Note 2 – Going Concern and Management’s Plans
The Company has realized a cumulative
net loss of $1,308,971 for the period from inception (June 2, 2015) to March 31, 2017, has negative working capital of
$517,524, and no revenues. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern for a year following the issuance of these condensed consolidated financial statements. The Company has insufficient
revenue and capital commitments to fund the development of its planned products and to pay operating expenses.
3DIcon CORPORATION
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The ability of the Company to continue
as a going concern depends on the successful completion of the Company's capital raising efforts to fund the development of its
planned products. The Company intends to continue to raise additional capital through debt and equity financings. There is no assurance
that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations.
If the Company is unable to obtain such additional financing on a timely basis or, notwithstanding any request the Company may
make, the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes,
the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect
on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue
its operations and liquidate.
The accompanying condensed consolidated
financial statements have been prepared in conformity with U.S. GAAP, which contemplates the 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 condensed consolidated financial statements do not necessarily purport to represent realizable
or settlement values. The condensed consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Note 3 – Summary of Significant
Accounting Policies
Principles of Consolidation
The condensed consolidated balance sheets
as of March 31, 2017 and December 31, 2016 include the accounts of 3DIcon and its wholly owned subsidiary, Coretec. The condensed
consolidated statements of operations and cash flows for the three months ended March 31, 2017 include the accounts of 3DIcon and
its wholly owned subsidiary, Coretec. The condensed consolidated statements of operations and cash flows for the three months ended
March 31, 2016 include the historical results of Coretec prior to the completion of the reverse acquisition since it was determined
to be the accounting acquirer, and do not include the historical results of operations or cash flows for 3DIcon prior to the completion
of the acquisition. Intercompany transactions and balances have been eliminated in consolidation.
Reclassification
Certain amounts in prior periods have been
reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net loss.
Use of Estimates
The preparation of condensed consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could
differ from the estimates and assumptions used.
Long-Lived Assets
Long-lived assets, such as property and
equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment,
the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value.
If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment
is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation
techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary.
Fair Value of Financial Instruments
The following methods and assumptions were
used to estimate the fair value of each class of financial instrument held by the Company:
Current assets and current liabilities
- The carrying value approximates fair value due to the short maturity of these items.
|
Notes payable
-
|
The fair value of the Company's notes payable has been
estimated by the Company based upon the liability's characteristics, including interest rate. The carrying value approximates
fair value.
|
3DIcon CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Beneficial Conversion Feature of Convertible
Notes Payable
The Company accounts for convertible notes
payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options, Emerging Issues Task
Force ("EITF") 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios, and EITF 00-27, Application of Issue No 98-5 To Certain Convertible Instruments. The beneficial conversion feature
of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate
of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related
to the issuance of a convertible note when issued.
The beneficial conversion feature of a
convertible note is credited to additional paid-in-capital. The intrinsic value is recorded in the consolidated financial
statements as a debt discount and such discount is amortized over the expected term of the convertible note and is charged to interest
expense.
Basic and Diluted Loss Per Common Share
Basic loss per common share is computed
by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per share
reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted
into common stock. Since the Closing Date of the Share Exchange occurred on September 30, 2016 and no common stock was
issued to Coretec in the reverse acquisition, the Company did not compute weighted average common shares outstanding for the period
ended March 31, 2016.
The following securities are excluded from
the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Options
|
|
|
22,887,417
|
|
|
|
-
|
|
Warrants
|
|
|
19,568,318
|
|
|
|
-
|
|
Series A convertible preferred stock
|
|
|
34,500,000
|
|
|
|
-
|
|
Series B convertible preferred stock
|
|
|
12,552,672,330
|
|
|
|
9,112,309,008
|
|
Convertible debentures
|
|
|
9,938,968,058
|
|
|
|
-
|
|
Total potentially dilutive shares
|
|
|
22,568,596,123
|
|
|
|
9,112,309,008
|
|
Subsequent Events
The Company evaluates events
that have occurred after the balance sheet date but before the condensed consolidated financial statements are issued. Based
upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have
required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed.
Recent Accounting Pronouncements
The following is a summary of recent accounting
pronouncements that are relevant to the Company:
In February 2016, the FASB issued accounting
standards update (ASU) No. 2016-02,
Leases (Topic 842)
intended to increase transparency and comparability among
companies by requiring most leases to be included on the balance sheet and by expanding disclosure requirements. This is effective
for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company
is currently evaluating the impact that this new guidance may have on its consolidated results of operations, cash flows, financial
position and disclosures.
