UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: September 30, 2016March 31, 2017

OR

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

For the transition period from __________ to __________

Commission File No. 333-190456001-36268

AKERS BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

201 Grove Road

Thorofare, NJ 08086

(Address of principal executive offices)

(856) 848-2116

(Registrant’s telephone number, including area code)

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 past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.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.files). Yes [X] No [  ]

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

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

As of November 8, 2016,May 15, 2017, there were 5,452,5458,895,075 shares outstanding of the registrant’s common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATIONINFORMATION.

Item 1. Financial Statements.Statements

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

September 30, 2016March 31, 2017 and December 31, 20152016

See accompanying notes to these condensed consolidated financial statements.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive IncomeLoss

For the three months ended March 31, 2017 and 2016

(unaudited)

See accompanying notes to these condensed consolidated financial statements.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Stockholder’s Equity

For nine months ended September 30, 2016

See accompanying notes to these condensed consolidated financial statements.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash FlowsChanges in Stockholder’s Equity

For ninethe three months ended September 30, 2016 and 2015

(unaudited)March 31, 2017

See accompanying notes to these condensed consolidated financial statements.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2017 and 2016

(unaudited)

See accompanying notes to these condensed consolidated financial statements.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1 –- Nature of Business

(a) Reporting Entity

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally acceptedby Akers Biosciences, Inc. (“Akers” or the “Company”), a company domiciled in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicativeof America. The address of the results that may be expected forCompany’s registered office is 201 Grove Road, West Deptford, New Jersey, 08086. The Company is incorporated in the year ending December 31, 2016. InUnited States of America under the opinionlaws of management, the unaudited condensed consolidated financial statements include all adjustments, consistingState of normal recurring adjustments, considered necessary for a fair presentation. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2015 included in Form 10-K of Akers Biosciences, Inc. and Subsidiaries (“the Company”).New Jersey.

The condensed consolidated financial statements include two dormant subsidiaries, Akers Acquisition Sub, Inc. and Bout Time Marketing Corporation. All material intercompany balancestransactions have been eliminated upon consolidation.

The Company commenced research and development operations in September 1989, and until 2005 had devoted substantially all its efforts to establishing the new business.

The Company’s primary focus is the development and sale of disposable diagnostic testing devices that can be performed in minutes, to facilitate time sensitive therapeutic decisions. The Company’s main products are a disposable breathalyzer test that measures the blood alcohol content of the user, a rapid test detecting the antibody causing an allergic reaction to Heparin and a disposable breathalyzer test that measures Free Radical activity in the human body. When the Company enters into an agreement with a new distributor it typically requires an upfront licensing fee to be paid for the right to sell the Company’s products in specific markets.

Note 2 -Basis of Presentation and Significant Accounting Policies

(a) Basis of Presentation

The condensed consolidated financial statementsCondensed Consolidated Financial Statements of the Company are prepared in U.S. Dollars and in accordance with GAAP.accounting principles generally accepted in the United States of America (US GAAP).

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act enacted on April 5, 2012 and has elected to comply with certain reduced public company reporting requirements.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements(b) Use of Estimates and Judgments

(unaudited)

The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, informationInformation about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes for revenue recognition, allowances for doubtful accounts, inventory write-downs, impairment of intangible assets and valuation of share based payments.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(c) Functional and Presentation Currency

These condensed consolidated financial statements are presented in U.S. Dollars, which is the Company’s functional currency. All financial information presented in U.S. Dollars has been rounded to the nearest dollar. Foreign currency transaction gainsCurrency Transaction Gains or losses,Losses, resulting from loans and cash balances denominated in foreign currencies,Foreign Currencies, are recorded in the condensed consolidated statement of operations.operations and comprehensive loss.

(d) Comprehensive Income (Loss)

The Company follows Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) 220 in reporting comprehensive income (loss). Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

(e) Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances. The Company considers all highly liquid investments, which include short-term bank deposits (up to 3 months from date of deposit) that are not restricted as to withdrawal date or use, to be cash equivalents. Bank overdrafts are shown as part of trade and other payables in the condensed consolidated balance sheet.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated(f) Fair Value of Financial StatementsInstruments

(unaudited)

The Company’s financial instruments consist of cash and cash equivalents, marketable securities, receivables and trade and other payables. The carrying value of cash and cash equivalents, receivables and trade and other payables approximate their fair value because of their short maturities. The fair value of marketable securities is described in Note 2(g)3(c).

