UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 000-54172

SUREPURE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		26-3550286
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

405 Lexington Avenue, 26^th Floor, New York, NY		10174
(Address of Principal Executive Offices)		(Zip Code)

(917) 368-8480

(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 all 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 x 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer ¨	Accelerated filer ¨
	Non-accelerated filer ¨	Smaller reporting company x
	(Do not check if a smaller reporting company)

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

The number of shares outstanding of the issuer’s common stock, as of May 19, 2017 was 75,533,263.

SUREPURE, INC.

INDEX

PART I FINANCIAL INFORMATION		3

Item 1.	Financial Statements.	3

	Consolidated Balance Sheets March 31, 2017 (Unaudited) and December 31, 2016	3

	Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2017 and 2016	4

	Consolidated Statements of Other Comprehensive Loss (Unaudited) for the Three Months Ended March 31, 2017 and 2016	5

	Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited) for the Three Months Ended March 31, 2017	6

	Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2017 and 2016	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	27

Item 4.	Controls and Procedures.	27

PART II OTHER INFORMATION		28

Item 1.	Legal Proceedings.	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	28

Item 3.	Defaults Upon Senior Securities.	28

Item 4.	Mine Safety Disclosures.	28

Item 5.	Other Information.	28

Item 6.	Exhibits.	29

SIGNATURES		30

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements.

SUREPURE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2017 (UNAUDITED) AND DECEMBER 31, 2016

	March 31, 2017			December 31, 2016
	(Unaudited)			(Audited)

Assets

Current assets:
Cash	$	1,667		$	439
Accounts receivable		722			-
Prepaid expenses and other current assets		44,252			39,728
Total current assets		46,641			40,167

Intangible assets, net		58,117			62,284

Total assets	$	104,758		$	102,451

Liabilities and Stockholders' Deficit

Current liabilities:
Accounts payable and other current liabilities	$	1,460,686		$	1,345,748
Customer deposits		43,997			7,098
Due to officers		262,936			42,475
Income taxes payable		475			466
Loan payable		-			431,000
Convertible note, in default		305,000			-
Derivative liability		275,952			-

Total current liabilities		2,349,046			1,826,787

Total liabilities		2,349,046			1,826,787

Stockholders' deficit:
Common stock, $.001 par value, 200,000,000 shares authorized, 75,533,263 shares issued and outstanding at March 31, 2017 (70,841,796 shares issued and outstanding at December 31, 2016)		75,533			70,842
Preferred stock, $.01 par values, 31,155,282 shares authorized, 8,000,000 shares issued and outstanding at March 31, 2017 (12,000,000 shares issued and outstanding at December 31, 2016)		80,000			120,000
Additional paid-in capital		33,629,831			33,549,578
Other comprehensive income		1,017,020			1,044,429
Accumulated deficit		(37,046,672	)		(36,509,185	)
Total stockholders' deficit		(2,244,288	)		(1,724,336	)

Total liabilities and stockholders' deficit	$	104,758		$	102,451

See Notes to Unaudited Consolidated Financial Statements.

SUREPURE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2017 AND 2016

	Three Months Ended
	March 31,
	2017			2016
	(Unaudited)			(Unaudited)

Revenue	$	-		$	-

Cost of revenue		-			-

Gross profit		-			-

Expenses:
General and administrative expenses		334,710			410,051
Promotion and marketing		-			2,192
Research and development		2,617			13,322
Amortization		4,167			4,167
Total expenses		341,494			429,732

Loss from operations		(341,494	)		(429,732	)

Other income (expense):
Interest expense (net)		(195,993	)		(16,843	)
Total other expense		(195,993	)		(16,843	)

Loss before provision for taxes		(537,487	)		(446,575	)

Provision for income taxes		-			-

Net loss	$	(537,487	)	$	(446,575	)

Loss per share – basic and diluted	$	(0.01	)	$	(0.01	)

Weighted average shares outstanding – basic and diluted		72,212,718			58,533,992

See Notes to Unaudited Consolidated Financial Statements.

SUREPURE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS

THREE MONTHS ENDED MARCH 31, 2017 AND 2016

	Three Months Ended
	March 31,
	2017			2016
	(Unaudited)			(Unaudited)

Net loss	$	(537,487	)	$	(446,575	)

Other comprehensive income, net of tax

Unrealized loss on foreign currency translation		(27,409	)		(27,566	)
Comprehensive income (loss) net of tax	$	(564,896	)	$	(474,141	)

See Notes to Unaudited Consolidated Financial Statements.

SUREPURE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2017

													Accumulated
	Common							Additional					Other			Total
	Shares		Common		Preferred			Paid-in		Accumulated			Comprehensive			Stockholders'
	Issued		Stock		Stock			Capital		Deficit			Income			Deficit
December 31, 2016 (Audited)		70,841,796	$	70,842	$	120,000		$	33,549,578	$	(36,509,185	)	$	1,044,429		$	(1,724,336	)

Issuance of common stock on conversion of note		691,467		691					44,253								44,944

Conversion of preferred stock to common stock		4,000,000		4,000		(40,000	)		36,000								-

Net loss for the period											(537,487	)					(537,487	)

Unrealized loss on foreign currency translation adjustment		-		-		-			-		-			(27,409	)		(27,409	)

March 31, 2017 (Unaudited)		75,533,263	$	75,533	$	80,000		$	33,629,831	$	(37,046,672	)	$	1,017,020		$	(2,244,288	)

See Notes to Unaudited Consolidated Financial Statements.

