UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~September~~March 3031, ~~2015~~2016



[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________ to _____________

Commission file number: 333-199619

VIATAR CTC SOLUTIONS INC.

(Exact name of Company as specified in its charter)



Delaware		26-1581305
(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification No.)
organization)



116 John Street, Suite 10, Lowell, Massachusetts		01852
(Address of principal executive offices)		(Zip Code)



	(617) 299-6590
	(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 [X ] No [ X]

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.



Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[ ]	Smaller reporting company	[X]

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

1As of May 6, 2016, there were 19,140,426 shares of $0.001 par value common stock issued and outstanding.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

As of November 13, 2015, there were 18,313,176 shares of $0.001 par value common stock issued and outstanding.

VIATAR CTC SOLUTIONS INC.

FORM 10-Q

INDEX

		Page
PART I.	Financial Information
	Item 1. Financial Statements (Unaudited).	F-1
	Item 2. Management’s Discussion and Analysis of Financial Condition and results of Operation.	4
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
	Item 3. Quantitative and Qualitative Disclosures About Market Risk.	1410
	Item 4. Controls and Procedures.	1410
PART II.	Other Information
	Item 1. Legal Proceedings.	1511
	Item 1A. Risk Factors.	1511
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	1511
	Item 3. Defaults Upon Senior Securities.	1611
	Item 4. Mine Safety Disclosures.	1611
	Item 5. Other Information.	1611
	Item 6. Exhibits.	1611
	Signatures	1712

PART I –FINANCIAL INFORMATION

Item 1. Financial Statements

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014	F-2
Condensed Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31 2015	F-1
Condensed Consolidated Statements of Operations for the nine and three months ended September 30, 2015 and 2014 (unaudited)	F-3
Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015 (unaudited)	F-2
Condensed Consolidated Statement of Stockholders’ Deficit for the period ended September 30, 2015 (unaudited)	F-4
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the period ended March 31, 2016 (unaudited)	F-3
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014 (unaudited)	F-5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)	F-4
Notes to Condensed Consolidated Financial Statements (unaudited)	F-65

~~F-1~~3

Viatar CTC Solutions Inc. and Subsidiary

Condensed Consolidated Balance Sheets

				September 30, 2015	December 31, 2014
				March 31, 2016	December 31, 2015
ASSETS
CURRENT ASSETS
	Cash			$ ~~107~~3,~~432~~755,926	$ 31508,~~351~~445
			TOTAL ASSETS	$ 107,432	$ 31,351
	Prepaid expenses			116,252	247,659
LIABILITIES AND STOCKHOLDERS' DEFICIT
		Total current assets		3,872,178	756,104
	Property and equipment, net			456,380	172,793
	Investment in non-publicly traded company			-	480,000
			TOTAL ASSETS	$ 4,328,558	$ 1,408,897
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses			$ ~~190~~244,~~595~~783	$ ~~290~~217,~~210~~977
	Accrued income tax liability			~~762~~791,~~637~~686	~~732~~777,~~550~~026
	Demand note payable			-	50,000
		Total current liabilities		1,036,469	995,003
	Convertible note payable			-	93,495
	Convertible notes payable, net			2,140,918	2,126,218
		Total current liabilities		953,232	1,166,255
			TOTAL LIABILITIES	3,177,387	3,121,221
	Convertible note payable, net			400,000	-
			TOTAL LIABILITIES	1,353,232	1,166,255
	Commitments and contingencies
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' EQUITY (DEFICIT)
	Series A preferred stock, $.001 par value, 20,000,000 shares
	Series A preferred stock, $.001 par value, 4,000,000 shares
		authorized, 4,000,000 shares issued and outstanding at
		September 30, 2015 and December 31, 2014, respectively		4,000	4,000
		March 31, 2016 and December 31, 2015, respectively		4,000	4,000
	Series B preferred stock, $.001 par value, 5,000,000 shares
		authorized, 1,679,696 and 0 shares issued and outstanding at
		March 31, 2016 and December 31, 2015, respectively		1,680	-
	Preferred stock, $.001 par value, 11,000,000 shares
		authorized, 0 shares issued and outstanding at March 31, 2016
		and December 31, 2015, respectively		-	-
	Common stock, $.001 par value, 100,000,000 shares authorized,
		18,107,176 and 16,814,426 shares issued and outstanding at
		18,605,426 and 18,605,426 shares issued and outstanding at
		September 30, 2015 and December 31, 2014, respectively		18,108	16,815
		March 31, 2016 and December 31, 2015, respectively		18,606	18,606
	Common stock subscription and interest receivable			-	(605,475)
	Additional paid-in capital			24,763,114	20,492,974
	Additional paid-in capital			19,773,834	17,611,374
	Accumulated deficit			(23,625,835)	(22,217,527)
	Accumulated deficit			(21,031,520)	(18,151,789)
			Total stockholders' equity (deficit)	1,161,565	(1,701,947)
			Total stockholders' deficit	(1,235,578)	(1,125,075)
	Noncontrolling interest			(10,394)	(10,377)
	Noncontrolling interest			(10,222)	(9,829)
	TOTAL STOCKHOLDERS' EQUITY (DEFICIT)			1,151,171	(1,712,324)
			TOTAL STOCKHOLDERS' DEFICIT	(1,245,800)	(1,134,904)
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)			$ 4,328,558	$ 1,408,897
			TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 107,432	$ 31,351

See notes to condensed consolidated financial statements.

F-21

Viatar CTC Solutions Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)

			For the Nine Months Ended September 30,		For the Three Months Ended September 30,
			For the Three Months Ended March 31,
			2015	2014	2015	2014
			2016	2015
REVENUE
	Sales		$ ~~37,940~~-	$ 9,~~000~~970	~~$ 13,985~~	~~$ -~~
COST OF REVENUE
~~Cost of sales~~	Cost of sales		~~7,660~~-	-	~~3,830~~	-
GROSS PROFIT			30,280	9,000	10,155	-
GROSS MARGIN			-	9,970
EXPENSES
	Research and development		1895,~~889,156~~365	~~982~~820,~~450~~655	~~677,878~~	~~552,321~~
	General and administrative		~~948~~426,~~116~~932	~~807~~269,~~176~~525	~~250,648~~	~~136,031~~
TOTAL EXPENSES			21,~~837~~322,~~272~~297	1,~~788~~090,~~626~~180	~~928,526~~	~~688,352~~
LOSS FROM OPERATIONS			(21,~~806~~322,~~992~~297)	(1,~~779~~080,~~626~~210)	~~(918,371)~~	~~(688,352)~~
OTHER INCOME (EXPENSE)
	Change in value of derivative liability		-	1,800	-	-
	Dividend income		3,227	-
	Interest expense		(7354,~~132~~281)	(1736,~~663~~028)	~~(16,413)~~	~~(17,663)~~
TOTAL OTHER INCOME (EXPENSE)			(7351,~~132~~054)	(1536,~~863~~028)	~~(16,413)~~	~~(17,663)~~
LOSS BEFORE INCOME TAX (EXPENSE) BENEFIT			(21,~~880~~373,~~124~~351)	(1,~~795~~116,~~489~~238)	~~(934,784)~~	~~(706,015)~~
	Income tax (expense) benefit		-	-	-	-
NET LOSS			(21,~~880~~373,~~124~~351)	(1,~~795~~116,~~489~~238)	~~(934,784)~~	~~(706,015)~~
	Net loss attributable to noncontrolling
		interest in consolidated subsidiary	(~~393~~17)	(~~280~~165)	~~(120)~~	~~(194)~~
NET LOSS ATTRIBUTABLE TO
	STOCKHOLDERS		$ (2,879,731)	$ (1,795,209)	$ (934,664)	$ (705,821)
	STOCKHOLDERS BEFORE PREFERRED DIVIDENDS		$ (1,373,334)	$ (1,116,073)
LOSS PER COMMON SHARE -
LESS: PREFERRED DIVIDENDS			(34,974)	-
	BASIC AND DILUTED:
NET LOSS ATTRIBUTABLE TO
		Net Loss Attributable to Common
	STOCKHOLDERS		$ (1,408,308)	$ (1,116,073)
		Stockholders	$ (0.16)	$ (0.12)	$ (0.05)	$ (0.04)
LOSS PER COMMON SHARE -
		Weighted Average Shares	17,604,366	15,556,312	17,981,054	15,918,177
	BASIC AND DILUTED:
		Net Loss Attributable to Common
		Stockholders	$ (0.08)	$ (0.07)
		Weighted Average Shares	18,605,426	17,020,815

See notes to condensed consolidated financial statements.

F-2

Viatar CTC Solutions Inc. and Subsidiary

Consolidated Statement of Stockholders' Equity (Deficit)

For the Period Ended March 31, 2016


								Accumulated Deficit	Total
							Additional		Stockholders'		Total
	Preferred A Stock		Preferred B Stock		Common Stock		Paid-in		Equity	Noncontrolling	Equity
	Shares	Amount	Shares	Amount	Shares	Amount	Capital		(Deficit)	Interest	(Deficit)

Balance, December 31, 2015	4,000,000	$ 4,000	-	$ -	18,605,426	$ 18,606	$ 20,492,974	$ (22,217,527)	$ (1,701,947)	$ (10,377)	$ (1,712,324)

Issuance of Preferred B stock, net of offering costs	-	-	1,679,696	1,680	-	-	4,197,560	-	4,199,240	-	4,199,240

Issuance of stock for services	-	-	-	-	-	-	72,580	-	72,580	-	72,580

Series B Preferred dividend	-	-	-	-	-	-	-	(34,974)	(34,974)	-	(34,974)

Net loss	-	-	-	-	-	-	-	(1,373,334)	(1,373,334)	(17)	(1,373,351)

Balance, March 31, 2016	4,000,000	$ 4,000	1,679,696	$ 1,680	18,605,426	$ 18,606	$ 24,763,114	$ (23,625,835)	$ 1,161,565	$ (10,394)	$ 1,151,171

F-3

Viatar CTC Solutions Inc. and Subsidiary

Condensed Consolidated Statements of ~~Stockholders’~~Cash ~~Deficit~~Flows

For the Period Ended September 30, 2015

(Unaudited)

						Common Stock Subscription and Interest Receivable		Accumulated Deficit	Total
				For the Three Months Ended March 31,
							Additional		Stockholders'
				2016	2015
	Preferred Stock			Common Stock			Paid-in		Equity
CASH FLOWS FROM OPERATING ACTIVITIES:
	Shares		Amount	Shares	Amount		Capital		(Deficit)
	Net loss			$ (1,373,351)	$ (1,116,238)
Balance, December 31, 2014	4,000,000		$ 4,000	6,814,426	$ 16,815	$ 05,475)	$ 7,611,374	$ (18,151,789)	$ (1,125,075)
	Adjustments to reconcile net loss to net cash used in
Issuance of stock, net of offering costs of $134,750	-		-	697,000	697	-	1,008,428	-	1,009,125
	operating activities:
Issuance of warrants with demand notes	-		-	-	-	-	31,149	-	31,149
		Stock based compensation		203,987	642,716
Issuance of stock per incentive plan	-		-	427,750	428	-	857,087	-	857,515
		Amortization of discount on debt		14,700	36,028
Issuance of stock for services	-		-	168,000	168	-	259,332	-	259,500
		Depreciation expense		13,657	-
Interest on common stock receivable	-		-	-	-	(6,464)	6,464	-	-
	Changes in operating assets and liabilities:
Cash received for common stock receviable and interest	-		-	-	-	611,939	-	-	611,939
		Accrued expenses		(8,168)	(72,620)
Net loss	-		-	-	-	-	-	(2,879,731)	(2,879,731)
		Accrued income tax expense		14,660	-
Balance, September 30, 2015	4,000,000		$ 4,000	18,107,176	$ 18,108	$ -	$ 9,773,834	$ (21,031,520)	$ (1,235,578)
			Net cash used in operating activities	(1,134,515)	(510,114)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of investment in non-publicly traded company			480,000	-
	Purchase of equipment			(297,244)	-
			Net cash provided by investing activities	182,756	-
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from demand note			-	50,000
	Repayment of demand notes			-	(100,000)
	Proceeds from promissory note for common stock subscription			-	611,939
	Proceeds from issuance of stock and warrants			-	525,000
	Proceeds from issuance of Preferred B shares			4,199,240	-
			Net cash provided by financing activities	4,199,240	1,086,939
Net increase in cash				3,247,481	576,825
Cash - beginning of the period				508,445	31,351
Cash - end of the period				$ 3,755,926	$ 608,176
Supplemental disclosure of cash flow information:
	Cash paid for interest			$ 35,110	$ -
Supplemental disclosure of non-cash financing activities:
	Discount on debt issued with warrants			$ -	$ 31,149
	Series B dividends accrued			$ 34,974	$ -

See notes to condensed consolidated financial statements.