(g) Fair Value Measurement – Marketable Securities

The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements(h) Trade Receivables, Trade Receivables – Related Party and Allowance for Doubtful Accounts

(unaudited)

The carrying amounts of current trade receivables is stated at cost, net of allowance for doubtful accounts and approximate their fair value given their short term nature.

The normal credit terms extended to customers ranges between 30 and 90 days. The Company reviews all receivables that exceed terms and establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade and other receivables. A considerable amount of judgment is required in assessing the amount of allowance. The Company considers the historical level of credit losses, makes judgments about the credit worthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future.

As of September 30, 2016March 31, 2017 and December 31, 2015,2016, allowances for doubtful accounts for trade receivables were $1,010,196$187,055 and $864,000. Allowances charged$1,010,196. Bad debt expenses for doubtful accounts amounted totrade receivables were $42,361 and $- for the three and nine months ended September 30, 2016March 31, 2017 and September 30, 2015.2016.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(i) Concentration of Credit Risk

The Company is exposed to credit risk in the normal course of business primarily related to trade receivables and cash and cash equivalents.

Substantially allAll of the Company’s cash is maintained with Fulton Bank of New Jersey, and Bank of America.America, NA and PayPal. The funds are insured by the Federal Deposit Insurance CorporationFDIC up to a maximum of $250,000, per account or instrument, but are otherwise unprotected. The Company placed $181,216$2,080,924 and $369,525$67,865 with Fulton Bank of New Jersey, $10,604$118 and $28,494$795 with Bank of America, NA and $4,040 and $4,040 with PayPal as of September 30, 2016March 31, 2017 and December 31, 2015.2016. No losses have been incurred in these accounts.

Concentration of credit risk with respect to trade receivables exists as approximately 80%67% of itsthe Company’s product revenue wasis generated by three customers for the nine months ended September 30, 2016.two customers. These customers accounted for 38%55% of gross trade receivables (including related parties) as of September 30, 2016.March 31, 2017. In order to limit such risks, the Company performs ongoing credit evaluations of its customers’ financial condition.

(j) Inventories

Inventories are measured at the lower of cost or market.net realizable value. The cost of inventories is based on the weighted-average principle, and includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, costs include an appropriate share of production overheads based on normal operating capacity.

(k) Property, Plant and Equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Costs include expenditures that are directly attributable to the acquisition of the asset.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized within “other income” in the condensed consolidated statement of operations.operations and comprehensive loss.

Depreciation is recognized in the condensed consolidated statement of operationsprofit and loss on the accelerated basis over the estimated useful lives of the property, plant and equipment. Leased assets are depreciated over the shorter of the lease term or their useful lives.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The estimated useful lives for the current and comparative periods are as follows:

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

(l)Intangible Assets

(i) Patents and Trade Secrets

The Company has developed or acquired several diagnostic tests that can detect the presence of various substances in a person’s breath, blood, urine and saliva. Propriety protection for the Company’s products, technology and process is important to its competitive position. As of September 30, 2016,March 31, 2017, the Company has ten patents from the United States Patent Office in effect (9,383,368; 7,896,167; 8,097,171; 8,003,061; 8,425,859; 8,871,521; 8,808,639; D691,056; D691,057 and D691,058). Other patents are in effect in Australia through the Design Registry (348,310; 348,311 and 348,312), the Community Trade Mark in the European Union ((OHIM)Patents 1793906, 2684025, 002216895-0001; 002216895-0002 and 002216895-0003), in Hong Kong (HK11004006) and in Japan (1,515,170; 4,885,134; 4,931,821 5,775,790, and 5,775,790)6023096). Patents are in the national phase of prosecution in many Patent Cooperation Treaty participating countries. Additional proprietary technology consists of numerous different inventions. The Company intends to file additional patent applications, where appropriate, relating to new products, technologies and their use in the U.S., European and Asian markets. Management intends to protect all other intellectual property (e.g. copyrights, trademarks and trade secrets) using all legal remedies available to the Company.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES(ii) Patent Costs

Notes to Condensed Consolidated Financial Statements

(unaudited)

Costs associated with applying for patents are capitalized as patent costs. Once the patents are approved, the respective costs are amortized over their estimated useful lives (maximum of 17 years) on a straight-line basis. Patent pending costs for patents that are not approved are charged to the statement of operations the year the patent is rejected.

