~~UNITED STATES~~ SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON~~Washington, ~~D.C.~~DC 20549

FORM 10-Q

~~(Mark~~☒ ~~One~~QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934:

~~þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~ For the quarterly period ended ~~March 31~~September 30, 2015

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

¨Commission ~~TRANSITION~~file ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to~~number: 333-128226

~~Commission~~INTELLECT ~~File~~NEUROSCIENCES, ~~Number:~~INC. ~~333-128226~~(Exact name of registrant as specified in its charter)

INTELLECT NEUROSCIENCES, INC.


Delaware		20-8329066
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
550 Sylvan Ave. Englewood Cliffs, NJ		07632
(Address of principal executive offices)		(Zip Code)

(~~Exact~~201) ~~Name~~608 of5101 (Registrant’s astelephone ~~Specified in~~number, ~~Its~~including ~~Charter~~area code)

Delaware	20-8329066
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation)	Identification Number)
550 Sylvan Ave.
Englewood Cliffs, New Jersey	07632
(Address of Principal Executive Offices)	(Zip Code)

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 ☒ No ☐

Indicate by checkmark whether the Registrant has submitted electronically and posted on its corporate website, if any, any Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T (~~201~~Section 232.405) ~~608-5101~~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 ☐

(Registrant’s Telephone Number, Including Area Code)

Indicate by checkmark whether the Registrant has submitted electronically and posted on its corporate website, if any, any Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T (Section 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 þ 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 the 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 þ☐ ☐ (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 þ~~

~~The~~Yes ~~registrant~~☐ No ~~had 3,370,648 shares of Common Stock, par value $.001 par value per share, outstanding as of May 11, 2015.~~☒

~~Index~~The registrant had 5,567,037 shares of Common Stock, par value $.001 par value per share, outstanding as of November 11, 2015.

		PAGE
Index			Page No.
PART I.	FINANCIAL INFORMATION
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements: (Unaudited)		2
	Consolidated Balance Sheets as of December 31, 2014 and June 30, 2014	3
	Consolidated Balance Sheets as of September 30, 2015 and June 30, 2015		2
	Consolidated Statements of Operations for the six and three months ended December 31, 2014 and 2013	4
	Consolidated Statements of Operations for the three months ended September 30, 2015 and 2014		3
	Consolidated Statements of Cash Flows for the six months ended December 31, 2014 and 2013	5
	Consolidated Statements of Cash Flows for the three months ended September 30, 2015 and 2014		4
	Notes to Consolidated Financial Statements	6	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12	10
Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	17	14
Item 4.	Controls and Procedures	17	14
PART II.	OTHER INFORMATION	18
PART II	OTHER INFORMATION		15
Item 1.	Legal Proceedings.	18	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18	15
Item 3.	Defaults Upon Senior Securities	18	16
Item 4.	Mine Safety Disclosures	18	16
Item 5.	Other	18	16
Item 6.	Exhibits	19	16
SIGNATURES		20	17
CERTIFICATIONS

ITEM 1 Financial Statements.

Intellect Neurosciences Inc. and Subsidiary

Consolidated Balance Sheets

	March 31, 2015			June 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	309,628		$	-
Due from licensee
Total current assets		309,628			-
Security deposits		2,250			2,250
Total Assets	$	311,878		$	2,250
LIABILITIES AND CAPITAL DEFICIENCY
Current Liabilities:
Accounts payable and accrued expenses	$	2,617,020		$	2,682,272
Accrued interest - convertible promissory notes		1,621,316			1,047,383
Derivative instruments		6,883,239			7,209,188
Preferred stock dividend payable		18,594,792			15,032,543
Convertible promissory notes - current, net of debt discount of $438,740 and $167,408, respectively		1,771,260			1,464,452
Total Current liabilities	$	31,487,627		$	27,435,838
Long Term Debt
Convertible promissory notes - long term, net of debt discount of $152,864 and $936,297, respectively		617,136			727,203
Total Liabilities	$	32,104,763		$	28,163,041
Capital deficiency:
Series B Convertible Preferred Stock, $.001 par value - 459,309 shares designated and 75,751 shares issued and outstanding at March 31, 2015 and June 30, 2014 (liquidation preference $1,325,644)		75			75
Series C Convertible Preferred Stock, $.001 par value - 25,000 shares designated and 10,365 and 20,977 shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively (liquidation preference $10,365,000 and $20,977,000, respectively)		10			21
Series D Convertible Preferred stock, $.001 par value - 25,000 shares designated and 2,533 shares issued and outstanding at March 31, 2015 and June 30, 2014 (liquidation preference $2,533,000 )		3			3
Series E Convertible Preferred stock, $.001 par value - 25,000 shares designated and 20,805 shares issued and outstanding at March 31, 2015 and June 30, 2014 (liquidation preference $20,805,000)		21			21
Series F Convertible Preferred stock, $.001 par value - 25,000 shares designated and 1,200 issued and outstanding at March 31, 2015 (liquidation preference $1,200,000)		1
Common stock, par value $0.001 per share, 2,000,000,000 shares authorized; 2,664,048 and 1,638,048 issued and outstanding at March 31, 2015 and June 30, 2014, respectively		2,664			1,638
Additional paid in capital		72,094,946			70,780,961
Accumulated Deficit		(103,890,605	)		(98,943,510	)
Total Capital Deficiency	$	(31,792,885	)	$	(28,160,791	)
Total Liabilities and Capital Deficiency	$	311,878		$	2,250

(Unaudited)

	September 30, 2015			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	189,160		$	23,858
Total current assets		189,160			23,858

Security deposits		2,250			2,250
Total Assets	$	191,410		$	26,108

LIABILITIES AND CAPITAL DEFICIENCY

Current Liabilities:
Accounts payable and accrued expenses	$	2,549,010		$	2,599,706
Accrued interest - convertible promissory notes		1,402,067			1,447,601
Derivative instruments		422,562			2,682,541
Preferred stock dividend payable		11,762,418			11,880,647
Convertible promissory notes - current, net of debt discount of $57,240 and $155,528, respectively		2,227,260			2,166,472
Total Current liabilities	$	18,363,317		$	20,776,967

Long Term Debt
Convertible promissory notes - long term, net of debt discount of $54,822 and $298,368, respectively	$	580,676		$	339,130

Total Liabilities	$	18,943,993		$	21,116,097

Capital deficiency:

Series B Convertible Preferred Stock, $.001 par value - 459,309 shares designated and 40,686 and 76,887 shares issued and outstanding at September 30, 2015 and June 30, 2015 (liquidation preference at September 30, 2015 of $1,111,551)	$	41		$	77

Series C Convertible Preferred Stock, $.001 par value - 25,000 shares designated and 14,960 and 16,636 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively (liquidation preference at September 30, 2015 of $21,401,274)		15			16

Series D Convertible Preferred stock, $.001 par value - 25,000 shares designated and 1,054 and 2,729 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively (liquidation preference at September 30, 2015 of $1,345,626)		1			3

Series E Convertible Preferred stock, $.001 par value - 25,000 shares designated and 19,233 shares issued and outstanding at September 30, 2015 and June 30, 2015 (liquidation preference at September 30, 2015 of $23,511,030)		19			19

Series F Convertible Preferred stock, $.001 par value - 25,000 shares designated and 1,005 and 1,200 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively (liquidation preference at September 30, 2015 of $2,219,191)		1			1

Series G Convertible Preferred stock, $.001 par value - 10,000 shares designated and 3,489 shares issued and outstanding at September 30, 2015 (liquidation preference $7,119,129)		4			—

Series H Convertible Preferred stock, $.001 par value - 2,000 shares designated and 1,081 shares issued and outstanding at September 30, 2015 (liquidation preference $2,194,655)		1			—

Common stock, par value $0.001 per share, 2,000,000,000 shares authorized; 5,567,037 and 3,550,336 shares issued and outstanding at September 30, 2015 and June 30, 2015, respectively		5,568			3,550

Additional paid in capital		74,248,801			72,144,582

Accumulated Deficit		(93,007,034	)		(93,238,237	)

Total Capital Deficiency	$	(18,752,583	)	$	(21,089,989	)

Total Liabilities and Capital Deficiency	$	191,410		$	26,108

See notes to consolidated financial statements

Intellect Neurosciences Inc. and Subsidiary

Consolidated Statements of Operations

	Nine Months Ended						Three Months Ended
	March 31,						March 31,
	2015			2014			2015			2014
Revenues:
License fees	$	1,200,000		$	-		$	-		$	-
Total revenue	$	1,200,000		$	-		$	-		$	-
Costs and Expenses:
Research and development		31,202			68,400			4,001			-
General and administrative		1,786,230			741,335			528,800			94,667
Total cost and expenses		1,817,432			809,735			532,801			94,667
Loss from operations	$	(617,432	)	$	(809,735	)	$	(532,801	)	$	(94,667	)
Other income/(expenses):
Interest expense, net of interest income		(4,718,857	)		(6,561,445	)		(1,255,149	)		(1,033,537	)
Changes in fair value of derivative instruments		389,194			32,675			(5,989,647	)		16,033
Total other income/(expense):		(4,329,663	)		(6,528,770	)		(7,244,796	)		(1,017,504	)
Net (loss)	$	(4,947,095	)	$	(7,338,505	)	$	(7,777,597	)	$	(1,112,171	)
Deemed preferred stock dividend		-						-
Net loss allocable to common shareholders	$	(4,947,095	)	$	(7,338,505	)	$	(7,777,597	)	$	(1,112,171	)
Basic and diluted loss per share	$	(2.27	)	$	(6.23	)	$	(3.03	)	$	(0.80	)
Weighted average number of shares outstanding:
Basic and diluted		2,183,018			1,178,347			2,563,262			1,392,493

(Unaudited)


	Three Months Ended
	September 30,
	2015			2014

Revenues:
License fee	$	—		$	—
Total revenue	$	—		$	—

Costs and Expenses:
Research and development		5,605		$	27,326
General and administrative		491,275			468,041
Total cost and expenses		496,880		$	495,367

Loss from operations	$	(496,880	)	$	(495,367	)

Other income/(expenses):

Interest expense, net	$	(1,531,896	)	$	(1,726,795	)
Changes in fair value of derivative instruments		2,259,979			5,596,259
Total other income/(expense):	$	728,083		$	3,869,464

Income before provision for taxes	$	231,203		$	3,374,097
Income tax provision
Net income allocable to common shareholders
	$	231,203		$	3,374,097
Income per share
Basic and Diluted	$	0.05		$	2.64

Weighted average number of shares outstanding:
Basic and Diluted		4,899,131			1,279,007

See notes to consolidated financial statements

Intellect Neurosciences Inc. and Subsidiary

Consolidated Statements of Cash Flows

	Nine Months Ended
	March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)	$	(4,947,095	)	$	(7,338,505	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative instruments	$	(389,194	)		(32,675	)
Stock and warrant based compensation		115,000			370,000
Non-cash interest expense		4,711,168			6,561,445
Change in assets and liabilities
Accounts payable and accrued expenses		(65,251	)		(92,807	)
Net cash used in operating activities	$	(575,372	)		(532,542	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes		45,000			552,510
Proceeds from issuance of preferred stock		1,200,000			-
Repayments of convertible notes		(360,000	)		(25,000	)
Net cash provided by financing activities	$	885,000			527,510
NET INCREASE (DECREASE) IN CASH		309,628			(5,032	)
CASH - BEGINNING OF PERIOD		-			5,138
CASH - END OF PERIOD	$	309,628		$	106
		-
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	-
Taxes	$	-
Non-cash financing activities
Conversion of convertible notes and interest to common stock	$	131,929		$	131,181
Conversion of preferred stock to common stock	$	-		$	55,267
Debt discount recognized as derivative liabiltiy	$	45,000		$	342,500

(Unaudited)

	Three Months Ended
	September 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income / (loss)	$	231,203		$	3,374,097

Adjustments to reconcile net income / (loss) to net cash used in operating activities:
Change in fair value of derivative instruments		(2,259,979	)		(5,596,259	)
Non-cash interest expense		1,532,274			1,727,352

Change in assets and liabilities
Accounts payable and accrued expenses		(50,697	)		(3,894	)

Net cash used in operating activities	$	(547,199	)	$	(498,704	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes				$	—
Proceeds from issuance of preferred stock	$	750,000			1,200,000
Repayments of convertible notes		(37,500	)		(300,000	)

Net cash provided by financing activities	$	712,500		$	900,000

NET INCREASE (DECREASE) IN CASH	$	165,301		$	401,296

CASH - BEGINNING OF PERIOD	$	23,858			—

CASH - END OF PERIOD	$	189,159		$	401,296

SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash financing activities
Conversion of convertible notes and interest to common stock	$	—		$	131,929
Debt discount recognized as derivative liabiltiy	$	—		$	637,500

See notes to consolidated financial statements

Intellect Neurosciences, Inc.

