Rafina Innovations Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Rafina Innovations Inc.	Financial_Report.xls
EX-31.1 - CERTIFICATION - Rafina Innovations Inc.	ex311.htm
EX-32.1 - CERTIFICATION - Rafina Innovations Inc.	ex321.htm

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 March 31, 2015

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

	For the transition period from __________ to __________

000-53089
Commission File Number

HCi Viocare
(Exact name of registrant as specified in its charter)

Nevada	30-0428006
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Kintyre House, 209 Govan Road, Glasgow Scotland	G51 1HJ
(Address of principal executive offices)	(Zip Code)

44 141 370 0321
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

[X]

[ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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]

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]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

[ ]

[X]

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST 5 YEARS:

Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Section 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

[ ]

APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

14,731,961 shares of common stock issued and outstanding as of May 20, 2015

HCI VIOCARE

TABLE OF CONTENTS

		Page
	PART I – Financial Information

Item 1	Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 3	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4	Controls and Procedures	12

	PART II – Other Information

Item 1	Legal Proceedings	13
Item 1A	Risk Factors	13
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3	Defaults Upon Senior Securities	13
Item 4	Mine Safety Disclosures	13
Item 5	Other Information	13
Item 6	Exhibits	14
	SIGNATURES	15

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Form 10-Q. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by these forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

CERTAIN TERMS USED IN THIS REPORT

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to HCi Viocare and its consolidated subsidiaries, and “SEC” refers to the Securities and Exchange Commission.

PART I -- FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month period ended March 31, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. For further information refer to the audited financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 as filed with the Securities and Exchange Commission on April 15, 2015.

	Page
Consolidated Balance Sheets	F-1
Consolidated Statements of Operations and Comprehensive Loss (unaudited)	F-2
Consolidated Statements of Cash Flows (unaudited)	F-3
Notes to Financial Statements (unaudited)	F-4 to F-22

HCi Viocare

CONSOLIDATED BALANCE SHEETS

	March 31, 2015 (Unaudited)			December 31, 2014


ASSETS
Current Assets:
Cash and cash equivalents	$	263,589		$	408,252
Accounts receivable		1,247			918
Inventory		7,506			6,750
Prepaid expenses (Note 5)		72,820			47,369
Total Current Assets		345,162			463,289

Long-term Assets
Property, plant and equipment, net (Note 6)		109,591			103,377

Total Assets	$	454,753		$	566,666

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses	$	142,252		$	115,527
Accounts payable and accrued expenses-related party (Note 11)		120,570			81,818
Loan from a related party (Note 11)		370,552			393,044
Convertible notes from a related party (Note 9 and Note 11)		(22,545	)		(3,620	)
Total Current Liabilities		610,829			586,769

Deferred taxes		193			202

Total Liabilities		611,022			586,971

Commitments and Contingencies

Stockholders' Equity (Deficit):
Preferred stock, par value $0.0001, 5,000,000 shares authorized;
none issued and outstanding as of March 31, 2015 and December 31, 2014		-			-
Common stock, par value $0.0001, 100,000,000 shares authorized;
14,731,961 shares issued and outstanding as of March 31, 2015
14,636,983 shares issued and outstanding as of December 31, 2014		1,473			1,464
Additional paid-in capital		21,074,564			20,641,429
Retained Deficit		(21,336,928	)		(20,716,789	)
Accumulated other comprehensive income		104,622			53,591
Stockholders' equity (deficiency)		(156,269	)		(20,305	)
Total Liabilities and Stockholders' Equity (Deficiency)	$	454,753		$	566,666

See Notes to Financial Statements

F-1

HCi Viocare

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	For the Three Month Ended
		March 31,
		2015			2014
Revenues:
Sales		$	10,416		$	-
Cost of goods sold		6,065			-
Gross Profit			4,351			-

Operating Expenses
Depreciation			4,983			-
Office rent			38,650			4,303
Office expenses			58,684			9,909
Consultancy Fees			33,056			37,858
Professional fees			50,139			17,283
Research and development			383,605			632,237
Travel and entertainment			36,151			11,574
Total Operating Expenses			605,268			713,164

Loss from Operations			(600,917	)		(713,164	)

Other Income (Expenses)
Gain (Loss) on foreign currency transaction			5,208			(424	)
Interest Expenses			(24,430	)		-
Total Other Income (Expenses)			(19,222	)		(424	)

Loss before Provision for Income Tax			(620,139	)		(713,588	)

Provision for Income Tax			-			-

Net Loss		$	(620,139	)	$	(713,588	)

Basic and fully diluted loss per share		$	(0.04	)		(0.16	)

Weighted average shares outstanding			14,685,395			4,553,650

Comprehensive Income (Loss) :
Net loss		$	(620,139	)	$	(713,588	)
Effect of foreign currency translation			51,031			44
Comprehensive Loss		$	(569,108	)	$	(713,544	)

See Notes to Financial Statements

F-2

HCi Viocare

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Month Ended
	March 31,
	2015			2014

Operating Activities
Net loss	$	(620,139	)	$	(713,588	)
Adjustments to reconcile net loss to net cash used by operating activities:
Shares issued for acquisition of patented technologies		-			625,000
Stock option vested gradually		231,550			-
Amortization of beneficial conversion feature		20,198			-
Gain on foreign currency transactions		(27,479	)		-
Depreciation		4,983			-
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable		(370	)		-
Decrease (Increase) in prepaid expense		(34,361	)		(26,685	)
Decrease (Increase) in inventory		(1,060	)		-
Increase (Decrease) in accounts payable and accrued expenses		35,387			12,320
Increase (Decrease) in accounts payable and accrued expenses, related party		44,991			65,138
Net cash used by operating activities		(346,300	)		(37,815	)

Investing Activities
Computer & equipment		(4,432	)		-
Leaseholder improvement		(18,410	)		(27,063	)
Net cash (used) by investing activities		(22,842	)		(27,063	)

Financing Activities
Loans from a shareholder		11,294			68,162
Proceeds from private placement		201,594			-
Net cash provided by financing activities		212,888			68,162

Increase (decrease) in cash		(156,254	)		3,284

Cash at beginning of period		408,252			-
Effects of exchange rates on cash		11,591			44
Cash at end of period	$	263,589		$	3,328

Supplemental Disclosures of Cash Flow Information:
Cash paid (received) during year for:
Interest	$	-		$	-
Income taxes	$	-		$	-

See Notes to Financial Statements

F-3

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 1 - ORGANIZATION AND BUSINESS BACKGROUND

HCi Viocare (formerly China Northern Medical Device, Inc.) ("VICA" or the "Company") was incorporated on March 26, 2007 under the laws of the State of Nevada. The Company has selected December 31 as its fiscal year end.

The Company has not yet generated significant revenues from planned principal operations and is considered a startup enterprise. The Company was formed to sell medical devices with an emphasis on portable medical devices designed for home treatments with the initial focus in the northern regions of China. The Company’s intent was to seek strategic relationships with medical device manufacturers both in China and North America with the aim to be their sales and distribution agent in Northern China and to assist Chinese medical device manufacturers on the development of the North American market.

On September 10, 2013, the controlling shareholder of the Company sold his controlling interest in the shares of the Company and there was a change in the Board of Directors of the Company, effecting a change in control of the Company. The business of the Company remains in the field of medical devices and other opportunities related to their uses. We are currently engaged in healthcare innovation by the technology development and marketing of prosthetics and orthotics (P&O), and we intend to be engaged in the operation of P&O total rehabilitation clinics.

On January 15, 2014, the Company incorporated two wholly-owned subsidiaries in Scotland, U.K., HCi Viocare Technologies Limited and HCi Viocare Clinics UK Limited. The Company intends to operate in Scotland under these two subsidiaries, one of which will undertake the development and marketing of technologies and the other which is intended to acquire or establish operating clinics related to the field of prosthetics and orthotics.

On February 12, 2014, through our wholly owned subsidiary, HCi Viocare Technologies Limited, the Company acquired an interest in a patented technology known as “Socket-Fit”. SocketFit is a system that will help overcome technical and resource hurdles endemic to the prosthetic sector. The system has been designed with the aim of offering optimally fitted prosthetic sockets that will reduce the number of prostheses made for patients, resulting in a reduced number of visits by the patient to the prosthetic, and also assisting in the rehabilitation of amputees. Socket-Fit is a digital system for assessing an amputee’s residual limb and for the production of truly functional and comfortable prosthetic sockets. The technology takes account of the external and internal geometry of the amputee’s stump, the biomechanical properties of each individual soft tissue layer and the boundary and loading conditions of a complete prosthesis to generate a virtual 3D model of the residual limb making it possible to product any accurate, functional and comfortable prosthetic socket. By minimizing the time and cost of socket production and reducing the number of faulty sockets there will be a reduction in costs incurred by health services and insurance companies worldwide as well as benefits to the amputee. The Company intends to undertake and fund, through its U.K. subsidiary, a project to improve the nature of the data used in socket modeling software with a view to creating a system that will enable prosthetists to build a socket that evenly distributes weight, provides enhanced comfort, and can be marketed and used across the industry for improved socket creation.

