CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Overview
QuantRx Biomedical Corporation was incorporated on December 5,
1986, in the State of Nevada. Our principal business office is
located at 10190 SW 90th Avenue, Tualatin, Oregon 97123. When used
in this Quarterly Report on Form 10-Q, the terms
“
Company
,”
“
we
,”
“
our
,”
“
ours
,”
or “
us
”
mean QuantRx Biomedical Corporation, a Nevada
corporation.
We have developed
and intend to
commercialize our innovative PAD based products for the
over-the-counter markets for the treatment of hemorrhoids, minor
vaginal infection, urinary incontinence, general catamenial uses
and other medical needs. We have also developed genomic diagnostics
for the laboratory market, based on our patented
PadKit®
technology. Our
platforms include: inSync®, Unique™, PadKit®, and
OEM branded over-the-counter and laboratory testing products based
on our core intellectual property related to our PAD
technology.
The continuation of our operations remains contingent on the
receipt of financing required to execute our business and operating
plan, which is currently focused on the commercialization of our
over-the-counter PAD products either directly or through a joint
venture, or other relationship intended to increase shareholder
value. In the interim, we have nominal operations, focused
principally on maintaining our intellectual property portfolio and
continuing to comply with the public company reporting
requirements. No assurances can be given that we will obtain
financing, or otherwise successfully develop a business and
operating plan or enter into an alternative relationship to
commercialize our PAD technology.
Our principal business line consists of our over-the-counter
business (the “
OTC
Business
”), which
includes commercialization of our InSync feminine hygienic
interlabial pad, the Unique® Miniform for hemorrhoid
application, and other treated miniforms, as well as maintaining
established and continuing licensing relationships related to the
OTC Business. We also maintain a diagnostic testing business (the
“
Diagnostic
Business
”) that is based
principally on our proprietary PadKit® technology, which we
believe provides a patented platform technology for genomic
diagnostics, including fetal genomics. Management believes this
corporate structure permits the Company to more efficiently explore
options to maximize the value of the Diagnostics Business and the
OTC Business (collectively, the “
Businesses
”), with the objective of maximizing the
value of the Businesses for the benefit of the Company and its
stakeholders.
Our current focus is to obtain additional working capital necessary
to continue as a going concern, and develop a longer term financing
and operating plan to: (i) leverage our broad-based intellectual
property and patent portfolio to develop new and innovative
diagnostic products; (ii) commercialize our OTC Business and
Diagnostics Business either directly or through joint ventures,
mergers or similar transactions intended to capitalize on
commercial opportunities presented by each of the Businesses; (iii)
contract manufacturing to third parties while maintaining control
over the manufacturing process; and (iv) maximize the value of our
investments in non-core assets. However, as a result of
our current financial condition, our efforts in the short-term will
be focused on obtaining financing necessary to continue as a going
concern.
We follow the accounting guidance outlined in the Financial
Accounting Standards Board Codification guidelines. The
accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted principles
for interim financial information and with the items under
Regulation S-X required by the instructions to Form 10-Q.
They may not include all information and footnotes required by
United States Generally Accepted Accounting Principles
(“
GAAP
”) for complete financial statements.
However, except as disclosed herein, there have been no material
changes in the information disclosed in the notes to the financial
statements for the year ended December 31, 2016 included in the
Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on April 17, 2017. The
interim unaudited financial statements presented herein should be
read in conjunction with those financial statements included in the
Form 10-K. In the opinion of Management, all adjustments
considered necessary for a fair presentation, which unless
otherwise disclosed herein, consisting primarily of normal
recurring adjustments, have been made. Operating results for the
nine months ended September 30, 2017 are not necessarily indicative
of the results that may be expected for the year ending December
31, 2017.
Certain amounts in the prior period financial statements have been
reclassified to conform to the current period presentation. These
reclassifications had no effect on previously reported losses,
total assets or stockholders’ equity.
Recent Developments
Memorandum of
Understanding.
