Annual report pursuant to Section 13 and 15(d)

Summary of significant accounting policies (Policies)

v3.10.0.1
Summary of significant accounting policies (Policies)
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2017
Accounting Policies [Abstract]    
Basis of Presentation

Basis of presentation

 

 

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America.

 

The accompanying condensed consolidated financial statements include the accounts of 5BARz International Inc., and its subsidiary companies CelLynx Group Inc. (60%) and its wholly owned subsidiary CelLynx Inc. (100%), 5BARz International SA de CV (99%) in Mexico, and 5BARz India Private Limited (99.9%) in India. Results of operations for subsidiary Companies are reflected only from the date of acquisition of that subsidiary, for the period indicated in the respective statements. All intercompany accounts and transactions have been eliminated in consolidation.

Basis of presentation and principles of consolidation

 

 

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America and the rules and regulation of the U.S. Securities and Exchange Commission (SEC).

 

The accompanying consolidated financial statements include the accounts of 5BARz International Inc., and its subsidiary companies CelLynx Group Inc. (60%) and its wholly owned subsidiary CelLynx Inc. (100%), 5BARz International SA de CV (99%) in Mexico, 5BARz India Private Limited (99.9%) in India, 5BARz Pte. Limited (100%) in Singapore and 5BARz Global Technology in Grand Cayman. Results of operations for subsidiary Companies are reflected only from the date of acquisition of that subsidiary, for the period indicated in the respective statements. All intercompany accounts and transactions have been eliminated in consolidation.

 

Use of estimates

Use of estimates

 

The preparation of these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include impairment analysis for long lived assets, income taxes, litigation and valuation of derivative instruments. Actual results could differ from those estimates.

Use of estimates

 

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include impairment analysis for long lived assets, income taxes, litigation, valuation of derivative instruments, stock based compensation and inventory reserves. Actual results could differ from those estimates.

Research and development costs

Research and development costs

 

Research and development costs are charged to expense as incurred. The costs of materials and equipment that are acquired or constructed for research and development activities and have alternative future uses (either in research and development, marketing or production), are classified as property and equipment and depreciated over their estimated useful lives.

Research and development costs

 

Research and development costs are charged to expense as incurred. The costs of materials and equipment that are acquired or constructed for research and development activities and have alternative future uses (either in research and development, marketing or production), are classified as property and equipment and depreciated over their estimated useful lives.

Furniture and equipment

Furniture and equipment

 

Furniture and equipment is recorded at historical cost and is depreciated using the straight-line method over their estimated useful lives.  The useful life and depreciation method are reviewed periodically to ensure that the depreciation method and period are consistent with the anticipated pattern of future economic benefits. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. The furniture and equipment is being depreciated over their estimated useful life of three to seven years.

Furniture and equipment

 

Furniture and equipment is recorded at historical cost and is depreciated using the straight-line method over their estimated useful lives.  The useful life and depreciation method are reviewed periodically to ensure that the depreciation method and period are consistent with the anticipated pattern of future economic benefits. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the results of operations. The furniture and equipment is being depreciated over their estimated useful life of three to seven years. 

Inventory

Inventory

 

Inventories are carried at the lower of cost and net realizable value. Cost is determined using the FIFO method. The aggregate inventory as of September 30, 2017 was $176,672, June 30, 2017 was $177,733 and March 31, 2017 was $178,683.

Inventory

 

Inventories are carried at the lower of cost and net realizable value. Cost is determined using the FIFO method. As of December 31, 2017, the Company’s component inventory for production in India had a value of $83,428 (2016 - $97,169, 2015 – Nil). In addition, engineering component inventory in the US aggregates $6,464, further finished goods in Mexico had a cost basis of $92,383 at December 31, 2016 and net carry value of Nil at December 31, 2017.

Goodwill and other intangible assets

Goodwill and other intangible assets

 

The Company accounts for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. The Accounting Standards Codification (“Codification”) requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. 

