ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
This Quarterly Report on Form 10-Q contains predictions, estimates and other forward-looking statements relating to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology.
Forward-looking statements involve known and unknown risks, uncertainties and other factors including the risks set forth in the section entitled "Risk Factors" in our Post-Effective Amendment No. 1 to our Registration Statement on Form S-1, as
filed with the Securities and Exchange Commission (the "SEC") on March 15, 2018, that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by
the forward-looking statements.
Forward-looking statements represent our management's beliefs and assumptions only as of the date of this Report. You should read this Report with the understanding that our actual future results
may be materially different from what we expect.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after
the date on which they are made, except as required by federal securities and any other applicable law.
The management's discussion and analysis of our financial condition and results of operations are based upon our condensed financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP").
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements for the nine months ended September 30, 2019 and the notes
thereto appearing elsewhere in this Report and the Company's audited financial statements for the fiscal year ended December 31, 2018, as filed with the SEC in its Annual Report on Form 10-K on March 25, 2019, along with the accompanying notes. As
used in this Quarterly Report, the terms "we", "us", "our", and the "Company" means BioLabMart Inc. prior to August 8, 2017 and Qrons Inc. since August 8, 2017.
Overview
The Company was incorporated under the laws of the State of Wyoming on August 22, 2016 as BioLabMart Inc. and changed its name to Qrons Inc. on August 8, 2017.
The Company is a preclinical stage biotechnology company developing advanced stem cell synthetic hydrogel-based solutions to combat neuronal injuries and achieve a breakthrough in the treatment of traumatic brain
injuries ("TBIs") for both concussions and penetrating injuries, an unmet medical need. We believe that our approach is pushing the boundaries of science by using the latest advances in molecular biology and chemistry. The Company collaborates with
universities and scientists in the fields of regenerative medicine, tissue engineering and 3D printable hydrogels to develop a treatment that integrates proprietary, engineered mesenchymal stem cells, 3D printable implant, smart materials and a novel
delivery system.
To date, the Company has two product candidates for treating penetrating and non-penetrating (concussion-like) TBIs, both integrating proprietary, anti-brain inflammation synthetic hydrogel and modified mesenchymal
stem cells ("MSCs"). QS100TM is an injury specific, 3D printable, implantable MSCs-synthetic hydrogel, to treat penetrating brain injuries and QS200TM is an injectable MSCs-synthetic hydrogel for the treatment of diffused injuries commonly referred
to as concussions.
As described below, while continuing research under the Company's sponsored research agreement (the "Sponsored Research Agreement") with the Trustees of Dartmouth College ("Dartmouth") to develop innovative 3D
printable, biocompatible advanced materials, the Company entered into an intellectual property license agreement (the “Intellectual Property Agreement”) with Dartmouth pursuant to which Dartmouth granted the Company an exclusive worldwide, royalty
bearing license for such 3D printable materials in the field of human and animal health and certain additional patent rights to use and commercialize licensed products and services.
In addition, the Company is engaged in laboratory research relating to neuronal tissue regeneration and/or repair in Israel in connection with service agreements with Ariel University R&D Co., Ltd., now known as
Ariel Scientific Innovations Ltd., a wholly owned subsidiary of Ariel University, in Ariel, Israel ("Ariel").
The Company has relied primarily on its two co-founders, Jonah Meer, Chief Executive Officer, and Ido Merfeld, President, who are its sole directors to manage its day-to-day business. Effective July 1, 2019, the
Company appointed John N. Bonfiglio as its Chief Operating Officer. The Company currently outsources all professional services to third parties in an effort to maintain lower operational costs.
Messrs. Meer and Merfeld, as the holders of the Company's issued and outstanding shares of the Company's Class A Preferred Stock, collectively have 66 2/3% of the voting rights of the Company. Acting together, they
will be able to influence the outcome of all corporate actions requiring approval of our stockholders.
The Company's common stock was approved by the Financial Industry Regulatory Authority ("FINRA") for quotation on the OTC pink sheets under the symbol "BLMB" as of July 3, 2017. On July 6, 2017, the Company's board of
directors and shareholders approved an amendment to its Articles of Incorporation changing the name of the Company from "BioLabMart Inc." to "Qrons Inc. The Secretary of State of the State of Wyoming approved such name change, effective August 8,
2017. FINRA announced the Company's name change to Qrons Inc. on its Daily List on August 9, 2017. The new name and symbol, "QRON", became effective on August 10, 2017.