F-4

Viatar CTC Solutions Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)

				For the Nine Months Ended September 30,
				2015	2014
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$ (2,880,124)	$ (1,795,489)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Issuance of stock for license		-	29,731
		Issuance of stock for services		1,117,015	646,710
		Contribution of services from noncontrolling interest		-	29,882
		Amortization of discount on debt		37,654	14,636
		Change in derivative liability		-	(1,800)
	Changes in operating assets and liabilities:
		Accounts receivable		-	(4,530)
		Tax refund receivable		-	147,997
		Accrued expenses		(99,615)	119,930
		Accrued income tax expense		30,087	-
			Net cash used in operating activities	(1,794,983)	(812,933)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from demand note			50,000	-
	Repayment of demand notes			(100,000)	-
	Proceeds from convertible note payable			300,000	-
	Proceeds from promissory note for common stock subscription			611,939	-
	Issuance of stock and warrants			1,009,125	830,000
	Proceeds from the exercise of warrants			-	50,000
			Net cash provided by financing activities	1,871,064	880,000
Net increase in cash and cash equivalents				76,081	67,067
Cash - beginning of the period				31,351	66,769
Cash - end of the period				$ 107,432	$ 133,836
Supplemental disclosure of cash flow information:
	Cash paid for interest			$ 4,291	$ 2,000
Supplemental disclosure of non-cash financing activities:
	Conversion of demand note payable to common stock			$ -	$ 60,000
	Issuance of stock for services			$ -	$ 242,643
	Discount on debt issued with warrants			$ 31,149	$ -
	Transfer from derivative liability classification to equity classification			$ -	$ 9,000

See notes to condensed consolidated financial statements.

F-5

Viatar CTC Solutions Inc. and Subsidiary

Notes to the Condensed Consolidated Financial Statements

~~September~~March 3031, ~~2015~~2016

(Unaudited)

NATURE OF OPERATIONS ~~AND GOING CONCERN~~

Viatar CTC Solutions Inc., formerly known as Vizio Medical Devices LLC (“Vizio”), and Subsidiary (as defined below) is a development stage company focused on medical devices for oncology applications which remove circulating tumor cells for diagnostic and therapeutic purposes.

Vizio was a Delaware limited liability company with perpetual duration that was formed on December 18, 2007. On February 25, 2014, Vizio converted to a Delaware C corporation and changed its name to Viatar CTC Solutions Inc. (“Viatar CTC Solutions”).

Viatar CTC Solutions conducts all of its operations through its subsidiary, Viatar LLC (the “Subsidiary”). The Subsidiary was formed on September 23, 2010 as a Delaware limited liability company with perpetual duration.

Viatar CTC Solutions and Vizio are together referred to as the “Company”.

Since inception, the Company has not generated significant revenues. As reflected in the accompanying condensed consolidated financial statements, the Company has a net loss and net cash used in operations of $21,~~880~~373,~~124~~351 and $1,~~794~~134,~~983~~515, respectively, for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. As of ~~September~~March 3031, ~~2015~~2016 the Company had a working capital ~~deficit~~of $2,835,709 and an accumulated deficit ~~totaling~~of $~~845~~23,~~800 and $21~~625,~~031,520, respectively~~835. ~~These conditions raise substantial doubt about the Company’s ability to continue as a going concern.~~ The Company’s continued existence is dependent upon several factors, including (a) obtaining funding, whether in the form of equity, or debt investments, licensing revenues, strategic collaboration payments or grants from government or other sources, (b) success in achieving its research and development goals, (c) obtaining regulatory approvals, and (d) gaining market acceptance and/or distribution or strategic partners for its products. The Company has raised approximately $14.8 million of equity capital since its inception, and management is continually pursuing additional funding sources. During the nine months ended September 30, 2015, the Company also obtained debt financing to support its operations, including demand and convertible notes from which the Company received aggregate proceeds of $50,000 and $300,000, respectively. In October 2015, the Company obtained an additional $1,300,000 of financing from convertible notes.

The Company has raised approximately $21.7 million of capital since its inception, including $20.3 million from the sale of common and Series B Preferred stock, $1.4 million from convertible notes and $100,000 of demand notes. Management is continually pursuing additional funding sources.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying unaudited condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management 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.

~~F-6~~ The financial statements contained herein have been prepared by the Company in accordance with GAAP for interim financial information. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. The balance sheet at December 31, 2015 was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2015.

The financial statements contained herein have been prepared by the Company in accordance with GAAP for interim financial information. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. The balance sheet at December 31, 2014 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of the periods presented. The results of operations for the nine and three months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2014.F-5

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Viatar CTC Solutions, ~~Viatar~~the Subsidiary and amounts related to a noncontrolling interest in ~~Viatar~~the Subsidiary. The noncontrolling interest represents a 0.01% ownership interest in ~~Viatar~~the Subsidiary at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with ~~accounting~~GAAP ~~principles generally accepted in the United States of America~~ requires management 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 income and expenses during the reporting period. Significant estimates subject to such estimates and assumptions include the valuation of debt and equity instruments issued for services and in connection with agreements and contracts entered in to by the Company. Actual results could differ from those estimates.

Cash

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at ~~September~~March 3031, ~~2015~~2016 or December 31, ~~2014~~2015.

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts payable and accrued expenses. Fair value estimates of these instruments are made at a specific point in time, based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. As of March 31, 2016 and December 31, 2015, the carrying amount of cash and cash equivalents, accounts payable and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

Property and Equipment

Property and equipment are recorded at cost. Depreciation expense is computed using straight-line methods over the estimated useful lives.

Asset lives for financial statement reporting of depreciation are:


Machinery and equipment		5 years

Cost-Method Investment

The Company’s cost-method investment in a non-publicly traded company is included in the condensed consolidated balance sheets and is carried at cost, adjusted for any impairment, because the Company does not have a controlling interest and does not have the ability to exercise significant influence over this company. The Company monitors this investment for impairment on a quarterly basis, and adjusts carrying value for any impairment charges recognized. Realized gains and losses on this investment are reported in other income (expense), net in the condensed consolidated statements of operations.

Revenue Recognition

The Company records revenue for products when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products. The Company generally meets these criteria upon shipment.

F-6

Cost of Sales

Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product cost, freight, packaging, and labor costs.

Research and Development

Research and development costs consist of ongoing testing and research and are expensed as incurred.

Derivatives

The Company evaluated its options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassed to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liability at the fair value of the instrument on the reclassification date.

F-7

Income Taxes

In the ordinary course of business, there is inherent uncertainty in quantifying income tax positions. The Company assesses its income tax positions and records tax assets or liabilities for all years subject to examination based upon management’s evaluation of the facts and circumstances and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense or benefit.

The Company files income tax returns with the U.S. federal government and various state and local jurisdictions. The Company is no longer subject to tax examinations by tax authorities for years prior to ~~2011~~2012.

The Company is currently under audit by New York City tax authorities for the 2011, 2012, and 2013 tax years. The Company applied for New York City biotechnology tax credits and received certificates of eligibility from the NYC Department of Finance in the amounts of $147,997, $242,016, and $236,874 for tax years 2013, 2012, and 2011, respectively. ~~These~~The ~~credits~~Company ~~have~~received ~~been~~refunds ~~recognized~~for asthese ~~income~~amounts ~~tax benefits on the consolidated statements of operations~~ in ~~the~~previous ~~year of application~~years. ~~As of September 30, 2015, the 2011, 2012, and 2013 tax refunds have been received for these amounts.~~ The City of New York subsequently ruled that the Company does not qualify for the tax credits. As of ~~September~~March 3031, ~~2015~~2016, the Company accrued $~~762~~791,~~637~~686 on the condensed consolidated balance sheet which includes $~~135~~164,~~750~~799 of interest. The Company appealed the decision made by the City of New York. As of the date of this report, no decision has been made regarding the appeal.

Commitments and Contingencies

The Company follows subtopic 450-20 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) to report accounting for contingencies. Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

F-7

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

F-8

Stock-Based Compensation

In December 2004, the FASB issued ASC 718, Compensation – Stock Compensation, or ASC 718. Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include options, restricted stock, restricted stock units, performance-based awards, share appreciation rights, and employee share purchase plans. As such, compensation cost is measured on the date of grant at fair value. The Company amortizes such compensation amounts, if any, over the respective vesting periods of the award. The Company uses the Black-Scholes-Merton option pricing model, or the Black-Scholes Model, an acceptable model in accordance with ASC 718, that requires the input of highly complex and subjective variables, including the expected life of the award and the expected stock price volatility over a period equal to or greater than the expected life of the award.

Equity instruments (“~~instruments~~Instruments”) issued to anyone other than employees are recorded on the basis of the fair value of the ~~instruments~~Instruments, as required by ASC 718. ASC 505, Equity Based Payments to Non-Employees, or ASC 505, defines the measurement date and recognition period for such ~~instruments~~Instruments. In general, the measurement date is when either (a) a performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the ~~instruments~~Instruments are vested. The measured value related to the ~~instruments~~Instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

The Company recognizes the compensation expense for all share-based compensation granted based on the grant date fair value estimated in accordance with ASC 718. The Company generally recognizes the compensation expense on a straight-line basis over the employee’s requisite service period.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

The Company had the following potential common stock equivalents at ~~September~~March 3031, ~~2015~~2016:

Restricted stock awards			~~117~~1,~~250~~296,000
Common stock warrants, exercise price range of $1.00-$2.00			535,000
Conversion feature on convertible notes, exercise price of $2.50			~~120~~920,000
Conversion feature on Series B preferred stock, exercise price of $2.50			1,679,696
Total common stock equivalents			4,430,696

The Company had the following potential common stock equivalents at ~~September~~March 3031, ~~2014~~2015:

Common stock warrants, exercise price range of $1.00-$2.00 435,000


Restricted stock awards			740,000
Common stock warrants, exercise price range of $1.00-$2.00			535,000
Total common stock equivalents			1,275,000

Since the Company reflected a net loss during the ~~nine and~~ three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, the effect of considering any common stock equivalents, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

F-98

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. OnIn July ~~9th~~2015, the effective date was delayed one year by a vote by the FASB. Public business entities, certain not-for-profit entities, and certain employee benefit plans would apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application would be permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement~~, however it believes that there will be no material effect on the consolidated financial statements~~.

