|
|
|
|
|
Page
|
|
PART I - Financial Information
|
||||||
|
|
|
||||
Item 1.
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
||||
|
Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016
|
|
|
|
3
|
|
|
|
|
||||
|
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)
|
|
|
|
4
|
|
|
Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2017 (unaudited)
|
|
|
|
5
|
|
|
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (unaudited)
|
|
|
|
6
|
|
|
|
|
||||
|
Notes to Consolidated Financial Statements (unaudited)
|
|
|
|
7
|
|
|
|
|
||||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
25
|
|
|
|
|
||||
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
|
29
|
|
|
|
|
||||
Item 4.
|
Controls and Procedures
|
|
|
|
29
|
|
|
|
|
||||
PART II - Other Information
|
||||||
|
|
|
||||
Item 1.
|
Legal Proceedings
|
|
|
|
30
|
|
|
|
|
||||
Item 1A.
|
Risk Factors
|
|
|
|
30
|
|
|
|
|
||||
Item 6.
|
Exhibits
|
|
|
|
38
|
|
|
|
|
||||
|
Signatures
|
|
|
|
39
|
|
|
||||||||
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
||
|
|
(Unaudited)
|
|
|
(Reclassified)
|
|
||
ASSETS
|
|
|
|
|
||||
Current assets (Note 1):
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
13,139,722
|
|
|
$
|
5,529,848
|
|
Short-term investments
|
|
|
-
|
|
|
|
7,506,761
|
|
Prepaid expenses and other current assets
|
|
|
295,059
|
|
|
|
219,991
|
|
Current assets of discontinued operations (Note 9)
|
|
|
11,532
|
|
|
|
486,890
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
13,446,313
|
|
|
|
13,743,490
|
|
|
||||||||
Property and equipment, net (Note 3)
|
|
|
4,113
|
|
|
|
5,538
|
|
Investment in Coinsquare (Note 2)
|
3,000,000
|
-
|
||||||
|
||||||||
Other long term assets, net (Note 4)
|
|
|
899,319
|
|
|
|
938,038
|
|
|
||||||||
Noncurrent assets of discontinued operations (Note 9)
|
|
|
-
|
|
|
|
2,353,749
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
17,349,745
|
|
|
$
|
17,040,815
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
248,820
|
|
|
$
|
253,817
|
|
Accrued compensation
|
|
|
4,659
|
|
|
|
1,520
|
|
Accrued expenses
|
|
|
122,990
|
|
|
|
304,675
|
|
Notes and other obligations, current portion (Note 5)
|
|
|
215,712
|
|
|
|
139,611
|
|
Deferred revenue, current portion (Note 8)
|
|
|
96,698
|
|
|
|
96,698
|
|
Current liabilities of discontinued operations (Note 9)
|
|
|
202,080
|
|
|
|
258,819
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
890,959
|
|
|
|
1,055,140
|
|
|
||||||||
Deferred revenue, less current portion (Note 8)
|
|
|
992,792
|
|
|
|
1,065,316
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,883,751
|
|
|
|
2,120,456
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Notes 6, 8 and 10)
|
||||||||
|
|
|
|
|
|
|
|
|
Stockholders' equity (Notes 6 and 7):
|
|
|
|
|
|
|
|
|
Preferred Stock, no par value, 15,000,000 (2017) and 0 (2016) shares authorized; 2,000,000 (2017) and 0 (2016) shares designated as 2% Series A Convertible Stock, 19,194.72 shares issued and outstanding (2017)
|
4,798,671
|
-
|
||||||
Common stock, no par value, 170,000,000 (2017) and 60,000,000 (2016) shares authorized; shares issued and outstanding 5,447,792 (2017) and 4,503,971 (2016)
|
|
|
131,490,219
|
|
|
|
124,775,635
|
|
Accumulated deficit
|
|
|
(120,822,896
|
)
|
|
|
(109,855,276
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
15,465,994
|
|
|
|
14,920,359
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
17,349,745
|
|
|
$
|
17,040,815
|
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Other revenue – fee (Note 8)
|
$
|
