# Co-Diagnostics, Inc.: Form 10-Q for the period ended Jun 30, 2017 - Company: [Co-Diagnostics, Inc.](/companies/codx.md) (CIK 1692415) - Form: 10-Q - Filed: 2017-08-25 - Accepted by EDGAR: Aug 25, 2017, 17:10 ET - Period: 2017-06-30 - Accession: 0001477932-17-004217 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1692415/000147793217004217/codx_10q.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1692415/000147793217004217/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2017-06-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Cost of revenue | 3 months, 2017-04-01 to 2017-06-30 | $302 | us-gaap:CostOfRevenue | | Cost of revenue | 6 months, 2017-01-01 to 2017-06-30 | $302 | us-gaap:CostOfRevenue | | Gross profit | 3 months, 2017-04-01 to 2017-06-30 | $2.2k | us-gaap:GrossProfit | | Gross profit | 6 months, 2017-01-01 to 2017-06-30 | $2.2k | us-gaap:GrossProfit | | Research and development | 3 months, 2017-04-01 to 2017-06-30 | $184.9k | us-gaap:ResearchAndDevelopmentExpense | | Research and development | 6 months, 2017-01-01 to 2017-06-30 | $449.6k | us-gaap:ResearchAndDevelopmentExpense | | Operating income | 3 months, 2017-04-01 to 2017-06-30 | −$701.0k | us-gaap:OperatingIncomeLoss | | Operating income | 6 months, 2017-01-01 to 2017-06-30 | −$1.3m | us-gaap:OperatingIncomeLoss | | Interest expense | 3 months, 2017-04-01 to 2017-06-30 | $154.1k | us-gaap:InterestExpense | | Interest expense | 6 months, 2017-01-01 to 2017-06-30 | $295.4k | us-gaap:InterestExpense | | Net income | 3 months, 2017-04-01 to 2017-06-30 | −$855.0k | us-gaap:NetIncomeLoss | | Net income | 6 months, 2017-01-01 to 2017-06-30 | −$1.6m | us-gaap:NetIncomeLoss | | Diluted EPS | 3 months, 2017-04-01 to 2017-06-30 | $3529896.00 | us-gaap:EarningsPerShareDiluted | | Diluted EPS | 6 months, 2017-01-01 to 2017-06-30 | $3529896.00 | us-gaap:EarningsPerShareDiluted | | Operating cash flow | 6 months, 2017-01-01 to 2017-06-30 | −$667.3k | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 6 months, 2017-01-01 to 2017-06-30 | $87.6k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Cash and equivalents | at 2017-06-30 | $116.8k | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2017-06-30 | $313.4k | us-gaap:AssetsCurrent | | Total assets | at 2017-06-30 | $467.6k | us-gaap:Assets | | Current liabilities | at 2017-06-30 | $4.7m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2017-06-30 | $4.9m | us-gaap:Liabilities | | Current portion of debt | at 2017-06-30 | $2.6m | us-gaap:LongTermDebtCurrent | | Shareholders' equity | at 2017-06-30 | −$4.4m | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 26,752 characters. ### Cautionary Note Regarding Forward-Looking Statements This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent risk and uncertainties. Any statements about our expectations, beliefs, plans, objectives, strategies or future events or performance constitute forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend” and similar words or phrases. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied therein. All forward-looking statements are qualified in their entirety by reference to the factors discussed in this report and to the following risk factors discussed more fully in the Risk Factors in our registration statement on Form S-1/A filed with the commission on July 10, 2017: - dependence on commercialization of our molecular diagnostic technology; - our continued losses; - concerns of customers relating to our financial uncertainty; - general economic and market conditions; - ineffective internal operational and financial control systems; - rapid technological change; - intense competitive factors; - our ability to hire and retain specialized and key personnel; - dependence on the sales efforts of others; - uncertainty of intellectual property protection; - potential infringement on the intellectual property rights of others; - extreme price fluctuations in our common stock; - price decreases due to future sales of our common stock; - future shareholder dilution; and - absence of dividends. Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statement. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of future events or developments. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. ### Critical Accounting Policies The preparation of financial statements in conformity with U.S. GAAP requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our assumptions and estimates, including those related to recognition of revenue, valuation of investments, valuation of inventory, valuation of intangible assets, measurement of stock-based compensation expense and litigation. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As an emerging growth company, we have elected to opt-in to the extended transition period for new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates. 19 #### Table of Contents ### Executive Overview Co-Diagnostics, Inc. (“Company,” or “CDI,”), a Utah corporation, is a molecular diagnostics company that has developed, and intends to sell molecular diagnostic technology such as lab systems (which we refer to as the “MDx device”) and manufacture and sell reagents used for tests that are designed using the detection and/or analysis of nucleic acid molecules (DNA or RNA). Dr. Brent Satterfield, our Chief Technology Officer, created the Company’s suite of intellectual properties. Our scientists were the first to understand the complex mathematics of DNA test design, to “engineer” a DNA test and to automate algorithms that rapidly screen millions of possible options to pinpoint the optimum design. Dr. Satterfield developed the Company’s intellectual property consisting of the predictive mathematical algorithms and proprietary reagents used in the testing process, which together represent a major advance in Polymerase Chain Reaction (“PCR”) testing systems. CDI’s technologies are now protected by five granted or pending US patents, as well as certain trade secrets. Our platform allows us to avoid paying existing patent royalties required by other PCR test systems, which has the potential of allowing CDI to sell diagnostic labs and tests at a lower cost than competitors, while generating a profit margin. We will either sell or lease our portable labs to existing diagnostic centers, through sale or lease agreements, and sell reagents used in our proprietary tests. We designed our tests by identifying the optimal locations on the target gene for amplification and paired the location with the optimized primer and probe structure to achieve outputs that meet the design input requirements identified from market research. This is done by following planned and documented processes, procedures and testing. In other words, the data resulting from our tests verify that we succeeded in designing what we intended to at the outset. Verification is a series of testing that concludes that the product is ready to proceed to validation in a clinical evaluation setting using initial production tests to confirm that the product as designed meets the user needs. CDI’s diagnostics systems enable very rapid, low-cost, sophisticated molecular testing for organisms and genetic diseases by greatly automating historically complex procedures in both the development and administration of tests. CDI’s newest technical advance involves a novel approach to PCR test design (cooperative primers) that eliminates one of the key vexing issues of PCR amplification, the exponential growth of primer-dimer pairs (false positives and false negatives) which adversely interferes with identification of the target DNA. Using its proprietary test design system and proprietary reagents, CDI will design and sell PCR diagnostic tests for diseases and pathogens starting with tests for tuberculosis, a drug resistant tuberculosis test, hepatitis B and C, Malaria, dengue, HIV and Zika virus, all of which tests have been designed and validated in CDI’s laboratory. ### Organizational History and Corporate Information We were incorporated as Co-Diagnostics, Inc., in Utah on April 18, 2013. Our principal executive office is located 8160 S. Highland Drive, Salt Lake City, Utah 84124. Our telephone number is (801) 278-9769. Our web address is http://codiagnostics.com. The information included on our website is not, and shall not be interpreted to be, a part of this prospectus. ### Product Offering ### Caribbean and Central and South America Our initial sales will be to entities within the Caribbean Public Health Agency Members States (Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, BES Islands, British Virgin Islands, Cayman Islands, Curacao, Dominica, Grenada, Haiti, Guyana, Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, St Maarten, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands). In some of these countries, there are no regulatory hurdles and we can start offering our tests immediately. The U.S. Food and Drug Administration (FDA) has granted permission for us to export our products. The FDA's permission to export was granted under Section 801 (e) of the Federal Food, Drug, and Cosmetic Act, as amended (the “FDC Act”). Section 801 (e) of the Act covers certain medical devices that have not yet received an approved Premarket Approval in the United States by the FDA, such as our products. Section 801 (e) applies to medical devices that are acceptable to the importing country and that are manufactured under the FDA's Good Manufacturing Practices. We will first offer our Zika test in this region because of the demand for such test followed quickly by test for tuberculosis, hepatitis B and C, dengue then our full range of tests. 20 #### Table of Contents ### India The Company has entered into an agreement to manufacture diagnostics tests for seven infectious diseases with a pharmaceutical manufacturing company in India. The agreement provides for the manufacture of the tests named above and the joint sales and marketing of those tests in India. Since the tests will be conducted in India on Indian citizens, no FDA approval or inspection will be required. Certain Indian regulatory approval from the Central Drugs Standard Control Organization (CDSCO) must be acquired. We are engaging the services of an experienced consultant in India to help get us through this process. Research Use Only (RUO) reagents are able to be sold without requiring regulatory approval as long as they are labeled and designated as such. We are beginning to sell these products in India in 2017. India is the country with the highest burden of tuberculosis. According to the World Health Organization (WHO) tuberculosis statistics for India for 2015 give an estimated incidence figure of 2.2 million cases of tuberculosis for India out of a global incidence of 9.6 million. The tuberculosis incidence for India is the number of new cases of active tuberculosis disease in India during a certain time period (usually a year). ### Europe Most molecular tests, such as our tests, are governed in Europe by the framework for in vitro diagnostics (IVDs), which encompasses diagnostic products such as reagents, instruments and systems intended for use in diagnosis of disease. The regulatory system for IVDs is built largely on a self-certification procedure, placing heavy responsibility on manufacturers. Examples of current obligations include having in place a qualitative manufacturing process, user instructions that are clear and fit for purpose, ensuring that the ‘physical’ features of devices and diagnostics do not pose any danger. If a product fulfils these and other related control requirements, it may be CE-marked as an indication that the product is compliant with EU legislation