SUREPURE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2017 AND 2016

	Three Months Ended
	March 31,
	2017			2016
	(Unaudited)			(Unaudited)
Cash from operating activities:
Net loss	$	(537,487	)	$	(446,575	)

Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		4,167			4,167
Non-cash interest expense and loan costs		194,897			16,333
Changes in assets and liabilities:
Accounts receivable		(722	)		-
Prepaid expenses and other current assets		(4,524	)		(55,737	)
Accounts payable and other current liabilities		114,938			146,561
Customer deposits payable		36,899			18,377
Due to officers		220,461			98,031

Total cash provided by (used in) operating activities		28,629			(218,843	)

Cash from financing activities:
Proceeds from issuance of note		-			300,000

Total cash provided by financing activities		-			300,000

Effect of exchange rate changes on cash		(27,401	)		(27,552	)

Net increase in cash		1,228			53,605

Cash, beginning of period		439			5,476

Cash, end of period	$	1,667		$	59,081

Supplemental disclosures:
Interest paid	$	1,096		$	510

Issuance of common stock on conversion of note	$	25,000		$	-

See Notes to Unaudited Consolidated Financial Statements.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

1. Organization and Significant Accounting Policies

Description of Business

SurePure Investment Holding AG (“SPI”) was incorporated in Switzerland in 2007. From 2007 to December 12, 2012 SPI was the holding company of the SurePure Group (the “Group”), which included subsidiaries and other entities whose activities primarily benefit the Group. On December 12, 2012, SPI entered into an Amended and Restated Share Exchange Agreement with SurePure, Inc. (“SurePure US” or the “Company”) pursuant to which SurePure US acquired SPI in a share exchange (the “Share Exchange”) and became the holding company for the Group, including SPI. Although SurePure US is the legal acquirer of SPI, SPI is treated as the acquirer for accounting and financial reporting purposes and under this method, SurePure US retains SPI’s financial reporting history.

Under the Share Exchange, each share of the capital stock of SPI was exchanged for one share of SurePure US common stock, par value $.001 per share (“Common Stock”), and, in the case of one shareholder of SPI, one share of Nonvoting Convertible Preferred Stock, par value $.01 per share (the “Nonvoting Convertible Preferred Stock”).

The Group has developed technology for using shortwave ultraviolet light (“UV-C”) to purify turbid liquids such as wine, fruit juice and milk. Although initially designed to treat food-grade applications, it has successfully been applied to liquids such as dairy products for animal consumption, protein products, bovine blood plasma, water, brines and sugar syrup solutions. The Group holds a patent in 68 countries for this technology. The Group has been engaged in raising capital, continuing research and development of its technologies and developing markets for its products.

Basis of Presentation

Our accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements. Our consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. Amounts in our unaudited consolidated financial statements are, except as otherwise noted, expressed in U.S. Dollars.

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2017.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Inter-company items and transactions have been eliminated in consolidation.

The Company’s wholly-owned subsidiaries are as follows:

· SurePure Investment Holding AG (“SPI”), which wholly-owns SPO;

· SurePure Operations AG (“SPO”), which markets the products of the Group and earns its revenue by selling or otherwise distributing equipment utilizing the Group’s technology globally. SPO owns a patent for the Group’s technology in various countries;

· SurePure Participations AG (“SPP”), is a minority stockholder of SPI and is part of the common holding structure of the Group. SPP has no operations. SPP became a subsidiary as a result of the Share Exchange on December 12, 2012;

· SurePure Holdings South Africa (Pty) Ltd., which holds the South African patent, and its wholly-owned subsidiary, SurePure Marketing South Africa (Pty) Ltd. (“SPMSA”), which sells or otherwise distributes equipment utilizing the Group’s technology in South Africa. These entities became subsidiaries as a result of their acquisition on June 12, 2013; and

· SurePure Latin America Maqinas de Purificasao UVC Ltda. (“SPLAM”), which conducts no operations currently and is in the final stages of deregistration.

The Group’s reporting currency is the United States Dollar (“USD”) and these consolidated financial statements are presented in USD or “$.”

Adoption of New Accounting Standards

Use of Estimates

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

Income Taxes

The Group accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not provide a future tax benefit.

GAAP requires that, in applying the liability method, the consolidated financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion, the most likely resolution of an uncertain tax position should be analyzed based on technical merits and one that will likely be sustained under examination. There are no uncertain tax positions requiring adjustment to or disclosure in these consolidated financial statements.

Accounts Receivable

Accounts receivable represent amounts due from customers and are carried at original invoice amount less an estimate made for doubtful receivables. The Group establishes a provision for estimated doubtful accounts, if necessary.

Property, Equipment and Related Depreciation

Property and equipment are recorded at cost, less accumulated depreciation. Cost includes the price paid to acquire the asset and any expenditures that substantially increase the asset’s value or extend the useful life of an existing asset. Depreciation is computed using the straight-line method over the estimated useful lives of the property and equipment. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Expenditures for routine repairs and maintenance are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is recognized in operations.

Depreciation is provided over the following estimated useful lives:

Plant machinery		3 to 5 years
Furniture and fixtures		3 to 5 years
Motor vehicles		5 years
Office and computer equipment		3 to 5 years

Intangible Assets

Intangible assets consist of patents in various countries around the world for the Company’s UV-C purification technology. The patents were initially recognized at their cost and are being amortized on a straight-line basis over their estimated useful lives of twelve years beginning with the acquisition of the patents in 2008. The patents expire in October 2020.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

The Group evaluates the carrying value of its intangible assets for impairment at least annually or when events or changes in circumstances are identified by management that indicate that such carrying values may not be fully recoverable. The evaluation involves estimating the future undiscounted cash flows expected to be derived from the assets to assess whether or not a potential impairment exists. As a result of its evaluations, management determined that it was not necessary to recognize a loss on impairment of its intangible assets for the three months ended March 31, 2017 and 2016.

Convertible Notes and Derivative Liabilities

Convertible notes payable consist of the face amount due. The holder of the note has the right to convert the unpaid balance into shares of Common Stock of the Company at a discount. Upon exercise of the conversion option by the holder, the loan amount is reduced and increases to common stock and additional paid-in capital are recorded.

