Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company’s condensed consolidated balance sheets as of September 30, 2016 and December 31, 2015 and the related condensed consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015 and the related condensed consolidated statements of cash flows for the nine months ended September 30, 2016 and 2015, included elsewhere in this report. This discussion contains forward-looking statements, the accuracy of which involves risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons including, but not limited to, those discussed under the heading “Forward Looking Statements” below and elsewhere in this report. We disclaim any obligation to update information contained in any forward-looking statements.
Overall Business Strategy
CurAegis Technologies, Inc. (“CurAegis”, “the Company”) was incorporated as a New York business corporation on September 25, 1996 under the name Torvec, Inc. The Company’s name was changed from Torvec, Inc. to CurAegis Technologies, Inc. in June 2016 in connection with the establishment of its two business divisions. The CURA division is engaged in the fatigue management business, and the Aegis division is engaged in the power and hydraulic business.
The Company develops and markets advanced technologies in the areas of power, safety and wellness. The Company is focused on the commercialization of a wellness and safety system (the CURA system and the myCadian watch) and a uniquely designed hydraulic pump that will be smaller, lighter and more efficient than current technology. The Company has not had any significant revenue-producing operations.
The Company has created the CURA system to develop and market products that reduce fatigue risk in the workplace and help individuals manage their sleep and improve alertness. The CURA system will comprise the following:
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real-time alertness monitoring using the myCadian watch,
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panic button and man down system,
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the Z-Coach wellness program and
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exercise and nutrition modules.
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The Aegis hydraulic pump is an innovative hydraulic design, the goal of which is to deliver better efficiencies in a package that is smaller and lighter than existing technologies.
It is important to note, regarding both the CURA and Aegis products, that the cycle time from the initiation of the sales process to revenue realization can be highly variable especially for a start-up entity. In addition to the activities to be undertaken by us to implement our plan of operation detailed below, we may expand and/or refocus our marketing activities depending upon future circumstances and developments.
Information regarding the Company and all of our inventions, including regular updates on technological and business developments, can be found on our website www.curaegis.com. The website and its contents are not incorporated by reference into this report.
CURA Division: the CURA™ System
The Company’s CURA division is developing a proprietary technology and suite of products designed to (i) measure the decrease in a person’s alertness and (ii) to train individuals on how to improve alertness levels. The CURA system and the myCadian watch will enable the user and third parties to anticipate and avert undesired or disastrous situations caused by the degradation of alertness. With the information provided from the CURA software analytics, employees can work with Z-Coach, our proprietary sleep training and education solution, to correct sleep issues and improve overall wellness.
CurAegis has engaged a number of sleep study experts and neurologists to assist with the analysis and validation of our new technologies. The Company believes a solutions approach can be created to indicate a “degradation of alertness” and thus give immediate and important information to the user and other parties. Action taken upon a warning of a change in alertness will lead to a better and safer environment. The myCadian watch paired with the CURA software is designed to be a real time alertness and emergency monitoring system that addresses sleep and fatigue management solutions. This is especially important when an individual’s alertness is essential in properly performing tasks, fulfilling responsibilities and averting disasters. The Company has filed for patent protection for these inventions.
The myCadian watch is a wearable device developed using physiological monitoring hardware and our proprietary CURA (Circadian User Risk Assessment) software and is designed to detect a degradation of alertness in a user and reveal sleep and fatigue problems. The myCadian watch will contain an emergency notification function through the use of a panic button or in sensing a lack of motion would generate a third party panic notification. The CURA system will include:
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a proprietary tool that combines signal processing and pattern recognition to guide users and third parties about the alertness of the wearer,
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a risk assessment that identifies the degradation of alertness potentially affecting the wearer’s ability to perform tasks,
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a comprehensive assessment for wellness, alertness and sleep,
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real-time reporting that distills complex data into actionable information on mobile and desktop platforms,
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predictive reporting for a user to take action when alertness begins to wane - before fatigue becomes dangerous,
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flexible settings to provide employers a customized tool within existing safety definitions and to create protocols for a unique environment and
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pricing that makes it affordable across a broad based workforce.