The Company's common stock was upgraded from the Pink Market and commenced trading on the OTCQB Venture Market on August 12, 2019. The common stock will continue to be traded under the symbol "QRON".
Intellectual Property Agreement with Dartmouth
Pursuant to an option agreement with Dartmouth entered into on October 17, 2017, on October 2, 2019 the Company entered into the Intellectual Property Agreement pursuant to which, effective September 3, 2019 (the
Effective Date”), Dartmouth granted the Company an exclusive world-wide license under the patent application entitled “Mechanically Interlocked Molecules-based Materials for 3D Printing” in the field of human and animal health and certain additional
patent rights to use and commercialize licensed products and services. The license grant includes the right of the Company to sublicense to third parties subject to the terms of the Agreement.
The Company will pay Dartmouth: (i) a $25,000 license issue fee; (ii) an annual license maintenance fee of $25,000, commencing on the first anniversary of the Effective Date until the first commercial sale of a
licensed product or service; (iii) an earned royalty of 2% of net sales (as defined in the Agreement) of licensed products and services by the Company or a sublicensee; (iv) 15% of consideration received by the Company under a sublicense; and (v)
beginning as of the first commercial sale, an annual minimum royalty payment of $500,000 in the first calendar year after the first commercial sale, $1,000,000 in the second calendar year, and $2,000,000 in the third calendar year and each year
thereafter. The Company will also reimburse Dartmouth for all patent preparation, filing, maintenance and defense costs.
Under the Agreement, the Company must diligently proceed with the development, manufacture and sale of licensed products and licensed services, including funding at least $1,000,000 of research in each calendar year
beginning in 2019 and ending with the first commercial sale of a licensed product; filing an IND/BLA (or equivalent) with the FDA or a comparable European regulatory agency before the four-year anniversary of the Effective Date, make the first
commercial sale of a licensed product before the twelve-year anniversary of the Effective Date and achieve annual net sales of at least $50,000,000 by 2033. If the Company fails to perform any of these obligations, Dartmouth has the option to
terminate the Agreement or change the exclusive license to a nonexclusive license.
Failure to timely make any payment due under the Agreement will result in interest charges to the Company of the lower of 10% per year or the maximum amount of interest allowable by applicable law.
The Agreement may be terminated by Dartmouth if the Company is in material breach of the Agreement which is not cured after 30 days of notice thereof or if the Company becomes insolvent. Dartmouth may terminate the
Agreement if the Company challenges a Dartmouth patent or does not terminate a sublicensee that challenges a Dartmouth patent, except in response to a valid court or governmental order. The Company may terminate the Agreement at any time upon six
months written notice to Dartmouth.
If the Company or any sublicensee or affiliate institutes or participates in a licensed patent challenge, the then current earned royalty rate for licensed products covered by Dartmouth patents will automatically be
increased to three times the then current earned royalty rate.
Sponsored Research Agreement with Dartmouth
On July 12, 2018, the Company entered into a one-year Sponsored Research Agreement with Dartmouth pursuant to which the Company will fund research conducted by Dartmouth of mutual interest to the parties in accordance
with the Agreement. Intellectual property invented or developed solely by a party shall be owned by such party and intellectual property jointly invented or developed shall be jointly owned. Dartmouth shall retain an irrevocable worldwide right to
use intellectual property owned by it resulting from its research under the Sponsored Research Agreement on a non-exclusive royalty-free basis for research and education purposes.
If either party desires to obtain patent and copyright protection for intellectual property created under the Sponsored Research Agreement, such party shall notify the other party and the parties shall agree upon
intellectual property protection strategy and cost allocation. Each party shall have the right to grant licenses under jointly-owned patents to third parties, subject to the Company's option to the exclusive right to license Dartmouth intellectual
property and/or Dartmouth's ownership in jointly-owned intellectual property upon notification to Dartmouth in accordance with the terms of the Agreement and at the Company's cost. If the Company exercises its option to license intellectual property,
Dartmouth shall negotiate exclusively with the Company for 180 days (or such additional period as agreed upon by the parties) for such licenses. The Company will be required to reimburse Dartmouth for the costs of patent prosecution and maintenance
in the United States and any foreign country and demonstrate reasonable efforts to commercialize the technology.