On February 27,
2017, the Company entered into a memorandum of understanding
(“
MOU
”) with an unrelated third party regarding
the sale of certain assets pertaining to the Company’s
Diagnostic Business, including the intellectual property,
trade-secrets and diagnostic applications related to the
Company’s PadKit technology and the lateral flow diagnostics
technology. Under the MOU, the Company retains all rights and
assets relating to the OTC Business, which includes all assets
necessary to pursue marketing the over the counter miniform
products for female hygiene and hemorrhoid treatment. If the
transaction contemplated by the MOU is consummated, the Company
would receive gross proceeds of approximately $1.0 million at
closing, a 15% percent ownership interest in the acquiring company
and future cash payments ranging from 1.5%-2% of gross revenue
generated from the Padkit and lateral flow
technologies. The MOU is subject to numerous
contingencies and conditions, and there is no assurance that a
transaction will be completed.
MOU Notes
. During the nine
months ended September 30, 2017, the Company issued two convertible
promissory demand notes in connection with the MOU in the aggregate
principal amount of $50,000 (the "
MOU Notes
"). The MOU Notes matured on September 30, 2017;
however, the maturity date has been extended to December 31, 2017.
The MOU Notes accrue interest at a rate of 8% per annum, and are
convertible, at the option of the holder, into that number of
shares of the Company's common stock, par value $0.001 per share
("
Common
Stock
") equal to the
outstanding balance, divided by $0.10.
Subsequent
to September 30, 2017, in October 2017, the Company issued an
additional MOU Note in the principal amount of
$15,000.
2017 Bridge Notes
. In July and
August, 2017, the Company entered into Note Purchase Agreements
with two existing stockholders, pursuant to which the Company
issued convertible promissory demand notes in the aggregate
principal amount of $86,000 (the “
2017 Bridge
Notes
”). As additional
consideration for the purchase of the 2017 Bridge Notes, the
Company reserved for issuance an aggregate of 860,000 shares of the
Company’s Series B Convertible Preferred Stock
(“
Series B
Preferred
”) to be issued
to the purchasers of the 2017 Bridge Notes.
The 2017 Bridge Notes accrue interest at a rate of 10% per annum,
payable in either cash or shares of the Company’s Common
Stock, and matured on September 30, 2017. The 2017 Bridge Notes are
now payable on demand. Each 2017 Bridge Note is convertible, at the
option of the holder thereof, into that number of shares of Common
Stock equal to the outstanding principal balance of the 2017 Bridge
Note, plus accrued but unpaid interest (the
“
Outstanding
Balance
”), divided by
$0.08 (the “
Conversion
Shares
”). Additionally,
in the event the Company completes an equity or equity-linked
financing with gross proceeds to the Company of at least $1.5
million (a “
Qualified
Financing
”), the
Outstanding Balance of the 2017 Bridge Notes will, at the
discretion of each respective holder, either (i) convert into
securities sold in the Qualified Financing, or (ii) automatically
convert into Conversion Shares.
2.
MANAGEMENT STATEMENT REGARDING GOING CONCERN
The Company currently is not generating revenue from operations,
and does not anticipate generating meaningful revenue from
operations or otherwise in the short-term. The Company
has historically financed its operations primarily through
issuances of equity and the proceeds from the issuance of
promissory notes. In the past, the Company also provided
for its cash needs by issuing Common Stock, options and warrants
for certain operating costs, including consulting and professional
fees, as well as divesting its minority equity interests and
equity-linked investments.
The Company’s history of operating losses, limited cash
resources and the absence of an operating plan necessary to
capitalize on the Company’s assets raise
substantial doubt about our ability to continue as a going
concern absent a strengthening of our cash
position. Management is currently pursuing various
funding options, including seeking debt or equity financing,
licensing opportunities and the sale of certain investment
holdings, as well as a strategic, merger or other transaction to
obtain additional funding to continue the development of, and to
successfully commercialize, its products. There can be
no assurance that the Company will be successful in its
efforts. Should the Company be unable to obtain adequate
financing or generate sufficient revenue in the future, the
Company’s business, result of operations, liquidity and
financial condition would be materially and adversely harmed, and
the Company will be unable to continue as a going
concern.
There can be no assurance that, assuming the Company is able
to strengthen its cash position, it will achieve sufficient revenue
or profitable operations to continue as a going
concern.
3. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is
presented to assist in understanding the Company’s financial
statements. The financial statements and notes are representations
of the Company’s management, which is responsible for their
integrity and objectivity. These accounting policies conform to
GAAP and have been consistently applied in the preparation of the
financial statements.
Accounting for Share-Based Payments.