Certain costs including legal and other costs, and derivative liabilities were recognized in connection with the note. These costs have been charged to expense as the conversion option rests solely with the holder of the notes.

Revenue

Revenue is earned from sales or use of equipment that uses the Company’s patented technology and is recognized, net of returns and discounts, when persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collectability is reasonably assured. These criteria are usually met upon completion of delivery and customer acceptance testing of the product by the customer.

Major Customers and Accounts Receivable

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable. As of March 31, 2017, one customer represented 100% of account receivable.

Shipping and Handling Costs

Shipping and handling costs are expensed as cost of goods sold when the related inventory is sold.

Research and Development

Research and development costs are charged to expense as incurred.

Equity-Based Compensation

The Company measures compensation cost for all stock options granted based on fair value on the measurement date, which is typically the grant date. The fair value of each stock option granted is estimated on the grant date using the Black-Scholes-Merton option valuation model. The fair value of each share is based on the fair market value of the Company’s common stock on the date of the grant. Equity-based compensation expense is recognized on a straight-line basis over the requisite service period for each stock option or stock grant expected to vest with forfeitures estimated at the date of grant based on the Company’s historical experience and future expectations.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

Foreign Currency Translations

These consolidated financial statements are presented in USD, which is the Group’s reporting currency. The consolidated financial statements of the Group members have been translated into USD in accordance with GAAP. All asset and liability accounts on the consolidated balance sheets have been translated using the spot exchange rate in effect at the consolidated balance sheet date. Equity accounts have been translated at their historical rates when the capital transaction occurred. Income and expenses have been translated at the average exchange rates for the periods presented. Adjustments resulting from the translation of the Group’s consolidated financial statements are included in the consolidated statement of other comprehensive income (loss). Actual transaction gains and losses are included in the consolidated statements of operations as incurred.

The functional currencies of the companies included in the Group are their respective local currencies. Accordingly, the Group is exposed to transaction gains and losses that result from changes in various foreign currency exchange rates.

Applicable functional currencies are:

SPI, SPO, and SPP		Swiss Francs – CHF
SPLAM		Brazilian Real – BRL
SPHSA and SPMSA		South African Rand – ZAR

Exchange rates used for conversion of foreign items to USD at the end of each period and the average for each period were:

	March 31,		December 31,
	2017		2016
CHF:
Reporting date		0.9991		0.9809
Average for period		0.9957		1.0151

BRL:
Reporting date		0.3175		0.3069
Average for period		0.3179		0.2882

ZAR:
Reporting date		0.0745		0.0726
Average for period		0.0756		0.0681

Earnings (Loss) per Share

Basic and diluted earnings (loss) per share are computed by dividing net income or loss by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue shares of Common Stock, such as options, convertible notes and convertible preferred stock, were exercised or converted into shares of Common Stock or could otherwise cause the issuance of shares of Common Stock that then would share in earnings (losses). Such potential issuances of additional shares of Common Stock are included in the computation of diluted earnings per share. Except as disclosed in Notes 5, 6 and 9 of these Notes to consolidated financial statements, the Company has no securities or other contracts to issue shares of Common Stock that could cause any dilution of earnings. In addition, when there is a loss, diluted loss per share is not computed because any potential additional common shares of Common Stock would reduce the reported loss per share and therefore have an anti-dilutive effect.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

2. Property and Equipment

Property and equipment consists of the following:

	March 31,		December 31,
	2017		2016

Machinery and equipment	$	5,010	$	5,010
Furniture and fixtures		12,753		12,753
Motor vehicles		14,400		14,400
Office and computer equipment		12,647		12,647
		44,810		44,810
Less: Accumulated depreciation		44,810		44,810

Property and equipment, net	$	-	$	-

Property and equipment is fully depreciated, and there was no depreciation expense for the three months ended March 31, 2017 and 2016.

3. Intangible Assets

Intangible assets consist of the following:

	March 31,		December 31,
	2017		2016

Patents	$	208,943	$	208,943
Less: Accumulated amortization		150,826		146,659

Intangible assets, net	$	58,117	$	62,284

Amortization expense was $4,167 and $4,167 for the three months ended March 31, 2017 and 2016 respectively.

4. Due to Officers

Due to officers consists of unpaid salaries, reimbursible expenses and advances from executives totaling $267,936 and $42,475 at March 31, 2017 and December 31, 2016, respectively.

5. Other Loans Payable, Convertible Note in Default, Derivative Liability

Other Loans Payable

On February 11, 2016 the Company entered into a Securities Purchase Agreement with SBI Investments LLC, 2014-1, a statutory series of Delaware limited liability company (“SBI”). Under the Purchase Agreement, SBI purchased the Company’s promissory note (the “SBI Note”) in the principal amount of $330,000 for a purchase price of $300,000. The SBI Note bears interest at the rate of 0% per annum until the occurrence of an Event of Default, at which time the SBI Note bears default interest at the rate of 22% per annum. SBI has the right to convert the SBI Note into shares of the Company’s Common Stock following the occurrence of an event of default under the SBI Note, including the failure to repay the note on or before its maturity date. On August 1, 2016 the Company and SBI agreed to extend the maturity date of the SBI Note from August 9, 2016 to October 11, 2016.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

On November 17, 2016 the Company and SBI agreed to extend the maturity date of the SBI Note from October 11, 2016 to January 11, 2017. As part of the agreement on November 17, 2016 to extend the maturity of the SBI Note until January 11, 2017, SBI and the Company agreed that (i) the number of shares of the Company’s Common Stock into which SBI could convert the SBI Note following the occurrence of an event of default under the SBI Note, including the failure to repay the SBI Note on or before January 11, 2017, would be based on a conversion price that is 52.5% of the market price of the Company’s shares, rather than 55%; and (ii) the principal amount to be paid to SBI to discharge the SBI Note in full is $390,000 if the Company repays the SBI Note prior to or on January 11, 2017. In connection with Amendment No. 2, the Company entered into a fee letter agreement with SBI under which the Company agreed to pay SBI a structuring fee on November 17, 2016 in the amount of $90,000 with 1,058,824 shares of its Common Stock and a loan monitoring fee of $45,000 which is due on the maturity of the SBI Note.

