10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

COMMISSION FILE NUMBER 000-54697

THE CORETEC GROUP INC. 

(Exact Name of small business issuer as specified in its charter)

Oklahoma	73-1479206
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

6804 South Canton Avenue, Suite 150, Tulsa, Oklahoma 74136

(Address of principal executive offices) (Zip Code)

(918) 494-0505

(Registrant’s telephone number, including area code) 

(Former name, former address and former fiscal year, if changed
since last report)

Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes    ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b- 2 of the Exchange Act.

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of August 14, 2018, the issuer had 68,105,598 outstanding shares of Common Stock.

TABLE OF CONTENTS

		Page
	PART I - Financial Information
Item 1.	Financial Statements.	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	6
Item 4.	Controls and Procedures.	6
	PART II - Other Information
Item 1.	Legal Proceedings.	7
Item 1A.	Risk Factors.	7
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	7
Item 3.	Defaults Upon Senior Securities.	7
Item 4.	Mine Safety Disclosure.	7
Item 5.	Other Information.	8
Item 6.	Exhibits.	8
SIGNATURES		8

2

PART I

Item 1.    Financial Statements. 

THE CORETEC GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited) 

	June 30,			December 31,
	2018			2017
Assets
Current assets:
Cash	$	30,528		$	470,630
Prepaid expenses		13,412			35,358
Total current assets		43,940			505,988
Property and equipment, net		1,260			1,638
Other assets:
Patents, net		1,259,599			1,299,714
Goodwill		166,000			166,000
Deposits-other		2,315			2,315
Total other assets		1,427,914			1,468,029
Total Assets	$	1,473,114		$	1,975,655
Liabilities and Stockholders' Deficiency
Current liabilities:
Notes payable - related party, net of discount	$	1,477,078		$	1,262,434
Notes and debentures payable		63,675			110,788
Accounts payable and accrued expenses		514,062			755,481
Accrued interest payable - related party		359,846			258,815
Accrued interest payable		24,505			22,984
Total current liabilities		2,439,166			2,410,502
Notes payable - related party, net of current portion and discount		-			124,422
Total Liabilities		2,439,166			2,534,924
Stockholders' deficiency:
Preferred stock, Series A convertible, $0.0002 par value, 500,000 shares authorized; 345,000 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		69			69
Common stock $0.0002 par value, 1,500,000,000 shares authorized; 67,979,605 and 66,785,428 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively		13,596			13,357
Additional paid-in capital		2,141,838			2,020,642
Accumulated deficit		(3,121,555	)		(2,593,337	)
Total Stockholders' Deficiency		(966,052	)		(559,269	)
Total Liabilities and Stockholders' Deficiency	$	1,473,114		$	1,975,655

See notes to unaudited condensed consolidated financial statements

F-1

THE CORETEC GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Income:
Revenue	$	-		$	-		$	-		$	-
Expenses:
Research and development		21,182			155,437			42,100			260,807
General and administrative		211,829			315,489			433,129			596,820
Interest		96,442			81,497			192,778			123,663
Total expenses		329,453			552,423			668,007			981,290
Other income:
Gain on settlemment of accounts payable		139,789			-			139,789			-
Net loss	$	(189,664	)	$	(552,423	)	$	(528,218	)	$	(981,290	)
Loss per share:
Basic and diluted	$	(0.003	)	$	(0.112	)	$	(0.008	)	$	(0.199	)
Weighted average shares outstanding, basic and diluted		67,744,239			4,939,182			67,512,716			4,939,182

See notes to unaudited condensed consolidated financial statements

F-2

THE CORETEC GROUP INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY

  (unaudited)

	Series A Preferred Stock				Common Stock				Additional
			Par				Par		Paid-In		Accumulated
	Shares		Value		Shares		Value		Capital		Deficit			Total
Balance December 31, 2017		345,000	$	69		66,785,428	$	13,357	$	2,020,642	$	(2,593,337	)	$	(559,269	)
Warrants exercised		-		-		-		-		49,106		-			49,106
Debentures converted to common stock		-		-		641,253		128		322		-			450
Common stock issued for liabilities		-		-		552,924		111		71,768		-			71,879
Net loss for the period		-		-		-		-		-		(528,218	)		(528,218	)
Balance June 30, 2018		345,000	$	69		67,979,605	$	13,596	$	2,141,838	$	(3,121,555	)	$	(966,052	)

See notes to unaudited condensed consolidated financial statements

F-3

THE CORETEC GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended June 30,
	2018			2017
Cash Flows from Operating Activities
Net loss	$	(528,218	)	$	(981,290	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		378			498
Amortization - intangible assets		40,116			46,782
Amortization - debt discount		90,222			34,200
Options issued for common stock		-			50,000
Gain on settlement of accounts payable		(139,789	)		-
Loss on sale of property and equipment		-			3,259
Change in:
Prepaid expenses		21,946			29,390
Accounts payable and accrued liabilities		72,801			359,702
Net cash used in operating activities		(442,544	)		(457,459	)
Cash Flows from Investing Activities
Purchase of property and equipment		-			(2,268	)
Proceeds from sale of property and equipment		-			2,500
Net cash provided by investing activities		-			232
Cash Flows from Financing Activities
Payment on insurance premium financing		(21,323	)		(24,794	)
Proceeds from exercise of warrants		23,765			-
Proceeds from note payable-related party		-			486,750
Net cash provided by financing activities		2,442			461,956
Net change in cash		(440,102	)		4,729
Cash, beginning of period		470,630			594
Cash, end of period	$	30,528		$	5,323
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	210		$	626
Non-cash Investing and Financing Activities
Debentures and warrants converted to common stock	$	25,791		$	-
Common stock issued for liabilities	$	71,879		$	-

See notes to unaudited condensed consolidated financial statements

F-4

THE CORETEC GROUP INC. 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Business Organization, Nature of Business and Basis of Presentation  

Nature of Business

The Coretec Group Inc. (the “Group”) (formerly 3DIcon Corporation) (“3DIcon”) was incorporated on August 11, 1995, under the laws of the State of Oklahoma as First Keating Corporation. The articles of incorporation were amended August 1, 2003 to change the name to 3DIcon Corporation. During 2001, First Keating Corporation began to focus on the development of 360-degree holographic technology. From January 1, 2001, 3DIcon’s primary activity has been the raising of capital in order to pursue its goal of becoming a significant participant in the development, commercialization and marketing of next generation 3D display technologies.

Coretec Industries, LLC (“Coretec”), a wholly owned subsidiary of the Group (collectively the “Company”), was organized on June 2, 2015 in the state of North Dakota. Coretec is currently developing, testing, and providing new and/or improved technologies, products, and service solutions for energy-related industries including, but not limited to oil/gas, renewable energy, and distributed energy industries. Many of these technologies and products also have application for medical, electronic, photonic, display, and lighting markets among others. Early adoption of these technologies and products is anticipated in markets for energy storage (Li-ion batteries), renewable energy (BIPV), and electronics (Asset Monitoring).

Reverse Acquisition

On May 31, 2016, the Group entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Coretec and four Coretec members (the “Members”), which Members held all outstanding membership interests in Coretec. On September 30, 2016 (the “Closing Date”), the Group closed the transaction contemplated by the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Members agreed to sell all their membership interests in Coretec to the Group in exchange for the Group’s issuance of an aggregate 4,760,872 shares of the Group’s Series B Convertible Preferred Stock to the Members (the “Exchange”). Coretec became a wholly-owned subsidiary of the Group and the former Members beneficially owned approximately 65% of the Group’s common stock on a fully-diluted basis on the Closing Date. Upon the closing of the Share Exchange Agreement, two of the Group’s Directors resigned and three new Directors associated with Coretec were nominated and elected, giving control of the board of directors to former Coretec Members.

Authorization of Reverse Stock Split

On February 21, 2017 (the “Record Date”), the Board of Directors unanimously approved, and a majority of the Company’s stockholders, as of the Record Date, approved by written consent pursuant to Section 18-1073 of the Oklahoma Act, to permit the Company’s Board of Directors, in its sole discretion, to effectuate one or more consolidations of the issued and outstanding shares of common stock at some future date no later than the first anniversary of the Record Date, pursuant to which the shares of common stock would be combined and reclassified into one validly issued fully paid and non-assessable share of common stock at a ratio (the “Reverse Split Ratio”) within the range of 1-for-50 and up to 1-for-300 (the “Reverse Split Range”), with each stockholder otherwise entitled to receive a fractional share of common stock as a result of the Reverse Stock Split. Effective June 28, 2017, a Reverse Stock Split pursuant to the maximum stated Reverse Split Ratio, each 300 shares of our issued and outstanding common stock was automatically converted into 1 share of common stock

F-5

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s year-end audited consolidated financial statements and related footnotes included in the previously filed Form 10-K, and in the opinion of management, reflects all adjustments necessary to present fairly the condensed consolidated financial position of the Company. The condensed consolidated results of operations for interim periods may not be indicative of the results which may be realized for the full year. 

Note 2 – Going Concern and Management’s Plans

The Company has realized a cumulative net loss of $3,121,555 for the period from inception (June 2, 2015) to June 30, 2018, has negative working capital of $2,395,226, and no revenues. The Company has insufficient revenue and capital commitments to fund the development of its planned products and to pay operating expenses. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a year following the issuance of these condensed consolidated financial statements. 

The ability of the Company to continue as a going concern depends on the successful completion of the Company's capital raising efforts to fund the development of its planned products. The Company intends to continue to raise additional capital through grants and debt and equity financings. There is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis or, notwithstanding any request the Company may make, the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates the continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

Note 3 – Summary of Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Group and its wholly owned subsidiary, Coretec. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from the estimates and assumptions used.

Long-Lived Assets

Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary.

F-6

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument held by the Company:

Current assets and current liabilities - The carrying value approximates fair value due to the short maturity of these items.

Notes payable - The fair value of the Company’s notes payable has been estimated by the Company based upon the liability’s characteristics, including interest rate. The carrying value approximates fair value.

Beneficial Conversion Feature of Convertible Notes Payable

The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options, Emerging Issues Task Force ("EITF") 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF 00-27, Application of Issue No 98-5 To Certain Convertible Instruments. The beneficial conversion feature of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related to the issuance of a convertible note when issued.