The Sponsored Research Agreement may be terminated earlier than one year upon written agreement of the parties, a material breach which is not cured within 30 days of notice thereof, if Professor Ke
no longer conducts the research under the Agreement and a successor acceptable to both parties is not available, or in the event of an unauthorized assignment of the Company's rights and obligations under the Agreement. On November 4, 2019, the
Company and Dartmouth entered in the First Amendment to the Sponsored Research Agreement to extend the term of the Agreement and provide for an additional year of funding through July 14, 2020.
License Agreement with Ariel
On December 14, 2016, the Company entered into a license and research funding agreement (the "License Agreement") with Ariel under which the Company paid Ariel $100,000 to fund research for 12 months (with an option to
extend such research financing and research period). In consideration therefor, the Company received an exclusive worldwide royalty-bearing license in Ariel patents and know-how to develop and commercialize products based on or incorporating
coral-based conditioned medium for neuronal tissue regeneration and/or repair, resulting from Ariel's research or technology or the Company's research funding in accordance with milestones set forth in the Agreement.
The License Agreement provides that the Company make royalty payments of 4% of net sales (which may be increased if any patent is challenged by the Company or its affiliates or decreased if there is a valid patent
claim) within 30 days of each calendar quarter for the later of (i) 15 years from the date of the first sale in a country and (ii) until the last to expire of Ariel's patents in a country. The Company may provide a sublicense for cash in a bonafide
arm's length transaction. The Company agreed to pay Ariel 15% of any consideration received by the Company in connection with any such sublicense (except royalties on net sales) within 30 days of receipt. The Company is also required to make
milestone payments of (i) $130,000 upon the successful completion of clinical U.S. Food and Drug Administration ("FDA") Phase II trials and (ii) $390,000 upon the successful completion of clinical FDA Phase III trials, within 6 months of completion.
Any late payments under the License Agreement will bear interest at 3% plus LIBOR.
Patent expenses incurred by Ariel under the License Agreement will be reimbursed by the Company. Any infringement action instituted by a party to the License Agreement that results in a recovery in excess of such
party's expenses will belong 85% to the party bringing such action and 15% to the other party.
Under the License Agreement, at the Company's discretion, Ariel will transfer its technology to the Company upon the earliest to occur of (i) a successful Phase II FDA trial of a product developed under the Agreement;
(ii) the acquisition of the Company by a third party of at least 45% of the share capital of the Company in a bonafide transaction valued at least at $100 million and the assumption of the License Agreement by such third party, or (iii) Ariel's
written consent.
The License Agreement provides that each of the Company and Ariel are required to keep the other party's proprietary information confidential for the longer of (i) the term of the License Agreement and seven years from
the date of disclosure. The License Agreement shall continue in effect until all of the Company's payment obligations under the Agreement have been made. After the expiration of the License Agreement, the Company will have a non-exclusive worldwide
license to the Ariel technology. The Company can terminate the License Agreement for any reason upon 60 days prior written notice in which event Ariel will be required to reimburse the Company for any unused research funds. The License Agreement will
terminate upon a material breach of either party that is not cured in 30 days from notice thereof, or by bankruptcy, dissolution, liquidation or the discontinuance of business. Ariel may immediately terminate the License Agreement upon a challenge to
its patent validity by the Company or an affiliate of the Company. Without Ariel's prior written consent, the Company may not assign the License Agreement except to an affiliate or to a successor entity in a merger or acquisition provided the
assignee assumes the License Agreement obligations.
Upon the earliest occurrence of (i) an underwritten public offering with proceeds of at least $25 million, (ii) the consolidation, merger or reorganization, or (iii) the sale of all or substantially all of its shares
or assets of the Company or its affiliates, the Company is required to issue to Ariel an immediately exercisable warrant for that number of shares equal to 4% of the issued and outstanding shares of the Company at the time of issuance (the "Ariel
Warrant"). The License Agreement also provides that the Company register shares exercised pursuant to the warrant by Ariel within 6 months of a request by Ariel by either "piggyback" or a demand registration.