As at March 31, 2017 the SBI Note at its remaining face value is reflected in these consolidated financial statements as Convertible Note in default, and the Derivative Liability related thereto is reflected as a Derivative Liability in these consolidated financial statements.

Convertible Note in Default

On March 29, 2017, the Company was advised by SBI that SBI will begin conversion of the SBI Note, with an initial conversion of $25,000. This initial conversion results in the issuance of 691,467 shares of Common Stock to SBI. In addition SBI has required that the Company increase the number of shares of Common Stock that are reserved for issuance upon conversion of the SBI Note by 25,000,000 shares to 30,000,000 shares based on the decline in the share price. The conversion results from the Company’s failure to pay the SBI Note on January 11, 2017.

On May 4, 2017, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of April 27, 2017, with LG Capital Funding, LLC, a New York limited liability company (“LGCF”). Under the Securities Purchase Agreement, LGCF agreed to purchase from the Company its 4% Convertible Redeemable Note (the “LGCF Note”) in the principal amount of $42,900. The LGCF Note is convertible into shares of Common Stock, at the option of its holder, at a conversion price equal to 55% of the average of the three lowest trading prices of Common Stock for the last 15 trading days prior to conversion. The LGCF Note also bears interest at 4% per annum, contains a 10% original issue discount such that the purchase price paid by LGCF is $39,000 and matures on April 27, 2018. As a condition to the obligation of LGCF to purchase the LGCF Note, the Company also amended and restated $35,000 principal amount of the SBI Note into a new promissory note in the principal amount of $35,000 payable to LGCF (the “Amended and Restated Note”). The Amended and Restated Note is convertible into shares of Common Stock at a conversion price equal to 55% of the average of the three lowest trading prices of Common Stock for the last 15 trading days prior to conversion, bears interest at 4% per annum interest and matures on April 27, 2018.

Derivative Liability

The SBI Note has variable priced conversion rights with no fixed floor price and will reprice dependent on the share price performance over varying periods of time. This gives rise to a derivative financial liability, which was valued by comparing the market price to the conversion price on the measurement date. The value of this derivative financial liability was assessed at March 31, 2017. The value of the derivative liability will be re-assessed at the end of each financial reporting period, with any movement thereon recorded in the statement of operations in the period in which it is incurred. The interest charge of debt discount for the three months ended March 31, 2017 was $194,897.

6. Equity

Common Stock through the date of the Share Exchange consisted of the common stock of SPI. The amounts presented for periods prior to the Share Exchange were denominated in CHF and have been translated from CHF to USD using the exchange rates in effect on the date of each issuance. As of December 31, 2011, SPI had 26,822,215 common shares issued and outstanding. During 2012 prior to the Share Exchange, SPI issued 2,500,000 shares in connection with the subscription agreement referenced in Note 7 of these Notes to Consolidated Financial Statements and 7,378,416 shares in connection with the conversion of SPI stockholder loans to common shares, resulting in 36,700,631 common shares of SPI being outstanding immediately prior to the Share Exchange.

On December 12, 2012, SurePure US designated 31,155,282 of its authorized shares of preferred stock as Nonvoting Convertible Preferred Stock, par value $0.01 per share. Under the terms of the Certificate of Designation (the “Certificate”), each share of Nonvoting Convertible Preferred Stock is convertible into one share of Common Stock, subject to certain limitations and restrictions as defined in the Certificate.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

The issued shares of Nonvoting Convertible Preferred Stock automatically convert, at the applicable conversion ratio as defined in the Certificate, into shares of Common Stock upon the assignment, sale or other transfer of shares to any person other than an affiliate of the holder of the seller. Any assignee, purchaser or other transferee may surrender certificates representing the assigned shares to the Company and will receive shares of Common Stock in return.

During the three months ended March 31, 2016, the preferred stockholder converted 4,000,000 shares of the Company’s preferred stock into 4,000,000 shares of Common Stock.

At March 31, 2017 and December 31, 2016, there were 8,000,000 and 12,000,000 issued and outstanding shares of Nonvoting Convertible Preferred Stock respectively.

See Note 5 to the consolidated financial statements for information regarding the SBI Note and the conversion of $25,000 of the SBI Note on March 29, 2017.

There were 75,533,263 shares of Common Stock issued and outstanding at March 31, 2017 and 70,841,796 shares of Common Stock issued and outstanding at December 31, 2016.

7. Shareholders’ Deficit

The consolidated shareholders’ deficit of the Company consists of common stock, additional paid-in capital, deficit and accumulated other comprehensive income.

8. Income Taxes

The Company and its subsidiaries file income tax returns in Switzerland, South Africa, the United States and Brazil. The components of income (loss) from operations before income taxes, by jurisdiction, are as follows:

	Three Months Ended March 31,
	2017			2016
Switzerland	$	(270,466	)	$	(272,093	)
South Africa		(2,326	)		(51,397	)
United States		(264,695	)		(123,085	)
Brazil		-			-
Total Net Loss	$	(537,487	)	$	(446,575	)

The provision for income taxes shown in the accompanying consolidated statements of operations consists of the following for the three months ended March 31, 2017 and 2016:

	Three Months Ended March 31,
	2017			2016
Current tax provision:
Switzerland	$	-		$	-
South Africa		-			-
United States		-			-
Brazil		-			-
Total current tax provision	$	-		$	-

Deferred tax provision:
Switzerland	$	(48,508	)	$	(48,711	)
South Africa		(620	)		(14,364	)
United States		(92,643	)		(43,080	)
Brazil		-			-
Change in valuation allowance		141,771			106,155
Total deferred provision		-			-

Total	$	-		$	-

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

The Company has determined that the future tax benefits from net operating losses are not likely to be realized in future periods and a 100% valuation allowance has been provided for all periods.