On February 19, 2014, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to change the name of the Company to HCi Viocare effective March 21, 2014. Effective March 21, 2014, in accordance with approval from FINRA, we changed our name from China Northern Medical Device, Inc. to HCi Viocare. Concurrently we commenced trading on the Over-the-Counter Bulletin Board under the symbol “VICA”.

On April 16, 2014, through our wholly owned subsidiary HCi Viocare Technologies Limited, we acquired all rights and interest in and to the background Intellectual Property Rights (“IPR”) for a developing technology known as “Smart Insole”. The Smart Insole System is believed to be a state-of-the-art, pressure and shear (friction)-sensing insole with an incorporated real-time global display application and a fully featured support web-space that tells the user and his podiatrist/physiotherapist when inappropriate or dangerous conditions are developing on the feet. The product is being designed to mitigate diabetic foot complications, such as ulceration, infection and amputation, as well as improve the total health of a person with diabetes, by incorporating the readings from the insole system to a specialized web-space that will help the user monitor not just the health of his feet but also his diabetes by looking after his diet and exercise.

F-4

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 1 - ORGANIZATION AND BUSINESS BACKGROUND (continued)

On June 9, 2014, the Company, through our wholly owned subsidiary, HCi Viocare Clinics, acquired W D Spence Prosthetics Limited (the “Clinic”). The Clinic is located in Glasgow, Scotland, and is a fully operational prosthetics clinic. The acquisition of the Clinic is the first step to the Company’s and HCi Viocare Clinics’ intention to develop the first chain of prosthetics and orthotics (P&O) and diabetes clinics in the European market, covering Southern Europe, the Middle East and North Africa.

On March 31, 2015 the Company’s wholly owned subsidiary HCi Viocare Clinics and its subsidiary W D Spence Prosthetics Limited completed a merger with the resulting combined entity having the name HCi Viocare Clinics UK Limited.

Note 2 - GOING CONCERN

The Company incurred net losses of $620,139 and $713,588 for the three months ended March 31, 2015 and 2014, respectively and had a retained deficit of $21,336,928. In addition, the Company had a working capital deficiency of $265,667 and a stockholders' deficit of $156,269 at March 31, 2015. These factors raise substantial doubt about the Company's ability to continue as a going concern.

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing stockholders.

The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

The Company has relied heavily for its financing needs on its Chief Executive Officer and President as more fully disclosed in Note 11.

Note 3 - CONTROL BY PRINCIPAL STOCKHOLDER/OFFICER

Our Chief Executive Officer owns beneficially and in the aggregate, the majority of the voting power of the Company. Accordingly, the Chief Executive Officer has the ability to control the approval of most corporate actions, including approving significant expenses, increasing the authorized capital stock and the dissolution, merger or sale of the Company's assets.

Note 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principals of Consolidation

The consolidated financial statements include the accounts of HCi Viocare and its wholly-owned subsidiaries, HCi Viocare Technologies Limited and HCi Viocare Clinics UK Limited with W D Spence Prosthetics Limited which is the wholly-owned subsidiary of HCi Viocare Clinics UK. All significant intercompany balances and transactions have been eliminated.

F-5

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of Presentation

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2014, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited consolidated financial statements should be read in conjunction with those audited financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results when ultimately realized could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less.

Concentrations of Credit Risk

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-quality institutions.

Fair Value of Financial Instruments

The carrying value of financial instruments including cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses, approximates their fair value due to the relatively short-term nature of these instruments.

Foreign Currencies

Functional and presentation currency - Items included in the consolidated financial statements of each of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in US Dollars, which is the Company’s functional and presentation currency.

Transactions and balances - Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at quarter end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of operations.

F-6

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currencies (cont’d)

Subsidiaries The results and financial position of all subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

i) assets and liabilities are translated at the closing rate at the date of the balance sheet;

ii) income and expenses are translated at average exchange rates;

iii) all resulting exchange differences are recognized as other comprehensive income, a separate component of equity.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete and persuasive evidence of an arrangement exists. This generally occurs when products are shipped to unaffiliated customers, both title and the risks and rewards of ownership are transferred or services have been rendered and accepted, the selling price is fixed or determinable, and collectability is reasonably assured.

Advertising Costs

The Company expenses advertising costs as incurred or the first time the advertising takes place, whichever is earlier, in accordance with ASC 720-35. Advertising costs were immaterial for the three month ended March 31, 2015 and 2014, respectively.

Research and Development Costs

The Company charges research and development costs to expense when incurred in accordance with FASB ASC 730, “Research and Development”. Research and development costs were $383,605 and $632,237 for the three months ended March 31, 2015 and 2014, respectively.

Related parties

For the purposes of these financial statements, parties are considered to be related if one party has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Stock-based compensation

For stock-based compensation the Company follows the guidance codified in the Compensation – Stock Compensation Topic of FASB ASC (“ASC 718”). The Company determines the value of stock issued at the date of grant. It also determines at the date of grant, the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.

Income Taxes

The Company accounts for income tax in accordance with FASB ASC 740, "Income Taxes", which requires the asset and liability approach for financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company has retained deficit from operations. Because there is no certainty that we will realize taxable income in the future, we did not record any deferred tax benefit as a result of these losses.

All income tax years from inception are open to examination by the taxing authorities.

F-7

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings (Loss) Per Share

The Company reports earnings per share in accordance with FASB ASC 260, “Earnings Per Share.” FASB ASC 260 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company had potentially dilutive securities outstanding (convertible debt and liabilities) for the three months ended March 31, 2015 and December 31, 2014, respectively, however, since the Company reflected a net loss in the three months ended March 31, 2015 and in the fiscal year ended December 31, 2014, respectively, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

Comprehensive Income

FASB ASC 220, “Comprehensive Income", establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources.

Segment Reporting

FASB ASC 820 “Segments Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. Our proposed business segments are expected to span more than one geographical area. Specifically the Company intends to operate prosthetic and orthotic rehabilitation clinics with various European based locations, as well as a corporate development and technology center which will undertake ongoing research and marketing activities.

Fair Value of Measurements

Accounting principles generally accepted in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2: Input other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.

Level 3: Unobservable inputs. Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.

F-8

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Measurements (cont’d)

An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities.

Recent Accounting Pronouncements

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts. Currently, debt issuance costs are presented as a deferred asset. The recognition and measurement requirements will not change as a result of this guidance. The standard is effective for the annual reporting periods beginning after December 15, 2015 and will be applied on a retrospective basis. This amendment will not have a material impact on our financial statements.

There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of March 31, 2015, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

Note 5 - PREPAID EXPENSES

Prepaid expenses consist of the following:

	March 31, 2015		December 31, 2014
Office lease	$	55,143	$	21,687
Professional fees		11,000		17,000
Travel advances and other expenses		6,677		8,682
Total prepaid expense	$	72,820	$	47,369

Note 6 - PROPERTY AND EQUIPMENT

	Leasehold Improvement			Office Furniture			Computer & Equipment			Vehicles			Total
Cost
At 1 January, 2014	$	-		$	-		$	-		$	-		$	-
Additions - purchase		34,148			7,151			12,702			62,123			116,124
Additions - business combination		-			-			731			-			731
Foreign exchange		(3,927	)		(798	)		(910	)		(1,341	)		(6,976	)
At December 31, 2014		30,221			6,353			12,523			60,782			109,879

Additions - purchase		18,410			2,571			1,861			-			22,842
Foreign exchange		(3,169	)		(634	)		(1,315	)		(6,527	)		(11,645	)
At March 31, 2015		45,462			8,290			13,069			54,255			121,076

F-9

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 6 - PROPERTY AND EQUIPMENT (continued)

	Leasehold Improvement		Office Furniture		Computer & Equipment		Vehicles		Total
Amortization
At 1 January, 2014	$	-	$	-	$	-	$	-	$	-
Charge for the period		-		-		-		-		-
At March 31, 2014		-		-		-		-		-

At December 31, 2014		3,299		1,332		1,340		531		6,502
Charge for the period		1,276		231		752		2,724		4,983
At March 31, 2015	$	4,575	$	1,563	$	2,092	$	3,255	$	11,485

Carrying Amounts
At December 31, 2014	$	26,922	$	5,021	$	11,183	$	60,251	$	103,377
At March 31, 2015	$	40,887	$	6,727	$	10,977	$	51,000	$	109,591

Leasehold improvements are amortized over the term of the lease: three to ten years.

Furniture is amortized over three to five years and Computer and Equipment is amortized over three years.

Vehicles are amortized over five years.

Note 7 - PATENTED TECHNOLOGY

(1)	Socket-Fit

On February 12, 2014, the Company, through our wholly owned Scottish subsidiary, HCi Viocare Technologies Limited (“Viocare”), entered into an acquisition agreement with Dr. Christos Kapatos, a director of both the Company and Viocare (“Kapatos”), to acquire all rights and interest in and to a patented technology known as “Socket-Fit”.

