Notes
to Unaudited Financial Statements
September
30, 2019
1.
The Company and Significant Accounting Policies
Organizational
Background
E-Qure
Corp. (“EQURE” or the “Company”) is a Delaware corporation with offices in Israel. The Company owns IP
of innovate technology of wound healing device (BST).
Basis
of Presentation:
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source
of revenue to cover its operating costs, and as such, has incurred an operating loss since inception.
Significant
Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Cash
and Cash Equivalents
For
financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities
of three months or less to be cash or cash equivalents. There were no cash equivalents as of September 30, 2019 and December 31,
2018.
Property
and Equipment
New
property and equipment are recorded at cost. Property and equipment included in the bankruptcy proceedings and transferred to
the Trustee had been valued at liquidation value. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items,
repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected
in the operating results in the period the event takes place.
Valuation
of Long-Lived Assets
We
review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes
in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment
is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and
without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment
loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based
on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.
Stock
Based Compensation
Stock-based
awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type
of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs
for the valuation analysis of the options include the market value of the Company’s common stock, the estimated volatility
of the Company’s common stock, the exercise price of the warrants and the risk-free interest rate.
Accounting
For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock
We
account for obligations and instruments potentially to be settled in the Company’s stock in accordance with FASB ASC 815,
Accounting for Derivative Financial Instruments. This issue addresses the initial balance sheet classification and measurement
of contracts that are indexed to, and potentially settled in, the Company’s own stock.
Fair
Value of Financial Instruments
FASB
ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets
and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC
825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties. At September 30, 2019 and December 31, 2018, the carrying value of certain financial instruments (cash
and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments
or interest rates, which are comparable with current rates.
Fair
Value Measurements
The
Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three
levels of inputs which prioritize the inputs used in measuring fair value are:
Level
1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair
value hierarchy gives the highest priority to Level 1 inputs.
Level
2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market
corroborated inputs.
Level
3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions
about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level
3 inputs.
In
determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs
and minimize the use of unobservable inputs. The following table presents the Company’s financial assets and liabilities
that are carried at fair value, classified according to the three categories described above:
Fair
Value Measurements at September 30, 2019
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Quoted Prices
in Active
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Significant
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Markets for
Identical
Assets
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Other
Observable
Inputs
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Significant Unobservable Inputs
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Total
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(Level 1)
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(Level 2)
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(Level 3)
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None
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$
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-
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$
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-
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$
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-
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$
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-
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Total assets and liabilities at fair value
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$
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-
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$
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-
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$
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-
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$
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-
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Fair
Value Measurements at December 31, 2018
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Quoted Prices
in Active
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Significant
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Markets for
Identical
Assets
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Other
Observable
Inputs
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Significant Unobservable Inputs
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Total
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(Level 1)
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(Level 2)
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(Level 3)
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None
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$
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-
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$
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-
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$
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-
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$
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-
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Total assets and liabilities at fair value
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$
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-
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$
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-
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$
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-
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$
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-
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When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the fiscal periods ended September 30, 2019 and December 31, 2018, there were no significant transfers of financial assets
or financial liabilities between the hierarchy levels.
Earnings
per Common Share
We
compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method
and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period
is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is anti-dilutive.
Income
Taxes
We
have adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for
net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial
statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward
in future years.
We
must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates
and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition
of revenue and expense for tax and financial statement purposes.
Deferred
tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and
liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition
of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets
is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit
from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely
than not that these timing differences will not materialize and have provided a valuation allowance against substantially all
of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related
valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we
would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary
based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.
In
addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.
We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether,
and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary,
we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer
necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded
tax liability is less than we expect the ultimate assessment to be.
ASC
740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and
for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax
is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available
tax benefits not expected to be realized.
Uncertain
Tax Positions
The
Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN No. 48”) which was effective for
the Company on January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position
should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate
settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods and disclosure requirements.