Notes to Unaudited Consolidated Condensed Financial Statements

~~March 31~~September 30, 2015

Note 1. Basis of Presentation

The accompanying unaudited consolidated condensed financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and note disclosures required by accounting principles generally accepted in the United States. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2014~~2015 filed with the Securities and Exchange Commission (the “SEC”) on October 14, ~~2014~~2015. In the opinion of management, this interim information includes all material adjustments, which are of a normal and recurring nature, necessary for fair presentation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to change include assumptions used in determining the fair value of securities owned or issued and non-readily marketable securities.

The results of operations for the ~~nine and~~ three months ended ~~March~~September 3130, 2015, are not necessarily indicative of the results to be expected for the entire year or for any other period.

~~On August 12, 2014, the board of directors~~Note ~~approved an amendment to the Company’s Certificate of Incorporation, as amended, to effect a 1-for-250 reverse stock split on the issued and outstanding common shares~~2. ~~All~~Business ~~relevant~~Description ~~information relating to numbers of shares~~ and ~~warrants~~Going ~~and per share information have been retrospectively adjusted to reflect the reverse stock split for all periods presented. The reverse split was effected on February 11, 2015.~~Concern

WeIntellect Neurosciences, ~~adopted~~Inc., ~~early~~a ~~application~~Delaware ofcorporation, ~~Accounting~~(“Intellect”, “our”, “us”, “we” or ~~Standards~~the ~~Update~~“Company” ~~No.~~refer ~~2014-10,~~to ~~Development~~Intellect ~~Stage~~Neurosciences, ~~Entities~~Inc. ~~(Topic~~and ~~915~~its subsidiary): ~~Elimination~~is ofa ~~Certain~~biopharmaceutical ~~Financial~~company, ~~Reporting~~which ~~Requirements effective~~together ~~June~~with 30its subsidiary, ~~2014~~Intellect Neurosciences, ~~therefore~~USA, weInc. no(“Intellect ~~longer~~USA”), ~~present~~is orengaged ~~disclose~~in ~~inception-to-date~~the ~~information~~discovery and ~~other~~development of ~~remaining~~disease-modifying ~~disclosure~~therapeutic ~~requirements~~ agents for the treatment and prevention of ~~Topic~~rare ~~915~~neurodegenerative conditions.

2Since our inception in 2005, we have devoted all of our efforts and resources to research and development activities and advancing our patent estate. ~~Business~~Our ~~Description~~losses from operations have been funded with the proceeds of equity and ~~Going~~debt ~~Concern~~financings and fees from license arrangements.

~~Intellect Neurosciences, Inc., a Delaware~~These ~~corporation,~~consolidated ~~(“Intellect”,~~financial ~~“our”,~~statements ~~“us”,~~are ~~“we”~~presented oron the ~~“Company”~~basis ~~refer to~~that ~~Intellect~~we ~~Neurosciences,~~will ~~Inc.~~continue ~~and~~as ~~its subsidiary) is~~ a ~~biopharmaceutical~~going ~~company,~~concern. ~~which~~The ~~together~~going ~~with~~concern ~~its subsidiary, Intellect~~concept ~~USA,~~contemplates ~~Inc.~~the ~~(“Intellect~~realization ~~USA”),~~of isassets ~~engaged in the discovery~~ and ~~development~~satisfaction of ~~disease-modifying~~liabilities ~~therapeutic~~in ~~agents for~~ the ~~treatment~~normal ~~and~~course ~~prevention~~ of ~~neurodegenerative~~business. ~~conditions,~~No ~~collectively~~adjustment ~~known~~has asbeen made ~~proteinopathies,~~to ~~which~~the ~~include~~carrying ~~Alzheimer’s (“AD”),~~amount ~~Parkinson’s~~ and ~~Huntington~~classification ~~disease.~~of ~~Since~~ our ~~inception~~assets inand ~~2005,~~the wecarrying ~~have~~amount ~~devoted substantially all~~ of ~~our~~ ~~efforts and resources to research and development activities and advancing~~ our ~~patent~~liabilities ~~estate.~~based Weon ~~operate~~the ~~under~~going ~~a single segment.~~concern ~~We have had no product sales from inception through March 31, 2015 but we have received $11,716,667 in license fees from inception through March 31, 2015~~uncertainty.

~~On December 31, 2014, the Company and Pfizer~~Note ~~Inc~~3. ~~and~~Summary ~~Rinat Neuroscience Corp. (collectively, “Pfizer”) executed a Settlement Agreement (the “Settlement Agreement”) to resolve ongoing litigation in connection with In the matter~~ of ~~Intellect~~Significant ~~Neurosciences,~~Accounting ~~Inc. v. Pfizer Inc. and Rinat Neuroscience Corp., Supreme Court for the State of New York, County of New York, Index No. 653320/2012 (the “Action”).~~Policies

Pursuant to the terms of the Settlement Agreement, Pfizer agreed to pay the Company $1.2 million to settle the Action and to withdraw the IPR petition with respect to the associated Intellect patent filed by Pfizer with the USPTO on November 24, 2014. Each of the parties agreed to bear their own legal costs and attorneys’ fees. The Settlement Agreement constitutes a settlement of the disputed claims and is not in any way an admission of liability as to any claim, contention or cause of action.

Our core business strategy is to build a portfolio of compounds with the potential to treat or prevent neurodegenerative diseases, develop each to pre-determined milestones, and license them to pharmaceutical companies for advanced development and commercialization. To supplement our own work, we intend to license promising novel technologies and early stage compounds from academia and other biotechnology companies. We intend to obtain revenues from licensing fees, milestone payments, development fees, royalties and/or sales related to the use of our drug candidates or intellectual property for specific therapeutic indications or applications.

As of March 31, 2015, we had no self-developed or licensed products approved for sale by the U.S. Food and Drug Administration (“FDA”). There can be no assurance that our research and development efforts will be successful, that any products developed by any of our licensees will obtain necessary government regulatory approval or that any approved products will be commercially viable. In addition, we operate in an environment of rapid change in technology and are dependent upon the continued services of our current employees, consultants and subcontractors.

Since our inception in 2005, we have generated losses from operations and we anticipate that we will continue to generate significant losses from operations for the foreseeable future. We have limited capital resources and operations since inception have been funded with the proceeds from equity and debt financings and license fee arrangements. As of March 31, 2015, we had approximately $310,000 of cash. We anticipate that our existing capital resources will enable us to continue operations for the next four months. If we fail to raise additional capital or obtain substantial cash inflows from existing or potential partners within the next few months, we may be forced to cease operations. We cannot assure you that financing will be available in a timely manner, on favorable terms or at all.

These consolidated financial statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been made to the carrying amount and classification of our assets and the carrying amount of our liabilities based on the going concern uncertainty

3. Summary of Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of our wholly owned subsidiary, Intellect USA.

Use of Estimates. The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States involves the use of estimates and assumptions that affect the recorded amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the fair value of derivative instruments, including stock options and warrants to purchase our common stock, recognition of clinical trial costs, certain consulting expenses and deferred taxes. Actual results may differ substantially from these estimates.

Revenue Recognition. We recognize revenue in accordance with authoritative accounting guidance, which provides that non-refundable upfront and research and development milestone payments and payments for services are recognized as revenue as the related services are performed over the term of the collaboration.

Convertible Instruments. We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.5

Convertible Instruments We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

We account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. We also record when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.

7Common Stock Purchase Warrants We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 (“Contracts in Entity’s Own Equity”). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Common Stock Purchase Warrants. We classify as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 ("Contracts in Entity's Own Equity"). We classify as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). We assess classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Preferred Stock. We apply the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. We classify conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, we classified our preferred shares in stockholders’ equity.

Derivative Instruments. Our derivative financial instruments consist of embedded derivatives related to the convertible debt, warrants and beneficial conversion features embedded within our convertible debt. The accounting treatment of derivative financial instruments requires that we record the derivatives and related warrants at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.

During the ~~six and~~ three month period ended ~~December~~ 31September 30, ~~2014~~2015, we recognized other income (expense) of $62,~~378~~259,~~841~~979 ~~and $782,582, respectively,~~ relating to ~~the~~recording ~~change in fair value of~~ the derivative ~~liabilities,~~instruments ~~which are recorded~~ at their fair value. At ~~December~~September 3130, ~~2014~~2015 and June 30, ~~2014~~2015, there were approximately $~~830,000~~423 thousand and $7.2.7 million of derivative liabilities outstanding, respectively.

~~Our derivative instruments were valued using the Black-Scholes option pricing model, using the following assumptions during the quarter ended December 31, 2014:~~6

Estimated dividends			None
Expected volatility			188%
Risk-free interest rate			1.73%
Expected term (years)			1.0 - 5.0 years

Our derivative instruments were valued using the Black-Scholes option pricing model, using the following assumptions during the quarter ended September 30, 2015:

4. Notes Payable

Estimated dividends		None
Expected volatility		188%
Risk-free interest rate		0.28% - 0.92%
Expected term (years)		1 - 5 years

~~The following table presents the components~~Note of4. ~~Convertible~~ Notes Payable ~~at March 31, 2015 and June 30, 2014:~~

8The following table presents the components of Convertible Notes Payable at September 30, 2015 and June 30, 2015:

			March 31,2015				June 30, 2014
	September 30, 2015				June 30, 2015
(a)	Convertible Notes issued during fiscal year ended June 30, 2010		$	80,000			$	80,000
Convertible Notes issued during fiscal year ended June 30, 2010	$	17,500			$	17,500
(b)	Convertible Notes issued during fiscal year ended June 30, 2011		$	1,150,000			$	1,150,000
Convertible Notes issued during fiscal year ended June 30, 2011		812,500				850,000
(c )	Convertible Notes issued during fiscal year ended June 30, 2012		$	301,500			$	301,500
Convertible Notes issued during fiscal year ended June 30, 2012		301,500				301,500
Convertible Notes issued during fiscal year ended June 30, 2013	~~Convertible Notes issued during fiscal year ended June 30, 2013~~	1,116,000	$	~~1,141,000~~		1,116,000	$	~~1,141,000~~
Convertible Notes issued during fiscal year ended June 30, 2014	~~Convertible Notes issued during fiscal year ended June 30, 2014~~	657,500	$	~~622,500~~		657,500	$	~~622,500~~
	Convertible Notes issued during three months ended September 30, 2015		$	45,000
Convertible Notes issued during fiscal year ended June 30, 2015		15,000				15,000
	Convertible Notes repaid during three months ended September 30, 2015		$	(305,000	)
Balance at End of Period	$	2,920,000			$	2,957,500
	Convertible Notes repaid during three months ended March 31, 2015		$	(55,000	)
Less debt discount:		112,062				451,898
	Balance at End of Period		$	2,980,000			$	3,295,000
Convertible Notes Payable, Net	$	2,807,938			$	2,505,602
	Less debt discount:		$	591,604			$	1,103,345
Classified as follows on the accompanying consolidated balance sheets:
	Convertible Notes Payable, Net		$	2,388,396			$	2,191,655
Current portion of Convertible Notes Payable	$	2,227,260			$	2,166,472
	Classified as follows on the accompanying consolidated balance sheets:
Long term portion of Convertible Notes Payable		580,676				339,130
	Current portion of Convertible Notes Payable		$	1,771,260			$	1,464,452
	$	2,807,936			$	2,505,602
	Long term portion of Convertible Notes Payable		$	617,136			$	727,203
			$	2,388,396			$	2,191,655

All of the foregoing convertible notes carry interest at 14% annually, mature three years from the issue date and are convertible into the Company'’s common shares at a conversion price of $1.25 per share except for notes with an aggregate principal amount of $420,000 and $500,000, whch are convertible into the Company'’s common shares at a conversion price of $0.08 and $0.14 per share, respectively. (a) During fiscal year ended June 30, 2010, we issued Convertible Promissory Notes of $730,000. As of June 30, 2014, Notes of $80,000 were in default. Notes of $62,500 were repaid in July 2014. (b) During fiscal year ended June 30, 2011, we issued Convertible Promissory Notes of $1,150,000. As of June 30, 2014, these Notes were in default. Notes of $10,000, $237,500 and $55,000 were repaid in January 2014, July 2014 and March 2015, respectively. (c) During fiscal year ended June 30, 2012, we issued Convertible Promissory Notes of $401,500. Notes of $100,000 were rconverted into common shares in October 2013.