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Management is developing marketing and sales programs in support of beta trials planned for the fourth quarter of 2016. The beta trials will include multiple industry instances in an active user program to compare and align the user experience with our product definitions and objectives.
The Company has invested in controlled clinical studies at the Sleep and Chronobiology Laboratory at the University of Colorado-Boulder using scientifically validated studies. We have calibrated our proprietary technologies and algorithms to these studies. The Company is currently completing controlled studies at the University of Rochester Medical Center to validate the accuracy of myCadian data.
The Z-Coach e-learning tool is a critical component of the CURA system and was originally created by highly respected fatigue management scientists. We acquired the Z-Coach e-learning tool in September 2015. Z-Coach learning topics include: Risks and Costs of Fatigue, Fundamentals of Sleep, Fatigue Mitigation and Countermeasures. Z-Coach participants gain an awareness of the dangers inherent in the lack of sleep and learn to utilize lifestyle tools to make changes to improve their health, mood, productivity and safety. The first Z-Coach e-learning module, Z-Coach Aviation, has been designed for aviation professionals, from flight and ground crews, to scheduling, dispatch, administration and management. Z-Coach Aviation was first offered for sale in the first quarter of 2016. During the third quarter of 2016, the Company completed the design and development of the Z-Coach Pro module which will be marketed to a broad range of organizations for fatigue learning and mitigation. The Company is currently developing Z-Coach modules tailored to the trucking and busing industry, to first responders, 911 operations and other municipal employee groups as well as to medical industries. These industry-specific Z-Coach modules will be included in the launch of the CURA™ system and the myCadian™ watch.
Aegis Division: Hydraulic Pump
The development of our hydraulic pump has taken on added significance in light of U.S. government emissions regulations for off road diesel engines. To help achieve these standards, companies are attempting to run diesel engines, and their hydraulic pumps, at lower rotational speeds. This requires larger displacement hydraulic pumps to be installed to compensate for the decrease in rotational speed. Among other advantages, the Aegis hydraulic pump technology allows a larger displacement pump to fit into the same or smaller footprint than that of existing pumps. This enables manufacturers to keep the current equipment layout without the need for expensive modifications to accommodate larger hydraulic pumps.
Our goal with the Aegis hydraulic pump technology is to bring to the marketplace a revolutionary new concept in hydraulic pumps and motors that will be:
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smaller and lighter than conventional pumps and motors,
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unique in its ability to scale larger, allowing more powerful pumps and motors.
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Since 2012, we have invested in software, test equipment and personnel to enhance our development efforts and begun a redesign of the hydraulic pump to improve the overall performance while maintaining the advantages we have in size and weight. We have built our own testing facility, which would have otherwise taken place at a third party testing facility. Our engineer and design team has progressively made adjustments to the valve sealing design and each change has resulted in an improvement in the measured efficiency of the pump. We have filed for patent protection for our novel non-rotating group pump concept, and we are also working on additional patents as a result of engineering breakthroughs in our design process.
In the second quarter of 2016, the Company submitted the Aegis hydraulic pump for testing at the Fluid Power Institute at the Milwaukee School of Engineering (“MSOE”). The MSOE research laboratories provide custom in-depth testing, systems analysis solutions, and evaluations. The Aegis pump evaluated by MSOE was our test pump, not a production prototype, thus the tested unit was not completely optimized. The MSOE test results demonstrated that our pump can achieve the high speed and pressure levels needed and should result in greater efficiencies and power density than current axial piston hydraulic pumps in the market. We also believe the testing at MSOE confirmed our test stand accuracy and the mathematical models used in our design development. Our next steps will be to begin the manufacture of a production prototype in tandem with a potential customer thereby designing to a specific customer application. Management believes that the manufacture of a production prototype should be completed in 2017.
Three Month Periods Ended September 30, 2016 and 2015
The Company recorded $14,000 in revenue during the three-month period ended September 30, 2016. There was no revenue earned during the three months ended September 30, 2015. The Company began offering the Z-Coach aviation wellness program in February of 2016. The Z-Coach wellness program provides fatigue safety training over an annual subscription period of twelve months. This allows the user unlimited access during the annual subscription period. Customers are billed at the acceptance of the subscription and revenue is recognized ratably over the subscription period as our performance obligations are satisfied and when collection is reasonably assured.