The beneficial conversion feature of a convertible note is credited to additional paid-in-capital.  The intrinsic value is recorded in the consolidated financial statements as a debt discount and such discount is amortized over the expected term of the convertible note and is charged to interest expense.

Basic and Diluted Loss Per Common Share 

Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. 

Basic and diluted loss per shares are calculated the same for all periods presented due to the net loss. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: 

	June 30,
	2018		2017
Options		2,883,379		284,166
Warrants		1,061		65,228
Series A convertible preferred stock		115,000		115,000
Series B convertible preferred stock		-		41,842,241
Convertible debentures		107,185,742		61,122,346
Total potentially dilutive shares		110,185,182		103,428,981

Subsequent Events

The Company evaluates events that have occurred after the balance sheet date but before the condensed consolidated 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 7. 

F-7

Recent Accounting Pronouncements

The following is a summary of recent accounting pronouncements that are relevant to the Company:

In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Non-Employee Share-Based Payment Accounting. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company does not expect the amendment, which is effective beginning with our 2019 fiscal year, to have a material impact on our consolidated financial statements. 

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments, specifically equity investments and financial instruments measured at amortized cost. ASU 2016-01 is effective for public companies for annual and interim periods beginning after December 15, 2017. ASU 2016-01 did not have a material impact on the Company’s financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for public companies for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. ASU 2016-15 did not have a material impact on the Company’s cash flows.

In February 2016, the FASB issued accounting standards update (ASU) No. 2016-02, Leases (Topic 842) intended to increase transparency and comparability among companies by requiring most leases to be included on the balance sheet and by expanding disclosure requirements. This is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company is currently evaluating the impact that this new guidance may have on its consolidated results of operations, cash flows, financial position and disclosures.

The FASB has issued ASU 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements in FASB ASC 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB deferred the effective date of ASU No. 2014-09 from annual periods beginning after December 15, 2016 to annual periods beginning after December 15, 2017. This ASU should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations because the Company currently has no revenue.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The amendments in this ASU are effective beginning after December 15, 2017, including interim periods within those periods and should be applied prospectively. The adoption of this standard did not have a material impact on its consolidated financial position and results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill test. Under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and labilities following the procedure that would be required in determining the fair value of assets acquired and labilities assumed in a business combination. Instead, an entity should perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments in this ASU are effective beginning after December 15, 2019, however early adoption is permitted beginning January 1, 2017 and should be applied on a prospective basis. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial position and results of operations.

F-8

Note 4 – Debentures and Notes Payable

	June 30,			December 31,
	2018			2017
Notes and debentures payable:
5.25% Insurance premium finance agreement due June 2018	$	-		$	21,323
9% Promissory note due June 2018		-			25,341
4.75% Convertible debenture due September 2018		63,675			64,124
Total notes and debentures payable	$	63,675		$	110,788
Notes payable - related party:
14% Term loan due June 2019	$	264,993		$	264,993
14% Term loan due June 2019		596,500			596,500
14% Term loan due June 2019		400,941			400,941
7% Convertible promissory note due March 2019, net		163,407			98,187
7% Convertible promissory note due June 2019, net		51,237			26,235
Total notes payable - related party		1,477,078			1,386,856
Less current portion		(1,477,078	)		(1,262,434	)
Long term debt	$	-		$	124,422

5.25% Insurance premium finance agreement, due June 2018 

The Company entered into an insurance financing agreement in 2017 totaling $37,711 due June 2018 and made payments of $21,323 during the six months ended June 30, 2018.

9% Promissory note due June 2018

On April 26, 2016, the Company signed a 9% promissory note with Golden State in the amount of $40,000. Golden State advanced the $40,000 on the note and, on June 16, 2016, applied $14,659 to fund the exercise of warrants under the terms of the 4.75% convertible debenture (described below) held by Golden State, leaving $25,341 outstanding on the 9% promissory note as of December 31, 2017. During the six months ended June 30, 2018, Golden State applied $25,341 to fund the exercise of warrants under the terms of the 4.75% convertible debenture.

4.75% Convertible debenture due September 2018

On November 3, 2006, the Company issued to Golden State a 4.75% convertible debenture in a principal amount of $100,000, due December 31, 2014 and subsequently extended to September 30, 2018 and warrants to buy 61 post-split equivalent shares of common stock at a post-split exercise price of $114,450 per share. In connection with each conversion, Golden State is expected to simultaneously exercise a percentage of warrants equal to the percentage of the principal being converted. On January 8, 2018, Golden State converted $225 of the 4.75% convertible debenture into 244,618 shares of common stock at $0.0009 per share and exercised 0.2143 warrants at $114,450 per share for $24,525. On May 24, 2018, Golden State converted $225 of the 4.75% convertible debenture into 396,635 shares of common stock at $0.0006 per share and exercised 0.2143 warrants at $114,450 per share for $24,581.

F-9

 14% Term loan due June 2019, related party

On April 18 2016, the Company entered into an unsecured loan agreement whereby Carlton James North Dakota Limited ("CJNDL”) agreed to provide the Company a loan facility of up to $100,000. Under the terms of the agreement, the Company shall pay interest on the outstanding unpaid balance at the rate of 1.167% per month. The interest is due quarterly, and the principal is due June 29, 2019. CJNDL has advanced $264,993 ($164,993 in excess of the facility) on the loan as of June 30, 2018. During 2017, CJND agreed that the excess amount funded to and any future funding under the loan will be done on the same terms and conditions as the original note.

14% Term loan due June 2019, related party

On February 24, 2016, the Company entered into an unsecured loan agreement whereby Victor Keen, Co-Chairman of the Company (“Keen”) agreed to provide the Company a loan facility of up to $300,000. Under the terms of the agreement, the Company shall pay interest on the outstanding unpaid balance at the rate of 1.167% per month. The interest is due quarterly, and the principal is due June 29, 2019. Keen has advanced $596,500 ($276,500 in excess of the facility) on the loan through June 30, 2018. During 2017, Keen agreed that the excess amount funded and any future funding under the loan will be done on the same terms and conditions as the original note.  

14% Term loan due June 2019, related party

On June 1, 2015, Coretec obtained a $500,000 revolving note agreement with CJNDL. The total amount of borrowings by Coretec shall not exceed $500,000. Coretec accrues interest on the outstanding balance at the rate of 1.167% per month, payable on a quarterly basis. CJNDL has advanced $400,941 on the loan. Outstanding borrowings are secured by substantially all assets of the Company. The note is due on June 29, 2019.

7% Convertible promissory note due March 2019, related party 

On March 30, 2017, the Company issued to Mr. Victor Keen, Co-Chairman of the Board of Directors, a 7% convertible promissory note in a principal amount of $250,000, due March 1, 2019 (“Maturity Date”). The promissory note shall automatically convert into eight percent (8%) of the fully diluted outstanding shares of common stock of the Company calculated after giving effect to (a) the exercise of all outstanding options, warrants or other rights to acquire shares of common stock of the Company, (b) the conversion of all outstanding convertible or exchangeable securities, and (c) after giving effect to the issuance of common stock upon conversion of this note (the “Conversion Shares”). The conversion shall not occur until both of the following two events shall have occurred (the “Conversion Event”): (i) the consummation of the Reverse Split by the Company as reflected in the Preliminary Information Statement filed with the Securities and Exchange Commission on March 7, 2017, and (ii) the conversion of all the Company’s issued and outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock into the Conversion Shares. If the Conversion Event has not occurred prior to the earlier to occur of the Maturity Date and the occurrence of an event of default, then this note shall not be automatically converted into the Conversion Shares and Mr. Victor Keen may elect, at his sole discretion, (i) to have the outstanding principal balance of this note converted into the Conversion Shares; or (ii) to declare the outstanding principal balance of this note, together with all accrued interest, be paid in accordance with the terms of the note. Such election may be made at any time on or following the Maturity Date or the occurrence of an event of default. This note is an unsecured obligation of the Company. The embedded conversion option was deemed to be a beneficial conversion feature because the active conversion price was less than the commitment date market price of the common stock. The dollar amount of the beneficial conversion feature is limited to the carrying value of the promissory note, so a $250,000 debt discount was recorded, with a corresponding credit to additional paid-in capital for the beneficial conversion feature. The debt discount is being amortized over the life of the debt and $65,220 and $32,967 was amortized during the six months ended June 30, 2018 and 2017 respectively.

F-10

7% Convertible promissory note due June 2019, related party

On June 21, 2017, the Company issued to Mr. Victor Keen, Co-Chairman of the Board of Directors, a 7% convertible promissory note in a principal amount of $100,000, due June 21, 2019. The promissory note shall automatically convert into four percent (4%) of the fully diluted outstanding shares of common stock of the Company calculated after giving effect to (a) the exercise of all outstanding options, warrants or other rights to acquire shares of common stock of the Company, (b) the conversion of all outstanding convertible or exchangeable securities, and (c) after giving effect to the issuance of common stock upon conversion of this note (the “Conversion Shares”). The conversion shall not occur until both of the following two events shall have occurred (the “Conversion Event”): (i) the consummation of the Reverse Split by the Company as reflected in the Preliminary Information Statement filed with the Securities and Exchange Commission on March 7, 2017, and (ii) the conversion of all of the Company’s issued and outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock into the Conversion Shares. If the Conversion Event has not occurred prior to the earlier to occur of the Maturity Date and the occurrence of an event of default, then this note shall not be automatically converted into the Conversion Shares and Mr. Victor Keen may elect, at his sole discretion, (i) to have the outstanding principal balance of this note converted into the Conversion Shares; or (ii) to declare the outstanding principal balance of this note, together with all accrued interest, be paid in accordance with the terms of the note. Such election may be made at any time on or following the Maturity Date or the occurrence of an event of default. This note is an unsecured obligation of the Company. The embedded conversion option was deemed to be a beneficial conversion feature because the active conversion price was less than the commitment date market price of the common stock. The dollar amount of the beneficial conversion feature is limited to the carrying value of the promissory note, so a $100,000 debt discount was recorded, with a corresponding credit to additional paid-in capital for the beneficial conversion feature. The debt discount is being amortized over the life of the debt and $25,002 and $1,233 was amortized during the six months ended June 30, 2018 and 2017 respectively. 

