UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


_______________________________





FORM 10 - Q


_______________________________





[mark one]


x
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended: March 31, 2010





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





For the transition period from _________ to ____________





Commission File Number 333-139354


_____________________________________________________________





IMMUNOBIOTICS, INC .


(Exact name of registrant as specified in its charter)





Florida
20-0947115(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification Number)





1062 Calle Negocio, Suite C, San Clemente, California 92673


(Address of principal executive offices including zip code)





800-524-9172


( Registrant’s telephone number, including area code)





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





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every 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  o No   ̈





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


Yes o    No x





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  o
Accelerated Filer  o
Non-Accelerated Filer  o
Smaller Reporting Company x





Number of shares outstanding of the issuer’s common stock as of the latest practicable date: 23,460,000 shares of common stock, $.001 par value per share, as of May 15, 2010.





Transitional Small Business Disclosure Format (Check one): Yes o    No x











IMMUNOBIOTICS, INC.





Index





PART I. FINANCIAL INFORMATION

PageItem 1.

Financial Statements

1Balance Sheets for the three months ended March 31, 2010 (unaudited) and  December 31, 2009 (audited)

1Statement of Operations for the three months ended March 31, 2010 and 2009 (unaudited) and for the period from April 1, 2004 to March 31,2010

2Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) and for the period from April 1, 2004 to March 31,2010

3Notes to Condensed Financial Statements

4Item 2.

Management’s Discussion and Analysis or Plan of Operation

10Item 4T.

Controls and Procedures

13PART II. OTHER INFORMATIONItem 1.

Legal Proceedings

13Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

13Item 3.

Defaults Upon Senior Securities

13Item 4.

Removed and Reserved

14Item 5.

Other Information

14Item 6.

Exhibits

16












IMMUNOBIOTICS, INC.
 (F/K/A MULTINATIONAL MERGER CORPORATION)
 (A Development Stage Company)
 BALANCE SHEETS
  ASSETSMarch 31,

December 31,2010

2009CURRENT ASSETSCash

$
8,255


$
8,389Inventory


15,471



15,47123,726



23,860Computer equipment, net


3,214



3,673Patent


1,803



1,8035,017



5,476TOTAL ASSETS

$
28,743


$
29,336LIABILITIES AND STOCKHOLDERS’ DEFICIENCYCURRENT LIABILITIESAccounts payable and accrued expenses

$
176,535


$
139,603Accounts payable - related party


124,875



124,875Accrued salaries


214,000



176,250Deferred revenue


27,400



24,900Convertible notes payable


112,500



102,500Convertible notes payable, net of discount


47,397



27,397Note payable - related party


30,500



13,000Notes payable


7,000



7,000TOTAL CURRENT LIABILITIES


740,207



615,525COMMITMENTS AND CONTINGENCIES


—



—STOCKHOLDERS’ DEFICIENCYCommon stock, no par value, 100,000,000 shares authorized, 15,610,000 and shares issued and outstanding, respectively


857,267



857,267Accumulated deficit during development stage


(1,568,731
)


(1,443,456
)Total Stockholders’ Deficiency


(711,464
)


(586,189
)TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

$
28,743


$
29,336
  The accompanying notes are an integral part of these financial statements.
 -1-
 
 IMMUNOBIOTICS, INC.
 
 (F/K/A MULTINATIONAL MERGER CORPORATION)
 (A Development Stage Company)
 STATEMENTS OF OPERATIONS
  For the Three Months Ended March 31,


For the Period From

April 1, 2004 , (Inception)

to March 312010


2009


2010RevenueSale of products


—



—



770Licensing fees


2,500


$
2,500


$
25,0002,500



2,500



25,770OPERATING EXPENSESGeneral and administrative


3,956



1,220



155,997Rent


7,394



10,500



92,970Professional fees


29,402



8,205



355,681Salaries


37,750



18,750



252,750Research and development


—



—



78,850Advertising


10,000



—



42,956Consulting


15,000



—



553,955TOTAL OPERATING EXPENSES


103,502



38,675



1,533,159Net loss from operations


(101,002
)


(36,175
)


(1,507,389
)OTHER EXPENSESInterest Expense


24,273



345



61,342NET LOSS BEFORE PROVISION FOR INCOME TAXES


(125,275
)


(36,520
)


(1,568,731
)PROVISION FOR INCOME TAXES


—



—



—NET LOSS


(125,275
)

$
(36,520
)

$
(1,568,731
)Net loss per share - basic and diluted


(0.01
)


(0.00
)Weighted average number of shares outstanding during the period - basic and diluted


15,610,000



15,460,000
  The accompanying notes are an integral part of these financial statements.
 -2-
 
 IMMUNOBIOTICS, INC.
 