The income tax effect of each type of temporary difference giving rise to the net deferred tax asset as follows:

	March 31,			December 31,
	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	6,100,840		$	5,959,069
Less: valuation allowance		(6,100,840	)		(5,959,069	)

Total	$	-		$	-

The following reconciles the effective income tax rates with the statutory rates for the three months ended March 31, 2017 and 2016:

							United
	Switzerland			South Africa			States			Brazil			Total

Statutory rate of tax		8.5%/18	%		28.0	%		35.0	%		25.0	%

Three months ended March 31, 2017:
Net (loss) from operations before taxes	$	(270,466	)	$	(2,326	)	$	(264,695	)	$	-		$	(537,487	)

As calculated at the statutory rate		(48,508	)		(620	)		(92,643	)		-			(141,771	)

Permanent differences		-			-			-			-			-
Change in valuation reserves		48,508			620			92,643			-			141,771

Provision for income taxes	$	-		$	-		$	-		$	-		$	-

Three months ended March 31, 2016:
Net (loss) from operations before taxes	$	(272,093	)	$	(51,397	)	$	(123,085	)	$	-		$	(446,575	)

As calculated at the statutory rate		(48,711	)		(14,391	)		(43,080	)		-			(106,182	)

Permanent differences		-			27			-			-			27
Change in valuation reserves		48,711			14,364			43,080			-			106,155

Provision for income taxes	$	-		$	-		$	-		$	-		$	-

Permanent differences are principally related to loss on disposal of property and equipment, interest and penalties and unallowable expenses.

The Company and Group members remain subject to tax examinations for the two years ended December 31, 2016 in Switzerland and South Africa, for the eight years ended December 31, 2016 in the U.S and for the six years ended December 31, 2016 in Brazil.

During June 2016, the IRS levied penalties of $120,000 relating to filings of United States income tax returns for the year ended December 31, 2014 and December 31, 2015 beyond the required deadlines. These penalties have been provided for in current liabilities as at March 31, 2017. The Company has proposed settlements of these penalties to the IRS, but as of March 31, 2017 had not received a response from the IRS.

9. 2012 Stock Option Plan

On December 11, 2012, the Company adopted the 2012 Stock Plan (the “Plan”). Under the terms of the Plan, 3,000,000 shares of Common Stock have been reserved for future issuance. The Plan authorizes the granting of non-qualified stock options to the Company’s directors and to any independent consultants. The Plan is administered by the Company’s board of directors, and may also be administered by a committee appointed by the board of directors (the “Committee”). The Committee may determine persons eligible for grants and the timing, type, amount, fair market value and other provisions of such grants. The Committee will have authority, subject to the express provisions of the Plan, to construe the Plan and the option agreements granted pursuant to the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all other determinations in the judgment of the Committee necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option agreement in the manner and to the extent it shall deem expedient to promote the best interests of the Company. The Plan terminates on December 9, 2022.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

The Plan provides that the determination of the option price per share for any option rests in discretion of the Committee. Options granted under the Plan must be granted within ten years from the date on which the Plan has been adopted. No options granted under the Plan may be exercisable after ten years from the date of grant. The Company’s board of directors may suspend or terminate the Plan in whole or in part or amend the Plan in such respects as the board may deem appropriate and in the best interest of the company. No amendment, suspension or termination of the Plan shall, however, without the optionee's consent, alter or impair any of the rights or obligations granted under the Plan.

On November 12, 2013, the Company granted non-qualified stock options to purchase an aggregate of 475,000 shares of the Company’s Common Stock under the plan, each at an exercise price of $0.89 per share. The options now are fully vested.

The Company uses the Black-Scholes-Merton option pricing model to estimate the fair value of stock options. The principal assumptions utilized in valuing stock options include the expected stock price volatility (based on the most recent historical period beginning December 12, 2012); the expected option life; the expected dividend yield; and the risk-free rate (an estimate based upon the yields of Treasury constant maturities) equal to the expected life of the option. The fair values for the options, all of which were granted in 2013, were determined using the Black-Scholes-Merton option pricing model with the following assumptions:

Dividend yield	0.00	%
Risk-free interest rates	2.80	%
Expected volatility	72.68	%
Expected term (in years)	10

There was no reduction for estimated forfeitures. Under this model and the foregoing assumptions, the options granted in 2013 were valued at $151,053. Of this amount, $87,452, $15,900 and $47,701 is attributable to executives, employees and consultants, respectively.

10. Commitments, Contingencies and Tax Obligation

Lease Commitments

On June 1, 2014, the Company leased new office and workshop facilities for a one-year term with an automatic extension for another year unless cancelled with due notice. A new lease for these premises was entered into on May 30, 2016 for an additional one-year term, commencing June 1, 2016, with an option for extension for another year with due notice. It is not expected that the Company will extend the lease for the additional term. The monthly rent for the workshop lease is approximately $850. In addition to the payments required under the workshop lease, payments are made for space rentals on an as-needed basis. The total rent expense was approximately $3,800 and $3,300 for the three months ended March 31, 2017 and 2016, respectively. Rent expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

The future rent commitments under the above lease for the year ending December 31, 2017 is approximately $1,800.

Payroll Tax Obligations

During 2013, SPMSA received notification from the South African Revenue Service (“SARS”) regarding unpaid payroll taxes of approximately $185,000. SPMSA requested additional time to arrange a payment plan that is suitable to both parties and commenced making monthly payments to SARS. Due to insufficient funds the SPMSA has been unable to continue making additional payments in this regard and has requested additional time to arrange a payment plan that is suitable to both parties. As at March 31, 2017 and December 31, 2016, the unpaid balance of this liability was approximately $107,500 and $105,000, respectively and is included in accounts payable and other current liabilities in the accompanying Consolidated Balance Sheets. Effective October 31, 2014, SARS placed a collection order on the bank account of SPMSA for the outstanding amounts due.

