Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies

v3.7.0.1
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2017
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 3 – Summary of Significant Accounting Policies
 
Principles of Consolidation
 
The consolidated condensed balance sheets as of June 30, 2017 and December 31, 2016 include the accounts of the Group and its wholly owned subsidiary, Coretec. The consolidated condensed statements of operations for the three and six months ended June 30, 2017 and cash flows for the six months ended June 30, 2017 include the accounts of the Group and its wholly owned subsidiary, Coretec. The consolidated condensed statements of operations for the three and six months ended June 30, 2016 and cash flows for the six months ended June 30, 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 the Group 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.
 
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 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 periods ended June 30, 2016.
 
The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:
 
 
 
June 30,
 
 
 
2017
 
2016
 
Options
 
 
284,166
 
 
-
 
Warrants
 
 
65,228
 
 
-
 
Series A convertible preferred stock
 
 
115,000
 
 
-
 
Series B convertible preferred stock
 
 
41,842,241
 
 
41,842,241
 
Convertible debentures
 
 
61,122,346
 
 
-
 
Total potentially dilutive shares
 
 
103,428,981
 
 
41,842,241
 
 
The table above for all periods has been retroactively adjusted to reflect the Reverse Split. 
 
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.