analyze the activity of multiple genes involved in a specific disease. Our manufacturing system has the capability to produce a variety of chips with a choice of mRNA, microRNA, protein, or other biomarker probes for the diagnosis and prognosis of many diseases. Although we may market our products as CLIA laboratory tests, we are designing them to be approved by the FDA, which can then be used in any certified laboratory. Starting at the point of a breast biopsy diagnosis of cancer, the Nano-Biochip and informatics program are designed to enable a treating physician to quickly prescribe a personalized treatment regimen that will have the greatest probability of success for each patient’s particular type of cancer. Our product platform is being developed to lead to more effective diagnosis and treatment not only for patients with breast cancer, but also for those with neurological disorders, heart disease, diabetes, metabolic problems, and other diseases.

Product Research and Development

We anticipate spending, in order to accelerate our growth, which is contingent upon raising additional funds, at least $2,000,000 for product research and development activities related to our anticipated product launches during the next twelve months.

Acquisition of Plant and Equipment and Other Assets

We do not anticipate the sale of any material property, plant or equipment during the next 12 months. We do anticipate the acquisition of some material property, plant or equipment during the next 12 months, to accelerate our growth to fulfill the unmet needs of a large, growing market.

Number of Employees

From our inception through ~~March~~June 3130, 2016, we have principally relied on the services of outside consultants and part-time employees for services. We currently have 7 full-time and part-time employees and 6 full-time and part-time consultants. In order for us to attract and retain quality personnel, we anticipate we will have to offer competitive salaries to future employees. We anticipate that it may become desirable to add additional full and or part time employees to discharge certain critical functions during the next 12 months. This projected increase in personnel is dependent upon our ability to generate revenues and obtain sources of financing. There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the projected increase in the number of employees. As we continue to expand, we will incur additional cost for personnel.

Results of Operations

We have not generated revenues. The risks specifically discussed are not the only factors that could affect future performance and results. In addition to the discussion in this prospectus concerning us, our business and our operations contain forward-looking statements. Such forward-looking statements are necessarily speculative and there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. We do not have a policy of updating or revising forward-looking statements and thus it should not be assumed that silence by our Management over time means that actual events or results are occurring as estimated in the forward-looking statements herein.

From our inception through ~~March~~June 3130, 2016, we have not generated any revenues and have incurred cumulative losses of $12,~~515~~704,~~919~~470. In addition, a significant part of the overall remaining costs are associated principally with equity-based compensation to employees and consultants, research and development costs and professional services rendered.

We have yet to earn revenues from operations. We may experience fluctuations in operating results in future periods due to a variety of factors, including our ability to obtain additional financing in a timely manner and on terms favorable to us, our ability to successfully develop our business model, the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure and the implementation of marketing programs, key agreements, and strategic alliances, and general economic conditions specific to our industry.

As a result of limited capital resources and no revenues from operations since inception, we have relied on the issuance of equity securities to employees and non-employees in exchange for services. Our management enters into equity compensation agreements with non-employees if it is in our best interest under terms and conditions consistent with the requirements of Accounting Standards Codification Subtopic 718-10 Compensation (ASC 718-10). In order to conserve our limited operating capital resources, we anticipate continuing to compensate non-employees with equity for services during the next twelve months. This policy may have a material effect on our results of operations during the next twelve months.

Three Months Ended ~~March~~June 3130, 2016 Compared to Three Months Ended ~~March~~June 3130, 2015

Revenues

We have generated no operating revenues from operations since our inception. On April 9, 2014, we formed a subsidiary company called Iris Wellness Labs, Inc. for the purpose of commercializing our products and services worldwide. We believe we will begin earning revenues from operations in 2016 as we transition to that of an active growth stage company.

Costs and Expenses

Selling, general and administrative (“SG&A”) expenses decreased by $~~111~~22,~~627~~362 from $~~257~~176,~~220~~411 for the three months ended ~~March~~June 3130, 2015 to $~~145~~154,~~593~~049 for ~~the~~ the three months ended ~~March~~June 3130, 2016, primarily in labor and consulting fees, as well as certain other expenses controllable by management. SG&A expenses consisted of accounting, legal, consulting, public relations, startup and organizational expenses. SG&A expenses also included non-cash charges from the issuance of stock, warrants and stock options in the amounts of $86187,~~204~~ 036 for the three months ended ~~March~~June 3130, 2016 and $~~214~~130,~~850~~229 for the three months ended ~~March~~June 3130, 2015, a period to period ~~decrease~~increase of $~~128~~56,~~646~~807. ~~The~~For ~~remaining~~the three ~~SG&A~~months ~~expenses,~~ended ~~which~~June ~~require~~30, ~~cash~~2016, ~~amounted~~we toutilized $5943,~~389~~577 ~~and~~cash for operations as compared to $42109,~~370~~615 for the ~~three~~same ~~months~~period, ~~ended~~last ~~March 31~~year, a ~~2016 and 2015~~$66,038 ~~respectively~~reduction. During the three months ended ~~March~~June 3130, 2016, we reduced labor expense and other controllable expenses such as consulting and travel expenses, as compared to the same period last year. We used stock in lieu of cash to conserve our cash resources.