Convertibe Notes Payable are payable as follows:	~~Convertibe Notes Payable are payable as follows:~~
	Fiscal year ended June 30, 2015		$	1,171,500
Past Due	$	1,131,500
Fiscal year ended June 30, 2016	~~Fiscal year ended June 30, 2016~~	1,116,000	$	~~1,161,000~~
Fiscal year ended June 30, 2017	~~Fiscal year ended June 30, 2017~~	657,500	$	~~622,500~~
Fiscal year ended June 30, 2018	~~Fiscal year ended June 30, 2018~~	15,000	$	~~25,000~~
Total	~~Total~~$	2,920,000	$	~~2,980,000~~

Note 5. Convertible Preferred Stock ~~and Derivative Liability~~

Series B Convertible Preferred Stock

The Series B Convertible Preferred Stock carries a cumulative dividend of 6% per annum and a stated value of $17.50 per share. Each share is convertible into 0.05 common shares based on the current conversion price of $375. During the quarter ended September 30, 2015, 36,201 shares of Series B Convertible Preferred Stock plus accrued dividends were exchanged for 1,081 shares of newly issued Series H Convertible Preferred Stock.

Series C Convertible Preferred Stock

The Series C Convertible Preferred Stock carries a cumulative dividend of 14% per annum and a stated value of $1,000 per share. Each share is convertible into 800 common shares based on the current conversion price of $1.25. ~~During the nine month period ended March 31, 2015, 1,283 shares were converted into 1,026,000 common shares.~~

~~Series D Convertible Preferred Shares~~7

~~The~~During the quarter ended September 30, 2015, 700 shares of Series DC Convertible Preferred Stock ~~carries~~ awere ~~cumulative~~exchanged ~~dividend~~for 700 shares of Series 8%G ~~per~~Convertible ~~annum~~Preferred Stock. During the quarter ended September 30, 2015 and athe fiscal ~~stated~~year ~~value~~ended ofJune $30, 2015, 913 and 1,~~000~~013 ~~per~~shares ~~share.~~of ~~Each~~Series ~~share~~C Convertible isPreferred ~~convertible~~Stock were converted into ~~800~~730,400 and 810,000 common shares, ~~based~~respectively. onIn addition, during the ~~current~~year ~~conversion~~ended ~~price~~June 30, 2015, one of ~~$1.25.~~our ~~During~~significant shareholders ~~the~~surrendered ~~nine~~shares ~~month~~of ~~period~~Series ~~ended~~C ~~March~~Convertible ~~31,~~Preferred ~~2015~~Stock nocarrying ~~shares~~accrued ~~were~~dividends ~~converted~~of $7,232,864.

Series D E Convertible Preferred ~~Shares~~Stock

The Series ED Convertible Preferred Stock carries a cumulative dividend of 8% per annum and a stated value of $1,000 per share. Each share is convertible into ~~400~~800 common shares based on the current conversion price of $21.5025. During the ~~nine~~quarter ~~month period~~ ended September ~~March 31~~30, 2015, no1,675 shares of Series D Convertible Preferred Stock plus accrued dividends thereon were ~~converted~~exchanged for 2,039 shares of Series G Convertible Preferred Stock.

Series E F Convertible Preferred ~~Shares~~Stock

OnThe Series ~~July~~E ~~25,~~Convertible ~~2014,~~Preferred weStock ~~entered~~carries ~~into~~ a ~~stock purchase~~cumulative ~~agreement~~dividend ~~with~~of ~~certain~~8% ~~accredited~~per ~~investors~~annum ~~whereby~~and wea ~~issued~~stated value of $1,~~200~~000 ~~shares~~per ofshare. Each ~~Series~~share Fis ~~Convertible~~convertible ~~Preferred~~into ~~Stock~~400 ~~and warrants~~common toshares ~~purchase~~based ~~9,600,000~~on ~~shares~~the ofcurrent ~~common~~conversion ~~stock~~price ~~(the~~of ~~“Financing”)~~$2.50.

~~Each share of~~ Series ~~F Preferred Stock has~~ ~~a stated value and liquidation preference of $1,000, and accrues a dividend of 8% of the Stated Value per annum, and is convertible at any time into 4,000 common shares. The Series~~ F Convertible Preferred ~~holders vote together with holders of Common~~ Stock ~~on an as converted basis. The Warrants are exercisable for a period of five (5) years from the date of issuance and are exercisable into shares of Common Stock at an exercise price of $.25 per share.~~

InThe Series ~~connection~~F ~~with~~Convertible ~~the~~Preferred ~~Financing,~~Stock (the ~~Company filed~~“Series aF (iPreferred”) ~~Certificate~~carries ofa ~~Amendment~~cumulative todividend ~~the Certificate~~ of ~~Designations,~~8% ~~Preferences~~per ~~and~~annum ~~Rights of Series B Convertible Preferred~~and ~~Stock,~~a ~~(ii)~~stated ~~Certificate~~value of ~~Amendment to the Certificate of Designations~~$1,000 ~~Preferences~~per ~~and~~share. ~~Rights~~Each ofshare ~~Series~~is Cconvertible ~~Convertible~~into ~~Preferred Stock~~10,000 ~~(iii)~~common ~~Certificate~~shares ofbased ~~Amendment~~on to the ~~Certificate~~current conversion price of ~~Designations,~~$0.10. ~~Preferences~~The ~~and Rights of~~ Series DF ~~Convertible~~ Preferred ~~Stock~~ ~~and~~has ~~(iv)~~a ~~Certificate~~right ~~of Amendment~~ to ~~the~~a ~~Certificate~~liquidation preference of ~~Designations~~$2,000 ~~Preferences~~per ~~and Rights of Series E Convertible Preferred Stock~~share.

InThe Series ~~connection~~F ~~with~~Preferred ~~the~~was ~~Financing~~issued on July 25, ~~the~~2014, ~~Company and~~pursuant to a ~~majority~~stock ofpurchase ~~each~~agreement ~~Series~~with B,certain ~~Series~~accredited Cinvestors whereby we issued 1,200 shares of Series DF Preferred and ~~Series~~warrants Eto ~~Preferred~~purchase ~~Stock,~~an byaggregate ~~written~~of ~~consent~~9,600,000 ~~agreed~~shares toof common stock (the ~~amendment~~“Series F Financing”). The Warrants are exercisable for a period of five (5) years from the date of issuance and are exercisable ~~each~~into ~~respective~~shares ~~series~~of ascommon ~~follows:~~ stock at an exercise price of $.10 per share.

·In connection with the Series BF ~~Preferred~~Financing, ~~Stock~~we ·repaid ~~Eliminate~~$300,000 of principal on outstanding promissory notes of a certain investor and the ~~ratchet~~investor ~~provision~~surrendered ~~for~~shares ~~subsequent~~of ~~issuances~~Series C Convertible Preferred Stock carrying accrued dividends of ~~securities~~$7,232,864.

·Based on ~~Series~~authoritative Cguidance, ~~Preferred~~the ~~Stock~~entire ·proceeds ~~The~~from ~~conversion~~the ~~price~~Series ~~per~~F ~~share~~Financing were ofcredited ~~Common~~to ~~Stock~~preferred ~~will~~stock ~~be $0.005;~~ and additional ~~eliminate~~paid ~~the~~in ~~ratchet provision for subsequent issuances of securities~~capital.

·During the ~~Series~~quarter Dended ~~Preferred~~September ~~Stock~~30, ·2015 ~~The~~and ~~conversion~~the ~~price~~fiscal ~~per~~year ~~share~~ended ofJune ~~Common~~30, ~~Stock~~2015, ~~will~~95 beand ~~$0.005;~~100 ~~and~~shares ~~eliminate~~of ~~the~~Series ~~ratchet~~F ~~provision~~Preferred ~~for~~were converted ~~subsequent~~into ~~issuances~~950,000 ofand ~~securities~~400,000 common shares, respectively.

· Series G Eand ~~Preferred~~Series ~~Stock~~H ·Convertible ~~Eliminate~~Preferred ~~the ratchet provision for subsequent issuances of securities.~~Stock

·On July ~~Series B~~1, ~~Series C~~2015, ~~Series~~(the D“Closing ~~and~~Date”) ~~Series~~we Eentered ~~Preferred~~into ~~Stock~~a ·stock ~~Waive~~purchase agreement (the “Purchase ~~covenant~~Agreement”) ofwith certain accredited investors (the ~~Company~~“Investors”) whereby we issued to ~~refrain~~the Investors ~~from~~(i) ~~issuing~~an ~~any~~aggregate of 3,490 shares of ~~capital~~Series ~~stock~~G ~~senior~~Convertible toPreferred orStock on(the ~~parity~~“Series ~~with~~G ~~each~~Preferred”) (ii) ~~series~~an aggregate of ~~preferred stock~~1,117 ~~and~~shares toof ~~reserve~~Series ~~and~~Convertible ~~keep~~H ~~available~~Preferred ~~unissued~~Stock ~~shares~~(the of“Series ~~Common~~H ~~Stock~~Preferred”) ~~for~~and ~~the~~(iii) warrants ~~purpose~~to ofpurchase ~~effecting~~an ~~the~~aggregate ~~conversion~~ of ~~the~~15,000,000 shares of ~~each~~common ~~series~~stock of(the ~~preferred~~“Series ~~stock~~G Financing”). The Warrants are exercisable for a period of ~~six~~five (65) ~~months~~years from the ~~Closing~~date ~~Date~~of issuance and are exercisable into shares of common stock at an exercise price of $.10 per share.

In connection with the Series G Financing, ~~pursuant to~~the ~~consents~~Board ~~and~~of ~~waivers~~Directors ~~obtained from holders~~ of the Company’s ~~outstanding~~approved ~~convertible~~the ~~promissory~~filing ~~notes~~of ~~(the “Promissory~~Certificates ~~Notes”)~~of ~~their~~Designations, ~~respective~~Preferences ~~Promissory~~and ~~Notes~~Rights ~~were~~of ~~amended~~Series asG ~~follows,~~Convertible ~~effective~~Preferred ~~upon~~Stock (the ~~issuance~~“Series G Certificate of ~~one~~Designation”) orand ~~more~~Series ~~shares~~H ofConvertible ~~Series F~~ Preferred Stock: (~~i) eliminate~~ the ~~ratchet~~“Series ~~provision~~H ~~for~~Certificate ~~subsequent issuances~~ of ~~securities going forward, (ii~~Designation”) ~~waive the covenant~~both of ~~the~~which ~~Company~~were tofiled ~~reserve~~with and ~~keep~~accepted ~~available~~by ~~unissued~~the ~~shares~~Secretary of ~~Common~~State ~~Stock for the purpose~~ of ~~effecting~~ the ~~conversion~~State of ~~the Promissory~~Delaware ~~Notes~~on ~~and~~June ~~(iii)~~30, ~~provide~~2015. ~~that~~Pursuant to the Series ~~conversion~~G ~~price~~and ~~will~~Series beH ~~$1.25~~Certificates ~~but for two~~ of ~~the~~Designation, ~~holders~~we ~~holding~~established ana ~~aggregate~~new series of ~~$920~~10,000 ~~principal~~ ~~amount of Promissory Notes~~shares, ~~the~~par ~~conversion~~value ~~price is equal to~~ $0.08001 per share, and of2,000 ~~Common~~shares, ~~Stock~~par ~~and~~value $0.14001 per share of ~~Common Stock~~Series G Preferred and Series H Preferred, respectively.