Consideration for the acquisition by Viocare of the exclusive, perpetual, revocable, transferable, royalty free worldwide ownership of the Intellectual Property Rights (“IPR”) and know how to develop and exploit the IPR was the issuance of 500,000 shares of the common stock of the Company to Kapatos valued at fair market value at issuance of $625,000 or $1.25 per share. The Company recorded the $625,000 as research and development expenses during the three month period ended March 31, 2014 due to the fact that Mr. Kapatos is a related party to the Company.

(2)	Smart Insole

On April 16, 2014, through our wholly owned Scottish subsidiary, HCi Viocare Technologies Limited, the Company entered into a second acquisition agreement with Dr. Christos Kapatos to acquire all rights and interest in and to the background IPR for a developing technology known as “Smart Insole”.

As consideration for the acquisition:

· HCi Viocare Technologies shall cause the parent Company to issue to Kapatos a total of 500,000 shares of the common stock of the Company on execution of the agreement and 500,000 shares of the common stock of the Company for each and every new version of the technology (new version to mean any update or improvement to the initial commercial product to be developed from the technology, after the commercial development of the first Market Ready Insole from the technology acquired, should the new version be developed to commercial market ready stage);

F-10

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 7 - PATENTED TECHNOLOGY (continued)

· a cash bonus in the amount of $10,000,000USD should the technology be sold at any stage of development for an amount equal or greater than five hundred million ($500,000,000) cash or the equivalent thereof by way of any other consideration.

The issuance of 500,000 shares of the common stock of the Company to Kapatos was valued at fair market value on issuance totaling $1,125,000 or $2.25 per share. The Company recorded the $1,125,000 as research and development expenses during the three months ended June 30, 2014 due to the fact that Mr. Kapatos is a related party to the Company.

Note 8 - OFFICE LEASE

Office in UK

On February 19, 2014 the Company leased office space in Glasgow, United Kingdom on a three month renewable term, commencing on February 20, 2014 and initially ending on May 31, 2014. The per month rental fee is $914 (GBP 549) plus applicable taxes and can be renewed at any time prior to each three month lease term ending date. During the period ended December 31, 2014, the monthly rental fee increased to $1,380 (GBP 930) plus applicable taxes when the Company elected to lease a larger office space within the same facility.

Under the term of the lease agreement, the Company paid $2,759 (GBP 1,860) as a deposit. This lease was terminated subsequent to March 31, 2015.

Office in Greece

On February 3, 2014 the Company leased office space in Paleo Faliro, Greece on a three year lease, commencing on March 1, 2014 and ending on February 28, 2017. The monthly rental fee is $1,686(EUR € 1,554) including applicable taxes in the first year. Thereafter, for every further lease year and for the whole duration of the lease agreement, as well as in case of compulsory statutory extension or extension by tacit agreement, the monthly rent shall be annually adjusted by a percentage equal to the Consumer Price Index of the adjustment month with respect to the respective month of the year before (simple annual rate of change), as this is calculated by the Hellenic Statistical Authority (ESYE), plus two (2) percentage points (+2%).

Under the term of the lease agreement, the Company paid a total of $25,010 (EUR €18, 540) including $4,047 (EUR €3,000) for deposit and $20,963 (EUR €15,540) for ten months rental fee upon executing the agreement. As of March 31, 2015, $3,254 (EUR €3,000) is shown as deposit in the prepaid account.

Clinic in Greece

On December 29, 2014 the Company leased office space at Peania Region of Attica in Greece on a ten year lease, commencing on January 2, 2015 and ending on October 5, 2024. The monthly rental fee is $6,764 (EUR €6,233) plus applicable taxes and the monthly operating cost estimate is $1,082 (EUR €997).

Under the term of the lease agreement, the Company paid a total of $13,527 (EUR €12, 465) as deposit in the prepaid account.

F-11

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 8 - OFFICE LEASE (continued)

Lease in UK

On March 2, 2015 the Company entered into a lease agreement for a modern, stand-alone 5,300 square foot facility in Glasgow, Scotland with an entry date of 1 March, 2015. The building will host the Company’s first Viocare centre, a full service Prosthetic and Orthotic (“P&O”) practice with a superior standard of personalized care, due to open in the second quarter of 2015. In the first anniversary of the date of entry, the lease is GBP (£20,000) (USD$29,673) per annum (exclusive of VAT). In the second anniversary of the date of entry, the lease will increase to GBP (£40,000) (USD$59,345) per annum (exclusive of VAT). In the third anniversary of the date of entry, the lease will be GBP (£40,000) (USD$59,345) per annum (exclusive of VAT). In the fourth anniversary of the date of entry, the lease will decrease to GBP (£30,000) (USD$44,510) per annum (exclusive of VAT). In the fifth anniversary of the date of entry, the lease will be GBP (£40,000) (USD$59,345) per annum (exclusive of VAT).

Under the term of the lease agreement, the Company paid a total of $37,073 (GBP £24,000) as deposit in the prepaid account.

Prepaid expense relating to the office leases consists of the following:

Location	Greece			United Kingdom
As of January 1, 2014	$	-		$	-
Addition – deposit		16,738			3,107
Addition – 10 month rental		20,963			-
Expensed rental fee during the fiscal year ended December 31, 2014		(20,620	)		-
Foreign exchange		1,717			(218	)
As of December 31, 2014		18,798			2,889
Addition – deposit		-			37,073
Foreign exchange		(2,017	)		(1,600	)
As of March 31, 2015	$	16,781		$	38,362

Note 9 - CONVERTIBLE NOTES

(1)	Convertible notes due on June 10, 2016:

On June 10, 2014, the Company entered into a loan agreement with Mr. Leontaritis, the President of the Company, pursuant to which the Company received $136,237 (EUR €100,000) as advances from a related party (the “Note”). The Note earns simple interest accruing at one percent (1%) per annum and is due and payable within two years from the date of the agreement (“Maturity Date”). At any such date as Mr. Leontaritis may desire on or before the Maturity Date of the Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price of $0.03 per share.

The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the date of grant to be $136,237 on the Note. This value was recorded as a discount on debt and offset to additional paid in capital.

On November 28, 2014 the convertible note $124,971 (EUR € 100,000) was fully converted to 3,747,510 shares of common stock at $0.0333 per share.

Amortization of the discount for the period ended November 28, 2014 was $32,356, which amount has been recorded as interest expense. Unamortized discount as of November 28, 2014 was $103,881 and has been recorded as interest expenses.

F-12

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 9 - CONVERTIBLE NOTES (continued)

(1)	Convertible notes due on June 10, 2016: (cont’d)

Interest expenses:

	For the three months ended
	March 31,
	2015		2014
Amortization of debt discount	$	-	$	-
Interest at contractual rate		-		-
Totals	$	-	$	-

(2)	Convertible notes due on July 25, 2019:

On July 25, 2014, the Company entered into a loan agreement with Mr. Leontaritis, the President of the Company, pursuant to which the Company received $403,956 (EUR €300,000) as advances from a related party (the “Note”). The Note earns simple interest accruing at five percent (5%) per annum and is due and payable within five years from the date of the agreement (“Maturity Date”). At any such date as Mr. Leontaritis may desire on or before the Maturity Date of the Note, any unpaid indebtedness shall be convertible into common shares of the Company at a price of $0.03 per share.

The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the date of grant to be $403,956 on the Note. This value was recorded as a discount on debt and offset to additional paid in capital. Amortization of the discount for the three months ended March 31, 2015 was $20,198, which amount has been recorded as interest expense.

Interest expenses:

	For the three months ended
	March 31,
	2015		2014
Amortization of debt discount	$	20,198	$	-
Interest at contractual rate		4,232		-
Totals	$	24,430	$	-

The following table summarizes the balance of the convertible notes on the balance sheets as of March 31, 2015 and December 31, 2014:

Balance, December 31, 2013	$	-
Gross principal amount		540,193
Converted to shares		(124,971	)
Foreign exchange		(50,569	)
Balance, December 31, 2014	$	364,653
Foreign exchange		(39,123	)
Balance, March 31, 2015	$	325,530
Unamortized discount	$	(348,075	)

F-13

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 10 - COMMITMENTS

(1)	Consulting Agreement with Kapatos

On April 16, 2014, the Company entered into a Consulting Agreement with Kapatos whereby he will provide his services as Chief Technical Officer for the Company and the Company’s wholly-owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be forty thousand Euros (€40,000) (USD$43,407) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Kapatos shall receive two hundred thousand (200,000) shares of the Company’s common stock for each research project completed with a valuation less than twenty million dollars ($20,000,000 USD), five hundred thousand (500,000) shares of the Company’s common stock for each research project completed with a valuation equal or greater than twenty million US dollars ($20,000,000 USD).