 (F/K/A MULTINATIONAL MERGER CORPORATION)
 (A Development Stage Company)
 STATEMENTS OF CASH FLOWS
 For the Three Months Ended March 31,


For the Period From

April 1, 2004 (Inception)2010


2009


to March 31, 2010CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(125,275
)

$
(36,520
)

$
(1,568,731
)Adjustments to reconcile net loss to net cash used in operating activities:Common stock issued for services


—



—



60,000Warrants issued for services






—



180,000Amortization of debt discount


20,000



—



47,397Depreciation expense


459



238



2,313Changes in operating assets and liabilities:Increase in inventory


—



—



(15,471
)Increase in deferred revenue


2,500



6,000



27,400Increase in accrued payroll


37,750



18,608



214,000Accounts payable and accrued expenses


36,932



7,432



176,534Accounts payable related party


—



—



124,876Net Cash Used In Operating Activities


(27,634
)


(4,242
)


(751,682
)CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of computer equipment


—



—



(5,528
)Net Cash Used in Investing Activities


—



—



(5,528
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from notes payable


—



—



7,000Proceeds from convertible notes payable


10,000



—



112,500Proceeds from convertible notes payable


—



—



100,000Proceeds from notes payable - related party


17,500



—



30,500Proceeds from capital contribution from related party


—



—



115,365Proceeds from issuance of common stock


—



—



400,100Net Cash Provided By Financing Activities


27,500



—



765,465NET INCREASE (DECREASE) IN CASH


(134
)


(4,242
)


8,255CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


8,389



4,870



—CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
8,255


$
628


$
8,255Supplemental disclosure of non cash investing & financing activities:Cash paid for income taxes

$
—


$
—


$
—Cash paid for interest expense

$
—


$
—


$
—
  The accompanying notes are an integral part of these financial statements.
 
 -3-
 (F/K/A MULTINATIONAL MERGER CORPORATION)
 (A Development Stage Company)
 NOTES TO FINANCIAL STATEMENTS
 
 MARCH 31, 2010
 NOTE 1 – ORGANIZATION
 
 Organization
 
 ImmunoBiotics, Inc. (the “Company”) was incorporated under the laws of the State of Florida on April 1, 2004 under the name Multinational Merger Corporation. The Company was originally formed for the purpose of, and engaged in the business of, conducting regulatory compliance consulting, through its website, the archive of which can be seen at http://web.archive.org/web/20050322155356/http://www.mmc2100.com/. The Company discontinued its consulting operations in November 2005. The Company changed its name to Immunobiotics, Inc. in August 2007 after its acquisition in May 2007 of US Patent number 6,774,142 entitled “Inhibition by 3-Deoxyflavonoids of T-Lymphocyte Activation and Therapies Related Thereto” which protects the compounds and formulas that the products manufactured in accordance with its licensing agreements are based upon as well as the use of Luteolin in the prevention and treatment of many diseases. The Company is in the business of licensing the manufacture, distribution, and sale of nutraceutical products that are made entirely of naturally occurring dietary substances.
 
 Activities during the development stage include developing the business plan and raising capital.  Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
 
 Interim Financial Statements
 
 The accompanying interim unaudited financial information has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2010 and the related operating results and cash flows for the interim period presented have been made. The results of operations of such interim period are not necessarily indicative of the results of the full year.
 