 

When testing goodwill for impairment, the Company may assess qualitative factors for some or all of its reporting units to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively, the Company may bypass this qualitative assessment for some or all of our reporting units and perform a detailed quantitative test of impairment (step 1). If the Company performs the detailed quantitative impairment test and the carrying amount of the reporting unit exceeds its fair value, the Company would perform an analysis (step 2) to measure such impairment. The Company performed a qualitative assessment to identify and evaluate events and circumstances to conclude whether it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying amount. Based on the Company’s qualitative assessments, the Company concluded that a positive assertion can be made from the qualitative assessment that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount. In accordance with the Codification, the Company reviews the carrying value of its intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair market value. No impairment was deemed to exist as of September 30, 2017, June 30, 2017, March 31, 2017.

Goodwill and other intangible assets

 

The Company accounts for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. The Accounting Standards Codification (“Codification”) requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment). Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. 

 

When testing goodwill for impairment, the Company may assess qualitative factors for some or all of its reporting units to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. Alternatively, the Company may bypass this qualitative assessment for some or all of our reporting units and perform a detailed quantitative test of impairment (step 1). If the Company performs the detailed quantitative impairment test and the carrying amount of the reporting unit exceeds its fair value, the Company would perform an analysis (step 2) to measure such impairment. The Company performed a qualitative assessment to identify and evaluate events and circumstances to conclude whether it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying amount. Based on the Company’s qualitative assessments, the Company concluded that a positive assertion can be made from the qualitative assessment that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount. In accordance with the Codification, the Company reviews the carrying value of its intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair market value. No impairment was deemed to exist as of December 31, 2017, 2016 and 2015.

Cash held in Trust

Cash Held in Trust

 

Cash held in trust is comprised in part of amounts held in escrow by law firms engaged by the Company for the purpose of attending to financings entered into by the Company.  Pursuant to the terms of the Company’s subscription agreement, those trust funds are non-interest-bearing loans held until such time as the subscription agreement is completed and the underlying security is issued by the Company.  These trust arrangements are not fixed term but occur from time to time in conjunction with financings in progress by the Company.

 

In addition, on April 3, 2013, the Company entered into a Trust Agreement with Next Digital Corporation, a Company controlled by Mr. Daniel Bland, the CEO, CFO and Director of the Company.  Mr. Bland is the designated trustee of the Next Digital Corporation trust account.  Trust fund deposits are made by the Company or investors of the Company to the Next Digital bank account. The Trust funds remain on the books of the Company as a cash asset, and said funds are utilized solely for operating expenses of the Company. The trust funds are disbursed solely by the Trustee for expenditures for and on behalf of the Company and are made in compliance with the internal controls and cash management policies of the Company. In June 2018 that trust account was closed.

Cash held in trust aggregated $2,773 on September 30, 2017, $76,246 on June 30, 2017 and $34,480 on March 31, 2017.

Cash held in trust

 

Cash held in trust is comprised in part of amounts held in escrow by law firms engaged by the Company for the purpose of attending to financings entered into by the Company.  Pursuant to the terms of the Company’s subscription agreement, those trust funds are non-interest bearing loans held until such time as the subscription agreement is completed and the underlying security is issued by the Company.

 

In addition, on April 3, 2013, the Company entered into a Trust Agreement with a US corporation controlled by Mr. Daniel Bland, the CEO, CFO and Director of the Company.  From time to time trust funds are paid by direct deposit by the Company or investors of the Company to the trust account. The trust agent shall hold the trust deposits in the account of the trustee, and such account is not utilized for any purposes other than the business of the Company. In June 2018 that trust account was closed.

 

Cash held in trust aggregated $376 on December 31, 2017, (2016 - $170,221), (2015 - $193,000).

Long-Lived Assets Subject to Amortization

Long-Lived Assets Subject to Amortization

 

The Company amortizes intangible assets with finite lives over their estimated useful lives and reviews them for impairment annually or whenever impairment exists. The Company continually evaluates whether events or changes in circumstances might indicate that the remaining estimated useful life of long-lived assets may warrant revision, or that the remaining balance may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, the Company uses an estimate of the related undiscounted cash flows in measuring whether the long-lived asset should be written down to fair value. Measurement of the amount of impairment would be based on generally accepted valuation methodologies, as deemed appropriate. The intangible assets are being amortized over their estimated useful life of seven to ten years.  

 

There were no long-lived assets impairment charges recorded as of September 30, 2017, June 30, 2017 and March 31, 2017.