Research and development costs increased from $2122,~~603~~754 for the three months ended ~~March~~June 3130, 2015 to $3731,~~544~~934 for the three months ended ~~March~~June 3130, 2016. The Company’s expenditures for research and development are dependent on available resources and future expenditures are expected to increase with additional financing.

Other income (expense)

We recorded interest expense of $517 for the three months ended June 30, 2016 compared to interest expense of $495 for the same period, last year. Interest expense is comprised of interest on our long term convertible notes.

As a result of the above-mentioned expenses, net loss decreased by $12,275 from $200,826 in three months ended June 30, 2015 to $188,551 in the three months ended June 30, 2016.

Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015

Revenues

Costs and Expenses

Selling, general and administrative (“SG&A”) expenses decreased by $133,989 from $433,631 for the six months ended June 30, 2015 to $299,642 for the six months ended June 30, 2016, primarily in labor and consulting fees, as well as certain other expenses controllable by management. SG&A expenses consisted of accounting, legal, consulting, public relations, startup and organizational expenses. SG&A expenses also included non-cash charges from the issuance of stock, warrants and stock options in the amounts of $273,240 for the six months ended June 30, 2016 and $345,079 for the six months ended June 30, 2015, a period to period decrease of $71,839. For the six months ended June 30, 2016, we utilized $122,201 cash for operations as compared to $250,408 for the same period, last year, a $128,207 reduction. During the six months ended June 30, 2016, we reduced labor expense and other controllable expenses such as consulting and travel expenses, as compared to the same period last year. We used stock in lieu of cash to conserve our cash resources.

Research and development costs increased from $44,357 for the six months ended June 30, 2015 to $69,478 for the six months ended June 30, 2016. The Company’s expenditures for research and development are dependent on available resources and future expenditures are expected to increase with additional financing.

Other income (expense)

During the year ended December 31, 2015, we had the possibility of exceeding common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions of these agreements after consideration of all existing instruments that could be settled in shares. The accounting treatment of derivative financial instruments requires us to recognize the derivative liability thereby reclassifying the amount from equity to a liability at the fair values as of the date possible issuable shares exceeded the authorized level. At each subsequent balance sheet date the change in fair value is reflected in the statement of operations.

On March 17, 2016, in preparation for our multiple product launches, our board of directors unanimously approved the increase of our authorized shares of common and preferred stock from 20 million and 5 million to 100 million and 25 million respectively. On March 18, 2016, our Amendment to the Articles of Incorporation, regarding the increase in the authorized shares, was filed with the California Secretary of State. The State of California has approved and recorded the amendment.

For the ~~three~~six months ended ~~March~~June 3130, 2016, we recorded a loss on change in fair value of these derivative liabilities of $287,938. We did not have a derivative for the ~~three~~six months ended ~~March~~June 3130, 2015. On March 18, 2016, upon increasing the number of authorized common shares, we reclassified the then fair value from liability to equity.

We recorded interest expense of $~~485~~1,002 for the ~~three~~six months ended ~~March~~June 3130, 2016 compared to interest expense of $~~573~~1,068 for the same period, last year. Interest expense is comprised of interest on our long term convertible notes.

As a result of the above-mentioned expenses, net loss increased by $~~193~~181,~~404~~129 from $~~280~~481,~~208~~034 in ~~three~~six months ended ~~March~~June 3130, 2015 to $~~473~~662,~~612~~163 in the ~~three~~ six months ended ~~March~~June 3130, 2016.

Liquidity and Capital Resources

As of ~~March~~June 3130, 2016, we had a working capital deficit of $~~359~~363,~~452~~916 as compared to a working capital deficit of $445,116 as of December 31, 2015. Our cash position was $107,~~215~~638 as of ~~March~~June 3130, 2016 compared to $19,839 as of December 31, 2015. From the ~~three~~six months ended ~~March~~June 3130, 2016 we we have incurred an operating cash flow deficit of $78122,~~624~~201, which has been principally financed through the private placement of our common stock and cash infusions from the Founder.

We expect to continue to incur additional losses and negative cash flows from operating activities for the next two years.

Our available working capital and capital requirements will depend upon numerous factors, including progress of our research and development programs, our progress in and the cost of pre-clinical and clinical testing, the timing and cost of obtaining regulatory approvals, the cost of filing and prosecuting patent claims and other intellectual property rights, completing technological and market developments, current and future licensing relationships, the status of our competitors, and our ability to establish collaborative arrangements with other organizations .