Note 5 – Commitments and Contingencies

Litigation, Claims, and Assessments

The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. In the opinion of management, such matters are currently not expected to have a material impact on the Company’s consolidated financial statements. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

North Dakota State University Research Foundation License Agreement

Under the terms of the Exclusive License Agreement (the “License Agreement”) signed on June 16, 2016 with North Dakota State University Research Foundation (“NDSU/RF”), the Company was delinquent on payments of $139,789 and unable to meet certain milestones. A dispute arose between the Company and NDSU/RF regarding compensation and deliverables. The License Agreement was renegotiated with NDSU/RF and on June 29, 2018, the Company entered into a settlement agreement and general release (the “Settlement Agreement”) with NDSU/RF to resolve the dispute, pursuant to which the Company and NDSU/RF fully and forever released each other from the License Agreement and mutually released each other of all claims. Accordingly, the Company recognized a gain of $139,789 for the settlement of accounts payable during the three months ended June 30, 2018.

Supply Agreement

On December 13, 2016, the Company entered into a Supply Agreement (the “Supply Agreement”) with Gelest Inc., a Pennsylvania corporation (“Gelest”). This Supply Agreement was for the purchase and sale of Cyclohexasilane (“CHS” or the “Products”) as set forth in the Supply Agreement, pursuant to which the Company agrees to use Gelest as a primary source to manufacture the Products for the duration of three years from the effective date. 

F-11

Under the terms of the Supply Agreement, Gelest would have scaled-up production of CHS, within their available capacity of 12-18 Kg per year, and further optimize the manufacturing process licensed by the purchaser from NDSU Research Foundation (“NDSU/RF”). The term of this project was 90 days from the receipt of the first installment of YSi6Cl14 salt from the purchaser. The cost for scale-up and manufacturing optimization was $180,000 to be paid by the purchaser in two installments. The initial installment of $18,000 was paid upon finalizing this Supply Agreement. The second installment of $162,000 was to be paid net 30 days from availability for shipment of between 200 – 400 grams of the initial product of the quality stated in the Supply Agreement.

On April 6, 2018, Gelest and the Company mutually agreed to cancel the December 13, 2016 CHS Supply Agreement. The Company is currently negotiating an agreement with Gelest where Gelest will provide CHS storage and handling, website and catalog listings of CHS produced by or for the Company for sale to its customers, and customer service, including trans-fill of customer cylinders. 

Office Lease

The Company entered into a lease agreement in June 2015 for office space in North Dakota that was canceled on April 30, 2017 with no cancellation costs paid or due. The Company has an amended office lease in Tulsa, Oklahoma that expired on July 31, 2018.  Rent expense for operating leases was $13,398 and $19,500 for the six-month periods ended June 30, 2018 and 2017, respectively. The Company is now on a month to month basis under the terms of the lease. 

Note 6 – Options Issued to Purchase Common Stock

On March 21, 2017, the Company and Mr. Michael Kraft entered into a consulting agreement, pursuant to which the Company granted Mr. Kraft an option to purchase from the Company $50,000 of common stock at the market price on the date of the execution of the Reverse Split, which became effective on June 28, 2017. Accordingly, the $50,000 value of options calculates to 208,160 shares based upon the $0.24 closing price on June 28, 2017.  

The $50,000 estimated fair value of the option to purchase common stock issued in 2017 was determined using the Black-Scholes option pricing model. The expected dividend yield of $0 is based on the average annual dividend yield at the date issued. Expected volatility of 260.52% is based on the historical volatility of the stock. The risk-free interest rate of 1.84% is based on the U.S. Treasury Constant Maturity rates as of the issue date. The expected life of the option of ten years is based on historical exercise behavior and expected future experience. 

Note 7 – Subsequent Events

Subsequent to June 30, 2018, the Company issued 125,993 shares of common stock in payment of $7,662 of consulting services.

Subsequent to June 30, 2018, CJND, a company owned by Mr. Simon Calton, Co-Chairman of the Board of Directors, advanced an additional $40,000 under the terms of the 14% term loan.

F-12

Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” “anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

This Quarterly Report on Form 10-Q includes the accounts of The Coretec Group Inc., an Oklahoma corporation, together with its wholly-owned subsidiary, Coretec Industries LLC, a North Dakota limited liability corporation formed in North Dakota (individually referred to as “Coretec”). References in this Report to “we,” “our,” “us” or the “Group” refer to The Coretec Group Inc. and its consolidated subsidiary unless context dictates otherwise. The following discussion and analysis should be read in conjunction with our consolidated financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. 

Plan of Operation

Background:

On June 22, 2017, The Coretec Group Inc. (the “Group”) filed an Amended Certificate of Incorporation with the Secretary of State of the State of Oklahoma to change its name from “3DIcon Corporation” to “The Coretec Group Inc.”, which became effective on June 29, 2017.

The Group, formerly known as 3DIcon Corporation, was incorporated on August 11, 1995, under the laws of the State of Oklahoma. The Group’s primary activity has been the raising of capital in order to pursue its goal of becoming a significant participant in the development, commercialization and marketing of next generation 3D display technologies.

On September 30, 2016 (the “Closing Date”), we closed a transaction contemplated by a Share Exchange Agreement dated May 31, 2016 (the “Share Exchange Agreement”) with Coretec Industries, LLC (“Coretec”). Pursuant to the Share Exchange Agreement, Coretec became a wholly-owned subsidiary of the Group (collectively, the “Company”). Coretec was organized on June 2, 2015 in the state of North Dakota. It is currently developing, testing, and providing new and/or improved technologies, products, and service solutions for medical, electronic, photonic, display, and lighting markets among others.

The combination of the two companies provides a significant number of opportunities to increase shareholder value by: 

● Providing technological support to advance the refinement of CSpace image material;

● Adding recognized expertise to the team;

● Creating the opportunity for near-term revenue; and

● Adding a significant portfolio of Intellectual Property.

3

Recent Developments

On April 6, 2018, Gelest and the Company mutually agreed to cancel the December 13, 2016 CHS Supply Agreement. The Company is currently negotiating an agreement with Gelest where Gelest will provide CHS storage and handling, website and catalog listings of CHS produced by or for the Company for sale to its customers, and customer service, including trans-fill of customer cylinders. 

Under the terms of the Exclusive License Agreement (the “License Agreement”) signed on June 16, 2016 with North Dakota State University Research Foundation (“NDSU/RF”), the Company was delinquent on payments of $139,789 and unable to meet certain milestones. A dispute arose between the Company and NDSU/RF regarding compensation and deliverables. The License Agreement was renegotiated with NDSU/RF and on June 29, 2018, the Company entered into a settlement agreement and general release (the “Settlement Agreement”) with NDSU/RF to resolve the dispute, pursuant to which the Company and NDSU/RF fully and forever released each other from the License Agreement and mutually released each other of all claims. Accordingly, the Company recognized a gain of $139,789 for the settlement of accounts payable during the three months ended June 30, 2018.

Results of Operations

 RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2018 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2017

Revenue

We did not have revenue for the three-month periods ended June 30, 2018 and 2017.

Research and Development Expenses

The research and development expenses were $21,182 for the three months ended June 30, 2018, as compared to $155,437 for the three months ended June 30, 2017.  The approximate $134,000 decrease was a result of the decrease in activity with NDSU/RF under the now cancelled License Agreement of approximately $77,000, the decrease cost incurred under the Sponsored Research Agreement (“SRA”) with NDSU/RF of approximately $54,000 and the decrease cost of patent amortization of approximately $3,000.

General and Administrative Expenses

Our general and administrative expenses were $211,829 for the three months ended June 30, 2018, as compared to $315,489 for the three months ended June 30, 2017.  The approximate $104,000 net decrease is due primarily to a decrease in stock bonuses and stock options issued of $75,000, approximately $17,000 decrease in consulting fees, approximately $24,000 decrease in filing fees, approximately $3,000 decrease in office supplies, approximately $7,000 decrease in web page design and telephone charges, and a decrease in contract labor cost of approximately $2,000. The decreases were offset by the approximately $14,000 increase in marketing cost and approximately $10,000 in legal fees.

Interest Expense

Interest expense for the three months ended June 30, 2018 was $96,442 as compared to $81,497 for the three months ended June 30, 2017.  The approximate $15,000 increase was a result of the increase in the amount of our notes payable and debentures payable outstanding during the period.

Other Income

The Company recognized a gain of $139,789 for the settlement of accounts payable during the three months ended June 30, 2018.

4

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2018 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2017

Revenue

We did not have revenue for the six-month periods ended June 30, 2018 and 2017.

Research and Development Expenses

The research and development expenses were $42,100 for the six months ended June 30, 2018, as compared to $260,807 for the six months ended June 30, 2017.  The approximate $219,000 decrease was a result of the decrease in activity with NDSU/RF under the now cancelled Exclusive License Agreement of approximately $119,000, the decrease in cost incurred under the SRA with NDSU/RF of approximately $93,000, and the approximately $7,000 decrease amortization of other intangible assets.

General and Administrative Expenses 

Our general and administrative expenses were $433,129 for the six months ended June 30, 2018, as compared to $596,820 for the six months ended June 30, 2017.  The approximately $164,000 decrease is due primarily to a decrease in stock bonuses and stock options issued of $75,000, approximately $38,000 decrease in consulting fees, approximately $29,000 decrease in filing fees, approximately $21,000 decrease in accounting fees, approximately $7,000 decrease in legal fees, approximately $6,000 decrease in rent from closing the North Dakota office, approximately $4,000 decrease in office supplies, approximately $5,000 decrease in web page design, and a decrease in contract labor cost of approximately $2,000. The decreases were offset by the approximately $23,000 increase in marketing cost.

Interest Expense

Interest expense for the six months ended June 30, 2018 was $192,778 as compared to $123,663 for the six months ended June 30, 2017.  The approximate $69,000 increase was a result of the increase in the amount of our notes payable and debentures payable outstanding during the period.

Other Income

The Company recognized a gain of $139,789 for the settlement of accounts payable during the six months ended June 30, 2018.

