Texas
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59-2219994
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification Number)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated
filer
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☐
(Do not check if a smaller reporting
company)
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Smaller reporting company
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☒
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Emerging
growth company
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☐
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Page
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Part I – Financial Information
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ITEM 1. Financial Statements
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2
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Unaudited Consolidated Balance Sheets as of September 30, 2018 and
December 31, 2017
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2
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Unaudited
Consolidated Statements of Operations for the Three and Nine-months
Ended September 30, 2018 and 2017
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3
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Unaudited
Consolidated Statements of Cash Flows for the Nine-months Ended
September 30, 2018 and 2017
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4
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Notes to Unaudited Consolidated Financial Statements
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5
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ITEM 2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
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12
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ITEM 3. Quantitative and Qualitative
Disclosures about Market Risk
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15
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ITEM 4. Controls and Procedures
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15
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Part II. Other Information
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ITEM 1. Legal Proceedings
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16
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ITEM 1A Risk Factors
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16
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ITEM 2. Unregistered Sales of Equity
Securities and Use of Proceeds
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16
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ITEM 3. Defaults upon Senior
Securities
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16
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ITEM 4. Mine Safety Disclosures
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16
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ITEM 5. Other Information
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16
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ITEM 6. Exhibits
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17
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Signatures
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17
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September, 30
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December 31,
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2018
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2017
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Assets
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Current assets
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Cash
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$
646,496
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$
463,189
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Accounts
receivable, net of allowance for bad debt of $41,384 and
$28,910
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865,149
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786,250
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Royalty
receivable
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50,250
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50,250
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Inventory,
net of allowance for obsolescence of $0 and $144,996
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-
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711,397
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Prepaid
and other assets
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43,105
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26,274
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Total current assets
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1,605,000
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2,037,360
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Long-term assets:
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Property,
plant and equipment, net of accumulated depreciation of $65,874 and
$56,951
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57,069
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63,211
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Intangible
assets, net of accumulated amortization of $483,767 and
$434,999
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68,523
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117,291
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Equity
method investment (Cellerate, LLC)
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-
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Total long-term assets
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2,085,009
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180,502
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Total assets
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$
3,690,009
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$
2,217,862
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Liabilities and shareholder' equity
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Current liabilities
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Accounts
payable
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$
198,787
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$
225,462
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Accounts payable - Related
Parties
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23,044
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60,000
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Accrued
royalties and payables
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126,853
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244,422
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Accrued
bonus and commissions
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230,438
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46,534
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Deferred
rent
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12,141
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13,920
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Accrued
interest
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-
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324,986
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Convertible
notes payable - Related Parties
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-
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1,200,000
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Total current liabilities
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591,263
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2,115,324
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Long-term liabilities
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Convertible
notes payable
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1,500,000
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-
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Accrued interest
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6,986
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-
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Total long-term liabilities
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1,506,986
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-
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Total liabilities
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2,098,249
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2,115,324
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Shareholders' equity
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Series C Convertible Preferred Stock,
$10 par value, 100,000 shares authorized; none issued and
outstanding as of September 30, 2018 and 85,646 issued and
outstanding as of December 31, 2017
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-
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855,610
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Common Stock: $.001 par value;
250,000,000 shares authorized; 236,646,990 issued and 236,642,901
outstanding as of September 30, 2018 and 113,427,943 issued and
113,423,854 outstanding as of December 31, 2017
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236,647
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113,428
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Additional
paid-in capital
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48,349,245
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46,013,982
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Treasury
stock
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(12,039
)
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(12,039
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Accumulated
deficit
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(46,982,093
)
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(46,868,443
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Total
shareholders' equity
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1,591,760
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102,538
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Total liabilities and shareholders' equity
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$
3,690,009
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$
2,217,862
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Three Months
Ended
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Nine Months
Ended
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September
30
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September
30
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2018
(a)
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2017
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2018
(a)
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2017
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Revenues
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1,566,425
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$
1,549,016
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5,790,302
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$
4,607,162
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Cost
of goods sold
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115,907
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230,049
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484,801
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568,071
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Gross
profit
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1,450,518
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1,318,967
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5,305,501
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4,039,091
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Operating
expenses
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Selling,
general and administrative expenses
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1,561,197
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1,303,344
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5,263,858
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3,799,644
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Depreciation
and amortization
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21,316
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41,400
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63,392
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82,329
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Bad
debt expense
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-
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2,998
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12,558
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8,913
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Total
operating expenses
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1,582,513
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1,347,742
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5,339,808
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3,890,886
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Operating
income / (loss)
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(131,995
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(28,775
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(34,307
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148,205
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Other income / (expense)
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Income
from equity method investment – Cellerate, LLC
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10,906
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-
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10,906
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-
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Change
in fair value of derivative liability
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-
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6
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44
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Other
expense / (income)
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(22,957
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14
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(22,655
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65
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Interest
expense
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(6,986
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(19,807
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(67,594
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(115,421
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Debt
forgiveness
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-
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-
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-
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50,646
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Total other income / (expense)
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(19,037
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(19,787
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(79,343
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(64,666
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Net
income / (loss)
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(151,032
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(48,562
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(113,650
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83,539
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Series C preferred
stock dividends
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-
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(42,873
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(28,061
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(100,677
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Series C preferred
stock inducement dividends
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-
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-