Long-Lived Assets Subject to Amortization

 

The Company amortizes intangible assets with finite lives over their estimated useful lives and reviews them for impairment annually or whenever impairment exists. The Company continually evaluates whether events or changes in circumstances might indicate that the remaining estimated useful life of long-lived assets may warrant revision, or that the remaining balance may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, the Company uses an estimate of the related undiscounted cash flows in measuring whether the long-lived asset should be written down to fair value. Measurement of the amount of impairment would be based on generally accepted valuation methodologies, as deemed appropriate. The intangible assets are being amortized over their estimated useful life of seven to ten years.  

 

There were no long-lived assets impairment charges recorded during the years ended December 31, 2017, 2016 and 2015.

Revenue recognition

Revenue recognition

 

The Company's revenue recognition policies are in compliance with ASC Topic 605, “Revenue Recognition.”  Revenue is recognized at the date of shipment to customers, and when the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist, and collectability is reasonably assured.

Revenue recognition

 

The Company's revenue recognition policies are in compliance with ASC Topic 605, “Revenue Recognition.”  Revenue is recognized at the date of shipment to customers, and when the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist, and collectability is reasonably assured.

Foreign currency translation

Foreign currency translation

 

Items included in the financial statements are measured using their functional currency, being the currency of the primary economic environment in which the Company operates. The financial statements are presented in US dollar which is the Company’s functional and presentation currency. Transactions in foreign currencies have been translated into US dollars using the current rate method. The functional currency of the Company’s subsidiary 5BARz International SA de CV, in Mexico is the local currency, the Mexican Peso, and the functional currency in the Company’s subsidiary 5BARz India Private Limited is the functional currency in India, the Indian Rupee. The functional currency in the Company’s subsidiary 5BARz Pte. Ltd. in Singapore is the Singapore Dollar. Assets and liabilities are translated based on the exchange rates at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. The resulting translated gain and loss adjustments are accumulated as a component of stockholders’ equity in other comprehensive income. 

Foreign currency translation

 

Items included in the financial statements are measured using their functional currency, being the currency of the primary economic environment in which the Company operates. The financial statements are presented in US dollar which is the Company’s functional and presentation currency. Transactions in foreign currencies have been translated into US dollars using the current rate method. The functional currency of the Company’s subsidiary 5BARz International SA de CV, in Mexico is the local currency, the Mexican Peso, and the functional currency in the Company’s subsidiary 5BARz India Private Limited is the functional currency in India, the Indian Rupee. The functional currency in the Company’s subsidiary 5BARz Pte. Ltd. in Singapore is the Singapore Dollar. Assets and liabilities are translated based on the exchange rates at the balance sheet date, while revenue and expense accounts are translated at the average exchange rates prevailing during the year. Equity accounts are translated at historical exchange rates. The resulting translated gain and loss adjustments are accumulated as a component of stockholders’ equity in other comprehensive income. 

Concentrations

Concentrations

The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Mexico, India and Singapore bank accounts. There were aggregate uninsured cash balances of $6,774 at September 30, 2017, $ 2,835 at June 30, 2017 and $3,129 at March 31, 2017, respectively.

Concentrations

The Company maintains cash with major financial institutions. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. No similar insurance or guarantee exists for cash held in Mexico, India and Singapore bank accounts. There were aggregate uninsured cash balances of $83,784 at December 31, 2017, $44,266 at December 31, 2016 and $13,634 at December 31, 2015, respectively.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

 

Comprehensive income (loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The guidance requires other comprehensive income (loss) to include foreign currency translation adjustments.

Comprehensive Income (Loss)

 

Comprehensive income(loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners’s sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The guidance requires other comprehensive income (loss) to include foreign currency translation adjustments.

Income Taxes  

Income Taxes

 

The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. The Company additionally establishes a valuation allowance to reflect the likelihood of realization of deferred tax assets.

