NOTE
2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
of June 30, 2019, the Company had cash of $45,279 and a negative working capital of $656,908. As of June 30, 2019, the Company
has not yet generated any revenues, and has incurred cumulative net losses of $704,533. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern.
As
of June 30, 2019, the Company has raised a net of $444,455 from issuance of debt in form of convertible notes, but no cash proceeds
from the issuance of common stock. The Company is aware that its current cash on hand will not be sufficient to fund its projected
operating requirements through the month of September 2019 and is pursuing alternative opportunities to funding.
The
Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance
that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete
its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have
to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient
additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Accordingly,
the accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the
Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The
carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable
or settlement values. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE
3 – CONVERTIBLE NOTES PAYABLE
As
long as the following convertible notes remain outstanding, the Company cannot amend its charter in any matter that materially
effects rights of noteholders, repay or repurchase more than de minimis number of shares of common stock other than conversion
or warrant shares, repay or repurchase all or any portion of any indebtedness, or pay cash dividends.
Auctus
Note #1
On
October 24, 2018 (the “Date of Issuance”) the Company issued a convertible promissory note (the “Auctus
Note #1”) with a face value of $250,000, maturing on October 23, 2019, and a stated interest of 8% to a third-party investor.
The Auctus Note #1 is convertible into common stock of the Company, par value $.001 per share (the “Common Stock”)
at any time after the earlier of: (i) 180 days from the date of the Auctus Note #1, or (ii) upon effective date of a registration
statement. The conversion price of the Auctus Note #1 is equal to the lesser of: (i) the lowest trading price for the twenty-day
period prior to the date of the Auctus Note #1 or (ii) 65% of the average of the three lowest trading prices during the twenty
days prior to a conversion notice on the applicable trading market or the closing bid price on the applicable trading market.
The Auctus Note #1 was funded on October 29, 2018, when the Company received proceeds of $222,205, after disbursements for the
lender’s transaction costs, fees and expenses which in aggregate resulted in a total discount of $27,795 to be amortized to interest
expense over the life of the Auctus Note #1.
Additionally,
the variable conversion rate component requires that the Auctus Note #1 be valued at its stock redemption value (i.e., “if-converted” value)
pursuant to
ASC 480, Distinguishing Liabilities from Equity
, with the excess over the undiscounted face value being
deemed a premium to be added to the principal balance and accreted to additional paid-in capital over the life of the Auctus Note
#1. As such, the Company recorded a premium of $343,796 as a reduction to additional paid-in capital based on a discounted “if-converted” rate
of $0.21 per share (65% of the average of the three lowest trading prices during the 20 days preceding the note’s issuance), which
computed to 1,211,828 shares of ‘if-converted’ common stock with a redemption value of $593,796 due to $0.49 per share fair market
value of the Company’s stock on the Auctus Note #1’s date of issuance. Debt discount amortization is recorded as interest expense,
while debt premium accretion is recorded as an increase to additional paid-in capital. During the six months ended June 30, 2019,
the Company amortized $13,902 debt discount to operations as interest expense, and accreted $183,544 of premium to additional
paid-in capital.
Along
with the Auctus Note #1, on the Date of Issuance the Company issued 208,333 Common Stock Purchase Warrants (the “Warrants”),
exercisable immediately at a fixed exercise price of $0.60 with an expiration date of October 23, 2023. The Company has
determined that the Warrants are exempt from derivative accounting and were valued at $101,937 on the Date of Inception using
the Black Scholes Options Pricing Model. Assumptions used for the Black Scholes Options Pricing Model include (1) stock
price of $0.49 per share, (2) exercise price of $0.60 per share, (3) term of 5 years, (4) expected volatility of 251% and (5)
risk free interest rate of 2.51%. The note proceeds of $250,000 were then allocated between the fair value of the Auctus
Note #1 ($250,000) and the Warrants ($101,937), resulting in a debt discount of $72,412. As the warrants were exercisable
immediately, this debt discount was amortized in its entirety to interest expense on the Date of Issuance.