 Going Concern
 
 The financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company is in the development stage with limited operations, a stockholders' deficit of $711,464, working capital deficit of $716,481and has incurred operating losses since its inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Estimates that are critical to the accompanying financial statements arise from the determination of the fair value of the Company’s investment. Because such determination involves subjective judgment, it is at least reasonably possible that the Company’s estimates could change in the near term with respect to this matter.
 
 
 -4-
 
 
 Revenue Recognition
 
 Revenue is recognized when earned. In consideration for the Non-exclusive Patent License Agreement, Licensee shall manufacture and deliver to Licensor 5,000 bottles of 10 mg LutiMax tablets, bottled and labeled as directed by Licensor. Label copy and labels will be provided by Licensor. In addition to the manufacture and delivery of the 5,000 bottles of LutiMax 10 mg tablets, Licensee will pay a royalty of 5% of net sales of products sold by Licensee that are covered by the Patent for the first $500,000 in sales per year, 7.5% of net sales per year from $500,000 to $1,000,000 in sales, and for net sales exceeding $1,000,000 per year, Licensee will pay  10% of net sales. Licensee shall pay to Licensor annually a minimum earned royalty of $10,000. The payments of the royalties or minimum annual royalty payment will be paid quarterly within 30 days of completion of each quarter beginning the effective date of this Non-exclusive Patent License Agreement. For the three months ended March 31, 2010 and 2009, the Company recognized as revenue the minimum earned royalty of $2,500 and $2,500, respectively.
 
 Cash and Cash Equivalents
 
 The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
 
 Concentration of Credit Risk
 
 During the three months ended March 31, 2010 and 2009, one customer accounted 100% of the Company's sales.
 
 Net Loss per Share
 
 Basic and diluted net losses per common share are presented in accordance with ASC 260, “Earnings Per Share”, for all periods presented.
 
 Indefinite-lived and Long-Lived Assets
 
 The Company accounts for long-lived assets under ASC 350 “Accounting for Goodwill and Other Intangible Assets” and “Accounting for Impairment or Disposal of Long-Lived Assets”. In accordance with ASC 350, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets.
 
 The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value. The Company currently carries $1,803 as an intangible asset associated with the acquisition of a patent. The Company does not believe any impairment of this asset has occurred as of March 31, 2010 and, therefore, has recorded no loss from impairment in its statement of operations.
 
 Reclassification
 
 Certain amounts in the prior period financial statements have been reclassified for comparative purposes to conform to the presentation in the current year financial statements.
 
 
 -5-
 
 NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS
 
 In January 2010, the FASB issued Accounting Standards Update No. 2010-06 applicable to FASB ASC 820-10, Improving Disclosures about Fair Value Measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels and the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). This guidance is effective for interim and annual periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Company’s results of operations, cash flows or financial positions.
 
 In January 2010, the FASB has published ASU 2010-01 “Equity (Topic 505) - Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force,” as codified in ASC 505, ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that have both stock and cash components. The stock portion of such distributions is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  Early adoption is permitted.  The adoption of this standard is not expected to have a material impact on the Company’s financial position and results of operations; however, it may affect any future stock distributions.
 
 NOTE 5 - INVENTORIES
 
 Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (“FIFO”) method. We classify inventory into various categories based upon their stage in the product life cycle, future marketing sales plans and disposition process. We assign a degree of obsolescence risk to products based on this classification to determine the level of obsolescence provision.
 
 Inventories at March 31, 2010 and December 31, 2009 consisted of the following:
 
 Raw materials

$
15,471


$
15,471Total inventories

$
15,471


$
15,471
 
 NOTE 6 – INTANGIBLE ASSETS
 
 In May 2007, the Company transferred 8,794,042 shares of common stock in connection with the purchase of US Patent number 6,774,142 entitled “Inhibition by 3-Deoxyflavonoids of T-Lymphocyte Activation and Therapies Related Thereto” which protects the compounds and formulas that the products manufactured in accordance with its licensing agreements are based upon as well as the use of Luteolin in the prevention and treatment of many diseases.  This patent was acquired from a related party.  The Company valued the historical basis of the patent at $1,803.
 
