DD Support Board and Research Team

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Net Operating Loss Tax Carry-Forwards

As of December 31, 2016, Oncolix/DE had net operating loss carryforwards of approximately $8.4 million and an Orphan Drug Tax Credit carryforward of approximately $0.4 million, but the utilization of such amounts has been severely limited by the merger in 2017 and other changes in ownership. The amount of such carryforwards as of September 30, 2017 has not been determined, but the utilization is also similarly limited. In addition, we have deferred the deduction of approximately $6.9 million in research and administrative costs as of December 31, 2016, and these may be deducted in future federal tax returns.

Current federal tax laws include substantial restrictions on the utilization of net operating loss and tax credits in the event of a change in the ownership, as such term is defined in the federal tax code. Even if the carryforwards are available, they may be subject to annual limitations, lack of future taxable income, or future ownership changes that could result in the expiration of the carryforwards before they are utilized. Our principal stockholder, GHC effected a reorganization that is expected result in a change in ownership that would restrict our ability to utilize our prior accumulated tax benefits, but we do not expect such reorganization to have a significant effect on our operations.

At December 31, 2016 and September 30, 2017, we recorded a 100% valuation allowance against our deferred tax assets as our management believes it is uncertain that they will be fully realized. If we determine in the future that we will be able to realize all or a portion of our net operating loss carryforwards, an adjustment to our net operating loss carryforwards would increase net income in the period in which we make such a determination.

Proper statement!