In addition, patents may be purchased from third parties. The costs of acquiring the patent are capitalized as patent costs if it represents a future economic benefit to the Company. Once a patent is acquired it is amortized over its remaining useful life.

(iii) Other Intangible Assets

Other intangible assets that are acquired by the Company, which have definite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(iv) Amortization

Amortization is recognized on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

(m) Recoverability of Long Lived Assets

In accordance with FASB ASC 360-10-35 “Impairment or Disposal of Long-lived Assets”, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable or that the useful lives of those assets are no longer appropriate. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment.

The Company determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES(n) Investments

Notes to Condensed Consolidated Financial Statements

(unaudited)

In accordance with FASB ASC 323, the Company recognizes investments in joint ventures based upon the Company’s ability to significantly influence the operational or financial policies of the joint venture. An objective judgment of the level of influence is made at the time of the investment based upon several factors including, but not limited to the following:

The Company follows the equity method for valuating investments in joint ventures when the existence of significant influence over operational and financial policy has been established, as determined by management; otherwise, the Company will valuate these investments using the cost method.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Investments recorded using the cost method will be assessed for any decrease in value that has occurred that is other than temporary and the other than temporary decrease in value shall be recognized. As and when circumstances and facts change, the Company will evaluate the Company’s ability to significantly influence operational and financial policy to establish a basis for converting the investment accounted for using the cost method to the equity method of valuation.

On March 9, 2015, the Company contributed capital of $64,675 in Hainan Savy Akers Biosciences, Ltd., a company incorporated in the People’s Republic of China, resulting in a 19.9% ownership interest. The contribution was adjusted downward to $64,091 on April 8, 2015; the net effect of the currency conversion when the contribution was processed in Hainan. This is included in other assets in the condensed consolidated balance sheet as of September 30, 2016 and is accounted for using the cost method.(o) Revenue Recognition

In accordance with FASB ASC 605, the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) the collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales when title passes to the customer based on shipping terms. The Company typically does not accept returns nor offer charge backs or rebates except for certain distributors. Revenue recorded is net of any discount, rebate or sales return. NoThe accrual for estimated sales returns are necessarywas $- as of September 30,March 31, 2016 and December 31, 2015.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)2016.

The Company institutedimplemented a significant price increasestandard dealer cost model during the year ended December 31, 2016 which includes a provision for certain PIFA products effective May 1, 2015. In an effortrebates to phase in the increase for existing customers, the Company is providing a rebate to its distributors for the price increase through April 30, 2016 for their existing customer base as of April 30, 2015.under limited circumstances. The Company has recorded rebatesestablished an accrual of $84,128$28,202 and $299,781,$172,776, which is a reduction of revenue, for the three and nine months ended September 30, 2016March 31, 2017 and $70,282 and $362,150 for the three and nine months ended September 30, 2015 for this program.2016. Accounts receivable will be reduced when the rebates are applied by the customer.

Effective May 1, During the three months ended March 31, 2017 and 2016, the Company completedrecognized $102,824 and $99,968 in rebates, which is included as a reduction of product revenue in the implementationCondensed Consolidated Statement of pricing based upon a standardized adjusted dealer cost model. The program allows for pre-existing end-user customers to negotiate pricing contracts directly with the Company or through the distributor network. Rebates are available to the distributors to mitigate the effect of any discounts on these contracts. As of September 30, 2016Operations and December 31, 2015, accrued rebates amounted to $255,954 and $223,542.Comprehensive Loss.

License fee revenue is recognized on a straight-line basis over the term of the license agreement.