108

InThe Series ~~connection~~G ~~with~~Preferred ~~the~~has ~~Financing,~~a ~~the~~right ~~holders of~~to ~~the~~a ~~Company’s~~liquidation ~~outstanding~~preference ~~warrants~~of $2,000 ~~exclusive~~per ofshare ~~the~~and ~~Warrants~~is ~~issued~~convertible asat ~~part~~any oftime ~~the~~into ~~Financing,~~shares of ~~agreed~~our ascommon ~~follows,~~stock ~~effective upon~~at ~~the~~a ~~issuance~~conversion price of ~~one~~$.10 orper ~~more~~share, ~~Series~~subject Fto ~~Preferred~~adjustment. ~~Stock:~~Each ~~(i)~~share ~~eliminate~~of ~~the~~Series ~~ratchet~~G ~~provision~~Preferred ~~for~~has a ~~subsequent~~stated ~~issuances~~value of ~~securities going forward~~$1,000 (~~ii) waive~~ the ~~covenant~~“Stated ofValue”) ~~the Company to reserve~~ and ~~keep~~accrues ~~available~~a ~~unissued~~dividend ~~shares~~ of ~~Common~~8% ~~Stock~~of ~~for~~ the ~~purpose of~~Stated ~~effecting~~Value ~~the~~per ~~conversion~~annum, ofwhich ~~the~~is payable ~~Warrants~~annually ~~for~~on aJune ~~period~~30th ofin ~~six~~cash ~~months~~or, ~~from~~at the ~~Closing~~holder’s ~~Date~~option, ~~and~~in ~~(iii)~~common ~~provide~~stock, ~~that~~or ~~the~~a ~~exercise price~~combination ofthereof. ~~the~~The ~~Warrants~~Series G bePreferred ~~the~~has ~~effective~~no ~~price~~voting ~~per~~rights ~~share,~~and ~~upon~~holders ~~cashless~~thereof ~~exercise,~~ shall bevote ~~50%~~together ofwith ~~the~~holders ~~fair market value~~ of ~~the~~common ~~Common Stock~~stock on ~~the~~an ~~date~~as ~~of exercise~~converted basis.

InThe ~~connection~~Series ~~with~~H ~~the~~Preferred has ~~Financing,~~a right ~~the~~to ~~Company repaid~~a liquidation preference of $~~300~~2,000 ofper ~~principal~~share onand ~~outstanding~~is ~~promissory~~convertible ~~notes~~into common stock of the Company at a ~~certain~~conversion price ~~investor~~equal ~~and~~to ~~purchased~~eight times ~~from~~the ~~such~~fair ~~investor~~market ~~convertible preferred~~value of the underlying common stock, ~~and~~into ~~dividends~~which ~~accrued~~the ~~thereon,~~Series ~~having~~H anPreferred ~~aggregate~~are convertible. ~~stated~~“Fair ~~value~~Market Value” means the average of ~~$16,750,000~~the closing price of the common stock for the ~~total~~five trading ~~consideration~~days preceding the exchange date of the Series B Convertible Preferred Stock for the Series H Preferred (the “Conversion Price”). The fair market value conversion price was set at $~~100~~1.92 per share on the date of the exchange. The Series H Preferred has no voting rights and holders thereof vote together with holders of common stock on an as converted basis.

~~Based~~Pursuant to onthe ~~authoritative~~Purchase ~~guidance~~Agreement, we granted holders of previously issued Series C and Series D Convertible Preferred Stock the right ~~entire~~to exchange their shares of Series C and Series D Convertible Preferred Stock for shares of Series G Preferred and ~~proceeds~~holders ~~from~~of ~~the~~previously ~~Financing~~issued ~~were~~Series ~~credited~~B Convertible Preferred Stock the right to ~~preferred~~exchange ~~stock~~their shares of Series B Convertible Preferred Stock for shares of Series H Preferred. The stated value of each share of exchanged Series B, Series C and ~~additional~~Series ~~paid~~D Preferred Stock, plus accrued dividends, was treated as the cash value of such shares for purposes of determining the number of shares of Series G and H Preferred Stock to be issued in ~~capital~~connection with such exchange.

6.Based on ~~Outstanding~~authoritative ~~Warrants~~guidance, the entire proceeds from the Series G Financing were credited to preferred stock and ~~Warrant~~additional ~~Liability~~paid in capital.

~~The following table presents the number~~Note ~~of Warrants outstanding at the periods ended March 31, 2015 and June 30, 2014~~6. ~~All~~Outstanding Warrants have a 5 year term and are exercisable at December 31, 2014. All Warrants other than the Series F Warrants have an exercise price of $2.50 per common share. The Series F Warrants have an exercise price of $.25 per common share.

Warrants outstanding at June 30, 2014			2,742,000
Issued			9,630,000
Exercised			-
Expired			-
Warrants outstanding at March 31, 2015			12,372,000

The following table presents the number of warrants outstanding at the periods ended September 30, 2015 and June 30, 2015. All warrants have a 5 year term and are exercisable at September 30, 2015. The warrants issued in connection with the Series F and Series G Financings described above in Note 5 have an exercise price of $0.10 per share. All other outstanding warrants have an exercise price of $1.25 per common share, except for 44,800 warrants, which have an exercise price of $15.625 per share.

7. Capital Deficiency

Warrants outstanding at June 30, 2015			12,500,327
Issued			15,000,000
Exercised			—
Expired			—
Warrants outstanding at September 30, 2015			27,500,327

Note 7. Capital Deficiency

Common stock

In July ~~2014~~2015, we issued ~~200~~816,400 and 650,000 shares of our common stock to holders of Series C Convertible Preferred Stock and Series F Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.

In August ~~2014~~2015, we issued ~~396~~250,000 and 300,000 shares of our common stock to holders of Series C Convertible Preferred Stock and Series F Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.

~~In September 2014, we issued 260,000 shares of our common stock to holders of Series C Convertible Preferred Stock upon their exercise of the conversion feature contained in those securities.~~9

In August ~~January~~ 2015, we issued ~~80,000~~301 shares of our common stock toin ~~holders~~connection with implementation of ~~Series~~the Creverse ~~Convertible~~stock ~~Preferred~~split ~~Stock~~on ~~upon~~our ~~their~~outstanding common ~~exercise~~shares ofthat ~~the~~was ~~conversion~~effective ~~feature~~on ~~contained in~~February ~~those~~11, ~~securities~~2015.

~~In March 2015, we issued 90,000 shares of~~Note ~~our~~8. ~~common~~Income ~~stock to holders of Series C Convertible Preferred Stock upon their exercise of the conversion feature contained in those securities.~~Taxes

8. Income Taxes

No provision for income taxes has been recorded due to the utilization of net operating losses for which a 100% valuation allowance had been provided.

11Note 9. Subsequent Events

9. Subsequent Events

Management has evaluated events occurring after the date of these financial statements through the date these financial statements were issued. There were no material subsequent events as of that date other than disclosed below.

~~In April 2015, we issued 280,000 and 106,600~~ITEM ~~shares~~2. ofMANAGEMENTS’S ~~our~~DISCUSSION ~~common~~AND ~~stock~~ANALYSIS toOF ~~holders~~FINANCIAL ofCONDITION ~~Series~~AND FRESULTS ~~and~~OF ~~Series~~OPERATIONS ~~C Convertible Preferred Stock, respectively, upon their exercise of the conversion feature contained in those securities.~~

InThe following ~~May~~discussion ~~2015,~~and weanalysis ~~issued~~of ~~120,000~~our ~~shares~~financial condition and results of ~~our~~ ~~common~~operations ~~stock~~contains information that management believes is relevant to ~~holders~~an assessment and understanding of ~~Series~~our Fresults ~~Convertible~~of ~~Preferred~~operations. ~~Stock,~~You ~~upon~~should ~~their~~read ~~exercise~~this discussion in conjunction with the Financial Statements and Notes included elsewhere in this report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations for the ~~conversion~~year ~~feature~~ended June 30, 2015 contained in our Annual Report on Form 10-K filed with the ~~those~~Securities ~~securities~~and Exchange Commission (the “SEC”) on October 14, 2015. Certain statements set forth below constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. See “Special Note Regarding Forward-Looking Statements”. References to “Intellect,” the “Company,” “we,” “us” and “our” refer to Intellect Neurosciences, Inc. and its subsidiaries.

~~In May 2015, we issued 200,000 shares of~~General ~~our common stock to a consultant in exchange for services to be provided by the consultant to the Company.~~

~~ITEM~~We are 2a biopharmaceutical company engaged in the discovery and development of disease-modifying therapeutic agents for the treatment and prevention of rare neurodegenerative conditions. ~~MANAGEMENTS’S~~We ~~DISCUSSION~~have ~~AND~~an ~~ANALYSIS~~internal OFpipeline ~~FINANCIAL~~and ~~CONDITION~~have ~~AND~~granted ~~RESULTS~~licenses OFrelated ~~OPERATIONS~~to our patent estate to major pharmaceutical companies.

~~The following discussion and analysis of~~Since our ~~financial~~inception ~~condition~~in ~~and~~2005, ~~results~~we ofhave ~~operations~~devoted ~~contains~~substantially ~~information~~all ~~that~~of ~~management~~our ~~believes~~efforts isand ~~relevant~~resources to anadvancing ~~assessment and understanding of~~ our ~~results~~intellectual ofproperty ~~operations. You should read this discussion in conjunction with the Financial Statements~~ portfolio and ~~Notes included~~research ~~elsewhere in this report~~ and ~~with~~development ~~Management’s~~activities. ~~Discussion~~We ~~and~~have ~~Analysis~~entered ofinto ~~Financial~~license ~~Condition~~ and ~~Results~~other ofagreements ~~Operations for the year ended June 30, 2014 contained in our Annual Report on Form 10-K filed~~ with ~~the~~large ~~Securities~~pharmaceutical ~~and Exchange Commission~~companies ~~(the~~related ~~“SEC”)~~to onour ~~October~~patent 14estate, ~~2014.~~however, ~~Certain~~neither ~~statements~~we ~~set~~nor ~~forth~~any ~~below constitute “forward-looking statements” within the meaning~~ of ~~Section~~our ~~27A~~licensees ofhave ~~the~~obtained ~~Securities~~regulatory ~~Act~~approval offor ~~1933,~~sales ~~as amended, and Section 21E~~ of ~~the~~any product ~~Securities~~candidates ~~Exchange~~covered ~~Act~~by ~~of 1934,~~our ~~as amended~~patents. ~~See~~We ~~“Special~~operate ~~Note~~under ~~Regarding~~a ~~Forward-Looking~~single ~~Statements”~~segment. ~~References~~Our tofiscal ~~“Intellect,”~~year ~~the “Company,”~~end ~~“we,”~~is ~~“us”~~June ~~and “our” refer to Intellect Neurosciences, Inc~~30th. ~~and its subsidiaries.~~

~~General~~ Our core business strategy is to build a portfolio of compounds with the potential to treat or prevent rare neurodegenerative diseases, develop each compound to pre-determined milestones, and license the compounds to pharmaceutical companies for advanced development and commercialization. We intend to obtain revenues from licensing fees, milestone payments, development fees, royalties and/or sales related to the use of our drug candidates or intellectual property for specific therapeutic indications or applications. As an example, we developed OX1, a small molecule multi-modal antioxidant, completed preclinical and human safety trials, and then licensed the program to ViroPharma Inc. (subsequently merged into Shire plc) for development of a drug to treat Friedreich’s Ataxia and other neurodegenerative diseases. We could receive up to $120 million in milestone payments from Shire and significant royalties from sales if the resulting drug product is approved for sale by the US Food and Drug Administration (“FDA”). There can be no assurance that we will receive such milestone payments or royalties.

~~We are a biopharmaceutical company engaged~~Our inresearch ~~the discovery~~ and development ofactivity ~~disease-modifying~~is ~~therapeutic~~subject ~~agents~~to ~~for~~change ~~the~~as ~~treatment~~we ~~and~~develop ~~prevention~~a ofbetter ~~neurodegenerative conditions,~~understanding ~~collectively~~of ~~known~~our asprojects ~~proteinopathies, which include Alzheimer’s (“AD”), Parkinson’s~~ and ~~Huntington disease~~their prospects. Total Weresearch ~~have an internal diversified pipeline~~ and ~~have~~development ~~granted~~costs ~~licenses~~from ~~related~~inception tothrough ~~our~~September ~~patent~~30, ~~estate~~2015 towere ~~major pharmaceutical companies~~$15,086,730.