During the three months ended September 30, 2016, we sold fifty-eight Z-Coach aviation subscriptions to four customers resulting in total customer sales of $12,000. In anticipation of the launch of the CURA system, the Company reduced the price of the Z-Coach subscription fees effective October 1, 2016. In connection with this pricing strategy, customers that are still within their initial subscription year will receive a credit against future purchases of Z-Coach or the CURA system measured at this lower pro-rated price. During the third quarter of 2016, the Company reclassified $26,000 from deferred revenue to other current liabilities in connection with this sales strategy. As of September 30, 2016, the Company has deferred revenue of $14,000 attributed to Z-Coach subscription revenue that will be recognized ratably over the next twelve months as our performance obligations are satisfied.
The Company recorded $35,000 in cost of revenue during the three-month period ended September 30, 2016 attributed to the Z-Coach subscriptions reflecting software amortization of $30,000 and hosting fees of $6,000. Software amortization reflected in cost of revenue is based upon the straight line amortization of the capitalized software over is estimated useful life of 36 months. The Company has engaged a third party to provide hosting of the Z-Coach on-line subscriptions for the twelve-month period from February 2016 through January 2017. The Company has paid $22,500 to this provider and is recognizing hosting expense as a product cost over the twelve-month contract period.
Research and development expenses for the three months ended September 30, 2016 amounted to $365,000 as compared to $371,000 for the comparable period in 2015. Non-cash stock-based compensation expense attributable to stock options for the three months ended September 30, 2016 was $7,000, compared with $2,000 for the three months ended September 30, 2015. The increase in stock compensation expense reflects new grants of employee stock options in 2015 and 2016. Excluding the non-cash stock-based compensation expense, research and development expenses decreased by $11,000 for the three-month period ended September 30, 2016 compared to the third quarter of 2015. The CURA spending in 2016 is primarily from investments in (i) outside consulting services in the technical developmental of the myCadian watch and CURA software, (ii) purchase of components and materials and (iii) engineering salaries and benefits.
General and administrative expense for the three months ended September 30, 2016 amounted to $540,000 compared to $532,000 for the comparable period in 2015. Non-cash stock-based compensation expense for the three month periods ended September 30, 2016 and September 30, 2015 was $17,000 and $ 249,000, respectively. Excluding the non-cash stock-based compensation expense, general and administrative expense for the third quarter of 2016 amounted to $523,000 compared to $283,000 in the comparable period in 2015. The increase of $240,000 of spending in 2016 is attributed to new hires and an increase in professional fees associated with business growth.
The loss from operations for the three-month period ended September 30, 2016 was $926,000, compared with a loss from operations in the comparable period in 2015 of $903,000. Other income (expense) reflects interest expense accrued on the newly issued 6% convertible notes issued in August 2016. During the three-month period ended September 30, 2015, the Company recognized gains on the disposition of certain property and equipment no longer used in the business. Preferred stock dividends amounted to $62,000 and $64,000 in each of the quarters ended September 30, 2016 and 2015, respectively.
In connection with the issuance of the 1,204,000 shares of Series C-3 Preferred stock during the three months ended September 30, 2016, the Company valued the non-cash beneficial conversion feature associated with the right to convert the shares into common stock on a one-for-one basis. We compared the fair value of our common stock on the date of issuance with the effective conversion price, and determined that the value of the non-cash beneficial conversion feature was $285,000, which was recorded in the third quarter of 2016 and is reflected in our condensed consolidated statements of operations for the period ended September 30, 2016 as an adjustment to arrive at the net loss attributable to common stockholders.
The net loss attributable to common stockholders for the three-month period ended September 30, 2016 was $1,294,000 as compared to a net loss attributable to common stockholders $964,000 for the three months ended September 30, 2015. The weighted average diluted common shares outstanding amounted to 46,108,000 and 45,754,000 for the three month periods ended September 30, 2016 and 2015, respectively. Basic and diluted loss per common share for the three month periods ended September 30, 2016 and 2015 were $0.03 and $0.02, respectively.