The Company follows the provisions of ASC Topic
718, which establishes the accounting for transactions in which an
entity exchanges equity securities for services and requires
companies to expense the estimated fair value of these awards over
the requisite service period. The Company uses the Black-Scholes
option pricing model in determining fair value. Accordingly,
compensation cost has been recognized using the fair value method
and expected term accrual requirements as
prescribed. During the nine months ended September 30,
2017 and 2016, the Company had no stock compensation
expense.
The Company accounts for share-based payments granted to
non-employees in accordance with ASC Topic 505,
“
Equity Based Payments to
Non-Employees
.” The
Company determines the fair value of the stock-based payment as
either the fair value of the consideration received or the fair
value of the equity instruments issued, whichever is more reliably
measurable. If the fair value of the equity instruments
issued is used, it is measured using the stock price and other
measurement assumptions as of the earlier of either (i) the date at
which a commitment for performance by the counterparty to earn the
equity instruments is reached, or (ii) the date at which the
counterparty’s performance is
complete.
In the case of modifications, the Black-Scholes model is used to
value modified warrants on the modification date by applying the
revised assumptions. The difference between the fair value of the
warrants prior to the modification and after the modification
determines the incremental value. The Company has modified warrants
in connection with the issuance of certain notes and note
extensions. These modified warrants were originally issued in
connection with previous private placement investments. In the case
of debt issuances, the warrants were accounted for as original
issuance discount based on their relative fair values. When
modified in connection with a note issuance, the Company recognizes
the incremental value as a part of the debt discount calculation,
using its relative fair value in accordance with ASC Topic 470-20,
“
Debt
with Conversion and Other Options
.” When modified in connection with note
extensions, the Company recognized the incremental value as prepaid
interest, which is expensed over the term of the
extension.
The fair value of each share based payment is estimated on the
measurement date using the Black-Scholes model with the following
assumptions, which are determined at the beginning of each year and
utilized in all calculations for that year. During the nine months
ended September 30, 2017 and 2016, the Company did not make any
Black-Scholes model assumptions, as no share-based payments were
made during those periods.
Risk-Free Interest Rate.
The interest rate used is based on the yield
of a U.S. Treasury security as of the beginning of the
year.
Expected Volatility.
The
Company calculates the expected volatility based on historical
volatility of monthly stock prices over a three-year
period.
Dividend Yield.
The
Company has never paid cash dividends, and does not currently
intend to pay cash dividends, and thus has assumed a 0% dividend
yield.
Expected Term.
For
options, the Company has no history of employee exercise patterns.
Therefore, the Company uses the option term as the expected term.
For warrants, the Company uses the actual term of the
warrant.
Pre-Vesting Forfeitures.
Estimates of pre-vesting option forfeitures
are based on Company experience. The Company will adjust its
estimate of forfeitures over the requisite service period based on
the extent to which actual forfeitures differ, or are expected to
differ, from such estimates. Changes in estimated forfeitures will
be recognized through a cumulative catch-up adjustment in the
period of change and will also impact the amount of compensation
expense to be recognized in future periods.
Earnings per Share.
The Company computes net income (loss) per common
share in accordance with ASC Topic 260. Net income (loss) per share
is based upon the weighted average number of outstanding common
shares and the dilutive effect of common share equivalents, such as
options and warrants to purchase Common Stock, convertible
preferred stock and convertible notes, if applicable, that are
outstanding each year. Basic and diluted earnings per share were
the same at the reporting dates of the accompanying financial
statements, as including Common Stock equivalents in the
calculation of diluted earnings per share would have been
antidilutive.
As of September 30, 2017, the Company had outstanding options
exercisable for 2,352,000 shares of its Common Stock, and preferred
shares convertible into 16,676,942 shares of its Common Stock,
which options and preferred shares were deemed to be antidilutive
for the nine months ended September 30, 2017. At September 30,
2017, the Company has reserved for issuance to certain investors,
860,000 preferred shares, convertible into 860,000 shares of its
Common Stock.
As of September 30, 2016, the Company had outstanding options
exercisable for 2,352,000 shares of its Common Stock, and preferred
shares convertible into 16,676,942 shares of its Common Stock,
which options and preferred shares were deemed to be antidilutive
for the nine months ended September 30, 2016.