Foreign Operations

Foreign Operations

  

The following summarizes key financial metrics associated with the Company’s foreign operations:

  

    September 30, 2017   June 30, 2017   March 31, 2017   December 31, 2016
Assets- U.S.   $ 3,173,599     $ 3,419,382     $ 3,544,230     $ 3,826,006  
Assets- Mexico     74,648       69,565       70,156       94,147  
Assets- India     344,547       335,924       333,543       243,570  
Assets - Singapore     1,035       1,245       1,438       40,756  
Assets- Total   $ 3,593,829     $ 3,826,116     $ 3,949,367     $ 4,204,479  
                                 
Liabilities- U.S.   $ 7,436,598     $ 7,276,959     $ 7,215,005     $ 7,106,868  
Liabilities- Mexico     175,281       177,041       169,831       154,341  
Liabilities- India     1,522,920       1,287,906       1,020,754       1,067,090  
Liabilities - Singapore     5,127       5,085       3,579       5,389  
Liabilities- Total   $ 9,139,926     $ 8,746,991     $ 8,409,169     $ 8,333,688  
                                 

 

 

    For the three months ended   For the three months ended   For the three months ended
    September 30,   September 30,   June 30,   June 30,   March 31,   March 31,
    2017   2016   2017   2016   2017   2016
Revenues- U.S.   $ —       $ —       $ —       $ —       $ —       $ —    
Revenues- Mexico     —         —         —         —         —         —    
Revenues- India     17       19,543       2,308       16,969       —         19,559  
Revenues- Singapore                                     —         —    
Revenues- Total   $ 17     $ 19,543     $ 2,308     $ 16,969     $ —       $ 72,923  
                                                 
Net (income) loss- U.S.   $ 659,291     $ 1,014,831     $ 523,802     $ 2,967,092     $ 514,918     $ (193,308 )
Net (income) loss- Mexico     (343 )     43,473       7,801       46,398       39,549       57,188  
Net loss- India     395,743       310,103       305,114       379,709       116,952       271,260  
Net loss- Singapore     2,534       1,373       5,756       10,117       17,428       —    
Net Loss- Total   $ 1,057,225     $ 1,369,780     $ 842,473     $ 3,403,316     $ 688,847     $ 135,140  
                                                 

  

    For the nine months ended   For the six months ended
    September 30,   September 30,   June 30,   June 30,
    2017   2016   2017   2016
Revenues- U.S.   $ —       $ —       $ —       $ —    
Revenues- Mexico     —         —         —         —    
Revenues- India     2,325       56,071       2,308       36,528  
Revenues – Singapore     —         —         —         —    
Revenues- Total   $ 2,325     $ 56,071     $ 2,308     $ 36,528  
                                 
Net Loss- U.S.   $ 1,698,011     $ 3,788,616     $ 1,038,720     $ 2,773,784  
Net loss- Mexico     47,007       147,059       47,350       103,586  
Net loss- India     817,809       961,072       422,066       650,969  
Net loss - Singapore     25,718       11,490       23,184       10,117  
Net Loss- Total   $ 2,588,545     $ 4,908,237     $ 1,531,320     $ 3,538,456  
                                 

 

The following summarizes key financial metrics associated with the Company’s foreign operations:

 

 

    December 31,   December 31,   December 31,
    2017   2016   2015
Assets- U.S.   $ 3,129,229     $ 3,826,006     $ 4,396,990  
Assets- Mexico     3,355       94,147       172,170  
Assets- India     386,789       243,570       50,645  
Assets - Singapore     846       40,756       —    
Assets- Total   $ 3,520,219     $ 4,204,479     $ 4,619,805  
                         
Liabilities- U.S.   $ 9,145,727     $ 7,106,868     $ 9,540,657  
Liabilities- Mexico     166,198       154,341       57,422  
Liabilities- India     1,577,830       1,067,090       150,842  
Liabilities - Singapore     31,406       5,389       —    
Liabilities- Total   $ 10,921,161     $ 8,333,688     $ 9,748,921  
                         

 

 

    December 31,   December 31,   December 31,
    2017   2016   2015
Revenues- U.S.   $ —       $ —       $ —    
Revenues- Mexico     —         —         2,350  
Revenues- India     2,329       71,374       —    
Revenues – Singapore     —         —         —    
Revenues- Total   $ 2,329     $ 71,374     $ 2,350  
                         
Net Loss- U.S.   $ 2,637,634     $ 2,464,389     $ 9,720,192  
Net loss - Mexico     109,215       191,376       98,301  
Net loss - India     1,276,203       1,415,001       610,273  
Net loss - Singapore     58,077       260,450       —    
Net Loss- Total   $ 4,081,129     $ 4,331,216     $ 10,428,766  
                         
Fair value of financial instruments

Fair value of financial instruments

 

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, amounts due to related parties, notes payable and other current liabilities, approximate fair value due to the short-term nature of these instruments.

Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Level 1. Quoted prices in active markets for identical assets or liabilities.
Level 2. Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.
Level 3. Significant unobservable inputs that cannot be corroborated by market data.

 

 

The assets or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the assets that are measured at fair value on a recurring basis:

 

    Consolidated
Balance Sheet
  Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
  Quoted Prices for Similar Assets or Liabilities in Active Markets
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative Liabilities:                
      September 30, 2017   $ 377,571     $ —       $ —       $ 377,571  
June 30, 2017   $ 381,396     $ —       $ —       $ 381,396  
March 31, 2017   $ 577,241     $ —       $ —       $ 577,241  
December 31, 2016   $ 1,302,543     $ —       $ —       $ 1,302,543  

  

 

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis:

 

    September 30, 2017  

June 30,

2017

  March 31, 2017   December 31, 2016
Beginning balance   $ 381,396     $ 577,241     $ 1,302,543     $ 1,868,439  
Aggregate fair value of conversion feature upon issuance of common shares     —         —         —         —    
Change in fair value of derivative liabilities     (14,470 )     (212,886 )     (763,885 )     (3,485,801 )
Reclassification of warrants to derivative liability     6,462       9,968       30,095       2,785,655  
Reclassification of options to derivative liability     4,183       7,073       8,488       134,2495  
Ending balance   $ 377,571     $ 381,396     $ 577,241     $ 1,302,543  

 

 

The derivative conversion feature liabilities are measured at fair value using the Black-Scholes pricing model and are classified within Level 3 of the valuation hierarchy. The significant assumptions and valuation methods that the Company used to determine fair value and the change in fair value of the Company’s derivative financial instruments are provided below: 

 

    September 30, 2017   June 30, 2017   March 31, 2017   December 31, 2016
Stock price   $ 0.031     $ 0.041     $ 0.046     $ 0.0513  
Volatility     89.65 %     94.91 %     94.99 %     104.69 %
Risk-free interest rate     1.06 %     1.03 %     0.76 %     0.51 %
Dividend yield     0.0 %     0.0 %     0.0 %     0.0 %
Expected life     1.70 years       1.26 years       1.89 years       1.31 years  

 

 

Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category presented in the tables above may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs.  

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. 

   

Level 3 financial liabilities consist of the derivative liabilities for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses and other current liabilities, approximate fair value due to the short-term nature of these instruments.

Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

•  Level 1. Quoted prices in active markets for identical assets or liabilities.
Level 2. Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.
Level 3. Significant unobservable inputs that cannot be corroborated by market data.

 

The assets or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the assets that are measured at fair value on a recurring basis:

    Consolidated
Balance Sheet
  Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
  Quoted Prices for Similar Assets or Liabilities in Active Markets
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
Derivative Liabilities:                
      December 31, 2017   $ 826,782     $ —       $ —       $ 826,782  
December 31, 2016   $ 1,302,543     $ —       $ —       $ 1,302,543  
December 31, 2015   $ 1,868,439     $ —       $ —       $ 1,868,439  

  

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis:

 

    December 31, 2017   December 31, 2016   December 31, 2015
Beginning balance   $ 1,302,543     $ 1,868,439     $ 547,940  
Aggregate fair value of conversion feature upon issuance of common shares     —         —         (457,228 )
Change in fair value of derivative liabilities     (1,144,834 )     (3,485,801 )     (45,356 )
Reclassification of warrants to derivative liability     643,085       2,785,655       1,823,083  
Reclassification of options to derivative liability     25,988       134,249       —    
Ending balance   $ 826,782     $ 1,302,543     $ 1,868,439  

  

 

The derivative conversion feature liabilities are measured at fair value using the Black-Scholes pricing model and are classified within Level 3 of the valuation hierarchy. The significant assumptions and valuation methods that the Company used to determine fair value and the change in fair value of the Company’s derivative financial instruments are provided below: 

    December 31, 2017   December 31, 2016   December 31, 2015
Stock price   $ 0.042     $ 0.0513     $ 0.10  
Volatility     89.33 %     104.69 %     91.3 %
Risk-free interest rate     1.39 %     0.51 %     0.04 %
Dividend yield     0.0 %     0.0 %     0.0 %
Expected life     1.96 years       1.31 years       0.01 years  
                         

 

Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category presented in the tables above may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs.  