Nine Month Periods Ended September 30, 2016 and 2015
The Company recorded $20,000 in revenue during the nine-month period ended September 30, 2016. There was no revenue earned during the nine months ended September 30, 2015. The Company began offering the Z-Coach aviation wellness program in February of 2016. The Z-Coach wellness program provides fatigue safety training over an annual subscription period of twelve months. This allows the user unlimited access during the annual subscription period. Customers are billed at the acceptance of the subscription and revenue is recognized ratably over the subscription period as our performance obligations are satisfied and when collection is reasonably assured.
During the nine months ended September 30, 2016, two hundred and seventy-six Z-Coach aviation subscriptions were sold to twelve customers resulting in total customer sales of $59,000 of which $20,000 has been recognized as income year to date. In anticipation of the launch of the CURA system, the Company reduced the price of the Z-Coach subscription fees effective October 1, 2016. In connection with this pricing strategy, customers that are still within their initial subscription year will receive a credit against future purchases of Z-Coach or the CURA system measured at this lower pro-rated price. During the third quarter of 2016, the Company reclassified $26,000 from deferred revenue to other current liabilities in connection with this sales strategy. As of September 30, 2016, the Company has deferred revenue of $14,000 attributed to Z-Coach subscription revenue that will be recognized ratably over the next twelve months as our performance obligations are satisfied.
The Company recorded $92,000 of cost of revenue during the nine month periods ended September 30, 2016 related to Z-Coach aviation subscriptions. During the nine months ended September 30, 2016, software amortization of $77,000 and hosting fees of $15,000 are reflected in cost of revenue. Software amortization is based upon the straight line amortization of the capitalized software over is estimated useful life of 36 months. The Company has engaged a third party to provide hosting of the Z-Coach on-line subscriptions for the twelve-month period from February 2016 through January 2017. The Company has paid $22,500 to this provider and is recognizing hosting expense as a product cost over the twelve-month contract period.
Research and development expenses for the nine months ended September 30, 2016 amounted to $1,331,000 as compared to $960,000 for the comparable period in 2015. Non-cash stock-based compensation expense attributable to stock options for the nine months ended September 30, 2016 was $20,000, compared with $7,000 for the nine months ended September 30, 2015. The increase in stock compensation expense reflects the grant of employee stock options in the nine months ended September 30, 2016. Excluding the non-cash stock-based compensation expense, research and development expenses increased by $358,000 for the nine-month period ended September 30, 2016 compared to the comparable period in 2015. The increased spending in 2016 is attributable to (i) outside consulting services in the technical developmental of the myCadian watch and CURA software, (ii) purchase of components and materials and (iii) an increase in engineering salaries and benefits during the third half of 2015 and the first half of 2016.
General and administrative expense for the nine months ended September 30, 2016 amounted to $1,535,000 compared to $1,063,000 for the comparable period in 2015. Non-cash stock-based compensation expense for the nine months ended September 30, 2016 was $80,000 compared to $342,000 for the nine months ended September 30, 2015. The decrease in stock compensation expense reflects the vesting of certain grants made in the third quarter of 2015. Excluding the non-cash stock-based compensation expense, general and administrative expense for the nine months ended September 30, 2016 amounted to $1,455,000 compared to $721,000 in the comparable period in 2015. The increase of $734,000 of spending in 2016 is attributed to new hires during 2015 and the first half of 2016 and an increase in professional fees associated with business growth.
The loss from operations for the nine-month period ended September 30, 2016 was $2,938,000, compared with a loss from operations in the comparable period in 2015 of $2,023,000. Other income (expense) reflects interest expense accrued on the newly issued 6% convertible notes issued in August 2016. During the nine-month period ended September 30, 2015, the Company recognized gains on the disposition of certain property and equipment no longer used in the business. Preferred stock dividends amounted to $186,000 and $192,000 in each of the nine month periods ended September 30, 2016 and 2015, respectively.