Fair Value.
The
Company has adopted ASC Topic 820, "
Fair Value Measurements
and Disclosures
" for both
financial and nonfinancial assets and liabilities. The
Company has not elected the fair value option for any of its assets
or liabilities.
Use of Estimates.
The accompanying financial statements are prepared
in conformity with accounting principles generally accepted in the
United States of America, and include certain estimates and
assumptions, which affect the reported amounts of assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Accordingly, actual results may differ from
those estimates.
Recent Accounting Pronouncements
.
Management has considered all recent accounting pronouncements in
the current period and identified no pronouncements that would have
an impact on our financial statements.
4.
INVESTMENTS
In May 2006, the Company purchased
144,024 shares of common stock of GMS Biotech, formerly Genomics
USA, Inc. (“
GUSA
”) for $200,000. After the investment, the
Company owned approximately 5% of the total issued and outstanding
common stock of GUSA. As of December 31, 2016, the Company’s
position had been diluted to approximately 2% of the issued and
outstanding common stock of GUSA. The investment is
recorded at historical cost and is assessed at least annually for
impairment. During the year ended December 31, 2016, the Company
recorded a loss of $30,051 as an impairment on the value of its
common stock investment in GUSA. The Company has valued the
impairment based on the dilution of the Company’s investment
and certain other factors.
On September 3, 2015, we entered into a non-binding letter of
intent (the “
Global LOI
”) with Global Cancer Diagnostics, Inc., a
privately held laboratory in Tempe, Arizona
(“
Global
”), for a proposed business combination. The
Global LOI had an original termination date of October 31, 2015
(the “
Termination
Date
”), but could be
terminated or extended anytime by the mutual written consent of the
parties. During the quarter ended September 30, 2016, in accordance
with the terms and conditions of the executed Global LOI, the
Company deemed the Global LOI terminated. Accordingly, Global is
obligated to issue to us a number of shares of Global’s
common stock equal to 10% of its then outstanding shares of common
stock, on a fully-diluted basis, as payment of the Global Advance.
In addition to the share issuance, the Company is evaluating
certain additional remedies related to the Global LOI and the
$50,000 advance. The Company deemed the $50,000 Global Advance to
be fully impaired as of September 30, 2016.
5.
INTANGIBLE ASSETS
Intangible assets as of the balance sheet dates consisted
of the following:
|
September 30,
2017
(unaudited)
|
|
Licensed
patents and patent rights
|
$
50,000
|
$
50,000
|
Patents
|
41,044
|
41,044
|
Lateral
Flow Licensed Technology
|
13,200
|
13,200
|
Less:
accumulated amortization
|
(93,051
)
|
(90,370
)
|
Intangibles,
net
|
$
11,193
|
$
13,874
|
The Company’s intangible assets consist of patents, licensed
patents and patent rights, are carried at the legal cost to obtain
them. Costs to renew or extend the term of intangible assets are
expensed when incurred. Intangible assets are amortized using the
straight-line method over the estimated useful life. Useful lives
are as follows:
Asset
Categories
|
Estimated Useful Life in Years
|
Patents
|
17
|
Patents
under licensing
|
10
|
Intangibles
acquired in 2008 (weighted average)
|
15
|
Amortization expense for the nine months ended September 30, 2017
and 2016 totaled $2,681 and $5,182, respectively.
6.
CONVERTIBLE NOTES PAYABLE
On January 2, 2015, the Company issued an additional Bridge Note in
the principal amount of $36,500 and issued 73,000 shares of Common
Stock to the purchaser of the additional Bridge Note. Additionally,
we issued 500,000 shares of Common Stock in January 2015 to certain
investors who purchased Bridge Notes during the year ended December
31, 2014, which were previously classified as shares to be
issued.
In February 2015, the Company issued an aggregate total of 815,061
shares of Common Stock as payment for accrued interest for the
period from July 1, 2014 through December 31, 2014 under
certain convertible notes payable.
On June 30, 2015, the Company issued two additional Bridge Notes in
the aggregate principal amount of $50,000 and issued an aggregate
total of 100,000 shares of Common Stock to the purchasers of these
Bridge Notes. In connection with the issuance of these notes, the
Company recorded debt discount expenses totaling $2,830 and will
amortize these costs over the life of the notes.
