4. STOCK OPTIONS AND WARRANTS (Continued)
A summary of the Company’s stock option activity and related information follows:
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|
|
September 30, 2013
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|
|
2007
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|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Number
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|
|
average
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|
|
Number
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|
|
average
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|
|
|
|
of
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|
|
exercise
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|
|
of
|
|
|
exercise
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|
|
|
|
Options
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|
|
price
|
|
|
Options
|
|
|
price
|
|
|
Outstanding, beginning of period
|
|
|
236,667
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|
|
$
|
4.05
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|
|
|
1,740,000
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|
|
$
|
0.255
|
|
|
Granted
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|
|
600,000
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|
|
|
0.40
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|
|
|
-
|
|
|
|
-
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
(50,000
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)
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|
|
-
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|
|
Expired
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|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding, end of period
|
|
|
836,667
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|
|
$
|
1.43
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|
|
|
1,690,000
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|
|
$
|
0.255
|
|
|
Exercisable at the end of period
|
|
|
499,167
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|
|
$
|
2.13
|
|
|
|
1,650,425
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|
|
$
|
0.260
|
|
|
Weighted average fair value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
options granted during the period
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|
|
$
|
0.40
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|
|
|
|
|
|
$
|
0.500
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|
The weighted average remaining contractual life of options outstanding as of September 30, 2013 was as follows:
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|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Stock
|
|
|
Stock
|
|
|
Remaining
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|
|
Exercisable
|
|
|
Options
|
|
|
Options
|
|
|
Contractual
|
|
|
Prices
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
Life (years)
|
|
|
$
|
4.05
|
|
|
|
236,667
|
|
|
|
236,667
|
|
|
|
2.48
|
|
|
$
|
0.40
|
|
|
|
600,000
|
|
|
|
262,500
|
|
|
|
4.42
|
|
|
|
|
|
|
|
836,667
|
|
|
|
499,167
|
|
|
|
|
|
The stock-based compensation expense recognized in the statement of operations during the three months ended September 30, 2013, related to the granting of these options is $104,813.
Warrants
During the nine months ended September 30, 2013, the Company granted no warrants. As of September 30, 2013, 245,000 warrants are outstanding.
5.
CONVERTIBLE PROMISSORY NOTES
During the year ended December 31, 2012, the Company entered into two securities purchase agreements each providing for the sale by the Company of 8% unsecured Convertible Notes in the principal amounts of $42,500, and $32,500 for an aggregate total of $75,000. The notes matured on July 5, 2013, and August 14, 2013. After one hundred and eighty days (180) the holder converted both notes with an aggregate principal amount of $75,000, plus accrued interest of $3,000 on various dates during the period ended September 30, 2013 into 392,788 shares of common stock at prices ranging from $0.13 to $0.39 per share. The notes were measured at fair value using the Black-Scholes pricing model, and the Company recognized a gain on conversion of $4,676. The Company recorded debt discount of $55,493 related to the conversion feature of the notes, along with derivative liabilities at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $55,493, resulting in a net debt discount of $0 at September 30, 2013.
On January 18, 2013, the Company entered into a securities purchase agreement for the sale of 10% convertible promissory note for the aggregate principal amount of $80,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received an advance of $10,000. On April 16, 2013, the Company received an additional advance of $25,000. The total advances received as of September 30, 2013 was $35,000, of which $10,000 in principal, and $687 in accrued interest was converted into 106,577 shares of common stock on September 29, 2013. During July 2013, the Company extended the maturity date of the note from six (6) months to eighteen (18) months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of a) $0.40 per share b) fifty percent (50%) of the lowest trading price of common stock recorded on any trade day after the effective date, or c) the lowest effective price per share granted after the effective date. The fair value of the notes has been determined by using Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 71.48% to 274.85%, risk-free interest rate ranging from .01% to .10%, and an expected life of more than a year. The Company recorded debt discount of $35,000 related to the conversion feature of the notes, along with derivative liabilities at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $22,831, resulting in a net debt discount of $12,169 at September 30, 2013.
5.