Financial Condition, Liquidity and Capital Resources

Management remains focused on controlling cash expenses. We recognize our limited cash resources and plan our expenses accordingly. We intend to leverage stock-for-services whenever possible. The operating budget consists of the following expenses:

● Research and development expenses pursuant to the development of an initial demonstrable prototype and a second prototype for static volume technology.

● Acceleration of research and development through increased research personnel as well as other research agencies.

● General and administrative expenses: salaries, insurance, investor related expenses, rent, travel, website, etc.

● Hiring executive officers for technology, operations and finance. 

● Professional fees for accounting and audit; legal services for securities and financing; patent research and protection.

Our independent registered public accountants, in their audit report accompanying our consolidated financial statements for the year ended December 31, 2017, expressed substantial doubt about our ability to continue as a going concern due to our organization having insufficient revenues to fund development and operating expenses.

5

We had net cash of $30,528 at June 30, 2018.

We had negative working capital of $2,395,226 at June 30, 2018.

During the six months ended June 30, 2018, we used $442,544 of cash for operating activities, a net decrease of $14,915 or 3% compared to the six months ended June 30, 2017. The net decrease in the use of cash for operating activities was a result of a decrease in the net loss of $453,072 and the increase in the amortization of debt discount of $56,022, the increase in amortization of intangible assets of $6,666, offset by a decrease in accounts payable and accrued liabilities of $286,901, a gain on settlement of accounts payable of $139,789, a decrease in options issued for services of $50,000 and a decrease in prepaid expenses of $7,444.

During the six months ended June 30, 2018, there was $-0- of net cash provided by investing activities, a decrease of $232 or 100% compared to the six months ended June 30, 2017. The decrease was a result of no investing activity in 2018.

During the six months ended June 30, 2018, there was $2,442 of net cash provided by financing activities, a decrease of $459,514 or 99% compared to the six months ended June 30, 2017. The decrease was a result of $486,750 decrease in proceeds from note advances from a related party, an increase in proceeds from exercise of warrants of $23,765 and a $3,471 decrease in payments on our insurance premium financing.

We expect to fund the ongoing operations through the existing financing in place and through raising additional funds as permitted by the terms of Golden State financing.

Our ability to fund the operations of the Company is highly dependent on the underlying stock price of the Company.

There is no assurance that we’ll be successful in raising additional funds on reasonable terms or that the funding will be sufficient to enable us to fully complete our development activities or attain profitable operations. If we are unable to obtain such additional financing on a timely basis or, notwithstanding any request we may make, our debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, we may have to curtail development, marketing and promotional activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately, we could be forced to discontinue our operations and liquidate. 

Off Balance Sheet Arrangements

We do not engage in any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures. 

Significant Accounting Policies

There has been no change in the significant accounting policies summarized in our Form 10-K for the year ended December 31, 2017, which was filed on April 2, 2018.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

The Company is a smaller reporting company, as defined by Rule 229.10(f)(1) and is not required to provide the information required by this Item.

Item 4.   Controls and Procedures.

Limitations on Effectiveness of Controls. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

6

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2018. The term “disclosure controls and procedures,” as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2018, our disclosure controls and procedures were not effective at a reasonable assurance level as we do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, management will engage financial consultants and perform additional analysis and other procedures to help address this material weakness. Until remediation actions are fully implemented, and the operational effectiveness of related internal controls are validated through testing, the material weaknesses described above will continue to exist. 

Notwithstanding the assessment that our disclosure controls and procedures were not effective and that there is a material weakness as identified herein, we believe that our condensed consolidated financial statements contained in this Quarterly Report fairly present our condensed consolidated financial position, results of operations and cash flows for the periods covered thereby in all material respects.

Changes in Disclosure Controls and Procedures. There has been no change in our disclosure controls and procedures identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2018, that has materially affected, or is reasonably likely to materially affect, our disclosure controls and procedures. 

PART II

Item 1.   Legal Proceedings.

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

Item 1A. Risk Factors.

Not Applicable.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.  

4.75% Convertible debenture due September 2018

On January 8, 2018, Golden State converted $225 of the 4.75% convertible debenture into 244,618 shares of common stock at $0.0009 per share and exercised 0.2143 warrants at $114,450 per share for $24,525.  On May 24, 2018, Golden State converted $225 of the 4.75% convertible debenture into 396,635 shares of common stock at $0.0006 per share and exercised 0.2143 warrants at $114,450 per share for $24,581.

The above securities were issued in reliance upon the exemptions provided by Section 4(a) (2) under the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not Applicable.

7

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number	Description of Exhibit
31.1	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1	Section 1350 Certifications of Chief Executive Officer.
32.2	Section 1350 Certifications of Chief Financial Officer.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE CORETEC GROUP INC.
Date: August 14, 2018	/s/ Michael A. Kraft
	Name:	Michael A. Kraft
	Title:	Chief Executive Officer
	/s/ Ronald W. Robinson
	Name:	Ronald W. Robinson
	Title:	Chief Financial Officer

8

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Michael A. Kraft, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of The Coretec Group Inc.

2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange46 Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Dated:    August 14, 2018	By:	/s/ Michael A. Kraft
		Michael A. Kraft
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Ronald W. Robinson, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of The Coretec Group Inc.

2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Dated:    August 14, 2018	By:	/s/ Ronald W. Robinson
		Ronald W. Robinson
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Coretec Group Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael A. Kraft, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Date:  August 14, 2018	By:	/s/ Michael A. Kraft
		Michael A. Kraft
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Coretec Group Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald W. Robinson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Date:  August 14, 2018	By:	/s/ Ronald W. Robinson
		Ronald W. Robinson
		Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 14, 2018
Document Information [Line Items]
Entity Registrant Name	CORETEC GROUP INC.
Entity Central Index Key	0001375195
Trading Symbol	crtg
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		68,105,598
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 30,528	$ 470,630
Prepaid expenses	13,412	35,358
Total current assets	43,940	505,988
Property and equipment, net	1,260	1,638
Other assets:
Patents, net	1,259,599	1,299,714
Goodwill	166,000	166,000
Deposits-other	2,315	2,315
Total other assets	1,427,914	1,468,029
Total Assets	1,473,114	1,975,655
Current liabilities:
Notes payable - related party, net of discount	1,477,078	1,262,434
Notes and debentures payable	63,675	110,788
Accounts payable and accrued expenses	514,062	755,481
Accrued interest payable - related party	359,846	258,815
Accrued interest payable	24,505	22,984
Total current liabilities	2,439,166	2,410,502
Notes payable - related party, net of current portion and discount		124,422
Total Liabilities	2,439,166	2,534,924
Stockholders' deficiency:
Preferred stock, Series A convertible, $0.0002 par value, 500,000 shares authorized; 345,000 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively	69	69
Common stock $0.0002 par value, 1,500,000,000 shares authorized; 67,979,605 and 66,785,428 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively	13,596	13,357
Additional paid-in capital	2,141,838	2,020,642
Accumulated deficit	(3,121,555)	(2,593,337)
Total Stockholders' Deficiency	(966,052)	(559,269)
Total Liabilities and Stockholders' Deficiency	$ 1,473,114	$ 1,975,655

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Preferred stock, par value (in dollars per share)	$ 0.0002	$ 0.0002
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	345,000	345,000
Preferred stock, shares outstanding (in shares)	345,000	345,000
Common stock, par value (in dollars per share)	$ 0.0002	$ 0.0002
Common stock, shares authorized (in shares)	1,500,000,000	1,500,000,000
Common stock, shares issued (in shares)	67,979,605	66,785,428
Common stock, shares outstanding (in shares)	67,979,605	66,785,428

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income:
Revenue
Expenses:
Research and development	21,182	155,437	42,100	260,807
General and administrative	211,829	315,489	433,129	596,820
Interest	96,442	81,497	192,778	123,663
Total expenses	329,453	552,423	668,007	981,290
Other income:
Gain on settlemment of accounts payable	139,789		139,789
Net loss	$ (189,664)	$ (552,423)	$ (528,218)	$ (981,290)
Loss per share:
Basic and diluted (in dollars per share)	$ (0.003)	$ (0.112)	$ (0.008)	$ (0.199)
Weighted average shares outstanding, basic and diluted (in shares)	67,744,239	4,939,182	67,512,716	4,939,182

XML

Condensed Consolidated Statement of Changes in Stockholders' Deficiency (Unaudited) - USD ($)	3 Months Ended	6 Months Ended	37 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2018
Preferred Stock [Member] | Series A Preferred Stock [Member]
Balance (in shares)		345,000
Balance		$ 69
Balance (in shares)	345,000	345,000	345,000
Balance	$ 69	$ 69	$ 69
Common Stock [Member]
Balance (in shares)		66,785,428
Balance		$ 13,357
Debentures converted to common stock (in shares)		641,253
Debentures converted to common stock		$ 128
Common stock issued for liabilities (in shares)		552,924
Common stock issued for liabilities		$ 111
Balance (in shares)	67,979,605	67,979,605	67,979,605
Balance	$ 13,596	$ 13,596	$ 13,596
Additional Paid-in Capital [Member]
Balance		2,020,642
Warrants exercised		49,106
Debentures converted to common stock		322
Common stock issued for liabilities		71,768
Balance	2,141,838	2,141,838	2,141,838
Retained Earnings [Member]
Balance		(2,593,337)
Net loss		(528,218)
Balance	(3,121,555)	(3,121,555)	(3,121,555)
Balance		(559,269)
Warrants exercised		49,106
Debentures converted to common stock		450
Common stock issued for liabilities		71,879
Net loss	(189,664)	(528,218)	(3,121,555)
Balance	$ (966,052)	$ (966,052)	$ (966,052)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash Flows from Operating Activities
Net loss	$ (528,218)	$ (981,290)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	378	498
Amortization - intangible assets	40,116	46,782
Amortization - debt discount	90,222	34,200
Options issued for common stock		50,000
Gain on settlement of accounts payable	(139,789)
Loss on sale of property and equipment		3,259
Change in:
Prepaid expenses	21,946	29,390
Accounts payable and accrued liabilities	72,801	359,702
Net cash used in operating activities	(442,544)	(457,459)
Cash Flows from Investing Activities
Purchase of property and equipment		(2,268)
Proceeds from sale of property and equipment		2,500
Net cash provided by investing activities		232
Cash Flows from Financing Activities
Payment on insurance premium financing	(21,323)	(24,794)
Proceeds from exercise of warrants	23,765
Proceeds from note payable-related party		486,750
Net cash provided by financing activities	2,442	461,956
Net change in cash	(440,102)	4,729
Cash, beginning of period	470,630	594
Cash, end of period	30,528	5,323
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	210	626
Non-cash Investing and Financing Activities
Debentures and warrants converted to common stock	25,791
Common stock issued for liabilities	$ 71,879

XML

Note 1 - Business Organization, Nature of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

Note

1

– Business Organization, Nature of Business and Basis of Presentation

Nature of Business

The Coretec Group Inc. (the “Group”) (formerly

3DIcon

Corporation) (

“3DIcon”

) was incorporated on

August 11, 1995,

under the laws of the State of Oklahoma as First Keating Corporation. The articles of incorporation were amended

August 1, 2003

to change the name to

3DIcon

Corporation. During

2001,

First Keating Corporation began to focus on the development of

360

-degree holographic technology. From

January 1, 2001,

3DIcon’s

primary activity has been the raising of capital in order to pursue its goal of becoming a significant participant in the development, commercialization and marketing of next generation

3D

display technologies.

