Quarterly report pursuant to sections 13 or 15(d)

Uncertainties and Use of Estimates

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Uncertainties and Use of Estimates
6 Months Ended
Jun. 30, 2012
Uncertainties and Use of Estimates

Note 1 – Uncertainties and Use of Estimates

 

Basis of Presentation

 

The accompanying financial statements of 3DIcon Corporation (the “Company”) have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company's year-end audited financial statements and related footnotes included in the previously filed 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 30, 2012, and the statements of its operations for the three and six months ended June 30, 2012 and 2011, and the period from inception (January 1, 2001) to June 30, 2012, and cash flows for the six month periods ended June 30, 2012 and 2011, and the period from inception (January 1, 2001) to June 30, 2012, have been included. The results of operations for interim periods may not be indicative of the results which may be realized for the full year.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

 

Revenue Recognition

 

Revenues from software license fees are accounted for in accordance with Accounting Standards Codification (“ASC”) 985-605, “Software Revenue Recognition”.  The Company recognizes revenue when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured.

 

Grant revenue is recognized when earned.

 

Recent Accounting Pronouncements

 

Based on management's assessment no new accounting standards, if adopted, would have a material impact on the accompanying financial statements.

 

Uncertainties

 

The accompanying financial statements have been prepared on a going concern basis.  The Company is in the development stage and has insufficient revenue and capital commitments to fund the development of its planned product and to pay operating expenses.

 

The Company has realized a cumulative net loss of $17,266,743 for the period from inception (January 1, 2001) to June 30, 2012, and a net loss of $845,623 and $945,672 for the six months ended June 30, 2012 and 2011, respectively.

 

The ability of the Company to continue as a going concern during the next year depends on the successful completion of the Company's capital raising efforts to fund the development of its planned products.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management plans to fund the future operations of the Company with existing cash, grants and investor funding. Under the terms of the Golden State debentures, as further described in Note 4, Golden State may advance an additional $378,787.  The additional advance would be available if the Company filed a registration statement; however, the Company does not plan to file such registration statement. In addition, pursuant to the 4.75% Convertible Debenture due in December 2014, beginning in November 2007, Golden State is obligated to submit conversion notices in an amount such that Golden State receives 1% of the outstanding shares of the Company every calendar quarter for a period of one year.  In connection with each conversion, Golden State is expected to simultaneously exercise a percentage of warrants equal to the percentage of the principal being converted.  The warrants are exercisable at $381.50 per share.  The number of warrants exercisable is subject to certain beneficial ownership limitations contained in the 4.75% Convertible Debenture (“the Beneficial Ownership Limitations”).  The Beneficial Ownership Limitations prevent Golden State from converting on the 4.75% Convertible Debenture or exercising warrants if such conversion or exercise would cause Golden State’s holdings to exceed 9.99% of the Company’s issued and outstanding common stock.  Subject to the Beneficial Ownership Limitations and provided that Golden State is able to sell the shares under Rule 144, Golden State is required to convert $85.71 of the 4.75% Convertible Debenture and exercise 857 warrants per month.  Based upon our current stock price, our issued and outstanding shares as of June 30, 2012 and ignoring the impact of the Beneficial Ownership Limitations, the Company may receive up to $1,962,000 in funding from Golden State as a result of warrant exercises during the remainder of the year ended December 31, 2012. During the six months ended June 30, 2012, the Company received $638,831 in funding under the terms of the 4.75% Convertible Debenture (see Note 4). 

  

The Company was approved for a matching grant from Oklahoma Center for the Advancement of Science and Technology (“OCAST”) on November 19, 2008 in the amount of approximately $300,000.  There remains $13,029 of grant funds to be provided through the end of the grant period, August 31, 2012.  (see Note 3)

 

Additionally, the Company is continuing to pursue financing through private offerings of debt or common stock.