 On September 1, 2007, the Company entered into a license agreement with SYNORx, a related party company, whereby ImmunoBiotics, Inc. granted SYNORx Inc, a company controlled by the majority shareholders in ImmunoBiotics, Inc., a non-exclusive license to  research, develop, market, distribute and sell Luteolin and related bioflavonoid-based products covered by ImmunoBiotics, Inc.’s patent number 6,774,142.
 
 NOTE 7 – COMPUTER EQUIPMENT
 
 The Company purchased computer equipment. The Company is depreciating it over its estimated useful life of 3 years. Depreciation expense for the three months ended March 31, 2010 and 2009 was $459 and $238, respectively.
 
 
 -6-
 
 
 NOTE 8 – NOTE PAYABLE
 
 On November 24, 2008 the Company borrowed $7,000 pursuant to a note payable. The note bears interest at a rate of 20% per annum.  Accrued interest at March 31, 2010 and December 31, 2009 amounted to $1,887 and $1,542, respectively.
 
 NOTE 9 – CONVERTIBLE NOTES PAYABLE
 
 During the three months ended June 30, 2009 the Company borrowed a total of $82,500 pursuant to several convertible note payable. The notes are due 180 days from the date of issuance and bear an interest rate of 10% per annum. Accrued interest at March 31 2010 and December 31, 2009 amounted to $7,632 and $5,552, respectively. The notes are convertible at the request of the holder at a fixed price of $1.00 per share of common stock. The note is currently in default.
 
 In July 2009 the Company borrowed a total of $10,000 pursuant to a convertible notes payable. The note is due one year from the date of issuance and bears an interest rate of 10% per annum. Accrued interest at March 31, 2010 and December 31, 2009 amounted to $721 and $468, respectively. The notes are convertible at the request of the holder at a fixed price of $1.00 per share of common stock.
 
 In December 2009 the Company borrowed a total of $10,000 pursuant to a convertible notes payable. The note is due one year from the date of issuance and bears an interest rate of 10% per annum. Accrued interest at March 31, 2010 and December 31, 2009 amounted to $288 and $36, respectively. The note is convertible at the request of the holder at a fixed price of $1.00 per share of common stock.
 
 In February 2010 the Company borrowed a total of $10,000 pursuant to a convertible notes payable. The note is due one year from the date of issuance and bears an interest rate of 10% per annum. Accrued interest at March 31, 2010 amounted to $115. The note is convertible at the request of the holder at a fixed price of $1.00 per share of common stock.
  
 NOTE 10 -   CONVERTIBLE NOTES PAYABLE
 
 March 31,

2010Note Amount

$
100,000Discount


(52,603)Net

$
47,397
 
 On September 22, 2009, a third party loaned Company loaned the Company $100,000. The loan bears a rate of interest of 8% per annum and is payable twelve months from the date of issuance. The holder of the note has the right to convert the note into common stock of the Company at a price of $1.00 per share of common stock.  In addition the Company issued warrants to purchase 200,000 shares of common stock with cash-less exercise price of $.05 per share for eighteen months from the date of the note. The fair value of the warrants was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions: expected dividend yield 0%, volatility 110%, risk-free interest rate of 1%, and expected warrant life of 6 months. The fair value of the warrants on the date of issuance was $230,050. The Company will amortize the value up to the principle of the note of $100,000 over the term of the note.  As of March 31, 2010 the Company recorded and accrued interest of $4,205 and amortization of $52,603 related to the note.
 
 NOTE 11   NOTES PAYABLE – RELATED PARTY
 
 The Company’s Chief Operating Officer and Chairman of the Board loaned the Company a total of $30,500 pursuant to a notes payable. The notes are due one year from the date of issuance and accrue interest at a rate of 6% per annum. Accrued interest at March 31, 2010 was $366.
  -7-
  NOTE 12 – EQUITY
 
 (A) Common Stock
 
 During 2004 the Company issued 1,000,000 shares of common stock to founders for cash consideration of $100.
 
 During 2004 the Company issued 5,205,958 shares of common stock to founders in consideration for capital contributions made on behalf of the Company in the amount of $12,936.
 
 (B) Capital contributions
 
 During the year ended December 31, 2004 a related party paid $12,936 on behalf of the Company.
 