In June 2015, the Company authorized the issuance of an aggregate
total of 1,875,691 shares of Common Stock as payment for accrued
interest for the period from January 1, 2015 through June 30, 2015
under certain convertible notes payable. The Company
settled a total of $70,256 in accrued interest, recognizing a gain
on settlement in the amount of $23,364. The Company and
the holders of the Bridge Notes also agreed to extend the maturity
date of the Bridge Notes from June 30, 2015 to December 31, 2015.
As consideration for the extension of the maturity date of the
Bridge Notes, the Company issued an aggregate total of 286,500
shares of Common Stock to the Bridge Note holders.
In July 2015, the Company issued a Bridge Note in the principal
amount of $35,000 and issued an aggregate total of 70,000 shares of
Common Stock to the purchaser of the Bridge Note.
During
each of the quarters ended March 31, 2017, and June 30, 2017, the
Company issued an MOU Note in the principal amount of
$25,000.
In July and August 2017, the Company issued 2017 Bridge Notes in
the aggregate principal amount of $86,000. Each 2017 Bridge Note
accrues interest at a rate of 10% per annum, and matured on
September 30, 2017. The 2017 Bridge Notes are now payable on
demand.
BHA Note
. On March 31, 2016,
Burnham Hill Advisors, LLC (“
BHA
”) agreed to exchange the amounts owed to
BHA under the October 29, 2013 agreement for a promissory note, on
terms substantially similar to the Bridge Notes (the
“
BHA
Note
”), in the principal
amount of $283,000 with issuance date of March 31, 2016.
The BHA Note is payable on demand as
of December 31, 2016, and is past due as of September 30, 2017. On
April 1, 2017, BHA assigned the BHA Note to certain of its
employees, including Michael Abrams who serves as a director of the
Company, under the same terms.
At September 30, 2017 and December 31, 2016, the Company’s
Convertible Notes Payable are as follows:
|
|
|
Notes
Payable
|
1,784,187
|
1,059,784
|
Notes
Payable, related party
|
117,801
|
558,287
|
Total
notes payable
|
1,901,988
|
1,618,071
|
Notes Payable, Related Party.
As of September 30, 2017, the Company owed Michael Abrams, a
director of the Company, an aggregate total of $117,801 for
outstanding principal and accrued and unpaid interest on certain
Bridge Notes.
As of December
31, 2016, the Company owed Mr. Abrams an aggregate total of $2,059
and BHA an aggregate total of $556,168 for outstanding principal
and accrued and unpaid interest on certain Bridge Notes. Mr. Abrams
is an employee of BHA.
On April 1, 2017, BHA assigned its the BHA Note, including all
accrued but unpaid interest to its employees, and is no longer a
related party note payable.
As
noted above, Michael Abrams, one of the Company’s directors
and an employee of BHA, was assigned $50,000 of the outstanding
principal amount of the BHA Note, plus all accrued but unpaid
interest on such amount.
7.
LONG-TERM NOTES PAYABLE
The Company received a $44,000 loan from the Portland Development
Commission in 2007. The loan matures in 20 years and was interest
free through February 2010. The terms of the note stipulate monthly
interest only payments from April 2010 through December 2014, at a
5% annual rate. Effective January 1, 2015, the Company began a
payment program whereby it would make quarterly payments towards
principal and interest through the life of the loan. During the
nine months ended September 30, 2017, the Company made principal
payments of $1,815 and payments towards accrued interest of $1,467.
The Company recorded interest expense on this loan of $1,941 and
$1,538 for the nine months ended September 30, 2017 and 2016,
respectively. At September 30, 2017 and December 31, 2016, the
balance of the loan payable was $38,685 and $40,022,
respectively.
8. OTHER
BALANCE SHEET INFORMATION
Components of selected captions in the accompanying balance sheets
consist of:
Prepaid expenses:
|
September 30,
2017
(unaudited)
|
|
Prepaid
insurance
|
$
-
|
$
28,094
|
Prepaid expenses
|
$
-
|
$
28,094
|
|
|
|
Property and equipment:
|
|
|
Computers
and office furniture, fixtures and equipment
|
$
28,031
|
$
28,031
|
Machinery
and equipment
|
5,475
|
5,475
|
Less:
accumulated depreciation
|
(33,506
)
|
(33,506
)
|
Property and equipment, net
|
$
-
|
$
-
|
|
|
|
Accrued expenses:
|
|
|
Other
Accrued expenses
|
$
0
|
36,342
|
Accrued expenses
|
$
0
|
36,342
|
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of
the assets. The Company’s property and equipment at September
30, 2017 consisted of computer and office equipment, machinery and
equipment with estimated useful lives of three to seven years. As
of December 31, 2016 and September 30, 2017, the Company’s
property and equipment was fully depreciated.