(2)

Advisors

On April 15, 2014, the Company established a scientific advisory board whereby the Company intends to appoint certain advisors that can contribute to the Company’s overall business strategy and future direction. On April 16, 2014 the Company entered into Consulting Agreements with the members of its Scientific Advisory Board as follows:

Professor Stephan Solomonidis (“Solomonidis”) will provide services as Head of Research for the Company and the Company’s wholly owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be twenty thousand pounds (£20,000 GBP) (USD$29,673) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Solomonidis’ fee will be readjusted to the amount of forty thousand pounds (£40,000 GBP) (USD$59,346) per annum, and he shall receive two hundred thousand (200,000) shares of the Company’s common stock for each research project completed with a valuation less than twenty million dollars ($20,000,000 USD), five hundred thousand (500,000) shares of the Company’s common stock for each research project completed with a valuation equal or greater than twenty million dollars ($20,000,000 USD).

Professor Martha Lucia Zequera (“Zequera”) will provide services as Director of Diabetic Foot Related Products and Services for the Company and the Company’s wholly owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be twenty thousand dollars ($20,000 USD) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Zequera’s fee will be readjusted to the amount of forty thousand dollars ($40,000 USD) per annum, and she shall receive two hundred thousand (200,000) shares of the Company’s common stock for each research project completed with a valuation less than twenty million dollars ($20,000,000 USD), five hundred thousand (500,000) shares of the Company’s common stock for each research project completed with a valuation equal or greater than twenty million dollars ($20,000,000 USD).

Professor William Sandham (“Sandham”) will provide services as Director of Diabetes Technology Research for the Company and the Company’s wholly owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be Twenty Thousand pounds (£20,000 GBP) (USD$29,673) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Sandham’s fee will be readjusted to the amount of forty thousand pounds (£40,000 GBP) (USD$59,346) per annum, and he shall receive two hundred thousand (200,000) shares of the Company’s common stock for each research project completed with a valuation less than twenty million dollars ($20,000,000 USD), five hundred thousand (500,000) shares of the Company’s common stock for each research project completed with a valuation equal or greater than twenty million dollars ($20,000,000 USD).

F-14

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 10 - COMMITMENTS (continued)

(2)	Advisors (cont’d)

On June 9, 2014, the Company appointed Mr. William Spence to the Advisory Board of the Company and entered into an advisory board agreement. Compensation shall be the grant of a total of 5,000 stock options entitling Mr. William Spence the right to purchase a total of 5,000 shares of Series A Preferred Stock of the Company at a price of $0.04 per share. The advisory board appointment is for a term of one year and the options granted under the agreement will vest on completion of the term of the appointment. The Series A Preferred shares when vested will be convertible on the basis of 20 shares of common stock for each one share held and have voting rights of 50 votes per share of Series A Preferred stock held at any meetings of the stockholders.

(3)	Employment Agreement with William Donald Spence

On June 9, 2014, HCi Viocare Clinics entered into an agreement with Mr. William Donald Spence (the “Employment Agreement”) whereby he will provide his services as Director of Clinical Operations of HCi Viocare Clinics and its wholly-owned subsidiary clinics. The contract has a term of one year, starting on June 10, 2014, and ending on June 9, 2015, renewable for such further term as may be mutually agreed between the parties. Compensation shall be sixty thousand GBP (£60,000) (USD$89,018) per year payable monthly in arrears on the last Friday of every month by credit transfer. HCi Viocare Clinics shall also pay any fees in connection with the membership of Mr. Spence to any professional, regulatory or other such body of which Mr. Spence’s membership is required to carry out his role with HCi Viocare Clinics, as well as all insurance payments.

(4)	Employment Agreement with Heleen Kist

On November 7, 2014, the Company’s subsidiary, W.D. Spence Prosthetics Limited entered into a service agreement with Mrs. Heleen Francoise Kist (the “Agreement”) whereby she will provide her services as Chief Operating Officer (“COO”) of the Company. The contract has a term of one year, being effective as of October 1, 2014, and ending on September 30, 2015, renewable for such further term as may be mutually agreed between the parties. Compensation shall be thirty thousand GBP (£30,000) (USD$44,509) per year payable monthly in arrears on the last Friday of every month by credit transfer.

(5)	Consulting Agreement with Mikulas Dylowicz

On January 1, 2015 the Company entered into a consulting agreement (the “Agreement”) with Mikulas Dylowicz (“the Consultant”), an individual residing in the Czech Republic, for the provision of Investor Relations Services for the Company. Under the terms of the Agreement, the Consultant shall be an independent contractor and shall provide services including responding to shareholder and investor email and telephone inquiries, dissemination of the Company’s public press releases and working with the Company to continue to raise operating capital. The Consultant shall receive monthly consideration of EUR€2,000(US$2,170) per month and shall be reimbursed for all approved out-of-pocket expenses including travel and office expense.

(6)	Lease Agreement in Glasgow, Scotland

F-15

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 11 - RELATED PARTY TRANSACTIONS

The following table provides details of the Company’s related party transactions during the three month ended March 31, 2015 and 2014:

Services provided from related parties:

	Three Months Ended March 31,
	2015		2014
Consulting fees from CEO and President (i)	$	15,000	$	15,000
Consulting fees from a Director (ii)		11,285		8,222
Professional fees from CFO (iii)		-		5,482
Professional fees from Director (iv)		3,386		4,111
Research and development from Director (v)		22,731		-
	$	52,402	$	32,815

(i)		On September 10, 2013 Mr. Leontaritis was appointed President. On January 15, 2014, the Board of Directors of the Company approved the execution of a consulting agreement between the Company and Sotirios Leontaritis (“Leontaritis”), whereby Leontaritis shall provide services to the Company as the Company’s President and Chief Executive Officer in regards to the Company’s management and operations for the period from January 1, 2014 to December 31, 2017. Under the terms of the agreement, the Company agreed to pay to Leontaritis US$60,000 per annum payable in monthly payments of US$5,000 a month for the term of the contract.
(ii)		On September 30, 2013, the Board of Directors of the Company appointed Dr. Christos Kapatos as a director of the Company.

(iii)		On November 27, 2013, the Board of Directors of the Company appointed Mr. Grigorios Tsourtos as Chief Financial Officer of the Company. On June 9, 2014, Mr. Grigorios Tsourtos resigned as Chief Financial Officer of the Company.
(iv)		On September 10, 2013, the Board of Directors of the Company elected Nicolaos Kardaras as Secretary and a director of the Company.
(v)		On June 9, 2014, HCi Viocare Clinics entered into an employment agreement with Mr. William Donald Spence whereby he will provide his services as Director of Clinical Operations of HCi Viocare Clinics and any subsidiary clinics.

Accounts payable and accrued liabilities from related parties:

	Balance, December 31, 2014 ($)		Services provided during the period ($)	Reimbursement on Company’s expenses And interest on loan ($)		Payments ($)		Foreign exchange ($)			Balance, March 31, 2015 ($)
Consulting fees from CEO and President (i)		80,602	15,000		29,991		-	(6,108		)		119,485
Consulting fees from a Director (ii)		-	11,285		-		11,285	-				-
Professional fees from Director (iv)		1,216	3,386		-		3,517		-			1,085
Research and development from Director (v)		-	22,731		-		22,731					-
		81,818	52,402		29,991		37,533		(6,108	)		120,570

F-16

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 11 - RELATED PARTY TRANSACTIONS (continued)

Advances from related parties:

		Balance, December 31, 2014 ($)				Addition ($)				Foreign exchange ($)				Balance, March 31, 2015 ($)
CEO and President (i)			393,044				11,294				(33,786	)			370,552

Loan Agreement from related parties (ref Note 9 – Convertible Notes)

		Balance, December 31, 2014 ($)				Addition ($)				Converted to Shares ($)				Foreign Exchange on the Note ($)				Balance, March 31, 2015 ($)
CEO and President (i)			364,653				-				-				(39,123	)			325,530

Note 12 - CAPITAL STOCK

The Articles of Incorporation authorize the Company to issue 5,000,000 shares of preferred stock with a par value of $0.0001, and 100,000,000 shares of common stock with a par value of $0.0001. No shares of preferred stock have been issued.

Share issuances in 2015:

On February 2, 2015, the Company entered into a Private Placement Subscription Agreement (the “Agreement”) with a private investor for a total of 67,706 shares of the Company’s common stock at a purchase price of $2.10 per share for total cash proceeds of $142,183. The shares are subject to applicable resale restrictions.

On February 17, 2015, the Company entered into a Private Placement Subscription Agreement (the “Agreement”) with a private investor for a total of 8,225 shares of the Company’s common stock at a purchase price of $2.36 per share for total cash proceeds of $19,410. The shares are subject to applicable resale restrictions.

On March 23, 2015, the Company entered into a Private Placement Subscription Agreement (the “Agreement”) with a private investor for a total of 19,047 shares of the Company’s common stock at a purchase price of $2.10 per share for total cash proceeds of $40,000. The shares are subject to applicable resale restrictions.

Share issuances in 2014:

On January 22, 2014, the Company issued 1,000,000 shares, valued at $1,250,000, to the Company’s President, Mr. Leontaritis as compensation for consultancy services provided in 2013. The $1,250,000 was accrued as of December 31, 2013.

On February 13, 2014, the Company issued 500,000 shares of common stock, valued at $625,000, the required share consideration under an acquisition agreement with Kapatos,completing the acquisition of the IPR - Socket-Fit.