Note 4 – Share Exchange Agreement
On May 31, 2016,
3DIcon entered into a Share Exchange Agreement with Coretec and its Members, which Members held all outstanding membership interests
in Coretec. Pursuant to the Share Exchange Agreement, the Members agreed to sell all their membership interests in Coretec to 3DIcon
in exchange for 3DIcon’s issuance of an aggregate 4,760,872 shares of 3DIcon’s Series B Convertible Preferred Stock
to the Members. Upon the closing of the Share Exchange on the Closing Date, considering any preferred stock on an “as
converted” basis, approximately 65% of 3DIcon’s issued and outstanding common stock is now owned by the former Coretec
Members. The remaining 35% is held by 3DIcon’s prior stockholders. The acquisition is treated as a “reverse acquisition”
(See Note 1).
The following
unaudited pro forma results for the three months ended March 31, 2016 summarizes the consolidated results of operations of the
Company, assuming the reverse acquisition had occurred on January 1, 2016 and after giving effect to the reverse acquisition adjustments,
including amortization of tangible and intangible assets acquired in the transaction:
|
|
Three Months
Ended March 31, 2016
|
|
Net revenues
|
|
$
|
-
|
|
Net loss
|
|
$
|
(291,682
|
)
|
3DIcon CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Note 5 – Debentures and Notes Payable
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Notes and debentures payable:
|
|
|
|
|
|
|
|
|
5.25% Insurance premium finance agreement, due June 2017
|
|
$
|
12,548
|
|
|
$
|
24,794
|
|
9% Promissory note due June 2017
|
|
|
25,341
|
|
|
|
25,341
|
|
4.75% Convertible debenture due
June 2017
|
|
|
64,124
|
|
|
|
64,124
|
|
Total notes and debentures payable
|
|
$
|
102,013
|
|
|
$
|
114,259
|
|
|
|
|
|
|
|
|
|
|
Notes payable - related party:
|
|
|
|
|
|
|
|
|
14% Term loan due June 2018
|
|
$
|
213,993
|
|
|
$
|
213,993
|
|
14% Term loan due June 2018
|
|
|
576,500
|
|
|
|
440,500
|
|
14% Term loan due June 2018
|
|
|
400,582
|
|
|
|
399,832
|
|
7%
Convertible promissory note due March 2019, net
|
|
|
357
|
|
|
|
-
|
|
Total notes payable - related party
|
|
$
|
1,191,432
|
|
|
$
|
1,054,325
|
|
5.25% Insurance premium finance agreement, due June 2017
The Company made payments of $12,246 against
the insurance premium financing obligation.
14% Term loan due June 2018, related
party
Mr. Victor Keen, Co-Chairman of
the Board of Directors, advanced an additional $136,000 during the three months ended March 31, 2017. As of March 31, 2017,
an aggregate amount of $576,500 is due to Mr. Keen under the 14% term loan. As of March 31, 2017, accrued interest related to
the 14% term loan amounted to $39,544 and interest expense was $19,026 for the three months ended March 31, 2017.
As of March 31, 2017, Carlton
James North Dakota Limited (“CJNDL”), a company owned by Mr. Simon Calton, a director of the Company, has
advanced $614,575 to the Company under the terms of two loans, which are included in notes payable. As of March 31, 2017,
accrued interest related to the CJNDL term loans due June 2018 amounted to $72,298 and interest expense was $21,507 and
$4,571 during the three months ended March 31, 2017 and 2016, respectively.