24,175
|
$
|
24,175
|
$
|
72,524
|
$
|
72,524
|
||||||||
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative
|
597,018
|
1,480,141
|
2,694,211
|
3,333,102
|
||||||||||||
Research and development
|
17,658
|
52,963
|
63,008
|
498,634
|
||||||||||||
|
||||||||||||||||
Total operating expenses
|
614,676
|
1,533,104
|
2,757,219
|
3,831,736
|
||||||||||||
|
||||||||||||||||
Operating loss from continuing operations
|
(590,501
|
)
|
(1,508,929
|
)
|
(2,684,695
|
)
|
(3,759,212
|
)
|
||||||||
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||
Gain on property and equipment sale (Note 3)
|
-
|
13,062
|
-
|
1,933,335
|
||||||||||||
Interest expense
|
(4,773,397
|
)
|
(2,384
|
)
|
(4,802,296
|
)
|
(28,130
|
)
|
||||||||
Investment income
|
30,903
|
23,639
|
83,247
|
103,031
|
||||||||||||
|
||||||||||||||||
Total other income (expense)
|
(4,742,494
|
)
|
34,317
|
(4,719,049
|
)
|
2,008,236
|
||||||||||
|
||||||||||||||||
Loss from continuing operations
|
(5,332,995
|
)
|
(1,474,612
|
)
|
(7,403,744
|
)
|
(1,750,976
|
)
|
||||||||
|
||||||||||||||||
Discontinued operations (Note 9):
|
||||||||||||||||
Income (loss) from operations
|
30,922
|
(236,473
|
)
|
(944,557
|
)
|
(236,473
|
)
|
|||||||||
Escrow forfeiture gain (Note 6)
|
-
|
-
|
134,812
|
-
|
||||||||||||
Impairment (loss)
|
-
|
-
|
(2,754,131
|
)
|
-
|
|||||||||||
Total income (loss) from discontinued operations
|
30,922
|
(236,473
|
)
|
(3,563,876
|
)
|
(236,473
|
)
|
|||||||||
Net loss
|
$
|
(5,302,073
|
)
|
$
|
(1,711,085
|
)
|
$
|
(10,967,620
|
)
|
$
|
(1,987,449
|
)
|
||||
|
||||||||||||||||
Basic and diluted net income (loss) per share (Note 1)
|
||||||||||||||||
Continuing operations
|
$
|
(0.99
|
)
|
$
|
(0.37
|
)
|
$
|
(1.47
|
)
|
$
|
(0.45
|
)
|
||||
Discontinued operations
|
0.01
|
(0.06
|
)
|
(0.71
|
)
|
(0.06
|
)
|
|||||||||
Basic and diluted net loss per share (Note 1)
|
$
|
(0.98
|
)
|
$
|
(0.43
|
)
|
$
|
(2.18
|
)
|
$
|
(0.51
|
)
|
||||
|
||||||||||||||||
Basic and diluted weighted average number of shares outstanding (Note 1)
|
5,401,552
|
3,999,637
|
5,037,764
|
3,918,151
|
Preferred Stock
|
Common Stock
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Deficit
|
Total
|
|||||||||||||||||||
Balance, January 1, 2017
|
—
|
$
|
—
|
4,503,971
|
$
|
124,775,635
|
$
|
(109,855,276
|
)
|
$
|
14,920,359
|
|||||||||||||
Private placement of Common Stock (Note 6)
|
—
|
—
|
900,000
|
1,913,509
|
—
|
1,913,509
|
||||||||||||||||||
Common Shares in escrow forfeited and retired (Note 6)
|
—
|
—
|
(32,801
|
)
|
(134,812
|
)
|
—
|
(134,812
|
)
|
|||||||||||||||
Equity rights redemption (Note 6)
|
—
|
—
|
—
|
(291,995
|
)
|
—
|
(291,995
|
)
|
||||||||||||||||
Discount on Convertible Debt arising from values of (Note 6):
|
||||||||||||||||||||||||
Warrants
|
—
|
—
|
—
|
2,325,151
|
—
|
2,325,151
|
||||||||||||||||||
Beneficial conversion feature
|
—
|
—
|
—
|
2,424,849
|
—
|
2,424,849
|
||||||||||||||||||
Preferred Stock issued upon Notes payable conversion (Note 6)
|
19,194.72
|
4,798,671
|
—
|
—
|
—
|
4,798,671
|
||||||||||||||||||
Exercise of stock options
|
—
|
—
|
34,000
|
98,260
|
—
|
98,260
|
||||||||||||||||||
Stock-based compensation issued for services
|
—
|
—
|
42,622
|
379,622
|
—
|
379,622
|
||||||||||||||||||
Net loss for the period
|
—
|
—
|
—
|
—
|
(10,967,620
|
)
|
(10,967,620
|
)
|
||||||||||||||||
Balance, September 30, 2017
|
19,194.72
|
$
|
4,798,671
|
5,447,792
|
$
|
131,490,219
|
$
|
(120,822,896
|
)
|
$
|
15,465,994
|
|
2017
|
2016
|
||||||
Cash flows from operating activities:
