Note 3 - Financial Condition

The Company’s financial statements for the interim period ended March 31, 2017 have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

The Company has an accumulated deficit at March 31, 2017 of $72,570,721. In addition, the Company has not generated any revenues and no revenues are anticipated in the foreseeable future. Since May 2005, the Company has been engaged exclusively in research and development activities focused on developing targeted antiviral drugs. The Company has not yet commenced any product commercialization. Such losses are expected to continue for the foreseeable future and until such time, if ever, as the Company is able to attain sales levels sufficient to support its operations. There can be no assurance that the Company will achieve or maintain profitability in the future. As of March 31, 2017 the Company had cash and cash equivalents of $16,155,085. The Company’s Series B Convertible Debenture, in the amount of $6 million, matured on January 31, 2017. On February 8, 2017, the Company entered into agreements with certain holders (the “Holders”) of the Company’s Series B Convertible Debentures (the “Debentures”). The Company and the Holders agreed to convert an aggregate of $5,000,000 of principal and $27,178 of accrued interest attributable to the Company’s Series B Debentures, which were payable on January 31, 2017 (the “Maturity Date”) into 4,335,386 newly-issued, restricted shares (the “Conversion Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) for the conversion of the principal and 24,266 shares of common stock for the payment of accrued interest. The principal balance of $1,000,000 not being converted was paid in cash on February 8, 2017. The Company recognized a non-cash loss on extinguishment of debt of $332,524 on the conversion of the aforesaid principal and interest attributable to the Series B Debentures into the Company’s common stock.

While the Company continues to incur significant operating losses with significant capital requirements, the Company has been able to finance its business through sale of its securities. The Company has in the past adjusted its priorities and goals in line with the cash on hand and capital availability. The Company believes it can adjust its priorities of drug development and its plan of operations as necessary, if it is unable to raise additional funds. The Company has sufficient capital to continue its business for more than one year, at the current rate of expenditure.