On April 17, 2014, the Company issued 500,000 shares of common stock, valued at $1,125,000, the required share consideration under an acquisition agreement with Kapatos,completing the acquisition of the IPR – Smart Insole.

F-17

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 12 - CAPITAL STOCK (continued)

Share issuances in 2014(cont’d):

On November 28, 2014, the Company entered into a Debt Settlement and Subscription Agreement (the “Agreement”) with the President of the Company, Mr. Sotirios Leontaritis (“Leontaritis”). Under the Agreement Leontaritis agreed to accept 9,000,000 shares of the Company’s common stock at a price of US$0.03333 per share to settle a total of $300,000 of the debt including convertible note $124,971 (EUR€100,000). We recorded $15,582,387 loss on the debt settlement.

On December 24, 2014, the Company entered into a Private Placement Subscription Agreement (the “Agreement”) with the President and controlling shareholder of the Company, Mr. Sotirios Leontaritis (“Leontaritis”). Under the terms of the Agreement Leontaritis subscribed for a total of 133,333 shares of the Company’s common stock at a purchase price of $1.50 per share for total cash proceeds of $200,000. The shares are subject to applicable resale restrictions.

As at March 31, 2015 and December 31, 2014 the Company has a total of 14,731,961 and 14,636,983 shares issued and outstanding, respectively.

Designation of Series A Preferred Stock

On January 13, 2014, the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada. The Certificate of Designation sets forth the rights, preferences and privileges of a class of the Company’s preferred stock. Such class shall be designated as the “Series A Preferred Stock” and the number of shares constituting such series shall be 5,000,000 shares. The holders of Series A Preferred Stock will be entitled to a preference over all of the shares of the Company’s common stock. Holders of Series A Preferred Stock shall have 50 votes per share of Series A Preferred Stock held by them and shall be entitled to notice of any stockholders’ meeting and to vote as a single class upon any matter submitted to the stockholders for a vote. Each share of Series A Preferred Stock is convertible into 20 shares of our common stock at any time at the holder’s option. Shares of Series A Preferred Stock shall not be entitled to any dividends.

Note 13 - STOCK OPTIONS

On April 15, 2014, the Company appointed Professor Martha Lucia Zequera, Professor William Sandham, Professor Stephan Solomonidis and Doctor Christos Kapatos to the Advisory Board of the Company and entered into advisory board agreements with respect to services to be provided. Compensation for the members of the Advisory Board shall be the grant of a total of 5,000 stock options entitling the advisory board member the right to purchase a total of 5,000 shares of Series A Preferred Stock of the Company at a price of $0.04 per share for a period of five (5) years from the date of vesting. The advisory board appointments are for a term of one year and the options granted under the agreements will vest on completion of the term of the appointment. The Series A Preferred shares when vested will be convertible on the basis of 20 shares of common stock for each one share held and have voting rights of 50 votes per share of Series A Preferred stock held at any meetings of the stockholders.

On June 9, 2014, the Company appointed Mr. William Spence to the Advisory Board of the Company and entered into an advisory board agreement with Mr. Spence. Compensation shall be the grant of a total of 5,000 stock options entitling Mr. Spence the right to purchase a total of 5,000 shares of Series A Preferred Stock of the Company at a price of $0.04 per share for a period of five (5) years from the date of vesting. The advisory board appointment is for a term of one year and the options granted under the agreement will vest on completion of the term of the appointment. The Series A Preferred shares when vested will be convertible on the basis of 20 shares of common stock for each one share held and have voting rights of 50 votes per share of Series A Preferred stock held at any meetings of the stockholders.

F-18

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 13 - STOCK OPTIONS (continued)

The following table summarizes information concerning stock options outstanding as of March 31, 2015 and December 31, 2014:

	March 31, 2015			December 31, 2014
	Series A Preferred stock		Weighted Average Exercise Price $	Series A Preferred stock		Weighted Average Exercise Price $
Outstanding at beginning of the year		25,000	0.04		-	-
Granted		-	-		25,000	0.04
Exercised		-	-		-	-
Expired or cancelled		-	-		-	-
Outstanding at the period		25,000	0.04		25,000	0.04

	Stock Options		Weighted Average Grant Date Fair Value

Unvested, at December 31, 2013		-		-
Granted		25,000	$	0.04
Vested		-		-
Forfeited		-
Unvested, end of December 31, 2014		25,000	$	0.04
Unvested, end of March 31, 2015		25,000	$	0.04

The Company recognized stock-based compensation expense allocated to research and development of $231,550 during the three months ended March 31, 2015($nil – March 31, 2014).

Unrecognized compensation expense related to stock options as of March 31, 2015 was $59,660 and is expected to be recognized in future periods.

Valuation Assumptions

The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options using the Black-Scholes option pricing model. The fair value of stock options under the Black-Scholes model requires management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates, volatility of the Company’s stock price and expected dividends.

Stock compensation expense for stock options is recognized over the vesting period of the award.

F-19

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 13 - STOCK OPTIONS (continued)

The following table presents the range of the weighted average fair value of options granted and the related assumptions used in the Black-Scholes model for stock option grants:

	Options Granted September 30, 2014
Fair value of options granted	1.40 ~ 2.00
Assumptions used:
Expected life (years) (a)		1.00
Risk free interest rate (b)		0.11	%
Volatility (c)	117.09 ~ 119.83 %
Dividend yield (d)		0.00	%

	a)	Expected life: The expected term of options granted is determined using the “shortcut” method allowed by SAB No.107. Under this approach, the expected term is presumed to be immediately after the vesting date at the end of the contractual term of one (1) year.

	b)	Risk-free interest rate: The rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected life of the options.

	c)	Volatility: The expected volatility of the Company’s common stock is calculated by using the historical daily volatility of the Company’s stock price calculated over a period of time representative of the expected life of the options.

	d)	Dividend yield: The dividend yield rate is not considered in the model, as the Company has not established a dividend policy for the stock.

Note 14 – PROVISION FOR INCOME TAXES:

The Company has experienced losses since inception. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. The Greece Tax Code permits such carryforwards for a period of five years. The United Kingdom Tax Code permits such carryforwards indefinitely. The total of these NOL's at March 31, 2015 was $18,269,309 in U.S., $348,367 in the Greece and $279,544 in U.K. and at December 31, 2014 was $17,949,500 in U.S., $231,800 in the Greece and $226,800 in U.K.

The provision for income taxes in US consists of the following:

	Three Months ended March 31,
	2015			2014
Current operations	$	108,000		$	12,200
Timing differences, Stock based compensation		-			-
Less, Change in valuation allowance		(108,000	)		(12,200	)
Net refundable amount	$	-		$	-

F-20

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 14 – PROVISION FOR INCOME TAXES: (continued)

The provision for income taxes in Greece consists of the following:

	Three Months ended March 31,
	2015			2014
Current operations	$	30,000		$	10,100
Less, Change in valuation allowance		(30,000	)		(10,100	)
Net refundable amount	$	-		$	-

The provision for income taxes in UK consists of the following:

	Three Months ended March 31,
		2015			2014
Current operations	$	36,820		$	127,730
Research and development		(26,284	)		(127,000	)
Less, Change in valuation allowance		(10,536	)		(730	)
Net refundable amount	$	-		$	-

The cumulative tax effect at the expected rates in U.S., in Greece and in U.K. for significant items comprising our net deferred tax amounts as of March 31, 2015 and December 31, 2014 are as follows:

	March 31, 2015									December 31, 2014
	US Expected rate 34%			Greece Expected rate 26%			UK Expected rate 20%			US Expected rate 34%			Greece Expected rate 26%			UK Expected rate 20%
Deferred tax asset attributable to:
Net operating loss carryover	$	18,269,309		$	348,367		$	279,544		$	17,949,500		$	231,800		$	226,800
Less, Valuation allowance		(18,269,309	)		(348,367	)		(279,544	)		(17,949,500	)		(231,800	)		(226,800	)
Net deferred tax asset	$	-		$	-		$	-		$	-		$	-		$	-

The Company has no tax position at March 13, 2015 and December 31, 2014 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at March 31, 2015 or at December 31, 2014. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended activities.

The Company recognized deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. The Company will establish a valuation allowance to reflect the likelihood of realization of deferred tax assets. Tax years since inception to current are still open for examination by the taxing authorities.

F-21

HCi Viocare

Notes to Financial Statements

(Unaudited)

Note 15 - SUBSEQUENT EVENTS

Hellenic American Securities S.A.

On May 7, 2015, the Company entered into an Agreement with HELLENIC AMERICAN SECURITIES S.A. (“HAS S.A.”) for the provision of services to firms regarding their capital structure, industry strategy and similar matters (the “Agreement”) HAS S.A. is a Public Limited Stock Brokerage Company, member of the Athens Stock Exchange and Athens Derivative Exchange incorporated in Greece with registered office in Athens.

