Note 12. Subsequent Events.

The Company evaluates events or transactions that occur after the balance sheet date but prior to the issuance of consolidated financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For its interim financial statements as of September 30, 2015 and for the three and nine months then ended, management of the Company determined that there were no reportable subsequent event(s) to be disclosed, except as follows:

Pursuant to the Merger Agreement, the Company would have been required to issue 1,333,333 shares of Company common stock to the Pre-Merger Company stockholders in the event that the Company conducts an offering of at least $20,000,000 at a pre-money Company valuation between $200,000,000 and $400,000,000 with such offering proceeds placed in escrow on or before the date which was five months following the consummation of the Merger. The Merger Agreement further provided that, if the pre-money valuation on which the raised funds were placed into escrow was less than $200,000,000, or if no money was raised within such five month period, up to 3,500,000 shares of Company common stock were required to be surrendered for cancellation. Such 3,500,000 shares were placed into escrow pursuant to an Adjustment Shares Escrow Agreement entered into at the time of Merger Closing (the “Adjustment Shares Escrow Agreement”). The date on which the offering funds were required to be placed into escrow was extended under the terms of the Second Omnibus Amendment to November 5, 2015. No offering was consummated, nor were any offering funds placed into escrow. On November 10, 2015, the Company advised the escrow agent of such facts and demanded the surrender for cancellation of the 3,500,000 shares placed into escrow under the Adjustment Shares Escrow Agreement. Under the Adjustment Shares Escrow Agreement, the depositor of such escrowed shares had until November 18, 2015 to challenge the Company's demand for surrender of the Escrowed Shares. On November 18, 2015, the Company received notice from the depositor of such 3,500,000 shares disputing the grounds for the surrender for cancelation of those shares. The Company intends to challenge such dispute notice. Until resolved, by court order or otherwise, the 3,500,000 shares shall remain in escrow.

On October 16, 2015, the Company received $1,250,0000 the remaining balance due under the PPO Note. Upon receipt of such funds, the Company notified the escrow agent under the Subscription Note Escrow Agreement of such receipt and authorized the release of the 2,500,000 shares that were then being held in escrow under such agreement.