Auctus
Note #2
On
February 25, 2019, the Company entered into a $250,000 Senior Secured Promissory Note (“the Auctus Note #2”), dated
February 25, 2019 at an interest rate of 8% per annum, maturing on February 24, 2020 (the “Maturity Date”). Issuance
fees totaling $27,750 were recorded as a debt discount, resulting in net proceeds of $222,250. The Auctus Note #2 is convertible
into common stock of the Company, par value $.001 per share (the “Common Stock”) at any time after the earlier of:
(i) 180 days from the date of the Auctus Note #2 or (ii) upon effective date of a new registration statement. The conversion price
of the Auctus Note #2 is equal to the lesser of: (i) the lowest trading price for the twenty-day period prior to the date of the
Auctus Note #2 or (ii) 65% of the average of the three lowest trading prices during the twenty days prior to a conversion notice
on the applicable trading market or the closing bid price on the applicable trading market. The Company may prepay the Auctus
Note #2 at any time at a rate of 120% of outstanding principal and interest during the first 90 days it is outstanding and 130%
of outstanding principal and interest for the next 90 days thereafter. Thereafter the prepayment amount increases 5% for each
thirty-day period until 270 days from the issue date at which time it is fixed at 150% of the outstanding principal and interest
on the Auctus Note #2.
Once
the conversion feature is triggered, the Company will apply the provisions of ASC 480,
Distinguishing Liabilities from Equity
,
with the excess over the note’s undiscounted face value being deemed a premium to be added to the principal balance and
amortized to additional paid-in capital over the life of the note. Based on the classification of the debt instrument, it was
determined that derivative treatment is not a factor due to the ASC 480 treatment.
Along
with the the Auctus Note #2, on the Date of Issuance the Company issued 208,333 Common Stock Purchase Warrants (the “Warrants”),
exercisable immediately at a fixed exercise price of $0.60 with an expiration date of February 24, 2024. The Company has
determined that the Warrants are exempt from derivative accounting and were valued at $55,417 on the Date of Inception using the
Black Scholes Options Pricing Model. Assumptions used for the Black Scholes Options Pricing Model include (1) stock price
of $0.27 per share, (2) exercise price of $0.60 per share, (3) term of 5 years, (4) expected volatility of 323% and (5) risk free
interest rate of 2.56%. The Auctus Note #2 proceeds of $250,000 were then allocated between the fair value of the Auctus
Note #2 ($250,000) and the Warrants ($55,417), resulting in a debt discount of $45,361. As the warrants are exercisable immediately,
this debt discount was amortized in its entirety to issuance of warrants (other expenses) on the Date of Issuance. During the
six months ended June 30, 2019, the Company recorded $9,428 in amortization of debt discount.
Convertible
notes payable consists of the following at June 30, 2019 and December 31, 2018:
|
|
|
June 30,
2019
|
|
|
December 31,
2018
|
|
|
Principal balance
|
|
$
|
500,000
|
|
|
$
|
250,000
|
|
|
Unamortized debt discount
|
|
|
(27,042
|
)
|
|
|
(22,622
|
)
|
|
Unamortized debt premium
|
|
|
160,252
|
|
|
|
-
|
|
|
Outstanding, net of debt discount and premium
|
|
$
|
633,210
|
|
|
$
|
227,378
|
|
NOTE
4 – STOCKHOLDERS’ EQUITY
At
a Board of Director’s Meeting on July 30, 2018, the Company authorized a reverse split that resulted in a reduction of the
number of outstanding and issued shares of both common and preferred stock so that after the split became effective on August
13, 2018, the shares of both common and preferred stock were reduced to 1 share for each 30 shares currently issued and outstanding.
The effect on the Balance Sheet is a transfer of value from stock value at par to Additional Paid-in Capital.
As
a result of the one (1) for thirty (30) reverse stock split, the Company will continue to be authorized to issue 300,000,000 shares
of Common Stock.
Preferred
stock
As
of June 30, 2019, no preferred shares have been designated or issued.
Common
stock
On
May 30, 2019, 25,000 shares of common stock were issued as a result of conversion of accrued interest on the Auctus Note #1 at
$0.20 per share for a total of $5,000 (see Note 3).
As
of June 30, 2019, the Company has 85,128,673 shares of common stock issued and outstanding.