According to the Agreement which carries a term of one year, HAS S.A. shall provide advice to the Company regarding its capital structure, industry strategy and similar matters, as well as advice and services regarding mergers and acquisitions under the Greek Law, an introduction of the Company’s securities to Greek and Foreign Investors, both Private and Institutional ones as well as preparation of analyses for the Company which will be circulated to various websites and media groups.

HAS S.A. is entitled to the following consideration under the Agreement:

1.	$3,000 per month or its current equivalent in Euro, plus applicable VAT, payable monthly on the first day of the month, for each quarter;
2.	Issuance of 24,000 restricted shares of the Company’s common stock quarterly (the “Shares”), payable in monthly installments as to 8,000 shares per month, to be issued and delivered within 10 days after the 1st of each month.

Addendum to April 17, 2014 Acquisition Agreement with Christos Kapatos

On May 8, 2015, the Company through its wholly owned subsidiary company HCi Viocare Technologies Limited entered into an agreement with Dr. Christos Kapatos, to amend the acquisition agreement (“Amendment of Acquisition Agreement”) dated April 17, 2014, originally filed with the Securities and Exchange Commission on Form 8-K as of May 6, 2014. Under the Amendment of Acquisition Agreement, the parties agreed, among certain other terms and conditions, to the issuance of one million restricted shares of the common stock of the Company as additional consideration.

Extension to Consulting Agreements

On May 1, 2015, the Company approved a one-year extension of the three consulting agreements entered into with Dr. Christos Kapatos, Professor William Sandham and Professor Stephan Solomonidis on April 16, 2014 and originally filed on Form 8-K with the Securities and Exchange Commission on Form 8-K as of May 6, 2014.

The Company has evaluated its subsequent events from the balance sheet date through the date of issuance and determined that there are no additional events to disclose.

F-22

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

The following discussion and analysis of the results of operations and financial condition of HCi Viocare for the period ended March 31, 2015 shall be read in conjunction with the financial statements and notes. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results of the timing of events could differ materially from those projected in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Special Note Regarding Forward-Looking Statements and Business sections in our Form 10-K as filed with the Securities and Exchange Commission on April 15, 2015. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

BUSINESS OVERVIEW

We were incorporated on March 26, 2007 under the laws of Nevada. Our activities have been limited to developing our business plan. The Company was formed to sell medical devices with an emphasis on portable medical devices designed for home treatments with the initial focus in the northern regions of China. The Company’s intent was to seek strategic relationships with medical device manufacturers both in China and North America with the aim to be their sales and distribution agent in Northern China and to assist Chinese medical device manufacturers on the development of the North American market.

On September 10, 2013, the controlling shareholder of the Company sold his controlling interest in the shares of the Company and there was a change in the Board of Directors of the Company, effecting a change in control of the Company. The business of the Company remains in the field of medical devices and other opportunities related to their uses. We are currently engaged in healthcare innovation by the technology development and marketing of prosthetics and orthotics (P&O) and diabetes related products, and we intend to be engaged in the operation of prosthetics and orthotics ("P&O") total rehabilitation clinics.

On January 15, 2014, the Board of Directors of the Company approved the execution of a consulting agreement between the Company and Sotirios Leontaritis (“Leontaritis”), whereby Leontaritis shall provide services to the Company as the Company’s President and Chief Executive Officer in regards to the Company’s management and operations for the period from January 1, 2014 to December 31, 2017. Under the terms of the agreement, the Company agreed to pay to Leontaritis US$60,000 per annum payable in monthly payments of US$5,000 a month for the term of the contract. Further, under the terms of the contract, Leontaritis will receive cash compensation of US$5,000 and a stock award of 1,000,000 shares of common stock of the Company in consideration of his services as an officer and director for the period from September 10, 2013 to December 31, 2013. On January 22, 2014, the Company issued the 1,000,000 shares to Leontaritis pursuant to the agreement.

On January 15, 2014, the Company incorporated two wholly-owned subsidiaries in Scotland, U.K., HCi Viocare Technologies Limited and HCi Viocare Clinics UK Limited. HCi Viocare Technologies intends to research, develop and commercialize state of the art, new, innovative medical devices, methods and products in the fields of prosthetics, orthotics, rehabilitation, bioengineering, mobility, diabetes, diabetic foot, tissue mechanics, ultrasonics, medical signal processing and analysis, medical technology, orthopedics and robotic surgery. HCi Viocare Technologies also plans to expand its research and development reach, to create a stable pipeline of new products and upgrades in the fields of prosthetics, orthotics, and diabetes. HCi Viocare Technologies is intended to be staffed by a world class scientific team, and its current research and development (“R&D”) takes place in Scotland, UK. Our second subsidiary, HCi Viocare Clinics, is intended to acquire or establish operating clinics related to the field of prosthetics and orthotics.

On February 12, 2014, the Company, through our newly incorporated Scottish subsidiary, HCi Viocare Technologies Limited, entered into an acquisition agreement with Christos Kapatos, a director of both the Company and HCi Viocare Technologies (“Kapatos”), to acquire all rights and interest in and to a patented technology known as “Socket-Fit”. SocketFit is a system that will help overcome technical and resource hurdles endemic to the prosthetic sector. The system has been designed with the aim of offering optimally fitted prosthetic sockets that will reduce the number of prostheses made for patients, resulting in a reduced number of visits by the patient to the prosthetic, and also assisting in the rehabilitation of amputees. Socket-Fit is a digital system for assessing an amputee’s residual limb and for the production of truly functional and comfortable prosthetic sockets. The technology takes account of the external and internal geometry of the amputee’s stump, the biomechanical properties of each individual soft tissue layer and the boundary and loading conditions of a complete prosthesis to generate a virtual 3D model of the residual limb making it possible to produce an accurate, functional and comfortable prosthetic socket. By minimizing the time and cost of socket production and reducing the number of faulty sockets there will be a reduction in costs incurred by health services and insurance companies worldwide as well as benefits to the amputee. The Company intends through the acquisition of the background intellectual property rights (“IPR”) to undertake and fund, through its U.K. subsidiary, a project as defined in the Acquisition Agreement to improve the nature of the data used in socket modeling software with a view to creating a system that will enable prosthetists to build a socket that evenly distributes weight, provides enhanced comfort, and can be marketed and used across the industry for improved socket creation.

Consideration for the acquisition by HCi Viocare Technologies of the exclusive, perpetual, revocable, transferable, royalty free worldwide ownership of the IPR and knowhow to develop and exploit the IPR was the issuance of 500,000 shares of the common stock of the Company to Kapatos, which shares were issued on February 13, 2014.

HCi Viocare Technologies intends to fund any further development on the aforementioned innovative technology, as well as to complete the development of five additional technologies in P&O and wearable devices which it is currently in negotiation to acquire from Dr. Kapatos. More specifically, it intends to launch three products which it hopes to acquire from Dr. Kapatos prior to the first quarter of 2015 (Light-IS, W-Mode, and H-Cast). These products require less research and development to get to market. Remaining products that it hopes to acquire it will launch in 2015 and 2016 (SocketFit, A-Cone, D-Ring). SocketFit will take a minimum of two years to get to market from the commencement of the research and development of the product.

On April 16, 2014, the Company, through our Scottish subsidiary, HCi Viocare Technologies Limited, entered into an acquisition agreement with Dr. Christos Kapatos, a director of both the Company and HCi Viocare Technologies (“Kapatos”), to acquire all rights and interest in and to the background IPR for a developing technology known as “Smart Insole”. Kapatos has conceived and been working on a Smart Insole System which is believed to be a state-of-the-art, pressure and shear (friction)-sensing insole with an incorporated real-time global display application and a fully featured support web-space that tells the user and his podiatrist/physiotherapist when inappropriate or dangerous conditions are developing on the feet. The product is being designed to mitigate diabetic foot complications, such as ulceration, infection and amputation, as well as improve the total health of a person with diabetes, by incorporating the readings from the insole system to a specialized web-space that will help the user monitor not just the health of his feet but also his diabetes by looking after his diet and exercise.

The competing insoles that are currently commercially available at this time can only monitor vertical pressure on the foot and not shear (friction). Also, none of these devices produce real-time data that can be of assistance to the user. The web-space “total diabetes care” concept is also unique.

As consideration for the acquisition:

HCi Viocare Technologies shall cause the parent Company to issue to Kapatos a total of 500,000 shares of the common stock of the Company on execution of the agreement and 500,000 shares of the common stock of the Company for each and every new version of the technology (new version to mean any update or improvement to the initial commercial product to be developed from the technology, after the commercial development of the first Market Ready Insole from the technology acquired, should the new version be developed to commercial market ready stage);

-	a cash bonus in the amount of $10,000,000USD should the technology be sold at any stage of development for an amount equal or greater than $500,000,000 cash or the equivalent thereof by way of any other consideration.

Further, on April 16, 2014, the Company entered into a Consulting Agreement with Kapatos whereby he will provide his services as Chief Technical Officer for the Company and the Company’s wholly-owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be €40,000 (USD$43,407) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Kapatos shall receive 200,000 shares of the Company’s common stock for each research project completed with a valuation less than $20,000,000, 500,000 shares of the Company’s common stock for each research project completed with a valuation equal or greater than $20,000,000.