7% Convertible promissory note due March 2019
On March 30, 2017, the Company issued
to Mr. Victor Keen, Co-Chairman of the Board of Directors, a 7% convertible promissory note in a principal amount of
$250,000, due March 1, 2019 (“Maturity Date”). The promissory note shall automatically convert into eight percent
(8%) of the fully diluted outstanding shares of common stock of the Company calculated after giving effect to (a) the
exercise of all outstanding options, warrants or other rights to acquire shares of common stock of the Company, (b) the
conversion of all outstanding convertible or exchangeable securities, and (c) after giving effect to the issuance of common
stock upon conversion of this note (the “Conversion Shares”). The conversion shall not occur until both of the
following two events shall have occurred (the “Conversion Event”): (i) the consummation of the Reverse Split by
the Company as reflected in the Preliminary Information Statement filed with the Securities and Exchange Commission on March
7, 2017, and (ii) the conversion of all of the Company’s issued and outstanding Series A Convertible Preferred Stock
and Series B Convertible Preferred Stock into the Conversion Shares. If the Conversion Event has not occurred prior to the
earlier to occur of the Maturity Date and the occurrence of an event of default, then this note shall not be automatically
converted into the Conversion Shares and Mr. Victor Keen may elect, at his sole discretion, (i) to have the outstanding
principal balance of this note converted into the Conversion Shares; or (ii) to declare the outstanding principal balance of
this note, together with all accrued interest, be paid in accordance with the terms of the note. Such election may be made at
any time on or following the Maturity Date or the occurrence of an event of default. This note is an unsecured obligation of
the Company. The accrued interest and interest expense related to the $250,000 7% Convertible Promissory Notes amounted to
$175 during the three months ended March 31, 2017. The embedded conversion option was deemed to be a beneficial conversion
feature because the active conversion price was less than the commitment date market price of the common stock. The dollar
amount of the beneficial conversion feature is limited to the carrying value of the promissory note, so a $250,000 debt
discount was recorded, with a corresponding credit to additional paid-in capital for the beneficial conversion feature. The
debt discount will be amortized over the life of the debt and $357 was amortized during the three months ended March
31, 2017.
3DIcon CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Note 6 – Commitments and Contingencies
Litigation, Claims, and Assessments
The
Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. In the
opinion of management, such matters are currently not expected to have a material impact on the Company’s consolidated
financial statements. The Company records legal costs associated with loss contingencies as incurred and accrues for all
probable and estimable settlements.
Supply Agreement
On December 13, 2016, the Company entered
into a Supply Agreement (the “Supply Agreement”) with Gelest Inc., a Pennsylvania corporation (“Gelest”).
This Supply Agreement is for the purchase and sale of Cyclohexasilane (“CHS“ or the “Products”) as set
forth in the Supply Agreement, pursuant to which the Company agrees to use Gelest as a primary source to manufacture the Products
for the duration of three years from the effective date.
An initial estimate of pricing for the
Products is set forth in the Supply Agreement, which varies from $28/gram to $35/gram based on the quantity that is being purchased.
Final pricing will be reviewed and adjusted annually based on prior year’s consumption and/or as the global economic conditions
dictate, taking into account market conditions and raw material price fluctuations.
Under the terms of the Supply Agreement,
Gelest will scale-up production of CHS, within their available capacity of 12-18 Kg per year, and further optimize the manufacturing
process licensed by the purchaser from NDSU Research Foundation (“NDSU/RF”). The term of this project is 90 days from
the receipt of the first installment of YSi6Cl14 salt from the purchaser. The cost for scale-up and manufacturing optimization
is $180,000 to be paid by the purchaser in two installments. The initial installment of $18,000 was paid upon finalizing this Supply
Agreement. The second installment of $162,000 is to be paid net 30 days from availability for shipment of between 200 – 400
grams of the initial product of the quality stated in the Supply Agreement. As of the date of filing, the Company has not paid
the second installment, as Gelest has yet to complete the production of material.
Office Lease
The Company entered into a lease agreement
in June 2015 for office space in North Dakota that will expire in November 2017. The Company has an amended office lease in Tulsa,
Oklahoma that will expire on July 31, 2018. Rent expense for operating leases was $12,000 and $5,500 for the three-month
periods ended March 31, 2017 and 2016, respectively.
Note 7 – Subsequent Events
Research North Dakota Grant
The North Dakota Center of
Excellence Commission awarded a funding request for Research North Dakota (“RND”) grant to NDSU Chemistry and
Biochemistry in partnership with the Company.
RND promotes the development and
commercialization of products and processes through industry/university research partnerships. RND provides matching funds to
help companies pay for the university research.
The $150,000 matching grant is effective April 1, 2017 and expires on
March 31, 2018. The Company shall provide for a match to State dollars of at least $1:$1. The match can be in the form
of contribution directly to NDSU or cash expended by the Company on valid cost incurred in support of the project. The
purpose of the grant is to improve the yield and purity of the key ingredients required for an economical synthesis of CHS,
an ingredient for making a variety of commercially important silicon based materials and materials for lightweight batteries
and lightweight solar cells.
Item 2.
Management's Discussion and Analysis
of Financial Condition and Results of Operations.