In ~~February~~March ~~2015~~2016, the FASB issued ~~Accounting~~ASU ~~Standards Update~~ No. ~~2015~~2016-0206, ~~“Consolidation~~Derivatives ~~(Topic~~and ~~810):~~Hedging ~~Amendments to the Consolidation Analysis”~~ (~~“ASU~~topic ~~2015-02”~~815). The ~~new~~FASB ~~consolidation~~issued ~~standard~~this ~~changes~~update ~~the~~to ~~way~~clarify ~~reporting~~the ~~enterprises~~requirements ~~evaluate~~for assessing whether contingent call (aput) ~~they~~options ~~should~~that ~~consolidate~~can ~~limited~~accelerate ~~partnerships~~the ~~and~~payment ~~similar~~of ~~entities,~~principal ~~(b)~~on ~~fees~~debt ~~paid~~instruments toare aclearly ~~decision~~and ~~maker~~closely orrelated ~~service~~to ~~provider~~their ~~are~~debt ~~variable~~hosts. ~~interests~~An ~~in a variable interest~~ entity ~~("VIE"),~~performing ~~and~~the ~~(c)~~assessment ~~variable~~under ~~interests~~the amendments in athis ~~VIE~~update ~~held~~is byrequired ~~related~~to ~~parties~~assess of the ~~reporting~~embedded ~~enterprise~~call ~~require~~(put) ~~the~~options ~~reporting~~solely ~~enterprise~~in toaccordance ~~consolidate~~with the ~~VIE~~four-step decision sequence. The updated guidance is effective for ~~public business entities for~~ annual ~~and interim~~ periods ~~in fiscal years~~ beginning after December 15, ~~2015. Early adoption is allowed~~2016, including ~~early adoption in an~~ interim ~~period.~~periods Awithin ~~reporting~~those ~~entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the~~ fiscal ~~year~~years. ofEarly adoption orof ~~may apply~~ the ~~amendments~~update ~~retrospectively~~is permitted. The Company is currently ~~assessing~~evaluating the impact, ~~if any,~~ of the ~~adoption~~new ~~of this guidance on the condensed consolidated financial statements~~standard.

In ~~August~~April ~~2014~~2016, the ~~Financial~~FASB ~~Accounting Standards Board~~ issued ~~Accounting~~ASU ~~Standards~~No. ~~Update 2014~~2016-1509, ~~Presentation~~ ofCompensation ~~Financial~~– ~~Statements-~~Stock ~~Going~~Compensation ~~Concern. The~~(topic ~~Update provides U~~718).S. ~~GAAP~~The ~~guidance~~FASB onissued ~~management’s~~this ~~responsibility~~update into ~~evaluating~~improve ~~whether~~the ~~there~~accounting isfor ~~substantial~~employee ~~doubt~~share-based ~~about~~payments ~~a company’s ability to continue as a going concern~~ and ~~about~~affect ~~related~~all ~~footnote~~organizations ~~disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events~~ that ~~raise~~issue ~~substantial~~share-based ~~doubt~~payment ~~about~~awards ~~a company’s ability~~ to ~~continue~~their asemployees. aSeveral ~~going~~aspects ~~concern~~of ~~within~~the ~~one~~accounting ~~year~~for ~~from~~share-based ~~the~~payment ~~date~~award ~~the~~transactions ~~financial statements~~ are ~~issued.~~simplified, ~~This~~including: ~~Accounting~~(a) ~~Standards~~income ~~Update~~tax isconsequences; ~~the~~(b) ~~final~~classification ~~version~~ of ~~Proposed~~awards ~~Accounting~~as ~~Standards~~either ~~Update~~equity ~~2013-300–Presentation~~or ofliabilities; ~~Financial~~and ~~Statements~~ (~~Topic 205~~c): ~~Disclosure~~classification ofon ~~Uncertainties~~the ~~about~~statement anof ~~Entity’s~~cash ~~Going Concern Presumption, which has been deleted~~flows. The ~~amendments~~updated inguidance ~~this~~is ~~update are~~ effective for ~~the~~ annual ~~period~~periods ~~ending~~beginning after December 15, 2016, ~~and~~including ~~for~~interim ~~annual~~ periods ~~and~~within ~~interim~~those ~~periods~~fiscal ~~thereafter~~years. Early adoption of the update is permitted. The Company is currently evaluating the ~~effects~~impact of ~~ASU 2014-15 on~~ the ~~condensed~~new ~~consolidated financial statements~~standard.

InManagement ~~March~~does ~~2015,~~not ~~the~~believe ~~Financial~~that ~~Accounting~~any ~~Standards~~recently ~~Board~~ issued ~~Accounting Standards Update (ASU) No. 2015-03~~, ~~“Interest~~but - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not ~~affected~~yet ~~by the amendments in this ASU. The amendments are~~ effective ~~for~~accounting ~~financial~~pronouncements, ~~statements~~when ~~issued for fiscal years beginning after December 15~~adopted, ~~2015,~~will ~~and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that~~ have ~~not been previously issued. The amendments should be applied on~~ a ~~retrospective~~material basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect ~~of the change~~ on the ~~financial~~accompanying ~~statement line items (i.e., debt issuance cost asset and the debt liability). The Company is currently evaluating the effects of ASU 2015-03 on the condensed~~ consolidated financial statements.

F-10

~~CONVERTIBLE~~PROPERTY ~~NOTE~~AND ~~PAYABLE~~EQUIPMENT

InProperty ~~April 2013, the Company borrowed $100,000 in exchange for a 4% convertible promissory note due April 30, 2015~~ and aequipment five-year warrant to purchase 50,000 shares of common stock at $2 each. The note is convertible at any time prior to maturity at the option of the holder into 50,000 shares of common stock. The relative fair value of the warrant issued was $32,525 based on ~~the~~March ~~Black-Scholes option pricing model. The fair value of the warrant was recorded as a discount and is being amortized over two years based on the straight line method~~31, ~~which~~2016 ~~approximates the effective interest method. The unamortized discount at September 30, 2015~~ and December 31, ~~2014 was $0 and $6,505, respectively. The note requires interest payments semi-annually. In April~~ 2015 ~~the~~are ~~note~~as ~~and the related warrants were extended for an additional two year period maturing in April 2017. Based on management’s review, the accounting for debt modification applied.~~follows:

In June 2015, the Company borrowed $100,000 in exchange for a 4% convertible promissory note due October 1, 2018. The note is convertible at any time prior to maturity at the option of the holder into 40,000 shares of common stock; and may be automatically converted by the Company into 40,000 shares of common stock after May 5, 2017 if after that date the common stock trades above $2.50 per share for 20 trading days with an average daily volume of 25,000 shares.


	March 31, 2016		December 31, 2015
Machinery and Equipment	$	472,827	$	175,583

Less: Accumulated Depreciation		16,447		2,790
	$	456,380	$	172,793

InDepreciation ~~July~~expense ~~2015,~~charged ~~the~~to ~~Company~~income ~~borrowed $100,000 in exchange~~ for athe 4%three ~~convertible~~months ~~promissory~~ended ~~note~~March ~~due October 1~~31, ~~2018.~~2016 ~~The~~and ~~note~~2015 isamounted ~~convertible at any time prior~~ to ~~maturity at the option of the holder into 40~~$13,~~000~~657 ~~shares of common stock;~~ and ~~may be automatically converted by the Company into 40,000 shares of common stock after May 5, 2017 if after that date the common stock trades above~~ $~~2.50 per share for 20 trading days with an average daily volume of 25~~0,~~000~~ ~~shares~~respectively.

In August 2015, the Company borrowed $100,000 in exchange for a 4% convertible promissory note due October 1, 2018. The note is convertible at any time prior to maturity at the option of the holder into 40,000 shares of common stock; and may be automatically converted by the Company into 40,000 shares of common stock after May 5, 2017 if after that date the common stock trades above $2.50 per share for 20 trading days with an average daily volume of 25,000 shares.

INVESTMENT IN NON-PUBLICLY TRADED COMPANY

During the fourth quarter of 2015, the Company issued convertible promissory notes to an accredited investor for an aggregate total of 60,000 shares of stock in a non-publicly traded company which it valued at $720,000 based on the subsequent sale of a portion of those shares during the period for $12 per share. The Company sold 20,000 and 40,000 shares in November 2015 and February 2016, respectively, for approximately $240,000 and $480,000, respectively, resulting in a reduction of the investment. As of March 31, 2016, the balance of the investment was $0.

F-9

The following table summarizes the activity for the investment in non-publicly traded company:


	March 31, 2016
Balance at January 1, 2016	$	480,000
Additions – stock of non-publicly traded company		-
Disposal – sale of stock of non-publicly traded company		(480,000)
Balance at March 31, 2016	$	-

CONVERTIBLE NOTES PAYABLE

In April 2013, the Company borrowed $100,000 of cash in exchange for a 4% convertible promissory note due April 30, 2015 and a five-year warrant to purchase 50,000 shares of common stock at $2 each. The note is convertible at any time prior to maturity at the option of the holder at $2 per share of common stock (50,000 shares). The relative fair value of the warrant issued was $32,525 based on the Black-Scholes option pricing model. The fair value of the warrant was recorded as a discount and is being amortized over two years based on the effective interest method. The unamortized discount at March 31, 2016 and December 31, 2015 was $0 and $0, respectively. The note requires interest payments semi-annually. In April 2015 the note and the related warrants were extended for an additional two year period maturing in April 2017. Based on management’s review, the accounting for debt modification applied.

During the third and fourth quarters of 2015, the Company borrowed an aggregate of $1.3 million of cash in exchange for 4% convertible notes (the “4% Convertible Notes”) with the following terms: (i) maturing on October 1, 2018 ($300,000) and November 1, 2018 ($1,000,000); (ii) quarterly cash interest of 4%; (iii) convertible at any time at the holder’s option at $2.50 per share; and (iv) automatically convertible after May 5, 2017 at $2.50 per share if after that date the common stock trades above that price for 20 trading days with an average daily volume of 25,000 shares. As discussed in Note 8, $1.0 million was borrowed from a related party.

During the fourth quarter 2015, the Company issued 4% Convertible Notes in the aggregate principal amount of $900,000 in exchange for 60,000 shares of stock in a non-publicly traded company valued at $15 per share. Upon issuance of the notes, a debt discount of $180,000 was recorded for the value of the common shares of the private company and is being amortized using the effective internal method. The amortization of debt discount is included as a component of interest expense in the condensed consolidated statements of operations. There was an aggregate unamortized debt discount of $159,082 and $173,782 as of March 31, 2016 and December 31, 2015, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows the provisions of ASC 820 for fair value measurements of its financial assets and liabilities. The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels, as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company's own assumptions used to measure assets and liabilities at fair value. An asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

~~F-11~~7.