The Company and Ariel entered into Addendum #1, effective December 13, 2017 (the "Addendum") to the License Agreement pursuant to which Ariel was permitted to exercise a portion of the Ariel Warrant on December 13,
2017, the Company issued 119,950 shares of common stock to Ariel, representing 1% of the issued and outstanding shares of the Company on such date. The right to the balance of the shares subject to the Ariel Warrant remains subject to the terms of
the License Agreement and the occurrence of an Exit Event (as described in the License Agreement). In addition, the Addendum provides that Ariel may not request a demand registration until the balance of the shares subject to the Ariel Warrant is
exercised.
The issuance of shares upon exercise of the balance of the Ariel Warrant in the future will result in dilution to the interests of other stockholders.
Services Agreement with Ariel
In lieu of extending the research financing and research period under the License Agreement beyond the initial 12 months, on December 14, 2017, the Company entered into a 12-month services agreement with Ariel (the
"Services Agreement") pursuant to which a team at Ariel University under the direction of Prof. Danny Baranes will conduct molecular biology research activities involving the testing of implant materials for the Company. If Prof. Baranes ceases to
provide services, the Company must be notified and a replacement acceptable to the Company must be found within 30 days or the Company may terminate the Services Agreement. As compensation for such services, the Company paid Ariel (i) $17,250 on
December 19, 2017 and (ii) $17,250 on April 26, 2018. On April 12, 2018, the Services Agreement was amended to provide for the payment by the Company of an additional monthly fee, commencing March 2018, of up to 8,000 Israeli shekels as compensation
for additional costs which the Company may request.
The Services Agreement may be terminated by a non-breaching party upon a material breach that is not cured within 30 days by the other party. The Services Agreement may also be terminated by the Company upon thirty
days' written notice to Ariel. Ariel must keep confidential information of the Company confidential for five years after the term of the Services Agreement.
On March 6, 2018, the Company entered into an additional services agreement with Ariel for the services of Professor Gadi Turgeman and his neurobiology research team in their lab pursuant to which the Company paid
Ariel $20,580 on each of March 19, 2018 and August 22, 2018. On April 11, 2019, the services agreement was amended to extend the term for an additional twelve months until March 6, 2020 for an aggregate of $41,160 to be paid by the Company to Ariel
in quarterly payments of $10,290 on each of April 11, 2019, June 1, 2019, September 1, 2019 and December 1, 2019.
Plan of Operations
We have not generated any revenue from the sales of products.
To date, we have identified two product candidates. We have completed an in-vivo efficacy experiment with QS100TM for treating penetrating brain injuries in an animal model that was successful in substantiating our
theories and practices regarding cell regeneration. We have begun animal in-vivo efficacy experiments with QS200TM for treating concussions and other diffused axonal injuries. We are currently conducting an extensive animal proof of concept for our
products which will include a product mix study.
In the next 12 months, we currently plan on completing development of our product candidates. This will require us to continue working with Dartmouth under the Sponsored Research Agreement in our development of
innovative 3D printable biocompatible advanced materials and stem cell delivery techniques. At our research facilities located in Ariel's labs our Stem Cells Team will continue development of our proprietary, neuro-regenerative MSC lines. Upon
completion of the development of our product candidates we will begin testing for efficacy. This will require us to establish an Efficacy Team, in preparation to reach clinical trials. Subject to sufficient resources, we also plan to expand our
research and development, including engaging FDA experienced personnel, advisors and contract research organizations for an investigational new drug ("IND") application.
John N. Bonfiglio, PhD, has served as our Chief Operating Officer since July 1, 2019 to oversee and coordinate our IND activities in an effort to accelerate the IND process in preparation for human clinical trials.
As our research progresses, if and when we achieve functional supporting results, the Company intends to file for additional patents.
We will continue exploring sources of additional debt and equity financings as well as available grants.
There is substantial doubt that we can continue as an on-going business unless we obtain additional capital to pay our expenditures. We do not currently have sufficient resources to accomplish all of the conditions
necessary for us to generate revenue.
Results of Operations
Three Months Ended September 30, 2019 and September 30, 2018
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future.