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. 

   

Level 3 financial liabilities consist of the derivative liabilities for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

 

Derivative Instruments

Derivative instruments

 

The fair value of an embedded conversion option that is convertible into a variable amount of shares and warrants that include price protection reset provision features are deemed to be “down-round protection” and, therefore, do not meet the scope exception for treatment as a derivative under ASC 815 “Derivatives and Hedging”. As a result, the conversion feature is marked to market at each reporting period. The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. 

 

If the Company were to enter into a financial arrangement through the issuance of convertible debt and or warrants, for which such instruments would contain a variable conversion feature with an indeterminable number of shares, the Company would apply a sequencing policy in accordance with ASC 815- 40-35-12 whereby such instruments, and all future issuances of financial instruments regardless of conversion terms, would be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors. The Company may also apply sequencing in any circumstance, whereby the Company has entered into financial arrangements for commitments to issue shares, for which such issuances would exceed the authorized share limit. Upon the issuance of any such instrument, the excess shares committed to be issued, would also be reclassified as a derivative liability.

       

The Black-Scholes option valuation model was used to estimate the fair value of the warrants and conversion options. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the warrants or conversion options. Conversion options are recorded as debt discount and are amortized as interest expense over the life of the underlying debt instrument.

Derivative instruments

 

The fair value of an embedded conversion option that is convertible into a variable amount of shares and warrants that include price protection reset provision features are deemed to be “down-round protection” and, therefore, do not meet the scope exception for treatment as a derivative under ASC 815 “Derivatives and Hedging”. As a result, the conversion feature is marked to market at each reporting period. The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. 

 

If the Company were to enter into a financial arrangement through the issuance of convertible debt and or warrants, for which such instruments would contain a variable conversion feature with an indeterminable number of shares, the Company would apply a sequencing policy in accordance with ASC 815- 40-35-12 whereby such instruments, and all future issuances of financial instruments regardless of conversion terms, would be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors. The Company may also apply sequencing in any circumstance, whereby the Company has entered into financial arrangements for commitments to issue shares, for which such issuances would exceed the authorized share limit. Upon the issuance of any such instrument, the excess shares committed to be issued, would also be reclassified as a derivative liability.

       

The Black-Scholes option valuation model was used to estimate the fair value of the warrants and conversion options. The model includes subjective input assumptions that can materially affect the fair value estimates. The Company determined the fair value of the Binomial Lattice Model and the Black-Scholes Valuation Model to be materially the same. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the warrants or conversion options. Conversion options are recorded as debt discount and are amortized as interest expense over the life of the underlying debt instrument.

Amortization of Debt Discount

Amortization of Debt Discount

 

The Company issued various debt with warrants for which total proceeds were allocated to individual instruments based on the relative fair value of the each instrument at the time of issuance. The value of the debt was recorded as discount on debt and amortized over the term of the respective debt.

Amortization of Debt Discount

 

The Company issued various debt with warrants for which total proceeds were allocated to individual instruments based on the relative fair value of each instrument at the time of issuance. The value of the debt was recorded as discount on debt and amortized over the term of the respective debt.

Stock Based Compensation

Stock Based Compensation

 

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. Under ASC 718, the Company’s volatility is based on the historical volatility of the Company’s stock or the expected volatility of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

 

The Company uses the Black-Scholes option-pricing model which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted and the Company’s expected stock price volatility over a period equal to or greater than the expected life of the options. 

 

Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/seller market transaction.

 

For non-employees, the fair value of the award is generally re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount is then recognized over the period the services are required to be provided in exchange for the award, usually the vesting period.