COMMITMENTS AND CONTINGENCIES

In June 2012, the Company entered into an operating lease for its office space for $3,103 per month through June 2015, with a three year renewal option extending to June 2018. The future minimum rental payments to be paid under the non-cancelable operating lease in effect at March 31, 2015 was $9,309. In April 2015, the Company and the landlord agreed to extend and expand that lease agreement by increasing the size of the space rented. The annual rent according to the amended lease is $91,050 per year payable in equal monthly installments of $7,587, plus the Company’s share of common area maintenance charges and electricity. The amended lease is subject to a five year extension at the election of the Company.

6.F-10

RELATED PARTY TRANSACTIONS

In ~~January~~December ~~2013~~2014, the Company borrowed an aggregate of $6050,000 in exchange for an interest free demand note from a former member of the board of managers. In February 2014, the demand note was converted into 60,000 shares of common stock and a warrant to purchase 60,000 shares of common stock at $1 per share, expiring in 2019. At the date of grant, the warrants had a fair value of $44,862.

In ~~December~~January ~~2014~~2015, the Company borrowed an aggregate of $50,000 in exchange for an interest free demand note from a former member of the board of managers. In addition, warrants to purchase 50,000 shares of common stock at $1.00 per share were granted to the lender. The warrants expire in ~~2019~~2020 and have an exercise price of $1.00. The relative fair value of the warrant issued was $2131,~~381~~149 based on the Black-Scholes option pricing model. ~~See Note 7 for assumptions utilized.~~ As a result of this transaction, the Company recorded a debt discount and corresponding amortization expense of $2131,~~381~~149. The loan was repaid in January 2015.

In ~~January~~October 2015, the Company ~~borrowed~~sold ana ~~aggregate~~4% ofConvertible ~~$50,000~~Note in ~~exchange~~the ~~for~~principal anamount ~~interest free demand note from a former member~~ of ~~the board of managers. In addition~~$1, ~~warrants to purchase 50~~000,000 ~~shares of common stock at $1.00 per share were granted~~ to ~~the~~a ~~lender.~~related ~~The warrants expire in 2020 and have an exercise price of $1~~party.~~00.~~ ~~The relative fair value of the warrant issued was $31,149 based on the Black-Scholes option pricing model.~~ See Note ~~7 for assumptions utilized~~5. ~~As a result of this transaction, the Company recorded a debt discount and corresponding amortization expense of $31,149. The loan was repaid in January 2015.~~

79.

STOCKHOLDERS’ EQUITY (DEFICIT)

On February 25, 2014, the Company converted from a limited liability company to a C corporation pursuant to Delaware law, and changed its name from Vizio Medical Devices LLC to Viatar CTC Solutions Inc. Each Class A member unit was converted into one share of common stock and each Class B member unit was converted into one share of Series A Preferred Stock (the “Preferred Stock”). Each warrant to purchase Class A member units was converted into one warrant to purchase one share of common stock. The 2010 Incentive Plan was amended to provide for the issuance of common stock instead of Class B member units, and 3,000,000 shares of common stock are reserved for future issuance.

The Company’s capital structure consists of the authorization to issue 100,000,000 shares of common stock and 20,000,000 shares of Preferred Stock, which may be issued in series as designated by the Board of Directors. Each series of Preferred Stock shall have such voting and other rights as designated at the time of establishment by the Board of Directors.

~~F-12~~Each issued share of common stock and Series A Preferred Stock has one vote and the approval of a majority of the Series A Preferred Stock, voting as a separate class, is required to approve any corporate action. The Series A Preferred Stock is entitled to participate in dividends, rights issuances and property distributions on the same terms that the Class B member units had since the formation of the Company; namely, 20% of the dividends, rights and property distributed to common stockholders. Upon liquidation of the Company, the Series A Preferred Stock is entitled to 20% of the liquidation value, subject to a priority $13,470,000 allocation to the common shares. This formulation preserves the right of the former Class B member units to participate in profits once the holders of Class A member units recouped their aggregate capital contributions.

Each issued share of common stock and Preferred Stock has one vote and the approval of a majority of the Preferred Stock, voting as a separate class, is required to approve any corporate action. The Preferred Stock is entitled to participate in dividends, rights issuances and property distributions on the same terms that the Class B member units had since the formation of the Company; namely, 20% of the dividends, rights and property distributed to common stockholders. Upon liquidation of the Company, the Preferred Stock is entitled to 20% of the liquidation value, subject to a priority $13,470,000 allocation to the common shares. This formulation preserves the right of the former Class B member units to participate in profits once the holders of Class A member units recouped their aggregate capital contributions.

As of February 25, 2014, immediately following the conversion of the Company from a limited liability company to a C corporation, 15,196,292 shares of common stock and 4,000,000 shares of Preferred Stock were issued and outstanding. Also as of that date, 410,000 shares of common stock were reserved for issuance pursuant to warrants at prices ranging from $1 to $2 per share and expiring in 2014 through 2019.

During January 2015, the Company received $611,939 for the payoff of notes originally issued to purchase common stock receivable and all accrued interest.

In January 2015, the Company entered into an equity financing agreement with a ~~placement~~third ~~agent. The~~party ~~placement~~who ~~agent~~ committed to raise atan ~~least~~aggregate ~~$500,000~~ of ~~new~~$1.5 ~~equity~~million ~~financing~~by ~~in each of three separate financing tranches, on April 30, 2015, September 30, 2015, and~~ February 28, 2016. IfThis ~~the~~commitment ~~agent~~was ~~fails~~satisfied tothrough ~~meet~~(a) ~~this commitment,~~ the ~~Company~~sale ~~will~~of bean ~~granted~~aggregate ~~the~~of ~~option~~697,000 ~~to purchase~~ shares of acommon ~~private~~stock ~~company~~ to ~~overcome~~accredited ~~the~~investors ~~equity~~for ~~raise~~proceeds ~~shortfall. The exact number~~ of ~~the~~$1,009,125 ~~private~~(for ~~company~~an ~~shares~~average ~~subject~~price ~~to exercise under the option will be based on the shortfall and the greater~~ of $121.45 per share) ornet ~~the~~of ~~actual~~offering ~~value~~costs ~~the shares are sold for within 60 days. The proceeds from the exercise~~ of ~~the~~$134,750, ~~option~~and ~~with~~(b) ~~be paid to~~ the ~~Company in~~ exchange of ~~shares~~4% ofConvertible ~~the~~Notes ~~Company~~for atstock $2of ~~per~~a ~~share. The~~non-publicly ~~placement~~traded ~~agent~~company ~~met~~(See ~~the~~Note ~~funding requirements at April 30, 2015 and September 30, 2015~~4).

During ~~the~~February ~~nine months ended September 30~~2016, ~~2015,~~ the Company ~~issued~~raised anapproximately ~~aggregate~~$4.2 ofmillion ~~697,000 shares~~ of ~~common~~cash ~~stock~~through ~~in connection with~~ the sale of ~~common~~approximately ~~stock~~1.7 ~~for~~million ~~proceeds~~shares of ~~$1,009,125~~a ~~net~~new ofclass ~~offering costs~~ of ~~$134,750.~~Preferred ~~All~~Stock ofdesignated ~~these~~as ~~shares~~“Series ~~were~~B ~~issued~~Preferred ~~under~~Stock”. The ~~the~~shares ~~agreement~~of ~~with~~Series ~~the~~B ~~placement~~Preferred ~~agent discussed above.~~Stock:

During the nine months ended September 30, 2015, the Company expensed an aggregate of $1,117,015 on the condensed consolidated statement of operations for stock based compensation for services provided:·

~~(i)~~have a stated value of $2.50 and a conversion price of $2.50, subject to certain adjustments;

During March 2015, the Company issued 15,000 shares of fully vested common stock to its counsel as consideration of legal services. The Company expensed an aggregate of $30,000 as stock-based compensation to general and administrative expenses.·

~~(ii)~~are convertible into such number of shares of common stock as determined by dividing the number of shares of Series B Preferred Stock being converted, multiplied by the stated value, divided by the conversion price then in effect;

On May 7, 2015, the Company issued 150,000 shares of fully vested Common stock to a consultant as consideration of advisory services. The Company expensed an aggregate of $225,000 as stock-based compensation to general and administrative expenses.·

~~(iii)~~are entitled to one vote for each share of Series B Preferred Stock on any matter submitted to holders of common stock;

On May 7, 2015, the Company issued 3,000 shares of fully vested common stock to its transfer agent as consideration of services. The Company expensed an aggregate of $4,500 as stock-based compensation to general and administrative expenses.·

~~F-13~~are entitled to dividends at the annual rate of 9.5% (which will increase to 12% in the event that by March 31, 2018, the Company does not obtain CE Mark approval of its Therapeutic Oncopheresis System and generate at least $600,000 of gross profit in two fiscal quarters, subject to certain conditions), payable quarterly in shares of Series B Preferred Stock;

~~(iv)~~·

~~During~~upon ~~the~~any ~~nine months ended September 30~~liquidation, ~~2015,~~will ~~the~~be ~~Company~~entitled ~~granted~~to ~~an aggregate of 545~~receive,~~000~~ ~~shares~~prior ~~of common stock under the 2014 Incentive Plan~~ to ~~three~~any ~~employees~~payments asin ~~compensation~~respect ~~for services. The shares have a grant date fair value~~ of ~~$910,000 based on a per share price of $1.50 and $1.75 and are subject to immediate vesting or vesting terms ranging from 1 to 2 years. For~~ the ~~nine~~Company’s ~~months~~common ~~ended September 30~~stock, ~~2015,~~an ~~total~~amount ~~stock-based~~equal ~~compensation expense related~~ to the ~~incentive~~stated ~~plan~~value ~~was~~plus ~~$857,515~~any ~~which~~accrued isbut ~~included~~unpaid ~~in research and development expenses.~~ dividends;

As of September 30, 2015, 18,107,176 shares of common stock and 4,000,000 shares of Preferred Stock were issued and outstanding. Also as of that date, 535,000 shares of common stock were reserved for issuance pursuant to warrants at prices ranging from $1 to $2 per share and expiring in 2017 through 2020.F-11

beginning in 2022, will automatically convert into common stock in the event that the closing price of the common stock is at least $4.00 for 20 consecutive trading days with a minimum average trading volume of at least 25,000 shares for such period.

In conjunction with that financing the terms of the Series A Preferred Stock were amended to provide that it will not participate in dividends payable in shares of Series B Preferred Stock to the holders of the Series B Preferred Stock, and to provide that the liquidation amount payable to the holders of Series A Preferred Stock will be paid following payment of the liquidation amount due to holders of Series B Preferred Stock.

During the three months ended March 31, 2016 and 2015, the Company expensed an aggregate of $203,987 and $642,716, respectively, on the condensed consolidated statement of operations for stock based compensation for services provided.

As of March 31, 2016, 4,000,000 shares of Series A Preferred Stock, 1,679,696 shares of Series B Preferred Stock and 18,605,426 shares of common stock were issued and outstanding. See Note 2 for a description of potential common stock equivalents.