|
||||||||
Continuing operations:
|
||||||||
Net (loss)
|
$
|
(10,967,620
|
)
|
$
|
(1,987,449
|
)
|
||
(Loss) from discontinued operations
|
(3,563,876
|
)
|
(236,473
|
)
|
||||
(Loss) from continuing operations
|
(7,403,744
|
)
|
(1,750,976
|
)
|
||||
Adjustments to reconcile net loss from continuing operations to net cash used
|
||||||||
in operating activities of continuing operations:
|
||||||||
Amortization of discount on convertible debt
|
4,750,000
|
-
|
||||||
Stock-based compensation for services
|
379,622
|
368,459
|
||||||
Depreciation and amortization
|
55,899
|
74,098
|
||||||
Amortization of license fees
|
(72,524
|
)
|
(72,524
|
)
|
||||
Other non-cash (credits) charges
|
-
|
200,108
|
||||||
Gain on sale of property and equipment
|
-
|
(1,933,335
|
)
|
|||||
Change in:
|
||||||||
Prepaid expenses and other current assets
|
192,071
|
222,474
|
||||||
Accounts payable
|
(4,997
|
)
|
(483,410
|
)
|
||||
Accrued compensation
|
3,139
|
(120,775
|
)
|
|||||
Accrued expenses
|
(133,014
|
)
|
30,042
|
|||||
Net cash (used in) operating activities of continuing operations
|
(2,233,548
|
)
|
(3,465,839
|
)
|
||||
Net cash (used in) operating activities of discontinued operations
|
(930,323
|
)
|
(375,228
|
)
|
||||
Net cash (used in) operating activities
|
(3,163,871
|
)
|
(3,841,067
|
)
|
||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Continuing operations:
|
||||||||
Purchases of short-term investments
|
-
|
(13,818,949
|
)
|
|||||
Proceeds from sales of short-term investments
|
7,506,761
|
16,522,853
|
||||||
Investment in Coinsquare
|
(3,000,000
|
)
|
-
|
|||||
Proceeds from sale of property and equipment
|
-
|
1,799,143
|
||||||
Purchases of patent and trademark application costs
|
(14,255
|
)
|
(14,378
|
)
|
||||
Net cash provided by investing activities of continuing operations
|
4,492,506
|
4,488,669
|
||||||
Net cash provided by investing activities of discontinued operations
|
4,004
|
16,673
|
||||||
Net cash provided by investing activities
|
4,496,510
|
4,505,342
|
||||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Continuing operations:
|
||||||||
Net proceeds from issuance of convertible notes
|
4,750,000
|
-
|
||||||
Net proceeds from issuance of common stock, net of $336,491 in offering expenses
|
1,913,509
|
-
|
||||||
Net proceeds from exercise of stock options
|
98,260
|
-
|
||||||
Redemption of equity rights
|
(291,995
|
)
|
-
|
|||||
Repayment of notes payable and other obligations
|
(192,539
|
)
|
(229,238
|
)
|
||||
|
||||||||
Net cash provided by (used in) financing activities of continuing operations
|
6,277,235
|
(229,238
|
)
|
|||||
|
||||||||
Net increase in cash and cash equivalents
|
7,609,874
|
435,037
|
||||||
|
||||||||
Cash and cash equivalents at beginning of period
|
5,529,848
|
2,012,283
|
||||||
|
||||||||
Cash and cash equivalents at end of period
|
$
|
13,139,722
|
$
|
2,447,320
|
||||
|
||||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for interest
|
$
|
1,571
|
$
|
33,331
|
||||
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
Conversion of notes payable and accrued interest to preferred stock
|
$
|
4,798,671
|
$
|
-
|
||||
Liability payoffs upon property sale
|
$
|
-
|
$
|
2,064,758
|
• |
exploring other possible strategic options and financing opportunities available to the Company;
|
• |
evaluating options to monetize, partner or license the Company's assets, including the appendicitis product portfolio; and
|
• |
continuing to implement cost control initiatives to conserve cash.