 During the year ended December 31, 2005 a related party paid $161 on behalf of the Company.
 
 During the year ended December 31, 2006 a related party paid $50 on behalf of the Company.
 
 During the year ended December 31, 2007 a related party paid $75,357 on behalf of the Company.
 
 
 During the year ended December 31, 2008, the Company’s President contributed $1,100 cash to the Company.
 
 During the year ended December 31, 2008, a related party paid $25,760 on behalf of the Company.
 
 (C) Common stock issued for services
 
 During the year ended December 31, 2007 the Company issued 60,000 shares of common stock valued at $60,000 ($1.00 per share) for services. The Common stock was valued at the most recent cash offering price of $1.00 per share.
 
 In July 2009 the Company agreed to issue 150,000 shares of common stock valued at $180,000 for consulting services and cash of $500.
 
 (D) Sale of common Stock
 
 In January 2008 the Company sold a total of 400,000 shares of common stock to an unrelated third party for net proceeds of $400,000 ($1.00 per share).
 
 
 -8-
 
 NOTE 13 – RELATED PARTY TRANSACTIONS
 
 On September 1, 2007, the Company entered into a license agreement with SYNORx,  a related party company, whereby ImmunoBiotics, Inc. granted SYNORx Inc, a company controlled by the majority shareholders in ImmunoBiotics, Inc., a non-exclusive license to  research, develop, market, distribute and sell Luteolin and related bioflavonoid-based products covered by ImmunoBiotics, Inc.’s patent.
 
 In January 2008, the Company entered into employment agreement with Thomas Lahey, to serve as President and Chief Executive Officer. The agreement provides that he will serve as our President and Chief Executive Officer for an annual salary of $75,000 with annual increases in the salary of at least 5% and an annual bonus equal to a percentage of net income (as defined in the agreement). In addition, the agreement also provides medical benefits and a car allowance of $300 per month. The agreement also provides for life insurance in the amount of $2,000,000, with this individual having the right to name the beneficiary for $1,000,000. The agreement expired December 31, 2009 and was automatically renewed unless either party notifies the other 90 days prior to expiration. For the three months ended March 31, 2010 and 2009 the Company has recorded $18,750 of salary expense, respectively. As of March 1, 2010, the Company recorded accrued salary of $135,000. Mr. Lahey now serves as the Company’s Chief Operating Officer and Chairman of the Board.
 
 On May 14, 2009, Daniel Smith, a Company consultant since 2007, was appointed to the position of President and Chief Executive Officer. The Company is recording a monthly salary expense of $8,000. During the three months ended March 31, 2010 the Company recorded salary expense of $24,000. Accrued salary at March 31, 2010 amount to $79,000. On April 23, 2010 Mr. Smith resigned.
 
 The Company’s Chief Operating Officer and Chairman of the Board loaned the Company a total of $30,500 pursuant to a notes payable. The notes are one year from the date of issuance and accrue interest at a rate of 6% per annum. Accrued interest at March 31, 2010 was $366.
 
 During the year ended December 31, 2008, related parties contributed $26,860 to the Company.
 
 NOTE 14-SUBSEQUENT EVENT
 
 The Company evaluated subsequent events through May 20, 2010 the date the financial statements were issued and concluded there are no material subsequent events.
  In April 2010 the Company issued a total of 7,850,000 shares of common stock. 4,000,000 were issued but not transferred yet for patents currently owned by the Company’s Chairman, Chief Executive Officer and President and its Chief Financial Officer. The remaining 3,850,000 were issued to third parties for services.
 
 The Company evaluated subsequent events through May 20, 2010 the date the financial statements were issued.
 -9-


Item 2.  Management’s Discussion and Analysis of Plan of Operations





This discussion and analysis should be read in conjunction with the accompanying Financial Statements and related notes. Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis we review our estimates and assumptions. Our estimates are based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Our critical accounting policies, the policies we believe are most important to the presentation of our financial statements and require the most difficult, subjective and complex judgments, are outlined below in ‘‘Critical Accounting Policies,’’ and have not changed significantly.