Restricted Stock

The Company periodically grants restricted stock awards to certain employees and consultants pursuant to the Company’s 2014 Incentive Plan that typically vest one to two years from their grant date. As noted above, the Company recognized an aggregate of $~~857~~203,~~515~~987 in compensation expense during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016, related to restricted stock awards. Stock compensation expense is recognized over the vesting period of the restricted stock. At ~~September~~March 3031, ~~2015,~~2016 the Company had approximately $~~346~~290,~~306~~049, of total unrecognized compensation cost related to non-vested restricted stock, all of which will be recognized through ~~March~~September 2017.

	Restricted Stock		Weighted Average Exercise Price
Non-vested – December 31, 2014		220,000	$	2.00
Non-vested – December 31, 2015		470,167	$	1.68
Granted		~~545,000~~-	$	~~1.67~~-
Vested		(~~488~~87,~~333~~500)	$	1.8075
Forfeited/Cancelled		-	$	-
Non-vested – September 30, 2015		276,667	$	1.70
Non-vested – March 31, 2016		382,667	$	1.59

The following is a summary of the Company’s warrant activity:

	Warrants		Weighted Average Exercise Price
Outstanding – December 31, 2014		485,000	$	1.46
Outstanding – January 1, 2016		535,000	$	1.42
Exercisable – December 31, 2014		485,000	$	1.46
Exercisable –January 1, 2016		535,000	$	1.42
Granted		~~50,000~~-	$	~~1.00~~-
Exercised		-	$	-
Forfeited/Cancelled		-	$	-
Outstanding – September 30, 2015		535,000	$	1.42
Outstanding – March 31, 2016		535,000	$	1.42
Exercisable – September 30, 2015		535,000	$	1.42
Exercisable – March 31, 2016		535,000	$	1.42

F-14


Warrants Outstanding						Warrants Exercisable
Range of Exercise Price	Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price

$1.00-$2.00		535,000	2.91 years	$	1.42	535,000	$	1.42

Warrants Outstanding						Warrants Exercisable
Range of Exercise Price	Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$1.00-$2.00		535,000	3.40 years	$	1.42	535,000	$	1.42

F-12

The following table summarizes the range of assumptions the Company utilized to estimate the fair value of the convertible note and warrants, and derivative liability issued during the nine months ended September 30, 2015:10.

Assumptions		September 30, 2015
Expected term (years)		5.00
Expected volatility		100%
Risk-free interest rate		1.47%
Dividend yield		0.00%

The expected warrant term is based on the remaining contractual term. The expected volatility is based on historical-volatility of peer entities whose stock prices were publicly available. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related warrant at the valuation date. Dividend yield is based on historical trends.

SUBSEQUENT EVENTS

On ~~October~~April 191, ~~2015~~2016, the Company ~~sold~~issued ~~a convertible promissory note in the principal amount of $1~~460,000~~,000~~ to a related party. The note mature three years after its initial issuance and has an interest rate of 4% per annum. The note is convertible at any time prior to maturity at the option of the holder into shares of common stock ~~at $2.50 per share, subject~~ to ~~certain~~consultants adjustments (“Conversion Price”) and will be automatically converted into shares of common stock at the Conversion Price after May 5, 2017 if after that date the common stock trades above the Conversion Price for 20services ~~trading~~which ~~days~~vested ~~with~~upon ~~an average daily volume of at least 25,000 shares~~issuance.

On ~~October~~April 271, ~~2015~~2016, the Company issued ~~a convertible promissory note in the principal amount of $300~~495,000 ~~to an accredited investor for 20,000~~ shares of common stock into aemployees ~~private~~for ~~company valued at $15 per share~~services. The ~~note~~shares ~~mature~~vest ~~three years after its initial issuance and has an interest rate of 4~~50% ~~per annum. The note is convertible~~ at ~~any~~date ~~time prior to maturity at the option~~ of ~~the~~grant ~~holder~~and ~~into shares of common stock at $2.~~50% ~~per~~on ~~share,~~April ~~subject to certain adjustments (“Conversion Price”) and will be automatically converted into shares of common stock at the Conversion Price after May 5~~1, 2017 ~~if after that date the common stock trades above the Conversion Price for 20 trading days with an average daily volume of at least 25,000 shares~~.

InOn ~~October~~April ~~2015~~1, 2016, the Company issued ~~106~~75,000 shares toof acommon ~~consultant~~stock ~~pursuant~~ to aan ~~six~~employee ~~month~~for ~~agreement.~~services ~~The~~which ~~shares~~vested ~~have~~upon ~~a grant date fair value of $177,550 and vest over the life of the agreement~~issuance.

InOn ~~October~~April ~~2015~~1, 2016, the Company issued ~~100~~417,~~000~~981 ~~shares~~warrants to aadvisors ~~consultant~~for ~~pursuant to a two month agreement~~services. ~~The~~Of ~~shares~~these ~~have~~warrants, a300,000 ~~grant~~warrants ~~date~~are ~~fair~~for ~~value~~the replacement of ~~$167~~175,~~500~~000 ~~and~~warrants ~~vest~~which ~~over~~were ~~the life of the agreement~~cancelled.

~~F-15~~The Company issued 13,990 shares of Series B Preferred stock to the existing holders as the quarterly dividend due April 1, 2016.

F-13

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

Forward Looking Statements

~~This~~The ~~quarterly~~following ~~report~~is onmanagement’s ~~Form~~discussion ~~10-Q~~ and ~~other~~analysis ~~reports~~of ~~(collectively,~~certain ~~the~~significant ~~“Filings”)~~factors ~~filed~~which byhave ~~Viatar~~affected ~~CTC~~our ~~Solutions~~financial ~~Inc.~~position ~~(“Viatar”~~and oroperating ~~the~~results ~~“Company”)~~during ~~from time to time with~~ the ~~U.S.~~periods ~~Securities~~included ~~and~~in ~~Exchange Commission (~~the ~~“SEC”)~~accompanying ~~contain~~consolidated orfinancial ~~may contain forward-looking~~ statements, ~~and~~as ~~information~~well ~~that~~as ~~are based upon beliefs of, and~~ information ~~currently~~relating ~~available~~ to, the ~~Company’s~~plans ~~management~~of asour ~~well~~current asmanagement ~~estimates~~ and ~~assumptions~~should ~~made~~be byread ~~Company’s~~in ~~management.~~conjunction ~~Readers~~with ~~are~~the ~~cautioned~~accompanying ~~not~~financial ~~to place undue reliance on these forward-looking~~ statements, ~~which are only predictions~~ and ~~speak~~their ~~only~~related asnotes ofincluded ~~the~~in ~~date~~this ~~hereof~~Quarterly Report. ~~When~~References ~~used~~ in ~~the~~this ~~Filings,~~section ~~the~~to ~~words~~ “~~anticipate~~we,” “~~believe~~us,” “~~estimate~~our,” ~~“expect,” “future,” “intend,” “plan,”~~ or the ~~negative of these terms and similar expressions as they relate to the~~ “Company” ~~or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and~~ are ~~subject~~ to ~~risks, uncertainties, assumptions, and other factors, including~~ the ~~risks~~consolidated ~~contained~~business ~~in the “Risk Factors” section~~ of ~~the~~Viatar ~~Company’s~~CTC ~~Annual~~Solutions ~~Report~~Inc. ~~on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on March 31, 2015 relating to the Company’s industry, the Company’s operations~~ and ~~results~~its ofwholly ~~operations,~~owned ~~and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize~~subsidiary, orViatar ~~should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned~~LLC.

~~Although~~This Quarterly Report contains forward-looking statements. Generally, the ~~Company~~words “believes,” ~~that~~“anticipates,” ~~the~~“may,” ~~expectations~~“will,” ~~reflected~~“should,” in“expects,” “intends,” “estimates,” “continues,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are ~~reasonable~~subject to certain risks and uncertainties, including the ~~Company~~matters ~~cannot~~set ~~guarantee~~forth ~~future~~in ~~results,~~this ~~levels~~Quarterly ofReport ~~activity,~~or ~~performance,~~other reports or ~~achievements.~~documents ~~Except~~we asfile ~~required~~with bythe ~~applicable~~SEC ~~law~~from time to time, ~~including~~which ~~the~~could ~~securities~~cause ~~laws~~actual ofresults ~~the~~or ~~United~~outcomes ~~States,~~to ~~the~~differ ~~Company~~materially ~~does~~from ~~not~~those ~~intend~~projected. toUndue ~~update~~reliance ~~any~~should ofnot ~~the~~be placed on these forward-looking statements towhich ~~conform~~speak ~~these~~only ~~statements~~as of the date hereof. We undertake no obligation to ~~actual~~update ~~results~~these forward-looking statements.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Overview

We are a biotechnology company focused on developing and marketing cancer molecular diagnostics and cancer therapy products, both of which are based on the principle of removing blood-borne circulating tumor cells (CTCs). We are seeking to commercialize two products which utilize our proprietary CTC removal technology:

· The Viatar TM Collection System for Molecular Analysis is designed to collect and purify a statistically significant quantity of CTCs from up to 50 mL of blood as the “front end” for DNA sequencing and other genetic analysis technologies used primarily for research.

· The ~~ViatarTM~~Viatar ~~Collection~~TM ~~System~~Therapeutic ~~for~~Oncopheresis ~~Molecular~~System ~~Analysis~~ is designed to ~~collect~~remove ~~and purify a statistically significant quantity of~~ CTCs from upa topatient’s ~~50 mL of~~ blood as ~~the~~a ~~“front~~new ~~end”~~cancer ~~for~~therapy ~~DNA sequencing and other genetic analysis technologies used primarily~~ for ~~research~~metastatic disease.

·We anticipate launching the Viatar M Collection System for Molecular Analysis during 2016 once we receive the following regulatory clearances: first, a CE Mark in Europe and Canada and, second, a 510K designation in the United States. We are currently engaged in research collaborations with several CTC platform technology companies with the goal of marketing and selling the Viatar TM Collection System for Molecular Analysis through private label and distribution arrangements.

~~The~~We ~~ViatarTM~~anticipate launching the Viatar TM Therapeutic Oncopheresis System isduring ~~designed~~2016 towith ~~remove~~a ~~CTCs~~CE ~~from~~Mark in Europe and Canada. Introduction in the United States will take several years, based on the anticipated premarket approval application (“PMA”) classification by the FDA. We anticipate marketing and selling the Viatar TM Therapeutic Oncopheresis System on a ~~patient’s~~direct ~~blood~~basis through our own dedicated sales force in key large markets (such as athe ~~new~~United ~~cancer~~States, ~~therapy~~Germany, ~~for~~France, ~~metastatic~~Italy, ~~disease~~UK and Japan), and through distributors in other markets.

We anticipate launching the ViatarTM Collection System for Molecular Analysis during 2016 once we receive the following regulatory clearances: first, a CE Mark in Europe and Canada, second, a 510K designation in the United States. We are currently engaged in research collaborations with several CTC platform technology companies with the goal of marketing and selling the ViatarTM Collection System for Molecular Analysis through private label and distribution arrangements. During 2015 the Company agreed to be the exclusive supplier of filters for ScreenCell’s diagnostic CTC platform, and has begun to generate commercial sales to that customer.