Our continued operations will depend on whether we are able to raise additional funds through various potential sources, such as equity and debt financing, collaborative and licensing agreements, strategic alliances, and our ability to realize the full potential of our technology in development. Such additional funds may not become available on acceptable terms, if at all, and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. Through ~~March~~June 3130, 2016, virtually all of our financing has been through private placements of common stock, convertible notes and warrants and cash infusions from the Founder. We intend to continue to fund operations from cash on-hand and through the similar sources of capital previously described for the foreseeable future. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs. We believe that we will continue to incur net losses and negative cash flows from operating activities for the next two years. Based on the resources available to us, we have sufficient cash to operate for one year at the current burn rate with our CEO’s agreement to continue fund our operations. We may need additional financing thereafter.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Inflation

It is our opinion that inflation has not had a material effect on our operations.

Critical Accounting Policies

Our unaudited condensed consolidated financial statements require 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 consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Accounting for Stock-Based Compensation

We account for our stock options and warrants using the fair value method promulgated by Accounting Standards Codification Subtopic 718-10 Compensation (ASC 718-10), and 505-50 Equity Based Payments to Non-Employees (ASC 505-50) which address the accounting for transactions in which an entity exchanges its equity instruments for goods or services. Therefore, our results include non-cash compensation expense as a result of the issuance of stock options and warrants and we expect to record additional non-cash compensation expense in the future.

Derivative Liability

We account for derivatives in accordance with ASC 815, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value, regardless of hedging relationship designation. Accounting for changes in fair value of the derivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on the exposures hedged. At ~~March~~June 3130, 2016 and December 31, 2015, we did not have any derivative instruments that were designated as hedges.

At December 31, 2015 through March 18, 2016, we had the possibility of exceeding the common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions for all existing instruments that could be settled in shares. Issued shares never exceeded authorized shares and authorized shares were increased in March 2016.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We evaluated the design and operation of our disclosure controls and procedures to determine whether they are effective in ensuring that we disclose required information in a timely manner and in accordance with the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated by the SEC. The executive who serves as our President and Chief Financial Officer has participated in such evaluation. Management concluded, based on such review, that our disclosure controls and procedures, as defined by Exchange Act Rules 13a-15(e) and 15d-15(e), were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q. The ineffectiveness of these disclosure controls is due to the matters described below in "Internal Control over Financial Reporting."

Limitations on the Effectiveness of Controls

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives and our President and Chief Financial Officer has concluded that such controls and procedures are not effective at the "reasonable assurance" level. The ineffectiveness of these disclosure controls is due to the matters described below in "Internal Control over Financial Reporting."

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Management assessed the effectiveness of the internal controls over financial reporting as of ~~March~~June 3130, 2016, using the framework set forth in Internal Control-Integrated Framework ~~issued~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our management concluded that, as of ~~March~~June 3130, 2016, the internal controls over financial reporting were not effective. The reportable conditions and material weakness relate to a limited segregation of duties at the Company. Segregation of duties within our company is limited due to the small number of employees that are assigned to positions that involve the processing of financial information.

Specifically, certain key financial accounting and reporting personnel had an expansive scope of duties that allowed for the creation, review, approval and processing of financial data without independent review and authorization for preparation of schedules and resulting consolidated financial statements and related disclosures. We did not maintain a sufficient depth of personnel with an appropriate level of accounting knowledge, experience and training in the selection and application of Generally Accepted Accounting Principles commensurate with financial reporting requirements.

Accordingly, we place undue reliance on the finance team at corporate headquarters, specifically the executive who is our President and Chief Financial Officer along with outside accounting consulting. Accordingly, management has determined that this control deficiency constitutes a material weakness. This material weakness could result in material misstatements of significant accounts and disclosures that would result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected.

Going forward, management anticipates that additional staff will be necessary to mitigate these weaknesses, as well as to implement other planned improvements. Additional staff will enable us to document and apply transactional and periodic controls procedures, permit a better review and approval process and improve quality of financial reporting. However, the potential addition of new staff is contingent on obtaining additional financing, and there is no assurance that the Company will be able to do so.

Changes in Internal Control Over financial Reporting

During the three months ended ~~March~~June 3130, 2016, there were no changes to our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

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

During the ~~three~~six months ended June ~~March 31~~30, 2016, we issued 7397,500 shares of common stock to consultants for services rendered in the amount of $2530,~~859~~531. In ~~connection~~ connection with the issuance of such shares, we relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

2425

ITEM 6. EXHIBITS.

Exhibit Number		Description of Exhibit
31.1		Certifications required by Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C.§ 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

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

	IRIS BIOTECHNOLOGIES INC.
Date: May 13, 2015	By:	/s/ Simon Chin
		Simon Chin
		President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer)

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

	IRIS BIOTECHNOLOGIES INC.

Date: August 15, 2016	By:	/s/ Simon Chin
		Simon Chin
		President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer)

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