Since our inception in 2005, we have devoted substantially all of our efforts and resources to advancing our intellectual property portfolio and research and development activities. We have entered into license and other agreements with large pharmaceutical companies related to our patent estate, however, neither we nor any of our licensees have obtained regulatory approval for sales of any product candidates covered by our patents. We operate under a single segment. Our fiscal year end is June 30.10

~~Our core business strategy is to build a~~Results ~~portfolio~~ of compounds with the potential to treat or prevent neurodegenerative diseases, develop each compound to pre-determined milestones, and license the compounds to pharmaceutical companies for advanced development and commercialization. We intend to obtain revenues from licensing fees, milestone payments, development fees, royalties and/or sales related to the use of our drug candidates or intellectual property for specific therapeutic indications or applications. As an example, we developed OX1, a small molecule multi-modal antioxidant, completed preclinical and human safety trials, and then licensed the program to ViroPharma Inc. for development of a drug to treat Friedreich's Ataxia and other neurodegenerative diseases. ViroPharma subsequently merged with Shire plc. We could receive up to $120 million in milestone payments from Shire and significant royalties from sales if the resulting drug product is approved for sale by the US Food and Drug Administration (“FDA”). There can be no assurance that we will receive such milestone payments or royalties.Operations

~~Our current business is focused on granting~~Three ~~licenses~~Months toEnded ~~our~~September ~~patent~~30, ~~estate~~2015 toCompared large pharmaceutical companies and on research and development of proprietary therapies for the treatment of proteinopathies through outsourcing and other arrangements with third parties. Our research and development activity is subject to ~~change~~Three asMonths weEnded ~~develop~~September ~~a better understanding of our projects and their prospects. Total research and development costs from inception through March 31~~30, ~~2015 were $14,686,290.~~2014:


	Three Months Ended September 30,

	2015			2014			Change

Revenue	$	—		$	—		$	—
Research and Development Costs		5,605			27,326			(21,721	)
General and Administrative		491,275			468,041			23,234

Income (loss) from operations	$	(496,880	)	$	(495,367	)	$	1,513

	Three Months Ended September 30,

	2015			2014			Change

Income (loss) from operations	$	(496,880	)	$	(495,367	)	$	(1,512	)
Other income (expenses):		728,083			3,869,464			(3,141,381	)

Net income (loss)	$	231,203		$	3,374,097		$	(3,142,894	)

~~Results~~Our operating loss increased by $1,513 to a loss of ~~Operations~~$496,880 for the three months ended September 30, 2015 from an operating loss of $495,367 for the three months ended September 30, 2014. This was due to an increase in our General and Administrative costs of $23,234 offset by reductions in Research and Development costs of $21,721.

~~Three~~General ~~Months~~and ~~Ended~~Administrative ~~March~~expenses, 31which includes patent filing and maintenance costs, increased by $23,234, to $491,275 for the three months ended September 30, 2015 ~~Compared~~as compared to ~~Three~~$468,041 ~~Months~~for ~~Ended~~the ~~March~~three 31months ended September 30, 2014:. The increase in General and Administrative expenses primarily was due to an increase in professional fees of approximately $44,000 offset by a reduction in board fees of approximately $20,000.

	Three Months Ended March 31,
	2015			2014			Change
Revenue	$	-		$	-		$	-
Research and Development Costs		4,001			-		$	4,001
General and Administrative		528,800			94,667		$	434,133
Income (loss) from operations	$	(532,801	)	$	(94,667	)	$	(438,134	)

Research and Development costs decreased by $21,721, to $5,605 for the three months ended September 30, 2015 from $27,326 for the three months ended September 30, 2014. The reduction in R&D costs primarily was associated with the completion of a preclinical study for our TauC3 antibody program that occurred in the period ended September 30, 2014.

	Three Months Ended March 31,
	2015			2014			Change
Income (loss) from operations	$	(532,801	)	$	(94,667	)	$	(438,134	)
Other income (expenses):		(7,244,796	)		(1,017,504	)		(6,227,292	)
Net income (loss)	$	(7,777,597	)	$	(1,112,171	)	$	(6,665,426	)

Other income decreased by $3,141,381, to $728,083 for the three months ended September 30, 2015 from $3,869,464 for the three months ended September 30, 2014. This difference primarily is due to the recording of a gain on the change in the fair market value of derivative instruments of $2,259,979 for the three months ended September 30, 2015 as compared to a gain of $5,596,259 for the three months ended September 30, 2014, a decrease in gain of $3,336,280. This decrease was offset in part by a reduction in interest expense of $194,899, to $1,531,896 for the three months ended September 30, 2015 from an expense of $1,726,795 for the period ended September 30, 2014. The decrease in interest expense for the period ended September 30, 2015 as compared to the period ended September 30, 2014 primarily was due to a decrease in interest expense with respect to outstanding convertible preferred stock of approximately $300,000 offset by an increase in interest expense recognized with respect to outstanding convertible promissory notes of approximately $105,000.

~~Research~~As a ~~and~~result ~~Development~~of ~~costs~~the ~~increased by~~foregoing, we recognized net income of $4231,~~000~~203 for the three months ended September 30, ~~resulting~~2015 ~~from~~as ~~fees~~compared ~~incurred~~to $3, 374,097 for ~~our~~the ~~TauC3~~comparable ~~antibody~~period ~~program~~last year, a decrease in income of $3,142,894.

General and Administrative expenses increased by $434,133 to $528,800 for the three month period ended March 31, 2015, from $94,667 for the three month period ended March 31, 2014. The increase in General and Administrative expenses, which included a non-cash charge of $115,000 representing the fair value of Series C Preferred Stock recorded during the quarter for investor relations services, was due to an increase in travel and conference expenses of $25,000 recorded during the quarter, director and fees and executive compensation of $60,000, patent fees of $80,000 legal, proxy solicitation, and other fees aggregating approximately $140,000 incurred in connection with implementing the reverse stock split and other corporate legal matters, and in increase in miscellaneous G&A expense of $15,000 for the quarter.11

~~As a result of the foregoing, we generated~~Liquidity anand ~~operating~~Capital ~~loss of $532,801 for the three month period ended March 31, 2015 as compared to an operating loss of $94,667 for the three month period ended March 31, 2014, a change of $438,134.~~Resources

~~Other~~Since our ~~expenses~~inception ~~increased~~in ~~by $6~~2005,~~227,292~~ ~~to $7,244,796~~we ~~for~~have ~~the~~mainly ~~three~~generated ~~month~~losses ~~period ended March 31, 2015,~~ from ~~$1,017,504~~operations ~~for~~and ~~the~~we ~~three~~anticipate ~~month~~that ~~period~~we ~~ended~~will ~~March~~continue ~~31,~~to ~~2014.~~generate ~~This~~significant ~~primarily~~losses isfrom ~~due~~operations tofor the ~~recording~~foreseeable offuture. aAs ~~loss on the change in the fair market value~~ of ~~derivative~~September ~~instruments of $5~~30,~~989,647~~ ~~for the three months ended March 31,~~ 2015, ~~compared~~our toaccumulated adeficit ~~gain~~was of $1693,~~033 for the three months ended March 31~~007,034. ~~2014~~Our ~~and~~net cash anused ~~increase~~ in ~~accrued~~operations ~~interest~~was of $~~221~~547,~~612,~~198 ~~from~~and $1498,~~033,537~~704 for the three months ended ~~March~~September 3130, 2015 and 2014, torespectively. anOur ~~expense~~capital deficiency ofwas $118,~~255~~752,~~149~~583 ~~for~~as ~~the period~~of ~~ended~~September ~~March 31~~30, 2015.

AsWe have alimited ~~result~~capital ofresources and operations since inception have been funded with the ~~foregoing,~~proceeds wefrom ~~generated~~equity and debt financings aand ~~net~~license ~~loss~~fee arrangements. As of $7September 30,~~777~~ 2015,~~597~~ ~~for~~we ~~the~~had ~~three~~approximately ~~month~~$189,160 ~~period~~of ~~ended~~cash ~~March~~and ~~31,~~cash ~~2015,~~equivalents. ~~compared~~We toanticipate that aour ~~net~~existing ~~loss~~capital ofresources ~~$1,112,171~~will enable us to continue operations for the next three ~~month~~months. If we fail to raise additional ~~period~~capital ~~ended~~or ~~March~~obtain ~~31,~~substantial ~~2014~~cash inflows from existing or potential partners within the next few months, awe ~~change~~may ofbe $6forced to cease operations. We cannot assure you that financing will be available in a timely manner,~~665,426~~ on favorable terms or at all.

13The audit report prepared by our independent registered public accounting firm relating to our consolidated financial statements for the year ended June 30, 2015 includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

~~Nine Months Ended March 31, 2015 Compared to Nine Months~~Off-Balance ~~Ended~~Sheet ~~March 31, 2014:~~Arrangements

	Nine Months Ended March 31,
	2015			2014			Change
Revenue	$	1,200,000		$	-		$	1,200,000
Research and Development Costs	$	31,202		$	68,400		$	(37,198	)
General and Administrative	$	1,786,230		$	741,335		$	1,044,895
Income (loss) from operations	$	(617,432	)	$	(809,735	)	$	192,303

As of September 30, 2015, our material off-balance sheet arrangements, other than obligations under various agreements, are as follows:

	Nine Months Ended March 31,
	2014			2013			Change
Income (loss) from operations	$	(617,432	)	$	(809,735	)	$	192,303
Other income (expenses):		(4,329,663	)		(6,528,770	)		2,199,107
Net income (loss)	$	(4,947,095	)	$	(7,338,505	)	$	2,391,410

Under Research License Agreements with NYU and SAMSF (“RLA”), we are obligated to make future payments totaling approximately $1.5 million to each of NYU and SAMSF upon achievement of certain milestones based on phases of clinical development and approval of the FDA (or foreign equivalent) and also to pay each of NYU and SAMSF a royalty based on product sales by Intellect or royalty payments received by Intellect. In September 2011, we granted a sublicense of the RLAs to ViroPharma (merged into Shire plc). Pursuant to the terms of the RLAs, we paid SAMSF and NYU $650,000 of the up-front licensing fee and are obligated to pay a portion of future payments we may receive from Shire.

~~Revenue~~Under a ~~increased~~License byAgreement ~~$1,200,000~~with ~~for~~Northwestern ~~the nine~~University ~~month~~(“NWU”) ~~period~~dated ~~ended~~as ~~March~~of 31May 3, ~~2015~~2012, aswe ~~compared~~are obligated to ~~the~~make ~~nine~~future payments ~~month~~totaling ~~period~~approximately ~~ended~~$700,000 ~~March~~to ~~31,~~NWU ~~2014~~upon ~~due~~achievement toof ~~the~~certain ~~execution~~milestones based on phases of ~~the~~clinical ~~Settlement~~development ~~Agreement~~and ~~described~~also ~~above~~to inpay ~~Note~~NWU 2a toroyalty ~~the~~based ~~Consolidated~~on ~~Financial~~product ~~Statements~~sales..

Mindset Biopharmaceuticals, Inc. (“Mindset”) acquired from Mayo Foundation for Medical Education and Research (“Mayo”) a non-exclusive license to use certain transgenic mice as models for AD and ~~Development~~is ~~costs~~obligated ~~decreased~~to pay Mayo a royalty of 2.5% of any bynet ~~$37,198,~~revenue that Mindset receives from ~~$68,400~~the sale or licensing of a drug product for AD in which the ~~nine~~Mayo ~~month~~transgenic ~~period~~mice ~~ended~~were ~~March~~used for ~~31,~~research ~~2014~~purposes. toThe ~~$31,202~~Mayo ~~for~~transgenic ~~the~~mice ~~nine~~were ~~month~~used ~~period~~by ~~ended~~SAMSF ~~March~~to ~~31,~~conduct ~~2015, primarily~~research ~~due~~with respect to aOX1. ~~decrease~~Pursuant into ~~R&D~~an ~~fees~~Assignment Agreement ~~incurred~~dated inas ~~2014~~of inJune ~~connection~~23, 2005, which we executed with ~~our~~SAMSF, ~~TauC3~~we ~~antibody~~agreed ~~program~~to assume Mindset’s obligations to pay royalties to Mayo.