|
|
December 31, 2016
|
|||||||
|
Cost
|
Fair Value
|
||||||
Certificates of deposit / commercial paper
|
$
|
2,378,222
|
$
|
2,373,891
|
||||
|
||||||||
Corporate bonds
|
5,138,182
|
5,132,870
|
||||||
|
||||||||
Total trading securities
|
$
|
7,516,404
|
$
|
7,506,761
|
||||
|
|
2017
|
2016
|
||||||
Interest income
|
$
|
84,177
|
$
|
101,236
|
||||
|
||||||||
Realized (losses)
|
(21
|
)
|
(2,893
|
)
|
||||
|
||||||||
Unrealized gains
|
11,575
|
21,501
|
||||||
|
||||||||
Management fee expenses
|
(12,484
|
)
|
(16,813
|
)
|
||||
|
||||||||
Net investment income
|
$
|
83,247
|
$
|
103,031
|
September 30,
2017
|
December 31,
2016
|
|||||||
Office and computer equipment
|
$
|
114,309
|
$
|
116,510
|
||||
Less accumulated depreciation
|
110,196
|
110,972
|
||||||
|
$
|
4,113
|
$
|
5,538
|
|
Beginning Balance
(December 31, 2016)
|
Additions
|
Impairments
|
Ending Balance
(September 30, 2017)
|
||||||||||||
|
||||||||||||||||
Cost:
|
||||||||||||||||
Patents
|
$
|
1,032,982
|
$
|
14,255
|
$
|
—
|
$
|
1,047,237
|
||||||||
Goodwill
|
447,951
|
—
|
—
|
447,951
|
||||||||||||
Total
|
1,480,933
|
14,255
|
—
|
1,495,188
|
||||||||||||
|
||||||||||||||||
Accumulated Amortization:
|
||||||||||||||||
Patents
|
(482,183
|
)
|
(52,974
|
)
|
—
|
(535,157
|
)
|
|||||||||
Goodwill
|
(60,712
|
)
|
—
|
—
|
(60,712
|
)
|
||||||||||
Total
|
(542,895
|
)
|
(52,974
|
)
|
—
|
(595,869
|
)
|
|||||||||
|
||||||||||||||||
Net Other Long Term Assets
|
$
|
938,038
|
$
|
(38,719
|
)
|
$
|
—
|
$
|
899,319
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
|
||||||||||||||||
Restricted stock awards under the Plan
|
$
|
100,396
|
$
|
—
|
$
|
188,572
|
$
|
—
|
||||||||
Stock option awards under the Plan
|
8,172
|
137,367
|
103,430
|
361,639
|
||||||||||||
Non-qualified stock option awards
|
—
|
6,820
|
87,620
|
6,820
|
||||||||||||
|
||||||||||||||||
Total stock-based compensation
|
$
|
108,568
|
$
|
144,187
|
$
|
379,622
|
$
|
368,459
|
|
Number of Shares
|
Weighted
Average
Grant-Date Fair Value
|
||||||
Unvested at January 1, 2017
|
-
|
$
|
-
|
|||||
Granted
|
422,000
|
3.69
|
||||||
Vested
|
(42,622
|
)
|
3.20
|
|||||
Forfeited
|
(40,000
|
)
|
3.13
|
|||||
Unvested at September 30, 2017
|
339,378
|
$
|
3.75
|
·
|
Grant date exercise price – the closing market price of the Company's common stock on the date of the grant;
|
·
|
Estimated option term – based on historical experience with existing option holders;
|
·
|
Estimated dividend rates – based on historical and anticipated dividends over the life of the option;
|
·
|
Term of the option – based on historical experience, grants have lives of approximately 3-5 years;
|
·
|
Risk-free interest rates – with maturities that approximate the expected life of the options granted;
|
·
|
Calculated stock price volatility – calculated over the expected life of the options granted, which is calculated based on the daily closing price of the Company's common stock over a period equal to the expected term of the option; and
|
·
|
Option exercise behaviors – based on actual and projected employee stock option exercises and forfeitures.