We anticipate launching the ViatarTM Therapeutic Oncopheresis System during 2016 with a CE Mark in Europe and Canada. Introduction in the United States will take several years, based on the anticipated PMA classification by the FDA. We anticipate marketing and selling the ViatarTM Therapeutic Oncopheresis System on a direct basis through our own dedicated sales force in key large markets (such as the United States, Germany, France, Italy, UK and Japan), and through distributors in other markets.

Key Factors Affecting our Results of Operations and Financial Condition

Our overall long-term growth plan depends on our ability to develop and commercialize our two oncology products. We are working with several CTC-based diagnostic companies ~~and researchers~~ to optimize our ~~ViatarTM~~ Viatar TM Collection System for Molecular Analysis to their process flow, and we intend to enter into additional such collaborations in the coming year. These activities will help facilitate market adoption of that product, and we anticipate having to complete various studies with clinical samples to demonstrate its efficacy. We will also seek to publish the results of those studies in peer-reviewed scientific journals. Our ability to complete such clinical studies, as well as to perform clinical studies for the ~~ViatarTM~~Viatar TM Therapeutic Oncopheresis System is dependent on our ability to foster strong collaborative relationships with cancer researchers, other CTC technology platform companies, and companies which make DNA sequencing equipment or perform such services; to conduct the appropriate clinical studies; and to obtain favorable clinical data.

For the nine months ended September 30, 2015 and 2014, we generated $37,940 and $9,000 from commercial sales, respectively, from purchase orders submitted by ScreenCell. Assuming we are successful in completing development activities for the ViatarTM Collection System for Molecular Analysis, we expect to generate additional revenues during 2016 from sales of that product. However, significant revenues and growth will depend on market adoption of that product. Similarly, assuming we are successful in completing development activities for the ViatarTM Therapeutic Oncopheresis System, we expect to generate revenues in 2016; however, significant revenues and growth will depend on clinical studies showing its efficacy in mitigating the spread and growth of metastatic tumors and regulatory approval in the US.4

~~Our~~For ~~operating~~the ~~expenses~~years ~~consist~~ended ofDecember ~~general~~31, 2015 and ~~administrative;~~2014, ~~research~~we ~~and~~generated ~~development;~~$65,910 ~~clinical~~ and ~~regulatory;~~$9,000 ~~employee-based~~from ~~stock~~commercial ~~compensation;~~sales, ~~and business development~~respectively. ~~These~~Assuming ~~expenses~~we ~~principally~~are ~~consist~~successful ofin ~~personnel~~completing ~~costs,~~development ~~outside~~activities ~~services~~for ~~(such~~the asViatar ~~cost~~TM Collection ofSystem ~~supporting~~for ~~clinical~~Molecular ~~studies and regulatory consultants)~~Analysis, ~~laboratory~~we ~~equipment~~expect ~~and~~to ~~consumables,~~generate ~~rent~~revenues ~~and~~during ~~overhead,~~2016 ~~and~~from ~~legal~~sales ~~and~~of ~~accounting~~that ~~fees~~product. ~~All~~However, ofsignificant ~~these~~revenues ~~expense~~and ~~categories~~growth will ~~increase~~depend inon ~~the~~market ~~near-term,~~adoption ~~principally as a result~~ of ~~hiring~~that ~~additional~~product. ~~personnel~~Similarly, ~~and~~assuming ~~contracting~~we ~~with~~are ~~outside~~successful ~~engineering~~in ~~firms~~completing ~~to complete the~~ development ofactivities ~~our~~for ~~two products; expanding~~ the ~~range~~Viatar ~~and~~TM ~~scope~~Therapeutic ofOncopheresis ~~clinical~~System, ~~trials~~we ~~(both~~expect ~~with~~to ~~cancer~~generate ~~researchers~~revenues asin ~~well~~2017; ashowever, ~~companies~~significant werevenues ~~collaborate~~and ~~with);~~growth ~~hiring~~will ~~additional~~depend ~~personnel~~on toclinical ~~handle~~studies ~~business~~showing ~~development,~~its ~~sales~~efficacy ~~and~~in ~~marketing~~mitigating ~~activities;~~the spread and ~~hiring~~growth ~~additional~~of ~~personnel~~metastatic ortumors, ~~outside~~and ~~services~~regulatory toapproval ~~handle~~in ~~administrative~~the ~~functions~~US.

Our operating expenses consist of general and administrative; research and development; clinical and regulatory; and business development. These expenses principally consist of personnel costs, outside services (such as cost of supporting clinical studies and regulatory consultants), laboratory equipment and consumables, rent and overhead, and legal and accounting fees. We have also begun to incur significant capital costs for customized manufacturing and inspection equipment. All of these expense and capital equipment categories will increase in the near-term, principally as a result of hiring additional personnel and contracting with outside engineering firms to complete the development of our two products; expanding the range and scope of clinical trials (both with cancer researchers as well as companies we collaborate with); hiring additional personnel to handle business development, sales and marketing activities; and hiring additional personnel or outside services to handle administrative functions.

We expect there to be an element of seasonality to our business, as research activities and patient treatment or monitoring with CTC-based tests is likely to decline during vacation and holiday seasons. We expect this trend of seasonality to continue for the foreseeable future.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, which management believes to be reasonable under the circumstances, which form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The notes to our financial statements, which are included elsewhere in this report, contain a summary of our significant accounting policies. We consider the accounting policies discussed below as being critical to the understanding of our current and future results of our operations.

Revenue Recognition

We recognize revenue in accordance with ASC 605, Revenue Recognition, and ASC 954-605, Health Care Entities, Revenue Recognition - which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred and title and the risks and rewards of ownership have been transferred to the client or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. For contract partners, revenue is recorded based upon the contractually agreed upon fee schedule. When assessing collectability, we ~~will~~ consider whether we have sufficient payment history to reliably estimate a payor’s individual payment patterns.

Accounts Receivable and Bad Debts

We ~~will~~ carry accounts receivable at original invoice amounts, less an estimate for doubtful receivables, based on a review of all outstanding amounts on a periodic basis. The estimate for doubtful receivables will be determined from an analysis of the accounts receivable on a quarterly basis, and be recorded as bad debt expense. Since we will only recognize revenue to the extent we expect to collect such amounts, bad debt expense related to receivables from product revenue will be recorded in general and administrative expense in the statements of operations. Accounts receivable will be written off when deemed uncollectible. Recoveries of accounts receivable previously written off will be recorded when received.

Stock-Based Compensation Expense

In December 2004, the Financial Accounting Standards Board (the “FASB”) issued ASC 718, Compensation – Stock Compensation, or ASC 718. Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include options, restricted stock, restricted stock units, performance-based awards, share appreciation rights, and employee share purchase plans. As such, compensation cost is measured on the date of grant at fair value. The Company amortizes such compensation amounts, if any, over the respective vesting periods of the award. The Company uses the Black-Scholes-Merton option pricing model, or the Black-Scholes Model, an acceptable model in accordance with ASC 718, that requires the input of highly complex and subjective variables, including the expected life of the award and the expected stock price volatility over a period equal to or greater than the expected life of the award.

6Equity instruments (“Instruments”) issued to anyone other than employees are recorded on the basis of the fair value of the Instruments, as required by ASC 718. ASC 505, Equity Based Payments to Non-Employees, or ASC 505, defines the measurement date and recognition period for such Instruments. In general, the measurement date is when either (a) a performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the Instruments are vested. The measured value related to the Instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

Equity instruments (“instruments”) issued to anyone other than employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC 505, Equity Based Payments to Non-Employees, or ASC 505, defines the measurement date and recognition period for such instruments. In general, the measurement date is when either (a) a performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in ASC 505.

Recent Accounting Pronouncements

In ~~August~~March ~~2014~~2016, the ~~Financial~~FASB ~~Accounting Standards Board~~ issued ~~Accounting~~ASU ~~Standards~~No. ~~Update 2014~~2016-1506, ~~Presentation~~ ofDerivatives Financial Statements- Going Concern. The Update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and ~~about~~Hedging related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2013-300–Presentation of Financial Statements (~~Topic~~topic ~~205~~815)~~: Disclosure of Uncertainties about an Entity’s Going Concern Presumption, which has been deleted~~. The ~~amendments~~FASB inissued this update ~~are~~to ~~effective~~clarify ~~for~~ the ~~annual~~requirements ~~period ending after December 15, 2016, and~~ for ~~annual~~assessing ~~periods~~whether ~~and~~contingent ~~interim~~call ~~periods~~(put) ~~thereafter. The~~options ~~Company~~that iscan ~~currently~~accelerate ~~evaluating~~ the ~~effects~~payment of ~~ASU~~principal ~~2014-15~~ on ~~the~~debt ~~condensed~~instruments ~~consolidated~~are ~~financial~~clearly ~~statements.~~and Inclosely ~~February~~related ~~2015,~~to ~~the~~their ~~FASB~~debt ~~issued Accounting Standards Update No~~hosts. ~~2015-02,~~An ~~“Consolidation~~entity ~~(Topic~~performing ~~810): Amendments to~~ the ~~Consolidation~~assessment ~~Analysis”~~under ~~(“ASU 2015-02”). The new consolidation standard changes~~ the ~~way~~amendments ~~reporting~~in ~~enterprises~~this ~~evaluate~~update ~~whether~~is ~~(a)~~required ~~they should consolidate limited partnerships and similar entities, (b) fees paid~~ to aassess ~~decision~~the ~~maker~~embedded orcall ~~service provider are variable interests in a variable interest entity~~ (~~"VIE"~~put), ~~and~~options ~~(c)~~solely ~~variable interests~~ in aaccordance ~~VIE~~with ~~held by related parties of~~ the ~~reporting~~four-step ~~enterprise~~decision ~~require the reporting enterprise to consolidate the VIE~~sequence. The updated guidance is effective for ~~public business entities for~~ annual ~~and interim~~ periods ~~in fiscal years~~ beginning after December 15, ~~2015. Early adoption is allowed~~2016, including ~~early adoption in an~~ interim ~~period.~~periods Awithin ~~reporting~~those ~~entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the~~ fiscal ~~year~~years. ofEarly adoption orof ~~may apply~~ the ~~amendments~~update ~~retrospectively~~is permitted. The Company is currently ~~assessing~~evaluating the impact, ~~if any,~~ of the ~~adoption~~new ~~of this guidance on the condensed consolidated financial statements~~standard.

7In April 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years

InManagement ~~March~~does ~~2015,~~not ~~the~~believe ~~Financial~~that ~~Accounting~~any ~~Standards~~recently ~~Board~~ issued ~~Accounting Standards Update (ASU) No. 2015-03~~, ~~“Interest~~but - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not ~~affected~~yet ~~by the amendments in this ASU. The amendments are~~ effective ~~for~~accounting ~~financial~~pronouncements, ~~statements~~if ~~issued for fiscal years beginning after December 15~~adopted, ~~2015,~~would ~~and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that~~ have ~~not been previously issued. The amendments should be applied on~~ a ~~retrospective~~material basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect ~~of the change~~ on the ~~financial~~accompanying ~~statement line items (i.e., debt issuance cost asset and the debt liability). The Company is currently evaluating the effects of ASU 2015-03 on the~~ condensed consolidated financial statements.