Expenditures for repairs and maintenance are expensed as
incurred.
9.
PREFERRED STOCK
The Company has authorized 25,000,000 shares of preferred stock, of
which 20,500,000 is designated as Series B Convertible Preferred
Stock, $0.01 par value, with a stated value of approximately
$204,000. The remaining authorized preferred shares have not been
designated by the Company as of September 30, 2017.
On November 19, 2010, the Company filed a Certificate of Withdrawal
of the Certificates of Designations of the Series A Preferred Stock
(“
Series A
Preferred
”) with the
Nevada Secretary of State, as there were no shares of Series A
Preferred issued and outstanding after the exchange transaction
discussed below.
Series B Convertible Preferred Stock
The Series B Preferred ranks prior to the Common Stock for purposes
of liquidation preference, and to all other classes and series of
equity securities of the Company that by their terms did not rank
senior to the Series B Preferred (“
Junior
Stock
”). Holders
of the Series B Preferred are entitled to receive cash dividends,
when, as and if declared by the Board of Directors, and they shall
be entitled to receive an amount equal to the cash dividend
declared on one share of Common Stock multiplied by the number of
shares of Common Stock equal to the outstanding shares of Series B
Preferred, on an as converted basis. The holders of Series B
Preferred have voting rights to vote as a class on matters a)
amending, altering or repealing the provisions of the Series B
Preferred so as to adversely affect any right, preference,
privilege or voting power of the Series B Preferred; or b) to
affect any distribution with respect to Junior Stock. At
any time, the holders of Series B Preferred may, subject to
limitations, elect to convert all or any portion of their Series B
Preferred into fully paid non-assessable shares of Common Stock at
a 1:1 conversion rate.
As
disclosed under Note 1 above, in July and August, 2017, the Company
entered into Note Purchase Agreements with two existing
stockholders, pursuant to which the Company issued 2017 Bridge
Notes in the aggregate principal amount of $86,000. As additional
consideration for the purchase of the 2017 Bridge Notes, the
Company has reserved for issuance an aggregate of 860,000 shares of
Series B Preferred to be issued the purchasers of the 2017 Bridge
Notes. The Company has valued the Series B Preferred and has
recorded a discount on the 2017 Bridge Notes of $7,818 which was
amortized in full during the three months ended September 30,
2017.
As of September 30, 2017 and December 31, 2016, the Company had
16,676,942 shares of Series B Preferred issued and outstanding with
a liquidation preference of $166,769, respectively, and convertible
into 16,676,942 shares of Common Stock.
10. COMMON
STOCK, OPTIONS AND WARRANTS
The Company has authorized 150,000,000 shares of its Common Stock,
of which 78,696,461 were issued and outstanding at each of
September 30, 2017 and December 31, 2016.
In July 2016, the Company authorized an aggregate total of 8.9
million shares of Common Stock to be issued to certain convertible
note holders as payment of accrued and unpaid interest in the
amount of $151,700.
During the three months ended September 30, 2017 and 2016, there
were no warrants issued by the Company. As of September
30, 2017, the Company had no warrants issued and
outstanding.
2007 Incentive and Non-Qualified Stock Option Plan.
The fair value of options
granted under the Company’s 2007 Incentive and Non-Qualified
Stock Option Plan is recorded as compensation expense over the
vesting period, or, for performance based awards, the expected
service term.
The Company did not
issue any options during the nine months ended September 30, 2017
or 2016.
11.
SUBSEQUENT EVENTS
In October 2017, the Company issued an additional MOU Note in the
principal amount of $15,000.
We have evaluated subsequent events through the date of this filing
in accordance with the Subsequent Events Topic of the FASB ASC 855,
and have determined that, except as disclosed herein, no subsequent
events occurred that are reasonably likely to impact these
financial statements.