and sold in the European Union. We have received ISO 13485 and ISO 9001 certifications relating to the design and manufacture of our medical device products. The ISO certification indicates that we meet the standards required to self-certify certain of our products and affix a CE marking for sales of our products in countries accepting the CE marking (not in the United States) with only minimal further governmental approvals in each country. We expect to have our Zika and tuberculosis tests CE-marked in 2017. We estimate the remaining costs for CE-marks to be approximately $100,000. ### United States We do not anticipate offering our tests in the United States in the near future. We believe, however, our tests may be able to qualify as Laboratory Developed Tests (LDT's), diagnostic tests that are developed and manufactured by CLIA certified laboratories. These tests are developed by the lab for use only in that laboratory. CLIA laboratories develop the performance characteristics, perform the analytical validation for their LDT's and obtain licenses to offer them as diagnostic services. The FDA has publicly announced its intention to regulate certain LDTs in a phased-in approach, but draft guidance that was published a couple of years ago was withdrawn at the end of the Obama administration and replaced by an informal non-enforceable discussion paper reflecting some of the feedback that it received on LDT regulation. ### Market Opportunity The molecular diagnostics market is a fast growing portion of the in vitro (test tube based, controlled environment) diagnostics market. There are several advantages of molecular tests over other forms of diagnostic testing, which include higher sensitivities, the ability to perform multiplex tests and the ability to test for drug resistance or individual genes. ### Intellectual Property Protection Because much of our future success and value depends on our proprietary technology, our patent and intellectual property strategy is of critical importance. Three of our initial U.S. patents related to our technology have been granted by the U.S. Patent and Trademark Office, or PTO. As of March 31, 2017, we had two additional patents pending in the U.S. and foreign counterpart applications. Two of our issued patents expire in 2034 and the other patent expires in 2036. We have identified additional applications of the technology, which represent potential patents that further define specific applications of the processes that are covered by the original patents. We intend to continue building our intellectual property portfolio as development continues and resources are available. We have copyrighted our development software that can be used by any lab or developer to develop diagnostic tests based on our technology. 21 #### Table of Contents ### Recent corporate Developments On July 12, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with WallachBeth Capital, LLC and Network 1 Financial Securities, Inc. (the “Underwriters”), related to the Company’s initial public offering of 1,178,532 shares of the Company’s common stock, at a price of $6.00 per share, less $0.60 constituting the underwriting commissions and non-accountable expense allowance. Under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 45 days, to purchase up to an additional 176,780 shares of common stock to cover over-allotments, if any. Total gross proceeds from the offering were $7,071,192 and the Company received net proceeds of $6,251,572. Coincident with the closing of the IPO, the Company retired all of its principal debt of $3,440,000 and approximately $283,000 of accrued interest through the issuance of approximately 857,000 shares. ### RESULTS OF OPERATIONS ### Results of Operations for the Six Months ended June 30, 2017 and June 30, 2016 ### Revenues For the six months ended June 30, 2017, we generated $2,466 of revenues compared to no revenues in the six months ended June 30, 2016. Revenues of $600 represented the first placement of a thermocycler with a laboratory in the Caribbean that contracted to use our diagnostic tests on a reagent rental agreement. Revenues of $1,000 represented the fee charged for the test design for a customer and the remainder was a license fee for licensing our Zika tests and certain other Flaviviruses for limited distribution to a Canadian company. ### Cost of Revenues For the six months ended June 30, 2017, we recorded $302 of cost of sales that was depreciation on the thermocycler that was part of our reagent rental program described above. We had no costs of revenues in the six months ended June 30, 2016. ### Expenses We incurred total operating expenses of $1,267,481 for the six months ended June 30, 2017 compared to total operating expenses of $851,037 for the six months ended June 30, 2016. The increase of $416,444 was due primarily to an increase in general and administrative expenses of $193,115, an increase in sales and marketing costs of $142,133, and an increase of $82,554 in our research and development expenses. Our general and administrative expenses increased $193,116 from $414,142 for the six months ended June 30, 2016 to $607,258 for the six months ended June 30, 2017. The increase was primarily the result of an increase of $187,865 in independent consulting expenses, an increase of $46,788 in salaries and related benefits and an increase of $44,398 in accounting expenses partially offset by a decrease of $36,353 in option and warrant related expenses and a decrease of $30,000 in management fee expense. Our sales and marketing expenses for the six months ended June 30, 2017, were $189,843 compared to sales and marketing expenses of $47,710 for the six months ended June 30, 2016. The increase of $142,133 is due primarily to an increase of $70,195 of salary and related benefits expense, an increase in