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected price volatility
|
|
|
101
|
%
|
|
|
99-100
|
%
|
Risk free interest rate
|
|
|
1.92
|
%
|
|
|
1.20
|
%
|
Expected term
|
5 years
|
|
5 years
|
|
|
|
Shares
Underlying
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Aggregate
Intrinsic
Value
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Outstanding at January 1, 2017
|
|
|
566,747
|
|
|
$
|
20.46
|
|
|
|
|
|
||||
Granted
|
|
|
20,000
|
|
|
|
4.02
|
|
|
|
|
|
||||
Exercised
|
|
|
(34,000
|
)
|
|
|
2.89
|
|
|
|
|
|
||||
Forfeited
|
|
|
(495,414
|
)
|
|
|
22.98
|
|
|
|
|
|
||||
Outstanding at September 30, 2017
|
|
|
57,333
|
|
|
$
|
3.32
|
|
|
|
9.1
|
|
|
$
|
105,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2017
|
|
|
27,500
|
|
|
$
|
3.07
|
|
|
|
8.8
|
|
|
$
|
57,500
|
|
Nonvested Shares
|
Nonvested
Shares
Underlying
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Grant Date
Fair Value
|
|||||||||
|
||||||||||||
Nonvested at January 1, 2017
|
97,738
|
$
|
3.51
|
$
|
2.58
|
|||||||
Granted
|
20,000
|
4.02
|
3.04
|
|||||||||
Vested
|
(30,905
|
)
|
4.92
|
3.57
|
||||||||
Forfeited
|
(57,000
|
)
|
2.92
|
2.16
|
||||||||
|
||||||||||||
Nonvested at September 30, 2017
|
29,833
|
$
|
3.54
|
$
|
2.67
|
|
|
Shares
Underlying
Options / Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
|
Aggregate
Intrinsic
Value
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding at January 1, 2017
|
|
|
527,003
|
|
|
$
|
13.36
|
|
|
|
|
|
|
|
||
Granted
|
|
|
2,800,000
|
|
|
|
3.54
|
|
|
|
|
|
|
|
||
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
||
Forfeited
|
|
|
(169,074
|
)
|
|
|
18.62
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Outstanding at September 30, 2017
|
|
|
3,157,929
|
|
|
$
|
4.37
|
|
|
|
2.3
|
|
|
$
|
4,534,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2017
|
|
|
3,157,929
|
|
|
$
|
4.37
|
|
|
|
2.3
|
|
|
$
|
4,534,000
|
|
• |
milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;
|
• |
potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and
|
• |
royalties, at low double digit rates, based on sales of licensed products.