~~General and Administrative expenses increased~~Pursuant ~~by $1,044,895~~ to $1,786,230 for the nine month period ended March 31, 2015, from $741,335 for the nine month period ended March 31, 2014. The increase in General and Administrative expenses primarily was due to the incurrence of additional fees, including, a ~~contingent~~Letter ~~legal~~Agreement ~~fee of $400,000 incurred in connection~~ with the ~~Settlement~~Institute ~~Agreement~~for ~~described above; approximately $112,000 in license fees incurred in connection with~~ the ~~OX1~~Study ~~program~~of ~~licensed~~Aging todated ~~Shire~~as ~~plc; an increase~~ of ~~approximately~~December ~~$80~~29,~~000~~ ~~in patent fees and legal~~2006, ~~proxy~~we ~~solicitation,~~are ~~and~~obligated ~~other~~to ~~fees~~pay ~~aggregating approximately $140,000 incurred in connection with implementing the reverse stock split and other corporate legal matters,~~ a ~~non-cash charge~~ total of $~~115~~225,~~000~~500 ~~representing the fair value~~ of ~~Series C~~milestone ~~Preferred~~payments ~~Stock~~contingent ~~recorded~~upon ~~during~~future ~~the~~clinical ~~quarter~~development ~~for investor relations services, an increase in travel and conference expenses~~ of ~~$25,000~~ ~~recorded during the quarter, director and fees and executive compensation of $60,000, and an increase in consulting fees of approximately $112,000~~OX1.

As Under a ~~result~~Research Agreement with MRCT dated as of ~~the~~September ~~foregoing~~16, 2012, we ~~generated an~~are ~~operating~~obligated ~~loss~~to ofmake future research milestone payments totaling approximately $~~617~~560,~~432~~000 ~~for~~to ~~the~~MRCT ~~nine~~related ~~month~~to ~~period~~the ~~ended~~development ~~March~~of ~~31,~~the ~~2015~~82E1 ashumanized ~~compared~~antibody and to anpay ~~operating~~additional ~~loss~~milestones ofrelated to ~~$809~~the commercialization,~~735~~ ~~for~~and ~~the nine~~a ~~month~~royalty ~~period~~based ~~ended~~on ~~March 31~~sales, ~~2014,~~of athe ~~change~~resulting ofdrug ~~$192,303~~products.

~~Other expenses decreased by $2,199,107 to~~Under ~~$4,329,663 for~~ the ~~nine~~terms ~~month~~of ~~period ended March 31, 2015, from $6,528,770 for~~ the ~~nine~~IBL ~~month~~Agreement ~~period~~with ~~ended~~Immuno-Biological ~~March~~Laboratories 31Co., ~~2014~~Ltd. ~~This primarily~~dated isas ~~due to a decrease in interest expense~~ of ~~$1,842,588, related to interest expense recorded in the six month period ended~~ December 3126, ~~2013 for the cost of warrants issued with convertible notes and Series D and Series E preferred stock issued during the period~~2006, ~~which~~we ~~did~~agreed ~~not~~to ~~reoccur~~pay ~~in the nine month period ended March 31, 2015, and~~ IBL a ~~difference~~total of $~~356~~2,~~519~~125,000 ~~related~~upon to the ~~change~~achievement inof ~~the~~certain ~~fair~~milestones ~~market~~plus ~~value~~a ofspecified ~~derivative~~royalty ~~instruments~~based ~~for~~on ~~the~~sales ~~nine~~of ~~months~~any ~~ended~~pharmaceutical product ~~March~~derived ~~31,~~from ~~2015 compared to~~ the ~~nine~~82E1or ~~months ended~~1A10 ~~March 31, 2014~~antibodies.

1412

AsIn the aordinary ~~result~~course of ~~the foregoing~~business, we ~~generated a~~enter ~~net~~into ~~loss~~agreements ofwith $4third parties that include indemnification provisions which,~~947~~ in our judgment,~~095~~ are normal and customary for ~~the~~companies ~~nine~~in ~~month~~our ~~period~~industry ~~ended~~sector. ~~March~~These 31agreements are typically with business partners, ~~2015~~clinical sites, ~~compared~~and suppliers. Pursuant to athese ~~net~~agreements, ~~loss~~we ofgenerally $7agree to indemnify,~~338~~ hold harmless,~~505~~ and reimburse indemnified parties for losses suffered or incurred by the ~~nine~~indemnified ~~month period~~parties ~~ended~~with ~~March~~respect 31to our product candidates, ~~2014~~use of such product candidates, or other actions taken or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a ~~change~~result, the estimated fair value of $2liabilities relating to these provisions is minimal. Accordingly,~~391~~ we have no liabilities recorded for these provisions as of September 30,~~410~~ 2015 or June 30, 2015.

~~Liquidity~~In the normal course of business, we may be confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits, claims, environmental actions or the actions of various regulatory agencies. We consult with counsel and ~~Capital~~other appropriate ~~Resources~~experts to assess the claim. If, in our opinion, we have incurred a probable loss as set forth by accounting principles generally accepted in the United States, an estimate is made of the loss and the appropriate accounting entries are reflected in our consolidated financial statements. After consultation with legal counsel, we do not anticipate that liabilities arising out of currently pending or threatened lawsuits and claims will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

~~Since our inception in 2005, we have mainly~~Critical ~~generated~~Accounting ~~losses~~Estimates ~~from operations~~ and weNew ~~anticipate~~Accounting ~~that~~Pronouncements we will continue to generate significant losses from operations for the foreseeable future. As of March 31, 2015, our accumulated deficit was $103,890,605. Our loss from operations for the nine month periods ended March 31, 2015 and 2014 was $617,432 and $809,735, respectively. Our cash used in operations was $575,372 and $532,542 for the nine months ended March 31, 2015 and 2014, respectively. Our capital deficiency was $31,792,885 as of March 31, 2015.

~~We have limited capital resources and operations~~Critical ~~since~~Accounting inception have been funded with the proceeds from equity and debt financings and license fee arrangements. As of March 31, 2015, we had approximately $310,000 of cash and cash equivalents. We anticipate that our existing capital resources will enable us to continue operations for the next four months. If we fail to raise additional capital or obtain substantial cash inflows from existing or potential partners within the next few months, we may be forced to cease operations. We cannot assure you that financing will be available in a timely manner, on favorable terms or at all.Estimates

The preparation ~~audit~~of ~~report~~financial ~~prepared~~statements byin ~~our~~accordance ~~independent registered~~with ~~public~~ accounting ~~firm~~principles ~~relating~~generally accepted in the United States requires management to ~~our~~make ~~consolidated~~estimates and assumptions that affect reported amounts and related disclosures in the financial statements. Management ~~for~~considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the ~~year~~time the ~~ended~~estimate ~~June~~was 30made, ~~2014~~and ~~includes~~changes ~~an explanatory~~in ~~paragraph~~the ~~expressing~~estimate ~~substantial~~or ~~doubt~~different ~~about~~estimates ~~our~~that ~~ability~~could tohave ~~continue~~been asselected could have a ~~going~~material impact ~~concern~~on our consolidated results of operations or financial condition.

~~Off~~Convertible Instruments. We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-~~Balance~~measured ~~Sheet~~at ~~Arrangements~~fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

AsWe account offor ~~March~~convertible ~~31,~~instruments ~~2015,~~(when we ~~had~~have nodetermined ~~material off-balance~~that ~~sheet~~the ~~arrangements~~embedded ~~other~~conversion ~~than~~options ~~obligations~~should ~~under~~not ~~various~~be ~~agreements~~bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. We also record when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.

~~Under~~Common Stock ~~Research~~Purchase ~~License~~Warrants. ~~Agreements~~We ~~with~~classify ~~NYU and~~as ~~SAMSF~~equity ~~(“RLA”),~~any wecontracts ~~are~~that ~~obligated~~require tophysical ~~make~~settlement ~~future~~or ~~payments~~net-share ~~totaling~~settlement ~~approximately~~or ~~$1.5~~provide us ~~million~~a tochoice ~~each~~ of ~~NYU~~net-cash ~~and SAMSF~~settlement ~~upon~~or ~~achievement~~settlement ofin ~~certain~~our ~~milestones~~own ~~based~~shares on(physical ~~phases~~settlement ofor ~~clinical~~net-share ~~development~~settlement) ~~and~~provided ~~approval~~that such ofcontracts ~~the~~are ~~FDA~~indexed to our own stock as defined in ASC 815-40 (or“Contracts ~~foreign~~in ~~equivalent~~Entity’s Own Equity”). We ~~and~~classify ~~also~~as toassets ~~pay~~or ~~each~~liabilities ofany ~~NYU~~contracts ~~and~~that ~~SAMSF~~require net-cash settlement (including a ~~royalty~~requirement ~~based~~to onnet ~~product~~cash ~~sales~~settle bythe contract ~~Intellect~~if oran ~~royalty~~event ~~payments~~occurs ~~received~~and byif ~~Intellect. In~~that ~~September~~event ~~2011,~~is weoutside ~~granted~~our acontrol) ~~sublicense~~or ofgive the ~~RLAs~~counterparty toa ~~ViroPharma.~~choice ~~Pursuant~~of tonet-cash ~~the~~settlement or ~~terms~~settlement ofin ~~the~~shares ~~RLAs,~~(physical wesettlement ~~paid~~or ~~SAMSF~~net-share ~~and~~settlement). ~~NYU $650,000~~We assess classification of ~~the~~our ~~up-front~~common ~~licensing~~stock ~~fee~~purchase warrants and ~~are~~other ~~obligated~~free standing derivatives at each reporting date to ~~pay~~determine whether a ~~portion~~change ofin ~~future~~classification ~~payments~~between weassets ~~may~~and liabilities ~~receive~~is ~~from ViroPharma~~required.

Mindset Biopharmaceuticals, Inc. (“Mindset”) acquired from Mayo Foundation for Medical Education and Research (“Mayo”) a non-exclusive license to use certain transgenic mice as models for AD and is obligated to pay Mayo a royalty of 2.5% of any net revenue that Mindset receives from the sale or licensing of a drug product for AD in which the Mayo transgenic mice were used for research purposes. The Mayo transgenic mice were used by SAMSF to conduct research with respect to OX1. Pursuant to an Assignment Agreement dated as of June 23, 2005, which we executed with SAMSF, we agreed to assume Mindset’s obligations to pay royalties to Mayo. We have not received any net revenue that would trigger a payment obligation to Mayo.13

~~Pursuant~~Preferred Stock. toWe aapply ~~Letter~~the ~~Agreement~~guidance ~~with~~enumerated ~~the Institute~~in ~~for~~ASC 480 “Distinguishing Liabilities from Equity” when determining the classification ~~Study~~and measurement of ~~Aging~~preferred ~~dated~~stock. Preferred shares subject to mandatory redemption (if any) are classified as liability ofinstruments ~~December~~and ~~29,~~are ~~2006~~measured at fair value. We classify conditionally redeemable preferred shares (if any), wewhich includes preferred shares that feature redemption rights that are ~~obligated~~either within the control of the holder or subject to ~~pay~~redemption aupon the ~~total~~occurrence of ~~$225~~uncertain events not solely within our control,~~500~~ ofas ~~milestone~~temporary ~~payments contingent~~equity. ~~upon~~At ~~future~~all ~~clinical~~other ~~development~~times, ofwe ~~OX1~~classified our preferred shares in stockholders’ equity.