~~Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.~~6

Three Months Ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015

The following table sets forth certain information concerning our results of operations for the periods shown:

	Three Months Ended September 30,				Change
	Three Months Ended March 31,				Change
	2015		2014		Dollars		Percent
	(unaudited)
	2016		2015		Dollars		Percent
Revenue
Sales	$	~~13,985~~-	$	-9,970	$	13(9,~~985~~970)		(100)%
Cost of Revenue
Cost of Sales		~~3,830~~-		-		~~3,830~~-		~~100%~~-
Gross Profit		~~10,155~~-		-9,970		10(9,~~155~~970)		(100)%
Expenses
Research and Development
Research and Development		~~523~~842,~~824~~398		~~548~~818,~~157~~724		~~(24~~23,~~333)~~674		~~(4)~~3%
Clinical & Regulatory		~~154~~52,~~054~~967		41,~~164~~931		~~149~~51,~~890~~036		*2,643%
Total R&D		~~677~~895,~~878~~365		~~552~~820,~~321~~655		~~125~~74,~~557~~710		239%
General and Administrative
General and Administrative		~~205~~309,~~139~~855		~~133~~193,~~491~~195		71116,~~648~~660		5460%
Business Development		45117,~~509~~077		276,~~540~~330		4240,~~968~~747		*53%
Total G&A		~~250~~426,~~648~~932		~~136~~269,~~031~~525		~~114~~157,~~616~~407		8458%
Total Expenses		~~928~~1,~~526~~322,297		~~688~~1,~~352~~090,180		~~240~~232,~~174~~117		3521%
Other Income (Expenses)
Interest Expense		(16,413)		(17,663)		1,250		7%
Dividend Income		3,227		-		3,227		100%
Total Other Income (Expense)		(16,413)		(17,663)		1,250		7%
Interest Expense		(54,281)		(36,028)		(18,253)		51%
Net Loss	$	(934,784)	$	(706,015)	$	(228,769)		32%
Total Other Income (Expense)		(51,054)		(36,028)		(15,026)		42%
Loss Before Income Tax (Expense)		(1,373,351)		(1,116,238)		(257,113)		(23)%
Income tax (expense) benefit		-		-		-		-
Net Loss	$	(1,373,351)	$	(1,116,238)	$	(257,113)		(23)%

* - Not significant.

Revenue

~~Commercial~~Sales ~~sales~~ of $~~13,985~~0 and $09,970 for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively, arose in connection with ~~evaluation testing of our filters and~~ commercial sales. The ~~increase~~decrease is attributable to ~~the~~no ~~integration~~sales ~~of our filters into a diagnostic CTC company’s product line~~ during the ~~third~~period ~~quarter~~ended ~~2015~~March 31, 2016. We do not expect to achieve significant sales until that and other potential customers undertake a full scale commercial rollout and successfully obtain widespread adoption by the research community.

Gross Profit

Gross profit for the three months ended ~~September~~March 3031, ~~2015~~2016 was $100 or 0% of revenue compared to $9,~~155~~970 or 73100% of revenue for the three months ended March 31, 2015.

Expenses

Research and Development Expenses

Research and development ~~(“R&D”)~~ expenses consist of two categories of expenses: (i) research and development (“R&D”); and (ii) clinical trial and regulatory expenses.

R&D Expenses

~~The~~ R&D ~~component of this category~~ was $~~523~~842,~~824~~398 for the three months ended ~~September~~March 3031, ~~2015~~2016, aan ~~decrease~~increase of $2423,~~333~~674 or 43%, compared with $~~548~~818,~~157~~724 for the three months ended ~~September~~March 3031, ~~2014~~2015. ~~One~~Of of the ~~largest~~$842,398 ~~components~~for of the ~~current~~three ~~quarter~~months -ended ~~$160~~March 31,~~266~~ -2016, $39,932 was ~~due~~attributable to the non-cash expensing of restricted and unrestricted stock awards to employees and consultants issued pursuant to the Company’s 2014 Equity Incentive Plan (“2014 Equity Incentive Plan”) compared to $~~346~~612,~~379~~716 for the three months ended ~~September~~March 3031, ~~2014~~2015. The balance for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015 was $~~363~~802,~~558~~466 and $~~201~~206,~~778,~~008 respectively. The increase was due to higher staffing levels, use of third- party engineering resources, and the purchase of supplies and equipment to support the oncology program.

Clinical Trial and Regulatory Expenses

Clinical trial and regulatory expenses were $~~154~~52,~~054~~967 for the three months ended ~~September~~March 3031, ~~2015~~2016, an increase of $~~149~~51,~~890~~036, or 2,643%, compared with $41,~~164~~931 for the three months ended ~~September~~March 3031, ~~2014~~2015. ~~The~~Of ~~increase~~the $52,967 for the three months ended March 31, 2016, $32,648 was ~~due~~attributable to the ~~first~~non-cash ~~payment~~expensing of restricted and unrestricted stock awards to aemployees ~~hospital~~and ~~that~~consultants ~~has~~issued ~~agreed~~pursuant to ~~conduct~~the a2014 ~~pilot~~Equity ~~human~~Incentive Plan compared to $0 for the three months ended March 31, 2015. The balance was due to expenses in preparation for upcoming clinical ~~trial~~trials for the Company’s Therapeutic Oncopheresis System.

General and Administrative Expenses

General and administrative ~~(“G&A”)~~ expenses consist of general and administrative (“G&A”) and business development expenses.

G&A Expenses

G&A expenses were $~~205~~309,~~139~~855 for the three months ended ~~September~~March 3031, ~~2015~~2016, an increase of $71116,~~648~~660 or 5460%, compared ~~with~~to $~~133~~193,~~491~~195 for the three months ended ~~September~~March 3031, ~~2014~~2015. The increase iswas ~~attributable~~due to the ~~increased~~non-cash ~~professional~~stock ~~fees~~based ~~since~~compensation ~~becoming~~totaling ~~a public filer in March 2015. We expect to incur approximately~~ $60131,~~000~~407 ~~per~~during ~~quarter~~the ofcurrent ~~legal~~period ~~and~~compared ~~accounting costs~~ to ~~remain~~$0 ~~compliant~~in ~~with~~ the ~~SEC~~prior ~~required filings~~period.

Business Development Expenses

Business development expenses were $45117,~~509~~077 for the three months ended ~~September~~March 3031, ~~2015~~2016, an increase of $4240,~~968~~747 or 53%, compared with $276,~~540~~330 for the three months ended ~~September~~March 3031, ~~2014~~2015. The increase was due to higher costs to obtain new capital, including certain investor relation activities and meetings.

Interest Expense

Interest expense was $1654,~~413~~281 for the three months ended ~~September~~March 3031, ~~2015~~2016 compared to $1736,~~663~~028 for the three months ended ~~September~~March 3031, ~~2014~~2015. ~~The~~Interest ~~current~~expense for the period ~~expense~~ended March 31, 2016 is comprised of $14,~~123~~660 ~~for~~of accrued interest in the outstanding NYC R&D tax credit appeal, $14,700 for non-cash amortization of debt discount related to warrants issued with convertible notes and $224,~~290~~921 of accrued interest on debt. ~~The~~Interest ~~prior~~expense for the period ended March 31, 2016 was offset by dividend income of $3,227 from the Company’s investment in a non-publicly traded company. Interest expense for the period ended March 31, 2015 was primarily comprised of $1436,~~636~~028 for non-cash amortization of debt discount related to warrants issued with a demand note ~~and $1,000 of accrued interest on debt~~.

Net Loss

Net loss was $~~934~~1,~~784~~373,351 for the three months ended ~~September~~March 3031, ~~2015~~2016, an increase of $~~228~~257,~~769~~113 or 3223%, compared ~~with~~to $~~706~~1,~~015~~116,238 for the three months ended ~~September~~March 3031, ~~2014~~2015. The ~~increase~~decrease was primarily due to ~~higher~~lower expenses as discussed above.

Nine Months Ended September 30, 2015 and 2014

The following table sets forth certain information concerning our results of operations for the periods shown:

	Nine Months Ended September 30,				Change
	2015		2014		Dollars		Percent
Revenue
Sales	$	37,940	$	9,000	$	28,940		322%
Cost of Revenue
Cost of Sales		7,660		-		7,660		100%
Gross Profit		30,280		9,000		21,280		236%
Expenses
Research and Development
Research and Development		1,732,079		907,152		824,927		91%
Clinical & Regulatory		157,077		75,298		81,779		109%
Total R&D		1,889,156		982,450		906,706		92%
General and Administrative
General and Administrative		755,363		772,159		(16,796)		(2)%
Business Development		192,753		34,017		158,736		467%
Total G&A		948,116		806,176		141,940		18%
Total Expenses		2,837,272		1,788,626		1,048,646		59%
Other Income (Expenses)
Change in Derivative Liability		-		1,800		(1,800)		(100)%
Interest Expense		(73,132)		(17,663)		55,469		314%
Total Other Income (Expense)		(73,132)		(15,863)		57,269		361%
Net Loss	$	(2,880,124)	$	(1,795,489)	$	(1,084,635)		60%

Revenue

Commercial sales of $37,940 and $9,000 for the nine months ended September 30, 2015 and 2014, respectively, arose in connection with evaluation testing of our filters and commercial sales. The increase is attributable to the integration of our filters into a diagnostic CTC company’s product line during the third quarter 2015. We do not expect to achieve significant sales until that and other potential customers undertake a full scale commercial rollout and successfully obtain widespread adoption by the research community.

Gross Profit

Gross profit for the three months ended September 30, 2015 was $30,280 or 80% of revenue.

Expenses

Research and Development Expenses

Research and development (“R&D”) expenses consist of two categories of expenses: (i) research and development; and (ii) clinical trial and regulatory expenses.

R&D Expenses

The R&D component of this category was $1,732,079 for the nine months ended September 30, 2015, an increase of $824,927 or 91%, compared with $907,152 for the nine months ended September 30, 2014. The largest component of the current period - $857,515 - was due to the non-cash expensing of restricted and unrestricted stock awards to employees issued pursuant to the 2014 Equity Incentive Plan compared to $346,379 for the nine months ended September 30, 2014. The balance for the nine months ended September 30, 2015 and 2014 was $874,564 and $560,773, respectively. The increase was due to higher staffing levels, use of third party engineering resources, and the purchase of supplies and equipment to support the oncology program.

Clinical Trial and Regulatory Expenses

Clinical trial and regulatory expenses were $157,077 for the nine months ended September 30, 2015, an increase of $81,779, or 109%, compared with $75,298 for the nine months ended September 30, 2014. The increase was due to the first payment to a hospital that has agreed to conduct a pilot human clinical trial.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist of G&A and business development expenses.

G&A Expenses

G&A expenses were $755,363 for the nine months ended September 30, 2015, a decrease of $16,796 or 2%, compared with $772,159 for the nine months ended September 30, 2014. The decrease was due to the significant financial advisory and legal expenses incurred during the nine months ended September 30, 2014 in order to become a public filer.

We expect to incur approximately $60,000 per quarter of legal and accounting costs on a regular basis to remain compliant with required SEC filings.