 

The Company incurred stock based compensation charges relating to options during the three, six and nine-months period ended March 31, 2017 and 2016, June 30, 2017 and 2016, September 30, 2017 and 2016 as follows:

 

    For the Nine Months Ended   For the Six Months Ended   For the Three Months Ended
             
     

September 30,

2017

     

September 30,

2016

     

June 30,

2017

      June 30, 2016      

March 31,

2017

     

March 31,

2016

 
                                                 
General and administrative   $ 41,629     $ 223,447     $ 29,788     $ 177,675     $ 15,886     $ 14,711  
Research and development     —         33,644       —         33,644       —         33,644  
Sales and marketing     —         7,007       —         7,007       —         7,007  
Total   $ 41,629     $ 246,098     $ 29,788     $ 218,326     $ 15,886     $ 55,362  
                                                 

 

 

 

 

Stock Based Compensation

   

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. Under ASC 718, the Company’s volatility is based on the historical volatility of the Company’s stock. The expected life assumption is primarily based on historical exercise patterns, the option is based on the simplified method of term, and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

  

The Company uses the Black-Scholes option-pricing model which was developed for use in estimating the fair value of options. Option-pricing models require the input of highly complex and subjective variables including the expected life of options granted and the Company’s expected stock price volatility over a period equal to or greater than the expected life of the options. 

 

Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/seller market transaction.

 

For non-employees, the fair value of the award is generally re-measured on financial reporting dates and vesting dates until the service period is complete. The fair value amount is then recognized over the period the services are required to be provided in exchange for the award, usually the vesting period.

 

The Company incurred stock based compensation charges relating to options during the year ended December 31, 2017, 2016 and 2015 as follows:

    December 31, 2017   December 31, 2016   December 31, 2015
General and administrative   $ 122,432     $ 256,466     $ 146,932  
Research and development     —         33,644       98,741  
Sales and marketing     —         7,007       130,024  
Total   $ 122,432     $

297,117

    $ 375,697  

 

 

 

Net loss per share

Net loss per share

 

The Company reports net loss per share in accordance with the ASC Topic 260, “Earnings Per Share”, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying condensed consolidated financial statements, basic earnings per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants and conversion of notes payable. These potentially dilutive securities outstanding at September 30, 2017, June 30, 2017 and March 31, 2017, respectively, of 235,512,048, 243,743,847 and 251,254,051 were not included in the calculation of loss per common share, because their effect would be anti-dilutive.  

 

The Company may not have sufficient Common shares available to issue should all of the above conversions and exercises occur. Accordingly, the Company may have to settle these contracts in cash if they are not successful in increasing the authorized number of shares. (see Note 10 for derivative liabilities).

 

The Company applies sequencing with respect to such commitments and other circumstances as disclosed in its accounting policies for derivatives.

Net loss per share

 

The Company reports net loss per share in accordance with the ASC Topic 260, “Earnings Per Share”, which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants and conversion of notes payable. These potentially dilutive securities outstanding at December 31, 2017, December 31, 2016 and December 31, 2015 respectively of 313,273,100, 235,101,809 and 155,670,170 were not included in the calculation of loss per common share, because their effect would be anti-dilutive.  

 

The Company may not have sufficient Common shares available to issue should all of the above conversions and exercises occur. Accordingly, the Company may have to settle these contracts in cash if they are not successful in increasing the authorized number of shares. (see Note 10 for derivative liabilities).

 

The Company applies sequencing with respect to such commitments and other circumstances as disclosed in its accounting policies for derivatives. The break-out of these potentially dilutive securities is as follows;

 

 

Year Options Warrants Convertible notes Total
2017 22,952,000 222,869,429 67,451,671 313,273,100
2016 26,345,000 188,125,232 20,631,577 235,101,809
2015 15,480,000 102,188,477 38,001,693 155,670,170

 

The Company may not have sufficient Common shares available to issue should all of the above conversions and exercises occur. Accordingly, the Company may have to settle these contracts in cash if they are not successful in increasing the authorized number of shares. (see Note 10 for derivative liabilities).

 

The Company applies sequencing with respect to such commitments and other circumstances as disclosed in its accounting policies for derivatives.

Reclassifications

Reclassifications

 

Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

 
Recent Accounting Pronouncements  

Recent Accounting Pronouncements

 

The FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 requires that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. An entity should disclose sufficient information to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is not permitted for all public business entities. We anticipate that the adoption of this standard will increase the note disclosures of the nature, amount and timing of revenue and cash flows arising from contracts with customers in our consolidated financial statements.