Forward-Looking Statements
The information
in this report contains forward-looking statements. All statements other than statements of historical fact made in this report
are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial
position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,”
“estimates,” “could,” “possibly,” “probably,” “anticipates,” “projects,”
“expects,” “may,” “will,” or “should” or other variations or similar words. No
assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking
statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly
from management’s expectations.
The following discussion
and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will
necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment
of our management.
Plan of Operation
Background:
Coretec
Industries, LLC (“Coretec”), a wholly owned subsidiary of 3DIcon Corporation (“3DIcon”), was organized
on June 2, 2015 in the state of North Dakota. Coretec is currently developing, testing, and providing new and/or improved
technologies, products, and service solutions for medical, electronic, photonic, display, and lighting markets among
others.
On September 30, 2016
(the “Closing Date”), we closed a transaction contemplated by a Share Exchange Agreement dated May 31, 2016 (the “Share
Exchange Agreement”) with 3DIcon. Pursuant to the Share Exchange Agreement, Coretec became
a wholly-owned subsidiary of 3DIcon.
3DIcon was incorporated on August 11, 1995, under the laws of the State of Oklahoma. 3DIcon’s primary activity
has been the raising of capital in order to pursue its goal of becoming a significant participant in the development, commercialization
and marketing of next generation 3D display technologies.
The combination of
the two companies provides a significant number of opportunities to increase shareholder value by:
|
·
|
Providing technological support to advance the refinement of CSpace image material;
|
|
·
|
Adding recognized expertise to the team;
|
|
·
|
Creating the opportunity for near-term revenue; and
|
|
·
|
Adding a significant portfolio of Intellectual Property.
|
Recent Developments
Supply Agreement
On December 13, 2016,
we entered into a Supply Agreement (the “Supply Agreement”) with Gelest Inc., a Pennsylvania corporation (“Gelest”).
This Supply Agreement is for the purchase and sale of Cyclohexasilane (“CHS”) as set forth in the Supply Agreement (the “Products”),
pursuant to which the Company agrees to use Gelest as a primary source to manufacture the Products for a period of three years.
NDSU provided raw materials required to produce CHS to Gelest in January 2017. Efforts by Gelest to scale the manufacturing
process for CHS are ongoing with the goal of producing up to 400 grams of material that will be available for sale to potential
customers. An initial estimate of pricing for the Products is set forth in the Supply Agreement, which varies from $28/gram to
$35/gram based on the quantity and quality of material that is being purchased. We believe this price is competitive with
competing higher order silanes such as trisilane and neopentasilane while offering a number of advantages.
Research North Dakota Grant
The North Dakota
Center of Excellence Commission awarded a funding request for Research North Dakota (“RND”) grant to NDSU
Chemistry and Biochemistry in partnership with the Company.
RND promotes the development and
commercialization of products and processes through industry/university research partnerships. RND provides matching funds to
help companies pay for the university research.
The $150,000 matching grant is effective April 1, 2017 and expires on
March 31, 2018. We shall provide for a match to State dollars of at least $1:$1. The match can be in the form of
contribution directly to NDSU or cash expended by us on valid cost incurred in support of the project. The purpose of
the grant is to improve the yield and purity of the key ingredients required for an economical synthesis of CHS, an
ingredient for making a variety of commercially important silicon based materials and materials for lightweight batteries and
lightweight solar cells.
Authorization of Name Change
On February
21, 2017, the Board of Directors unanimously approved the proposal to seek stockholder approval and authorization to amend
our Certificate of Incorporation to change our name to “The Coretec Group Inc.” (the “Name Change”)
and thereafter change its trading symbol to a trading symbol resembling the name of the Company following the Name Change. On
February 21, 2017, a majority of our stockholders adopted resolutions by written consent authorizing the Board of Directors
to undertake the Name Change. This Name Change will become effective immediately upon our filing of the Name Change
Amendment with the Oklahoma Secretary of State.
Authorization of Reverse Stock Split
On February 21, 2017
(the “Record Date”), the Board of Directors unanimously approved, and a majority of our stockholders, as of the Record
Date, approved by written consent pursuant to Section 18-1073 of the Oklahoma Act, to permit our Board of Directors, in its
sole discretion, to effectuate one or more consolidations of the issued and outstanding shares of common stock at some future date
no later than the first anniversary of the Record Date, pursuant to which the shares of common stock would be combined and reclassified
into one validly-issued, fully-paid and non-assessable share of common stock at a ratio (the “Reverse Split Ratio”)
within the range of 1-for-50 and up to 1-for-300 (the “Reverse Split Range”), with each stockholder otherwise entitled
to receive a fractional share of common stock as a result of the Reverse Stock Split. If effectuating a Reverse Stock Split
pursuant to the minimum stated Reverse Split Ratio, each 50 shares of our issued and outstanding common stock will be automatically
converted into 1 share of common stock. If effectuating a Reverse Stock Split pursuant to the maximum stated Reverse Split Ratio,
each 300 shares of our issued and outstanding common stock will be automatically converted into 1 share of common stock.