Net Loss
Our net loss for the three months ended September 30, 2019 and 2018 is as follows:
Total operating expenses for the three months ended September 30, 2019 were $459,743 compared to total operating expenses of $534,314 for the three months ended September 30, 2018. During the three months ended
September 30, 2019, the Company incurred $136,080 of research and development expenses which included payroll of $59,012, service fees related to certain research and development agreements of $57,670, fees associated with a sponsored research
agreement of $9,073, legal and filing fees related to patents of $2,263, purchases of expendable lab supplies and equipment of $5,979 and technology licensing fees of $2,083, compared
to $150,469
of research and development expenses which included payroll of $34,563, service fees related to certain research and development agreements of $71,757, fees associated with a sponsored research agreement of $9,073, legal and filing fees related to
patents of $710, publication and software fees of $2,163 and purchases of expendable lab supplies and equipment of $32,203. The Company incurred general and administrative expenses of $308,735 for the three months ended September 30, 2019
compared to general and administrative expenses of $377,545 for the three months ended September 30, 2018. The substantial decrease in general and administrative expense during the three months ended September 30, 2019 was primarily due to a decrease
in stock-based compensation costs for the three months ended September 30, 2019 compared to the three months ended September 30, 2018.
Professional fees were $14,928 for the three months
ended September 30, 2019, which reflect an increase in legal fees as a result of certain specialized contract and tax advice received compared to professional fees of $6,300 during the three months ended September 30, 2018. Other income in the three
months ended September 30, 2019 was $5,585 and included a gain of $6,828 as a result of the change in value of our derivative liabilities and interest expense of $1,243. Other expense was $9,027 in the three months ended September 30, 2018, which
represents
a loss of $2,979 as a result of the change in value of our derivative liabilities and interest expense of $6,048, including accretion of our convertible notes of $5,541.
We had a net loss of $454,158 in the three months ended September 30, 2019 compared to a net loss of $543,341 in the three months ended September 30, 2018.
Nine Months Ended September 30, 2019 and September 30, 2018
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future.
Net Loss
Our net loss for the nine months ended September 30, 2019 and 2018 is as follows:
Operating Expenses
Total operating expenses for the nine months ended September 30, 2019 were $922,414 compared to total operating expenses of $1,706,199 for the nine months ended September 30, 2018. During the nine months ended
September 30, 2019, the Company incurred $439,608 of research and development expenses which included payroll of $166,074, service fees related to certain research and development agreements of $180,720, fees associated with a sponsored research
agreement of $45,366, legal and filing fees related to patents of $21,760, software fees of $1,374, technology licensing fees of $2,083 and purchases of expendable lab supplies and equipment of $22,231, compared to research and development expenses
of $360,586, which included payroll of $88,856, service fees related to certain research and development agreements of $186,983, fees associated with a sponsored research agreement of $9,073, legal and filing
fees related to patents of $21,566, publication and software fees of $4,910 and purchases of expendable lab supplies and equipment of $49,198 during the nine months ended September 30, 2018. The Company incurred general and administrative
expenses of $424,652 for the nine months ended September 30, 2019 compared to general and administrative expenses of $1,310,164 for the nine months ended September 30, 2018. The substantial decrease in general and administrative expense during the
nine months ended September 30, 2019 was primarily due to stock-based compensation costs of $1,060,290 related to the issuance of stock options to our officers and certain advisors during the nine months ended September 30, 2018, with only $53,307
in stock-based compensation to our officers and advisors in the nine months ended September 30, 2019. Professional fees were $58,154 for the nine months ended September 30, 2019 compared to professional fees of $35,449 during the nine months ended
September 30, 2018, the increase in fees in the current nine months resulting in certain specialized contract and tax advice. Other expense in the nine months ended September 30, 2019 included a loss of $7,629 as a result of the change in value of
our derivative liabilities and interest expense of $3,159. Other expense was $19,255 in the nine months ended September 30, 2018, which represents a gain of $584 as a result of the change in value of our
derivative liabilities and interest expense of $19,839, including accretion of our convertible notes of $18,335.
We had a net loss of $933,202 in the nine months ended September 30, 2019 compared to a net loss of $1,725,454 in the nine months ended September 30, 2018.