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(103,197
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-
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Net
loss available to common shareholders
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$
(151,032
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$
(91,435
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$
(244,908
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$
(17,138
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Basic loss per
share of common stock
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$
(0.00
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$
(0.00
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$
(0.00
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$
(0.00
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Diluted loss per
share of common stock
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$
(0.00
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$
(0.00
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$
(0.00
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$
(0.00
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Weighted average
number of common shares outstanding basic
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236,642,901
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111,161,335
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210,599,065
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110,536,584
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Weighted average
number of common shares outstanding diluted
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236,642,901
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111,161,335
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210,599,065
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110,536,584
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2018
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2017
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Cash flows from operating activities:
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Net
income / (loss)
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$
(113,650
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$
83,539
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Adjustments
to reconcile net loss to net cash used in operating
activities
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Depreciation
and amortization
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63,392
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82,330
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Additional
interest expense on convertible debt
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60,608
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-
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Gain
on forgiveness of debt
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-
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(50,646
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Bad
debt expense
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12,558
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8,913
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Recognition
of vesting stock option expense
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17,278
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-
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Income
from equity method investment
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(10,906
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-
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Common
stock issued for services
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60,250
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(Gain)
on change in fair value of derivative liabilities
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-
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(44
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Changes
in assets and liabilities:
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(Increase)
decrease in accounts receivable
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(91,457
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(78,917
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(Increase)
decrease in inventory
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262,886
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(472,451
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(Increase)
decrease in prepaids and other assets
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(16,831
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(31,880
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Increase
(decrease) in accrued royalties
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(185,877
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(44,405
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Increase
(decrease) in accounts payable
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(26,675
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(37,831
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Increase
(decrease) in accounts payable related parties
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(36,956
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(71,813
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Increase
(decrease) in accrued liabilities
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250,433
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36,970
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Increase
(decrease) in accrued interest payable
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6,986
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104,482
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Net cash flows provided by (used in) operating
activities
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191,789
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(411,503
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Cash flows from investing activities:
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Purchase
of property and equipment
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(8,482
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(126,453
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Net cash flows used in investing activities
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(8,482
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(126,453
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Cash flows from financing activities:
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Payments
on capital lease obligation
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-
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(3,422
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Payments
on debt
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-
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(190,838
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Cash
proceeds from sale of series C preferred stock
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-
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50,050
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Net cash flows used in financing activities
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-
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(144,210
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Net increase (decrease) in cash
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183,307
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(682,166
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Cash and cash equivalents, beginning of period
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463,189
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833,480
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Cash and cash equivalents, end of period
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$
646,496
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$
151,314
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Cash paid during the period for:
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Interest
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-
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10,937
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Income
taxes
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-
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-
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Supplemental non-cash investing and financing
activities:
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Equity
method investment
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1,948,511
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-
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Common
stock issued for Series C dividends
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15,007
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137
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Common
stock issued for conversion of Series C Preferred
Stock
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85,561
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8,000
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Common
stock issued for conversion of related party debt and
interest
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1,585,594
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-
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Nine-months Ended
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September,
30
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2018
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2017
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CellerateRX
Powder
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$
5,249,059
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$
4,083,068
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CellerateRX
Gel
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355,472
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373,344
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HemaQuell
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35,021
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-
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Royalty
revenue
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150,750
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150,750
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Total Revenue
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$
5,790,302
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$
4,607,162
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For the
Nine-months Ended
September 30,
2018
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Shares
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Weighted
Average
Exercise
Price
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Outstanding at
beginning of period
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5,100,000
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$
0.06
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Granted
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-
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-
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Exercised
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-
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-
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Forfeited
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-
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-
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Expired
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(5,100,000
)
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0.06
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Outstanding at end
of period
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-
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$
-
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For the Nine-months Ended September 30, 2018
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Options
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Weighted Average
Exercise Price
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Outstanding
at beginning of period
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1,150,000
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$
0.06
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Granted
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400,000
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0.06
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Exercised
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-
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-
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Forfeited
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-
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-
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Expired
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Outstanding
at end of period
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1,550,000
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$
0.06
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Exhibit No.
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Description
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10.1
*
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Contribution
Agreement dated August 27, 2018 between Wound Care Innovations, LLC
and CGI Cellerate RX, LLC.
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10.2
*
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Operating
Agreement dated August 27, 2018 between Wound Care Innovations, LLC
and CGI Cellerate RX, LLC.
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10.3
*
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Sublicense
Agreement dated August 27, 2018 between CGI Cellerate RX, LLC and
Cellerate, LLC.
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10.4
*
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Professional
Services Agreement dated August 27, 2018 between Wound Management
Technologies, Inc., CGI Cellerate RX, LLC and Cellerate,
LLC.
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10.5
*
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Convertible
Promissory Note to CGI Cellerate RX, LLC
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10.6
*
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Cellerate,
LLC Statement of Operations for the month ending September 30,
2018
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31.1
*
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Certification
of Principal Executive Officer in accordance with 18 U.S.C. Section
1350, as adopted by Section 302 of the Sarbanes-Oxley Act of
2002.
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31.2
*
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Certification
of Principal Financial Officer in accordance with 18 U.S.C. Section
1350, as adopted by Section 302 of the Sarbanes-Oxley Act of
2002.
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32.1
*
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Certification
of Principal Executive Officer in accordance with 18 U.S.C. Section
1350, as adopted by Section 906 of the Sarbanes-Oxley Act of
2002.
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32.2
*
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Certification
of Principal Financial Officer in accordance with 18 U.S.C. Section
1350, as adopted by Section 906 of the Sarbanes-Oxley Act of
2002.
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101
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Interactive
Data Files pursuant to Rule 405 of Regulation S-T.
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Wound Management Technologies, Inc.
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November
14, 2018
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By:
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/s/ Michael
McNeil
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Michael
McNeil
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Chief
Financial Officer
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