CONVERTIBLE PROMISSORY NOTES (Continued)
On March 1, 2013, the Company entered into a securities purchase agreement, providing for the sale by the Company of a 10% unsecured Convertible Note in the aggregate principal amount of $100,000, to be advanced in amounts at the lender’s discretion. The total advance received on the note as of September 30, 2013 was $10,000. The note matures one (1) year from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.20 per share or fifty percent (50%) of the lowest trading price recorded on any trade day after the effective date. The fair value of the note has been determined by using the Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 65.07% to 168.03%, risk-free interest rate ranging from .04% to .16%, and an expected life of a year. The Company recorded debt discount of $10,000 related to the conversion feature of the note, along with derivative liability at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $5,836, resulting in a net debt discount of $4,164 at September 30, 2013.
On March 20, 2013, the Company entered into a securities purchase agreement, providing for the sale by the Company a 10% unsecured Convertible Note in the aggregate principal amount of $100,000, to be advanced in amounts at the lender’s discretion. The total advance received on the note as of September 30, 2013 was $25,000. The note matures one (1) year from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.20 per share or fifty percent (50%) of the lowest trading price recorded on any trade day after the effective date. The fair value of the note has been determined by using the Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 88.93% to 165.50%, risk-free interest rate ranging from .04% to .16%, and an expected life of a year. The Company recorded debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $13,288, resulting in a net debt discount of $11,712 at September 30, 2013.
On May 1, 2013, the Company entered into a securities purchase agreement for the sale of an 8% convertible promissory note for the aggregate principal amount of $32,500. The note matures on February 3, 2014. After one hundred and eighty days (180) the holder may convert into shares of common stock at a variable conversion price of 58% multiplied by the market price of the average lowest three (3) trading prices for the common stock during the ten (10) trading days prior to the conversion date. The fair value of the note has been determined by using Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 112.61% to 182.26%, risk-free interest rate ranging from .10% to .15%, and an expected life of less than a year. The Company recorded a debt discount of $32,492 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $17,765, resulting in a net debt discount of $14,727 at September 30, 2013.
On May 13, 2013, the Company entered into a securities purchase agreement for the sale of a 10% convertible promissory note in the aggregate principal amount of $80,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received an advance of $25,000. The note matures six (6) months from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.40 per share or fifty percent (50%) of the lowest trading price recorded on any trade day after the effective date. The fair value of the notes has been determined by using the Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 98.91% to 184.0%, risk-free interest rate ranging from .02% to .09%, and an expected life of less than a year. The Company recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $19,444, resulting in a net debt discount of $5,556 at September 30, 2013.
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|
On June 5, 2013, the Company issued two 5% convertible promissory notes in exchange for services rendered in the aggregate amount of $242,000. The notes are convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.24 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The notes mature two (2) years from their effective dates. The fair value of the notes has been determined by using the Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 95.58% to 117.40%, risk-free interest rate ranging from .22% to .34%, and an expected life of two (2) years. The Company recorded a debt discount of $160,479 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $25,721, resulting in a net debt discount of $134,758 at September 30, 2013.
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|
|
5.
CONVERTIBLE PROMISSORY NOTES (Continued)
|
On June 21, 2013, the Company entered into a securities purchase agreement] for the sale of a 10% convertible promissory note in the aggregate principal amount of $100,000, to be advanced in amounts at the lender’s discretion. Upon execution of the securities purchase agreement, the Company received an advance of $25,000. On July 26, 2013, the Company received an additional advance of $25,000. The total advances received on the note as of September 30, 2013 was $50,000. The note matures one (1) year from the effective date of each advance. The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.40 per share or fifty percent (50%) of the lowest trading price recorded on any trade day after the effective date. The fair value of the notes has been determined by using the Black-Scholes pricing model with the following weighted average assumptions: no dividend yield, expected volatility ranging from 137.04% to 159.84%, risk-free interest rate ranging from .11% to .15%, and an expected life of one (1) year. The Company recorded a debt discount of $50,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2013, the debt discount was amortized, and recorded as interest expense in the amount of $11,438, resulting in a net debt discount of $38,562 at September 30, 2013.
We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The derivative liability is adjusted periodically according to the stock price fluctuations. At the time of conversion, any remaining derivative liability will be charged to additional paid-in capital.
The derivative liability recognized in the financial statements as of September 30, 2013 was $718,799.
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|
Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported no subsequent events.
|
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Special Note on Forward-Looking Statements.
Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below, and elsewhere in this report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements contained herein after the date of this report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth in our annual report on Form 10-K filed with the SEC on February 26,2013, and in other reports filed by us with the SEC
You should read the following description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included in this report.
We are developing an innovative technology to produce bio-based materials from renewable plant sources that will reduce the cost per watt of Photovoltaic solar modules. Most of the solar industry is focused on photovoltaic efficiency to reduce cost, but we are introducing a new dimension of cost reduction by replacing petroleum-based plastic solar module components with durable bio-based components. The process for producing electricity from sunlight is known as Photovoltaics. Photovoltaic ("PV") is the science of capturing and converting sun light into electricity.
We are focusing our research and product development efforts on producing bio-based components that meet the thermal and durability requirements of current PV solar module manufacturing processes for conventional crystalline cell designs as well as thin film PV devices in an effort to capitalize on what we perceive as cost advantages to current petroleum based PV solar module components. We currently use Nylon 11, which is derived from castor oil in the development of our technology.
Our current supplier of this product is Arkema, Inc. We do not currently have an agreement with Arkema for the supply of Nylon 11 and there is currently no other known supplier of Nylon 11. If we are unable to obtain Nylon 11 for our products, we will seek alternative options which may include similar biobased materials such as Nylon 1010 for which there are many known suppliers.
We were incorporated in the State of Nevada on April 24, 2006, as BioSolar Labs, Inc. Our name was changed to BioSolar, Inc. on June 8, 2006. Our principal executive offices are located at 27936 Lost Canyon Road, Suite 202, Santa Clarita, California 91387, and our telephone number is (661) 251-0001. Our fiscal year end is December 31.
Application of Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the Black Scholes option pricing model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.
In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to recording net revenue, collectability of accounts receivable, useful lives and impairment of tangible and intangible assets, accruals, income taxes, inventory realization, stock-based compensation expense and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.
Fair Value of Financial Instruments
Our cash, cash equivalents, investments, inventory, prepaid expenses, and accounts payable are stated at cost which approximates fair value due to the short-term nature of these instruments.
Recently Issued Accounting Pronouncements
Management reviewed accounting pronouncements issued during the nine months ended September 30, 2013 and no pronouncements were adopted during the period.
Results of Operations – Three Months Ended September 30, 2013 Compared to the Three Months Ended September 30, 2012
OPERATING EXPENSES
General and Administrative Expenses
General and administrative (“G&A”) expenses decreased by $1,390 to $173,868 for the three months ended September 30, 2013, compared to $175,258 for the prior period ended September 30, 2012. This decrease in G&A expenses was the result of a decrease in non-cash stock compensation expense of $17,735, an increase in license fees of $2,514, delivery expense of $3,976, professional fees of $9,263 and an overall increase of $592 in other G&A expenses.
Research and Development (“R&D”) expenses were $707 for the three months ended September 30, 2013, compared to $36,399 for the prior period ended September 30, 2012. R&D costs have decreased due to the Company shifting its focus to product marketing.
Other income and (expenses) increased by $288,589 to $289,026 for the three months ended September 30, 2013, compared to $437 for the prior period ended September 30, 2012. The increase was the result of an increase in interest income of $40, an increase on gain in settlement of debt of $2,090, the change in fair value of the derivative instruments of $216,998, amortization of debt discount in the amount of $66,758, and an increase in interest expense in the amount of $6,963. The increase in other income and (expenses) was due to the Company entering into debt financing with convertible promissory notes.
Our loss increased by $251,507 to $465,652 for the three months ended September 30, 2013, compared to $214,145 for the prior period ended September 30, 2012. The increase in net loss was due to an increase in other income and (expenses), and an overall decrease in operating expenses. Currently the Company is in its development stage and has no revenues.
Results of Operations – Nine Months Ended September 30, 2013 Compared to the Nine Months Ended September 30, 2012
OPERATING EXPENSES
General and Administrative Expenses
G&A expenses decreased by $133,345 to $494,642 for the nine months ended September 30, 2013, compared to $627,987 for the prior period ended September 30, 2012. This decrease in G&A expenses was the result of an increase in professional fees of $11,448, with a decrease in non-cash stock compensation expense of $122,111, payroll tax expense of $13,696, travel expenses of $10,774 and an overall increase of $1,788 in other G&A expenses.