Coretec Industries, LLC (“Coretec”), a wholly owned subsidiary of the Group (collectively the “Company”), was organized on

June 2, 2015

in the state of North Dakota. Coretec is currently developing, testing, and providing new and/or improved technologies, products, and service solutions for energy-related industries including, but

not

limited to oil/gas, renewable energy, and distributed energy industries. Many of these technologies and products also have application for medical, electronic, photonic, display, and lighting markets among others. Early adoption of these technologies and products is anticipated in markets for energy storage (Li-ion batteries), renewable energy (BIPV), and electronics (Asset Monitoring).

Reverse Acquisition

On

May 31, 2016,

the Group entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Coretec and

four

Coretec members (the “Members”), which Members held all outstanding membership interests in Coretec. On

September 30, 2016 (

the “Closing Date”), the Group closed the transaction contemplated by the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Members agreed to sell all their membership interests in Coretec to the Group in exchange for the Group’s issuance of an aggregate

4,760,872

shares of the Group’s Series B Convertible Preferred Stock to the Members (the “Exchange”). Coretec became a wholly-owned subsidiary of the Group and the former Members beneficially owned approximately

65%

of the Group’s common stock on a fully-diluted basis on the Closing Date. Upon the closing of the Share Exchange Agreement,

two

of the Group’s Directors resigned and

three

new Directors associated with Coretec were nominated and elected, giving control of the board of directors to former Coretec Members.

Authorization of Reverse Stock Split

On

February 21, 2017 (

the “Record Date”), the Board of Directors unanimously approved, and a majority of the Company’s stockholders, as of the Record Date, approved by written consent pursuant to Section 

18

-

1073

of the Oklahoma Act, to permit the Company’s Board of Directors, in its sole discretion, to effectuate

one

or more consolidations of the issued and outstanding shares of common stock at some future date

no

later than the

first

anniversary of the Record Date, pursuant to which the shares of common stock would be combined and reclassified into

one

validly issued fully paid and non-assessable share of common stock at a ratio (the “Reverse Split Ratio”) within the range of

1

-for-

50

and up to

1

-for-

300

(the “Reverse Split Range”), with each stockholder otherwise entitled to receive a fractional share of common stock as a result of the Reverse Stock Split. Effective

June 28, 2017,

a Reverse Stock Split pursuant to the maximum stated Reverse Split Ratio, each

300

shares of our issued and outstanding common stock was automatically converted into

1

share of common stock

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made are adequate to make the information presented

not

misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s year-end audited consolidated financial statements and related footnotes included in the previously filed Form

10

-K, and in the opinion of management, reflects all adjustments necessary to present fairly the condensed consolidated financial position of the Company. The condensed consolidated results of operations for interim periods

may

not

be indicative of the results which

may

be realized for the full year. 

XML

Note 2 - Going Concern and Management's Plans

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

Note

2

– Going Concern and Management’s Plans

The Company has realized a cumulative net loss of

$3,121,555

for the period from inception (

June 2, 2015)

to

June 30, 2018,

has negative working capital of

$2,395,226,

and

no

revenues. The Company has insufficient revenue and capital commitments to fund the development of its planned products and to pay operating expenses. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a year following the issuance of these condensed consolidated financial statements. 

The ability of the Company to continue as a going concern depends on the successful completion of the Company's capital raising efforts to fund the development of its planned products. The Company intends to continue to raise additional capital through grants and debt and equity financings. There is

no

assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis or, notwithstanding any request the Company

may

make, the Company’s debt holders do

not

agree to convert their notes into equity or extend the maturity dates of their notes, the Company

may

have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates the continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do

not

necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do

not

include any adjustments that might result from the outcome of this uncertainty.

XML

Note 3 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

Note

3

– Summary of Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Group and its wholly owned subsidiary, Coretec. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from the estimates and assumptions used.

Long-Lived Assets

Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company

first

compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is

not

recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and

third

party independent appraisals, as considered necessary.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument held by the Company:

Current assets and current liabilities

- The carrying value approximates fair value due to the short maturity of these items.

Notes payable

-

The fair value of the Company’s notes payable has been estimated by the Company based upon the liability’s characteristics, including interest rate. The carrying value approximates fair value.

Beneficial Conversion Feature of Convertible Notes Payable

The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic

470

-

20,

Debt with Conversion and Other Options, Emerging Issues Task Force ("EITF")

98

-

5,

Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF

00

-

27,

Application of Issue

No

98

-

5

To Certain Convertible Instruments. The beneficial conversion feature of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related to the issuance of a convertible note when issued.

The beneficial conversion feature of a convertible note is credited to additional paid-in-capital.  The intrinsic value is recorded in the consolidated financial statements as a debt discount and such discount is amortized over the expected term of the convertible note and is charged to interest expense.

Basic and Diluted Loss Per Common Share

 

Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. 

Basic and diluted loss per shares are calculated the same for all periods presented due to the net loss. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: 

	June 30 ,
	2018		2017
Options		2,883,379		284,166
Warrants		1,061		65,228
Series A convertible preferred stock		115,000		115,000
Series B convertible preferred stock		-		41,842,241
Convertible debentures		107,185,742		61,122,346
Total potentially dilutive shares		110,185,182		103,428,981

Subsequent Events

The Company evaluates events that have occurred after the balance sheet date but before the condensed consolidated 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

7.

Recent Accounting Pronouncements

The following is a summary of recent accounting pronouncements that are relevant to the Company:

In

June 2018,

the Financial Accounting Standards Board (“FASB”) issued ASU

No.

2018

-

07

–

Compensation – Stock Compensation (Topic

718

): Improvements to Non-Employee Share-Based Payment Accounting

. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company does

not

expect the amendment, which is effective beginning with our

2019

fiscal year, to have a material impact on our consolidated financial statements. 

In

January 2016,

the FASB issued ASU

No.

 

2016

-

01,

Financial Instruments – Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities

(“ASU

2016

-

01”

). ASU

2016

-

01

addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments, specifically equity investments and financial instruments measured at amortized cost. ASU

2016

-

01

is effective for public companies for annual and interim periods beginning after

December 15, 2017.

ASU

2016

-

01

did

not

have a material impact on the Company’s financial statements.

In

August 2016,

the FASB issued ASU

No.

 

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

(“ASU

2016

-

15”

). ASU

2016

-

15

will make

eight

targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU

2016

-

15

is effective for public companies for interim and annual periods beginning after

December 15, 2017,

with early adoption permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. ASU

2016

-

15

did

not

have a material impact on the Company’s cash flows.

In

February 2016,

the FASB issued accounting standards update (ASU)

No.

2016

-

02,

 

Leases (Topic

842

)

 intended to increase transparency and comparability among companies by requiring most leases to be included on the balance sheet and by expanding disclosure requirements. This is effective for public business entities for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company is currently evaluating the impact that this new guidance

may

have on its consolidated results of operations, cash flows, financial position and disclosures.

The FASB has issued ASU

2014

-

09,

Revenue from Contracts with Customers

. This ASU supersedes the revenue recognition requirements in FASB ASC

605

- Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. On

July 9, 2015,

the FASB deferred the effective date of ASU

No.

2014

-

09

from annual periods beginning after

December 15, 2016

to annual periods beginning after

December 15, 2017.

This ASU should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard did

not

have a material impact on the Company’s consolidated financial position and results of operations because the Company currently has

no

revenue.

In

January 2017,

the FASB issued ASU

2017

-

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business

. This ASU provides a screen to determine when a set is

not

a business. The screen requires that when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is

not

a business. The amendments in this ASU are effective beginning after

December 15, 2017,

including interim periods within those periods and should be applied prospectively. The adoption of this standard did

not

have a material impact on its consolidated financial position and results of operations.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment

. This ASU simplifies the subsequent measurement of goodwill by eliminating Step

2

from the goodwill test. Under Step

2,

an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and labilities following the procedure that would be required in determining the fair value of assets acquired and labilities assumed in a business combination. Instead, an entity should perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments in this ASU are effective beginning after

December 15, 2019,

however early adoption is permitted beginning

January 1, 2017

and should be applied on a prospective basis. The Company does

not

anticipate that the adoption of this standard will have a material impact on its consolidated financial position and results of operations.

XML

Note 4 - Debentures and Notes Payable

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

4

– Debentures and Notes Payable

	June 30 ,			December 31,
	2018			2017
Notes and debentures payable:
5.25% Insurance premium finance agreement due June 2018	$	-		$	21,323
9% Promissory note due June 2018		-			25,341
4.75% Convertible debenture due September 2018		63,675			64,124
Total notes and debentures payable	$	63,675		$	110,788
Notes payable - related party:
14% Term loan due June 2019	$	264,993		$	264,993
14% Term loan due June 2019		596,500			596,500
14% Term loan due June 2019		400,941			400,941
7% Convertible promissory note due March 2019, net		163,407			98,187
7% Convertible promissory note due June 2019, net		51,237			26,235
Total notes payable - related party		1,477,078			1,386,856
Less current portion		(1,477,078	)		(1,262,434	)
Long term debt	$	-		$	124,422

5.25%

Insurance premium finance agreement, due

June 2018 

The Company entered into an insurance financing agreement in

2017

totaling

$37,711

 due

June 2018

and made payments of

$21,323

during the

six

months ended

June 30, 2018.

