CurAegis Technologies, Inc. (OTCMKTS:CRGS) Files An 8-K Other EventsItem 8.01 Other Events.
As part of our business strategy we plan to explore whether there are opportunities to realize potential value from our net operating loss carry-forwards (“NOL Strategy”). Our net operating loss carry-forwards permit us to apply our net operating losses from prior fiscal years to taxable income in future years in order to reduce our tax liability. As we have incurred losses since our inception, we are unable to realize value from our net operating loss carry-forwards unless we become profitable, either through the commercialization of the products we are developing or through the acquisition of a profitable company. The success of a NOL Strategy will be predicated on maintaining the value of and utilizing all or substantially all of our net operating loss carry-forwards to offset future taxable income of our company or any acquired company. This strategy would be adversely affected if we are unable to realize value from, or otherwise preserve and utilize, our net operating loss carry-forwards, including for any of the following reasons, none of which we have explored or researched as of October18, 2017:
| ● | Past Ownership Changes.In the event that we are deemed to have undergone an “ownership change” as definedin Section382(g)(1) of the Internal Revenue Code (the “Code”), our net operating loss carry-forwards generated prior to the ownershipchange would be subject to annual limitations, which could reduce, eliminate, or defer the utilizationof these losses. Generally, an “ownership change” occurs if the percentage of the stock owned by one or more “5-percent shareholders” (as that term is defined for purposes of Section382 of the Code) has increased by more than 50 percentage points over the lowest percentage of stock owned by those shareholders at any timeduring the “testing period”, which is generally the preceding three-year period. |
| ● | Future Ownership Changes.Even if an ownership change has not occurred in the past, there is still the potential for an ownership change to occur under Section382 of the Code as a result of future changes in stock ownership. For example, our issuance of additional stock in the future will result in additional ownership change. |
| ● | Equity Structure Shift.Certain equity structure shifts, including certain reorganization type-transactions, public offerings, and similar transactions that give rise to a change in the ownership of the Company may result in a limitation or prohibition on the use of the net operating loss carry-forwards. Additionally, the IRS has viewed an acquisition of an ownership percentage in a company that is represented by certain equity instruments, including certain preferred stock, debt instruments, or stock options, as indicative of a transfer of a beneficial ownership interest in a company under Section382 of the Code. Accordingly, when those instruments are issued, there could be an unintended ownership change that results in a limitation or prohibition on the use of the net operating loss carry-forwards. |
| ● | De Facto Liquidation.In order to preserve our net operating loss carry-forwards, there must not be a “de facto liquidation” of the Company. The IRS has interpreted a “de facto liquidation” to include sales or the discontinuation of the current business of a company. |
In light of the significant uncertainties inherent in the forward-looking statements made by us, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements.Such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
This Current Report on Form8-K does not constitute an offer to sell, or a solicitation of an offer to buy, any securities of the Company.
About CurAegis Technologies, Inc. (OTCMKTS:CRGS)
CurAegis Technologies Inc., formerly Torvec, Inc., develops and markets technologies in the areas of power, safety and wellness. The Company is focused on technologies, such as the Circadian User Risk Assessment (CURA) system and the Aegis hydraulic pump. The Company’s divisions include CURA Division and Aegis Division. The CURA division is engaged in the fatigue management business. The CURA system consists of individual elements, including the myCadian watch; panic-button and man-down system; CURA software, and the Z-Coach wellness program. The myCadian watch, a wearable device paired with the CURA system, is a real time alertness and emergency monitoring system that addresses sleep and fatigue management solutions. The Z-Coach e-learning module includes Z-Coach Aviation, which is designed for aviation professionals, from flight and ground crews, to scheduling, dispatch, administration and management. The Company’s Aegis division is engaged in the power and hydraulic business.