When the Company enters into arrangements that contain more than one deliverable, the Company allocates revenue to the separate elements under the arrangement based on their relative selling prices in accordance with FASB ASC 605-25.

(p) Income Taxes

The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(q) Shipping and Handling Fees and Costs

The Company charges actual shipping plus a handling fee to customers, which amounted to $12,321$18,420 and $42,754$16,045 for the three and nine months ended September 30, 2016March 31, 2017 and $10,998 and $43,776 for the three and nine months ended September 30, 2015.2016. These fees are classified as part of product revenue in the condensed consolidated statementsCondensed Consolidated Statement of operations.Operations and Comprehensive Loss. Shipping and other related delivery costs, including those for incoming raw materials are classified as part of the cost of net revenue, which amounted to $19,418$16,177 and $88,427$21,714 for the three and nine months ended September 30, 2016March 31, 2017 and $15,590 and $82,996 for the three and nine months ended September 30, 2015.2016.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES(r) Research and Development Costs

Notes to Condensed Consolidated Financial Statements

(unaudited)

In accordance with FASB ASC 730, research and development costs are expensed when incurred.

(s) Stock-based Payments

The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the shorter of the period over which services are to be received or the vesting period.

The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC 505-50, “Equity-Based Payments to Non-Employees”. Under FASB ASC 505-50, the Company determines the fair value of the stock warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The Company estimates the fair value of stock-based awards to non-employees on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the period which services are to be received. At the end of each financial reporting period, prior to vesting or prior to the completion of services, the fair value of equity based payments will be re-measured and the non-cash expense recognized during the period will be adjusted accordingly. Since the fair value of equity based payments granted to non-employees is subject to change in the future, the amount of the future expense will include fair value re-measurementsre-measurement until the equity based payments are fully vested or the service is completed.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(t) Basic and Diluted Earnings per Share of Common Stock

Basic earnings per common share are based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share are computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period.

Potential common shares consistthat would have the effect of restricted sharesincreasing diluted earnings per share are considered anti-dilutive, i.e. the exercise prices of commonthe outstanding stock options and warrants. Diluted net income perwere greater than the market price of the common sharestock.

(u) Reclassifications

Certain prior year amounts have been reclassified to conform to the current year’s presentation.

(v) Recently Adopted Accounting Pronouncements

As of March 31, 2017 and for the three months ended September 30, 2016 included 56,000 units of options and 18,333 units of unvested restricted shares of common stock. Diluted net loss per common share was the same as basic loss per common share for the nine months ended September 30, 2016 and for the three and nine months ended September 30, 2015 since the effect of options and warrants would be anti-dilutive due to the net loss attributable to the common stockholders for the periods. Instruments excluded from dilutive earnings per share, because their inclusion would be anti-dilutive were 203,000 units of options and 18,333 units of unvested restricted shares of common stock for the nine months ended September 30, 2016 and 175,000 units of options for the three and nine months ended September 30, 2015.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

The table below details the calculation of the basic and diluted income/(loss) per share for the three and nine months ended September 30, 2016 and 2015:

As of September 30, 2016 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

(w) Recently Issued Accounting Pronouncements Not Yet Adopted

As of September 30, 2016, there are nothe Company is an emerging growth company, it has elected to adopt recently issued accounting standards based on effective dates applicable to nonpublic entities. All effective dates as mentioned in the following paragraphs refer to that applicable to nonpublic entities.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14 which deferred the effective date of Update 2014-09 to annual reporting periods beginning after December 15, 2018 and interim reporting periods within annual reporting periods beginning after December 15, 2019. Early application is permitted as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that reporting period. The Company is currently evaluating the effect of the amendments but it does not yet adopted which would haveanticipate a material impact of its financial statements. The Company expects to use the modified retrospective adoption method.