9%

Promissory note due

June 2018

On

April 26, 2016,

the Company signed a

9%

promissory note with Golden State in the amount of

$40,000.

Golden State advanced the

$40,000

on the note and, on

June 16, 2016,

applied

$14,659

to fund the exercise of warrants under the terms of the

4.75%

convertible debenture (described below) held by Golden State, leaving

$25,341

outstanding on the

9%

promissory note as of

December 31, 2017.

During the

six

months ended

June 30, 2018,

Golden State applied

$25,341

to fund the exercise of warrants under the terms of the

4.75%

convertible debenture.

4.75%

Convertible debenture due

September 2018

On

November 3, 2006,

the Company issued to Golden State a

4.75%

convertible debenture in a principal amount of

$100,000,

due

December 31, 2014

and subsequently extended to

September 30, 2018

and warrants to buy

61

post-split equivalent shares of common stock at a post-split exercise price of

$114,450

per share. In connection with each conversion, Golden State is expected to simultaneously exercise a percentage of warrants equal to the percentage of the principal being converted. On

January 8, 2018,

Golden State converted

$225

of the

4.75%

convertible debenture into

244,618

shares of common stock at

$0.0009

per share and exercised

0.2143

warrants at

$114,450

per share for

$24,525.

On

May 24, 2018,

Golden State converted

$225

of the

4.75%

convertible debenture into

396,635

shares of common stock at

$0.0006

per share and exercised

0.2143

warrants at

$114,450

per share for

$24,581.

 

14%

Term loan due

June

201

9

, related party

On

April 18 2016,

the Company entered into an unsecured loan agreement whereby Carlton James North Dakota Limited ("CJNDL”) agreed to provide the Company a loan facility of up to

$100,000.

Under the terms of the agreement, the Company shall pay interest on the outstanding unpaid balance at the rate of

1.167%

per month. The interest is due quarterly, and the principal is due

June 29, 2019.

CJNDL has advanced

$264,993

(

$164,993

in excess of the facility) on the loan as of

June 30, 2018.

During

2017,

CJND agreed that the excess amount funded to and any future funding under the loan will be done on the same terms and conditions as the original note.

14%

Term loan

due

June

201

9

, related party

On

February 24, 2016,

the Company entered into an unsecured loan agreement whereby Victor Keen, Co-Chairman of the Company (“Keen”) agreed to provide the Company a loan facility of up to

$300,000.

Under the terms of the agreement, the Company shall pay interest on the outstanding unpaid balance at the rate of

1.167%

per month. The interest is due quarterly, and the principal is due

June 29, 2019.

Keen has advanced

$596,500

(

$276,500

in excess of the facility) on the loan through

June 30, 2018.

During

2017,

Keen agreed that the excess amount funded and any future funding under the loan will be done on the same terms and conditions as the original note.  

14%

Term loan due

June

201

9

, related party

On

June 1, 2015,

Coretec obtained a

$500,000

revolving note agreement with CJNDL. The total amount of borrowings by Coretec shall

not

exceed

$500,000.

Coretec accrues interest on the outstanding balance at the rate of

1.167%

per month, payable on a quarterly basis. CJNDL has advanced

$400,941

on the loan. Outstanding borrowings are secured by substantially all assets of the Company. The note is due on

June 29, 2019.

7%

Convertible promissory note due

March 2019,

related party 

On

March 30, 2017,

the Company issued to Mr. Victor Keen, Co-Chairman of the Board of Directors, a

7%

convertible promissory note in a principal amount of

$250,000,

due

March 1, 2019 (

“Maturity Date”). The promissory note shall automatically convert into

eight

percent (

8%

) of the fully diluted outstanding shares of common stock of the Company calculated after giving effect to (a) the exercise of all outstanding options, warrants or other rights to acquire shares of common stock of the Company, (b) the conversion of all outstanding convertible or exchangeable securities, and (c) after giving effect to the issuance of common stock upon conversion of this note (the “Conversion Shares”). The conversion shall

not

occur until both of the following

two

events shall have occurred (the “Conversion Event”): (i) the consummation of the Reverse Split by the Company as reflected in the Preliminary Information Statement filed with the Securities and Exchange Commission on

March 7, 2017,

and (ii) the conversion of all the Company’s issued and outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock into the Conversion Shares. If the Conversion Event has

not

occurred prior to the earlier to occur of the Maturity Date and the occurrence of an event of default, then this note shall

not

be automatically converted into the Conversion Shares and Mr. Victor Keen

may

elect, at his sole discretion, (i) to have the outstanding principal balance of this note converted into the Conversion Shares; or (ii) to declare the outstanding principal balance of this note, together with all accrued interest, be paid in accordance with the terms of the note. Such election

may

be made at any time on or following the Maturity Date or the occurrence of an event of default. This note is an unsecured obligation of the Company. The embedded conversion option was deemed to be a beneficial conversion feature because the active conversion price was less than the commitment date market price of the common stock. The dollar amount of the beneficial conversion feature is limited to the carrying value of the promissory note, so a

$250,000

debt discount was recorded, with a corresponding credit to additional paid-in capital for the beneficial conversion feature. The debt discount is being amortized over the life of the debt and

$65,220

and

$32,967

was amortized during the

six

months ended

June 30, 2018

and

2017

respectively.

7%

Convertible promissory note due

June 2019,

related party

On

June 21, 2017,

the Company issued to Mr. Victor Keen, Co-Chairman of the Board of Directors, a

7%

convertible promissory note in a principal amount of

$100,000,

due

June 21, 2019.

The promissory note shall automatically convert into

four

percent (

4%

) of the fully diluted outstanding shares of common stock of the Company calculated after giving effect to (a) the exercise of all outstanding options, warrants or other rights to acquire shares of common stock of the Company, (b) the conversion of all outstanding convertible or exchangeable securities, and (c) after giving effect to the issuance of common stock upon conversion of this note (the “Conversion Shares”). The conversion shall

not

occur until both of the following

two

events shall have occurred (the “Conversion Event”): (i) the consummation of the Reverse Split by the Company as reflected in the Preliminary Information Statement filed with the Securities and Exchange Commission on

March 7, 2017,

and (ii) the conversion of all of the Company’s issued and outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock into the Conversion Shares. If the Conversion Event has

not

occurred prior to the earlier to occur of the Maturity Date and the occurrence of an event of default, then this note shall

not

be automatically converted into the Conversion Shares and Mr. Victor Keen

may

elect, at his sole discretion, (i) to have the outstanding principal balance of this note converted into the Conversion Shares; or (ii) to declare the outstanding principal balance of this note, together with all accrued interest, be paid in accordance with the terms of the note. Such election

may

be made at any time on or following the Maturity Date or the occurrence of an event of default. This note is an unsecured obligation of the Company. The embedded conversion option was deemed to be a beneficial conversion feature because the active conversion price was less than the commitment date market price of the common stock. The dollar amount of the beneficial conversion feature is limited to the carrying value of the promissory note, so a

$100,000

debt discount was recorded, with a corresponding credit to additional paid-in capital for the beneficial conversion feature. The debt discount is being amortized over the life of the debt and

$25,002

and

$1,233

was amortized during the

six

months ended

June 30, 2018

and

2017

respectively. 

XML

Note 5 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

5

– Commitments and Contingencies

Litigation, Claims, and Assessments

The Company

may

be involved in legal proceedings, claims and assessments arising in the ordinary course of business. In the opinion of management, such matters are currently

not

expected to have a material impact on the Company’s consolidated financial statements. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

North Dakota State University Research Foundation License Agreement

Under the terms of the Exclusive License Agreement (the “License Agreement”) signed on

June 16, 2016

with North Dakota State University Research Foundation (“NDSU/RF”), the Company was delinquent on payments of

$139,789

and unable to meet certain milestones. A dispute arose between the Company and NDSU/RF regarding compensation and deliverables. The License Agreement was renegotiated with NDSU/RF and on

June 29, 2018,

the Company entered into a settlement agreement and general release (the “Settlement Agreement”) with NDSU/RF to resolve the dispute, pursuant to which the Company and NDSU/RF fully and forever released each other from the License Agreement and mutually released each other of all claims. Accordingly, the Company recognized a gain of

$139,789

for the settlement of accounts payable during the

three

months ended

June 30, 2018.

Supply Agreement

On

December 13, 2016,

the Company entered into a Supply Agreement (the “Supply Agreement”) with Gelest Inc., a Pennsylvania corporation (“Gelest”). This Supply Agreement was for the purchase and sale of Cyclohexasilane (“CHS” or the “Products”) as set forth in the Supply Agreement, pursuant to which the Company agrees to use Gelest as a primary source to manufacture the Products for the duration of

three

years from the effective date. 

Under the terms of the Supply Agreement, Gelest would have scaled-up production of CHS, within their available capacity of

12

-

18

Kg per year, and further optimize the manufacturing process licensed by the purchaser from NDSU Research Foundation (“NDSU/RF”). The term of this project was

90

days from the receipt of the

first

installment of

YSi6Cl14

salt from the purchaser. The cost for scale-up and manufacturing optimization was

$180,000

to be paid by the purchaser in

two

installments. The initial installment of

$18,000

was paid upon finalizing this Supply Agreement. The

second

installment of

$162,000

was to be paid net

30

days from availability for shipment of between

200

–

400

grams of the initial product of the quality stated in the Supply Agreement.

On

April 6, 2018,

Gelest and the Company mutually agreed to cancel the

December 13, 2016

CHS Supply Agreement. The Company is currently negotiating an agreement with Gelest where Gelest will provide CHS storage and handling, website and catalog listings of CHS produced by or for the Company for sale to its customers, and customer service, including trans-fill of customer cylinders. 

Office Lease

The Company entered into a lease agreement in

June 2015

for office space in North Dakota that was canceled on

April 30, 2017

with

no

cancellation costs paid or due. The Company has an amended office lease in Tulsa, Oklahoma that expired on

July 31, 2018. 