travel related expenses of $49,424 and an increase of $12,107 in advertising expenses. Our research and development expenses increased by $82,554 from $367,014 for the six months ended June 30, 2016 to $449,568 for the six months ended June 30, 2017. The increase was primarily due to an increase of $34,862 in payroll and employee related expenses and an increase of $65,181 in lab supplies and services, $18,905 in building rent and $17,449 in consulting fees partially offset by a decrease of $72,500 in technology license fees due to a restructuring of our Co-Primer license ### Interest Expense For the six months ended June 30, 2017, we incurred interest expense of $295,432 compared to interest expense for the six months ended June 30, 2016 of $102,454. The increase of $192,978 was the result of having our bridge loans outstanding for the entire six-month period and an increase in our total indebtedness. 22 #### Table of Contents ### Net Loss We realized a net loss for the six months ended June 30, 2017, of $1,560,749 compared with a net loss for the six months ended June 30, 2016 of $953,491. The increase in net loss of $607,258 was the result of the increased operating expenses and increased interest expense as explained above. ### Results of Operations for the Three Months ended June 30, 2017 and 2016 ### Revenues For the three months ended June 30, 2017, we generated $2,466 of revenues compared to no revenues in the six months ended June 30, 2016. $600 of the revenues represented the first placement of a thermocycler with a laboratory in the Caribbean that contracted to use our diagnostic tests on a reagent rental agreement. $1,000 of the revenues was the fee charged for the test design for a customer and the remainder was a license fee for licensing our Zika test and certain other Flaviviruses for limited distribution to a Canadian company. ### Cost of Revenues For the three months ended June 30, 2017, we recorded $302 of cost of sales that was depreciation on the thermocycler that was part of our reagent rental program described above. We had no costs of revenues in the six months ended June 30, 2016. ### Expenses We incurred total operating expenses of $703,116 for the three months ended June 30, 2017 compared to total operating expenses of $390,291 for the three months ended June 30, 2016. The increase of $312,825 was due primarily to an increase in general and administrative expenses of $194,619, an increase in sales and marketing costs of $103,207, and an increase of $12,771 in our research and development expenses. Our general and administrative expenses increased $194,621 from $186,903 for the three months ended June 30, 2016 to $381,524 for the three months ended June 30, 2017. The increase was primarily the result of an increase of $147,332 in independent consulting expenses, an increase of $37,377 in salaries and related benefits and an increase of $28,250 in accounting and other professional services and an increase of $17,043 in regulatory expenses partially offset by a decrease of $10,934 in building rent expenses and a decrease of $15,000 in management fee expense. Our sales and marketing expenses for the three months ended June 30, 2017 were $125,626 compared to sales and marketing expenses of $22,419 for the three months ended June 30, 2016. The increase of $103,207 is due primarily to an increase of $45,751 of salary and related benefits expense, an increase in travel related expenses of $35,230 and an increase of $12,107 in advertising expenses. Our research and development expenses increased by $12,771 from $172,109 for the three months ended June 30, 2016 to $184,880 for the three months ended June 30, 2017. The increase was primarily due to an increase of $35,446 in payroll and employee related expenses and an increase of $35,404 in lab supplies and services, $11,343 in building rent and $8,458 in consulting fees partially offset by a decrease of $90,000 in technology license fees due to a restructuring of our Co-Primer license ### Interest Expense For the three months ended June 30, 2017, we incurred interest expense of $154,055 compared to interest expense for the three months ended June 30, 2016 of $52,351. The increase of $101,704 was the result of having our bridge loans outstanding for the entire three-month period and an increase in our total indebtedness. ### Net Loss We realized a net loss for the three months ended June 30, 2017 of $855,007 compared with a net loss for the three months ended June 30, 2016 of $442,642. The increase in net loss of $412,365 was the result of the increased operating expenses and increased interest expense as explained above. 23 #### Table of Contents ### Liquidity and Capital Resources At June 30, 2017, we had cash of $116,773, total current assets of $313,357, total current liabilities of $4,674,195 and total stockholders' deficit of $4,395,357. At December 31, 2016, we had cash of $998,737, total current assets of $1,208,398, total current liabilities of $3,845,413 and total stockholders' deficit of $2,994,586. On July 12, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with WallachBeth Capital, LLC and Network 1 Financial Securities, Inc. (the “Underwriters”), related to the Company’s initial public offering of 1,178,532 shares of the Company’s common stock, at a price of $6.00 per share, less $0.60 constituting the underwriting commissions and non-accountable expense allowance. Under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 45 days, to purchase up to an additional 176,780 shares of common stock to cover over-allotments, if any. Total gross proceeds from the offering were $7,071,192 and the Company received net proceeds of $6,251,572. Coincident with the closing of the IPO, the Company retired all of its principal debt of $3,440,000 and approximately $283,000 of accrued interest through