In connection with the issuance of the 6,042,000 shares of Series C-3 Preferred stock, the Company valued the non-cash beneficial conversion feature associated with the right to convert the shares into common stock on a one-for-one basis. We compared the fair value of our common stock on the date of issuance with the effective conversion price, and determined that the value of the non-cash beneficial conversion feature was $885,000, and is reflected in our condensed consolidated statements of operations for the nine-month period ended September 30, 2016 as an adjustment to arrive at the net loss attributable to common stockholders.
The net loss attributable to common stockholders for the nine-month period ended September 30, 2016 was $4,028,000 as compared to a net loss attributable to common stockholders $2,184,000 for the nine months ended September 30, 2015. The weighted average diluted common shares outstanding amounted to 45,901,000 and 45,754,000 for each of the nine month periods ended September 30, 2016 and 2015, respectively. Basic and diluted loss per common share for the nine month periods ended September 30, 2016 and 2015 were $0.09 and $0.05 respectively.
Liquidity and Capital Resources
As of September 30, 2016, cash and cash equivalents totaled $1,069,000, a net decrease of $172,000 from the beginning of the period. During the nine months ended September 30, 2016, we used $2,585,000 of cash in operating activities. A net loss of $2,957,000 was adjusted for $243,000 in non-cash expenses for depreciation, amortization and stock-based compensation and $129,000 in changes in working capital components which resulted in $2,585,000 of cash used by operating activities. The increase in cash used in operations of $1,057,000 in 2016 over the comparable period in 2015 was driven by the increase in the net loss in the current period. In 2015, the net loss of $1,992,000 was adjusted for $433,000 in non-cash expenses for depreciation, amortization and stock-based compensation, $19,000 of gains on asset dispositions, $20,000 of bad debt recovery and $70,000 in changes in components of working capital.
We invested $68,000 in capitalized software and property and equipment in the nine months ended September 30, 2016 compared to the investment of $246,000 in the nine months ended September 30, 2015. The 2015 investments included $308,000 for the purchase of the Z-Coach fatigue management software offset by $62,000 in proceeds from the sales of fixed assets.
During the nine months ended September 30, 2016, the Company generated $2,481,000 in cash from financing activities. Net proceeds of $983,000 was generated from the issuance of the 6% senior convertible notes and $1,498,000 in net proceeds were generated from the issuance of the Series C-3 convertible preferred shares. During the nine-month period ended September 30, 2015, we used $4,000 in cash in the repayment on outstanding capital lease obligation.
Current Cash Outlook
Plans
As of September 30, 2016, we have cash on hand of $1,069,000, working capital of $823,000, stockholders’ equity of $1,200,000 and an accumulated deficit of $74,213,000. During the nine months ended September 30, 2016 we raised $1,510,500 through the sale of our Series C-3 preferred stock and $995,000 through the issuance of 6% senior convertible notes and warrants. The proceeds from these private placements are being used to support the ongoing development and marketing of our core technologies and product initiatives.
On December 8, 2015, the Company commenced the offering of up to ten million shares of its Series C-3 Voting Convertible Preferred stock with an offering price of $0.25 per share in a private placement pursuant to Rule 506(c) of Regulation D under the Securities Act of 1933. The offering was made only to “accredited investors” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933. The C-3 preferred stock offering expired on September 1, 2016.
On August 25, 2016 the Company commenced the sales of up to $3 million in senior convertible notes and warrants in a private placement pursuant to Rule 506(c) of Regulation D under the Securities Act of 1933. The offering has been made only to “accredited investors” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933. The Company closed on the sale of $995,000 of the senior convertible notes and warrants during the three-month period ended September 30, 2016.
Management will continue to use its best efforts to develop financing opportunities to fund the development and commercialization of the CURA and Aegis products. Management estimates that the 2016 cash needs, based on its current development and product plans, will be approximately $3.7 million. As of September 30, 2016, the Company’s cash and cash equivalents on hand may not be sufficient to cover the Company’s future working capital requirements. The Company’s ability to fund its current and future commitments out of its available cash depends on a number of factors. These factors include the Company’s ability to (i) launch and generate sales from the CURA division and; (ii) decrease research and overhead expenses. If these and other factors are not met and if the Company cannot generate sufficient cash from its operations, the Company would need to raise additional funds in the future in order to fund its working capital needs and pursue its growth strategy. Although there can be no assurances, management believes that sources for these additional funds will be available through either current or future investors.