Our
federal and state income tax returns are open for fiscal years ending on or after December 31, 2008. We are not under examination
by any jurisdiction for any tax year. At September 30, 2019, we had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required under FIN 48.
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-02, “Lease” Topic 842, which amends the guidance in former ASC Topic 840,
Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees
of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under
the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing,
and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification
affecting the pattern and classification of expense recognition in the income statement.
The
Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying
the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently,
financial information will not be updated and the disclosures required under the new standard will not be provided for dates and
periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any
expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3)
any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient
which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard
did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment
to opening equity. As of September 30, 2019, the adoption of the standard had no impact on the Company, as there were no leases
in place longer than 12 months.
In
May 2014, the FASB issued ASU 2014-09 which will supersede virtually all existing revenue guidance. Under this update, an entity
is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected
consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more
estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period
presented in the financial statements, or only to the most current reporting period presented in the financial statements with
a cumulative effect adjustment to retained earnings. The Company will elect to apply the impact (if any) of applying ASU 2014-09
to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings.
In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective
Date (“ASU 2015-14”). ASU 2015-14 deferred the effective date of ASU 2014-09 for one year, making it effective
for the year beginning December 31, 2017, with early adoption permitted as of January 1, 2017. We adopted ASU 2014-09 as of January
1, 2018. The Company does not believe the adoption of ASU 2014-09 had any material impact on its condensed consolidated financial
statements.
In
May 2017, the FASB issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including
adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not
yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available
for issuance. Early adoption is permitted. This adoption is not expected to have a material impact on our financial position or
results of operations.
In
February 2017, FASB issued Update 2017-06 - Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension
Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of
the Emerging Issues Task Force). Under Topic 960, investments in master trusts are presented in a single line item in the statement
of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in
practice. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest
in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available
for benefits and in the statement of changes in net assets available for benefits, respectively. Topics 960 and 962 require plans
to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by
general type, within the plan’s financial statements. Stakeholders said that the disclosure can be misleading when the plan
has a divided interest in the individual investments of the master trust (that is, when the plan has a specific, rather than a
proportionate, interest in the master trust). The amendments in this Update remove the requirement to disclose the percentage
interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest
in each of those general types of investments, which supplements the existing requirement to disclose the master trust’s
balances in each general type of investments. Early adoption is permitted. This adoption is not expected to have a material impact
on our financial position or results of operations.
In
the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary
for a fair statement of the financial position and results of operations and cash flows as of and for the six-month periods ended
June 30, 2019 and 2018 and for the twelve-month period ended December 31, 2018. All such adjustments are of a normal recurring
nature.
Management
does not anticipate that the adoption of these standards will have a material impact on the financial statements.
2.
Stockholders’ Equity
Common
Stock
We
are currently authorized to issue up to 500,000,000 shares of $0.00001 par value common stock.
Issuances
of Common Stock During the Period ended September 30, 2019:
The
Company did not issue any Common Stock during the three and nine months ended September 30, 2019.
Issuances
of Common Stock in 2018:
During
the year ended December 31, 2018, the Company raised $1,795,147 from a rights offering of a total of 9,555,468 Units at $0.10
per Unit, each consisting of: (i) one share of Common Stock; (ii) one Class A Warrant exercisable for a period of 24 months to
purchase ½ share of Common Stock at the equivalent of $0.50 per share; and (iii) one Callable Class B Warrant exercisable
for a period of 36 months to purchase ½ share of Common Stock at the equivalent of $1.25 per share. The Company intends
to use the proceeds of the rights offering for general corporate purposes, including working capital, capital expenditures, as
well as acquisitions and other strategic purposes. The warrants fair value is $408,093 and were valued using a Black- Scholes
valuation model.