the issuance of approximately 857,000 shares. We experienced negative cash flow used in operations during the six months ended June 30, 2017 of $752,858 compared to negative cash flow used in Operations for the six months ended June 30, 2016 of $458,316. The negative cash flow was met by cash reserves, sales of our common stock, sale of an exclusive license to sell our Zika test and related mosquito borne illnesses and most recently from the issuances of short term debt. The exclusive license agreement was later rescinded and the advanced royalty converted to debt. A more limited license for our Zika test and related mosquito borne illnesses was entered into in June 2017 and the proceeds of the license fee was used to fund operations. The amount of our operating deficit could decrease or increase significantly depending on strategic and other operating decisions, thereby affecting our need for additional capital. We expect our operating losses will continue until we are able to generate revenue. Until our operations become profitable, we will continue to rely on proceeds received from our recently completed IPO. We expect additional investment capital may come from (i) additional private placements of our common stock with existing and new investors and (ii) the private placement of other securities with investors similar to those that have provided funding in the past. Our monthly operating expenses, including our technology research and development expenses and interest expense, were approximately $211,250 per month during the six months ended June 30, 2017. We did not have sufficient capital resources at December 31, 2016 to fund our negative cash flow for the next year without raising additional capital and therefore completed our IPO, which will fund our operations for approximately two years. We will continue to need to raise additional capital through sales of common stock or issuance of debt financing to fund operations until we commence sales of products sufficient to fund our operations. The foregoing estimates, expectations and forward-looking statements are subject to change as we make strategic operating decisions from time to time and as our expenses fluctuate from period to period. The amount of our operating deficit could decrease or increase significantly depending on strategic and other operating decisions, thereby affecting our need for additional capital. We expect our operating expenses will continue until we are able to generate revenue. Our business model contemplates that revenue will commence in 2017 and our need for additional investment will depend on the amount of revenue generated. Our long-term liquidity is dependent upon execution of our business model and the commencement of revenue generating activities and working capital as described above, and upon capital needed for continued commercialization and development of our diagnostic testing technology. Commercialization and future development of diagnostic tests utilizing our PCR technology are expected to require additional capital estimated to be approximately $850,000 annually for the foreseeable future. This estimate will increase or decrease depending on specific opportunities and available funding. To date, we have met our working capital needs primarily through funds received from sales of our common stock and from convertible debt financings. Until our operations become profitable, we will continue to rely on proceeds received from external funding. We expect additional investment capital may come from additional private placements of our common stock with existing and new investors and the private placement of other securities with investors similar to those that have provided funding in the past. ### Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. 24 #### Table of Contents ## Market risk As filed, 892 characters. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We do not issue financial instruments for trading purposes or have any derivative financial instruments. As discussed above, however, the embedded conversion feature and prepayment option of our senior secured convertible notes and our related warrants are deemed to be derivatives and are subject to quarterly “mark-to-market” valuations. Our cash and cash equivalents are also exposed to market risk. However, because of the short-term maturities of our cash and cash equivalents, we do not believe that an increase in market rates would have any significant impact on the realized value of our cash and cash equivalent investments. We currently do not hedge interest rate exposure and are not exposed to the impact of foreign currency fluctuations. ## Controls and procedures As filed, 1,704 characters. #### Evaluation of Disclosure Controls and Procedures The Company has established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. The Company's controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers to allow timely decisions regarding required disclosure. We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at June 30, 2017 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, at June 30, 2017, our disclosure controls and procedures are not effective. #### Changes in Internal Control over Financial Reporting There have been no changes in the Company's internal control over financial reporting that occurred during the Company's last three-month period that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 25 #### Table of Contents ## Risk factors As filed, 160 characters. There have been no material changes in risk factors from those described in our registration statement on Form S-1/A filed with the commission on July 10, 2017. Filed Aug 25, 2017. Source: SEC EDGAR, the filing index for accession 0001477932-17-004217. Last ingested by Listed: Nov 4, 2026, 18:23 ET. No prices; not investment advice.