FORWARD-LOOKING STATEMENTS





Certain statements made in this report may constitute “forward-looking statements on our current expectations and projections about future events”. These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Registrant to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties.. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.   These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements.





General





The following discussion and analysis should be read in conjunction with the our financial statements and related footnotes for the year ended December 31, 2009 included in our Form 10K for the year ended December 31, 2009 filed with the Securities and Exchange Commission.  The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.





Overview





We are a development stage company in the process of establishing a business engaged in the licensing of the manufacture, distribution and sale of nutraceutical products that are made entirely of naturally occurring dietary substances.  To date our nutraceutical activities have been minimal and have included the acquisition of the patent which protects the compounds and formulas that the products manufactured in accordance with our licensing agreements are based upon.  At the present time we have one licensee who has developed two lines of products based upon our patented compounds and formulas. LutiMax is an antioxidant and anti-inflammatory product that provides various health benefits and LutiSport is a performance-enhancing sports product.  Both product lines consist of products that are intended for human consumption and consumption by household pets.





-10-


Since inception, we have funded our operations from the sale of common stock and contributions from related parties.  We have had minimal revenues from royalty payments.  We still require funds to advertise the products made by our licensee and to further establish our distribution network as well as to hire personnel to run our day to day operations.  We plan to obtain the necessary funds through a combination of revenue derived from royalty payments and direct sales of our products.  If our anticipated royalty payments received and sales for the next few months do not meet our current expectations, our existing resources will not be sufficient to meet our cash flow requirements for the next few months. Furthermore, if our expenses exceed what we currently anticipate, we will need additional funds to continue to fully implement our business plan.  If we do not have adequate working capital we will not be able to fully establish our business and we may be forced to raise additional funds, whether through a stock offering or otherwise.





Critical accounting Policies –





Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.





Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.





Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.





RESULTS OF OPERATIONS





Results of Operations





Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009





Revenue - During the quarter ended March 31, 2010 we generated revenue of $2,500.  During the same period of 2009, we also generated revenue of $2,500.





Expenses- Our total operating expenses for the three months ended March 31, 2010 increased 168% from $38,675 for the three months ended March 31, 2009 to $103,502 for the three months ended March 31,2010.  The increase in operating expense was primarily related to a 101% increase in salaries from $18,750 for the three months ended March 31, 2009 to $37,750 for the three months ended March 31, 2010,  a 258% increase in professional fees from $8,210 for the three months ended March 31, 2009 to $29,402 for the three months ended March 31, 2010 and the addition of consulting expenses and advertising expenses of $15,000 and $10,000 for the three months ended March 31, 2010, all of which was offset by a slight decrease in rent expense. The professional fees primarily consisted of accounting and other fees  incurred by us in connection with our obligations as a reporting company under the Securities Exchange Act of 1934 for our required regulatory filings and on-going corporate governance.





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Continued -





Salary expense increased due to the addition of a new Chief Executive Officer for a portion of the year. The salary of $37,750 represents accrued salary for amounts which are owed to our President and Chief Executive Officer pursuant to the terms of his employment agreement. The rent expense of $7,394 also represents accrued expense for the rent of our office facility that we share with our licensee.





Net loss for the quarter ended March 31, 2010 increased from $36,520 for the quarter ended March 31, 2009 as compared to $125,275 for the period ended March 31, 2010.  The increase was attributed to the increased expenses previously described.





Liquidity and Capital Resources





To date, we have generated minimal revenue from our nutraceutical business.





For the three months ended March 31, 2010, we had cash flows from financing activities of $27,500 related to the proceeds of notes payable form our Chief Executive Officer and a third party. Our cash used in operating activities was $27,634 and reflected an increase in accrued payroll and an increase in accounts payable and accrued expenses.  Our cash at the end of the period was $8,255.





Expenses





To date, our expenses have consisted primarily of, consulting fees, salary, general and administrative  and professional fees, mostly in connection with becoming a reporting company and the ongoing reporting requirements. We anticipate that our principal expenses in the next year will consist of professional fees and consulting fees as well as advertising and marketing, and personnel required to operate our business.