Additionally, the Company has payroll tax and social security obligations in Switzerland relating to the employment of the chief financial officer by SPOAG. As at March 31, 2017 and December 31, 2016, the unpaid balance of this liability was approximately $256,000 and $246,000, respectively and is included in accounts payable and other current liabilities in the accompanying Consolidated Balance Sheets. The Company entered into a payment plan with the Swiss authorities, but has been unable to keep up-to-date with these payments.

During the fourth quarter of 2016, the Company reported that it had received a notice from the Debt Enforcement Authority Zug (the “Authority”) on behalf of the Canton of Zug, Switzerland, relating to a possible seizure of the assets of its SPOAG subsidiary, which include all of the Company’s international patents other than its South African patent. The basis for the notice of seizure was SPOAG’s failure to pay payroll taxes and social security obligations owing to the Canton of Zug included in the obligations referred to above. Within the next two weeks, that Company was advised by its Swiss counsel that the Authority had agreed to a revised payment schedule for the payment of the overdue payroll taxes, with payments by SPOAG to be made before December 31, 2016. The Company did not make any of the scheduled payments and, as a result, the Authority rejected the plan. Until the Company can make a payment that is satisfactory to the Authority, SPOAG remains at risk of having all of its assets seized by the Authority.

On May 22, 2017 the Company received an additional notice from the Authority advising that the Company should report to the Authority’s offices on June 1, 2017 with certain documentation and records to substantiate the Company’s ability to settle the amounts owing to the Canton of Zug, Switzerland. This notice includes notice of a possible seizure of the assets of its SPOAG subsidiary, which include all of the Company’s international patents other than its South African patent.

Employment and Consulting Agreements

The Company has entered into agreements to secure the services of two executives. These agreements provide for annual compensation and require a minimum termination notice period by the employer of three months. Both executives are stockholders of the Company. The total compensation to these executives was approximately $136,300 and $139,420 for the three months ended March 31, 2017 and 2016 respectively. The minimum amount due under these agreements is approximately $136,300 over the year ending December 31, 2017.

The Company has entered into agreements with third party consultants and institutions for consulting, research and professional services. These agreements can be terminated by either party with between one and three months written notice or immediately if for cause. The amounts due vary according to the nature of the service arrangement and the length of notice required for termination. The minimum amount due under these agreements is approximately $73,600 over the year ending December 31, 2017.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

Other Commitments

The Company is obligated to make payments of approximately $6,500 subsequent to March 31, 2016 in connection with purchase orders open as of March 31, 2016 for the purchase of machines to be delivered in 2017. Payments to vendors relating to these purchases are scheduled to be made prior to June 30, 2017 from the proceeds of the sales to which they relate.

11. Subsequent Events

The Company has evaluated its subsequent events since March 31, 2017. The Company has determined that, other than as noted under Notes 5 and 10 to these consolidated financial statements, there were no material subsequent events requiring adjustment to or disclosure in these consolidated financial statements.

12. Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the continuation of the Company as a going concern.

The Company has incurred recurring operating losses and has a working capital deficiency. Also, as more fully described in Note 10 to the consolidated financial statements, the Company is in arrears with various governmental authorities in Switzerland. This could result in seizure of the Company’s assets and effectively force a shutdown of its operations which could force liquidation of the entire Company. These conditions among others raise substantial doubt about the Company’s ability to continue as a going concern.

The Company has generated recurring losses and expects to incur additional losses as it expands its photopurification technology and develops marketing, sales and financial plans. As reflected in the accompanying audited consolidated financial statements, the Company’s total consolidated liabilities exceed total consolidated assets at March 31, 2017 and December 31, 2016 by $2,244,288 and $1,724,336, respectively.

To date, the Company’s cash flow has been funded with cash investments by its shareholders, certain third parties and to a considerably lesser extent, revenue. These inflows have been insufficient to enable the company to cover its costs and, as disclosed in Notes 4 and 6,resulting from the inability to settle liabilities with cash, the Company issued Common Stock to settle a portion of its liabilities during the three months ended March 31, 2017. Additionally, as disclosed in Note 8, with respect to payroll tax obligations due in both Switzerland and South Africa and tax penalties due the IRS, the Company has been unable to meet its obligations for payment of its taxes and the filing of tax returns.

The Company requires additional capital to continue its development and to achieve sufficient revenues to support its operations. The extent of the Company’s future working capital requirements depend on many factors, including its ability to maintain revenues and to manage expenses. The Company requires additional financing either through borrowings or the sale of equity to support its operations.

The Company’s access to additional financing, if any, will depend on a variety of factors over which the Company has little or no control. These factors include market conditions, the general unavailability of equity financing to the Company in light of its limited revenues, the actual financial and operational results of the Company on a consolidated basis, as well as investors’ perception of the Company’s short-term and long-term financial prospects. If future financing is not available on acceptable terms, or on any other terms, the Company will not be able to continue as a going concern.

SurePure, Inc. and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended March 31, 2017 and 2016

Management is currently pursuing plans to address the cash flow requirements of the Company for the year ending December 31, 2017 and beyond. The Company is engaged in discussions with current and other potential investors, and the Company is also considering additional offerings of Common Stock. The Company was not, however, able to secure significant additional equity financing during the quarter ended March 31, 2017 from existing shareholders or otherwise, despite its efforts to do so. In addition, although the Company has projected that increase in the commercialization of its technology may provide additional cash flow for operations, it has not generated any significant new equipment sales orders in the past year.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Insufficient Funding

For the period from our inception on August 24, 2005 to March 31, 2017, we had net losses of approximately $36,991,000. During the three months ended March 31, 2017, we continued to experience a significant shortfall in funding from investors. As a result, we require significant additional funding to maintain our operations and execute our business plan. If we are unable to obtain financing from our current shareholders or other sources, we will be unable to meet our business objectives and may scale back or even discontinue our operations until such time, if ever, that we are able to obtain financing. Notwithstanding our efforts to obtain financing, there is no assurance that any financing will be available on acceptable terms or at all. See “—Liquidity and Capital Resources.”