Since inception, we have financed our operations by the sale of our securities and debt financings. We may need to raise additional funds in the future to fund our working capital needs, to fund more aggressive expansion of our business, to complete development, testing and marketing of our products, or to make strategic acquisitions or investments. We may require additional equity or debt financings, collaborative arrangements with corporate partners or funds from other sources for these purposes. No assurance can be given that necessary funds will be available for us to finance our development on acceptable terms, if at all. Furthermore, such additional financings may involve dilution of our shareholders or may require that we relinquish rights to certain of our technologies or products. In addition, we may experience operational difficulties and delays due to working capital restrictions. If adequate funds are not available from operations or additional sources of financing, we may have to delay or scale back our growth plans.
Critical Accounting Policies
Revenue Recognition
The Company began offering the Z-Coach aviation wellness program in the first quarter of 2016. The Z-Coach wellness program provides fatigue safety training over an annual subscription period of twelve months. The Z-Coach program allows the user unlimited access during the annual subscription period. Customers are billed at the acceptance of the subscription, and revenue is recognized ratably over the subscription period as our performance obligations are satisfied and when collection is reasonably assured. Our collection terms provide customers standard terms of net 30 days. Future performance obligations are reflected in deferred revenue.
Income Taxes
We account for income taxes using the asset and liability method, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax basis of our assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
We account for uncertain tax positions using a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax benefits that meet the more-likely-than-not recognition threshold should be measured as the largest amount of tax benefits, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement in the financial statements. It is our policy to recognize interest and penalties related to income tax matters as general and administrative expenses. As of September 30, 2016 and December 31, 2015, there were no accrued interest or penalties related to uncertain tax positions.
Stock-Based Compensation
FASB ASC 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their fair values on the grant date. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. In addition, the realization of tax benefits in excess of amounts recognized for financial reporting purposes will be recognized as a financing activity in accordance with FASB ASC 718-10.
No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for substantially all net deferred tax assets. We elected to adopt the alternative method of calculating the historical pool of windfall tax benefits as permitted by FASB ASC 718-10-65 (previously known as FASB Staff Position (FSP) No. SFAS 123(R)-c, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards”). This is a simplified method to determine the pool of windfall tax benefits that is used in determining the tax effects of stock compensation in the results of operations and cash flow reporting for awards that were outstanding as of the adoption of FASB ASC 718-10.
FASB ASC 505-50, “Equity-Based Payments to Non-Employees,” requires all share-based payments to non-employees, including grants of stock options, to be recognized in the condensed consolidated financial statements as compensation expense generally over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black-Scholes valuation model, we periodically reassess the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and we adjust the expense recognized in the consolidated financial statements accordingly.
FASB ASC 718-20 requires that modifications of the terms or conditions of equity awards be treated as an exchange of the original award for a new award. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified.
Safe Harbor
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This report contains certain forward-looking statements that are based on the beliefs of management as well as assumptions made by and information currently available to management. The statements contained in this report relating to matters that are not historical facts are forward-looking statements that involve risks and uncertainties, including, but not limited to, future demand for our products and services, the successful commercialization of our products, general domestic and global economic conditions, government and environmental regulations, competition and customer strategies, changes in our business strategy or development plans, capital deployment, business disruptions, including those caused by fires, raw material supplies, technical failures, environmental regulations, and other risks and uncertainties, certain of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those forward-looking statements set forth herein. When used in this report, the words “anticipate”, “believe”, “estimate” or “expect” or words of similar import are intended to identify forward-looking statements. For further discussion of certain of the matters described above and other risks and uncertainties, see “Risk Factors” in Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2015 filed with the Securities and Exchange Commission.
Undue reliance should not be placed on our forward-looking statements. Except as required by law, we disclaim any obligation to update any factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in this quarterly report on Form 10-Q to reflect new information, future events or other developments.