Rent expense for operating leases was

$13,398

and

$19,500

for the

six

-month periods ended

June 30, 2018

and

2017,

respectively. The Company is now on a month to month basis under the terms of the lease.

XML

Note 6 - Options Issued to Purchase Common Stock

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

6

– Options Issued to Purchase Common Stock

On

March 21, 2017,

the Company and Mr. Michael Kraft entered into a consulting agreement, pursuant to which the Company granted Mr. Kraft an option to purchase from the Company

$50,000

of common stock at the market price on the date of the execution of the Reverse Split, which became effective on

June 28, 2017.

Accordingly, the

$50,000

value of options calculates to

208,160

shares based upon the

$0.24

closing price on

June 28, 2017.  

The

$50,000

estimated fair value of the option to purchase common stock issued in

2017

was determined using the Black-Scholes option pricing model. The expected dividend yield of

$0

is based on the average annual dividend yield at the date issued. Expected volatility of

260.52%

is based on the historical volatility of the stock. The risk-free interest rate of

1.84%

is based on the U.S. Treasury Constant Maturity rates as of the issue date. The expected life of the option of

ten

years is based on historical exercise behavior and expected future experience. 

XML

Note 7 - Subsequent Events

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

Note

7

–

Subsequent Events

Subsequent to

June 30, 2018,

the Company issued

125,993

shares of common stock in payment of

$7,662

of consulting services.

Subsequent to

June 30, 2018,

CJND, a company owned by Mr. Simon Calton, Co-Chairman of the Board of Directors, advanced an additional

$40,000

under the terms of the

14%

term loan.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Nature of Business [Policy Text Block]

Nature of Business

The Coretec Group Inc. (the “Group”) (formerly

3DIcon

Corporation) (

“3DIcon”

) was incorporated on

August 11, 1995,

under the laws of the State of Oklahoma as First Keating Corporation. The articles of incorporation were amended

August 1, 2003

to change the name to

3DIcon

Corporation. During

2001,

First Keating Corporation began to focus on the development of

360

-degree holographic technology. From

January 1, 2001,

3DIcon’s

primary activity has been the raising of capital in order to pursue its goal of becoming a significant participant in the development, commercialization and marketing of next generation

3D

display technologies.

Coretec Industries, LLC (“Coretec”), a wholly owned subsidiary of the Group (collectively the “Company”), was organized on

June 2, 2015

in the state of North Dakota. Coretec is currently developing, testing, and providing new and/or improved technologies, products, and service solutions for energy-related industries including, but

not

limited to oil/gas, renewable energy, and distributed energy industries. Many of these technologies and products also have application for medical, electronic, photonic, display, and lighting markets among others. Early adoption of these technologies and products is anticipated in markets for energy storage (Li-ion batteries), renewable energy (BIPV), and electronics (Asset Monitoring).

Business Combinations Policy [Policy Text Block]

Reverse Acquisition

On

May 31, 2016,

the Group entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Coretec and

four

Coretec members (the “Members”), which Members held all outstanding membership interests in Coretec. On

September 30, 2016 (

the “Closing Date”), the Group closed the transaction contemplated by the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Members agreed to sell all their membership interests in Coretec to the Group in exchange for the Group’s issuance of an aggregate

4,760,872

shares of the Group’s Series B Convertible Preferred Stock to the Members (the “Exchange”). Coretec became a wholly-owned subsidiary of the Group and the former Members beneficially owned approximately

65%

of the Group’s common stock on a fully-diluted basis on the Closing Date. Upon the closing of the Share Exchange Agreement,

two

of the Group’s Directors resigned and

three

new Directors associated with Coretec were nominated and elected, giving control of the board of directors to former Coretec Members.

Authorization of Reverse Stock Split, Policy [Policy Text Block]

Authorization of Reverse Stock Split

On

February 21, 2017 (

the “Record Date”), the Board of Directors unanimously approved, and a majority of the Company’s stockholders, as of the Record Date, approved by written consent pursuant to Section 

18

-

1073

of the Oklahoma Act, to permit the Company’s Board of Directors, in its sole discretion, to effectuate

one

or more consolidations of the issued and outstanding shares of common stock at some future date

no

later than the

first

anniversary of the Record Date, pursuant to which the shares of common stock would be combined and reclassified into

one

validly issued fully paid and non-assessable share of common stock at a ratio (the “Reverse Split Ratio”) within the range of

1

-for-

50

and up to

1

-for-

300

(the “Reverse Split Range”), with each stockholder otherwise entitled to receive a fractional share of common stock as a result of the Reverse Stock Split. Effective

June 28, 2017,

a Reverse Stock Split pursuant to the maximum stated Reverse Split Ratio, each

300

shares of our issued and outstanding common stock was automatically converted into

1

share of common stock

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made are adequate to make the information presented

not

misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s year-end audited consolidated financial statements and related footnotes included in the previously filed Form

10

-K, and in the opinion of management, reflects all adjustments necessary to present fairly the condensed consolidated financial position of the Company. The condensed consolidated results of operations for interim periods

may

not

be indicative of the results which

may

be realized for the full year. 

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Group and its wholly owned subsidiary, Coretec. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from the estimates and assumptions used.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Long-Lived Assets

Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company

first

compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is

not

recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and

third

party independent appraisals, as considered necessary.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument held by the Company:

Current assets and current liabilities

- The carrying value approximates fair value due to the short maturity of these items.

Notes payable

-

The fair value of the Company’s notes payable has been estimated by the Company based upon the liability’s characteristics, including interest rate. The carrying value approximates fair value.

Debt, Policy [Policy Text Block]

Beneficial Conversion Feature of Convertible Notes Payable

The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic

470

-

20,

Debt with Conversion and Other Options, Emerging Issues Task Force ("EITF")

98

-

5,

Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF

00

-

27,

Application of Issue

No

98

-

5

To Certain Convertible Instruments. The beneficial conversion feature of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. The Company records a beneficial conversion feature related to the issuance of a convertible note when issued.

The beneficial conversion feature of a convertible note is credited to additional paid-in-capital.  The intrinsic value is recorded in the consolidated financial statements as a debt discount and such discount is amortized over the expected term of the convertible note and is charged to interest expense.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Loss Per Common Share

 

Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted loss per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. 

Basic and diluted loss per shares are calculated the same for all periods presented due to the net loss. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: 

	June 30 ,
	2018		2017
Options		2,883,379		284,166
Warrants		1,061		65,228
Series A convertible preferred stock		115,000		115,000
Series B convertible preferred stock		-		41,842,241
Convertible debentures		107,185,742		61,122,346
Total potentially dilutive shares		110,185,182		103,428,981

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

The Company evaluates events that have occurred after the balance sheet date but before the condensed consolidated 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

7.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

The following is a summary of recent accounting pronouncements that are relevant to the Company:

In

June 2018,

the Financial Accounting Standards Board (“FASB”) issued ASU

No.

2018

-

07

–

Compensation – Stock Compensation (Topic

718

): Improvements to Non-Employee Share-Based Payment Accounting

. The new guidance aligns the requirements for nonemployee share-based payments with the requirements for employee share-based payments. The Company does

not

expect the amendment, which is effective beginning with our

2019

fiscal year, to have a material impact on our consolidated financial statements. 

In

January 2016,

the FASB issued ASU

No.

 

2016

-

01,

Financial Instruments – Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities

(“ASU

2016

-

01”

). ASU

2016

-

01

addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments, specifically equity investments and financial instruments measured at amortized cost. ASU

2016

-

01

is effective for public companies for annual and interim periods beginning after

December 15, 2017.

ASU

2016

-

01

did

not

have a material impact on the Company’s financial statements.

In

August 2016,

the FASB issued ASU

No.

 

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

(“ASU

2016

-

15”

). ASU

2016

-

15

will make

eight

targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU

2016

-

15

is effective for public companies for interim and annual periods beginning after

December 15, 2017,

with early adoption permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. ASU

2016

-

15

did

not

have a material impact on the Company’s cash flows.

In

February 2016,

the FASB issued accounting standards update (ASU)

No.

2016

-

02,

 

Leases (Topic

842

)

 intended to increase transparency and comparability among companies by requiring most leases to be included on the balance sheet and by expanding disclosure requirements. This is effective for public business entities for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company is currently evaluating the impact that this new guidance

may

have on its consolidated results of operations, cash flows, financial position and disclosures.

The FASB has issued ASU

2014

-

09,

Revenue from Contracts with Customers

. This ASU supersedes the revenue recognition requirements in FASB ASC

605

- Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. On

July 9, 2015,

the FASB deferred the effective date of ASU

No.

2014

-

09

from annual periods beginning after

December 15, 2016

to annual periods beginning after

December 15, 2017.

This ASU should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard did

not

have a material impact on the Company’s consolidated financial position and results of operations because the Company currently has

no

revenue.

In

January 2017,

the FASB issued ASU

2017

-

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business

. This ASU provides a screen to determine when a set is

not

a business. The screen requires that when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is

not

a business. The amendments in this ASU are effective beginning after

December 15, 2017,

including interim periods within those periods and should be applied prospectively. The adoption of this standard did

not

have a material impact on its consolidated financial position and results of operations.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles – Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment

. This ASU simplifies the subsequent measurement of goodwill by eliminating Step

2

from the goodwill test. Under Step

2,

an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and labilities following the procedure that would be required in determining the fair value of assets acquired and labilities assumed in a business combination. Instead, an entity should perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The amendments in this ASU are effective beginning after

December 15, 2019,

however early adoption is permitted beginning

January 1, 2017

and should be applied on a prospective basis. The Company does

not

anticipate that the adoption of this standard will have a material impact on its consolidated financial position and results of operations.