During
the year ended December 31, 2018, the Company converted $167,800 in accrued wages and $107,503 in related party debt owed to management
into 2,753,030 shares of Common Stock. In connection with this conversion, the Company issued 1,376,515 Class A Warrants; 1,376,515
Class B Warrants and 2,750,000 Class C Warrants. The warrants were valued at $385,552 and were recorded for a total as loss on
conversion on debt under additional paid in capital of $315,900.
Preferred
Stock
We
are currently authorized to issue up to 25,000,000 shares of $0.00001 par value preferred stock. Effective December 31, 2007 the
board of directors approved the cancellation of all previously issued preferred shares and approved the cancellation and extinguishment
of all common and preferred share conversion rights of any kind, including without limitation, warrants, options, convertible
debt instruments and convertible preferred stock of every series and accompanying conversion rights of any kind. There are no
preferred shares outstanding as of September 30, 2019 and December 31, 2019.
3.
Notes Payable
As
of September 30, 2019 and December 31, 2018, the Company had notes for a total of $65,905 and $37,736, respectively, outstanding.
For the nine months ended September 30, 2019 and the year ended December 31, 2018, we recorded $2,853 and $13,150, respectively,
in imputed interest related to the notes outstanding. During the three months ended September 30, 2019, the Company received advances
of $28,169 from a related party and expenses interest of $982.
During
the year ended December 31, 2018, the Company received advances on outstanding notes for a total of $64,648 from a related party.
During
the year ended December 31, 2018, the In Company’s chief executive officers and chairman converted debt and accrued wages
in the aggregate amount of $275,303 into Units consisting of a total of: (i) 2,753,030 restricted shares, 1,376,515 Class A Warrants
and Class B Warrants, having the same terms as the Class A and Class B Warrants set forth in the Reg S Unit Offering, and 2,750,000
Class C Warrants exercisable to purchase one share of Common Stock at a price of $1.00 per Share. The warrants were valued at
$385,552 using the Black- Scholes valuation model and were recorded for a total as loss on conversion on debt under additional
paid in capital of $315,900.
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September 30, 2019
|
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December 31, 2018
|
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Michael Cohen
|
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$
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65,905
|
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$
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37,736
|
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4.
Other Assets
As
of September 30, 2019 and December 31, 2018, the Company recorded $0 and $4,882, as other assets representing securities compliance
services to be repaid in cash or securities compliance services pursuant to an arrangement with the Company’s securities
compliance consultant.
5.
Related Party Transactions Not Disclosed Elsewhere
As
of September 30, 2019 and December 31, 2019, the Company had short-term notes for a total of $65,905 and $37,736, respectively,
outstanding. For the nine months ended September 30, 2019 and the year ended December 31, 2018, we recorded $2,853 and $13,150,
respectively, in imputed interest related to the note outstanding.
During
the year ended December 31, 2018, the Company received advances on outstanding notes for a total of $64,648 from a related party.
During
the year ended December 31, 2018, the In Company’s chief executive officers and chairman converted debt and accrued wages
in the aggregate amount of $275,303 into Units consisting of a total of: (i) 2,753,030 restricted shares, 1,376,515 Class A Warrants
and Class B Warrants, having the same terms as the Class A and Class B Warrants set forth in the Reg S Unit Offering, and 2,750,000
Class C Warrants exercisable to purchase one share of Common Stock at a price of $1.00 per Share. The warrants were valued at
$385,552 using the Black- Scholes valuation model and were recorded for a total as loss on conversion on debt under additional
paid in capital of $315,900.
As
of September 30, 2019 and December 31, 2018, we had accrued salaries of $252,580 and $157,810, respectively, due to three of our
officers.
As
of September 30, 2019 and December 31, 2018, we had accrued interest of $1,564 due to Mr. Weissberg, who is the Company’s
Chairman of the audit committee. The principal underlying the note was converted in 2014.
6.
Going Concern
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source
of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. These and other factors
raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
7.
Subsequent Events
There
were no other subsequent events following the period ended September 30, 2019 through the date the financial statements were issued
that would materially affect the financial statements.