In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842). The amendments in this Update specify the accounting for leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application of the amendments in this Update is permitted. The Company is currently evaluating the effect the amendments in this Update will have on its financial statements and related disclosures.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

In March 2016, the FASB issued ASU No. 2016-08,Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies certain aspects of the principal versus agent guidance in the new revenue recognition standard. The effective date and transition requirement for this ASU are the same as the effective date and transition requirements of ASU 2014-09,Revenue from Contracts with Customers (Topic 606), as amended by ASU 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date to annual reporting periods beginning after December 15, 2018. The Company is currently evaluating the effect the amendments in this Update will have on its financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09,Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including: (1) income tax consequences; (2) classification of awards as either equity or liabilities, and (3) classification on the Company’sstatement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the effect the amendments in this Update will have on its financial statements through 2017.and related disclosures.

In August 2016, the FASB issued ASU No. 2016-15,Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The Update addresses eight specific changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the effect the amendments in this Update will have on its financial statements and related disclosures.

Note 3 – Management Plan

Historically, the Company has relied upon public offerings and private placements of common stock to raise operating capital. During the three month period ending March 31, 2017, the Company raised approximately $1.7 million in a public offering and an additional $1.8 million from a private placement of common stock (Note 11). As of May 10, 2017, the Company had cash and marketable securities of approximately $1.75 million and working capital of approximately $3.70 million.

The 2017-19 Strategic Business Plan (“Strat Plan”) was presented to and approved by the Board of Directors on December 12, 2016. The plan outlines the Company’s business objectives for the next three years and sets measurable targets for new product releases, sales and marketing programs to increase market penetration for the Company’s products and operational expense management.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Implementation of the Strat Plan began in January 2017 and management remains confident that the objectives are achievable, however; during the first half of 2017, the Company may encounter limited periods of cash shortages and is proactively working to minimize their impact on operations. The Company anticipates maintaining a cash-flow positive position during the next twelve months based upon the revenue targets as outlined in the Strat Plan, the results of the private placement offering in March 2017 and the backing by a shareholder if required. In Addition, the Company has initiated discussions with our primary financial institution to establish a line of credit to manage short-term cash fluctuations.

During the year ended December 31, 2016, the Company significantly reduced operating expenses through a systematic review of operations throughout the organization. As a result, the Company achieved a reduction in our weekly operating cash requirements of approximately 19% to $80,253 (2015: $98,699). The Strat Plan assumes the weekly cash requirement to remain steady through the year ending December 31, 2017. 

The Company has achieved the reduction in weekly cash requirements by renegotiating contracts with key consultants and canceling consulting agreements where the cost-benefits are negligible, working with vendors to reduce or eliminate minimum purchasing requirements, to extend payment terms and re-sourcing materials when necessary to reduce costs.

Production cost savings, especially direct manufacturing costs, have been realized by utilizing sub-contractors to perform labor intensive production processes. This improves efficiency for our manufacturing staff, allowing them to concentrate their efforts on more complex assembly and production tasks.

During the three months ended March 31, 2017, the Company’s average weekly operating cash requirement increased to $120,722. The increase resulted from payments to vendors and sub-contractors included in the December 31, 2016 accounts payable balance, a significant royalty payment that had been deferred in 2016 as part of a legal settlement and other payments for contractual obligations. Many of these items are one-time events and the Company anticipates the cash requirements to revert to the $80,000 to $85,000 per week.

Barring any unforeseen circumstances, the Company believes that it is probable that it will be able to meet its obligations as they fall due within one year after the financial statements are issued.

Note 4 - Fair Value Measurement - Marketable Securities

Following is a description of the valuation methodologies used for assets measured at fair value as of September 30, 2016March 31, 2017 and December 31, 2015.2016.

Money market funds andU.S. Agency Securities, Corporate and Municipal Securities:Securities and Certificates of Deposits: Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

The aboveMarketable securities include U.S. agency securities, corporate securities, and municipal securities, which are classified as available for sale. The securities are valued at fair market value. Maturities of the securities are less than one year. Unrealized gains and losses relating to the available for sale investment securities were recorded in the condensed consolidated statementCondensed Consolidated Statement of changesChanges in stockholders’ equityStockholders’ Equity as comprehensive income. The net unrealized lossThese amounts were $156 and $8,534 (net of $2,837 and a net unrealized gaineffect of $3,691 income tax expense of $-)for the three and nine months ended September 30, 2016March 31, 2017 and a net unrealized gain of $5,810 and $28,965 for the three and nine months ended September 30, 2015 were recorded in the condensed consolidated statement of changes in stockholders’ equity as comprehensive income.