RESULTS OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 2017 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2016
The results of operations for the three
months ended March 31, 2017 represent the consolidated results of 3DIcon and its wholly-owned subsidiary, Coretec, while the results
of operations for the three months ended March 31, 2016 solely represent the results of Coretec.
Revenue
We did not have revenues for the three
months ended March 31, 2017 or for the three months ended March 31, 2016.
Research and Development Expenses
The research and development
expenses were $105,370 for the three months ended March 31, 2017, as compared to $12,748 for the three months ended March
31, 2016. The approximate $92,000 increase was primarily a result of the amortization of patents acquired in
the acquisition of 3DIcon of $23,000, an increase of $26,000 related to the Sponsored Research Agreement and an increase of
$43,000 related to the Exclusive License Agreement, both with the NDSU Research Foundation.
General and Administrative Expenses
Our general and administrative
expenses were $281,331 for the three months ended March 31, 2017, as compared to $31,716 for the three months ended March 31,
2016. The approximate $250,000 increase included the additional costs of being a public company consisting of
audit fees of $75,000, legal fees of $28,000, filing fees and outside services of $20,000. Additionally, our consultants fees
to the CEO, CFO and other consultants increased $75,000. Other increases include website design of $6,000, insurance of
$14,000, rent from adding a second office of $6,000, corporate secretary of $8,000, and various other administrative
increases of $11,000.
Interest Expense
Interest expense was $42,166 for the
three months ended March 31, 2017, as compared to $4,571 for the three months ended March 31, 2016. The increase
was a result of additional notes payable.
Financial Condition, Liquidity and Capital
Resources
Management remains focused on controlling
cash expenses. We recognize our limited cash resources and plan our expenses accordingly. We intend to leverage stock-for-services,
wherever possible. The operating budget consists of the following expenses:
|
·
|
Acceleration of research and development through increased research personnel as well as other research agencies.
|
|
·
|
General and administrative expenses: salaries, insurance, investor related expenses, rent, travel, website, etc.
|
|
·
|
Hiring executive officers for technology, operations and finance.
|
|
·
|
Professional fees for accounting and audit; legal services for securities and financing; patent research and protection.
|
We had cash of $111,974 at March 31,
2017. We had negative working capital of $517,524 at March 31, 2017.
During the three months ended March
31, 2017, we used $263,124 of cash for operating activities, an increase of $254,949 compared to the three-month period ended
March 31, 2016. The increase in the use of cash for operating activities was a result of an increase in the loss of $379,832,
partially offset by the increase in the amortization expense of $23,748, the decrease in prepaid expenses of $13,579 and the
increase in accounts payable and accrued liabilities of $87,556.
During the three months ended March
31, 2017, there was $374,504 of cash provided by financing activities, compared to no funds provided in the three-month
period ended March 31, 2016. The increase was due to $386,750 advanced from related party promissory notes partially
offset by a payment of $12,246 on our insurance financing agreement.
We expect to fund the ongoing operations
through the existing financing facilities in place; through raising additional funds as permitted by the terms of Golden State
financing as well as reducing our monthly expenses. Our ability to fund our operations is highly dependent on our stock price.
There is no assurance that we’ll
be successful in raising additional funds on reasonable terms or that the funding will be sufficient to enable us to fully complete
our development activities or attain profitable operations. If we are unable to obtain such additional financing on a timely basis
or, notwithstanding any request we may make, our debt holders do not agree to convert their notes into equity or extend the maturity
dates of their notes, we may have to curtail development, marketing and promotional activities, which would have a material adverse
effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations
and liquidate.
Off Balance Sheet Arrangements
We do not engage in any off balance sheet
arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of
operations, liquidity or capital expenditures.
Significant Accounting Policies
There has been no change in the
significant accounting policies summarized in our Form 10-K for the year ended December 31, 2016, which was filed on April
14, 2017, except for the additional beneficial conversion features discussed in Note 3 in this Quarterly Report.