Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Summary of Significant Accounting Policies

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Note 3 - Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
 
Note
3
– Summary of Significant Accounting Policies
 
Principles of Consolidation
 
The condensed consolidated financial statements include the accounts of the Group and its wholly owned subsidiary, Coretec. Intercompany transactions and balances have been eliminated in consolidation.
 
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 that a long-lived asset or asset group be tested for possible impairment, the Company
first
compares undiscounted cash flows expected to be generated with 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.
 
Reclassification
 
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications apply only to the Statement of Operations and have
no
effect on the previously reported net loss.
 
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 rates, embedded instruments and conversion discounts. 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. 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 condensed 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.  
 
Earnings(Loss) Per Common Share
 
 
Basic earnings (loss) per common share is computed by dividing net income or loss by the weighted average number of vested common shares outstanding during the period. Diluted earnings 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.  
 
Diluted loss per common share is calculated the same as basic loss per common share for all periods presented because the exercise or conversion of the securities and other instruments would be anti-dilutive due to the net loss. 
 
The following securities and other instruments to issue common stock are excluded from the calculation of weighted average dilutive common shares: 
 
   
September 30
,
 
   
2020
   
2019
 
Options
   
20,212,174
     
20,716,557
 
Warrants
   
1,770,000
     
61
 
Series A convertible preferred stock
   
115,000
     
115,000
 
Convertible debt
   
35,755,783
     
253,106,815
 
Total potentially dilutive shares
 
 
57,852,957
   
 
273,938,433
 
 
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 in Note
6.
 
 
Recent Accounting Pronouncements
 
The following is a summary of recent accounting pronouncements that are relevant to the Company:  
 
In
January 2017,
the FASB issued ASU
2017
-
04,
Intangibles – Goodwill and Other (Topic
350
): Simplifying the Test for Goodwill Impairment
. This ASU simplifies the subsequent measurement of goodwill by eliminating Step
2
from the goodwill test. Under Step
2,
an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, an entity should measure goodwill impairment and test by comparing the fair value of a reporting unity with its carrying amount. The Company adopted this standard effective
January 1, 2020
and will apply the standard on a prospective basis. The adoption of this standard did
not
have a material impact on the Company's consolidated financial position and results of operations.  
 
In
August 2020,
the FASB issued ASU
2020
-
06,
Debt with Conversion and Other Options (Subtopic
470
-
20
) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic
815
-
40
).
This ASU simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. As a result, after adopting ASU
No.
2020
-
06,
the Company will
no
longer separately present the embedded conversion feature of its convertible debt within stockholders' equity and interest expense is expected to decrease due to the elimination of debt discount amortization. ASU
No.
2020
-
06
is effective for the Company in the
first
quarter of
2024,
with early adoption permitted for the Company in the
first
quarter of
2021,
and
may
be adopted using either a full or modified retrospective approach. The Company is currently evaluating the full effect adopting ASU
No.
2020
-
06,
including the quantitative impact, will have on its consolidated financial statements, including the timing and adoption approach.