Mr. Kapatos abstained from voting on the acquisition of the IPR and the Consulting Agreement. Kapatos is an officer of the Company and is also an officer and director of HCi Viocare Technologies.

Concurrently, the Company appointed Professor Martha Lucia Zequera, Professor William Sandham, Professor Stephan Solomonidis and Doctor Christos Kapatos to the Advisory Board of the Company and entered into advisory board agreements with each member. Compensation for the members of the Advisory Board shall be the grant of a total of 5,000 stock options entitling the advisory board member the right to purchase a total of 5,000 shares of Series A Preferred Stock of the Company at a price of $0.04 per share for a period of five years from the date of vesting. The advisory board appointments are for a term of one year and the options granted under the agreements will vest on completion of the term of the appointment. The Series A Preferred shares when vested will be convertible on the basis of 20 shares of common stock for each one share held and have voting rights of 50 votes per share of Series A Preferred stock held at any meetings of the stockholders.

Further, on April 16, 2014 the Company entered into Consulting Agreements with the members of its Scientific Advisory Board as follows:

Professor Stephan Solomonidis (“Solomonidis”) will provide services as Head of Research for the Company and the Company’s wholly owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be £20,000 GBP (USD$29,673) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Solomonidis’ fee will be readjusted to the amount of £40,000 GBP (USD$59,346) per annum, and he shall receive 200,000 shares of the Company’s common stock for each research project completed with a valuation less than $20,000,000, 500,000 shares of the Company’s common stock for each research project completed with a valuation equal or greater than $20,000,000.

Professor Martha Lucia Zequera (“Zequera”) will provide services as Director of Diabetic Foot Related Products and Services for the Company and the Company’s wholly owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be $20,000 USD per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Zequera’s fee will be readjusted to the amount of $40,000 USD per annum, and she shall receive 200,000 shares of the Company’s common stock for each research project completed with a valuation less than $20,000,000, 500,000 shares of the Company’s common stock for each research project completed with a valuation equal or greater than $20,000,000.

Professor William Sandham (“Sandham”) will provide services as Director of Diabetes Technology Research for the Company and the Company’s wholly owned subsidiaries. The contract has a term of one year, renewable for such further term as may be mutually agreed between the parties. Compensation shall be £20,000 GBP (USD$29,673) per year payable in equal monthly installments beginning on May 1, 2014. In the case that a research and development project is initiated and completed during the term of the agreement, Sandham’s fee will be readjusted to the amount of £40,000 GBP (USD$59,346) per annum, and he shall receive 200,000 shares of the Company’s common stock for each research project completed with a valuation less than $20,000,000, 500,000 shares of the Company’s common stock for each research project completed with a valuation equal or greater than $20,000,000.

On June 9, 2014, the Company, through our Scottish subsidiary, HCi Viocare Clinics, entered into a Share Purchase Agreement with Mr. William Donald Spence, Miss Catriona Ann Spence, and Mrs. Eilidh Isabel Malcolm (together the “vendors”), to acquire 100% of the issued capital of W D Spence Prosthetics Limited (the “Clinic”). The Clinic is incorporated in Scotland under company number SC307652, having its registered office at 8 Tomcroy Terrace, Pitlochry, Perthshire, PH16 5JA, UK. The Clinic is a private company limited by shares, with no registered charges, and the total issued share capital amounts to 1,000 ordinary shares par value of £1 each. The vendors to the Share Purchase Agreement are the beneficial owners and registered holders of all (100%) the shares of the Clinic, with Mr. William Donald Spence holding 520 ordinary shares, and Miss Catriona Ann Spence and Mrs. Eilidh Isabel Malcolm each holding 240 ordinary shares. Mr. Spence is also the director of the Clinic, and Miss Malcolm is the secretary. The Clinic has no employees or subsidiaries, and is not a subsidiary of another company.

The Clinic is located in Glasgow, Scotland, and is a fully operational prosthetics clinic. The acquisition of the Clinic is the first step to the Company’s and HCi Viocare Clinics’ intention to develop the first chain of P&O and diabetes clinics in the European market, covering Southern Europe, the Middle East and North Africa.

As consideration for the acquisition, HCi Viocare Clinics shall pay to the vendors in cash the amount of GBP£100,000 (USD$168,121) on execution of the agreement.

Further, on June 10, 2014, HCi Viocare Clinics entered into a Taxation Undertaking with the vendors pursuant to the Share Purchase Agreement.

Concurrently, on June 10, 2014, the Company made the required payment under the agreement to the vendors, thus completing the acquisition of the Clinic.

Also on June 9, 2014, HCi Viocare Clinics entered into an agreement with Mr. William Donald Spence whereby he will provide his services as Director of Clinical Operations of HCi Viocare Clinics and its wholly-owned subsidiary clinics. The contract has a term of one year, starting on June 10, 2014, and ending on June 9, 2015, renewable for such further term as may be mutually agreed between the parties. Compensation shall be GBP £60,000 (USD$89,018) per year payable monthly in arrears on the last Friday of every month by credit transfer. HCi Viocare Clinics shall also pay any fees in connection with the membership of Mr. Spence to any professional, regulatory or other such body of which Mr. Spence’s membership is required to carry out his role with HCi Viocare Clinics, as well as all insurance payments.

Further, on June 9, 2014, the Company appointed Mr. William Spence to the Advisory Board of the Company and entered into an advisory board agreement. Compensation shall be the grant of a total of 5,000 stock options entitling Mr. William Spence the right to purchase a total of 5,000 shares of Series A Preferred Stock of the Company at a price of $0.04 per share for a period of five years from the date of vesting. The advisory board appointment is for a term of one year and the options granted under the agreement will vest on completion of the term of the appointment. The Series A Preferred shares when vested will be convertible on the basis of 20 shares of common stock for each one share held and have voting rights of 50 votes per share of Series A Preferred stock held at any meetings of the stockholders.

On July 25, 2014, the Company entered into another Loan Agreement with the Company’s CEO, President and Director, Sotirios Leontaritis, (the “Lender”), whereby the Lender, in order to provide general working capital and to allow the Company to effectuate its business plan, agreed to provide the Company a loan facility of 300,000 Euros with an annual interest of 5%, and the Company agreed to repay the Facility within 5 years from the date of the loan agreement. If for any reason the Company fails to repay the loan facility on the due date, the Lender has the right to convert it into shares of the common stock of the Company at Three Cents in the lawful currency of the United States (USD $0.03) per share.

Additional information on the Company’s technologies and management team can be found at the Company’s website: http://www.Viocare.eu/

RESULTS OF OPERATIONS

For the three months ended March 31, 2015 and 2014

We have incurred losses since inception. We generated $10,416 in revenues from operations and $6,065 in cost of goods sold for the three months ended March 31, 2015 and $nil in revenue and costs of goods sold for the same period ended March 31, 2014. Operating expenses for the three months ended March 31, 2015 and 2014 were $605,268 and $713,164 respectively

	For the Three Month Ended
		March 31,
		2015			2014
Revenues:
Sales		$	10,416		$	-
Cost of goods sold		6,065			-
Gross Profit			4,351			-

Operating Expenses
Depreciation			4,983			-
Office rent			38,650			4,303
Office expenses			58,684			9,909
Consultancy Fees			33,056			37,858
Professional fees			50,139			17,283
Research and development			383,605			632,237
Travel and entertainment			36,151			11,574
Total Operating Expenses			605,268			713,164

Loss from Operations			(600,917	)		(713,164	)

Research and development expense:

Research and development expense of $632,237 in the three months ended March 31, 2014 included $625,000 related to the acquisition of a technology known as “Socket Fit” from one of our officers and directors.

Research and development expense of $383,605 in the three months ended March 31, 2015 included $231,550 in stock-based compensation.

Office expenses, professional fees and travel and entertainment expenses were substantially increased in the current period primarily as a result of the Company’s commencement of operations in the healthcare innovation sector in the field of technology development and marketing of prosthetics and orthotics (P&O), and preparations for the operation of P&O total rehabilitation clinics both in Glasgow and Athens. In addition the Company experienced and increase to consultancy fees we during the current three month period as compared to the three months ended March 31, 2014 as the Company executed its business plan, requiring more man hours to complete allocated tasks.

CAPITAL RESOURCES AND LIQUIDITY

At March 31, 2015, we had $263,589 cash on hand ($408,252 – December 31, 2014) and liabilities of $262,822 in accounts payable and accrued expenses (including amounts due to related parties) ($197,345 – December 31, 2014) and $370,552 in advances from related parties ($393,044 – December 31, 2014). Presently we rely on our officers and director, as well as private placements from qualified investors to fund our general operating expenses. The Company has secured an operating loan from the Company’s President of EUR€300,000 (USD$325,530) during 2014 and closed private placements in the amount of $201,594, which amount should allow us to meet our operating expenses and ongoing obligations until such time as the Company can conclude a larger equity based financing, anticipated shortly in 2015.