As of September 30, 2016, investments in money market funds and corporate securities and municipal securities classified as available for sale mature within one year.2016.

Proceeds from the sale of marketable securities in the three months ended March 31, 2017 and 2016 were $1,095,218 and $1,601,456. Gross gains as a result of the sales amounted to $1,051 and $308 for the three and nine months ended September 30,March 31, 2017 and 2016, were $950,514 and $3,452,833 and were $1,202,311 and $4,108,632 for the three and nine months ended September 30, 2015. As a result of these sales, a gross gain of $1,269 and $3,421 was recorded for the three and nine months ended September 30, 2016 and a gross loss of $5,213 and $7,201 was recorded for the three and nine months ended September 30, 2015.respectively.

Note 45 - Trade Receivables – Related Party

Trade receivables – related party are made up of amounts due from Hainan Savy Akers Biosciences Ltd (“Hainan”), a joint venture partnerbetween Akers, Thomas Knox, Akers’ current Board Chairman, and Hainan Savy Investment Management Ltd, located in the PeoplesPeople’s Republic of China. The Company holds a 19.9% position in the joint venture. The amount due is non-interest bearing, unsecured and generally has a term of 30-90 days.days (Note 14).

Note 56 - Inventories

Inventories at September 30, 2016 and December 31, 2015 consists of the following categories:

For the three and nine months ended September 30, 2016, $24,965 and $27,933 were expensed to cost of goods sold for obsolete inventory. For the three and nine months ended September 30, 2015, $252 was expensed to cost of goods sold for obsolete inventory.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

For the three months ended March 31, 2017 and 2016, $- and $2,968 was charged to cost of goods sold for obsolete inventory.

Note 67 - Property, Plant and Equipment

Property, plant and equipment asconsists of September 30, 2016 and December 31, 2015 are as follows:the following:

DepreciationDuring the three months ended March 31, 2017 and 2016 depreciation expense was $65,264$17,941 and $93,615 for the three and nine months ended September 30, 2016 and $15,938 and $47,583 for the three and nine months ended September 30, 2015.

The Company disposed of a fully depreciated telephone system with no salvage value during the nine months ended September 30, 2016.$13,702.

Note 7Note 8 - Intangible Assets

Intangible assets as of September 30, 2016March 31, 2017 and December 31, 20152016 and the movements for the three monthsperiods then ended are as follows:

AmortizationDuring the three months ended March 31, 2017 and 2016 amortization expense was $42,777 and $128,331 for the three and nine months ended September 30, 2016 and $64,643 and $193,929 for the three and nine months ended September 30, 2015.

Impairment expense was $- for the three and nine months ended September 30, 2016 and $466,476 for the three and nine months ended September 30, 2015.

$42,777.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

The estimated aggregate amortization expense for each of the five succeeding fiscal years is as follows:

Note 89 - Trade and Other Payables and Trade and Other Payables - Related Party

Trade and other payables asconsists of September 30, 2016 and December 31, 2015 are as follows:the following:

Trade and other payables – related party as of September 30, 2016 and December 31 2015 are as follows:

The Company recorded royalty expenses of $117,949 in$32,279 and $- for the three and nine months ended September 30,March 31, 2017 and 2016 for ChubeWorkx Guernsey Limited (“ChubeWorkx”), a major shareholder, in relation to the settlement of legal claims (Note 12)14). The expense is included in sales and marketing expenses – related party on the condensed consolidated statementCondensed Consolidated Statement of operationsOperations and comprehensive income.Comprehensive Loss. As of September 30, 2016,March 31, 2017, the Company owed ChubeWorkx $6,908 for the period of August 18, 2016 through September 30, 2016$16,139 which was paid on OctoberApril 20, 2016 and had an accrual of $52,066 for the period of January 1, 2016 through August 17, 2016 which is payable on January 17, 2017.