XML

Note 3 - Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	June 30 ,
	2018		2017
Options		2,883,379		284,166
Warrants		1,061		65,228
Series A convertible preferred stock		115,000		115,000
Series B convertible preferred stock		-		41,842,241
Convertible debentures		107,185,742		61,122,346
Total potentially dilutive shares		110,185,182		103,428,981

XML

Note 4 - Debentures and Notes Payable (Tables)

6 Months Ended

Jun. 30, 2018

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	June 30 ,			December 31,
	2018			2017
Notes and debentures payable:
5.25% Insurance premium finance agreement due June 2018	$	-		$	21,323
9% Promissory note due June 2018		-			25,341
4.75% Convertible debenture due September 2018		63,675			64,124
Total notes and debentures payable	$	63,675		$	110,788
Notes payable - related party:
14% Term loan due June 2019	$	264,993		$	264,993
14% Term loan due June 2019		596,500			596,500
14% Term loan due June 2019		400,941			400,941
7% Convertible promissory note due March 2019, net		163,407			98,187
7% Convertible promissory note due June 2019, net		51,237			26,235
Total notes payable - related party		1,477,078			1,386,856
Less current portion		(1,477,078	)		(1,262,434	)
Long term debt	$	-		$	124,422

XML

Note 1 - Business Organization, Nature of Business and Basis of Presentation (Details Textual)	Jun. 28, 2017	Feb. 21, 2017	Sep. 30, 2016 shares
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio	300
Reverse Stock Split [Member] | Minimum [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio		50
Reverse Stock Split [Member] | Maximum [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio		300
Series B Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, Conversion of Convertible Securities			4,760,872
Sale of Stock, Percentage of Ownership after Transaction			65.00%

XML

Note 2 - Going Concern and Management's Plans (Details Textual) - USD ($)	3 Months Ended		6 Months Ended		37 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Net Income (Loss) Attributable to Parent, Total	$ (189,664)	$ (552,423)	$ (528,218)	$ (981,290)	$ (3,121,555)
Working Capital Deficit	(2,395,226)		(2,395,226)		(2,395,226)
Revenue from Contract with Customer, Including Assessed Tax					$ 0

XML

Note 3 - Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Total potentially dilutive shares (in shares)	110,185,182	103,428,981
Options [Member]
Total potentially dilutive shares (in shares)	2,883,379	284,166
Warrant [Member]
Total potentially dilutive shares (in shares)	1,061	65,228
Series A Convertible Preferred Stock [Member]
Total potentially dilutive shares (in shares)	115,000	115,000
Series B Convertible Preferred Stock [Member]
Total potentially dilutive shares (in shares)		41,842,241
Convertible Debt Securities [Member]
Total potentially dilutive shares (in shares)	107,185,742	61,122,346

XML

Note 4 - Debentures and Notes Payable (Details Textual) - USD ($)						6 Months Ended
	May 24, 2018	Jan. 08, 2018	Jun. 21, 2017	Mar. 30, 2017	Jun. 16, 2016	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Aug. 25, 2017	Apr. 26, 2016	Apr. 18, 2016	Feb. 24, 2016	Jun. 01, 2015	Nov. 03, 2006
Debt Instrument, Interest Rate, Stated Percentage										4.75%
Proceeds from Warrant Exercises						$ 23,765
Notes Payable, Related Parties						1,477,078		$ 1,386,856
Amortization of Debt Discount (Premium)						$ 90,222	34,200
Conversion from Convertible Debenture to Common Stock [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 114,450
Debt Conversion, Original Debt, Amount	$ 225	$ 225
Debt Conversion, Converted Instrument, Shares Issued	396,635	244,618
Debt Instrument, Convertible, Conversion Price	$ 0.0006	$ 0.0009
Class of Warrant or Right, Exercised During Period	0.2143
Proceeds from Warrant Exercises	$ 24,581
Warrants in Connection with 4.75% Convertible Debenture Due June 2018 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														61
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 114,450												$ 114,450
Class of Warrant or Right, Exercised During Period		0.2143
Proceeds from Warrant Exercises		$ 24,525
Five Point Two Five Percent Insurance Premium Finance Agreement, Due June 2018 [Member]
Debt Instrument, Interest Rate, Stated Percentage						5.25%
Debt Instrument, Face Amount									$ 37,711
Repayments of Debt						$ 21,323
Nine Percent Promissory Note Due June 2018 [Member]
Debt Instrument, Interest Rate, Stated Percentage										9.00%
Debt Instrument, Face Amount										$ 40,000
Long-term Debt, Gross										$ 40,000
Debt Instruments, Proceeds from Notes to Fund Exercise of Warrants					$ 14,659	25,341
Long-term Debt, Total								25,341
Four Point Seventy Five Percent Convertible Debenture Due June 2018 [Member]
Debt Instrument, Interest Rate, Stated Percentage														4.75%
Debt Instrument, Face Amount														$ 100,000
Fourteen Percent Term Loan Due June 2018, One [Member]
Notes Payable, Related Parties						264,993		264,993
Fourteen Percent Term Loan Due June 2018, One [Member] | Carlton James North Dakota Limited [Member]
Debt Instrument, Interest Rate, Stated Percentage											14.00%
Debt Agreement, Maximum Borrowing Capacity											$ 100,000
Debt Instrument, Interest Rate, Monthly											1.167%
Notes Payable, Related Parties						264,993
Debt Instrument, Advances in Excess of Facility Limit						164,993
Fourteen Percent Term Loan Due June 2018, Two [Member]
Notes Payable, Related Parties						596,500		596,500
Fourteen Percent Term Loan Due June 2018, Two [Member] | Co-chairman of Board of Directors [Member]
Debt Instrument, Interest Rate, Stated Percentage												14.00%
Debt Agreement, Maximum Borrowing Capacity												$ 300,000
Debt Instrument, Interest Rate, Monthly												1.167%
Notes Payable, Related Parties								596,500
Debt Instrument, Advances in Excess of Facility Limit								276,500
Fourteen Percent Term Loan Due June 2018, Three [Member]
Notes Payable, Related Parties						400,941		400,941
Fourteen Percent Term Loan Due June 2018, Three [Member] | Carlton James North Dakota Limited [Member]
Debt Instrument, Interest Rate, Stated Percentage													14.00%
Debt Instrument, Face Amount													$ 500,000
Debt Agreement, Maximum Borrowing Capacity													$ 500,000
Debt Instrument, Interest Rate, Monthly													1.167%
Notes Payable, Related Parties						400,941
Seven Percent Convertible Promissory Note Due March 2019, Related Party [Member] | Co-chairman of Board of Directors [Member]
Debt Instrument, Interest Rate, Stated Percentage				7.00%
Debt Instrument, Face Amount				$ 250,000
Debt Instrument, Convertible, Conversion Percentage				8.00%
Debt Instrument, Unamortized Discount, Total				$ 250,000
Amortization of Debt Discount (Premium)						65,220	32,967
Seven Percent Convertible Promissory Note Due June 2019 [Member]
Notes Payable, Related Parties						51,237		$ 26,235
Seven Percent Convertible Promissory Note Due June 2019 [Member] | Co-chairman of Board of Directors [Member]
Debt Instrument, Interest Rate, Stated Percentage			7.00%
Debt Instrument, Face Amount			$ 100,000
Debt Instrument, Convertible, Conversion Percentage			4.00%
Debt Instrument, Unamortized Discount, Total			$ 100,000
Amortization of Debt Discount (Premium)						$ 25,002	$ 1,233

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Note 4 - Debentures and Notes Payable - Schedule of Debt (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Notes and debentures payable	$ 63,675	$ 110,788
Notes Payable, Related Parties	1,477,078	1,386,856
Less current portion	(1,477,078)	(1,262,434)
Long term debt		124,422
Five Point Two Five Percent Insurance Premium Finance Agreement, Due June 2018 [Member]
Notes and debentures payable		21,323
Nine Percent Promissory Note Due June 2018 [Member]
Notes and debentures payable		25,341
Four Point Seventy Five Percent Convertible Debenture Due June 2018 [Member]
Notes and debentures payable	63,675	64,124
Fourteen Percent Term Loan Due June 2018, One [Member]
Notes Payable, Related Parties	264,993	264,993
Fourteen Percent Term Loan Due June 2018, Two [Member]
Notes Payable, Related Parties	596,500	596,500
Fourteen Percent Term Loan Due June 2018, Three [Member]
Notes Payable, Related Parties	400,941	400,941
Seven Percent Convertible Promissory Note Due March 2019 [Member]
Notes Payable, Related Parties	163,407	98,187
Seven Percent Convertible Promissory Note Due June 2019 [Member]
Notes Payable, Related Parties	$ 51,237	$ 26,235

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Note 5 - Commitments and Contingencies (Details Textual)		3 Months Ended		6 Months Ended
	Dec. 13, 2016 USD ($) g	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 28, 2018 USD ($)	Jun. 30, 2017 USD ($)
Gain (Loss) on Extinguishment of Debt, Total		$ 139,789		$ 139,789
Supply Agreement Term	3 years
Product Scale up and Manufacturing Optimization Cost	$ 180,000
Product Scale up and Manufacturing Optimization Cost, First Installment	18,000
Product Scale up and Manufacturing Optimization Cost, Second Installment	$ 162,000
Operating Leases, Rent Expense, Total				$ 13,398		$ 19,500
Minimum [Member]
Shipment Product | g	200
Maximum [Member]
Shipment Product | g	400
North Dakota State University Research Foundation [Member]
Debt Instrument, Periodic Payment, Total					$ 139,789

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Note 6 - Options Issued to Purchase Common Stock (Details Textual) - Chief Executive Officer [Member] - USD ($)			12 Months Ended
	Jun. 28, 2017	Mar. 21, 2017	Dec. 31, 2017
Stock Issued During Period, Value, Share-based Compensation, Gross		$ 50,000
Stock Issued During Period, Shares, Share-based Compensation, Gross	208,160
Share Price	$ 0.24
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			260.52%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			1.84%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			10 years

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Note 7 - Subsequent Events (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	Aug. 13, 2018	Jun. 30, 2018	Jun. 30, 2017	Apr. 26, 2016
Stock Issued During Period, Value, Issued for Services		$ 71,879
Proceeds from Related Party Debt			$ 486,750
Debt Instrument, Interest Rate, Stated Percentage				4.75%
Subsequent Event [Member]
Stock Issued During Period, Shares, Issued for Services	125,993
Stock Issued During Period, Value, Issued for Services	$ 7,662
Subsequent Event [Member] | Carlton James North Dakota Limited [Member] | 14% Term Loan Due June 2019 [Member]
Proceeds from Related Party Debt	$ 40,000
Debt Instrument, Interest Rate, Stated Percentage	14.00%