Accounts Receivable and Accounts Payable





We do not anticipate that we will have any significant level of accounts receivable in connection with the operation of our business.  We will require each customer to pay us via credit card or cash equivalent prior to the time that any product is shipped to the customer.  Additionally, we do not anticipate that we will have a significant level of accounts payable, because most of the vendors that our licensee derives products from will not have a direct relationship with us but we anticipate that they will require our licensee to pay them before products are shipped





Capital Expenditures





We expect to purchase additional office furniture, equipment and computers during the next 12 months.  We have budgeted approximately $50,000 for capital expenditures during this period.





Current and Future Financing Needs





We have incurred an accumulated deficit of $1,568,731 through March 31, 2010 and at March 31, 2010 had a stockholder deficiency of $711,464. We have incurred negative cash flow from operations since we started our business. During the three months ended June 30, 2009 we borrowed a total of $82,500 pursuant to several convertible notes payable. The notes are past due and are currently in default. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials, and fees in connection with regulatory compliance and corporate governance. The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control.  If our anticipated sales for the next few months do not meet our expectations, our existing resources will not be sufficient to meet our cash flow requirements for the next few months.  Furthermore, if our expenses exceed our anticipations, we will need additional funds to implement our business plan.  We will not be able to fully establish our business if we do not have adequate working capital and if we do not have adequate working capital we may need to raise additional funds, whether through a stock offering or otherwise.







Our continued operations in the short and long term will depend on whether we are able to raise additional funds through various potential sources, such as equity and debt financing. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. We will continue to fund operations from cash on hand and through the similar sources of capital previously described. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs.





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Other factors that may impact our financing needs include the following:




•
the progress of the development efforts of parties with whom we have entered into research and development agreements;•
our ability to maintain current research and development programs and to establish new research and development and licensing arrangements;•
the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and•
the costs and timing of regulatory approvals.





We have based our estimate on assumptions that may prove to be wrong. As previously stated, we need to obtain additional funds in the next couple of months or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit or cease our operations and our business, financial condition and results of operations would be materially harmed.





Item 4T - Controls and Procedures





As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer, who is our principal executive officer and our principal financial officer.  Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





Disclosure controls and procedures are our 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 Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure 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 principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.





Part II.   OTHER INFORMATION





Item 1. Legal Proceedings





None.





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





During May 2010, we issued 7,850,000 shares to 50 individuals, 4,000,000 of which were issued but not transferred yet for patents currently owned by the Company’s Chairman, Chief Executive Officer and President and its Chief Financial Officer in.  The remaining 3,850,000 were issued to third parties for services.  The issuance of the securities qualified for exemption under Section 4(2) of the Securities Act of 1933 (the “Act”) since the issuance by us did not involve a public offering. The offering was not a public offering as defined in Section 4(2) because the offer and sale was made to an insubstantial number of persons and because of the manner of the offering. In addition, the investors had the necessary investment intent as required by Section 4(2) since they agreed to, and received, securities bearing a legend stating that such securities are restricted. This restriction ensured that these securities will not be immediately redistributed into the market and therefore be part of a public offering. This offering was done with no general solicitation or advertising by us. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Act for this transaction.




Item 3.  Defaults Upon Senior Securities





During the three months ended June 30, 2009 the Company borrowed a total of $82,500 pursuant to several convertible notes payable. The notes are due 180 days from the date of issuance and bear an interest rate of 10% per annum. Accrued interest at March 31 2010 and December 31, 2009 amounted to $7,632 and $5,552, respectively. The notes are convertible at the request of the holder at a fixed price of $1.00 per share of common stock. The notes are currently in default.




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Item 4.  Removed and Reserved








Item 5.  Other Information





None.




Item 6.  Exhibits





Regulation

S-B Number
Exhibit31.1
Certification of the Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
Certification of the Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act





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SIGNATURES





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








DATE: May 24, 2010
IMMUNOBIOTICS, INC.

(Registrant)By:
/s/ Thomas LaheyThomas Lahey

Chairman, Chief Executive Officer and President

(Principal Executive Officer)




By:
/s/ Vithal J. RajadhyakshaVithal J. Rajadhyaksha

Chief Financial Officer

(Principal Financial Officer)