 

In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period," ("ASU 2014-12"). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification Topic No. 718, "Compensation - Stock Compensation" as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 and was adopted by the Company at that time. Early adoption was permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The single performance-based award issued by the Company was not met and the opportunity to meet the award expired during 2016.  Accordingly, the adoption of the policy had no effect on the financial statements of the Company.

 

In April 2015, the FASB issued ASU 2015-03 on “Simplifying the Presentation of Debt issuance costs” The ASU changes the presentation of debt issue costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability. Amortization of the cost is reported as an interest expense. The amendments in this ASU are effective for public business entities for annual periods ending after December 15, 2015. Early adoption is permitted. The Company adopted this ASU effective December 31, 2015 upon issuance of its annual audited financial statements. At that time the Company would apply the new guidance retrospectively to all prior periods.  The Company did issue debt, with debt issue costs in 2015 of $45,000 in aggregate, that expense was recorded when issued.  The period of amortization on the debt instruments issued during the year was six months accordingly under the new policy amortization too place during the same fiscal year.  Accordingly, the adoption of this standard did not have a material impact on our consolidated financial statements.

 

In July 2015, the FASB issued ASU No. 2015-11, “Inventory: Simplifying the Measurement of Inventory”, that requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. The Company currently uses lower of cost or net realizable value. The adoption of the policy in 2017 did not have a material impact on the financial statements.

 

The FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public business entities. The Company has not yet determined the effect of the adoption of this standard on the Company’s consolidated financial position and results of operations.

 

The FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718). ASU 2016-09 is a simplification initiative involving several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows.  The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted for any entity in any interim period or annual period. The adoption of this policy for fiscal year 2017 did not have any effect on the financial statements as the payments were made to independent contractors and were in all cases for services or debt and were reflected as such in the statement of cash flows.  There were no income tax consequences of the awards.

 

The FASB issued ASU 2016-15, Compensation – Statement of Cash Flow (Topic 230). ASU 2016-15 provides a classification of how certain cash receipts and payments are presented and classification in the statement of cash flows.  The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice.  The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted for any entity in any interim period or annual period. The Company do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

 

The FASB issued ASU 2016-18, Statement of Cash Flow (Topic 230). ASU 2016-18 provides a consensus of the Emerging Issue Task Force on the classification and presentation of changes in restricted cash on the statement of cash flows.  This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.  Amounts generally described as restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amount shown on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted for any entity in any interim period or annual period. The adoption of this standard did not have a material impact on our consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. As the Company has no business combinations after the effective date of this pronouncement, the Company expects no effect on the consolidated financial statements as a result of adopting this pronouncement.

 

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

 

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting.  The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update are effective for all companies for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted for public companies for any reporting period for which financial statements have not been issued.  The Company does not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

 

In July 2017, the FASB issued ASU 2017-11, Earnings per share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815). The amendments in this update address narrow issues identified as a result of the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The amendments apply to all companies that issue financial instruments (for example, warrants or convertible instruments) that include down round features. The amendments provide guidance as to whether the instruments should be classified as equity or liabilities, also guidance as to the calculation of earnings per share which is impacted by that instrument as well as classification as a derivative instrument and the valuation thereof. The amendments in this update are effective for all companies for annual periods beginning after December 15, 2018, including interim periods within those periods. Early adoption is permitted for public companies. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

 

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this update address share-based payment transaction for acquiring goods and services from non-employees. The guidance addresses the financial disclosures with respect to the measurement, timing, performance conditions and classification of the awards. The amendments in this update are effective for all companies for annual periods beginning after December 15, 2018, including interim periods within those periods. Early adoption is permitted. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the disclosure requirements for fair value measurement. The amendments in this update effect all entities that are required, under current GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments modify the disclosure requirements on fair value measurements based on the concepts in the Concepts Statement, including consideration of costs and benefits. The amendments in this update are effective for all companies for annual periods beginning after December 15, 2019, including interim periods within those periods. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements.

 

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of December 31, 2017 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2017 or 2016, and it does not believe that any of those pronouncements will have a significant impact on our consolidated financial statements at the time they become effective.

Subsequent Events

Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date up to the date the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed in Note 16 to the December 31, 2017 financial statements included in this document.

Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date up to the date the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed in Note 16.