Business Overview

SurePure Inc. (SURP) is quoted on the OTCQB market and owns the international patent for a novel liquid purification technology that uses UV, rather than heat, to sterilize liquids. Using ultraviolet C light, the photopurification process can deliver the same or superior microbiological efficacy to pasteurization on both clear and turbid liquids without the concomitant energy consumption or degradation of the liquid, either biochemically or organoleptically.

Although UV light has long been used as a surface sterilizer and has been applied to clear water successfully, this is the first technology of its kind that can process opaque or turbid liquids. Its scope of application is therefore virtually unlimited. Food-grade liquid application in beverages abound; technical application to process water and liquid raw materials, as well as liquids such as diesel are possible; even the medical application of this technology from blood to breast milk is being explored. We continue to do research work either by ourselves or in conjuction with clients to establish the efficacy on other liquids including various consumer beverages and home care products.

The heart of the SurePure photopurification technology is the Turbulator technology for which SurePure holds one United States and 16 foreign patents. The unique and self-cleaning design of the Turbulator enables the purification of turbid liquids on an industrial processing scale.

We have experienced negative cash flows from operations with respect to our business since our inception. As of March 31, 2017, we did not have adequate working capital resources to satisfy our current liabilities, and, as a result, we have substantial doubt about our ability to continue as a going concern. Based on our current projections, we are not assured that we will have the cash resources to enable us to continue to fund normal operations. In addition, during the year, we issued Common Stock in settlement of certain liabilities that we were unable to settle in cash.

Plan of Operation

We seek to expand the commercial acceptance of our SurePure Turbulator purification systems. To pursue this goal, contingent on our obtaining sufficient capital to maintain our operations, we plan to execute the following steps:

Relying on the regulatory approval that was granted in January 2016 by the European Food Standards Agency for dairy milk treated with our Technology to extend its shelflife and increase its vitamin D content, to generate additional customer interest and transactions in the EU and elsewhere for dairy applications;

Attend and promote our product at international trade shows in 2017 for the brewing, dairy industries, carbonated soft drink and industrial applications. At these venues we will seek to establish contact with industry participants, including distributors of engineered systems, and to make them aware of our product’s advantages and the expanded applications of the product that we have developed;

Seek to market and sell our product and our technology for industrial applications;

Seek to expand the level of commercialization of our technology in the wine, dairy, fruit juice, carbonated soft drink and other beverage industries;

Expand our distribution networks for our products by identifying additional distributors according to geographic market, expertise with specific liquids and existing client relationships and negotiating agreements with the identified distributors on terms acceptable to both the distributors and to us; and

Obtain additional equity financing to support our growth from current shareholders, institutional investors or other investors to provide capital to support and augment our operations.

Results of Operations

The following table summarizes our results of operations for the three months ended March 31, 2017 compared with our results of operations for the three months ended March 31, 2016:

	Three Months Ended:				Variance
	March 31, 2017		March 31, 2016		$			%

Revenues	$	-		-		-			-	%

General and Administrative Expenses		335,000		410,000		(75,000	)		-18	%

Research and Development		3,000		13,000		(10,000	)		-77	%

Interest Expense		196,000		17,000		179,000			1,053	%

Net Loss		537,000		447,000		90,000			20	%

Revenues

We had no revenue during the three months ended March 31, 2017, similar to the three months ended March 31, 2016. This lack of revenues is due to the lack of new customer orders.

Although we are negotiating certain agreements for the commercialization of our SurePure technology and although there are ongoing tests of our technology with potential customers, it is unlikely that more than two or three of those agreements as currently structured will generate significant amounts of revenue during the remainder of 2017. As a general matter, however, we expect that revenues will increase to the extent that our commercialization efforts are successful. These commercialization efforts seek to introduce our technology to a broader range of clients and geographic areas. Our business model is largely based on sales of equipment.

General and Administrative Expenses

We had general and administrative expenses of approximately $335,000 during the three months ended March 31, 2017, representing a 18% decrease as compared with approximately $410,000 during the three months ended March 31, 2016. The decrease as compared to 2016 was primarily due to lower travel and general expenditures due to timing of customer visits.

General and administrative expenses are largely attributable to employment costs, professional and consulting fees and business travel expenses.

Research and Development Expenses

We incurred research and development expenses of approximately $3,000 for the three months ended March 31, 2017, representing a 77% decrease as compared with approximately $13,000 for the three months ended March 31, 2016. This decrease as compared to the 2016 year was primarily due to timing of client validation studies.

Net Interest Expense

We had net interest expense of approximately $196,000 for the three months ended March 31, 2017, representing a 1,053% increase, as compared to approximately $17,000 of net interest expense for the three months ended March 31, 2016. This increase was mainly due to our issuance of a note in the principal amount of $330,000 during February 2016.

Net Loss

For the reasons discussed above, we had a net loss of approximately $537,000 for the three months ended March 31, 2017, compared with a net loss of approximately $447,000 for the three months ended March 31, 2016.

We did not generated sufficient revenue to fund our operations for the three months ended March 31, 2017. We expect our net losses to occur until such time as our commercialization efforts for our technology produce an increase in revenues sufficient to meet the cost of our operations on an ongoing basis.