~~Under~~Derivative Instruments. aOur ~~Research~~derivative ~~Agreement~~financial ~~with~~instruments ~~MRCT~~consist ~~dated as~~ of ~~September~~embedded ~~16,~~derivatives ~~2012~~related to the convertible debt, wewarrants and ~~are~~beneficial ~~obligated~~conversion tofeatures ~~make~~embedded ~~future~~within ~~research~~our ~~milestone~~convertible ~~payments~~debt. ~~totaling~~The ~~approximately~~accounting ~~$560,000~~treatment toof ~~MRCT~~derivative ~~related~~financial instruments torequires that we record the ~~development~~derivatives and related warrants at their fair values as of the ~~82E1~~inception ~~humanized~~date ~~antibody~~of the debt agreements and toat ~~pay~~fair ~~additional~~value ~~milestones~~as ~~related~~of toeach ~~the~~subsequent ~~commercialization~~balance sheet date. Any change in fair value was recorded as non-operating, ~~and~~non-cash aincome or ~~royalty~~expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we ~~based~~recorded ona ~~sales~~non-operating, non-cash charge. If the fair value of the ~~resulting~~derivatives ~~drug~~was ~~products~~lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.

~~Under~~Research and ~~the~~Development ~~terms~~Costs ofand ~~the~~Clinical ~~IBL~~Trial ~~Agreement~~Expenses. ~~with~~Research and development costs include costs directly attributable to the ~~Immuno-Biological~~conduct ~~Laboratories~~of ~~Co.~~research and development programs, ~~Ltd.~~including ~~dated~~the ascost of ~~December~~salaries, 26payroll taxes, ~~2006~~employee benefits, wematerials, ~~agreed~~supplies, maintenance of research equipment, costs related to ~~pay~~research ~~IBL~~collaboration aand ~~total~~licensing agreements, the cost of $2services provided by outside contractors,~~125~~ including services related to our clinical trials,~~000~~ ~~upon~~clinical trial expenses, the ~~achievement~~ full cost of ~~certain~~manufacturing drugs ~~milestones~~for ~~plus~~use ain ~~specified~~research, ~~royalty~~preclinical ~~based~~development, onand ~~sales~~clinical oftrials. ~~any~~All ~~pharmaceutical~~costs ~~product~~associated ~~derived~~with ~~from~~research ~~the~~and ~~82E1or~~development ~~1A10~~are expensed ~~antibodies~~as incurred.

15Revenue Recognition. We recognize revenue in accordance with authoritative accounting guidance, which provides that non-refundable upfront and research and development milestone payments and payments for services are recognized as revenue as the related services are performed over the term of the collaboration. For the year ended June 30, 2015, all revenue was received from one licensee.

~~Under a License Agreement with Northwestern~~New ~~University~~Accounting (“NWU”) dated as of May 3, 2012, we are obligated to make future payments totaling approximately $700,000 to NWU upon achievement of certain milestones based on phases of clinical development and also to pay NWU a royalty based on product sales. Pronouncements

In August ~~the ordinary course of business~~2014, wethe ~~enter into~~FASB ~~agreements~~issued ~~with~~authoritative ~~third~~guidance ~~parties~~ that ~~include~~requires ~~indemnification~~an ~~provisions~~entity’s ~~which,~~management into ~~our~~evaluate ~~judgment,~~whether ~~are~~there ~~normal and customary for companies in our industry sector. These agreements~~ are ~~typically with business partners, clinical sites, and suppliers. Pursuant~~conditions toor ~~these agreements~~events, weconsidered ~~generally~~in ~~agree~~the ~~to indemnify~~aggregate, ~~hold~~that ~~harmless,~~raise ~~and~~substantial ~~reimburse~~doubt ~~indemnified~~about ~~parties for losses suffered or incurred by~~ the ~~indemnified~~entity’s ~~parties~~ability ~~with respect~~ to ~~our~~continue ~~product~~as ~~candidates,~~a ~~use~~going ofconcern and ~~such~~requires ~~product~~additional ~~candidates,~~disclosures orif ~~other~~certain ~~actions~~criteria ~~taken~~are ~~or omitted by us~~met. ~~The~~This ~~maximum~~guidance ~~potential~~is ~~amount~~effective offor ~~future~~fiscal ~~payments~~periods weending ~~could~~after ~~be required to make under these indemnification provisions is unlimited.~~December We15, ~~have~~2016, ~~not~~with ~~incurred~~early ~~material~~adoption ~~costs to defend lawsuits or settle claims related to these indemnification provisions~~permitted. AsThis aaccounting ~~result, the~~standard ~~estimated~~update ~~fair~~is ~~value~~not ofexpected ~~liabilities relating~~ to ~~these provisions is minimal. Accordingly, we~~ have noany ~~liabilities~~impact ~~recorded~~on ~~for~~the Company’s ~~these~~financial ~~provisions as of June 30, 2014 or 2013~~statements.

In ~~the normal course of business, we may~~ beJune ~~confronted with issues or events that may result in a contingent liability. These generally relate to lawsuits~~2014, ~~claims, environmental actions or~~ the ~~actions~~FASB ofissued ~~various~~ASU ~~regulatory agencies~~No. We2014-10, ~~consult~~Development ~~with~~Stage ~~counsel~~Entities ~~and~~(Topic ~~other~~915): ~~appropriate~~Elimination ~~experts~~of toCertain ~~assess~~Financial ~~the claim.~~Reporting IfRequirements, inIncluding ~~our~~an ~~opinion,~~Amendment weto ~~have~~Variable ~~incurred~~Interest aEntities ~~probable~~Guidance ~~loss~~in asTopic ~~set~~810, ~~forth~~Consolidation. byWe ~~accounting~~have ~~principles~~elected ~~generally~~to ~~accepted in the United States,~~adopt anearly ~~estimate~~application ~~is made~~ of ~~the~~Accounting ~~loss~~Standards ~~and~~Update ~~the appropriate accounting entries are reflected in our consolidated financial statements~~No. ~~After~~ ~~consultation~~2014-10; ~~with~~accordingly ~~legal counsel,~~ we dono ~~not~~longer ~~anticipate~~present ~~that liabilities arising out of currently pending~~ or ~~threatened~~disclose ~~lawsuits~~inception-to-date information and ~~claims~~other ~~will~~remaining ~~have~~disclosure arequirements ~~material adverse effect on our consolidated financial position, results~~ of ~~operations~~Topic ~~or cash flows~~915.

~~Critical~~Management does ~~Accounting~~not ~~Estimates~~believe ~~and~~that ~~New~~any ~~Accounting~~other ~~Pronouncements~~ recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

~~Critical~~ITEM 3. ~~Accounting~~QUANTITATIVE ~~Estimates~~AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~The preparation of financial statements~~Not inapplicable ~~accordance with accounting principles generally accepted in the United States requires management~~ to ~~make~~smaller ~~estimates~~reporting and assumptions that affect reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made, and changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated results of operations or financial condition.companies

~~Convertible Instruments. We~~ITEM ~~evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”~~4. ~~Applicable~~CONTROLS ~~GAAP~~AND ~~requires~~PROCEDURES companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

~~We account for convertible instruments (when~~Evaluation we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of ~~conversion~~Disclosure ~~options~~Controls ~~embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction~~ and ~~the effective~~Procedures conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. We also record when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.

~~Common~~Disclosure controls ~~Stock~~and ~~Purchase~~procedures ~~Warrants. We classify~~are ascontrols ~~equity~~and ~~any~~other ~~contracts~~procedures that ~~require~~are ~~physical~~designed ~~settlement~~to orensure ~~net-share~~that ~~settlement~~information orrequired ~~provide~~to usbe ~~a choice of net-cash settlement~~disclosed orby ~~settlement~~us in ~~our~~the ~~own~~reports ~~shares~~that ~~(physical~~we ~~settlement~~file or ~~net-share~~submit ~~settlement)~~under ~~provided~~the ~~that~~Securities ~~such~~Exchange ~~contracts~~Act ~~are~~of ~~indexed~~1934, toas ~~our~~amended ~~own stock~~(the as“Exchange ~~defined~~Act”) are inrecorded, ~~ASC~~processed, ~~815-40~~summarized ~~("Contracts~~and inreported, ~~Entity's~~within ~~Own~~the ~~Equity").~~time Weperiods ~~classify~~specified asin ~~assets~~the orSecurities ~~liabilities~~and ~~any~~Exchange ~~contracts~~Commission’s ~~that~~rules ~~require~~and ~~net-cash~~forms. ~~settlement~~Disclosure ~~(including~~controls aand ~~requirement~~procedures toinclude, ~~net~~without ~~cash~~limitation, ~~settle~~controls ~~the~~and ~~contract~~procedures ifdesigned anto ~~event~~ensure ~~occurs and if~~ that ~~event~~ isinformation ~~outside~~required ~~our~~to ~~control)~~be ordisclosed ~~give~~by ~~the~~us ~~counterparty~~in athe ~~choice~~reports ofthat ~~net-cash~~we ~~settlement~~file orunder ~~settlement~~the inExchange ~~shares~~Act ~~(physical~~is ~~settlement~~accumulated orand communicated ~~net-share~~to ~~settlement).~~our Wemanagement, ~~assess~~including ~~classification of~~ our ~~common~~principal ~~stock~~executive ~~purchase warrants~~ and ~~other~~financial ~~free~~officers, ~~standing~~as ~~derivatives~~appropriate ~~at each reporting date~~ to ~~determine~~allow ~~whether~~timely adecisions ~~change in classification between assets and liabilities is~~ regarding required disclosure.

1614

~~Preferred Stock. We apply~~Our ~~the~~principal ~~guidance~~executive ~~enumerated~~officer inand ~~ASC~~principal ~~480~~financial ~~“Distinguishing~~officer ~~Liabilities~~has ~~from~~evaluated ~~Equity”~~the ~~when~~effectiveness ~~determining~~of ~~the~~our ~~classification~~disclosure controls and procedures, ~~measurement~~as ofdefined ~~preferred~~in ~~stock.~~Rules ~~Preferred~~13a ~~shares~~– ~~subject~~15(e) toand ~~mandatory~~15d ~~redemption~~– 15(~~if any~~e) ~~are~~under ~~classified~~the Securities Exchange Act of 1934, as ~~liability~~amended ~~instruments~~(the “Exchange ~~and~~Act”) ~~are~~as ~~measured~~of atthe ~~fair~~end ~~value.~~of Wethe ~~classify~~period ~~conditionally~~covered ~~redeemable~~by ~~preferred~~this ~~shares~~report. ~~(if~~In ~~any),~~designing ~~which~~and ~~includes~~evaluating ~~preferred~~the ~~shares~~disclosure controls and procedures, management recognizes that ~~feature~~any ~~redemption~~controls ~~rights~~and ~~that~~procedures, ~~are~~no ~~either~~matter ~~within~~how ~~the~~well ~~control~~designed and operated, can provide only reasonable assurance of achieving the ~~holder~~desired orcontrol ~~subject~~objectives. toIn ~~redemption~~addition, ~~upon~~ the ~~occurrence~~design of ~~uncertain~~ ~~events~~disclosure ~~not~~controls ~~solely~~and ~~within~~procedures ~~our~~must ~~control,~~reflect the asfact ~~temporary~~that ~~equity.~~there Atare ~~all~~resource ~~other~~constraints ~~times,~~and wethat ~~classified~~management ~~our~~is ~~preferred~~required ~~shares~~to apply its judgment in evaluating the benefits ~~stockholders’~~of ~~equity~~possible controls and procedures relative to their costs.

~~Derivative Instruments.~~ Our ~~derivative~~ ~~financial~~CEO ~~instruments~~and ~~consist~~CFO ofhas ~~embedded~~concluded ~~derivatives~~that, ~~related~~based toon ~~the~~such ~~convertible debt~~evaluation, ~~warrants and beneficial conversion features embedded within~~ our ~~convertible~~disclosure ~~debt. The~~controls ~~accounting~~and ~~treatment~~procedures ofare ~~derivative~~not ~~financial~~designed ~~instruments~~at ~~requires~~a ~~that we~~reasonable ~~record~~assurance ~~the~~level ~~derivatives~~ and ~~related~~are ~~warrants~~ineffective atto ~~their~~provide ~~fair~~reasonable ~~values~~assurance asthat ofinformation ~~the~~we ~~inception~~are ~~date~~required ofto ~~the~~disclose ~~debt~~in ~~agreements~~reports ~~and at fair value~~that aswe offile ~~each~~or ~~subsequent~~submit ~~balance~~under ~~sheet~~the ~~date. Any~~Exchange ~~change~~Act inis ~~fair value was~~ recorded, asprocessed, ~~non-operating~~summarized, ~~non-cash~~and ~~income~~reported ~~or expense~~within ~~at each balance sheet date. If~~ the ~~fair~~time ~~value~~periods ofspecified ~~the derivatives was higher at the subsequent balance sheet~~in ~~date,~~SEC werules ~~recorded~~and aforms ~~non-operating,~~as ~~non-cash charge. If the fair value~~ of ~~the~~September ~~derivatives was lower at the subsequent balance sheet date~~30, ~~we recorded non-operating, non-cash income~~2015.