R&D expenses were $2,736 for the nine months ended September 30, 2013, compared to $74,134 for the prior period ended September 30, 2012. R&D costs have decreased due to the Company shifting its focus to product marketing.
Other income and (expenses) increased by $634,188 to $634,801 for the nine months ended September 30, 2013, compared to $613 the prior period ended September 30, 2012. The increase was the result of an increase in interest income of $46, an increase on gain in settlement of debt of $6,766, the change in fair value of derivative instruments of $461,115, amortization of debt discount in the amount of $167,232, and an increase in interest expense in the amount of $12,653. The increase in other income and (expenses) was due to the Company entering into debt financing with convertible promissory notes.
Our loss increased by $429,552 to $1,138,331 for the nine months ended September 30, 2013, compared to $708,779 for the prior period ended September 30, 2012. The increase in net loss was due to an increase in other income and (expenses), and an overall decrease in operating expenses. Currently the Company is in its development stage and has no revenues.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2013, we had a capital deficit of $632,146 compared to working capital of $190,013 for the year ended December 31, 2012. This increase in capital deficit of $442,133 was due primarily to an increase in cash, prepaid expenses, derivative liability, and convertible notes issued by the Company, with a decrease in accounts payable and accrued expenses
During the nine months ended September 30, 2013, the cash used in operating activities was $326,349 as compared to $271,956 for the prior period ended September 30, 2012. The increase of $54,393 in the use of cash for operating activities was primarily due to an overall increase in net loss due to the non-cash cost associated with debt financing transactions consummated by the Company, and an increase in prepaid expenses, with a decrease in accounts payable, accrued expenses, and non cash stock compensation.
Cash used in investing activities for the nine months ended September 30, 2013 was $5,808, as compared to $3,664 for the prior period ended September 30, 2012. The overall net change of $2,144 in investing activities was primarily due to an increase in patent expenditures, and no purchase of equipment for the current period compared to the prior period.
Cash provided from financing activities was $575,791 for the nine months ended September 30, 2013, as compared to $255,365 for the prior period ended September 30, 2012. Our capital needs have primarily been met from the proceeds of equity financing and convertible debt, as we are currently in the development stage and have not generated any revenues since inception.
We do not have any material commitments for capital expenditures during the next twelve months. Although proceeds from our financing activities are currently sufficient to fund our operating expenses through the next four months, we will need to raise additional funds in the future so that we can expand our operations. Therefore, our future operations are dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, or experience unexpected cash requirements that would force us to seek additional financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.
We believe that we have assets to ensure that we can continue to operate without liquidation over the next four months, due to our cash on hand, and our ability to raise money from our investor base. Based on the aforesaid, we believe we have the ability to continue our operations for the next twelve months and will be able to realize assets and discharge liabilities in the normal course of our operations.
Our financial statements as of September 30, 2013 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued their report dated February 25, 2013 that included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern ultimately is dependent on our ability to generate revenue, which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
PLAN OF OPERATION AND FINANCING NEEDS
We are engaged in the development of an innovative technology to produce bio-based materials from renewable plant sources that will reduce the cost per watt of Photovoltaic solar cells. We plan to develop our products and thereafter focus our efforts on establishing markets in related sectors by the end of 2013
.
Our plan of operation within the next nine months is to utilize our cash balances to fully commercialize our bio-based backsheet component (BioBacksheet
TM
) to replace the petroleum based backsheet in crystalline photovoltaic modules. In addition, we intend to further enhance test programs to determine the physical properties and characteristics that will be most suitable for the further development of biobased solar module components, and build solar panels, as we attempt to validate the commercial viability of our product. We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next four months. Management estimates that it will require additional cash resources during 2014, based upon its current operating plan and condition. We expect increased expenses during the first half of 2014 as we ramp up sales and marketing efforts associated with gradual production volume increase. We will be investigating additional financing alternatives, including equity and/or debt financing. There is no assurance that capital in any form would be available to us, and if available, on terms and conditions that are acceptable. If we are unable to obtain sufficient funds during the next twelve months, we may be forced to scale back our operations, which could have a material adverse impact on, or cause us to curtail and/or cease the development of our products.
Off-Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, result of operations, liquidity or capital expenditures.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There was no change to our internal control over financial reporting that occurred during our third fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