Common
Stock Warrants
The
following table summarizes the Company’s common stock warrant activity for the 3-months ended June 30, 2019 and the year
ended December 31, 2018 (see Note 3):
|
|
|
|
|
|
Weighted Average
|
|
|
Weighted-Average Remaining
|
|
|
|
|
Warrants
|
|
|
Exercise
Price
|
|
|
Expected
Term
|
|
|
Outstanding as of January 1, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
Granted
|
|
|
208,333
|
|
|
|
0.60
|
|
|
|
5.0
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Forfeited/Canceled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding as of December 31, 2018
|
|
|
208,333
|
|
|
$
|
0.60
|
|
|
|
4.6
|
|
|
Granted
|
|
|
208,333
|
|
|
|
0.60
|
|
|
|
5.0
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Forfeited/Canceled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding as of June 30, 2019
|
|
|
416,666
|
|
|
$
|
0.60
|
|
|
|
4.5
|
|
NOTE
5 – COMMITMENTS AND CONTINGENCIES
Employment
contracts
The
Company’s executive officers have entered employment contracts and confidentiality, non-disclosure and assignment of invention
agreements. The employment agreements do not provide for the payment of any compensation to our executive officers but provide
for the payment of $100,000 in severance upon termination of employment without cause and make no provisions for any payment upon
a change of control.
Litigation
In
the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary
course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees
for such matters are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.
NOTE
6 – SUBSEQUENT EVENTS
The
Company has evaluated events from June 30, 2019 through the date the financial statements were issued. The events requiring disclosure
for this period are as follows;
On
July 22, 2019, effective July 15, 2019, the Company and Cynthia Tsai (“the Advisor”), entered into an agreement whereby
the Advisor will assist the Company with its strategic planning, introduction to key relationships in the biotechnology industry
and development of relationships with potential investors and investment bankers. The term of the agreement is for three months
unless earlier terminated. The Company agreed to pay the Advisor a fee of $1,500 per month and initially issue the Advisor 100,000
shares of its restricted common stock and 50,000 shares every three months thereafter, prorated if earlier terminated.
On
July 22, 2019, effective July 15, 2019, the Company and Johnathan Barkman (“the Advisor”), entered into an agreement
whereby the Advisor will assist the Company with market insight guidance, capital markets promotion and development, , and financing
strategies. The Advisor will also help build market awareness with potential accredited investors, funds, traders and broker dealers
with whom the Advisor has maintained a longstanding relationship and introduce the Company to such individuals and entities. The
term of the agreement is for three months unless earlier terminated. The Company agreed to pay the Advisor a fee of $1,500 per
month and initially issue the Advisor 100,000 shares of its restricted common stock and 50,000 shares every three months thereafter,
prorated if earlier terminated.
On
July 18, 2019, an additional of 25,000 shares of common stock were issued as a result of conversion of $5,000 in accrued interest
for the Auctus #1 Convertible Note at $0.20 per share.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
following discussion and analysis is based on, and should be read in conjunction with, the audited financial statements and the
notes thereto for the period since the inception of the Company through December 31, 2018 included in our Annual Report on Form
10-K as filed with the Securities and Exchange Commission on March 13, 2019. This discussion contains forward-looking statements.
These statements are often identified by the use of words such as “may,” “will,” “expect,”
“believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,”
and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that
could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such
forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the
date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change.
However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention
of doing so, except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements
as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Overview
We do not currently have
sufficient capital resources to fund operations. To stay in business and to continue the development of our products, we will need
to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination
of the foregoing. We believe that if we can raise $10.000,000 in our currently effective public offering, we will have sufficient
working capital to repay the two Auctus Notes and develop our business over the next approximately 15 to 18 months. At funding
raised that is significantly less than $10,000,000, we can likely repay the two Auctus Notes and continue to develop our business
over the same 15-18 months period, but funding at that level will delay the development of our technology and business.
Bioxytran,
Inc. is headquartered in Newton, Massachusetts. The Company’s initial product pipeline is focused on developing and commercializing
therapeutic molecules for stroke and wound healing. BXT-25 will be designed to be an injectable anti-necrosis drug specifically
designed to treat a person immediately after that person suffers an ischemic stroke. The drug is designed to be injected intravenously
to travel to the lungs to pick up oxygen molecules to carry to the brain. Like a red blood cell, the drug will cross the blood
brain barrier, which is a protective semi-permeable membrane allowing some material to cross but preventing others from crossing.
BXT-25 will be designed to diffuse oxygen into the brain tissues. We expect the BXT-25 molecule to be 5,000 times smaller than
a red blood cell.
Our
second product, BXT-252, will be designed to be an injectable anti-necrosis drug specifically designed to treat a wound that does
not heal because limited amount of oxygen reaching the wound. As is the case with BXT-25, we believe that BXT-252 will enable
the delivery of oxygen to tissue in conditions in which red blood cells do not, enabling wound healing by addressing the necrosis
problem.