The Company expects it will need to raise a total of $5,000,000 to fund its proposed operations for the next twelve months. It intends to fund operations by a combination of related party loans and equity placements. The Company intends to undertake a registration statement or bond offering to raise a total of $15,000,000 which it hopes to file prior to the end of the second quarter. In the interim, the Company is seeking equity private placements with which to fund operations until such time as it can file and clear the registration statements.

There can be no assurance that continued funding will be available on satisfactory terms.

GOING CONCERN

The Company incurred net losses of $620,139 and $713,588 for the three month ended March 31, 2015 and 2014, respectively and had a retained deficit of $21,336,928. In addition, the Company had a working capital deficiency of $265,667 and a stockholders' deficit of $156,269 at March 31, 2015. These factors raise substantial doubt about the Company's ability to continue as a going concern.

During the period March 26, 2007 (inception) through March 31, 2015, the Company relied heavily for its financing needs on its former CEO/director, Mr. Wu Jinzhao and subsequently to the date of this report, the Company has continued to be funded by its current President and Director, Sotirios Leontaritis.

NEED FOR ADDITIONAL FINANCING

Costs associated with being a public company are much higher than those of a private company. HCi Viocare, has chosen public registration before the business has developed a predictable cash flow. There are present registration expenses and future legal and accounting expenses, future reporting requirements to the SEC, future exchange listing requirements, and future investor relations costs that must be borne by a public company but not by a private company. These costs can be a burdensome expense which could adversely affect our financial survival. The ongoing regulatory costs, reporting requirements, and management details, which must be met when registering and maintaining a public company, may make the economic viability of HCi Viocare very doubtful. In addition the Company requires additional financing in order to continue to execute its business plan which includes the commercialization of one or more technologies, the ongoing operation of a P&O clinic in Glasgow as well as the opening of a new clinic planned for 2015 in Athens and ongoing research and development to bring new technologies to market.

In the past we have relied on advances from our president to cover our operating costs. There can be no assurance that our president will continue to fund the Company or that any other capital will be available if and when required. Our need for capital may change dramatically if we acquire an interest in a business opportunity during that period. At present, we have no commitments or agreements with respect to the acquisition of any business venture, however, we are currently looking at a number of business opportunities in the medical field. There can be no assurance that we will identify a business venture suitable for acquisition in the future. Further, we cannot assure that we will be successful in consummating any acquisition on favorable terms or that we will be able to profitably manage any business venture we acquire. Should we require additional capital, we may seek additional advances from officers, sell common stock or find other forms of debt financing.

CRITICAL ACCOUNTING POLICIES

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 4 of our financial statements for the period ended March 31, 2015. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

RECENT ACCOUNTING PRONOUNCEMENTS

OFF BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”), also the Chief Financial Officer (“CFO”) (the Company’s principal executive officer, principal financial and accounting 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 end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective as of March 31, 2015 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

Item 1A. Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

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

There were no unregistered securities to report which were sold or issued by the Company without the registration of these securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements, within the period covered by this report, which have not been previously included in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibits:
3.1.1	Articles of Incorporation	Incorporated by reference to our Registration Statement filed with the SEC on Form SB-2 dated June 29, 2007.
3.1.2	Certificate of Amendment to the Articles of Incorporation	Incorporated by reference to our Definitive 14C filed with the SEC on December 27, 2013
3.1.3	Certificate of Amendment to the Articles of Incorporation	Incorporated by reference to our Definitive 14C filed with the SEC on March 3, 2014
3.2	Bylaws	Incorporated by reference to our Registration Statement filed with the SEC on Form SB-2/A dated October 11, 2007.
4.1	Certificate of Designation	Incorporated by reference to our Definitive 14C filed with the SEC on December 27, 2013
10.1	Marketing Research Agreement	Incorporated by reference to our Registration Statement
10.2	Loan Agreement	Incorporated by reference to our Registration Statement filed with the SEC on Form SB-2/A dated January 28, 2008.
.10.3	Subscription Agreement	Incorporated by reference to our Registration Statement filed with the SEC on Form SB-2 dated June 29, 2007.
10.4	Contract between the Company and Sotirios Leontaritis dated effective January 1, 2014	Incorporated by reference to our Form 8-K filed with the SEC on January 21, 2014
10.5	Acquisition Agreement between HCi Viocare Technologies Limited and Christos Kapatos dated February 2, 2014	Incorporated by reference to our Form 8-K filed with the SEC on February 14, 2014.
10.6	Acquisition Agreement between HCi Viocare Technologies Limited and Dr. Christos Kapatos dated April 16, 2014	Incorporated by reference to our Form 8-K filed with the SEC on May 6, 2014
10.7	Consulting Agreement between the Company and Dr. Christos Kapatos dated April 16, 2014	Incorporated by reference to our Form 8-K filed with the SEC on May 6, 2014
10.8	Consulting Agreement between the Company and Professor Stephan Solomonidis dated April 16, 2014	Incorporated by reference to our Form 8-K filed with the SEC on May 6, 2014
10.9	Consulting Agreement between the Company and Professor William Sandham dated April 16, 2014	Incorporated by reference to our Form 8-K filed with the SEC on May 6, 2014
10.10	Form of Advisory Board Agreement	Incorporated by reference to our Form 8-K filed with the SEC on May 6, 2014
10.11	Share Purchase Agreement between Mr. William Spence, Miss Catriona Ann Spence, and Mrs Eilidh Isabel Malcolm, and HCi Viocare Clinics UK Limited dated June 9, 2014	Incorporated by reference to our Form 8-K filed with the SEC on June 9, 2014
10.12	Disclosure Letter dated June 10, 2014	Incorporated by reference to our Form 8-K filed with the SEC on June 9, 2014
10.13	Taxation Undertaking between Mr. William Spence, Miss Catriona Ann Spence, and MrsEilidh Isabel Malcolm, and HCi Viocare Clinics UK Limited, dated June 9, 2014	Incorporated by reference to our Form 8-K filed with the SEC on June 9, 2014
10.14	Agreement between HCi Viocare Clinics UK Limited and William Donald Spence, dated June 9, 2014	Incorporated by reference to our Form 8-K filed with the SEC on June 9, 2014
10.15	Letter from Zhen dated June 19, 2014 regarding change in certified accountant.	Incorporated by reference to our Form 8-K filed with the SEC on June 25, 2014
10.16	Loan Agreement between the Company and Sotirios Leontaritis dated June 10, 2014	Incorporated by reference to our Form 10-Q filed with the SEC on August 19, 2014
10.17	Loan Agreement between the Company and Sotirios Leontaritis dated July 25, 2014	Incorporated by reference to our Form 10-Q filed with the SEC on August 19, 2014
10.18	Agreement between W.D. Spence Prosthetics Limited and Heleen Francoise Kist, dated November 7, 2014	Incorporated by reference to our Form 8-K filed with the SEC on November 12, 2014
10.19	Share purchase agreement between Sotirios Leontaritis and Hci Viocare Dated November 28, 2014	Incorporated by reference to our Form 8-K filed with the SEC on December 2, 2014
10.20	Private placement subscription agreement dated December 24, 2014	Incorporated by reference to our Form 8-K filed with the SEC on January 2, 2015
10.21	Consulting Agreement between the Company and Mikulas Dylowicz dated January 1, 2015	Incorporated by reference to our Form 8-K filed with the SEC on January 2, 2015
10.22	Private placement subscription agreement dated February 2, 2015	Incorporated by reference to our Form 8-K filed with the SEC on February 9, 2015
10.23	Private placement subscription agreement dated March 23, 2015	Incorporated by reference to our Form 10-K filed with the SEC on April 16, 2015.
10.24	The Agreement with HELLENIC AMERICAN SECURITIES S.A. dated May 7, 2015	Incorporated by reference to our Form 8-K filed with the SEC on May 13, 2015
10.25	The Amendment of Acquisition Agreement between HCi VioCare Technologies Limited and Dr. Christos Kapatos dated May 8, 2015	Incorporated by reference to our Form 8-K filed with the SEC on May 13, 2015
10.26	The Addendums to the Consulting Agreements of 16.04.2014with Dr. Christos Kapatos, Professor William Sandham and Professor Stephan Solomonidis dated May 1, 2015	Incorporated by reference to our Form 8-K filed with the SEC on May 13, 2015
10.27	The amendments to the scientific advisory agreements, dated May 8, 2015	Incorporated by reference to our Form 8-K filed with the SEC on May 13, 2015
14.1	Code of Ethics	Incorporated by reference to the registration statement filed with the SEC on Form 10-K dated April 6, 2009.
21	List of subsidiaries	Incorporated by reference to our Form 10-K filed with the SEC on April 16, 2015.
31.1	Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema	Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

		HCi Viocare

Date:	May 20, 2015	By:	/s/ Sotirios Leontaritis
		Name:	Sotirios Leontaritis
		Title:	Chief Executive Officer and President (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Rafina Innovations Inc. - FORM 10-Q - May 20, 2015

Attached files

Rafina Innovations Inc. Reports