|
Category
|
Totals
|
|||
License fees and milestone amounts paid / achieved
|
$
|
1,920,000
|
||
Third party obligations recorded, including WU
|
(363,700
|
)
|
||
Deferred revenue balance
|
1,556,300
|
|||
Revenue amortization to September 30, 2017
|
(466,810
|
)
|
||
Net deferred revenue balance at September 30, 2017
|
$
|
1,089,490
|
Commencement of license fees revenue recognition
|
Upon signing or receipt
|
|
Commencement of milestone revenue recognition
|
Upon milestone achievement over then remaining life
|
|
Original amortization period
|
197 months
|
|
Cash and cash equivalents
|
$
|
17,000
|
||
Accounts receivable
|
21,000
|
|||
Inventory
|
379,000
|
|||
Prepaid and other assets
|
51,000
|
|||
Equipment
|
1,000
|
|||
Identifiable intangible assets:
|
||||
Trademarks (5 year estimated useful life)
|
99,000
|
|||
Customer base (6 year estimated useful life)
|
37,000
|
|||
Developed technology (4 year estimated useful life)
|
1,864,000
|
|||
Total identifiable intangible assets
|
2,000,000
|
|||
Goodwill
|
430,000
|
|||
Accounts payable
|
(118,000
|
)
|
||
Accrued and other liabilities
|
(175,000
|
)
|
||
Non-controlling interest
|
(29,000
|
)
|
||
Purchase price
|
$
|
2,577,000
|
Trademarks
|
$
|
99,000
|
||
Customer base
|
37,000
|
|||
Developed technology
|
1,864,000
|
|||
Total
|
2,000,000
|
|||
Less accumulated amortization
|
(148,264
|
)
|
||
Balance at December 31, 2016
|
$
|
1,851,736
|
|
September 30, 2017
|
December 31, 2016
|
||||||
Current assets:
|
||||||||
Accounts receivable
|
$
|
8,000
|
$
|
5,000
|
||||
Inventories
|
-
|
416,000
|
||||||
Prepaid expenses
|
4,000
|
66,000
|
||||||
Total current assets
|
$
|
12,000
|
$
|
487,000
|
||||
|
||||||||
Equipment and furnishings, net
|
$
|
-
|
$
|
36,000
|
||||
Intangible assets, net
|
-
|
2,281,000
|
||||||
Deposit
|
-
|
37,000
|
||||||
Total noncurrent assets
|
$
|
-
|
$
|
2,354,000
|
||||
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
37,000
|
$
|
174,000
|
||||
Accrued expenses
|
28,000
|
85,000
|
||||||
Deferred revenue
|
137,000
|
-
|
||||||
Total current liabilities
|
$
|
202,000
|
$
|
259,000
|
|
Three Months
|
Nine Months
|
||||||
|
||||||||
Sales
|
$
|
7,000
|
$
|
37,000
|
||||
Cost of sales
|
2,000
|
6,000
|
||||||
Gross margin
|
5,000
|
31,000
|
||||||
Operating expenses (credit)
|
(26,000
|
)
|
975,000
|
|||||
Operating income (loss)
|
31,000
|
(944,000
|
)
|
|||||
Escrow forfeiture gain
|
-
|
135,000
|
||||||
Impairment (loss)
|
-
|
(2,754,000
|
)
|
|||||
|
||||||||
Income (loss) from discontinued operations
|
$
|
31,000
|
$
|
(3,563,000
|
)
|
|||
|
• |
continuing to evaluate opportunities for investments in the
blockchain and digital currency sector;
|
• |
exploring other possible strategic options and financing opportunities available to the Company;
|
• |
evaluating options to monetize, partner or license the Company's assets, including appendicitis product portfolio; and
|
• |
continuing to implement cost control initiatives to conserve cash.
|
• |
milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;
|
• |
potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and
|
• |
royalties, at low double digit rates, based on sales of licensed products.
|
|
•
|
Continued worldwide growth in the adoption and use of cryptocurrencies;
|
|
•
|
Governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems;
|
|
•
|
Changes in consumer demographics and public tastes and preferences;
|
|
•
|
The maintenance and development of the open-source software protocol of the network;
|
|
•
|
The availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;
|
|
•
|
General economic conditions and the regulatory environment relating to digital assets; and
|
|
•
|
Negative consumer sentiment and perception of bitcoin specifically and cryptocurrencies generally.
|
|
Riot Blockchain, Inc.
(Registrant)
|
|
|
Dated: November 13, 2017
|
|
|
/s/ John O’Rourke
|
|
John O’Rourke
Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
/s/ Jeffrey G. McGonegal
|
Dated: November 13, 2017
|
Jeffrey G. McGonegal
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
||
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
||
|
|
|
||
November 13, 2017
|
|
|
||
|
/s/ John O’Rourke
|
|
||
|
John O’Rourke, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
||
November 13, 2017
|
|
|
||
|
/s/ Jeffrey G. McGonegal
|
|
||
|
Jeffrey G. McGonegal, Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
November 13, 2017
|
|
|
|
/s/ Jeffrey G. McGonegal
|
|
|
Jeffrey G. McGonegal, Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
|
November 13, 2017
|
|
|
|
/s/ John O’Rourke
|
|
|
John O’Rourke, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)
|
|
TO:
|
goNumerical ltd.