Business Development Expenses

Business development expenses were $192,753 for the nine months ended September 30, 2015, an increase of $158,736, or 467%, compared with $34,017 for the nine months ended September 30, 2014. The increase was due to higher costs to obtain new capital, including investor relation activities and meetings.

Interest Expense

Interest expense was $73,132 for the nine months ended September 30, 2015 compared to $17,663 for the nine months ended September 30, 2014. The current period expense is comprised of $30,088 of accrued interest in the outstanding NYC R&D tax credit appeal, $37,654 for non-cash amortization of debt discount related to warrants issued with a demand note and $5,390 of accrued interest on debt. The prior period expense was primarily comprised of $14,636 for non-cash amortization of debt discount related to warrants issued with a demand note and $1,000 of accrued interest on debt.

Net Loss

Net loss was $2,880,124 for the nine months ended September 30, 2015, an increase of $1,084,635 or 60%, compared with $1,795,489 for the nine months ended September 30, 2014. The increase was primarily due to higher expenses as discussed above.

Liquidity and Capital Resources

We are actively working to improve our financial position and enable the growth of our business by raising new capital. During the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015 we raised $14,~~009~~199,~~125~~240 and $~~830~~525,000, respectively, through equity financing and $~~350,000~~0 and $050,000, respectively, through debt financing. In addition, we received $~~611,939~~0 and $0611,939 from the promissory note for common stock subscription during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively. We repaid $~~100,000~~0 and $0100,000, respectively, on two outstanding demand notes during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively.

We have ~~yet~~a limited operating history and our business is subject to ~~generate~~all ~~significant~~of ~~revenues~~the usual risks inherent in establishing and growing a new business enterprise. As aof ~~result~~March 31, 2016, we ~~have~~had ~~incurred~~an ~~significant~~accumulated ~~net~~deficit of approximately $23.6 million. If we continue to incur operating losses and ~~significant~~fail ~~negative~~to ~~cash~~become ~~flows~~a ~~from~~profitable ~~operations~~company, ~~since~~we may be unable to continue our ~~inception~~operations. ~~Our~~We ~~ability~~expect to continue asto operate at a ~~going~~net ~~concern~~loss ~~relies~~until onwe ~~the~~can ~~continued~~obtain ~~availability~~regulatory ofapproval ~~funds~~to ~~from~~commercialize ~~equity~~our Therapeutic Oncopheresis System and ~~debt~~secure ~~financing~~widespread market acceptance and ~~other~~favorable ~~sources~~reimbursement rates. While ~~Our~~we ~~condensed~~currently ~~consolidated~~have ~~financial~~sufficient ~~statements~~cash doon ~~not~~hand ~~include~~to ~~any~~fund ~~adjustments~~operating ~~that~~and ~~might~~capital ~~result~~expenses ~~from~~for the ~~outcome~~next year, we anticipate that substantial additional capital of ~~this~~approximately ~~uncertainty~~$8-15 million will be needed in order to achieve profitability.

In January 2015 we received a commitment from an existing shareholder to provide $1.5 million of financing by February 28, 2016. As This commitment was satisfied through (a) the sale of ~~November~~an ~~13,~~aggregate ~~2015~~of 697,000 weshares ~~received~~of common stock to accredited investors for proceeds of $1,009,125 ~~from~~(for ~~the~~an ~~sale~~average price of ~~common~~$1.45 ~~stock~~per toshare) ~~accredited~~net ~~investors~~of ~~pursuant~~offering tocosts ~~that~~of ~~commitment.~~$134,750, Noand ~~warrants~~(b) orthe ~~commissions~~exchange ~~were~~of ~~paid~~4% inConvertible ~~relation~~Notes tofor ~~these~~stock ~~transactions.~~of a non-publicly traded company.

In October 2015, the Company borrowed $1,000,000 from a related party in exchange for a 4% convertible promissory note due November 2018. In October 2015, the Company issued a 4% convertible promissory note of $300,000 due December 2018 in exchange for 20,000 shares of stock in a private company valued at $15 per share, which it is now seeking to monetize. We anticipate raising additional capital to fund operations for 2016.8

In October 2015, the Company borrowed $1,000,000 from a related party in exchange for a 4% convertible promissory note due November 2018. In October 2015, the Company issued a 4% convertible promissory note of $900,000 due December 2018 in exchange for 60,000 shares of stock in a non-publicly company valued at $15 per share, which was monetized in February 2016.

During the first quarter of 2016, the Company raised approximately $4.2 million of cash through the sale of approximately 1.7 million shares of Series B Preferred Stock. The investors are existing, accredited shareholders of the Company.

The Company anticipates raising substantial additional equity capital in 2016, as well as funds from grants for research, development and clinical activities.

Cash Flows

Cash Used in Operating Activities

Net cash used in operating activities was $1,~~794~~134,~~983~~515 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016, compared to net cash used in operating activities of $~~812~~510,~~933~~114 for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015. The change in cash used in operating activities was a result of the overall increase in expenses described above.

In all periods, the primary use of cash in operating activities was to fund operations.

12Cash Provided by Investing Activities

~~Cash~~During ~~Used~~the three months ended March 31, 2016, the Company received proceeds of $480,000 from the sale of the investment in ~~Investing~~a ~~Activities~~non-publicly traded company. The increase in cash was offset by $297,244 utilized for the purchase of equipment and machinery for full-scale production of components for our Therapeutic Oncopheresis System. There was no cash provided by or used in investing activities in 2015.

Inasmuch as we expense all purchased assets used in research and development activities, there was no cash used in investing activities in 2015 or 2014.

Cash Provided by Financing Activities

Net cash provided by financing activities was $14,~~871~~199,~~064~~240 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016, compared to net cash provided by financing activities of $~~880~~1,~~000~~086,939 for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015. Our primary source of financing in all periods consisted of equity capital contributed by current and new investors, as well as debt financing from various lenders. ~~Our~~While ~~ability~~we tocurrently ~~continue~~have assufficient acash ~~going~~on ~~concern~~hand ~~relies~~to onfund operating and capital expenses for the ~~continued~~next ~~availability~~year, we anticipate that substantial additional capital of ~~financing~~approximately ~~from~~$8-15 ~~these~~million ~~and~~will ~~other~~be ~~sources~~needed in order to achieve profitability.

Contingencies

The Company is currently under audit by New York City tax authorities for the 2011, 2012, and 2013 tax years. The Company applied for New York City biotechnology tax credits and received certificates of eligibility from the NYC Department of Finance in the amounts of $147,997, $242,016, and $236,874 for tax years 2013, 2012, and 2011, respectively. These credits have been recognized as income tax benefits on the consolidated statements of operations in the year of application. AsThe ofCompany ~~September~~received ~~30, 2015, the 2011, 2012, and 2013 tax~~ refunds ~~have been received~~ for these amounts in previous years. The City of New York subsequently ruled that the Company does not qualify for the tax credits. As of ~~September~~March 3031, ~~2015~~2016, the Company accrued $~~762~~791,~~637~~686 on the condensed consolidated balance sheet which includes $~~135~~164,~~750~~799 of interest. The Company appealed the decision made by the City of New York. As of the date of this report, no decision has been made regarding the appeal.

Subsequent Events

The Company issued 13,990 shares of Series B Preferred stock to the existing holders as the quarterly dividend due April 1, 2016.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not ~~applicable~~required for a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to the Company's management, including the Company's chief executive officer and chief financial officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company’s management, including Ilan Reich, the Company’s chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of ~~the~~March ~~quarter ended September 30~~31, ~~2015~~2016. Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were not effective due to the deficiencies in the Company’s internal control over financial reporting identified below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. Based on management's assessment over financial reporting, management believes as of ~~September~~March 3031, ~~2015~~2016, the Company's internal control over financial reporting was not effective due to the following deficiencies:

(i)

there are limited controls over information processing due to limited resources,

(ii)

a lack of sufficient internal accounting expertise to provide reasonable assurance that our financial statements and notes thereto are prepared in accordance with GAAP, and

(iii)

a lack of segregation of duties to ensure adequate review of financial statement preparation.

Accordingly, as the result of identifying the above material weaknesses, we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company's internal controls.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and are intrinsic to our small size. Management believes these weaknesses did not have a material effect on our financial results and intends to take remedial actions upon receiving funding for the Company's business operations.

Changes in Internal Controls over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

14There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 10

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~None~~We are not party to, and our property is not the subject to, any material legal proceedings.

Item 1A. Risk Factors

Not ~~applicable~~required for a smaller reporting company.

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

~~On August 28, 2015, the Company sold 135,000 shares of its common stock to an accredited investor for a total purchase price of $226,125 with 87,750 shares sold at $1~~None.~~50 per share and 47,250 shares sold at $2.00 per share.~~

On September 1, 2015, the Company granted 175,000 shares of its common stock to an employee as partial consideration for services. The shares shall vest 33% every year, beginning September 1, 2015 at which time 57,750 shares were issued.

On October 19, 2015, the Company sold a convertible promissory note in the principal amount of $1,000,000 to a related party. The note mature three years after its initial issuance and has an interest rate of 4% per annum. The note is convertible at any time prior to maturity at the option of the holder into shares of common stock at $2.50 per share, subject to certain adjustments (“Conversion Price”) and will be automatically converted into shares of common stock at the Conversion Price after May 5, 2017 if after that date the common stock trades above the Conversion Price for 20 trading days with an average daily volume of at least 25,000 shares.

On October 27, 2015, the Company issued a convertible promissory note in the principal amount of $300,000 to an accredited investor for 20,000 shares of stock in a private company valued at $15 per share. The note mature three years after its initial issuance and has an interest rate of 4% per annum. The note is convertible at any time prior to maturity at the option of the holder into shares of common stock at $2.50 per share, subject to certain adjustments (“Conversion Price”) and will be automatically converted into shares of common stock at the Conversion Price after May 5, 2017 if after that date the common stock trades above the Conversion Price for 20 trading days with an average daily volume of at least 25,000 shares. Subsequent to entering into the agreement, the Company agreed to sell those 20,000 shares for $240,000. As of the date of this filing, the Company owes the full principal on the note.

On October 16, 2015, the Company issued a total of 206,000 shares of its common stock to two consultants for services.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) for the issuance of the securities referenced herein pursuant to Section 4(a)(2) of the Securities Act because the issuance did not involve a public offering.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.	Description
4.1	Form of Convertible Promissory Note (1)
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 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 Calculation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		XBRL Taxonomy Label Linkbase Document*
101.PRE		XBRL Taxonomy Presentation Linkbase Document*

101.PRE XBRL Taxonomy Presentation Linkbase Document*

*Filed herewith.

** Furnished herewith.

~~(1)~~11

Incorporated herein by reference the exhibits to the Company’s quarterly report on Form 10-Q filed with the SEC on August 10, 2015.

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.

	VIATAR CTC SOLUTIONS INC.
Date: November 13, 2015	By:	/s/ Ilan Reich
Date: May 6, 2016	By:	/s/ Ilan Reich
		Ilan Reich
		President, Chief Executive Officer and Chief Financial Officer
		(Principal Executive Officer and Principal Accounting and Financial Officer)

1712

Filing Compare · Viatar CTC Solutions Inc.