Liquidity and Capital Resources
As of September 30, 2019, we had cash of $47,496. We are in the early stage of development and have experienced net losses to date and have not generated revenue from operations which raises substantial doubt about our
ability to continue as a going concern. There are a number of conditions that we must satisfy before we will be able to commercialize potential products and generate revenue, including successful development of product candidates, which includes
clinical trials, FDA approval, demonstration of effectiveness sufficient to generate commercial orders by customers, establishing production capabilities as well as effective marketing and sales capabilities for our product. We do not currently have
sufficient resources to accomplish any of these conditions necessary for us to generate revenue and currently expect to incur increasing operating expenses. We will require substantial additional funds for operations, the service of debt and to fund
our business objectives. We will have to continue to rely on equity and debt financing. There can be no assurance that financing, whether debt or equity, will always be available to us in the amount required at any particular time or for any
particular period or, if available, that it can be obtained on terms favorable to us.
The Company raised an aggregate of $281,000 between November 2, 2016 and January 27, 2017 from 37 accredited investors and an aggregate of $575,000 during 2018 from accredited investors in private placement offerings
under Regulation D and Regulation S under the Securities Act of 1933, as amended, respectively. The Company raised an additional $65,000 from accredited investors in private offerings in 2019. Additionally, on May 1, 2019, CubeSquare, LLC, a Delaware
limited liability company whose managing member is Jonah Meer, our Chief Executive Officer and which is 25% owned by Ido Merfeld, our President, loaned the Company $50,000 pursuant to a demand promissory note which accrues interest at 8% per annum.
On June 20, 2019, the Company received $100,000 from a third party in the form of an unsecured, demand, non-interest bearing, short term advance to meet its ongoing operating needs. On August 1, 2019, Jonah Meer, our Chief Executive Officer
provided a demand, short-term advance of $50,000 and on August 20, 2019, Ido Merfeld, our President, provided a demand, short-term advance of $50,000 to the Company to meet ongoing operating needs. However, without additional financing, we do not
believe our resources will be sufficient to meet our operating and capital needs beyond the fourth quarter of 2019.
Working Capital
Cash Flows
Operating Activities
Net cash used in operating activities was $411,366 for the nine months ended September 30, 2019 compared to $384,145 for the nine months ended September 30, 2018. Cash used in operating activities for the nine months
ended September 30, 2019 was primarily the result of our net loss, offset by non-cash items including compensation in the form of stock options for research and development expense totaling $126,686, stock options recorded as advisory and consulting
services of $201,375, stock options granted for administrative and advisory services of $53,307 and changes to our operating assets and liabilities including a decrease to prepaid expenses and increases to our accounts payable and accounts payable –
related parties. Cash used in the nine months ended September 30, 2018 was primarily the result of our net loss, offset by non-cash items including compensation in the form of stock options for research and development expense totaling $122,816, stock awards totaling $28,000, and stock-based compensation of $150,000 related to shares issued under the terms of an investor relations agreement, stock options recorded as administrative and advisory
expenses totaling 1,060,290, and changes to our operating assets and liabilities including an increase to prepaid expenses and increases to our accounts payable and accounts payable-related parties. In the nine months ended September 30, 2018, we
also recorded $18,335 as the non-cash accretion of the debt discount related to certain convertible notes.
Investing Activities
There were no investing activities during the nine months ended September 30, 2019 and September 30, 2018.
Financing Activities
Net cash provided by financing activities was $315,000 for the nine months ended September 30, 2019 compared to $525,000 for the nine months ended September 30, 2018. We received proceeds from private placement
offerings totaling $65,000 in the nine months ended September 30, 2019 as compared to $525,000 in the nine months ended September 30, 2018. During the nine months ended September 30, 2019 we received $50,000 in proceeds from related parties in the
form of a demand loan, $100,000 as a short-term advance from a third party and $100,000 as short-term advances from our officers with no comparative transactions during the nine months ended September 30, 2018.
Going Concern
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification
of liabilities that may be necessary should we be unable to continue in operation. Our report from our independent registered public accounting firm for the fiscal year ended December 31, 2018 includes an explanatory paragraph stating the Company has
experienced net losses to date, and it has not generated revenue from operations, and will need additional working capital for ongoing operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going
concern. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of our financial statements requires management to make 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 and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other
factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under
different assumptions and circumstances. Our significant accounting policies are more fully discussed in Note 2 to our unaudited financial statements contained herein.
Recent Accounting Pronouncements
There were various accounting standards and interpretations issued recently, none of which are expected to have a material effect on the Company's operations, financial position or cash flows.