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited
resources and operating history. As described in Note 3 of the financial statements, on October 24, 2018, we issued the first
of a two-tranche 8% convertible promissory note of $250,000 in gross proceeds (The Auctus Note #1). On February 25, 2019, we issued
the second tranche 8% convertible promissory note of $250,000 in gross proceeds (the Auctus Note #2), in order to finance the
Company until we start raising equity. As shown in the accompanying financial statements, the Company had an accumulated deficit
of $704,533 as of June 30, 2019. The accumulated deficit as of December 31, 2018 was $382,830.
The
future of the Company is dependent upon its ability to obtain financing to develop its new business opportunities and support
the cost of the drug development including clinical trials and regulatory submission to the FDA.
Management
plans to seek additional capital through private placements and public offerings of its common stock. There can be no assurance
that the Company will be successful in accomplishing its objectives. Without such additional capital or the establishment of strategic
relationships with established pharmaceutical companies, the Company may be required to cease operations. These conditions raise
substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities
that might be necessary in the event the Company cannot continue operations.
Results
of Operations for the three months ended June 30, 2019
We
are a start-up company. Historically, Bioxytran was engaged in formation, fund raising and identifying and consulting with the
scientific community regarding the development, formulation and testing of its products.
General
and Administrative
General
and administrative (G&A) expenses for the three months ended June 30, 2019 were $106,498, while for the three months ended
June 30, 2018, they were $275. The Company only started its activities in October 2018. The components of G&A expenses are
as follows:
|
|
-
|
Payroll
and related expenses for the three months ended June 30, 2019 were $16,450, while there
were no expenses for payroll for the three months ended June 30, 2018.
|
|
|
-
|
Costs
for legal, accounting and other professional services for the three months ended June
30, 2019 were $56,632, while there were no expenses for professional services for the
three months ended June 30, 2018.
|
|
|
-
|
Sales
and marketing expense for the three months ended June 30, 2019 were $11,173, while there
were no expenses for professional services for the three months ended June 30, 2018.
|
|
|
-
|
The
remaining miscellaneous G&A expenses totaled $22,243 for the three months ended June
30, 2019, as compared to $275 for the three months ended June 30, 2018.
|
Interest
Expense and Amortization of Debt Discount and Premium
During
the three months ended June 30, 2019, the Company recorded $123,276 of premium accretion to additional paid-in capital, and $13,794
in amortization of debt discount to interest expense. The interest for the two convertible notes outstanding amounted to $10,002.
There were no expenses for debt discount and interest for the three months ended June 30, 2018. The Company only started its activities
in October 2018.
Net
Loss
The
Company generated a net loss for the three months ended June 30, 2019 of $130,294. In comparison, for the three months ended June
30, 2018, the Company generated a net loss of $275. The increased loss is mainly linked to current quarter costs for legal, accounting
and other professional services for the S-1 application and subsequent amendments that were filed with the SEC, as well as the
amortization of debt discounts applied to warrants issued in connection with convertible debt and the related loan fees.
Results
of Operations for the six months ended June 30, 2019
We
are a start-up company. Historically, Bioxytran was engaged in formation, fund raising and identifying and consulting with the
scientific community regarding the development, formulation and testing of its products.
General
and Administrative
General
and administrative (G&A) expenses for the six months ended June 30, 2019 were $236,123, while for the six months ended June
30, 2018, they were $945. The Company only started its activities in October 2018. The components of G&A expenses are as follows:
|
|
-
|
Payroll
and related expenses for the six months ended June 30, 2019 were $66,958, while there
were no expenses for payroll for the six months ended June 30, 2018.
|
|
|
-
|
Costs
for legal, accounting and other professional services for the six months ended June 30,
2019 were $97,443, while there were no expenses for professional services for the six
months ended June 30, 2018.
|
|
|
-
|
Sales
and marketing expense for the six months ended June 30, 2019 were $28,223, while there
were no expenses for professional services for the six months ended June 30, 2018.
|
|
|
-
|
The
remaining miscellaneous G&A expenses totaled $43,499 for the six months ended June
30, 2019, as compared to $945 for the six months ended June 30, 2018.
|
Interest
Expense, Amortization of Debt Discount and Premium and Issuance of Warrants
During
the six months ended June 30, 2019, the Company recorded $183,544 of premium accretion to additional paid-in capital, and $23,330
in amortization of debt discount to interest expense. The interest for the two convertible notes outstanding amounted to $16,889.