(the “
Corporation
”)
|
Issuer:
goNumerical ltd.
|
Issue:
Units
|
Issue Price Per Unit:
|
C$1.73
|
No. of Units Purchased:
|
1,816,079
|
Total Issue Price:
|
C$ 3,141,817.00
|
GONUMERICAL LTD
By: _____________________
Name: Cole Diamond
Title: CEO
|
(i) |
is an accredited investor as defined in Rule 501(a) of Regulation D (a “
U.S. Accredited Investor
”) and is purchasing the Subscriber’s Securities pursuant to the exemption from registration provided by Section 4(a)(2) of the United States
Securities Act of 1933
, as amended, including the rules and regulation promulgated thereunder (the “
U.S. Securities Act
”) and Rule 506(b) of Regulation D thereunder, and has executed and delivered herewith a copy of
Schedule C
;
|
(iii) |
is not a party to any contract, undertaking, agreement or arrangement with any person to sell, transfer or pledge to such person, or anyone else, the Subscriber’s Securities, or any part thereof, or any interest therein and the Subscriber has no present plans to enter into any such contract, undertaking, agreement or arrangement;
|
(iv) |
is not planning to offer, sell or otherwise transfer any of the Subscriber’s Securities, and, if it does, it will not offer, sell or otherwise transfer any of the Subscriber’s Securities, directly or indirectly, unless the sale is:
|
(A) |
to the Corporation;
|
(B) |
made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations; or
|
(C) |
made in a transaction that is exempt from registration under the U.S. Securities Act pursuant to Section 4(a)(7) as a private resale of restricted securities, Rule 144 or Rule 144A, if available, or under applicable States Laws or does not require registration under the U.S. Securities Act or any applicable States Laws and the Purchaser has furnished to the Corporation, prior to such sale, an opinion of counsel of recognized standing or other evidence of exemption reasonably satisfactory to the Corporation confirming the compliance of such sale with the U.S. Securities Act and applicable States Laws;
|
(v) |
is not subscribing for the Subscriber’s Securities as a result of any form of general solicitation or general advertising, as those terms are used in Regulation D under the U.S. Securities Act, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio or television, or other form of telecommunications, or published or broadcast on the Internet or other forms of electronic display, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
|
(vi) |
acknowledges and agrees that, because the Corporation is incorporated outside of the United States, it may not be possible for U.S. shareholders of the Corporation to enforce outside of the United States judgments against the Corporation that are obtained in the United States, including actions predicated upon the civil liability provisions of the U.S. Securities Act. While reciprocal enforcement of judgment legislation exists between Canada and the United States, the Corporation may have defences available to avoid in Canada the effect of U.S. judgments under Canadian law, making enforcement difficult or impossible, and as such there is uncertainty as to whether Canadian courts would enforce (a) judgments of United States courts obtained against the Corporation predicated upon the civil liability provisions of the United States federal and state securities laws or (b) in original actions brought in Canada, liabilities against the Corporation predicated upon the United States federal and state securities laws. Therefore, shareholders of the Corporation in the United States may have to avail themselves of remedies under Canadian corporate and securities laws. Canadian law may not provide for remedies equivalent to those available under U.S. law,
|
· |
ordinary brokerage transactions and transactions in which the broker‑dealer solicits purchasers;
|
· |
block trades in which the broker‑dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
· |
purchases by a broker‑dealer as principal and resale by the broker‑dealer for its account;
|
· |
an exchange distribution in accordance with the rules of the applicable exchange;
|
· |
privately negotiated transactions;
|
· |
settlement of short sales;
|
· |
broker‑dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
|
· |
a combination of any such methods of sale; and
|
· |
any other method permitted pursuant to applicable law.
|
RIOT BLOCKCHAIN, INC.
By:
Name: _____________________________
Title:
_____________________________
Date Signed: ________________________
|
|
Executive: JOHN O’ROURKE
Date Signed: _________________________
|