~~Research~~The conclusion ~~and~~was ~~Development~~due ~~Costs~~to ~~and~~the ~~Clinical Trial~~presence ~~Expenses. Research~~of ~~and~~the ~~development~~following ~~costs~~material ~~include~~weaknesses ~~costs~~in ~~directly~~disclosure ~~attributable~~controls and procedures due to ~~the~~our ~~conduct~~small size and limited resources: (1) we lack a sufficient number of ~~research~~employees to properly segregate duties and ~~development~~ ~~programs,~~provide ~~including~~adequate review of the ~~cost~~preparation of ~~salaries,~~the ~~payroll~~financial ~~taxes,~~statements ~~employee~~and ~~benefits,~~(2) ~~materials,~~we ~~supplies,~~lack ~~maintenance~~sufficient independent directors on our Board of ~~research~~Directors to maintain ~~equipment,~~Audit ~~costs~~and ~~related~~other tocommittees ~~research~~consistent ~~collaboration~~with proper corporate governance standards. We have limited financial resources and ~~licensing~~only one ~~agreements,~~employee. ~~the~~The ~~cost~~lack of ~~services~~personnel ~~provided~~is bya ~~outside~~weakness ~~contractors, including~~because ~~services~~it ~~related~~could lead to ~~our~~improper ~~clinical~~classification ~~trials,~~of ~~clinical~~items ~~trial~~and ~~expenses,~~other failures to make the ~~full~~entries ~~cost~~and ofadjustments ~~manufacturing~~necessary ~~drugs~~to ~~for~~comply ~~use~~with inU.S. ~~research, preclinical~~GAAP. ~~development~~Accordingly, ~~and~~management’s ~~clinical~~assessment ~~trials.~~is ~~All~~that ~~costs~~the Company’s ~~associated~~internal ~~with~~controls ~~research~~over ~~and~~financial ~~development~~reporting ~~are~~were ~~expensed~~not effective as ~~incurred~~of September 30, 2015.

~~Revenue Recognition. We recognize~~Changes ~~revenue~~ in ~~accordance~~Internal ~~with~~Controls ~~authoritative~~Over ~~accounting~~Financial guidance, which provides that non-refundable upfront and research and development milestone payments and payments for services are recognized as revenue as the related services are performed over the term of the collaboration.Reporting

~~ITEM~~No changes 3.in ~~QUANTITATIVE~~the ~~AND~~Company’s ~~QUALITATIVE~~internal ~~DISCLOSURES~~control ~~ABOUT~~over ~~MARKET~~financial ~~RISK~~reporting have come to management’s attention during the Company’s last fiscal quarter that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

~~Not~~PART II ~~Applicable~~ - OTHER INFORMATION

ITEM 4 1. ~~CONTROLS~~Legal ~~AND PROCEDURES~~Proceedings.

~~Evaluation~~We are not a party to any pending legal proceeding, nor is our property the subject of ~~Disclosure~~a ~~Controls~~pending ~~and~~legal ~~Procedures~~ proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

~~Disclosure controls~~ITEM and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms1A. ~~Disclosure~~Risk controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosureFactors.

~~Our Chief Executive~~Not Officer (“CEO”) and Chief Financial Officer (“CFO”), the Company’s principal executive and financial officer conducted an evaluation of the design and effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required tofor ~~apply~~smaller ~~its~~reporting ~~judgment in evaluating the benefits of possible controls and procedures relative to their costs~~companies.

17ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Based on this evaluation,~~In ~~our~~July ~~CEO and CFO concluded that as of March 31,~~ 2015, ~~our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information~~ we ~~are~~issued ~~required~~3,490 toshares ~~disclose~~of inSeries ~~reports~~G ~~that~~Convertible wePreferred ~~file or~~Stock; ~~submit under the Exchange Act is recorded~~1,081 ~~processed,~~shares ~~summarized,~~of ~~and~~Series ~~reported~~H ~~within~~Convertible ~~the~~Preferred ~~time periods specified in SEC rules~~Stock; and ~~forms,~~warrants ~~and that such information is accumulated and communicated~~ to ~~our~~purchase ~~management,~~an ~~including~~aggregate ~~our~~of ~~CEO and CFO~~15, ~~as appropriate~~000, to000 ~~allow~~shares ~~timely~~of ~~decisions~~common ~~regarding~~stock ~~required disclosure. The conclusion was due~~ to ~~the~~investors ~~presence~~who ofpurchased the ~~following~~Series ~~material~~G ~~weaknesses in disclosure controls~~ and ~~procedures due to our small size and limited resources: (i) inadequate segregation of duties and effective~~Series ~~risk~~H ~~assessment;~~Preferred ~~(ii)~~Shares, ~~insufficient~~as ~~written~~described ~~policies~~in ~~and~~Note ~~procedures~~5 ~~for accounting and financial reporting with respect~~ to the ~~requirements and~~unaudited ~~application~~consolidated offinancial ~~both~~statements ~~U.S.~~of ~~GAAP~~the ~~and SEC Guidelines; (iii) inadequate security and restricted access to computer systems including insufficient disaster recovery plans; and (iv) no written whistleblower policy~~Company.

~~Our CEO and CFO plans~~In toJuly ~~implement~~2015, ~~appropriate~~we ~~disclosure~~issued ~~controls~~816,400 and ~~procedures to remediate these material weaknesses~~650,000 ~~including~~shares ~~(i)~~of ~~appointing~~our ~~additional qualified~~common ~~personnel~~stock to ~~address~~holders ~~inadequate segregation~~ of ~~duties~~Series ~~and~~C ~~ineffective~~Convertible ~~risk~~Preferred ~~management;~~Stock ~~(ii)~~and ~~adopting sufficient written~~Series ~~policies~~F ~~and~~Convertible ~~procedures~~Preferred ~~for~~Stock, ~~accounting~~respectively, ~~and~~upon ~~financial~~their ~~reporting~~exercise ~~and~~of athe ~~whistle~~conversion ~~blower~~feature ~~policy;~~contained ~~and~~in ~~(iii)~~those ~~implementing sufficient security and restricted access measures regarding our computer systems and implement a disaster recovery plan~~securities.

~~Changes in Internal Controls Over Financial Reporting~~15

~~There has been no change in our internal~~In ~~control~~August ~~over~~2015, ~~financial~~we ~~reporting~~issued ~~(as~~250,000 ~~such~~and ~~term~~300,000 isshares ~~defined~~of inour ~~Rules~~common ~~13a-15(f)~~stock ~~and~~to ~~15d-15(f)~~holders ~~under~~of ~~the~~Series ~~Exchange~~C ~~Act)~~Convertible ~~during~~Preferred ~~the~~Stock ~~quarter~~and Series ~~ended~~F ~~March~~Convertible 31Preferred Stock, ~~2015 that has materially affected~~respectively, orupon istheir ~~reasonably~~exercise ~~likely~~of tothe ~~materially~~conversion ~~affect,~~feature ~~our~~contained ~~internal~~in ~~control~~those ~~over financial reporting~~securities.

~~PART~~In August II2015, –we ~~OTHER~~issued ~~INFORMATION~~301 shares of our common stock in connection with implementation of the reverse stock split on our outstanding common shares that was effective on February 11, 2015.

ITEM 1 3. ~~Legal~~Defaults ~~Proceedings~~Upon Senior Securities.

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None ~~of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business~~.

ITEM 1A 4. ~~Risk~~Mine ~~Factors~~Safety Disclosures.

Not ~~required for smaller reporting companies~~ applicable.

ITEM 2 5. ~~Unregistered Sales of Equity Securities and Use of Proceeds~~Other

~~In July 2014, we issued 200,000 shares of our common stock to holders of Series C Convertible Preferred Stock upon their exercise of the conversion feature contained in those securities.~~ None

~~On July 25, 2014, we entered issued 1,200~~ITEM ~~shares~~6. ofExhibits ~~Series F Convertible Preferred Stock and warrants to purchase 9,600,000 shares of common stock pursuant to a stock purchase agreement with certain accredited investors.~~

In31.1* Certification ~~August~~of ~~2014,~~Principal weExecutive ~~issued~~Officer ~~396,000~~and ~~shares of~~Chief ~~our~~Financial ~~common~~Officer ~~stock~~pursuant to ~~holders~~Rule of13a-14(a) ~~Series~~and C15d-14(a) ~~Convertible~~as ~~Preferred~~adopted ~~Stock~~pursuant to ~~upon~~Section ~~their~~302 ~~exercise~~ of the ~~conversion~~Sarbanes-Oxley ~~feature~~Act ~~contained in~~of ~~those~~2002 ~~securities.~~ (filed herewith)

In32.1* Certification ~~September~~of ~~2014,~~Principal weExecutive ~~issued~~Officer ~~260,000~~and ~~shares of~~Chief ~~our~~Financial ~~common~~Officer ~~stock~~pursuant to ~~holders~~Rule of18 ~~Series~~ U.S.C ~~Convertible~~Section ~~Preferred~~1350, ~~Stock~~as ~~upon~~adopted ~~their~~pursuant to ~~exercise~~Section 906 of the ~~conversion~~Sarbanes-Oxley ~~feature~~Act ~~contained in~~of ~~those~~2002 ~~securities.~~(filed herewith)

~~In January 2015, we issued 80,000 shares~~101.INS** ofXBRL ~~our~~Instance ~~common stock to holders of Series C Convertible Preferred Stock upon their exercise of the conversion feature contained in those securities.~~Document

~~In March 2015, we issued 90,000 shares of~~101.SCH** ~~our~~XBRL ~~common~~Taxonomy ~~stock~~Extension ~~to holders of Series C Convertible Preferred Stock upon their exercise of the conversion feature contained in those securities.~~Schema

~~ITEM 3~~101.CAL** XBRL ~~Defaults~~Taxonomy ~~Upon~~Extension ~~Senior~~Calculation ~~Securities.~~Linkbase

~~None~~101.DEF** XBRL Taxonomy Extension Definition Linkbase

~~ITEM 4~~101.LAB** XBRL ~~Mine~~Taxonomy ~~Safety~~Extension ~~Disclosures.~~Label Linkbase

~~Not applicable~~101.PRE** XBRL Taxonomy Extension Presentation Linkbase

~~ITEM~~* Filed ~~5. OTHER~~herewith

~~None~~ ** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

1816

~~ITEM 6. EXHIBITS~~SIGNATURES

31.01*Pursuant to ~~Certification~~the requirements of ~~Principal~~the ~~Executive~~Exchange ~~Officer~~Act, ~~and~~the ~~Chief Financial~~registrant ~~Officer~~has ~~pursuant~~duly tocaused ~~Rule~~this ~~13a-14(a)~~report ~~and~~to ~~15d-14(a)~~be assigned ~~adopted~~on ~~pursuant~~its tobehalf ~~Section~~by ~~302 of~~ the ~~Sarbanes-Oxley Act of 2002~~undersigned ~~(filed~~thereunto ~~herewith)~~duly authorized.

32.01* Certification of Principal Executive Officer and Chief Financial Officer pursuant to Rule 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

November 12, 2015	Intellect Neurosciences, Inc.

	/s/ Elliot Maza

	Elliot Maza
	Chief Executive Officer and Chief Financial Officer

~~101.INS** XBRL Instance Document~~17

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation Linkbase

101.DEF** XBRL Taxonomy Extension Definition Linkbase

101.LAB** XBRL Taxonomy Extension Label Linkbase

101.PRE** XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

SIGNATURES

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

May 12, 2015	Intellect Neurosciences, Inc.
	/s/ Elliot Maza
	Elliot Maza
	Chief Executive Officer and Chief Financial Officer

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