There were no expenses for debt discount and interest for the six months ended June 30, 2018. The issuance of warrants in connection
with convertible debt resulted in a debt discount of $45,361, immediately allocated as interest expense. The Company only started
its activities in October 2018.
Net
Loss
The
Company generated a net loss for the six months ended June 30, 2019 of $321,703. In comparison, for the six months ended June
30, 2018, the Company generated a net loss of $945. The increased loss is mainly linked to current quarter costs for legal, accounting
and other professional services for the S-1 application and subsequent amendments that were filed with the SEC, as well as the
amortization of debt discounts applied to warrants issued in connection with convertible debt and the related loan fees.
Cash-Flows
Net
cash used in operating activities was $213,382 and $75 for the six months ended June 30, 2019 and 2018, respectively. The Company
only started its activities in October 2018.
The
Company did not engage in any investing activities during the six months ended June 30, 2019 or 2018.
Cash
flows from financing activities were $222,250 and $0 for the six months ended June 30, 2019 and 2018. The Company only started
its activities in October 2018.
LIQUIDITY
AND CAPITAL RESOURCES
As
of June 30, 2019, our only asset was $45,279 in cash. We had total liabilities of $702,187, which were all current liabilities,
and which consisted of $68,977 in accounts payable and accrued expenses, and $633,210 in the form of a convertible loan of $250,000,
maturing on October 23, 2019, and a second convertible loan of $250,000, maturing on February 24, 2020 (which include, in the
aggregate, unamortized debt premium of $160,252, and which has been netted with unamortized debt discounts totaling $27,042).
The equivalent numbers at December 31, 2018, were $36,411 in cash and total liabilities of $261,725, which were all current liabilities,
and which consisted of $23,447 in accounts payable and accrued expenses, $10,900 in accounts payable to related parties, and $227,378
(net of $22,622 in unamortized debt discounts) in the form of a convertible loan, maturing on October 23, 2019.
At
June 30, 2019, we had total working capital of negative $656,908 and an accumulated deficit of $704,533. Comparatively, on December
31, 2018, we had total working capital of negative $225,314 and an accumulated deficit of $382,830. We believe that we must raise
not less than $2,700,000 in our currently effective public offering in addition to current cash on hand to be able to continue
our business operations for approximately the next 15 to 18 months and repay the two Auctus Notes.
Net
cash used in operating activities was $213,382 and $75 for the six months ended June 30, 2019 and 2018, respectively. We did not
engage in any investing activities during the six months ended June 30, 2019 or 2018. Cash flows from financing activities were
$222,250 and $0 for the six months ended June 30, 2019 and 2018. The net increase in cash was $8,868 for the six months ended
June 30, 2019, while there was a decrease of $75 for the six months ended June 30, 2018. The Company only started its activities
in October 2018.
We
have no current commitment from our officers and directors or any of our shareholders, to supplement our operations or provide
us with financing in the future. If we are unable to raise additional capital from conventional sources and/or additional sales
of stock in the future, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the
failure to obtain financing could have a substantial adverse effect on our business and financial results. In the future, we may
be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring
cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if
accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts
or on terms acceptable to us, or at all.
Contractual
Obligations
Our
contractual obligations include two convertible notes, each of $250,000, described under Note 3 to the Financial Statements.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect
on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL
ACCOUNTING POLICIES
In
presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates
and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate
to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot
be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant
unfavorable change to current conditions, it could result in a material adverse impact to our results of operations, financial
position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the
most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments
that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a
fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial
statements using accounting policies that are not particularly subjective, nor complex.
Stock
Based Compensation
The
Company has share-based compensation plans under which non-employees, consultants and suppliers may be granted restricted stock,
as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation
cost is measured by the Company at the grant date, based on the fair value of the award over the requisite service period. For
options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related
period of benefit. Grants of stock options and stock to non-employees and other parties are accounted for in accordance with ASC
505.
The
Company applies ASC 718 for options, common stock and other equity-based grants to its employees and directors. ASC 718 requires
measurement of all employee equity-based payment awards using a fair-value method and recording of such expense in the consolidated
financial statements over the requisite service period. The fair value concepts have not changed significantly in ASC 718; however,
in adopting this standard, companies must choose among alternative valuation models and amortization assumptions. After assessing
alternative valuation models and amortization assumptions, the Company will continue using both the Black-Scholes valuation model
and straight-line amortization of compensation expense over the requisite service period for each separately vesting portion of
the grant.