Income Tax Expense (Benefit)

We have realized net operating losses in Switzerland, South Africa and the United States. In addition to net operating losses in prior periods, our net operating losses may result in a potential future income tax benefit, to the extent that any unexpired net operating loss carry-forwards can offset future operating profits.

Impact of Inflation

We believe that inflation has not had a material effect on our operations for the period from August 24, 2005 (when our operations began) to March 31, 2017.

Capital Expenditures

We did not invest in property and equipment during the three months ended March 31, 2017.

Liquidity and Capital Resources

Our principal sources of liquidity have historically been through sales of our Common Stock to our investors. During the three months ended March 31, 2017, however, we were unable to obtain significant additional equity funding. On February 16, 2016 we issued a note in the principal amount of $330,000 and a portion of the February 2016 note was converted on March 29, 2017.

We continue to discuss potential financing transactions with various third parties, but we cannot provide any assurance that we will be able to conclude financing transactions with these or any other investors.

Our current assets are insufficient to meet our current obligations or to satisfy our cash needs over the next twelve months and, as such, we require debt or equity financing. We are pursuing prospective sources for equity financing in an amount that would allow us to meet our commercialization targets. We face significant obstacles to attracting new financing due to our historical and current record of net losses and working capital deficits and the low level of the commercialization of our technology. Therefore, despite our efforts, we can provide no assurances that we will be able to obtain the financing required to meet our stated objectives or even to continue our business as a going concern.

The following table summarizes our financial position at March 31, 2017, compared with our financial position at December 31, 2016:

	As of:				Variance
	March 31, 2017		December 31, 2016		$		%

Cash	$	2,000		-		2,000		100	%

Other Current Assets		45,000		40,000		5,000		13	%

Total Assets		105,000		102,000		3,000		3	%

Current Liabilities		2,349,000		1,827,000		522,000		29	%

As noted above under “Insufficient Funding” and as also noted below under this heading, our current cash resources are extremely limited.

As of March 31, 2017, we had cash of approximately $2,000 and other current assets of approximately $45,000, consisting of prepaid expenses, and total assets of approximately $105,000. As of March 31, 2017, we had approximately $1,000 of accounts receivable. As of March 31, 2017, we had current liabilities of approximately $2,349,000, consisting of accounts payable, accounts payable to related parties, accrued liabilities and convertible note derivative liability. Of this amount, approximately $263,000 represented liabilities that were due to officers and directors, an increase in liabilities to officers and stockholders of approximately $221,000 as compared to such amount as of December 31, 2016. This was attributable to the fact that we did not pay our officers during this time.

Our shareholders’ deficit was approximately $2,188,000 as of March 31, 2017, compared with deficit of approximately $1,724,000 as of December 31, 2016.

Cash Flow Analysis

For the three months ended March 31, 2017 our cash provided by operating activities was approximately $29,000, which amount corresponded mainly to net losses from our operations reduced by non-cash interest and loss on debt settlements and offset by increases in liabilities and amounts due to officers and stockholders. We expect to continue to have periods of negative cash flows from operating activities until such time as we fully commercialize our technology.

We do not expect to pay cash dividends in the foreseeable future.

We have a defined stock option plan and contractual commitments with all of our officers and directors. See “Market for Registrants Common Equity, Related Equity Stockholder Matters and Issuer Purchases of Equity Securities—Equity Compensation Plan Information” below in this Quarterly Report on Form 10-Q.

We plan to increase the number of employees and consultants to meet the anticipated demand if we are able to achieve wider acceptance of our technology.

Off Balance Sheet Arrangements

As of March 31, 2017, we had no off-balance sheet arrangements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosures.

As of the end of the period covered by this report, our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures. Based on their evaluation of our disclosure controls and procedures, management, including our principal executive officer and principal financial officer, has concluded that our disclosure controls and procedures were effective as of March 31, 2017.

Changes in Internal Control Over Financial Reporting

Our management, including our principal executive and principal financial officers, has evaluated any changes in our internal control over financial reporting that occurred during the quarterly period ended March 31, 2017, and has concluded that there was no change that occurred during the quarterly period ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings.

On January 30, 2017 the accounting firm RSSM CPA LLP (“RSSM”) commenced a collection action against us in the Supreme Court of the State of New York , New York County, seeking to collect $94,783.49 in unpaid fees. We and RSSM had previously settled our fee dispute in November 2016, but we were not able to perform our payment obligations under the settlement agreement that had been entered into. We have accrued the full amount that may be due to RSSM in our current liabilities. Since the commencement of the lawsuit, RSSM has entered bankruptcy and we understand that RSSM’s trustee has not determined whether it will pursue this claim against us.

Item 1A.

Risk Factors.

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

As more fully disclosed in our Current Report filed on April 3, 2017, on March 29, 2017 we issued 691,467 shares of our Common Stock to SBI.

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Mine Safety Disclosures.

None

Item 5.

Other Information.

None

Item 6.

Exhibits.

The following is a list of exhibits filed as part of this Form 10-Q:

Exhibit Number		Description

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Document

101.DEF*		XBRL Taxonomy Extension Definition Document

101.LAB*		XBRL Taxonomy Extension Labeled Document

101.PRE*		XBRL Taxonomy Extension Presentation Document

_____________

*	Filed herewith.

SIGNATURES

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

	SurePure,, Inc.

Date: May 23, 2017	By:	/s/ Guy R Kebble
		Name:	Guy R Kebble
		Title:	President and Chief Executive Officer
			(Principal Executive Officer)

Date: May 23, 2017	By:	/s/ Stephen M. Robinson
		Name:	Stephen M. Robinson
		Title:	Chief Financial Officer
			(Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number		Description

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Document

101.DEF*		XBRL Taxonomy Extension Definition Document

101.LAB*		XBRL Taxonomy Extension Labeled Document

101.PRE*		XBRL Taxonomy Extension Presentation Document

_____________

Filed herewith.

SurePure, Inc. 10-Q