As of September 30, 2016,March 31, 2017, the Company owed Hainan Savy–Akers$670. Senior management at Hainan are actively involved in two other companies, Shenzhen Savy-Akers Biosciences a joint venture partner, $699.(“Shenzhen”) and Dong Guan Senming E&P (“Senming”) and are therefore being included as related parties. The Company owed these two companies $79,074 as of March 31, 2017.

Trade and other payables and trade ant other payables – related party are non-interest bearing and are normally settled on 30 – 60 day terms.

Note 910 - Share-based Payments

On January 23, 2014, upon effectiveness of the registration statement filed with the SEC, the Company adopted the 2013 Stock Incentive Plan (the “Plan”) which will provide for the issuance of up to 400,000 shares. The purpose of the Plan is to provide additional incentive to those officers, employees, consultants and non-employee directors of the Company and its parents, subsidiaries and affiliates whose contributions are essential to the growth and success of the Company’s business.

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

On January 9, 2015, the Board of Directors of the Company approved, upon recommendation from the Compensation Committee of the Board, by unanimous written consent the Amended and Restated 2013 Incentive Stock and Award Plan (the “Plan”“Amended Plan”), which increases the number of authorized shares of common stock subject to the Plan to 800,000 shares.

On September 30, 2016, the Board of Directors increased the number of authorized shares of common stock subject to the Amended and Restated 2013 Incentive Stock and Award Plan to 830,000 shares. As of September 30, 2016,March 31, 2017, under the 2013 Amended Plan, grants of restricted stock and options to purchase 277,333268,166 shares of common stock have been issued and are unvested or unexercised and 73,29213,292 shares of common stock remain available for grants.

The 2013Amended Plan may be administered by the board or a board-appointed committee. Eligible recipients of option awards are employees, officers, consultants or directors (including non-employee directors) of the Company or of any parent, subsidiary or affiliate of the Company. The board has the authority to grant to any eligible recipient any options, restricted stock or other awards valued in whole or in part by reference to, or otherwise based on, the Company’s common stock.

On January 1, 2016, the Company approved the issuance of 12,500 options to purchase common shares to a key consultant for services at an exercise price of $3.70 per common share with vesting over one year.

On August 9, 2016 the Company approved the issuance of 26,000 options to purchase common shares to two key employees at an exercise price of $3.25 per common share with vesting over two years.

These options were issued under the Amended and Restated 2013 Incentive Stock and Award Plan. The options have a five-year expiration.

The calculated fair value of the options was distributed to the following categories on the condensed consolidated statement of operations and comprehensive income:

The options and warrants issued under the above plan were valued using a Black Scholes option pricing model. The assumptions utilized in calculating the value of the issued options under Black Scholes are as follows:

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

Qualified option holders may exercise their options at their discretion. Each option granted may be exchanged for a prescribed number of shares of common stock.

The Company did not issue any options or warrants under the above plan during the three months ended March 31, 2017.

The following table summarizes the option activities for the ninethree months ended September 30, 2016:March 31, 2017:

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $3.36$1.80 for the Company’sour common shares on September 30, 2016. The above intrinsic value represents that of awards with an exercise price below $3.36.March 31, 2017. Forfeited

AKERS BIOSCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The total grant date fair valueA summary of stock options vested for the threeCompany’s non-vested shares as of March 31, 2017 and nine monthsthe changes during the period then ended September 30, 2016 was $35,422 and for the three and nine months ended September 30, 2015 was $-.are as follows:

As of September 30, 2016 and December 31, 2015 the Company had 259,000 and 220,500 respectively reserved shares of its common stock for outstanding options.

As of September 30, 2016, there was $38,444 of unrecognizedUnrecognized compensation cost related to outstandingnon-vested employee stock options.options totaled $28,259 as of March 31, 2017. The cost is to be recognized over a weighted average period of 1.38 years.

During the three months ended March 31, 2017 and 2016, the Company incurred stock option expenses totaling $5,036 and $-, respectively.

During the three months ended March 31, 2017, The Company issued 894,750 warrants in conjunction with the January 2017 public offering and an additional 724,200 warrants with the March 2017 private placement. All warrants carry a five-year expiration term. The table below summarizes the warrant activity for the three months ended March 31, 2017: